Amendment No. 2 to Preferred Subscription Agrmt



 





Exhibit 4.1




AMENDMENT NO. 2 TO THE




PREFERRED SUBSCRIPTION AGREEMENT




     AMENDMENT NO. 2 TO THE PREFERRED SUBSCRIPTION AGREEMENT, dated as of June
8, 2004 (this “Amendment”), among Waste Services, Inc., a Delaware corporation
(“WSI”), Capital Environmental Resource Inc., a corporation amalgamated under
the laws of the Province of Ontario, Canada (“CERI”), Kelso Investment
Associates VI, L.P., a Delaware limited partnership, and KEP VI, LLC, a
Delaware limited liability company.



     WHEREAS, the parties hereto entered into the Preferred Subscription
Agreement, dated as of May 6, 2003 (the “Preferred Subscription Agreement”);
capitalized terms used herein without definition shall have the meaning
assigned to them in the Preferred Subscription Agreement; and



     WHEREAS the parties hereto desire to amend the Preferred Subscription
Agreement pursuant to Section 8.4 therein.



     NOW, THEREFORE, it is agreed as follows:



     1. Amendment to Section 6.7(a). Section 6.7(a) of the Preferred
Subscription Agreement is hereby amended and restated in its entirety to read
as follows:




“(a) Each of the US Company and the Canadian Company shall take the
actions described in Exhibit C hereto and shall use their reasonable best
efforts to take all actions necessary or advisable and permitted by
applicable law to complete the Migration on or before July 31, 2004 (the
“Migration Outside Date”) in compliance with all applicable laws and
regulations. Each of the US Company and the Canadian Company shall
update the Purchasers regularly on the terms and conditions of and
progress made towards consummating such Migration.”



     2. Amendment to Section 6.7(b). Section 6.7(b) of the Preferred
Subscription Agreement is hereby amended and restated in its entirety to read
as follows:




“(b) Notwithstanding anything herein to the contrary, if the Migration
does not occur on or prior to the Migration Outside Date, the Purchasers
shall have the right to require the Canadian Company at any time
following the expiration of the Consultation Period (as defined below)
upon request by the Purchasers, to (x) exchange the Preferred Shares for
preferred shares in the capital of the Canadian Company having the
revised terms set forth on Exhibit F hereto and (y) exchange the Warrants
(including any Warrants issued pursuant to Section 6.7(c)) for warrants
to purchase common shares in the capital of the Canadian Company having
the revised terms set forth on Exhibit G hereto (with appropriate
adjustments for the Warrants issued under Section 6.7(c)), and in each
case having economic and other rights and



 









 






preferences with respect to the Canadian Company and its Subsidiaries
that are substantially identical to those applicable to the US Company
and its Subsidiaries immediately prior to such exchange (any such
exchange, an “Exchange Event”). If the Migration does not occur by
September 6, 2005, the US Company will have the right to require that the
Purchasers participate in an Exchange Event. Following any such Exchange
Event, all references to any of the Securities or the Conversion Shares
herein shall be deemed to refer to the new securities or conversion
shares, respectively, of the Canadian Company issued in connection with
the Exchange Event or thereafter. “Consultation Period” means a 60 day
period following the Migration Outside Date, during which period the
Companies and the Purchasers shall discuss in good faith whether there
are structuring alternatives to an Exchange Event that would preserve for
the Purchasers the economic and other rights associated with direct
ownership of Securities and Conversion Shares issued by the Canadian
Company that could be achieved without an exchange of Securities and
Conversion Shares issued by the US Company, subject to the right of the
Purchasers in their sole discretion to reject any such alternatives.



     3. Certificate of Designations. For the avoidance of doubt, the parties
hereto hereby acknowledge and agree that the references to the “Migration
Outside Date” in section 5 of the Certificate of Designations shall be deemed
to refer to the Migration Outside Date as modified by this Amendment.



     4. Full Force and Effect. Except as provided in this Amendment, the
Subscription Agreement shall continue in full force and effect in accordance
with the provisions thereof.



     5. Miscellaneous. Pursuant to Section 8.4 of the Preferred Subscription
Agreement, this Amendment shall be effective, as of the date hereof, at such
time as it is executed by WSI and the Purchasers. This Amendment shall be
construed in accordance with and governed by the internal law of the State of
New York (without reference to its rules as to conflict of laws). The section
headings herein are for convenience only and shall not affect the construction
hereof. This Amendment may be executed in one of more counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument.



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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.



	 	 	 	 
	 	 	
CAPITAL ENVIRONMENTAL RESOURCE INC.
	 	 	 
	 	 	
By: /s/ Ivan R. Cairns



Name: Ivan R. Cairns

Title: Executive Vice-President and

General Counsel
	 	 	 
	 	 	
WASTE SERVICES, INC.
	 	 	 
	 	 	
By:    /s/ Ivan R. Cairns



Name: Ivan R.  Cairns

Title: Executive Vice-President and

General Counsel
	 	 	 
	 	 	
KELSO INVESTMENT ASSOCIATES VI, L.P.
	 	 	 
	 	 	
By: Kelso GP VI, LLC,

its general partner
	 	 	 
	 	 	
By:    /s/ George E. Matelich



Managing Member
	 	 	 
	 	 	
KEP VI, LLC
	 	 	 
	 	 	
By:    /s/ George E. Matelich



Managing Member








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