-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ke9FrLPi31i6lf3MJ2zM7DjfkMPtCqjqx+ALJlDDHofpb+odhfbnodo1IrUMQoA8 vkPCUDhLeWE08FSUB8O/6A== 0000950109-99-002692.txt : 19990805 0000950109-99-002692.hdr.sgml : 19990805 ACCESSION NUMBER: 0000950109-99-002692 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19990804 GROUP MEMBERS: APOLLO (UK) PARTNERS III, L.P. GROUP MEMBERS: APOLLO / AW LLC GROUP MEMBERS: APOLLO ADVISORS II, L.P. GROUP MEMBERS: APOLLO ADVISORS IV, L.P. GROUP MEMBERS: APOLLO INVESTMENT FUND III LP GROUP MEMBERS: APOLLO INVESTMENT FUND IV, L.P. GROUP MEMBERS: APOLLO MANAGEMENT IV, L.P. GROUP MEMBERS: APOLLO MANAGEMENT, L.P. GROUP MEMBERS: APOLLO OVERSEAS PARTNERS III, L.P. GROUP MEMBERS: APOLLO OVERSEAS PARTNERS IV, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ALLIED WASTE INDUSTRIES INC CENTRAL INDEX KEY: 0000848865 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] IRS NUMBER: 880228636 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-43433 FILM NUMBER: 99677889 BUSINESS ADDRESS: STREET 1: 15880 NORTH GREENWAY-HADEN LOOP STREET 2: SUITE 100 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 6026272700 MAIL ADDRESS: STREET 1: 7201 E CAMELBACK RD STREET 2: STE 375 CITY: SCOTTSDALE STATE: AZ ZIP: 85251 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: APOLLO INVESTMENT FUND III LP CENTRAL INDEX KEY: 0001015567 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: APOLLO ADVISORS II LP STREET 2: 2 MANHATTANVILLE ROAD CITY: NEW YORK STATE: NY ZIP: 10577 BUSINESS PHONE: 9146948000 MAIL ADDRESS: STREET 1: C/O APOLLO ADVISORS LP STREET 2: 2 MANHATTANVILLE RD CITY: PURCHASE STATE: NY ZIP: 10577 SC 13D/A 1 AMENDMENT #2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------- SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 2)/1/ ALLIED WASTE INDUSTRIES, INC. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 019589 - -------------------------------------------------------------------------------- (CUSIP Number) John F. Hartigan, Esq. Morgan, Lewis & Bockius LLP 300 South Grand Avenue Los Angeles, California 90071-3132 (213) 612-2500 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) July 30, 1999 - -------------------------------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [_]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. /1/The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 2 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo Investment Fund III, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(E) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 20,586,217 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 20,586,217 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 2 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 3 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo Overseas Partners III, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 1,306,119 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 1,306,119 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 3 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 4 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo (UK) Partners III, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 808,116 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 808,116 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 4 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 5 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo Advisors II, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 0 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 5 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 6 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo Management, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 0 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 6 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 7 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo Investment Fund IV, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 15,787,500 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 15,787,500 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 7 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 8 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo Overseas Partners IV, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 879,167 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 879,167 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 8 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 9 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo Advisors IV, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 0 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 9 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 10 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo Management IV, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 0 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 0 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 10 of 20 Pages - ---------------------------- ------------------------------ CUSIP NO. 019589 13D Page 11 of 20 Pages --------- --- ---- - ---------------------------- ------------------------------ - ------------------------------------------------------------------------------ 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Apollo/AW LLC - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [_] - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* 00 - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e) [_] - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER NUMBER OF 2,222,222 shares of Common Stock (see Item 5) SHARES ----------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 81,932,321 shares of Common Stock (see Item 5) OWNED BY ----------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 2,222,222 shares of Common Stock (see Item 5) PERSON ----------------------------------------------------------- 10 SHARED DISPOSITIVE POWER WITH 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 81,932,321 shares of Common Stock (see Item 5) - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [_] - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.7% (see Item 5) - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 11 of 20 Pages STATEMENT PURSUANT TO RULE 13d-1 OF THE GENERAL RULES AND REGULATIONS UNDER THE SECURITIES EXCHANGE ACT OR 1934, AS AMENDED ================================================================================ The Statement on Schedule 13D of Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P., Apollo (UK) Partners III, L.P., Apollo Advisors II, L.P. and Apollo Management IV, L.P. relating to the Common Stock, par value $0.01 per share, of Allied Waste Industries, Inc., a Delaware corporation (the "Company"), is hereby amended as set forth herein. Responses to each item below are incorporated by reference into each other item, as applicable. Item 2. Identity and Background. - ------- ------------------------ Item 2 is hereby amended and restated as follows: This statement is being filed jointly on behalf of the following persons (collectively, the "Reporting Persons"): Apollo Investment Fund III, L.P., a Delaware limited partnership ("Fund III"), Apollo Overseas Partners III, L.P., a Delaware limited partnership ("Overseas III"), Apollo (UK) Partners III, L.P., a limited partnership organized under the laws of the United Kingdom ("UK III"), Apollo Advisors II, L.P., a Delaware limited partnership ("Advisors II"), Apollo Management, L.P., a Delaware limited partnership ("Management"), Apollo Investment Fund IV, L.P., a Delaware limited partnership ("Fund IV"), Apollo Overseas Partners IV, L.P., an exempted limited partnership registered in the Cayman Islands ("Overseas IV"), Apollo Advisors IV, L.P., a Delaware limited partnership ("Advisors IV"), Apollo Management IV, L.P., a Delaware limited partnership ("Management IV"), and Apollo/AW LLC, a Delaware limited liability company ("AWLLC"). Fund III, Overseas III, UK III, Fund IV and Overseas IV are principally engaged in the business of investment in securities. The general partner of Fund III, UK III and Overseas III is Advisors II, which is principally engaged in the business of serving as the general partner of such entities. The general partner of Fund IV and Overseas IV is Advisors IV, which is principally engaged in the business of serving as the general partner of such entities. The general partner of Advisors II is Apollo Capital Management II, Inc., a Delaware corporation ("Capital Management II"), which is principally engaged in the business of serving as general partner of Advisors II. The general partner of Advisors IV is Apollo Capital Management IV, Inc., a Delaware corporation ("Capital Management IV"), which is principally engaged in the business of serving as general partner of Advisors IV. Management serves as manager of Fund III, Overseas III and UK III and manages their day-to-day operations. AIF III Management, Inc. a Delaware corporation ("AIF Management III"), is the general partner of Management. AIF Management III is principally engaged in the business of serving as general partner to Management. Page 12 of 20 Pages Apollo Administration II LDC, a Cayman Islands LDC ("Administration II"), is the administrative general partner of Overseas III and UK III. Administration II is principally engaged in the business of serving as administrative general partner of Overseas III and UK III. Apollo Management (UK) Ltd., an English corporation ("Management UK"), is the resident general partner of UK III. Management UK is principally engaged in the business of serving as resident general partner of UK III. Management IV serves as manager of Fund IV and Overseas IV and manages their day-to-day operations. AIF IV Management, Inc. a Delaware corporation ("AIF Management IV"), is the general partner of Management IV. AIF Management IV is principally engaged in the business of serving as general partner to Management IV. Apollo Fund Administration IV, LLC, a Delaware limited liability company ("Administration IV"), is the administrative general partner of Overseas IV. Administration IV is principally engaged in the business of serving as administrative general partner of Overseas IV. AWLLC is an investment vehicle formed for purposes of purchasing and holding securities of the Company. Management IV is the manager of AWLLC. Two of the members of AWLLC are Ares Leveraged Investment Fund, L.P. and Ares Leveraged Investment Fund II, L.P., private securities investment funds related to the Reporting Persons. The address of Fund III, UK III, Overseas III, Capital Management II, Management and AIF Management III is c/o Apollo Advisors II, L.P., Two Manhattanville Road, Purchase, New York 10577. The address of Advisors II is Two Manhattanville Road, Purchase, New York 10577. The address of Administration II is c/o CIBC Bank and Trust Company (Cayman) Limited, Edward Street, Georgetown, Grand Cayman, Cayman Islands, British West Indies. The address of Management UK is Hill House, 1 Little New Street, London EC4A 3TR, England. The address of Fund IV, Overseas IV, Capital Management IV, Management IV, AIF Management IV, Administration IV and AWLLC IV is c/o Apollo Advisors IV, L.P., Two Manhattanville Road, Purchase, New York 10577. The address of Advisors IV is Two Manhattanville Road, Purchase, New York 10577. Set forth in Schedule 1 attached hereto and incorporated herein by reference are the names, business addresses, principal occupation and citizenship of each executive officer and director of the Reporting Persons and other entities as to which such information is required to be disclosed in response to Item 2 and General Instruction C to Schedule 13D. During the last five years, none of the Reporting Persons, Capital Management II, AIF Management III, Administration II, Management UK, Capital Management IV, AIF Management IV and Administration IV, or, to the best of their respective knowledge, any executive officer or director of such entities, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Page 13 of 20 Pages Item 5. Interest in Securities of the Issuer ------------------------------------ Items 5(a) and (b) are hereby amended and restated as follows: Fund III is the beneficial owner of 15,632,717 shares of Common Stock. In addition, as a result of certain voting rights that accrue to holders of Convertible Preferred Stock, Fund III may also be deemed to have beneficial ownership of 4,953,500 shares of Common Stock that may be acquired upon conversion of 89,163 shares of Convertible Preferred Stock held by Fund III. Including such additional shares, Fund III may be deemed to have beneficial ownership of 20,586,217 shares of Common Stock, or 10.7% of the outstanding Common Stock. Overseas III is the beneficial owner of 934,397 shares of Common Stock. In addition, as a result of certain voting rights that accrue to holders of Convertible Preferred Stock, Overseas III may also be deemed to have beneficial ownership of 371,722 shares of Common Stock that may be acquired upon conversion of 6,691 shares of Convertible Preferred Stock held by Overseas III. Including such additional shares, Overseas III may be deemed to have beneficial ownership of 1,306,199 shares of Common Stock, or 0.7% of the outstanding Common Stock. UK III is the beneficial owner of 577,783 shares of Common Stock. In addition, as a result of certain voting rights that accrue to holders of Convertible Preferred Stock, UK III may also be deemed to have beneficial ownership of 230,333 shares of Common Stock that may be acquired upon conversion of 4,146 shares of Convertible Preferred Stock held by UK III. Including such additional shares, UK III may be deemed to have beneficial ownership of 808,116 shares of Common Stock, or 0.4% of the outstanding Common Stock. Advisors II, as the general partner of Fund III, Overseas III and UK III, and Management, as the manager of Fund III, Overseas III and UK III, may be deemed to be the beneficial owners of securities of the Company owned by Fund III, Overseas III and UK III. As a result of certain voting rights that accrue to holders of Convertible Preferred Stock, Fund IV may be deemed to have beneficial ownership of 15,787,500 shares of Common Stock that may be acquired upon conversion of 284,175 shares of Convertible Preferred Stock held by Fund IV, or 7.8% of the outstanding Common Stock. As a result of certain voting rights that accrue to holders of Convertible Preferred Stock, Overseas IV may be deemed to have beneficial ownership of 879,167 shares of Common Stock that may be acquired upon conversion of 15,825 shares of Convertible Preferred Stock held by Overseas IV, or 0.5% of the outstanding Common Stock. As a result of certain voting rights that accrue to holders of Convertible Preferred Stock, AWLLC may be deemed to have beneficial ownership of 2,222,222 shares of Common Stock that may be acquired upon conversion of 40,000 shares of Convertible Preferred Stock held by AWLLC, or 1.2% of the outstanding Common Stock. Advisors IV, as the general partner of Fund IV and Overseas IV, may be deemed the beneficial owner of securities of the Company owned by Fund IV and Overseas IV. Management IV, as the manager of Fund IV, Overseas IV and AWLLC, may be deemed to be the beneficial owner of securities of the Company owned by Fund IV, Overseas IV and AWLLC. Page 14 of 20 Pages By virtue of the Second Amended and Restated Shareholders Agreement and the Amended and Restated Investment Agreement, the Reporting Persons may be deemed to have shared beneficial ownership over securities of the Company owned by the Investors and the Stockholders (as defined below), other than the Reporting Persons, that in the aggregate, together with securities owned by the Reporting Persons, constitute beneficial ownership of 81,932,321 shares of Common Stock of the Company (or 33.7% of the outstanding Common Stock). The filing of this Schedule 13D shall not be construed as an admission that any Reporting Person is, for the purposes of Section 13(d) or 13(g) of the Exchange Act, or for any other purpose, the beneficial owner of any shares of Common Stock other than those shares of Common Stock over which the Reporting Person has sole voting and dispositive power, as reported herein. Further, each of the Reporting Persons disclaims any pecuniary interest in any securities of the Company owned by any other Reporting Person or any other party, and expressly disclaims the existence of a group. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect - ------- --------------------------------------------------------------------- to the Securities of the Issuer. ------------------------------- Item 6 is hereby amended by adding the following text at the end thereof: On July 30, 1999, the Reporting Persons together with Blackstone Capital Partners III Merchant Banking Fund L.P. and certain of its affiliates (collectively, "Blackstone"), Greenwich Street Capital Partners II, L.P. and certain of its affiliates and DLJ Merchant Banking Partners II, L.P. and certain of its affiliates (collectively, the "Investors") purchased an aggregate of 1,000,000 shares, including an aggregate of 440,000 shares purchased by the Reporting Persons, of a newly created series of preferred stock (the "Preferred Stock") pursuant to the terms of a Stock Purchase Agreement, dated as of July 30, 1999 (the "Stock Purchase Agreement"). The Preferred Stock purchased by the Reporting Persons and the junior preferred stock into which the Preferred Stock is convertible (the "Junior Preferred Stock") conform to the expected terms of such Preferred Stock and Junior Preferred Stock, respectively, set forth in Amendment No. 1 to the Statement on Schedule 13D. The Reporting Persons purchased the Preferred Stock for general investment purposes but, subject to the restrictions set forth in the Second Amended and Restated Shareholders Agreement, retain the right to change their investment intent, to propose one or more possible transactions to the Company's board, to acquire additional shares of the Company's preferred stock or common stock from time to time or to sell or otherwise dispose of all or part of the Preferred Stock, Common Stock or Junior Preferred Stock which are beneficially owned or acquired by them in any manner permitted by law. In addition, the Reporting Persons may maintain various credit facilities and arrangements, including customary margin arrangements, with banks and other financial institutions in the ordinary course of business and in connection therewith provide to the lenders as collateral thereunder the shares of Preferred Stock purchased by them or other securities of the Company held by them. In accordance with a letter agreement, dated March 7, 1999, by and among certain of the Reporting Persons, Blackstone, certain of the other Investors and certain other stockholders of the Company (collectively, the "Stockholders"), as of July 30, 1999, entered into a Second Amended and Restated Shareholders Agreement and an Amended and Restated Registration Rights Agreement. The terms of such Second Amended and Restated Shareholders Agreement cover the Preferred Stock, the Common Stock and the Junior Preferred Stock and provide, among other things, that: (i) the Stockholders are prohibited from making certain acquisitions and taking Page 15 of 20 Pages certain other actions for a standstill period of ten years from July 30, 1999 (subject to the earlier termination of the standstill period in certain circumstances) and (ii) the Reporting Persons and Blackstone will have the right to designate a maximum of five directors of the Company, subject to the reduction in the number of such designees if the Reporting Persons and Blackstone collectively decrease their ownership of shares by specified percentages or their ownership position is diluted as a result of issuances of Common Stock by the Company, for ten years from July 30, 1999. The Amended and Restated Registration Rights Agreement provides for incidental and demand registration rights for the Preferred Stock, Common Stock and Junior Preferred Stock. The Amended and Restated Investment Agreement, dated as of July 30, 1999 (the "Amended and Restated Investment Agreement"), further defines the rights of the Investors under the Second Amended and Restated Shareholders Agreement and the Registration Rights Agreement. The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to the Stock Purchase Agreement, the Second Amended and Restated Shareholders Agreement, the Amended and Restated Registration Rights Agreement, the Amended and Restated Investment Agreement and the Certificates of Designation of Preferences of the Preferred Stock and the Junior Preferred Stock, a copy of each of which has been filed as an exhibit to this Amendment No. 2 to Schedule 13D and is incorporated herein by reference. Such agreements supersede the terms of the Equity Commitment Letter Agreement and the Amendments Letter Agreement described in Amendment No 1 to Schedule 13D. The statement in this Amendment No. 2 to Schedule 13D shall not be construed as an admission that the Reporting Persons and any other persons or entities constitute a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder. Further, the Reporting Persons disclaim any pecuniary interest in any shares of Preferred Stock or any other securities of the Company held by any other person or entity. Item 7. Material to be Filed as Exhibits. - ------- --------------------------------- Item 7 is hereby amended by adding the following text at the end thereof: Exhibit 10 Stock Purchase Agreement Exhibit 11 Second Amended and Restated Shareholders Agreement Exhibit 12 Amended and Restated Registration Rights Agreement Exhibit 13 Amended and Restated Investment Agreement Exhibit 14 Certificate of Designation of the Preferred Stock Exhibit 15 Certificate of Designation of the Junior Preferred Stock Page 16 of 20 Pages SIGNATURE After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: August 4, 1999 APOLLO INVESTMENT FUND III, L.P. By: Apollo Advisors II, L.P., its General Partner By: Apollo Capital Management II, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, Apollo Capital Management II, Inc. APOLLO OVERSEAS PARTNERS III, L.P. By: Apollo Advisors II, L.P., its Managing General Partner By: Apollo Capital Management II, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, Apollo Capital Management II, Inc. APOLLO (UK) PARTNERS III, L.P. By: Apollo Advisors II, L.P., its Managing General Partner By: Apollo Capital Management II, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, Apollo Capital Management II, Inc. Page 17 of 20 Pages APOLLO ADVISORS II, L.P. By: Apollo Capital Management II, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, Apollo Capital Management II, Inc. APOLLO MANAGEMENT, L.P. By: AIF IV Management, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, AIF IV Management, Inc. APOLLO INVESTMENT FUND IV, L.P. By: Apollo Advisors IV, L.P., its General Partner By: Apollo Capital Management IV, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, Apollo Capital Management IV, Inc. APOLLO OVERSEAS PARTNERS IV, L.P. By: Apollo Advisors IV, L.P., its Managing General Partner By: Apollo Capital Management IV, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, Apollo Capital Management IV, Inc. Page 18 of 20 Pages APOLLO ADVISORS IV, L.P. By: Apollo Capital Management IV, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, Apollo Capital Management IV, Inc. APOLLO MANAGEMENT IV, L.P. By: AIF IV Management, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, AIF IV Management, Inc. APOLLO/AW LLC By: AIF IV Management, Inc., its General Partner By: /s/ Michael D. Weiner ---------------------- Name: Michael D. Weiner Title: Vice President, AIF IV Management, Inc. Page 19 of 20 Pages Schedule 1 The following sets forth information with respect to the general partners, executive officers, directors and principal shareholders of the Reporting Persons that is not set forth in the Schedule 13D to which this Schedule 1 relates. Except as otherwise indicated in this Schedule I or in the Schedule 13D to which this Schedule I relates, the principal business address of each person set forth below is c/o Apollo Advisors II, L.P. and c/o Apollo Advisors IV, L.P., Two Manhattanville Road, Purchase, New York 10577. The directors and principal executive officers of Capital Management III and Capital Management IV are Messrs. Leon D. Black and John J. Hannan. The principal occupation of each of Messrs. Black and Hannan is to act as an executive officer and director of Capital Management II, Capital Management IV and the other entities identified below. Messrs. Black and Hannan are also limited partners of Advisors II and Advisors IV. Mr. Black is the President and a director of AIF Management III and AIF Management IV. Mr. Hannan is the Vice President and a director of AIF Management III and AIF Management IV. Messrs. Black and Hannan are also founding principals of Apollo Advisors, L.P. ("Advisors"), Lion Advisors, L.P. ("Lion"), Apollo Real Estate Advisors, L.P. ("AREA") and Apollo Real Estate Advisors II, L.P. ("AREA II"). The principal business of Advisors and Lion is to provide advice regarding investments in securities and the principal business of AREA and AREA II is to provide advice regarding investments in real estate and real estate-related investments. Peter Henry Larder, Michael Francis Benedict Gillooly, Ian Thomas Patrick and Martin William Laidlaw, each of whom is a British citizen, each serves as a director of Administration. Each of the above four individuals is principally employed by CIBC Bank and Trust Company (Cayman) Limited ("CIBC") in the following positions: Mr. Larder, Managing Director; Mr. Gillooly, Deputy Managing Director; Mr. Patrick, Manager-Accounting Services; and Mr Laidlaw, Senior Fund Accountant. CIBC is a Cayman Islands corporation which is principally engaged in the provision of trust, banking and corporate administration services, the principal address of which is Edward Street, Grand Cayman, Cayman Islands, British West Indies. It provides accounting, administrative and other services to Administration pursuant to a contract. Page 20 of 20 Pages EX-10 2 STOCK PURCHASE AGREEMENT EXHIBIT 10 ================================================================================ STOCK PURCHASE AGREEMENT BY AND AMONG ALLIED WASTE INDUSTRIES, INC. AND THE PURCHASERS LISTED ON SCHEDULE 1 HERETO ___________________________ Dated as of July 30, 1999 ___________________________ ================================================================================ STOCK PURCHASE AGREEMENT STOCK PURCHASE AGREEMENT, dated as of July 30, 1999 (this "Agreement"), by and among Allied Waste Industries, Inc., a Delaware corporation (together with its predecessors and successors, the "Company"), and each of the purchasers listed on Schedule 1 hereto (the "Purchasers"). WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated as of March 7, 1999, as amended and restated as of May 21, 1999 (the "Merger Agreement"), by and among Browning Ferris Industries, a Delaware corporation ("BFI"), the Company and AWIN I Acquisition Corporation, a Delaware corporation; WHEREAS, prospective bank lenders have entered into a commitment letter, dated March 7, 1999, with the Company, providing for up to $9.5 billion of new borrowing upon the closing of the transactions contemplated by the Merger Agreement, and it is a condition to the funding of such commitment that the Company receive an additional equity investment; and WHEREAS, the Company, certain of the Purchasers and affiliates of certain of the Purchasers entered into a commitment letter, dated March 7, 1999 (the "Commitment Letter"), providing for the issuance and purchase of the Shares (as defined) subject to the satisfaction or waiver of certain conditions; NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows. ARTICLE I DEFINITIONS (a) As used in this Agreement, the following terms shall have the following meanings: "Affiliate" means, with respect to any person, any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such person. For the purposes of this definition, "control" when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership 1 of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Apollo" means Apollo Advisors II, L.P., a Delaware limited partnership, on behalf of one or more managed funds. "Applicable Law" means (a) any United States federal, state, local or foreign law, statute, rule, regulation, order, writ, injunction, judgment, decree or permit of any Governmental Authority and (b) any rule or listing requirement of any stock exchange or listing requirement of any stock exchange or Commission recognized trading market on which securities issued by the Company or any of the Subsidiaries are listed or quoted (an "Exchange Requirement"). "Bank Commitment Letter" means the bank commitment letter and related documents, dated March 7, 1999, as amended, among the Company and the lenders named therein. "Bank Financing" means the incurrence by the Company of up to $9.5 billion principal amount of indebtedness under the Financing Documents. "Basic Documents" means the Merger Agreement, the Financing Documents and the Equity Documents. "Blackstone" means Blackstone Capital Partners III Merchant Banking Fund L.P., a Delaware limited partnership, on behalf of one or more managed funds. "Business Day" means any day other than a Saturday, a Sunday or a day when banks in The City of New York are authorized by Applicable Law to be closed. "Capital Stock" means, (i) with respect to any Person that is a corporation, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, and (ii) with respect to any other Person, any and all partnership or other equity interests of such Person. "Certificates of Designation" means (i) the Certificate of Designation relating to the Series A Preferred Stock, in the form attached hereto as Exhibit ------- A (the "Series A Certificate"), and (ii) the Certificate of Designation relating - - to the Series B Junior Preferred Stock, in the form attached hereto as Exhibit B --------- (the "Series B Certificate"). "Commission" means the United States Securities and Exchange Commission. 2 "Commission Filings" means all reports, registration statements and other filings filed by the Company with the Commission since December 31, 1997 (and all notes, exhibits and schedules thereto and documents incorporated by reference therein). "Common Stock" means the common stock, par value $.01 per share, of the Company. "Contract" means any contract, lease, loan agreement, mortgage, security agreement, trust indenture, note, bond, or other agreement (whether written or oral) or instrument. "Conversion Shares" means the shares of Common Stock and Series B Junior Preferred Stock issuable upon the conversion of the Series A Preferred Stock in accordance with the terms of the Series A Certificate and the shares of Common Stock issuable upon the conversion of the Series B Junior Preferred Stock in accordance with the terms of the Series B Certificate. "Equity Documents" means this Agreement, the Registration Rights Agreement, the Certificates of Designation and the Shareholders Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. "Financing Documents" means the Credit Agreement, to be dated as of the Closing Date (the "Credit Agreement"), among the Company, Allied Waste North America, Inc., the lenders a party thereto, The Chase Manhattan Bank, as administrative agent and collateral agent, Citicorp USA, Inc., as syndication agent, and DLJ Capital Funding, Inc, as documentation agent and the documents to be delivered in connection therewith in connection with the initial funding of loans thereunder. "GAAP" means United States generally accepted accounting principles, consistently applied. "Governmental Authority" means (i) any foreign, Federal, state or local court or governmental or regulatory agency or authority, (ii) any arbitration board, tribunal or mediator and (iii) any stock exchange or Commission recognized trading market on which securities issued by the Company or any of the Subsidiaries are listed or quoted. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and applicable rules and regulations and any similar state acts. 3 "Investment Agreement" means the Amended and Restated Investment Agreement, to be dated the Closing Date, to be entered into by and among the Purchasers and others concurrently with the Closing, in the form attached hereto as Exhibit C. --------- "Lien" means any mortgage, pledge, lien, security interest, claim, restriction, charge or encumbrance of any kind. "Material Adverse Effect" means, (i) a material adverse effect on the business, condition (financial or otherwise), operations, performance or properties of the Company and the Subsidiaries, taken as a whole, (ii) a material impairment of the ability of the Company or any of the Subsidiaries to perform their collective obligations under any of the Basic Documents, or (iii) a material impairment of the rights of the Purchasers under or enforceability by the Purchasers of the Equity Documents. "Person" means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity. "Preferred Stock" means the Preferred Stock, par value $.10 per share, of the Company. "Registration Rights Agreement" means the Amended and Restated Registration Rights Agreement, to be dated as of the Closing Date, to be entered into by and among the Company, the Purchasers and others concurrently with the Closing, in the form attached hereto as Exhibit D. --------- "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder. "Series A Preferred Stock" means the Series A Senior Convertible Preferred Stock of the Company, having the designation, powers, preferences and rights, and qualifications, limitations and restrictions thereof set forth in the Series A Certificate. "Series B Junior Preferred Stock" means the Series B Junior Preferred Stock of the Company, having the designation, powers, preferences and rights, and qualifications, limitations and restrictions thereof set forth in the Series B Certificate. 4 "Shareholders Agreement" means the Second Amended and Restated Shareholders Agreement, to be dated as of the Closing Date, to be entered into by and among the Company, the Purchasers and others concurrently with the Closing, in the form attached hereto as Exhibit E. --------- "Shares" means the shares of Series A Preferred Stock to be issued and sold by the Company to the Purchasers under Section 2.1 hereof. "subsidiary" means, with respect to any Person (i) a corporation a majority of whose capital stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such Person, by a subsidiary of such Person, or by such Person and one or more subsidiaries of such Person, (ii) a partnership in which such Person or a subsidiary of such Person is, at the date of determination, a general partner of such partnership and has the power to direct the policies and management of such partnership, or (iii) any other Person (other than a corporation) in which such Person, a subsidiary of such Person or such Person and one or more subsidiaries of such Person, directly or indirectly, at the date of determination thereof, has (A) at least a majority ownership interest or (B) the power to elect or direct the election of the directors or other governing body of such Person. "Subsidiary" means a subsidiary of the Company. "Transactions" means the transactions contemplated by the Basic Documents. (b) As used in this Agreement, the following terms shall have the meanings given thereto in the Sections set forth opposite such terms: Term Section ---- ------- Agreement Preamble Apollo Management 2.2(c) AWNA 2.2(b) BFI Preamble Blackstone Management 2.2(c) Closing 2.2 Closing Date 2.2 Commitment Letter Preamble Company Preamble CSI 3.3 DGCL 3.8 5 indemnified person 8.1 Information 3.9 Issuance 2.1 Losses 8.1 Merger Agreement Preamble Nonperforming Purchaser 8.4(a) Notices 8.2 Performing Purchasers 8.4(b) Projections 3.9 Purchasers Preamble Purchase Price 2.1 Substitute Purchaser Undertaking 8.4(b) Supplying Purchasers 8.18 ARTICLE II SALE AND PURCHASE SECTION 2.1. Agreement to Sell and to Purchase; Purchase Price. On ------------------------------------------------- the Closing Date, and upon the terms and subject to the conditions set forth in this Agreement, the Company shall issue and sell to each Purchaser, and each Purchaser, severally and not jointly, shall purchase and accept from the Company, such number of Shares as is indicated on such Purchaser's signature page attached hereto (the "Issuance"), for a purchase price, payable in immediately available funds, equal to $1,000.00 per Share (the "Purchase Price"). SECTION 2.2. Closing. The closing of the Issuance (the "Closing") ------- shall take place simultaneously with the closing of the merger contemplated by the Merger Agreement, or such other date as promptly thereafter as of which all of the conditions set forth in Article VII hereof shall have been satisfied or at such other time and date as the parties hereto shall agree in writing (such date and time, the "Closing Date"), at the offices of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004 or at such other place as the parties hereto shall agree in writing. At the Closing: (a) Each Purchaser shall deliver: 6 (i) against delivery of a certificate or certificates representing the Shares being purchased by such Purchaser pursuant to Section 2.1; an amount equal to the aggregate Purchase Price of such Shares via wire transfer of immediately available funds to such bank account as the Company shall designate not later than two Business Days prior to the Closing Date; (ii) an executed copy of the Registration Rights Agreement; (iii) an executed copy of the Investment Agreement (it being agreed that this clause (iii) is an agreement solely among the Purchasers and its breach shall not excuse the obligations of the Purchasers in any respect); and (iv) an executed copy of the Shareholders Agreement. (b) The Company shall deliver to each Purchaser: (i) against payment of the Purchase Price therefor, a certificate or certificates representing the Shares being purchased by such Purchaser pursuant to Section 2.1, which shall be in definitive form and registered in the name of such Purchaser or its nominee or designee (to the extent permitted by the Shareholders Agreement) and in a single certificate or in such other denominations as such Purchaser shall request not later than one Business Day prior to the Closing Date. (ii) an opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company, dated the Closing Date in the form of Exhibit F; --------- (iii) an officer's certificate of the Company as contemplated by Section 7.2(h); (iv) a certificate of the secretary of the Company substantially in the form attached hereto as Exhibit G; --------- (v) long-form good standing certificates of each of the Company, BFI and Allied Waste North America, Inc., a Delaware corporation and a wholly owned subsidiary of the Company ("AWNA"), issued by the Secretary of State of the State of Delaware; 7 (vi) an executed copy of the Registration Rights Agreement; and (vii) an executed copy of the Shareholders Agreement. (c) The Company shall also deliver, if not previously delivered pursuant to the terms of the Commitment Letter, to Apollo Management IV, L.P. ("Apollo Management") or its designees, Blackstone Management Partners III LLC ("Blackstone Management"), GSCP, Inc. or its designee and DLJ Merchant Banking II, Inc. or its designee a non-refundable transaction fee of $11.0 million, $8.75 million, $2.5 million and $2.75 million, respectively, via wire transfer of immediately available funds to such bank accounts as such payees shall designate not later than two Business Days prior to the Closing Date. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to each Purchaser that on the date hereof and on the Closing Date as follows: SECTION 3.1. Organization and Standing. The Company is duly ------------------------- incorporated, validly existing and in good standing as a domestic corporation under the laws of the State of Delaware and has all requisite corporate power and authority to own its properties and assets and to carry on its business as it is now being conducted and as proposed to be conducted. The Company is duly qualified to transact business as a foreign corporation and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of its business makes such qualification necessary, except for any such failures to so qualify or be in good standing that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. SECTION 3.2. Capital Stock. (a) As of June 30, 1999, (i) the ------------- authorized Capital Stock of the Company consisted solely of 300,000,000 shares of Common Stock, of which 188,715,107 shares were issued and 188,112,392 shares were outstanding, and 10,000,000 shares of Preferred Stock, of which no shares were authorized, issued or outstanding. Each share of Capital Stock of the Company that is issued and outstanding immediately following the Closing, including without limitation the Shares, will be duly authorized and validly issued and fully paid and nonassessable, and the issuance thereof will not have been subject to any preemptive rights or made in violation of any Applicable Law. Since June 30, 1999, the Company has not issued any shares 8 of Capital Stock except upon the exercise or conversion of securities outstanding on June 30, 1999 and securities whose aggregate proceeds have been less than $50 million. (b) Except as set forth on Schedule 3.2, as of June 30, 1999, there ------------ are (i) no outstanding options, warrants, agreements, conversion rights, exchange rights, preemptive rights or other rights (whether contingent or not) to subscribe for, purchase or acquire any issued or unissued shares of Capital Stock of the Company or any Subsidiary, and (ii) no restrictions upon, or Contracts or understandings of the Company or any Subsidiary with respect to, the voting or transfer of any shares of Capital Stock of the Company or any Subsidiary. (c) The Conversion Shares have been duly authorized and adequately reserved in contemplation of the conversion of the Series A Preferred Stock and the Series B Junior Preferred Stock and, when issued and delivered in accordance with the terms of the Series A Certificate or the Series B Certificate, as applicable, will have been validly issued and will be fully paid and nonassessable, and the issuance thereof will not have been subject to any preemptive rights or made in violation any Applicable Law. (d) The holders of the Series A Preferred Stock and the Series B Junior Preferred Stock will, upon issuance thereof, have the rights set forth in the Certificate of Designations for each such series (subject to the limitations and qualifications set forth therein and under the DGCL). SECTION 3.3. Authorization; Enforceability. Each of the Company and ----------------------------- each Subsidiary has the power and authority to execute, deliver and perform the terms and provisions of each of the Basic Documents to which it is a party, and has taken all action necessary to authorize the execution, delivery and performance by it of each of such Basic Documents and to consummate each of the Transactions. The Transactions have been approved by a majority of the members of the Company's Board of Directors who are not affiliated with the Purchasers, and such Board of Directors has received the opinion of Chase Securities Inc. ("CSI") to the effect that the sale of the Series A Preferred Stock is fair to the Company from a financial point of view. No other corporate proceeding on the part of the Company is necessary for such authorization, execution, delivery and consummation. The Company has duly executed and delivered this Agreement and, at the Closing, the Company will have duly executed and delivered each of the other Basic Documents to be executed and delivered at or prior to Closing. This Agreement constitutes, and each of the other Basic Documents, when executed and delivered by the Company and each Subsidiary party thereto, will constitute, a legal, valid and binding obligation of each such Person. 9 SECTION 3.4. No Violation; Consents. (a) The execution, delivery ---------------------- and performance by the Company and the Subsidiaries of each of the Basic Documents and the consummation of the Transactions do not and will not contravene any Applicable Law, except for any such contravention of an Exchange Requirement that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as set forth on Schedule 3.4(a), the execution, delivery and performance by the Company and the Subsidiaries of each of the Basic Documents and the consummation of the Transactions (i) will not (A) violate, result in a breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any Contract to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or to which any of their respective assets is subject, or (B), except pursuant to the Financing Documents, result in the creation or imposition of any Lien upon any of the assets of the Company or any Subsidiary, except for any such violations, breaches, defaults or Liens that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and (ii) will not conflict with or violate any provision of the certificate of incorporation or bylaws or other governing documents of the Company or any Subsidiary. (b) Except for (i) the filings by the Company required by the HSR Act, (ii) applicable filings, if any, with the Commission pursuant to the Exchange Act, (iii) filing of the Certificate of Merger with the Secretary of State of the State of Delaware in connection with the Merger, (iv) any required fillings with or approvals from authorities of any foreign country or Puerto Rico in which the Company, BFI or their respective subsidiaries conduct any business or own any assets and (v) any required filings with or approvals from applicable environmental authorities, public service commissions and public utility commissions, in each case, which shall be made (or are not required to be made) on or prior to the Closing Date, no consent, authorization or order of, or filing or registration with, any Governmental Authority or other Person is required to be obtained or made by the Company or any Subsidiary for the execution, delivery and performance of any of the Basic Documents or the consummation of any of the Transactions, except where the failure to obtain such consents, authorizations or orders, or make such filings or registrations, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. SECTION 3.5. Commission Filings; Financial Statements. (a) Since ---------------------------------------- December 31, 1997, the Company has filed all reports, registration statements and other filings, together with any amendments or supplements required to be made with respect thereto, that it has been required to file with the Commission under the Securities Act and the Exchange Act. As of the respective dates of their filing with the Commission, the Commission Filings complied in all material respects with the applicable provisions of the Securities Act and the Exchange Act and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary 10 to make the statements made therein, in the light of the circumstances under which they were made, not misleading. (b) Each of the historical financial statements of the Company (including any related notes or schedules) included in the Commission Filings was prepared in accordance with GAAP (except as may be disclosed therein) and complied in all material respects with the rules and regulations of the Commission. Such financial statements fairly present the consolidated financial position of the Company and the Subsidiaries as of the dates thereof and the results of operations, cash flows and changes in stockholders' equity for the periods then ended (subject, in the case of the unaudited interim financial statements, to normal year-end audit adjustments on a basis comparable with past periods). SECTION 3.6. Representations and Warranties in the Financing ----------------------------------------------- Documents. The representations and warranties of the Company and the - --------- Subsidiaries in Sections 3.07, 3.08, 3.09, 3.10, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.19, 3.20 and 3.21 of the Credit Agreement (including, without limitation, those made on the Closing Date both immediately before and immediately after giving effect to the Transactions and regardless of whether any such representations or warranties survive beyond the Closing Date) were true in all material respects as of the date thereof, and will be true in all material respects on the Closing Date (after giving effect to the Transactions), except in the case of such representations and warranties which are qualified by materiality, which were true in all respects as of the date thereof and will be true in all respects on the Closing Date (after giving effect to the Transactions). SECTION 3.7. Private Offering. Based, in part, on the Purchasers' ---------------- representations in Section 4.2, the offer and sale of the Shares is exempt from the registration and prospectus delivery requirements of the Securities Act. None of the Company and the Subsidiaries, nor anyone acting on behalf of any of them, has offered or sold or will offer or sell any securities, or has taken or will take any other action, which would subject any of the Transactions to the registration provisions of the Securities Act. SECTION 3.8. Antitakeover Laws. The Company and the Board of ----------------- Directors of the Company have each taken all action required to be taken by it in order to exempt the execution, delivery, and performance of the Equity Documents, the Issuance and the conversion of the Shares from, and each of the foregoing hereby is exempt from, the requirements of any "moratorium," "control share," "fair price," "affiliate transaction," "business combination" or other antitakeover laws and regulations of any state, including, without limitation, the State of Delaware, and Section 203 of the General Corporation Law of the State of Delaware (the "DGCL"). 11 SECTION 3.9. Provided Information. To the best of the Company's -------------------- knowledge, all information (excluding information of a general economic nature and financial projections) concerning the Company, BFI and the Transactions (the "Information") that has been or will be prepared by or on behalf of the Company or any of the Company's authorized representatives and that has been made or will be made available to the Purchasers or any of their authorized representatives in connection with the Transactions, when taken as a whole, was or will be, at the time made available, correct in all material respects and do not or will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statements are made. All financial projections concerning the Company and the Transactions or, to the best of the Company's knowledge, BFI (the "Projections") that have been prepared by or on behalf of the Company or BFI or any of the Company's or BFI's authorized representatives and that have been or will be made available to the Purchasers or any of their authorized representatives in connection with the Transactions have been and at the time made available will be prepared in good faith based upon assumptions believed by the Company to be reasonable. SECTION 3.10. Material Adverse Change. Except as disclosed in the ----------------------- Commission Filings, since December 31, 1998, there has not been any material adverse change in the business condition (financial or otherwise), operations, performance or properties of the Company and its Subsidiaries, taken as a whole, after giving effect to the Transactions. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS Each Purchaser severally as to itself only, and not jointly, hereby represents and warrants to the Company as follows: SECTION 4.1. Authorization. Such Purchaser is duly organized, ------------- validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to own its properties and assets and to carry on its business as it is now being conducted and as currently proposed to be conducted. Such Purchaser has the power to execute, deliver and perform its obligations under each of the Basic Documents to which it is a party and has taken all necessary action to authorize the execution, delivery and performance by it of such Basic Documents and to consummate the transactions contemplated hereby and thereby. No other proceedings on the part of such Purchaser are necessary for such authorization, execution, delivery and consummation. This Agreement constitutes, and each of the other Basic Documents to which 12 such Purchaser is a party, when executed and delivered by such Purchaser, will constitute, a legal, valid and binding obligation of such Purchaser. SECTION 4.2. Private Placement. (a) Such Purchaser understands that ----------------- (i) the offering and sale of the Shares in the Issuance by the Company is intended to be exempt from registration under the Securities Act pursuant to Section 4(2) thereof, and (ii) there is no existing public or other market for the Shares. (b) Such Purchaser is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act. (c) Such Purchaser is acquiring the Shares to be acquired hereunder (and will acquire the Conversion Shares) for its own account (or for accounts over which it exercises investment authority), for investment and not with a view to the public resale or distribution thereof, in violation of any securities law. (d) Each Purchaser understands that the Shares and the Series B Junior Preferred Stock will be issued in a transaction exempt from the registration or qualification requirements of the Securities Act and applicable state securities laws, and that such securities must be held indefinitely unless a subsequent disposition thereof is registered or qualified under the Securities Act and such laws or is exempt from such registration or qualification. (e) Each Purchaser (A) has been furnished with or has had full access to all of the information that it considers necessary or appropriate to make an informed investment decision with respect to the Shares and the Series B Junior Preferred Stock and that it has requested from the Company, (B) has had an opportunity to discuss with management of the Company the intended business and financial affairs of the Company and to obtain information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to it or to which had access, and (C) can bear the economic risk of such investment in the Shares and the Series B Junior Preferred Stock, has such knowledge and experience in business and financial matters so as to enable it to understand and evaluate the risks of and form an investment decision with respect to its investment in the Shares and to protect its own interest in connection with such investment. SECTION 4.3. Authorization; Enforceability. Each Purchaser has the ----------------------------- power and authority to execute, deliver and perform the terms and provisions of each of the Equity Documents to which it is a party, and has taken all action necessary to authorize the execution, delivery and performance by it of each of such Equity Documents and to consummate each of the Transactions contemplated thereby. All requisite proceedings (corporate or other) on the part of such Purchaser 13 necessary for such authorization, execution, delivery and consummation has been taken or made. Such Purchaser has duly executed and delivered this Agreement and, at the Closing, such Purchaser will have duly executed and delivered each of the other Equity Documents to be executed and delivered at or prior to Closing. This Agreement constitutes, and each of the other Equity Documents, when executed and delivered by such Purchaser, will constitute, a legal, valid and binding obligation of such Purchaser. SECTION 4.4. No Violation; Consents. (a) The execution, delivery ---------------------- and performance by such Purchaser of each of the Equity Documents and the consummation of the Transactions do not and will not contravene any Applicable Law except for such contraventions as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Purchaser to timely perform its obligations under this Agreement. The execution, delivery and performance by such Purchaser of each of the Equity Documents and the consummation of the Transactions (i) will not (A) violate, result in a breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any Contract to which the such Purchaser is party or by which such Purchaser is bound or to which any of its assets is subject, or (B) result in the creation or imposition of any Lien upon any of the assets of such Purchaser, except for any such violations, breaches, defaults or Liens that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Purchaser to timely perform its obligations under this Agreement, and (ii) will not conflict with or violate any provision of the certificate of incorporation or bylaws or other governing documents of such Purchaser. (b) No consent, authorization or order of, or filing or registration with, any Governmental Authority or other Person is required to be obtained or made by such Purchaser for the execution, delivery and performance of any of the Basic Documents or the consummation of any of the Transactions, except (i) for those filings which have been made and (ii) where the failure to obtain such consents, authorizations or orders, or make such filings or registrations, would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Purchaser to timely perform its obligations under this Agreement. SECTION 4.5. No Brokers. Except for the fees payable pursuant to ---------- Section 2.2(c), no Purchaser has engaged any Person as a broker, finder or other agent who would be entitled to a fee relating to the consummation by such Purchaser of the Transactions to be contemplated by such Purchaser. 14 ARTICLE V COVENANTS OF THE COMPANY SECTION 5.1. Operation of Business. (a) From the date hereof until --------------------- the Closing Date, except as contemplated by the Basic Documents, the Company shall, and shall cause each of the Subsidiaries to: (i) operate its business in all material respects in compliance with Applicable Laws; (ii) not adopt any amendment to the Company's charter or by-laws or comparable organizational documents that have or could reasonably be expected to have an adverse effect on the Purchasers or their ownership or control of the Shares; and (iii) except for issuances of Capital Stock of the Subsidiaries to the Company or a wholly-owned Subsidiary (or on a proportionate basis to all of such Subsidiary's stockholders) and issuance of Common Stock or options to acquire Common Stock pursuant to employee benefit plans disclosed in the Commission Filings, as in effect on the date hereof, not issue, reissue, sell, pledge, dispose of or encumber or authorize the issuance, reissuance, sale, pledge, disposition or encumbrance of additional shares of Capital Stock of any class, or securities convertible into Capital Stock or any rights, warrants or options or other rights of any kind to acquire any convertible securities or Capital Stock or any other ownership interest (including, but not limited to, stock appreciation rights or phantom stock) of the Company or any of its Subsidiaries in excess of shares of Common Stock whose aggregate market value is less than $25 million, other than the issuance of the Shares and Conversion Shares, in accordance with the terms of the instruments governing such issuance on the date hereof. (b) From the date hereof until the Closing Date, except as provided for in, or contemplated by, the Basic Documents and except as consented to or approved by the Purchasers, the Company shall not, and shall not permit any of the Subsidiaries to, take any action that would trigger any adjustment as described in subparagraph 5(e) of the Series A Certificate unless such adjustment as described in subparagraph 5(e) of the Series A Certificate is made effective as of the Closing Date. 15 SECTION 5.2. Access to Books and Records. (a) The Company shall --------------------------- afford, and shall cause each of the Subsidiaries to afford, to each of the Purchasers and the Purchasers' accountants, counsel and representatives full access during normal business hours throughout the period prior to the Closing Date (or the earlier termination of this Agreement pursuant to Section 8.4) to all their respective properties, books, Contracts, commitments and records (including, but not limited to, tax returns) and, during such period, shall, upon request, furnish promptly to each of the Purchasers (i) a copy of each report, schedule and other document filed or received by any of them pursuant to the requirements of Federal or state securities laws, and (ii) all other information concerning their respective business, properties and personnel as the Purchasers may reasonably request, provided that no investigation or receipt of information pursuant to this Section 5.2 shall affect any representation or warranty of the Company or the conditions to the obligations of the Purchasers. (b) The Company shall supplement the Information and the Projections from time to time until the Closing Date so that the representations and warranties in Section 3.9 shall remain correct. SECTION 5.3. Agreement to Take Necessary and Desirable Actions. The ------------------------------------------------- Company shall (a) subject to the satisfaction of the conditions set forth in Section 7.1, execute and deliver the Basic Documents to which it is a party and such other documents, certificates, agreements and other writings and (b) take such other actions, in each case, as may be necessary or reasonably requested by any of the Purchasers in order to consummate or implement expeditiously the Transactions in accordance with the terms of the Basic Documents. SECTION 5.4. Compliance with Conditions; Reasonable Best Efforts. --------------------------------------------------- The Company shall use its best efforts to cause all conditions precedent to the obligations of the Company and the Purchasers to be satisfied. Upon the terms and subject to the conditions of this Agreement, the Company will use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to consummate and make effective in the most expeditious manner practicable the transactions contemplated hereby. SECTION 5.5. HSR Act Notification. To the extent required by the HSR -------------------- Act, the Company shall, to the extent it has not already done so, (a) file or cause to be filed, as promptly as practicable after the execution and delivery of this Agreement, with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice, all reports and other documents required to be filed by it under the HSR Act concerning the transactions contemplated hereby and (b) promptly comply with or cause to be complied with any requests by the United States Federal Trade Commission or the Antitrust Division of the United States 16 Department of Justice for additional information concerning such transactions, in each case so that the waiting period applicable to this Agreement and the transactions contemplated hereby under the HSR Act shall expire as soon as practicable after the execution and delivery of this Agreement. The Company agrees to request, and to cooperate with the Purchasers in requesting, early termination of any applicable waiting period under the HSR Act. SECTION 5.6. Consents and Approvals. The Company (a) shall use its ---------------------- reasonable best efforts to obtain all necessary consents, waivers, authorizations and approvals of all Governmental Authorities and of all other Persons required in connection with the execution, delivery and performance of the Basic Documents or the consummation of the Transactions and (b) shall diligently assist and cooperate with the Purchasers in preparing and filing all documents required to be submitted by the Purchasers to any Governmental Authority in connection with such Transactions (which assistance and cooperation shall include, without limitation, timely furnishing to the Purchasers all information concerning the Company and its Subsidiaries that counsel to the Purchasers reasonably determines is required to be included in such documents or would be helpful in obtaining any such required consent, waiver, authorization or approval). SECTION 5.7. Reservation of Shares. The Company shall: --------------------- (i) cause to be authorized and reserve and keep available at all times during which any of the Shares remain outstanding, free from preemptive rights, out of its treasury stock or authorized but unissued shares of Capital Stock, or both, solely for the purpose of effecting the conversion of the Shares pursuant to the terms of the Series A Certificate, sufficient shares of Common Stock and Series B Junior Preferred Stock to provide for the issuance of the maximum number of shares issuable upon conversion of outstanding Shares and shares of Series B Junior Preferred Stock; (ii) issue and cause the transfer agent to deliver such shares as required upon conversion of the Shares or shares of Series B Preferred Stock, as the case may be, and take all actions necessary to ensure that all such shares will, when issued and paid for pursuant to the conversion of the Shares or the Series B Junior Preferred Stock, as the case may be, be duly and validly issued, fully paid and nonassessable; and (iii) if any shares reserved for the purpose of issuance upon conversion of the Shares or the Series B Junior Preferred Stock require registration with or approval of any Governmental Authority under any Applicable Law before such shares may be validly issued or delivered, secure such registration or approval, 17 as the case may be, and maintain such registration or approval in effect so long as so required. SECTION 5.8. Use of Proceeds. The Company shall use approximately --------------- $7.3567 billion of the proceeds from the Issuance and the Bank Financing for payments to holders of shares of common stock or options of BFI pursuant to the Merger Agreement, up to approximately $177.0 million for severance and termination payments related to the acquisition of BFI contemplated by the Merger Agreement, up to approximately $740.5 million to repay commercial paper of BFI and up to approximately $319.8 million to repay the existing senior secured credit facility of AWNA. The remainder of such proceeds shall be used for payment of expenses incurred in connection with the Transactions and for general corporate purposes. SECTION 5.9. Shareholder Vote. The Company shall (unless previously ---------------- adopted) present a proposal, in accordance with all Applicable Laws, at the Company's 2000 and 2001 annual meeting of its stockholders for purposes of voting on the approval of the conversion of the Shares into Common Stock. A majority of the members of the Board of Directors of the Company not affiliated with the Purchasers or their Affiliates shall, to the extent consistent with their fiduciary duties, recommend approval of such conversion by the Company's stockholders. Unless previously adopted, the Company shall submit such a proposal at two special meetings convened at the request of the holders of a majority of the outstanding Shares and at any other meeting chosen by the Company. In connection with any such meeting, the Company shall (a) use its reasonable best efforts to file and have cleared by the Commission and will thereafter mail to its stockholders as promptly as practicable all proxy materials for such meeting and (b) will use its reasonable best efforts to obtain the necessary approvals by its stockholders in accordance with Applicable Law. SECTION 5.10. Filing of Certificates of Designation. Prior to the ------------------------------------- Issuance, the Company shall file each of the Certificates of Designation with the Secretary of State of the State of Delaware pursuant to Section 151(g) of the DGCL. SECTION 5.11. Listing of Shares. The Company shall use its ----------------- reasonable best efforts to cause the shares of Common Stock and, after June 30, 2001, upon request of the holders of a majority of the outstanding shares of Series A Preferred Stock, to the extent permitted, the Series B Junior Preferred Stock issuable upon conversion of the Shares to be listed or otherwise eligible for trading on each principal trading market for the Common Stock. SECTION 5.12. Tax Treatment of Shares. (a) The Company and the ----------------------- Purchasers hereby agree not to treat the Series A Preferred Stock or the shares of Series B Junior Preferred Stock as "preferred stock" within the meaning of Treasury regulation section 1.305-5(a), except to the extent required by a "determination" (as defined below) to the contrary. Except as otherwise 18 required by a "determination," the Company and the Purchasers shall prepare any and all returns, reports, and other statements (including, in each case, any schedule or attachment thereto, or amendment thereof) filed for United States federal, state, or local income tax purposes in a manner consistent with such treatment. A "determination" shall mean a decision, judgment, decree, or other order by any court of competent jurisdiction, which decision, judgment, decree, or other order has become final, a closing agreement entered into under section 7121 (or any successor to such section) of the Code, or any other settlement agreement entered into in connection with an administrative or judicial proceeding. (b) If any United States federal, state, or local governmental authority with jurisdiction over matters relating to taxation (each, a "Tax Authority") asserts to the Company that the Series A Preferred Stock or the shares of Series B Junior Preferred Stock should be treated as "preferred stock" (within the meaning of Treasury regulation section 1.305-5(a)) or otherwise challenges the Company's treatment of the Series A Preferred Stock or the shares of Series B Junior Preferred Stock in a manner, or having an effect, that would, directly or indirectly, adversely affect any of the Purchasers (collectively, a "Tax Challenge"), the Company shall provide written notice of such event (a "Tax Challenge Notice") within ten days thereof to Apollo Management and Blackstone and Apollo Management and Blackstone shall have the right to assume the defense (at their expense) of any such Tax Challenge through counsel of their own choosing by notifying the Company within thirty days of the receipt by Apollo Management and Blackstone of the Tax Challenge Notice. If Apollo Management and Blackstone assume the defense of a Tax Challenge, the Company shall have the right to participate in such defense and to employ counsel, at its own expense, separate from the counsel employed by Apollo Management and Blackstone; provided, that Apollo Management and Blackstone shall control all aspects of the defense, negotiation, and ultimate settlement or other disposition of the Tax Challenge. If Apollo Management and Blackstone choose to control the defense of any Tax Challenge, the Company shall cooperate in the defense thereof, which cooperation shall include, to the extent reasonably requested by Apollo Management or Blackstone, the retention and the provision to Apollo Management and Blackstone, of records and information relevant to such defense, making employees of the Company available on a mutually convenient basis to provide additional information, explanation of any materials or other information, and supplying any requested powers of attorney or other authorization requested by Apollo Management and Blackstone relating to the defense of the Tax Challenge, and the Purchasers shall reimburse the Company for all reasonable out of pocket expenses (but not any internal allocated expenses) relating to such cooperation. If Apollo Management and Blackstone choose not to assume the defense of any Tax Challenge, the Company shall control the defense, negotiation and ultimate settlement or other disposition of the Tax Challenge; provided, that (i) the Company shall use its reasonable best efforts to defend the position that the Series A Preferred Stock and the shares of Series B Junior Preferred Stock do not constitute "preferred stock" (within the meaning of Treasury regulation section 1.305-5(a)) and; (ii) that the Company shall not settle or 19 otherwise resolve any Tax Challenge without the prior written consent of Apollo Management and Blackstone Shareholders, which consent shall not be unreasonably withheld. In addition, notwithstanding any provision to the contrary, the Company shall not take any action a purpose of which is to prejudice the defense of any Tax Challenge. (c) Except to the extent required by a "determination," the Company shall not report to any Tax Authority, or to the holders of the Series A Preferred Stock or the shares of Series B Junior Preferred Stock, as a dividend payment, any increases to the Liquidation Preference, or any other amount, resulting from, or relating to, the Company's failure to pay a dividend in cash on the Series A Preferred Stock or the shares of Series B Junior Preferred Stock on any Dividend Payment Date (as such terms are defined in the Certificates of Designation) or otherwise including, but not limited to, any reporting on Internal Revenue Service Forms 1098, 1099-DIV, or any similar forms or successors thereto. SECTION 5.13. Periodic Information. For so long as the Shares or any -------------------- Conversion Shares are outstanding the Company shall file all reports required to be filed by the Company under Section 13 or 15(d) of the Exchange Act and shall provide the holders of the Shares and the Conversion Shares and prospective purchasers of such shares with the information specified in Rule 144A(d) under the Securities Act. SECTION 5.14. Legends. So long as applicable, each certificate ------- representing any portion of the Shares or the Series B Junior Preferred Stock shall be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws): "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND DELIVERY TO ALLIED WASTE INDUSTRIES, INC. OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THOSE LAWS. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF A SECOND AMENDED AND RESTATED SHARE- 20 HOLDERS AGREEMENT, DATED AS OF JULY 30, 1999, BETWEEN ALLIED WASTE INDUSTRIES, INC. ("ALLIED") AND CERTAIN SHAREHOLDERS OF ALLIED NAMED THEREIN AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF ALLIED." ARTICLE VI COVENANTS OF THE PURCHASERS SECTION 6.1. Agreement to Take Necessary and Desirable Actions. Each ------------------------------------------------- Purchaser shall (a) subject to the satisfaction of the conditions set forth in Section 7.2, execute and deliver each of the Basic Documents to which it may be a party and such other documents, certificates, agreements and other writings and (b) take such other actions as may be reasonably necessary, desirable or requested by the Company in order to consummate or implement expeditiously the transactions contemplated hereby. SECTION 6.2. Compliance with Conditions; Reasonable Best Efforts. --------------------------------------------------- Each Purchaser will use its reasonable best efforts to cause all of the obligations imposed upon it in this Agreement to be duly complied with, and to cause all conditions precedent to the obligations of the Company and the Purchasers to be satisfied. Upon the terms and subject to the conditions of this Agreement, each Purchaser will use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to consummate and make effective in the most expeditious manner practicable the Transactions. SECTION 6.3. HSR Act Notification. To the extent required by the HSR -------------------- Act, each Purchaser shall, if it has not already done so, (a) file or cause to be filed, as promptly as practicable after the execution and delivery of this Agreement, with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice, all reports and other documents required to be filed by it under the HSR Act concerning the transactions contemplated hereby and (b) promptly comply with or cause to be complied with any requests by the United States Federal Trade Commission or the Antitrust Division of the United States Department of Justice for additional information concerning such transactions, in each case so that the waiting period applicable to this Agreement and the transactions contemplated hereby under the HSR Act shall expire as soon as practicable after the execution and delivery of this Agreement. Each 21 Purchaser agrees to request, and to cooperate with the Company in requesting, early termination of any applicable waiting period under the HSR Act. SECTION 6.4. Shareholder Vote. The Purchasers shall vote the Shares --------------- and any shares of Common Stock or Series B Junior Preferred Stock beneficially owned (as such term is defined in Rule 13d-3 under the Exchange Act) by them and their Affiliates for any proposal contemplated by Section 5.9 submitted to stockholders by the Company. SECTION 6.5. Consents and Approvals. Each Purchaser (a) shall use ---------------------- its reasonable best efforts to obtain all necessary consents, waivers, authorizations and approvals of all Governmental Authorities and of all other Persons required in connection with the execution, delivery and performance of the Equity Documents or the consummation of the Transactions and (b) shall diligently assist and cooperate with the Company in preparing and filing all documents required to be submitted by the Company to any Governmental Authority in connection with such Transactions (which assistance and cooperation shall include, without limitation, timely furnishing to the Company all information concerning such Purchaser that counsel to the Company reasonably determines is required to be included in such documents or would be helpful in obtaining any such required consent, waiver, authorization or approval). ARTICLE VII CONDITIONS PRECEDENT TO CLOSING SECTION 7.1. Conditions to the Company's Obligations. The --------------------------------------- obligations of the Company hereunder required to be performed on the Closing Date shall be subject, at the election of the Company, to the satisfaction or waiver, at or prior to the Closing, of the following conditions: (a) The representations and warranties of each Purchaser contained in this Agreement shall have been true and correct when made and, in addition, shall be repeated and true and correct in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. (b) Each Purchaser shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants contained in this Agreement to be performed and complied with by such Purchaser at or prior to the Closing Date. (c) Any applicable waiting period under the HSR Act shall have expired or been terminated. 22 SECTION 7.2. Conditions to Purchasers' Obligations. The obligations ------------------------------------- of each Purchaser hereunder required to be performed on the Closing Date shall be subject, at the election of Apollo Management and Blackstone, to the satisfaction or waiver, at or prior to the Closing, of the following conditions: (a) The representations and warranties of the Company contained in Sections 3.1, 3.2, 3.3, 3.7 and 3.8 of this Agreement (i) shall have been true and correct when made and (ii) shall be (A) in the case of representations and warranties that are qualified as to materiality or Material Adverse Effect, true and correct and (B) in all other cases, true and correct all material respects, in the case of clauses (A) and (B), as of the Closing Date with the same force and effect as though made on and as of the Closing Date. (b) The Company shall have performed in all material respects all of its obligations, agreements and covenants contained in this Agreement to be performed and complied with at or prior to the Closing Date. (c) The Company shall have entered into each of the Registration Rights Agreement and the Shareholders Agreement. (d) The Company shall have filed each of the Certificates of Designation with the Secretary of State of the State of Delaware. (e) Any applicable waiting period under the HSR Act shall have expired or been terminated; provided, that each Purchaser has used its reasonable best efforts to obtain clearance under the HSR Act prior to satisfaction of the other conditions to this Agreement and the transactions contemplated by the Bank Documents. (f) The acquisition contemplated by the Merger Agreement and each of the other Transactions (other than the purchase by the Purchasers of the Shares) shall have been consummated or shall be consummated simultaneously with the other Transactions, without any waiver by the Company of the conditions thereto (without the prior written consent of the Purchasers affiliated with Apollo and Blackstone, which may be given or withheld in their sole discretion), and the Bank Financing shall be consummated on terms that in all material respects are as favorable to the Company and the Purchasers as those set forth in Bank Commitment Letter. (g) The Company shall have delivered to the Purchasers a certificate executed by it or on its behalf by a duly authorized representative, dated the Closing Date, to the effect that each of the conditions specified in paragraph (a) through (f) of this Section 7.2 has been satisfied. 23 (h) No provision of any Applicable Law, injunction, order or decree of any Governmental Entity shall be in effect which has the effect of making the Transactions illegal or shall otherwise restrain or prohibit the consummation of the Transactions. (i) The Purchasers shall have received (i) an opinion of counsel to the Company, dated the Closing Date, and addressed to the Purchasers, in the form attached hereto as Exhibit F and (ii) reliance letters from each counsel or --------- special counsel to the Company or any Subsidiary (in form and substance satisfactory to the Purchaser), dated the Closing Date, permitting the Purchaser to rely on all other opinions rendered by such counsel in connection with the Transaction. (j) The Purchasers shall have received certificates representing the Shares. ARTICLE VIII MISCELLANEOUS SECTION 8.1. Indemnification. (a) All representations, warranties, --------------- covenants and agreements (except as to the extent covenants and agreements are required to be performed after the Closing Date, which shall survive indefinitely) contained in this Agreement shall survive the Closing for two years, except that (i) Section 3.6 shall survive so long as the underlying representations and warranties survive in the Credit Agreement and (ii) Sections 3.1, 3.2, 3.3, 3.7 and 3.8 shall survive without time limitation (but subject to statutes of limitation of general application). Notwithstanding the foregoing, with respect to claims asserted pursuant to this Section 8.1 before the expiration of the applicable representation, warranty, covenant or agreement, such claims shall survive until the date they are finally adjudicated or otherwise resolved. (b) The Company agrees to indemnify and hold harmless each Purchaser, its Affiliates and partners, and the respective officers, directors, members, employees, advisors and agents of each of each Purchaser, its Affiliates and partners (each an "indemnified person"), from and against (and to reimburse each indemnified person as the same are incurred) any and all losses (including, but not limited to, impairment of the value of the Shares), claims, damages, liabilities, costs and expenses (collectively, "Losses") to which any indemnified person may become subject or incur based upon, arising out of, or in connection with (A) a breach of any representation, warranty or covenant of this Agreement or (B) claims by third parties relating to the Commitment Letter, the Bank Financing, the use of the proceeds thereof, the other Transactions or any related transaction or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless of whether any indemnified person is a party thereto, and to reimburse each indemnified 24 person upon demand for any reasonable legal or other reasonable out of pocket expenses incurred in connection with investigating or defending any of the foregoing, provided that (x) the foregoing indemnity will not, as to any indemnified person, apply to Losses to the extent they are found by a final, non-appealable judgment of a court to arise from the willful misconduct or gross negligence of such indemnified person, and (y) the maximum amount indemnifiable to each Purchaser (and its successors or assigns) under clause (A) shall not exceed the purchase price of the Shares purchased by such Purchaser. No person shall be liable for any indirect, consequential or punitive damages in connection with the Commitment Letter, the Financing Documents or its activities related to the Transactions. (c) If a person entitled to indemnity hereunder (an "Indemnified Party") asserts that any party hereto (the "Indemnifying Party") has become obligated to the Indemnified Party pursuant to Section 8.1(b), or if any suit, action, investigation, claim or proceeding is begun, made or instituted as a result of which the Indemnifying Party may become obligated to the Indemnified Party hereunder, the Indemnified Party shall notify the Indemnifying Party promptly and shall cooperate with the Indemnifying Party, at the Indemnifying Party's expense, to the extent reasonably necessary for the resolution of such claim or in the defense of such suit, action or proceedings, including making available any information, documents and things in the possession of the Indemnified Party which are reasonably necessary thereof. Notwithstanding the foregoing notice requirement, the right to indemnification hereunder shall not be affected by any failure to give, or delay in giving, notice unless, and only to the extent that, the rights and remedies of the Indemnifying Party shall have been materially prejudiced as a result of such failure or delay. (d) In fulfilling its obligations under this Section 8.1, after the Indemnifying Party has provided each Indemnified Party with a written notice of its acceptance of liability under this Section 8.1, as between such Indemnified Party and the Indemnifying Party, the Indemnifying Party shall have the right to investigate, defend, settle or otherwise handle, with the aforesaid cooperation, any claim, suit, action or proceeding brought by a third party in such manner as the Indemnifying Party may in its sole discretion reasonably deem appropriate; provided, that (i) counsel retained by the Indemnifying Party is reasonably satisfactory to the Indemnified Party and (ii) the Indemnifying Party will not consent to any settlement or entry of judgment imposing any obligations on any other party hereto other than financial obligations for which such party will be indemnified hereunder, unless such party has consented in writing to such settlement or judgment (which consent may be given or withheld in its sole discretion). Notwithstanding the Indemnifying Party's election to assume the defense or investigation of such claim, action or proceeding, the Indemnified Party shall have the right to employ separate counsel and to participate in the defense or investigation of such claim, action or proceeding, which participation shall be at the expense of the Indemnifying Party, if (i) on the advice of counsel to the Indemnified Party use of counsel of the Indemnifying Party's choice could reasonably be expected to give rise to a material conflict of interest, (ii) the 25 Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party within a reasonable time after notice of the assertion of any such claim or institution of any such action or proceeding, (iii) if the Indemnifying Party shall authorize the Indemnified Party to employ separate counsel at the Indemnifying Party's expense or (iv) such action shall seek relief other than monetary damages against the Indemnified Party. SECTION 8.2. Notices. All notices, demands, requests, consents, ------- approvals or other communications (collectively, "Notices") required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice. Notice shall be deemed given on the date of service or transmission if personally served or transmitted by telegram, telex or facsimile. Notice otherwise sent as provided herein shall be deemed given on the next business day following delivery of such notice to a reputable air courier service. To the Company: Allied Waste Industries, Inc. 15880 North Greenway-Hayden Loop Scottsdale, Arizona 85260 Attn: Steven Helm Vice President, Legal Fax: (602) 627-2703 with a copy (which shall not constitute notice) to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attn: Peter Golden Fax: (212) 859-4000 To the Purchasers: To the address specified on the signature page executed by each such Purchaser, with a copy (which shall not constitute notice) to: 26 Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071-3144 Attn: Michael A. Woronoff Fax: (213) 687-5600 Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Attn: Wilson S. Neely Fax: (212) 455-2502 Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Stephen M. Besen Fax: (212) 310-8007 SECTION 8.3. Governing Law. This Agreement shall be governed by, ------------- interpreted under, and construed in accordance with the laws of the state of New York, including, without limitation, Sections 5-1401 and 5-1402 of the New York General Obligations Law. SECTION 8.4. Termination. This Agreement may be terminated (i) at ----------- any time prior to the Closing Date by mutual agreement of the Company, Apollo Management and Blackstone Management, on behalf of all purchasers, (ii) if the Closing shall not have occurred on or prior to December 31, 1999, by either the Company, Apollo Management or Blackstone Management, at any time after December 31, 1999 or (iii) if the Merger Agreement has been terminated, by the Company, Apollo Management or Blackstone Management. termination pursuant to the foregoing clause (i), (ii) or (iii) notwithstanding, Sections 8.1 and 8.10 hereof shall remain in effect. In addition, concurrently with any termination pursuant to clause (iii) of the second preceding sentence, the Company shall, if BFI becomes obligated to pay any fee to the Company pursuant to the Merger Agreement, including, without limitation, pursuant to Section 5.11(b) of the Merger Agreement, pay the fee described in Section 2.2(c). Section 8.5. Entire Agreement. This Agreement and the Basic ---------------- Documents (including all agreements entered into pursuant hereto and thereto and all certificates and instruments delivered pursuant hereto and thereto) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, 27 understandings, negotiations and discussions between the parties, whether oral or written, with respect to the subject matter hereof, including, but not limited to, the Commitment Letter. SECTION 8.6. Modifications and Amendments. No amendment, ---------------------------- modification or termination of this Agreement shall be binding upon any other party unless executed in writing by the parties hereto intending to be bound thereby. It is understood that members of the Company's board of directors nominated by Apollo and Blackstone will recuse themselves from any consideration by the Company of any amendment, modification or termination of this Agreement. SECTION 8.7. Waivers and Extensions. Any party to this Agreement may ---------------------- waive any right, breach or default which such party has the right to waive, provided that such waiver will not be effective against the waiving party unless it is in writing, is signed by such party, and specifically refers to this Agreement. Waivers may be made in advance or after the right waived has arisen or the breach or default waived has occurred. Any waiver may be conditional. it is understood that members of the Company's board of directors nominated by Apollo and Blackstone will recuse themselves from any consideration by the Company of any waiver of the terms and conditions of this Agreement. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof nor of any other agreement or provision herein contained. No waiver or extension of time for performance of any obligations or acts shall be deemed a waiver or extension of the time for performance of any other obligations or acts. SECTION 8.8. Titles and Headings. Titles and headings of sections of ------------------- this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement. SECTION 8.9. Exhibits and Schedules. Each of the exhibits and ---------------------- schedules referred to herein and attached hereto is an integral part of this Agreement and is incorporated herein by reference. SECTION 8.10. Expenses; Brokers. The Company shall pay or cause to be ----------------- paid, whether or not the closing occurs hereunder, all reasonable out-of-pocket fees and expenses incurred by the Company and by or on behalf of the Purchasers and their Affiliates in connection with the transactions (including, without limitation, reasonable expenses of due diligence, travel expenses, reasonable fees, charges and disbursements of counsel, accountants, experts and consultants). Other than the use of CSI and Donaldson, Lufkin & Jenrette Securities Corporation by the Company, each of the parties represents to the others that neither it nor any of its Affiliates has used a broker or other intermediary in connection with the Transactions for whose fees or expenses any other party will be liable. Each party agrees to indemnify and hold the other parties to this Agreement harmless from 28 and against any and all claims, liabilities or obligations with respect to any such fees or expenses asserted by any Person on the basis of any act or statement alleged to have been made by such party or any of its Affiliates. SECTION 8.11. Press Releases and Public Announcements. All public --------------------------------------- announcements or disclosures relating to the transactions contemplated hereby shall be made only if mutually agreed upon by the Company and the Purchasers, except to the extent such disclosure is, in the opinion of counsel, required by law or by stock exchange regulation, provided that (a) any such required disclosure shall only be made, to the extent consistent with law and stock exchange regulation, after consultation with Apollo and Blackstone and (b) no such announcement or disclosure (except as required by law or by stock exchange regulation) shall identify any Purchaser without such Purchaser's prior consent. SECTION 8.12. Assignment; No Third Party Beneficiaries. This ---------------------------------------- Agreement and the rights, duties and obligations hereunder may not be assigned or delegated by the Company without the prior written consent of the Purchasers, which may be withheld in their sole discretion and may not be assigned or delegated by any Purchaser, without the Company's prior written consent, which shall not be unconditionally withheld, except that in each case a Purchaser may assign its rights hereunder to its Permitted Transferee (as that term is defined in the Shareholders Agreement) without being itself relieved of its obligations hereunder on or prior to the Closing. Any assignment or delegation of rights, duties or obligations hereunder made by the Company without the prior written consent of the Purchasers, shall be void and of no effect. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and their respective successors and permitted assigns. This Agreement is not intended to confer any rights or benefits on any Persons other than as expressly set forth in Section 8.1 or this Section 8.12. SECTION 8.13. Severability. This Agreement shall be deemed severable, ------------ and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable. SECTION 8.14. Counterparts. This Agreement may be executed in ------------ counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 29 SECTION 8.15. Further Assurances. Each party hereto, upon the ------------------ request of any other party hereto, shall do all such further acts and execute, acknowledge and deliver all such further instruments and documents as may be necessary or desirable to carry out the transactions contemplated by this Agreement, including, in the case of the Company, such acts, instruments and documents as may be necessary or desirable to convey and transfer to each Purchaser the Shares to be purchased by it hereunder. SECTION 8.16. Remedies Cumulative. The remedies provided herein ------------------- shall be cumulative and shall not preclude the assertion by any party hereto of any other rights or the seeking of any remedies against the other party hereto. SECTION 8.17. Several Liability of the Purchasers. Nothing in this ----------------------------------- Agreement shall be construed to impose on any Purchaser any liability for any action or failure to act of any other Purchaser. SECTION 8.18. No Duty to Other Purchasers. Each Purchaser confirms --------------------------- with each other Purchaser that such Purchaser has conducted its own due diligence in connection with its investment in the Shares and the other Purchasers may therefore have information different from, or additional to, the information possessed by such Purchaser. In addition, although certain of the other Purchasers (the "Supplying Purchasers") may have shared information received by them (including information contained in third party reports prepared for such other Purchasers) with such Purchaser, no representation or warranty is being made with respect to such information by any Supplying Purchaser or any such third party. Nothing in this Section 8.18 is meant to limit any duty, obligation or liability the Company may have to any Purchaser under this Agreement or otherwise. 30 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. ALLIED WASTE INDUSTRIES, INC. By: /s/ Steven M. Helm ------------------- Name: Steven M. Helm Title: Vice President Number of Shares being purchased from the Company: 284,175 APOLLO INVESTMENT FUND IV, L.P. By: Apollo Advisors IV, L.P. its General Partner By: Apollo Capital Management IV, Inc. its General Partner By: /s/ David B. Kaplan --------------------------- Name: David B. Kaplan Title: Vice President Address for Notice: c/o Apollo Management IV, L.P. 1999 Avenue of the Stars Suite 1900 Los Angeles, California 90067 Telephone: (310) 201-4100 Telecopy: (310) 201-4198 Number of Shares being purchased from the Company: 15,825 APOLLO OVERSEAS PARTNERS IV, L.P. By: Apollo Advisors IV, L.P. its Managing Partner By: Apollo Capital Management IV, Inc. its General Partner By: /s/ David B. Kaplan --------------------------- Name: David B. Kaplan Title: Vice President Address for Notice: c/o Apollo Management IV, L.P. 1999 Avenue of the Stars Suite 1900 Los Angeles, California 90067 Telephone: (310) 201-4100 Telecopy: (310) 201-4198 Number of Shares being purchased from the Company: 89,163 APOLLO INVESTMENT FUND III, L.P. By: Apollo Advisors II, L.P. its General Partner By: Apollo Capital Management II, Inc. its General Partner By: /s/ David B. Kaplan -------------------------- Name: David B. Kaplan Title: Vice President Address for Notice: c/o Apollo Management, L.P. 1999 Avenue of the Stars Suite 1900 Los Angeles, California 90067 Telephone: (310) 201-4100 Telecopy: (310) 201-4198 Number of Shares being purchased from the Company: 6,691 APOLLO OVERSEAS PARTNERS III, L.P. c/o Apollo Advisors II, L.P. its Managing Partner By: Apollo Capital Management II, Inc. its General Partner By: /s/ David B. Kaplan -------------------------- Name: David B. Kaplan Title: Vice President Address for Notice: c/o Apollo Management L.P. 1999 Avenue of the Stars Suite 1900 Los Angeles, California 90067 Telephone: (310) 201-4100 Telecopy: (310) 201-4198 Number of Shares being purchased from the Company: 4,146 APOLLO (UK) PARTNERS III, L.P. By: Apollo Advisors II, L.P. its Managing Partner By: Apollo Capital Management II, Inc. its General Partner By: /s/ David B. Kaplan ---------------------------- Name: David B. Kaplan Title: Vice President Address for Notice: c/o Apollo Management L.P. 1999 Avenue of the Stars Suite 1900 Los Angeles, California 90067 Telephone: (310) 201-4100 Telecopy: (310) 201-4198 Number of Shares being purchased from the Company: 40,000 APOLLO/AW, LLC By: Apollo Management IV, L.P. its Manager By: AIF IV Management, Inc. its General Partner By: /s/ David B. Kaplan -------------------------- Name: David B. Kaplan Title: Vice President Address for Notice: c/o Apollo Management IV, L.P. 1999 Avenue of the Stars Suite 1900 Los Angeles, California 90067 Telephone: (310) 201-4100 Telecopy: (310) 201-4198 Number of Shares being purchased from the Company: 277,540.586 BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P., By: Blackstone Management Associates III L.L.C. its General Partner By: /s/ Howard A. Lipson -------------------------- Name: Howard A. Lopson Title: Senior Managing Director Address for Notice: 345 Park Avenue New York, New York 10154 Telephone: (212) 935-2626 Telecopy: (212) 754-8710 Number of Shares being purchased from the Company: 51,459.414 BLACKSTONE OFFSHORE CAPITAL PARTNERS III L.P. By: Blackstone Management Associates III L.L.C. its General Partner By: /s/ Howard A. Lipson -------------------------------- Name: Howard A. Lipson Title: Senior Managing Director Address for Notice: 345 Park Avenue New York, New York 10154 Telephone: (212) 935-2626 Telecopy: (212) 754-8710 Number of Shares being purchased from the Company: 21,000 BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P., By: Blackstone Management Associates III L.L.C. its General Partner By: /s/ Howard A. Lipson ------------------------- Name: Howard A. Lipson Title: Senior Managing Director Address for Notice: 345 Park Avenue New York, New York 10154 Telephone: (212) 935-2626 Telecopy: (212) 754-8710 Number of Shares being purchased from the Company: 89,434 GREENWICH STREET CAPITAL PARTNERS II, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------- Name: Sanjay H. Patel Title: Managing Member Address for Notice: 388 Greenwich Street 36/th/ Floor New York, New York 10013 Telephone: (212) 816-9628 Telecopy: (212) 816-0166 Number of Shares being purchased from the Company: 3,030 GSCP OFFSHORE FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------- Name: Sanjay H. Patel Title: Managing Member Address for Notice: 388 Greenwich Street 36/th/ Floor New York, New York 10013 Telephone: (212) 816-9628 Telecopy: (212) 816-0166 Number of Shares being purchased from the Company: 1,864 GREENWICH FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------- Name: Sanjay H. Patel Title: Managing Member Address for Notice: 388 Greenwich Street 36/th/ Floor New York, New York 10013 Telephone: (212) 816-9628 Telecopy: (212) 816-0166 Number of Shares being purchased from the Company: 5,231 GREENWICH STREET EMPLOYEES FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel -------------------- Name: Sanjay H. Patel Title: Managing Editor Address for Notice: 388 Greenwich Street 36/th/ Floor New York, New York 10013 Telephone: (212) 816-9628 Telecopy: (212) 816-0166 Number of Shares being purchased from the Company: 441 TRV EXECUTIVE FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------- Name: Sanjay H. Patel Title: Managing Member Address for Notice: 388 Greenwich Street 36/th/ Floor New York, New York 10013 Telephone: (212) 816-9628 Telecopy: (212) 816-0166 Number of Shares being purchased from the Company: 14,136 DLJMB FUNDING II, INC. By: /s/ Ari Benacerraf ---------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 69,292 DLJ MERCHANT BANKING PARTNERS II, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 2,760 DLJ MERCHANT BANKING PARTNERS II-A, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 4,051 DLJ DIVERSIFIED PARTNERS, L.P. By: DLJ Diversified Partners, Inc. Managing General Partner By: /s/ Ari Benacerraf -------------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 1,504 DLJ DIVERSIFIED PARTNERS-A, L.P. By: DLJ Diversified Partners, Inc. Managing General Partner By: /s/ Ari Benacerraf ------------------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 1,120 DLJ MILLENNIUM PARTNERS, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf -------------------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 219 DLJ MILLENNIUM PARTNERS-A, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf ------------------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 133 DLJ FIRST ESC L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ivy Dodes ------------------- Name: Ivy Dodes Title: Vice President Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 3,407 DLJ OFFSHORE PARTNERS II, C.V. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 311 DLJ EAB PARTNERS, L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ari Benacerraf --------------------- Name: Ari Benacerraf Title: Principal Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Number of Shares being purchased from the Company: 13,067 DLJ ESC II L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ivy Dodes ------------------ Name: Ivy Dodes Title: Vice President Address for Notice: 277 Park Avenue New York, New York 10172 Telephone: (212) 892-3000 Telecopy: (212) 892-7272 Schedule 1 ----------
Purchase Shares Price -------------- ----------------- Apollo Investment Fund IV, L.P. 284,175.000 $ 284,175,000.00 Apollo Overseas Partners IV, L.P. 15,825.000 15,825,000.00 Apollo Investment Fund III, L.P. 89,163.000 89,163,000.00 Apollo Overseas Partners III, L.P. 6,691.000 6,691,000.00 Apollo (UK) Partners III, L.P. 4,146.000 4,146,000.00 Apollo/AW LLC 40,000.000 40,000,000.00 Blackstone Capital Partners III Merchant Banking Fund L.P. 277,540.586 277,540,586.00 Blackstone Offshore Capital Partners III L.P. 51,459.414 51,459,414.00 Blackstone Family Investment Partnership III L.P. 21,000.000 21,000,000.00 Greenwich Street Capital Partners II, L.P. 89,434.000 89,434,000.00 GSCP Offshore Fund, L.P. 3,030.000 3,030,000.00 Greenwich Fund, L.P. 1,864.000 1,864,000.00 Greenwich Street Employees Fund, L.P. 5,231.000 5,231,000.00 TRV Executive Fund, L.P. 441.000 441,000.00 DLJMB Funding II, Inc. 14,136.000 14,136,000.00 DLJ Merchant Banking Partners II, L.P. 69,292.000 69,292,000.00 DLJ Merchant Banking Partners II-A, L.P. 2,760.000 2,760,000.00 DLJ Diversified Partners, L.P. 4,051.000 4,051,000.00 DLJ Diversified Partners-A, L.P. 1,504.000 1,504,000.00 DLJ Millennium Partners, L.P. 1,120.000 1,120,000.00 DLJ Millennium Partners-A, L.P. 219.000 219,000.00 DLJ First ESC L.P. 133.000 133,000.00 DLJ Offshore Partners II, C.V 3,407.000 3,407,000.00 DLJ EAB Partners, L.P. 311.000 311,000.00 DLJ ESC II, L.P. 13,067.000 13,067,000.00 ------------- ----------------- Totals 1,000,000.000 $1,000,000,000.00 ============= =================
EX-11 3 2ND AMENDED & RESTATED SHAREHOLDERS AGMNT. EXHIBIT 11 SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT This Second Amended and Restated Shareholders Agreement, dated as of July 30, 1999 (this "Agreement"), by and between Allied Waste Industries, Inc., --------- a Delaware corporation (the "Company"), on the one hand, and Apollo Investment ------- Fund IV, L.P., a Delaware limited partnership ("AIF IV"), Apollo Investment Fund ------ III, L.P., a Delaware limited partnership ("AIF III"), Apollo Overseas Partners ------- IV, L.P., a Delaware limited partnership ("AOP IV"), Apollo Overseas Partners ------ III, L.P., a Delaware limited partnership ("AOP III"), Apollo (U.K.) Partners ------- III, L.P., an English limited partnership ("AUK III"), Apollo/AW LLC, a Delaware ------- limited liability company ("AAW"), Blackstone Capital Partners II Merchant --- Banking Fund L.P., a Delaware limited partnership ("BCP II"), Blackstone Capital ------ Partners III Merchant Banking Fund L.P., a Delaware limited partnership ("BCP"), --- Blackstone Offshore Capital Partners III L.P., a Cayman Islands limited partnership ("BOC III"), Blackstone Offshore Capital Partners II L.P., a Cayman ------- Islands limited partnership ("BOC II"), Blackstone Family Investment Partnership ------ III L.P., a Delaware limited partnership ("BFP III"), and Blackstone Family ------- Investment Partnership II L.P., a Delaware limited partnership ("BFP II"), ------ Greenwich Street Capital Partners II, L.P., a Delware limited partnership, GSCP Offshore Fund, L.P., a Cayman Islands exempted limited partnership, Greenwich Fund, L.P., a Delaware limited partnership, Greenwich Street Employees Fund, L.P., a Delaware limited partnership, TRV Executive Fund, L.P., a Delaware limited partnership, DLJMB Funding II, Inc., a Delaware corporation, DLJ Merchant Banking Partners II, L.P., a Delaware limited partnership, DLJ Merchant Banking Partners II-A, L.P., a Delaware limited partnership, DLJ Diversified Partners, L.P., a Delaware limited partnership, DLJ Diversified Partners-A, L.P., a Delaware limited partnership, DLJ Millennium Partners, L.P., a Delaware limited partnership, DLJ Millennium Partners-A, L.P., a Delaware limited partnership, DLJ First ESC L.P., a Delaware limited partnership, DLJ Offshore Partners II, C.V., a Netherlands Antilles limited partnership, DLJ EAB Partners, L.P., a Delaware limited partnership, and DLJ ESC II L.P., a Delaware limited partnership (collectively, the "Shareholders"), on the other hand, amending and ------------ restating in its entirety the Amended and Restated Shareholders Agreement dated as of April 21, 1997 (the "Original Agreement"), by and between the Company, on ------------------ the one hand, and certain of the Shareholders, on the other hand. WHEREAS, certain of the Shareholders purchased an aggregate of 11,776,765 shares (the "TPG Group Block") of the Company's common stock, par --------------- value $.01 per share (the "Common Stock"), from TPG Partners, L.P., a Delaware ------------ limited partnership, and TPG Parallel I, L.P., a Delaware limited partnership, and an aggregate of 14,600,000 shares of Common Stock (the "Laidlaw Block" and together ------------- with the TPG Group Block, the "Shares") from Laidlaw, Inc., a Canadian ------ corporation; WHEREAS, under the Original Agreement, the Company granted to certain of the Shareholders the right as a group to appoint certain designees for election to the Board of Directors of the Company and those Shareholders agreed to certain restrictions on the acquisition and disposition of Common Stock and the conduct of such Shareholders with respect to the Company; WHEREAS, simultaneously with the execution of this Agreement, certain of the Shareholders are entering into (i) a Preferred Stock Purchase Agreement (the "Preferred Stock Purchase Agreement") pursuant to which, upon the terms and ---------------------------------- subject to the conditions set forth in the Purchase Agreement, certain of the Shareholders shall purchase an aggregate of 1,000,000 shares of Senior Convertible Preferred Stock, par value $.10 per share, of the Company ("Senior ------ Preferred Stock"), which shall be convertible into either shares of Series A - --------------- Junior Preferred Stock, par value $.10 per share, of the Company ("Junior ------ Preferred Stock"), or shares of Common Stock, and (ii) an Amended and Restated - --------------- Registration Rights Agreement (the "Registration Rights Agreement") granting ----------------------------- certain registration rights; and WHEREAS, in recognition of Shareholders' significant change in ownership in the Company upon the closing of the purchase of the Senior Preferred Stock pursuant to the Preferred Stock Purchase Agreement, the parties desire to amend and restate the Original Agreement in its entirety (except as may be otherwise set forth herein) as set forth herein; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the Preferred Stock Purchase Agreement, and in the Amended and Restated Registration Rights Agreement and intending to be legally bound hereby, the parties agree as follows, effective upon the closing of the purchase of the Senior Preferred Stock pursuant to the Preferred Stock Purchase Agreement: ARTICLE 1 Definitions; Representations and Warranties SECTION 1.1 Definitions. Unless otherwise specified all references to ----------- "days" shall be deemed to be references to calendar days. For purposes of this ---- Agreement, the following terms shall have the following meanings: -2- "Actual Voting Power" shall mean, as of the date of determination, the ------------------- total voting power of all the then outstanding securities of the Company at the time then entitled to vote for the general election of directors, without giving effect to securities issuable upon exercise or conversion of such outstanding securities. (When issued, shares of Senior Preferred Stock and Junior Preferred Stock shall be deemed to be outstanding securities then entitled to vote for the general election of directors and (i) each share of Senior Preferred Stock will be deemed, as of the date of determination, to have the number of votes that would be represented by the number of shares of Common Stock into which such share of Senior Preferred Stock pursuant to its terms would otherwise be convertible and (ii) each share of Junior Preferred Stock will be deemed, as of the date of determination, to have the number of votes that would otherwise be represented by the number of shares of Common Stock in lieu of whose issuance such share of Junior Preferred Stock is issued.) "Affiliate" of a Person shall have the meaning set forth in Rule 12b-2 --------- of the Exchange Act as in effect on the date of this Agreement, but shall not include (i) any investment fund in which a Person has invested if the Person does not otherwise control the investment fund or have, directly or indirectly, voting or dispositive power over any securities owned by such fund or (ii) any investor or limited partner of any Person who does not otherwise have voting or dispositive power over securities owned by that Person and is not controlled by that Person. It is expressly intended that any Person who now or hereafter controls, directly or indirectly, any Shareholder (other than an Exempt Affiliate) shall be subject to the restrictions of Section 2.1 as if it were a ----------- Shareholder. "Apollo/Blackstone Shareholders" mean those Shareholders who are ------------------------------ affiliated with either Apollo Advisors II, L.P., Apollo Management IV, L.P. or Blackstone Management Associates II L.L.C., including, but not limited to, AIF III, AOP III, AUK III, AIF IV, AOP IV, AAW, BCP, BOC III, BFP III, BCP II, BOC II and BFP II. "Apollo/Blackstone Shares" means the TPG Group Block, the Laidlaw ------------------------ Block, the 790,000 shares of Senior Preferred Stock to be sold to the Apollo/Blackstone Shareholders pursuant to the Preferred Stock Purchase Agreement and any shares of Common Stock or Junior Preferred Stock issued upon conversion of such 790,000 shares of Senior Preferred Stock or of such Junior Preferred Stock. "Beneficial ownership" by a Person of any Voting Securities shall be -------------------- determined in accordance with the term "beneficial ownership" as defined in Rule 13d-3 under the Exchange Act as in effect on the date of this Agreement and, in addition, "beneficial ownership" shall include securities which such Person has the right to acquire (irrespective of whether such right is exercisable immediately or only after the passage of time, including the passage of time in excess of sixty (60) days) pursuant to any -3- agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise. For purposes of this Agreement, a Shareholder shall be deemed to beneficially own any Voting Securities beneficially owned by its Affiliates or any Group of which such Shareholder or any such Affiliate is a member. "Board of Directors" shall mean the Board of Directors of the Company. ------------------ "Commission" shall mean the Securities and Exchange Commission. ---------- "Conversion Shares" shall mean the shares of Junior Preferred Stock or ----------------- shares of Common Stock into which shares of Senior Preferred Stock or Junior Preferred Stock have been converted. "DLJ Parent Entities" mean and includes Donaldson, Lufkin & Jenrette ------------------- Securities Corporation, Donaldson, Lufkin & Jenrette Inc., DLJdirect Inc. Pershing Trading, L.P., Autranet Inc. and any Person that, directly or indirectly, controls Donaldson, Lufkin & Jenrette Inc. "DLJ Shareholders" shall mean DLJMB Funding II, Inc., DLJ Merchant ---------------- Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ First ESC L.P., DLJ Offshore Partners II, C.V., DJL EAB Partners, L.P. and DLJ ESC II L.P. "Exchange Act" shall mean the Securities Exchange Act of 1934, as ------------ amended. "Greenwich Street Parent Entities" means and includes CitiGroup and -------------------------------- Salomon Smith Barneyand any Person or Group that, directly or indirectly, controls CitiGroup. "Greenwich Street Shareholders" shall mean Greenwich Street Capital ----------------------------- Partners II, L.P., GSCP Offshore Fund, L.P., Greenwich Fund, L.P., Greenwich Street Employees Fund, L.P. and TRV Executive Fund, L.P. "Group" shall mean a "group" as such term is used in Section 13(d)(3) ----- of the Exchange Act as in effect on the date of this Agreement. "Laws" shall mean all applicable foreign, federal, state and local ---- laws, statutes, rules, regulations, codes and ordinances. -4- "Person" shall mean any individual, Group, corporation, general or ------ limited partnership, limited liability company, governmental entity, joint venture, estate, trust, association, organization or other entity of any kind or nature. "Related Person" means, with respect to any Person, (A) any Affiliate -------------- of such Person, (B) any investment manager, investment advisor or partner of such Person or an Affiliate of such Person, and (C) any investment fund, investment account or investment entity whose investment manager, investment advisor or general partner is such Person or a Related Person of such Person; provided, however, that "Related Person" shall mean with respect to any DLJ - -------- ------- Shareholder, (I) any general or limited partner of such DLJ Shareholder (a "DLJ --- Partner"), (II) any corporation, partnership or other entity which is an - ------- Affiliate of such DLJ Shareholder or of any DLJ Partner (collectively, the "DLJ --- Affiliates"), (III) any managing director, general partner, director, limited - ---------- partner, officer or employee of (x) such DLJ Shareholder, (y) such DLJ Partner or (z) any DLJ Affiliate of such DLJ Partner or a DLJ Affiliate, or the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any of the foregoing Persons referred to in this clause (III) (collectively, "DLJ Associates"), (IV) any trust, the beneficiaries of which, or a corporation, -------------- limited liability company or partnership, the stockholders, members or general or limited partners of which, include only such DLJ Shareholder, DLJ Affiliates, DLJ Associates, their spouses or their lineal descendants, and (V) a voting trustee for one or more DLJ Shareholders, DLJ Affiliates or DLJ Associates. "Reorganization Transaction" means: (i) any merger, consolidation, -------------------------- recapitalization, liquidation or other business combination transaction involving the Company; (ii) any tender offer or exchange offer for any securities of the Company; or (iii) any sale or other disposition of assets of the Company or any of its Subsidiaries in a single transaction or in a series of related transactions in each of the foregoing cases constituting individually or in the aggregate 10% or more of the assets or Voting Securities (as applicable) of the Company. "Securities Act" shall mean the Securities Act of 1933, as amended. -------------- "Shareholder Designee" shall mean a person designated for election to -------------------- the Board of Directors by the Apollo/Blackstone Shareholders as provided in Section 3.1. - ----------- "Total Voting Power" shall mean the total combined Voting Power, on a ------------------ fully diluted basis, of all the Voting Securities then outstanding. "Voting Power" shall mean, as of the date of determination, the voting ------------ power in the general election of directors of the Company, and shall be calculated for -5- each Voting Security by reference to the maximum number of votes such Voting Security is or would be entitled to cast in the general election of directors, and, in the case of convertible (or exercisable or exchangeable) securities, by reference to the maximum number of votes such Voting Security would be entitled to cast in unconverted or converted (or exercised, unexercised, exchanged or unexchanged) status. For purposes of determining Voting Power under this Agreement, a Voting Security which is convertible into or exchangeable for a Voting Security shall be counted as having the greater of (i) the number of votes to which such Voting Security is entitled prior to conversion or exchange and (ii) the number of votes to which the Voting Security into which such Voting Security is convertible or exchangeable is entitled. Notwithstanding anything else to the contrary contained in this Agreement, there shall not be included in calculating Voting Power any votes which a Person shall have upon and by reason of the non-payment of dividends on preferred shares in accordance with the terms of such preferred shares. "Voting Securities" shall mean (x) any securities entitled, or which ----------------- may be entitled, to vote generally in the election of directors of the Company (including, when issued, shares of Senior Preferred Stock and Junior Preferred Stock), (y) any securities convertible or exercisable into or exchangeable for such securities (whether or not the right to convert, exercise or exchange is subject to the passage of time or contingencies or both), or (z) any direct or indirect rights or options to acquire any such securities; provided that -------- unexercised options granted pursuant to any employment benefit or similar plan and rights issued pursuant to any shareholder rights plan shall be deemed not to be "Voting Securities" (or to have Voting Power). In addition, the following terms have the definitions specified in the Sections noted:
Term Section ---- ------- AIF IV recitals AIF III recitals AOP IV recitals AOP III recitals AUK III recitals AAW recitals Actual Voting Power Threshold 3.1(b) Agreement recitals BCP recitals BCP II recitals BOC III recitals BOC II recitals BFP III recitals BFP II recitals Beneficial Ownership Threshold 3.1(b)
-6- Common Stock recitals Company recitals Credit Agreement 1.2(e) Disposition 4.1 Exempt Affiliate 2.1 Future Major Investor 2.3 HSR Act 1.2(c) Information 3.4 Junior Preferred Stock recitals Laidlaw Block recitals Laidlaw recitals Management Directors 3.1(b) Material Adverse Effect 1.2(b) Moving Party 5.3 Nominating Committee 3.1(b) Original Agreement recitals Preferred Stock Purchase Agreement recitals Purchase Date 4.1(b) Registration Rights Agreement recitals Related Transferee 4.1(f) Representatives 5.13 Rule 144 Sale 4.1(c) Senior Preferred Stock recitals Shareholder Designee Period 3.1(b) Shareholders recitals Shares recitals Specific Rights 5.13 Standstill Period 2.1 TPG Group Block recitals Unaffiliated Directors 3.1(b)
SECTION 1.2. Representations and Warranties of the Company. The --------------------------------------------- Company represents and warrants to Shareholders as follows: (a) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby are within its corporate powers and have been duly authorized by all necessary corporate action on its part. This Agreement constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, and insolvency, fraudulent transfer reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles. (b) The execution, delivery and performance of this Agreement by the Company does not and will not (i) contravene or conflict with or constitute a default under the Company's Certificate of Incorporation or Bylaws, (ii) contravene or conflict with or constitute a default under any agreement to which the Company is a party or is -7- bound, or result in a breach of or default under any instrument or agreement to which the Company is a party or is bound, which violation, breach or default would have a material adverse effect on the Company's business taken as a whole or would adversely affect the consummation of the transactions contemplated by this Agreement or the Preferred Stock Purchase Agreement (a "Material Adverse ---------------- Effect"), (iii) violate any judgment, order, injunction, decree or award against - ------ or binding upon the Company as of the date of this Agreement, the violation of which, individually or in the aggregate, would have a Material Adverse Effect, (iv) violate any Law relating to the Company, the violation of which, individually or in the aggregate, would have a Material Adverse Effect or (v) constitute a "change of control," or result in the acceleration of rights, under any material debt instrument to which the Company is a party. (c) Except for applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the Exchange ------- Act or as disclosed in the Preferred Stock Purchase Agreement, the Company is not required to make any filing or registration with, or obtain any permit, authorization, consent or approval of, any governmental entity or any other Person in connection with this Agreement, the Preferred Stock Purchase Agreement, or any of the transactions contemplated hereby and thereby. (d) As of the date of this Agreement, there is no action, suit or proceeding pending or, to the knowledge of the Company, threatened against the Company that relates to this Agreement, the Preferred Stock Purchase Agreement, or any of the transactions contemplated hereby or thereby. (e) As of the date hereof, the Company would be entitled to make at least $1.00 in additional borrowings under the Credit Agreement (the "Credit ------ Agreement") among the Company, Allied Waste North America, Inc., the lenders - --------- party thereto, The Chase Manhattan Bank, as Administrative Agent, Collateral Agent and Collateral Trustee, Citicorp USA, Inc., as Syndication Agent, Credit Suisse First Boston and DLJ Capital Funding, Inc., as Documentation Agents, and the consummation of the transactions contemplated by the Amended and Restated Agreement and Plan of Merger, dated as of May 21, 1999, among Browning - Ferris Industries, Inc., the Company and AWINI Acquisition Corporation and this Agreement will not, by itself, limit the Company's ability to borrow under the Credit Agreement. (f) All documents which have been filed by the Company with the Commission under the Exchange Act, at the time they were filed with the Commission, conformed in all material respects with the requirements of Exchange Act, and the rules and regulations of the Commission thereunder, and, as of the date thereof and taken as a whole as of the date hereof do not contain an untrue statement of a material fact or omit -8- to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. SECTION 1.3. Representations and Warranties of Shareholder. Each --------------------------------------------- Shareholder severally, but not jointly, represents and warrants to the Company as follows: (a) The execution, delivery and performance by such Shareholder of this Agreement and the consummation by such Shareholder of the transactions contemplated by this Agreement are within its powers and have been duly authorized by all necessary action on its part. This Agreement constitutes a legal, valid and binding agreement of such Shareholder enforceable against such Shareholder in accordance with its terms, subject, as to enforcement, to bankruptcy, and insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles. (b) The execution, delivery and performance of this Agreement by such Shareholder does not and will not contravene or conflict with or constitute a default under such Shareholder's partnership agreement or similar governing documents. (c) As of the date of this Agreement, such Shareholder does not beneficially own any Voting Securities except (i) any Voting Securities beneficially owned on the date hereof in compliance with the Original Agreement and (ii) to the extent such shares may be deemed to be beneficially owned, the shares of Senior Preferred Stock which are subject to the Preferred Stock Purchase Agreement. ARTICLE 2 Standstill SECTION 2.1. Standstill. (a) Until the earliest to occur of (A) the ---------- tenth anniversary of the purchase of the Senior Preferred Stock pursuant to the Preferred Stock Purchase Agreement, (B) the date on which the Apollo/Blackstone Shareholders own, collectively, Voting Securities which would represent (i) less than 10% of the Total Voting Power, excluding voting securities beneficially owned by the Shareholders other than the Apollo/Blackstone Shareholders and (ii) less than 10% of the Actual Voting Power, excluding voting securities beneficially owned by the Shareholders other than the Apollo/Blackstone Shareholders; provided that the Shareholders at such time are entitled to designate not more than one director pursuant to Article 3 hereof, and (C) termination under Section 2.2 (such period, the "Standstill Period") (provided ----------- ----------------- -------- that the Standstill -9- Period shall end (x) with respect to the DLJ Shareholders, on the date on which the DLJ Shareholders no longer own any shares of Senior Preferred Stock or any Conversion Shares, and (y) with respect to the Greenwich Street Shareholders, on the date on which the Greenwich Street Shareholders no longer own any shares of Senior Preferred Stock or any Conversion Shares), each Shareholder will not, and will cause each of its Affiliates (other than Exempt Affiliates) not to, directly or indirectly: (i) acquire, offer to acquire, or agree to acquire, by purchase or otherwise, any Voting Securities or voting rights or direct or indirect rights or options to acquire any Voting Securities of the Company or any of its Affiliates other than (A) the exercise of convertible securities acquired in compliance with the terms of this Agreement (including the acquisition of shares of Common Stock or Junior Preferred Stock upon conversion of shares of Senior Preferred Stock), or an acquisition as a result of a stock split, stock dividend or similar recapitalization, (B) the acquisition of shares of Senior Preferred Stock which are subject to the Preferred Stock Purchase Agreement, (C) with the prior written consent of the chairman of the Board of Directors and the chief executive officer of the Company, acquisitions by the Apollo/Blackstone Shareholders of up to a collective aggregate amount of 3,000,000 shares (as such number may be appropriately adjusted to reflect stock splits, reverse stock splits, stock dividends or any other recapitalization of the Company) of Common Stock, (D) stock options or similar rights granted by the Company to an Affiliate of such Shareholder as compensation for performance as a director or officer of the Company or its subsidiaries (and any shares issuable upon exercise thereof), (E) transfers between such Shareholder and Related Transferees as permitted under Section 4.1(f) or (F) any rights which are -------------- granted to all shareholders of the Company (and any shares issuable upon exercise thereof); provided, however, that if the Shareholders or any of -------- ------- their Affiliates in good faith inadvertently acquire not more than 500,000 shares of Common Stock in violation of these provisions and within 15 days after the first date on which the Shareholders have actual knowledge (including by way of written notice given by the Company) that a violation has occurred Shareholders or any of their Affiliates shall have transferred any shares of Common Stock held in violation of these provisions to unrelated third parties so that the Shareholders and their Affiliates no longer beneficially own any such shares or have any agreement or understanding relating to such shares, this Section 2.1 shall be deemed to ----------- not have been violated; and provided, further, that no violation of this -------- ------- provision shall be deemed to have occurred by reason of the indirect acquisition of beneficial ownership of securities resulting from (x) investments in investment funds as to which no Shareholder or Affiliate thereof has control or power to control with respect to voting or investment decisions or -10- (y) acquisitions of securities by a limited partner in any Shareholder or Affiliates thereof as to which limited partner no Shareholder or its Affiliates has control or power to control; (ii) make or cause to be made any proposal for a Reorganization Transaction except for Dispositions in accordance with Article 4; (iii) form, join or in any way participate in a Group with respect to any securities of the Company or its Affiliates, other than with other Shareholders or Affiliates of any Shareholder; provided, -------- however, that in the case of securities other than Voting Securities, ------- Shareholders may participate in a Group with respect thereto with the prior approval of a majority of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or to any third party); (iv) make, or in any way cause or participate in, any "solicitation" of "proxies" to vote (as those terms are defined in Regulation 14A under the Exchange Act) with respect to the Company or its Affiliates, or communicate with, seek to advise, encourage or influence any Person, in any manner, with respect to the voting of, securities of the Company or its Affiliates, or become a "participant" in any "election contest" (as those terms are defined or used in Rule 14a-11 under the Exchange Act) with respect to the Company or its Affiliates (other than non-public communications with other Shareholders or Affiliates of any Shareholder which would not require public disclosure by any Person or solicitation of proxies in support of the election of Shareholder Designees, Management Directors and Unaffiliated Directors nominated by the Board of Directors in accordance with Section 3.1 hereof in circumstances ----------- in which a third party is soliciting parties for the election of nominees not nominated by the Board of Directors); (v) initiate, propose or, except with the prior approval of a majority of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or to any third parties) otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to the Company or its Affiliates or induce or attempt to induce any other Person to initiate any stockholder proposal or seek election to or seek to place a representative on the Board of Directors of the Company (except pursuant to Section 3.1 of this Agreement) ----------- or its Affiliates or seek the removal of any member of the Board of Directors of the Company or its Affiliates (for this purpose, the actions of the Shareholder Designees in communicating (without public disclosure or disclosure to third parties) with the Board of Directors in their capacity as directors of the Company, and non-public communication by a Shareholder with -11- other Shareholders or Affiliates of any Shareholder which would not require public disclosure by any Person, shall not be deemed to be in contravention of this paragraph (v)); (vi) in any manner, agree, attempt, seek or propose (other than making any request for permission with respect thereto which would not require disclosure publicly or to any third party) to deposit any securities of the Company or its Affiliates in any voting trust or similar arrangement or to subject any securities of the Company or its Affiliates to any other voting or proxy agreement, arrangement or understanding (other than any such agreements or understandings with other Shareholders or Affiliates of any Shareholder) ; (vii) offer, sell or transfer any Voting Securities or rights to receive Voting Securities except for Dispositions in accordance with Article 4; --------- (viii) disclose any intention, plan or arrangement, or make any public announcement (or request permission to make any such announcement other than making any request for permission which would not require disclosure publicly or to any third party), or induce any other Person to take any action, inconsistent with the foregoing; (ix) enter into any negotiations, arrangements or understandings with any third party with respect to any of the foregoing; (x) advise, assist or encourage or finance (or assist or arrange financing to or for) any other Person in connection with any of the foregoing; (xi) otherwise act in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company or its Affiliates (for this purpose, the actions of the Shareholder Designees in their capacity as directors of the Company shall not be deemed to be in contravention of this paragraph (xi)); or (xii) request a waiver of any of the provisions of any of paragraphs (i) through (xii) of this Section 2.1 (except any request which ----------- would not require disclosure publicly or to any third party); provided, that this Section 2.1 shall not restrict or inhibit the rights of a - -------- ----------- Shareholder to exercise its voting rights as a stockholder of the Company (subject to Section 3.2). ----------- (b) Affiliates of Shareholders who (i) are not Apollo/Blackstone Shareholders or their Affiliates, (ii) are not Related Transferees of any Shareholder, -12- (iii) are not in possession of any material non-public Information provided to Shareholders by the Company, its subsidiaries or representatives pursuant to Section 3.4 hereof or otherwise, and (iv) do not have voting or dispositive - ----------- power over any shares of Senior Preferred Stock or any Conversion Shares (such affiliates being "Exempt Affiliates") shall not be subject to this Section 2.1. ----------------- ----------- (c) The DLJ Shareholders represent and warrant to the Company that the DLJ Parent Entities are now, and at any time during the Standstill Period that they take actions that would be otherwise prohibited by Section 2.1(a) will be, Exempt Affiliates. The Greenwich Street Shareholders represent and warrant to the Company that the Greenwich Street Parent Entities are now, and at all times during the Standstill Period that they take actions that would be otherwise prohibited by Section 2.1(a) will be, Exempt Affiliates. Based upon the foregoing representations and warranties in this Section 2.1(c), the Company -------------- will consider the DLJ Parent Entities and the Greenwich Street Parent Entities to be Exempt Affiliates. SECTION 2.2. Early Termination of Standstill. The obligations of ------------------------------- Shareholders under Section 2.1 shall terminate early upon the occurrence of any ----------- of the following events: (a) At least $10,000,000 in indebtedness for monies borrowed by the Company or its subsidiaries shall have been accelerated and payment therefor shall not have been made within 20 days after such acceleration, and the Company shall not in good faith be contesting whether such amount is owed. (b) A final judgment or judgments (not subject to appeal) for the payment of money shall have been entered against the Company or its subsidiaries in an aggregate amount in excess of $10,000,000 (exclusive of any amounts fully covered by insurance (less any applicable deductible) or indemnification) by a court or courts of competent jurisdiction, which judgments remain unsatisfied, undischarged, unstayed or unbonded for a period of 45 days after the entry of such judgment or judgments. (c) The Company shall file a petition in bankruptcy or for reorganization or for an arrangement or any composition, readjustment, liquidation, dissolution or similar relief pursuant to Title 11 of the United States Code or under any similar present or future federal law or the law of any other jurisdiction or shall be adjudicated a bankrupt or insolvent, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or for all or any substantial part of its property, or shall make a general assignment for the benefit of its creditors. -13- (d) A petition or answer shall be filed proposing the adjudication of the Company as bankrupt or its reorganization or arrangement, or any composition, readjustment, liquidation, dissolution or similar relief with respect to it pursuant to Title 11 of the United States Code or under any similar present or future federal law or the law of any other jurisdiction, and the Company shall consent to or acquiesce in the filing thereof, or such petition or answer shall not be discharged or denied within 60 days after the filing thereof. (e) The Company shall be in material breach of its obligations to Shareholders under the Registration Rights Agreement and such breach shall not have been cured within 20 days after receipt by the Company from Shareholders of a written notice specifying such breach and requiring it to be remedied, and the Company shall not in good faith be contesting whether such breach has occurred. (f) If the Company shall, in breach of its obligations under this Agreement, fail to nominate for election to the Board of Directors any Shareholder Designee who satisfies the requirements for designation to the Board of Directors set forth in Section 3.1(d). ------------- SECTION 2.3. Modification Upon Subsequent Agreement. If (a) the Company -------------------------------------- enters into any agreement, understanding or arrangement with any other Person or Group (each a "Future Major Investor") relating to the Company's obligation, --------------------- whether absolute, contingent, current or future, to support or cause the nomination of one or more Persons to the Board of Directors at the request of the Future Major Investor, and (b) such agreement, understanding or arrangement contains any terms with respect to the matters covered by this Article 2 that --------- are more favorable to the Future Major Investor than those provided to the Shareholders hereunder, then this Article 2 shall be automatically modified to --------- include the more favorable terms and thereby provide the Shareholders with rights at least as favorable and obligations no more burdensome as those given to the Future Major Investor. ARTICLE 3 Board Representation and Voting SECTION 3.1. Board Representation. (a) Until the earlier to occur of the -------------------- tenth anniversary of the purchase of shares of Senior Preferred Stock pursuant to the Preferred Stock Purchase Agreement and the date on which the Apollo/Blackstone Shareholders own, collectively, less than 20% of the Apollo/Blackstone Shares (the "Shareholder Designee Period"), the Board of --------------------------- Directors shall consist of no more than thirteen (13) directors during the Shareholder Designee Period. -14- For so long as the Apollo/Blackstone Shareholders are entitled to at least two Shareholder Designees under this Agreement, the Apollo/Blackstone Shareholders shall be entitled to have one Shareholder Designee serve on each committee of the Board of Directors other than any committee formed for the purpose of considering matters relating to the Shareholders and as set forth below with respect to the Nominating Committee. (b) Immediately following the purchase of shares of Senior Preferred Stock pursuant to the Preferred Stock Purchase Agreement, the Company will cause David Blitzer to be elected or appointed to the Board of Directors. At all times during the Shareholder Designee Period, the Company agrees, subject to Section 3.1(d), to support the nomination of, and the Company's Nominating - -------------- Committee (as defined herein) shall recommend to the Board of Directors the inclusion in the slate of nominees recommended by the Board of Directors to shareholders for election as directors at each annual meeting of shareholders of the Company: (i) no more than two persons who are executive officers of the Company ("Management Directors"), (ii) (A) five Shareholder Designees, so long -------------------- as the Apollo/Blackstone Shareholders beneficially own 80% or more of the Apollo/Blackstone Shares, (B) four Shareholder Designees, so long as the Apollo/Blackstone Shareholders beneficially own 60% or more but less than 80% of the Apollo/Blackstone Shares, (C) three Shareholder Designees, so long as the Apollo/Blackstone Shareholders beneficially own 40% or more but less than 60% of the Apollo/Blackstone Shares, (D) two Shareholder Designees, so long as the Apollo/Blackstone Shareholders beneficially own 20% or more but less than 40% of the Apollo/Blackstone Shares, and (E) one Shareholder Designee, so long as the Apollo/Blackstone Shareholders beneficially own 10% or more but less than 20% of the Apollo/Blackstone Shares (each a "Beneficial Ownership Threshold"); ------------------------------ provided, however, that if at any time as a result of the Company's issuance of - -------- ------- Voting Securities the Shareholders beneficially own 9% or less of the Actual Voting Power (the "Actual Voting Power Threshold"), the Apollo/Blackstone ----------------------------- Shareholders shall be entitled to no more than three Shareholder Designees (even if the Apollo/Blackstone Shareholders would otherwise be entitled to a greater number of Shareholder Designees pursuant to clauses (A) through (E) above), and (iii) such other persons, each of whom is (A) recommended by the Nominating Committee and (B) not an employee or officer of or outside counsel to the Company or a partner, employee, director, officer, affiliate or associate (as defined in Rule 12b-2 under the Exchange Act) of any Shareholder or any affiliate of a Shareholder or as to which the Shareholders or their affiliates own at least ten percent of the voting equity securities ("Unaffiliated ------------ Directors"). If any vacancy (whether by death, retirement, disqualification, - --------- removal from office or other cause, or by increase in number of directors) occurs prior to a meeting of the Company's stockholders, the Board (i) may appoint a member of management to fill a vacancy caused by a -15- Management Director ceasing to serve as a director, (ii) shall appoint, subject to Section 3.1(d), a person designated by the Apollo/Blackstone Shareholders to -------------- fill a vacancy created by a Shareholder Designee ceasing to serve as a director (except as a result of the reduction of the number of Shareholder Designees entitled to be included on the Board of Directors by reason of a decrease in the Apollo/Blackstone Shareholders' beneficial ownership of Apollo/Blackstone Shares below any Beneficial Ownership Threshold or by reasons of a decrease in the Shareholders' beneficial ownership of Voting Securities below the Actual Voting Power Threshold), and (iii) may appoint a person who qualifies as an Unaffiliated Director and is recommended by the Nominating Committee pursuant to the procedures set forth in the following paragraph to fill a vacancy created by an Unaffiliated Director ceasing to serve as a director (provided, however, that -------- ------- in the case of a vacancy relating to an Unaffiliated Director, if a majority of the Nominating Committee is unable to recommend a replacement, then the Board seat with respect to this vacancy shall remain vacant), and each such person shall be a Management Designee, Shareholder Designee or Unaffiliated Director, as the case may be, for purposes of this Agreement. At all times during the Shareholder Designee Period, Unaffiliated Directors shall be designated exclusively by a majority of a nominating committee (the "Nominating Committee"), which shall at all times during the -------------------- Shareholder Designee Period consist of not more than four persons, two of whom shall be Shareholder Designees (or such lesser number of Shareholder Designees as then serves on the Board of Directors) and two of whom shall be either Management Directors or Unaffiliated Directors. If the Nominating Committee is unable to recommend one or more persons to serve as Unaffiliated Directors (except with respect to any vacancy created by an Unaffiliated Director ceasing to serve as such), then the Board of Directors shall nominate and recommend for election by stockholders an Unaffiliated Director then serving on the Board of Directors. Notwithstanding the foregoing, if the Apollo/Blackstone Shareholders beneficially own less than 50% of the Apollo/Blackstone Shares, the Nominating Committee shall be comprised of individuals only one of whom is a Shareholder Designee. The foregoing provisions shall be effected pursuant to an amendment to the Company's Bylaws in a form reasonably acceptable to the parties to this Agreement, which shall not be further amended by the Board of Directors during the Shareholder Designee Period. Notwithstanding the foregoing, the Company shall have no obligation to support the nomination, recommendation or election of any Shareholder Designee pursuant to this Section 3.1(b) or any other obligation under this Section 3.1 -------------- ----------- if the Apollo/Blackstone Shareholders are in breach of any material provision of this Agreement. -16- (c) Upon any decrease in Apollo/Blackstone Shareholders' beneficial ownership of Apollo/Blackstone Shares below any Beneficial Ownership Threshold or any decrease in the Shareholders beneficial ownership of Voting Securities below the Actual Voting Power Threshold, the Apollo/Blackstone Shareholders shall cause a number of Shareholder Designees to offer to immediately resign from the Company's Board of Directors such that the number of Shareholder Designees serving on the Board of Directors immediately thereafter will be equal to the number of Shareholder Designees which the Apollo/Blackstone Shareholders would then be entitled to designate under Section 3.1(b). Upon termination of -------------- the Shareholder Designee Period, the Apollo/Blackstone Shareholders shall promptly cause all of the Shareholder Designees to offer to resign immediately from the Board of Directors and any committees thereof and the Company's obligations under this Section 3.1 shall terminate. ----------- (d) Notwithstanding the provisions of this Section 3.1, the ----------- Apollo/Blackstone Shareholders shall not be entitled to designate any person to the Company's Board of Directors (or any committee thereof) in the event that the Company receives a written opinion of its outside counsel that a Shareholder Designee would not be qualified under any applicable law, rule or regulation to serve as a director of the Company or if the Company objects to a Shareholder Designee because such Shareholder Designee has been involved in any of the events enumerated in Item 2(d) or (e) of Schedule 13D or such person is currently the target of an investigation by any governmental authority or agency relating to felonious criminal activity or is subject to any order, decree, or judgment of any court or agency prohibiting service as a director of any public company or providing investment or financial advisory services and, in any such event, the Apollo/Blackstone Shareholders shall withdraw the designation of such proposed Shareholder Designee and designate a replacement therefor (which replacement Shareholder Designee shall also be subject to the requirements of this Section). The Company shall use its reasonable best efforts to notify the Apollo/Blackstone Shareholders of any objection to a Shareholder Designee sufficiently in advance of the date on which proxy materials are mailed by the Company in connection with such election of directors to enable the Apollo/Blackstone Shareholders to propose a replacement Shareholder Designee in accordance with the terms of this Agreement. (e) Each Shareholder Designee serving on the Board of Directors shall be entitled to all compensation and stock incentives granted to directors who are not employees of the Company on the same terms provided to, and subject to the same limitations applicable to, such directors. SECTION 3.2. Voting. (a) Each Shareholder agrees that during the ------ Standstill Period such Shareholder shall, and shall cause its Affiliates and any Person which is a member of any Group of which such Shareholder or any of its Affiliates is a -17- member to, be present, in person or represented by proxy, at all meetings of shareholders of the Company so that all Voting Securities beneficially owned by such Shareholder shall be counted for the purpose of determining the presence of a quorum at such meetings. Each Shareholder agrees that during the Standstill Period: (i) In connection with the election of directors of the Company, such Shareholder shall vote or cause to be voted all Voting Securities beneficially owned by such Shareholder to elect those individuals nominated in accordance with the provisions of Section 3.1. ----------- (ii) In connection with any proposal for a Reorganization Transaction, such Shareholder shall vote or cause to be voted, or consent with respect to, all Voting Securities beneficially owned by such Shareholder in the manner recommended by a majority of the entire Board of Directors. (iii) In connection with other proposals submitted to shareholders of the Company, such Shareholder shall be free to vote or cause to be voted, or consent with respect to, all Voting Securities beneficially owned by such Shareholder in its discretion. SECTION 3.3. Notices of Dispositions of Voting Securities. Not later -------------------------------------------- than the tenth day following the end of any calendar month during the Standstill Period in which one or more Dispositions of Voting Securities by a Shareholder or any of its Affiliates shall have occurred, such Shareholder shall use its reasonable best efforts to give written notice to the Company of all such Dispositions (in the case of Dispositions by Affiliates, to the extent it has knowledge) unless any such Disposition has been reflected in a public filing that was delivered to the Company on or in advance of the date upon which notice thereof under this Section 3.3 would have been due. Such notice shall state the ----------- date upon which each such Disposition was effected, the number and type of Voting Securities involved in each such Disposition, the means by which each such Disposition was effected and, to the extent known, the identity of the Person acquiring Voting Securities. SECTION 3.4. Access to Information. The Company will provide each --------------------- Shareholder during normal business hours with reasonable prior written notice with (i) access to the books and records of the Company and information relating to the Company, its properties, operations, financial condition and affairs ("Information") and (ii) the opportunity to consult with management of the ----------- Company from time to time regarding the Company, its properties, operations, finances and affairs. Certain of the Shareholders have requested the Information and consultation rights provided herein to enable the Shares held by such Shareholders to qualify as a "venture capital investment" -18- as to which such Shareholders have "management rights," in each case as such terms are defined in Department of Labor Regulation Section 2510.3-101(d); provided, however, that nothing herein shall require the Company to furnish such - -------- ------- Shareholders with more than rights of access to Information and consultation provided herein regardless of whether such rights are sufficient for such Shareholders to comply with venture capital operating company requirements. In furtherance of the foregoing, the Company agrees to inform the Shareholders with respect to any corporate actions which the Company considers to be major or significant, including, without limitation, extraordinary dividends, mergers, acquisitions or dispositions of significant assets, issuances of significant amounts of debt or equity and material amendments to the certificate of incorporation or by-laws of the Company, and (subject to the limitations specified in the proviso in the preceding sentence) to provide the Shareholders with the opportunity to consult with management of the Company with respect to such matters. The Shareholders agree to hold in strict confidence all nonpublic Information furnished to them and to use all Information only in connection with the management of their investment in the Company, except that the Shareholders may disclose any information that (i) is or becomes generally available to the public other than as a result of disclosure by the Shareholders, and (ii) is or becomes available to the Shareholders from a source other than the Company; provided, however, that, to the knowledge of the Shareholders, the source is not - -------- ------- bound by a confidentiality obligation with the Company in respect thereof. If any Shareholder is required by a court or administrative agency to disclose any of the nonpublic Information, the Shareholder shall promptly notify the Company of such requirement so that the Company may at its own expense oppose such requirement or seek a protective order and request confidential treatment of such Information. It is agreed that if the Shareholder is nonetheless compelled to disclose the Information, the Shareholder may disclose such portion of the Information which is legally required without liability hereunder. In any event, the Shareholder will not oppose action by the Company to obtain a protective order or other reliable assurance that confidential treatment will be accorded the Information. Nothing herein shall permit any Shareholder to disclose material non-public Information to permit such Shareholder to purchase or sell securities of the Company in compliance with the federal securities laws. ARTICLE 4 Transfer Restrictions SECTION 4.1. Restrictions on Dispositions. During the Standstill ---------------------------- Period, each Shareholder shall not, and shall cause its Affiliates not to, directly or indirectly (including, without limitation, through the disposition or transfer of control of another Person), sell, assign, donate, transfer, pledge, hypothecate, grant any option with respect to or otherwise dispose of any interest in (or enter into an agreement or understanding -19- with respect to the foregoing) any Voting Securities (a "Disposition"), except ----------- as set forth below in this Section 4.1. Without limiting the generality of the ----------- foregoing, any sale of securities held by any Shareholder or any of its Affiliates which is currently (or following the passage of time, the occurrence of any event or the giving of notice), directly or indirectly, exchangeable or exercisable for, or convertible into, any Voting Securities shall constitute a Disposition of such Voting Securities. Dispositions may be effected by a Shareholder during the Standstill Period as follows: (a) No Dispositions of any nature may be made prior to the first anniversary of the purchase of the Senior Preferred Stock pursuant to the Preferred Stock Purchase Agreement, except pursuant to Sections 4.1(b) through --------------- 4.1(f). - ------ (b) As of the date of purchase of the shares of Senior Preferred Stock pursuant to the Preferred Stock Purchase Agreement (the "Purchase Date"), ------------- with respect to the Shares, and after the first anniversary of the Purchase Date, with respect to all other Voting Securities, Dispositions of Voting Securities may be made at any time in compliance with the Registration Rights Agreement. (c) As of the Purchase Date, with respect to the Shares, and after the first anniversary of the Purchase Date, with respect to all other Voting Securities, Dispositions of Voting Securities may be made pursuant to sales effected in accordance with Rule 144 under the Securities Act (a "Rule 144 -------- Sale"); provided that such Dispositions shall not be made to any Person who or - ---- -------- which would immediately thereafter, to the knowledge of such Shareholder, any of its Affiliates, or such Shareholder's broker, beneficially own Voting Securities representing 9% or more of the Total Voting Power (and such Person shall have provided a certificate to such effect). (d) As of the Purchase Date, with respect to the Shares, and after the first anniversary of the Purchase Date, with respect to all other Voting Securities, Dispositions may be made to any Person (other than pursuant to a Reorganization Transaction) that would, following such sale, beneficially own no more than 9% of the Total Voting Power (and such Person shall have provided a certificate to such effect). (e) Dispositions may be made pursuant to a merger transaction or other business combinations or a tender offer for outstanding shares of Common Stock which is recommended to the shareholders of the Company generally by at least a majority of the entire Board of Directors, on the terms and conditions of such transaction available to all other holders of shares of Common Stock or on terms and conditions recommended by at -20- least a majority of the entire Board of Directors (excluding the Apollo/Blackstone Designees) as to the Preferred Stock and Junior Preferred Stock. (f) Dispositions may be made by a Shareholder to (i) any other Shareholder or (ii) any Related Person of any Shareholder that executes an instrument in form and substance satisfactory to the Company in which it makes the representations and warranties set forth in Section 1.3(b) as of the date of -------------- the execution of such instrument and agrees to be bound by the terms of this Agreement as if an original signatory to this Agreement (such transferee, a "Related Transferee"), in which case such Related Transferee shall thereafter be ------------------ a "Shareholder" for all purposes of this Agreement. (g) With respect to Voting Securities which are, by their terms, convertible into or exercisable or exchangeable for other Voting Securities such conversion, exercise or exchange shall not be deemed a Disposition. Without limiting the foregoing, the Company acknowledges that the conversion of shares of Senior Preferred Stock or shares of Junior Preferred Stock into Conversion Shares shall not be a Disposition. (h) Each Shareholder agrees that during the Standstill Period, without the consent of the managing underwriter(s) in an underwritten offering in respect of the Company's Voting Securities, it will not effect any sale or distribution of Voting Securities (other than in connection with such Shareholder's own registration pursuant to paragraph (b) of this Section 4.1), ----------- including a Rule 144 Sale, during the ten (10) day period prior to, and during the ninety (90) day period beginning on, the effective date of the registration statement filed by the Company in respect of such underwritten offering, or any shorter period as may apply to the Company and its affiliates. ARTICLE 5 Miscellaneous SECTION 5.1. Notices. All notices, requests, demands and other ------- communications required or permitted hereunder shall be made in writing by hand- delivery, registered first-class mail, telex, fax or air courier guaranteeing delivery: (a) If to the Company, to: Allied Waste Industries, Inc. 15880 North Greenway-Hayden Loop, Suite 100 Scottsdale, Arizona 85260 Attn: Steven Helm, Esq. Fax: (602) 627-2703 -21- with copies to: Fennemore Craig 3003 North Central Avenue Phoenix, AZ 85012-2913 Attn: Karen McConnell, Esq. Fax: (602) 916-5999 and to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attn: Peter Golden Fax: (212) 859-4000 or to such other person or address as the Company shall furnish to Shareholders in writing; (b) If to Shareholders, to: Apollo Management, L.P. 1999 Avenue of the Stars, Suite 1900 Los Angeles, CA 90067 Attn: David Kaplan Fax: (310) 201-4198 with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, CA 90071-3144 Attn: Michael Woronoff Fax: (213) 687-5600 and: -22- The Blackstone Group 345 Park Avenue New York, NY 10154 Attn: Howard A. Lipson Fax: (212) 754-8716 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Attn: Wilson S. Neely Fax: (212) 455-2502 and: Greenwich Street Investment II, L.L.C. 388 Greenwich Street, 36th Floor New York, New York 10013 Attn: Matthew Kaufman Fax: (212) 816-0166 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Michael Nissan Fax: (212) 310-8007 and: DLJ Merchant Banking II, Inc. 277 Park Avenue New York, New York 10172 Attn: Ari Benacerraf Fax: (212) 892-7272 and -23- Attn: Ivy Dodes Fax: (212) 892-2689 with a copy to: DLJ Merchant Banking II, Inc. 277 Park Avenue New York, New York 10172 Attn: Ivy Dodes Fax: (212) 892-2689 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Stephen M. Besen Fax: (212) 310-8007 or to such other person or address as Shareholders shall furnish to the Company in writing. All such notices, requests, demands and other communications shall be deemed to have been duly given: at the time of delivery by hand, if personally delivered; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed domestically in the United States (and seven (7) Business Days if mailed internationally); when answered back, if telexed; when receipt acknowledged, if telecopied; and on the Business Day for which delivery is guaranteed, if timely delivered to an air courier guaranteeing such delivery. SECTION 5.2. Legends. (a) If requested in writing by the Company, a ------- Shareholder shall present or cause to be presented promptly all certificates representing Voting Securities beneficially owned by such Shareholder or any of its Affiliates, for the placement thereon of a legend substantially to the following effect, which legend will remain thereon so long as such legend is required under applicable securities laws: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY NOT BE -24- OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH A REGISTRATION THEREUNDER OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND DELIVERY TO ALLIED WASTE INDUSTRIES, INC. OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THOSE LAWS." (b) Each Shareholder shall present or cause to be presented promptly all certificates representing Voting Securities beneficially owned by such Shareholder or any of its Affiliates, for the placement thereon of a legend substantially to the following effect, which legend will remain thereon during the Standstill Period as long as such Voting Securities are beneficially owned by any Shareholder or an Affiliate of any Shareholder: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF A SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, DATED AS OF JULY 30, 1999, BETWEEN ALLIED WASTE INDUSTRIES, INC. ("ALLIED") AND CERTAIN STOCKHOLDERS OF ALLIED NAMED THEREIN AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF ALLIED" (c) The Company may enter a stop transfer order with the transfer agent or agents of Voting Securities against any Disposition not in compliance with the provisions of this Agreement. SECTION 5.3. Enforcement. Shareholders, on the one hand, and the ----------- Company, on the other hand, acknowledge and agree that irreparable injury to the other party would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that such injury would not be adequately compensable in damages. It is accordingly agreed that, in addition to any other remedies which may be available at law or in equity, each -25- party hereto (the "Moving Party") shall be entitled to specific enforcement of, ------------ and injunctive relief to prevent any violation of, the terms of this Agreement, and the other parties hereto will not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in equity. The parties further agree that no bond shall be required as a condition to the granting of any such relief. SECTION 5.4. Entire Agreement. This Agreement constitutes the entire ---------------- agreement and understanding of the parties with respect to the transactions contemplated hereby; provided that the Original Shareholders Agreement shall -------- remain in full force and effect until the closing of the purchase and sale of the Senior Preferred Stock pursuant to the Preferred Stock Purchase Agreement and the representations and warranties of the parties set forth in Sections 1.2 ------------ and 1.3 of the Original Agreement shall survive and shall be deemed to be not --- amended or otherwise affected by this Agreement. This Agreement may be amended only by a written instrument duly executed by the parties or their respective successors or assigns; provided, however, that any amendment or waiver by the -------- ------- Company shall be made only with the prior approval of a majority of the directors of the Company other than Shareholder Designees. SECTION 5.5. Severability. Whenever possible, each provision or ------------ portion of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law, rule or regulation in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision shall have been replaced with a provision which shall, to the maximum extent permissible under such applicable law, rule or regulation, give effect to the intention of the parties as expressed in such invalid, illegal or unenforceable provision. SECTION 5.6. Headings. Descriptive headings contained in the -------- Agreement are for convenience only and will not control or affect the meaning or construction of any provision of this Agreement. SECTION 5.7. Counterparts. For the convenience of the parties, any ------------ number of counterparts of this Agreement may be executed by the parties, and each such executed counterpart will be an original instrument. SECTION 5.8. No Waiver. Any waiver by any party of a breach of any --------- provision of this Agreement shall not operate as or be construed to be a waiver of any -26- other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. SECTION 5.9. Successors and Assigns. This Agreement shall be binding ---------------------- upon and inure to the benefit of the Company and Shareholders, and to their respective successors and assigns other than, in the case of Shareholders, transferees that are not Related Transferees, including any successors to the Company or Shareholders or their businesses or assets as the result of any merger, consolidation, reorganization, transfer of assets or otherwise, and any subsequent successor thereto, without the execution or filing of any instrument or the performance of any act; provided that no party may assign this Agreement -------- without the other party's prior written consent, except by the Shareholders to a Shareholder or a Related Transferee as expressly provided in this Agreement (and that nothing herein restricts the transfer of any of the rights of Shareholders under the Registration Rights Agreement in accordance the terms of the Registration Rights Agreement). SECTION 5.10. Governing Law. This Agreement will be governed by and ------------- construed and enforced in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws principles thereof. SECTION 5.11. Further Assurances. From time to time on and after the ------------------ date of this Agreement, the Company and Shareholders, as the case may be, shall deliver or cause to be delivered to the other party hereto such further documents and instruments and shall do and cause to be done such further acts as the other parties hereto shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure that it is protected in acting hereunder. SECTION 5.12. Consent to Jurisdiction and Service of Process. Any ---------------------------------------------- legal action or proceeding with respect to this Agreement or any matters arising out of or in connection with this Agreement, and any action for enforcement of any judgment in respect thereof shall be brought exclusively in the state or federal courts located in the State of Delaware, and, by execution and delivery of this Agreement, the Company and Shareholders each irrevocably consent to service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company or Shareholders at their respective addresses referred to in this Agreement. The Company and Shareholders each hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of -27- the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to above and hereby further irrevocably waives and agrees, to the extent permitted by applicable law, not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing in this Agreement shall affect the right of any party hereto to serve process in any other manner permitted by law. SECTION 5.13. Shareholder Action. The Company shall be entitled to ------------------ rely upon any written notice, designation, or instruction signed by Apollo Management IV, L.P. and BCP (the "Representatives") as a notice, designation or --------------- instruction of all Shareholders and the Company shall not be liable to any Shareholder if the Company acts in accordance with and relies upon such writing. Notwithstanding the foregoing, however, the Company shall not be entitled to rely upon any written notice, designation or instruction signed by the Representatives as a notice, designation or instruction of the DLJ Shareholders or the Greenwich Street Shareholders if such notice, designation or instruction states that it relates to the first parenthetical proviso contained in the first paragraph of Section 2.1(a) or Section 2.1(b), 3.2(a)(iii), 3.4, 4.1(c), 5.4 or 5.9 of this Agreement (the "Specific Rights"). Each of the Shareholders --------------- acknowledges that the Representatives have full power and authority to act on their behalf; provided, however, that none of the DLJ Shareholders and the -------- ------- Greenwich Street Shareholders acknowledge the power or authority of the Representatives to act on their behalf with respect to the Specific Rights. -28- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first referred to above. ALLIED WASTE INDUSTRIES, INC. By: /s/ Steven M. Helm --------------------------- Name: Steven M. Helm Title: Vice President APOLLO INVESTMENT FUND IV, L.P. APOLLO OVERSEAS PARTNERS IV, L.P. By: Apollo Advisors IV, L.P. its General Partner By: Apollo Capital Management IV, Inc. its General Partner By: /s/ David B. Kaplan --------------------------- Name: David B. Kaplan Title: Vice President -29- APOLLO/AW LLC By: Apollo Management IV, L.P. its Manager By: AIF IV Management, Inc. its General Partner By: /s/ David B. Kaplan --------------------------------- Name: David B. Kaplan Title: Vice President APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (UK) PARTNERS III, L.P. By: Apollo Advisors II, L.P. its General Partner By: Apollo Capital Management II, Inc. its General Partner By: /s/ David B. Kaplan --------------------------------- Name: David B. Kaplan Title: Vice President -30- BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS III L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P. By: Blackstone Management Associates III L.L.C. its General Partner By: /s/ Howard A. Lipson -------------------------------------- Name: Howard A. Lipson Title: Senior Managing Director BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II, L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II, L.P. By: Blackstone Management Associates III L.L.C. its General Partner By: /s/ Howard A. Lipson -------------------------------------- Name: Howard A. Lipson Title: Senior Managing Director -31- GREENWICH STREET CAPITAL PARTNERS II, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------------------------- Name: Sanjay H. Patel Title: Managing Member GSCP OFFSHORE FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------------------------- Name: Sanjay H. Patel Title: Managing Member GREENWICH FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------------------------- Name: Sanjay H. Patel Title: Managing Member -32- GREENWICH STREET EMPLOYEES FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ----------------------------------- Name: Sanjay H. Patel Title: Managing Member TRV EXECUTIVE FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ----------------------------------- Name: Sanjay H. Patel Title: Managing Member DLJMB FUNDING II, INC. By: /s/ Ari Benacerraf ----------------------------------- Name: Ari Benacerraf Title: Principal -33- DLJ MERCHANT BANKING PARTNERS II, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf ------------------------------ Name: Ari Benacerraf Title: Principal DLJ MERCHANT BANKING PARTNERS II-A, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf ------------------------------ Name: Ari Benacerraf Title: Principal DLJ DIVERSIFIED PARTNERS, L.P. By: DLJ Diversified Partners, Inc. Managing General Partner By: /s/ Ari Benacerraf ------------------------------ Name: Ari Benacerraf Title: Principal -34- DLJ DIVERSIFIED PARTNERS-A, L.P. By: DLJ Diversified Partners, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Principal DLJ MILLENNIUM PARTNERS, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Principal DLJ MILLENNIUM PARTNERS-A, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Principal -35- DLJ FIRST ESC L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ivy Dodes --------------------------------- Name: Ivy Dodes Title: Vice Precident DLJ OFFSHORE PARTNERS II, C.V. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Principal DLJ EAB PARTNERS, L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Principal -36- DLJ ESC II L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ivy Dodes ---------------------------------- Name: Ivy Dodes Title: Vice President -37- EX-12 4 AMENDED & RESTATED REG. RIGHTS AGMNT. EXHIBIT 12 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT This Amended and Restated Registration Rights Agreement, dated as of July 30, 1999 (this "Agreement"), by and between Allied Waste Industries, Inc., --------- a Delaware corporation (the "Company"), on the one hand, and Apollo Investment ------- Fund IV, L.P., a Delaware limited partnership, Apollo Investment Fund III, L.P., a Delaware limited partnership, Apollo Overseas Partners IV, L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware limited partnership, Apollo (U.K.) Partners III, L.P., an English limited partnership, Apollo/AW LLC, a Delaware limited liability company, Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Capital Partners III Merchant Banking Fund L.P., a Delaware limited partnership ("BCP"), Blackstone Offshore Capital Partners III L.P., a Cayman Islands limited --- partnership, Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership, Blackstone Family Investment Partnership III L.P., a Delaware limited partnership, and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership, Blackstone Capital Partners III Merchant Banking Fund L.P., a Delaware limited partnership, Greenwich Street Capital Partners II, L.P., a Delware limited partnership, GSCP Offshore Fund, L.P., a Cayman Islands exempted limited partnership, Greenwich Fund, L.P., a Delaware limited partnership, Greenwich Street Employees Fund, L.P., a Delaware limited partnership, TRV Executive Fund, L.P., a Delaware limited partnership, DLJMB Funding II, Inc., a Delaware corporation, DLJ Merchant Banking Partners II, L.P., a Delaware limited partnership, DLJ Merchant Banking Partners II-A, L.P., a Delaware limited partnership, DLJ Diversified Partners, L.P., a Delaware limited partnership, DLJ Diversified Partners-A, L.P., a Delaware limited partnership, DLJ Millenium Partners, L.P., a Delaware limited partnership, DLJ Millenium Partners-A, L.P., a Delaware limited partnership, DLJ First ESC L.P., a Delaware limited partnership, DLJ Offshore Partners II, C.V., a Netherlands Antilles limited partnership, DLJ EAB Partners, L.P., a Delaware limited partnership, and DLJ ESC II L.P., a Delaware limited partnership (collectively, the "Shareholders"), on the other hand, amending and restating in its entirety ------------ the Registration Rights Agreement dated as of April 21, 1997 (the "Original -------- Agreement"), by and between the Company, on the one hand, and certain of the - --------- Shareholders, on the other hand. W I T N E S S E T H: WHEREAS, concurrently herewith, the Company and certain of the Shareholders are entering into a Preferred Stock Purchase Agreement (the "Purchase Agreement") pursuant to which, upon the terms and subject to the ------------------ conditions set forth in the Purchase Agreement, certain of the Shareholders shall purchase an aggregate of 1,000,000 shares of Senior Convertible Preferred Stock, par value $.10 per share, of the Company ("Senior Preferred Stock"), ---------------------- which shall be convertible into either shares of Series A Junior Preferred Stock, par value $.10 per share, of the Company ("Junior ------ Preferred Stock"), or shares of common stock, par value $.01 per share, of the - --------------- Company (the "Common Stock"); ------------ WHEREAS, concurrently herewith, the Company and Shareholders are entering into a Second Amended and Restated Shareholders Agreement (the "Shareholders Agreement"), which shall become effective at the time the shares ---------------------- of Senior Preferred Stock are purchased by the Shareholders (the "Effective --------- Time"), granting Shareholders certain rights to designate directors and setting forth certain restrictions on the acquisition and distribution of securities of the Company by Shareholders and the conduct of Shareholders with respect to the Company; and WHEREAS, as part of establishing the relationship between Shareholders and the Company, Shareholders and the Company have agreed to enter into this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained in this Agreement, the Purchase Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows, effective upon the closing of the purchase of the Senior Preferred Stock pursuant to the Purchase Agreement: ARTICLE I Definitions 1.1. Certain Definitions. In this Agreement: ------------------- "Apollo/Blackstone Shareholders" shall have the meaning set forth in ------------------------------ the Shareholders Agreement. "Exchange Act" means the United States Securities Exchange Act of ------------ 1934, as amended, and the rules and regulations of the SEC promulgated under such Act. "Non-Apollo/Blackstone Shareholders" means all of the Shareholders ---------------------------------- other than the Apollo/Blackstone Shareholders. "Registrable Securities" means the 11,776,765 shares of Common Stock ---------------------- acquired by certain of the Shareholders from TPG Partners, L.P. and TPG Parallel I, L.P. (the "TPG Block"), the 14,600,000 shares of Common Stock acquired by --------- certain of the Shareholders from Laidlaw, Inc. (the "Laidlaw Block" and, ------------- together with the TPG Block, the "Original Shares"), the 1,000,000 shares of --------------- Senior Preferred Stock, any shares of Junior Preferred Stock or Common Stock issued upon conversion of the Senior Preferred Stock (such shares, the "Additional Shares", together with the Original Shares and the Senior Preferred ----------------- Stock, the "Shares"), and any additional shares of Common Stock ------ -2- acquired by Shareholders in compliance with the Shareholders Agreement, and any additional shares of Common Stock, Senior Preferred Stock or Junior Preferred Stock issued in connection with any stock dividend on, or any stock split, reclassification or reorganization of any of the Shares or such additional shares; provided, however, that shares of Junior Preferred Stock shall not be -------- ------- Registrable Securities at any time on or prior to June 30, 2001. "SEC" means the United States Securities and Exchange Commission or --- any successor agency. "Securities Act" means the United States Securities Act of 1933, as -------------- amended, and the rules and regulations of the SEC promulgated under such Act. "Subject Securities" means shares of Senior Preferred Stock, Junior ------------------ Preferred Stock, Common Stock or other equity securities of the Company convertible into or exchangeable for shares of Common Stock. ARTICLE II REGISTRATION RIGHTS 2.1. Incidental Rights. If at any time or from time to time (but ----------------- subject to the limitations on sales of Registrable Securities in the Shareholders Agreement) the Company proposes to file with the SEC a registration statement (whether on Form S-1, S-2, or S-3, or any equivalent form then in effect) for the registration under the Securities Act of any shares of Subject Securities for sale, for cash consideration, to the public by Company or on behalf of one or more shareholders of Company (excluding any sale of securities upon conversion into or exchange or exercise for shares of Common Stock, and any shares of Common Stock issuable by Company upon the exercise of employee stock options, or to any employee stock ownership plan, or in connection with any acquisition made by Company, any securities exchange offer, dividend reinvestment plan, employee benefit plan, corporate reorganization, or in connection with any amalgamation, merger or consolidation of Company or any direct or indirect subsidiary of Company with one or more other corporations if Company is the surviving corporation), Company shall give Shareholders at least 20 days' prior written notice of the proposed filing (or if 20 days' notice is not practicable, a reasonable shorter period to be not less than 7 days), which notice shall outline the nature of the proposed distribution and the jurisdictions in the United States in which Company proposes to qualify and offer such securities (the "Elected Jurisdictions"). On the written request of --------------------- Shareholders received by Company within 15 days after the date of Company's delivery to Shareholders of the notice of intended registration (which request shall specify the Registrable Securities sought to be disposed of by Shareholders and the intended method or methods by which dispositions are intended to be made), Company shall, under the terms and subject to the conditions of this Article II, at its own expense as provided in Section 4.1, ---------- ----------- include in the coverage of -3- such registration statement (or in a separate registration statement concurrently filed) and qualify for sale under the blue sky or securities laws of the various states in the Elected Jurisdictions the number of Registrable Securities of the kind being registered (the "Specified Securities") held by -------------------- Shareholders or into which the Registrable Securities are convertible, as the case may be, and which Shareholders have so requested to be registered or qualified for distribution, to the extent required to permit the distribution (in accordance with the intended method or methods thereof as aforesaid) in the Elected Jurisdictions requested by Shareholders of such Registrable Securities. Notwithstanding anything else contained in this Section 2.1, if the ----------- registration statement to be filed by the Company is a registration filed in response to any of the first three demands made by the Apollo/Blackstone Shareholders pursuant to Section 2.2 (the "First Three Demands"), then the Non- ----------- ------------------- Apollo/Blackstone Shareholders shall not be entitled to have their Registrable Securities included in the coverage of such a registration statement, provided, -------- however, that if the First Three Demands include Additional Shares (or shares - ------- into which Additional Shares have been converted), then the Non- Apollo/Blackstone Shareholders shall be entitled to have their Registrable Securities included in the coverage of such registration statement, on the terms and conditions set forth in this Section 2.1. ----------- If the distribution proposed to be effected by Company involves an underwritten offering of the securities being so distributed by or through one or more underwriters, and if the managing underwriter of such underwritten offering indicates in writing its reasonable belief that including all or part of the Specified Securities in the coverage of such registration statement or in the distribution to be effected by such prospectus will materially and adversely affect the sale of securities proposed to be sold (which statement of the managing underwriter shall also state the maximum number of shares, if any, which can be sold by Shareholders requesting registration under this Section 2.1 ----------- without materially adversely affecting the sale of the shares proposed to be sold), then the number of Specified Securities which Shareholders shall have the right to include in such registration statement shall be reduced to the maximum number of shares specified by the managing underwriter. In the case of a registration statement filed in response to any of the First Three Demands covering both Original Shares and Additional Shares (or shares into which Additional Shares have been converted), first priority shall be afforded to the Original Shares, with all other securities to be completely eliminated before the number of such Original Shares is reduced and second priority shall be given to the other Registrable Securities of both the Apollo/Blackstone Shareholders and the Non-Apollo/Blackstone Shareholders, with all other securities to be completely eliminated before the number of such Registrable Securities is reduced; provided; however, that if the number of Registrable Securities is to -------- ------- be reduced, then reductions will respect to the Registrable Securities shall be made among the Shareholders on a pro-rata basis in accordance with the relationship which the number of the Registrable Securities held by each Shareholder bears to the number of Registrable -4- Securities held by all Shareholders (the "Additional Shares Pro-Rata -------------------------- Reduction"). - --------- In all other cases, first priority shall be afforded to securities covered by a registration statement filed in response to the exercise of a demand registration right by another holder of Common Stock, Senior Preferred Stock or Junior Preferred Stock, including the Apollo/Blackstone Shareholders, and no securities proposed to be sold by such holders shall be so reduced until all securities proposed to be sold by all other parties have been entirely eliminated and second priority shall be afforded to the Original Shares; provided, however, that in the case of a registration statement filed in - -------- response to a demand from the Apollo/Blackstone Shareholders (other than any of the First Three Demands) (the "Other Demands"), first priority shall be afforded ------------- to the Original Shares, with all other securities to be completely eliminated before the number of such Original Shares is reduced and second priority shall be given to the other Registrable Securities of both the Apollo/Blackstone Shareholders and the Non-Apollo/Blackstone Shareholders, with all other securities to be completely eliminated before the number of such Registrable Securities is reduced. As to any reductions to be made to the Registrable Securities (other than the Original Shares) proposed to be sold by the Shareholders pursuant to a registration statement filed in response to the Other Demands, such reductions to be made among the Shareholders shall be made on a pro-rata basis in accordance with the relationship which the number of Registrable Securities (other than the Original Shares) held by each Shareholder bears to the number of Registrable Securities (other than the Original Shares) held by all Shareholders (the "Pro-Rata Reduction"). As to all other proposed ------------------ selling shareholders of Securities, including Shareholders, any such reduction in the number of Securities proposed to be sold by the selling shareholders shall be effected on a pro rata basis in accordance with the relationship which the number of such Securities of the class proposed to be sold by each selling shareholder bears to the number of such Securities of that class proposed to be sold by all selling shareholders. For purposes of calculating the Additional Shares Pro-Rata Reduction and the Pro-Rata Reduction, each share of Preferred Stock shall be counted as the number of shares of Common Stock into which such Preferred Share would be convertible as of the date of determination, assuming Stockholder Approval (as defined in the Purchase Agreement) , and each share of Junior Preferred Stock shall be counted as the number of shares of Common Stock that would have been issued in lieu of such share of Junior Preferred Stock, as of the date of determination. Company shall have the sole right to select any underwriters, including the managing underwriter, of any public offering of securities made other than as a result of the rights granted in Section 2.2. Nothing in this ----------- Section 2.1 shall create any liability on the part of Company to Shareholders if - ----------- Company for any reason decides not to file or to -5- delay or withdraw a registration statement (which Company may do in its sole discretion). Shareholders may request to have Registrable Securities included in an unlimited number of registrations under this Section 2.1. ----------- 2.2. Demand Rights. Upon written request of the Apollo/Blackstone ------------- Shareholders made at any time (but subject to the limitations on sales of Registrable Securities in the Shareholders Agreement), the Company shall, under the terms and subject to the conditions set forth in this Section 2.2, and ----------- Sections 2.3 and 2.4, file (and use its reasonable efforts to cause to become - ------------ --- effective) a registration statement covering, and use its reasonable efforts to qualify for sale under the blue sky or securities laws of the various states of the United States as may be requested by the Apollo/Blackstone Shareholders (except any such state in which, in the opinion of the managing underwriter of the offering, the failure to so qualify would not materially and adversely affect the proposed offering), in accordance with the intended method or methods of disposition set forth in that notice, of such number of Registrable Securities, as may be designated by the Apollo/Blackstone Shareholders in their request, or that portion thereof designated in said request for registration in each of the Designated Jurisdictions (as defined below). A request for registration under this Section 2.2 shall specify the number of shares to be ----------- registered, the jurisdictions in the United States in which such registration is to be effected (the "Designated Jurisdictions") and the proposed manner of sale, ------------------------ including the name and address of any proposed underwriter; provided, that all -------- offerings contemplated by a request for registration under this Section 2.2 ----------- shall be underwritten offerings involving a distribution of Registrable Shares to the public in which reasonable efforts are made not to knowingly sell to any single buyer, acting individually or with others, who after such underwriting will own more than 9% of the Total Voting Power (as defined in the Shareholders Agreement) (any such buyer, "Significant Stockholder"), under circumstances in ----------------------- which it would reasonably be expected to not result in any person becoming a Significant Stockholder. The principal underwriter or underwriters for any such offering shall be selected by the Apollo/Blackstone Shareholders, subject to Company's approval, which may not be unreasonably withheld. Notwithstanding any other provision in this Section, the Apollo/Blackstone Shareholders shall not be permitted to make a demand for registration pursuant to this Section unless the number of Registrable Securities covered by such demand is at least 2,500,000 shares of Common Stock (or securities convertible into such number of shares of Common Stock) (as such number may be appropriately adjusted to reflect stock splits, reverse stock splits, dividends and any other recapitalization or reorganization of Company) or such lesser number of shares as would yield gross proceeds of not less than $50 million based on the average closing price of the Common Stock (and assuming that the market price of shares of Junior Preferred Stock was equal to the market price of the shares of Common Stock into which such shares would then be convertible) over the ten trading day period immediately preceding the date of the written request hereunder (with the gross proceeds -6- of Senior Preferred Stock deemed to be its liquidation preference on the date of such demand). No Shareholders other than the Apollo/Blackstone Shareholders and their Related Transferees shall have demand registration rights. If the distribution proposed to be effected pursuant to this Section ------- 2.2 involves an underwritten offering of Registrable Securities and securities - --- of the Company other than Registrable Securities ("Other Securities"), and if ---------------- the managing underwriter of such underwritten offering indicates in writing its reasonable belief that including all or part of such securities in the coverage of such registration statement will materially and adversely affect the sale of the securities proposed to be sold, then the number of securities proposed to be sold shall be reduced to the maximum number of securities specified by the managing underwriter. In such a case, first priority shall be afforded to Registrable Securities in accordance with the third and fourth paragraph of Section 2.1, and such Other Securities, subject to the limitations set forth in - ----------- such third and fourth paragraphs. Company may delay the filing of any registration statement requested under this Section 2.2, or delay its effectiveness, for a reasonable period (but ----------- not longer than 90 days) if, in the sole judgment of Company's Board of Directors, (i) a delay is necessary in light of pending financing transactions, corporate reorganizations, or other major events involving Company, or (ii) filing at the time requested would materially and adversely affect the business or prospects of Company in view of disclosures that may be thereby required. Once the cause of the delay is eliminated, Company shall promptly notify the Apollo/Blackstone Shareholders and, promptly after Shareholders notify Company to proceed, Company shall file a registration statement and begin performance of its other obligations under this Section 2.2. ----------- The Apollo/Blackstone Shareholders shall be entitled to request not more than nine registrations under this Section 2.2 (provided that the filing of ----------- -------- a registration statement in more than one Designated Jurisdiction in connection with a concurrent or substantially concurrent distribution shall be deemed for the purposes of this Agreement to be a single registration). However, if the Apollo/Blackstone Shareholders request a registration under this Section 2.2, ----------- but no registration statement becomes effective with respect to the Registrable Securities covered by such request, then such request shall not count as a request for purposes of determining the number of requests for registration the Apollo/Blackstone Shareholders may make under this Section 2.2. ----------- If there is an effective registration statement requested by the Apollo/Blackstone Shareholders pursuant to this Section 2.2, the ----------- Apollo/Blackstone Shareholders may require the Company to delay the filing of any registration statement relating to shares of Common Stock or delay its effectiveness, for a reasonable period (but not longer than 90 days) if, in the sole judgment of the Apollo/Blackstone Shareholders, a delay is necessary in order to avoid materially and adversely affecting the -7- disposition of Registrable Securities pursuant to the offering by the Shareholders; provided that the foregoing shall not limit the Company's right to -------- file and have declared effective registration statements relating to shares of Common Stock issuable pursuant to employee benefit plans of the Company or any of its subsidiaries or issuable pursuant to a merger, acquisition or similar transaction involving the Company or any of its subsidiaries. 2.3. Registration Conditions. Notwithstanding any other ----------------------- provision of this Agreement, Company shall not be required to effect a registration of any securities under this Article II, or file any post-effective ---------- amendment to such a registration statement relating to such a qualification: (a) unless Shareholders agree to (x) sell and distribute a portion or all of their Registrable Securities in accordance with the plan or plans of distribution adopted by and through underwriters, if any, acting for Company or any such other sellers of Common Stock, Senior Preferred Stock or Junior Preferred Stock, and (y) bear a pro rata share of underwriter's discounts and commissions; (b) if a registration requested under Section 2.2, or any ----------- post-effective amendment to the registration statement filed in connection therewith, requires, under applicable statutes and rules, a special audit (other than a normal fiscal year-end audit) of any financial statements, unless Shareholders agree to pay their proportionate share (determined by the number of shares to be sold by Shareholders in the offering in proportion to the total number of shares to be sold by Company and all other participants in such offering) of the reasonable fees and expenses of accountants incurred in connection with the special audit and which would otherwise not be incurred; provided that Shareholders shall not be required -------- to pay any share of such fees and expenses if such audit would otherwise be required at substantially the same time to satisfy the Company's reporting requirements under the Exchange Act absent such registration; (c) if, in the case of a request for registration under Section 2.2, (x) any offering pursuant to a registration statement covering securities of the same kind otherwise sought to be registered regarding which Shareholders could have exercised registration rights under Section ------- 2.1 of this Agreement has been completed within the prior 90 days, (y) a --- registration statement requested by Shareholders pursuant to Section 2.2 ----------- has become effective under the Securities Act within the prior six months, or (z) Company has given notice under Section 2.1 of its intention to file ----------- a registration statement under the Securities Act and has not completed or abandoned the proposed offering (for so long as the Company continues in good faith to pursue the proposed offering); and -8- (d) unless Company has received from Shareholders all information Company has reasonably requested concerning Shareholders and their method of distribution of Registrable Securities, so as to enable Company to include in the registration statement all facts required to be disclosed in it. 2.4. Covenants and Procedures. If Company becomes obligated ------------------------ under this Article II to effect a registration of Registrable Securities on behalf of Shareholders, then (as applicable to the jurisdictions for which such registration is to be made): (a) Company, at its expense as provided in Section 4.2, shall prepare and file with the SEC a registration statement covering such securities and such other related documents as may be necessary or appropriate relating to the proposed distribution, and shall use reasonable efforts to cause the registration statement to become effective. Company will also, with respect to any registration statement, file such post- effective amendments to the registration statement (and use reasonable efforts to cause them to become effective) and such supplements as are necessary so that current prospectuses are at all times available for a period of at least 90 days after the effective date of the registration statement or for such longer period, not to exceed 180 days, as may be required under the plan or plans of distribution set forth in the registration statement. Shareholders shall promptly provide Company with such information with respect to Shareholders' Registrable Securities to be so registered and, if applicable, the proposed terms of their offering, as is required for the registration. If the Registrable Securities to be covered by the registration statement are not to be sold to or through underwriters acting for Company, Company shall: (i) deliver to Shareholders, as promptly as practicable, as many copies of preliminary prospectuses as Shareholders may reasonably request (in which case Shareholders shall keep a written record of the distribution of the preliminary prospectuses and shall refrain from delivery of the preliminary prospectuses in any manner or under any circumstances which would violate the Securities Act or the securities laws of any other jurisdiction, including the various states of the United States); (ii) deliver to Shareholders, as soon as practicable after the effective date of the registration statement, and from time to time thereafter during the applicable period described in Section 2.4, as many copies of the relevant prospectuses as Shareholders may reasonably request; and (iii) in case of the happening, after the effective date of the registration statement and during the applicable 90 or 180-day period described in the second sentence of Section ------- 2.4(a), of any event or occurrence as a result of which the ------ prospectus, as then in effect, would -9- include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make any statement therein not misleading in the light of the circumstances in which it was made, give Shareholders written notice of the event or occurrence and prepare and furnish to Shareholders, in such quantities as it may reasonably request, copies of an amendment of or a supplement to such prospectus as may be necessary so that the prospectus, as so amended or supplemented and thereafter delivered to purchasers of the securities, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which it was made, not misleading. (b) Company will notify Shareholders of any action by the SEC or any Commission to suspend the effectiveness of any registration statement filed pursuant hereto or the initiation or threatened initiation of any proceeding for such purpose or the receipt by Company of any notification with respect to the suspension of the qualification of the securities for sale in any jurisdiction. Immediately upon receipt of any such notice, Shareholders shall cease to offer or sell any Registrable Securities pursuant to the registration statement or prospectus in the jurisdiction to which such order or suspension relates. Company will also notify Shareholders promptly of the occurrence of any event or the existence of any state of facts that, in the judgment of Company, should be set forth in such registration statement or prospectus. Immediately upon receipt of such notice, Shareholders shall cease to offer or sell any Registrable Securities pursuant to such registration statement or prospectus, cease to deliver or use such registration statement or prospectus and, if so requested by Company, return to Company at Company's expense all copies of such registration statement or prospectus. Company will as promptly as practicable take such action as may be necessary to amend or supplement such registration statement or prospectus in order to set forth or reflect such event or state of facts and provide copies of such proposed amendment or supplement to Shareholders. (c) On or before the date on which the registration statement is declared effective, Company shall use its reasonable efforts to: (i) register or qualify (and cooperate with Shareholders, the underwriter or underwriters, if any, and their counsel, in connection with the registration or qualification of) the securities covered by the registration statement for offer and sale under the securities or blue sky laws of each state and other jurisdiction as Shareholders or any underwriter reasonably requests; -10- (ii) keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the period the registration statement or prospectus is required to be kept effective; and (iii) do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions of the Registrable Securities covered by the applicable registration statement, provided that Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified. (d) Company shall use its reasonable efforts to cause all Registrable Securities of Shareholders included in the registration statement to be listed, by the date of the first sale of such shares pursuant to such registration statement, on each securities exchange on which the securities are then listed or proposed to be listed, if any, as directed by the Apollo/Blackstone Shareholders (subject to the Company's consent, which consent shall not be unreasonably withheld). (e) Company shall make generally available to Shareholders and any underwriter participating in the offering conducted pursuant to the registration statement an earnings statement satisfying Section 11(a) of the Securities Act no later than 45 days after the end of the 12-month period beginning with the first day of Company's first fiscal quarter commencing after the effective date of the registration statement. The earnings statement shall cover such 12-month period. This requirement will be deemed to be satisfied if Company timely files complete and accurate information on Forms 10-Q, 10-K, and 8-K under the Exchange Act, and otherwise complies with Rule 158 under the Securities Act as soon as feasible. (f) Company shall cooperate with Shareholders and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be sold under the registration statement, and to enable such securities to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or Shareholders, may request, subject to the underwriters' obligation to return any certificates representing unsold securities. (g) Company shall use its reasonable efforts to cause Registrable Securities covered by the registration statement to be registered with or approved by such other governmental agencies or authorities in the United States (including the registration of Registrable Securities under the Exchange Act) as may be necessary to enable Shareholders or the underwriter or underwriters, if any, to consummate the disposition of such securities. -11- (h) Company shall, during normal business hours and upon reasonable notice, make available for inspection by Shareholders, any underwriter participating in any offering pursuant to the registration statement, and any attorney, accountant or other agent retained by Shareholders or any such underwriter (collectively, the "Inspectors"), all ---------- financial and other records, pertinent corporate documents, and properties of Company (including non-public information), as shall be reasonably necessary to enable the Inspectors to exercise their due diligence responsibilities; provided that any Inspector receiving non-public -------- information shall have previously entered into an appropriate confidentiality agreement in mutually satisfactory form and substance. Company shall also cause its officers, directors, and employees to supply all nonconfidential information reasonably requested by any Inspector in connection with the registration statement. (i) Company shall use its reasonable efforts to obtain a "cold comfort" letter and, as applicable, a "long-form comfort letter" from Company's independent public accountants, and an opinion of counsel for Company, each in customary form and covering such matters of the type customarily covered by cold comfort letters and long form comfort letters and legal opinions in connection with public offerings of securities, as Shareholders reasonably request. (j) Company shall enter into such customary agreements (including an underwriting agreement containing such representations and warranties by Company and such other terms and provisions, as are customarily contained in underwriting agreements for comparable offerings and are reasonably satisfactory to the Company) and take all such other actions as Shareholders or the underwriters participating in such offering and sale may reasonably request in order to expedite or facilitate such offering and sale (other than such actions which are disruptive to the Company or require significant management availability), including providing reasonable availability of appropriate members of senior management of the Company to provide customary due diligence assistance in connection with any offering and to participate in customary "road show" presentations in connection with any underwritten offerings in substantially the same manner as they would in an underwritten primary registered public offering by the Company of its Common Stock, after taking into account the reasonable business requirements of the Company in determining the scheduling and duration of any road show. -12- ARTICLE III INDEMNIFICATION 3.1. Indemnification by Company. In the event of any registration -------------------------- under the Securities Act by any registration statement pursuant to rights granted in this Agreement of Registrable Securities held by Shareholders, Company will hold harmless Shareholders and each underwriter of such securities and each other person, if any, who controls any Shareholder or such underwriter within the meaning of the Securities Act, against any losses, claims, damages, or liabilities (including legal fees and costs of court), joint or several, to which Shareholders or such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, or liabilities (or any actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (i) contained, on its effective date, in any registration statement under which such securities were registered under the Securities Act or any amendment or supplement to any of the foregoing, or which arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading or (ii) contained in any preliminary prospectus, if used prior to the effective date of such registration statement, or in the final prospectus (as amended or supplemented if Company shall have filed with the SEC any amendment or supplement to the final prospectus) if used within the period which Company is required to keep the registration to which such registration statement or prospectus relates current under Section 2.4, or which arise out of or are based ----------- upon the omission or alleged omission (if so used) to state a material fact required to be stated in such prospectus or necessary to make the statements in such prospectus not misleading; and will reimburse Shareholders and each such underwriter and each such controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, or liability; provided, however, that Company shall -------- ------- not be liable to any Shareholder or its underwriters or controlling persons in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or such amendment or supplement, in reliance upon and in conformity with information furnished to Company through a written instrument duly executed by Shareholders or such underwriter specifically for use in the preparation thereof. 3.2. Indemnification by Shareholders. It shall be a condition ------------------------------- precedent to the obligation of Company to include in any registration statement any Registrable Securities of Shareholders that Company shall have received from Shareholders an undertaking, reasonably satisfactory to Company and its counsel, to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 3.1) Company, each director of Company, each officer of Company ----------- who shall sign the -13- registration statement, and any person who controls Company within the meaning of the Securities Act, (i) with respect to any statement or omission from such registration statement, or any amendment or supplement to it, if such statement or omission was made in reliance upon and in conformity with information furnished to Company through a written instrument duly executed by Shareholders specifically for use in the preparation of such registration statement or amendment or supplement, and (ii) with respect to compliance by Shareholders with applicable laws in effecting the sale or other disposition of the securities covered by such registration statement. 3.3 Indemnification Procedures. Promptly after receipt by an -------------------------- indemnified party of notice of the commencement of any action involving a claim referred to in the preceding Sections of this Article III, the indemnified party ----------- will, if a resulting claim is to be made or may be made against and indemnifying party, give written notice to the indemnifying party of the commencement of the action. If any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense of the action with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume defense of the action, the indemnifying party will not be liable to such indemnified party for any legal or other expenses incurred by the latter in connection with the action's defense. An indemnified party shall have the right to employ separate counsel in any action or proceeding and participate in the defense thereof, but the fees and expenses of such counsel shall be at such indemnified party's expense unless (a) the employment of such counsel has been specifically authorized in writing by the indemnifying party, which authorization shall not be unreasonably withheld, (ii) the indemnifying party has not assumed the defense and employed counsel reasonably satisfactory to the indemnified party within 30 days after notice of any such action or proceeding, or (iii) the named parties to any such action or proceeding (including any impleaded parties) include the indemnified party and the indemnifying party and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to the indemnified party that are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action or proceeding on behalf of the indemnified party), it being understood, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to all local counsel which is necessary, in the good faith opinion of both counsel for the indemnifying party and counsel for the indemnified party in order to adequately represent the indemnified parties) for the indemnified party and that all such fees and expenses shall be reimbursed as they are incurred upon written request and presentation of invoices. Whether or not a defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent. No indemnifying party will -14- consent to entry of any judgment or enter into any settlement which does not include as an unconditional term the giving by the claimant or plaintiff, to the indemnified party, of a release from all liability in respect of such claim or litigation. 3.4. Contribution. If the indemnification required by this Article ------------ ------- III from the indemnifying party is unavailable to or insufficient to hold - --- harmless an indemnified party in respect of any indemnifiable losses, claims, damages, liabilities, or expenses, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities, or expenses in such proportion as is appropriate to reflect (i) the relative benefit of the indemnifying and indemnified parties and (ii) if the allocation in clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect the relative benefit referred to in clause (i) and also the relative fault of the indemnified and indemnifying parties, in connection with the actions which resulted in such losses, claims, damages, liabilities, or expenses, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact, has been made by, or relates to information supplied by, such indemnifying party or parties, and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damage, liabilities, and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. Company and Shareholders agree that it would not be just and equitable if contribution pursuant to this Section 3.4 were ----------- determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the prior provisions of this Section 3.4. ----------- Notwithstanding the provisions of this Section 3.4, no indemnifying ----------- party shall be required to contribute any amount in excess of the amount by which the total price at which the securities were offered to the public by the indemnifying party exceeds the amount of any damages which the indemnifying party has otherwise been required to pay by reason of an untrue statement or omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such a fraudulent misrepresentation. ARTICLE IV OTHER AGREEMENTS 4.1. Other Registration Rights. Company agrees that it will not ------------------------- grant to any party registration rights which would allow such party to limit Shareholders' priority -15- for the sale or distribution of Registrable Securities upon the exercise of a demand registration right pursuant to Section 2.2. ----------- 4.2. Expenses. All expenses incurred by Company in connection with -------- any registration statement covering Registrable Securities offered by Shareholders, including, without limitation, all registration and filing fees (including all expenses incident to filing with the National Association of Securities Dealers, Inc.), printing expenses, fees and disbursements of counsel (except for the fees and disbursements of counsel for Shareholders) and of the independent certified public accountants (except, in the case of any special audits, if required in connection with any such registration, Shareholders' proportionate share of their expense as provided in Section 2.4), and the ----------- expense of qualifying such shares under state blue sky laws, shall be borne by Company, including such expenses of any registration delayed by the Company under the fourth paragraph of Section 2.2; provided, however, that Company shall ----------- -------- ------- not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.2 if the registration request is subsequently withdrawn at ----------- the request of the Apollo/Blackstone Shareholders (in which case the Apollo/Blackstone Shareholders shall bear such expenses, each such Shareholder to bear its pro rata share of the expense based on the number of Registrable Securities such Apollo/Blackstone Shareholder intended to include in such registration compared to the total number of Registrable Securities all of such Apollo/Blackstone Shareholders intended to include in such registration), unless the Apollo/Blackstone Shareholders agree to forfeit their right to one demand registration under Section 2.2; provided further, however, that if at the time ----------- -------- ------- of such withdrawal, the Apollo/Blackstone Shareholders have learned of a material adverse change in the condition, business, or prospects of the Company from that known at the time of its request, then the Apollo/Blackstone Shareholders shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 2.2. Company's obligations under this Section ----------- ------- 4.2 shall apply to each registration under the Securities Act or state blue sky - --- legislation pursuant to Section 2.2. However, all underwriting expenses ----------- incurred by Shareholders, including underwriter's discounts and commissions and legal, accounting and similar expenses, shall be borne by Shareholders. 4.3. Dispositions During Registration. Each Shareholder agrees that, -------------------------------- without the consent of the managing underwriter(s) in an underwritten offering in respect of Common Stock or other Subject Securities, it will not effect any sale or distribution of Common Stock or other Subject Securities (other than Registrable Securities included in such offering), during the ten (10) day period prior to, and during the ninety (90) day period beginning on, the effective date of the registration statement filed by the Company in respect of such underwritten offering, or any shorter period as may apply to the Company and its affiliates. 4.4. Transfer of Rights. All rights of Shareholders under this ------------------ Agreement shall be transferable by Shareholders to a Related Transferee (as defined in the -16- Shareholders Agreement) who acquires Registrable Securities in compliance with Section 4.1(f) of the Shareholders Agreement and who executes an instrument in form and substance satisfactory to the Company in which it agrees to be bound by the terms of this Agreement as if an original signatory hereto, in which case such Related Transferee shall thereafter be a "Shareholder" for all purposes of this Agreement. The incidental registration rights or benefits of this Agreement and the demand registration rights, including indemnification by Company, shall be transferable by Shareholders only in a transaction permitted under Section 4.1(c) or 4.1(d) of the Shareholders Agreement to a transferee that is not an Affiliate of the Company who receives at least an aggregate of 1,000,000 shares of Common Stock, in the case of incidental registration rights, or 2,500,000 shares of Common Stock (or securities convertible into such number of shares of Common Stock) or such lesser number of shares as would yield gross proceeds of not less than $50 million (as calculated in accordance with the first paragraph of Section 2.2) for each right to demand registration, in the case of demand registration rights. In the case of any assignment, the party or parties who have the rights and benefits of Shareholders under this Agreement shall become parties to and be subject to this Agreement, and shall not, as a group, have the right to request any greater number of registrations than Shareholders would have had if no assignment had occurred. Upon any transfer of the registration rights or benefits of this Agreement, Shareholders shall give Company written notice prior to or promptly following such transfer stating the name and address of the transferee and identifying the securities with respect to which such rights are being assigned. Such notice shall include or be accompanied by a written undertaking by the transferee to comply with the obligations imposed hereunder. In the event any registration rights are transferred in accordance with the terms of this Agreement, any actions required to be taken by Shareholders will be taken with the approval of the holders of such registration rights who hold a majority of the Registrable Securities, whose actions shall bind all such holders of such registration rights provided that, any actions -------- required to be taken by the Apollo/Blackstone Shareholders will be taken with the approval of the holders of such registration rights who hold a majority of the Registrable Securities originally held by the Apollo/Blackstone Shareholders or in such other manner as the Apollo/Blackstone Shareholders shall agree, whose actions shall bind all holders (including all non-Apollo/Blackstone Shareholders) of such registration rights.. 4.5. Best Registration Rights. If the Company grants to any Person ------------------------ with respect to any security issued by the Company or any of its Affiliates registration rights that provide for terms that are in any manner more favorable to the holder of such registration rights than the terms granted to the Shareholders other than the number of demand registrations or the minimum amount of shares required to exercise demand registration rights (or if the Company amends or waives any provision of any agreement providing registration rights of others or takes any other action whatsoever to provide for terms that are more favorable to other holders than the terms provided to the Shareholders other than the number of demand registrations or the minimum amount of shares required to exercise demand registration rights), then this Agreement shall immediately be deemed -17- amended to provide the Shareholders with any (or all) of such more favorable terms as Shareholders shall elect to include herein. The Company shall promptly give notice to the Shareholders of the granting of any such registration rights to another Person. ARTICLE V MISCELLANEOUS 5.1. Notices. All notices, requests, demands and other ------- communications required or permitted hereunder shall be made in writing by hand- delivery, registered first-class mail, telex, fax or air courier guaranteeing delivery: (a) If to the Company, to: Allied Waste Industries, Inc. 15880 North Greenway-Hayden Loop, Suite 100 Scottsdale, Arizona 85260 Attn: Steven Helm, Esq. Fax: (602) 627-2703 with copies to: Fennemore Craig 3003 North Central Avenue Phoenix, AZ 85012-2913 Attn: Karen C. McConnell, Esq. Fax: (602) 916-5999 and to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attn: Peter Golden Fax: (212) 859-4000 or to such other person or address as the Company shall furnish to Shareholders in writing; -18- (b) If to Shareholders, to: Apollo Management, L.P. 1999 Avenue of the Stars, Suite 1900 Los Angeles, CA 90067 Attn: David Kaplan Fax: (310) 201-4198 with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, CA 90017-3144 Attn: Michael Woronoff Fax: (213) 687-5600 and: The Blackstone Group 345 Park Avenue New York, NY 10154 Attn: Howard A. Lipson Fax: (212) 754-8716 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Attn: Wilson S. Neely Fax: (212) 455-2502 -19- and: Greenwich Street Investments II, L.L.C. 388 Greenwich Street, 36th Floor New York, New York 10013 Attn: Matthew Kaufman Fax: (212) 816-0166 with a copy to: Weil Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Michael Nissan Fax: (212) 310-8007 and: DLJ Merchant Banking II, Inc. 277 Park Avenue New York, New York 10172 Attn: Ari Benacerraf Fax: (212) 892-7272 and Attn: Ivy Dodes Fax: (212) 892-2689 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn: Stephen M. Besen Fax: (212) 310-8007 or to such other person or address as Shareholders shall furnish to the Company in writing. All such notices, requests, demands and other communications shall be deemed to have been duly given: at the time of delivery by hand, if personally delivered; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed -20- domestically in the United States (and seven (7) Business Days if mailed internationally); when answered back, if telexed; when receipt acknowledged, if telecopied; and on the Business Day for which delivery is guaranteed, if timely delivered to an air courier guaranteeing such delivery. 5.2. Section Headings. The article and section headings in this ---------------- Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. References in this Agreement to a designated "Article" or "Section" refer to an Article or Section of this Agreement unless otherwise specifically indicated. 5.3. Governing Law. This Agreement shall be construed and enforced ------------- in accordance with and governed by the law of Delaware, without regard to its conflicts of laws principles. 5.4. Consent to Jurisdiction and Service of Process. Any legal ---------------------------------------------- action or proceeding with respect to this Agreement or any matters arising out of or in connection with this Agreement (other than the Shareholders Agreement, which shall be governed solely by the analogous provisions thereof), and any action for enforcement of any judgment in respect thereof shall be brought exclusively in the state of federal courts located in the State of Delaware, and, by execution and delivery of this Agreement, the Company and Shareholders each irrevocably consent to service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company or Shareholders at their respective addresses referred to in this Agreement. The Company and the Shareholders each hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement (other than the Shareholders Agreement, which shall be governed solely by the analogous provisions thereof) brought in the courts referred to above and hereby further irrevocably waives and agrees, to the extent permitted by applicable law, not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing in this Agreement shall affect the right of any party hereto to serve process in any other manner permitted by law. 5.5. Amendments. This Agreement may be amended only by an instrument ---------- in writing executed by all of its parties. 5.6. Entire Agreement. This Agreement and the Shareholders Agreement ---------------- constitute the entire agreement and understanding of the parties with respect to the transactions contemplated hereby and thereby. The registration rights granted under this Agreement supersede any registration, qualification or similar rights with respect to any of the Shares granted under any other agreement, and any of such preexisting registration -21- rights are hereby terminated. This Agreement may be amended only by a written instrument duly executed by the parties or their respective successors or assigns; provided, however, that any amendment or waiver by the Company shall be -------- ------- made only with the prior approval of a majority of the entire Board of Directors of the Company other than Shareholder Designees (as defined in the Shareholders Agreement). 5.7. Severability. The invalidity or unenforceability of any ------------ specific provision of this Agreement shall not invalidate or render unenforceable any of its other provisions. Any provision of this Agreement held invalid or unenforceable shall be deemed reformed, if practicable, to the extent necessary to render it valid and enforceable and to the extent permitted by law and consistent with the intent of the parties to this Agreement. 5.8. Counterparts. This Agreement may be executed in multiple ------------ counterparts, each of which shall be deemed an original, but all of which together shall constitute the same instrument. 5.9. Shareholder Action. The Company shall be entitled to rely upon ------------------ any written notice, designation, or instruction signed by Apollo Capital Management IV, L.P. or Apollo Capital Management II, Inc, as the case may be, and BCP (the "Representatives") as a notice, designation or instruction of all --------------- Shareholders and the Company shall not be liable to any Shareholder if the Company acts in accordance with and relies upon such writing; provided, however, -------- that any such notice, designation or instruction shall not (in the sole good faith determination of the Company) have a disproportionate effect upon any of the Shareholders. Notwithstanding the foregoing, however, the Company shall not be entitled to rely upon any notice, designation or instruction signed by the Representatives as a notice, designation or instruction of the DLJ Shareholder, the Greenwich Street Stockholder if such notice, designation or instruction relates to Section 2.1, 4.4 or 5.5 of this Agreement (the "Specific Rights"). --------------- In that regard, each of the Shareholders acknowledges that the Representatives have full power and authority to act on their behalf provided, however, that -------- none of the DLJ Shareholders and the Greenwich Street Stockholders acknowledge the power or authority of the Representatives to act on their behalf with respect to the Specific Rights. -22- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. ALLIED WASTE INDUSTRIES, INC. By: /s/ Steven M. Helm --------------------------- Name: Steven M. Helm Title: Vice President APOLLO INVESTMENT FUND IV, L.P. APOLLO OVERSEAS PARTNERS IV, L.P. By: Apollo Advisors IV, L.P. its General Partner By: Apollo Capital Management IV, Inc. its General Partner By: /s/ David B. Kaplan --------------------------- Name: David B. Kaplan Title: Vice President APOLLO/AW LLC By: Apollo Management IV, L.P. its Manager By: AIF IV Management, Inc. its General Partner By: /s/ David B. Kaplan --------------------------- Name: David B. Kaplan Title: Vice President -23- APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (UK) PARTNERS III, L.P. By: Apollo Advisors II, L.P. its General Partner By: Apollo Capital Management II, Inc. its General Partner By: /s/ David B. Kaplan --------------------------------- Name: David B. Kaplan Title: Vice President BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS III L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P. By: Blackstone Management Associates III L.L.C. its General Partner By: /s/ Howard A. Lipson --------------------------------- Name: Howard A. Lipson Title: Senior Managing Director -24- BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND, L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II, L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II, L.P. By: Blackstone Management Associates II L.L.C. its General Partner By: /s/ Howard A. Lipson ------------------------------- Name: Howard A. Lipson Title: Senior Managing Director GREENWICH STREET CAPITAL PARTNERS II, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------------------- Name: Sanjay H. Patel Title: Managing Member GSCP OFFSHORE FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ------------------------------- Name: Sanjay H. Patel Title: Managing Member -25- GREENWICH FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ----------------------------------- Name: Sanjay H. Patel Title: Managing Member GREENWICH STREET EMPLOYEES FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ----------------------------------- Name: Sanjay H. Patel Title: Managing Member TRV EXECUTIVE FUND, L.P. By: GREENWICH STREET INVESTMENTS II, L.L.C., its General Partner By: /s/ Sanjay H. Patel ---------------------------------- Name: Sanjay H. Patel Title: Managing Member -26- DLJMB FUNDING II, INC. By: /s/ Ari Benacerraf ----------------------------------- Name: Ari Benacerraf Title: Principal DLJ MERCHANT BANKING PARTNERS II, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf ----------------------------------- Name: Ari Benacerraf Title: Principal DLJ MERCHANT BANKING PARTNERS II-A, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf ----------------------------------- Name: Ari Benacerraf Title: Principal -27- DLJ DIVERSIFIED PARTNERS, L.P. By: DLJ Diversified Partners, Inc. Managing General Partner By: /s/ Ari Benacerraf -------------------------------------- Name: Ari Benacerraf Title: Principal DLJ DIVERSIFIED PARTNERS-A, L.P. By: DLJ Diversified Partners, Inc. Managing General Partner By: /s/ Ari Benacerraf -------------------------------------- Name: Ari Benacerraf Title: Principal DLJ MILLENNIUM PARTNERS, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf -------------------------------------- Name: Ari Benacerraf Title: Principal -28- DLJ MILLENNIUM PARTNERS-A, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf ------------------------------------- Name: Ari Benacerraf Title: Principal DLJ FIRST ESC L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ivy Dodes ------------------------------------- Name: Ivy Dodes Title: Vice Precident DLJ OFFSHORE PARTNERS II, C.V. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf ------------------------------------- Name: Ari Benacerraf Title: Principal -29- DLJ EAB PARTNERS, L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ari Benacerraf --------------------------------------- Name: Ari Benacerraf Title: Principal DLJ ESC II L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ivy Dodes --------------------------------------- Name: Ivy Dodes Title: Vice Precident -30- EX-13 5 AMENDED & RESTATED INVESTMENT AGREEMENT EXHIBIT 13 AMENDED AND RESTATED INVESTMENT AGREEMENT ----------------------------------------- This Amended and Restated Investment Agreement (the "Agreement"), dated as of July 30, 1999, is made and entered into by and among: (i) Apollo Investment Fund III, L.P., a Delaware limited partnership ("AIF III"), Apollo Overseas Partners III, L.P., a Delaware limited partnership, and Apollo (UK) Partners III, L..P., an English limited partnership (collectively, the "Original Apollo Stockholders"), (ii) Apollo Investment Fund IV, L.P., a Delaware limited partnership ("AIF IV"), Apollo Overseas Partners IV, L.P., a Delaware limited partnership, and Apollo/AW LLC, a Delaware limited liability company (collectively, and together with the Original Apollo Stockholders and their respective Affiliate Transferees (as defined herein), the "Apollo Stockholders"), (iii) Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership, and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership (collectively, the "Original Blackstone Stockholders"), (iv) Blackstone Capital Partners III Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners III L.P., a Cayman Islands limited partnership, and Blackstone Family Investment Partnership III L.P., a Delaware limited partnership (together with the Original Blackstone Stockholders and their respective Affiliate Transferees, the "Blackstone Stockholders"), (v) Greenwich Street Capital Partners II, L.P., a Delaware limited partnership, GSCP Offshore Fund, L.P., a Cayman Islands exempted limited partnership, Greenwich Fund, L.P., a Delaware limited partnership, Greenwich Street Employees Fund, L.P., a Delaware limited partnership, TRV Executive Fund, L.P., a Delaware limited partnership (collectively, and together with their respective Affiliate Transferees, the "Greenwich Stockholders"), and (vi) DLJMB Funding II, Inc., a Delaware corporation, DLJ Merchant Banking Partners II, L.P., a Delaware limited partnership, DLJ Merchant Banking Partners II-A, L.P., a Delaware limited partnership, DLJ Diversified Partners, L.P., a Delaware limited partnership, DLJ Diversified Partners-A.L.P., a Delaware limited partnership, DLJ Millennium Partners, L.P., a Delaware limited partnership, DLJ Millennium Partners-A.L.P., a Delaware limited partnership, DLJ First ESC L.P., a Delaware limited partnership, DLJ Offshore Partners II, C.V., a Netherlands Antilles limited partnership, DLJ EAB Partnership, L.P., a Delaware limited partnership and DLJ ESC II L.P., a Delaware limited partnership (collectively, and together with their respective Affiliate Transferees, the "DLJ Stockholders"). The Apollo Stockholders, the Blackstone Stockholders, the Greenwich Stockholders and the DLJ Stockholders are collectively referred to herein as the "Stockholders;" WHEREAS, the Original Apollo Stockholders and the Original Blackstone Stockholders (together, the "Original Stockholders") entered into an Investment Agreement, dated as of April 14, 1997 (the "Original Agreement"), for the purpose of allocating and administering among themselves certain rights and obligations with respect to their ownership of the common stock, par value $.01 per share (the "Common Stock"), of Allied Waste Industries, Inc., a Delaware corporation (the "Company"), and certain other matters as set forth therein; and WHEREAS, the Company, AWIN I Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of the Company ("Merger Subsidiary"), and Browning-Ferris Industries, Inc., a Delaware corporation ("BFI"), have entered into an Agreement and Plan of Merger, dated as of March 7, 1999, as amended and restated as of May 21, 1999 (the "Merger Agreement"), pursuant to which Merger Subsidiary will be merged with and into BFI (the "Merger"); and WHEREAS, simultaneously with the execution of the Merger Agreement, certain of the Stockholders or their affiliates and the Company executed an Equity Commitment Letter, dated March 7, 1999 (such letter, including the exhibits attached thereto, the "Equity Commitment Letter"), pursuant to which the Company agreed to sell and certain of the Stockholders or their affiliates committed, severally and not jointly, to purchase on the terms and subject to the conditions set forth in the Equity Commitment Letter, shares of a newly created Series A Senior Convertible Preferred Stock par value $.10 per share, of the Company (the "Preferred Stock"); and WHEREAS, the Company and certain of the Stockholders have entered into a Purchase Agreement, dated as of July 30, 1999 (the "Purchase Agreement"), for the purchase and sale of shares of the Preferred Stock (the "Additional Shares"), and the execution and delivery of this Agreement is a condition to the closing of the transactions contemplated by the Purchase Agreement; and WHEREAS, concurrently with the execution and delivery of this Agreement, the Company and the Shareholders are entering into a Second Amended and Restated Shareholders Agreement (as such agreement may be amended, modified, supplemented, or replaced, the "Shareholders Agreement") and an Amended and Restated Registration Rights Agreement (the "Registration Rights Agreement"). NOW, THEREFORE, in consideration of the premises and the mutual agreements, covenants and provisions contained herein, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 CERTAIN DEFINITIONS The following terms shall have the definitions set forth below: 2 "Affiliate" has the meaning given such term in Rule 12b-2 under the Exchange Act. "Affiliate Transferee" means any Affiliate of, or investment fund sponsored by, a Stockholder or an Affiliate of a Stockholder. "Business Day" means any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York. "Closing Dates" means collectively, the closing date of the purchase of the Additional Shares pursuant to the Purchase Agreement. "DLJ Parent Entities" means and includes Donaldson, Lufkin & Jenrette Securities Corporation, Donaldson, Lufkin & Jenrette Inc., DLJdirect Inc., Pershing Trading, L.P., Autranet Inc. and any Person that, directly or indirectly, controls Donaldson, Lufkin & Jenrette Inc. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Greenwich Parent Entities" means and includes CitiGroup and Salomon Smith Barney and any Person or group that, directly or indirectly, controls CitiGroup. "Group" means a "group" as such term is used in Section 13(d)(3) of the Exchange Act as in effect on the date of this Agreement. "Junior Preferred Stock" means the Series B Junior Convertible Preferred Stock, par value $.10 per share, of the Company. "Losses" means any and all damages, fines, fees, penalties, deficiencies, losses and expenses (including without limitation interest, court costs, fees of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment) "Majority Decision" means approval by Stockholders holding a majority of the Shares then held by all Stockholders (assuming the exercise of all convertible and exchangeable securities); provided, that if a dissenting Stockholder reasonably determines that the decision will materially adversely affect its ownership of the Shares or rights or obligations under this Agreement, then the decision must also be approved by such Stockholder. "Original Shares" means the shares of Common Stock acquired by the Original Apollo Stockholders and the Original Blackstone Stockholders prior to the purchase of the Additional Shares. "Permitted Transferees" means, with respect to any Stockholder, 3 (a) any Affiliate Transferee of such Stockholder; (b) if such Stockholder is a limited partnership, any partners (or a liquidating trust for the benefit of the partners) of such limited partnership in accordance with the provisions of the limited partnership agreement of such Stockholder as then in effect; (c) solely with respect to bona fide pledges by such Stockholder of Shares to a financial institution to secure indebtedness for borrowed money to finance the purchase of shares of Preferred Stock, Junior Preferred Stock or Common Stock, respectively, such financial institution; or (d) Permitted Transferees of such Stockholder's Permitted Transferees. provided, that (i) with respect to clause (a), the Affiliate Transferee agrees in a writing provided to each of the other Stockholders to be bound by the terms of this Agreement; and (ii) with respect to clause (c), the pledge agreement gives the other Stockholders the right to purchase the pledged shares from the financial institution on substantially the same terms as those provided in Section 4.2 in connection with any foreclosure on such pledged shares. "Person" means any natural person, corporation, general partnership, limited partnership, proprietorship, other business organization, trust, union or association or governmental or regulatory authority. "Registration Percentage" means the quotient of (a) the total number of shares of the series or class proposed to be offered owned directly by a Stockholder immediately prior to an offering divided by (b) the total number of shares of the series or class proposed to be offered beneficially owned by the Stockholders participating in such offering, as a group, immediately prior to such offering. "Rule 144" means Rule 144 promulgated under the Securities Act, and any successor provision thereto. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Shares" means all shares of capital stock of the Company now owned or hereafter acquired by any Stockholder. "Transfer" shall mean with respect to any security, any sale, assignment, donation, pledge, hypothecation, grant or other transfer of, or the grant of any option with respect to, such security (or the entering into of any agreement or understanding with respect to the foregoing). 4 ARTICLE 2 REPRESENTATIONS AND WARRANTIES A. Each Apollo Stockholder hereby severally (and not jointly) represents and warrants to the Blackstone Stockholders, the Greenwich Stockholders and the DLJ Stockholders with respect to itself and the Shares to be acquired by such Apollo Stockholder pursuant to the Purchase Agreement, and not with respect to any other Apollo Stockholder or any other shares of capital stock of the Company as follows: Section 2.A.l. Organization; Authorization. Such Apollo Stockholder --------------------------- is a limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Such Apollo Stockholder is duly authorized to execute and deliver, to perform its obligations under and to consummate the transactions contemplated by this Agreement, the Purchase Agreement, the Shareholders Agreement and the Registration Rights Agreement. This Agreement, the Purchase Agreement and the Shareholders Agreement are valid and legally binding agreements of such Apollo Stockholder, enforceable against such Apollo Stockholder in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally and, as to enforceability, general equitable principles. Section 2.A.2. Acquisition for Investment. Such Apollo Stockholder is -------------------------- acquiring the shares of Preferred Stock for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and such Apollo Stockholder has no present intention or plan to effect any distribution of the shares of Preferred Stock. B. Each Blackstone Stockholder hereby severally (and not jointly) represents and warrants to the Apollo Stockholders, the Greenwich Stockholders and the DLJ Stockholders with respect to itself and the shares of Preferred Stock to be acquired by such Blackstone Stockholder pursuant to the Purchase Agreement, and not with respect to any other Blackstone Stockholder or any other shares of capital stock of the Company as follows: Section 2.B.1. Organization; Authorization. Such Blackstone --------------------------- Stockholder is a limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Such Blackstone Stockholder is duly authorized to execute and deliver, to perform its obligations under and to consummate the transactions contemplated by this Agreement, the Purchase Agreement, the Shareholders Agreement and the Registration Rights Agreement. This Agreement, the Purchase Agreement and the Shareholders Agreement are valid and legally binding agreements of such Blackstone Stockholder, enforceable against such Blackstone Stockholder in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally and, as to enforceability, general equitable principles. 5 Section 2.B.2. Acquisition for Investment. Such Blackstone -------------------------- Stockholder is acquiring the shares of Preferred Stock for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and such Blackstone Stockholder has no present intention or plan to effect any distribution of the shares of Preferred Stock. C. Each Greenwich Stockholder hereby severally (and not jointly) represent and warrants to the Apollo Stockholders, the Blackstone Stockholders and the DLJ Stockholders with respect to itself and the shares of Preferred Stock to be acquired by such Greenwich Stockholder pursuant to the Purchase Agreement, and not with respect to any other Greenwich Stockholder or any other shares of capital stock of capital stock of the Company follows: Section 2.C.1. Organization; Authorization. Such Greenwich --------------------------- Stockholder is a limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Such Greenwich Stockholder is duly authorized to execute and deliver, to perform its obligations under and to consummate the transactions contemplated by this Agreement, the Purchase Agreement, the Shareholders Agreement and the Registration Rights Agreement. This Agreement, the Purchase Agreement and the Shareholders Agreement are valid and legally binding agreements of such Greenwich Stockholder, enforceable against such Greenwich Stockholder in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally and, as to enforceability, general equitable principles. Section 2.C.2. Acquisition for Investment. Such Greenwich Stockholder -------------------------- is acquiring the shares of Preferred Stock for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and such Greenwich Stockholder has no present intention or plan to effect any distribution of the shares of Preferred Stock. D. Each DLJ Stockholder hereby severally (and not jointly) represents and warrants to the Apollo Stockholders, the Blackstone Stockholders and the Greenwich Stockholders with respect to itself and the shares of Preferred Stock to be acquired by such DLJ Stockholder pursuant to the Purchase Agreement, and not with respect to any other DLJ Stockholder or any other shares of capital stock of the Company as follows: Section 2.D.1. Organization; Authorization. Such DLJ Stockholder is a --------------------------- corporation or limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Such DLJ Stockholder is duly authorized to execute and deliver, to perform its obligations under and to consummate the transactions contemplated by this Agreement, the Purchase Agreement, the Shareholders Agreement and the Registration Rights Agreement. This Agreement, the Purchase Agreement and the Shareholders Agreement are valid and legally binding agreements of such DLJ Stockholder, enforceable against such DLJ Stockholder in accordance with 6 their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally and, as to enforceability, general equitable principles. Section 2.D.2. Acquisition for Investment. Such DLJ Stockholder is -------------------------- acquiring the shares of Preferred Stock for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and such DLJ Stockholder has no present intention or plan to effect any distribution of the shares of Preferred Stock. E. Reliance on Representations and Warranties in Purchase Agreements. ----------------------------------------------------------------- In addition to the foregoing representations and warranties, each of the Stockholders shall be entitled to rely upon the representations and warranties of each other Stockholder contained in the Purchase Agreement. ARTICLE 3 BOARD OF DIRECTORS The Stockholders agree among themselves as follows: Section 3.1 Allocation of Affiliate Director Designees. If the ------------------------------------------ number of persons the Stockholders are entitled to designate to serve on the Board of Directors of the Company (the "Board") pursuant to the Shareholders Agreement, without restriction as to the affiliation of such person ("Affiliate Designees"), is: (a) five (5), AIF III shall be entitled to designate one (1) Affiliate Designee, AIF IV shall be entitled to designate two (2) Affiliate Designees, Blackstone Capital Partners II Merchant Banking Fund L.P. ("BCP II") shall be entitled to designate one (1) Affiliate Designee and Blackstone Capital Partners III Merchant Banking Fund L.P. ("BCP III") shall be entitled to designate one (1) Affiliate Designee; (b) four (4), then AIF III shall be entitled to designate one (1) Affiliate Designee, AIF IV shall be entitled to designate one (1) Affiliate Designee, BCP II shall be entitled to designate one (1) Affiliate Designee and BCP III shall be entitled to designate one (1) affiliate Designee; (c) three (3), then AIF III shall be entitled to designate one (1) Affiliate Designee, AIF IV shall be entitled to designate one (1) Affiliate Designee and BCP III shall be entitled to designate one (1) Affiliate Designee; (d) two (2), then AIF III shall be entitled to designate one (1) Affiliate Designee and BCP III shall be entitled to designate one (1) Affiliate Designee; and 7 (e) one (l), then AIF III shall be entitled to designate that Affiliate Designee; provided, however, that if the Blackstone Stockholders own more shares of Common Stock (on an as if converted basis) than the Apollo Stockholders at the time of such designation, then BCP III shall be entitled to designate that Affiliate Designee. Section 3.2 Allocation of Non-Affiliate Designees. If the ------------------------------------- Stockholders are entitled pursuant to the Shareholders Agreement to designate persons to serve on the Board in addition to the Affiliate Designees, such designations shall be allocated between the Apollo Stockholders and Blackstone Stockholders in the same proportions as the allocation of Affiliate Designees; provided, however, that any designation must be reasonably acceptable to the non-designating Apollo Stockholders or Blackstone Stockholders, as the case may be. Section 3.3 Exercise of Veto Rights for Third Party Designees. If ------------------------------------------------- the Stockholders are entitled pursuant to the Shareholders Agreement to approve or reject a person designated by a third party to serve on the Board or any committee thereof, such rejection may be exercised by either the Blackstone Stockholders or the Apollo Stockholders. Section 3.4 Agreement to Vote. The Stockholders agree to vote all ----------------- Shares held by them in favor of the persons designated pursuant to Sections 3.1 and 3.2 hereof. The failure of any Stockholder entitled to designate nominees pursuant to Sections 3.1 or 3.2 hereof to fully exercise its respective designation rights shall not constitute a waiver or diminution of such rights, nor shall it prevent such Stockholder from fully exercising such rights prospectively. Should a person designated pursuant to Section 3.1 or 3.2 hereof be unwilling or unable to serve, or otherwise cease to serve (including by means of removal in accordance with the following sentence), the Stockholders who originally nominated such director pursuant to Sections 3.1 or 3.2 shall be entitled to designate any replacement director. If the Apollo Stockholders propose to remove any director designated by them, or if the Blackstone Stockholders propose to remove any director designated by them, the Stockholders agree to cooperate in, and vote all Shares held by them in support of, such removal and any resulting vacancy shall be filled in accordance with the preceding sentence. The Stockholders agree not to take any action to remove, with or without cause, any director other than in accordance with the foregoing. Section 3.5 Committees of the Board of Directors. If the ------------------------------------ Stockholders are entitled pursuant to the Shareholders Agreement to designate directors to serve on the executive committee or any other committee established by the Board, such designation shall be allocated among the Apollo Stockholders and the Blackstone Stockholders based on the same proportions as the allocation provisions set forth in this Article III for designating persons to serve as a director on the Board. Section 3.6 Further Assurances. Each Stockholder shall vote, in ------------------ person or by proxy, all of the Shares owned by such Stockholder, at any annual or special meeting of stockholders of the Company called for the purpose of voting on the election of directors or by consensual action of stockholders without a meeting with respect to the election of directors, in favor of the election 8 of the directors designated in accordance with this Article III. Each Stockholder shall vote the Shares owned by such Stockholder and shall take all other actions necessary to ensure that the certificate of incorporation and by- laws of the Company do not at any time conflict with the provisions of this Agreement. ARTICLE 4 TRANSFERS OF COMMON STOCK Section 4.1 Restrictions on Transfers; Permitted Transferees. (a) ------------------------------------------------ Except as otherwise provided in Sections 4.1(b) of this Agreement, each Stockholder agrees and acknowledges that such Stockholder will not: (i) directly or indirectly, Transfer or offer to Transfer any Shares or solicit any offers to purchase or otherwise acquire or make a pledge of any Shares; (ii) grant any proxy or enter into or agree to be bound by any voting trust with respect to any Shares (other than a revocable proxy granted in response to a proxy solicitation by the Company, which proxy is to be voted in accordance with this Agreement and the Shareholders Agreement); (iii) enter into any stockholder agreements or arrangements of any kind (other than agreements entered into by all of the Stockholders) with any Person with respect to any Shares (whether or not such agreements and arrangements are with other Stockholders hereto or holders of Shares who are not parties to this Agreement), including but not limited to, agreements or arrangements with respect to the acquisition, disposition or voting of Shares; or (iv) act, for any reason, as a member of a group or in concert with any other Persons (other than Permitted Transferees) in connection with the Transfer or voting of Shares. (b) Except as provided in Section 4.1(c), none of the restrictions contained in Section 4.1(a) shall apply to: (i) Transfers to a Permitted Transferee of the transferor (whereupon the transferor hereby agrees to provide written notice thereof, together with such transferee's written undertaking to assume the transferor's obligations hereunder) to the other Stockholders within 30 days after such Transfer); (ii) transactions and arrangements contemplated by Section 4.1(a) (ii) and (iii), above, solely among a Stockholder and its Affiliate Transferees; or 9 (iii) Transfers to any Person; provided, that the transferor has first complied with the provisions of Sections 4.2. (c) Notwithstanding anything in this Agreement to the contrary, (i) no Transfer of Shares may be made by a Stockholder if such Transfer would violate any of the provisions of the Shareholders Agreement (unless such provision is waived by the Company); and (ii) until such time as any Apollo Stockholder Transfers any of its Shares to a Person who is not a Permitted Transferee, no Transfer of Shares may be made by any of the Blackstone Stockholders, the Greenwich Stockholders or the DLJ Stockholders that would result in the Stockholders losing any rights to designate persons to serve on the Board or any committee thereof; provided, that the provisions of this clause (ii) shall not apply to a sale by the Greenwich Stockholders or the DLJ Stockholders if the Apollo/Blackstone Stockholders do not provide the notice contemplated by Section 4.2(c)(ii)(B) in connection with such sale. Section 4.2 Right of First Negotiation with Respect to Certain -------------------------------------------------- Share Transfers. (a) Except for Transfers permitted pursuant to Sections - --------------- 4.1(b)(i), if any Stockholder desires to Transfer any Shares (a "Selling Stockholder"), such Selling Stockholder shall first give written notice (the "Sellers Notice") to the Apollo Stockholders (unless the Selling Stockholder is an Apollo Stockholder) and to the Blackstone Stockholders (unless the Selling Stockholder is a Blackstone Stockholder) (the "Offeree Stockholders") stating the Selling Stockholder's desire to make such Transfer and the number of shares of Common Stock, Preferred Stock or Junior Preferred Stock proposed to be transferred (the "Offered Shares"). (b) Upon receipt of the Sellers Notice, each of the Offeree Stockholders shall (in proportion to their respective ownership, on an as if converted basis, of the shares of Common Stock owned by all Offeree Stockholders or as they may otherwise agree) have a 15-day exclusive right to negotiate to purchase the Offered Shares. The Selling Stockholders and the Offeree Stockholders agree to negotiate in good faith. (c) If the Sellers Notice shall be duly given, and if the Offeree Stockholders shall not purchase the Offered Shares within such 15-day period or shall have otherwise declined to purchase the Offered Shares, then the Selling Stockholders shall be free to sell the Offered Shares to any third party transferee; provided, that (i) such sale complies with the provisions of Section 4.1(c) of this Agreement and (ii) if the Selling Stockholder is a Greenwich Stockholder or a DLJ Stockholder, (A) such sale complies with the provisions of Rule 144 promulgated under the Securities Act of 1933, as amended (or any successor rule), applicable to an affiliate of the Company (other than the requirement to make a filing with the Securities and Exchange Commission) and (B) the Apollo/Blackstone Stockholders do not provide, within such 15 day period, a notice stating that 10 such sale would result in the loss of the right to elect one or more directors to the Company's board of directors. Section 4.3 Pro Rata Right to Participate in Certain Share ---------------------------------------------- Purchases. (a) If any Apollo Stockholder or any of its Affiliates (an "Apollo - --------- Purchaser), pursuant to a single transaction or series of related transactions, proposes to purchase shares of capital stock of the Company from a Person other than a Stockholder or an Affiliate Transferee of a Stockholder, the Blackstone Stockholders shall have the exclusive option to purchase up to 50% of the total number of shares proposed to be purchased by the Apollo Purchaser, upon the same terms and conditions applicable to such Apollo Purchaser. (b) If any Blackstone Stockholder or any of its Affiliates (a "Blackstone Purchaser"), pursuant to a single transaction or series of related transactions, proposes to purchase shares of capital stock of the Company from a Person other than a Stockholder or an Affiliate Transferee of a Stockholder, the Apollo Stockholders shall have the exclusive option to purchase up to 50% of the total number of shares proposed to be purchased by the Blackstone Purchaser, upon the same terms and conditions applicable to such Blackstone Purchaser. (c) Any Apollo Purchaser or Blackstone Purchaser proposing to purchase any shares of capital stock of the Company subject to this Section 4.3 shall use its best efforts to keep the other Apollo Stockholders and Blackstone Stockholders informed and shall cooperate with such other Stockholders with respect to such proposed purchase so as to allow such other Stockholders a reasonable opportunity to exercise their purchase option hereunder. Without limiting the foregoing, the Apollo Purchaser or Blackstone Purchaser shall provide a written notice (an "Option Notice") to such other Stockholders describing the proposed purchase, including the price and the proposed closing date, promptly after the proposed purchase price has been determined; provided that the Apollo Purchaser or Blackstone Purchaser shall endeavor to provide such notice sufficiently in advance of the proposed closing date so as to allow such other Stockholders a reasonable opportunity to make a "capital call" or otherwise arrange funding for their purchase option. Any such Stockholder may exercise its purchase option by giving written notice (an "Exercise Notice") to the Apollo Purchaser or Blackstone Purchaser, as the case may be, specifying the number of shares such Stockholder desires to purchase, within one (1) Business Day after receiving the Option Notice. If such Option Notice shall be duly given by an Apollo Purchaser or Blackstone Purchaser, and if the Exercise Notice shall not have been received by such Apollo Purchaser or Blackstone Purchaser within one (1) Business Day thereafter or such other Stockholders shall have otherwise declined to exercise such option, then such Apollo Purchaser or Blackstone Purchaser shall be free to purchase and own all of the subject shares. (d) Each of the Greenwich Stockholders and the DLJ Stockholders shall not, and shall cause their respective Affiliates (other than the DLJ Parent Entities and the Greenwich Parent Entities) not to, purchase any shares of capital stock other than from a Stockholder or an Affiliate Transferee of a Stockholder. 11 Section 4.4 Notice of Certain Sales. The Apollo Stockholders or ----------------------- the Blackstone Stockholders, as applicable, shall promptly provide notice to the Greenwich Stockholders and the DLJ Stockholders following the sale of Additional Shares by such Apollo Stockholders or Blackstone Stockholders, as applicable, the net proceeds of which exceed $20 million in a calendar quarter (when taken together will all prior sales in such calendar quarter by the Apollo Stockholders or the Blackstone Stockholders, as applicable). ARTICLE 5 ALLOCATION OF REGISTRATION RIGHTS Section 5.1 Registration Rights. If any of the Stockholders are ------------------- entitled pursuant to any registration rights agreement with the Company, including, but not limited to the Amended Registration Rights Agreement (a "Registration Rights Agreement"), to require that the Company cause to be filed a registration statement with respect to resales of Shares beneficially owned by any of the Stockholders, the number of demands to require the filing of a shelf registration statement shall be divided 5/9 for the Apollo Stockholders and 4/9 for the Blackstone Stockholders; provided, that the Blackstone Stockholders may not exercise more than one (1) of the First Three Demands (as defined in Section 5.2(b)). Section 5.2 Shares Included. --------------- (a) Subject to Section 5.3(b) hereof, in connection with any offering made pursuant to a registration statement in which the Stockholders are entitled to include Shares beneficially owned by them, whether pursuant to shelf, demand or "piggyback" registration rights, each Stockholder shall have the right to include a number of shares owned by it in the offering in an amount up to the product of (A) the aggregate number of shares the Stockholders as a group are entitled to include in such offering multiplied by (B) such Stockholder's Registration Percentage; provided, that the Stockholders shall be entitled to increase on a pro rata basis the number of shares they can include in such offer to the extent any Stockholder includes less than the full number of shares it has a right to include in such offering. For the purposes of this clause, the Stockholders may allocate their rights to include shares in an offering among their respective Affiliates in their sole discretion. The Stockholders shall give each other reasonable notice in advance of the exercise of any shelf, demand or piggy-back rights pursuant to any Registration Rights Agreement. (b) Notwithstanding anything else contained herein, if a registration statement is filed in response to the first three demands made by the Apollo/Blackstone Shareholders (the "First Three Demands") pursuant to Section 2.2 of the Restated Registration Rights Agreement, dated the date hereof, among the Company and the Stockholders (the "Registration Rights Agreement"), then the Non-Apollo/Blackstone Shareholders shall not be entitled to have their Registerable Securities included in the coverage of such a registration statement, provided, that if the First Three Demands include Additional Shares (or shares into which Additional Shares have been or are to be converted), 12 then the Non-Apollo/Blackstone Shareholders shall be entitled to have their Securities included in the coverage of such registration statement, on the terms and conditions set forth in Section 2.1 of the Amended Registration Rights Agreement. Capitalized terms used in this clause (b) shall have the meanings given thereto in the Registration Rights Agreement. Section 5.3 Cutbacks. (a) If in connection with any underwritten -------- offering the total number of shares that the Stockholders seek to have included in such offering is limited by the underwriters (a "Cutback"), and following such Cutback, the Apollo Stockholders include more shares in such registration statement filed upon the demand of the Blackstone Stockholders, or the Blackstone Stockholders include more shares in such registration statement filed upon the demand of the Apollo Stockholders, such demand shall be deemed exercised by the Stockholder that included more shares in such registration statement (regardless of which Stockholder initially exercised such demand right). (b) If a Cutback occurs in any offering relating to both Original Shares and Additional Shares the Cutback shall reduce the Additional Shares of all of the Stockholders on a pro-rata basis first and after all Additional Shares are eliminated shall reduce the Original Shares. Section 5.4 Underwriters. If the Stockholders have the right to ------------ designate a managing underwriter in connection with any firm commitment underwriting, whichever of the Apollo Stockholders or the Blackstone Stockholders made the demand for such registration shall be entitled to choose such managing underwriter, otherwise the decision shall be made by Majority Decision. ARTICLE 6 OTHER AGREEMENTS Section 6.1 Dispute Resolution. Any allocation of rights or ------------------ obligations not specifically provided for herein shall be allocated first by Majority Decision. The parties hereby waive any rights to a jury trial in connection with any disputes to be decided pursuant to the provisions of this Section. Section 6.2 Expenses. Unless specifically provided for otherwise -------- herein, each party shall bear its own expenses in connection with the matters covered by this Agreement, except that in connection with any registered offering of Shares, any counsel and fees and offering expenses (other than underwriting discounts) charged to the Stockholders shall be allocated based on each Stockholder's proportionate number of shares included in such offering. Section 6.3 Required Filings; Publicity. (a) Each of the --------------------------- Stockholders shall (and shall cause each of its Affiliates to) (i) take all actions necessary to comply promptly with all legal requirements which may be imposed on such Stockholder (or its Affiliates) as a result of this 13 Agreement or any of the transactions contemplated hereby and (ii) without limiting the foregoing, make all required filings pursuant to the Securities Act and the Exchange Act. (b) To the extent reasonably practicable, the Stockholders shall consult with each other prior to all public statement or filings to be issued or made by any of them or their Affiliates with respect to this Agreement and the transactions contemplated hereby. ARTICLE 7 MISCELLANEOUS Section 7.1 Termination. Article III of this Agreement shall ----------- terminate on the earlier of (a) the termination of the Shareholders Agreement and (b) the termination of all Registration Rights Agreements. All of the provisions of this Agreement shall terminate with respect to any Stockholder, on the date when such Stockholder ceases to own any Shares. Section 7.2 Notices. All notices to be given by any Stockholder ------- hereunder shall be in writing and shall be deemed have been duly given if mailed, by first class or registered mail, three (3) Business Days after deposit in the United States Mail, or if telexed or telecopied or delivered by hand or reputable overnight courier, when confirmation is received, at the addresses set forth below, or in the case of any transferee of a Stockholder, at the address set forth in the stock ledger of the Company: in the case of the Apollo Stockholders (or any of them), to: c/o Apollo Management, L.P. 1999 Avenue of the Stars, Suite 1900 Los Angeles, California 90067 Attention: David B. Kaplan Telecopy: (310) 201-4198 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400, Suite 3400 Los Angeles, CA 90071 Attention: Michael A. Woronoff Telecopy: (213) 687-5600 14 In the case of the Blackstone Stockholders (or any of them), to: c/o The Blackstone Group 345 Park Avenue New York, New York 10154 Attention: Howard A. Lipson Telecopy: (212) 754-8703 with a copy (which shall not constitute notice) to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, New York 10017-3954 Attention: Wilson S. Neely Telecopy: (212) 455-2502 In the case of the Greenwich Stockholders (or any of them), to: c/o Greenwich Street Investment II, L.L.C. 388 Greenwich Street, 36/th/ Floor New York, New York 10013 Attention: Matthew Kaufman Telecopy: (212) 816-0166 with a copy (which shall not constitute notice) to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Michael Nissan Telecopy: (212) 310-8007 In the case of the DLJ Stockholders (or any of them), to: c/o DLJ Merchant Banking II, Inc. 277 Park Avenue New York, New York 10172 Attention: Ari Benacerraf Telecopy: (212) 892-7272 and Attention: Ivy Dodes Telecopy: (212)892-2689 15 with a copy (which shall not constitute notice) to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Stephen M. Besen Telecopy: (212) 310-8007 The parties may change their respective addresses for purposes of notice hereunder by giving notice of such change to all other parties in the manner provided in this Section 7.2. Section 7.3 Binding Effect. This Agreement supersedes all prior -------------- negotiations, statements and agreements of the parties hereto with respect to the subject matter of this Agreement, and shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. If any transferee of any Stockholder shall acquire any Shares in any manner, whether by operation of law or otherwise, such Shares shall be held subject to all of the terms of this Agreement, and by taking and holding such Shares such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, provided, that Shares which have been transferred in accordance with this Agreement to any person other than a Stockholder or an Affiliate Transferee shall no longer be subject to this Agreement. Section 7.4 Complete Agreement. This Agreement represents the ------------------ entire agreement among the Stockholders with respect to the matters set forth herein, and the parties hereto acknowledge that there have been no representations, warranties, covenants or agreements made by any party hereto other than those contained in this Agreement. Section 7.5 Counterparts. This Agreement may be executed in ------------ counterparts and all of which are deemed to be one and the same agreement binding upon each of the Stockholders. Section 7.6 Headings. The headings of the various sections of this -------- Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement. Section 7.7 Governing Law. This Agreement shall be governed by and ------------- construed in accordance with the laws of the State of New York, except for matters of corporate law, which shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware. By execution and delivery of this Agreement, each of the Stockholders accepts, generally and unconditionally, the nonexclusive jurisdiction of the state or federal courts in New York. Section 7.8 Injunctive Relief. It is hereby agreed and ----------------- acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties to this Agreement fail to comply with any of the obligations imposed on them by this Agreement and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have 16 an adequate remedy at law. Any such person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. Section 7.9 Severability. The invalidity or unenforceability of ------------ any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. Section 7.1 Recapitalization, etc. In the event that any capital ---------------------- stock or other securities are issued in respect of, in exchange for, or in substitution of, any Shares by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to stockholders or combination of the Shares or any other change in the Company's capital structure, appropriate adjustments shall be made to the provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the parties hereto under this Agreement. 17 IN WITNESS WHEREOF, the undersigned, hereunto duly authorized, have hereunto set their respective hands as or the day and year first above written. APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (UK) PARTNERS III, L.P. By: Apollo Advisors II, L.P. By: Apollo Capital Management II, Inc. By: /s/ David B. Kaplan ------------------------------- David B. Kaplan Vice President APOLLO INVESTMENT FUND IV, L.P. APOLLO OVERSEAS PARTNERS IV, L.P. By: Apollo Advisors IV, L.P. By: Apollo Capital Management IV, Inc. By: /s/ David B. Kaplan ------------------------------- David B. Kaplan Vice President APOLLO/AW, LLC By: Apollo Management IV, L.P. By: AIF IV Management, Inc. By: /s/ David B. Kaplan ------------------------------- David B. Kaplan Vice President BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P. By: Blackstone Management Associates II L.L.C. By: /s/ Howard A. Lipson ----------------------------------- Name: Howard A. Lipson Title: Senior Managing Director BLACKSTONE CAPITAL PARTNERS III MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS III L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP III L.P. By: Blackstone Management Associates III L.L.C. By: /s/ Howard A. Lipson ------------------------------------ Name: Howard A. Lipson Title: Senior Managing Director GREENWICH STREET CAPITAL PARTNERS II, L.P. GSCP OFFSHORE FUND, L.P. GREENWICH FUND, L.P. GREENWICH STREET EMPLOYEES FUND, L.P. TRV EXECUTIVE FUND, L.P. By: Greenwich Street Investments II, L.L.C. By: /s/ Sanjay H. Patel ------------------------------------ Name: Sanjay H. Patel Title: Managing Member DLJ MERCHANT BANKING PARTNERS II-A, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Prinicipal DLJ DIVERSIFIED PARTNERS, L.P. By: DLJ Diversified Partners, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Principal DLJ DIVERSIFIED PARTNERS-A, L.P. By: DLJ Diversified Partners, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Prinicipal DLJ MILLENNIUM PARTNERS, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf --------------------------------- Name: Ari Benacerraf Title: Prinicipal DLJ MILLENNIUM PARTNERS-A, L.P. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerrat ----------------------------- Name: Ari Benacerrat Title: Principal DLJ FIRST ESC L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ivy Dodes ------------------------------------ Name: Ivey Dodes Title: Vice President DLJ OFFSHORE PARTNERS II, C.V. By: DLJ Merchant Banking II, Inc. Managing General Partner By: /s/ Ari Benacerraf ------------------------------------ Name: Ari Benacerraf Title: Principal DLJ EAB PARTNERS, L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ari Benacerraf ------------------------------------ Name: Ari Benacerraf Title: Principal DLJ ESC II L.P. By: DLJ LBO Plans Management Corporation General Partner By: /s/ Ivy Dodes --------------------------- Name: Ivy Dodes Title: Vice President EX-14 6 CERT. OF DESIGNATION - PREFERED STOCK Exhibit 14 ---------- CERTIFICATE OF DESIGNATION OF SERIES A SENIOR CONVERTIBLE PREFERRED STOCK OF ALLIED WASTE INDUSTRIES, INC. Pursuant to Section 151 of the General Corporation Law of the State of Delaware We, Thomas H. Van Weelden and Steven M. Helm, Chairman of the Board of Directors, President and Chief Executive Officer, and Vice President-Legal and Secretary, respectively, of Allied Waste Industries, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Corporation, as amended, the Board of Directors on July 27, 1999 adopted the following resolution creating a series of 1,000,000 shares of Preferred Stock, par value $.10 per share, designated as Series A Senior Convertible Preferred Stock: NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Certificate of Incorporation, as amended, a series of Preferred Stock, par value $.10 per share, of the Corporation be and it hereby is created, and that the designation and amount and relative rights, limitations and preferences thereof are as follows: 1. Certain Definitions. Unless the context otherwise requires, the terms defined in this paragraph 1 shall have, for all purposes of this resolution, the meanings herein specified. "Accrual Rate" means, with respect to any Dividend Period, (a) with respect to dividends accruing prior to the earlier of the date the Stockholder Approval is obtained and the tenth anniversary of the Issue Date, (i) 6.5% of the Liquidation Preference per annum during the first six months following the Issue Date and (ii) thereafter, 6.5% of the Liquidation Preference as of the first day of such Dividend Period per annum plus an additional 1% of the Liquidation Preference as of the first day of such Dividend Period per annum for each consecutive, non-overlapping complete six calendar month period after the Issue Date until the Stockholder Approval is obtained; (b) with respect to dividends accruing on or after the date the Stockholder Approval has been obtained and on or before the tenth anniversary of the Issue Date, 6.5% of the Liquidation Preference as of the first day of such Dividend Period per annum; or (c) with respect to dividends accruing after the tenth anniversary of the Issue Date, 12% of the Liquidation Preference as of the first day of such Dividend Period per annum; provided, however, that the Accrual Rate for any Divided Period shall not exceed 12% of the Liquidation Preference as of the first day of such Dividend Period per annum. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Allied Waste N.A." means Allied Waste North America, Inc., a Delaware corporation and wholly owned Subsidiary of the Corporation. "Apollo" means Apollo Management IV, L.P. and its Related Persons. "Blackstone" means Blackstone Capital Partners III Merchant Banking Fund, L.P. and its Related Persons. "Business Day" means any day other than a Saturday, a Sunday or a day when commercial banks in The City of New York are authorized by law, rule or regulation to be closed. "Board of Directors" means the Board of Directors of the Corporation. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of corporate stock or other equity participations, including partnership interests, whether general or limited, of such Person. "Change of Control" shall be deemed to have occurred in the event that, after the date hereof, -2- (a) any Person or any Persons (other than Apollo, Blackstone or their respective Affiliates and Related Persons) acting together that would constitute a "group" (a "Group," which term also includes each member thereof) for purposes of Section 13(d) under the Exchange Act or any successor provision, together with any Affiliates thereof (other than any employee stock option plan), shall beneficially own (within the meaning of Rule 13d-3 of the Exchange Act or any successor provision) 50% or more of the total voting power of all classes of Voting Stock of the Corporation; (b) a majority of the seats (other than vacant seats) on the Board of Directors shall at any time be occupied by Persons (other than nominees of Blackstone or Apollo or their respective Affiliates) who were neither nominated by the Board of Directors nor appointed by directors so nominated; (c) Allied Waste N.A. (or its successor) ceases to be a Subsidiary of the Corporation unless substantially all of the assets previously owned by Allied Waste N.A. are otherwise owned directly or indirectly by the Corporation; or (d) the sale, transfer or lease by the Corporation (on a consolidated basis) or Allied Waste N.A. and its Subsidiaries (on a consolidated basis) of all or substantially all of its assets unless after such sale, transfer or lease substantially all of the assets owned prior to such sale, transfer or lease continue to be owned directly or indirectly by the Corporation. "Change of Control Offer" means an offer to purchase all of the shares of Preferred Stock outstanding pursuant to paragraph 8 below at a per share purchase price equal to the Change of Control Price. "Change of Control Payment Date" means a business day, as specified in a notice given pursuant to paragraph 8, no earlier than 30 days nor later than 45 days from the date the Change of Control Offer is commenced. "Change of Control Price" means 101% of the sum of (a) the Liquidation Preference plus (b) dividends accrued on a share of Preferred Stock for the period from the most recent Dividend Payment Date through but excluding the Change of Control Payment Date. "Common Equivalent Rate" means, with respect to any Dividend Period, (i) the product of (a) four, and (b) the amount of dividends that the holder of one share of Preferred Stock would have been entitled to receive if such holder had converted (assuming the Stockholder Approval had been obtained) such share into shares of Common Stock on the first day of such Dividend Period, divided -3- by (ii) the Liquidation Preference of a share of Preferred Stock on the first day of such Dividend Period. "Common Stock " means, with respect to any Person, Capital Stock of such Person that does not rank prior, as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of such Person, to any other shares of Capital Stock of such Person. Except as otherwise expressly provided or unless the context otherwise requires, references to "Common Stock" shall mean the Common Stock of the Corporation. "Conversion Date" shall have the meaning set forth in subparagraph 5(c) below. "Conversion Price" means the price per share of Common Stock or Unit used to determine the number of shares of Common Stock or Units deliverable upon conversion of a share of the Preferred Stock, which price shall initially be $18.00 per share, subject to adjustment in accordance with the provisions of paragraph 5 below. "Current Market Price" at any date, means (in each case as adjusted for any stock dividend, split, combination or reclassification that took effect during the Measurement Period); (a) if the Common Stock is publicly traded on any national securities exchange, the average of the daily closing prices per share of Common Stock during the Measurement Period (as reported (absent manifest error) in The Wall Street Journal); (b) if the Common Stock is not publicly traded on any national securities exchange, but traded over-the-counter, the average of the daily closing reported bid and asked prices of the Common Stock during the Measurement Period, as reported by Nasdaq or any comparable system (or if not so reported by Nasdaq or any comparable system, as furnished by two members of the National Association of Securities Dealers, Inc. selected from time to time by the Corporation for that purpose); or (c) if the Common Stock is not traded in such manner that the quotations referred to above are available for the Measurement Period, Current Market Price shall be deemed to be the fair market value as determined in good faith by the Board of Directors. "Dividend Payment Date" means March 31, June 30, September 30 and December 31 of each year. "Dividend Period" means (a) with respect to the first dividend period, the period beginning on and including the Issue Date and ending on and excluding the first Dividend Payment Date and -4- (b) thereafter, each quarterly period beginning on and excluding a Dividend Payment Date and ending on and including the next succeeding Dividend Payment Date. "Exchange Act" means the Securities Exchange Act of 1934 (or any successor statute), as it may be amended from time to time. "Excluded Stock" means shares of Common Stock issued or reserved for issuance by the Corporation (a) as a stock dividend payable in shares of Common Stock, (b) upon any subdivision or split-up of the outstanding shares of Common Stock, (c) upon conversion of shares of Preferred Stock or Junior Preferred Stock, (d) pursuant to bona fide employee benefit plans or (e) in a transaction that is addressed in subparagraph 5(e) (other than clause (i) of subparagraph 5(e)). "Issue Date" means the date that shares of Preferred Stock are first issued by the Corporation. "Junior Preferred Stock" means the Series B Junior Preferred Stock, par value $.10 per share, of the Corporation. "Junior Stock" means any class or series of stock of the Corporation not entitled to receive any dividends and/or any assets upon the liquidation, dissolution or winding up of the affairs of the Corporation until the Preferred Stock shall have received the entire amount to which such stock is entitled (including, without limitation, the Junior Preferred Stock). "Liquidation Preference" means, on any date, the sum of (a) $1,000 per share of Preferred Stock, plus (b) accrued and unpaid dividends that were added to the Liquidation Preference prior to such date in accordance with subparagraph 2(c) below. "Measurement Period" means, as of any date, the thirty consecutive trading days ending fifteen trading days before such date. "Normal Cash Dividend" means a cash dividend on the Common Stock; provided that the per share amount of such dividend, together with the aggregate per share amount of all cash dividends and distributions on the Common Stock paid or declared in the 365 day period ending on the date such dividend is declared does not exceed 5% of the Current Market Price of the Common Stock on the date such dividend is declared. "Parity Stock" means any other class or series of stock of the Corporation entitled to receive payment of dividends and/or assets upon the liquidation, dissolution or winding up of the affairs of the Corporation, in either case on a parity with the Preferred Stock. -5- "Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof. "Record Date" means, with respect to the dividend payable on March 31, June 30, September 30 and December 31, respectively, of each year, the preceding March 15, June 15, September 15 and December 15. "Redemption Agent" means a bank or trust company in good standing, organized under the laws of the United States of America or any jurisdiction thereof, having capital, surplus and undivided profits aggregating at least One Hundred Million Dollars, appointed by the Corporation to act as agent to redeem the Preferred Stock. "Redemption Date" means the date fixed for redemption of the Preferred Stock pursuant to subparagraph 4(b) below or, if the Corporation shall default in the payment of the Redemption Price on such date, the date the Corporation actually makes such payment "Redemption Price" means the sum of (a) the Liquidation Preference on the Redemption Date plus (b) dividends accrued and unpaid on a share of Preferred Stock for the period from the most recent Dividend Payment Date through the Redemption Date. "Related Person" has the meaning ascribed to such term in the Shareholders Agreement. "Senior Stock" means any class or series of stock of the Corporation ranking senior to the Preferred Stock in respect of the right to receive dividends and/or assets upon the liquidation, dissolution or winding up of the affairs of the Corporation. "Shareholders Agreement" means the Second Amended and Restated Shareholders Agreement, dated as of the Issue Date, by and among the Corporation and the stockholders of the Corporation named therein, as it may be amended from time to time in accordance with the provisions thereof. "Stockholder Approval" means approval of the conversion of the Preferred Stock into shares of Common Stock by holders of a majority of the shares of the capital stock of the Corporation voting thereon (at a meeting at which a quorum is present). "Subsidiary" means (a) a corporation more than 50% of the combined voting power of the outstanding Voting Stock of which is owned, directly or indirectly, by the Corporation, or by one or more Subsidiaries, or by the Corporation and one or more Subsidiaries, (b) a partnership of which the Corporation, or one or more other Subsidiaries, or the Corporation and one or more Subsidiaries, -6- directly or indirectly, is the general partner and has the power to direct the policies, management and affairs or (c) any other Person (other than a corporation) in which the Corporation, or one or more Subsidiaries, or the Corporation and one or more Subsidiaries, directly or indirectly, has at least a majority ownership interest and power to direct to policies, management and affairs thereof. "Trigger Date" means the fifth anniversary of the Issue Date. "Units" means one or more units of 1/10,000 of a share of Junior Preferred Stock. "Voting Stock" means, with respect to any Person, Capital Stock of such Person that ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. 2. Dividends. (a) The holders of Preferred Stock shall be entitled to receive cash dividends, out of funds legally available for that purpose, in the amounts set forth below. Such dividends shall be cumulative from the Issue Date and shall be payable in arrears, when, as and if declared by the Board of Directors, on each Dividend Payment Date, commencing on the first Dividend Payment Date following the Issue Date; provided, that if any such payment date is not a Business Day then such dividend shall be payable on the next Business Day. (b) Dividends shall accrue on the Liquidation Preference on a daily basis and be payable in respect of each Dividend Period, at an annual rate (with compounding quarterly as of each Dividend Payment Date) equal to the greater of (i) the Common Equivalent Rate and (ii) the Accrual Rate; provided, that dividends accruing on or after the Trigger Date that are not paid in cash on the applicable Dividend Payment Date shall accrue with respect to the Dividend Period ending on such Dividend Payment Date at an annual rate equal to the greater of (i) the Common Equivalent Rate and (ii) 12% of the Liquidation Preference as of the first day of such Dividend Period. (c) Dividends shall be paid to the holders of record of the Preferred Stock as their names appear on the share register of the Corporation on the corresponding Record Date. Dividends on account of arrears for any particular Dividend Period in which dividends were not paid in cash on the Dividend Payment Date applicable to such Dividend Period shall be added to the Liquidation Preference on the relevant Dividend Payment Date and may no longer be declared or paid as dividends in cash. (d) If full cash dividends are not paid or made available to the holders of all outstanding shares of Preferred Stock on the applicable Dividend Payment Date, and funds available shall be insufficient to permit payment in full in cash to all such holders of the preferential amounts -7- to which they are then entitled, the entire amount available for payment of cash dividends shall be distributed among the holders of the Preferred Stock ratably in proportion to the full amount to which they would otherwise be respectively entitled, and any remainder not paid in cash to the holders of the Preferred Stock shall be added to the Liquidation Preference as provided in subparagraph 2(c) above. (e) The Corporation shall not (i) declare or pay any dividend or make any distribution on any Junior Stock, whether in cash, property or otherwise (other than dividends (x) payable in shares (or options, warrants or rights to acquire shares) of the class or series upon which such dividends are declared or paid or (y) in the case of Junior Stock other than Common Stock, payable in shares (or options, warrants or rights to acquire shares) of Common Stock, in each case, together with cash in lieu of fractional shares) or (ii) purchase or redeem, or permit any Subsidiary to purchase or redeem any Junior Stock, or pay or make available any monies for a sinking fund for the purchase or redemption of any Junior Stock, unless all dividends to which the holders of Preferred Stock shall have been entitled for the Dividend Period immediately preceding such action (or, if such action occurs on a Dividend Payment Date, for the Dividend Period ending on such Dividend Payment Date) shall have been paid in cash on the applicable Dividend Payment Date. (f) If the Company is required by a "determination" (as defined below) to pay any United States federal income tax (a "Tax Payment") in respect of any addition to the Liquidation Preference as a result of subparagraph 2(c) with respect to a record holder of the Preferred Stock, the Company may withhold such Tax Payment (but not any interest factor, penalty, or addition thereto) from a subsequent cash dividend to such record holder (in addition to any required withholdings of United States federal income tax on such cash dividend). For avoidance of doubt, the Company shall not be entitled to withhold any Tax Payment if the record holder of the Preferred Stock at the time of any required Tax Payment is not the record holder at the time of any subsequent cash dividend. A "determination" shall mean a decision, judgment, decree, or other order by any court of competent jurisdiction, which decision, judgment, decree, or other order has become final, a closing agreement entered into under Section 7121 (or any successor to such Section) of the Internal Revenue Code of 1986, as amended, or any other settlement agreement entered into in connection with an administrative or judicial proceeding. 3. Distributions Upon Liquidation, Dissolution or Winding Up. Upon any voluntary or involuntary liquidation, dissolution or other winding up of the affairs of the Corporation, before any distribution or payment shall be made to the holders of Junior Stock, the holders of the Preferred Stock shall be entitled to be paid, to the extent possible in cash, the greater of (a) the Liquidation Preference, together with dividends accrued thereon with respect to the period from the most recent Dividend Payment Date through and excluding the date of determination, and (b) the amount that would be payable to the holders of the Preferred Stock if such holders had converted (assuming the -8- Stockholder Approval had been obtained) all outstanding shares of Preferred Stock into shares of Common Stock immediately prior to such liquidation, dissolution or other winding up. If such payment shall have been made in full to the holders of the Preferred Stock, the remaining assets and funds of the Corporation shall be distributed among the holders of Junior Stock, according to their respective shares and priorities. If, upon any such liquidation, dissolution or other winding up of the affairs of the Corporation, the net assets of the Corporation distributable among the holders of all outstanding shares of the Preferred Stock shall be insufficient to permit the payment in full to such holders of the preferential amounts to which they are entitled, then the entire net assets of the Corporation shall be distributed among the holders of the Preferred Stock ratably in proportion to the full amounts to which they would otherwise be respectively entitled. Neither the consolidation or merger of the Corporation into or with another corporation or corporations, nor the sale of all or substantially all of the assets of the Corporation to another corporation or corporations shall be deemed a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this paragraph 3. 4. Redemption by the Corporation. (a) The Corporation shall not have the right to redeem the Preferred Stock prior to the later of (i) the third anniversary of the Issue Date and (ii) receipt of the Stockholder Approval. Thereafter, the Corporation shall have the right to redeem the Preferred Stock, in whole but not in part, at the Redemption Price; provided that, if such redemption is to be effected prior to the Trigger Date, the Corporation shall not have such right unless the Current Market Price on the day before the date of notice of the Corporation's intent to redeem the Preferred Stock (the "Redemption Notice") exceeds 150% of the Conversion Price as then in effect. (b) A Redemption Notice shall be sent by or on behalf of the Corporation, by first class mail, postage prepaid, to the holders of record of the Preferred Stock at their respective addresses as they shall appear on the records of the Corporation, not less than thirty days nor more than sixty days prior to the Redemption Date (i) notifying such holders of the election of the Corporation to redeem such shares and of the date of redemption, (ii) stating the date on which the shares cease to be convertible and the Conversion Price, (iii) stating the place or places at which the shares called for redemption shall, upon presentation and surrender of the certificates evidencing such shares, be redeemed, and the Redemption Price to be paid therefor, and (iv) stating the name and address of the Redemption Agent, and the name and address of the Corporation's transfer agent for the Preferred Stock. (c) The Corporation shall appoint one or more Redemption Agents. Following such appointment and prior to any redemption, the Corporation shall deliver to the Redemption Agent irrevocable written instructions authorizing the Redemption Agent, on behalf and at the expense of the Corporation, to cause the Redemption Notice to be duly mailed as soon as practicable after receipt of such irrevocable instructions and in accordance with the above provisions. All funds -9- necessary for the redemption shall be deposited with the Redemption Agent in trust at least one business day prior to the Redemption Date, for the pro rata benefit of the holders of the Preferred Stock, so as to be and continue to be available therefor. Neither failure to mail any such Redemption Notice to one or more such holders nor any defect in any Redemption Notice shall affect the sufficiency of the proceedings for redemption as to other holders. (d) If a Redemption Notice shall have been given as hereinbefore provided, then each holder of Preferred Stock shall be entitled to all preferences and relative and other rights accorded by this resolution until and including the Redemption Date. From and after the Redemption Date, Preferred Stock shall no longer be deemed to be outstanding, and all rights of the holders of such shares shall cease and terminate, except the right of the holders of such shares, upon surrender of certificates therefor, to receive amounts to be paid hereunder. (e) The deposit of monies in trust with the Redemption Agent shall be irrevocable except that the Corporation shall be entitled to receive from the Redemption Agent the interest or other earnings, if any, earned on any monies so deposited in trust, and the holders of the shares redeemed shall have no claim to such interest or other earnings, and any balance of monies so deposited by the Corporation and unclaimed by the holders of the Preferred Stock entitled thereto at the expiration of two years from the Redemption Date shall be repaid, together with any interest or other earnings thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for such payment, without interest. 5. Conversion Rights. The Preferred Stock shall be convertible as follows: (a) Conversion. Subject to and upon compliance with the provisions of this paragraph 5, the holder of any share of Preferred Stock shall have the right at such holder's option, to convert such share of Preferred Stock (i) prior to the receipt of the Stockholder Approval, into fully paid and nonassessable Units and (ii) thereafter, into fully paid and nonassessable shares of Common Stock, in each case, at the Conversion Price in effect on the Conversion Date. If the Preferred Stock has been called for redemption, such right of conversion shall terminate at the close of business on the business day prior to the Redemption Date. (b) Conversion Price. Each share of Preferred Stock shall be converted into a number of shares of Common Stock or Units, as applicable, determined by dividing the Liquidation Preference on the Conversion Date, together with dividends accrued thereon with respect to the period from the most recent Dividend Payment Date through and including the Conversion Date, by the Conversion Price in effect on the Conversion Date. -10- (c) Mechanics of Conversion. The holder of any shares of Preferred Stock may exercise the conversion right specified in subparagraph 5(a) by surrendering to the Corporation or any transfer agent of the Corporation the certificate or certificates for the shares to be converted, accompanied by written notice specifying the number of shares to be converted. Such written notice may state that Conversion is conditional upon the occurrence or non- occurrence of one or more events. Conversion shall be deemed to have been effected on the date when delivery of notice of an election to convert and certificates for shares is received by the Corporation and such date is referred to herein as the "Conversion Date." Subject to the provisions of subparagraph 5(e)(vii), as promptly as practicable thereafter, the Corporation shall issue and deliver to or upon the written order of such holder a certificate or certificates for the number of full shares of Common Stock or a number of full Units, as applicable, to which such holder is entitled and a check or cash with respect to any fractional interest in a share of Common Stock or Units, as provided in subparagraph 5(d). Subject to the provisions of subparagraph 5(e)(vii), the person in whose name the certificate or certificates for Common Stock or Junior Preferred Stock, as applicable, are to be issued shall be deemed to have become a holder of record of such Common Stock or Junior Preferred Stock, as applicable, immediately prior to the close of business on the Conversion Date. Upon conversion of only a portion of the number of shares covered by a certificate representing shares of Preferred Stock surrendered for conversion, the Corporation shall issue and deliver to or upon the written order of the holder of the certificate so surrendered for conversion, at the expense of the Corporation, a new certificate covering the number of shares of Preferred Stock representing the unconverted portion of the certificate so surrendered. (d) Fractional Shares. No fractional shares of Common Stock or Units, as the case may be, shall be issued upon conversion of shares of Preferred Stock. If more than one share of Preferred Stock shall be surrendered for conversion at any one time by the same holder, the number of full shares of Common Stock or Units, as the case may be, issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Preferred Stock so surrendered. Instead of any fractional shares of Common Stock or Units, as the case may be, that would otherwise be issuable upon conversion of any shares of Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal to that fractional interest of a share multiplied by the then Current Market Price. In lieu of paying cash on account of any fractional interests, the Corporation may, at its options, cause an agent to aggregate all fractional share interests and sell such aggregated number of shares on the open market in regular way brokerage transactions and cause the aggregate net proceeds (with all costs of sale and brokerage commissions deducted from the gross proceeds) to be paid pro rata to each Person who otherwise would be entitled to receive cash in lieu of a fractional share interest. -11- (e) Conversion Price Adjustments. The Conversion Price shall be subject to adjustment from time to time as follows: (i) Common Stock Issued at Less Than the Current Market Price. If the Corporation shall issue any Common Stock, other than Excluded Stock, without consideration or for a consideration per share less than the Current Market Price immediately prior to such issuance (other than pursuant to a bona fide underwritten offering (including so-called Rule 144A offerings) or in connection with a bona fide acquisition of a business or a line of business or division to be used in the operation of the business of the Corporation and its Subsidiaries (whether pursuant to a merger, asset acquisition or otherwise)), the Conversion Price in effect immediately prior to each such issuance shall immediately (except as provided below) be reduced to the price determined by multiplying the Conversion Price in effect immediately prior to such issuance by a fraction (A) the numerator of which is the sum of (1) the number of shares of Common Stock outstanding immediately prior to such issuance and (2) the number of shares of Common Stock that the aggregate consideration, if any, received by the Corporation upon such issuance, would purchase at such Current Market Price and (B) the denominator of which is the total number of shares of Common Stock outstanding immediately after such issuance. For the purposes of any adjustment of the Conversion Price pursuant to this clause (e), the following provisions shall be applicable: (A) Cash. In the case of the issuance of Common Stock for cash, the amount of the consideration received by the Corporation shall be deemed to be the amount of the cash proceeds received by the Corporation for such Common Stock before deducting therefrom any discounts, commissions, taxes or other expenses allowed, paid or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof. (B) Consideration Other Than Cash. In the case of the issuance of Common Stock (otherwise than upon the conversion of shares of capital stock or other securities of the Corporation) for a consideration in whole or in part other than cash, including securities acquired in exchange therefor (other than securities by their terms so exchangeable), the consideration other than cash shall be deemed to be the fair market value thereof, irrespective of any accounting treatment. (C) Options and Convertible Securities. In the case of the issuance of (1) options, warrants or other rights to purchase or acquire Common Stock (whether or not at the time exercisable), (2) securities by their terms convertible into or exchangeable for Common Stock (whether or not at the time so convertible or exchangeable) or options, -12- warrants or rights to purchase such convertible or exchangeable securities (whether or not at the time exercisable): (1) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options, warrants or other rights to purchase or acquire Common Stock shall be deemed to have been issued at the time such options, warrants or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subclauses (A) and (B) above), if any, received by the Corporation upon the issuance of such options, warrants or rights plus the minimum purchase price provided in such options, warrants or rights for the shares of Common Stock covered thereby; (2) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable securities, or upon the exercise of options, warrants or other rights to purchase or acquire such convertible or exchangeable securities and the subsequent conversion or exchange thereof, shall be deemed to have been issued at the time such securities were issued or such options, warrants or rights were issued and for a consideration equal to the consideration, if any, received by the Corporation for any such securities and related options, warrants or rights (excluding any cash received on account of accrued interest or accrued dividends), plus the additional consideration (determined in the manner provided in subclauses (A) and (B) above), if any, to be received by the Corporation upon the conversion or exchange of such securities, or upon the exercise of any related options, warrants or rights to purchase or acquire such convertible or exchangeable securities and the subsequent conversion or exchange thereof; (3) on any change in the number of shares of Common Stock deliverable upon exercise of any such options, warrants or rights or conversion or exchange of such convertible or exchangeable securities or any change in the consideration to be received by the Corporation upon such exercise, conversion or exchange, including, but not limited to, a change resulting from the anti-dilution provisions thereof, the Conversion Price as then in effect shall forthwith be readjusted to such Conversion Price as would have been obtained had an adjustment been made upon the issuance of such options, warrants or rights not exercised prior to such change, or of such convertible or exchangeable securities not converted or exchanged prior to such change, upon the basis of such change; (4) on the expiration or cancellation of any such options, warrants or rights that are unexercised, or the termination of the right to convert or exchange such convertible or exchangeable securities, if the Conversion Price shall have been adjusted -13- upon the issuance thereof, the Conversion Price shall forthwith be readjusted to such Conversion Price as would have been obtained had an adjustment been made upon the issuance of such options, warrants, rights or such convertible or exchangeable securities on the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such options, warrants or rights, or upon the conversion or exchange of such convertible or exchangeable securities; and (5) if the Conversion Price shall have been adjusted upon the issuance of any such options, warrants, rights or convertible or exchangeable securities, no further adjustment of the Conversion Price shall be made for the actual issuance of Common Stock upon the exercise, conversion or exchange thereof. (ii) Excluded Stock. All shares of Excluded Stock which the Corporation has reserved for issuance shall be deemed to be outstanding for all purposes of computations under subparagraph 5(e)(i). (iii) Stock Dividends Subdivisions, Reclassifications or Combinations. If the Corporation shall (A) declare a dividend or make a distribution on its Common Stock in shares of its Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares, or (C) combine or reclassify the outstanding Common Stock into a smaller number of shares, the Conversion Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that the holder of any shares of Preferred Stock surrendered for conversion after such date shall be entitled to receive the number of shares of Common Stock that such holder would have owned or been entitled to receive had such Preferred Stock been converted immediately prior to such date. Successive adjustments in the Conversion Price shall be made whenever any event specified above in this clause (iii) shall occur (in each case assuming the Stockholder Approval had then been obtained). (iv) Other Distributions. In case the Corporation shall fix a record date for the making of a distribution (an "Extraordinary Distribution") to all holders of shares of its Common Stock (A) of shares of any class other than its Common Stock or (B) of evidence of indebtedness of the Corporation or any Subsidiary or (C) of assets, including but not limited to, securities issued by Subsidiaries or others (excluding Normal Cash Dividends and dividends or distributions referred to in subparagraph 5(e)(iii) above), or (D) of options, warrants or other rights (excluding those referred to in subparagraph 5(e)(i) above), then in each such case either, at the option of the Corporation, (x) the Corporation shall declare and distribute to each holder of shares of Preferred Stock a dividend or distribution in the same form and kind, and at the same time, as the Extraordinary Distribution and in an amount so that such holder shall receive the same dividend or -14- distribution as if such shares of Preferred Stock had been converted to Common Stock immediately prior to the record date for the Extraordinary Distribution, or (y) the Conversion Price in effect immediately prior thereto shall be reduced immediately thereafter to the price determined by dividing (1) an amount equal to the difference resulting from (A) the number of shares of Common Stock outstanding on such record date multiplied by the Conversion Price per share on such record date, less (B) the fair market value of said shares or evidences of indebtedness or assets or rights or warrants to be so distributed, by (2) the number of shares of Common Stock outstanding on such record date. Such adjustment shall be made successively whenever such a record date is fixed. In the event that such distribution is not so made, the Conversion Price then in effect shall be readjusted, effective as of the date when the Board of Directors determines not to distribute such shares, evidences of indebtedness, assets, rights or warrants, as the case may be, to the Conversion Price which would then be in effect if such record date had not been fixed. (v) Consolidation, Merger, Sale, Lease or Conveyance. In case of any consolidation with or merger of the Corporation with or into another corporation or entity, or in case of any sale, lease or conveyance to another corporation of the assets of the Corporation as an entirety or substantially as an entirety, each share of Preferred Stock shall after the date of such consolidation, merger, sale, lease or conveyance be convertible into the number of shares of stock or other securities or property (including cash) to which the Common Stock issuable (immediately prior to the time of such consolidation, merger, sale, lease or conveyance) upon conversion of such share of Preferred Stock would have been entitled upon such consolidation, merger, sale, lease or conveyance; and in any such case, if necessary, the provisions set forth herein with respect to the rights and interests thereafter of the holders of the shares of Preferred Stock shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any shares of stock or other securities or property thereafter deliverable on the conversion of the shares of Preferred Stock. (vi) Rounding of Calculations. All calculations under this subparagraph (e) shall be made to the nearest cent or to the nearest one ten thousandth of a share, as the case may be. (vii) Timing of Issuance of Additional Common Stock Upon Certain Adjustments. In any case in which the provisions of this subparagraph (e) shall require that an adjustment shall become effective immediately after a record date for an event, the Corporation may defer until the occurrence of such event (A) issuing to the holder of any share of Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock or Junior Preferred Stock issuable upon such conversion by reason of the adjustment required by such event over and above the shares of Common Stock or Junior Preferred Stock issuable upon such conversion before giving effect to such adjustment and (B) paying to such holder any amount of cash in lieu of a fractional share of Common Stock pursuant to subparagraph 5(d); -15- provided that the Corporation, upon request, shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment. (viii) Incorporation of More Favorable Adjustments. If the Corporation issues any securities in a transaction (or series of related transactions) with an aggregate fair market value as determined in good faith by the Board of Directors in excess of $50 million containing provisions that, in the aggregate, protect the holder or holders thereof against dilution upon the occurrence of certain events in a manner more favorable to such holder or holders than those set forth in this paragraph 5 (other than a provision specifying an initial exercise, conversion or analogous price that is less than the Conversion Price as then in effect), such provisions shall be deemed to be incorporated herein with respect to such events as if fully set forth in this Certificate of Designation and, to the extent the provisions of this paragraph 5 would in the aggregate be less favorable to the holders of the Preferred Stock, such provisions shall be substituted therefor. (f) Statement Regarding Adjustments. Whenever the Conversion Price shall be adjusted, the Corporation shall forthwith file, at the office of any transfer agent for the Preferred Stock and at the principal office of the Corporation, a statement showing in detail the facts requiring such adjustment and the Conversion Price that shall be in effect after such adjustment, and the Corporation shall also cause a copy of such statement to be sent by mail, first class postage prepaid, to each holder of shares of Preferred Stock at its address appearing on the Corporation's records. Each such statement shall be signed by the Corporation's independent public accountants, if applicable. Where appropriate, such copy may be given in advance and may be included as part of a notice required to be mailed under the provisions of subparagraph 5(g). (g) Notice to Holders. In the event the Corporation shall propose to take any action of the type described in clause (i) (but only if the action of the type described in clause (i) would result in an adjustment in the Conversion Price), (iii), (iv) or (v) of subparagraph 5(e), the Corporation shall give notice to each holder of shares of Preferred Stock, in the manner set forth in subparagraph 5(f), which notice shall specify the record date, if any, with respect to any such action and the approximate date on which such action is to take place. Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action (to the extent such effect may be known at the date of such notice) on the Conversion Price and the number, kind or class of shares or other securities or property which shall be deliverable upon conversion of shares of Preferred Stock. In the case of any action which would require the fixing of a record date, such notice shall be given at least ten days prior to the date so fixed, and in case of all other action, such notice shall be given at least fifteen days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action. -16- (h) Treasury Stock. For the purposes of this paragraph 5, the sale or other disposition of any Common Stock theretofore held in the Corporation's treasury shall be deemed to be an issuance thereof. (i) Costs. The Corporation shall pay all documentary, stamp, transfer or other transactional taxes attributable to the issuance or delivery of shares of Common Stock or Junior Preferred Stock, as applicable, upon conversion of any shares of Preferred Stock; provided that the Corporation shall not be required to pay any taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificate for such shares in a name other than that of the holder of the shares of Preferred Stock in respect of which such shares are being issued. (j) Reservation of Shares. The Corporation shall reserve at all times so long as any shares of Preferred Stock remain outstanding, free from preemptive rights, out of its treasury stock (if applicable) or its authorized but unissued shares, or both, solely for the purpose of effecting the conversion of the shares of Preferred Stock, sufficient shares of Common Stock and Junior Preferred Stock to provide for the conversion of all outstanding shares of Preferred Stock. (k) Approvals. If any shares of Common Stock and Junior Preferred Stock to be reserved for the purpose of conversion of shares of Preferred Stock require registration with or approval of any governmental authority under any Federal or state law before such shares may be validly issued or delivered upon conversion, then the Corporation will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. If, and so long as, any Common Stock and Junior Preferred Stock into which the shares of Preferred Stock are then convertible is then listed on any national securities exchange, the Corporation will, if permitted by the rules of such exchange, list and keep listed on such exchange, upon official notice of issuance, all shares of such Common Stock and Junior Preferred Stock issuable upon conversion. (l) Valid Issuance. All shares of Common Stock and Junior Preferred Stock which may be issued upon conversion of the shares of Preferred Stock will upon issuance by the Corporation be duly and validly issued, fully paid and nonassessable, not issued in violation of any preemptive rights arising under law or contract and free from all taxes, liens and charges with respect to the issuance thereof, and the Corporation shall take no action which will cause a contrary result (including without limitation, any action which would cause the Conversion Price to be less than the par value, if any, of the Common Stock or Junior Preferred Stock). 6. VOTING RIGHTS -17- (a) In addition to the voting rights provided by applicable law, the holders of shares of Preferred Stock shall have the right to vote, together with the Common Stock and the Junior Preferred Stock, as a single class, on all matters on which the holders of shares of Common Stock are entitled to vote. For purposes of such voting, each share of Preferred Stock shall have the number of votes equal to the number of shares of Common Stock then issuable upon conversion of such share of Preferred Stock (without regard to whether the Stockholder Approval has then been obtained) pursuant to paragraph 5. (b) The holders of shares of Preferred Stock and Junior Preferred Stock, together, voting separately as a class, shall have the right to elect the number of directors of the Corporation entitled to be elected pursuant to the Shareholders Agreement, by and among the Corporation and the investors named therein, as such agreement may be amended from time to time. (c) Without the consent of the holders of at least a majority of the shares of Preferred Stock then outstanding, given in writing or by vote at a meeting of stockholders called for such purpose, the Corporation will not: (i) create or issue any Parity Stock or Senior Stock, increase the authorized amount of any such class, or reclassify any class or series of any Junior Stock into Parity Stock or Senior Stock; or (ii) amend, alter or repeal any provision of, or add any provision to, the Corporation's Certificate of Incorporation or By-Laws (by merger or otherwise), if such action would alter or change the powers, preferences or special rights of the shares of the Preferred Stock so as to effect them adversely, or increase or decrease below the number then outstanding the number of shares of Preferred Stock authorized hereby. 7. CAPITAL. On any redemption of Preferred Stock, the Corporation's capital shall be reduced by an amount equal to the Liquidation Preference multiplied by the number of shares of Preferred Stock redeemed on such date. The provisions of this paragraph 7 shall apply to all certificates representing Preferred Stock whether or not all such certificates have been surrendered to the Corporation. 8. PURCHASE UPON A CHANGE OF CONTROL. (a) Upon the occurrence of a Change of Control, the Corporation shall notify the transfer agent for the Preferred Stock in writing thereof, if any, and shall make a Change of Control Offer on the terms set forth in this paragraph 8. The Change of Control Offer shall be made in compliance with all applicable laws, including, without limitation (if applicable), Regulation 14E -18- and 14D under the Exchange Act and the rules thereunder and all other applicable Federal and state securities laws. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this paragraph 8, the Corporation shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this paragraph 8 by virtue thereof. (b) Within thirty days following any Change of Control, the Corporation shall commence the Change of Control Offer by mailing to the transfer agent for the Preferred Stock, if any, and each holder of shares of Preferred Stock a notice, which shall govern the terms of the Change of Control Offer, and shall state: (i) that the Change of Control Offer is being made pursuant to this paragraph 8 and that all shares of Preferred Stock tendered will be accepted for payment; (ii) the Change of Control Price and the Change of Control Payment Date; (iii) that any shares of Preferred Stock not tendered for payment pursuant to the Change of Control Offer shall continue to accrue dividends and be convertible in accordance with the terms hereof; (iv) that, unless the Corporation defaults in the payment of the Change of Control Payment, all shares of Preferred Stock accepted for payment pursuant to the Change of Control Offer shall cease to accrue dividends on the Change of Control Payment Date; (v) that any holder electing to have certificates representing shares of Preferred Stock purchased pursuant to a Change of Control Offer shall be required to surrender such certificates representing shares of Preferred Stock to the Corporation or its designated agent at the address specified in the notice prior to the close of business on the Change of Control Payment Date; (vi) that any holder of a share of Preferred Stock shall be entitled to withdraw such election if the Corporation or its designated agent receives, not later than the close of business on the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder of such shares of Preferred Stock, the number of shares of Preferred Stock such holder delivered for purchase, and a statement that such holder is withdrawing its election to have such shares of Preferred Stock purchased; (vii) that a holder whose shares of Preferred Stock are being purchased only in part shall be issued new shares of Preferred Stocks for the unpurchased shares of Preferred Stock represented by any certificate surrendered; -19- (viii) the instructions that holders must follow in order to tender their shares of Preferred Stock; and (ix) the circumstances and relevant facts regarding such Change of Control. (c) On the Change of Control Payment Date, the Corporation shall, to the extent of funds legally available therefor and otherwise lawful, (i) accept for payment the shares of Preferred Stock tendered and not withdrawn pursuant to the Change of Control Offer, and (ii) deposit with a paying agent an amount equal to the Change of Control Payment in respect of all shares of Preferred Stock so tendered and not withdrawn. Such paying agent shall promptly mail to each holder of shares of Preferred Stock so accepted payment in an amount equal to the purchase price for such shares, and the unpurchased shares of Preferred Stock surrendered, if any. (d) The Corporation shall make a public announcement of the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (e) The Corporation shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this paragraph 8 and purchases all shares of Preferred Stock validly tendered and not withdrawn under such Change of Control Offer. 9. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law, the shares of Preferred Stock shall not have any preferences or relative, participating, optional or other special rights, other than those specifically set forth in this resolution (as such resolution may be amended from time to time) and in the Corporation's certificate of incorporation. The shares of Preferred Stock shall have no preemptive or subscription rights. 10. HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. 11. SEVERABILITY OF PROVISIONS. If any right, preference or limitation of the Preferred Stock set forth in this resolution (as such resolution may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other rights, preferences and limitations set forth in this resolution (as so amended) which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect, and no right, preference or limitation herein set forth -20- shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein. 12. STATUS OF REACQUIRED SHARES. Shares of Preferred Stock which have been issued and reacquired in any manner shall (upon compliance with any applicable provisions of the laws of the State of Delaware) have the status of authorized and unissued shares of preferred stock undesignated as to series and may, subject to subparagraph 6(c)(i), be redesignated and reissued. -21- IN WITNESS WHEREOF, we have executed and subscribed this Certificate of Designation and affirm the foregoing as true this 30th day of July, 1999. ALLIED WASTE INDUSTRIES, INC. By: /s/ Thomas H. Van Weelden ----------------------------------------- Name: Thomas H. Van Weelden Title: Chairman of the Board of Directors, President and Chief Executive Officer ATTEST: By: /s/ Steve M. Helm ---------------------------------- Steve M. Helm Vice President-Legal and Secretary -22- EX-15 7 CERT. OF DESIGNATION - JR. PREFERED STOCK EXHIBIT 15 CERTIFICATE OF DESIGNATION OF SERIES B JUNIOR PREFERRED STOCK OF ALLIED WASTE INDUSTRIES, INC. Pursuant to Section 151 of the Delaware General Corporation Law, We, Thomas H. Van Weelden, Chairman of the Board, President and Chief Executive Officer, and Steven Helm, Secretary, of Allied Waste Industries, Inc. (the "Corporation"), a corporation organized and existing under the Delaware General Corporation Law, DO HEREBY CERTIFY: That pursuant to the authority conferred upon the Board of Directors by the Amended Certificate of Incorporation of the Corporation, as amended, the Board of Directors on July 27, 1999 adopted the following resolution creating a series of 10,000 shares of Preferred Stock, par value $.10 per share, designated as Series B Junior Preferred Stock: NOW, THEREFORE, BE IT RESOLVED, that pursuant to the authority vested in the Board of Directors of this Corporation in accordance with the provisions of its Amended Certificate of Incorporation, as amended, a series of Preferred Stock, par value $.10 per share, of the Corporation be and it hereby is created, and that the designation and amount and relative rights, limitations and preferences thereof are as follows: Section 1. Designation and Amount. The shares of such series shall be ---------------------- designated as "Series B Junior Preferred Stock" (the "Series B Preferred Stock"); the number of shares constituting such series shall be ten thousand (10,000). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation into Series B Preferred Stock. Section 2. Preference. The preferences of shares of Series B ---------- Preferred Stock with respect to dividend payments or distributions upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, as the case may be, will be in every respect junior, and subordinate to preferences of every other share of any other series of preferred stock of the Corporation from time to time outstanding other than any series which by its terms is not senior, prior and superior to the preferences of the Series B Preferred Stock. Section 3. Dividends. (a) Whenever the Corporation shall declare a --------- dividend on shares of Common Stock, par value $.01 per share, of the Corporation (the "Common Stock"), following the first date of issuance of any shares of Series B Preferred Stock, the Corporation shall at the same time declare a dividend on shares of Series B Preferred Stock in a per share amount equal to the greater of (i) $100.00 and (ii) the Adjustment Number (as defined in Section 6) times the aggregate per share amount of cash and/or the per share amount (payable in kind) of all noncash dividends or other distributions declared on each share of Common Stock, other than a dividend payable in shares of Common Stock (by reclassification or otherwise), payable at the same time as any such dividend on the Common Stock. The declaration date, the record date and the payment date for any such dividends or other distributions on the Series B Preferred Stock shall be the same as those for the Common Stock. No other dividends shall be required to be paid on shares of the Series B Preferred Stock. (b) If, at any time when shares of Series B Preferred Stock are outstanding, the Corporation shall repurchase or offer to repurchase shares of Common Stock, then the Corporation shall offer to repurchase shares of Series B Preferred stock in such amounts which are in the same proportion to the amount of Common Stock repurchased or offered to be repurchased as the number of then outstanding shares of Series B Preferred Stock bears to the number of then outstanding shares of Common Stock and at such per share prices as are equal to the Adjustment Number times the per share amount offered to or paid to the holders of Common Stock. Section 4. Voting Rights. In addition to any voting rights to which ------------- holders of shares of Series B Preferred Stock may be entitled under applicable law, the holders of shares of Series B Preferred Stock shall have the following voting rights: (A) Each share of Series B Preferred Stock shall entitle the holder thereof to a number of votes on all matters submitted to a vote of the holders of shares of Common Stock equal to the Adjustment Number. (B) Except as otherwise provided herein or by law, the holders of shares of Series B Preferred Stock and the holders of shares of Common Stock shall vote together as one class, and not as a separate class, on all matters submitted to a vote of stockholders of the Corporation. (C) The holders of shares of Series B Preferred Stock, voting separately as a class, shall (unless such directors have been elected by the holders of the Series A Senior Convertible Preferred Stock, par value $.01 per share, of the Corporation) have the right to elect the number of directors of the Corporation who are entitled to be elected pursuant to the Second Amended and Restated Shareholders Agreement, dated as of July 30, 1999, by and among the Corporation and the investors named therein, as such agreement may be amended from time to time. -2- (D) Without the consent of the holders of at least a majority of the shares of Series B Preferred Stock then outstanding, given in writing or by vote at a meeting of stockholders called for such purpose, amend, alter or repeal any provision of, or add any provision to, the Corporation's certificate of incorporation or by-laws (by merger or otherwise) if such action would alter or change the powers, preferences, or special rights of the Series B Preferred Stock so as to affect them adversely, or increase or decrease (below the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of all outstanding securities issued by the Corporation, including, without limitation, the outstanding shares of Series A Convertible Preferred Stock) the number of shares of Series B Preferred Stock authorized hereby. Except as set forth herein, holders of Series B Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for the taking of any corporate action. Section 5. Certain Restrictions. (a) If at any time any dividend on -------------------- any Series B Preferred Stock shall not have been declared and paid in cash or in kind as provided in Section 3 hereof, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time as all accrued but unpaid dividends have been declared and paid in full as provided in Section 3 above. (b) During and until the expiration of a default period, the Corporation shall not declare or pay dividends or make any other distributions on, or redeem or purchase or otherwise acquire for consideration, any shares (or any rights or warrants to purchase such shares) of any other capital stock of the Corporation ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with, or junior to, the Series B Preferred Stock. (c) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with, or junior to, the Series B Preferred Stock unless the Corporation could, under paragraph (b) of this Section 5, purchase or otherwise acquire such shares at such time and in such manner. Section 6. Liquidation, Dissolution or Winding Up. (a) Upon any -------------------------------------- liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of any other capital stock of the Corporation junior to the shares of Series B Preferred Stock unless, prior thereto, the holders of shares of Series B Preferred Stock shall have received $100.00 per share (the "Liquidation Preference"), plus all accrued but unpaid dividends thereon, whether or not earned, to the date fixed for liquidation, dissolution or winding up. Following the payment of the full amount of the -3- Liquidation Preference, plus accrued but unpaid dividends, no additional distributions shall be made to the holders of shares of Series B Preferred Stock until and unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Catch-up") equal to the quotient obtained by dividing (i) the Liquidation Preference by (ii) the Adjustment Number. Following the payment of the full amount of the Liquidation Preference and the Common Catch-up in respect of all outstanding shares of Series B Preferred Stock and Common Stock, respectively, holders of shares of Series B Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such shares of Series B Preferred Stock and Common Stock, on a per share basis, respectively. (b) If there are not sufficient assets available to permit payment in full of the Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series B Preferred Stock, then such remaining assets shall be distributed ratably to the holders of the Series B Preferred Stock and such parity shares in proportion to their respective liquidation preferences. If there are not sufficient assets available to permit payment in full of the Common Catch-up, then such remaining assets shall be distributed ratably to the holders of Common Stock. (c) "Adjustment Number" shall mean 10,000; provided, that if the Corporation shall at any time after July 30, 1999 (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock (by stock split, reclassification or otherwise), or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall --------------------------- enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series B Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share equal to the Adjustment Number times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. Section 8. Conversion. (a) Immediately upon receipt of the ---------- Stockholder Approval (as hereinafter defined), each outstanding share of Series B Preferred Stock shall automatically be converted into a number of fully paid, non-assessable shares of Common Stock equal to the Adjustment Number, without any further action of the holder of such shares and thereafter the holder shall have no rights as a holder of Series B Preferred Stock -4- and no other rights against, or with respect to, the Corporation except (i) dividends accrued with respect to the Series B Preferred Stock prior to receipt of the Stockholder Approval and (ii) as a holder of the shares of Common Stock into which the Series B Preferred Stock has been converted and the right to receive certificates representing such shares of Common Stock. Upon surrender of certificates which previously had represented such shares of Series B Preferred Stock in accordance with paragraph (b) of this Section 8, the Corporation shall deliver or cause to be delivered to such holder certificates representing such shares of Common Stock. (In no event shall the Corporation be required to issue fractional shares of Common Stock in connection with any conversion and, in lieu thereof, the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal to that fractional interest of a share multiplied by (a) if the Common Stock is publicly traded on any national securities exchange, the average of the daily closing prices per share of Common Stock during the Measurement Period (as defined below) as reported (absent manifest error) in The Wall Street Journal, (b) if the Common Stock is not publicly traded on any national securities exchange, but traded over-the- counter, the average of the daily closing reported bid and asked prices of the Common Stock during the Measurement Period, as reported by Nasdaq or any comparable system (or if not so reported by Nasdaq or any comparable system, as furnished by two members of the National Association of Securities Dealers, Inc. selected from time to time by the Corporation for that purpose), or (c) if the Common Stock is not traded in such manner that the quotations referred to above are available for the Measurement Period, the fair market value of one share of Common Stock as determined in good faith by the Board of Directors. "Measurement Period" means, as of any date, the twenty consecutive trading days ending two trading days before such date. In lieu of paying cash on account of any fractional interests, the Corporation may, at its option, cause an agent to aggregate all fractional share interests and sell such aggregated number of shares on the open market in regular way brokerage transactions and cause the aggregate net proceeds (with all costs of sale and brokerage commissions deducted from the gross proceeds of such sale) to be paid pro rata to each person who otherwise would be entitled to receive cash in lieu of a fractional share interest). (b) Upon the surrender of the certificate or certificates which previously had represented shares of Series B Preferred Stock at any time following the conversion of shares of Series B Preferred Stock into shares of Common Stock at the principal office of the Corporation (or such other office or agency of the Corporation as the Corporation may designate by notice in writing to the holder or holders of the Series B Preferred Stock) at any time during normal business hours, the holder of such certificates shall be entitled to receive from the Corporation a certificate or certificates representing the shares of Common Stock into which the Series B Preferred Stock previously represented by the surrendered certificates has been converted. Whether or not such certificates are surrendered, such conversion will be deemed to have been effected as of the close of business on the date on which Stockholder Approval has been obtained, and, except as set forth above, at such time the rights of the holder of the converted Series B Preferred Stock as such holder will cease and the person or persons in whose name or names the certificate or certificates for such -5- Series B Preferred Stock had been issued upon such conversion will be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby. (c) As promptly as practicable after such surrender, the Corporation will issue and deliver in accordance with the surrendering holder's instructions the certificate or certificates for the Common Stock into which such shares of Series B Preferred Stock have been converted. (d) Shares of Series B Preferred Stock which are converted into shares of Common Stock as provided herein shall not be reissued. (e) The Corporation will at all times reserve and keep available out of its authorized but unissued shares of Common Stock or its treasury shares, free of preemptive rights, solely for the purpose of issue upon the conversion of the Series B Preferred Stock as provided in this Section 8, such number of shares of Common Stock as shall then be issuable upon the conversion of all then outstanding shares of Series B Preferred Stock. (f) The issuance of certificates for Common Stock upon the conversion of Series B Preferred Stock will be made without charge to the holders of such shares for any documentary, stamp, transfer or similar tax in respect thereof or other cost incurred by the Corporation in connection with such conversion and the related issuance of Common Stock issued or issuable upon the conversion of Series B Preferred Stock. However, if any such certificate is to be issued in a name other than that of the record holder of the share or shares of Series B Preferred Stock converted, the person or persons requesting the issuance thereof shall pay to the Corporation the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid. (g) Certificates representing shares of Series B Preferred Stock shall note the automatic conversion of shares upon the occurrence of certain events as set forth in this Section. (h) For purposes of this Section, "Stockholder Approval" means any vote of the stockholders of the Company required to issue shares of Common Stock upon the conversion of the Series B Preferred Stock under the rules of any stock exchange or other self-regulatory authority applicable to the Corporation or, if no such vote is required, the delivery of a written statement by the Corporation to that effect to the record holders of the Series B Preferred Stock. (i) All shares of Common Stock which may be issued upon conversion of the shares of Series B Preferred Stock will, upon issuance by the Corporation, be duly and validly issued, fully paid and non-assessable, not issued in violation of any preemptive rights arising under law or contract and free from all liens and adverse claims with respect to -6- the issuance thereof, and the Corporation shall take no action which will cause a contrary result. (j) If any shares of Common Stock to be reserved for the purpose of conversion of shares of Series B Preferred Stock require registration with or approval of any governmental authority under any Federal or state law before such shares may be validly issued or delivered upon conversion, then the Corporation will in good faith and as expeditiously as possible endeavor to secure such registration or approval, as the case may be. If, and so long as, any shares of Common Stock into which the shares of Series B Preferred Stock are then convertible is then listed on any national securities exchange, the Corporation will, if permitted by the rules of such exchange, list and keep listed on such exchange, upon official notice of issuance, all shares of such Common Stock issuable upon conversion. Section 9. No Redemption. The shares of Series B Preferred Stock ------------- shall not be redeemable. Section 10. Reacquired Shares. Any shares of Series B Preferred Stock ----------------- which shall at any time have been redeemed, purchased or otherwise acquired by the Corporation (upon compliance with any applicable provisions of the laws of the State of Delaware) shall have the status of authorized but unissued shares of Preferred Stock, without designation as to series until such shares are once more designated as part of a particular series by the board of directors. Section 11. Fractional Shares. Series B Preferred Stock may be issued ----------------- in fractions of a share which shall entitle the holder, in proportion to such holders fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series B Preferred Stock. Section 12. Severability. If any right, preference or limitation of ------------ the Series B Preferred Stock set forth in this resolution (as such resolution may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other rights, preferences and limitations set forth in this resolution (as so amended) which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect, and no right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein. -7- IN WITNESS WHEREOF, we have executed and subscribed this Certificate this day of July, 1999. /s/ Thomas H. Van Weelden -------------------------------- Chairman of the Board, President and Chief Executive Officer Attest: /s/ Steve M. Helm - ---------------------------------- Secretary -8- -----END PRIVACY-ENHANCED MESSAGE-----