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