<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ALLIED WASTE INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4953 88-0228636
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
15880 NORTH GREENWAY-HAYDEN LOOP, SUITE 100
SCOTTSDALE, ARIZONA 85260
(602) 423-2946
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
HENRY L. HIRVELA
CHIEF FINANCIAL OFFICER
ALLIED WASTE INDUSTRIES, INC.
15880 NORTH GREENWAY-HAYDEN LOOP, SUITE 100
SCOTTSDALE, ARIZONA 85260
(602) 423-2946
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:
ROBERT G. REEDY
PORTER & HEDGES, L.L.P.
700 LOUISIANA, 35TH FLOOR
HOUSTON, TEXAS 77002-2764
(713) 226-0600
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment, please check the following box. [ ]
If any of the securities being registered on this form are to be offered in
connection with the termination of a holding company and there is compliance
with General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF CLASS OF AMOUNT TO BE AGGREGATE OFFERING PER AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT UNIT(1) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11.30% Senior Discount Notes due 2007.............. $418,000,000 100% $418,000,000 $126,667
===================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(f)(2) under the Securities Act of 1933.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
Allied Waste Industries, Inc.
OFFER TO EXCHANGE ALL OF ITS OUTSTANDING 11.30% SENIOR DISCOUNT NOTES
DUE 2007 FOR 11.30% SENIOR DISCOUNT NOTES DUE 2007
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1997, UNLESS EXTENDED.
Allied Waste Industries, Inc., a Delaware corporation (the "Company"),
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (the "Letter of Transmittal") relating to the Exchange Offer, to
exchange $1,000 principal amount of its 11.30% Senior Discount Notes due 2007
(the "Exchange Notes"), which will be registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement of
which this Prospectus is a part, for $1,000 principal amount of its outstanding
11.30% Senior Discount Notes due 2007 (the "Notes"), of which an aggregate of
$418,000,000 in principal amount is outstanding as of the date of this
Prospectus. The form and terms of the Exchange Notes are identical in all
material respects to the form and terms of the Notes.
The Exchange Notes will not accrue cash interest until June 1, 2002, and
thereafter cash interest will be payable semi-annually on June 1 and December 1
of each year, commencing December 1, 2002. The Exchange Notes will mature on
June 1, 2007. Holders of the Exchange Notes will be required to include the
original issue discount as interest income in advance of the receipt of the cash
payments to which such income is attributable. See "Description of the Exchange
Notes" and "Certain United States Federal Income Tax Consequences of an
Investment in the Exchange Notes." The Exchange Notes will not be subject to
redemption at the option of the Company except as follows. The Exchange Notes
will be redeemable at the option of the Company, in whole or in part, at any
time on or after December 1, 2001 at the redemption prices set forth herein plus
accrued and unpaid interest to the date of redemption. Up to 33 1/3% in
aggregate principal amount of Exchanges Notes originally issued will be
redeemable at the option of the Company at any time or times prior to June 1,
2000 from the net proceeds of one or more public offerings of capital stock of
the Company at a redemption price of 111.30% of their Accreted Value as of, plus
accrued and unpaid interest to the date of redemption. Upon a Change of Control,
holders of the Exchange Notes may require the Company to purchase all or a
portion of the Exchange Notes at a purchase price equal to (i) in the case of
any such purchase prior to June 1, 2002, 101% of their Accreted Value as of the
purchase date and (ii) in the case of any such purchase on or after June 1,
2002, 101% of their principal amount, in each case, plus accrued and unpaid
interest to the date of purchase. See "Description of the Exchange Notes."
The Exchange Notes will be senior unsecured obligations of the Company, will
rank pari passu in right of payment with all existing and future senior
unsecured obligations of the Company and will rank senior in right of payment to
any future subordinated obligations of the Company. Holders of secured
obligations of the Company will, however, have claims that are prior to the
claims of the holders of the Exchange Notes with respect to the assets securing
such secured obligations. The Company conducts its operations through its
subsidiary, Allied Waste North America, Inc. ("Allied Waste NA"), which is
subject, under its bank credit facility, (the "Senior Credit Facility") and its
10 1/4% Senior Subordinated Notes due 2006 (the "Allied Waste NA Notes"), to
certain restrictions on its ability to pay funds to the Company. The Exchange
Notes will be effectively subordinated to all obligations, including trade
payables, of the Company's subsidiaries. As of March 31, 1997, the Exchange
Notes will be effectively subordinated to approximately $583.1 million of debt
of the Company's subsidiaries. See "Risk Factors -- Holding Company Structure;
Structural Subordination."
The Company will accept for exchange any and all validly tendered Notes on
or prior to 5:00 p.m., New York City time, on , 1997, unless
extended (if and as extended, the "Expiration Date"). Tenders of Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date. See "The Exchange Offer."
The Exchange Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement (as
defined herein). Based on interpretations by the staff of the Securities and
Exchange Commission (the "Commission") set forth in no-action letters issued to
third parties, the Company believes the Exchange Notes issued pursuant to the
Exchange Offer in exchange for Notes may be offered for resale, resold and
otherwise transferred by any holder thereof (other than broker-dealers, as set
forth below, and any such holder that is an "affiliate" of the Company or Allied
within the meaning of Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery requirements of the Securities Act,
provided that such Exchange Notes are acquired in the ordinary course of such
holder's business and that such holder has no arrangement or understanding with
any person to participate in the distribution of such Exchange Notes. Any holder
who tenders in the Exchange Offer with the intention to participate, or for the
purpose of participating, in a distribution of the Exchange Notes or who is an
affiliate of the Company may not rely upon such interpretations by the staff of
the Commission and, in the absence of an exemption therefrom, must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Holders of Notes wishing to
accept the Exchange Offer must represent to the Company in the Letter of
Transmittal that such conditions have been met.
Each broker-dealer (other than an affiliate of the Company) that receives
Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Notes where such Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution." Any broker-dealer who is an affiliate
of the Company or Allied may not rely on such no-action letters and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with a secondary resale transaction.
The Company will not receive any proceeds from this Exchange Offer. No
dealer-manager is being used in connection with this Exchange Offer.
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BEFORE TENDERING NOTES IN THE EXCHANGE OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (No 333- ), including any amendments thereto, under the Securities
Act, with respect to the Exchange Notes offered hereby (the "Registration
Statement"). This Prospectus does not contain all the information set forth in
the Registration Statements and the exhibits and schedules thereto. For further
information with respect to the Company and the Exchange Notes, reference is
made to the Registration Statement and the exhibits and schedules filed as a
part thereof. Statements made in this Prospectus as to the contents of any
contract or any other document referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or document filed
as an exhibit to the Registration Statement. Each such statement is qualified in
all respects by reference to such exhibit. The Registration Statement, including
exhibits and schedules thereto, is on file at the offices of the Commission and
may be inspected without charge. Copies of such material may be obtained from
the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement, with exhibits, as well as such reports,
proxy statements and other information, can be inspected and copied at the
public reference facilities maintained by the Commission at its principal
offices at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, its
regional offices at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60601 and 7 World Trade Center, 13th Floor, New York,
New York 10007, and at its site on the World Wide Web at http://www.sec.gov.
Copies of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at its principal office at Judiciary Plaza,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. The Company's common
stock is listed on the National Market tier of the Nasdaq Stock Market
("Nasdaq") and material filed by the Company can be inspected at the offices of
Nasdaq at 1735 K Street, N.W., Washington, D.C. 20006.
A copy of (i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1996; and (ii) the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 are provided with this Prospectus and are
incorporated herein by reference. All other reports filed pursuant to Section
13(a) or 15(d) of the Exchange Act since December 31, 1996 are also incorporated
by reference.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request from
Allied Waste Industries, Inc., 15880 North Greenway-Hayden Loop, Suite 100,
Scottsdale, Arizona 85260, Attn: Peter S. Hathaway, Telephone: (602)-423-2946.
In order to ensure timely delivery of the documents, any request should be made
by .
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information appearing elsewhere in this
Prospectus. Unless the context requires otherwise, all references in this
Prospectus to the "Company" are to Allied Waste Industries, Inc., and its direct
and indirect subsidiaries.
THE COMPANY
The Company is a major solid waste management company in the United States,
as measured by revenues. The Company is a vertically-integrated, non-hazardous
solid waste management company providing collection, recycling and disposal
services. The Company serves approximately 1.4 million customers in 21 states.
The Company currently conducts its operations through 41 transfer stations, 56
landfills and 20 recycling facilities.
BUSINESS STRATEGY
The Company's strategy is to build a vertically-integrated solid waste
management company with a strong presence in select markets. The Company plans
to implement this strategy by establishing a market presence generally based on
its landfills, increasing volume in its markets through "tuck-in" acquisitions
of collection companies, marketing to new customers, providing a high level of
customer service, competitively pricing its services based on the particular
circumstances of each market, and continuing to control costs and reduce
corporate overhead as a percentage of revenues. Management believes that its
strategy to build vertically-integrated operations will provide the Company with
competitive advantages in its targeted regional markets.
THE NOTE OFFERING
The Notes.................. The Notes were sold by the Company on May 15, 1997,
and were subsequently resold to qualified
institutional buyers pursuant to Rule 144A under
the Securities Act and to certain persons in
transactions outside the United States in reliance
on Regulation S under the Securities Act (the "Note
Offering").
Registration Rights
Agreement................ In connection with the Note Offering, the Company
entered into the Registration Rights Agreement,
which grants holders ("Holders") of the Notes
certain exchange and registration rights. The
Exchange Offer is intended to satisfy such exchange
and registration rights, which generally terminate
upon the consummation of the Exchange Offer.
THE EXCHANGE OFFER
Securities Offered......... $418,000,000 aggregate principal amount of 11.30%
Senior Discount Notes due 2007.
The Exchange Offer......... $1,000 principal amount of the Exchange Notes in
exchange for each $1,000 principal amount of Notes.
As of the date hereof, $418,000,000 aggregate
principal amount of Notes are outstanding. The
Company will issue the Exchange Notes to holders on
or promptly after the Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Notes may be offered for resale,
resold and otherwise transferred by any
3
<PAGE> 5
Holder thereof (other than any such Holder which is
an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the
ordinary course of such Holder's business and that
such Holder does not intend to participate and has
no arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes.
Each broker-dealer that receives Exchange Notes for
its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes.
The Letters of Transmittal state that by so
acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales
of Exchange Notes received in exchange for Notes
where such Notes were acquired by such
broker-dealer as a result of market-making
activities or other trading activities. The Company
has agreed that for a period of 90 days after the
Expiration Date, it will make this Prospectus
available to any broker-dealer for use in
connection with any such resale.
Any Holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose of
participating, in a distribution of the Exchange
Notes could not rely on the position of the staff
of the Commission enunciated in Exxon Capital
Holdings Corporation (available April 13, 1989),
Morgan Stanley & Co., Inc. (available June 5, 1991)
or similar no-action letters and, in the absence of
an exemption therefrom, must comply with the
registration and prospectus delivery requirements
of the Securities Act in connection with the resale
of the Exchange Notes. Failure to comply with such
requirements in such instance may result in such
Holder incurring liability under the Securities Act
for which the Holder is not indemnified by the
Company.
Expiration Date............ 5:00 p.m., New York City time, on ,
1997, unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Offer is
extended.
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company.
Procedures for
Tendering Notes.......... Each Holder of Notes wishing to accept the Exchange
Offer must complete, sign and date the relevant
accompanying Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Notes and any other
required documentation to the Exchange Agent at the
address set forth in the Letter of Transmittal. By
executing the Letter of Transmittal, each Holder
will represent to the Company that, among other
things, the Holder or the person receiving such
Exchange Notes, whether or not such person is the
Holder, is acquiring the Exchange Notes in the
ordinary course of business and that neither the
Holder nor any such
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<PAGE> 6
other person has any arrangement or understanding
with any person to participate in the distribution
of such Exchange Notes. In lieu of physical
delivery of the certificates representing Notes,
tendering Holders may transfer Notes pursuant to
the procedure for book-entry transfer as set forth
under "The Exchange Offer -- Procedures for
Tendering."
Special Procedures for
Beneficial Owners........ Any beneficial owner whose Notes are registered in
the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered Holder
promptly and instruct such registered Holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's
own behalf, such beneficial owner must, prior to
completing and executing the Letter of Transmittal
and delivering its Notes, either make appropriate
arrangements to register ownership of the Notes in
such beneficial owner's name or obtain a properly
completed bond power from the registered holder.
The transfer of registered ownership may take
considerable time.
Guaranteed Delivery
Procedures............... Holders of Notes who wish to tender their Notes and
whose Notes are not immediately available or who
cannot deliver their Notes, the Letter of
Transmittal or any other documents required by the
Letter of Transmittal to the Exchange Agent (or
comply with the procedures for book-entry transfer)
prior to the Expiration Date must tender their
Notes according to the guaranteed delivery
procedures set forth in "The Exchange
Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date
pursuant to the procedures described under "The
Exchange Offer -- Withdrawals of Tenders."
Acceptance of Notes and
Delivery of Exchange
Notes.................... The Company will accept for exchange any and all
Notes that are properly tendered in the Exchange
Offer prior to 5:00 p.m., New York City time, on
the Expiration Date. The Exchange Notes issued
pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date.
Federal Income Tax
Consequences of the
Exchange Offer........... The issuance of the Exchange Notes to Holders of
the Notes pursuant to the terms set forth in this
Prospectus will not constitute an exchange for
federal income tax purposes. Consequently, no gain
or loss would be recognized by Holders of the Notes
upon receipt of the Exchange Notes. See "Certain
Federal Income Tax Consequences of the Exchange
Offer."
Effect on Holders of
Notes.................... As a result of the making of this Exchange Offer,
the Company will have fulfilled certain of its
obligations under the Registration Rights
Agreement, and Holders of Notes who do not tender
their Notes will generally not have any further
registration rights under the Registration Rights
Agreement or otherwise. Such Holders will continue
to hold the untendered Notes and will be entitled
to all the rights and subject to all the
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<PAGE> 7
limitations applicable thereto under the
Indentures, except to the extent such rights or
limitations, by their terms, terminate or cease to
have further effectiveness as a result of the
Exchange Offer. All untendered Notes will continue
to be subject to certain restrictions on transfer.
Accordingly, if any Notes are tendered and accepted
in the Exchange Offer, the trading market for the
untendered Notes could be adversely affected.
Exchange Agent............. First Bank National Association (the "Exchange
Agent").
THE EXCHANGE NOTES
Maturity Date.............. June 1, 2007.
Interest................... The Exchange Notes will accrete in value at a rate
of 11.30% compounded semi-annually, to an aggregate
principal amount of $418.0 million by June 1, 2002.
No cash interest (other than Special Interest, if
any) will accrue on the Exchange Notes prior to
June 1, 2002. Thereafter, the Exchange Notes will
accrue cash interest at the rate of 11.30% per
annum from June 1, 2002, payable semi-annually in
arrears on June 1 and December 1 of each year,
commencing December 1, 2002.
Yield...................... 11.30% per annum, computed on a semi-annual
bond-equivalent basis and calculated from May 15,
1997.
Ranking.................... The Exchange Notes will be senior unsecured
obligations of the Company, will rank pari passu in
right of payment with all existing and future
senior unsecured obligations of the Company and
will rank senior in right of payment to any future
subordinated obligations of the Company. Holders of
secured obligations of the Company will, however,
have claims that are prior to the claims of the
holders of the Exchange Notes with respect to the
assets securing such obligations. The Company
conducts its operations through its subsidiary,
Allied Waste North, America, Inc. ("Allied Waste
NA"), which is subject, under the Senior Credit
Facility (as defined herein) and the indenture
relating to Allied Waste NA's 10 1/2% Senior
Subordinated Notes due 2006 (the "Allied Waste NA
Notes"), to certain restrictions on its ability to
pay funds to the Company. The Exchange Notes will
be effectively subordinated to all obligations,
including trade payables, of the Company's
subsidiaries. As of March 31, 1997, the Exchange
Notes will be effectively subordinated to
approximately $583.1 million of debt of the
Company's subsidiaries.
Optional Redemption........ Except as set forth below, the Exchange Notes will
not be redeemable prior to December 1, 2001. On or
after such date, the Exchange Notes will be subject
to redemption, at the option of the Company, in
whole or in part, at any time prior to maturity, at
the redemption prices set forth herein, plus
accrued and unpaid interest (if any) to the date of
redemption.
At any time, or from time to time, prior to June 1,
2000, up to 33 1/3% in aggregate principal amount
of Exchange Notes originally issued will be
redeemable, at the option of the Company, from the
net proceeds of one or more public offerings of
capital stock of the Company at a redemption price
equal to 111.30% of their Accreted Value as of,
plus accrued and unpaid Special Interest (if any)
to, the date of redemption. See "Description of the
Exchange Notes -- Optional Redemption."
6
<PAGE> 8
Change of Control.......... Upon the occurrence of a Change of Control, each
holder of the Exchange Notes may require the
Company to repurchase all or a portion of the
Exchange Notes held by such holder at a purchase
price equal to (i) in the case of any such purchase
prior to June 1, 2002, 101% of their Accreted Value
as of the purchase date and (ii) in the case of any
such purchase on or after June 1, 2002, 101% of
their principal amount, in each case plus accrued
and unpaid interest (if any) to the date of
repurchase. See "Description of the Exchange
Notes -- Repurchase at the Option of
Holders -- Change of Control."
Original Issue Discount.... The issuance of the Exchange Notes will result in
original issue discount for federal income tax
purposes. Thus, although interest (other than
Special Interest, if any) will not accrue on the
Exchange Notes prior to June 1, 2002, and there
will be no periodic cash payments of interest
(other than Special Interest, if any) on the
Exchange Notes prior to December 1, 2002, original
issue discount (that is, the difference between the
stated redemption price at maturity and the issue
price of the Exchange Notes) will accrue from the
original issue date of the Notes and will be
includable as interest income periodically in a
holder's gross income for federal income tax
purposes in advance of receipt of the cash payments
to which the income is attributable. See "Certain
United States Federal Income Tax Consequences."
Restrictive Covenants...... The Indenture will restrict, among other things,
the ability of the Company and its Restricted
Subsidiaries, (i) to incur additional Debt, (ii) to
pay dividends and make other distributions, (iii)
to have restrictions on the ability of any
Restricted Subsidiary to make dividends or other
payments to the Company or any other Restricted
Subsidiary, (iv) to sell assets and to use the
proceeds of asset sales, (v) to pledge assets, (vi)
to sell a minority interest in a Restricted
Subsidiary, (vii) to merge or consolidate with or
transfer all or substantially all of its assets to,
or to acquire the stock or assets of, another
entity or (viii) to engage in certain transactions
with affiliates. All of these restrictions,
however, are subject to a number of important
qualifications. See "Description of the Exchange
Notes -- Certain Covenants."
Form and Denomination...... The Exchange Notes will be fully registered as to
principal and interest in minimum denominations of
$1,000 and integral multiples thereof. The Exchange
Notes will be initially issued in the form of one
or more global notes and deposited with a custodian
for and registered in the name of a nominee of The
Depository Trust Company. Exchange Notes will not
be issued in certificated, fully registered form,
except in the circumstances provided for in the
Indenture. See "Description of Exchange Notes --
Form, Denomination, Transfer, Exchange and
Book-Entry, Delivery and Form."
Registration Rights........ Under current interpretations of applicable law by
the staff of the Commission, holders of Exchange
Notes will be permitted to resell such securities
into the public market without further registration
or delivery of a prospectus, except that any such
holder who is a broker or dealer would be required
to deliver a copy of this prospectus in connection
with any such resale. The Company has agreed to
keep such prospectus current so as to enable
brokers and dealers to effect this resales for a
period of 90 days following completion of the
Exchange Offer. Certain holders who participate in
the Exchange Offer will not be permitted to
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<PAGE> 9
rely on the interpretation of the Commission staff.
For a discussion of the requirements that must be
met in order to rely on the interpretation, see
"Description of the Exchange Notes -- Registration
Rights."
Pursuant to an Exchange and Registration Rights
Agreement (the "Registration Rights Agreement")
between the Company and the Initial Purchasers (as
defined herein), in the event the interpretation of
the Commission staff does not permit the Company to
effect the Exchange Offer and under certain other
circumstances, the Company would use its best
efforts to cause to become effective a "shelf"
registration statement (the "Shelf Registration
Statement") with respect to the resale of the
Exchange Notes (a "Shelf Registration") and to keep
such Shelf Registration Statement effective until
the third anniversary of the effectiveness of the
Shelf Registration Statement. In such event,
Holders who registered their Exchange Notes would
be permitted to resell their Exchange Notes into
the public market, but only if they delivered a
copy of the prospectus included in the Shelf
Registration Statement in connection with such
resales.
In the event that (i) the Company has not filed the
Shelf Registration Statement on or before the date
on which such registration statement is required to
be filed pursuant to the Registration Rights
Agreement, or (ii) such Shelf Registration
Statement has not become effective or been declared
effective by the Commission on or before the date
on which such registration statement is required to
become or be declared effective pursuant to the
Registration Rights Agreement, or (iii) the
Exchange Offer has not been completed within 45
days after the date upon which the Registration
Statement is declared effective or (iv) the
Registration Statement or any Shelf Registration
Statement required under the Registration Rights
Agreement is filed and declared effective but shall
thereafter either be withdrawn by the Company or
shall become subject to an effective stop order
issued pursuant to Section 8(d) of the Securities
Act suspending the effectiveness of such
registration statement (except as specifically
permitted in the Registration Rights Agreement)
without being succeeded immediately by an
additional registration statement filed and
declared effective (each such event referred to in
clauses (i) through (iv), a "Registration Default"
and each period during which a Registration Default
has occurred and is continuing, a "Registration
Default Period"), then, as liquidated damages for
such Registration Default, special interest
("Special Interest"), in addition to the base
interest that would otherwise accrue on the
Exchange Notes, shall accrue at a per annum rate of
0.25% for the first 90 days of the Registration
Default Period, at a per annum rate of 0.50% for
the second 90 days of the Registration Default
Period, at a per annum rate of 0.75% for the third
90 days of the Registration Default Period and at a
per annum rate of 1.0% thereafter for the remaining
portion of the Registration Default Period. See
"Description of the Exchange Notes -- Registration
Rights."
For additional information regarding the Exchange Notes, see "Certain
Federal Income Tax Consequences of an Investment in the Exchange Notes" and
"Description of the Exchange Notes."
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RISK FACTORS
Holders of Notes should consider carefully all of the information set forth
in this Prospectus and, in particular, the information set forth under "Risk
Factors" before making any decision regarding tendering their Notes pursuant to
the Exchange Offer and receiving Exchange Notes.
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RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Exchange Notes offered by this Prospectus, including information under
"Disclosure Regarding Forward Looking Statements."
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE DEBT
The Company has substantial indebtedness with significant debt service
requirements and is highly leveraged. At March 31, 1997, the Company's
consolidated debt was approximately $1,224.4 million. The degree to which the
Company is leveraged has important consequences to holders of the Exchange
Notes, including the following: (i) the ability of the Company to obtain
additional financing in the future, whether for working capital, capital
expenditures, acquisitions or other purposes, may be impaired, (ii) a
substantial portion of the Company's cash flow from operations is required to be
dedicated to the payment of principal and interest on its debt, thereby reducing
funds available to the Company for other purposes, (iii) the Company's
flexibility in planning for or reacting to changes in market conditions may be
limited, (iv) the Company may be more vulnerable in the event of a downturn in
its business, and (v) to the extent of the Company's outstanding debt under the
Senior Credit Facility at variable rates that have not been hedged, the Company
will be vulnerable to increases in interest rates. At June 5, 1997,
approximately $525.0 million in aggregate borrowings were outstanding under the
Senior Credit Facility. All borrowings under the Senior Credit Facility will
mature in 2003.
The ability of the Company to meet its debt service obligations will depend
on the future operating performance and financial results of the Company, which
will be subject in part to factors beyond the control of the Company. Although
the Company believes that its cash flow will be adequate to meet its interest
payments, there can be no assurance that the Company will continue to generate
earnings in the future sufficient to cover its fixed charges. If the Company is
unable to generate earnings in the future sufficient to cover its fixed charges
and is unable to borrow sufficient funds under either the Senior Credit Facility
or from other sources, it may be required to refinance all or a portion of its
existing debt or to sell all or a portion of its assets. There can be no
assurance that a refinancing would be possible, nor can there be any assurance
as to the timing of any asset sales or the proceeds which the Company could
realize therefrom. In addition, the terms of certain of its debt restrict the
Company's ability to sell assets and the Company's use of the proceeds
therefrom.
If for any reason, including a shortfall in anticipated operating results
or proceeds from asset sales, the Company were unable to meet its debt service
obligations, it would be in default under the terms of certain of its debt. In
the event of such a default, the holders of such debt could elect to declare all
of such debt immediately due and payable, including accrued and unpaid interest,
and to terminate their commitments with respect to funding obligations under
such debt. In addition, such holders could proceed against any collateral which,
in the case of certain debt, consists of the capital stock of the Company's
subsidiaries and substantially all of the assets of the Company. Any default
with respect to any of the Company's debt could result in a default under other
debt or result in the bankruptcy of the Company.
HOLDING COMPANY STRUCTURE; STRUCTURAL SUBORDINATION
The Company holds all of its assets and conducts all of its operations
through its subsidiary, Allied Waste NA, and its subsidiaries. The Company thus
derives all of its operating income and cash flow from Allied Waste NA and must
rely upon distributions from Allied Waste NA to generate the funds necessary to
meet its obligations, including the payment of principal of and interest on the
Notes. Although the Indenture generally prohibits the Company from permitting
its Restricted Subsidiaries to allow restrictions on their ability to pay
dividends and other amounts to the Company, any such restrictions could
materially and adversely affect the ability of the Company to service and repay
its existing debt, including the Exchange Notes. Allied Waste NA is subject,
under the Senior Credit Facility and the Allied Waste NA Notes, to certain
restrictions on its ability to pay funds to the Company.
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The Exchange Notes will be effectively subordinated in right of payment to
all existing and future secured debt of the Company to the extent of the
collateral securing such debt.
In addition, the Exchange Notes will be effectively subordinated to all
existing and future indebtedness and other liabilities, including trade
payables, of the Company's subsidiaries. As of March 31, 1997, the Exchange
Notes will be effectively subordinated to approximately $583.0 million of debt
of the Company's subsidiaries.
ABILITY TO ACHIEVE SYNERGIES; INTEGRATION OF ACQUIRED BUSINESSES
In December 1996, the Company acquired (the "Laidlaw Acquisition")
substantially all of the non-hazardous solid waste management business of
Laidlaw Inc. ("Laidlaw"). The Laidlaw Acquisition represented a substantial
increase in the scope of the Company's business. In March 1997, the Company sold
(the "Canadian Sale") substantially all of the Canadian operations that it
acquired in the Laidlaw Acquisition to USA Waste Services, Inc. ("USA Waste").
On a pro forma basis, after giving effect to the Laidlaw Acquisition and the
Canadian Sale, the businesses acquired from Laidlaw (the "Acquired Businesses")
generated revenues for the twelve months ended November 30, 1996 of
approximately $494.5 million. The revenues for the year ended December 31, 1996
generated by the operations of the Company excluding such Acquired Businesses
were approximately $246.7 million. Successful integration of such Acquired
Businesses will depend primarily on the Company's ability to manage its
operations and to eliminate redundancies and excess costs. There can be no
assurance that the Company will successfully integrate the Acquired Businesses
and any failure or any inability to do so may have a material adverse effect on
the Company's results of operations and financial condition. In addition, the
Company expects to realize certain financial benefits and operational
efficiencies as a result of the Laidlaw Acquisition. Realization and timing of
such financial benefits and operational efficiencies could be affected by a
number of factors beyond the Company's control, such as general economic
conditions, increased operating costs, the response of competitors or customers
and regulatory developments. There can be no assurance that the Company will
achieve all or any portion of the expected financial benefits and operational
efficiencies.
The integration and consolidation of the Acquired Businesses will require
substantial management time and financial and other resources. While the Company
believes that it has sufficient financial and management resources to accomplish
the integration of the Acquired Businesses, there can be no assurances in this
regard or that the Company will not experience difficulties with customers,
personnel or operations.
LIMITED OPERATING HISTORY IN REGARD TO SIGNIFICANT ASSETS
The Company has a limited operating history with regard to a significant
portion of its operations. During 1996, the Company acquired 21 companies,
excluding the Acquired Businesses, which collectively comprised approximately
$78.8 million or 31.9% of the Company's revenues in 1996. The financial position
and results of operations of the Company will depend to a large extent on the
Company's ability to integrate these acquired operations effectively and to
realize expected financial benefits and operational efficiencies. There can be
no assurance that the Company's efforts to integrate these acquired operations
will be effective, or that expected financial benefits and operational
efficiencies will be realized. Failure to effectively integrate acquired
operations could have an adverse effect on the Company's future results of
operations. As the Company continues to pursue its acquisition strategy in the
future, its financial position and results of operations may fluctuate
significantly from period to period.
CAPITAL REQUIREMENTS AND LIMITED WORKING CAPITAL
The Company intends to fund its cash needs through cash flow from
operations and borrowings under the Senior Credit Facility and its equipment
lease facilities. Because of the capital intensive nature of the solid waste
industry, the Company may use amounts in excess of the cash generated from
operations to retire and service debt, fund acquisitions, develop landfills and
for capital expenditures. A substantial portion of the Company's available cash
will be required to be applied to service indebtedness, including indebtedness
incurred to finance the Laidlaw Acquisition, which is expected to include
approximately $0.7 million for
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preferred stock dividends and approximately $135.3 million in annual principal
and interest payments, after giving effect to the Laidlaw Repurchase (as defined
herein). During 1997, the Company also expects to spend approximately $126
million for capital, closure and post-closure, and remediation expenditures and
expects to provide approximately $227.6 million in financial assurance
obligations related to its landfill operations. Amounts expended on capital
expenditures and financial assurance obligations will increase as a result of
any acquisitions or expansions of the Company's operations. As a result of these
capital requirements, the Company may periodically have low levels of working
capital or be required to finance working capital deficits.
Further regulatory action by federal, state and local governments could
accelerate expenditures for closure and post-closure monitoring and obligate the
Company to spend sums in addition to those presently reserved for such purposes.
These factors, together with the other factors discussed above, could
substantially increase the Company's operating costs and impair the Company's
ability to invest in its facilities.
The Company's ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness depends on its future performance,
which, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors beyond its control. One
of the primary factors impacting the Company's future performance will be its
ability to integrate the Acquired Businesses, and to reduce redundancies and
excess costs. These operations are significantly larger than the Company's
previous operations and represent a substantial increase in the scope of the
Company's business. Based upon the current level of operations and anticipated
growth, management of the Company believes that available cash flow, together
with available borrowing under the Senior Credit Facility, and other sources of
liquidity, will be adequate to meet the Company's anticipated future
requirements for working capital, letters of credit, capital expenditures and
scheduled payments of principal of, and interest on debt. However, the principal
payments at maturity on the Exchange Notes may require refinancing. There can be
no assurance that the Company's business will generate sufficient cash flow from
operations or that future financings will be available in an amount sufficient
to enable the Company to service its indebtedness, including the Exchange Notes,
or to make necessary capital expenditures, or that any refinancing would be
available on commercially reasonable terms or at all. Additionally, depending on
the timing, amount and structure of any future acquisitions and the availability
of funds under the acquisition facility under the Senior Credit Facility, the
Company may need to raise additional capital to fund the acquisition and
integration of additional solid waste businesses. There can be no assurance that
the Company will be able to secure such additional funding on favorable terms,
if at all.
THE COMPANY'S STRATEGY; POTENTIAL DIFFICULTY IN OBTAINING SUITABLE LANDFILLS,
COLLECTION OPERATIONS, TRANSFER STATIONS AND PERMITS
The Company's strategy depends on its ability to identify and acquire
appropriate landfills, collection operations and transfer stations. There can be
no assurance that the Company will be able to locate appropriate acquisition
candidates, that any identified candidates will be acquired or that acquired
operations will be integrated effectively or prove profitable. Completion of an
acquisition requires the expenditure of sizeable amounts of capital and the
competition among companies pursuing an acquisition strategy may increase
capital requirements. The Company could be forced to alter its strategy in the
future if such candidates become unavailable or too costly. In addition,
obtaining permits to operate non-hazardous waste landfills has become
increasingly difficult and expensive, often taking a number of years to obtain,
requiring numerous hearings and compliance with zoning, environmental and other
regulatory measures, and often being subject to resistance from citizen or other
groups. There can be no assurance that the Company will be successful in
obtaining the permits it requires, and an inability to receive such permits
could have an adverse effect on the Company's future results of operations. In
some areas, suitable land may be unavailable for new landfill sites. There can
be no assurance that the Company will be successful in obtaining new landfill
sites or expanding the permitted capacity of its current landfills once its
landfill capacity has been consumed. In such event, the Company could be forced
to dispose of collected waste at landfills operated by its competitors, which
could have an adverse effect on the Company's landfill revenues and collection
expenses.
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COMPETITION FROM OTHER COMPANIES AND MUNICIPALITIES; LANDFILL ALTERNATIVES
The non-hazardous solid waste industry is led by five large national waste
management companies, one of which is the Company, and includes numerous
regional and local companies, all of which contribute to the high level of
competition that characterizes the industry. Some of these companies have
considerably greater financial and operational resources than the Company. In
addition, cities and counties that operate their own waste collection and
disposal facilities often enjoy the benefits of tax-exempt financing and may
control the disposal of waste collected within their jurisdictions.
Alternatives to landfill disposal, such as recycling and composting, are
increasingly being used, and incineration continues to be utilized in some
markets in which the Company operates. There has also been an increasing trend
at the state and local levels to mandate waste reduction at the source and to
prohibit the disposal of certain types of wastes, such as yard wastes, at
landfills. This trend may result in a reduction in the volume of waste going to
landfills in certain areas, which may affect the Company's ability to operate
its landfills at their full capacity and/or affect the prices that can be
charged for landfill disposal services. In addition, most of the states in which
the Company operates landfills have adopted plans or requirements that set goals
for specified percentages of certain solid waste items to be recycled. These
recycling goals will be phased in over the next few years.
LACK OF PUBLIC MARKET FOR THE EXCHANGE NOTES; RESTRICTIONS ON RESALE
There is no existing trading market for the Exchange Notes, and there can
be no assurance regarding the future development of a market for the Exchange
Notes, or the ability of the holders of the Exchange Notes to sell their
Exchange Notes, or the price at which such holders may be able to sell their
Exchange Notes. If such a market were to develop, the Exchange Notes, could
trade at prices that may be higher or lower than the initial offering price
depending on many factors, including prevailing interest rates, the Company's
operating results and the market for similar securities. Each of Goldman, Sachs
& Co., Merrill Lynch & Co. and Credit Suisse First Boston (the "Initial
Purchasers") has advised the Company that it intends to make a market in the
Exchange Notes. The Initial Purchasers are not obligated to do so, however, and
any market making with respect to the Exchange Notes may be discontinued at any
time without notice. Therefore, there can be no assurance as to the liquidity of
any trading market for the Exchange Notes or that an active trading market for
the Exchange Notes will develop. The Company does not intend to apply for
listing or quotation of the Exchange Notes on any securities exchange or stock
market.
Historically, the market for non-investment grade debt has been subject to
disruptions that have caused substantial volatility in the prices of such
securities. There can be no assurance that the market for the Exchange Notes
will not be subject to similar disruptions. Any such disruptions may have an
adverse effect on holders of the Exchange Notes.
POTENTIAL INABILITY TO EFFECT CHANGE OF CONTROL REPURCHASES
The Indenture requires the Company, in the event of a Change of Control, to
make an offer to purchase all outstanding Exchange Notes at a price equal to (i)
in the case of any such purchase prior to June 1, 2002, 101% of their Accreted
Value as of the Purchase Date and (ii) in the case of any such purchase on or
after June 1, 2002, 101% of their principal amount, in each case, plus accrued
interest to the date of repurchase. The Senior Credit Facility restricts such a
purchase and such an offer would require the approval of the lenders thereunder.
Accordingly, the right of the holders of the Exchange Notes to require the
Company to repurchase the Exchange Notes may be of limited value if the Company
cannot obtain the required approval under the Senior Credit Facility. In
addition, the indenture relating to the Allied Waste NA Notes requires Allied
Waste NA to repurchase the Allied Waste NA Notes upon a Change of Control and
Allied Waste NA will be unable to make distributions to the Company prior to
repurchasing the Allied Waste NA Notes upon a Change of Control. There can be no
assurance that the Company will have the financial resources necessary to
purchase the Exchange Notes upon a Change of Control. Failure to offer to
repurchase the Exchange Notes under such circumstances, however, would
constitute an event of default under the Indenture. See "Description of the
Exchange Notes -- Repurchase at Option of Holders -- Change of Control."
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RESTRICTIONS IMPOSED BY THE SENIOR CREDIT FACILITY AND THE ALLIED WASTE NA NOTES
The Senior Credit Facility and the indenture relating to the Allied Waste
NA Notes contain a number of significant covenants that, among other things,
will restrict the ability of the Company and its subsidiaries to dispose of
assets, incur additional indebtedness, incur liens on property or assets, repay
other indebtedness, pay dividends, enter into certain investments or
transactions, repurchase or redeem capital stock, engage in mergers or
consolidations, or engage in certain transactions with subsidiaries and
affiliates and otherwise restrict corporate activities. There can be no
assurance that such restrictions will not adversely affect the Company's ability
to finance its future operations or capital needs or engage in other business
activities that may be in the interest of the Company. In addition, the Senior
Credit Facility also requires the Company to maintain compliance with certain
financial ratios. The ability of the Company to comply with such ratios may be
affected by events beyond the Company's control. A breach of any of these
covenants or the inability of the Company to comply with the required financial
ratios could result in a default under the Senior Credit Facility or the
indenture relating to the Allied Waste NA Notes. In the event of any such
default under the Senior Credit Facility, the lenders under the Senior Credit
Facility could elect to declare all borrowings outstanding under the Senior
Credit Facility, together with accrued interest and other fees, to be due and
payable, to require the Company to apply all of its available cash to repay such
borrowings or to prevent the Company from making debt service payments on the
Exchange Notes. If the Company were unable to repay any such borrowings when
due, the lenders could proceed against their collateral, in the event of a
default under the indenture relating to the Allied Waste NA Notes, the holders
of the Allied Waste NA Notes could elect to declare the Allied Waste NA Notes to
be due and payable. If the indebtedness under the Senior Credit Facility, the
Allied Waste NA Notes or the Exchange Notes were to be accelerated, it is
unlikely that the assets of the Company would be sufficient to repay the
Exchange Notes. See "Description of the Exchange Notes" and "Description of
Certain Indebtedness."
ORIGINAL ISSUE DISCOUNT; POSSIBLE UNFAVORABLE TAX AND OTHER LEGAL CONSEQUENCES
FOR HOLDERS OF EXCHANGE NOTES AND THE COMPANY
The Exchange Notes will be issued at a substantial discount from the stated
principal amount thereof. Consequently, purchasers of the Exchange Notes should
be aware that, although cash interest (other than Special Interest, if any) will
not accrue on the Exchange Notes prior to June 1, 2002, and there will be no
periodic payments of cash interest on the Exchange Notes prior to December 1,
2002, original issue discount (that is, the difference between the stated
redemption price at maturity and the issue price of the Exchange Notes) will
accrue from the original issue date of the Notes and will be includable as
interest income periodically (including for periods ending prior to June 1,
2002) in a holder's gross income for U.S. federal income tax purposes in advance
of receipt of the cash payments to which the income is attributable. Similar
results may apply under state and other tax laws.
If a bankruptcy case is commenced by or against the Company under the U.S.
Bankruptcy Code after the issuance of the Exchange Notes, the claim of a holder
of Exchange Notes with respect to the principal amount thereof may be limited to
an amount equal to the sum of (i) the initial offering price and (ii) that
portion of the original issue discount that is not deemed to constitute
"unmatured interest" for purposes of the U.S. Bankruptcy Code. Any original
issue discount that was not amortized as of any such bankruptcy filing would
constitute "unmatured interest."
See "Certain United States Federal Income Tax Consequences of an Investment
in the Exchange Notes" for a more detailed discussion of the federal income tax
consequences to the holders regarding the purchase, ownership and disposition of
the Exchange Notes.
RELIANCE ON MANAGEMENT
The Company will rely significantly on the services of its senior
management team. The Company could be adversely affected if any member of the
senior management team were unwilling or unable to continue in the Company's
employ. The Company is expanding the staff in its executive offices to support
the new
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operations associated with the Laidlaw Acquisition. There can be no assurance
that the Company will be successful in locating, hiring or retaining qualified
personnel.
IMPACT OF ADVERSE WEATHER CONDITIONS
The collection and landfill operations of the Company could be adversely
affected by protracted periods of inclement weather which delay the development
of landfill capacity, the transfer of waste or reduce the volume of waste
generated. There can be no assurance that protracted periods of inclement
weather will not have a material adverse effect on the Company's future results
of operations.
COST OF COMPLIANCE WITH ENVIRONMENTAL REGULATIONS; RISK OF FUTURE LITIGATION
The scope and stringency of laws and regulations designed to protect the
environment have increased dramatically. Compliance with the evolving and
expanding regulatory requirements, including the adoption in October 1991 of
Subtitle D regulations ("Subtitle D") pursuant to the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA"), has been and will continue to be
costly. Rigorous regulatory standards require waste management companies to
enhance or replace equipment and to modify landfill operations or, in some
cases, to close landfills. There can be no assurance that the Company will be
able to implement price increases sufficient to offset the cost of complying
with these standards. In addition, environmental regulatory changes could
accelerate expenditures for closure and post-closure monitoring at solid waste
facilities and obligate the Company to spend sums in addition to those presently
reserved for such purposes. These factors could increase substantially the
Company's operating costs as well as the possibility of the impairment of the
Company's investment in its facilities.
In addition to the costs of complying with environmental regulations, the
Company will continue to be involved in legal proceedings in the ordinary course
of business. Government agencies may seek to impose fines on the Company for
alleged failure to comply with laws and regulations or to revoke or to deny the
renewal of, the Company's permits and licenses. In addition, governmental
agencies, as well as surrounding landowners, may assert claims against the
Company alleging environmental damage or violations of permits and licenses
pursuant to which the Company operates. Citizens' groups have become
increasingly active in challenging the grant or renewal of permits and licenses,
and responding to such challenges has further increased the costs associated
with permitting new facilities or expanding current facilities. A significant
judgment against the Company, the loss of a significant permit or license or the
imposition of a significant fine could have a material adverse effect on the
Company's financial condition.
Certain of the Company's waste disposal operations traverse state
boundaries. Such operations could be adversely affected if the federal
government or a state in which a landfill is located limits or prohibits,
imposes discriminatory fees on, or otherwise seeks to discourage disposal,
within state boundaries, of waste collected outside of the state.
As a condition to the Laidlaw Acquisition, Allied engaged Emcon
Environmental Services, Inc. ("Emcon"), an independent environmental consultant,
to conduct environmental assessments of the subsidiaries acquired in the Laidlaw
Acquisition (the "LSW Subsidiaries"). In its report (the "Emcon Report"), Emcon
identified several contaminated landfills and other locations, including
landfills and other locations owned by the LSW Subsidiaries, that could pose
significant sources of liability to the LSW Subsidiaries. The costs of
performing the investigation, design, remediation and allocation of
responsibility to the subsidiaries of the Company vary significantly between
sites. Based on the information currently available, the Company recorded a
provision of $51.5 million for environmental matters, including closure and
post-closure costs, in the 1996 statement of operations and expects these
amounts to be disbursed over the next 30 years. The actual liability at these
sites cannot currently be determined due to a number of uncertainties including
the extent of the contamination, the appropriate remedy, the financial viability
of other potentially responsible parties and the ultimate apportionment of
responsibility among such potentially responsible parties.
The representations made by the Laidlaw sellers in the Stock Purchase
Agreement, dated September 17, 1996, among Allied, the Company and Laidlaw,
among others, relating to the Laidlaw Acquisition (the "Laidlaw Acquisition
Agreement") with respect to environmental matters (i) terminated on the closing
of the
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Laidlaw Acquisition as to all matters disclosed in writing to Allied at least
five business days prior to the closing or disclosed with specificity in the
Emcon Report and (ii) terminate on the third anniversary of the closing of the
Laidlaw Acquisition as to all matters other than those described in clause (i)
and which are known to Laidlaw on the closing date. The Laidlaw Acquisition
Agreement further provided that Laidlaw's indemnification obligations with
respect to environmental matters would be limited to the amount by which the
aggregate of all such damages exceed a $1 million basket, without giving effect
to any materiality qualifications. At the closing of the Laidlaw Acquisition,
the Company and Laidlaw entered into a Special Environmental Indemnity, which
provided that the indemnity in respect of properties located at Etobicoke,
Ontario, Delafield, Wisconsin and Gary Lagoons, Indiana would not be subject to
the three-year limitation or any basket. In connection with the Laidlaw
Repurchase (as defined herein), Allied has agreed that the indemnity for damages
arising out of the Etobicoke, Ontario and Delafield, Wisconsin sites will be
limited to a three-year period from the closing of the Laidlaw Acquisition and
to an amount in excess of a $25 million basket with such $25 million basket to
be reduced by any damages to which the $1 million basket in the Laidlaw
Acquisition Agreement applies.
POTENTIAL UNINSURED OR UNDERINSURED ENVIRONMENTAL LIABILITIES
As is typically the case in the solid waste industry, the Company is able
to obtain only very limited environmental impairment insurance regarding its
landfills. An uninsured or underinsured claim of sufficient magnitude could have
a material adverse effect on the Company's financial condition. In connection
with any transaction made by the Company, there may be liabilities that the
Company fails or is unable to discover, including liabilities arising from
non-compliance with environmental laws by prior owners, and for which the
Company, as a successor owner, may be responsible.
HAZARDOUS SUBSTANCES LIABILITY
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), has been interpreted to impose joint and several
liability on current and former owners or operators of facilities at which there
has been a release or a threatened release of a "hazardous substance" and on
persons who generate, transport or arrange for the disposal of such substances
at the facility. Hundreds of substances are defined as "hazardous" under CERCLA
and their presence, even in minute amounts, can result in substantial liability.
The statute provides for the remediation of contaminated facilities and imposes
costs on the responsible parties. The expense of conducting such a cleanup can
be significant. Notwithstanding its efforts to comply with applicable
regulations and to avoid transporting and receiving hazardous substances, such
substances may be present in waste collected by the Company or disposed of in
its landfills, or in waste collected, transported or disposed of in the past by
acquired companies. As used in this Prospectus, "non-hazardous waste" means
substances, including asbestos, that are not defined as hazardous wastes under
federal regulations.
POTENTIAL UNDISCLOSED LIABILITIES ASSOCIATED WITH ACQUISITIONS
In connection with any acquisition of business or assets by the Company,
there may be liabilities that the Company fails or is unable to discover,
including liabilities arising from non-compliance with environmental laws by
prior owners, and for which the Company, as a successor owner, may be
responsible.
LAIDLAW TAX INDEMNIFICATION
Laidlaw has disclosed to the Company the existence of a tax controversy
(the "Tax Controversy") in the amount of more than $385 million with the United
States Internal Revenue Service (the "IRS") involving the consolidated U.S.
federal income tax liability for the fiscal years 1986 through 1991 of the
members of an affiliated group of corporations (the "LTI U.S. Consolidated Tax
Group") within the meaning of Section 1504(c) of the Internal Revenue Code
("IRC"), of which Laidlaw Transportation, Inc. ("LTI") is the common parent
corporation (which includes LTI, those Acquired Businesses which are
incorporated in the U.S. (the "LSW U.S. Subsidiaries"), and other U.S.
subsidiaries of LTI which were not acquired in the Laidlaw Acquisition). The LTI
U.S. Consolidated Tax -- Group has also received notice that fiscal years
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1992, 1993 and 1994 will be examined regarding this issue. Under Treasury
Regulations promulgated under Section 1502 of the IRC, each member of the LTI
U.S. Consolidated Tax Group including each LSW U.S. Subsidiary, is or could be
severally liable for United States federal income tax liabilities of the entire
LTI U.S. Consolidated Tax Group, including all amounts at issue in the Tax
Controversy which are ultimately determined to be owed.
The Company has obtained an indemnity from the Laidlaw Group which covers
the amounts at issue in the Tax Controversy for which any LSW U.S. Subsidiary
may ultimately be found liable. The obligation of the Laidlaw Group to indemnify
the Company in respect of amounts at issue in the Tax Controversy is a general,
unsecured obligation of the Laidlaw Group. The ability of the Laidlaw Group to
pay and fulfill such indemnification obligation will depend on the financial
condition of the Laidlaw Group at the time of any required performance of such
obligation, as to which the Company has no assurance.
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Prospectus contains certain statements that are "Forward Looking
Statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. Those statements include, among other things, the
discussions of the Company's business strategy and expectations concerning
market position, future operations, margins, profitability, liquidity and
capital resources, as well as statements concerning the integration of the
operations of businesses and assets that have been acquired by the Company and
the achievement of financial benefits and operational efficiencies in connection
therewith. Although the Company believes that the expectations reflected in such
Forward Looking Statements are reasonable, they can give no assurance that such
expectations will prove to be correct. Generally, these statements relate to
business plans or strategies, projected or anticipated benefits or other
consequences of such plans or strategies, number of acquisitions and projected
or anticipated benefits from acquisitions made by or to be made by the Company,
or projections involving anticipated revenues, expenses, earnings, levels of
capital expenditures or other aspects of operating results and financial
conditions. All phases of the operations of the Company are subject to a number
of uncertainties, risks and other influences, many of which are outside the
control of the Company and any one of which, or a combination of which, could
materially affect the results of the Company's operations and whether the
Forward Looking Statements made by the Company ultimately prove to be accurate.
Important factors that could cause actual results to differ materially from the
Company's expectations are disclosed in this section and in "Risk Factors," and
any prospective investor in the Exchange Notes should give careful consideration
to such factors.
THE COMPANY
Allied is a major solid waste management company in the United States, as
measured by revenues. The Company pursues a business strategy designed to
develop vertically-integrated operations centered around landfills that are
owned or operated by the Company in the markets it currently serves. The
Company, which conducts all of its business operations through its subsidiaries,
is a vertically-integrated, non-hazardous solid waste management company
providing collection, transfer, processing and disposal services. The Company
serves 1.4 million customers through operations in 21 states located primarily
in the midwest, northeast, southeast and southwest United States. The Company
has an extensive network of 41 transfer stations, 56 landfills, and 20 recycling
facilities.
RECENT TRANSACTIONS
On December 30, 1996, the Company completed the Laidlaw Acquisition for
consideration comprised of $1.2 billion cash (the "Cash Consideration"), 14.6
million shares (the "Laidlaw Shares") of Allied's common stock (the "Common
Stock"), a warrant to acquire 20.4 million shares of Allied common stock (the
"Laidlaw Warrant"), and two junior subordinated debentures, with an aggregate
face amount of $318.3 million (the "Allied Canada Debentures") issued by Allied
Waste Holdings (Canada), Ltd., a Canadian corporation and a wholly-owned
subsidiary of the Company. Immediately after the closing of the Laidlaw
Acquisition, Laidlaw exchanged the Allied Canada Debentures for identical
debentures (the "Allied Finance Debentures" and,
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collectively with the Allied Canada Debentures, the "Allied Debentures") issued
by Allied Waste Finance (Canada), Ltd., a Canadian corporation and a
wholly-owned subsidiary of Allied ("Allied Finance"). The cash consideration was
financed from the proceeds of the 1996 Senior Credit Facility (as defined
herein) and the sale of the Allied Waste NA Notes.
On March 16, 1997, the Company completed the Canadian Sale for
approximately $518 million in cash. The Company acquired the Canadian operations
in the Laidlaw Acquisition in December 1996. Under the terms of the Canadian
Sale, USA Waste acquired 41 collection companies, eight transfer stations, ten
recycling facilities and seven landfills in Canada. The Company used the
proceeds from the Canadian Sale to pay down approximately $517 million in debt
under the 1996 Senior Credit Facility. Unless otherwise indicated, all
references to the Company and its operations contained herein give effect to the
Laidlaw Acquisition and the Canadian Sale.
On May 15, 1997, Allied repurchased ("Laidlaw Repurchase") the Allied
Finance Debentures and the Laidlaw Warrant from Laidlaw and Laidlaw
Transportation, Inc. ("Laidlaw Transportation") for cash consideration of $230
million. Contemporaneously with the Laidlaw Repurchase, certain private
securities investment funds affiliated with either Apollo Advisors II, L.P. or
The Blackstone Group (collectively, the "Apollo/Blackstone Investors") acquired
the Laidlaw Shares from Laidlaw Transportation and also acquired approximately
11.8 million shares of Common Stock from TPG Partners, L.P. and TPG Parallel I,
L.P. Pursuant to the terms of the Shareholders Agreement dated May 15, 1997
between Allied and the Apollo/Blackstone Investors (the "Shareholders
Agreement"), the Apollo/Blackstone Investors currently have the right to
designate four members of the Board of Directors of Allied, subject to reduction
upon the occurrence of certain circumstances. The Shareholders Agreement also
grants the Apollo/Blackstone Investors certain registration rights regarding the
shares of Common Stock owned by the Apollo/Blackstone Investors and restricts
the Apollo/Blackstone Investors from engaging in certain activities or
transactions which could result in a change in control of Allied. In connection
with the Laidlaw Repurchase, Allied issued the Notes. The net proceeds of the
Note Offering were used to pay the cash consideration of the Laidlaw Repurchase.
On June 5, 1997 the Company entered into an Amended and Restated Credit
Agreement (the "Senior Credit Facility") with Goldman Sachs Credit Partners,
L.P., as syndication agent, Credit Suisse First Boston ("Credit Suisse"), as
administrative agent, and Citibank, N.A., as documentation agent. See
"Description of Certain Indebtedness -- Senior Credit Facility."
On June 12, 1997, the Company completed a series of transactions with USA
Waste (the "USA Waste Transactions") pursuant to which the Company acquired six
landfills, eight collection operations, five transfer stations and one recycling
facility with an annual aggregate revenue of $58.0 million for consideration of
$87.5 million. Two additional landfills, the consideration for which is included
in the $87.5 million, are scheduled to be acquired in July 1997 upon the
satisfactory completion of certain permitting and regulatory matters. Also
pursuant to the USA Waste Transactions, the Company sold to USA Waste one
landfill, two collection operations and one recycling facility with an aggregate
of approximately $33.6 million in annual revenue for which it received
consideration of approximately $61.3 million.
Since January 1, 1997, the Company has completed the acquisition of ten
solid waste businesses, not including the assets acquired in the USA Waste
Transactions, representing approximately $71.4 million in annual revenue. The
acquired businesses, which include three landfills (one of which is under
development), nine collection operations, four transfer stations and one
recycling facility, are located in ten separate markets and will be integrated
into existing operations. Total consideration of approximately $123.2 million
(including $10 million for the landfill under development), comprised of cash,
notes and Common Stock, was paid in these transactions.
INDUSTRY TRENDS
According to the National Solid Waste Management Association and Waste Age
Magazine, the North American solid waste industry was estimated to have had
revenues of more than $32 billion in 1995. The industry is highly fragmented
with the four largest companies accounting, in 1995, for approximately 30% of
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revenues, seven mid-sized public companies accounting for approximately 4% of
revenues, and several thousand municipalities and independent collection firms
accounting for the remainder. The solid waste management industry has been
affected significantly by increased regulation of disposal activities and to a
lesser extent collection activities also, have been affected. In October 1991,
the Environmental Protection Agency (the "EPA") adopted new regulations pursuant
to Subtitle D of the RCRA governing the disposal of non-hazardous solid waste.
These regulations led to a variety of requirements applicable to landfill
disposal sites, including the construction of liners and the installation of
leachate collection systems, groundwater monitoring systems and methane gas
recovery systems. The regulations also require enhanced control systems to
monitor more closely the waste streams being disposed at landfills, extensive
post-closure monitoring of sites and financial assurances that landfill
operators will be able to comply with the stringent regulations. The rising
costs associated with increasingly stringent industry regulations have tended to
promote consolidation and acquisition activity within the industry.
The Company believes that these trends will continue and are the result of
several factors:
(1) Subtitle D and similar state regulations have significantly increased
the amount of capital and technical expertise required to own and
operate a landfill. As a result, many landfill operators that lack the
necessary capital or expertise are electing to sell their landfills as
an alternative to closing them;
(2) a number of municipalities are electing to privatize their municipal
landfills as an alternative to funding the changes to such landfills
required by Subtitle D and related state regulations; and
(3) as a result of heightened sensitivity to environmental conditions in
many communities, it is becoming increasingly desirable for solid
waste management companies to provide waste recycling programs in
addition to conventional collection and disposal services.
These developments, as well as more stringent bonding requirements being
imposed on solid waste management companies by various municipalities, have
increased the amount of capital generally required for solid waste management
operations, causing smaller companies that lack the requisite capital to sell
their operations to better-capitalized companies.
BUSINESS STRATEGY
The Company's business strategy is to build a vertically-integrated solid
waste management company with a strong presence in specific markets. The Company
implements this strategy by (i) establishing a market presence generally based
on the acquisition or development of a landfill; (ii) increasing volume in its
markets through "tuck-in" acquisitions of collection companies and marketing to
new customers; (iii) providing a high level of customer service; (iv)
competitively pricing its services based on the particular circumstances of each
market; and (v) continuing to control costs and reduce corporate overhead as a
percentage of revenues. The Company believes that its strategy to build
vertically-integrated operations will provide the Company with competitive
advantages in its targeted regional markets.
The Company pursues acquisitions in geographic areas characterized by one
or more of the following criteria: (i) the availability of permitted and
underutilized landfill capacity located either close to or outside of, but
within economic range of, a major population center, (ii) disposal fees that
justify necessary transportation expenses, (iii) near- or medium-term scheduled
closures of landfills near such a population center, (iv) a shift in landfill
ownership from public to private and (v) rural landfills that are likely to
provide opportunities in a local market.
The Company has adopted the following four-step program in executing its
business strategy:
(1) Landfill Acquisitions. Once the Company identifies an area that
qualifies under its target market criteria, the Company seeks to
establish a market presence, generally by acquiring one or more
landfills in that area that can be accessed economically from the
metropolitan center or from the regional market area, either through
direct hauling or through strategically located transfer operations.
In evaluating a landfill acquisition, the Company considers, among
others, the following
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factors: (i) current disposal costs together with transportation costs
to the targeted landfill relative to transportation and disposal costs
of potential competitors, (ii) landfill capacity, (iii) opportunities
for landfill expansion, and (iv) projected short-term ability to
secure an acceptable level of disposal volume.
(2) Secure Captive Waste Volumes. The Company seeks to build a market
presence and increase the utilization of the landfill by securing
captive waste streams, which includes developing and acquiring
transfer stations, entering into waste collection contracts and
acquiring waste collection companies. Generally, the Company pursues
the acquisition of collection companies that: (i) have
well-established residential or commercial collection routes and
accounts, (ii) own and operate transfer stations, or (iii) do not own
landfills and are vulnerable to volatile disposal pricing, which the
Company believes it can minimize through landfill ownership.
(3) "Tuck-in" Acquisitions. The Company acquires service rights,
obligations, machinery and equipment in "tuck-in" acquisitions of
collection companies to: (i) increase the waste stream directed to its
landfills, (ii) maximize its market presence, and (iii) increase
customer density on collection routes to reduce operating costs and
strengthen return on capital.
(4) Integration of Operations. Immediately following an acquisition, the
Company begins to integrate the acquired company into its operating
and control systems, internalizing waste previously disposed at third
party landfills to facilities owned or operated by the Company,
establishing an operating plan, implementing the Company's operating
policies and procedures, including the consolidation and
rationalization of routes and pricing, establishing new banking and
cash control procedures, integrating the acquired company's
accounting, data processing and management reporting systems and
appointing a new board of directors. In many acquisitions, the Company
retains the management of the company it acquires in order to benefit
from the existing management's understanding of the local market,
personal and business contacts, and goodwill in the community.
OPERATIONS
COLLECTION. Collection operations involve collecting and transporting
non-hazardous waste from the point of generation to the transfer station or the
site of disposal. Solid waste collection is generally provided under two primary
types of arrangements, depending on the customer being served.
Commercial. The Company provides containerized non-hazardous solid
waste disposal services to a wide variety of commercial and industrial
customers. These customers are provided with containers that are designed
to be lifted mechanically and either emptied into a collection vehicle's
compaction hopper or, in the case of roll-off containers, to be loaded onto
the collection vehicle. The Company's commercial containers generally range
in size from one to eight cubic yards and its roll-off containers generally
range in size from 20 to 40 cubic yards. Contracts for commercial
containers typically have terms of up to five years, may not be terminated
by the customer prior to the end of the term and have renewal options.
Contracts for roll-off containers may provide for temporary (such as the
removal of waste from a construction site) or ongoing services. Fees
relating to those contracts are determined by general competitive and
prevailing local economic conditions and include other considerations such
as collection frequency, type of equipment furnished, distance traveled to
the disposal site, the cost of disposal and the type and volume or weight
of the waste collected.
Residential. Residential collection services are performed pursuant
to individual monthly subscriptions directly to households or long-term
contracts with municipal governments that give the Company exclusive rights
to service all or a portion of the homes in such municipalities at
established rates. The Company seeks to obtain municipal contracts which
enhance the efficiency and profitability of the Company's operations as a
result of the density of collection customers within a given area. At the
end of the term of most municipal contracts, the Company will attempt to
renegotiate the contract, and if unable to do so, will rebid the contract
on a sealed bid basis. Residential collection service arrangements with
households are made directly between the Company and the resident. The
Company seeks to enter into
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residential service arrangements where the route density is high, thereby
creating additional economic benefit. Collection fees are determined by the
Company and the customer based on general competitive and prevailing local
economic conditions and include other considerations such as collection
frequency, the type and volume or weight of the waste collected, the
distance to the disposal facility, and cost of disposal. Residential
collection fees are either paid by the municipalities out of tax revenues
or service charges or are paid directly by the residents who receive the
service.
TRANSFER STATIONS. A transfer station is a facility where solid waste is
received from third-party and Company owned collection vehicles and then
transferred to and compacted in large, specially-constructed trailers for
transportation to disposal facilities. This consolidation reduces costs by
increasing the density of the waste being transported and by improving
utilization of collection personnel and equipment, and is an increasingly common
procedure in the solid waste management industry. Fees are generally based upon
such factors as the type and volume or weight of the waste transferred and the
transport distance involved. The Company believes that as increased regulations
and public pressure restrict the development of landfills in urban and suburban
areas, transfer stations will increasingly be used as an efficient means to
transport waste over longer distances to available landfills.
RECYCLING. In response to increasing awareness by the customer of
environmental concerns and expanding federal and state regulations pertaining to
waste recycling, the Company includes recycling as a component of its vertically
integrated solid waste business strategy. Services include curbside collection
of recyclable materials for residential customers, commercial and industrial
collection of recyclable materials, and, to a lesser extent, material
recovery/waste reduction. Recycling fees are generally service based wherein the
customer pays for the cost of removing, processing and disposing of potentially
recyclable materials. In most cases, mixed waste materials are received at an
owned or leased materials recovery facility which is often integrated into or
contiguous to a transfer operation. Materials such as paper, cardboard, plastic,
aluminum and other metals are sorted, separated, accumulated, bound or placed in
a container and readied for transportation to a third-party which will reuse the
separated materials. The purchaser generally pays for the materials based on
fluctuating spot-market prices. Material for which there is no market or for
which the market price is insufficient to warrant processing are disposed of at
a landfill or other disposal facility. The Company seeks to avoid exposure to
fluctuating commodity prices by passing through substantially all of the profit
or loss from the sale of recyclables to its service customers.
LANDFILLS. Landfills are the primary method of disposal of solid waste in
the United States. Currently, a landfill must be designed, permitted, operated
and closed in compliance with federal, state and local regulations pursuant to
Subtitle D. Operating procedures include excavation, continuous spreading and
compacting of waste, and covering of waste with earth or other inert material.
The cost of transferring solid waste to a disposal location places an economic
restriction on the geographic scope of landfill operations in a particular
market. Access to a disposal facility, such as a landfill, is a requirement for
all solid waste management companies. While access can generally be obtained to
disposal facilities owned or operated by unaffiliated parties, the Company
believes that, in keeping with its business strategy, it is preferable for
collection companies to own or operate their own disposal facilities thereby
ensuring access on favorable terms and the internalization of disposal fees.
MARKETING AND SALES
Each of the Company's districts has a staff responsible for sales and
marketing. The Company's policy is to periodically visit each commercial account
to ensure customer satisfaction and to sell additional services. In addition to
calling on existing customers, each salesperson calls upon potential customers
within a defined area in each market.
In addition to its sales efforts directed at commercial and industrial
customers, the Company has a municipal marketing coordinator in most service
areas. The municipal marketing coordinators are responsible for interfacing with
each municipality or community to which the Company provides residential service
to assure customer satisfaction. In addition, the municipal coordinators
organize and handle bids for renewal and new municipal contracts in their
service area.
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COMPETITION
The industry is comprised of four national waste companies in addition to
the Company: WMX Technologies, Inc., Browning-Ferris Industries, Inc. ("BFI"),
Republic Industries, Inc., USA Waste Services, Inc., and local and regional
companies of varying sizes and competitive resources such as Waste Industries,
Inc. and Superior Services, Inc. The Company also competes with those counties
and municipalities that maintain their own waste collection or disposal
operations. These counties and municipalities may have financial advantages
through their access to tax revenues and tax-exempt financing and their ability
to mandate the disposal of waste collected within the jurisdiction at a
municipal landfill. The Company may also experience competition from companies
using alternative methods of managing solid waste streams, such as incineration.
The solid waste collection and disposal industry is currently undergoing
significant consolidation, and the Company encounters competition in its efforts
to acquire landfills and collection operations.
Accordingly, it may become uneconomical for the Company to make further
acquisitions or the Company may be unable to locate or acquire suitable
acquisition candidates at price levels and on terms and conditions that the
Company considers appropriate, particularly in markets the Company does not
already serve.
ENVIRONMENTAL AND OTHER REGULATIONS
The Company is subject to extensive and evolving environmental laws and
regulations. These regulations are administered by the EPA and various other
federal, state and local environmental, zoning, health and safety agencies, many
of which periodically examine the Company's operations to monitor compliance
with such laws and regulations. The Company believes that there will be
increased regulation and legislation related to the waste management industry
and the Company attempts to anticipate such future regulatory requirements to
ensure compliance.
The Company's operation of landfills subjects it to certain operational,
monitoring, site maintenance, closure, post-closure and other obligations which
could give rise to increased costs for monitoring and corrective measures. In
connection with the Company's acquisition of existing landfills, it is often
necessary to expend considerable time, effort and money to obtain permits
required to increase the capacity of these landfills. Governmental authorities
have the power to enforce compliance with these regulations and to obtain
injunctions or impose civil or criminal penalties in case of violations. The
Company cannot predict whether or not it will be able to obtain the governmental
approvals necessary to establish new or expand existing landfills and, if it
does, whether or not it will be economically beneficial to do so.
The Company's operations are subject to extensive regulation, principally
under the following federal statutes:
The Resource Conservation and Recovery Act of 1976, as amended. RCRA
regulates the handling, transportation and disposal of hazardous and
non-hazardous wastes and delegates authority to states to develop programs to
ensure the safe disposal of solid wastes. On October 9, 1991, the EPA
promulgated Solid Waste Disposal Facility Criteria for non-hazardous solid waste
landfills under Subtitle D. Subtitle D includes location standards, facility
design and operating criteria, closure and post-closure requirements, financial
assurance standards and groundwater monitoring as well as corrective action
standards, many of which had not commonly been in place or enforced previously
at landfills. Subtitle D applies to all solid waste landfill cells that received
waste after October 9, 1991, and, with limited exceptions, all landfills were
required to meet these requirements by October 9, 1993. Landfills that were not
in compliance with the requirements of Subtitle D on the applicable date of
implementation were required to close. In addition, landfills that stopped
receiving waste before October 9, 1993 were not required to comply with the
final cover provisions of Subtitle D. Each state must comply with Subtitle D and
was required to submit a permit program designed to implement Subtitle D to the
EPA for approval by April 9, 1993. States may impose requirements for landfill
units that are more stringent than the requirements of Subtitle D. Once a state
has an approved program, it must review all existing landfill permits to ensure
that they comply with Subtitle D.
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The Federal Water Pollution Control Act of 1972, as amended (the "Clean
Water Act"). This act establishes rules regulating the discharge of pollutants
into streams and other waters of the United States (as defined in the Clean
Water Act) from a variety of sources, including solid waste disposal sites. If
runoff from the Company's landfills or transfer stations may be discharged into
surface waters, the Clean Water Act requires the Company to apply for and obtain
discharge permits, conduct sampling and monitoring and, under certain
circumstances, reduce the quantity of pollutants in those discharges. The permit
program has been expanded to include stormwater discharges from landfills that
receive, or in the past received, industrial waste. In addition, if development
may alter or affect "wetlands," a permit may have to be obtained and certain
mitigation measures may need to be undertaken before such development may be
commenced. This requirement is likely to affect the construction or expansion of
many solid waste disposal sites, including some owned or being developed by the
Company. The Clean Water Act provides civil, criminal and administrative
penalties for violations of its provisions.
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended. CERCLA addresses problems created by the release or threatened
release of hazardous substances into the environment. CERCLA's primary mechanism
for remediating such problems is to impose strict, joint and several liability
for cleanup of disposal sites on current owners and operators of the site,
former site owners and operators at the time of disposal, and waste generators
and parties who arranged for disposal at the facility. The costs of a CERCLA
cleanup can be substantial. Liability under CERCLA is not dependent on the
existence or disposal of "hazardous wastes" (as defined under RCRA), but can
also be founded on the existence of even minute amounts of the more than 700
"hazardous substances" listed by the EPA.
The Clean Air Act of 1970, as amended (the "Clean Air Act"). The Clean Air
Act provides for increased federal, state and local regulation of the emission
of air pollutants. The EPA has construed the Clean Air Act to apply to
landfills. In March 1996, the EPA adopted New Source Performance Standard and
Emission Guidelines (the "Emission Guidelines") for municipal solid waste
landfills. The Emission Guidelines impose limits on air emissions from solid
waste landfills. The Emission Guidelines propose two sets of emissions
standards, one of which is applicable to all solid waste landfills that commence
construction, reconstruction or modification after May 30, 1991 and another
which is applicable to all solid waste landfills that received waste or had the
capacity to receive waste after November 8, 1987. The Emission Guidelines may be
implemented by the states. These guidelines, combined with the new permitting
programs established under the recent Clean Air Act amendments, will likely
subject solid waste landfills to significant new permitting requirements and, in
some instances, require installation of methane gas recovery systems.
The Occupational Safety and Health Act of 1970, as amended ("OSHA"). OSHA
establishes certain employer responsibilities, including maintenance of a
workplace free of recognized hazards likely to cause death or serious injury,
compliance with standards promulgated by the Occupational Safety and Health
Administration, and various recordkeeping, disclosure and procedural
requirements. Various standards, including standards for notices of hazards,
safety in excavation and demolition work, and the handling of asbestos, may
apply to the Company's operations.
Future Federal Legislation. In the future, the Company's collection,
transfer and landfill operations may also be affected by legislation that may be
proposed in the United States Congress that would authorize the states to enact
legislation governing interstate shipments of waste. Such proposed federal
legislation may allow individual states to prohibit the disposal of out-of-state
waste or to limit the amount of out-of-state waste that could be imported for
disposal and would require states, under certain circumstances, to reduce the
amounts of waste exported to other states. If this or similar legislation is
enacted, states in which the Company will operate landfills could act to limit
or prohibit the importation of out-of-state waste. Such state actions could
adversely affect landfills within these states that receive a significant
portion of waste originating from out-of-state.
State Regulation. Each state in which the Company operates has laws and
regulations governing solid waste disposal, water and air pollution and
remediation, and, in most cases, the design, operation, maintenance and closure
of landfills and transfer stations. Management believes that several states have
proposed or have considered adopting legislation that would regulate the
interstate transportation and disposal of waste in their
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landfills. Many states have also adopted legislative and regulatory measures to
mandate or encourage waste reduction at the source and waste recycling.
The Company's collection and landfill operations may be affected by the
current trend toward laws requiring the development of waste reduction and
recycling programs. For example, a number of states have recently enacted laws
that will require counties to adopt comprehensive plans to reduce, through waste
planning, composting and recycling or other programs, the volume of solid waste
deposited in landfills within the next few years. A number of states have also
taken or propose to take steps to ban or otherwise limit the disposal of certain
wastes, such as yard wastes, beverage containers, newspapers, unshredded tires,
lead-acid batteries and household appliances into landfills.
The Company has implemented and will continue to implement its own
environmental safeguards that comply with or exceed governmental requirements.
Additionally, the Company's policy will be to obtain an environmental assessment
prepared by an independent environmental consulting firm for all real estate it
acquires.
LIABILITY INSURANCE AND BONDING
The Company carries general liability, comprehensive property damage,
workers' compensation, employer's liability, directors' and officers' liability
and other coverages it believes are customary to the industry. The Company also
has environmental impairment liability insurance for all of its operating
landfills except one owned and four operated sites. The environmental impairment
liability insurance is in the amount of up to $5 million for the policy term in
excess of a $1 million deductible per claim. Except as discussed in "-- Legal
Proceedings" below, management does not expect the impact of any known
environmental or other contingencies to be material to the Company's
consolidated liquidity, financial position or results of operations.
The Company is required to provide certain financial assurances to
governmental agencies under applicable environmental regulations relating to its
landfill and collection operations. These financial assurances include
performance bonds, letters of credit, insurance policies and trust deposits
required principally to secure the Company's estimated landfill closure and
post-closure obligations and collection contracts. The Company expects to be
required to provide approximately $227.6 million in financial assurance
obligations relating to its landfill operations during 1997. The Company expects
that financial assurances will increase in the future as the Company acquires
and expands its activities and that a greater percentage of the financial
assurances will be comprised, directly and indirectly, of letters of credit.
EMPLOYEES
As of March 31, 1997, the Company employed approximately 5,000 persons.
Certain employees of the Company are covered by collective bargaining
agreements. The Company believes relations with its employees are satisfactory.
PROPERTIES
The Company's principal executive offices are located at 15880 North
Greenway-Hayden Loop, Suite 100, Scottsdale, Arizona 85260 where it currently
leases 33,000 square feet of office space. The Company also maintains six
regional administrative offices in the United States.
The principal fixed assets used by the Company in its collection and
transfer operations are 41 transfer stations, 56 landfills and 20 recycling
facilities.
LEGAL PROCEEDINGS
The Company is currently involved in certain routine litigation. The
Company believes that all such litigation arose in the ordinary course of
business and that costs of settlements or judgments arising from such suits will
not have a materially adverse effect on the Company's consolidated liquidity
financial position or results of operations.
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The business of the Company is regulated by federal, state and local
provisions that relate to the protection of the environment. The nature of the
Company's business results in it frequently becoming a party to judicial or
administrative proceedings involving governmental authorities and other
interested parties. At May 31, 1997, the Company was not involved in any such
proceedings where management believes sanctions imposed by governmental
authorities may exceed $100,000. From time to time the Company may also be
subject to actions brought by citizens' groups, adjacent landowners or others in
connection with the permitting and licensing of its landfills or transfer
stations, or alleging personal injury, environmental damage or violations of the
permits and licenses pursuant to which the Company operates.
In connection with the Laidlaw Acquisition, the Company engaged Emcon to
assist in conducting an environmental assessment of the real property owned by
the LSW Subsidiaries or third-parties, and properties under the management of
the LSW Subsidiaries. Several contaminated landfills and other properties have
been identified, two of which are owned by subsidiaries of the Company, that
would require those subsidiaries to incur costs for incremental closure and
post-closure measures, remediation activities and litigation costs in the
future. The cost of performing the investigation, design, remediation and
allocation of responsibility to the subsidiaries of the Company vary
significantly between sites. Based on information available to the Company,
Allied recorded a provision of $51.5 million for environmental matters,
including closure and post-closure costs, in the 1996 statement of operations
and expects these amounts to be disbursed over the next 30 years.
The Company has been notified that it is considered a potentially
responsible party at a number of locations under CERCLA or other environmental
laws. The Company continually reviews its status with respect to each location,
taking into account the alleged connection to the location and the extent of the
contribution to the volume of waste at the location, the available evidence
connecting the entity to that location and the numbers and financial soundness
of other potentially responsible parties at the location. The ultimate amounts
for environmental liabilities at sites regarding which the Company may be a
potentially responsible party cannot be determined and estimates of such
liabilities made by the Company, after consultation with its independent
environmental engineers, require assumptions about future events due to a number
of uncertainties including the extent of the contamination, the appropriate
remedy, the financial viability of other potentially responsible parties and the
final apportionment of responsibility among the potentially responsible parties.
Where the Company has concluded that its estimated share of potential
liabilities is probable, a provision has been made in the consolidated financial
statements. Since the ultimate outcome of these matters may differ from the
estimates used in the Company's assessment to date, the recorded liabilities
will be periodically evaluated as additional information becomes available to
ascertain that the accrued liabilities are adequate. The Company has determined
that the recorded liability for environmental matters as of December 31, 1996 of
approximately $152.5 million (including the $51.5 million provision charged to
the 1996 statement of operations) represents the most probable outcome of these
contingent matters. The Company does not expect that adjustments to estimates,
which are reasonably possible in the near term and that may result in changes to
recorded amounts, will have a material effect on the Company's consolidated
liquidity, financial position or results of operations.
The consolidated federal income tax returns for the fiscal years ended
August 31, 1986, 1987 and 1988 of certain subsidiaries of the Company that were
acquired from Laidlaw in December 1996 have been under audit by the IRS. In
March 1994, the LSW U.S. Subsidiaries received a Statutory Notice of Deficiency
proposing that the LSW U.S. Subsidiaries pay additional taxes relating to the
Tax Controversy. The consolidated tax group of the LSW U.S. Subsidiaries has
also received notice that fiscal years 1992, 1993 and 1994 will be examined
regarding the Tax Controversy. The LSW U.S. Subsidiaries could be directly
liable for a substantial portion of any tax and interest assessed if the
disallowance of the deduction is sustained. In addition, under Treasury
Regulations promulgated under Section 1502 of the IRC, each member of the
consolidated tax group including each LSW U.S. Subsidiary, is or could be
severally liable for federal income tax liabilities of the entire consolidated
tax group, including any taxes due on the deemed sale of assets by the LSW U.S.
Subsidiaries pursuant to Section 338 of the IRC and all amounts at issue in the
Tax Controversy which are ultimately determined to be owed.
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Any amounts at issue in the Tax Controversy and for which any LSW U.S.
Subsidiary may ultimately be found liable, are included in and covered by the
indemnification of the Company by Laidlaw set forth in the Laidlaw Acquisition
Agreement. The obligation of Laidlaw to indemnify the Company in respect of
amounts at issue in the Tax Controversy is a general, unsecured obligation of
Laidlaw. The ability of Laidlaw to pay and fulfill such indemnification
obligation will depend on the financial condition of Laidlaw at the time of any
required performance of such obligation.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Notes were sold by the Company on May 15, 1997, and were subsequently
resold to qualified institutional buyers pursuant to Rule 144A under the
Securities Act and to certain persons in transactions outside the United States
in reliance on Regulation S under the Securities Act. In connection with the
Note Offering, the Company entered into the Registration Rights Agreement, which
requires, among other things, that on or before July 14, 1997, the Company (i)
file with the Commission a registration statement under the Securities Act with
respect to an issue of new notes of the Company identical in all material
respects to the Notes, (ii) use their best efforts to cause such registration
statement to become effective under the Securities Act and (iii) upon the
effectiveness of that registration statement, offer to the Holders of the Notes
the opportunity to exchange their Notes for a like principal amount of Exchange
Notes, which would be issued without a restrictive legend and may be reoffered
and resold by the holder without restrictions or limitations under the
Securities Act (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act). A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The term "Holder" with respect to
the Exchange Offer means any person in whose name the Notes are registered on
the books of the Company or any other person who has obtained a properly
completed bond power from the registered holder.
Because the Exchange Offer is for any and all Notes, the number of Notes
tendered and exchanged in the Exchange Offer will reduce the principal amount of
Notes outstanding. Following the consummation of the Exchange Offer, Holders of
the Notes who did not tender their Notes generally will not have any further
registration rights under the Registration Rights Agreement, and such Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for such Notes could be adversely affected. The Notes
are currently eligible for sale pursuant to Rule 144A through the PORTAL System
of the National Association of Securities Dealers, Inc. Because the Company
anticipates that most holders of Notes will elect to exchange such Notes for
Exchange Notes due to the absence of restrictions on the resale of Exchange
Notes under the Securities Act, the Company anticipates that the liquidity of
the market for any Notes remaining after the consummation of the Exchange Offer
may be substantially limited.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Notes
validly tendered and not withdrawn prior to 5:00 p.m. New York City time, on the
Expiration Date. The Company will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Notes accepted
in the Exchange Offer. Holders may tender some or all of their Notes pursuant to
the Exchange Offer. However, Notes may be tendered only in integral multiples of
$1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes except that (i) the Exchange Notes have been registered under the
Securities Act and hence will not bear legends restricting the transfer thereof
and (ii) the holders of the Exchange Notes generally will not be entitled to
certain rights under the Registration Rights Agreement, which rights generally
will terminate upon consummation of the Exchange Offer. The Exchange Notes will
evidence the same debt as the Notes and will be entitled to the benefits of the
Indenture.
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Holders of Notes do not have any appraisal or dissenter's rights under the
General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder, including Rule 14e-1 thereunder.
The Company shall be deemed to have accepted validly tendered Notes when,
as and if the Company has given oral or written notice thereof to the Exchange
Agent. The Exchange Agent will act as agent for the tendering Holders for the
purpose of receiving the Exchange Notes from the Company.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
To extend the Exchange Offer, the Company will notify the Exchange Agent of
any extension by oral or written notice, followed by a public announcement
thereof no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
The Company reserves the right, in its reasonable judgment, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by a public announcement
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered Holders, and, depending upon the significance of the amendment and
the manner of disclosure to the registered Holders, the Company will extend the
Exchange Offer for a period of five to ten business days if the Exchange Offer
would otherwise expire during such five to ten business-day period.
If the Company does not consummate the Exchange Offer, or, in lieu thereof,
the Company does not file and cause to become effective the Shelf Registration
Statement within the time periods set forth herein, liquidated damages will
accrue and be payable on the Notes either temporarily or permanently. See
"Description of Exchange Notes -- Registration Rights."
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
PROCEDURES FOR TENDERING
Only a Holder of Notes may tender such Notes in the Exchange Offer. To
tender in the Exchange Offer, a Holder must complete, sign and date the Letter
of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed
if required by the Letter of Transmittal and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Notes and any other
required documents, to the Exchange
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<PAGE> 29
Agent so as to be received by the Exchange Agent at the address set forth below
prior to 5:00 p.m., New York City time, on the Expiration Date. Delivery of the
Notes may be made by book-entry transfer in accordance with the procedures
described below. Confirmation of such book-entry transfer must be received by
the Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each Holder will make to the
Company the representation set forth below in the second paragraph under the
heading "-- Resale of Exchange Notes."
The tender by a Holder and the acceptance thereof by the Company will
constitute an agreement between such Holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered Holder promptly and instruct such registered
Holder to tender on such beneficial owner's behalf.
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined herein)
unless the Notes tendered pursuant thereto are tendered (i) by a registered
Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Notes listed therein, such Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered Holder
as such registered Holder's name appears on such Notes with the signature
thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or
any Notes or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and unless waived by the Company, evidence satisfactory to the Company
of their authority to so act must be submitted with the Letter of Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Notes at the Depository for the purpose of facilitating the Exchange Offer,
and subject to the establishment thereof, any financial institution that is a
participant in the Depository's system may make book-entry delivery of the Notes
by causing the Depository to transfer such Notes into the Exchange Agent's
account with respect to the Notes in accordance with the Depository's procedures
for such transfer. Although delivery of the Notes may be effected through
book-entry transfer into the Exchange Agent's account at the Depository, an
appropriate Letter of Transmittal properly completed and duly executed with any
required signature guarantee and all other required documents must in each case
be transmitted to and received or confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures. Delivery of documents to the Depository does not
constitute delivery to the Exchange Agent.
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<PAGE> 30
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Notes not properly tendered or any Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Notes. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Notes must be cured within such
time as the Company shall determine. Although the Company intends to notify
Holders of defects or irregularities with respect to tenders of Notes, none of
the Company, the Exchange Agent or any other person shall incur any liability
for failure to give such notification. Tenders of Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Notes received by the Exchange Agents that are not properly tendered and as
to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the Holder, the certificate number(s) of such Notes and the
principal amount of Notes tendered, stating that the tender is being made
thereby and guaranteeing that, within three New York Stock Exchange trading days
after the Expiration Date, the Letter of Transmittal (or facsimile thereof),
together with the certificate(s) representing the Notes (or a confirmation of
book-entry transfer of such Notes into the Exchange Agent's account at the
Depository) and any other documents required by the Letter of Transmittal, will
be deposited by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer of
such Notes into the Exchange Agent's account at the Depository) and all other
documents required by the Letter of Transmittal, are received by the Exchange
Agent within three New York Stock Exchange trading days after the Expiration
Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWALS OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the Exchange Agent at its
address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Notes to be withdrawn (the "Depositor"), (ii)
identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes, or, in the case of notes transferred by
book-entry transfer, the name and number of the account at the Depository to be
credited), (iii) be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal by which such Notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer
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<PAGE> 31
sufficient to have the Trustee with respect to the Notes register the transfer
of such Notes into the name of the person withdrawing the tender and (iv)
specify the name in which any such Notes are to be registered, if different from
that of the Depositor. All questions as to the validity, form and eligibility
(including time or receipt) of such notices will be determined by the Company,
whose determination shall be final and binding on all parties. Any Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Notes so withdrawn are validly retendered. Any Notes which have been
tendered but which are not accepted for exchange will be returned to the Holder
thereof without cost to such Holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or to exchange Exchange Notes for, any
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Notes, if:
(a) any law, statute, rule, regulation or interpretation by the staff of
the Commission is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company to
proceed with the Exchange Offer or materially impair the contemplated benefits
of the Exchange Offer to the Company; or
(b) any governmental approval has not been obtained, which approval the
Company shall, in its reasonable judgment, deem necessary for the consummation
of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable judgment that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Notes and
return all tendered Notes to the tendering Holders, (ii) extend the Exchange
Offer and retain all Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of Holders to withdraw such Notes (see
"-- Withdrawals of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Notes which have
not been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered Holders, and, depending
upon the significance of the waiver and the manner of disclosure to the
registered Holders, the Company will extend the Exchange Offer for a period of
five to ten business days if the Exchange Offer would otherwise expire during
such five to ten business-day period.
EXCHANGE AGENT
First Bank National Association will act as Exchange Agent for the Exchange
Offer.
Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal for the Notes and requests for
copies of Notice of Guaranteed Delivery should be directed to the Exchange
Agent, addressed as follows:
By mail or delivery service:
First Bank National Association
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: David Hauger
By hand delivery:
First Bank National Association
First Trust Center
Fourth Floor -- Bond Drop Window
180 Fifth Street
St. Paul, Minnesota 55101
Attn: David Hauger
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By facsimile (eligible institutions only):
(612) 244-1537
For telephone inquiries:
(612) 244-1197
FEES AND EXPENSES
The expenses of the Exchange Offer will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone, facsimile or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith and pay
other registration expenses, including fees and expenses of the Trustee, filing
fees, blue sky fees and printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Notes pursuant to the Exchange Offer. If, however, certificates
representing the Exchange Notes or the Notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Notes tendered, or if
tendered Notes are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the exchange of the Notes pursuant to the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered Holder
or any other person) will be payable by the tendering Holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Notes, as reflected in the Company's accounting records on the date of exchange.
Accordingly, no gain or loss for accounting purposes will be recognized in
connection with the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in exchange for Notes may be offered
for resale, resold and otherwise transferred by any Holder of such Exchange
Notes (other than any such Holder which is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such Holder's
business and such Holder does not intend to participate, and has no arrangement
or understanding with any person to participate, in the distribution of such
Exchange Notes. Any Holder who tenders in the Exchange Offer with the intention
to participate, or for the purpose of participating, in a distribution of the
Exchange Notes may not rely on the position of the staff of the Commission
enunciated in Exxon Capital Holdings Corporation (available April 13, 1989) and
Morgan Stanley & Co., Incorporated (available June 5, 1991), or similar no-
action letters, but rather must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction. In addition, any such resale transaction should be covered by an
effective registration statement containing the selling security holders
information required by Item 507 of Regulation S-K of the Securities Act. Each
broker-dealer that receives Exchange Notes for its own account in exchange for
Notes, where such Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, may be a statutory
underwriter and must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes.
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<PAGE> 33
By tendering in the Exchange Offer, each Holder will represent to the
Company that, among other things, (i) the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
person receiving such Exchange Notes, whether or not such person is a Holder,
(ii) neither the Holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and (iii) the Holder and such other person acknowledge that if
they participate in the Exchange Offer for the purpose of distributing the
Exchange Notes (a) they must, in the absence of an exemption therefrom, comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale of the Exchange Notes and cannot rely on the
no-action letters referenced above and (b) failure to comply with such
requirements in such instance could result in such Holder incurring liability
under the Securities Act for which such Holder is not indemnified by the
Company. Further, by tendering in the Exchange Offer, each Holder that may be
deemed an "affiliate" (as defined under Rule 405 of the Securities Act) of the
Company will represent to the Company that such Holder understands and
acknowledges that the Exchange Notes may not be offered for resale, resold or
otherwise transferred by that Holder without registration under the Securities
Act or an exemption therefrom.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the Commission with respect to
resales of the Exchange Notes without compliance with the registration and
prospectus delivery requirements of the Securities Act.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled one of its obligations under the Registration Rights Agreement, and
Holders of Notes who do not tender their Notes generally will not have any
further registration rights under the Registration Rights Agreement or
otherwise. Accordingly, any Holder of Notes that does not exchange that Holder's
Notes for Exchange Notes will continue to hold the untendered Notes and will be
entitled to all the rights and limitations applicable thereto under the
Indenture, except to the extent that such rights or limitations, by their terms,
terminate or cease to have further effectiveness as a result of the Exchange
Offer.
The Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii)
pursuant to an effective registration statement under the Securities Act, (iii)
so long as the Notes are eligible for resale pursuant to Rule 144A, to a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, (iv)
outside the United States to a foreign person pursuant to the exemption from the
registration requirements of the Securities Act provided by Regulation S
thereunder, (v) pursuant to an exemption from registration under the Securities
Act provided by Rule 144 thereunder (if available) or (vi) to an institutional
accredited investor in a transaction exempt from the registration requirements
of the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
OTHER
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. Holders of the Notes are urged to consult
their financial and tax advisors in making their own decision on what action to
take.
The Company may in the future seek to acquire untendered Notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. The Company has no present plans to acquire any Notes that are not
tendered in the Exchange Offer or to file a registration statement to permit
resales of any untendered Notes.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the IRC,
applicable Treasury regulations, judicial authority and administrative rulings
and practice. There can be no assurance that the IRS will not take a contrary
view, and no ruling from the IRS has been or will be sought. Legislative,
judicial or administrative changes or interpretations may be forthcoming that
could alter or modify the statements and conditions set forth herein. Any such
changes or interpretations may or may not be retroactive and could affect the
tax consequences to Holders. Certain Holders of the Notes (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below. Each Holder of a
Note should consult his, her or its own tax advisor as to the particular tax
consequences of exchanging such Holder's Notes for Exchange Notes, including the
applicability and effect of any state, local or foreign tax laws.
The issuance of the Exchange Notes to Holders of the Notes pursuant to the
terms set forth in this Prospectus will not constitute an exchange for federal
income tax purposes. Consequently, no gain or loss would be recognized by
Holders of the Notes upon receipt of the Exchange Notes, and ownership of the
Exchange Notes will be considered a continuation of ownership of the Notes. For
purposes of determining gain or loss upon the subsequent sale or exchange of the
Exchange Notes, a Holder's basis in the Exchange Notes should be the same as
such Holder's basis in the Notes exchanged therefor. A Holder's holding period
for the Exchange Notes should include the Holder's holding period for the Notes
exchanged therefor. The issue price, original issue discount inclusion and other
tax characteristics of the Exchange Notes should be identical to the issue
price, original issue discount inclusion and other tax characteristics of the
Notes exchanged therefor.
See also "Description of Certain Federal Income Tax Consequences of an
Investment in the Exchange Notes."
DESCRIPTION OF CERTAIN INDEBTEDNESS
SENIOR CREDIT FACILITY
Concurrently with the Laidlaw Acquisition, the Company entered into a bank
credit facility (the "1996 Senior Credit Facility") consisting of (i) a $475
million five and one-half year amortizing senior secured term loan facility (the
"1996 Term Loan Facility"), (ii) three amortizing senior secured term loan
facilities (the "1996 Serialized Facilities") in an aggregate original principal
amount of $500 million and with ultimate maturities which ranged from six and
one-half years to eight and one-half years, and (iii) a $300 million five and
one-half year senior secured revolving credit facility. In connection with the
closing of the Canadian Sale, an aggregate amount of approximately $517 million
was applied to prepayment of the 1996 Term Loan Facility and the 1996 Serialized
Facilities.
In June 1997, the Company entered into the Senior Credit Facility providing
for a six and one-half year senior secured $500 million term loan facility (the
"Term Loan Facility") and a six and one-half year senior secured $400 million
revolving credit facility (the "Revolving Credit Facility"). The Term Loan
Facility is an amortizing senior secured term loan with annual amortizations of
principal (payable quarterly) increasing from $10 million in 1997 to $100
million in each of 2000, 2001, 2002 and 2003.
The Company is required to make prepayments on the Senior Credit Facility
under certain circumstances, including upon certain asset sales and issuance of
debt or equity securities. The Company is also required to make prepayments on
the Senior Credit Facility in an amount equal to 50% of the Company's annual
Excess Cash Flow (as defined in the Senior Credit Facility) unless the Company's
Senior Debt Ratio (as defined in the Senior Credit Facility) for the relevant
fiscal year is less than 2.0 to 1.0. These mandatory prepayments will be applied
first, to the Term Loan Facility and second, to the permanent reduction of the
Revolving Credit Facility. In no event, however, will the Revolving Credit
Facility be required to be reduced to an amount less than $300 million in
connection with any such mandatory prepayment.
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The Term Loan Facility and the Revolving Credit Facility bear interest, at
the Company's option, at Credit Suisse's customary base rate or at Credit
Suisse's Eurodollar rate plus, in either case, an agreed upon margin. The
applicable margins above Credit Suisse's customary base rate and Credit Suisse's
Eurodollar rate, at which the Term Loan Facility and the Revolving Credit
Facility bear interest, will be adjusted from time to time pursuant to a
floating performance pricing grid which is based on the Leverage Ratio and
Senior Debt Ratio (as defined in the Senior Credit Facility) applicable for each
testing period. Based upon the floating performance pricing grid, the margin
applicable to base rate loans may vary between .75% (if the Leverage Ratio is
greater than or equal to 4.5 to 1.0) and zero (if the Leverage Ratio is less
than 3.5 to 1.0) and the margin applicable to Eurodollar based loans may vary
between 1.75% (if the Leverage Ratio is greater than or equal to 4.5 to 1.0) and
.75% (if the Leverage Ratio is less than 3.0 to 1.0). If the Senior Debt Ratio
is greater than 2.5 to 1.0, the applicable margin for all loans will be
increased by .25%.
Pursuant to the Revolving Credit Facility, the Company has $400 million of
availability for working capital, letters of credit, and other general corporate
purposes. Not more than $175 million of the Revolving Credit Facility will be
available to support the issuance of letters of credit. All loans under the
Senior Credit Facility must be "Senior Debt" under the indenture related to the
Allied Waste NA Notes. At June 5, 1997, approximately $850 million in loans
could be incurred pursuant to the Senior Credit Facility which would be "Senior
Debt" under the Indenture. As a result, notwithstanding the aggregate amount of
the Revolving Credit Facility at June 5, 1997, the aggregate amount of the
Senior Credit Facility which is available for loans pursuant to the Revolving
Credit Facility is approximately $307 million.
The Senior Credit Facility is guaranteed by each of the Company's present
and future subsidiaries and is secured by all of the stock of the Company's
present and future subsidiaries and by substantially all of the present and
future property and assets of the subsidiaries of the Company and its present
and future subsidiaries.
The Senior Credit Facility contains certain financial covenants, including,
but not limited to, covenants related to cash interest coverage, fixed charge
coverage, Total Debt/EBITDA ratio and a limit upon annual capital expenditures.
In addition, the Senior Credit Facility contains other affirmative and negative
covenants relating to (among other things) liens, payments on other Debt
(including the Exchange Notes), transactions with affiliates, mergers and
acquisitions, sales of assets, leases, guarantees and investments. The Senior
Credit Facility contains customary events of default for highly leveraged
financings.
The Company has entered into interest rate protection agreements in an
amount equal to approximately 46% of the Term Loan Facility.
ALLIED WASTE NA NOTES
Also in connection with the Laidlaw Acquisition, Allied Waste NA issued
$525 million of the Allied Waste NA Notes in a Rule 144A private offering. Net
proceeds from the sale of the Allied Waste NA Notes, after the underwriting
discount and other expenses, were approximately $509 million. The net proceeds
were used to pay a portion of the cash purchase price of the Laidlaw
Acquisition, repay amounts outstanding under the Company's previous $300 million
bank credit facility, fund certain acquisitions and for general corporate
purposes. Allied Waste NA has an obligation to offer fully registered
securities, pursuant to an exchange offer, that are substantially identical to
the Allied Waste NA Notes. If Allied Waste NA fails to effect an exchange offer,
or if the registration statement relating to the exchange offer shall be
withdrawn by Allied Waste NA before certain dates, Allied Waste NA will be
subject to penalty interest in varying amounts ranging from 0.25% to 1.0% per
annum on the principal amount thereof as liquidated damages to the holders of
the Allied Waste NA Notes. On June 23, 1997, Allied Waste NA commenced the
required exchange offer, which is scheduled to expire on July 23, 1997.
The Allied Waste NA Notes cannot be redeemed until December 1, 2001, except
under certain circumstances. Prior to December 1, 2001, the Allied Waste NA
Notes are subject to redemption, at the option of Allied Waste NA, at the
greater of (i) 100% of the principal amount or (ii) the sum of the present
values of the remaining scheduled payments of principal and interest thereon
discounted to maturity on a semiannual basis at a comparable treasury yield plus
75 basis points, plus in each case accrued and unpaid
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interest to the date of redemption. At any time prior to December 1, 1999, up to
33% of principal amount of Allied Waste NA Notes will be redeemable, at the
option of Allied Waste NA, from the proceeds of one or more public offerings of
capital stock by the Company at a redemption price of 110.25% of principal
amount, plus accrued interest. The Allied Waste NA Notes are guaranteed by the
Company and substantially all of Allied Waste NA's subsidiaries, the guarantees
of which are expressly subordinated to the guarantees of the Senior Credit
Facility. The Allied Waste NA Notes contain several covenants, the most
restrictive of which limits Allied Waste NA and its subsidiaries' ability to
incur additional indebtedness without complying with an interest coverage ratio
test. Other covenants contain limitations on payment of dividends except for
certain preferred stock, issuance of redeemable preferred stock, transactions
with affiliates, granting of liens and security interests, sales of assets and
the use of proceeds from sales of assets, mergers and consolidations, and
changes of control. The covenants do permit Allied Waste NA to incur certain
indebtedness, including indebtedness under the Senior Credit Facility,
indebtedness issued and/or assumed in permitted acquisitions and other
indebtedness which is limited to a certain percentage of Allied Waste NA's total
assets.
DESCRIPTION OF THE EXCHANGE NOTES
The Exchange Notes will be issued pursuant to an indenture, to be dated as
of May 15, 1997 (the "Indenture"), between the Company and First Bank National
Association, as trustee (the "Trustee").
The Indenture is by its terms subject to and governed by the Trust
Indenture Act of 1939, as amended. The statements under this caption relating to
the Exchange Notes and the Indenture are summaries and do not purport to be
complete, and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indenture, including the definitions therein of
certain terms. Wherever defined terms or particular sections of the Indenture
are referred to, such defined terms and sections are incorporated herein by
reference. Copies of the Indenture, the Collateral Agreement (if necessary) and
the Registration Rights Agreement referred to below (see "-- Collateral
Agreement; Special Mandatory Redemption" and "-- Registration Covenant; Exchange
Offer") are available at the corporate trust office of the Trustee. All
references in this section to the "Company" refer solely to Allied Waste
Industries, Inc., the issuer of the Exchange Notes, and all references in this
section to "Allied Waste NA" refer solely to Allied Waste North America, Inc.,
and not to their respective subsidiaries.
GENERAL
The Exchange Notes will be unsecured senior obligations of the Company,
will be limited to $418.0 million aggregate principal amount and will mature on
June 1, 2007.
The Exchange Notes are effectively subordinated to all existing and future
indebtedness and other liabilities (including trade payables and capital lease
obligations) of the Company's subsidiaries. As of March 31, 1997, the Exchange
Notes will be effectively subordinated to approximately $583.1 million of debt
of the Company's subsidiaries. See "Risk Factors -- Holding Company Structure;
Structural Subordination." In addition, subject to certain financial tests, the
Company's Restricted Subsidiaries may from time to time hereafter incur
additional Debt, including under the Senior Credit Facility, to which the
Exchange Notes would be effectively subordinated. See "Certain
Covenants -- Limitation on Debt of the Company and Certain of its Restricted
Subsidiaries" and "-- Limitation on Debt of Allied Waste NA and its Restricted
Subsidiaries."
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided. (Section 101).
"Accreted Value" means, as of any date prior to June 1, 2002, an amount per
$1,000 principal amount at maturity of Notes that is equal to the sum of (a) the
initial offering price ($574.36 per $1,000 principal amount at maturity of
Notes) of such Notes and (b) the portion of the excess of the principal amount
of such
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Notes over such initial offering price which shall have been amortized through
such date, such amount to be so amortized on a daily basis and compounded
semi-annually on each June 1 and December 1 at the rate of 11.30% per annum from
the date of original issue of the Notes through the date of determination
computed on the basis of a 360-day year of twelve 30-day months and as of any
date on or after June 1, 2002, the principal amount of each Note.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Allied Canada Debentures" means the Zero Coupon Junior Subordinated
Debenture of Allied Canada and the 7% Junior Subordinated Debenture of Allied
Canada issued to Laidlaw in connection with the Acquisition and subsequently
transferred by Laidlaw to Allied Finance.
"Allied Insurance" means Allied Insurance and Indemnity Corporation, a
Vermont corporation and a Subsidiary of the Company, engaged solely in the
business of issuing insurance policies with respect to the closure and
post-closure financial assurance obligations of the Company and its Restricted
Subsidiaries.
"Asset Disposition" by any Person that is the Company or any Restricted
Subsidiary means any transfer, conveyance, sale, lease or other disposition by
the Company or any of its Restricted Subsidiaries (including a consolidation or
merger or other sale of any Restricted Subsidiary with, into or to another
Person in a transaction in which such Subsidiary ceases to be a Restricted
Subsidiary), of (i) shares of Capital Stock (other than directors' qualifying
shares) or other ownership interests of a Restricted Subsidiary, (ii) the
property or assets of such Person or any Restricted Subsidiary representing a
division or line of business or (iii) other assets or rights of such Person or
any Restricted Subsidiary outside of the ordinary course of business, but
excluding in each case in Clauses (i), (ii) and (iii), (x) a disposition by a
Subsidiary of such Person to such Person or a Wholly Owned Restricted Subsidiary
or by such Person to a Wholly Owned Restricted Subsidiary, (y) the disposition
of all or substantially all of the assets of the Company in a manner permitted
pursuant to the provisions described above under "Mergers, Consolidations and
Certain Sales and Purchases of Assets" and (z) any disposition that constitutes
a Restricted Payment or Permitted Investment that is permitted pursuant to the
provisions described under "Certain Covenants -- Limitation on Restricted
Payments."
"Bank Facility Capacity Increase" means a replacement, amendment,
supplement, restatement, renewal or other modification of the Senior Credit
Facility that increases the aggregate amount of borrowings permitted under the
Senior Credit Facility.
"Bank Facility Limit" means (x) $1,275 million less principal payments of
term loans and permanent commitment reductions with respect to revolving loans
under the Senior Credit Facility since the date of the Indenture or (y)
following a Bank Facility Capacity Increase, the Increased Bank Facility Limit,
less principal payments of term loans and permanent commitment reductions with
respect to revolving loans under the Bank Agreement, as so replaced, amended,
supplemented, restated, renewed or modified, since the date of such Bank
Facility Capacity Increase.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other arrangements conveying the
right to use) real or personal property of such Person which is required to be
classified and accounted for as a capital lease or a liability on a balance
sheet of such Person in accordance with generally accepted accounting
principles. The stated maturity of such obligation shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty. The principal amount of such obligation shall be the capitalized amount
thereof that appear on a balance sheet of such Person in accordance with
generally accepted accounting principles.
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"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated EBITDA" of any Person means for any period the Consolidated
Net Income for such period increased by the sum of (i) Consolidated Interest
Expense of such Person for such period, plus (ii) Consolidated Income Tax
Expense of such Person for such period, plus (iii) the consolidated depreciation
and amortization expense deducted in determining the Consolidated Net Income of
such Person for such period; provided, however, that the Consolidated Interest
Expense, Consolidated Income Tax Expense and consolidated depreciation and
amortization expense of a Consolidated Subsidiary of such Person shall be added
to the Consolidated Net Income pursuant to the foregoing only (x) to the extent
and in the same proportion that the Consolidated Net Income of such Consolidated
Subsidiary was included in calculating the Consolidated Net Income of such
Person and (y) only to the extent that the amount specified in Clause (x) is not
subject to restrictions that prevent the payment of dividends or the making of
distributions to such Person.
"Consolidated EBITDA Coverage Ratio" of any Person means for any period the
ratio of (i) Consolidated EBITDA of such Person for such period to (ii) the sum
of (A) Consolidated Interest Expense of such Person for such period plus (B) the
annual interest expense (including the amortization of debt discount) with
respect to any Debt Incurred or proposed to be incurred by such Person or its
Consolidated Subsidiaries since the beginning of such period to the extent not
included in clause (ii) (A), minus (C) Consolidated Interest Expense of such
Person with respect to any Debt that is no longer outstanding or that will no
longer be outstanding as a result of the transaction with respect to which the
Consolidated EBITDA Coverage Ratio is being calculated, to the extent included
within Clause (ii) (A); provided, however, that in making such computation, the
Consolidated Interest Expense of such Person attributable to interest on any
Debt bearing a floating interest rate shall be computed on a pro forma basis as
if the rate in effect on the date of computation had been the applicable rate
for the entire period; and provided further, that, in the event such Person or
any of its Consolidated Subsidiaries has made acquisitions or dispositions of
assets not in the ordinary course of business (including by merger,
consolidation or purchase of Capital Stock) during or after such period, the
computation of the Consolidated EBITDA Coverage Ratio (and for the purpose of
such computation, the calculation of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated EBITDA) shall
be made on a pro forma basis as if the acquisitions or dispositions had taken
place on the first day of such period.
"Consolidated Income Tax Expense" of any Person means for any period the
consolidated provision for income taxes of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally accepted
accounting principles.
"Consolidated Interest Expense" of any Person means for any period the
consolidated interest expense included in a consolidated income statement (net
of interest income) of such Person and its Consolidated Subsidiaries for such
period determined in accordance with generally accepted accounting principles,
including without limitation or duplication (or, to the extent not so included,
with the addition of), (i) the portion of any rental obligation in respect of
any Capital Lease Obligation allocable to interest expense in accordance with
generally accepted accounting principles; (ii) the amortization of Debt
discounts; (iii) any payments or fees with respect to letters of credit,
bankers' acceptances or similar facilities; (iv) fees with respect to interest
rate swap or similar agreements or foreign currency hedge, exchange or similar
agreements; (v) any Preferred Stock dividends declared and paid or payable in
cash; and (vi) any interest capitalized in accordance with generally accepted
accounting principles; provided, however, that Consolidated Interest Expense
shall not include interest expense or amortization of Debt discounts relating to
the Allied Canada Debentures.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person and its Consolidated
Subsidiaries for such period determined in accordance with generally
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accepted accounting principles; provided that there shall be excluded therefrom
(a) the net income (or loss) of any Person acquired by such Person or a
Subsidiary of such Person in a pooling-of interests transaction for any period
prior to the date of such transaction (subject to the final proviso of the
definition of Consolidated EBITDA Coverage Ratio when Consolidated Net Income is
being computed for purposes of calculating the Consolidated EBITDA Coverage
Ratio), (b) the net income (but not net loss) of any Consolidated Subsidiary of
such Person that is subject to restrictions that prevent the payment of
dividends or the making of distributions to such Person to the extent of such
restrictions, (c) the net income (or loss) of any Person that is not a
Consolidated Subsidiary of such Person except to the extent of the amount of
dividends or other distributions actually paid to such Person by such other
Person during such period, (d) gains or losses on asset dispositions by such
Person or its Consolidated Subsidiaries, (e) any net income (loss) of a
Consolidated Subsidiary that is attributable to a minority interest in such
Consolidated Subsidiary, (f) all extraordinary gains and extraordinary losses
that involve a present or future cash payment, (g) all non-cash non-recurring
charges during such period, including charges for acquisition-related costs (it
being understood that (x) non-cash non-recurring charges shall not include
accruals for closure and post-closure liabilities and (y) charges, other than
charges for the accruals referred to in Clause (x) above, shall be deemed
non-cash charges until the period that cash disbursements attributable to such
charges are made, at which point such charges shall be deemed cash charges) and
(h) the tax effect of any of the items described in Clauses (a) through (g)
above.
"Consolidated Net Worth" of any Person at any date means the consolidated
stockholders' equity of such Person and its Restricted Subsidiaries at such
date, as determined on a consolidated basis in accordance with generally
accepted accounting principles, less amounts attributable to Redeemable
Interests of such Person; provided, however, that, with respect to the Company
and its Restricted Subsidiaries, adjustments following the date of the Indenture
to the accounting books and records of the Company and its Restricted
Subsidiaries in accordance with Accounting Principles Board Opinions Nos. 16 and
17 (or successor opinions thereto) or otherwise resulting from the acquisition
of control of the Company by another Person shall not be given effect to.
"Consolidated Subsidiaries" of any Person means all other Persons that
would be accounted for as consolidated Persons in such Person's financial
statements in accordance with generally accepted accounting principles;
provided, however, that, for any particular period during which any Subsidiary
of such Person was an Unrestricted Subsidiary, "Consolidated Subsidiaries" will
exclude such Subsidiary for such period (or portion thereof) during which it was
an Unrestricted Subsidiary.
"Consolidated Total Assets" of any Person at any date means the
consolidated total assets of such Person and its Restricted Subsidiaries at such
date, as determined on a consolidated basis in accordance with generally
accepted accounting principles.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person, (i) every
obligation of such Person for money borrowed, (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations Incurred in connection with the acquisition of property,
assets or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person, (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business), (v) every Capital Lease Obligation of such Person, (vi) the maximum
fixed redemption or repurchase price of Redeemable Interests of such Person at
the time of determination, (vii) every net payment obligation of such Person
under interest rate swap or similar agreements or foreign currency hedge,
exchange or similar agreements at the time of determination and (viii) every
obligation of the type referred to in Clauses (i) through (vii) of another
Person and all dividends of another Person the payment of which, in either case,
such Person has Guaranteed or for which such Person is responsible or liable,
directly or indirectly, jointly or severally, as obligor, Guarantor or
otherwise.
"Excepted Disposition" means a transfer, conveyance, sale, lease or other
disposition by the Company or any Restricted Subsidiary of (i) the Capital Stock
or assets of Specialized Waste or (ii) any other asset of the Company or any
Restricted Subsidiary the fair market value of which does not exceed $5 million
by itself or
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$10 million in aggregate with all other assets disposed of in Excepted
Dispositions under this Clause (ii) in any fiscal year.
"Guaranty" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing any Debt, or dividends or distributions on any equity
security, of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, and including, without limitation, any obligation of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Debt or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Debt, (ii) to purchase
property, securities or services for the purpose of assuring the holder of such
Debt of the payment of such Debt or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Debt (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guaranty by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business.
"Increased Bank Facility Limit" means, in connection with any Bank Facility
Capacity Increase, the amount that is the least of (i) the aggregate amount of
Debt permitted to be outstanding under the terms of the Senior Credit Facility,
as amended pursuant to such Bank Facility Capacity Increase, (ii) the amount
equal to three times Consolidated EBITDA of Allied Waste NA and its Restricted
Subsidiaries for the most recently ended four fiscal quarters period for which
financial statements are available immediately preceding the date of such Bank
Facility Capacity Increase and (iii) the amount equal to the sum of (x) the
maximum amount of Debt that Allied Waste NA would be permitted to Incur on such
date under the Consolidated EBITDA Coverage Ratio test described in the first
paragraph under the covenant "Limitation on Debt of Allied Waste NA and its
Restricted Subsidiaries" on the terms contemplated by the Senior Credit
Facility, as amended by the Bank Facility Capacity Increase and (y) the
aggregate amount of Debt outstanding under the Senior Credit Facility on such
date.
"Incur" means, with respect to any Debt of any Person, to create, issue,
incur (by conversion, exchange or otherwise), assume, Guarantee or otherwise
become liable in respect of such Debt, or the taking of any other action which
would cause such Debt, in accordance with generally accepted accounting
principles, to be recorded on the balance sheet of such Person (and
"Incurrence", "Incurred", "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided that, the Debt of any other Person
becoming a Restricted Subsidiary of such Person will be deemed for this purpose
to have been Incurred by such Person at the time such other Person becomes a
Restricted Subsidiary of such Person, provided, however, that a change in
generally accepted accounting principles that results in an obligation of such
Person that exists at such time becoming Debt shall not be deemed an Incurrence
of such Debt.
"Intercompany Agreements" means the Management Agreement between the
Company and Allied Waste NA dated November 15, 1996.
"Interest Rate or Currency Protection Agreement" of any Person means any
interest rate protection agreement (including, without limitation, interest rate
swaps, caps, floors, collars, derivative instruments and similar agreements),
and/or other types of interest hedging agreements and any currency protection
agreement (including foreign exchange contracts, currency swap agreements or
other currency hedging arrangements).
"Investment" by any Person in any other Person means (i) any direct or
indirect loan, advance or other extension of credit or capital contribution to
or for the account of such other Person (by means of any transfer of cash or
other property to any Person or any payment for property or services for the
account or use of any Person, or otherwise), (ii) any direct or indirect
purchase or other acquisition of any Capital Stock, bond, note, debenture or
other debt or equity security or evidence of Debt, or any other ownership
interest, issued by such other Person, whether or not such acquisition is from
such or any other Person, (iii) any direct or indirect payment by such Person on
a Guaranty of any obligation of or for the account of such other Person or any
direct or indirect issuance by such Person of such a Guaranty or (iv) any other
investment of cash or other property by such Person in or for the account of
such other Person.
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"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, easement or title exception, encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Net Available Proceeds" from any Asset Disposition by any Person that is
the Company or any Restricted Subsidiary means cash or readily marketable cash
equivalents received (including by way of sale or discounting of a note,
installment receivable or other receivable, but excluding any other
consideration received in the form of assumption by the acquiree of Debt or
other obligations relating to such properties or assets or received in any other
noncash form) therefrom by such Person, net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses Incurred and all
federal, state, provincial, foreign and local taxes required to be accrued as a
liability as a consequence of such Asset Disposition, (ii) all payments made by
such Person or its Restricted Subsidiaries on any Debt that is secured by such
assets in accordance with the terms of any Lien upon or with respect to such
assets or that must, by the terms of such Lien, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law, be repaid out
of the proceeds from such Asset Disposition (iii) amounts provided as a reserve
by such Person or its Restricted Subsidiaries, in accordance with generally
accepted accounting principles, against liabilities under any indemnification
obligations to the buyer in such Asset Disposition (except to the extent and at
the time any such amounts are released from any such reserve, such amounts shall
constitute Net Available Proceeds) and (iv) all distributions and other payments
made to minority interest holders in Restricted Subsidiaries of such Person or
joint ventures as a result of such Asset Disposition.
"pari passu", when used with respect to the ranking of any Debt of any
Person in relation to other Debt of such Person, means that each such Debt (a)
either (i) is not subordinated in right of payment to any other Debt of such
Person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other Debt and is so subordinate to the same extent and (b) is
not subordinate in right of payment to the other Debt or to any Debt of such
Person as to which the other Debt is not so subordinate.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby.
"Permitted Investment" means (i) Investments in the Company or any Person
that is, or as a consequence of such Investment becomes, a Restricted
Subsidiary, (ii) securities either issued directly or fully guaranteed or
insured by the government of the United States of America or any agency or
instrumentality thereof having maturities of not more than year, (iii) time
deposits and certificates of deposit, demand deposits and banker's acceptances
having maturities of not more than one year from the date of deposit, of any
domestic commercial bank having capital and surplus in excess of $500 million
and having peer group rating of B or better (or the equivalent thereof) by
Thompson BankWatch, Inc. or outstanding long-term debt rated BBB or better (or
the equivalent thereof) by Standard & Poor's Ratings Group or Baa or better (or
the equivalent thereof) by Moody's Investors Service, Inc., (iv) demand deposits
made in the ordinary course of business and consistent with the Company's
customary cash management policy in any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof,
(v) insured deposits issued by commercial banks of the type described in Clause
(iv) above, (vi) mutual funds whose investment guidelines restrict such funds'
investments primarily to those satisfying the provisions of Clauses (ii) and
(iii) above, (vii) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in Clauses (ii) and (iii)
above entered into with any bank meeting the qualifications specified in Clause
(iii) above, (viii) commercial paper (other than commercial paper issued by an
Affiliate or Related Person) rated A-1 or the equivalent thereof by Standard &
Poor's Ratings Group or P-1 or the equivalent thereof by Moody's Investors
Service, Inc., and in each case maturing within 360 days, (ix) receivables owing
to the Company or a Restricted Subsidiary of the Company if created or acquired
in the ordinary course of business and payable or dischargeable in accordance
with customary trade terms,
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<PAGE> 42
(x) any Investment consisting of loans and advances to employees of the Company
or any Restricted Subsidiary for travel, entertainment, relocation or other
expenses in the ordinary course of business, (xi) any Investment consisting of
loans and advances by the Company or any Restricted Subsidiary to employees,
officers and directors of the Company or Allied Waste NA in connection with
management incentive plans not to exceed $5 million at any time outstanding;
provided, however, that to the extent the proceeds thereof are used to purchase
Capital Stock (other than Redeemable Interests) of the Company, such limitation
on the amount of such Investments at any time outstanding shall not apply with
respect to such Investments, (xii) any Investment consisting of a Permitted
Interest Rate or Currency Protection Agreement, (xiii) any Investment acquired
by the Company or any of its Restricted Subsidiaries (A) in exchange for any
other Investment or accounts receivable held by the Company or any such
Restricted Subsidiary in connection with or as a result of a bankruptcy,
workout, reorganization or recapitalization of the issuer of such other
Investment or the obligor with respect to such accounts receivable or (B) as a
result of a foreclosure by the Company or any of its Restricted Subsidiaries
with respect to any secured Investment or other transfer of title with respect
to any secured Investment in default, (xiv) any Investment that constitutes part
of the consideration from an Asset Disposition made pursuant to, and in
compliance with, the covenant described above under "Repurchase at the Option of
Holders -- Asset Dispositions," (xv) Investments the payment for which consists
exclusively of Capital Stock (exclusive of Redeemable Interests) of the Company;
and (xvi) other Investments in an aggregate amount not to exceed $50 million.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Public Offering" means any underwritten public offering of Capital Stock
pursuant to a registration statement filed under the Securities Act of 1933, as
amended.
"Redeemable Interest" of any Person means any equity security of or other
ownership interest in such Person that by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or
otherwise (including upon the occurrence of an event) matures or is required to
be redeemed (pursuant to any sinking fund obligation or otherwise) or is
convertible into or exchangeable for Debt or is redeemable at the option of the
holder thereof, in whole or in part, at any time prior to the final Stated
Maturity of the Notes.
"Related Person" of any Person means, without limitation, any other Person
owning (a) 5% or more of the outstanding Common Stock of such Person or (b) 5%
or more of the Voting Stock or such Person.
"Restricted Subsidiary" means (i) at any date, a Subsidiary of the Company
that is not an Unrestricted Subsidiary as of such date and (ii) for any period,
a Subsidiary of the Company that for any portion of such period is not an
Unrestricted Subsidiary, provided that such term shall mean such Subsidiary only
for such portion of such period.
"Sale and Leaseback Transaction" means an arrangement with any lender or
investor or to which such lender or investor is a party providing for the
leasing by a Person of any property or asset of such Person which has been or is
being sold or transferred, more than 270 days after the acquisition thereof or
the completion of construction or commencement of operation thereof, by such
Person to such lender or investor or to any person to whom funds have been or
are to be advanced by such lender or investor on the security of such property
or asset. The stated maturity of such arrangement shall be the date of the last
payment of rent or any other amount due under such arrangement prior to the
first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Senior Credit Facility" means the Credit Agreement, dated as December 30,
1996, among the Company, Allied Waste NA, Goldman Sachs Credit Partners L.P.,
Credit Suisse, Citibank, N.A. and the other Lenders referred to therein, or any
bank credit agreement that replaces, amends, supplements, restates or renews
such Credit Agreement.
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<PAGE> 43
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof, (ii) a
partnership of which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, is the general partner and has the power to direct the policies,
management and affairs or (iii) any other Person (other than a corporation) in
which such Person, or one or more other Subsidiaries of such Person or such
Person and one or more other Subsidiaries thereof, directly or indirectly, has
at least a majority ownership interest and power to direct the policies,
management and affairs thereof.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account of
the holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"Unrestricted Subsidiary" means (i) at any date, a Subsidiary of the
Company that is an Unrestricted Subsidiary in accordance with the provisions of
the Indenture described under the caption "Certain Covenants -- Unrestricted
Subsidiaries" and (ii) for any period, a Subsidiary of the Company that for any
portion of such period is an Unrestricted Subsidiary in accordance with the
provisions of the Indenture as described under the caption "Certain
Covenants -- Unrestricted Subsidiaries," provided that such term shall mean such
Subsidiary only for such portion of such period.
"Voting Stock" of any Person means Capital Stock of such Person that
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
"Weighted Average Life to Maturity" means, as of the date of determination,
with respect to any Debt, the quotient obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the dates of
each successive scheduled principal payment of such Debt and the amount of such
principal by (ii) the sum of all such principal payments.
INTEREST AND PAYMENTS
No cash interest (other than Special Interest (as defined below, if any))
will accrue on the Exchange Notes prior to June 1, 2002. The Exchange Notes will
accrue interest at the rate per annum shown on the front cover of this Offering
Circular from June 1, 2002 or from the most recent Interest Payment Date to
which interest has been paid or provided for, payable semi-annually on June 1
and December 1 of each year, commencing December 1, 2002, until the principal
thereof is paid or made available for payment, to the Person in whose name the
Exchange Notes (or any predecessor Exchange Note) is registered at the close of
business on the preceding May 15 or November 15, as the case may be. The
Exchange Notes will bear interest on overdue principal and premium (if any) and,
to the extent permitted by law, overdue interest at the rate per annum shown on
the front cover of this Offering Circular plus 2%. Interest on the Exchange
Notes will be computed on the basis of a 360-day year of twelve 30-day months.
(Section 301).
Pursuant to the Registration Rights Agreement, the Company has agreed to
file and cause to become effective a registration statement relating to an
exchange offer for the Exchange Notes, or, in lieu thereof, to file and cause to
become effective a resale shelf registration statement for the Exchange Notes.
If such exchange offer or shelf registration statement is not filed or is not
declared effective, or if such exchange offer
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<PAGE> 44
is not consummated, within the time periods set forth in the Registration Rights
Agreement, Special Interest will accrue and be payable on the Exchange Notes
either temporarily or permanently. See "-- Registration Covenant; Exchange
Offer."
No service charge will be made for any registration of transfer or exchange
of Exchange Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
(Sections 203 and 307).
FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES
Exchange Notes will be issued only in fully registered form, without
interest coupons, in denominations of $1,000 and integral multiples thereof. The
Exchange Notes generally will be represented by one or more fully-registered
global notes (collectively, the "Global Exchange Note"). Notwithstanding the
foregoing, Notes held in certificated form will be exchanged solely for Exchange
Notes in certificated form, as discussed below. The Global Exchange Note will be
deposited upon issuance with The Depository Trust Company ("DTC") and registered
in the name of DTC or a nominee of DTC (the "Global Exchange Note Registered
Owner"). Except as set forth below, the Global Exchange Note may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee.
A Holder may transfer or exchange Exchange Notes in accordance with the
Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any Exchange Notes selected for redemption. Also, the Company is not required to
transfer or exchange an Exchange Note for a period of 15 days before a selection
of Exchange Notes to be redeemed.
The registered Holder of an Exchange Note will be treated as the owner of
such Exchange Note for all purposes.
EXCHANGES OF BOOK-ENTRY EXCHANGE NOTES FOR CERTIFICATED EXCHANGE NOTES
A beneficial interest in a Global Exchange Note may not be exchanged for an
Exchange Note in certificated form unless (i) DTC (x) notifies the Company that
it is unwilling or unable to continue as Depositary for the Global Exchange Note
or (y) has ceased to be a clearing agency registered under the Exchange Act, and
in either case the Company thereupon fails to appoint a successor Depositary,
(ii) the Company, at its option, notifies the Trustee in writing that it elects
to cause the issuance of the Exchange Notes in certificated form or (iii) there
shall have occurred and be continuing an Event of Default or any event which
after notice or lapse of time or both would be an Event of Default with respect
to the Exchange Notes. In all cases, certificated Exchange Notes delivered in
exchange for any Global Exchange Note or beneficial interests therein will be
registered in the names, and issued in any approved denominations, requested by
or on behalf of the Depositary (in accordance with its customary procedures).
Any such exchange will be effected through the DWAC System and an appropriate
adjustment will be made in the records of the Security Registrar to reflect a
decrease in the principal amount of the relevant Global Exchange Note.
CERTAIN BOOK-ENTRY PROCEDURES FOR GLOBAL EXCHANGE NOTES
The descriptions of the operations and procedures of DTC that follow are
provided solely as a matter of convenience. These operations and procedures are
solely within the control of the respective settlement systems and are subject
to changes by them from time to time. The Company takes no responsibility for
these operations and procedures and urges investors to contact the system or
their participants directly to discuss these matters.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants ("participants") and
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<PAGE> 45
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical transfer and delivery of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations.
Indirect access to the DTC system is available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
DTC had advised the Company that its current practice, upon the issuance of
the Global Exchange Notes, is to credit, on its internal system, the respective
principal amount of the individual beneficial interests represented by such
Global Exchange Notes to the accounts with DTC of the participants through which
such interests are to be held. Ownership of beneficial interests in the Global
Exchange Notes will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominees (with respect
to interests of participants) and the records of participants and indirect
participants (with respect to interests of persons other than participants).
AS LONG AS DTC, OR ITS NOMINEE, IS THE REGISTERED HOLDER OF A GLOBAL
EXCHANGE NOTE, DTC OR SUCH NOMINEE, AS THE CASE MAY BE, WILL BE CONSIDERED THE
SOLE OWNER AND HOLDER OF THE EXCHANGE NOTES REPRESENTED BY SUCH GLOBAL EXCHANGE
NOTE FOR ALL PURPOSES UNDER THE INDENTURE AND THE EXCHANGE NOTES. Except in the
limited circumstances described above under "-- Exchanges of Book-Entry Notes
for Certificated Notes," owners of beneficial interests in a Global Exchange
Note will not be entitled to have any portions of such Global Exchange Note
registered in their names, will not receive or be entitled to receive physical
delivery of Exchange Notes in definitive form and will not be considered the
owners or Holders of the Global Exchange Note (or any Exchange Notes represented
thereby) under the Indenture or the Exchange Notes.
Investors may hold their interests in the Global Exchange Note directly
through DTC, if they are participants in such system, or indirectly through
organizations (including Euroclear and CEDEL) which are participants in such
system. The laws of some states require that certain persons take physical
delivery in definitive form of securities that they own. Consequently, the
ability to transfer beneficial interests in a Global Exchange Note to such
persons may be limited to that extent. Because DTC can act only on behalf of its
participants, which in turn act on behalf of indirect participants and certain
banks, the ability of a person having beneficial interests in a Global Exchange
Note to pledge such interest to persons or entities that do not participate in
the DTC system, or otherwise take actions in respect of such interests, may be
affected by the lack of a physical certificate evidencing such interests.
Payments of the principal of, premium, if any, and interest on Global
Exchange Notes will be made to DTC or its nominee as the registered owner
thereof. Neither the Company, the Trustee nor any of their respective agents
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Exchange Notes or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of a Global Exchange Note representing any
Exchange Notes held by it or its nominee, will credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of such Global Exchange Note for such Exchange Notes as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in such Global
Exchange Note held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in "street name." Such payments will be
the responsibility of such participants. None of the Company or the Trustee will
be liable for any delay by DTC or any of its participants in identifying the
beneficial owners of the Exchange Notes, and the Company and the Trustee may
conclusively rely on and will be protected in relying on instructions from DTC
or its nominee as the registered owner of the Exchange Notes for all purposes.
Interests in the Global Exchange Notes will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject
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<PAGE> 46
in all cases to the rules and procedures of DTC and its participants. Transfers
between participants in DTC will be effected in accordance with DTC's
procedures, and will be settled in same-day funds.
Because of time zone differences, the securities account of a Euroclear or
CEDEL participant purchasing an interest in a Global Exchange Note from a DTC
participant will be credited, and any such crediting will be reported to the
relevant Euroclear or CEDEL participant, during the securities settlement
processing day (which must be a business day for Euroclear and CEDEL)
immediately following the DTC settlement date. Cash received in Euroclear or
CEDEL as a result of sales of interests in a Global Exchange Note by or through
a Euroclear or CEDEL participant to a DTC participant will be received with
value on the DTC settlement date but will be available in the relevant Euroclear
or CEDEL cash account only as of the business day for Euroclear or CEDEL
following the DTC settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Notes only at the direction of one or more
participants to whose accounts with DTC interests in the Global Exchange Notes
are credited and only in respect of such portion of the aggregate principal
amount of the Exchange Notes as to which such participant or participants has or
have given such direction. However, if there is an Event of Default (as defined
below) under the Exchange Notes, DTC reserves the right to exchange the Global
Exchange Notes for Exchange Notes in certificated form, and to distribute such
Exchange Notes to its participants.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial ownership interests in the Global Exchange Notes among
participants of DTC, it is under no obligation to perform or continue to perform
such procedures, and such procedures may be discontinued at any time. None of
the Company, the Trustee nor any of their respective agents will have any
responsibility for the performance by DTC, or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations, including maintaining, supervising or reviewing the
records relating to, or payments made on account of, beneficial ownership
interests in Global Exchange Notes.
OPTIONAL REDEMPTION
The Exchange Notes will not be subject to any redemption at the option of
the Company prior to December 1, 2001 except as set forth in the following
paragraphs. On or after December 1, 2001, the Exchange Notes will be subject to
redemption, in whole or in part, at the option of the Company at any time prior
to maturity, upon not less than 30 nor more than 60 days' notice mailed to each
Holder of Exchange Notes to be redeemed at the address of such Holder appearing
in the Security Register, in amounts of $1,000 or an integral multiple of $1,000
principal amount, (i) at the following Redemption Price (expressed as a
percentage of Accreted Value) plus any accrued but unpaid Special Interest to
but excluding the Redemption Date (subject to the right of Holders of record on
the relevant Regular Record Date to receive Special Interest due on an Interest
Payment Date that is on or prior to the Redemption Date), if redeemed during the
six-month period beginning on December 1 of the year indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------------------------------------------------- ----------
<S> <C>
2001................................................. 107.000%
</TABLE>
and (ii) at the following Redemption Prices (expressed as percentages of
principal amount) plus any accrued but unpaid interest (including Special
Interest) to but excluding the Redemption Date (subject to the right of Holders
of record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), if redeemed
during the twelve-month period beginning on June 1 of each of the years
indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
----------------------------------------------------- ----------
<S> <C>
2002................................................. 105.650%
2003................................................. 102.825
2004 and thereafter.................................. 100.000
</TABLE>
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<PAGE> 47
At any time, or from time to time, prior to June 1, 2000 up to 33 1/3% in
aggregate principal amount of Exchange Notes originally issued under the
Indenture will be redeemable, at the option of the Company, from the net
proceeds of one or more Public Offerings of Capital Stock (other than Redeemable
Interests) of the Company, at a Redemption Price equal to 111.30% of their
Accreted Value as of, together with any accrued but unpaid Special Interest to,
the Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive any Special Interest due on an Interest Payment
Date that is on or prior to the Redemption Date); provided that the notice of
redemption with respect to any such redemption is mailed within 30 days
following the closing of the corresponding public offering. (Sections 203, 301
and 1102).
If less than all the Notes are to be redeemed, the particular Notes to be
redeemed will be selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Notes not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions (equal to $1,000 or any integral
multiple thereof) of the principal amount of Notes of a denomination larger than
$1,000. (Sections 1103, 1104 and 1105).
MANDATORY REDEMPTION
Except as described below under "Repurchase at the Option of
Holders -- Asset Dispositions," "-- Change of Control" and "Collateral
Agreement; Special Mandatory Redemption," the Notes will not have the benefit of
any mandatory redemption or sinking fund obligations of the Company.
REPURCHASE AT THE OPTION OF HOLDERS
Asset Dispositions
The Company may not make, and may not permit any Restricted Subsidiary to
make, any Asset Disposition (other than an Asset Disposition permitted under
"Mergers, Consolidations and Certain Sales and Purchases of Assets") unless: (i)
the Company (or such Restricted Subsidiary, as the case may be) receives
consideration at the time of such disposition at least equal to the fair market
value of the shares or the assets disposed of, as determined in good faith by
the Board of Directors for any transaction (or series of transactions) involving
in excess of $1 million and not involving solely a sale of equipment or other
assets specifically contemplated by the Company's capital expenditure budget
previously approved by the Board of Directors; (ii) at least 75% of the
consideration received by the Company (or such Subsidiary) consists of (u) cash
or readily marketable cash equivalents, (v) the assumption of Debt or other
liabilities reflected on the consolidated balance sheet of the Company and its
Restricted Subsidiaries in accordance with generally accepted accounting
principles (excluding Debt or any other liabilities subordinate in right of
payment to the Notes) and release from all liability on such Debt or other
liabilities assumed, (w) assets used in, or stock or other ownership interests
in a Person that upon the consummation of such Asset Disposition becomes a
Restricted Subsidiary and will be principally engaged in, the business of the
Company or any of its Wholly Owned Restricted Subsidiaries as such business is
conducted immediately prior to such Asset Disposition or (x) any combination
thereof; and (iii) 100% of the Net Available Proceeds from such Asset
Disposition (including from the sale of any marketable cash equivalents received
therein) are applied by the Company or a Restricted Subsidiary, within one year
from the later of the date of such Asset Disposition or the receipt of such Net
Available Proceeds, (A) first, to repayment of Debt then outstanding under any
agreements or instruments which would require such application or which would
prohibit payments pursuant to Clause (B) following; (B) second, to the extent
Net Available Proceeds are not required to be applied to Debt as specified in
Clause (A), to purchases of Outstanding Notes pursuant to an Offer to Purchase
(to the extent such an offer is not prohibited by the terms of any Debt then
outstanding) at a purchase price equal to (x) in the case of any such purchase
prior to June 1, 2002, 100% of their Accreted Value as of the purchase date and
(y) in the case of any such purchase on or after June 1, 2002, 100% of their
principal amount, in each case, plus any accrued interest (including Special
Interest) to the date of purchase (subject to the rights of Holders of record on
the relevant Regular Record Date to receive interest due on an Interest Payment
Date that is on or prior to the purchase date) and, to the extent required by
the terms thereof, any other Debt of the Company that is pari passu with the
Notes at a price no greater than 100% of the principal amount thereof plus
accrued interest to the date of purchase (or 100% of the accreted value in the
case of original issue discount Debt); and
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<PAGE> 48
(C) third, to the extent of any remaining Net Available Proceeds following
completion of such Offer to Purchase, to any other use as determined by the
Company which is not otherwise prohibited by the Indenture. (Section 1014).
Notwithstanding the foregoing, the Company will not be required to comply
with the provisions of the Indenture described in Clause (iii) of the preceding
paragraph if the Net Available Proceeds (less any amounts ("Reinvested Amounts")
invested within one year from the later of the date of the related Asset
Disposition or the receipt of such Net Available Proceeds in assets that will be
used in the business of the Company or any of its Wholly Owned Restricted
Subsidiaries as such business is conducted prior to such Asset Disposition
(determined by the Board of Directors in good faith)) are less than $50 million
(such lesser amount to be carried forward on a cumulative basis for purposes of
determining the application of this paragraph). Notwithstanding the foregoing,
if any Restricted Subsidiary in which a Reinvested Amount is invested becomes an
Unrestricted Subsidiary thereafter, then such change in status will be deemed an
Asset Disposition with Net Available Proceeds in an amount equal to such
Reinvested Amount, and such amount will be applied pursuant to Clause (iii)
above (subject to this paragraph). (Section 1014).
Notwithstanding the foregoing, the Company will not be required to comply
with the requirements described in Clause (ii) of the second preceding paragraph
if the Asset Disposition is an Excepted Disposition.
Any Offer to Purchase required by the provisions described above will be
effected by the sending of the written terms and conditions thereof (the "Offer
Document"), by first class mail, to Holders of the Notes within 30 days after
the date which is one year after the later of the date of such Asset Disposition
or the receipt of the related Net Available Proceeds. The form of the Offer to
Purchase and the requirements that a Holder must satisfy to tender any Note
pursuant to such Offer to Purchase are substantially the same as those described
below under "-- Change of Control."
Change of Control
Within 30 days following the date the Company becomes aware of the
consummation of a transaction that results in a Change of Control (as defined
below), the Company will commence an Offer to Purchase all Outstanding Notes, at
a purchase price equal to (x) in the case of any such purchase prior to June 1,
2002, 101% of their Accreted Value as of the purchase date and (y) in the case
of any such purchase on or after June 1, 2002, 101% of their principal amount,
in each case (x) and (y), plus any accrued interest (including Special Interest)
to the date of purchase (subject to the rights of Holders of record on the
relevant Regular Record Date to receive interest due on an Interest Payment Date
that is on or prior to the date of purchase). Such obligation will not continue
after a discharge of the Company or defeasance from its obligations with respect
to the Notes. See "Defeasance."
A "Change of Control" will be deemed to have occurred in the event that,
after the date of the Indenture, (i) any Person, or any Persons acting together
that would constitute a "group" (a "Group") for purposes of Section 13(d) of the
Exchange Act, together with any Affiliates or Related Persons thereof (other
than any employee stock ownership plan), beneficially own 50% or more of the
total voting power of all classes of Voting Stock of the Company, (ii) any
Person or Group, together with any Affiliates or Related Persons thereof,
succeeds in having sufficient of its nominees elected to the Board of Directors
of the Company such that such nominees, when added to any existing director
remaining on the Board of Directors of the Company after such election who is an
Affiliate or Related Person of such Person or Group, will constitute a majority
of the Board of Directors of the Company, (iii) there occurs any transaction or
series of related transactions, and the beneficial owners of the Voting Stock of
the Company immediately prior to such transaction (or series) do not,
immediately after such transaction (or series), beneficially own Voting Stock
representing more than 50% of the total voting power of all classes of Voting
Stock of the Company (or in the case of a transaction (or series) in which
another entity becomes a successor to the Company, of the successor entity) or
(iv) Allied Waste NA ceases to be a Subsidiary of the Company. (Section 1015).
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes resulting from a Change of Control.
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<PAGE> 49
The terms of the Senior Credit Facility prohibit and the terms of the
indenture relating to the Allied Waste NA Notes limit Allied Waste NA from
paying dividends or other distributions to the Company in respect of the Capital
Stock of Allied Waste NA, and thus may effectively prohibit any repurchase of
Notes by the Company, in the event of a Change of Control, unless all
indebtedness then outstanding under the Senior Credit Facility and the Allied
Waste NA Notes are first repaid. In order to repay such indebtedness and
repurchase the Notes, it may be necessary for the Company to recapitalize and/or
refinance some or all of its outstanding indebtedness. There can be no assurance
that such recapitalization or refinancing, if required, would be accomplished on
favorable terms, in a timely manner or at all. See "Risk Factors -- Holding
Company Structure; Structural Subordination."
Prior to the mailing of an Offer Document, the Company will in good faith
seek to obtain any required consents of the lenders under the Senior Credit
Facility and holders of the Allied Waste NA Notes or repay the outstanding
obligations thereunder. The right of the Holders to require the Company to
purchase Notes pursuant to an Offer will be subject to obtaining the requisite
consents or to making such repayment.
Within 30 days of a Change of Control, an Offer Document will be sent, by
first class mail, to Holders of the Notes, accompanied by such information
regarding the Company and its Subsidiaries as the Company in good faith believes
will enable such Holders to make an informed decision with respect to the Offer
to Purchase, which at a minimum will include (a) the most recent annual and
quarterly financial statements and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained in the documents
required to be filed with the Trustee pursuant to the provisions described under
"Certain Covenants -- Provision of Financial Information" below (which
requirements may be satisfied by delivery of such documents together with the
Offer to Purchase), (b) a description of material developments in the Company's
business subsequent to the date of the latest of such financial statements
referred to in Clause (a) (including a description of the events requiring the
Company to make the Offer to Purchase), (c) if applicable, appropriate pro forma
financial information concerning the Offer to Purchase and the events requiring
the Company to make the Offer to Purchase and (d) any other information required
by applicable law to be included therein. The Offer Document will contain all
instructions and materials necessary to enable Holder's of the Notes to tender
Notes pursuant to the Offer to Purchase. The Offer Document will also state (i)
that a Change of Control has occurred (or, if the Offer to Purchase is delivered
in connection with an Asset Disposition, that an Asset Disposition has occurred)
and that the Company will offer to purchase the Holders Notes, (ii) the
Expiration Date of the Offer to Purchase, which will be, subject to any contrary
requirements of applicable law, not less than 30 days or more than 60 days after
the date of such Offer Document, (iii) the Purchase Date for the purchase of
Notes which will be within five Business Days after the Expiration Date, (iv)
the aggregate principal amount of Notes to be purchased (including, if less than
100%, the manner by which such purchase has been determined pursuant to the
Indenture) and the purchase price and (v) a description of the procedure which a
Holder must follow to tender all or any portion of the Notes. (Sections 101 and
1016).
To tender any Note, a Holder must surrender such Note at the place or
places specified in the Offer Document prior to the close of business on the
Expiration Date (such Note being, if the Company or the Trustee so requires,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof
or his attorney duly authorized in writing). Holders will be entitled to
withdraw all or any portion of Notes tendered if the Company (or its Paying
Agent) receives, not later than the close of business on the Expiration Date, a
telegram, telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder tendered, the certificate
number of the Note the Holder tendered and a statement that such Holder is
withdrawing all or a portion of his tender. Any portion of a Note tendered must
be tendered in an integral multiple of $1,000 principal amount. (Section 101).
REGISTRATION COVENANT; EXCHANGE OFFER
The Company will enter into an Exchange and Registration Rights Agreement
(the "Registration Rights Agreement") pursuant to which the Company will agree,
for the benefit of the holders of the Notes, (i) to file with the Commission,
within 60 days following the closing of the issuance and sale of the Notes (the
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"Closing"), a registration statement (the "Exchange Offer Registration
Statement") under the Securities Act relating to an Exchange Offer (the
"Exchange Offer") pursuant to which securities substantially identical to the
Notes (except that such securities will not contain terms with respect to the
special interest payments described below or transfer restrictions) (the
"Exchange Notes") would be offered in exchange for the then outstanding Notes
tendered at the option of the Holders thereof and (ii) to use its best efforts
to cause the Exchange Offer Registration Statement to become effective as soon
as practicable, but in no case later than 180 days following the Closing. The
Company has further agreed to use its best efforts to commence and complete the
Exchange Offer promptly, but no later that 45 days after such registration
statement has become effective, hold the Exchange Offer open for at least 30
days, and issue Exchange Notes for all Notes validly tendered and not withdrawn
before the expiration of the Exchange Offer.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which will be available upon request to the Company.
Under existing Commission interpretations, the Exchange Notes would in
general be freely transferable after the Exchange Offer without further
registration under the Securities Act, except that broker-dealers
("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer
will be subject to a prospectus delivery requirement with respect to resale of
those Exchange Notes. The Commission has taken the position that Participating
Broker-Dealers may fulfill their prospectus delivery requirements with respect
to such Exchange Notes (other than a resale of any unsold allotment from the
original sale of the Notes) by delivery of the prospectus contained in the
Exchange Offer Registration Statement. Under the Registration Rights Agreement,
the Company is required to allow Participating Broker-Dealers to use the
prospectus contained in the Exchange Offer Registration Statement in connection
with the resale of such Exchange Notes. The Exchange Offer Registration
Statement will be kept effective for a period of 90 days after the Exchange
Offer has been completed in order to permit resales of Exchange Notes acquired
by broker-dealers in the Exchange Offer for Notes acquired in after-market
transactions. Each holder of the Notes (other than certain specified holders)
who wishes to exchange such Notes for Exchange Notes in the Exchange Offer will
be required to represent that any Exchange Notes to be received by it will be
acquired in the ordinary course of its business, that at the time of the
commencement of the Exchange Offer it has no arrangement with any Person to
participate in the distribution (within the meaning of the Securities Act) of
the Exchange Notes and that it is not an Affiliate of the Company.
However, if on or before the date of consummation of the Exchange Offer the
existing Commission interpretations are changed such that the Exchange Notes
would not in general be freely transferable on such date, the Company will, in
lieu of effecting registration of Exchange Notes, use its best efforts to file a
registration statement under the Securities Act relating to a shelf registration
of the Notes for resale by Holders (such registration, the "Shelf Registration"
and such registration statement, the "Shelf Registration Statement") as soon as
practicable, but no later than the later of 30 days after the time such
obligation to file arises and 60 days after the Closing. In addition, in the
event that the Purchasers shall not have resold all of the Notes initially
purchased by them from the Company prior to the consummation of the Exchange
Offer, the Company shall file under the Securities Act as soon as practicable a
Shelf Registration Statement. The Company agrees to use its best efforts to
cause the Shelf Registration Statement to become or be declared effective no
later than 120 days after such Shelf Registration Statement is filed and to keep
such Shelf Registration Statement continuously effective until the second
anniversary of the Closing. The Company will, in the event of the Shelf
Registration, provide to the Holders of the Notes copies of the prospectus that
is a part of the Shelf Registration Statement, notify such Holders when the
Shelf Registration Statement for the Notes has become effective and take certain
other actions as are required to permit unrestricted resales of the Notes. A
Holder of Notes that sells such Notes pursuant to the Shelf Registration
Statement generally will be required to be named as a selling securityholder in
the related prospectus and to deliver a prospectus to purchasers, will be
subject to certain of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions of the
Registration Rights Agreement that are applicable to such a Holder (including
certain indemnification obligations).
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Although the Company intends to file the registration statement previously
described, there can be no assurance that the registration statement will be
filed or, if filed, that it will become effective. In the event that (i) the
Company has not filed the Exchange Offer Registration Statement or Shelf
Registration Statement on or before the date on which such registration
statement is required to be filed as described above, (ii) such Exchange
Registration Statement or Shelf Registration Statement has not become or been
declared effective by the Commission on or before the date on which such
registration statement is required to become or be declared effective as
described above, (iii) the Exchange Offer has not been completed within 45 days
after the initial effective date of the Exchange Offer Registration Statement
(if the Exchange Offer is then required to be made) or (iv) any Exchange Offer
Registration Statement or Shelf Registration Statement required as described
above is filed and declared effective but shall thereafter either be withdrawn
by the Company or shall become subject to an effective stop order issued
pursuant to Section 8(d) of the Securities Act suspending the effectiveness of
such registration statement (except as specifically permitted in the
Registration Rights Agreement) without being succeeded immediately by an
additional registration statement filed and declared effective (each such event
referred to in Clauses (i) through (iv), a "Registration Default" and each
period during which a Registration Default has occurred and is continuing, a
"Registration Default Period"), then, as liquidated damages for such
Registration Default, special cash interest ("Special Interest"), in addition to
any base interest that would otherwise accrue on the Notes, shall accrue and be
payable at a per annum rate of 0.25% for the first 90 days of the Registration
Default Period, at a per annum rate of 0.50% for the second 90 days of the
Registration Default Period, at a per annum rate of 0.75% for the third 90 days
of the Registration Default Period and at a per annum rate of 1.0% thereafter
for the remaining portion of the Registration Default Period. The Special
Interest will be payable in cash semiannually in arrears on each June 1 and
December 1. Special Interest, if any, will be computed on the basis of a 365 or
366 day year, as the case may be, and the number of days actually elapsed.
The Notes and the Exchange Notes will be considered collectively to be a
single class and series for all purposes under the Indenture, including waivers,
amendments, redemptions and Offers to Purchase, and for purposes of this
Description of the Notes (except under this caption "Registration Covenant;
Exchange Offer"), all references herein to "Notes" shall be deemed to refer
collectively to the Notes and any Exchange Notes, unless the context otherwise
requires.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Debt of the Company and Certain of its Restricted Subsidiaries
The Company may not Incur any Debt and may not permit any of its Restricted
Subsidiaries (other than Allied Waste NA and its Restricted Subsidiaries) to
Incur any Debt or issue Preferred Stock unless, immediately after giving pro
forma effect to the Incurrence of such Debt or issuance of such Preferred Stock
and the receipt and application of the proceeds thereof, the Consolidated EBITDA
Coverage Ratio of the Company and its Restricted Subsidiaries for the four full
fiscal quarters next preceding the Incurrence of such Debt or issuance of such
Preferred Stock, calculated on a pro forma basis as if such Debt had been
Incurred or such Preferred Stock had been issued and the proceeds thereof had
been received and so applied at the beginning of the four fiscal quarters, would
be greater than 2.0 to 1.0.
Without regard to the foregoing limitations, the Company and its Restricted
Subsidiaries (other than Allied Waste NA and its Restricted Subsidiaries) may
Incur the following Debt:
(i) Debt under the Senior Credit Facility in an aggregate principal
amount at any one time outstanding not to exceed the Bank Facility Limit
then in effect;
(ii) Debt owed by the Company to any Restricted Subsidiary or Debt
owed by a Restricted Subsidiary to the Company or to a Restricted
Subsidiary; provided, however, that in the event that either (x) the
Company or the Restricted Subsidiary to which such Debt is owed transfers
or otherwise disposes of such Debt to a Person other than the Company or
another Restricted Subsidiary or (y) such Restricted Subsidiary ceases to
be a Restricted Subsidiary, the provisions of this Clause (ii) shall no
longer be applicable to such Debt and such Debt shall be deemed to have
been Incurred at the time of
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such transfer or other disposition or at the time such Restricted
Subsidiary ceases to be a Restricted Subsidiary;
(iii) Debt outstanding on the date of the Indenture;
(iv) Debt consisting of Permitted Interest Rate or Currency Protection
Agreements;
(v) Debt incurred to renew, extend, refinance or refund any
outstanding Debt permitted in Clauses (i) through (iii) above; provided,
however, that such Debt does not exceed the principal amount (or accreted
value in the case of original issue discount Debt) of Debt so renewed,
extended, refinanced or refunded; and provided further, that Debt the
proceeds of which are used to refinance or refund Debt which expressly
states that it is subordinate in right of payment to the Notes shall only
be permitted if (A) the refinancing or refunding Debt is made subordinate
to the Notes to substantially the same extent as, or a greater extent than,
the Debt being refinanced or refunded is subordinated to the Notes and (B)
such refinancing or refunding Debt (x) does not have a final Stated
Maturity earlier than the final Stated Maturity of the refinanced or
refunded Debt or permit redemption or other retirement of such Debt
(including pursuant to an offer to purchase by the Company) at the option
of the holder thereof prior to the final Stated Maturity of the Debt being
refinanced or refunded, other than a redemption or other retirement at the
option of the holder of such Debt on terms and in circumstances that are
substantially similar to those on and in which the Debt being refinanced
may be redeemed or otherwise retired and (y) does not have a Weighted
Average Life less than the Weighted Average Life of the Debt being
refinanced; and
(vi) Debt not otherwise permitted to be incurred pursuant to Clauses
(i) through (v) above, which, in aggregate amount, together with the
aggregate amount of all other Debt previously Incurred pursuant to the
provisions of the Indenture described under this Clause (vi) and then
outstanding, does not exceed $75 million. (Section 1008).
Limitation on Debt of Allied Waste NA and its Restricted Subsidiaries
The Company may not permit Allied Waste NA or any Restricted Subsidiary of
Allied Waste NA to incur any Debt or issue Preferred Stock unless, immediately
after giving effect to the Incurrence of such Debt or issuance of such Preferred
Stock and the receipt and application of the proceeds thereof, the Consolidated
EBITDA Coverage Ratio of Allied Waste NA and its Restricted Subsidiaries for the
four full fiscal quarters next preceding the Incurrence of such Debt or issuance
of such Preferred Stock, calculated on a pro forma basis as if such Debt had
been Incurred or such Preferred Stock had been issued and the proceeds thereof
had been received and so applied at the beginning of the four full fiscal
quarters, would be greater than 2.0 to 1.0 if such Incurrence or issuance is on
or prior to December 31, 1999 and 2.25 to 1.0 if thereafter. (Section 1009).
Without regard to the foregoing limitations, Allied Waste NA and its
Restricted Subsidiaries may Incur the following Debt:
(i) Debt under the Senior Credit Facility in an aggregate principal
amount at any one time outstanding not to exceed the Bank Facility Limit
then in effect;
(ii) Debt owned by Allied Waste NA to the Company or to any Restricted
Subsidiary or Debt owed by a Restricted Subsidiary of Allied Waste NA to
the Company or to a Restricted Subsidiary; provided, however, that in the
event that either (x) the Company or the Restricted Subsidiary to which
such Debt is owed transfers or otherwise disposes of such Debt to a Person
other than the Company or another Restricted Subsidiary or (y) such
Restricted Subsidiary ceases to be a Restricted Subsidiary, the provisions
of this Clause (ii) shall no longer be applicable to such Debt and such
Debt shall be deemed to have been Incurred at the time of such transfer or
other disposition or at the time such Restricted Subsidiary ceases to be a
Restricted Subsidiary;
(iii) Debt outstanding on the date of the Indenture;
(iv) Debt Incurred in connection with an acquisition, merger or
consolidation transaction permitted under the provisions of the Indenture
described under "Mergers, Consolidations and Certain Sales and
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Purchases of Assets," which Debt (A) was issued by a Person prior to the
time such Person becomes a Restricted Subsidiary of Allied Waste NA in such
transaction (including by way of merger or consolidation with Allied Waste
NA or another Restricted Subsidiary of Allied Waste NA) and was not issued
in contemplation of such transaction or (B) is issued by Allied Waste NA or
a Restricted Subsidiary of Allied Waste NA to a seller in connection with
such transaction, in an aggregate amount for all such Debt issued pursuant
to the provisions of the Indenture described under this Clause (iv) not to
exceed $50 million at any one time outstanding;
(v) Debt consisting or Permitted Interest Rate or Currency Protection
Agreements;
(vi) Debt Incurred to renew, extend, refinance or refund any
outstanding Debt permitted in Clauses (i) through (iv) above; provided,
however, that such Debt does not exceed the principal amount (or accreted
value in the case of original issued discount Debt) of Debt so renewed,
extended, refinanced or refunded; and provided further, that Debt the
proceeds of which are used to refinance or refund Debt which expressly
states that it is subordinate in right of payment to the Notes shall only
be permitted if (A) the refinancing or refunding Debt is made subordinate
to the Notes to substantially the same extent as, or a greater extent than,
the Debt being refinanced or refunded is subordinated to the Notes and (B)
such refinancing or refunding Debt (x) does not have a final Stated
Maturity earlier than the final Stated Maturity of the refinanced or
refunded Debt or permit redemption or other retirement of such Debt
(including pursuant to an offer purchase by the Company) at the option of
the holder thereof prior to the final Stated Maturity of the Debt being
refinanced or refunded, other than a redemption or other retirement at the
option of the holder of such Debt on terms and in circumstances that are
substantially similar to those on and in which the Debt being refinanced
may be redeemed or otherwise retired and (y) does not have a Weighted
Average Life less than the Weighted Average Life of the Debt being
refinanced; and
(vii) Debt not otherwise permitted to be Incurred pursuant to Clauses
(i) through (vi) above, which, in aggregate amount, together with the
aggregate amount of all other Debt previously Incurred pursuant to the
provisions of the Indenture described under this Clause (vii) and then
outstanding, does not exceed 5% of the Consolidated Total Assets of Allied
Waste NA and its Restricted Subsidiaries at the time of such Incurrence.
(Section 1009).
Notwithstanding the foregoing, the Company may not permit Allied Insurance
to Incur any Debt other than reimbursement obligations with respect to letters
of credit and other financial assurance obligations issued to enable Allied
Insurance to issue insurance policies for the benefit of the Company and its
Restricted Subsidiaries.
Limitation on Restricted Payments
The Company may not, and may not permit any Restricted Subsidiary to,
directly or indirectly, (i) declare or pay any dividend, or make any
distribution, of any kind or character (whether in cash, property or securities)
in respect of the Capital Stock of the Company or any Restricted Subsidiary or
to the holders thereof in their capacity as such (excluding any dividends or
distributions) (u) to the extent payable in shares of the Capital Stock of the
Company (other than Redeemable Interests) or in options, warrants or other
rights to acquire the Capital Stock of the Company (other than Redeemable
Interests), (v) dividends or distributions by a Restricted Subsidiary to the
Company or another Restricted Subsidiary and (w) the payment of pro rata
dividends by a Restricted Subsidiary to holders of both minority and majority
interests in such Restricted Subsidiary), (ii) purchase, redeem or otherwise
acquire or retire for value (a) any Capital Stock of the Company or any Capital
Stock of or other ownership interests in any Subsidiary or any Affiliate or
Related Person of the Company or (b) any options, warrants or rights to purchase
or acquire shares of Capital Stock of the Company or any Capital Stock of or
other ownership interests in any Subsidiary or any Affiliate or Related Person
of the Company (excluding, in each case of (a) and (b), the purchase,
redemption, acquisition or retirement by any Restricted Subsidiary of any of its
Capital Stock, other ownership interests or options, warrants or rights to
purchase such Capital Stock or other ownership interests, in each case, owned by
the Company or a Wholly Owned Restricted Subsidiary), (iii) make any Investment
that is
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not a Permitted Investment or (iv) redeem, defease, repurchase, retire or
otherwise acquire or retire for value prior to any scheduled maturity, repayment
or sinking fund payment, Debt of the Company (other than the Notes) that is
subordinate in right of payment to the Notes (each of the transactions described
in Clauses (i) through (iv) being a "Restricted Payment"), if:
(1) an Event of Default, or an event that with the lapse of time or
the giving of notice, or both, would constitute an Event of Default, shall
have occurred and be continuing;
(2) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the most recently ended four full fiscal
quarter period for which internal financial statements are available
immediately preceding the date of such Restricted Payment, not have been
permitted to Incur at least $1.00 of additional Debt pursuant to the
Consolidated EBITDA Coverage Ratio test described under "Limitation on Debt
of the Company and Certain of its Restricted Subsidiaries" above; or
(3) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments (excluding Restricted Payments permitted by Clauses
(i), (iii) and (iv) of the next succeeding paragraph) from the date of the
Indenture (the amount so expended, if other than in cash, determined in
good faith by the Board of Directors) exceeds the sum, without duplication,
of:
(a) 50% of the aggregate Consolidated Net Income (or, in case
Consolidated Net Income shall be negative, less 100% of such deficit)
for the period (taken as one accounting period) from January 1, 1997 to
the end of the Company's most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment;
(b) 100% of the aggregate net cash proceeds from the issuance and
sale (other than to a Restricted Subsidiary) of Capital Stock (other
than Redeemable Interests) of the Company and options, warrants or other
rights to acquire Capital Stock (other than Redeemable Interests and
Debt convertible into Capital Stock) of the Company and the principal
amount of Debt and Redeemable Interests of the Company that has been
converted into Capital Stock (other than Redeemable Interests) of the
Company after January 1, 1997, provided that any such net proceeds
received by the Company from an employee stock ownership plan financed
by loans from the Company or a Subsidiary of the Company shall be
included only to the extent such loans have been repaid with cash on or
prior to the date of determination;
(c) 50% of any dividends received by the Company or a Wholly Owned
Restricted Subsidiary after January 1, 1997 from an Unrestricted
Subsidiary of the Company; and
(d) $10 million. (Section 1010).
The foregoing covenant will not be violated by reason of:
(i) the repurchase by the Company of the Warrant to purchase 20.4
million shares of the Company's Common Stock and the repurchase by the
Company or Allied Finance of the Allied Finance Debentures;
(ii) the payment of any dividend within 60 days after declaration
thereof if at the declaration date such payment would have complied with
the foregoing covenant;
(iii) any refinancing or refunding of Debt permitted pursuant to
Clause (vi) of the second paragraph under "Limitation on Debt of Allied
Waste NA and its Restricted Subsidiaries" or pursuant to Clause (v) of the
second paragraph under "Limitation on Debt of the Company and Certain of
its Restricted Subsidiaries" above; and
(iv) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Company or any options, warrants or
rights to purchase or acquire shares of Capital Stock of the Company in
exchange for, or out of the net cash proceeds of, the substantially
concurrent issuance or sale (other than to a Restricted Subsidiary) of
Capital Stock (other than Redeemable Interests) of the Company; provided
that the amount of any such net cash proceeds that are utilized for any
such
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purchase, redemption or other acquisition or retirement for value shall be
excluded from Clause(3)(b) in the foregoing paragraph.
Upon the designation of any Restricted Subsidiary as an Unrestricted
Subsidiary, an amount equal to the greater of the book value and the fair market
value of all assets of such Restricted Subsidiary at the end of the Company's
most recently ended fiscal quarter for which internal financial statements are
available prior to such designation will be deemed to be a Restricted Payment at
the time of such designation for purposes of calculating the aggregate amount of
Restricted Payments (including the Restricted Payment resulting from such
designation) permitted under provisions described in the second preceding
paragraph. (Section 1010).
Limitations Concerning Distributions by Subsidiaries, Etc.
The Company may not, and may not permit any Restricted Subsidiary to,
suffer to exist any consensual encumbrance or restriction on the ability of such
Restricted Subsidiary: (i) to pay, directly or indirectly, dividends or make any
other distributions in respect of its Capital Stock or other ownership interests
or pay any Debt or other obligation owed to the Company or any other Restricted
Subsidiary; (ii) to make loans or advances to the Company or any other
Restricted Subsidiary; or (iii) to sell, lease or transfer any of its property
or assets to the Company or any Wholly Owned Restricted Subsidiary, except, in
any such case, any encumbrance or restriction: (a) pursuant to the Notes, the
Indenture or any other agreement in effect on the date of the Indenture, (b)
pursuant to the Allied Waste NA Notes, including any Guarantees thereof or Liens
securing any of such Debt, (c) pursuant to the Senior Credit Facility, including
any Guarantees of or Liens securing the Debt incurred thereunder, (d) pursuant
to an agreement relating to any Debt Incurred by such Subsidiary prior to the
date on which such Subsidiary was acquired by the Company and outstanding on
such date and not Incurred in anticipation of becoming a Subsidiary, (e)
pursuant to an agreement which has been entered into for the pending sale or
disposition of all or substantially all of the Capital Stock, other ownership
interests or assets of such Subsidiary, provided that such restriction
terminates upon consummation or abandonment of such disposition and upon
termination of such agreement, (f) pursuant to customary non-assignment
provisions in leases entered into in the ordinary course of business, (g)
pursuant to purchase money obligations for property acquired in the ordinary
course of business or liens in connection therewith permitted to be incurred
under "-- Limitation on Liens" that impose restrictions of the nature described
in Clause (iii) above on the property so acquired, (h) pursuant to Debt
permitted to be Incurred by Allied Waste NA and its Restricted Subsidiaries
pursuant to the provisions of the Indenture described under "Limitation on Debt
of Allied Waste NA and its Restricted Subsidiaries," provided, however, that the
provisions relating to such encumbrance or restriction contained in such Debt
are no more restrictive in any material respect than the restrictions contained
in the indenture pursuant to which the Allied Waste NA Notes were issued or (i)
pursuant to an agreement effecting a renewal, extension, refinancing or
refunding of Debt Incurred pursuant to an agreement referred to in Clause (a),
(b), (c) or (h) above; provided, however, that the provisions relating to such
encumbrance or restriction contained in such renewal, extension, refinancing or
refunding agreement are no more restrictive in any material respect than the
provisions contained in the agreement it replaces, as determined in good faith
by the Board of Directors. (Section 1011).
Limitation on Liens
The Company may not incur any Lien on property or assets of the Company now
owned or hereafter acquired without making effective provision for securing the
Notes, provided that in the event such Lien secures Debt which is subordinate in
right of payment to the Notes, the Notes are secured on a basis prior to such
Debt as to such property or assets for so long as such Debt will be so secured.
(Section 1012).
Limitation on Transactions with Affiliates and Related Persons
The Company may not, and may not permit any Restricted Subsidiary of the
Company to, directly or indirectly, enter into any transaction (or series of
related transactions) after the date of the Indenture with any Affiliate or
Related Person unless: (i) such Affiliate or Related Person is (both before and
after such transaction) (a) the Company or a Restricted Subsidiary or (b)
another Restricted Subsidiary the minority interests in which are not held by
any Affiliate or Related Person; or (ii) where the total consideration given or
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to be provided by the Company or such Restricted Subsidiary in or pursuant to
such transaction (or series) (including cash, the fair value of noncash property
and the assumption of Debt) (a) will be no more than $1 million, the Chief
Executive Officer, the Chief Operating Officer or the Chief Financial Officer
certifies in an Officer's Certificate that the terms of the transaction (or
series) are in the best interests of the Company or such Restricted Subsidiary
and are no less favorable to the Company or such Restricted Subsidiary than
those that could be obtained in a comparable arm's-length transaction with an
entity that is not an Affiliate or Related Person, (b) will be in excess of $1
million but no more than $5 million, a majority of the disinterested members of
the Board of Directors determines in its good faith judgment that the terms of
the transaction are in the best interests of the Company or such Restricted
Subsidiary and are no less favorable to the Company or such Restricted
Subsidiary than those that could be obtained in a comparable arm's-length
transaction with an entity that is not an Affiliate or a Related Person; or (c)
will be in excess of $5 million, a nationally recognized investment banking firm
(which may not be an Affiliate or Related Person of the Company), delivers a
written opinion to the Board of Directors prior to consummation of such
transaction (or series) that the terms of the transaction (or series) are in the
best interests of the Company or such Restricted Subsidiary and are no less
favorable to the Company or such Restricted Subsidiary than those that could be
obtained in a comparable arm's-length transaction with an entity that is not an
Affiliate or Related Person; provided, however, that the foregoing restriction
will not apply to the Repurchase or to the Intercompany Agreements as in effect
on the date of the Indenture or the transactions contemplated thereby. (Section
1013).
Limitation on Sale of Capital Stock of Subsidiaries
The Company may not, and may not permit any Restricted Subsidiary to,
issue, transfer, convey, lease or otherwise dispose of any shares of Capital
Stock of or other ownership interests in a Restricted Subsidiary or securities
convertible or exchangeable into, or options, warrants, rights or any other
interest with respect to, Capital Stock of or other ownership interests in a
Restricted Subsidiary to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary) except in a transaction that consists of a sale of all of
the Capital Stock of or other ownership interests in such Subsidiary owned by
the Company and any Subsidiary of the Company and that complies with the
provisions described under "Repurchase at the Option of Holders -- Asset
Dispositions" above to the extent such provisions apply. (Section 1019).
Restriction on Business and Incurrence of Debt by Allied Finance
Allied Finance may not, and the Company may not permit Allied Finance to,
engage in any activities, transactions or business, including, without
limitation, the Incurrence of any Debt, provided that the foregoing will not
prohibit Allied Finance from holding the Allied Canada Debentures and engaging
in any other activities and transactions that are directly related to its status
as an obligor under the Allied Finance Debentures or its status as a holder of
the Allied Canada Debentures. (Section 1020).
Provision of Financial Information
Whether or not the Company is required to be subject to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, or any successor provision
thereto, the Company will file with the Commission the annual reports, quarterly
reports and other documents which the Company would have been required to file
with the Commission pursuant to such Section 13(a) or 15(d) or any successor
provision thereto if the Company were so required, such documents to be filed
with the Commission on or prior to the respective dates (the "Required Filing
Dates") by which the Company would have been required so to file such documents
if the Company were so required. The Company shall also in any event (a) within
15 days of each Required Filing Date (i) transmit by mail to all Holders, as
their names and addresses appear in the Security Register, without cost to such
Holders, and (ii) file with the Trustee, copies of the annual reports, quarterly
reports and other documents which the Company files with the Commission pursuant
to such Section 13(a) or 15(d) or any successor provisions thereto or would have
been required to file with the Commission pursuant to such Section 13(a) or
15(d) or any successor provisions thereto if the Company were required to comply
with such Sections and (b) if filing such documents by the Company with the
Commission is not permitted under the
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Securities Exchange Act of 1934, promptly upon written request supply copies of
such documents to any prospective Holder. (Section 1016).
Unrestricted Subsidiaries
The Company at any time may designate any Person that is a Subsidiary, or
after the date of the Indenture becomes a Subsidiary, of the Company as an
"Unrestricted Subsidiary," whereupon (and until such Person ceases to be an
Unrestricted Subsidiary) such Person and each other Person that is then or
thereafter becomes a Subsidiary of such Person will be deemed to be an
Unrestricted Subsidiary. In addition, the Company may at any time terminate the
status of any Unrestricted Subsidiary as an Unrestricted Subsidiary, whereupon
such Subsidiary and each other Subsidiary of the Company (if any) of which such
Subsidiary is a Subsidiary will be a Restricted Subsidiary. (Section 1018).
Notwithstanding the foregoing, no change in the status of a Subsidiary of
the Company from a Restricted Subsidiary to an Unrestricted Subsidiary or from
an Unrestricted Subsidiary to a Restricted Subsidiary will be effective, and no
Person may otherwise become a Restricted Subsidiary, if:
(i) (x) in the event such Subsidiary is not a Subsidiary of Allied
Waste NA, the Consolidated EBITDA Coverage Ratio of the Company and its
Restricted Subsidiaries for the four full fiscal quarters of the Company
next preceding the effective date of such purported change or other event,
calculated on a pro forma basis as if such change or other event had been
effective at the beginning of such period, would not exceed 2.0 to 1.0 and
(y) in the event such Subsidiary is a Subsidiary of Allied Waste NA, the
Consolidated EBITDA Coverage Ratio of Allied Waste NA and its Restricted
Subsidiaries for the four full fiscal quarters of the Company next
preceding the effective date of such purported change or other event,
calculated on a pro forma basis as if such change or other event had been
effective at the beginning of such period, would not exceed 2.0 to 1.0 if
such purported change is to occur on or prior to December 31, 1999 and 2.25
to 1.0 if thereafter;
(ii) in the case of any change in status of a Restricted Subsidiary to
an Unrestricted Subsidiary, the Restricted Payment resulting from such
change, would violate the provisions of the Indenture described under
Clause (3) of the first paragraph under "Limitation on Restricted Payments"
above; or
(iii) such change or other event would otherwise result (after the
giving of notice or the lapse of time, or both) in an Event of Default.
In addition and notwithstanding the foregoing, no Restricted Subsidiary may
become an Unrestricted Subsidiary, and the status of any Unrestricted Subsidiary
as an Unrestricted Subsidiary will be deemed to have been immediately terminated
(whereupon such Subsidiary and each other Subsidiary of the Company (if any) of
which such Subsidiary is a Subsidiary will be a Restricted Subsidiary) at any
time when:
(i) such Subsidiary (A) has outstanding Debt that is Unpermitted Debt
or (B) owns or holds any Capital Stock of or other ownership interests in,
or a Lien on any property or other assets of, the Company or any of its
Restricted Subsidiaries; or
(ii) the Company or any other Restricted Subsidiary (A) provides
credit support for, or a Guaranty of, any Debt of such Subsidiary
(including any undertaking, agreement or instrument evidencing such Debt)
or (B) is directly or indirectly liable for any Debt of such Subsidiary.
Any termination of the status of an Unrestricted Subsidiary as an
Unrestricted Subsidiary pursuant to the preceding sentence will be deemed to
result in a breach of this covenant in any circumstance in which the Company
would not be permitted to change the status of such Unrestricted Subsidiary to
the status of a Restricted Subsidiary pursuant to the provision of the Indenture
described under the preceding paragraph. "Unpermitted Debt" means any Debt of a
Subsidiary of the Company if (x) a default thereunder (or under any instrument
or agreement pursuant to or by which such Debt is issued, secured or evidenced),
or any right that the holders thereof may have to take enforcement action
against such Subsidiary or its property or other assets, would permit (whether
or not after the giving of notice or the lapse of time or both) the holders of
any Debt of the Company or any other Restricted Subsidiary to declare the same
due and payable prior to the date
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on which it otherwise would have become due and payable or otherwise to take any
enforcement action against the Company or any such other Restricted Subsidiary
or (y) such Debt is secured by a Lien on any property or other assets of the
Company and any of its other Restricted Subsidiaries. (Section 1018).
Each Person that is or becomes a Subsidiary of the Company will be deemed
to be a Restricted Subsidiary at all times when it is a Subsidiary of the
Company that is not an Unrestricted Subsidiary. Each Person that is or becomes a
Wholly Owned Subsidiary of the Company shall be deemed to be a Wholly Owned
Restricted Subsidiary at all times when it is a Wholly Owned Subsidiary of the
Company that is not an Unrestricted Subsidiary. Each reference herein to a
Restricted Subsidiary of Allied Waste NA refers to a Restricted Subsidiary that
is a Subsidiary of Allied Waste NA. (Section 1018).
MERGERS, CONSOLIDATIONS AND CERTAIN SALES AND PURCHASES OF ASSETS
The Company (i) may not, and may not permit any Restricted Subsidiary to,
consolidate with or merge into any Person, provided that this Clause (i) will
not prohibit any such consolidation or merger by a Restricted Subsidiary if (x)
such Restricted Subsidiary ceases to be a Restricted Subsidiary in such
consolidation or merger or (y) such consolidation or merger is with or into the
Company or another Wholly Owned Restricted Subsidiary; (ii) may not permit any
Person other than a Wholly Owned Restricted Subsidiary to consolidate with or
merge into the Company or any Restricted Subsidiary, provided that this Clause
(ii) will not prohibit any such consolidation or merger with or into a
Restricted Subsidiary if such Restricted Subsidiary ceases to be a Restricted
Subsidiary in such consolidation or merger; (iii) may not, directly or
indirectly, in one or a series of transactions, transfer, convey, sell, lease or
otherwise dispose of all or substantially all of the properties and assets of
the Company and its Subsidiaries on a consolidated basis; (iv) may not, and may
not permit any Restricted Subsidiary of the Company to, acquire Capital Stock of
or other ownership interests in any other Person such that such other Person
becomes a Restricted Subsidiary (excluding transactions with an aggregate
purchase price of not more than $50 million with respect to the consummation of
which, as of the date of the Indenture, the Company has entered into a letter of
intent, option or other contract); and (v) may not, and may not permit any
Restricted Subsidiary of the Company to, purchase, lease or otherwise acquire
all or substantially all of the properties and assets of any Person or any
existing business (whether existing as a separate entity, subsidiary, division,
unit or otherwise) of any Person (excluding transactions with an aggregate
purchase price of not more than $50 million with respect to the consummation of
which, as of the date of the Indenture, the Company has entered into a letter of
intent, option or other contract) unless, in each case (i), (ii), (iii), (iv)
and (v) above:
(1) immediately before and after giving effect to such transaction (or
series) and treating any Debt incurred by the Company or a Subsidiary of
the Company as a result of such transaction (or series) as having been
Incurred by the Company or such Subsidiary at the time of the transaction
(or series), no Event of Default, or event that with the passing of time or
the giving of notice, or both, will constitute an Event of Default, shall
have occurred and be continuing;
(2) in a transaction (or series) in which the Company does not survive
or in which the Company transfers, conveys, sells, leases or otherwise
disposes of all or substantially all of its properties and assets, the
successor entity is a corporation, partnership, limited liability company
or trust and is organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and
expressly assumes, by a supplemental indenture executed and delivered to
the Trustee in form satisfactory to the Trustee, all the Company's
obligations under the Indenture;
(3) immediately after giving effect to such transaction (or series),
the Company or the successor entity would have a Consolidated Net Worth
equal to or greater than 90% of the Consolidated Net Worth of the Company
and its Restricted Subsidiaries immediately prior to such transaction (or
series);
(4) if such transaction (or series) involves Allied Waste NA or any of
its Restricted Subsidiaries, either (x) Allied Waste NA or its successor
entity would, at the time of such transaction (or series) and after giving
pro forma effect thereto as if such transaction (or series) had occurred at
the beginning of the most recently ended four full fiscal quarter period
for which internal financial statements are available immediately preceding
the date of such transaction (or series), have been permitted to Incur at
least
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$1.00 of additional Debt pursuant to the Consolidated EBITDA Coverage Ratio
test described in the first paragraph under "Certain
Covenants -- Limitation on Debt of Allied Waste NA and its Restricted
Subsidiaries" above or (y) the Consolidated EBITDA Coverage Ratio of Allied
Waste NA (or its successor entity) and its Restricted Subsidiaries for the
most recently ended four full fiscal quarter period for which internal
financial statements are available immediately preceding the date of such
transaction (or series), calculated on a pro forma basis as if such
transaction (or series) had occurred at the beginning of such four full
fiscal quarter period, would be no less than such Consolidated EBITDA
Coverage Ratio, calculated without giving effect to such transaction or
series or any other transactions (or series) that is subject to the
provisions of the Indenture described in this paragraph and that occurred
after the later of December 30, 1996 and the date that is twelve months
before the date of such transaction (or series);
(5) if such transaction (or series) involves the Company or any of its
Restricted Subsidiaries (other than Allied Waste NA and any of its
Restricted Subsidiaries), either (x) the Company or its successor entity
would, at the time of such transaction (or series) and after giving pro
forma effect thereto as if such transaction (or series) had occurred at the
beginning of the most recently ended four full fiscal quarter period for
which internal financial statements are available immediately preceding the
date of such transaction (or series), have been permitted to Incur at least
$1.00 of additional Debt pursuant to the Consolidated EBITDA Coverage Ratio
test described under "Certain Covenants -- Limitation on Debt of the
Company and Certain of its Restricted Subsidiaries" or (y) the Consolidated
EBITDA Coverage Ratio of the Company (or its successor entity) and its
Restricted Subsidiaries for the most recently ended four full fiscal
quarter period for which internal financial statements are available
immediately preceding the date of such transaction (or series), calculated
on a pro forma basis as if such transaction (or series) had occurred at the
beginning of such four full fiscal quarter period, would be no less than
such Consolidated EBITDA Coverage Ratio, calculated without giving effect
to such transaction or series or any other transactions (or series) that is
subject to the provisions of the Indenture described in this paragraph and
that occurred after the later of December 30, 1996 and the date that is
twelve months before the date of such transaction (or series);
(6) if, as a result of any such transaction, property or assets of the
Company would become subject to a Lien prohibited by the covenant described
above under "Certain Covenants -- Limitations on Liens," the Company or its
successor entity will have secured the Notes as required by such covenant;
and
(7) unless such transaction (or series) is of the type referred to in
Clause (iii) or (iv) above and involves an aggregate purchase price of less
than $50 million, the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel as specified in the Indenture.
(Section 801).
EVENTS OF DEFAULT
The following will be Events of Default under the Indenture: (a) failure to
pay any interest on any Note when due, continued for 30 days; (b) failure to pay
principal of (or premium, if any, on) any Note when due; (c) failure to perform
or comply with the provisions described under "Mergers, Consolidations and
Certain Sales and Purchases of Assets" or the provisions described under
"Repurchase at the Option of Holders -- Asset Dispositions" and "-- Change of
Control;" (d) failure to perform any other covenant or warranty of the Company
in the Indenture or the Notes, continued for 60 days after written notice from
Holders of at least 10% in principal amount of the Outstanding Notes as provided
in the Indenture; (e) a default or defaults under any bonds, debentures, notes
or other evidences of, or obligations constituting, Debt by the Company or any
Restricted Subsidiary or under any mortgages, indentures, instruments or
agreements under which there may be issued or existing or by which there may be
secured or evidenced any Debt of the Company or any Restricted Subsidiary, in
each case with a principal or similar amount then outstanding, individually or
in the aggregate, in excess of $25 million, whether such Debt now exists or is
hereafter created, which default or defaults constitute a failure to pay any
portion of the principal or similar amount of such Debt when due and payable
after the expiration of any applicable grace period with respect thereto or will
have resulted in such Debt becoming or being declared due and payable prior to
the date on which it would otherwise have become
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due and payable; (f) the rendering of a final judgment or judgments (not subject
to appeal) against the Company or any of its Restricted Subsidiaries in an
aggregate amount in excess of $25 million which remains unstayed, undischarged
or unbonded for a period of 60 days thereafter; and (g) certain events of
bankruptcy, insolvency or reorganization affecting the Company or any Restricted
Subsidiary of the Company. (Section 501).
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default occurs and is continuing, the Trustee will
be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
have offered to the Trustee reasonable indemnity. (Section 603). Subject to such
provisions for the indemnification of the Trustee and certain other conditions
provided in the Indenture, the Holders of a majority in aggregate principal
amount of the Outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee. (Section 512).
If an Event of Default (other than an Event of Default of the type
described in Clause (g) above) occurs and is continuing, either the Trustee or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Notes may accelerate the maturity of all Notes. If an Event of Default of the
type described in Clause (g) above occurs, the Accreted Value (if such event
occurs prior to June 1, 2002) or the principal amount (if such event occurs on
or after June 1, 2002) of and any accrued interest (including Special Interest)
on the Notes then outstanding will become immediately due and payable; provided,
however, that after such acceleration, but before a judgment or decree based on
acceleration, the Holders of a majority in aggregate principal amount of
Outstanding Notes may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
Accreted Value or principal amount, as the case may be, have been cured or
waived as provided in the Indenture. (Section 502). For information as to waiver
of defaults, see "Modification and Waiver."
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder has
previously given to the Trustee written notice of a continuing Event of Default
and unless also the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceeding as trustee, and the Trustee has not
received from the Holders of a majority in aggregate principal amount of the
Outstanding Notes a direction inconsistent with such request and has failed to
institute such proceeding within 60 days. However, such limitations do not apply
to a suit instituted by a Holder of a Note for enforcement of payment of the
Accreted Value or principal amount, as the case may be, of (and premium, if any)
or any interest (including Special Interest) on such Note on or after the
respective due dates expressed in such Note. (Sections 507 and 508).
In the case any Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the Notes pursuant to the provisions
described above under "Optional Redemption," an equivalent premium will also
become and be immediately due and payable upon the acceleration of the Notes.
The Company will be required to furnish to the Trustee annually a statement
as to the performance by the Company of certain of its obligations under the
Indenture and as to any default in such performance. The Company will be
required to deliver to the Trustee, as soon as possible and in any event within
30 days after the Company becomes aware of the occurrence of an Event of Default
or an event which, with notice or the lapse of time or both, would constitute an
Event of Default, an Officers' Certificate setting forth the details of such
Event of Default or default, and the action which the Company proposes to take
with respect thereto. (Section 1020).
DEFEASANCE
The Indenture will provide that (A) if applicable, the Company will be
discharged from any and all obligations in respect of the Outstanding Notes or
(B) if applicable, the Company may omit to comply with
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certain restrictive covenants, and that such omission will not be deemed to be
an Event of Default under the Indenture and the Notes, in either case (A) or (B)
upon irrevocable deposit with the Trustee, in trust, of money and/or U.S.
Government Obligations that will provide money in an amount sufficient in the
opinion of a nationally recognized firm of independent certified public
accountants to pay the principal of, and premium, if any, and each installment
of interest, if any, on the Outstanding Notes. With respect to Clause (B), the
obligations under the Indenture other than with respect to such covenants and
the Events of Default other than the Event of Default relating to such covenants
above will remain in full force and effect. Such trust may only be established
if, among other things (i) with respect to Clause (A), the Company has received
from, or there has been published by, the Internal Revenue Service a ruling or
there has been a change in law, which in the Opinion of Counsel provides that
Holders of the Notes will not recognize gain or loss for Federal income tax
purposes as a result of such deposit, defeasance and discharge and will be
subject to Federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit, defeasance and discharge
had not occurred; or, with respect to Clause (B), the Company has delivered to
the Trustee an Opinion of Counsel to the effect that the Holders of the Notes
will not recognize gain or loss for Federal income tax purposes as a result of
such deposit and defeasance and will be subject to Federal income tax on the
same amount, in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred; (ii) no Event of Default
(or event that with the passing of time or the giving of notice, or both, will
constitute an Event of Default) shall have occurred or be continuing; (iii) the
Company has delivered to the Trustee an Opinion of Counsel to the effect that
such deposit shall not cause the Trustee or the trust so created to be subject
to the Investment Company Act of 1940; and (iv) certain other customary
conditions precedent are satisfied. (Sections 1201, 1202, 1203 and 1204).
In the event the Company omits to comply with its remaining obligations
under the Indenture and the Notes after a defeasance of the Indenture with
respect to the Notes as described under Clause (B) above and the Notes are
declared due and payable because of the occurrence of any Event of Default, the
amount of money and U.S. Government Obligations on deposit with the Trustee may
be insufficient to pay amounts due on the Notes at the time of the acceleration
resulting from such Event of Default. However, the Company will remain liable in
respect of such payments.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in aggregate
principal amount of the Outstanding Notes; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Note affected thereby, (a) change the Stated Maturity of the
principal of, or any installment of interest (including Special Interest) on,
any Note, (b) reduce the Accreted Value or principal amount, as the case may be,
of (or the premium, if any), or interest (including Special Interest) on, any
Note, (c) change the place or currency of payment of Accreted Value or principal
amount, as the case may be, of (or premium, if any), or interest (including
Special Interest) on, any Note, (d) impair the right to institute suit for the
enforcement of any payment on or with respect to any Note, (e) reduce the
above-stated percentage of Outstanding Notes necessary to modify or amend the
Indenture, (f) reduce the percentage of aggregate principal amount of
Outstanding Notes necessary for waiver of compliance with certain provisions of
the Indenture or for waiver of certain defaults, (g) modify any provisions of
the Indenture relating to the modification and amendment of the Indenture or the
waiver of past defaults or covenants, except as otherwise specified or (h)
modify the provisions described under "Repurchase at the Option of
Holders -- Asset Dispositions" and under "-- Change of Control" in a manner
adverse to the Holders thereof in any material respect. (Section 902).
The Holders of a majority in aggregate principal amount of the Outstanding
Notes may waive compliance by the Company with certain restrictive provisions of
the Indenture. (Section 1021). The Holders of a majority in aggregate principal
amount of the Outstanding Notes may waive any past default under the Indenture,
except a default in the payment of principal (or premium, if any) or interest.
(Section 513).
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NOTICES
Notices to Holders of Notes will be given by mail to the addresses of such
Holders as they may appear in the Security Register. (Sections 101 and 106).
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Note is registered as the absolute owner
thereof (whether or not such Note may be overdue) for the purpose of making
payment and for all other purposes. (Section 308).
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York. (Section 112).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF
AN INVESTMENT IN THE EXCHANGE NOTES
The following summary of the principal United States federal income tax
consequences of ownership of Exchange Notes deals only with Exchange Notes held
as capital assets by initial purchasers, and not with special classes of
holders, including, without limitation, dealers in securities or currencies,
banks, certain U.S. expatriates, tax-exempt organizations, life insurance
companies, persons that hold Exchange Notes that are a hedge or that are hedged
against currency risks or that are part of a straddle or conversion transaction,
or persons whose functional currency is not the U.S. dollar. The summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), its
legislative history, existing and proposed regulations thereunder, published
rulings and court decisions, all as currently in effect and all subject to
change at any time, perhaps with retroactive effect. This summary does not
address the effect of any United States state or local law on a holder of
Exchange Notes.
For purposes of this discussion, the term "United States Holder" means a
beneficial owner of an Exchange Note who or that is (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, (iii) a trust whose administration is subject to the
primary supervision of a U.S. court and one or more U.S. fiduciaries of which
have authority to control all substantial decisions of the trust, or (iv) an
estate the income of which is includable in gross income for U.S. federal income
tax purposes regardless of its source, and the term "United States Alien Holder"
means a beneficial owner of an Exchange Note who or that is not a United States
Holder.
Prospective purchasers of Exchange Notes should consult their own tax
advisors concerning the consequences, in their particular circumstances, under
the Code and the laws of any other state, local or foreign taxing jurisdiction,
of the ownership of Exchange Notes.
UNITED STATES HOLDERS
Original Issue Discount
General. The Exchange Notes will be treated as issued at an original issue
discount because the excess of an Exchange Note's "stated redemption price at
maturity" over its "issue price" is more than a "de minimis amount." Generally,
the issue price of an Exchange Note will be the first price at which a
substantial amount of Exchange Notes included in the issue of which the Exchange
Note is a part is sold to other than bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers. The stated redemption price at maturity of an Exchange Note is the
total of all payments provided by the Exchange Note that are not payments of
"qualified stated interest." A qualified stated interest payment is generally
any one of a series of stated interest payments on an Exchange Note that are
unconditionally payable at least annually at a single fixed rate applied to the
outstanding principal amount of
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the Exchange Note. Under this rule, none of the interest payments on the
Exchange Notes will be qualified stated interest.
In general, a United States Holder is required to include original issue
discount ("OID") in income calculated on a constant-yield method before the
receipt of cash attributable to such income, regardless of whether the United
States Holder is otherwise a cash method or accrual method taxpayer. The amount
of OID includable in income by a United States Holder is the sum of the daily
portions of OID with respect to the Exchange Note for each day during the
taxable year or portion of the taxable year on which the United States Holder
holds such Exchange Note ("accrued OID"). The daily portion is determined by
allocating to each day in any "accrual period" a pro rata portion of the OID
allocable to that accrual period. Accrual periods with respect to an Exchange
Note may be of any length selected by the United States Holder and may vary in
length over the term of the Exchange Note as long as (i) no accrual period is
longer than one year and (ii) each scheduled payment of interest or principal on
the Exchange Note occurs on either the final or first day of an accrual period.
The amount of OID on an Exchange Note that is allocable to an accrual period
equals the product of the Exchange Note's adjusted issue price at the beginning
of the accrual period and such Exchange Note's yield to maturity (determined on
the basis of compounding at the close of each accrual period and properly
adjusted for the length of the accrual period). The "adjusted issue price" of an
Exchange Note at the beginning of any accrual period is the issue price of the
Exchange Note increased by (x) the amount of accrued OID for each prior accrual
period and decreased by (y) the amount of any payments previously made on the
Exchange Note. The amount of OID allocable to an initial short accrual period
may be computed using any reasonable method if all other accrual periods other
than a final short accrual period are of equal length. The amount of OID
allocable to the final accrual period is the difference between (x) the amount
payable at the maturity of the Exchange Note and (y) the Exchange Note's
adjusted issue price as of the beginning of the final accrual period. Under the
foregoing rules, a United States Holder will generally have to include in gross
income increasingly greater amounts of OID in successive accrual periods.
Acquisition Premium. A United States Holder that purchases an Exchange
Note for an amount less than or equal to the sum of all amounts payable on the
Exchange Note after the purchase date but in excess of its adjusted issue price
(as determined above under "Original Issue Discount -- General") (any such
excess being "acquisition premium") and that does not make the election
described below under "Election to Treat All Interest as Original Issue
Discount" shall reduce the daily portions of OID by a fraction, the numerator of
which is the excess of the United States Holder's adjusted basis in the Exchange
Note immediately after its purchase over the adjusted issue price of the
Exchange Note, and the denominator of which is the excess of the sum of all
amounts payable on the Exchange Note after the purchase date over the Exchange
Note's adjusted issue price.
Market Discount. An Exchange Note will be treated as purchased at a market
discount (a "Market Discount Exchange Note") if (i) a United States Holder's
purchase price for the Exchange Note is less than the Exchange Note's issue
price (as determined above under "Original Issue Discount -- General") and (ii)
the Exchange Note's "revised issue price" exceeds such purchase price by at
least 1/4 of 1 percent of such Exchange Note's stated redemption price at
maturity multiplied by the number of complete years to the Exchange Note's
maturity after the purchase date. If such excess is not sufficient to cause the
Exchange Note to be a Market Discount Exchange Note, then such excess
constitutes "de minimis market discount" and such Exchange Note is not subject
to the rules discussed in the following paragraphs. The Code provides that, for
these purposes, the "revised issue price" of an Exchange Note generally equals
its issue price, increased by the amount of any OID that has accrued on the
Exchange Note.
Any gain recognized on the maturity or disposition of a Market Discount
Exchange Note will be treated as ordinary income (generally interest income) to
the extent that such gain does not exceed the accrued market discount on such
Exchange Note. Alternatively, a United States Holder of a Market Discount
Exchange Note may elect to include market discount in income currently as it
accrues (under either a ratable or constant yield method) over the life of the
Exchange Note. Such an election will apply to all debt instruments with market
discount acquired by the electing United States Holder on or after the first day
of the first taxable year to which the election applies. This election may not
be revoked without the consent of the
62
<PAGE> 64
Service. Such currently included market discount will increase a United States
Holder's tax basis for the Exchange Note and generally is treated as ordinary
interest income.
Market discount on a Market Discount Exchange Note will accrue on a
straight-line basis unless the United States Holder elects to accrue such market
discount on a constant-yield method. Such an election will apply only to the
Exchange Note with respect to which it is made and may not be revoked. A United
States Holder of a Market Discount Exchange Note that does not elect to include
market discount in income currently may be required to defer deductions for all
or a portion of the interest expense on any borrowings allocable to such
Exchange Note until the maturity or taxable disposition of such Exchange Note.
Election to Treat All Interest as Original Issue Discount. A United States
Holder may elect to include in gross income all interest that accrues on an
Exchange Note using the constant-yield method described above under the heading
"Original Issue Discount -- General," with the modifications described below.
For purposes of this election, interest includes stated interest, OID, de
minimis original issue discount, market discount, de minimis market discount and
unstated interest, as adjusted by an acquisition premium.
In applying the constant-yield method to an Exchange Note with respect to
which this election has been made, the issue price of the Exchange Note will
equal its cost to the electing United States Holder, the issue date of the
Exchange Note will be the date of its acquisition by the electing United States
Holder, and no payments on the Exchange Note will be treated as payments of
qualified stated interest. This election will generally apply only to the
Exchange Note with respect to which it is made and may not be revoked without
the consent of the Service. If the election to apply the constant-yield method
to all interest on an Exchange Note is made with respect to a Market Discount
Exchange Note, the electing United States Holder will be treated as having made
the election discussed above under "Original Issue Discount -- Market Discount"
to include market discount in income currently over the life of all debt
instruments held or thereafter acquired by such United States Holder.
Purchase, Sale and Retirement of the Exchange Notes
A United States Holder's tax basis in an Exchange Note will generally be
its cost, increased by the amount of any OID or market discount included in the
United States Holder's income with respect to the Exchange Note and the amount,
if any, of income attributable to de minimis market discount included in the
United States Holder's income with respect to the Exchange Note, and reduced by
the amount of all payments on the Exchange Note.
A United States Holder will generally recognize gain or loss on the sale or
retirement of an Exchange Note equal to the difference between the amount
realized on the sale or retirement and the adjusted tax basis of the Exchange
Note. Except to the extent described above under "Original Issue
Discount -- Market Discount," gain or loss recognized on the sale or retirement
of an Exchange Note will be capital gain or loss and will be long-term capital
gain or loss if the Exchange Note was held for more than one year at the time of
the sale or retirement.
UNITED STATES ALIEN HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion of backup withholding below:
(i) payments of principal, premium (if any) and OID by the Company or
any of its paying agents to any holder of an Exchange Note that is a United
States Alien Holder will not be subject to United States federal
withholding tax if, in the case of interest or OID, (a) the beneficial
owner of the Exchange Note does not actually or constructively own 10% or
more of the total combined voting power of all classes of stock of the
Company entitled to vote, (b) the beneficial owner of the Exchange Note is
not (x) a controlled foreign corporation that is related to the Company
through stock ownership, or (y) a bank receiving interest described in
Section 881(c)(3)(A) of the Code, and (c) either (A) the beneficial owner
of the Exchange Note certifies to the Company or its agent, under penalties
of perjury, that it is not a United States Holder and provides its name and
address or (B) a securities clearing organization, bank
63
<PAGE> 65
or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "financial institution") and
holds the Exchange Note certifies to the Company or its agent under
penalties of perjury that such statement has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof;
(ii) a United States Alien Holder of an Exchange Note will not be
subject to United States federal withholding tax on any gain realized on
the sale or retirement of an Exchange Note unless (a) such holder is an
individual who is present in the United States for 183 days or more during
the taxable year and certain other conditions are met, or (b) the gain is
effectively connected with a United States trade or business of the holder,
or if an income tax treaty applies, is generally attributable to a United
States "permanent establishment" maintained by the holder; and
(iii) an Exchange Note held by an individual who at death is not a
citizen or resident of the United States will not be includable in the
individual's gross estate for purposes of the United States federal estate
tax as a result of the individual's death if (a) the individual did not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote and (b) the
income on the Exchange Note would not have been effectively connected with
a United States trade or business of the individual at the individual's
death.
If a United States Alien Holder is engaged in a trade or business in the
United States and OID on the Exchange Note is effectively connected with the
conduct of such trade or business (or, if an income tax treaty applies, and the
United States Alien Holder maintains a United States "permanent establishment"
to which the OID is generally attributable), the United States Alien Holder,
although exempt from the withholding tax discussed in the preceding paragraph
(i) (provided that such holder furnishes a properly executed IRS Form 4224 on or
before any payment date to claim such exemption), may be subject to United
States federal income tax on such OID in the same manner as if it were a United
States person.
In addition, a foreign corporation that is a holder of an Exchange Note may
be subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments,
unless it qualifies for a lower rate under an applicable tax treaty. For this
purpose, OID on an Exchange Note or gain on the disposition of an Exchange Note
will be included in earnings and profits if such OID or gain is effectively
connected with the conduct by the foreign corporation of a trade of business in
the United States.
Recently proposed Internal Revenue Service Treasury regulations (the
"Proposed Regulations") would provide alternative methods for satisfying the
certification requirement described in clause (i)(c) above. The Proposed
Regulations also would require, in the case of Exchange Notes held by a foreign
partnership, that (x) the certification described in clause (i)(c) above be
provided by the partners rather than by the foreign partnership and (y) the
partnership provide certain information, including a United States taxpayer
identification number. A look-through rule would apply in the case of tiered
partnerships. The Proposed Regulations are proposed to be effective for payments
made after December 31, 1997. There can be no assurance that the Proposed
Regulations will be adopted or as to the provisions that they will include if
and when adopted in temporary or final form.
BACKUP WITHHOLDING AND INFORMATION REPORTING
United States Holders
In general, information reporting requirements will apply to payments of
principal, any premium and the proceeds of the sale of an Exchange Note before
maturity within the United States to, and to the accrual of OID on an Exchange
Note with respect to, non-corporate United States Holders, and "backup
withholding" at a rate of 31% will apply to such payments and to payments of OID
if the United States Holder fails to provide an accurate taxpayer identification
number or is notified by the Internal Revenue Service that it has failed to
report all interest and dividends required to be shown on its federal income tax
returns.
64
<PAGE> 66
United States Alien Holders
Under current law, information reporting on Internal Revenue Service Form
1099 and backup withholding will not apply to payments of principal, premium (if
any) and OID made by the Company or a paying agent to a United States Alien
Holder on an Exchange Note; provided, the certification described in clause
(i)(c) under "United States Alien Holders" above is received; and provided
further that the payor does not have actual knowledge that the holder is a
United States person. The Company or a paying agent, however, may report (on
Internal Revenue Service Form 1042S) payments of OID on the Exchange Notes. See
the discussion above with respect to the rules under the Proposed Regulations.
Payments of the proceeds from the sale by a United States Alien Holder of
an Exchange Note made to or through a foreign office of a broker will not be
subject to information reporting or backup withholding, except that if the
broker is a United States person, a controlled foreign corporation for United
States tax purposes or a foreign person 50% or more of whose gross income is
effectively connected with a United States trade or business for a specified
three-year period, information reporting may apply to such payments. Payments of
the proceeds from the sale of an Exchange Note to or through the United States
office of a broker is subject to information reporting and backup withholding
unless the holder or beneficial owner certifies as to its non-United States
status or otherwise establishes an exemption from information reporting and
backup withholding.
65
<PAGE> 67
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
Prospectus in connection with any resale of such Exchange Notes. The Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Notes where such Notes were acquired as a result of market-making activities
or other trading activities. The Company has agreed that, for a period of 90
days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until , 1997 (90 days after commencement of the
Exchange Offer), all dealers effecting transactions in the Exchange Notes may be
required to deliver a Prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to the purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells the Exchange Notes that were received by it for its
own account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letters of Transmittal state that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay certain expenses
incident to the Exchange Offer, other than commission or concessions of any
brokers or dealers, and will indemnify the holders of the Exchange Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes for its own account pursuant to the Exchange Offer agrees that,
upon receipt of notice from the Company of the happening of any event which
makes any statement in the Prospectus untrue in any material respect or which
requires the making of any changes in the Prospectus in order to make the
statements therein not misleading (which notice the Company agrees to deliver
promptly to such broker-dealer), such broker-dealer will suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemental Prospectus to such broker-dealer.
LEGAL MATTERS
Certain legal matters in connection with the Exchange Notes offered hereby
will be passed on for the Company by Porter & Hedges, L.L.P., Houston, Texas.
EXPERTS
The audited consolidated financial statements incorporated by reference in
this prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are incorporated by reference in reliance upon
the authority of said firm as experts in giving said reports.
66
<PAGE> 68
The audited consolidated financial statements of Laidlaw Solid Waste
Management Group incorporated by reference in this Prospectus and elsewhere in
the Registration Statement have been audited by Coopers & Lybrand, independent
public accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in accounting and auditing.
67
<PAGE> 69
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Prospectus Summary.................... 3
Risk Factors.......................... 10
Disclosure Regarding Forward Looking
Statements.......................... 17
The Company........................... 17
The Exchange Offer.................... 26
Certain Federal Income Tax
Consequences of the Exchange
Offer............................... 33
Description of Certain Indebtedness... 33
Description of the Exchange Notes..... 35
Certain Federal Income Tax
Consequences of an Investment in the
Exchange Notes...................... 61
Plan of Distribution.................. 66
Legal Matters......................... 66
Experts............................... 66
</TABLE>
======================================================
======================================================
ALLIED WASTE
INDUSTRIES, INC.
$418,000,000
OFFER TO EXCHANGE
ITS 11.30% SENIOR DISCOUNT NOTES
DUE 2007 FOR 11.30% SENIOR
DISCOUNT NOTES DUE 2007 THAT
HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
, 1997
======================================================
<PAGE> 70
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits a corporation
to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action. In an action brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees, actually
and reasonably incurred in connection with the defense or settlement of such
action, and the corporation may not indemnify for amounts paid in satisfaction
of a judgment or in settlement of the claim. In any such action, no
indemnification may be paid in respect of any claim, issue or matter as to which
such person shall have been adjudged liable to the corporation except as
otherwise approved by the Delaware Court of Chancery or the court in which the
claim was brought. In any other type of proceeding, the indemnification may
extend to judgments, fines and amounts paid in settlement, actually and
reasonably incurred in connection with such other proceeding, as well as to
expenses.
The statute does permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner be reasonably believed
to be in, or not opposed to, the best interests of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. The statute contains additional limitations
applicable to criminal actions and to actions brought by or in the name of the
corporation. The determination as to whether a person seeking indemnification
has met the required standard of conduct is to be made (1) by a majority vote of
a quorum of disinterested members of the board of directors, (2) by independent
legal counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (3) by the stockholders.
The Company's Certificate of Incorporation and Bylaws require the Company
to indemnify its directors to the fullest extent permitted under Delaware law.
Pursuant to employment agreements entered into by the Company with its executive
officers and certain other key employees, the Company must indemnify such
officers and employees in the same manner and to the same extent that the
Company is required to indemnify its directors under the Company's Bylaws. The
Company's Certificate limits the personal liability of a director to the
corporation or its stockholders to damages for breach of the director's
fiduciary duty.
The Company has not purchased insurance on behalf of its directors and
officers against certain liabilities that may be asserted against, or incurred
by, such persons in their capacities as directors or officers of the registrant,
or that may arise out of their status as directors or officers of the
registrant, including liabilities under the federal and state securities laws.
The Company has entered into indemnification agreements to indemnify its
directors to the extent permitted under Delaware law.
II-1
<PAGE> 71
ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULES.
(A) EXHIBITS
The following is a list of all the exhibits filed as part of the
Registration Statement.
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
3.1 Certificate of Incorporation of the Company. Exhibit 3.1 to the Company's Annual
Report on Form 10-K is incorporated herein by reference.
3.2 Bylaws of the Company. Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
is incorporated herein by reference.
4.1 Indenture, dated as of May 15, 1997, by and among the Company and First Bank
National Association with respect to the Notes and Exchange Notes.*
4.4 Form of Exchange Note.*
5.1 Opinion of Porter & Hedges, L.L.P., as to the legality of the Exchange Notes.*
10.1 Registration Rights Agreement, dated as of December 5, 1996, by and among the
Company, Goldman, Sachs & Co., Merrill Lynch & Co., and Credit Suisse First Boston.*
23.1 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).*
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Coopers & Lybrand.
24.1 Power of Attorney (included in the signature page of this Registration Statement).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of First Bank
National Association under the Trust Indenture Act of 1934.*
99.1 Letter of Transmittal for the Notes.*
</TABLE>
- ---------------
* to be filed by amendment
(B) FINANCIAL STATEMENT SCHEDULES
Schedules are omitted since the information required to be submitted has
been included in the Consolidated Financial Statements of the Company or the
notes thereto, or the required information is not applicable.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
II-2
<PAGE> 72
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 73
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Scottsdale, State of Arizona on July
14, 1997.
ALLIED WASTE INDUSTRIES, INC.
By: /s/ HENRY L. HIRVELA
------------------------------------
Henry L. Hirvela
Vice President -- Chief Financial
Officer
POWER OF ATTORNEY
Each of the undersigned hereby appoints Roger A. Ramsey, Thomas H. Van
Weelden, Henry L. Hirvela, Peter S. Hathaway and each of them, with full power
to act alone, as attorney and agents for the undersigned, with full power of
substitution, for and in the name, place and stead of the undersigned, to sign
and file with the Commission under the Securities Act any and all amendments and
exhibits to this Registration Statement and any and all applications,
instruments and other documents to be filed with the Commission pertaining to
the registration of the securities covered hereby, with full power and authority
to do and perform any and all acts and things whatsoever requisite or desirable.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on July 14, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ------------------------------------------------
<C> <S> <C>
/s/ ROGER A. RAMSEY Chairman of the Board of Directors
- ------------------------------------------
Roger A. Ramsey
/s/ THOMAS H. VAN WEELDEN Director, President and Chief Executive Officer
- ------------------------------------------ (Principal Executive Officer)
Thomas H. Van Weelden
/s/ HENRY L. HIRVELA Vice President -- Chief Financial Officer
- ------------------------------------------ (Principal Financial Officer)
Henry L. Hirvela
/s/ PETER S. HATHAWAY Vice President -- Chief Accounting Officer
- ------------------------------------------ (Principal Accounting Officer)
Peter S. Hathaway
/s/ NOLAN LEHMANN Director
- ------------------------------------------
Nolan Lehmann
/s/ ALAN B. SHEPARD Director
- ------------------------------------------
Alan B. Shepard
/s/ BRIAN A. O'LEARY Director
- ------------------------------------------
Brian A. O'Leary
/s/ MICHAEL GROSS Director
- ------------------------------------------
Michael Gross
</TABLE>
II-4
<PAGE> 74
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------ ------------------------------------------------
<C> <S> <C>
/s/ DAVID B. KAPLAN Director
- ------------------------------------------
David B. Kaplan
/s/ ANTONY P. RESSLER Director
- ------------------------------------------
Antony P. Ressler
/s/ HOWARD A. LIPSON Director
- ------------------------------------------
Howard A. Lipson
/s/ DENNIS HENDRIX Director
- ------------------------------------------
Dennis Hendrix
/s/ WARREN B. RUDMAN Director
- ------------------------------------------
Warren B. Rudman
/s/ VINCENT TESE Director
- ------------------------------------------
Vincent Tese
</TABLE>
II-5
<PAGE> 75
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ------ ------------------------------------------------------------------------------------
<C> <S>
3.1 Certificate of Incorporation of the Company. Exhibit 3.1 to the Company's Annual
Report on Form 10-K is incorporated herein by reference.
3.2 Bylaws of the Company. Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
is incorporated herein by reference.
4.1 Indenture, dated as of May 15, 1997, by and among the Company and First Bank
National Association with respect to the Notes and Exchange Notes.*
4.4 Form of Exchange Note.*
5.1 Opinion of Porter & Hedges, L.L.P., as to the legality of the Exchange Notes.*
10.1 Registration Rights Agreement, dated as of December 5, 1996, by and among the
Company, Goldman, Sachs & Co., Merrill Lynch & Co., and Credit Suisse First Boston.*
23.1 Consent of Porter & Hedges, L.L.P. (included in Exhibit 5.1).*
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Coopers & Lybrand
24.1 Power of Attorney (included in the signature page of this Registration Statement).
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of First Bank
National Association under the Trust Indenture Act of 1934.*
99.1 Letter of Transmittal for the Notes.*
</TABLE>
- ---------------
* previously filed
<PAGE> 1
Exhibit 23.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 26, 1997
included in Allied Waste Industries, Inc.'s Form 10-K for the year ended
December 31, 1996 and to all references to our firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Phoenix, Arizona,
July 11, 1997.
<PAGE> 1
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
LAIDLAW SOLID WASTE MANAGEMENT GROUP
We consent to the incorporation by reference in the registration statement of
Allied Waste Industries, Inc. on Form S-4 dated July 14, 1997, of our report
dated September 30, 1996, to the Directors of Laidlaw Inc. on the balance
sheets of the Laidlaw Solid Waste Management Group as at August 31, 1995 and
1996 and the statements of operations and cash flows for years ended August 31,
1994, 1995 and 1996, which report is incorporated in the Form 8K/A-4 dated of
February 19, 1997.
This letter is provided to securities regulatory authorities pursuant to the
requirements of their securities legislation and is not for any other purpose.
/s/ COOPERS & LYBRAND
Coopers & Lybrand
Chartered Accountants
July 14, 1997
Hamilton, Canada
Coopers & Lybrand is a member of Coopers & Lybrand International, a limited
liability association incorporated in Switzerland.
