-----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, CVmmleQP68WTs+WMYmfko/yd7CzYEUMfZr/81v7Jdc5KIaCWCexf1g4zAElGQlnb Mc9HcgsAlGfEonZlZAenrg== 0000912057-97-014192.txt : 19970428 0000912057-97-014192.hdr.sgml : 19970428 ACCESSION NUMBER: 0000912057-97-014192 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19970425 SROS: NASD GROUP MEMBERS: APOLLO (U.K.) PARTNERS III, L.P. GROUP MEMBERS: APOLLO ADVISORS II, L.P. GROUP MEMBERS: APOLLO INVESTMENT FUND III LP GROUP MEMBERS: APOLLO OVERSEES PARTNERS III, 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 SEC ACT: 1934 Act SEC FILE NUMBER: 005-43433 FILM NUMBER: 97587847 BUSINESS ADDRESS: STREET 1: 15880 NORTH GREENWAY-HADEN LOOP STREET 2: SUITE 100 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 6024232946 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 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 1 SC 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ____)* Allied Waste Industries, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.01 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 019589 -------------- (CUSIP Number) John F. Hartigan Morgan, Lewis & Bockius 801 South Grand Avenue Los Angeles, California 90071 (213) 612-2500 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 15, 1997 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - ------------------------------ ----------------------------------- CUSIP NO. 019589 PAGE 2 OF 13 PAGES ---------- --- ---- - ------------------------------ ----------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Apollo Investment Fund III, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/ (b)/ / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY -0- OWNED BY ------------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 26,376,765 ------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER -0- ------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 26,376,765 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 26,376,765 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 34.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ------------------------------ ----------------------------------- CUSIP NO. 019589 PAGE 3 OF 13 PAGES ---------- --- ---- - ------------------------------ ----------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Apollo Overseas Partners III, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/ (b)/ / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY -0- OWNED BY ------------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 26,376,765 ------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER -0- ------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 26,376,765 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 26,376,765 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 34.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D - ------------------------------ ----------------------------------- CUSIP NO. 019589 PAGE 4 OF 13 PAGES ---------- --- ---- - ------------------------------ ----------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Apollo (U.K.) Partners III, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/ (b)/ / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United Kingdom - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY -0- OWNED BY ------------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 26,376,765 ------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER -0- ------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 26,376,765 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 26,376,765 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 34.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 4 SCHEDULE 13D - ------------------------------ ----------------------------------- CUSIP NO. 019589 PAGE 5 OF 13 PAGES ---------- --- ---- - ------------------------------ ----------------------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Apollo Advisors II, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)/X/ (b)/ / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES BENEFICIALLY -0- OWNED BY ------------------------------------------------------------------- EACH 8 SHARED VOTING POWER REPORTING PERSON WITH 26,376,765 ------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER -0- ------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 26,376,765 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 26,376,765 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 34.4% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. 5 ITEM 1. SECURITY AND ISSUER This Statement relates to the common stock, par value $0.01 per share ("Common Stock"), of Allied Waste Industries, Inc., a Delaware corporation (the "Issuer"). The address of the principal executive office of the Issuer is 15880 N. Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona 85260. ITEM 2. IDENTITY AND BACKGROUND (a)-(c) AND (f) This Statement is filed jointly by Apollo Investment Fund III, L.P., a Delaware limited partnership ("Fund III"), Apollo Overseas Partners III, L.P., a Delaware limited partnership ("Overseas Partners"), Apollo (U.K.) Partners III, L.P., a limited partnership organized under the laws of the United Kingdom ("U.K. Partners" and, together with Fund III and Overseas Partner, the "Apollo Purchasers") and Advisors (as defined below). The foregoing entities are hereinafter referred to collectively as the "Reporting Entities." The Reporting Entities are making this joint filing because they may be deemed to constitute a "group" within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act"). In addition, certain information concerning the Blackstone Entities (as defined below) is included in this Schedule 13D because the Reporting Entities together with the Blackstone Entities may be deemed to constitute a "group" within the meaning of Section 13(d)(3). The Reporting Entities disclaim any pecuniary interest in the Blackstone Block (as defined below). Each of the Apollo Purchasers is principally engaged in the business of investment in securities. The principal office of each of the Apollo Purchasers is c/o Apollo Advisors II, L.P., Two Manhattanville Road, Purchase, New York 10577. Apollo Advisors II, L.P., a Delaware limited partnership ("Advisors"), is the managing general partner of each of the Apollo Purchasers. Advisors is principally engaged in the business of serving as managing general partner of the Apollo Purchasers. Apollo Capital Management II, Inc., a Delaware corporation ("Apollo Capital"), is the general partner of Apollo Advisors. Apollo Capital is principally engaged in the business of serving as general partner to Advisors. Apollo Management, L.P., a Delaware limited partnership ("Apollo Management"), serves as manager of the Apollo Purchasers and manages their day-to-day operations. AIF III Management, Inc., a Delaware corporation ("AIM"), is the general partner of Apollo Management. AIM is principally engaged in the business of serving as general partner to Apollo Management. 6 The respective addresses of the principal office of Advisors, Apollo Capital, Apollo Management and AIM are c/o Apollo Advisors II, L.P., Two Manhattanville Road, Purchase, New York 10577. Apollo Fund Administration II LDC, a Cayman Islands LDC ("Administration"), is the administrative general partner of each of Overseas Partners and UK Partners. Administration is principally engaged in the business of serving as administrative general partner of Overseas Partners and UK Partners. The principal place of business of Administration is Apollo Fund Administration II LDC, c/o CIBC Bank and Trust Company (Cayman) Limited, Edward Street, Georgetown, Grand Cayman, Cayman Islands, British West Indies. Apollo Management (UK) Ltd., an English corporation ("Management UK"), is the resident general partner of UK Partners. Management UK is principally engaged in the business of serving as resident general partner of UK Partners. The address of the principal business of Management UK is Hill House, 1 Little New Street, London EC4A 3TR, England. Attached as Schedule I to this Statement is information concerning the Reporting Entities and other persons and entities as to which such information is required to be disclosed in response to Item 2 and General Instruction C to Schedule 13D. (d) AND (e) None of the Reporting Entities, Apollo Capital, Apollo Management, AIM, Administration, Management UK nor any of the persons or entities referred to in Schedule I has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Pursuant to a Stock Purchase Agreement, dated as of April 14, 1997 and delivered among the parties thereto on April 15, 1997 (the "TPG Agreement"), by and between the Apollo Purchasers, Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership (collectively, the "Blackstone Entities" and, together with the Apollo Purchasers, "Purchasers"), and TPG Partners, L.P., a Delaware limited partnership and TPG Parallel I, L.P., a Delaware limited partnership (collectively, "TPG"), and subject to the terms and conditions therein, the Purchasers will acquire an aggregate of 11,776,765 shares of Common Stock of the Issuer from TPG (the "TPG Shares") for an aggregate purchase price of $111,879,267.50 (exclusive of related fees and expenses). The TPG Agreement provides that the closing is to occur following termination or expiration of applicable waiting 7 periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). At the closing, TPG is obligated to deliver to the Purchasers, among other things, the resignations of TPG's four director representatives from the Board of Directors of the Issuer (the "Board"). Pursuant to a Securities Purchase Agreement, dated as of April 21, 1997 (the "Laidlaw Agreement" and, together with the TPG Agreement, the "Purchase Agreements"), by and between the Issuer, the Purchasers and Laidlaw, Inc., a Canadian corporation, and Laidlaw Transportation, Inc., a Delaware corporation (collectively, "Laidlaw"), and subject to the terms and conditions therein, the Purchasers will acquire an aggregate of 14,600,000 shares of Common Stock of the Issuer from Laidlaw (the "Laidlaw Shares" and, together with the TPG Shares, the "Shares") for an aggregate purchase price of $146,000,000 (exclusive of fees and expenses). In addition, the Laidlaw agreement provides for the Issuer's retirement of Laidlaw's interest in warrants of the Issuer and debt of certain subsidiaries of the Issuer ("Laidlaw Warrants and Debt"). The Laidlaw Agreement provides that the closing is to occur on the later of (i) the termination or expiration of applicable waiting periods under the HSR Act and (ii) the Issuer's consummation of the financing required for the retirement of the Laidlaw Warrants and Debt. At the closing, Laidlaw is obligated to deliver to the Purchasers, among other things, the resignations of Laidlaw's two director representatives from the Board. Pursuant to an Investment Agreement, dated as of April 14, 1997 and delivered among the parties thereto on April 15, 1997 (the "Investment Agreement"), by and among the Purchasers, the Apollo Purchasers agreed to purchase 65% of the Shares, or 17,144,897 shares of Common Stock (such percentage of the Shares is referred to herein as the "Apollo Block"), and pay 65% of the aggregate purchase price for the Shares, and the Blackstone Entities agreed to purchase 35% of the Shares, or 9,231,868 shares of Common Stock (such percentage of the Shares is referred to herein as the "Blackstone Block"), and pay 35% of the aggregate purchase price for the Shares. Under the Investment Agreement, the Apollo Purchasers may allocate their obligation to purchase the Apollo Block, and the ownership of shares received, among themselves in their sole discretion; the Blackstone Entities have similar allocation rights with respect to the Blackstone Block. The Apollo Purchasers plan to fund their purchase of the Apollo Block through capital contributions from their investors. All references to, and summaries of, the TPG Agreement, Laidlaw Agreement and the Investment Agreement in this Schedule 13D are qualified in their entirety by reference to such agreements, the full texts of which are filed as Exhibits 1, 2 and 3 hereto, respectively, and incorporated herein by this reference. ITEM 4. PURPOSE OF TRANSACTION The Apollo Purchasers have entered into the Purchase Agreements in order to acquire a significant equity interest in the Issuer and for general investment purposes. The Apollo Purchasers retain the 8 right to change their investment intent, and, subject to the restrictions set forth in the Investment Agreement and the Shareholders Agreements (as defined below), to propose one or more possible transactions to the Issuer and/or other stockholders with the consent of the Issuer and/or the Blackstone Entities. In the event of a material change in the present plans of the Apollo Purchasers, the Reporting Entities will amend this Schedule 13D to reflect such change. The Purchasers and the Issuer have entered into a Shareholders Agreement, dated April 14, 1997 and delivered among the parties thereto on April 15, 1997 (the "TPG Shareholders Agreement"), relating to, among other things, (i) certain restrictions during the Standstill Period (as defined) on the Purchasers' (A) dispositions and acquisitions of voting securities of the Issuer, except in certain limited circumstances including the opportunity to obtain up to a maximum of 3,000,000 additional shares with the written consent of the two most senior executives of the Issuer, (B) making of any proposals for certain Reorganization Transactions (as defined) and (C) solicitation of shareholders for the approval of various shareholder proposals, (ii) the assignment of registration rights held by TPG to the Purchasers and (iii) corporate governance matters concerning the Issuer, including the requirement that the Issuer cause two Purchasers representatives, consisting of one designee of each of the Apollo Purchasers and the Blackstone Entities, to be elected to the Board. Pursuant to an Amended and Restated Shareholders Agreement, dated April 21, 1997 (the "Amended Shareholders Agreement"), the Purchasers and the Issuer have agreed to amend the TPG Shareholders Agreement, effective upon the Purchasers' acquisition of the Laidlaw Shares, to provide that (1) two additional designees of the Apollo Purchasers be elected to the Board, for a total of three designees of the Apollo Purchasers and one designee of the Blackstone Entities, (2) during the Standstill Period, the Purchasers will not make Dispositions (as defined) of voting securities of the Issuer prior to the second anniversary of the effective date of the amendment, except in certain limited circumstances, and (3) during the Shareholder Designee Period (as defined), the Issuer support the election of the Purchasers' four designees to serve as directors on the Board, subject to a reduction in the number of such designees if the Purchasers decrease their ownership of the Shares by specified percentages. The Purchasers also have the right to include their director designees on a nominating committee, which will make recommendations with respect to the Unaffiliated Directors (as defined) who will be included in management's slate of nominees to the Board. The Purchasers and the Company have also entered into an Agreement, dated April 21, 1997 (the "Interim Agreement"), concerning certain governance matters and the suspension of the Purchasers' registration rights during the period prior to the Purchasers' acquisition of the Laidlaw Shares. The Interim Agreement also provides that the Issuer will not fill any of the vacancies created by the TPG and Laidlaw director resignations provided for in the Purchase Agreements other than in accordance with the TPG Shareholders Agreement and the Amended Shareholders Agreement. Pursuant to a Registration Rights Agreement, dated April 21, 1997 (the "Registration Rights Agreement"), between the Purchasers and the 9 Company, the Company granted to the Purchasers certain registration rights with respect to Common Stock owned by the Purchasers. Upon the Purchasers' acquisition of the Laidlaw Shares, the rights granted under the Registration Rights Agreement will supersede all other registration rights held by the Purchasers with respect to the Common Stock and are not exercisable until the second anniversary of such acquisition. All references to, and summaries of, the TPG Shareholders Agreement, Amended Shareholders Agreement, Interim Agreement and Registration Rights Agreement (collectively, the "Shareholders Agreements") in this Schedule 13D are qualified in their entirety by reference to such agreements, the full texts of which are filed as Exhibits 4, 5, 6 and 7 hereto, respectively, and incorporated herein by this reference. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) AND (b) Fund III has the right to acquire 15,632,717 shares of Common Stock pursuant to the Purchase Agreements and the Investment Agreement, representing approximately 20.4% of the outstanding shares of Common Stock as of March 31, 1997 (the "Outstanding Shares"), and will have, upon such acquisition and subject to the Shareholders Agreements and the Investment Agreement, sole voting and sole dispositive power with respect to such shares. Overseas Partners has the right to acquire 934,397 shares of Common Stock pursuant to the Purchase Agreements and Investment Agreement, representing approximately 1.2% of the Outstanding Shares, and will have, upon such acquisition and subject to the Shareholders Agreements and the Investment Agreement, sole voting and sole dispositive power with respect to such shares. U.K. Partners has the right to acquire 577,783 shares of Common Stock pursuant to the Purchase Agreements and Investment Agreement, representing approximately 0.8% of the Outstanding Shares, and will have, upon such acquisition and subject to the Shareholders Agreements and the Investment Agreement, sole voting and sole dispositive power with respect to such shares. Each of Advisors and Apollo Capital may be deemed, pursuant to the attribution rules of Rule 13d-3 of the Exchange Act, to be the beneficial owner of 17,144,897 shares of Common Stock, representing approximately 22.4% of the Outstanding Shares, consisting of the Apollo Block. Each of Advisors and Apollo Capital disclaim beneficial ownership of such shares. By virtue of the Purchase Agreements, Investment Agreement and Shareholders Agreements, and pursuant to the attribution rules of Rules 13d-3 and 13d-5(b) of the Exchange Act, each of the Reporting Entities and each of the Blackstone Entities may be deemed to beneficially own 26,376,765 shares of Common Stock, representing 34.4% of the Outstanding Shares, constituting all of the Shares which the Purchasers collectively have a right to acquire under the Purchase 10 Agreements. The statements in this Schedule 13D shall not be construed as an admission that a Reporting Entity is the beneficial owner of any of the Shares other than those which such Reporting Entity has a right to acquire pursuant to the Purchase Agreements and the Investment Agreement. Further, each of the Reporting Entities disclaim any pecuniary interest in the shares of Common Stock held by the Blackstone Entities. In addition, by virtue of the Purchase Agreements, Investment Agreement and Shareholders Agreements, each of the Reporting Entities and each of the Blackstone Entities may be deemed to share voting and dispositive power with respect to the Shares. The Reporting Entities disclaim the existence of such shared power. (C) The responses to Items 3 and 4 of this Schedule 13D are incorporated herein. (D) Not applicable (E) Not applicable ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The response to Items 3, 4 and 5 of this Schedule 13D are incorporated herein. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS (1) Stock Purchase Agreement, dated as of April 14, 1997 (2) Securities Purchase Agreement, dated as of April 21, 1997 (3) Investment Agreement, dated as of April 14, 1997 (4) Shareholders Agreement, dated as of April 14, 1997 (5) Amended and Restated Shareholders Agreement, dated as of April 21, 1997 (6) Agreement, dated as of April 21, 1997 (7) Registration Rights Agreement, dated as of April 21, 1997 11 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. In addition, by signing below, the undersigned agrees that this Schedule 13D may be filed jointly on behalf of each of Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P., Apollo (U.K.) Partners III, L.P. and Apollo Advisors II, L.P. Dated as of the 25th day of April, 1997. APOLLO INVESTMENT FUND III, L.P. By: Apollo Advisors II, L.P., its General Partner By: Apollo Capital Management II, Inc., its General Partner By: /s/ Michael D. Weiner ------------------------------------------------------------ Name: Michael D. Weiner Title: Vice President APOLLO OVERSEAS PARTNERS III, L.P. By: Apollo Advisors II, L.P., its General Partner By: Apollo Capital Management II, Inc., its General Partner By: /s/ Michael D. Weiner ------------------------------------------------------------ Name: Michael D. Weiner Title: Vice President APOLLO (U.K.) PARTNERS III, L.P. By: Apollo Advisors II, L.P., its General Partner By: Apollo Capital Management II, Inc., its General Partner By: /s/ Michael D. Weiner ------------------------------------------------------------ Name: Michael D. Weiner Title: Vice President APOLLO ADVISORS II, L.P. By: Apollo Capital Management II, its General Partner By: /s/ Michael D. Weiner ------------------------------------------------------------ Name: Michael D. Weiner Title: Vice President 12 SCHEDULE I The following sets forth information with respect to the general partners, executive officers, directors and principal shareholders of Advisors, Apollo Capital, Apollo Management, AIM, Administration and Management UK. Capitalized terms used herein without definition have the meanings assigned thereto in the Schedule 13D to which this Schedule I relates. Except as otherwise indicated in this Schedule I or in the Schedule 13D to which this Schedule I relates, the principal business address of each person or entity set forth below is c/o Apollo Advisors II, L.P., Two Manhattanville Road, Purchase, New York 10577, and each such person or entity is a citizen of the United States of America. The principal business of Advisors is to provide advice regarding investments by, and serving as general partner to, the Apollo Purchasers, and the principal business of Apollo Capital is that of serving as general partner of Advisors. The principal business of Apollo Management is to serve as the manager of the Apollo Purchasers. The principal business of AIM is to serve as general partner to Apollo Management. The principal occupation of each of Messrs. Leon D. Black and John J. Hannan is to act as an executive officer and director of Apollo Capital and AIM. Messrs. Black and Hannan are also limited partners of Advisors and Apollo Management. Messrs. Black and Hannan are also founding principals of Apollo Advisors, L.P. ("Apollo Advisors"), Lion Advisors, L.P. ("Lion") and Apollo Real Estate Advisors, L.P. ("AREA"). The principal business of Apollo Advisors and Lion is to provide advice regarding investments in securities and the principal business of AREA is to provide advice regarding investments in real estate and real estate-related investments. The business address of each of Messrs. Black and Hannan is c/o Apollo Management, L.P., 1301 Avenue of the Americas, New York, New York 10019. Peter Henry Larder, Michael Francis Benedict Gillooly, Ian Thomas Patrick and Martin William Laidlaw, each of whom is a British citizen, serve as directors of Administration. Each of the above four individuals is principally employed by CIBC Bank and Trust Company (Cayman) Limited ("CIBC") in the following positions: Mr. Larder, Managing Director; Mr. Gillooly, Deputy Managing Director; Mr. Patrick, Manager-Accounting Services; and Mr. Laidlaw, Senior Fund Accountant. CIBC is a Cayman Islands corporation which is principally engaged in the provision of trust, banking and corporate administration services, the principal address of which is Edward Street, Grand Cayman, Cayman Islands, British West Indies. It provides accounting, administrative and other services to Administration pursuant to a contract. Mr. Leon D. Black is the beneficial owner of the stock of Administration. 13 EX-1 2 EXHIBIT 1 - STOCK PURCHASE AGREEMENT EXHIBIT 99.2 STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT dated as of April 14, 1997 (this "AGREEMENT") is made and entered into by and between Apollo Investment Fund III, L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware limited partnership, and Apollo (U.K.) Partners III, L.P., an English limited partnership (collectively, "APOLLO"), and Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership, and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership (collectively, "BLACKSTONE" and, together with Apollo, "PURCHASERS"), and TPG Partners, L.P., a Delaware limited partnership ("TPG PARTNERS"), and TPG Parallel I, L.P., a Delaware limited partnership ("TPG PARALLEL" and together with TPG Partners, "SELLERS"). Capitalized terms not otherwise defined herein have the meanings set forth in SECTION 9.1. WHEREAS, Sellers own collectively 11,776,765 shares of common stock, par value $.01 per share, of Allied Waste Industries, Inc., a Delaware corporation (the "COMPANY"), constituting approximately 15.6% of the issued and outstanding shares of capital stock of the Company as of the date hereof (such shares being referred to herein as the "SHARES"); WHEREAS, Sellers desire to sell, and Purchasers desire to purchase, the Shares on the terms and subject to the conditions set forth in this Agreement; and NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I SALE OF SHARES AND CLOSING 1.1 PURCHASE AND SALE. At the Closing, on the terms and subject to the conditions set forth in this Agreement, each Seller agrees to sell to Purchasers all of the right, title and interest of such Seller in and to the Shares, and the Purchasers jointly and severally agree to purchase from the Sellers all of such Shares. 1.2 PURCHASE PRICE. The purchase price for the Shares is $9.50 per share, or $111,879,267.50 in the aggregate (the "PURCHASE PRICE"), payable in immediately available United States funds at the Closing in the manner provided in SECTION 1.3. 1.3 CLOSING. The Closing will take place at the offices of Kelly, Hart & Hallman, 201 Main Street, Suite 2500, Fort Worth, Texas, or at such other place as Purchasers and Sellers mutually agree, at 10:00 A.M. local time, on the Closing Date. At the Closing, Purchasers will pay the Purchase Price by wire transfer of immediately available funds to such account or accounts as Sellers may reasonably direct by written notice delivered to Purchasers by Sellers at least one (1) Business Day before the Closing Date. Simultaneously, each Seller will assign and transfer to Purchasers all of such Seller's right, title and interest in and to the Shares by delivering to Purchasers a certificate or certificates representing such Shares, in genuine and unaltered form, duly endorsed in blank or accompanied by duly executed stock powers endorsed in blank, with requisite stock transfer tax stamps, if any, attached. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER Each Seller, jointly and severally, hereby represents and warrants to Purchasers as follows: 2.1 ORGANIZATION OF SELLER. Seller is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware. Seller has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby, including without limitation to own, hold, sell and transfer (pursuant to this Agreement) the Shares. 2.2 TITLE TO SHARES. TPG Partners and TPG Parallel own 10,709,637 and 1,067,128 Shares, respectively (such amounts representing all of the Shares and any other equity equivalents owned directly or indirectly by Sellers or any of their affiliates), and each Seller is the sole record and beneficial owner of such Shares, free and clear of all Liens. The delivery of a certificate or certificates at the Closing representing the Shares in the manner provided in SECTION 1.3 will transfer to Purchasers good and valid title to the Shares, free and clear of all Liens (except such as may be imposed on the Shares by the Purchasers). -2- 2.3 AUTHORITY. The execution and delivery by Seller of this Agreement and the performance by Seller of its obligations hereunder have been duly and validly authorized, no other action on the part of Seller, its general partner or their respective partners and stockholders being necessary. This Agreement has been duly and validly executed and delivered by Seller and constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except to the extent such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors' rights and (ii) the availability of equitable remedies (whether in a proceeding in equity or at law). 2.4 NO CONFLICTS. The execution and delivery by Seller of this Agreement do not, and the performance by Seller of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the partnership agreement, certificate or articles of incorporation or by-laws (or other comparable organizational documents) of Seller or their general partners; (b) subject to making all filings, giving all notices and obtaining all approvals required under the HSR Act, conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to Seller or the Shares; or (c) (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, (iii) require Seller to obtain any consent from any Person as a result or under the terms of, or (iv) result in the creation or imposition of any Lien (other than such Liens as may be created by this Agreement) upon Seller or the Shares under, any Contract to which Seller is a party. 2.5 GOVERNMENTAL APPROVALS AND FILINGS. Other than the filing of a Schedule 13D and applicable forms under Section 16 as required under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), no consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Seller is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 2.6 LEGAL PROCEEDINGS. There are no Actions or Proceedings pending or, to the knowledge of Seller, threatened against, relating to or affecting Seller (or to the knowledge of -3- Seller, the Company) which could reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. 2.7 BROKERS. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Seller directly with Purchasers without the intervention of any Person on behalf of Seller in such manner as to give rise to any valid claim by any Person against Purchasers or the Company for a finder's fee, brokerage commission or similar payment. 2.8 AGREEMENTS RELATING TO SHARES. Other than documents listed on SCHEDULE 2.8 (the "SELLER AGREEMENTS"), true and complete copies of which have been filed with the Securities and Exchange Commission and made available to Purchasers, and other than the respective partnership agreements of each Seller, there are no (i) Contracts or other arrangements concerning the acquisition, disposition or the voting of the Shares, (ii) options with respect to the Shares, including without limitation any form of preemptive rights or claims of third parties or (iii) outstanding proxies, shareholder agreements, voting trusts, powers of attorney or comparable delegations of authority concerning the Shares. Each Seller Agreement is valid, binding and in full force and effect. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASERS Each Purchaser, severally but not jointly, hereby represents and warrants to Sellers as follows: 3.1 ORGANIZATION. Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Purchaser has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. 3.2 AUTHORITY. The execution and delivery by Purchaser of this Agreement, and the performance by Purchaser of its obligations hereunder, have been duly and validly authorized, no other action on the part of Purchaser, its general partner or their respective partners and stockholders being necessary. This Agreement has been duly and validly executed and delivered by Purchaser and constitutes a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its -4- terms, except to the extent such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors' rights and (ii) the availability of equitable remedies (whether in a proceeding in equity or at law). 3.3 NO CONFLICTS. The execution and delivery by Purchaser of this Agreement do not, and the performance by Purchaser of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not: (a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the partnership agreement, certificate or articles of incorporation or by-laws (or other comparable organizational documents) of Purchaser or its general partner; (b) subject to making all filings, giving all notices and obtaining all approvals required under the HSR Act, conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to Purchaser; (c) (i) conflict with or result in a violation or breach of, (ii) constitute (with or without notice or lapse of time or both) a default under, or (iii) require Purchaser to obtain any consent from any Person as a result or under the terms of, any Contract to which Purchaser is a party. 3.4 GOVERNMENTAL APPROVALS AND FILINGS. Other than filings, notices and approvals required under the HSR Act or the Exchange Act, no consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Purchaser is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 3.5 LEGAL PROCEEDINGS. There are no Actions or Proceedings pending or, to the knowledge of Purchaser, threatened against, relating to or affecting Purchaser which could reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. 3.6 PURCHASE FOR INVESTMENT. The Shares will be acquired by Purchaser (or, if applicable, its permitted assigns hereunder) for its own account for the purpose of investment, it being understood that the right to dispose of such Shares shall be entirely within the discretion of Purchaser (or such assignee, as the case may be). -5- 3.7 BROKERS. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Purchaser directly with Sellers without the intervention of any Person on behalf of Purchaser in such manner as to give rise to any valid claim by any Person against Sellers or the Company for a finder's fee, brokerage commission or similar payment, except for Goldman Sachs & Co., whose fees and expenses will be paid by Purchaser. ARTICLE IV COVENANTS OF SELLERS Each Seller covenants and agrees with Purchasers that: 4.1 CERTAIN RESTRICTIONS. During the term hereof, Seller will not vote the Shares in any manner that would have a material adverse effect on Business or Condition of the Company or vote for any material transaction not otherwise in the ordinary course of business of the Company. 4.2 NOTICE AND CURE. Seller will notify Purchasers in writing of, and contemporaneously will provide Purchasers with true and complete copies of any and all information or documents relating to, and will use all commercially reasonable efforts to cure before the Closing, any event, transaction or circumstance, as soon as practicable after it becomes known to Seller, occurring after the date of this Agreement that causes or will cause any covenant or agreement of Seller under this Agreement to be breached or that renders or will render untrue any representation or warranty of Seller contained in this Agreement as if the same were made on or as of the date of such event, transaction or circumstance. ARTICLE V COVENANTS OF PURCHASERS Each Purchaser covenants and agrees with Sellers that: 5.1 HSR. Purchaser will within ten Business Days file a notification under the HSR Act, and will promptly take all reasonable actions to obtain all approvals required under the HSR Act in connection with the transactions contemplated by this Agreement. 5.2 NOTICE AND CURE. Purchaser will notify Sellers in writing of, and contemporaneously will provide Sellers with true -6- and complete copies of any and all information or documents relating to, and will use all commercially reasonable efforts to cure before the Closing, any event, transaction or circumstance, as soon as practicable after it becomes known to Purchaser, occurring after the date of this Agreement that causes or will cause any covenant or agreement of Purchaser under this Agreement to be breached or that renders or will render untrue any representation or warranty of Purchaser contained in this Agreement as if the same were made on or as of the date of such event, transaction or circumstance. No notice given pursuant to this Section shall have any effect on the representations, warranties, covenants or agreements contained in this Agreement for purposes of determining satisfaction of any condition contained herein. ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASERS The obligation of Purchasers hereunder to purchase the Shares is subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part only by Purchasers in their sole discretion): 6.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by Sellers in this Agreement (other than those made as of a specified date earlier than the Closing Date) shall be true and correct in all material respects on and as of the Closing Date as though such representation or warranty was made on and as of the Closing Date, and any representation or warranty made as of a specified date earlier than the Closing Date shall have been true and correct in all material respects on and as of such earlier date. 6.2 PERFORMANCE. Sellers shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by Sellers at or before the Closing. 6.3 REGULATORY CONSENTS AND APPROVALS. All approvals (or terminations or expirations of waiting periods) required under the HSR Act necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained (or terminated or expired). 6.4 DELIVERY OF SHARES. All of the Shares, and not just a portion thereof, shall have been delivered for sale by Sellers. -7- 6.5 ASSIGNMENT OF REGISTRATION RIGHTS. Sellers shall have validly assigned to Purchasers, to the fullest extent permitted under the Seller Agreements, all of Sellers' registration rights relating to the Shares; provided that Purchasers shall execute and deliver to the Company a written undertaking to comply with the obligations imposed on the holder of such registration rights under the Seller Agreements. 6.6 BOARD RESIGNATIONS. Each of James G. Coulter, Jeffrey A. Shaw, John M. Lewis and William K. Reilly, representing all of Sellers' designees or affiliates on the Board of Directors, (or any other person who shall replace or succeed such person as a member of the Board of Directors of the Company) shall have resigned from the Board of Directors of the Company. ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLERS The obligations of Sellers hereunder to sell the Shares are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Sellers in their sole discretion): 7.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by Purchasers in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though such representation or warranty was made on and as of the Closing Date. 7.2 PERFORMANCE. Purchasers shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by Purchasers at or before the Closing. 7.3 REGULATORY CONSENTS AND APPROVALS. All approvals (or terminations or expirations of waiting periods) required under the HSR Act necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained (or terminated or expired). -8- ARTICLE VIII TERMINATION 8.1 TERMINATION. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned: (a) at any time before the Closing, by mutual written agreement of Sellers and Purchasers; or (b) at any time after June 15, 1997 by Sellers or Purchasers upon notification of the non-terminating party by the terminating party if the Closing shall not have occurred on or before such date and such failure to consummate is not caused by a breach of this Agreement by the terminating party. ARTICLE IX DEFINITIONS 9.1 DEFINITIONS. (a) DEFINED TERMS. As used in this Agreement, the following defined terms have the meanings indicated below: "ACTIONS OR PROCEEDINGS" means any action, suit, proceeding, arbitration or Governmental or Regulatory Authority investigation or audit. "BUSINESS OR CONDITION OF THE COMPANY" means the business, condition (financial or otherwise), results of operations, assets and properties and prospects of the Company taken as a whole. "BUSINESS DAY" means a day other than Saturday, Sunday or any other day on which banks located in the States of New York, Texas or California are authorized or obligated to close. "CLOSING" means the closing of the transactions contemplated by SECTION 1.3. "CLOSING DATE" means (a) the first Business Day after the day on which the last of the approval or waiting period described in SECTION 6.3 and SECTION 7.3 has been obtained or has expired, as applicable, or (b) such other date as Purchasers and Sellers mutually agree upon in writing. "COMPANY" means Allied Waste Industries, Inc., a Delaware corporation. Unless the context requires otherwise, all -9- references to the Company herein shall be deemed to include all of the consolidated subsidiaries of the Company. "CONTRACT" means any agreement, lease, license, evidence of indebtedness, mortgage, indenture, security agreement or other contract (whether written or oral). "GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision. "HSR ACT" means Section 7A of the Clayton Act (Title II of the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules and regulations promulgated thereunder. "LAWS" means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental or Regulatory Authority. "LIENS" means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or other Contract to give any of the foregoing. "ORDER" means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final). "PERSON" means any natural person, corporation, general partnership, limited partnership, proprietorship, other business organization, trust, union, association or Governmental or Regulatory Authority. ARTICLE X MISCELLANEOUS 10.1 FURTHER ASSURANCES. Sellers and Purchasers will execute and deliver at the Closing each agreement and other document that such party is required hereby to execute and deliver as a condition to the Closing, and will take all commercially reasonable steps necessary or desirable and proceed diligently and in good faith to satisfy each condition to the obligations of such party contained in this Agreement and will -10- not take or fail to take any action that could reasonably be expected to result in the nonfulfillment of any such condition. At the Closing and from time to time thereafter, Sellers and Purchasers shall execute and deliver such other documents and instruments (including officers' certificates and opinions of counsel), provide such materials and information and take such other actions as may be reasonably requested to cause such party to fulfill its obligations under this Agreement. 10.2 ENTIRE AGREEMENT. This Agreement supersedes all prior discussions and agreements between the parties with respect to the subject matter hereof, and contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof. 10.3 AMENDMENT. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each party hereto. 10.4 REMEDIES. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. Notwithstanding the foregoing, the parties acknowledge that it will be impossible to measure in money the damage caused by any failure of either party to comply with its agreements set forth herein, that each such agreement is material, and that in the event of any such failure, the other party will not have an adequate remedy at law or in damages. Therefore, each party consents to the issuance of an injunction or the enforcement of other equitable remedies against such party at the suit of the other party, without bond or other security, to compel performance of all of the terms hereof, and each party hereby waives the defense of availability of relief in damages. 10.5 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to a Contract executed and performed in such State, without giving effect to the conflicts of laws principles thereof. 10.6 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. -11- IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party hereto as of the date first above written. APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (U.K.) PARTNERS III, L.P. By: Apollo Advisors II, L.P. By: Apollo Capital Management II, Inc. By: \s\ David B. Kaplan --------------------------------- Name: David B. Kaplan Title: Vice President BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P. By: Blackstone Management Associates II L.L.C. By: \s\ Howard A. Lipson --------------------------------- Name: Howard A. Lipson Title: Senior Managing Director TPG PARTNERS, L.P. TPG PARALLEL I, L.P. By: TPG GenPar, L.P. By: TPG Advisors, Inc. By: \s\ James J. O'Brien --------------------------------- Name: James J. O'Brien Title: Vice President -12- EX-2 3 EXHIBIT 2 - SECURITIES PURCHASE AGREEMENT EXHIBIT 99.3 SECURITIES PURCHASE AGREEMENT This SECURITIES PURCHASE AGREEMENT dated as of April 21, 1997 (this "AGREEMENT") is made and entered into by and between Apollo Investment Fund III, L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware limited partnership, and Apollo (U.K.) Partners III, L.P., an English limited partnership (collectively, the "APOLLO PURCHASERS"), and Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership, and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership (collectively, the "BLACKSTONE PURCHASERS" and, together with the Apollo Purchasers, "PURCHASERS"), Laidlaw Inc., a Canadian corporation ("LAIDLAW") and Laidlaw Transportation, Inc., a Delaware corporation and a wholly-owned subsidiary of Laidlaw ("LTI" and, together with Laidlaw, "SELLERS"), and Allied Waste Industries, Inc., a Delaware corporation (the "COMPANY"). Capitalized terms not otherwise defined herein have the meanings set forth in SECTION 6.1. WHEREAS, LTI owns (a) 14,600,000 shares of common stock, par value $.01 per share, of the Company, constituting approximately 19.3% of the issued and outstanding shares of capital stock of the Company as of the date hereof (such shares being referred to herein as the "SHARES") and (b) Warrants to purchase 20,400,000 shares of the Company's common stock (the "WARRANTS"); WHEREAS, Laidlaw owns (a) $150,000,000 aggregate principal amount of the 7% Junior Subordinated Debentures of Allied Waste Finance (Canada) Ltd., a Canadian corporation and a wholly-owned subsidiary of the Company ("ALLIED FINANCE") (the "7% DEBENTURES") and (b) $168,300,000 aggregate principal amount of the Zero Coupon Junior Subordinated Debentures of Allied Finance (the "ZERO COUPON DEBENTURES" and, together with the 7% Debentures, the "DEBENTURES"); WHEREAS, LTI desires to sell, and Purchasers desire to purchase, the Shares on the terms and subject to the conditions set forth in this Agreement; WHEREAS, LTI desires to sell the Warrants, and the Company desires to purchase, the Warrants on the terms and subject to the conditions set forth in this Agreement; WHEREAS, Laidlaw desires to sell the Debentures, and the Company desires to purchase, the Debentures on the terms and subject to the conditions set forth in this Agreement; WHEREAS, in connection with the agreement to purchase certain shares of the Company's common stock (including the assignment of certain related registration rights (the "TPG REGISTRATION RIGHTS")) pursuant to a Stock Purchase Agreement dated April 14, 1997 between the Purchasers, TPG Partners, L.P. and TPG Parallel I, L.P., the Company and Purchasers have entered into a Shareholders Agreement, dated April 14, 1997 (the "TPG SHAREHOLDERS AGREEMENT"); WHEREAS, in connection with this Agreement, the Company and the Purchasers have entered into (i) an amended and restated Shareholders Agreement, dated the date hereof (the "SHAREHOLDERS AGREEMENT"), and (ii) a Registration Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT"), each effective upon the Closing Date (which Shareholders Agreement and Registration Rights Agreement shall supersede and replace the TPG Shareholders Agreement and the TPG Registration Rights on the Closing Date); NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I SALE OF SHARES AND CLOSING 1.1 PURCHASE AND SALE. At the Closing, on the terms and subject to the conditions set forth in this Agreement, (i) LTI agrees to sell to Purchasers all of the right, title and interest of LTI in and to the Shares, and Purchasers jointly and severally agree to purchase from LTI all of the Shares and (ii) LTI agrees to sell to the Company all of the right, title and interest of LTI in and to the Warrants, and the Company agrees to purchase from LTI all of the Warrants, and (iii) Laidlaw agrees to sell to the Company all of the right, title and interest of Laidlaw in and to the Debentures, and the Company agrees to purchase from Laidlaw all of the Debentures. 1.2 PURCHASE PRICE. (a) SHARES. Subject to adjustment as provided in SECTION 5.1(B), the purchase price per share for the Shares is $10.00 per share, or $146,000,000 in the aggregate (the -2- "SHARES PURCHASE PRICE"), payable in immediately available United States funds at the Closing in the manner provided in SECTION 1.3. (b) OTHER SECURITIES. Subject to adjustment as provided in SECTION 5.1(B), the purchase price for the Debentures and the Warrants, (collectively, the "OTHER SECURITIES") shall be $230,000,000 (the "OTHER SECURITIES PURCHASE PRICE"), payable in immediately available United States funds at the Closing in the manner provided in SECTION 1.3. 1.3 CLOSING. The Closing will take place at the offices of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York, or at such other place as Purchasers, Sellers and the Company mutually agree, at 10:00 A.M. local time, on the Closing Date; PROVIDED, that the parties hereto will use commercially reasonable efforts to cause the Closing to occur by May 31, 1997. At the Closing, Purchasers will pay the Shares Purchase Price and the Company will pay the Other Securities Purchase Price by wire transfer of immediately available funds to such account or accounts as Laidlaw may reasonably direct by written notice delivered to Purchasers and the Company at least one (1) Business Day before the Closing Date (Laidlaw shall accept delivery of the Securities Purchase Price on behalf of itself and LTI, which hereby appoints Laidlaw as its agent for such purpose). Simultaneously, (i) LTI will assign and transfer to Purchasers all of LTI's right, title and interest in and to the Shares by delivering to Purchasers one or more certificates representing such Shares, in genuine and unaltered form, duly endorsed in blank or accompanied by duly executed stock powers endorsed in blank, with requisite transfer tax stamps, if any, attached, and (ii) each of Laidlaw and LTI will assign and transfer to the Company all of Laidlaw's and LTI's respective right, title and interest in and to the Others Securities by delivering to the Company one or more Notes, Warrants or other certificates representing such Other Securities, in genuine and unaltered form, duly endorsed in blank or accompanied by duly executed bond or stock powers endorsed in blank, with requisite transfer tax stamps, if any, attached. ARTICLE II REPRESENTATIONS AND WARRANTIES 2.1 REPRESENTATIONS AND WARRANTIES OF SELLERS. Laidlaw and LTI, jointly and severally, hereby represent and warrant to Purchasers and the Company as follows: -3- (a) ORGANIZATION. Each of Laidlaw and LTI is a corporation duly organized, validly existing and in good standing under the laws of Canada and Delaware, respectively. Each of Laidlaw and LTI has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby, including without limitation to own, hold, sell and transfer (pursuant to this Agreement) the Shares and the Other Securities owned by such Seller. (b) TITLE TO SHARES. The Shares represent all of the common stock and any other equity equivalents (other than the Warrants and options held by Company directors who are affiliates of Sellers) of the Company owned directly or indirectly by Sellers or any of their affiliates, and LTI is the sole record and beneficial owner of such Shares, free and clear of all Liens. The delivery of one or more certificates at the Closing representing the Shares in the manner provided in SECTION 1.3 will transfer to Purchasers good and valid title to the Shares, free and clear of all Liens (except such as may be imposed on the Shares by the Purchasers). (c) TITLE TO OTHER SECURITIES. The Other Securities represent all of the securities (other than the Shares and options held by Company directors who are affiliates of Sellers) of the Company owned directly or indirectly by Sellers or any of their affiliates. Laidlaw is the sole record and beneficial owner of the Debentures, and, LTI is the sole record and beneficial owner of the Warrants, in each case, free and clear of all Liens. The delivery of one or more Notes, Warrants or other certificates at the Closing representing the Other Securities in the manner provided in SECTION 1.3 will transfer to the Company good and valid title to the Other Securities, free and clear of all Liens (except such as may be imposed on the Other Securities by the Company). (d) AUTHORITY. The execution and delivery by each of Laidlaw and LTI of this Agreement and the performance by each of Laidlaw and LTI of its obligations hereunder have been duly and validly authorized, no other action on the part of Laidlaw, LTI or their stockholders being necessary. This Agreement has been duly and validly executed and delivered by each of Laidlaw and LTI and constitutes a legal, valid and binding obligation of each of Laidlaw and LTI enforceable against each of Laidlaw and LTI in accordance with its terms, except to the extent such enforceability may be limited by (i) bankruptcy, insolvency, -4- reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors' rights and (ii) the availability of equitable remedies (whether in a proceeding in equity or at law). (e) NO CONFLICTS. The execution and delivery by each of Laidlaw and LTI of this Agreement do not, and the performance by each of Laidlaw and LTI of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not: (i) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the certificate or articles of incorporation or by-laws (or other comparable charter documents) of Laidlaw or LTI; (ii) subject to making all filings, giving all notices and obtaining all approvals required under the HSR Act, conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to Laidlaw or LTI, the Shares or the Other Securities; or (iii)(A) conflict with or result in a violation or breach of, (B) constitute (with or without notice or lapse of time or both) a default under, (C) require Laidlaw or LTI to obtain any consent from any Person as a result or under the terms of, or (D) result in the creation or imposition of any Lien (other than such Liens as may be created by this Agreement) upon Laidlaw or LTI, the Shares or the Other Securities under, any Contract to which Laidlaw or LTI is a party. (f) GOVERNMENTAL APPROVALS AND FILINGS. Other than the filing of a Schedule 13D and applicable forms under Section 16 as required under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), no consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Laidlaw or LTI is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. (g) LEGAL PROCEEDINGS. As of the date of this Agreement, there are no Actions or Proceedings pending or, to the knowledge of Laidlaw or LTI, threatened against, relating to or affecting Laidlaw or LTI (or to the knowledge of Laidlaw or LTI, the Company) which could reasonably be -5- expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. (h) BROKERS. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Laidlaw and LTI directly with Purchasers and the Company without the intervention of any Person on behalf of such Seller in such manner as to give rise to any valid claim by any Person against Purchasers or the Company for a finder's fee, brokerage commission or similar payment, except for Goldman, Sachs & Co., whose fees (i) with respect to the purchase of the Shares shall be payable by Purchasers and (ii) with respect to the Financing (as defined herein) shall be payable by the Company. (i) AGREEMENTS RELATING TO SHARES. Other than the documents listed on SCHEDULE 2.1(I) (the "SELLERS AGREEMENTS"), true and complete copies of which have been filed with the Securities and Exchange Commission by the Company and made available to Purchasers, neither Laidlaw nor LTI is a party to (i) any Contracts or other arrangements concerning the acquisition, disposition or the voting of the Shares or the Other Securities, (ii) any options with respect to the Shares or the Other Securities, including without limitation any form of preemptive rights or claims of third parties or (iii) any outstanding proxies, shareholder agreements, voting trusts, powers of attorney or comparable delegations of authority concerning the Shares or the Other Securities. Each Sellers Agreement is valid, binding and in full force and effect. 2.2 REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Purchaser, severally but not jointly, hereby represents and warrants to Sellers and the Company as follows: (a) ORGANIZATION. Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Purchaser has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. (b) AUTHORITY. The execution and delivery by Purchaser of this Agreement, and the performance by Purchaser of its obligations hereunder, have been duly and validly authorized, no other action on the part of Purchaser, its general partner or their respective partners and stockholders being necessary. This Agreement has been -6- duly and validly executed and delivered by Purchaser and constitutes a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms, except to the extent such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors' rights and (ii) the availability of equitable remedies (whether in a proceeding in equity or at law). (c) NO CONFLICTS. The execution and delivery by Purchaser of this Agreement do not, and the performance by Purchaser of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not: (i) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the partnership agreement, certificate or articles of incorporation or by-laws (or other comparable organizational documents) of Purchaser or its general partner; (ii) subject to making all filings, giving all notices and obtaining all approvals required under the HSR Act, conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to Purchaser; (iii)(A) conflict with or result in a violation or breach of, (B) constitute (with or without notice or lapse of time or both) a default under, or (C) require Purchaser to obtain any consent from any Person as a result or under the terms of, any Contract to which Purchaser is a party. (d) GOVERNMENTAL APPROVALS AND FILINGS. Other than filings, notices and approvals required under the HSR Act and the Exchange Act, no consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of Purchaser is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. (e) LEGAL PROCEEDINGS. As of the date hereof, there are no Actions or Proceedings pending or, to the knowledge of Purchaser, threatened against, relating to or affecting Purchaser which could reasonably be expected to result in the issuance of an Order restraining, enjoining or -7- otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. (f) PURCHASE FOR INVESTMENT. The Shares will be acquired by Purchaser (or, if applicable, its permitted assigns hereunder) for its own account for the purpose of investment, it being understood that the right to dispose of such Shares shall be entirely within the discretion of Purchaser (or such assignee, as the case may be). (g) BROKERS. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Purchaser directly with Sellers and the Company without the intervention of any Person on behalf of such Purchaser in such manner as to give rise to any valid claim by any Person against Sellers or the Company for a finder's fee, brokerage commission or similar payment, except for Goldman, Sachs & Co., whose fees (i) with respect to the purchase of the Shares shall be payable by Purchasers and (ii) with respect to the Financing shall be payable by the Company. 2.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and warrants to Purchasers and Sellers as follows: (a) ORGANIZATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and to consummate the transactions contemplated hereby, including without limitation to purchase (pursuant to this Agreement) the Other Securities. (b) AUTHORITY. The execution and delivery by the Company of this Agreement and the performance by the Company of its obligations hereunder have been duly and validly authorized, no other action on the part of the Company or its stockholders being necessary. This Agreement has been duly and validly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors' rights and (ii) the availability of equitable remedies (whether in a proceeding in equity or at law). -8- (c) NO CONFLICTS. The execution and delivery by the Company of this Agreement do not, and the performance by the Company of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not: (i) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the certificate or by-laws of the Company; (ii) subject to making all filings, giving all notices and obtaining all approvals required under the HSR Act and the Exchange Act, conflict with or result in a violation or breach of any term or provision of any Law or Order applicable to the Company, the Shares or the Other Securities, except as would not, and in the aggregate have a material adverse effect on the Business or Condition of the Company or the consummation of the transactions contemplated hereby; (iii)(A) conflict with or result in a violation or breach of, (B) constitute (with or without notice or lapse of time or both) a default under, or (C) require the Company to obtain any consent from any Person as a result or under the terms of, any Contract to which the Company is a party, except as would not, in the aggregate have a material adverse effect on the Business or Condition of the Company or the consummation of the transactions contemplated hereby. (d) GOVERNMENTAL APPROVALS AND FILINGS. Other than filings, notices and approvals required under the HSR Act and the Exchange Act, no consent, approval or action of, filing with or notice to any Governmental or Regulatory Authority on the part of the Company is required in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. (e) LEGAL PROCEEDINGS. As of the date of this Agreement, there are no Actions or Proceedings pending or, to the knowledge of the Company, threatened against, relating to or affecting the Company which could reasonably be expected to result in the issuance of an Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. -9- (f) BROKERS. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by the Company directly with Purchasers and Sellers without the intervention of any Person on behalf of the Company in such manner as to give rise to any valid claim by any Person against Purchasers, Sellers or the Company for a finder's fee, brokerage commission or similar payment, except for Goldman, Sachs & Co., whose fees (i) with respect to the purchase of the Shares shall be payable by Purchasers and (ii) with respect to the Financing shall be payable by the Company. (g) USRPHC STATUS. None of the Company and its subsidiaries is a United States real property holding company within the meaning of Section 897(c)(2) of the Internal Revenue Code of 1986, as amended (the "CODE") during the applicable period specified in Code Section 897(c)(1)(A)(ii). ARTICLE III COVENANTS 3.1 COVENANTS OF SELLERS. Each Seller, jointly and severally, covenants and agrees with Purchasers and the Company that: (a) NO SOLICITATIONS. From and after the date hereof, Seller will not take, nor will it permit any affiliate of Seller (or authorize or permit any investment banker, financial advisor, attorney, accountant or other Person retained by or acting for or on behalf of Seller or any such affiliate) to take, directly or indirectly, any action to solicit, encourage, receive, negotiate, assist or otherwise facilitate any offer or inquiry from any Person concerning a transfer of the Shares or the Other Securities (other than the sale pursuant to this Agreement). If Seller or any such affiliate (or any such Person acting for or on their behalf) receives from any Person any offer, inquiry or informational request referred to above, Seller will promptly advise such Person, by written notice, of the terms of this Section and will promptly, orally and in writing, advise Purchasers and the Company of such offer, inquiry or request and deliver a copy of such notice to Purchasers and the Company. (b) CERTAIN RESTRICTIONS. Seller will not vote the Shares in any manner that would have a material adverse effect on the Business or Condition of the Company or vote -10- for any material transaction not otherwise in the ordinary course of business of the Company. (c) NOTICE AND CURE. Seller will notify Purchasers and the Company in writing of, and contemporaneously will provide Purchasers and the Company with true and complete copies of any and all information or documents relating to, and will use all commercially reasonable efforts to cure before the Closing, any event, transaction or circumstance, as soon as practicable after it becomes known to Seller, occurring after the date of this Agreement that causes or will cause any covenant or agreement of Seller under this Agreement to be breached or that renders or will render untrue any representation or warranty of Seller contained in this Agreement as if the same were made on or as of the date of such event, transaction or circumstance. (d) BOARD RESIGNATIONS. Seller shall cause each of James R. Bullock and Ivan R. Cairns (or any other person who shall replace or succeed such person as a member of the Board of Directors of the Company), representing all of Sellers' designees or affiliates on the Board of Director of the Company, to have resigned from the Board of Directors of the Company on or prior to the Closing Date. (e) AMENDMENTS AND ASSIGNMENTS. From the date hereof until the earlier to occur of the Closing or the termination of this Agreement, without the consent of Purchasers, Sellers will not materially amend the Sellers Agreements or assign any of their rights under this Agreement. 3.2 COVENANTS OF PURCHASER. Each Purchaser, severally but not jointly, covenants and agrees with Sellers and the Company that: (a) HSR. Purchaser will promptly take all reasonable actions to obtain all approvals required under the HSR Act in connection with the transactions contemplated by this Agreement. (b) NOTICE AND CURE. Purchaser will notify Sellers and the Company in writing of, and contemporaneously will provide Sellers and the Company with true and complete copies of any and all information or documents relating to, and will use all commercially reasonable efforts to cure before the Closing, any event, transaction or circumstance, as soon as practicable after it becomes known to Purchaser, -11- occurring after the date of this Agreement that causes or will cause any covenant or agreement of Purchaser under this Agreement to be breached or that renders or will render untrue any representation or warranty of Purchaser contained in this Agreement as if the same were made on or as of the date of such event, transaction or circumstance. No notice given pursuant to this Section shall have any effect on the representations, warranties, covenants or agreements contained in this Agreement for purposes of determining satisfaction of any condition contained herein. (c) AMENDMENTS AND ASSIGNMENTS. From the date hereof until the earlier to occur of the Closing or the termination of this Agreement, without the consent of Sellers, Purchasers will not materially amend the TPG Shareholders Agreement or assign any of their rights under this Agreement; PROVIDED, that the Purchasers may assign this Agreement to any Person who is a Related Transferee (as such term is defined in the TPG Shareholders Agreement). 3.3 COVENANTS OF THE COMPANY. The Company covenants and agrees with Sellers and Purchasers that: (a) HSR. The Company will promptly take all reasonable actions to obtain all approvals required under the HSR Act in connection with the transactions contemplated by this Agreement. (b) CONDUCT OF BUSINESS. Until the Closing, the Company will conduct business only in the ordinary course consistent with past practice, except with the written consent of Purchasers or as otherwise contemplated by this Agreement (including the Financing) or the TPG Shareholders Agreement. (c) CERTAIN RESTRICTIONS. Until the Closing, the Company will not without the written consent of Purchasers: (i) amend its certificate of incorporation or by-laws, except as contemplated by the TPG Shareholders Agreement, or take any action with respect to any such amendment or any recapitalization, reorganization, liquidation or dissolution of the Company; (ii) authorize, issue, sell or otherwise dispose of any shares of capital stock of or any option with respect to the Company (other than (x) grants of stock or stock options pursuant to the Company's benefit plans and (y) issuances of shares of common -12- stock upon the exercise of such options, the conversion of currently outstanding securities or, in lieu of cash, acquisitions permitted in the ordinary course of business under SECTION 3.3(B)), or modify or amend any right of any holder of outstanding shares of capital stock of or option with respect to the Company; (iii) declare, set aside or pay any dividend or other distribution in respect of the capital stock of the Company, or directly or indirectly redeem, purchase or otherwise acquire any capital stock of or any option with respect to the Company (except with respect to the payment of regular dividends on shares of preferred stock); or (iv) enter into any Contract to do or engage in any of the foregoing. (d) NOTICE AND CURE. The Company will notify Sellers and Purchasers in writing of, and contemporaneously will provide Sellers and Purchasers with true and complete copies of any and all information or documents relating to, and will use all commercially reasonable efforts to cure before the Closing, any event, transaction or circumstance, as soon as practicable after it becomes known to the Company, occurring after the date of this Agreement that causes or will cause any covenant or agreement of the Company under this Agreement to be breached or that renders or will render untrue any representation or warranty of the Company contained in this Agreement as if the same were made on or as of the date of such event, transaction or circumstance. No notice given pursuant to this Section shall have any effect on the representations, warranties, covenants or agreements contained in this Agreement for purposes of determining satisfaction of any condition contained herein. (e) FINANCING. The Company will use commercially reasonable efforts to obtain the financing (the "FINANCING") for the Company's purchase of the Other Securities from Sellers on such terms as are satisfactory to Purchasers and the Company, and to obtain on the Closing Date the funds contemplated to be raised by such Financing. -13- ARTICLE IV CONDITIONS 4.1 SELLERS' CONDITIONS. The obligation of Sellers hereunder to sell the Shares and the Other Securities are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Sellers in their sole discretion): (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by Purchasers and the Company in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though such representation or warranty was made on and as of the Closing Date. (b) PERFORMANCE. Purchasers and the Company shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by Purchasers and the Company at or before the Closing. (c) REGULATORY CONSENTS AND APPROVALS. All approvals (or terminations or expirations of waiting periods) required under the HSR Act necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained (or terminated or expired). (d) NO ORDERS. There shall not be in effect on the Closing Date any Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. (e) PURCHASE OF SHARES AND OTHER SECURITIES. The Purchasers shall have paid to Sellers the Shares Purchase Price for the Shares and the Company shall have paid to Sellers the Other Securities Purchase Price for the Other Securities. 4.2 PURCHASERS' CONDITIONS. The obligations of Purchasers hereunder to purchase the Shares is subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part only by Purchasers in their sole discretion, except that Purchasers shall not waive the conditions in SECTION 4.2(G) without the Company's consent): -14- (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by Sellers and the Company in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though such representation or warranty was made on and as of the Closing Date. (b) PERFORMANCE. Sellers and the Company shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by Sellers and the Company at or before the Closing. (c) REGULATORY CONSENTS AND APPROVALS. All approvals (or terminations or expirations of waiting periods) required under the HSR Act necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained (or terminated or expired). (d) NO ORDERS. There shall not be in effect on the Closing Date any Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. (e) DELIVERY OF SHARES. All of the Shares, and not just a portion thereof, shall have been delivered for sale by Laidlaw. (f) PURCHASE OF OTHER SECURITIES. All of the Other Securities, and not just a portion thereof, shall have been delivered for sale by Sellers, and the Company shall have completed the Financing and purchased the Other Securities for the Other Securities Purchase Price. (g) BOARD RESIGNATIONS. Each of James R. Bullock and Ivan R. Cairns (or any other person who shall replace or succeed such person as a member of the Board of Directors of the Company), representing all of Sellers' designees or affiliates on the Board of Director of the Company, shall have resigned from the Board of Directors of the Company. (h) USRPHC AFFIDAVIT. The Company shall have delivered to Purchasers an affidavit of an authorized officer in form and substance reasonably satisfactory to Purchasers indicating that none of the Company or the Company's subsidiaries is a United States real property holding company within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). -15- 4.3 THE COMPANY'S CONDITIONS. The obligation of Company hereunder to purchase the Other Securities is subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by the Company in its sole discretion): (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties made by Sellers and Purchasers in this Agreement shall be true and correct in all material respects on and as of the Closing Date as though such representation or warranty was made on and as of the Closing Date. (b) PERFORMANCE. Sellers and Purchasers shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to be so performed or complied with by Sellers and Purchasers at or before the Closing. (c) REGULATORY CONSENTS AND APPROVALS. All approvals (or terminations or expirations of waiting periods) required under the HSR Act necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained (or terminated or expired). (d) NO ORDERS. There shall not be in effect on the Closing Date any Order restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. (e) FINANCING. The Company shall have consummated the Financing. (f) DELIVERY OF OTHER SECURITIES. All of the Other Securities, and not just a portion thereof, shall have been delivered for sale by Sellers. (g) PURCHASE OF SHARES. All of the Shares, and not just a portion thereof, shall have been delivered for sale by Laidlaw and purchased by Purchasers. (h) BOARD RESIGNATIONS. Each of James R. Bullock and Ivan R. Cairns (or any other person who shall replace or succeed such person as a member of the Board of Directors of the Company), representing all of Sellers' designees or affiliates on the Board of Director of the Company, shall have resigned from the Board of Directors of the Company. -16- ARTICLE V TERMINATION 5.1 TERMINATION. This Agreement may be terminated, and the transactions contemplated hereby may be abandoned: (a) at any time before the Closing, by mutual written agreement of Sellers, Purchasers and the Company; or (b) at any time after May 31, 1997, by Sellers, Purchasers or the Company, upon notification to the non-terminating parties by the terminating party if the Closing shall not have occurred on or before such date and such failure to consummate is not caused by a breach of this Agreement by the terminating party; PROVIDED, that Purchasers shall have the right from time to time to extend such date for up to an additional 10 days upon written notice to Sellers on or prior to such date. For each day that Purchasers and the Company extend the termination date by written notification pursuant to the foregoing provision, $25,000 shall be added to the Shares Purchase Price and $75,000 shall be added to the Other Securities Purchase Price, with the payment of such additional amounts being subject to the same terms and conditions hereunder as the payment of such Purchase Prices. 5.2 EFFECT OF TERMINATION. If this Agreement is validly terminated pursuant to SECTION 5.1, this Agreement will forthwith become null and void, and there will be no liability or obligation on the part of Sellers, Purchasers or the Company (or any of their respective officers, directors, employees, agents or other representatives or affiliates), except as provided in the next succeeding sentence and except that the provisions with respect to confidentiality in SECTION 7.1 will continue to apply following any such termination. Notwithstanding any other provision in this Agreement to the contrary, upon termination of this Agreement pursuant to SECTION 5.1(B), each party will remain liable to the other parties for any willful breach of this Agreement by such party existing at the time of such termination, and such other parties may seek such remedies, including damages and fees of attorneys, against the other with respect to any such breach as are provided in this Agreement or as are otherwise available at Law or in equity. -17- ARTICLE VI DEFINITIONS 6.1 DEFINITIONS. (a) DEFINED TERMS. As used in this Agreement, the following defined terms have the meanings indicated below: "ACTIONS OR PROCEEDINGS" means any action, suit, proceeding, arbitration or Governmental or Regulatory Authority investigation or audit. "BUSINESS OR CONDITION OF THE COMPANY" means the business, condition (financial or otherwise), results of operations, assets and properties and prospects of the Company taken as a whole. "BUSINESS DAY" means a day other than Saturday, Sunday or any other day on which banks located in the States of New York or California are authorized or obligated to close. "CLOSING" means the closing of the transactions contemplated by SECTION 1.3. "CLOSING DATE" means (a) the later of (i) the first Business Day after the day on which the last of the approval or waiting period described in SECTION 4.1(C), SECTION 4.2(C) and SECTION 4.3(C) has been obtained or has expired, as applicable, or (ii) the date of the consummation of the Financing or (b) such other date as Purchasers, Sellers and the Company mutually agree upon in writing. "COMPANY" means Allied Waste Industries, Inc., a Delaware corporation. Unless the context requires otherwise, all references to the Company herein shall be deemed to include all of the consolidated subsidiaries of the Company. "CONTRACT" means any agreement, lease, license, evidence of indebtedness, mortgage, indenture, security agreement or other contract (whether written or oral). "FINANCING" shall have the meaning set forth in SECTION 3.3(E). "GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision. -18- "HSR ACT" means Section 7A of the Clayton Act (Title II of the Hart- Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules and regulations promulgated thereunder. "LAWS" means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision or of any Governmental or Regulatory Authority. "LIENS" means any mortgage, pledge, assessment, security interest, lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or any conditional sale Contract, title retention Contract or other Contract to give any of the foregoing. "ORDER" means any writ, judgment, decree, injunction or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final). "PERSON" means any natural person, corporation, general partnership, limited partnership, proprietorship, other business organization, trust, union, association or Governmental or Regulatory Authority. ARTICLE VII MISCELLANEOUS 7.1 CONFIDENTIALITY. Until this Agreement is publicly disclosed, no party to this Agreement will, and each party will cause its respective representatives not to, make any release to the press or other public disclosure with respect to the existence or contents of this Agreement or the transactions contemplated by this Agreement, except for such public disclosure as may be necessary for the party proposing to make the disclosure not to be in violation of or default under any applicable law, regulation or governmental order. If any party proposes to make any such disclosure, such party will in good faith consult with and consider the suggestions of the other parties concerning the nature and scope of the information it proposes to disclose. 7.2 FURTHER ASSURANCES. The parties hereto will execute and deliver at or prior to the Closing each agreement and other document that such party is required hereby to execute and deliver as a condition to the Closing, and will take all commercially reasonable steps necessary or desirable and proceed diligently and in good faith to satisfy each condition to the -19- obligations of such party contained in this Agreement and will not take or fail to take any action that could reasonably be expected to result in the nonfulfillment of any such condition. At the Closing and from time to time thereafter, the parties hereto shall execute and deliver such other documents and instruments (including officers' certificates and opinions of counsel), provide such materials and information and take such other actions as may be reasonably requested to cause such party to fulfill its obligations under this Agreement. 7.3 ENTIRE AGREEMENT. This Agreement, the TPG Shareholders Agreement, the Shareholders Agreement and the Registration Rights Agreement supersede all prior discussions and agreements between the parties with respect to the subject matter hereof and thereof, and this Agreement contains the sole and entire agreement between the parties hereto with respect to the subject matter hereof. 7.4 AMENDMENT. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each party hereto. 7.5 REMEDIES. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. Notwithstanding the foregoing, the parties acknowledge that it will be impossible to measure in money the damage caused by any failure of either party to comply with its agreements set forth herein, that each such agreement is material, and that in the event of any such failure, the other party will not have an adequate remedy at law or in damages. Therefore, each party consents to the issuance of an injunction or the enforcement of other equitable remedies against such party at the suit of the other party, without bond or other security, to compel performance of all of the terms hereof, and each party hereby waives the defense of availability of relief in damages. 7.6 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to a Contract executed and performed in such State, without giving effect to the conflicts of laws principles thereof. 7.7 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Each Seller hereby irrevocably appoints Ivan R. Cairns, at its office at 3221 North Service Road, Burlington, Ontario, Canada, and each Apollo Purchaser hereby irrevocably appoints David Kaplan, at its offices at 1999 Avenue of the Stars, Suite 1900, Los Angeles, California, and each Blackstone Purchaser hereby irrevocably appoints Howard Lipson, at its offices at 345 Park -20- Avenue, New York, New York, and the Company hereby irrevocably appoints Steve Helm, at its offices at 15880 North Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona, its lawful agent and attorney to accept and acknowledge service of any and all process against it in any action, suit or proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby and upon whom such process may be served, with the same effect as if such party were a resident of the State of Delaware and had been lawfully served with such process in such jurisdiction, and waives all claims of error by reason of such service, PROVIDED that in the case of any service upon such agent and attorney, the party effecting such service shall also deliver a copy thereof to the other parties. Sellers, Purchasers and the Company will enter into such agreements with such agents as may be necessary to constitute and continue the appointment of such agents hereunder. In the event that such agent and attorney resigns or otherwise becomes incapable of acting as such, such party will appoint a successor agent and attorney, reasonably satisfactory to the other parties, with like powers. Each party hereby irrevocably submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York or any court of the State of New York located in the Borough of Manhattan in the City of New York in any action, suit or proceeding arising out of or relating to this Agreement or any of the transactions contemplated hereby, and agrees that any such action, suit or proceeding shall be brought only in such court, PROVIDED, HOWEVER, that such consent to jurisdiction is solely for the purpose referred to in this SECTION 7.7 and shall not be deemed to be a general submission to the jurisdiction of said courts or in the State of Delaware other than for such purpose. Each party hereby irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such action, suit or proceeding brought in such a court and any claim that any such action, suit or proceeding brought in such a court has been brought in an inconvenient forum. 7.8 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. 7.9 MISCELLANEOUS. The Company shall have the right to assign its right to purchase the Other Securities to any of its wholly-owned subsidiaries, PROVIDED that no such assignment shall relieve the Company of any of its obligations hereunder. -21- IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each party hereto as of the date first above written. LAIDLAW INC. By: \s\ Ivan R. Cairns ----------------------------------- Name: Ivan R. Cairns Title: Senior Vice President and General Counsel LAIDLAW TRANSPORTATION, INC. By: \s\ Ivan R. Cairns ----------------------------------- Name: Ivan R. Cairns Title: Senior Vice President and General Counsel APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (U.K.) PARTNERS III, L.P. By: Apollo Advisors II, L.P. By: Apollo Capital Management II, Inc. By: \s\ David B. Kaplan ----------------------------------- Name: David B. Kaplan Title: Vice President BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P. By: Blackstone Management Associates II L.L.C. By: \s\ Howard A. Lipson ----------------------------------- Name: Howard A. Lipson Title: Senior Managing Director ALLIED WASTE INDUSTRIES, INC. By: \s\ Thomas Van Weelden ----------------------------------- Name: Thomas Van Weelden Title: President and Chief Operating Officer -22- Schedule 2.1(i) - - Stock Purchase Agreement, dated September 17, 1996, as amended on December 30, 1996 - - $150 million 7% Junior Subordinated Debenture due 2008, dated December 30, 1996 - - Zero Coupon Junior Subordinated Debenture due 2008, dated December 30, 1996 - - Warrant (to purchase 20,400,000 shares of Allied common stock), dated December 30, 1996 - - Subscription Agreement, dated December 30, 1996 - - Registration Rights Agreement, dated December 30, 1996 -23- EX-3 4 EXHIBIT 3 - INVESTMENT AGREEMENT EXHIBIT 99.4 INVESTMENT AGREEMENT This Investment Agreement (the "Agreement"), dated as of April 14, 1997, is made and entered into by and among Apollo Investment Fund III, L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware limited partnership, and Apollo (UK) Partners III, L.P., an English limited partnership, (collectively, and together with their Affiliated Transferees (as defined herein), the "Apollo Stockholders"), and Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership, Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership, and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership (collectively, and together with their Affiliated Transferees, the "Blackstone Stockholders" and, together with the Apollo Stockholders, the "Stockholders"). WHEREAS, the Stockholders have entered into this Agreement for the purpose of allocating and administering among themselves certain rights and obligations with respect to their ownership of the common stock, par value $.01 per share (the "Common Stock"), of Allied Waste Industries, Inc., a Delaware corporation (the "Company"), and certain other matters as set forth herein; WHEREAS, the Stockholders have entered into a Stock Purchase Agreement with TPG Partners, L.P. and TPG Parallel I, L.P., each a Delaware limited partnership (collectively "TPG"), dated April 14, 1997 (the "TPG Purchase Agreement"), providing for the purchase by the Stockholders of an aggregate of 11,776,765 shares of the Common Stock (the "TPG Shares") from TPG, subject to the terms and conditions set forth therein, and may enter into additional agreements (such additional agreements, together with the TPG Purchase Agreement, the "Purchase Agreements") providing for the purchase by one or more of the Stockholders of additional shares of Common Stock (such additional shares, together with the TPG Shares, the "Shares"); and WHEREAS, the Stockholders have entered into a Shareholders Agreement with the Company, dated April 14, 1997, concerning certain governance rights, registration rights and other matters set forth therein, subject to the terms and conditions set forth therein (the "TPG Shareholders Agreement"), and may enter into additional agreements or amendments with respect thereto (such additional agreements and amendments, together with the TPG Shareholders Agreement, the "Shareholders Agreement"). NOW, THEREFORE, in consideration of the premises and the mutual agreements, covenants and provisions contained herein, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE I CERTAIN DEFINITIONS The following terms shall have the definitions set forth below: "Affiliate" has the meaning given such term in Rule 12b-2 under the Exchange Act. "Business Day" means any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York. "Closing Dates" shall mean collectively, the closing date of the purchase of the TPG Shares pursuant to the TPG Purchase Agreement, together with the closing of the sale of Common Stock under any other Purchase Agreement as provided under such Purchase Agreement. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Losses" shall mean any and all damages, fines, fees, penalties, deficiencies, losses and expenses (including without limitation interest, court costs, fees of attorneys, accountants and other experts or other expenses of litigation or other proceedings or of any claim, default or assessment). "Majority Decision" shall mean approval by Stockholders holding a majority of the Shares then held by all Stockholders; provided, however, that if a dissenting Stockholder reasonably determines that the decision will materially adversely affect its ownership of the Shares, then the decision must be approved by all Stockholders. "Permitted Transferees" shall mean: (a) any Affiliate of, or investment fund sponsored by, a Stockholder (an "Affiliated Transferee"); (b) with respect to any Stockholder which is a limited partnership, any partners (or a liquidating trust for the benefit of the partners) of such limited partnership in accordance with the provisions of the limited partnership agreement of such Stockholder as then in effect; or - 2 - (c) solely with respect to bona fide pledges of shares of Common Stock to a financial institution to secure indebtedness for borrowed money to finance the purchase of shares of Common Stock, such financial institution; PROVIDED that with respect to clause (a), the Affiliated Transferee agrees in a writing provided to each of the other Stockholders to be bound by the terms of this Agreement; PROVIDED, FURTHER, that with respect to clause (c), the pledge agreement gives the other Stockholders the right to purchase the pledged shares from the financial institution on substantially the same terms as those provided in Section 5.2 in connection with any foreclosure on such pledged shares. For purposes hereof, the Permitted Transferees of a Stockholder shall include the Permitted Transferees of such Stockholder's Permitted Transferees. "Person" means any natural person, corporation, general partnership, limited partnership, proprietorship, other business organization, trust, union or association or governmental or regulatory authority. "Registration Percentage" shall mean the quotient of (a) the total number of shares of Common Stock owned directly by a Stockholder immediately prior to an offering divided by (b) the total number of shares of Common Stock beneficially owned by the Stockholders as a group immediately prior to such offering. "Rule 144" means Rule 144 promulgated under the Securities Act, and any successor provision thereto. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Transfer" shall mean with respect to any security, any sale, assignment, donation, pledge, hypothecation, grant or other transfer of, or the grant of any option with respect to, such security (or the entering into of any agreement or understanding with respect to the foregoing). ARTICLE II REPRESENTATIONS AND WARRANTIES A. Each Apollo Stockholder hereby severally (and not jointly) represents and warrants to the Blackstone Stockholders with respect to itself and the Shares to be acquired by such Apollo Stockholder pursuant to the Purchase Agreements, and not with respect to any other Apollo Stockholder or any other Shares as follows: - 3 - Section 2.A.1. ORGANIZATION; AUTHORIZATION. Such Apollo Stockholder is a limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Such Apollo Stockholder is duly authorized to execute and deliver, to perform its obligations under and to consummate the transactions contemplated by this Agreement, the TPG Purchase Agreement and the Shareholders Agreement. This Agreement, the TPG Purchase Agreement and the Shareholders Agreement are valid and legally binding agreements of such Apollo Stockholder, enforceable against such Apollo Stockholder in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally and, as to enforceability, general equitable principles. Section 2.A.2. ACQUISITION FOR INVESTMENT. (a) Such Apollo Stockholder is acquiring the Shares for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and such Apollo Stockholder has no present intention or plan to effect any distribution of the Shares. B. Each Blackstone Stockholder hereby severally (and not jointly) represents and warrants to the Apollo Stockholders with respect to itself and the Shares to be acquired by such Blackstone Stockholder pursuant to the Purchase Agreements, and not with respect to any other Blackstone Stockholder or any other Shares as follows: Section 2.B.1. ORGANIZATION; AUTHORIZATION. Such Blackstone Stockholder is a limited partnership duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Such Blackstone Stockholder is duly authorized to execute and deliver, to perform its obligations under and to consummate the transactions contemplated by this Agreement, the TPG Purchase Agreement and the Shareholders Agreement. This Agreement, the TPG Purchase Agreement and the Shareholders Agreement are valid and legally binding agreements of such Blackstone Stockholder, enforceable against such Blackstone Stockholder in accordance with their terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally and, as to enforceability, general equitable principles. Section 2.B.2. ACQUISITION FOR INVESTMENT. (a) Such Blackstone Stockholder is acquiring the Shares for its own account for the purpose of investment and not with a view to or for sale in connection with any distribution thereof, and such Blackstone Stockholder has no present intention or plan to effect any distribution of the Shares. - 4 - C. RELIANCE ON REPRESENTATIONS AND WARRANTIES IN PURCHASE AGREEMENTS. In addition to the foregoing representations and warranties, each of the Stockholders shall be entitled to rely upon the representations and warranties of each other Stockholder contained in any Purchase Agreement. ARTICLE III PURCHASE OF THE SHARES Section 3.1. ALLOCATION OF PURCHASE PRICE. (a) On the Closing Date with respect to the purchase of any Shares from TPG or Laidlaw, Inc., a Canadian corporation ("Laidlaw") or its Affiliates, (i) the Apollo Stockholders hereby agree to purchase 65% of the Shares by paying 65% of the total purchase price for the Shares in the manner provided in the applicable Purchase Agreement and (ii) the Blackstone Stockholders hereby agree to purchase 35% of the Shares by paying 35% of the total purchase price for the Shares in the manner provided in the applicable Purchase Agreement. Prior to such Closing Date, in their sole discretion, (x) the Apollo Stockholders may allocate their rights and obligations under this Section among themselves and (y) the Blackstone Stockholders may allocate their rights and obligations under this Section among themselves. Except for purchases of Shares from TPG or Laidlaw which shall be subject to and allocated in accordance with this Section, all purchases of Shares shall be subject to and allocated in accordance with the provisions of Section 5.3. (b) If a Stockholder fails for any reason to make a purchase or payment as required under clause (a) of this Section 3.1, each of the non- failing Stockholders shall have the irrevocable and exclusive option to purchase up to that percentage of such failing Stockholder's shares, determined by dividing the number of Shares such non-failing Stockholder is then entitled to purchase by the total number of Shares that all Stockholders are then entitled to purchase (without reference to either the Shares such failing Stockholder was entitled to purchase or the number of Shares entitled to be purchased by a Stockholder who elects not to purchase such failing Stockholder's Shares). If a Stockholder's failure to purchase Shares constitutes a breach of the applicable Purchase Agreement, such failing Stockholder shall indemnify and hold harmless the non-failing Stockholders for any Losses incurred by them due to such breach; PROVIDED, HOWEVER, the maximum aggregate liability of a failing Stockholder under this Section 3.1 (including liability to the seller of the Shares) shall not exceed the amount that such failing Stockholder would have been required to pay had it not been in breach of such Purchase Agreement. - 5 - ARTICLE IV BOARD OF DIRECTORS The Stockholders agree among themselves as follows: Section 4.1. ALLOCATION OF AFFILIATE DIRECTOR DESIGNEES. If the number of persons the Stockholders are entitled to designate to serve on the Board of Directors of the Company (the "Board") pursuant to the Shareholders Agreement, without restriction as to the affiliation of such person ("Affiliate Designees"), is: (a) four (4), then the Apollo Stockholders shall be entitled to designate three (3) Affiliate Designees and the Blackstone Stockholders shall be entitled to designate one (1) Affiliate Designee; (b) three (3), then the Apollo Stockholders shall be entitled to designate two (2) Affiliate Designees and the Blackstone Stockholders shall be entitled to designate one (1) Affiliate Designee; (c) two (2), then the Apollo Stockholders shall be entitled to designate one (1) Affiliate Designee and the Blackstone Stockholders shall be entitled to designate one (1) Affiliate Designee; and (d) one (1), then the Apollo Stockholders shall be entitled to designate that Affiliate Designee; PROVIDED, HOWEVER, that if the Blackstone Stockholders own more shares of Common Stock than the Apollo Stockholders at the time of such designation, then the Blackstone Stockholders shall be entitled to designate that Affiliate Designee. Section 4.2. ALLOCATION OF NON-AFFILIATE DESIGNEES. If the Stockholders are entitled pursuant to the Shareholders Agreement to designate persons to serve on the Board in addition to the Affiliate Designees, such designations shall be allocated between the Apollo Stockholders and Blackstone Stockholders in the same proportions as the allocation of Affiliate Designees; provided, however, that any designation must be reasonably acceptable to the non-designating Stockholders. Section 4.3. EXERCISE OF VETO RIGHTS FOR THIRD PARTY DESIGNEES. If the Stockholders are entitled pursuant to the Shareholders Agreement to approve or reject a person designated by a third party to serve on the Board or any committee thereof, such approval or rejection may be exercised by either the Blackstone Stockholders or the Apollo Stockholders. - 6 - Section 4.4. AGREEMENT TO VOTE FOR DIRECTORS. The Stockholders agree to vote all shares of Common Stock held by them in favor of the persons designated pursuant to Sections 4.1 and 4.2 hereof. The failure of any Stockholder entitled to designate nominees pursuant to Sections 4.1 or 4.2 hereof to fully exercise its respective designation rights shall not constitute a waiver or diminution of such rights, nor shall it prevent such Stockholder from fully exercising such rights prospectively. Should a person designated pursuant to Section 4.1 or 4.2 hereof be unwilling or unable to serve, or otherwise cease to serve (including by means of removal in accordance with the following sentence), the Stockholders who originally nominated such director pursuant to Sections 4.1 or 4.2 shall be entitled to designate any replacement director. If the Apollo Stockholders propose to remove any director designated by them, or if the Blackstone Stockholders propose to remove any director designated by them, the Stockholders agree to cooperate in, and vote all shares of Common Stock held by them in support of, such removal and any resulting vacancy shall be filled in accordance with the preceding sentence. The Stockholders agree not to take any action to remove, with or without cause, any director other than in accordance with the foregoing. Section 4.5. COMMITTEES OF THE BOARD OF DIRECTORS. If the Stockholders are entitled pursuant to the Shareholders Agreement to designate directors to serve on the executive committee or any other committee established by the Board, such designation shall be allocated among the Stockholders based on the same proportions as the allocation provisions set forth in this Article IV for designating persons to serve as a director on the Board. Section 4.6. FURTHER ASSURANCES. Each Stockholder shall vote, in person or by proxy, all of the shares of Common Stock owned by such Stockholder, at any annual or special meeting of stockholders of the Company called for the purpose of voting on the election of directors or by consensual action of stockholders without a meeting with respect to the election of directors, in favor of the election of the directors designated in accordance with this Article IV. Each Stockholder shall vote the shares of Common Stock owned by such Stockholder and shall take all other actions necessary to ensure that the Certificate of Incorporation and By-laws of the Company do not at any time conflict with the provisions of this Agreement. - 7 - ARTICLE V TRANSFERS OF COMMON STOCK Section 5.1. RESTRICTIONS ON TRANSFERS; PERMITTED TRANSFEREES. (a) Except as otherwise provided in Section 5.1(b) and 5.1(c) of this Agreement, each Stockholder agrees and acknowledges that such Stockholder will not: (i) directly or indirectly, Transfer or offer to Transfer any shares of Common Stock or solicit any offers to purchase or otherwise acquire or make a pledge of any shares of Common Stock; (ii) grant any proxy or enter into or agree to be bound by any voting trust with respect to any shares of Common Stock; (iii) enter into any stockholder agreements or arrangements of any kind (other than agreements entered into by all of the Stockholders) with any Person with respect to any shares of Common Stock (whether or not such agreements and arrangements are with other Stockholders hereto or holders of shares of Common Stock who are not parties to this Agreement), including but not limited to, agreements or arrangements with respect to the acquisition, disposition or voting of shares of Common Stock; or (iv) act, for any reason, as a member of a group or in concert with any other Persons (other than Permitted Transferees) in connection with the Transfer or voting of shares of Common Stock. (b) Except as provided in Section 5.1(c), none of the restrictions contained in Section 5.1(a) shall apply to any Transfers: (i) to a Permitted Transferee of the transferor (whereupon the transferor hereby agrees to provide written notice thereof, together with such transferee's written undertaking to assume the transferor's obligations hereunder) to the other Stockholders within 30 days after such Transfer); or (ii) to any Person, provided the transferor has first complied with the provisions of Sections 5.2 and 5.3. (c) Notwithstanding anything in this Agreement to the contrary, - 8 - (i) no Transfer of shares of Common Stock may be made by a Stockholder if such Transfer would violate any of the provisions of the Shareholders Agreement (unless such provision is waived by the Company); and (ii) until such time as any Apollo Stockholder Transfers any of its Shares to a Person who is not a Permitted Transferee, no Transfer of shares of Common Stock may be made by any of the Blackstone Stockholders that would result in the Stockholders losing any rights to designate persons to serve on the Board or any committee thereof. Section 5.2. RIGHT OF FIRST NEGOTIATION WITH RESPECT TO CERTAIN SHARE TRANSFERS. (a) Except for Transfers permitted pursuant to Sections 5.1(b)(i), if any Apollo Stockholder or Blackstone Stockholder desires to Transfer any shares of Common Stock (a "Selling Stockholder"), such Selling Stockholder shall first give written notice (the "Sellers Notice") to the Apollo Stockholders (if a Blackstone Stockholder is the Selling Stockholder") and to the Blackstone Stockholders (if an Apollo Stockholder is the Selling Stockholder) (the "Offeree Stockholders") stating the Selling Stockholders' desire to make such Transfer and the number of shares of Common Stock proposed to be transferred (the "Offered Shares"). (b) Upon receipt of the Sellers Notice, each of the Offeree Stockholders shall have a 15-day exclusive right to negotiate to purchase the Offered Shares. The Selling Stockholders and the Offeree Stockholders agree to negotiate in good faith. (c) If the Sellers Notice shall be duly given, and if the Offeree Stockholders shall not purchase the Offered Shares within such 15-day period or shall have otherwise declined to purchase the Offered Shares, then the Selling Stockholders shall be free to sell the Offered Shares to any third party transferee; PROVIDED, that such sale complies with the provisions of Section 5.1 of this Agreement. Section 5.3. PRO RATA RIGHT TO PARTICIPATE IN CERTAIN SHARE PURCHASES. (a) Until an aggregate of 3,000,000 shares shall have been purchased by the Stockholders and their Affiliates from Persons other than the Stockholders, TPG and Laidlaw and their respective Affiliates (such other Persons, "Exempt Sellers"): (i) until the Apollo Stockholders and their Affiliates (the "Apollo Purchasers") purchase in aggregate 1,000,000 or more shares of Common Stock from Persons other than the Exempt Sellers: If any Blackstone Stockholder or any of their Affiliates (the "Blackstone Purchasers"), pursuant to - 9 - a single transaction or series of related transactions, proposes to purchase shares of Common Stock from a Person who is not an Exempt Seller, the Apollo Stockholders shall have the exclusive option to purchase up to 65% of the total number of shares proposed to be purchased by the Blackstone Purchasers, upon the same terms and conditions applicable to the Blackstone Purchasers. (ii) If any Apollo Purchaser, pursuant to a single transaction or series of related transactions, proposes to purchase shares of Common Stock from a Person who is not an Exempt Seller, the Blackstone Stockholders shall have the exclusive option to purchase up to 35% of the total number of shares proposed to be purchased by the Apollo Purchaser, upon the same terms and conditions applicable to the Apollo Purchaser; PROVIDED, HOWEVER, if the Apollo Purchasers have purchased in the aggregate 1,000,000 or more shares of Common Stock from persons other than the Exempt Sellers, the foregoing percentage shall be 100%. (b) After an aggregate of 3,000,000 shares shall have been purchased by the Stockholders and their Affiliates from Persons other than Exempt Sellers in accordance with Section 5.3(a) above: (i) If any Apollo Purchaser, pursuant to a single transaction or series of related transactions, proposes to purchase shares of Common Stock from a Person who is not an Exempt Seller, the Blackstone Stockholders shall have the exclusive option to purchase up to 50% of the total number of shares proposed to be purchased by the Apollo Purchaser, upon the same terms and conditions applicable to such Apollo Purchaser. (ii) If any Blackstone Purchaser, pursuant to a single transaction or series of related transactions, proposes to purchase shares of Common Stock from a Person who is not an Exempt Seller, the Apollo Stockholders shall have the exclusive option to purchase up to 50% of the total number of shares proposed to be purchased by the Blackstone Purchaser, upon the same terms and conditions applicable to such Blackstone Purchaser. (c) Any Apollo Purchaser or Blackstone Purchaser proposing to purchase of any shares of Common Stock subject to this SECTION 5.3 shall use its best efforts to keep the other Stockholders informed and shall cooperate with the other Stockholders with respect to such proposed purchase so as to allow the other Stockholders a reasonable opportunity to exercise their purchase option hereunder. Without limiting the foregoing, the Apollo Purchaser or Blackstone Purchaser shall provide a - 10 - written notice (an "OPTION NOTICE") to the other Stockholders describing the proposed purchase, including the price and the proposed closing date, promptly after the proposed purchase price has been determined; PROVIDED that the Apollo Purchaser or Blackstone Purchaser shall endeavor to provide such notice sufficiently in advance of the proposed closing date so as to allow the other Stockholders a reasonable opportunity to make a "capital call" or otherwise arrange funding for their purchase option. A Stockholder may exercise its purchase option by giving written notice (an "EXERCISE NOTICE") to the Apollo Purchaser or Blackstone Purchaser, as the case may be, specifying the number of shares such Stockholder desires to purchase, within one (1) Business Day after receiving the Option Notice. If such Option Notice shall be duly given by an Apollo Purchaser or Blackstone Purchaser, and if the Exercise Notice shall not have been received by such Apollo Purchaser or Blackstone Purchaser within one (1) Business Day thereafter or the other Stockholders shall have otherwise declined to exercise such option, then such Apollo Purchaser or Blackstone Purchaser shall be free to purchase and own all of the subject shares. ARTICLE VI ALLOCATION OF REGISTRATION RIGHTS Section 6.1. SHELF REGISTRATION RIGHTS. (a) If the Stockholders are entitled pursuant to any registration rights agreement with the Company (a "Registration Rights Agreement") to require that the Company cause to be filed pursuant to Rule 415 of the Securities Act a shelf registration statement with respect to resales of shares beneficially owned by the Stockholders, the number of demands to require the filing of a shelf registration statement shall be divided between the Apollo Stockholders and Blackstone Stockholders in the same proportions as the allocation of the number of Affiliate Designees in Section 4.1. Section 6.2. UNDERWRITTEN OFFERINGS. If the Stockholders are entitled pursuant to any Registration Rights Agreement to require that the Company cause to be filed a registration statement under the Securities Act with respect to a firm commitment underwritten offering of shares beneficially owned by the Stockholders, the number of demands to require the filing of a registration statement shall be divided between the Apollo Stockholders and Blackstone Stockholders in the same proportions as the allocation of the number of Affiliate Designees in Section 4.1; provided that the allocation of demand rights pursuant to this Section shall be determined on the date such demand rights are granted, and shall not be affected by subsequent changes in the allocation of the number of Affiliate Designees resulting from changes in the relative Share ownership of the Stockholders. - 11 - Section 6.3. SHARES INCLUDED. In connection with any offering made pursuant to a registration statement in which the Stockholders are entitled to include shares of Common Stock beneficially owned by them, whether pursuant to shelf, demand or "piggyback" registration rights, each Stockholder shall have the right to include a number of shares owned by it in the offering in an amount up to the product of (A) the aggregate number of shares the Stockholders as a group are entitled to include in such offering multiplied by (B) such Stockholder's Registration Percentage; PROVIDED, that the Stockholders shall be entitled to increase on a pro rata basis the number of Shares they can include in such offer to the extent any Stockholder includes less than the full number of shares it has a right to include in such offering. For the purposes of this clause, the Apollo Stockholders and the Blackstone Stockholders may allocate their rights to include shares in an offering among their respective Affiliates in their sole discretion. The Stockholders shall give each other reasonable notice in advance of the exercise of any shelf, demand or piggy-back rights pursuant to any Registration Rights Agreement. Section 6.4. CUTBACKS. If in connection with any underwritten offering the total number of shares that the Stockholders seek to have included in such offering is limited by the underwriters (a "Cutback"), and following such Cutback, the Apollo Stockholders include more shares in such registration statement filed upon the demand of the Blackstone Stockholders, or the Blackstone Stockholders include more shares in such registration statement filed upon the demand of the Apollo Stockholders, such demand shall be deemed exercised by the Stockholder that included more shares in such registration statement (regardless of which Stockholder initially exercised such demand right). Section 6.5. UNDERWRITERS. If the Stockholders have the right to designate a managing underwriter in connection with any firm commitment underwriting, whichever of the Apollo Stockholders or the Blackstone Stockholders made the demand for such registration shall be entitled to choose such managing underwriter, otherwise the decision shall be made by Majority Decision. ARTICLE VII OTHER AGREEMENTS Section 7.1. DISPUTE RESOLUTION. Any allocation of rights or obligations not specifically provided for herein shall be allocated first by Majority Decision. The parties hereby - 12 - waive any rights to a jury trial in connection with any disputes to be decided pursuant to the provisions of this Section. Section 7.2. EXPENSES. Unless specifically provided for otherwise herein, each party shall bear its own expenses in connection with the matters covered by this Agreement, except that in connection with any registered offering of shares of Common Stock, any counsel and fees and offering expenses (other than underwriting discounts) charged to the Stockholders shall be allocated based on each Stockholder's proportionate number of shares included in such offering. Notwithstanding the foregoing, Apollo Stockholders agree to bear 65%, and the Blackstone Stockholders agree to bear 35%, of all fees and expenses (including without limitation the fees and expenses of Milbank, Tweed, Hadley & McCloy, Simpson Thacher & Bartlett and any other legal counsel, Deloitte & Touche and any other accounting or financial advisor, and Goldman, Sachs & Co. or any other broker) incurred by such Stockholders in connection with their due diligence investigation or negotiation and purchase of Shares from TPG and Laidlaw. Section 7.3. REQUIRED FILINGS; PUBLICITY. (a) Each of the Stockholders shall (and shall cause each of its Affiliates to) (i) take all actions necessary to comply promptly with all legal requirements which may be imposed on such Stockholder (or its Affiliates) as a result of this Agreement or any of the transactions contemplated hereby and (ii) without limiting the foregoing, make all required filings pursuant to the Securities Act and the Exchange Act. (b) To the extent reasonably practicable, the Stockholders shall consult with each other prior to all public statement or filings to be issued or made by any of them or their Affiliates with respect to this Agreement and the transactions contemplated hereby. ARTICLE VIII MISCELLANEOUS Section 8.1. TERMINATION. This Agreement shall terminate on the earlier of (a) solely with respect to Article IV, upon termination of the Shareholders Agreement, (b) solely with respect to Article VI, upon termination of all Registration Rights Agreements and (c) with respect to all other provisions of this Agreement, on the date when either the Apollo Stockholders or the Blackstone Stockholders cease to own any shares of Common Stock. - 13 - Section 8.2. NOTICES. All notices to be given by any Stockholder hereunder shall be in writing and shall be deemed to have been duly given if mailed, by first class or registered mail, three (3) Business Days after deposit in the United States Mail, or if telexed or telecopied, sent by telegram, or delivered by hand or reputable overnight courier, when confirmation is received, at the addresses set forth below, or in the case of any transferee of a Stockholder, at the address set forth in the stock ledger of the Company: in the case of the Apollo Stockholders (or any of them), to: Apollo Investment Fund III, L.P. Apollo Overseas Partner III, L.P. Apollo (UK) Partners, III, L.P. C/O Apollo Management, L.P. 1999 Avenue of the Stars, Suite 1900 Los Angeles, CA 90067 Attention: David B. Kaplan Telecopy: (310) 201-4198 with a copy to: Milbank, Tweed, Hadley & McCloy 30th Floor 601 South Figueroa Street Los Angeles, CA 90017 Attention: Kenneth J. Baronsky, Esq. Telecopy: (213) 629-5063 In the case of the Blackstone Stockholders (or any of them), to: Blackstone Capital Partners II Merchant Banking Fund L.P. Blackstone Offshore Capital Partners II L.P. Blackstone Family Investment Partnership II L.P. C/O The Blackstone Group 345 Park Avenue New York, New York 10154 Attention: Howard A. Lipson Telecopy: (212) 754-8703 - 14 - with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017-3954 Attention: Wilson S. Neely, Esq. Telecopy: (212) 455-2000 The parties may change their respective addresses for purposes of notice hereunder by giving notice of such change to all other parties in the manner provided in this Section 8.2. Section 8.3. BINDING EFFECT. This Agreement supersedes all prior negotiations, statements and agreements of the parties hereto with respect to the subject matter of this Agreement, and shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. If any transferee of any Stockholder shall acquire any shares of Common Stock in any manner, whether by operation of law or otherwise, such shares of Common Stock shall be held subject to all of the terms of this Agreement, and by taking and holding such shares of Common Stock such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, PROVIDED, HOWEVER, that shares of Common Stock which have been transferred in accordance with this Agreement to any person other than a Stockholder or an Affiliated Transferee shall no longer be subject to this Agreement. Section 8.4. COMPLETE AGREEMENT. This Agreement represents the entire agreement among the Stockholders with respect to the matters set forth herein, and the parties hereto acknowledge that there have been no representations, warranties, covenants or agreements made by any party hereto other than those contained in this Agreement. Section 8.5. COUNTERPARTS. This Agreement may be executed in counterparts and all of which are deemed to be one and the same agreement binding upon each of the Stockholders. Section 8.6. HEADINGS. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement. Section 8.7. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to its conflicts of law doctrine, except for matters of corporate law, which shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware. By execution and delivery of this Agreement, each of the Stockholders accepts, - 15 - generally and unconditionally, the nonexclusive jurisdiction of the state or federal courts in New York. Section 8.8. INJUNCTIVE RELIEF. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties to this Agreement fail to comply with any of the obligations imposed on them by this Agreement and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have an adequate remedy at law. Any such person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. Section 8.9. SEVERABILITY. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. Section 8.10. RECAPITALIZATION, ETC. In the event that any capital stock or other securities are issued in respect of, in exchange for, or in substitution of, any shares of Common Stock by reason of any reorganization, recapitalization, reclassification, merger, consolidation, spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to stockholders or combination of the shares of Common Stock or any other change in the Company's capital structure, appropriate adjustments shall be made to the provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the parties hereto under this Agreement. - 16 - IN WITNESS WHEREOF, the undersigned, thereunto duly authorized, have hereunto set their respective hands as of the day and year first above written. APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (UK) PARTNERS III, L.P. By: Apollo Advisors II, L.P. By: Apollo Capital Management II, Inc. By: \s\ David B. Kaplan --------------------------- Name: David B. Kaplan Title: Vice President BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P. By: Blackstone Management Associates II L.L.C. By: \s\ Howard A. Lipson --------------------------- Name: Howard A. Lipson Title: Senior Managing Director EX-4 5 EXHIBIT 4 - SHAREHOLDERS AGREEMENT EXHIBIT 99.5 SHAREHOLDERS AGREEMENT This Shareholders Agreement (the "AGREEMENT"), dated as of April 14, 1997, by and between Allied Waste Industries, Inc., a Delaware corporation (the "COMPANY"), on the one hand, and Apollo Investment Fund III, L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware limited partnership, Apollo (U.K.) Partners III, L.P., an English limited partnership, Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership ("BCP"), Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership, and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership (collectively, "SHAREHOLDERS"), on the other hand. WHEREAS, simultaneously with the execution of this Agreement, Shareholders are entering into an agreement (the "TPG GROUP AGREEMENT") to purchase an aggregate of 11,776,765 shares (the "SHARES") of the Company's common stock, par value $.01 per share (the "COMMON STOCK"), from TPG Partners, L.P., a Delaware limited partnership, and TPG Parallel I, L.P., a Delaware limited partnership (collectively, "TPG GROUP"); WHEREAS, concurrently with the acquisition of the Shares by Shareholders pursuant to the TPG Group Agreement, TPG Group intends to assign to Shareholders its registration rights with respect to the Shares under Article IV of the Securities Purchase Agreement dated as of October 27, 1994, as amended, by and between TPG Group and the Company (the "REGISTRATION RIGHTS"); WHEREAS, in recognition of Shareholders' significant share ownership in the Company, the Company has determined to grant to Shareholders, effective upon the closing of the acquisition of the Shares pursuant to the TPG Group Agreement, the right as a group to appoint certain designees for election to the Board of Directors of the Company; and WHEREAS, in view of the foregoing, Shareholders have agreed to certain restrictions on the acquisition and disposition of Common Stock and the conduct of Shareholders with respect to the Company. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and in the Assignment Agreement and intending to be legally bound hereby, the parties agree as follows: ARTICLE 1 Definitions; Representations and Warranties SECTION 1.1 DEFINITIONS. Unless otherwise specified all references to "days" shall be deemed to be references to calendar days. For purposes of this Agreement, the following terms shall have the following meanings: "ACTUAL VOTING POWER" shall mean the total voting power of all the then outstanding securities of the Company at the time then entitled to vote for the general election of directors, without giving effect to securities issuable upon exercise or conversion of such outstanding securities. "AFFILIATE" of a Person shall have the meaning set forth in Rule 12b-2 of the Exchange Act as in effect on the date of this Agreement, but shall not include (i) any investment fund in which a Person has invested if the Person does not otherwise control the investment fund or have, directly or indirectly, voting or dispositive power over any securities owned by such fund or (ii) any investor or limited partner of any Person who does not otherwise have voting or dispositive power over securities owned by that Person and is not controlled by that Person. It is expressly intended that any Person who now or hereafter controls, directly or indirectly, any Shareholder shall be subject to the restrictions of Section 2.1 as if it were a Shareholder. "BENEFICIAL OWNERSHIP" by a Person of any Voting Securities shall be determined in accordance with the term "beneficial ownership" as defined in Rule 13d-3 under the Exchange Act as in effect on the date of this Agreement and, in addition, "beneficial ownership" shall include securities which such Person has the right to acquire (irrespective of whether such right is exercisable immediately or only after the passage of time, including the passage of time in excess of sixty (60) days) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise. For purposes of this Agreement, a Shareholder shall be deemed to beneficially own any Voting Securities beneficially owned by its Affiliates or any Group of which such Shareholder or any such Affiliate is a member. "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company. "CLOSING DATE" shall mean the date of the closing of the purchase of the Shares by Shareholders pursuant to the TPG Group Agreement. "COMMISSION" shall mean the Securities and Exchange Commission. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "GROUP" shall mean a "group" as such term is used in Section 13(d)(3) of the Exchange Act as in effect on the date of this Agreement. "LAWS" shall mean all applicable foreign, federal, state and local laws, statutes, rules, regulations, codes and ordinances. "PERSON" shall mean any individual, Group, corporation, general or limited partnership, limited liability company, governmental entity, joint venture, estate, trust, association, organization or other entity of any kind or nature. "REORGANIZATION TRANSACTION" means: (i) any merger, consolidation, recapitalization, liquidation or other business combination transaction involving the Company; (ii) any tender offer or exchange offer for any securities of the Company; or (iii) any sale or other disposition of assets of the Company or any of its Subsidiaries in a single transaction or in a series of related transactions in each of the foregoing cases constituting individually or in the aggregate 10% or more of the assets or Voting Securities (as applicable) of the Company. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SHAREHOLDER DESIGNEE" shall mean a person designated for election to the Board of Directors by Shareholders as provided in SECTION 3.1. "TOTAL VOTING POWER" shall mean the total combined Voting Power, on a fully diluted basis, of all the Voting Securities then outstanding. "VOTING POWER" shall mean the voting power in the general election of directors of the Company, and shall be calculated for each Voting Security by reference to the maximum number of votes such Voting Security is or would be entitled to cast in the general election of directors, and, in the case of convertible (or exercisable or exchangeable) securities, by reference to the maximum number of votes such Voting Security would be entitled to cast in unconverted or converted (or exercised, unexercised, exchanged or unexchanged) status. For purposes of determining Voting Power under this Agreement, a Voting Security which is convertible into or exchangeable for a Voting Security shall be counted as having the greater of (i) the number of votes to which such Voting Security is entitled prior to conversion or exchange and (ii) the number of votes to which the Voting Security into which such Voting Security is convertible or exchangeable is entitled. Notwithstanding anything else to the contrary contained in this Agreement, there shall not be included in calculating Voting Power any votes which a Person shall have upon the non- payment of dividends on the Preferred Shares in accordance with the terms of the Preferred Shares. "VOTING SECURITIES" shall mean (x) any securities entitled, or which may be entitled, to vote generally in the election of directors of the Company, (y) any securities convertible or exercisable into or exchangeable for such securities (whether or not the right to convert, exercise or exchange is subject to the passage of time or contingencies or both), or (z) any direct or indirect rights or options to acquire any such securities; PROVIDED that unexercised options granted pursuant to any employment benefit or similar plan and rights issued pursuant to any shareholder rights plan (including that described in SECTION 3.5) shall be deemed not to be "Voting Securities" (or to have Voting Power). In addition, the following terms have the definitions specified in the Sections noted: TERM SECTION Actual Voting Power Threshold 3.1(b) Agreement recitals Beneficial Ownership Threshold 3.1(b) Common Stock recitals Company recitals Disposition 4.1 Laidlaw 3.1(a) Laidlaw Agreement 3.1(a) Registration Rights recitals Related Transferee 4.1(e) Rule 144 Sale 4.1(b) Shareholders recitals Shareholder Designee Period 3.1(b) Shares recitals Standstill Period 2.1 TPG Group Agreement recitals SECTION 1.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Shareholders as follows: (a) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby are within its corporate powers and have been duly authorized by all necessary corporate action on its part. This Agreement constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, and insolvency, fraudulent transfer reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles. (b) The execution, delivery and performance of this Agreement by the Company does not and will not (i) contravene or conflict with or constitute a default under the Company's Articles of Incorporation or By-laws, (ii) contravene or conflict with or constitute a default under any agreement to which the Company is a party or is bound, or result in a breach of or default under any instrument or agreement to which the Company is a party or is bound, which violation, breach or default would have a material adverse effect on the Company's business taken as a whole or would adversely affect the consummation of the transactions contemplated by this Agreement or the TPG Group Agreement, (iii) violate any judgment, order, injunction, decree or award against or binding upon the Company as of the date of this Agreement, the violation of which, individually or in the aggregate, would have a material adverse effect on the Company's business taken as a whole or would adversely affect the consummation of the transactions contemplated by this Agreement or the TPG Group Agreement or (iv) violate any Law relating to the Company, the violation of which, individually or in the aggregate, would have a material adverse effect on the Company's business taken as a whole or would adversely affect the consummation of the transactions contemplated by this Agreement or the TPG Group Agreement. (c) Except for applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT") and the Exchange Act, the Company is not required to make any filing or registration with, or obtain any permit, authorization, consent or approval of, any governmental entity or any other Person in connection with this Agreement, the TPG Agreement, or any of the transactions contemplated hereby and thereby. (d) As of the date of this Agreement, there is no action, suit or proceeding pending or, to the knowledge of the Company, threatened against the Company that relates to this Agreement, the TPG Group Agreement, or any of the transactions contemplated hereby or thereby. (e) As of the date hereof, the Company would be entitled to make at least $1.00 in additional borrowings under the Credit Agreement between the Company and NatWest Bank, N.A., as agent (the "CREDIT AGREEMENT"), and the consummation of the transactions contemplated by the TPG Group Agreement and this Agreement will not, by themselves, limit the Company's ability to borrow under the Credit Agreement. (f) All documents which have been filed by the Company with the Commission under the Exchange Act, at the time they were filed with the Commission, conformed in all material respects with the requirements of Exchange Act, and the rules and regulations of the Commission thereunder, and, as of the date thereof and taken as a whole, as of the date hereof do not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (g) The Board of Directors of the Company has approved the transfer of the Shares to the Shareholders pursuant to the TPG Group Agreement, subject to the execution and delivery by the Shareholders of this Agreement. SECTION 1.3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Each Shareholder severally, but not jointly, represents and warrants to the Company as follows: (a) The execution, delivery and performance by such Shareholder of this Agreement and the consummation by such Shareholder of the transactions contemplated by this Agreement are within its powers and have been duly authorized by all necessary action on its part. This Agreement constitutes a legal, valid and binding agreement of such Shareholder enforceable against such Shareholder in accordance with its terms, subject, as to enforcement, to bankruptcy, and insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles. (b) The execution, delivery and performance of this Agreement by such Shareholder does not and will not contravene or conflict with or constitute a default under such Shareholder's partnership agreement or similar governing documents. (c) As of the date of this Agreement, such Shareholder does not beneficially own any Voting Securities except, to the extent such shares may be deemed to be beneficially owned, the shares of Common Stock which are subject to the TPG Group Agreement. (d) A condition to the consummation of the purchase of the Shares by the Shareholders pursuant to the TPG Group Agreement is that the four persons designated to the Board of Directors by TPG Group shall have resigned, and the Shareholders agree not to waive this condition without the prior written consent of the Company. ARTICLE 2 Standstill SECTION 2.1. STANDSTILL. Until the earliest to occur of (A) the sixth anniversary of the Closing Date, (B) the date on which Shareholders own, collectively, Voting Securities which would represent (i) less than 10% of the Total Voting Power and (ii) less than 10% of the Actual Voting Power and (C) termination under SECTION 2.2 (such period, the "STANDSTILL PERIOD"), each Shareholder will not, and will cause each of its Affiliates not to, directly or indirectly: (i) acquire, offer to acquire, or agree to acquire, by purchase or otherwise, any Voting Securities or voting rights or direct or indirect rights or options to acquire any Voting Securities of the Company or any of its Affiliates other than (A) the exercise of convertible securities acquired in compliance with the terms of this Agreement, or an acquisition as a result of a stock split, stock dividend or similar recapitalization, (B) the acquisition of shares of Common Stock which are subject to the TPG Group Agreement, (C) in the event that the Company shall have issued or sold securities entitled to vote for the general election of directors, the acquisition of shares of Common Stock to the extent necessary to maintain such Shareholder's percentage of the Actual Voting Power as held immediately prior to such issuance or sale, (D) with the prior written consent of the two most senior executive officers of the Company, acquisitions by all Shareholders of up to a collective aggregate amount of 3,000,000 shares (as such number may be appropriately adjusted to reflect stock splits, reverse stock splits, stock dividends or any other recapitalization of the Company) of Common Stock, (E) stock options or similar rights granted by the Company to an Affiliate of such Shareholder as compensation for performance as a director or officer of the Company or its subsidiaries (and any shares issuable upon exercise thereof), (F) transfers between such Shareholder and Related Transferees as permitted under SECTION 4.1(E) or (G) any rights which are granted to all shareholders of the Company (and any shares issuable upon exercise thereof); PROVIDED, HOWEVER, that if the Shareholders or any of their Affiliates in good faith inadvertently acquire not more than 500,000 shares of Common Stock in violation of these provisions and within 15 days after the first date on which the Shareholders have actual knowledge (including by way of written notice given by the Company) that a violation has occurred Shareholders or any of their Affiliates shall have transferred any shares of Common Stock held in violation of these provisions to unrelated third parties so that the Shareholders or any of their Affiliates no longer beneficially own such shares or have any agreement or understanding relating to such shares, this SECTION 2.1 shall be deemed to not have been violated; and PROVIDED, FURTHER, that no violation of this provision shall be deemed to have occurred by reason of the indirect acquisition of beneficial ownership of securities resulting from (x) investments in investment funds as to which no Shareholder or Affiliate has control or power to control with respect to voting or investment decisions or (y) acquisitions of securities by limited partners in any Shareholder or its Affiliates as to limited partners which no Shareholder or its Affiliates has control or power to control; (ii) make or cause to be made any proposal for a Reorganization Transaction; (iii) form, join or in any way participate in a Group with respect to any securities of the Company or its Affiliates, other than with other Shareholders or Affiliates of any Shareholder; PROVIDED, HOWEVER, that in the case of securities other than voting securities, Shareholders may participate in a Group with respect thereto with the prior approval of a majority of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or to any third party); (iv) make, or in any way cause or participate in, any "solicitation" of "proxies" to vote (as those terms are defined in Regulation 14A under the Exchange Act) with respect to the Company or its Affiliates, or communicate with, seek to advise, encourage or influence any Person, in any manner, with respect to the voting of, securities of the Company or its Affiliates, or become a "participant" in any "election contest" (as those terms are defined or used in Rule 14a-11 under the Exchange Act) with respect to the Company or its Affiliates (other than non-public communications with other Shareholders or Affiliates of any Shareholder which would not require public disclosure by any Person); (v) initiate, propose or, except with the prior approval of a majority of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or to any third parties) otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to the Company or its Affiliates or induce or attempt to induce any other Person to initiate any stockholder proposal or seek election to or seek to place a representative on the Board of Directors of the Company (except pursuant to SECTION 3.1 of this Agreement) or its Affiliates or seek the removal of any member of the Board of Directors of the Company or its Affiliates (for this purpose, the actions of the Shareholder Designees in communicating (without public disclosure or disclosure to third parties) with the Board of Directors in their capacity as directors of the Company, and non-public communication by a Shareholder with other Shareholders or Affiliates of any Shareholder which would not require public disclosure by any Person, shall not be deemed to be in contravention of the paragraph (v)); (vi) in any manner, agree, attempt, seek or propose (other than making any request for permission with respect thereto which would not require disclosure publicly or to any third party) to deposit any securities of the Company or its Affiliates in any voting trust or similar arrangement or to subject any securities of the Company or its Affiliates to any other voting or proxy agreement, arrangement or understanding (other than any such agreements or understandings with other Shareholders or Affiliates of any Shareholder); (vii) offer, sell or transfer any Common Stock or rights to receive Common Stock except for Dispositions in accordance with ARTICLE 4; (viii) disclose any intention, plan or arrangement, or make any public announcement (or request permission to make any such announcement other than making any request for permission which would not require disclosure publicly or to any third party), or induce any other Person to take any action, inconsistent with the foregoing; (ix) enter into any negotiations, arrangements or understandings with any third party with respect to any of the foregoing; (x) advise, assist or encourage or finance (or assist or arrange financing to or for) any other Person in connection with any of the foregoing; (xi) otherwise act in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company or its Affiliates (for this purpose, the actions of the Shareholder Designees in their capacity as directors of the Company shall not be deemed to be in contravention of this paragraph (xi)); or (xii) request a waiver of any of the provisions of paragraphs (i) through (xi) above (except any request which would not require disclosure publicly or to any third party); PROVIDED, that this SECTION 2.1 shall not restrict or inhibit the rights of a Shareholder to exercise its voting rights as a stockholder of the Company (subject to SECTION 3.2). SECTION 2.2. EARLY TERMINATION OF STANDSTILL. The obligations of Shareholders under SECTION 2.1 shall terminate upon the occurrence of any of the following events: (a) At least $10,000,000 in indebtedness for monies borrowed by the Company or its subsidiaries shall have been accelerated and payment therefor shall not have been made within 20 days after such acceleration, and the Company shall not in good faith be contesting whether such amount is owed. (b) A final judgment or judgments (not subject to appeal) for the payment of money shall have been entered against the Company or its subsidiaries in an aggregate amount in excess of $10,000,000 (exclusive of any amounts fully covered by insurance (less any applicable deductible) or indemnification) by a court or courts of competent jurisdiction, which judgments remain unsatisfied, undischarged, unstayed or unbonded for a period of 45 days after the entry of such judgment or judgments. (c) The Company shall file a petition in bankruptcy or for reorganization or for an arrangement or any composition, readjustment, liquidation, dissolution or similar relief pursuant to Title 11 of the United States Code or under any similar present or future federal law or the law of any other jurisdiction or shall be adjudicated a bankrupt or insolvent, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or for all or any substantial part of its property, or shall make a general assignment for the benefit of its creditors. (d) A petition or answer shall be filed proposing the adjudication of the Company as bankrupt or its reorganization or arrangement, or any composition, readjustment, liquidation, dissolution or similar relief with respect to it pursuant to Title 11 of the United States Code or under any similar present or future federal law or the law of any other jurisdiction, and the Company shall consent to or acquiesce in the filing thereof, or such petition or answer shall not be discharged or denied within 60 days after the filing thereof. (e) The Company shall be in material breach of its obligations to Shareholders under the Registration Rights and such breach shall not have been cured within 20 days after receipt by the Company from Shareholders of a written notice specifying such breach and requiring it to be remedied, and the Company shall not in good faith be contesting whether such breach has occurred. (f) If the Company shall, in breach of its obligations under this Agreement, fail to nominate for election to the Board of Directors any Shareholder Designee who satisfies the requirements for designation to the Board of Directors set forth in SECTIONS 3.1(D). ARTICLE 3 Board Representation and Voting SECTION 3.1. BOARD REPRESENTATION. (a) As of the Closing Date and during the Standstill Period the Board of Directors shall consist of no more than twelve (12) directors as follows: (A) two directors shall be executive officers of the Company; (B) up to two directors, as determined pursuant to SECTIONS 3.1(B) and 3.1(C), shall be Shareholder Designees; (C) for so long as required under the Stock Purchase Agreement dated as of September 17, 1996, as the same may be amended (the "LAIDLAW AGREEMENT"), by and among the Company, Allied Holding (United States), Inc., a Delaware corporation, Laidlaw, Inc., a Canadian corporation ("LAIDLAW"), and certain of Laidlaw's subsidiaries, two directors as shall be designated in accordance with the Laidlaw Agreement; and (D) each other director shall be an individual who is not a partner, employee, director, officer or affiliate of any Shareholder or any employee or officer of the Company; PROVIDED, HOWEVER, that if Mr. O'Leary ceases to serve as a director, the Board of Directors shall thereafter consist of no more than eleven (11) directors during the Standstill Period. For so long as Shareholders are entitled to two Shareholder Designees under this Agreement, Shareholders shall be entitled to have one Shareholder Designee serve on each committee of the Board of Directors other than any committee formed for the purpose of considering matters relating to the Shareholders. (b) On the Closing Date, the Company will cause Anthony P. Ressler and Howard A. Lipson or, subject to SECTION 3.1(D), such other substitute persons as may be designated by Shareholders and be reasonably acceptable to the Company, to be elected to the Board of Directors. Until the earlier to occur of the sixth anniversary of the Closing Date and the date on which Shareholders own, collectively, less than 20% of the Shares (the "SHAREHOLDER DESIGNEE PERIOD"), the Company agrees, subject to SECTION 3.1(D), to support the nomination of, and the Company's nominating committee (or any other committee exercising a similar function) shall recommend to the Board of Directors that, (A) two Shareholder Designees, so long as Shareholders beneficially own 50% or more of the Shares and (B) one Shareholder Designee, so long as Shareholders beneficially own 20% or more and less than 50% of the Shares (each a "BENEFICIAL OWNERSHIP THRESHOLD"), be included in the slate of nominees recommended by the Board of Directors to shareholders for election as directors at each annual meeting of shareholders of the Company commencing with the next annual meeting of shareholders. Notwithstanding the foregoing, if at any time as a result of the Company's issuance of Voting Securities Shareholders beneficially own 9% or less of the Actual Voting Power (the "ACTUAL VOTING POWER THRESHOLD"), Shareholders shall be entitled to no more than one Shareholder Designee. In the event that any of the Shareholder Designees shall cease to serve as a director for any reason, the Board of Directors shall fill the vacancy resulting thereby, subject to the terms of this Agreement, with a person designated by Shareholders, subject to SECTION 3.1(D) (and such person shall be a "Shareholder Designee" for purposes of this Agreement). The foregoing provision shall be effected pursuant to an amendment to the Company's By-laws in a form reasonably acceptable to the parties to this Agreement which shall not be further amended by the Board of Directors during the Shareholder Designee Period. Notwithstanding the foregoing, the Company shall have no obligation to support the nomination, recommendation or election of any Shareholder Designee pursuant to this SECTION 3.1(B) if Shareholders are in breach of any material provision of this Agreement. (c) Upon any decrease in Shareholders' beneficial ownership of Common Stock below any Beneficial Ownership Threshold or Voting Securities below the Actual Voting Power Threshold, Shareholders shall cause a number of Shareholder Designees to offer to immediately resign from the Company's Board of Directors such that the number of Shareholder Designees serving on the Board of Directors immediately thereafter will be equal to the number of Shareholder Designees which Shareholders would then be entitled to designate under SECTION 3.1(B). Upon termination of the Shareholder Designee Period, Shareholders shall promptly offer to cause all of the Shareholder Designees to resign from the Board of Directors and any committees thereof and the Company's obligations under this SECTION 3.1 shall terminate. (d) Notwithstanding the provisions of this SECTION 3.1, Shareholder shall not be entitled to designate any person to the Company's Board of Directors (or any committee thereof) in the event that the Company receives a written opinion of its outside counsel that a Shareholder Designee would not be qualified under any applicable law, rule or regulation to serve as a director of the Company or if the Company objects to a Shareholder Designee because such Shareholder Designee has been involved in any of the events enumerated in Item 2(d) or (e) of Schedule 13D or such person is currently the target of an investigation by any governmental authority or agency relating to felonious criminal activity or is subject to any order, decree, or judgment of any court or agency prohibiting service as a director of any public company or providing investment or financial advisory services and, in any such event, the Shareholder shall withdraw the designation of such proposed Shareholder Designee and designate a replacement therefor (which replacement Shareholder Designee shall also be subject to the requirements of this Section). The Company shall use its reasonable best efforts to notify the Shareholder of any objection to a Shareholder Designee sufficiently in advance of the date on which proxy materials are mailed by the Company in connection with such election of directors to enable the Shareholder to propose a replacement Shareholder Designee in accordance with the terms of this Agreement. (e) Each Shareholder Designee serving on the Board of Directors shall be entitled to all compensation and stock incentives granted to directors who are not employees of the Company on the same terms provided to such directors. SECTION 3.2. VOTING. (a) Each Shareholder agrees that during the Standstill Period such Shareholder shall, and shall cause its Affiliates and any Person which is a member of any Group of which such Shareholder or any of its Affiliates is a member to, be present, in person or represented by proxy, at all meetings of shareholders of the Company so that all Voting Securities beneficially owned by such Shareholder shall be counted for the purpose of determining the presence of a quorum at such meetings. Each Shareholder agrees that during the Standstill Period: (i) In connection with (A) the election of directors of the Company and (B) any proposal for a Reorganization Transaction, such Shareholder shall vote or cause to be voted, or consent with respect to, all Voting Securities beneficially owned by such Shareholder in the manner recommended by a majority of the entire Board of Directors. (ii) In connection with other proposals submitted to shareholders of the Company, such Shareholder shall be free to vote or cause to be voted, or consent with respect to, all Voting Securities beneficially owned by such Shareholder in its discretion. SECTION 3.3. NOTICES OF DISPOSITIONS OF VOTING SECURITIES. Not later than the tenth day following the end of any calendar month during the Standstill Period in which one or more Dispositions of Voting Securities by a Shareholder or any of its Affiliates shall have occurred, such Shareholder shall use its reasonable best efforts to give written notice to the Company of all such Dispositions (in the case of Dispositions by Affiliates, to the extent it has knowledge) unless any such Disposition has been reflected in a public filing that was delivered to the Company on or in advance of the date upon which notice thereof under this SECTION 3.3 would have been due. Such notice shall state the date upon which each such Disposition was effected, the number and type of Voting Securities involved in each such Disposition, the means by which each such Disposition was effected and, to the extent known, the identity of the Person acquiring Voting Securities. ARTICLE 4 Transfer Restrictions SECTION 4.1. RESTRICTIONS ON DISPOSITIONS. During the Standstill Period, each Shareholder shall not, and shall cause its Affiliates not to, directly or indirectly (including, without limitation, through the disposition or transfer of control of another Person), sell, assign, donate, transfer, pledge, hypothecate, grant any option with respect to or otherwise dispose of any interest in (or enter into an agreement or understanding with respect to the foregoing) any Voting Securities (a "DISPOSITION"), except as set forth below in this SECTION 4.1. Without limiting the generality of the foregoing, any sale of securities held by any Shareholder or any of its Affiliates which is currently (or following the passage of time, the occurrence of any event or the giving of notice), directly or indirectly, exchangeable or exercisable for, or convertible into, any Voting Securities shall constitute a Disposition of such Voting Securities. Dispositions may be effected by a Shareholder during the Standstill Period as follows: (a) Dispositions of Voting Securities may be made at any time in compliance with the Registration Rights. (b) Dispositions of Voting Securities may be made pursuant to sales effected in accordance with Rule 144 under the Securities Act (a "RULE 144 SALE"); PROVIDED that such Dispositions shall not be made to any Person who or which would immediately thereafter, to the knowledge of such Shareholder, any of its Affiliates, or such Shareholder's broker, beneficially own Voting Securities representing 9% or more of the Total Voting Power (and such Person shall have provided a certificate to such effect). (c) Prior to the second anniversary of the Closing Date, Dispositions may be made to any Person which is a financial institution acting on its own behalf or ultimately on the behalf of another financial institution or institutions that would, following such sale, beneficially own no more than 9% of the Total Voting Power. After the second anniversary of the Closing Date, Dispositions may be made to any Person (other than pursuant to a Reorganization Transaction) that would, following such sale, beneficially own no more than 9% of the Total Voting Power (and such Person shall have provided a certificate to such effect). (d) Dispositions may be made pursuant to a merger transaction or a tender offer for all of the outstanding shares of Common Stock which is recommended to the shareholders of the Company generally by at least a majority of the entire Board of Directors, on the terms and conditions of such transaction available to all other holders of shares of Common Stock. (e) Dispositions may be made by a Shareholder to (i) any other Shareholder or (ii) any Affiliate of any Shareholder that executes an instrument in form and substance satisfactory to the Company in which it makes the representations and warranties set forth in SECTION 1.3(B) as of the date of the execution of such instrument and agrees to be bound by the terms of this Agreement as if an original signatory to this Agreement (such transferee, a "RELATED TRANSFEREE"), in which case such Related Transferee shall thereafter be a "Shareholder" for all purposes of this Agreement. (f) With respect to Voting Securities which are, by their terms, convertible into or exercisable or exchangeable for other Voting Securities such conversion, exercise or exchange shall not be deemed a Disposition. (g) Each Shareholder agrees that during the Standstill Period, without the consent of the managing underwriter(s) in an underwritten offering in respect of the Company's Voting Securities, it will not effect any sale or distribution of Voting Securities (other than in connection with such Shareholder's own registration pursuant to paragraph (b) of this SECTION 4.1), including a Rule 144 Sale, during the ten (10) day period prior to, and during the ninety (90) day period beginning on, the effective date of the registration statement filed by the Company in respect of such underwritten offering. ARTICLE 5 Miscellaneous SECTION 5.1. NOTICES. All notices, requests, demands and other communications required or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, fax or air courier guaranteeing delivery: (a) If to the Company, to: Allied Waste Industries, Inc. 7701 East Camelback Road, Suite 375 Scottsdale, Arizona 85251 Attn: Roger A. Ramsey Fax: (602) 481-9347 with copies to: Porter & Hedges, L.L.P. 700 Louisiana Street, Suite 3500 Houston, Texas 77002 Attn: Robert G. Reedy Fax: (713) 228-1331 and to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attn: Arthur Fleischer, Jr. Fax: (212) 859-4000 or to such other person or address as the Company shall furnish to Shareholders in writing; (b) If to Shareholders, to: Apollo Management, L.P. 1999 Avenue of the Stars, Suite 1900 Los Angeles, CA 90067 Attn: David Kaplan Fax: (310) 201-4198 with a copy to: Milbank, Tweed, Hadley & McCloy 601 South Figueroa Street, 30th Floor Los Angeles, CA 90017 Attn: Kenneth J. Baronsky, Esq. Fax: (213) 629-5063 and: The Blackstone Group 345 Park Avenue New York, NY 10154 Attn: Howard A. Lipson Fax: (212) 754-8716 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Attn: Wilson S. Neely, Esq. Fax: (212) 455-2502 or to such other person or address as Shareholders shall furnish to the Company in writing. All such notices, requests, demands and other communications shall be deemed to have been duly given: at the time of delivery by hand, if personally delivered; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed domestically in the United States (and seven (7) Business Days if mailed internationally); when answered back, if telexed; when receipt acknowledged, if telecopied; and on the Business Day for which delivery is guaranteed, if timely delivered to an air courier guaranteeing such delivery. SECTION 5.2. LEGENDS. (a) If requested in writing by the Company, a Shareholder shall present or cause to be presented promptly all certificates representing Voting Securities beneficially owned by such Shareholder or any of its Affiliates, for the placement thereon of a legend substantially to the following effect, which legend will remain thereon so long as such legend is required under applicable securities laws: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH A REGISTRATION THEREUNDER OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND DELIVERY TO ALLIED WASTE INDUSTRIES, INC. OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THOSE LAWS." (b) Each Shareholder shall present or cause to be presented promptly all certificates representing Voting Securities beneficially owned by such Shareholder or any of its Affiliates, for the placement thereon of a legend substantially to the following effect, which legend will remain thereon during the Standstill Period as long as such Voting Securities are beneficially owned by any Shareholder or a Affiliate: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF A SHAREHOLDERS AGREEMENT, DATED AS OF APRIL 14, 1997, BETWEEN ALLIED WASTE INDUSTRIES, INC. ("ALLIED") AND CERTAIN SHAREHOLDERS OF ALLIED NAMED THEREIN AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF ALLIED" (c) The Company may enter a stop transfer order with the transfer agent or agents of Voting Securities against any Disposition not in compliance with the provisions of this Agreement. SECTION 5.3. ENFORCEMENT. Shareholders, on the one hand, and the Company, on the other hand, acknowledge and agree that irreparable injury to the other party would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that such injury would not be adequately compensable in damages. It is accordingly agreed that, in addition to any other remedies which may be available at law or in equity, each party hereto (the "MOVING PARTY") shall be entitled to specific enforcement of, and injunctive relief to prevent any violation of, the terms of this Agreement, and the other parties hereto will not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in equity. The parties further agree that no bond shall be required as a condition to the granting of any such relief. SECTION 5.4. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties with respect to the transactions contemplated hereby. This Agreement may be amended only by a written instrument duly executed by the parties or their respective successors or assigns; PROVIDED, HOWEVER, that any amendment or waiver by the Company shall be made only with the prior approval of a majority of the directors of the Company other than Shareholder Designees. SECTION 5.5. SEVERABILITY. Whenever possible, each provision or portion of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law, rule or regulation in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision shall have been replaced with a provision which shall, to the maximum extent permissible under such applicable law, rule or regulation, give effect to the intention of the parties as expressed in such invalid, illegal or unenforceable provision. SECTION 5.6. HEADINGS. Descriptive headings contained in the Agreement are for convenience only and will not control or affect the meaning or construction of any provision of this Agreement. SECTION 5.7. COUNTERPARTS. For the convenience of the parties, any number of counterparts of this Agreement may be executed by the parties, and each such executed counterpart will be an original instrument. SECTION 5.8. NO WAIVER. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. SECTION 5.9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Company and Shareholders, and to their respective successors and assigns other than, in the case of Shareholders, transferees that are not Related Transferees, including any successors to the Company or Shareholders or their businesses or assets as the result of any merger, consolidation, reorganization, transfer of assets or otherwise, and any subsequent successor thereto, without the execution or filing of any instrument or the performance of any act; PROVIDED that no party may assign this Agreement without the other party's prior written consent, except by the Shareholders to a Shareholder or a Related Transferee as expressly provided in this Agreement (and that nothing herein restricts the transfer of Registration Rights in accordance their terms). SECTION 5.10. GOVERNING LAW. This Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws principles thereof. SECTION 5.11. FURTHER ASSURANCES. From time to time on and after the date of this Agreement, the Company and Shareholders, as the case may be, shall deliver or cause to be delivered to the other party hereto such further documents and instruments and shall do and cause to be done such further acts as the other parties hereto shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure that it is protected in acting hereunder. SECTION 5.12. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any legal action or proceeding with respect to this Agreement or any matters arising out of or in connection with this Agreement, and any action for enforcement of any judgment in respect thereof shall be brought exclusively in the state or federal courts located in the State of Delaware, and, by execution and delivery of this Agreement, the Company and Shareholders each irrevocably consent to service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company or Shareholders at their respective addresses referred to in this Agreement. The Company and Shareholders each hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to above and hereby further irrevocably waives and agrees, to the extent permitted by applicable law, not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing in this Agreement shall affect the right of any party hereto to serve process in any other manner permitted by law. SECTION 5.13. SHAREHOLDER ACTION. The Company shall be entitled to rely upon any written notice, designation, or instruction signed by Apollo Capital Management II, Inc. and BCP (the "REPRESENTATIVES") as a notice, designation or instruction of all Shareholders and the Company shall not be liable to any Shareholder if the Company acts in accordance with and relies upon such writing. In that regard, each of the Shareholders acknowledges that the Representatives have full power and authority to act on their behalf. SECTION 5.14. REGISTRATION RIGHTS. Upon closing of the acquisition of the Shares pursuant to the TPG Group Agreement, any previous demand by TPG Group for a shelf registration with respect to certain of the Shares shall be deemed withdrawn and the parties shall disregard such demand and treat such demand as if it were never made; PROVIDED that the Shareholders may reinstate such demand at any time after the Closing Date. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first referred to above. ALLIED WASTE INDUSTRIES, INC. By: /s/ Thomas Van Weelden --------------------------- Thomas Van Weelden Title: President and Chief Operating Officer APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (U.K.) PARTNERS III, L.P. By: Apollo Advisors II, L.P. By: Apollo Capital Management II, Inc. By: /s/ David B. Kaplan --------------------------- David B. Kaplan Title: Vice President BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P. By: Blackstone Management Associates II L.L.C. By: /s/ Howard A. Lipson ---------------------------- Howard A. Lipson Title: Senior Managing Director EX-5 6 EXHIBIT 5 - AMENDED & RESTATED SHAREHOLDERS AGMT EXHIBIT 99.6 AMENDED AND RESTATED SHAREHOLDERS AGREEMENT This Amended and Restated Shareholders Agreement (this "AGREEMENT"), dated as of April 21, 1997, by and between Allied Waste Industries, Inc., a Delaware corporation (the "COMPANY"), on the one hand, and Apollo Investment Fund III, L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware limited partnership, Apollo (U.K.) Partners III, L.P., an English limited partnership, Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership ("BCP"), Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership, and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership (collectively, "SHAREHOLDERS"), on the other hand, amending and restating in its entirety the Shareholders Agreement dated as of April 14, 1997 (the "ORIGINAL AGREEMENT"), by and between the Company, on the one hand, and the Shareholders, on the other hand. WHEREAS, simultaneously with the execution of the Original Shareholders Agreement, Shareholders entered into an agreement (the "TPG GROUP PURCHASE AGREEMENT") to purchase an aggregate of 11,776,765 shares (the "TPG GROUP BLOCK") of the Company's common stock, par value $.01 per share (the "COMMON STOCK"), from TPG Partners, L.P., a Delaware limited partnership, and TPG Parallel I, L.P., a Delaware limited partnership (collectively, "TPG GROUP"); WHEREAS, concurrently with the acquisition of the TPG Group Block by Shareholders pursuant to the TPG Group Purchase Agreement, TPG Group intends to assign to Shareholders its registration rights with respect to the TPG Group Block under Article IV of the Securities Purchase Agreement dated as of October 27, 1994, as amended, by and between TPG Group and the Company; WHEREAS, under the Original Stockholders Agreement, the Company granted to Shareholders, effective upon the closing of the acquisition of the TPG Group Block pursuant to the TPG Group Purchase Agreement, the right as a group to appoint certain designees for election to the Board of Directors of the Company and agreed to certain restrictions on the acquisition and disposition of Common Stock and the conduct of Shareholders with respect to the Company; WHEREAS, simultaneously with the execution of this Agreement, Shareholders are entering into (i) a Securities Purchase Agreement (the "LAIDLAW PURCHASE AGREEMENT") with Laidlaw, Inc., a Canadian corporation ("LAIDLAW"), Laidlaw Transportation, Inc., a Delaware corporation, and the Company, pursuant to which, among other things, the Shareholders have agreed to purchase an aggregate of 14,600,000 shares of Common Stock (the "LAIDLAW BLOCK" and together with the TPG Group Block, the "SHARES") from Laidlaw and (ii) a Registration Rights Agreement (the "REGISTRATION RIGHTS AGREEMENT") with respect to the Shares granting certain registration rights and superseding all other registration rights with respect to the Shares; WHEREAS, in recognition of Shareholders' significant change in ownership in the Company, upon the closing of the purchase of the Laidlaw Block pursuant to the Laidlaw Purchase Agreement, the parties desire to amend and restate the Original Shareholders Agreement in its entirety (except as may be otherwise set forth herein) as set forth herein; NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement and in the Registration Rights Agreement and intending to be legally bound hereby, the parties agree as follows, effective upon the -2- closing of the purchase of the Laidlaw Block pursuant to the Laidlaw Purchase Agreement: ARTICLE 1 Definitions; Representations and Warranties SECTION 1.1 DEFINITIONS. Unless otherwise specified all references to "days" shall be deemed to be references to calendar days. For purposes of this Agreement, the following terms shall have the following meanings: "ACTUAL VOTING POWER" shall mean the total voting power of all the then outstanding securities of the Company at the time then entitled to vote for the general election of directors, without giving effect to securities issuable upon exercise or conversion of such outstanding securities. "AFFILIATE" of a Person shall have the meaning set forth in Rule 12b-2 of the Exchange Act as in effect on the date of this Agreement, but shall not include (i) any investment fund in which a Person has invested if the Person does not otherwise control the investment fund or have, directly or indirectly, voting or dispositive power over any securities owned by such fund or (ii) any investor or limited partner of any Person who does not otherwise have voting or dispositive power over securities owned by that Person and is not controlled by that Person. It is expressly intended that any Person who now or hereafter controls, directly or indirectly, any Shareholder shall be subject to the restrictions of Section 2.1 as if it were a Shareholder. "BENEFICIAL OWNERSHIP" by a Person of any Voting Securities shall be determined in accordance with the term "beneficial ownership" as defined in Rule 13d-3 -3- under the Exchange Act as in effect on the date of this Agreement and, in addition, "beneficial ownership" shall include securities which such Person has the right to acquire (irrespective of whether such right is exercisable immediately or only after the passage of time, including the passage of time in excess of sixty (60) days) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise. For purposes of this Agreement, a Shareholder shall be deemed to beneficially own any Voting Securities beneficially owned by its Affiliates or any Group of which such Shareholder or any such Affiliate is a member. "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company. "COMMISSION" shall mean the Securities and Exchange Commission. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended. "FIRST CLOSING DATE" shall mean the date of the closing of the purchase of the TPG Group Block by Shareholders pursuant to the TPG Group Purchase Agreement. "GROUP" shall mean a "group" as such term is used in Section 13(d)(3) of the Exchange Act as in effect on the date of this Agreement. "LAWS" shall mean all applicable foreign, federal, state and local laws, statutes, rules, regulations, codes and ordinances. "PERSON" shall mean any individual, Group, corporation, general or limited partnership, limited liability company, governmental entity, joint venture, estate, trust, association, organization or other entity of any kind or nature. -4- "REORGANIZATION TRANSACTION" means: (i) any merger, consolidation, recapitalization, liquidation or other business combination transaction involving the Company; (ii) any tender offer or exchange offer for any securities of the Company; or (iii) any sale or other disposition of assets of the Company or any of its Subsidiaries in a single transaction or in a series of related transactions in each of the foregoing cases constituting individually or in the aggregate 10% or more of the assets or Voting Securities (as applicable) of the Company. "SECOND CLOSING DATE" shall mean the date of the closing of the purchase of the Laidlaw Block by Shareholders pursuant to the Laidlaw Purchase Agreement. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended. "SHAREHOLDER DESIGNEE" shall mean a person designated for election to the Board of Directors by Shareholders as provided in SECTION 3.1. "TOTAL VOTING POWER" shall mean the total combined Voting Power, on a fully diluted basis, of all the Voting Securities then outstanding. "VOTING POWER" shall mean the voting power in the general election of directors of the Company, and shall be calculated for each Voting Security by reference to the maximum number of votes such Voting Security is or would be entitled to cast in the general election of directors, and, in the case of convertible (or exercisable or exchangeable) securities, by reference to the maximum number of votes such Voting Security would be entitled to cast in unconverted or converted (or exercised, unexercised, exchanged or unexchanged) status. For purposes of determining Voting Power under this Agreement, a Voting Security which is convertible into or exchangeable for a Voting Security shall be counted as having the greater of (i) the number of votes to which such -5- Voting Security is entitled prior to conversion or exchange and (ii) the number of votes to which the Voting Security into which such Voting Security is convertible or exchangeable is entitled. Notwithstanding anything else to the contrary contained in this Agreement, there shall not be included in calculating Voting Power any votes which a Person shall have upon the non-payment of dividends on preferred shares in accordance with the terms of such preferred shares. "VOTING SECURITIES" shall mean (x) any securities entitled, or which may be entitled, to vote generally in the election of directors of the Company, (y) any securities convertible or exercisable into or exchangeable for such securities (whether or not the right to convert, exercise or exchange is subject to the passage of time or contingencies or both), or (z) any direct or indirect rights or options to acquire any such securities; PROVIDED that unexercised options granted pursuant to any employment benefit or similar plan and rights issued pursuant to any shareholder rights plan (including that described in SECTION 3.5) shall be deemed not to be "Voting Securities" (or to have Voting Power). In addition, the following terms have the definitions specified in the Sections noted: TERM SECTION Actual Voting Power Threshold 3.1(b) Agreement recitals Beneficial Ownership Threshold 3.1(b) Common Stock recitals Company recitals Disposition 4.1 Laidlaw recitals -6- Laidlaw Purchase Agreement recitals Laidlaw Block recitals Registration Rights Agreement recitals Related Transferee 4.1(f) Rule 144 Sale 4.1(c) Shareholders recitals Shareholder Designee Period 3.1(b) Shares recitals Standstill Period 2.1 TPG Group Block recitals TPG Group Purchase Agreement recitals SECTION 1.2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to Shareholders as follows: (a) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby are within its corporate powers and have been duly authorized by all necessary corporate action on its part. This Agreement constitutes a legal, valid and binding agreement of the Company enforceable against the Company in accordance with its terms, subject, as to enforcement, to bankruptcy, and insolvency, fraudulent transfer reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles. (b) The execution, delivery and performance of this Agreement by the Company does not and will not (i) contravene or conflict with or constitute a default -7- under the Company's Certificate of Incorporation or Bylaws, (ii) contravene or conflict with or constitute a default under any agreement to which the Company is a party or is bound, or result in a breach of or default under any instrument or agreement to which the Company is a party or is bound, which violation, breach or default would have a material adverse effect on the Company's business taken as a whole or would adversely affect the consummation of the transactions contemplated by this Agreement or the Laidlaw Purchase Agreement, (iii) violate any judgment, order, injunction, decree or award against or binding upon the Company as of the date of this Agreement, the violation of which, individually or in the aggregate, would have a material adverse effect on the Company's business taken as a whole or would adversely affect the consummation of the transactions contemplated by this Agreement or the Laidlaw Purchase Agreement, (iv) violate any Law relating to the Company, the violation of which, individually or in the aggregate, would have a material adverse effect on the Company's business taken as a whole or would adversely affect the consummation of the transactions contemplated by this Agreement or the Laidlaw Purchase Agreement or (v) constitute a "change of control," or result in the acceleration of rights, under any material debt instrument to which the Company is a party. (c) Except for applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT") and the Exchange Act, the Company is not required to make any filing or registration with, or obtain any permit, authorization, consent or approval of, any governmental entity or any other Person in connection with this Agreement, the Laidlaw Purchase Agreement, or any of the transactions contemplated hereby and thereby. -8- (d) As of the date of this Agreement, there is no action, suit or proceeding pending or, to the knowledge of the Company, threatened against the Company that relates to this Agreement, the TPG Group Purchase Agreement, the Laidlaw Purchase Agreement, or any of the transactions contemplated hereby or thereby. (e) As of the date hereof, the Company would be entitled to make at least $1.00 in additional borrowings under the Credit Agreement (the "CREDIT AGREEMENT") among the Company, Allied Waste North America, Inc. and the various lenders represented by Goldman Sachs Credit Partners, L.P., Credit Suisse and Citibank, N.A., and the consummation of the transactions contemplated by the Laidlaw Purchase Agreement and this Agreement will not, by themselves, limit the Company's ability to borrow under the Credit Agreement. (f) All documents which have been filed by the Company with the Commission under the Exchange Act, at the time they were filed with the Commission, conformed in all material respects with the requirements of Exchange Act, and the rules and regulations of the Commission thereunder, and, as of the date thereof and taken as a whole as of the date hereof do not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (g) The Board of Directors of the Company has approved the transfer of the Laidlaw Block to the Shareholders pursuant to the Laidlaw Purchase Agreement, subject to the execution and delivery by the Shareholders of this Agreement. -9- SECTION 1.3. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER. Each Shareholder severally, but not jointly, represents and warrants to the Company as follows: (a) The execution, delivery and performance by such Shareholder of this Agreement and the consummation by such Shareholder of the transactions contemplated by this Agreement are within its powers and have been duly authorized by all necessary action on its part. This Agreement constitutes a legal, valid and binding agreement of such Shareholder enforceable against such Shareholder in accordance with its terms, subject, as to enforcement, to bankruptcy, and insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor's rights and to general equity principles. (b) The execution, delivery and performance of this Agreement by such Shareholder does not and will not contravene or conflict with or constitute a default under such Shareholder's partnership agreement or similar governing documents. (c) As of the date of this Agreement, such Shareholder does not beneficially own any Voting Securities except (i) any Voting Securities beneficially owned on the date hereof in compliance with the Original Shareholders Agreement and (ii) to the extent such shares may be deemed to be beneficially owned, the shares of Common Stock which are subject to the Laidlaw Purchase Agreement or the TPG Group Purchase Agreement. (d) A condition to the consummation of the purchase of the Laidlaw Block by the Shareholders pursuant to the Laidlaw Purchase Agreement is that the persons designated to the Board of Directors by Laidlaw shall have resigned, and the -10- Shareholders agree not to waive this condition without the prior written consent of the Company. ARTICLE 2 Standstill SECTION 2.1. STANDSTILL. Until the earliest to occur of (A) the sixth anniversary of the Second Closing Date, (B) the date on which Shareholders own, collectively, Voting Securities which would represent (i) less than 10% of the Total Voting Power and (ii) less than 10% of the Actual Voting Power and (C) termination under SECTION 2.2 (such period, the "STANDSTILL PERIOD"), each Shareholder will not, and will cause each of its Affiliates not to, directly or indirectly: (i) acquire, offer to acquire, or agree to acquire, by purchase or otherwise, any Voting Securities or voting rights or direct or indirect rights or options to acquire any Voting Securities of the Company or any of its Affiliates other than (A) the exercise of convertible securities acquired in compliance with the terms of this Agreement, or an acquisition as a result of a stock split, stock dividend or similar recapitalization, (B) the acquisition of shares of Common Stock which are subject to the Laidlaw Purchase Agreement, (C) with the prior written consent of the two most senior executive officers of the Company, acquisitions by all Shareholders of up to a collective aggregate amount of 3,000,000 shares (as such number may be appropriately adjusted to reflect stock splits, reverse stock splits, stock dividends or any other recapitalization of the Company) of Common Stock, (D) stock options or similar rights granted by the Company to an Affiliate of such Shareholder as compensation for performance as -11- a director or officer of the Company or its subsidiaries (and any shares issuable upon exercise thereof), (E) transfers between such Shareholder and Related Transferees as permitted under SECTION 4.1(F) or (F) any rights which are granted to all shareholders of the Company (and any shares issuable upon exercise thereof); PROVIDED, HOWEVER, that if the Shareholders or any of their Affiliates in good faith inadvertently acquire not more than 500,000 shares of Common Stock in violation of these provisions and within 15 days after the first date on which the Shareholders have actual knowledge (including by way of written notice given by the Company) that a violation has occurred Shareholders or any of their Affiliates shall have transferred any shares of Common Stock held in violation of these provisions to unrelated third parties so that the Shareholders and their Affiliates no longer beneficially own any such shares or have any agreement or understanding relating to such shares, this SECTION 2.1 shall be deemed to not have been violated; and PROVIDED, FURTHER, that no violation of this provision shall be deemed to have occurred by reason of the indirect acquisition of beneficial ownership of securities resulting from (x) investments in investment funds as to which no Shareholder or Affiliate thereof has control or power to control with respect to voting or investment decisions or (y) acquisitions of securities by a limited partner in any Shareholder or Affiliates thereof as to which limited partner no Shareholder or its Affiliates has control or power to control; (ii) make or cause to be made any proposal for a Reorganization Transaction; (iii) form, join or in any way participate in a Group with respect to any securities of the Company or its Affiliates, other than with other Shareholders -12- or Affiliates of any Shareholder; PROVIDED, HOWEVER, that in the case of securities other than voting securities, Shareholders may participate in a Group with respect thereto with the prior approval of a majority of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or to any third party); (iv) make, or in any way cause or participate in, any "solicitation" of "proxies" to vote (as those terms are defined in Regulation 14A under the Exchange Act) with respect to the Company or its Affiliates, or communicate with, seek to advise, encourage or influence any Person, in any manner, with respect to the voting of, securities of the Company or its Affiliates, or become a "participant" in any "election contest" (as those terms are defined or used in Rule 14a-11 under the Exchange Act) with respect to the Company or its Affiliates (other than non-public communications with other Shareholders or Affiliates of any Shareholder which would not require public disclosure by any Person); (v) initiate, propose or, except with the prior approval of a majority of the entire Board of Directors (which approval is requested in a manner which does not require disclosure publicly or to any third parties) otherwise solicit stockholders for the approval of one or more stockholder proposals with respect to the Company or its Affiliates or induce or attempt to induce any other Person to initiate any stockholder proposal or seek election to or seek to place a representative on the Board of Directors of the Company (except pursuant to SECTION 3.1 of this Agreement) or its Affiliates or seek the removal of any member of the Board of Directors of the Company or its Affiliates (for this purpose, the actions of the Shareholder Designees in communicating (without public disclosure -13- or disclosure to third parties) with the Board of Directors in their capacity as directors of the Company, and non-public communication by a Shareholder with other Shareholders or Affiliates of any Shareholder which would not require public disclosure by any Person, shall not be deemed to be in contravention of the paragraph (v)); (vi) in any manner, agree, attempt, seek or propose (other than making any request for permission with respect thereto which would not require disclosure publicly or to any third party) to deposit any securities of the Company or its Affiliates in any voting trust or similar arrangement or to subject any securities of the Company or its Affiliates to any other voting or proxy agreement, arrangement or understanding (other than any such agreements or understandings with other Shareholders or Affiliates of any Shareholder); (vii) offer, sell or transfer any Common Stock or rights to receive Common Stock except for Dispositions in accordance with ARTICLE 4; (viii) disclose any intention, plan or arrangement, or make any public announcement (or request permission to make any such announcement other than making any request for permission which would not require disclosure publicly or to any third party), or induce any other Person to take any action, inconsistent with the foregoing; (ix) enter into any negotiations, arrangements or understandings with any third party with respect to any of the foregoing; (x) advise, assist or encourage or finance (or assist or arrange financing to or for) any other Person in connection with any of the foregoing; -14- (xi) otherwise act in concert with others, to seek to control or influence the management, Board of Directors or policies of the Company or its Affiliates (for this purpose, the actions of the Shareholder Designees in their capacity as directors of the Company shall not be deemed to be in contravention of this paragraph (xi)); or (xii) request a waiver of any of the provisions of any of paragraphs (i) through (xii) of this SECTION 2.1 (except any request which would not require disclosure publicly or to any third party); PROVIDED, that this SECTION 2.1 shall not restrict or inhibit the rights of a Shareholder to exercise its voting rights as a stockholder of the Company (subject to SECTION 3.2). SECTION 2.2. EARLY TERMINATION OF STANDSTILL. The obligations of Shareholders under SECTION 2.1 shall terminate early upon the occurrence of any of the following events: (a) At least $10,000,000 in indebtedness for monies borrowed by the Company or its subsidiaries shall have been accelerated and payment therefor shall not have been made within 20 days after such acceleration, and the Company shall not in good faith be contesting whether such amount is owed. (b) A final judgment or judgments (not subject to appeal) for the payment of money shall have been entered against the Company or its subsidiaries in an aggregate amount in excess of $10,000,000 (exclusive of any amounts fully covered by insurance (less any applicable deductible) or indemnification) by a court or courts of competent jurisdiction, which judgments remain unsatisfied, undischarged, unstayed or unbonded for a period of 45 days after the entry of such judgment or judgments. -15- (c) The Company shall file a petition in bankruptcy or for reorganization or for an arrangement or any composition, readjustment, liquidation, dissolution or similar relief pursuant to Title 11 of the United States Code or under any similar present or future federal law or the law of any other jurisdiction or shall be adjudicated a bankrupt or insolvent, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or for all or any substantial part of its property, or shall make a general assignment for the benefit of its creditors. (d) A petition or answer shall be filed proposing the adjudication of the Company as bankrupt or its reorganization or arrangement, or any composition, readjustment, liquidation, dissolution or similar relief with respect to it pursuant to Title 11 of the United States Code or under any similar present or future federal law or the law of any other jurisdiction, and the Company shall consent to or acquiesce in the filing thereof, or such petition or answer shall not be discharged or denied within 60 days after the filing thereof. (e) The Company shall be in material breach of its obligations to Shareholders under the Registration Rights Agreement and such breach shall not have been cured within 20 days after receipt by the Company from Shareholders of a written notice specifying such breach and requiring it to be remedied, and the Company shall not in good faith be contesting whether such breach has occurred. (f) If the Company shall, in breach of its obligations under this Agreement, fail to nominate for election to the Board of Directors any Shareholder Designee who satisfies the requirements for designation to the Board of Directors set forth in SECTIONS 3.1(D). -16- ARTICLE 3 Board Representation and Voting SECTION 3.1. BOARD REPRESENTATION. (a) As of the Second Closing Date and until the earlier to occur of the sixth anniversary of the Second Closing Date and the date on which Shareholders own, collectively, less than 20% of the Shares (the "SHAREHOLDER DESIGNEE PERIOD"), the Board of Directors shall consist of no more than twelve (12) directors; PROVIDED, HOWEVER, that if Mr. O'Leary ceases to serve as a director, the Board of Directors shall thereafter consist of no more than eleven (11) directors during the Shareholder Designee Period. For so long as Shareholders are entitled to at least two Shareholder Designees under this Agreement, Shareholders shall be entitled to have one Shareholder Designee serve on each committee of the Board of Directors other than any committee formed for the purpose of considering matters relating to the Shareholders and as set forth below with respect to the Nominating Committee. (b) On the Second Closing Date, the Company will cause David Kaplan and one additional person as designated by Shareholders or, subject to SECTION 3.1(D), such other substitute persons as may be designated by Shareholders, to be elected to the Board of Directors. At all times during the Shareholder Designee Period, the Company agrees, subject to SECTION 3.1(D), to support the nomination of, and the Company's Nominating Committee (as defined herein) shall recommend to the Board of Directors the inclusion in the slate of nominees recommended by the Board of Directors to shareholders for election as directors at each annual meeting of shareholders of the Company: (i) no more than two persons who are executive officers of the Company -17- ("Management Directors"), (ii) (A) four Shareholder Designees, so long as Shareholders beneficially own 75% or more of the Shares, (B) three Shareholder Designees, so long as Shareholders beneficially own 50% or more but less than 75% of the Shares, (C) two Shareholder Designees, so long as Shareholders beneficially own 25% or more but less than 50% of the Shares and (D) one Shareholder Designee, so long as Shareholders beneficially own 20% or more but less than 25% of the Shares (each a "BENEFICIAL OWNERSHIP THRESHOLD"), provided that if at any time as a result of the Company's issuance of Voting Securities Shareholders beneficially own 9% or less of the Actual Voting Power (the "ACTUAL VOTING POWER THRESHOLD"), Shareholders shall be entitled to no more than one Shareholder Designee, and (iii) such other persons, each of whom is (A) recommended by the Nominating Committee and (B) not an employee or officer of or outside counsel to the Company or a partner, employee, director, officer, affiliate or associate (as defined in Rule 12b-2 under the Exchange Act) of any Shareholder or any affiliate of a Shareholder or as to which the Shareholders or their affiliates own at lest ten percent of the voting equity securities ("Unaffiliated Directors"). If any vacancy (whether by death, retirement, disqualification, removal from office or other cause, or by increase in number of directors) occurs prior to a meeting of the Company's stockholders, the Board (i) may appoint a member of management to fill a vacancy caused by a Management Director ceasing to serve as a director, (ii) shall appoint, subject to Section 3.1(d), a person designated by the Shareholders to fill a vacancy created by a Shareholder Designee ceasing to serve as a director (except as a result of the reduction of the number of Shareholder Designees entitled to be included on the Board of Directors by reason of a decrease in Shareholders' beneficial ownership of Common Stock below any Beneficial Ownership Threshold or Voting Securities below the Actual Voting Power Threshold), and (iii) may appoint a person who qualifies as an Unaffiliated Director and is -18- recommended by the Nominating Committee pursuant to the procedures set forth in the following paragraph to fill a vacancy created by an Unaffiliated Director ceasing to serve as a director (provided that in the case of a vacancy relating to an Unaffiliated Director, if a majority of the Nominating Committee is unable to recommend a replacement, then the Board seat with respect to this vacancy shall remain vacant), and each such person shall be a Management Designee, Shareholder Designee or Unaffiliated Director, as the case may be, for purposes of this Agreement. At all times during the Shareholder Designee Period, Unaffiliated Directors shall be designated exclusively by a majority of a nominating committee (the "Nominating Committee"), which shall at all times during the Shareholder Designee Period consist of not more than four persons, two of whom shall be Shareholder Designees (or such lesser number of Shareholder Designees as then serves on the Board of Directors) and two of whom shall be either Management Directors or Unaffiliated Directors. If the Nominating Committee is unable to recommend one or more persons to serve as Unaffiliated Directors (except with respect to any vacancy created by an Unaffiliated Director ceasing to serve as such), then the Board of Directors shall nominate and recommend for election by stockholders an Unaffiliated Director then serving on the Board of Directors. Notwithstanding the foregoing, if the Shareholders beneficially own less than 50% of the Shares, the Nominating Committee shall be comprised of individuals only one of whom is a Shareholder Designee. The foregoing provisions shall be effected pursuant to an amendment to the Company's Bylaws in a form reasonably acceptable to the parties to this Agreement, which shall not be further amended by the Board of Directors during the Shareholder Designee Period. -19- Notwithstanding the foregoing, the Company shall have no obligation to support the nomination, recommendation or election of any Shareholder Designee pursuant to this SECTION 3.1(B) or any other obligation under this Section 3.1 if Shareholders are in breach of any material provision of this Agreement. (c) Upon any decrease in Shareholders' beneficial ownership of Common Stock below any Beneficial Ownership Threshold or Voting Securities below the Actual Voting Power Threshold, Shareholders shall cause a number of Shareholder Designees to offer to immediately resign from the Company's Board of Directors such that the number of Shareholder Designees serving on the Board of Directors immediately thereafter will be equal to the number of Shareholder Designees which Shareholders would then be entitled to designate under SECTION 3.1(B). Upon termination of the Shareholder Designee Period, Shareholders shall promptly offer to cause all of the Shareholder Designees to resign from the Board of Directors and any committees thereof and the Company's obligations under this SECTION 3.1 shall terminate. (d) Notwithstanding the provisions of this SECTION 3.1, Shareholder shall not be entitled to designate any person to the Company's Board of Directors (or any committee thereof) in the event that the Company receives a written opinion of its outside counsel that a Shareholder Designee would not be qualified under any applicable law, rule or regulation to serve as a director of the Company or if the Company objects to a Shareholder Designee because such Shareholder Designee has been involved in any of the events enumerated in Item 2(d) or (e) of Schedule 13D or such person is currently the target of an investigation by any governmental authority or agency relating to felonious criminal activity or is subject to any order, decree, or judgment of any court or agency prohibiting service as a director of any public company or providing investment or -20- financial advisory services and, in any such event, the Shareholder shall withdraw the designation of such proposed Shareholder Designee and designate a replacement therefor (which replacement Shareholder Designee shall also be subject to the requirements of this Section). The Company shall use its reasonable best efforts to notify the Shareholder of any objection to a Shareholder Designee sufficiently in advance of the date on which proxy materials are mailed by the Company in connection with such election of directors to enable the Shareholder to propose a replacement Shareholder Designee in accordance with the terms of this Agreement. (e) Each Shareholder Designee serving on the Board of Directors shall be entitled to all compensation and stock incentives granted to directors who are not employees of the Company on the same terms provided to such directors. SECTION 3.2. VOTING. (a) Each Shareholder agrees that during the Standstill Period such Shareholder shall, and shall cause its Affiliates and any Person which is a member of any Group of which such Shareholder or any of its Affiliates is a member to, be present, in person or represented by proxy, at all meetings of shareholders of the Company so that all Voting Securities beneficially owned by such Shareholder shall be counted for the purpose of determining the presence of a quorum at such meetings. Each Shareholder agrees that during the Standstill Period: (i) In connection with the election of directors of the Company, such Shareholder shall vote or cause to be voted all Voting Securities beneficially owned by such Shareholder to elect those individuals nominated in accordance with the provisions of Section 3.1. -21- (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. -22- ARTICLE 4 Transfer Restrictions SECTION 4.1. RESTRICTIONS ON DISPOSITIONS. During the Standstill Period, each Shareholder shall not, and shall cause its Affiliates not to, directly or indirectly (including, without limitation, through the disposition or transfer of control of another Person), sell, assign, donate, transfer, pledge, hypothecate, grant any option with respect to or otherwise dispose of any interest in (or enter into an agreement or understanding with respect to the foregoing) any Voting Securities (a "DISPOSITION"), except as set forth below in this SECTION 4.1. Without limiting the generality of the foregoing, any sale of securities held by any Shareholder or any of its Affiliates which is currently (or following the passage of time, the occurrence of any event or the giving of notice), directly or indirectly, exchangeable or exercisable for, or convertible into, any Voting Securities shall constitute a Disposition of such Voting Securities. Dispositions may be effected by a Shareholder during the Standstill Period as follows: (a) No Dispositions of any nature may be made prior to the second anniversary of the Second Closing Date except pursuant to SECTION 4.1(E) or 4.1(F). (b) After the second anniversary of the Second Closing Date, Dispositions of Voting Securities may be made at any time in compliance with the Registration Rights Agreement. (c) After the second anniversary of the Second Closing Date, Dispositions of Voting Securities may be made pursuant to sales effected in accordance -23- with Rule 144 under the Securities Act (a "RULE 144 SALE"); PROVIDED that such Dispositions shall not be made to any Person who or which would immediately thereafter, to the knowledge of such Shareholder, any of its Affiliates, or such Shareholder's broker, beneficially own Voting Securities representing 9% or more of the Total Voting Power (and such Person shall have provided a certificate to such effect). (d) After the second anniversary of the Second Closing Date, Dispositions may be made to any Person (other than pursuant to a Reorganization Transaction) that would, following such sale, beneficially own no more than 9% of the Total Voting Power (and such Person shall have provided a certificate to such effect). (e) Dispositions may be made pursuant to a merger transaction or a tender offer for all of the outstanding shares of Common Stock which is recommended to the shareholders of the Company generally by at least a majority of the entire Board of Directors, on the terms and conditions of such transaction available to all other holders of shares of Common Stock. (f) Dispositions may be made by a Shareholder to (i) any other Shareholder or (ii) any Affiliate of any Shareholder that executes an instrument in form and substance satisfactory to the Company in which it makes the representations and warranties set forth in SECTION 1.3(B) as of the date of the execution of such instrument and agrees to be bound by the terms of this Agreement as if an original signatory to this Agreement (such transferee, a "RELATED TRANSFEREE"), in which case such Related Transferee shall thereafter be a "Shareholder" for all purposes of this Agreement. (g) With respect to Voting Securities which are, by their terms, convertible into or exercisable or exchangeable for other Voting Securities such -24- conversion, exercise or exchange shall not be deemed a Disposition. (h) Each Shareholder agrees that during the Standstill Period, without the consent of the managing underwriter(s) in an underwritten offering in respect of the Company's Voting Securities, it will not effect any sale or distribution of Voting Securities (other than in connection with such Shareholder's own registration pursuant to paragraph (b) of this SECTION 4.1), including a Rule 144 Sale, during the ten (10) day period prior to, and during the ninety (90) day period beginning on, the effective date of the registration statement filed by the Company in respect of such underwritten offering, or any shorter period as may apply to the Company and its affiliates. ARTICLE 5 Miscellaneous SECTION 5.1. NOTICES. All notices, requests, demands and other communications required or permitted hereunder shall be made in writing by hand- delivery, registered first-class mail, telex, fax or air courier guaranteeing delivery: (a) If to the Company, to: Allied Waste Industries, Inc. 7701 East Camelback Road, Suite 375 Scottsdale, Arizona 85251 Attn: Roger A. Ramsey Fax: (602) 481-9347 -25- with copies to: Porter & Hedges, L.L.P. 700 Louisiana Street, Suite 3500 Houston, Texas 77002 Attn: Robert G. Reedy Fax: (713) 228-1331 and to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza New York, New York 10004 Attn: Arthur Fleischer, Jr. Fax: (212) 859-4000 or to such other person or address as the Company shall furnish to Shareholders in writing; (b) If to Shareholders, to: Apollo Management, L.P. 1999 Avenue of the Stars, Suite 1900 Los Angeles, CA 90067 Attn: David Kaplan Fax: (310) 201-4198 with a copy to: Milbank, Tweed, Hadley & McCloy 601 South Figueroa Street, 30th Floor Los Angeles, CA 90017 Attn: Kenneth J. Baronsky, Esq. Fax: (213) 629-5063 and: -26- The Blackstone Group 345 Park Avenue New York, NY 10154 Attn: Howard A. Lipson Fax: (212) 754-8716 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Attn: Wilson S. Neely, Esq. Fax: (212) 455-2502 or to such other person or address as Shareholders shall furnish to the Company in writing. All such notices, requests, demands and other communications shall be deemed to have been duly given: at the time of delivery by hand, if personally delivered; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed domestically in the United States (and seven (7) Business Days if mailed internationally); when answered back, if telexed; when receipt acknowledged, if telecopied; and on the Business Day for which delivery is guaranteed, if timely delivered to an air courier guaranteeing such delivery. SECTION 5.2. LEGENDS. (a) If requested in writing by the Company, a Shareholder shall present or cause to be presented promptly all certificates representing Voting Securities beneficially owned by such Shareholder or any of its Affiliates, for the placement thereon of a legend substantially to the following effect, which legend will remain thereon so long as such legend is required under applicable securities laws: -27- "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH A REGISTRATION THEREUNDER OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AND DELIVERY TO ALLIED WASTE INDUSTRIES, INC. OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THOSE LAWS." (b) Each Shareholder shall present or cause to be presented promptly all certificates representing Voting Securities beneficially owned by such Shareholder or any of its Affiliates, for the placement thereon of a legend substantially to the following effect, which legend will remain thereon during the Standstill Period as long as such Voting Securities are beneficially owned by any Shareholder or an Affiliate of any Shareholder: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS OF AN AMENDED AND RESTATED SHAREHOLDERS AGREEMENT, -28- DATED AS OF APRIL 21, 1997, BETWEEN ALLIED WASTE INDUSTRIES, INC. ("ALLIED") AND CERTAIN SHAREHOLDERS OF ALLIED NAMED THEREIN AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE CORPORATE SECRETARY OF ALLIED" (c) The Company may enter a stop transfer order with the transfer agent or agents of Voting Securities against any Disposition not in compliance with the provisions of this Agreement. SECTION 5.3. ENFORCEMENT. Shareholders, on the one hand, and the Company, on the other hand, acknowledge and agree that irreparable injury to the other party would occur in the event any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that such injury would not be adequately compensable in damages. It is accordingly agreed that, in addition to any other remedies which may be available at law or in equity, each party hereto (the "MOVING PARTY") shall be entitled to specific enforcement of, and injunctive relief to prevent any violation of, the terms of this Agreement, and the other parties hereto will not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available at law or in equity. The parties further agree that no bond shall be required as a condition to the granting of any such relief. -29- SECTION 5.4. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and understanding of the parties with respect to the transactions contemplated hereby; PROVIDED that the Original Shareholders Agreement shall remain in full force and effect until the closing of the purchase of the Laidlaw Block pursuant to the Laidlaw Purchase Agreement and the representations and warranties of the parties set forth in SECTIONS 1.2 and 1.3 of the Original Agreement shall survive and shall be deemed to be not amended or otherwise affected by this Agreement. This Agreement may be amended only by a written instrument duly executed by the parties or their respective successors or assigns; PROVIDED, HOWEVER, that any amendment or waiver by the Company shall be made only with the prior approval of a majority of the directors of the Company other than Shareholder Designees. SECTION 5.5. SEVERABILITY. Whenever possible, each provision or portion of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law, rule or regulation in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision shall have been replaced with a provision which shall, to the maximum extent permissible under such applicable law, rule or regulation, give effect to the intention of the parties as expressed in such invalid, illegal or unenforceable provision. -30- SECTION 5.6. HEADINGS. Descriptive headings contained in the Agreement are for convenience only and will not control or affect the meaning or construction of any provision of this Agreement. SECTION 5.7. COUNTERPARTS. For the convenience of the parties, any number of counterparts of this Agreement may be executed by the parties, and each such executed counterpart will be an original instrument. SECTION 5.8. NO WAIVER. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. SECTION 5.9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Company and Shareholders, and to their respective successors and assigns other than, in the case of Shareholders, transferees that are not Related Transferees, including any successors to the Company or Shareholders or their businesses or assets as the result of any merger, consolidation, reorganization, transfer of assets or otherwise, and any subsequent successor thereto, without the execution or filing of any instrument or the performance of any act; PROVIDED that no party may assign this Agreement without the other party's prior written consent, except by the Shareholders to a Shareholder or a Related Transferee as expressly provided in this Agreement (and that nothing herein restricts the transfer of any of the rights of Shareholders under the Registration Rights Agreement in accordance the terms of the Registration Rights Agreement). -31- SECTION 5.10. GOVERNING LAW. This Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without giving effect to the conflict of laws principles thereof. SECTION 5.11. FURTHER ASSURANCES. From time to time on and after the date of this Agreement, the Company and Shareholders, as the case may be, shall deliver or cause to be delivered to the other party hereto such further documents and instruments and shall do and cause to be done such further acts as the other parties hereto shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure that it is protected in acting hereunder. SECTION 5.12. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any legal action or proceeding with respect to this Agreement or any matters arising out of or in connection with this Agreement, and any action for enforcement of any judgment in respect thereof shall be brought exclusively in the state or federal courts located in the State of Delaware, and, by execution and delivery of this Agreement, the Company and Shareholders each irrevocably consent to service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company or Shareholders at their respective addresses referred to in this Agreement. The Company and Shareholders each hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to above and hereby further irrevocably waives and agrees, to the extent permitted by applicable law, not to plead or claim in any such court that any -32- such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing in this Agreement shall affect the right of any party hereto to serve process in any other manner permitted by law. SECTION 5.13. SHAREHOLDER ACTION. The Company shall be entitled to rely upon any written notice, designation, or instruction signed by Apollo Capital Management II, Inc. and BCP (the "REPRESENTATIVES") as a notice, designation or instruction of all Shareholders and the Company shall not be liable to any Shareholder if the Company acts in accordance with and relies upon such writing. In that regard, each of the Shareholders acknowledges that the Representatives have full power and authority to act on their behalf. -33- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first referred to above. ALLIED WASTE INDUSTRIES, INC. By: /s/ Thomas Van Welden _________________________ Title: President ________________________ APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (U.K.) PARTNERS III, L.P. By: Apollo Advisors II, L.P. By: Apollo Capital Management II, Inc. By: /s/ David B. Kaplan _________________________ Title: Vice President ________________________ BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P. By: Blackstone Management Associates II L.L.C. By: /s/ Howard S. Lipson _________________________ Title: Sr. Managing Director ________________________ -34- EX-6 7 EXHIBIT 6 - AGREEMENT EXHIBIT 99.7 AGREEMENT In connection the Shareholders Agreement (as defined herein) and Registration Rights Agreement (as defined herein) among the parties signatory hereto (the "Parties") and in consideration of the mutual covenants and agreements contained in this agreement (this "Agreement"), the Shareholders Agreement and the Registration Rights Agreement, the Parties agree, as of April 21, 1997, as follows: 1. Capitalized terms not defined herein shall have respective meanings given to such terms in the shareholders agreement (the "Shareholders Agreement") and the registration rights agreement (the "Registration Rights Agreement"), in each case, dated the date hereof and among the parties hereto. 2. Prior to the Annual Meeting of Shareholders of the Company to be held in 1997 (the "1997 Meeting"), the Company shall not fill any vacancies in the Board resulting from the resignation of the designees of the TPG Group or of Laidlaw except as contemplated by the Original Stockholders Agreement or the Shareholders Agreement. The Company will use its best efforts to hold the 1997 Meeting as soon as reasonably practicable after the Second Closing Date. The Company agrees that it shall not finally determine the Company's slate of directors proposed for election at the 1997 Meeting prior to the earlier of (a) the termination of the Laidlaw Purchase Agreement and (b) the Second Closing Date. 3. Each Shareholder agrees that it will not exercise any registration rights with respect to all or any part of the TPG Group Block prior to the earlier of (a) the termination of the Laidlaw Purchase Agreement and (b) the Second Closing Date. 4. In order to expedite the nomination of Unaffiliated Directors promptly after the Second Closing Date, the Company agrees to cause the Nominating Committee contemplated by section 3.1 of the Shareholders Agreement to be formed on the First Closing Date. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. ALLIED WASTE INDUSTRIES, INC. By: /s/ Thomas Van Welden _________________________ Title: President ________________________ APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (U.K.) PARTNERS III, L.P. By: Apollo Advisors II, L.P. By: Apollo Capital Management II, Inc. By: /s/ David B. Kaplan _________________________ Title: Vice President ________________________ BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P. By: Blackstone Management Associates II L.L.C. By: /s/ Howard S. Lipson _________________________ Title: Sr. Managing Director ________________________ 2 EX-7 8 EXHHIBIT 7 - REGISTRATION RIGHTS AGREEMENT EXHIBIT 99.8 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement dated as of April 21, 1997 (this "AGREEMENT"), by and between Allied Waste Industries, Inc., a Delaware corporation (the "COMPANY"), on the one hand, and Apollo Investment Fund III, L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware limited partnership, Apollo (U.K.) Partners III, L.P., an English limited partnership, Blackstone Capital Partners II Merchant Banking Fund L.P., a Delaware limited partnership ("BCP"), Blackstone Offshore Capital Partners II L.P., a Cayman Islands limited partnership, and Blackstone Family Investment Partnership II L.P., a Delaware limited partnership (collectively, "SHAREHOLDERS"), on the other hand. W I T N E S S E T H: WHEREAS, (i) prior to the date hereof, Shareholders have entered into an agreement to purchase an aggregate of 11,776,765 shares (the "TPG GROUP BLOCK") of the Company's common stock, par value $.01 per share (the "COMMON STOCK"), from TPG Partners, L.P., a Delaware limited partnership, and TPG Parallel I, L.P., a Delaware limited partnership and (ii) concurrently herewith, Shareholders are entering into an agreement to purchase an aggregate of 14,600,000 shares (the "LAIDLAW BLOCK" and, together with the TPG Group Block, the "SHARES") of Common Stock from Laidlaw, Inc., a Canadian corporation; WHEREAS, concurrently herewith, Company and Shareholders are entering into an Amended and Restated Shareholders Agreement (the "SHAREHOLDERS AGREEMENT") granting Shareholders certain rights to designate directors and setting forth certain restrictions on the acquisition and distribution of securities of the Company by Shareholders and the conduct of Shareholders with respect to the Company; and WHEREAS, as part of establishing the relationship between Shareholders and the Company, Shareholders and the Company have agreed to enter into this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: ARTICLE I Definitions 1.1. CERTAIN DEFINITIONS. In this Agreement: "EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated under such Act. "REGISTRABLE SECURITIES" means the Shares and any additional shares of Common Stock acquired by Shareholders in compliance with the Shareholders Agreement, and any shares of Common Stock issued in connection with any stock dividend on, or any stock split, reclassification or reorganization of Shares or such additional shares of Common Stock. "SEC" means the United States Securities and Exchange Commission or any successor agency. "SECURITIES ACT" means the United States Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated under such Act. -2- ARTICLE II REGISTRATION RIGHTS 2.1. INCIDENTAL RIGHTS. If at any time or from time to time after two years following the date of the closing of the purchase of the Laidlaw Block, Company proposes to file with the SEC a registration statement (whether on Form S-1, S-2, or S-3, or any equivalent form then in effect) for the registration under the Securities Act of any shares of Common Stock for sale, for cash consideration, to the public by Company or on behalf of one or more shareholders of Company (excluding any sale of securities convertible into or exercisable for Common Stock, and any shares of Common Stock issuable by Company upon the exercise of employee stock options, or to any employee stock ownership plan, or in connection with any acquisition made by Company, any securities exchange offer, dividend reinvestment plan, employee benefit plan, corporate reorganization, or in connection with any amalgamation, merger or consolidation of Company or any direct or indirect subsidiary of Company with one or more other corporations if Company is the surviving corporation), Company shall give Shareholders at least 20 days' prior written notice of the proposed filing (or if 20 days' notice is not practicable, a reasonable shorter period to be not less than 7 days), which notice shall outline the nature of the proposed distribution and the jurisdictions in the United States in which Company proposes to qualify and offer such securities (the "ELECTED JURISDICTIONS"). On the written request of Shareholders received by Company within 15 days after the date of Company's delivery to Shareholders of the notice of intended registration (which request shall specify the Registrable Securities sought to be disposed of by Shareholders and the intended method or methods by which dispositions are intended to be made), Company shall, under the terms and subject to the conditions of this ARTICLE II, at its own expense as provided in SECTION 4.1, include in the coverage of such registration statement (or in a separate registration statement concurrently filed) and -3- qualify for sale under the blue sky or securities laws of the various states in the Elected Jurisdictions the number of Registrable Securities (the "SPECIFIED SECURITIES") held by Shareholders and which Shareholders have so requested to be registered or qualified for distribution, to the extent requisite to permit the distribution (in accordance with the intended method or methods thereof as aforesaid) in the Elected Jurisdictions requested by Shareholders of such Registrable Securities. If the distribution proposed to be effected by Company involves an underwritten offering of the securities being so distributed by or through one or more underwriters, and if the managing underwriter of such underwritten offering indicates in writing its reasonable belief that including all or part of the Specified Securities in the coverage of such registration statement or in the distribution to be effected by such prospectus will materially and adversely affect the sale of securities proposed to be sold (which statement of the managing underwriter shall also state the maximum number of shares, if any, which can be sold by Shareholders requesting registration under this SECTION 2.1 without materially adversely affecting the sale of the shares proposed to be sold), then the number of Specified Securities which Shareholders shall have the right to include in such registration statement shall be reduced to the maximum number of shares specified by the managing underwriter. In all cases, priority shall be afforded to securities covered by a registration statement filed in response to the exercise of a demand registration right by another holder of Common Stock and no securities proposed to be sold by such other holder shall be so reduced until all securities proposed to be sold by all other parties have been entirely eliminated. As to all other proposed selling shareholders of Common Stock, including Shareholders, any such reduction in the number of shares of Common Stock proposed to be sold by the selling shareholders shall be effected on a pro rata basis in accordance with the relationship which the number of shares of Common -4- Stock proposed to be sold by each selling shareholder bears to the number of shares of Common Stock proposed to be sold by all selling shareholders. Company shall have the sole right to select any underwriters, including the managing underwriter, of any public offering of shares of Common Stock subject to this SECTION 2.1. Nothing in this SECTION 2.1 shall create any liability on the part of Company to Shareholders if Company for any reason decides not to file or to delay or withdraw a registration statement (which Company may do in its sole discretion). Shareholders may request to have Common Stock included in an unlimited number of registrations under this SECTION 2.1. 2.2. DEMAND RIGHTS. Upon written request of Shareholders made at any time after two years following the date of the closing of the purchase of the Laidlaw Block, Company shall, under the terms and subject to the conditions set forth in this SECTION 2.2, and SECTIONS 2.3 and 2.4, file (and use its reasonable efforts to cause to become effective) a registration statement covering, and use its reasonable efforts to qualify for sale under the blue sky or securities laws of the various states of the United States as may be requested by Shareholders (except any such state in which, in the opinion of the managing underwriter of the offering, the failure to so qualify would not materially and adversely affect the proposed offering), in accordance with the intended method or methods of disposition set forth in that notice, of such number of Registrable Securities, as may be designated by Shareholders in their request, or that portion thereof designated in said request for registration in each of the Designated Jurisdictions (as defined below). A request for registration under this SECTION 2.2 shall specify the number of shares to be registered, the jurisdictions in the United States in which such registration is to be effected (the "DESIGNATED JURISDICTIONS") and the proposed manner of sale, including the name and address of any proposed underwriter; PROVIDED, that all offerings -5- contemplated by a request for registration under this SECTION 2.2 shall be underwritten offerings involving a distribution of Registrable Shares to the public in which reasonable efforts are made not to knowingly sell to any single buyer, acting individually or with others, who after such underwriting will own more than 9% of the Total Voting Power (as defined in the Shareholders Agreement) (any such buyer, "SIGNIFICANT STOCKHOLDER"), under circumstances in which it would reasonably be expected to not result in any person becoming Significant Stockholder. The principal underwriter or underwriters for any such offering shall be selected by Shareholders, subject to Company's approval, which may not be unreasonably withheld. Notwithstanding any other provision in this Section, Shareholders shall not be permitted to make a demand for registration pursuant to this Section unless the number of Registrable Securities covered by such demand is at least five million shares (as such number may be appropriately adjusted to reflect stock splits, reverse stock splits, dividends and any other recapitalization or reorganization of Company). If the distribution proposed to be effected pursuant to this SECTION 2.2 involves an underwritten offering of Registrable Securities and securities of the Company other than Registrable Securities ("OTHER SECURITIES"), and if the managing underwriter of such underwritten offering indicates in writing its reasonable belief that including all or part of such securities in the coverage of such registration statement will materially and adversely affect the sale of the securities proposed to be sold, then the number of securities proposed to be sold shall be reduced to the maximum number of securities specified by the managing underwriter. In such a case, priority shall be afforded to Registrable Securities, and such Other Securities shall be completely eliminated before the number of Registrable Securities is reduced. Company may delay the filing of any registration statement requested under this SECTION 2.2, or delay its effectiveness, for a reasonable period (but not longer than 90 -6- days) if, in the sole judgment of Company's Board of Directors, (i) a delay is necessary in light of pending financing transactions, corporate reorganizations, or other major events involving Company, or (ii) filing at the time requested would materially and adversely affect the business or prospects of Company in view of disclosures that may be thereby required. Once the cause of the delay is eliminated, Company shall promptly notify Shareholders and, promptly after Shareholders notify Company to proceed, Company shall file a registration statement and begin performance of its other obligations under this SECTION 2.2. Shareholders shall be entitled to request not more than three registrations under this SECTION 2.2 (provided that the filing of a registration statement in more than one Designated Jurisdiction in connection with a concurrent or substantially concurrent distribution shall be deemed for the purposes of this Agreement to be a single registration). However, if Shareholders request a registration under this SECTION 2.2, but no registration statement becomes effective with respect to the Registrable Securities covered by such request, then such request shall not count as a request for purposes of determining the number of requests for registration Shareholders may make under this SECTION 2.2. If there is an effective registration statement requested by the Shareholders pursuant to this Section 2.2, the Shareholders may require the Company to delay the filing of any registration statement relating to shares of Common Stock or delay its effectiveness, for a reasonable period (but not longer than 90 days) if, in the sole judgment of the Shareholders, a delay is necessary in order to avoid materially and adversely affecting the disposition of Shares pursuant to the offering by the Shareholders; provided that the foregoing shall not limit the Company's right to file and have declared effective registration statements relating to shares of Common Stock issuable pursuant to employee benefit plans of the Company or any of its subsidiaries or issuable pursuant to a -7- merger, acquisition or similar transaction involving the Company or any of its subsidiaries. 2.3. REGISTRATION CONDITIONS. Notwithstanding any other provision of this Agreement, Company shall not be required to effect a registration of any securities under this ARTICLE II, or file any post-effective amendment to such a registration statement relating to such a qualification: (a) unless Shareholders agree to (x) sell and distribute a portion or all of their Registrable Securities in accordance with the plan or plans of distribution adopted by and through underwriters, if any, acting for Company or any such other sellers of Common Stock, and (y) bear a pro rata share of underwriter's discounts and commissions; (b) if a registration requested under SECTION 2.2, or any post- effective amendment to the registration statement filed in connection therewith, requires, under applicable statutes and rules, a special audit (other than a normal fiscal year-end audit) of any financial statements, unless Shareholders agree to pay their proportionate share (determined by the number of shares to be sold by Shareholders in the offering in proportion to the total number of shares to be sold by Company and all other participants in such offering) of the reasonable fees and expenses of accountants incurred in connection with the special audit and which would otherwise not be incurred; PROVIDED that Shareholders shall not be required to pay any share of such fees and expenses if such audit would otherwise be required at substantially the same time to satisfy the Company's reporting requirements under the Exchange Act absent such registration; (c) if, in the case of a request for registration under SECTION 2.2, (x) any offering pursuant to a registration statement covering securities regarding -8- which Shareholders could have exercised registration rights under SECTION 2.1 of this Agreement has been completed within the prior 90 days, (y) a registration statement requested by Shareholders pursuant to SECTION 2.2 has become effective under the Securities Act within the prior twelve months, or (z) Company has given notice under SECTION 2.1 of its intention to file a registration statement under the Securities Act and has not completed or abandoned the proposed offering; and (d) unless Company has received from Shareholders all information Company has reasonably requested concerning Shareholders and their method of distribution of Registrable Securities, so as to enable Company to include in the registration statement all facts required to be disclosed in it. 2.4. COVENANTS AND PROCEDURES. If Company becomes obligated under this ARTICLE II to effect a registration of Registrable Securities on behalf of Shareholders, then (as applicable to the jurisdictions for which such registration is to be made): (a) Company, at its expense as provided in SECTION 4.2, shall prepare and file with the SEC a registration statement covering such securities and such other related documents as may be necessary or appropriate relating to the proposed distribution, and shall use reasonable efforts to cause the registration statement to become effective. Company will also, with respect to any registration statement, file such post-effective amendments to the registration statement (and use reasonable efforts to cause them to become effective) and such supplements as are necessary so that current prospectuses are at all times available for a period of at least 90 days after the effective date of the registration statement or for such longer period, not to exceed 180 days, as may be required under the plan or plans of distribution set forth in the registration statement. Shareholders shall promptly provide Company with such information with respect to Shareholders' Registrable -9- Securities to be so registered and, if applicable, the proposed terms of their offering, as is required for the registration. If the Registrable Securities to be covered by the registration statement are not to be sold to or through underwriters acting for Company, Company shall: (i) deliver to Shareholders, as promptly as practicable, as many copies of preliminary prospectuses as Shareholders may reasonably request (in which case Shareholders shall keep a written record of the distribution of the preliminary prospectuses and shall refrain from delivery of the preliminary prospectuses in any manner or under any circumstances which would violate the Securities Act or the securities laws of any other jurisdiction, including the various states of the United States); (ii) deliver to Shareholders, as soon as practicable after the effective date of the registration statement, and from time to time thereafter during the applicable period described in SECTION 2.4, as many copies of the relevant prospectuses as Shareholders may reasonably request; and (iii) in case of the happening, after the effective date of the registration statement and during the applicable 90 or 180-day period described in the second sentence of SECTION 2.4(A), of any event or occurrence as a result of which the prospectus, as then in effect, would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make any statement therein not misleading in the light of the circumstances in which it was made, give Shareholders written notice of the event or occurrence and prepare and furnish to Shareholders, in such quantities as it may reasonably request, copies of an amendment of or a supplement to such prospectus as may be -10- 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: -11- (i) register or qualify (and cooperate with Shareholders, the underwriter or underwriters, if any, and their counsel, in connection with the registration or qualification of) the securities covered by the registration statement for offer and sale under the securities or blue sky laws of each state and other jurisdiction as Shareholders or any underwriter reasonably requests; (ii) use its reasonable efforts to keep each such registration or qualification effective, including through new filings, or amendments or renewals, during the period the registration statement or prospectus is required to be kept effective; and (iii) do any and all other acts or things necessary or advisable to enable the disposition in all such jurisdictions of the Common Stock covered by the applicable registration statement, provided that Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified. (d) Company shall use its reasonable efforts to cause all Registrable Securities of Shareholders included in the registration statement to be listed, by the date of the first sale of such shares pursuant to such registration statement, on each securities exchange on which the securities is then listed or proposed to be listed, if any. (e) Company shall make generally available to Shareholders and any underwriter participating in the offering conducted pursuant to the registration statement an earnings statement satisfying Section 11(a) of the Securities Act no later than 45 days after the end of the 12-month period beginning with the first day of Company's first fiscal quarter commencing after the effective date of the -12- registration statement. The earnings statement shall cover such 12-month period. This requirement will be deemed to be satisfied if Company timely files complete and accurate information on Forms 10-Q, 10-K, and 8-K under the Exchange Act, and otherwise complies with Rule 158 under the Securities Act as soon as feasible. (f) Company shall cooperate with Shareholders and the managing underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing Registrable Securities to be sold under the registration statement, and to enable such securities to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or Shareholders, may request, subject to the underwriters' obligation to return any certificates representing unsold securities. (g) Company shall use its reasonable efforts to cause Registrable Securities covered by the registration statement to be registered with or approved by such other governmental agencies or authorities in the United States (including the registration of Registrable Securities under the Exchange Act) as may be necessary to enable Shareholders or the underwriter or underwriters, if any, to consummate the disposition of such securities. (h) Company shall, during normal business hours and upon reasonable notice, make available for inspection by Shareholders, any underwriter participating in any offering pursuant to the registration statement, and any attorney, accountant or other agent retained by Shareholders or any such underwriter (collectively, the "INSPECTORS"), all financial and other records, pertinent corporate documents, and properties of Company (including non-public information), as shall be reasonably necessary to enable the Inspectors to exercise -13- their due diligence responsibilities; PROVIDED that any Inspector receiving non-public information shall have previously entered into an appropriate confidentiality agreement in mutually satisfactory form and substance. Company shall also cause its officers, directors, and employees to supply all nonconfidential information reasonably requested by any Inspector in connection with the registration statement. (i) Company shall use its reasonable efforts to obtain a "cold comfort" letter and, as applicable, a "long-form comfort letter" from Company's independent public accountants, and an opinion of counsel for Company, each in customary form and covering such matters of the type customarily covered by cold comfort letters and long form comfort letters and legal opinions in connection with public offerings of securities, as Shareholders reasonably request. (j) Company shall enter into such customary agreements (including an underwriting agreement containing such representations and warranties by Company and such other terms and provisions, as are customarily contained in underwriting agreements for comparable offerings and are reasonably satisfactory to the Company) and take all such other actions as Shareholders or the underwriters participating in such offering and sale may reasonably request in order to expedite or facilitate such offering and sale (other than such actions which are disruptive to the Company or require significant management availability). ARTICLE III INDEMNIFICATION 3.1. INDEMNIFICATION BY COMPANY. In the event of any registration under the Securities Act by any registration statement pursuant to rights granted in this -14- 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 -15- conformity with information furnished to Company through a written instrument duly executed by Shareholders or such underwriter specifically for use in the preparation thereof. 3.2. INDEMNIFICATION BY SHAREHOLDERS. It shall be a condition precedent to the obligation of Company to include in any registration statement any Registrable Securities of Shareholders that Company shall have received from Shareholders an undertaking, reasonably satisfactory to Company and its counsel, to indemnify and hold harmless (in the same manner and to the same extent as set forth in SECTION 3.1) Company, each director of Company, each officer of Company who shall sign the registration statement, and any person who controls Company within the meaning of the Securities Act, (i) with respect to any statement or omission from such registration statement, or any amendment or supplement to it, if such statement or omission was made in reliance upon and in conformity with information furnished to Company through a written instrument duly executed by Shareholders specifically for use in the preparation of such registration statement or amendment or supplement, and (ii) with respect to compliance by Shareholders with applicable laws in effecting the sale or other disposition of the securities covered by such registration statement. 3.3 INDEMNIFICATION PROCEDURES. Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in the preceding Sections of this ARTICLE III, the indemnified party will, if a resulting claim is to be made or may be made against and indemnifying party, give written notice to the indemnifying party of the commencement of the action. If any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense of the action with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume defense of the action, the indemnifying party -16- will not be liable to such indemnified party for any legal or other expenses incurred by the latter in connection with the action's defense. An indemnified party shall have the right to employ separate counsel in any action or proceeding and participate in the defense thereof, but the fees and expenses of such counsel shall be at such indemnified party's expense unless (a) the employment of such counsel has been specifically authorized in writing by the indemnifying party, which authorization shall not be unreasonably withheld, (ii) the indemnifying party has not assumed the defense and employed counsel reasonably satisfactory to the indemnified party within 30 days after notice of any such action or proceeding, or (iii) the named parties to any such action or proceeding (including any impleaded parties) include the indemnified party and the indemnifying party and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to the indemnified party that are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action or proceeding on behalf of the indemnified party), it being understood, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to all local counsel which is necessary, in the good faith opinion of both counsel for the indemnifying party and counsel for the indemnified party in order to adequately represent the indemnified parties) for the indemnified party and that all such fees and expenses shall be reimbursed as they are incurred upon written request and presentation of invoices. Whether or not a defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term the -17- 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. -18- Notwithstanding the provisions of this SECTION 3.4, no indemnifying party shall be required to contribute any amount in excess of [the amount by which the total price at which the securities were offered to the public by the indemnifying party exceeds the amount of any damages which the indemnifying party has otherwise been required to pay by reason of an untrue statement or omission]. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such a fraudulent misrepresentation. ARTICLE IV OTHER AGREEMENTS 4.1. OTHER REGISTRATION RIGHTS. Company agrees that it will not grant to any party registration rights which would allow such party to limit Shareholders' priority for the sale or distribution of Registrable Securities upon the exercise of a demand registration right pursuant to SECTION 2.2. 4.2. EXPENSES. All expenses incurred by Company in connection with any registration statement covering Registrable Securities offered by Shareholders, including, without limitation, all registration and filing fees (including all expenses incident to filing with the National Association of Securities Dealers, Inc.), printing expenses, fees and disbursements of counsel (except for the fees and disbursements of counsel for Shareholders) and of the independent certified public accountants (except, in the case of any special audits, if required in connection with any such registration, Shareholders' proportionate share of their expense as provided in SECTION 2.4), and the expense of qualifying such shares under state blue sky laws, shall be borne by Company, including such expenses of any registration delayed by the Company under the fourth paragraph of SECTION 2.2; PROVIDED, HOWEVER, that Company shall not be required to pay -19- for any expenses of any registration proceeding begun pursuant to SECTION 2.2 if the registration request is subsequently withdrawn at the request of Shareholders (in which case Shareholders shall bear such expenses), unless Shareholders agrees to forfeit their right to one demand registration under SECTION 2.2; PROVIDED FURTHER, however, that if at the time of such withdrawal, Shareholders have learned of a material adverse change in the condition, business, or prospects of the Company from that known at the time of its request, then Shareholders shall not be required to pay any of such expenses and shall retain their rights pursuant to SECTION 2.2. Company's obligations under this SECTION 4.2 shall apply to each registration under the Securities Act or state blue sky legislation pursuant to SECTION 2.2. However, all underwriting expenses incurred by Shareholders, including underwriter's discounts and commissions and legal, accounting and similar expenses, shall be borne by Shareholders. 4.3. DISPOSITIONS DURING REGISTRATION. Each Shareholder agrees that, without the consent of the managing underwriter(s) in an underwritten offering in respect of Common Stock or securities convertible into Common Stock, it will not effect any sale or distribution of Common Stock or securities convertible into Common Stock (other than Registrable Securities included in such offering), during the ten (10) day period prior to, and during the ninety (90) day period beginning on, the effective date of the registration statement filed by the Company in respect of such underwritten offering, or any shorter period as may apply to the Company and its affiliates. 4.4. TRANSFER OF RIGHTS. All rights of Shareholders under this Agreement shall be transferable by Shareholders to a Related Transferee (as defined in the Shareholders Agreement) who acquires shares of Common Stock in compliance with Section 4.1(f) of the Shareholders Agreement and who executes an instrument in form and substance satisfactory to the Company in which it agrees to be bound by the terms of this Agreement as if an original signatory hereto, in which case such Related Transferee -20- shall thereafter be a "Shareholder" for all purposes of this Agreement. The incidental registration rights or benefits of this Agreement and the demand registration rights, including indemnification by Company, shall be transferable by Shareholders only in a transaction permitted under Section 4.1(c) or 4.1(d) of the Shareholders Agreement to a transferee that is not an Affiliate of the Company who receives at least an aggregate of 1,000,000 shares of Common Stock, in the case of incidental registration rights, or 5,000,000 shares of Common Stock for each right to demand registration, in the case of demand registration rights. In the case of any assignment, the party or parties who have the rights and benefits of Shareholders under this Agreement shall become parties to and be subject to this Agreement, and shall not, as a group, have the right to request any greater number of registrations than Shareholders would have had if no assignment had occurred. Upon any transfer of the registration rights or benefits of this Agreement, Shareholders shall give Company written notice prior to or promptly following such transfer stating the name and address of the transferee and identifying the securities with respect to which such rights are being assigned. Such notice shall include or be accompanied by a written undertaking by the transferee to comply with the obligations imposed hereunder. In the event any registration rights are transferred in accordance with the terms of this Agreement, any actions required to be taken by Shareholders will be taken with the approval of the holders of such registration rights who hold a majority of the Registrable Securities, whose actions shall bind all such holders of such registration rights. 4.5. BEST REGISTRATION RIGHTS. If the Company grants to any Person with respect to any security issued by the Company or any of its Affiliates registration rights that provide for terms that are in any manner more favorable to the holder of such registration rights than the terms granted to the Shareholders other than the number of demand registrations or the minimum amount of shares required to exercise demand -21- registration rights (or if the Company amends or waives any provision of any agreement providing registration rights of others or takes any other action whatsoever to provide for terms that are more favorable to other holders than the terms provided to the Shareholders other than the number of demand registrations or the minimum amount of shares required to exercise demand registration rights), then this Agreement shall immediately be deemed amended to provide the Shareholders with any (or all) of such more favorable terms as Shareholders shall elect to include herein. ARTICLE V MISCELLANEOUS 5.1. NOTICES. All notices, requests, demands and other communications required or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, fax or air courier guaranteeing delivery: (a) If to the Company, to: Allied Waste Industries, Inc. 7701 East Camelback Road, Suite 375 Scottsdale, Arizona 85251 Attn: Roger A. Ramsey Fax: (602) 481-9347 with copies to: Porter & Hedges, L.L.P. 700 Louisiana Street, Suite 3500 Houston, Texas 77002 Attn: Robert G. Reedy Fax: (713) 228-1331 and to: Fried, Frank, Harris, Shriver & Jacobson One New York Plaza -22- New York, New York 10004 Attn: Arthur Fleischer, Jr. Fax: (212) 859-4000 or to such other person or address as the Company shall furnish to Shareholders in writing; (b) If to Shareholders, to: Apollo Management, L.P. 1999 Avenue of the Stars, Suite 1900 Los Angeles, CA 90067 Attn: David Kaplan Fax: (310) 201-4198 with a copy to: Milbank, Tweed, Hadley & McCloy 601 South Figueroa Street, 30th Floor Los Angeles, CA 90017 Attn: Kenneth J. Baronsky, Esq. Fax: (213) 629-5063 and: The Blackstone Group 345 Park Avenue New York, NY 10154 Attn: Howard A. Lipson Fax: (212) 754-8716 with a copy to: Simpson Thacher & Bartlett 425 Lexington Avenue New York, NY 10017 Attn: Wilson S. Neely, Esq. Fax: (212) 455-2502 or to such other person or address as Shareholders shall furnish to the Company in writing. -23- All such notices, requests, demands and other communications shall be deemed to have been duly given: at the time of delivery by hand, if personally delivered; five (5) Business Days after being deposited in the mail, postage prepaid, if mailed domestically in the United States (and seven (7) Business Days if mailed internationally); when answered back, if telexed; when receipt acknowledged, if telecopied; and on the Business Day for which delivery is guaranteed, if timely delivered to an air courier guaranteeing such delivery. 5.2. SECTION HEADINGS. The article and section headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. References in this Agreement to a designated "Article" or "Section" refer to an Article or Section of this Agreement unless otherwise specifically indicated. 5.3. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with and governed by the law of Delaware, without regard to its conflicts of laws principles. 5.4. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Any legal action or proceeding with respect to this Agreement or any matters arising out of or in connection with this Agreement (other than the Shareholders Agreement, which shall be governed solely by the analogous provisions thereof), and any action for enforcement of any judgment in respect thereof shall be brought exclusively in the state of federal courts located in the State of Delaware, and, by execution and delivery of this Agreement, the Company and Shareholder each irrevocably consent to service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company or Shareholder at their respective -24- addresses referred to in this Agreement. The Company and the Shareholder each hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement (other than the Shareholders Agreement, which shall be governed solely by the analogous provisions thereof) brought in the courts referred to above and hereby further irrevocably waives and agrees, to the extent permitted by applicable law, not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum. Nothing in this Agreement shall affect the right of any party hereto to serve process in any other manner permitted by law. 5.5. AMENDMENTS. This Agreement may be amended only by an instrument in writing executed by all of its parties. 5.6. ENTIRE AGREEMENT. This Agreement and the Shareholders Agreement constitute the entire agreement and understanding of the parties with respect to the transactions contemplated hereby and thereby. The registration rights granted under this Agreement supersede any registration, qualification or similar rights with respect to any of the Shares granted under any other agreement, and any of such preexisting registration rights are hereby terminated. This Agreement may be amended only by a written instrument duly executed by the parties or their respective successors or assigns; PROVIDED, HOWEVER, that any amendment or waiver by the Company shall be made only with the prior approval of a majority of the entire Board of Directors of the Company other than Shareholder Designees (as defined in the Shareholders Agreement). 5.7. SEVERABILITY. The invalidity or unenforceability of any specific provision of this Agreement shall not invalidate or render unenforceable any of its other provisions. Any provision of this Agreement held invalid or unenforceable shall be deemed reformed, if practicable, to the extent necessary to render it valid and enforceable -25- and to the extent permitted by law and consistent with the intent of the parties to this Agreement. 5.8. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute the same instrument. 5.9. SHAREHOLDER ACTION. The Company shall be entitled to rely upon any written notice, designation, or instruction signed by Apollo Capital Management II, Inc. and BCP (the "REPRESENTATIVES") as a notice, designation or instruction of all Shareholders and the Company shall not be liable to any Shareholder if the Company acts in accordance with and relies upon such writing. In that regard, each of the Shareholders acknowledges that the Representatives have full power and authority to act on their behalf. -26- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. ALLIED WASTE INDUSTRIES, INC. By: /s/ Thomas Van Welden _________________________ Title: President ________________________ APOLLO INVESTMENT FUND III, L.P. APOLLO OVERSEAS PARTNERS III, L.P. APOLLO (U.K.) PARTNERS III, L.P. By: Apollo Advisors II, L.P. By: Apollo Capital Management II, Inc. By: /s/ David B. Kaplan _________________________ Title: Vice President ________________________ BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P. BLACKSTONE OFFSHORE CAPITAL PARTNERS II L.P. BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P. By: Blackstone Management Associates II L.L.C. By: /s/ Howard S. Lipson _________________________ Title: Sr. Managing Director ________________________ -27- -----END PRIVACY-ENHANCED MESSAGE-----