<PAGE>
                                                                   EXHIBIT 10.61

                THIRD AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

                  This Third Amended and Restated Shareholders Agreement, dated
as of December 18, 2003 (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,
Blackstone Capital Partners III Merchant Banking Fund L.P., a Delaware limited
partnership ("BCP"), Blackstone Offshore Capital Partners II L.P., a Cayman
Islands limited partnership, Blackstone Offshore Capital Partners III L.P., a
Cayman Islands limited partnership ("BOC III"), Blackstone Family Investment
Partnership II L.P., a Delaware limited partnership, Blackstone Family
Investment Partnership III L.P., a Delaware limited partnership ("BFP III"),
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, Kenneth D. Moelis, Mark Lanigan, Jeffrey Klein and Susan Schnabel
(collectively, the "Shareholders"), on the other hand, amending and restating in
its entirety the Second Amended and Restated Shareholders Agreement dated as of
July 30, 1999 (the "Original Agreement"), by and between the Company, on the one
hand, and certain of the Shareholders, on the other hand.

                  WHEREAS, certain of the Shareholders purchased an aggregate of
11,776,765 shares (the "TPG Group Block") of the Company's common stock, par
value $.01 per share (the "Common Stock"), from TPG Partners, L.P., a Delaware
limited partnership, and TPG Parallel I, L.P., a Delaware limited partnership,
and an aggregate of



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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, on July 30, 1999, certain of the Shareholders entered
into (i) a Preferred Stock Purchase Agreement (the "Preferred Stock Purchase
Agreement") pursuant to which certain of the Shareholders purchased an aggregate
of 1,000,000 shares of Senior Convertible Preferred Stock, par value $.10 per
share, of the Company ("Senior Preferred Stock"), which is convertible into
shares of Common Stock, and (ii) an Amended and Restated Registration Rights
Agreement (the "Prior Registration Rights Agreement") granting certain
registration rights;

                  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, the Company and certain of the Shareholders have
entered into an Exchange Agreement, dated July 31, 2003 (the "Exchange
Agreement"), pursuant to which, upon the terms and subject to the conditions set
forth in the Exchange Agreement, the Shareholders will exchange their shares of
Senior Preferred Stock for shares of Common Stock to be issued by the Company
(the "Exchange");

                  WHEREAS, concurrently herewith, the Company and the
Shareholders are entering into a Second Amended and Restated Registration Rights
Agreement (the "Registration Rights Agreement") which shall become effective at
the time of closing of the Exchange;

                  WHEREAS, a condition to closing the Exchange is that the
Company and the Shareholders enter into a Supplementary Shareholders Agreement
and the Company and the Shareholders agree that this Agreement fully
incorporates the terms of the Supplementary Shareholders Agreement and the
execution and delivery of this Agreement by the Company and the Shareholders
satisfies the conditions in the Exchange Agreement relating to entry into the
Supplementary Shareholders Agreement; and

                  WHEREAS, in recognition of the transactions contemplated by
the Exchange 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, the parties hereto intending to be legally
bound hereby, the parties agree as follows, effective upon the closing of the
Exchange:

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                                    ARTICLE 1

                   Definitions; Representations and Warranties

                  SECTION 1.1 Definitions. Unless otherwise specified all
references to "days" shall be deemed to be references to calendar days. For
purposes of this Agreement, the following terms shall have the following
meanings:

                  "Actual Voting Power" shall mean, 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.

                  "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 and BFP III.

                  "Apollo/Blackstone Shares" means the TPG Group Block, the
Laidlaw Block, and the 87,295,000 shares of Common Stock to be issued to the
Apollo/Blackstone Shareholders pursuant to the Exchange Agreement.

                  "Beneficial ownership" by a Person of any Voting Securities
shall be determined in accordance with the term "beneficial ownership" as
defined in Rule 13d-3 under the Exchange Act as in effect on the date of this
Agreement and, in addition, "beneficial ownership" shall include securities
which such Person has the right to acquire (irrespective of whether such right
is exercisable immediately or only after the passage of time, including the
passage of time in excess of sixty (60) days) pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise. For purposes of this Agreement, a
Shareholder shall be deemed to beneficially own any Voting Securities
beneficially

                                     - 3 -
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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 Common Stock
issued by the Company in exchange for the shares of Senior Preferred Stock
pursuant to the Exchange Agreement.

                  "DLJ Parent Entities" mean and includes Credit Suisse First
Boston Private Equity, Inc., Credit Suisse First Boston (USA), Inc. and Credit
Suisse First Boston, LLC. and any Person that, directly or indirectly, controls
Credit Suisse First Boston (USA), 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., DLJ EAB Partners, L.P. and DLJ ESC II L.P.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.

                  "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.

                  "Person" shall mean any individual, Group, corporation,
general or limited partnership, limited liability company, governmental entity,
joint venture, estate, trust, association, organization or other entity of any
kind or nature.

                                     - 4 -
<PAGE>

                  "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 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

                                     - 5 -
<PAGE>

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 Common Stock issued pursuant to the
Exchange Agreement), (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
BOC III                               recitals
BFP III                               recitals
Beneficial Ownership Threshold        3.1(b)
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
</TABLE>

                                     - 6 -
<PAGE>

<TABLE>
<S>                                   <C>
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 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 Exchange
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

                                     - 7 -
<PAGE>

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 Exchange
Act, the New York Stock Exchange, or as disclosed in the Exchange 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 Exchange Agreement, or any
of the transactions contemplated hereby and thereby.

                  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 any predecessor to the Original Agreement and (ii) the shares of Common
Stock which are subject to the Exchange 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

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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 Period
shall end (x) with respect to the DLJ Shareholders, on the date on which the DLJ
Shareholders no longer own 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 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) an
         acquisition as a result of a stock split, stock dividend or similar
         recapitalization, (B) the acquisition of shares of Common Stock which
         are subject to the Exchange 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 and as reduced to reflect any such acquisitions pursuant to
         Section 2.1(a)(i)(C) of the Original Agreement) 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

                                     - 9 -
<PAGE>

         shares, this Section 2.1 shall be deemed to not have been violated; and
         provided, further, that no violation of this provision shall be deemed
         to have occurred by reason of the indirect acquisition of beneficial
         ownership of securities resulting from (x) investments in investment
         funds as to which no Shareholder or Affiliate thereof has control or
         power to control with respect to voting or investment decisions or (y)
         acquisitions of securities by a limited partner in any Shareholder or
         Affiliates thereof as to which limited partner no Shareholder or its
         Affiliates has control or power to control;

                           (ii)     make or cause to be made any proposal for a
         Reorganization Transaction 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

                                     - 10 -
<PAGE>

         representative on the Board of Directors of the Company (except
         pursuant to Section 3.1 of this Agreement) or its Affiliates or seek
         the removal of any member of the Board of Directors of the Company or
         its Affiliates (for this purpose, the actions of the Shareholder
         Designees in communicating (without public disclosure or disclosure to
         third parties) with the Board of Directors in their capacity as
         directors of the Company, and non-public communication by a Shareholder
         with other Shareholders or Affiliates of any Shareholder which would
         not require public disclosure by any Person, shall not be deemed to be
         in contravention of 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

                                     - 11 -
<PAGE>

                           (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, (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 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. Based upon the foregoing
representations and warranties in this Section 2.1(c), the Company will consider
the DLJ 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.

                                     - 12 -
<PAGE>

                  (c)      The Company shall file a petition in bankruptcy or
for reorganization or for an arrangement or any composition, readjustment,
liquidation, dissolution or similar relief pursuant to Title 11 of the United
States Code or under any similar present or future federal law or the law of any
other jurisdiction or shall be adjudicated a bankrupt or insolvent, or consent
to the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Company or
for all or any substantial part of its property, or shall make a general
assignment for the benefit of its creditors.

                  (d)      A petition or answer shall be filed proposing the
adjudication of the Company as bankrupt or its reorganization or arrangement, or
any composition, readjustment, liquidation, dissolution or similar relief with
respect to it pursuant to Title 11 of the United States Code or under any
similar present or future federal law or the law of any other jurisdiction, and
the Company shall consent to or acquiesce in the filing thereof, or such
petition or answer shall not be discharged or denied within 60 days after the
filing thereof.

                  (e)      The Company shall be in material breach of its
obligations to Shareholders under the Registration Rights Agreement and such
breach shall not have been cured within 20 days after receipt by the Company
from Shareholders of a written notice specifying such breach and requiring it to
be remedied, and the Company shall not in good faith be contesting whether such
breach has occurred.

                  (f)      If the Company shall, in breach of its obligations
under this Agreement, fail to nominate for election to the Board of Directors
any Shareholder Designee who satisfies the requirements for designation to the
Board of Directors set forth in 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.

                                     - 13 -
<PAGE>

                                    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.

                  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 and
other than such committees on which membership of a Shareholder Designee is
prohibited by applicable law or by the rules of the New York Stock Exchange.

                  (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

                                     - 14 -
<PAGE>

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 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

                                     - 15 -
<PAGE>

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.

                  (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

                                     - 16 -
<PAGE>

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 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

                                     - 17 -
<PAGE>

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" 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

                                     - 18 -
<PAGE>

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 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 of the shares of Common
Stock acquired pursuant to the Exchange Agreement may be made prior to the first
anniversary of the acquisition of shares of Common Stock pursuant to the
Exchange Agreement, except pursuant to Sections 4.1(e) and 4.1(f). For avoidance
of doubt, nothing in this Section 4.1(a) shall impose limitations on
Dispositions of the TPG Group Block or the Laidlaw Block.

                  (b)      As of the date of the acquisition of shares of Common
Stock pursuant to the Exchange Agreement (the "Purchase Date"), with respect to
the Shares and any other shares of Common Stock acquired in compliance with the
Original Agreement, and after the first anniversary of the Purchase Date, with
respect to the Conversion Shares, Dispositions of Voting Securities may be made
at any time in compliance with the Registration Rights Agreement.

                                     - 19 -
<PAGE>

                  (c)      As of the Purchase Date, with respect to the Shares
and any other shares of Common Stock acquired in compliance with the Original
Agreement, and after the first anniversary of the Purchase Date, with respect to
all other Conversion Shares, 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 any other shares of Common Stock acquired in compliance with the Original
Agreement, and after the first anniversary of the Purchase Date, with respect to
the Conversion Shares, 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.

                  (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
exchange of shares of Senior Preferred Stock for 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

                                     - 20 -
<PAGE>

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

                           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;

                                     - 21 -
<PAGE>

                  (b)      If to Shareholders, to:
                           Apollo Management, L.P.
                           1301 Avenue of the Americas
                           New York, New York 10019
                           Fax: (212) 515-3288

                           and:

                           The Blackstone Group
                           345 Park Avenue
                           New York, NY 10154
                           Attn: Howard A. Lipson
                           Fax: (212) 754-8710

                           with a copy to:

                           Simpson Thacher & Bartlett LLP
                           425 Lexington Avenue
                           New York, NY  10017
                           Attn: Wilson S. Neely
                           Fax: (212) 455-2502

                           and:

                           Greenwich Street Investment II, L.L.C.
                           12 East 49th Street
                           New York, New York 10021
                           Attn: Matthew Kaufman
                           Fax: (212) 884-6184

                           with a copy to:

                           Stroock & Stroock & Lavan LLP
                           180 Maiden Lane
                           New York, New York 10038
                           Attn: Hillel M. Bennett
                           Fax: (212) 806-6006

                                     - 22 -
<PAGE>

                           and:

                           DLJ Merchant Banking II, Inc.
                           11 Madison Avenue
                           New York, New York 10010
                           Attn: Ari Benacerraf
                           Fax: (917) 326-8076

                           with a copy to:

                           Shearman & Sterling LLP
                           599 Lexington Avenue
                           New York, New York 10022
                           Attn: Stephen M. Besen
                           Fax: (212) 848-7179

or to such other person or address as Shareholders shall furnish to the Company
in writing.

                  All such notices, requests, demands and other communications
shall be deemed to have been duly given: at the time of delivery by hand, if
personally delivered; five (5) Business Days after being deposited in the mail,
postage prepaid, if mailed domestically in the United States (and seven (7)
Business Days if mailed internationally); when answered back, if telexed; when
receipt acknowledged, if telecopied; and on the Business Day for which delivery
is guaranteed, if timely delivered to an air courier guaranteeing such delivery.

                  SECTION 5.2. Legends. (a) If requested in writing by the
Company, a Shareholder shall present or cause to be presented promptly all
certificates representing Voting Securities beneficially owned by such
Shareholder or any of its Affiliates, for the placement thereon of a legend
substantially to the following effect, which legend will remain thereon so long
as such legend is required under applicable securities laws:

                  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
                  AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
                  STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
                  PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN

                                     - 23 -
<PAGE>

                  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 THIRD AMENDED AND RESTATED SHAREHOLDERS
                  AGREEMENT, DATED AS OF DECEMBER 18, 2003, 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 party hereto (the "Moving Party") shall be
entitled to specific enforcement of, and

                                     - 24 -
<PAGE>

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
Exchange pursuant to the Exchange Agreement and the representations and
warranties of the parties set forth in Sections 1.2 and 1.3 of the Original
Agreement and in Sections 1.2 and 1.3 of the Amended and Restated Shareholders
Agreement dated as of April 21, 1997, by and between the Company and certain of
the Shareholders, 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.

                                     - 25 -
<PAGE>

                  SECTION 5.8. No Waiver. Any waiver by any party of a breach of
any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.

                  SECTION 5.9. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Company and Shareholders, and to
their respective successors and assigns other than, in the case of Shareholders,
transferees that are not Related Transferees, including any successors to the
Company or Shareholders or their businesses or assets as the result of any
merger, consolidation, reorganization, transfer of assets or otherwise, and any
subsequent successor thereto, without the execution or filing of any instrument
or the performance of any act; provided that no party may assign this Agreement
without the other party's prior written consent, except by the Shareholders to a
Shareholder or a Related Transferee as expressly provided in this Agreement (and
that nothing herein restricts the transfer of any of the rights of Shareholders
under the Registration Rights Agreement in accordance the terms of the
Registration Rights Agreement).

                  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

                                     - 26 -
<PAGE>

carrier or delivery service, to the Company or Shareholders at their respective
addresses referred to in this Agreement. The Company and Shareholders each
hereby irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement brought in the courts referred to above
and hereby further irrevocably waives and agrees, to the extent permitted by
applicable law, not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
Nothing in this Agreement shall affect the right of any party hereto to serve
process in any other manner permitted by law.

                  SECTION 5.13. Shareholder Action. The Company shall be
entitled to rely upon any written notice, designation, or instruction signed by
Apollo 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.

                                     - 27 -
<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:___________________________
                                              Name:
                                              Title:

                                          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:__________________________
                                              Name:
                                              Title:

                                     - 28 -
<PAGE>

                                          APOLLO/AW LLC

                                          By: Apollo Management IV, L.P.
                                              its Manager

                                          By: AIF IV Management, Inc.
                                              its General Partner

                                          By:__________________________
                                              Name:
                                              Title:

                                          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:__________________________
                                              Name:
                                              Title:

                                     - 29 -
<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:__________________________
                          Name:
                          Title:

                      GREENWICH STREET CAPITAL PARTNERS II, L.P.

                      By: GREENWICH STREET INVESTMENTS II,
                          L.L.C.,
                          its General Partner

                      By:_________________________
                          Name:
                          Title:

                      GSCP OFFSHORE FUND, L.P.

                                     - 30 -
<PAGE>

                      By: GREENWICH STREET INVESTMENTS II,
                          L.L.C.,
                          its General Partner

                      By:_________________________
                          Name:
                          Title:

                      GREENWICH FUND, L.P.

                      By: GREENWICH STREET INVESTMENTS II, L.L.C.,
                          its General Partner

                      By:________________________
                          Name:
                          Title:

                      GREENWICH STREET EMPLOYEES FUND, L.P.

                      By: GREENWICH STREET INVESTMENTS II, L.L.C.,
                          its General Partner

                      By:_________________________
                          Name:
                          Title:

                      TRV EXECUTIVE FUND, L.P.

                                     - 31 -
<PAGE>

                      By: GREENWICH STREET INVESTMENTS II, L.L.C.,
                          its General Partner

                      By:_________________________
                          Name:
                          Title:

                      DLJMB FUNDING II, INC.

                      By:________________________
                          Name:
                          Title:

                      DLJ MERCHANT BANKING PARTNERS II, L.P.

                      By: DLJ Merchant Banking II, Inc.
                          Managing General Partner

                      By:_________________________
                          Name:
                          Title:

                                     - 32 -
<PAGE>

                      DLJ MERCHANT BANKING PARTNERS II-A, L.P.

                      By: DLJ Merchant Banking II, Inc.
                          Managing General Partner

                      By:___________________________
                          Name:
                          Title:

                      DLJ DIVERSIFIED PARTNERS, L.P.

                      By: DLJ Diversified Partners, Inc.
                          Managing General Partner

                      By:___________________________
                          Name:
                          Title:

                      DLJ DIVERSIFIED PARTNERS-A, L.P.

                      By: DLJ Diversified Partners, Inc.
                          Managing General Partner

                      By:__________________________
                          Name:
                          Title:

                                     - 33 -
<PAGE>

                      DLJ MILLENNIUM PARTNERS, L.P.

                      By: DLJ Merchant Banking II, Inc.
                          Managing General Partner

                      By:__________________________
                          Name:
                          Title:

                      DLJ MILLENNIUM PARTNERS-A, L.P.

                      By: DLJ Merchant Banking II, Inc.
                          Managing General Partner

                      By:___________________________
                          Name:
                          Title:

                      DLJ FIRST ESC L.P.

                      By: DLJ LBO Plans Management Corporation
                          General Partner

                      By:___________________________
                          Name:
                          Title:

                                     - 34 -
<PAGE>

                      DLJ OFFSHORE PARTNERS II, C.V.

                      By:    DLJ Merchant Banking II, Inc.
                             Managing General Partner

                      By:___________________________
                          Name:
                          Title:

                      DLJ EAB PARTNERS, L.P.

                      By: DLJ LBO Plans Management Corporation
                          General Partner

                      By:___________________________
                          Name:
                          Title:

                                     - 35 -
<PAGE>

                      DLJ ESC II L.P.

                      By: DLJ LBO Plans Management Corporation
                          General Partner

                      By:___________________________
                          Name:
                          Title:

                      ____________________________________
                      Kenneth D. Moelis

                      ____________________________________
                      Mark Lanigan

                      ____________________________________
                      Jeffrey Klein

                      ____________________________________
                      Susan Schnable

                                     - 36 -
<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:___________________________
                          Name:
                          Title:

                                     - 37 -