<PAGE>
FILED PURSUANT TO RULE NO. 424(b)(3)
REGISTRATION NO. 333-64025
GEOWASTE
September 23, 1998
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders of
GeoWaste Incorporated ("GeoWaste") to be held at the offices of Stroock &
Stroock & Lavan LLP, located at 180 Maiden Lane, 36th Floor, New York, New
York 10038, on Monday, October 26, 1998, at 10:00 a.m., local time (the
"Special Meeting").
At the Special Meeting, you will be asked to consider and vote on a proposal
to approve and adopt an Agreement and Plan of Merger dated as of July 2, 1998
(the "Merger Agreement"), between GeoWaste and Superior Services, Inc.
("Superior") providing for the merger (the "Merger") of a wholly owned
subsidiary of Superior with and into GeoWaste. Upon consummation of the
Merger, GeoWaste, as the surviving corporation of the Merger, will become a
wholly owned subsidiary of Superior, and GeoWaste stockholders will be
entitled to receive in exchange for shares of GeoWaste common stock held by
them, that number of shares of Superior common stock having a trading value at
the time the exchange ratio is set of $2.65 per share of GeoWaste common stock
(assuming the average trading value of Superior common stock as of a specified
period is between $27.50 and $32.50), subject to certain adjustment provisions
described in the enclosed Proxy Statement/Prospectus. Under the Delaware
General Corporation Law, stockholders are not entitled to any appraisal rights
with respect to the Merger.
We have enclosed the following items relating to the Special Meeting and the
Merger:
1. Proxy Statement/Prospectus;
2. Proxy card; and
3. Pre-addressed return envelope for the proxy card.
The Proxy Statement/Prospectus and related proxy materials set forth (or
incorporate by reference) financial data and other important information
relating to GeoWaste and Superior and describe the terms and conditions of the
proposed Merger. The Board of Directors requests that you carefully review
these materials before completing the enclosed proxy card or attending the
Special Meeting.
THE BOARD OF DIRECTORS OF GEOWASTE HAS DETERMINED THAT THE TERMS OF THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN
THE BEST INTERESTS OF, GEOWASTE AND ITS STOCKHOLDERS. ACCORDINGLY, THE
GEOWASTE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT GEOWASTE STOCKHOLDERS
VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
The Board of Directors of GeoWaste has received the written opinion, dated
July 2, 1998, of Deutsche Bank Securities Inc., financial advisor to GeoWaste,
to the effect that as of such date, the Exchange Ratio (as defined in the
Proxy Statement/Prospectus) was fair, from a financial point of view, to the
GeoWaste stockholders. A copy of the opinion is attached as Annex B to the
Proxy Statement/Prospectus.
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT BY THE STOCKHOLDERS OF
GEOWASTE IS A CONDITION TO THE CONSUMMATION OF THE MERGER. It is important
that your shares be represented and voted at the Special Meeting, regardless
of the number of shares you own. Accordingly, whether or not you plan to
attend the Special Meeting in person, please promptly complete, sign and date
the enclosed proxy and return it in the enclosed pre-addressed envelope which
requires no postage if mailed within the United States.
Your prompt cooperation is greatly appreciated at this important time for
GeoWaste.
Sincerely,
/s/ Amy C. MacF. Burbott
Amy C. MacF. Burbott,
President and Chief Executive
Officer
<PAGE>
GEOWASTE INCORPORATED
SUITE 700
100 WEST BAY STREET
JACKSONVILLE, FLORIDA 32202
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MONDAY, OCTOBER 26, 1998
----------------
To the Stockholders of GeoWaste Incorporated:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of GeoWaste
Incorporated, a Delaware corporation ("GeoWaste"), will be held at the offices
of Stroock & Stroock & Lavan LLP located at 180 Maiden Lane, 36th Floor, New
York, New York 10038, on Monday, October 26, 1998, at 10:00 a.m., local time
(the "Special Meeting"), to consider and act upon the following proposal:
To approve and adopt the Agreement and Plan of Merger dated as of July 2,
1998 (the "Merger Agreement"), between Superior Services, Inc., a Wisconsin
corporation ("Superior"), and GeoWaste, pursuant to which, among other
things, (a) GeoWaste Acquisition Sub, Inc. ("Merger Sub"), a wholly owned
subsidiary of Superior recently organized under the laws of the State of
Delaware, will be merged (the "Merger") with and into GeoWaste with the
result that GeoWaste will become a wholly owned subsidiary of Superior, and
(b) GeoWaste stockholders will be entitled to receive in exchange for each
outstanding share of the common stock, par value $.10 per share, of
GeoWaste ("GeoWaste Common Stock") held by them a number of shares of
common stock, par value $.01 per share of Superior ("Superior Common
Stock") equal to the quotient obtained (rounded to the nearest ten-
thousandth of a share) by dividing $2.65 by the average per share closing
price of Superior Common Stock quoted on the Nasdaq National Market, as
reported by Bloomberg L.P., for the ten consecutive trading days (on which
shares of Superior Common Stock are actually traded) immediately preceding
October 19, 1998 (such average per share closing price is hereinafter
referred to as the "Final Superior Stock Price"); provided, however, that
if the Final Superior Stock Price is (i) equal to or less than $27.50, then
the exchange ratio will be 0.0964 or (ii) equal to or greater than $32.50,
then the exchange ratio will be 0.0815. GeoWaste has the right to terminate
the Merger Agreement if the Final Superior Stock Price is less than $25.00.
Under the Delaware General Corporation Law, stockholders are not entitled
to any appraisal rights with respect to the Merger. A copy of the Merger
Agreement is attached as Annex A to the accompanying Proxy
Statement/Prospectus.
The Board of Directors of GeoWaste has fixed the close of business on
September 3, 1998 as the record date for the determination of stockholders
entitled to notice of and to vote at the Special Meeting and any adjournments
or postponements thereof. Only stockholders of record at the close of business
on such date are entitled to notice of and to vote at the Special Meeting. A
list of GeoWaste stockholders entitled to vote at the Special Meeting will be
available for examination, during ordinary business hours, at the principal
executive offices of GeoWaste, located at Suite 700, 100 West Bay Street,
Jacksonville, Florida 32202, for a period commencing two business days after
the mailing of this Proxy Statement/Prospectus until the time of the Special
Meeting. Approval and adoption of the Merger Agreement by the GeoWaste
stockholders requires the affirmative vote of the holders of a majority of the
outstanding shares of GeoWaste Common Stock entitled to vote at the Special
Meeting.
Information regarding the Merger and related matters is contained in the
accompanying Proxy Statement/Prospectus and the annexes thereto, which are
incorporated by reference herein and form a part of this Notice.
<PAGE>
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WHETHER
OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE PROMPTLY SIGN, DATE AND
RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID RETURN
ENVELOPE. IF YOU ATTEND THE SPECIAL MEETING, YOU MAY REVOKE SUCH PROXY AND
VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY
CARD. IF YOU DO NOT ATTEND THE SPECIAL MEETING, YOU MAY STILL REVOKE SUCH
PROXY AT ANY TIME PRIOR TO THE SPECIAL MEETING BY PROVIDING WRITTEN NOTICE OF
SUCH REVOCATION TO THE SECRETARY OF GEOWASTE.
THE GEOWASTE BOARD OF DIRECTORS HAS DETERMINED THAT THE TERMS OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE
BEST INTERESTS OF, GEOWASTE AND ITS STOCKHOLDERS. ACCORDINGLY, THE GEOWASTE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. In considering the unanimous recommendation
of the Board of Directors of GeoWaste with respect to the Merger Agreement,
GeoWaste stockholders should be aware that certain members of GeoWaste's
management and of the Board of Directors have interests in the Merger that are
different from and in addition to the interests of the stockholders of
GeoWaste generally.
By Order of the Board of Directors,
/s/ Raymond F. Chase
Raymond F. Chase,
Secretary
Jacksonville, Florida
September 23, 1998
PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.
2
<PAGE>
GEOWASTE INCORPORATED
PROXY STATEMENT
----------------
SUPERIOR SERVICES, INC.
PROSPECTUS
SHARES OF COMMON STOCK
PAR VALUE $.01 PER SHARE
This Proxy Statement/Prospectus (the "Proxy Statement/Prospectus") is being
furnished to stockholders of GeoWaste Incorporated, a Delaware corporation
("GeoWaste"), in connection with the solicitation of proxies by the Board of
Directors of GeoWaste (the "GeoWaste Board") for use at a special meeting of
the GeoWaste stockholders to be held at the offices of Stroock & Stroock &
Lavan LLP located at 180 Maiden Lane, 36th Floor, New York, New York 10038, on
Monday, October 26, 1998 at 10:00 a.m., local time, and at any adjournments or
postponements thereof (the "Special Meeting").
At the Special Meeting, stockholders will consider and vote upon a proposal
to approve and adopt an Agreement and Plan of Merger dated as of July 2, 1998
(the "Merger Agreement"), between Superior Services, Inc., a Wisconsin
corporation ("Superior"), and GeoWaste, and the consummation of the
transactions contemplated thereby. Pursuant to the Merger Agreement, GeoWaste
Acquisition Sub, Inc., a wholly owned subsidiary of Superior recently formed
under the laws of the State of Delaware ("Merger Sub"), will be merged (the
"Merger") with and into GeoWaste. The Merger Agreement is attached as Annex A
hereto and is incorporated herein by reference.
This Proxy Statement/Prospectus also constitutes a prospectus of Superior
filed as part of a registration statement on Form S-4 (together with all
amendments, supplements and exhibits thereto, the "Registration Statement")
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
shares of Superior's common stock, par value $.01 per share, including the
common stock purchase rights associated therewith (the "Rights") under the
Rights Agreement dated February 21, 1997 (the "Rights Agreement"), between
Superior and LaSalle National Bank, as rights agent (collectively, "Superior
Common Stock"), issuable in the Merger in exchange for outstanding shares of
the common stock, par value $.10 per share, of GeoWaste ("GeoWaste Common
Stock"). Subject to the terms and conditions of the Merger Agreement, each
share of GeoWaste Common Stock, other than shares of GeoWaste Common Stock
that are owned, as of the Effective Time (as defined below), by GeoWaste as
treasury stock and all shares of GeoWaste owned by Superior, Merger Sub or any
other direct or indirect subsidiary of Superior, if any (collectively,
"Canceled Shares"), outstanding immediately prior to the time at which the
Merger becomes effective (the "Effective Time") will be converted into the
right to receive, upon due and proper surrender of certificates representing
GeoWaste Common Stock, such number of whole shares of Superior Common Stock
equal to the Exchange Ratio. Cash will be paid in lieu of any fractional share
of Superior Common Stock otherwise issuable in connection with the Merger.
(Continued on next page)
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 20 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BEFORE EXECUTING A PROXY SOLICITED HEREBY.
----------------
THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE MERGER HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
The date of this Proxy Statement/Prospectus is September 23, 1998.
<PAGE>
(Continued from cover page)
The "Exchange Ratio" will be equal to the quotient obtained (rounded to the
nearest ten-thousandth of a share) by dividing $2.65 by the average per share
closing price of Superior Common Stock quoted on the Nasdaq National Market,
as reported by Bloomberg L.P., for the ten consecutive trading days (on which
shares of Superior Common Stock are actually traded) immediately preceding
October 19, 1998 (the "Final Superior Stock Price"); provided, however, that
if the Final Superior Stock Price is (i) equal to or less than $27.50, then
the Exchange Ratio will be 0.0964 or (ii) equal to or greater than $32.50,
then the Exchange Ratio will be 0.0815. The Exchange Ratio will be adjusted to
reflect any stock dividend, distribution, stock split, reclassification or
certain other changes in Superior Common Stock prior to the Effective Time.
GeoWaste has the right to terminate the Merger Agreement if the Final Superior
Stock Price is less than $25.00. A decision to terminate the Merger Agreement
if the Final Superior Stock Price is less than $25.00 will be made by the
GeoWaste Board, after consulting with its financial and legal advisors, if it
determines in good faith that to do so would be consistent with its fiduciary
duties to GeoWaste's stockholders under Delaware law. Among the factors the
GeoWaste Board may consider in making a decision whether to terminate the
Merger Agreement will be the relative percentage of votes for and against the
Merger by GeoWaste's stockholders at the Special Meeting, the market price of
Superior Common Stock at that time, as well as the relationship of that price
to other comparable solid waste company stocks and general stock market
indices, and the various material factors considered by the GeoWaste Board in
first reaching its decision to approve the Merger Agreement and to recommend
that the holders of GeoWaste Common Stock vote to approve and adopt the Merger
Agreement described under "THE MERGER--GeoWaste's Reasons for the Merger;
Unanimous Recommendation of the GeoWaste Board of Directors." The Merger
Agreement does not provide for a resolicitation of GeoWaste's stockholders in
the event of a termination by GeoWaste of the Merger Agreement if the Final
Superior Stock Price is less than $25.00.
The following table sets forth information concerning the consideration that
each holder of shares of GeoWaste Common Stock will be entitled to receive
pursuant to the Merger depending on the Final Superior Stock Price:
<TABLE>
<CAPTION>
VALUE PER SHARE
ASSUMED FINAL OF GEOWASTE
SUPERIOR STOCK PRICE EXCHANGE RATIO COMMON STOCK*
-------------------- -------------- ----------------
<S> <C> <C>
$35.00 or greater 0.0815 $2.85 or greater
$32.50 0.0815 $2.65
$30.00 0.0883 $2.65
$27.50 0.0964 $2.65
$25.00 or less 0.0964 $2.41 or less
</TABLE>
- --------
* At the assumed Final Superior Stock Price.
Under the Merger Agreement, the Exchange Ratio will be equal to 0.0964 if
the Final Superior Stock Price is equal to or less than $27.50, and the
Exchange Ratio will be equal to 0.0815 if the Final Superior Stock Price is
equal to or greater than $32.50.
If, for example, the date for the Special Meeting were the date of this
Proxy Statement/Prospectus, the Exchange Ratio would be determined by dividing
(i) $2.65 by (ii) an assumed Final Superior Stock Price of $26.03 (the average
per share closing price of Superior Common Stock for the ten consecutive
trading days immediately preceding September 16, 1998). Accordingly, under
this example, because the assumed Final Superior Stock Price was less than
$27.50, upon consummation of the Merger, each share of GeoWaste Common Stock
would be convertible into the right to receive 0.0964 shares of Superior
Common Stock. GEOWASTE STOCKHOLDERS SHOULD NOTE THAT THE ACTUAL EXCHANGE RATIO
TO BE DETERMINED FOR PURPOSES OF THE MERGER MAY DIFFER FROM THE EXCHANGE RATIO
DESCRIBED IN THE PRECEDING EXAMPLE DUE TO FLUCTUATIONS IN THE MARKET PRICE OF
SUPERIOR COMMON STOCK FROM THE DATE OF THIS PROXY STATEMENT/PROSPECTUS TO
OCTOBER 16, 1998, THE DATE THE ACTUAL EXCHANGE RATIO WILL BE DETERMINED.
2
<PAGE>
Assuming an Exchange Ratio of 0.0964, the maximum number of shares of
Superior Common Stock to be issued to holders of outstanding shares of
GeoWaste Common Stock in connection with the Merger is approximately 2,052,505
shares (representing approximately 6.7% of the number of shares of Superior
Common Stock outstanding on September 2, 1998, assuming the issuance of such
number of shares of Superior Common Stock upon consummation of the Merger),
and assuming an Exchange Ratio of 0.0815, the minimum number of shares of
Superior Common Stock to be issued to holders of outstanding shares of
GeoWaste Common Stock in connection with the Merger is approximately 1,735,261
shares (representing approximately 5.8% of the number of shares of Superior
Common Stock outstanding on September 2, 1998, assuming the issuance of such
number of shares of Superior Common Stock upon consummation of the Merger).
Superior Common Stock is traded on the Nasdaq National Market under the
symbol "SUPR," and GeoWaste Common Stock is traded on The Nasdaq Small-Cap
Market under the symbol "GEOW." On July 2, 1998, the last trading day prior to
announcement by Superior and GeoWaste that they had entered into the Merger
Agreement, the last reported sales prices of Superior Common Stock and
GeoWaste Common Stock were $27.88 and $2.25, respectively. On September 22,
1998, the last full trading day prior to the date of this Proxy
Statement/Prospectus, the last reported sales prices of Superior Common Stock
and GeoWaste Common Stock were $25.50 and $1.72, respectively. STOCKHOLDERS
SHOULD OBTAIN CURRENT QUOTES FOR SUPERIOR COMMON STOCK AND GEOWASTE COMMON
STOCK.
Over the 90-day period ending on September 22, 1998, the last full trading
day prior to the date of this Proxy Statement/Prospectus, the market price of
Superior Common Stock has been subject to significant fluctuations, with the
market price during such period ranging from a high of $30.38 to a low of
$23.50. Because the market price of Superior Common Stock is subject to
fluctuation, the value of the shares of Superior Common Stock that GeoWaste
stockholders would receive in the Merger may increase or decrease prior to and
after the Merger. See "RISK FACTORS--Risks Relating to the Merger--Exchange
Ratio Subject to "Collar' " and "MARKET PRICES AND DIVIDEND INFORMATION."
All information concerning GeoWaste contained in this Proxy
Statement/Prospectus has been furnished by GeoWaste, and all information
concerning Superior contained in this Proxy Statement/Prospectus has been
furnished by Superior.
No person has been authorized to give any information or to make any
representations with respect to the matters described in this Proxy
Statement/Prospectus other than those contained herein or incorporated by
reference herein in connection with the solicitation of proxies or the
offering of securities made hereby and, if given or made, such information or
representations must not be relied upon as having been authorized by Superior
or GeoWaste. This Proxy Statement/Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, any securities, or the
solicitation of a proxy, in any jurisdiction to or from any person to whom it
is unlawful to make any such offer or solicitation in such jurisdiction.
Neither the delivery of this Proxy Statement/Prospectus nor any distribution
of securities made hereunder shall, under any circumstances, create an
implication that there has not been any change in the affairs of Superior or
GeoWaste since the date of this Proxy Statement/Prospectus or that the
information herein or the documents or reports incorporated by reference
herein are correct as of any time subsequent to such date.
This Proxy Statement/Prospectus, the letter to GeoWaste stockholders, the
Notice of Special Meeting and the form of proxy are first being mailed to the
stockholders of GeoWaste on or about September 23, 1998.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... 6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 6
SUMMARY................................................................... 8
Risk Factors............................................................ 8
The Parties............................................................. 8
The Special Meeting..................................................... 9
The Merger and the Merger Agreement..................................... 10
Anticipated Accounting Treatment........................................ 13
Certain Federal Income Tax Consequences................................. 13
No Appraisal Rights..................................................... 14
Comparison of Stockholders' Rights...................................... 14
Market Prices and Dividend Information.................................. 14
Selected Historical Financial Information............................... 15
Summary Combined Unaudited Pro Forma Condensed Financial Data........... 18
RISK FACTORS.............................................................. 20
Risks Relating to the Merger............................................ 20
Risks Relating to Superior.............................................. 21
INFORMATION CONCERNING SUPERIOR AND MERGER SUB............................ 28
INFORMATION CONCERNING GEOWASTE........................................... 28
MARKET PRICES AND DIVIDEND INFORMATION.................................... 29
COMPARATIVE UNAUDITED PER SHARE DATA OF SUPERIOR AND GEOWASTE............. 30
THE SPECIAL MEETING....................................................... 32
General................................................................. 32
Matters to be Considered at the Special Meeting......................... 32
Record Date; Voting; Solicitation and Revocation of Proxies............. 32
THE MERGER................................................................ 34
Background of the Merger................................................ 34
GeoWaste's Reasons for the Merger; Unanimous Recommendation of the
GeoWaste Board of Directors............................................ 36
Opinion of GeoWaste's Financial Advisor................................. 37
Superior's Reasons for the Merger....................................... 41
Interests of Certain Persons in the Merger.............................. 42
Regulatory Approvals.................................................... 45
Nasdaq Listing of Superior Common Stock................................. 46
Conduct of the Business of GeoWaste After the Merger.................... 46
Federal Securities Law Consequences..................................... 46
Anticipated Accounting Treatment........................................ 47
Material Federal Income Tax Consequences................................ 47
No Appraisal Rights..................................................... 48
MANAGEMENT AND PRINCIPAL STOCKHOLDERS OF GEOWASTE......................... 49
MANAGEMENT OF SUPERIOR.................................................... 51
Directors, Executive Officers and Key Employees......................... 51
THE MERGER AGREEMENT...................................................... 54
Terms of the Merger..................................................... 54
Exchange of Certificates Representing GeoWaste Common Stock............. 55
Dividends............................................................... 56
No Fractional Shares.................................................... 56
Unclaimed Amounts....................................................... 56
GeoWaste Stock Options and Warrants..................................... 56
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Representations and Warranties......................................... 58
Resales of Superior Common Stock Received in the Merger; Restrictions
on Affiliates......................................................... 58
Conduct of Business Pending the Merger................................. 59
No Solicitation........................................................ 61
Directors' and Officers' Indemnification and Insurance................. 62
Employee Matters....................................................... 63
Conditions to the Merger............................................... 64
Termination............................................................ 65
Termination Fee and Expenses........................................... 66
Waiver................................................................. 67
Amendment.............................................................. 67
ALLEN STOCKHOLDER SUPPORT AGREEMENTS..................................... 68
COMBINED UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS.............. 70
INFORMATION REGARDING SUPERIOR CAPITAL STOCK............................. 75
General................................................................ 75
Common Stock........................................................... 75
Preferred Stock........................................................ 75
Common Stock Purchase Rights........................................... 75
Certain Statutory and Other Provisions................................. 76
COMPARISON OF STOCKHOLDER RIGHTS......................................... 79
Classified Board of Directors.......................................... 79
Number of Directors; Cumulative Voting................................. 79
Removal of Directors; Filling Vacancies on the Board of Directors...... 80
Limitation on Directors' Liability; Indemnification.................... 80
Meeting of Stockholders................................................ 82
Quorum for Stockholder Meetings........................................ 82
Stockholder Voting Requirements Generally.............................. 82
Stockholder Action by Written Consent.................................. 83
Supermajority Provisions............................................... 83
Stockholder Voting in Certain Significant Transactions; Takeover
Legislation........................................................... 83
Statutory Stockholder Liability........................................ 84
Derivative Actions..................................................... 85
Dissenters' Rights and Appraisal Rights................................ 85
Stockholder Inspection of Books and Records............................ 85
Stockholder Rights Plan................................................ 86
Loans to Directors..................................................... 86
Amendment or Repeal of the Articles and Bylaws......................... 86
Dividend Declarations.................................................. 87
LEGAL MATTERS............................................................ 87
EXPERTS.................................................................. 87
STOCKHOLDER PROPOSALS.................................................... 88
</TABLE>
ANNEX A--THE MERGER AGREEMENT
ANNEX B--OPINION OF DEUTSCHE BANK SECURITIES INC.
ANNEX C--ANNUAL REPORT ON FORM 10-K OF GEOWASTE FOR THE YEAR ENDED DECEMBER 31,
1997
5
<PAGE>
AVAILABLE INFORMATION
Each of Superior and GeoWaste is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and,
in accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information
filed by Superior or GeoWaste with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates or from the web site maintained by
the Commission at "http://www.sec.gov." In addition, material filed by each of
Superior and GeoWaste can be inspected at the offices of The Nasdaq Stock
Market, 1735 K Street, N.W., Washington, D.C. 20006.
Superior has filed with the Commission the Registration Statement under the
Securities Act with respect to the shares of Superior Common Stock to be
issued pursuant to the Merger Agreement. As permitted by the rules and
regulations of the Commission, this Proxy Statement/Prospectus omits certain
information contained or incorporated by reference in the Registration
Statement and the exhibits thereto. Reference is hereby made to the
Registration Statement for further information with respect to Superior and
the securities offered hereby. Such additional information may be inspected
and copied as set forth above. Statements contained in this Proxy
Statement/Prospectus or in any document incorporated by reference in this
Proxy Statement/Prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement or such other document, each
such statement being qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by Superior
under the Exchange Act (File No. 0-27508) are incorporated by reference in
this Proxy Statement/Prospectus:
1. Superior's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, as amended by Amendment No. 1 thereto on Form 10-K/A
filed on May 8, 1998 (the "1997 Superior Form 10-K").
2. Superior's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998.
3. The description of the Rights set forth in Item 5 of Superior's
Current Report on Form 8-K dated February 21, 1997.
4. The portions of Superior's Proxy Statement for the Annual Meeting of
Shareholders held on May 12, 1998 that have been incorporated by reference
in the 1997 Superior Form 10-K.
All documents and reports filed by Superior pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy
Statement/Prospectus and prior to the termination of the offering made by this
Proxy Statement/Prospectus will be deemed to be incorporated by reference in
this Proxy Statement/Prospectus and to be a part hereof from the dates of
filing of such documents or reports.
The following documents previously filed with the Commission by GeoWaste
under the Exchange Act (File No. 0-9278) are incorporated by reference in this
Proxy Statement/Prospectus:
1. GeoWaste's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (the "1997 GeoWaste Form 10-K").
2. GeoWaste's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1998 and June 30, 1998.
6
<PAGE>
3. GeoWaste's Current Reports on Form 8-K filed July 7, 1998 and July 9,
1998.
The 1997 GeoWaste Form 10-K is included in this Proxy Statement/Prospectus
as Annex C and is being delivered to each stockholder of GeoWaste.
The information relating to Superior and GeoWaste contained in this Proxy
Statement/Prospectus does not purport to be complete and should be read
together with the information in the documents incorporated by reference
herein. Any statement contained in a document or report incorporated or deemed
to be incorporated by reference herein will be deemed to be modified or
superseded for purposes of this Proxy Statement/Prospectus to the extent that
a statement contained herein, or in any other subsequently filed document or
report that also is deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded will
not be deemed, except as so modified or superseded, to constitute a part of
this Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE CERTAIN DOCUMENTS
PREVIOUSLY FILED BY SUPERIOR AND GEOWASTE WITH THE COMMISSION, WHICH DOCUMENTS
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN
CERTAIN EXHIBITS THERETO) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS
DELIVERED, ON WRITTEN OR ORAL REQUEST OF SUCH PERSON DIRECTED TO THE PROXY
SOLICITOR, D.F. KING & CO., INC., 77 WATER STREET, NEW YORK, NEW YORK 10005,
(212) 269-5550 (CALL COLLECT), OR CALL TOLL FREE (800) 714-3310. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, REQUESTS SHOULD BE RECEIVED BY
OCTOBER 16, 1998.
7
<PAGE>
SUMMARY
The following is a summary of certain important terms of the proposed Merger
and related information discussed elsewhere in this Proxy Statement/Prospectus.
This summary is not intended to be complete and, accordingly, reference is made
to, and this summary is qualified in its entirety by, the more detailed
information contained or incorporated by reference in this Proxy
Statement/Prospectus and the Annexes hereto. As used herein, the terms
"Superior" and "GeoWaste" refer to such corporations, respectively, and, where
the context requires, such corporations and their respective subsidiaries on a
consolidated basis.
STOCKHOLDERS OF GEOWASTE ARE URGED TO READ THIS PROXY STATEMENT/PROSPECTUS
AND ANNEXES HERETO IN THEIR ENTIRETY AND SHOULD CONSIDER CAREFULLY THE
INFORMATION SET FORTH HEREIN UNDER "RISK FACTORS."
RISK FACTORS
In considering whether to approve the various matters pertaining to the
Merger, the stockholders of GeoWaste should carefully consider, among other
things, that (i) the Exchange Ratio is subject to change based on fluctuations
in Superior's stock price; (ii) GeoWaste may be obligated to reimburse Superior
for certain expenses if the Merger Agreement is terminated because of the
failure to obtain GeoWaste stockholder approval; (iii) expected benefits of the
Merger relative to the business of Superior may not be achieved; and (iv)
certain directors and executive officers of GeoWaste have interests in the
Merger that are in addition to their interests as holders of GeoWaste Common
Stock generally. See "RISK FACTORS--Risks Relating to the Merger."
In addition, the stockholders of GeoWaste should consider the general risks
involved in an investment in Superior Common Stock. See "RISK FACTORS--Risks
Relating to Superior."
THE PARTIES
Superior
Superior is an acquisition-oriented integrated solid waste services company
providing solid waste collection, transfer, recycling and disposal services. As
of June 30, 1998, Superior served over 570,000 residential, commercial and
industrial customers in Wisconsin, Alabama, Florida, Illinois, Iowa, Michigan,
Minnesota, Missouri, Ohio, Pennsylvania and West Virginia.
As of June 30, 1998, Superior owned and operated 17 landfills, including a
greenfield landfill and a municipal solid waste landfill subject to a
definitive purchase agreement, 41 solid waste collection operations, 15
recycling facilities and 13 transfer stations. Superior also manages four other
landfills for third parties. Superior also provides other integrated waste
services, most of which are project-based and a substantial number of which
provide additional waste volumes to Superior's landfills.
Superior's objective is to be one of the largest and most profitable fully
integrated providers of solid waste collection and disposal services in each
market it serves. Superior's strategy to achieve this objective is to (i)
continue to expand its operations and customer base in its existing markets and
to enter new markets through the acquisition of other solid waste operations;
(ii) pursue internal growth opportunities in its current markets; and (iii)
achieve continuing operating improvements in its business. Superior's principal
strategy for future growth is through the acquisition of additional solid waste
disposal, transfer and collection operations. Superior believes that its
reputation, strategy, culture and financial strength make it an attractive
buyer to acquisition candidates. Superior's operating strategy emphasizes the
integration of its solid waste collection and disposal operations and the
internalization of waste collected.
8
<PAGE>
Superior, a Wisconsin corporation, has its principal executive offices
located at Suite 200, 125 South 84th Street, Milwaukee, Wisconsin 53214. Its
telephone number is (414) 479-7800. See "INFORMATION CONCERNING SUPERIOR AND
MERGER SUB."
Merger Sub
Merger Sub, a Delaware corporation, was organized on July 16, 1998 as a
wholly owned subsidiary of Superior specifically for the purpose of effecting
the Merger, and has not engaged in any significant business activity since its
inception. Upon consummation of the Merger, the separate corporate existence of
Merger Sub will cease, Merger Sub will be merged with and into GeoWaste,
GeoWaste will continue as the surviving corporation and GeoWaste will succeed
to and assume all the rights and obligations of Merger Sub in accordance with
the Delaware General Corporation Law (the "DGCL").
The principal executive offices of Merger Sub are located at Suite 200, 125
South 84th Street, Milwaukee, Wisconsin 53214, and its telephone number is
(414) 479-7800.
GeoWaste
GeoWaste is a holding company which, through its subsidiaries, is in the
business of owning, operating and acquiring non-hazardous, solid waste
collection, transportation, transfer and disposal companies and facilities.
GeoWaste's solid waste services operations consist of a solid waste
collection and disposal company located in Valdosta, Georgia, a solid waste
collection, transfer, materials recovery facility and portable toilet company
based in Ocala, Florida, a solid waste collection business in Cordele, Georgia
and a solid waste transfer and transportation service under a contract with USA
Waste Services, Inc. in the Bronx, New York. Solid waste management and related
services accounted for 100% of GeoWaste's total consolidated revenue in 1997.
GeoWaste was incorporated in the State of Delaware under the name Utah Shale
Land & Minerals Corporation in 1972. Its principal executive offices are
located at Suite 700, 100 West Bay Street, Jacksonville, Florida 32202, and its
telephone number is (904) 353-5033. See "INFORMATION CONCERNING GEOWASTE."
THE SPECIAL MEETING
Time, Date and Place
The Special Meeting of GeoWaste's stockholders will be held at the offices of
Stroock & Stroock & Lavan LLP located at 180 Maiden Lane, 36th Floor, New York,
New York 10038, on Monday, October 26, 1998 at 10:00 a.m., local time.
Matters to be Considered
The purpose of the Special Meeting is to consider and vote upon the proposal
to approve and adopt the Merger Agreement, which is attached as Annex A to this
Proxy Statement/Prospectus. See "THE SPECIAL MEETING--Matters to be Considered
at the Special Meeting."
Record Date; Shares Entitled to Vote
Only holders of record of GeoWaste Common Stock at the close of business on
September 3, 1998 (the "Record Date") will be entitled to notice of, and to
vote at, the Special Meeting. At such date, there were
9
<PAGE>
21,291,549 shares of GeoWaste Common Stock outstanding held by 4,639 holders of
record. See "THE SPECIAL MEETING--Record Date; Voting; Solicitation and
Revocation of Proxies."
Required Vote
The approval and adoption of the Merger Agreement by stockholders of GeoWaste
will require the affirmative vote of the holders of a majority of the
outstanding shares of GeoWaste Common Stock entitled to vote at the Special
Meeting.
Share Ownership of Directors, Officers and Others
In connection with the execution of the Merger Agreement, certain of
GeoWaste's executive officers and former executive officers (Raymond F. Chase,
Vice President and Acting Chief Financial Officer, Michael D. Paglia, formerly
a Vice President, and John A. Paglia, formerly a Vice President), its directors
(Walter H. Barandiaran, Steven M. Engel, Harve A. Ferrill and Michael D.
Paglia) and certain of their affiliates, solely in their individual capacities
as owners or holders of the power to vote shares of GeoWaste Common Stock,
entered into Stockholder Support Agreements pursuant to which each such person
has agreed, among other things, to vote shares of GeoWaste Common Stock held by
them in favor of the approval and adoption of the Merger Agreement. As of the
Record Date, such persons beneficially owned an aggregate of 2,496,826 shares
of GeoWaste Common Stock (excluding shares issuable upon the exercise of
options held by such persons) or approximately 11.7% of the shares of GeoWaste
Common Stock entitled to vote at the Special Meeting. See "THE SPECIAL
MEETING."
In addition, each of Allen & Company Incorporated ("Allen & Company"), Allen
Value Partners, L.P., Allen Value Limited and Richard Fields, a managing
director of Allen & Company ("Fields"), who, as of the Record Date,
beneficially owned an aggregate of 5,010,000 shares of GeoWaste Common Stock
(excluding shares issuable upon the exercise of warrants held by such persons)
or approximately 23.5% of the shares of GeoWaste Common Stock entitled to vote
at the Special Meeting, have entered into Stockholder Support Agreements with
Superior pursuant to which they have agreed, among other things, to vote the
shares of GeoWaste Common Stock owned by them as of the Record Date in favor of
the approval and adoption of the Merger Agreement. See "ALLEN STOCKHOLDER
SUPPORT AGREEMENTS."
Accordingly, as of the Record Date, the aggregate number of shares of
GeoWaste Common Stock subject to Stockholder Support Agreements was 7,506,826
shares, representing approximately 35.2% of the shares of GeoWaste Common Stock
entitled to vote at the Special Meeting.
THE MERGER AND THE MERGER AGREEMENT
Effects of the Merger
Upon consummation of the Merger, Merger Sub will merge with and into
GeoWaste, with GeoWaste continuing as the surviving corporation and a wholly
owned subsidiary of Superior (GeoWaste after the Merger being sometimes
referred to herein as the "Surviving Corporation"). Each issued and outstanding
share of GeoWaste Common Stock, other than Canceled Shares, will be converted
into a number of shares of Superior Common Stock equal to the quotient obtained
(rounded to the nearest ten-thousandth of a share) by dividing $2.65 by the
Final Superior Stock Price; provided, however, that if the Final Superior Stock
Price is (i) equal to or less than $27.50, then the Exchange Ratio will be
0.0964 or (ii) equal to or greater than $32.50, then the Exchange Ratio will be
0.0815. The Exchange Ratio will be adjusted to reflect any stock dividend,
distribution, stock split, reclassification or certain other changes in
Superior Common Stock prior to the Effective Time. Cash will be paid in lieu of
any fractional share of Superior Common Stock otherwise issuable in connection
with the Merger. See "THE MERGER AGREEMENT--Terms of the Merger."
10
<PAGE>
The following table sets forth information concerning the consideration that
each holder of shares of GeoWaste Common Stock will be entitled to receive
pursuant to the Merger depending on the Final Superior Stock Price:
<TABLE>
<CAPTION>
VALUE PER SHARE
ASSUMED FINAL OF GEOWASTE
SUPERIOR STOCK PRICE EXCHANGE RATIO COMMON STOCK*
-------------------- -------------- ----------------
<S> <C> <C>
$35.00 or greater 0.0815 $2.85 or greater
$32.50 0.0815 $2.65
$30.00 0.0883 $2.65
$27.50 0.0964 $2.65
$25.00 or less 0.0964 $2.41 or less
</TABLE>
- --------
* At the assumed Final Superior Stock Price.
Under the Merger Agreement, the Exchange Ratio will be equal to 0.0964 if the
Final Superior Stock Price is equal to or less than $27.50 and the Exchange
Ratio will be equal to 0.0815 if the Final Superior Stock Price is equal to or
greater than $32.50.
Effective Time of the Merger
The Merger will become effective at the time the certificate of merger is
filed with the Secretary of State of the State of Delaware in accordance with
the DGCL or at such other time which Superior, Merger Sub and GeoWaste have
agreed upon and designated in the certificate of merger as the effective time
(the "Effective Time"). See "THE MERGER AGREEMENT--Terms of the Merger."
Unanimous Recommendation of the GeoWaste Board of Directors
The GeoWaste Board has determined that the terms of the Merger Agreement and
the transactions contemplated thereby are fair to, and in the best interests
of, GeoWaste and its stockholders. ACCORDINGLY, THE GEOWASTE BOARD UNANIMOUSLY
RECOMMENDS THAT HOLDERS OF GEOWASTE COMMON STOCK VOTE "FOR" THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT. For a complete discussion of the factors
considered by the GeoWaste Board in approving the Merger Agreement, see "THE
MERGER--GeoWaste's Reasons for the Merger; Unanimous Recommendation of the
GeoWaste Board of Directors."
In considering the unanimous recommendation of the GeoWaste Board with
respect to the Merger Agreement, GeoWaste stockholders should be aware that
certain members of GeoWaste's management and of the GeoWaste Board have
interests in the Merger that are different from and in addition to the
interests of the stockholders of GeoWaste generally. See "--Interests of
Certain Persons in the Merger" and "THE MERGER--Interests of Certain Persons in
the Merger."
Opinion of GeoWaste's Financial Advisor
The GeoWaste Board has received the written opinion, dated July 2, 1998, of
Deutsche Bank Securities Inc. ("Deutsche Bank"), financial advisor to GeoWaste,
to the effect that as of such date, the Exchange Ratio was fair, from a
financial point of view, to the GeoWaste stockholders. The full text of the
written opinion of Deutsche Bank, which sets forth the assumptions made, the
procedures followed, the matters considered and the limitations on the review
undertaken by Deutsche Bank in connection with such opinion, is attached as
Annex B to this Proxy Statement/Prospectus and holders of GeoWaste Common Stock
are urged to read carefully the opinion in its entirety. See "THE MERGER--
Opinion of GeoWaste's Financial Advisor."
11
<PAGE>
Interests of Certain Persons in the Merger
In considering the unanimous recommendation of the GeoWaste Board with
respect to the Merger Agreement, GeoWaste stockholders should be aware that
certain members of GeoWaste's management and of the GeoWaste Board have
interests in the Merger that are different from and in addition to the
interests of the stockholders of GeoWaste generally. These interests include,
among other things, provisions in the Merger Agreement, as well as other
agreements, relating to (i) the severance arrangements between GeoWaste and
certain of its executive officers, (ii) stock options held by GeoWaste's
executive officers and directors and (iii) indemnification of GeoWaste's
officers and directors. The GeoWaste Board was aware of such interests and
considered them, among other matters, in authorizing the Merger and unanimously
recommending to the GeoWaste stockholders their approval and adoption thereof.
See "THE MERGER--Interests of Certain Persons in the Merger."
No Solicitation
The Merger Agreement provides that GeoWaste will not, nor will it permit any
of its subsidiaries to, and it will use its best efforts to cause its officers,
directors, employees, agents or affiliates, including Deutsche Bank, not to,
directly or indirectly, (i) solicit, initiate or knowingly encourage, or
knowingly take any other action to facilitate, any inquiries or the making of
any proposal which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below) or (ii) participate in any discussions
or negotiations regarding any Acquisition Proposal; provided, however, that if
the GeoWaste Board determines in good faith, after consultation with and based
on the advice of outside counsel, that it is required to do so in order to
comply with its fiduciary duties to GeoWaste's stockholders under applicable
law, GeoWaste may, in response to an unsolicited Acquisition Proposal, furnish
information with respect to GeoWaste to any person making such Acquisition
Proposal pursuant to an executed confidentiality agreement with such person and
participate in negotiations regarding such Acquisition Proposal. As defined in
the Merger Agreement, an "Acquisition Proposal" means any bona fide proposal or
offer from any person relating to any merger, consolidation, business
combination, sale of a significant amount of assets outside of the ordinary
course of business, sale of shares of capital stock outside of the ordinary
course of business, tender or exchange offer or similar transaction involving
50% or more of the capital stock or assets of GeoWaste and its subsidiaries,
taken as a whole. See "THE MERGER AGREEMENT--No Solicitation."
Conditions to the Merger
The obligations of each party to consummate the Merger are subject to the
satisfaction or waiver of certain conditions, including the following:
obtaining requisite GeoWaste stockholder approval; no statute, rule,
regulation, executive order, decree, judgment, injunction or order preventing
or prohibiting consummation of the Merger; the receipt of all regulatory
approvals necessary to consummate the Merger and the expiration or termination
of all statutory waiting periods (including the applicable period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR Act")); the Registration
Statement has been declared effective and is not the subject of any stop order
or proceeding by the Commission; the shares of Superior Common Stock to be
issued in the Merger have been authorized for quotation on the Nasdaq National
Market; and Superior and GeoWaste have received certain accountants letters
regarding pooling of interests accounting treatment of the Merger.
The obligations of Superior and Merger Sub to consummate the Merger are
subject to the satisfaction or waiver of certain conditions, including the
following: the continued accuracy of the representations and warranties of
GeoWaste contained in the Merger Agreement; performance of or compliance with
all obligations and covenants to be performed or complied with by GeoWaste
under the Merger Agreement; and receipt by Superior of a written opinion of
Foley & Lardner, counsel to Superior, to the effect that the Merger, for
federal income tax purposes, constitutes a "reorganization" under Section 368
of the Internal Revenue Code of 1986, as amended (the "Code").
12
<PAGE>
The obligations of GeoWaste to consummate the Merger are subject to the
satisfaction or waiver of certain conditions, including the following: the
continued accuracy of the representations and warranties of Superior and Merger
Sub contained in the Merger Agreement; performance of or compliance with all
obligations and covenants to be performed or complied with by Superior and
Merger Sub under the Merger Agreement; and receipt by GeoWaste of a written
opinion of Stroock & Stroock & Lavan LLP, counsel to GeoWaste, to the effect
that the Merger, for federal income tax purposes, constitutes a
"reorganization" under Section 368 of the Code.
Termination of the Merger Agreement
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the Merger Agreement and the Merger
by the GeoWaste stockholders under certain circumstances, including, among
others: (i) by mutual written consent of Superior and GeoWaste; (ii) by either
Superior or GeoWaste, if the other has breached or failed to comply with, in
any material respect, any of its obligations under the Merger Agreement or if
any representation or warranty made by the other is incorrect in any material
respect when made or has since ceased to be true and correct in any material
respect, such that as a result of such breach, failure or misrepresentation the
conditions to consummation of the Merger set forth in the Merger Agreement
would not be satisfied (provided that the non-breaching party may not terminate
the Merger Agreement if such breach is curable through the exercise or
reasonable efforts and so long as the non-breaching party exercises such
efforts after notice of breach (but in no event longer than 30 days)); (iii) by
either Superior or GeoWaste if the requisite GeoWaste stockholder approval is
not obtained; (iv) by Superior if the GeoWaste Board withdraws or modifies in a
manner materially adverse to Superior its approval or recommendation of the
Merger or approves or recommends an Acquisition Proposal; (v) by GeoWaste in
the event the GeoWaste Board determines in good faith, after consultation with
and based on the advice of outside counsel, that it must withdraw or modify its
recommendation to the GeoWaste stockholders to approve the Merger Agreement and
the Merger in order to comply with its fiduciary duties; (vi) by GeoWaste, if
the Final Superior Stock Price is less than $25.00; or (vii) by either Superior
or GeoWaste if the Merger has not been consummated before October 30, 1998. See
"THE MERGER AGREEMENT--Termination."
The Merger Agreement provides for the payment of a termination fee of $1.5
million following the termination of the Merger Agreement under certain
circumstances. In addition, GeoWaste will be required to pay the reasonable
out-of-pocket expenses of Superior in an amount not to exceed $700,000 if the
requisite GeoWaste stockholder approval is not obtained. See "THE MERGER
AGREEMENT--Termination Fee and Expenses" and "--No Solicitation."
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a "pooling of interests" in
accordance with generally accepted accounting principles ("GAAP"). It is a
condition to each party's obligation to consummate the Merger that GeoWaste
receive a letter from PricewaterhouseCoopers LLP, its independent public
accountants, and that Superior receive a letter from Ernst & Young LLP, its
independent public accountants, providing in each case that the Merger will
qualify as a pooling of interests. See "THE MERGER--Anticipated Accounting
Treatment." This condition may be waived by either GeoWaste or Superior,
although it is highly unlikely that Superior would do so. Neither party
currently intends to waive such condition. In the event that such condition is
waived by both Superior and GeoWaste, GeoWaste will recirculate a revised Proxy
Statement/Prospectus that discloses the waiver of this condition and contains
all related material disclosure, including revised financial information to
reflect the change in the accounting treatment. In such event, GeoWaste will
resolicit proxies from its stockholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is expected that the Merger will constitute a reorganization under Section
368 of the Code for federal income tax purposes and, accordingly, no gain or
loss will be recognized by GeoWaste stockholders upon their
13
<PAGE>
exchange of GeoWaste Common Stock for Superior Common Stock (except to the
extent of any cash received in lieu of a fractional share interest in Superior
Common Stock). See "THE MERGER--Material Federal Income Tax Consequences."
GEOWASTE STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY
AND EFFECT OF VARIOUS STATE, LOCAL AND FOREIGN TAX LAWS. See "THE MERGER--
Material Federal Income Tax Consequences" and "THE MERGER AGREEMENT--Conditions
to the Merger."
NO APPRAISAL RIGHTS
Pursuant to Section 262 of the DGCL, GeoWaste stockholders are not entitled
to appraisal rights in connection with, or as a result of, the Merger. See "THE
MERGER--No Appraisal Rights."
COMPARISON OF STOCKHOLDERS' RIGHTS
Upon consummation of the Merger, the GeoWaste stockholders will become
stockholders of Superior. See "COMPARISON OF STOCKHOLDERS' RIGHTS" for a
summary of the material differences between the rights of holders of Superior
Common Stock and GeoWaste Common Stock. These differences arise from the
distinctions between the laws of the jurisdictions in which Superior and
GeoWaste are incorporated (Wisconsin and Delaware, respectively) and the
distinctions between the articles of incorporation and bylaws of Superior and
the certificate of incorporation and bylaws of GeoWaste.
MARKET PRICES AND DIVIDEND INFORMATION
Superior Common Stock is traded on the Nasdaq National Market under the
symbol "SUPR," and GeoWaste Common Stock is traded on The Nasdaq Small-Cap
Market under the symbol "GEOW."
Set forth below are the last reported sales prices of Superior Common Stock
and GeoWaste Common Stock and the equivalent per share price for GeoWaste
Common Stock giving effect to the Merger on (i) July 2, 1998, the last full
trading day prior to the announcement by Superior and GeoWaste that they had
entered into the Merger Agreement, and (ii) September 22, 1998, the last full
trading day prior to the date of this Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
EQUIVALENT
PRICE PER SHARE FOR
SUPERIOR GEOWASTE GEOWASTE
COMMON STOCK COMMON STOCK COMMON STOCK(1)
------------ ------------ -------------------
<S> <C> <C> <C>
July 2, 1998...................... $27.88 $2.25 $2.65
September 22, 1998................ $25.50 $1.72 $2.46
</TABLE>
- --------
(1) The equivalent per share price of GeoWaste Common Stock at each specified
date was determined by multiplying the applicable last reported sales price
of Superior Common Stock by an estimated Exchange Ratio calculated by
assuming a Final Superior Stock Price equal to the applicable last reported
sales price. "THE MERGER AGREEMENT--Terms of the Merger."
See "MARKET PRICES AND DIVIDEND INFORMATION."
14
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
Superior
The following table presents selected consolidated financial data of Superior
for the periods and at the dates indicated. The selected consolidated financial
data as of and for the years ended December 31, 1993, 1994, 1995, 1996 and 1997
are derived from Superior's consolidated financial statements for such periods.
The selected consolidated financial data for Superior for the six months ended
June 30, 1997 and 1998 are derived from Superior's unaudited interim
consolidated financial statements and, in the opinion of Superior's management,
all adjustments, consisting only of normal and recurring items, necessary to
present fairly Superior's financial position and results of operations at the
end of and for such periods have been reflected. The results of operations for
the six months ended June 30, 1998 may not be indicative of the results to be
expected for the year ending December 31, 1998. All financial data have been
restated and give retroactive effect to reflect Superior's March 31, 1998
merger with Alabama Waste System, Inc. and Acmar Regional Landfill, Inc.
(collectively, "AWS") in a transaction accounted for as a pooling of interests.
The selected consolidated financial data below should be read in conjunction
with Superior's consolidated financial statements and notes thereto
incorporated by reference in this Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- -------- -------- -------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $74,540 $84,542 $105,694 $129,443 $191,578 $82,707 $114,119
Expenses:
Cost of operations..... 43,047 51,787 55,022 66,609 103,894 44,356 61,953
Selling, general and
administrative
expenses.............. 13,854 16,853 18,587 21,333 27,667 13,102 14,461
Merger costs(1)........ 0 0 0 0 1,035 1,035 1,493
Litigation and
settlement costs(2)... 0 0 0 0 1,790 0 0
Depreciation and
amortization.......... 6,836 10,899 15,329 19,331 25,851 11,154 15,766
------- ------- -------- -------- -------- ------- --------
Operating income from
continuing operations.. 10,803 5,003 16,756 22,170 31,341 13,060 20,446
Interest expense........ (1,868) (2,605) (3,298) (1,296) (1,857) (845) (684)
Other income............ 841 716 750 1,020 1,617 63 675
------- ------- -------- -------- -------- ------- --------
Income from continuing
operations before
income taxes........... 9,776 3,114 14,208 21,894 31,101 12,278 20,437
Income taxes............ 3,343 1,389 5,733 8,540 12,706 4,687 9,155
------- ------- -------- -------- -------- ------- --------
Income from continuing
operations............. 6,433 1,725 8,475 13,354 18,395 7,591 11,282
Income (loss) from
discontinued
operations, net of
income tax(3).......... 56 (5,735) (329) 0 0 0 0
------- ------- -------- -------- -------- ------- --------
Net income (loss)....... $ 6,489 $(4,010) $ 8,146 $ 13,354 $ 18,395 $ 7,591 $ 11,282
======= ======= ======== ======== ======== ======= ========
EARNINGS (LOSS) PER
SHARE:
Basic.................. $ 0.46 $ (0.26) $ 0.48 $ 0.67 $ 0.81 $ 0.36 $ 0.42
======= ======= ======== ======== ======== ======= ========
Diluted................ $ 0.45 $ (0.26) $ 0.47 $ 0.66 $ 0.80 $ 0.35 $ 0.42
======= ======= ======== ======== ======== ======= ========
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
-------------------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 4,637 $ 2,418 $ 4,008 $ 18,992 $ 42,684 $ 5,064 $ 12,418
Working capital......... 9,348 11,096 3,740 16,554 43,501 8,403 25,259
Property and equipment,
net.................... 80,757 87,891 96,597 124,591 221,346 164,180 244,272
Total assets............ 124,316 137,023 144,171 203,340 382,600 273,020 397,921
Long-term debt, net of
current maturities..... 29,379 38,403 23,339 8,404 7,188 63,564 4,021
Total common
shareholders'
investment............. 35,416 31,497 41,204 109,629 261,322 120,965 279,855
</TABLE>
- --------
(1) On June 27, 1997, Superior completed its merger with Resource Recovery
Transfer and Transportation, Inc. ("R2T2"), which is accounted for as a
pooling of interests. Superior incurred nonrecurring merger costs of
$1,035,000 during 1997 as a result of the merger with R2T2. On March 1,
1998, Superior completed its merger with TWR, Inc. ("TWR"), which is
accounted for as a pooling of interests. In addition, on March 31, 1998,
Superior completed its merger with AWS, which is accounted for as a pooling
of interests. Superior incurred nonrecurring merger costs of $1,493,000
during the six months ended June 30, 1998 as a result of the mergers with
TWR and AWS.
(2) Prior to its merger with Superior, Acmar Regional Landfill, Inc. negotiated
a settlement agreement with the United States Government with respect to a
"Clean Water Act" violation in 1993 resulting in fines and restitutions
totaling $1,790,000 and was placed on probation for three years. This
amount was accrued for in the December 31, 1997 financial statements. As
provided in the settlement agreement, Acmar Regional Landfill, Inc.'s
probation was terminated as a result of the payment of the fine and its
merger with Superior on March 31, 1998. Additionally, AWS incurred legal
fees included in selling, general and administrative expenses of $342,000
during 1997 in connection with this matter. These costs, together with the
fine, net of applicable income taxes, amounted to approximately $0.07 per
share in 1997.
(3) Includes losses on disposition of discontinued operations, net of income
taxes of $5,042,000 and $329,000 for 1994 and 1995, respectively.
16
<PAGE>
GeoWaste
The following table presents selected consolidated financial data of GeoWaste
for the periods and at the dates indicated. The selected consolidated financial
data as of and for the years ended December 31, 1993, 1994, 1995, 1996 and 1997
are derived from GeoWaste's consolidated financial statements, which have been
audited by PricewaterhouseCoopers LLP, independent auditors. The selected
consolidated financial data for GeoWaste for the six months ended June 30, 1997
and 1998 are derived from GeoWaste's unaudited interim consolidated financial
statements and, in the opinion of GeoWaste's management, all adjustments,
consisting only of normal and recurring items, necessary to present fairly
GeoWaste's financial position and results of operations at the end of and for
such periods have been reflected. The results of operations for the six months
ended June 30, 1998 may not be indicative of the results to be expected for the
year ending December 31, 1998. The selected consolidated financial data below
should be read in conjunction with GeoWaste's consolidated financial statements
and notes thereto incorporated by reference in this Proxy Statement/Prospectus.
See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
------ ------ ------ ------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues............ $4,806 $6,967 $8,933 $13,703 $19,397 $ 9,722 $ 11,889
Costs and expenses:
Operating.............. 2,830 4,176 5,207 8,229 13,536 6,724 8,424
Unusual charges(1)..... -- -- -- -- 1,083 1,083 --
Strategic review
costs................. -- -- -- -- -- -- 365
Selling, general and
administrative
expenses.............. 1,572 1,507 1,460 2,619 3,954 1,964 2,030
Write off of
acquisition costs..... 300 -- -- -- -- -- --
Amortization of
intangibles........... -- -- 71 145 358 163 185
------ ------ ------ ------- ------- ------- --------
Income (loss) from
operations............. 104 1,252 2,195 2,710 466 (212) 885
Other income (expense):
Other income, primarily
interest.............. 20 113 175 200 10 153 16
Interest expense....... (341) (381) (368) (444) (578) (330) (401)
Gain on sale of
assets................ -- -- 7 433 79 -- --
Gain on sale of
investments........... -- -- -- 83 -- -- --
------ ------ ------ ------- ------- ------- --------
Income (loss) before
income taxes........... (217) 984 2,009 2,982 (181) (389) 500
Income tax (benefit)
provision.............. 0 (206) 547 1,275 243 73 251
------ ------ ------ ------- ------- ------- --------
Net (loss) income....... $ (217) $1,190 $1,462 $ 1,707 $ (424) $ (462) $ 249
====== ====== ====== ======= ======= ======= ========
EARNINGS (LOSS) PER
SHARE:
Basic................... $(0.01) $ 0.06 $ 0.08 $ 0.09 $ (0.02) $ (0.02) $ 0.01
====== ====== ====== ======= ======= ======= ========
Diluted................. $(0.01) $ 0.06 $ 0.07 $ 0.08 $ (0.02) $ (0.02) $ 0.01
====== ====== ====== ======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
---------------------------------------- ----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash.................... $ 1,209 $ 1,633 $ 3,985 $ 3,058 $ 739 $ 518 $ 1,284
Working capital
(deficit).............. 1,126 1,150 3,708 (3,023) (212) (3,459) 1,061
Total assets............ 11,293 14,528 15,637 30,618 32,109 29,994 31,504
Long-term debt.......... 5,800 6,538 6,785 5,776 11,870 6,691 11,336
Stockholders' equity.... 4,667 5,848 7,386 15,983 15,905 15,834 16,157
</TABLE>
- --------
(1) Unusual charges relate to litigation and certain other developments related
to North Florida Sweeping, Inc. ("NFS") occurring during the first quarter
of 1997. The $1,083,000 of unusual charges consists of $282,000 of legal
and consulting fees, $68,000 of additional sweeping costs, $96,000 of
accrued losses on sweeping contracts, $436,000 of write-off of NFS'
goodwill, $110,000 of write-down of land and building and $91,000 of write-
off of transfer station development costs.
17
<PAGE>
SUMMARY COMBINED UNAUDITED PRO FORMA CONDENSED FINANCIAL DATA
The following summary combined unaudited pro forma condensed financial data
has been prepared giving effect to the Merger as a pooling of interests. See
"THE MERGER--Anticipated Accounting Treatment." The summary combined unaudited
pro forma condensed statement of operations data for the six months ended June
30, 1998 and for the year ended December 31, 1997 assumes that the Merger had
been consummated at the beginning of the earliest period presented. The summary
combined unaudited pro forma condensed balance sheet data at June 30, 1998
assumes the Merger had been consummated at June 30, 1998. The combined
unaudited pro forma condensed financial statements as of June 30, 1998, for the
six months ended June 30, 1998 and for the year ended December 31, 1997, were
prepared based on the respective historical financial statements of Superior
and GeoWaste. The combined unaudited pro forma condensed financial data is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have been achieved had
the Merger been consummated as of the beginning of the periods presented, nor
are they necessarily indicative of the future operating results or financial
position of Superior. The combined unaudited pro forma condensed financial data
does not include the nonrecurring costs directly related to the Merger which
are expected to be included in operations of Superior within the twelve months
following the Merger. Such nonrecurring costs have yet to be determined. No
adjustment has been included in the combined unaudited pro forma condensed
financial data for any cost savings which may result from the integration of
Superior's and GeoWaste's operations. The summary combined unaudited pro forma
condensed financial data below should be read in conjunction with the combined
unaudited pro forma condensed financial statements and notes thereto appearing
elsewhere herein. See "COMBINED UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS."
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1997 JUNE 30, 1998
----------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues...................................... $210,975 $126,008
Expenses:
Cost of operations.......................... 114,085 68,539
Selling, general and administrative
expenses................................... 33,411 16,491
Merger costs................................ 1,035 1,858
Unusual charges............................. 1,083 0
Depreciation and amortization............... 29,554 17,789
-------- --------
Operating income from continuing operations... 31,807 21,331
Interest expense.............................. (2,435) (1,085)
Other income.................................. 1,548 691
-------- --------
Income from continuing operations before
income taxes................................. 30,920 20,937
Income taxes.................................. 12,949 9,406
-------- --------
Net income.................................... $ 17,971 $ 11,531
======== ========
EARNINGS PER SHARE (MINIMUM EXCHANGE RATIO)
(1):
Basic....................................... $ 0.74 $ 0.41
======== ========
Diluted..................................... $ 0.72 $ 0.40
======== ========
EARNINGS PER SHARE (MAXIMUM EXCHANGE RATIO)
(2):
Basic....................................... $ 0.73 $ 0.40
======== ========
Diluted..................................... $ 0.71 $ 0.40
======== ========
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
AT JUNE 30, 1998
----------------
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................... $ 13,702
Working capital................................................ 26,320
Property and equipment, net.................................... 259,449
Total assets................................................... 429,425
Long-term debt, net of current maturities...................... 11,881
Total common shareholders' investment.......................... 296,011
</TABLE>
- --------
(1) Adjusted to reflect the issuance of 0.0815 shares of Superior Common Stock
for each share of GeoWaste Common Stock or equivalent (the "Minimum
Exchange Ratio").
(2) Adjusted to reflect the issuance of 0.0964 shares of Superior Common Stock
for each share of GeoWaste Common Stock or equivalent (the "Maximum
Exchange Ratio").
19
<PAGE>
RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Proxy Statement/Prospectus, the following material risk factors should
be considered carefully by stockholders of GeoWaste before voting on the
Merger proposed herein. Certain matters discussed or incorporated by reference
in this Proxy Statement/Prospectus are "forward-looking statements," intended
to qualify for the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. These forward-looking statements can
generally be identified as such because the context of the statement will
include words such as the companies "believe," "anticipate," "expect" or words
of similar import. Similarly, statements that describe Superior's future
plans, objectives or goals are also forward-looking statements. Such forward-
looking statements are subject to certain risks and uncertainties, including
particularly the risk factors described below, which may cause actual results
to differ materially from those anticipated as of the date of this Proxy
Statement/Prospectus. Stockholders, potential investors and other readers are
urged to consider these factors in evaluating the forward-looking statements
and are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements included or incorporated by
reference herein are only made as of the date of this Proxy
Statement/Prospectus and neither GeoWaste nor Superior undertakes any
obligation to publicly update such forward-looking statements or reflect
subsequent events or circumstances. Readers are cautioned that the following
material risk factors could affect the future results of Superior and cause
those results to differ materially from those expressed in such forward-
looking statements.
RISKS RELATING TO THE MERGER
Exchange Ratio Subject to "Collar"
The Exchange Ratio is expressed in the Merger Agreement as a ratio subject
to limited adjustments or a "collar." Accordingly, the Exchange Ratio will not
be adjusted to reflect the amount by which the Final Superior Stock Price is
greater than $32.50 or less than $27.50, subject to the right of GeoWaste to
terminate the Merger Agreement if the Final Superior Stock Price is less than
$25.00. As a result, if the Final Superior Stock Price is greater than $32.50
or less than $27.50, GeoWaste stockholders will receive a number of shares of
Superior Common Stock representing a value per share of GeoWaste Common Stock
that is greater or less than the value per share such GeoWaste stockholders
would receive in the absence of such collar. The price of Superior Common
Stock prior to the Effective Time and the Final Superior Stock Price may vary
from its price at the date of this Proxy Statement/Prospectus and at the date
of the Special Meeting. Such variations may be the result of changes in the
business, operations or prospects of Superior or GeoWaste, market assessments
of the likelihood that the Merger will be consummated and the timing thereof,
regulatory considerations, general market and economic conditions and other
factors. Because the Effective Time may occur at a date later than the Special
Meeting, there can be no assurance that the price of Superior Common Stock on
the date of the Special Meeting will be indicative of its price at the
Effective Time. The Effective Time will occur as soon as practicable following
the Special Meeting and the satisfaction or waiver of the other conditions set
forth in the Merger Agreement. STOCKHOLDERS OF GEOWASTE ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR SUPERIOR COMMON STOCK. See "THE MERGER
AGREEMENT--Terms of the Merger," "--Conditions to the Merger" and "--
Termination."
Risk of Nonconsummation of the Merger
If the event of a termination of the Merger Agreement because of the failure
of the stockholders of GeoWaste to approve the proposal to approve and adopt
the Merger Agreement (a "GeoWaste Stockholder Nonapproval"), GeoWaste may be
obligated to pay Superior certain expenses, up to an aggregate of $700,000. In
the event of a termination of the Merger Agreement because of a GeoWaste
Stockholder Nonapproval and within one year following such termination
GeoWaste enters into a definitive agreement with respect to a Superior
Proposal (as defined under "THE MERGER AGREEMENT--No Solicitation") involving
GeoWaste that had been publicly announced prior to or at the time of the
Special Meeting, GeoWaste may be obligated to
20
<PAGE>
pay Superior a termination fee of $1.5 million. See "THE MERGER AGREEMENT--
Termination Fee and Expenses."
Expected Benefits of Merger May Not Be Achieved
There can be no assurance that the expected benefits of the Merger relative
to the business of Superior as described under "THE MERGER--Superior's Reasons
for the Merger," will be achieved. Whether the anticipated benefits of the
Merger are ultimately achieved will depend on a number of factors, including
the ability of Superior to (i) acquire complementary disposal, collection and
transfer operations in proximity to GeoWaste's operations in order to achieve
synergies, efficiencies, increased solid waste internalization rates and
improved operating margins; (ii) control the costs of integrating GeoWaste's
business into Superior's operations; (iii) achieve cost savings, as well as
geographic and other efficiencies resulting from the acquisition of GeoWaste's
operations, including from operating cost reductions, insurance and bonding
cost reductions and realizing general economies of scale; (iv) retain
GeoWaste's municipal, commercial and residential customer contracts; and (v)
generally to capitalize on GeoWaste's asset base and strategic position.
Interests of Certain Persons in the Merger
In considering the recommendation of the Merger, the stockholders of
GeoWaste should be aware that certain executive officers and directors of
GeoWaste have interests in the Merger that are in addition to their interests
as stockholders of GeoWaste generally. See "THE MERGER--Interests of Certain
Persons in the Merger." Such interests, together with other relevant factors,
were considered by the GeoWaste Board in recommending the Merger to GeoWaste's
stockholders and approving the Merger Agreement.
RISKS RELATING TO SUPERIOR
Ability to Manage Growth
Since Superior's March 1996 initial public offering through June 30, 1998,
Superior has acquired 41 solid waste collection, transfer and disposal
operations (a single acquisition transaction may involve the purchase of
multiple business operations). As a result of Superior's past acquisitions and
its potential additional future acquisitions, Superior has experienced, and
may continue to experience, a period or periods of rapid growth and expansion
which has placed, and could continue to place, additional demands on
Superior's management, personnel, resources and management information
systems. To support and continue this potential growth, Superior will need to
continue to attract, train, motivate, retain and supervise its management and
key employees. Any failure by Superior to manage its growth and potential
additional future growth effectively would be likely to have an adverse effect
on Superior's results of operations. Any failure to recruit appropriate
additional personnel in an efficient manner and at a pace consistent with
Superior's business growth could have an adverse effect on Superior's results
of operations.
Availability and Integration of Acquisition Targets
Superior's strategy envisions that a substantial part of its future growth
will result from acquiring and integrating additional solid waste collection,
transfer and disposal operations. There can be no assurance that Superior will
be able to continue to identify additional suitable acquisition candidates,
or, if identified, negotiate successfully their acquisition. If Superior is
successful in identifying and negotiating additional suitable acquisitions,
there can be no assurance that any debt or equity financing necessary to
complete any of such acquisitions can be arranged on terms satisfactory to
Superior or that any such financing will not significantly increase Superior's
leverage or result in additional dilution to existing shareholders. See "--
Potential Inability to Finance Superior's Growth" below. Moreover, there can
be no assurance that Superior will be able to continue to integrate
successfully any acquired operations, or manage or improve the operating or
administrative efficiencies or productivity of any acquired operations. As
Superior continues to pursue acquisition opportunities in new market areas,
the potential additional geographic expansion of Superior's operations
resulting from the successful completion of some of those acquisition
opportunities will make it more difficult for Superior to successfully and
efficiently integrate such operations with Superior's existing operations.
Similarly, Superior may
21
<PAGE>
not realize as many synergies and efficiencies from acquiring operations
outside its existing market areas. Failure by Superior to implement
successfully its acquisition strategy will limit, and may limit materially,
Superior's growth potential and may adversely affect Superior's results of
operations.
The ongoing consolidation and integration activity in the solid waste
industry, as well as the difficulties, uncertainties and expense relating to
the development and permitting of solid waste landfills and transfer stations,
has increased competition for the acquisition of existing solid waste
collection, transfer and disposal operations. Increased competition for
acquisition candidates has resulted, and may continue to result, in fewer
attractive acquisition opportunities being made available to Superior, as well
as less advantageous acquisition terms, including particularly increased
purchase prices. These circumstances may increase acquisition costs to levels
beyond Superior's financial capability or pricing parameters or which, as to
acquisitions made by Superior, may have an adverse effect on Superior's
results of operations. Several of Superior's competitors for acquisitions are
larger, better known companies with greater resources than Superior. Superior
also believes that a significant factor in its ability to consummate
additional acquisitions will be the relative attractiveness of Superior Common
Stock as an investment instrument to potential acquisition candidates. This
attractiveness may, in large part, be dependent upon the relative market price
and capital appreciation prospects of Superior Common Stock compared to the
equity securities of Superior's competitors. See "--Possible Stock Price
Volatility" below.
Restrictions on Landfill Expansion and Development
As its various landfills approach their respective allowed permitted
disposal capacity, Superior will need to obtain permits to expand, obtain
additional disposal capacity or dispose of its collected waste at landfills
owned by others. The permitting process for landfill expansion and new
development is lengthy, difficult, expensive and subject to substantial
uncertainty. Even when granted, final permits are often not approved until an
existing landfill's remaining disposal capacity is very low. There can be no
assurance that Superior will be able to successfully add additional disposal
capacity when needed or, if added, that such capacity can be added on
satisfactory terms or at its landfills in markets where expansion and
additional disposal capacity is most immediately needed. Failure to
successfully add additional landfill capacity when and where needed could have
a material adverse effect on Superior's results of operations and financial
condition.
Competition
The solid waste services industry is highly competitive, very fragmented and
requires substantial labor and capital resources. Virtually all of the markets
in which Superior competes or will likely compete in the near future are
served by one or more of the large national solid waste companies, as well as
numerous regional and local solid waste companies of varying sizes and
resources. Intense competition exists not only to provide services to
customers but also to acquire other operations within each market. The
national solid waste companies and some of the large regional companies have
significantly greater financial and other resources than Superior. From time
to time, these or other competitors may reduce the price of their services in
an effort to expand market share or to win a competitively bid municipal solid
waste collection contract. These practices may either require Superior to
reduce the pricing of its services or result in its loss of business.
Historically, Superior has provided a substantial portion of its residential
collection services under municipal contracts. As is generally the case in the
industry, these contracts are subject to periodic competitive bidding. There
can be no assurance that Superior will be the successful bidder in the
competition to obtain or retain these contracts. Superior's inability to
compete with larger and better capitalized companies, or to replace a
significant number of municipal contracts lost through the competitive bidding
process with comparable contracts or other revenue sources within a reasonable
time period, could have a material adverse effect on Superior's results of
operations. Also, as Superior continues to acquire other solid waste
collection operations, there can be no assurance that Superior will be able to
retain the customers of the acquired operations. Superior also competes, to a
lesser extent, with certain municipalities that maintain their own solid waste
disposal operations. These municipalities may have certain advantages over
Superior in financing their operations due to the availability of tax revenues
and tax-exempt financing.
Geographic Concentration
A substantial majority of Superior's operations and customers continue to be
located in the Upper Midwest and, in particular, in Wisconsin. As a
consequence, Superior's results of operations remain susceptible to
22
<PAGE>
downturns in the general economy in this geographic region. From Superior's
March 1996 initial public offering through June 30, 1998, Superior has
completed acquisitions of solid waste collection, transfer and disposal
operations in six new states: Alabama, Florida, Missouri, Ohio, Pennsylvania
and West Virginia; however, there can be no assurance that Superior will be
able to complete a sufficient number of additional acquisitions in these new
markets or in other markets to achieve a significant level of geographic
diversification. Moreover, if Superior is successful in effecting business
acquisitions outside of its current market areas, there can be no assurance
that Superior will be able to successfully manage or fully realize operating
efficiencies from such operations. See "--Availability and Integration of
Acquisition Targets" above.
Commodity Risk Upon Resale of Recyclables
One of the components of Superior's business is providing recycling services
to customers. The resale prices of, and demand for, recyclable waste products,
particularly wastepaper, have been, and may continue to be, volatile and
subject to changing market conditions. Accordingly, Superior's results of
operations have been and will continue to be affected, and may be affected
materially, by changing resale prices or demand for certain recyclable waste
products, particularly wastepaper. These changes may also contribute to
significant variability in Superior's period-to-period results of operations.
Seasonality of Business
Superior's historical results of operations have tended to vary seasonally,
with the first quarter of the year typically generating the least amount of
revenues, with revenues higher in the second and third quarter, followed by a
decline in the fourth quarter. This seasonality reflects the lower volume of
waste generated and decreased revenues from project-based and other integrated
waste services during the fall and winter months, as well as the operating
difficulties experienced from the protracted periods of cold and inclement
weather typically experienced during the winter in the Upper Midwest. Certain
operating and other fixed costs have remained relatively constant throughout
the calendar year, resulting in a similar seasonality of operating income.
Potential Charges Related to Capitalized Expenditure
In accordance with GAAP, Superior capitalizes certain expenditures and
advances directly associated with landfill expansion and development projects
and pending acquisitions. Indirect costs, such as executive salaries, market
development personnel salaries, general corporate overhead, public affairs and
other corporate services, are expensed as incurred. Superior's policy is to
charge against net income any unamortized capitalized expenditures and
advances (net of any portion thereof that Superior estimates will be
recoverable, through sale or otherwise) relating to any landfill that will be
permanently closed, any pending acquisition that is not consummated and any
landfill expansion or development project not completed successfully. Superior
recognized charges against its net income in the year ended December 31, 1997
relating to a terminated acquisition attempt. There can be no assurance that
Superior will not be required to incur additional charges in the future
against its net income in accordance with this policy. Any such charges
against net income, if significant, could have a material adverse effect on
Superior's results of operations and possibly its financial condition.
Potential Inability to Finance Superior's Growth
Superior anticipates that future business acquisitions will be financed
principally through the issuance of Superior Common Stock and/or the payment
of cash, as well as through the assumption of debt of the acquired operations.
To the extent that Superior's then available resources are insufficient to
fund such cash requirements, Superior will require additional equity and/or
debt financing in order to provide the cash to effect such acquisitions. There
can be no assurance that Superior will have sufficient existing capital
resources or will be able to raise sufficient additional capital resources on
terms satisfactory to Superior, if at all, in order to meet any or all of the
foregoing capital requirements.
Use of Alternatives to Landfill Disposal/Waste Reduction Programs
Alternatives to landfill disposal, such as recycling, incineration and
composting, are used throughout the United States. There also has been a trend
at the state and local levels to mandate recycling and waste reduction
23
<PAGE>
at the source and to prohibit the disposal of certain types of wastes at
landfills. Many states (including states in which Superior operates) have
enacted laws that require counties to adopt comprehensive plans to reduce the
volume of solid waste deposited in landfills through waste planning,
composting, recycling or other programs. Some states (including states in
which Superior operates) have adopted legislation that prohibits the disposal
of yard waste, tires and other items in landfills. These developments have
resulted, and could continue to result, in a reduction in the volume of waste
destined for landfills in certain areas, which may affect Superior's ability
to operate its landfills at their full capacity and/or affect the prices that
can be charged for landfill disposal services. Such effects could have a
material adverse effect on Superior's results of operations.
Government Regulation
Superior is subject to extensive and evolving environmental laws and
regulations which have become increasingly stringent in recent years as a
result of greater public interest in protecting the environment. These laws
and regulations affect Superior's business in many ways, including the ways
set forth below and will continue to impose substantial costs on Superior.
In order to develop, operate and expand solid waste facilities, it is
necessary to obtain and maintain in effect one or more licenses or permits, as
well as zoning, environmental and/or other land use approvals. These licenses
or permits and approvals are difficult and time consuming to obtain and renew
and are frequently subject to opposition by various elected officials or
citizens groups. There can be no assurance that Superior will be successful in
obtaining and maintaining in effect the permits and approvals required for the
successful operation and growth of its business, and the failure by Superior
to obtain or maintain in effect a permit or approval significant to its
business would have a material adverse effect on Superior's results of
operations and financial condition.
The design, operation and closure of landfills is extensively regulated.
These regulations include, among others, the regulations ("Subtitle D
Regulations") establishing minimum federal requirements adopted by the United
States Environmental Protection Agency ("EPA") in October 1991 under Subtitle
D of the Resource Conservation and Recovery Act of 1976 ("RCRA"). Most states
maintain extensive landfill regulations which have been updated or replaced
with new regulations consistent with, or more stringent than, the Subtitle D
Regulations. Failure to comply with these regulations could require Superior
to undertake investigatory or remedial activities, to curtail operations or to
close a landfill temporarily or permanently. Future changes in these
regulations may require Superior to modify, supplement or replace equipment or
facilities at costs which may be substantial. The failure of regulatory
agencies to enforce these regulations vigorously or consistently may give an
advantage to competitors of Superior whose facilities do not comply with the
Subtitle D Regulations or its state counterparts. Superior's ultimate
financial obligations relating to any failure to comply with these regulations
could have a material adverse effect on Superior's results of operations and
financial condition.
Companies in the solid waste services business, including Superior, are
frequently subject in the normal course of business to judicial and
administrative proceedings involving federal, state or local agencies or
citizen groups. These citizens groups or governmental agencies may seek to
impose fines or penalties on Superior or to revoke or deny renewal of
Superior's operating permits or licenses for violations or alleged violations
of environmental laws or regulations or require that Superior make
expenditures to remediate potential environmental problems relating to waste
disposed of or stored by Superior or its predecessors, or resulting from its
or its predecessors' transportation and collection operations. Superior has
been subject, and may continue to be subject, to actions brought by
individuals or community groups in connection with the permitting or licensing
of its operations, and alleged violation of such permits or licenses or other
matters. Any adverse outcome in the types of proceedings described in this
paragraph could have a material adverse effect on Superior's financial
condition or results of operations and may subject Superior to adverse
publicity. See "--Potential Environmental Liability" below.
Potential Environmental Liability
Superior is subject to liability for any environmental damage that its solid
waste facilities or hazardous waste transfer and temporary storage facility
may cause to neighboring landowners, particularly as a result of the
24
<PAGE>
contamination of drinking water sources or soil, including damage resulting
from conditions existing prior to the acquisition of such facilities by
Superior. Superior may also be subject to liability for any off-site
environmental contamination caused by pollutants or hazardous substances, the
transportation, treatment or disposal of which was arranged by Superior or its
predecessors. Any substantial liability for environmental damage incurred by
Superior could have a material adverse effect on Superior's financial
condition and results of operations.
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), imposes strict, joint and several liability on
the present owners and operators of facilities from which a release of
hazardous substances into the environment has occurred, as well as any party
that owned or operated the facility at the time of disposal of the hazardous
substances regardless of when the hazardous substance was first detected.
Similar liability is imposed upon the generators of waste which contains
hazardous substances and upon hazardous substance transporters that select the
treatment, storage or disposal site. All such persons, who are referred to as
potentially responsible parties ("PRPs"), generally are jointly and severally
liable for the expense of waste site investigation, waste site cleanup costs
and natural resource damages, regardless of whether they exercised due care
and complied with all relevant laws and regulations. These costs can be very
substantial. Furthermore, such liability can be based upon the existence of
even very small amounts of the more than 700 "hazardous substances" listed by
the EPA and is not limited to the disposal of "hazardous wastes," as
statutorily defined. It is likely that hazardous substances have in the past
come to be located in landfills with which Superior has been associated as an
owner or operator. Moreover, Superior's solid waste collection operations may
have transported hazardous substances in the past and may do so inadvertently
on occasion in the future. Additionally, Superior temporarily holds at its
temporary storage facility and transports to third-party disposal facilities
certain types of hazardous wastes. If any of these sites or operations ever
experience environmental problems, Superior could be subject to substantial
liability which could have a material adverse effect on its financial
condition and results of operations.
With respect to each operation that Superior acquires, there may be
liabilities that it fails or is unable to discover, including liabilities
arising from noncompliance with environmental laws by prior owners, and for
which Superior, as a successor owner, may be legally responsible.
Representations, warranties and indemnities from the sellers of such
operations, if obtained and if legally enforceable, may not cover fully the
resulting environmental liabilities to their limited scope, amount or
duration, the financial limitations of the warrantor or indemnitor or other
reasons. Certain environmental liabilities, even though expressly not assumed
by Superior, may nonetheless be imposed on Superior under certain legal
theories of successor liability, including particularly under CERCLA.
Potential Inadequacy of Accruals For Closure and Post-Closure Costs
Superior has material financial obligations relating to closure and post-
closure costs of the landfills it owns. There can be no assurance that
Superior's ultimate financial obligations for actual closing or post-closing
costs will not exceed the amount then accrued and reserved or amounts
otherwise receivable pursuant to insurance policies or trust funds. Such a
circumstance could have a material adverse effect on Superior's financial
condition and results of operations.
Potential Uninsured Risks and Performance Bonds
Superior's limited environmental impairment liability insurance does not
cover liabilities associated with any environmental cleanup or remediation on
Superior's own sites. As a result, an uninsured claim against Superior, if
successful and of sufficient magnitude, could have a material adverse effect
on Superior's results of operations and financial condition. Any future
difficulty in obtaining insurance could also impair Superior's ability to
secure future contracts conditioned upon the contractor having adequate
insurance coverage.
Additionally, Superior carries only limited insurance coverage against
general liability, personal injury and property damage which could result from
Superior's business operations, including its collection and
25
<PAGE>
transportation operations. As a result, a number of uninsured claims against
Superior, if successful and of sufficient magnitude, could have a material
adverse effect on Superior's results of operations and financial condition.
Municipal solid waste collection contracts typically require performance
bonds or other means of financial assurance to secure contractual performance.
If Superior were unable to obtain surety bonds or letters of credit in
sufficient amounts or at acceptable rates, it may be precluded from entering
into additional municipal solid waste collection contracts or obtaining or
retaining landfill operating permits.
Dependence on Management
Superior is highly dependent upon the services of the members of its senior
management team, the loss of any of whom may have an adverse effect on
Superior. Other than a "key-man" life insurance policy on the life of its
President and Chief Executive Officer, G. William Dietrich, Superior does not
maintain key-man life insurance on any other executive officers.
Potential Anti-Takeover Provisions
Each currently outstanding share of Superior Common Stock includes, and each
newly issued share of Superior Common Stock will include, Rights. The Rights
are attached to and trade with the shares of Superior Common Stock and are not
exercisable until there occurs a "Distribution Date," as described and defined
under "INFORMATION REGARDING SUPERIOR CAPITAL STOCK--Common Stock Purchase
Rights." Generally, a Distribution Date will occur when 15% or more of
Superior Common Stock is acquired by a third party or 10 business days
following the commencement of, or an announcement of an intention to make, a
tender or exchange offer for at least 15% of Superior Common Stock. Upon a
Distribution Date, the Rights will become exercisable and will allow the
holders of Rights (other than the person or entity which caused the
Distribution Date, whose Rights shall become void) to purchase, for half-
price, shares of Superior's Common Stock or the stock of the acquiror.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire Superior
without conditioning the offer on redemption of the Rights, amendment of the
Rights to exclude the acquiror or on a substantial number of Rights being
acquired. The Rights could have the effect of delaying, deferring or
preventing a change in control, or the removal of the Board of Directors of
Superior (the "Superior Board") or existing management, of Superior. See
"INFORMATION REGARDING SUPERIOR CAPITAL STOCK--Certain Statutory and Other
Provisions."
Superior's Restated Articles of Incorporation ("Superior Restated Articles")
and Superior restated bylaws (the "Superior Restated Bylaws") contain
provisions that, among other things, provide for staggered terms for members
of the Superior Board, place certain restrictions on the removal of directors,
authorize the Superior Board to issue undesignated preferred stock in one or
more series without shareholder approval, incorporate the limits of the
Wisconsin Business Corporation Law (the "WBCL") on certain types of business
combinations, establish certain procedures to call a special meeting of
shareholders, require advance notice for director nominations and certain
other matters to be considered at meetings of shareholders and impose
supermajority voting requirements on certain amendments to the Superior
Restated Articles and Superior Restated Bylaws. These provisions could have
the effect of delaying, deferring or preventing a change in control, or the
removal of the Superior Board or existing management, of Superior. See
"INFORMATION REGARDING SUPERIOR CAPITAL STOCK--Certain Statutory and Other
Provisions."
The WBCL contains several statutory provisions which could also have the
effect of discouraging non-negotiated takeover proposals for Superior or
impeding a business combination between Superior and a major shareholder of
Superior. Such provisions as they relate to Superior include (i) limiting the
voting power of certain shares which are held by any person or persons acting
as a group representing in excess of 20% of Superior's voting power to 10% of
the full voting power of such excess shares; (ii) requiring a supermajority
vote of shareholders, in addition to any vote otherwise required, to approve
certain business combinations not meeting
26
<PAGE>
certain adequacy of price standards; (iii) prohibiting certain business
combinations between Superior and a major shareholder for a period of three
years, unless such acquisition has been approved by the Superior Board prior
to the time such major shareholder became a 10% beneficial owner of shares or
under certain other circumstances; and (iv) limiting certain actions which can
be taken by Superior while a takeover offer for Superior is being made or
after a takeover offer for Superior has been publicly announced. See
"INFORMATION REGARDING SUPERIOR CAPITAL STOCK--Certain Statutory and Other
Provisions."
Possible Stock Price Volatility
The market price of Superior Common Stock may be subject to significant
fluctuations in response to numerous factors, including variations in the
annual or quarterly financial results of Superior or its competitors, changes
by financial research analysts in their estimates of the future earnings of
Superior or other companies in the solid waste and environmental services
industries, conditions in the economy or overall market in general or in
Superior's industry in particular, unfavorable publicity or changes in
applicable laws and regulations (or judicial or administrative interpretations
thereof) affecting Superior or the solid waste industry.
Subsequent Share Issuances; Shares Eligible for Future Sale
No prediction can be made as to the effect, if any, of the offer and sale of
additional shares of Superior Common Stock, or the availability of additional
shares for sale, or the market price of Superior Common Stock prevailing from
time to time. Nevertheless, issuances of substantial amounts of newly issued
shares of Superior Common Stock in the public market or to effect business
acquisitions could cause dilution to existing shareholders and could adversely
affect the prevailing market price of the Superior Common Stock and the future
ability of Superior to raise equity capital or issue Superior Common Stock to
effect business acquisitions. Similarly, sales of substantial amounts of
Superior Common Stock in the public market following this offering, or the
perception that such sales could occur, could adversely affect the prevailing
market price of Superior Common Stock.
On March 30, 1998, Superior filed a Registration Statement with the
Commission covering 5,000,000 shares of Superior Common Stock to be issued by
Superior from time to time in connection with its acquisition of operations or
properties. As of June 30, 1998, approximately 2,200,000 shares remained
eligible for issuance under such Registration Statement.
No Dividends
Superior has never paid, and does not anticipate paying any cash dividends
on Superior Common Stock for the foreseeable future. The payment of cash
dividends on Superior Common Stock is currently limited by Superior's credit
facilities and future debt or equity instruments or securities of Superior may
impose additional restrictions on Superior ability to pay cash dividends. See
"MARKET PRICES AND DIVIDEND INFORMATION."
27
<PAGE>
INFORMATION CONCERNING SUPERIOR AND MERGER SUB
Superior is an acquisition-oriented integrated solid waste services company
providing solid waste collection, transfer, recycling and disposal services.
As of June 30, 1998, Superior served over 570,000 residential, commercial and
industrial customers in Wisconsin, Alabama, Florida, Illinois, Iowa, Michigan,
Minnesota, Missouri, Ohio, Pennsylvania and West Virginia.
As of June 30, 1998, Superior owned and operated 17 landfills, including a
greenfield landfill and a municipal solid waste landfill subject to a
definitive purchase agreement, 41 solid waste collection operations, 15
recycling facilities and 13 transfer stations. Superior also manages four
other landfills for third parties. Superior also provides other integrated
waste services, most of which are project-based and a substantial number of
which provide additional waste volumes to Superior's landfills.
Superior's objective is to be one of the largest and most profitable fully
integrated providers of solid waste collection and disposal services in each
market it serves. Superior's strategy to achieve this objective is to (i)
continue to expand its operations and customer base in its existing markets
and to enter new markets through the acquisition of other solid waste
operations; (ii) pursue internal growth opportunities in its current markets;
and (iii) achieve continuing operating improvements in its business.
Superior's principal strategy for future growth is through the acquisition of
additional solid waste disposal, transfer and collection operations. Superior
believes that its reputation, strategy, culture and financial strength make it
an attractive buyer to acquisition candidates. Superior's operating strategy
emphasizes the integration of its solid waste collection and disposal
operations and the internalization of waste collected. Superior believes its
growth and operating strategies will lead to sustainable growth in revenue and
profitability.
Superior, a Wisconsin corporation, has its principal executive offices
located at Suite 200, 125 South 84th Street, Milwaukee, Wisconsin 53214. Its
telephone number is (414) 479-7800.
For additional information about Superior, reference is made to the 1997
Superior Form 10-K and the other documents incorporated herein by reference.
See "AVAILABLE INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE"
and "THE MERGER AGREEMENT."
Merger Sub, a Delaware corporation, was organized on July 16, 1998 as a
wholly owned subsidiary of Superior specifically for the purpose of effecting
the Merger, and has not engaged in any significant business activity since its
inception. Upon consummation of the Merger, the separate corporate existence
of Merger Sub will cease, Merger Sub will be merged with and into GeoWaste,
GeoWaste will continue as the surviving corporation and GeoWaste will succeed
to and assume all the rights and obligations of Merger Sub in accordance the
DGCL.
The principal executive offices of Merger Sub are located at Suite 200, 125
South 84th Street, Milwaukee, Wisconsin 53214, and its telephone number is
(414) 479-7800.
INFORMATION CONCERNING GEOWASTE
GeoWaste is a holding company which, through its subsidiaries, is in the
business of owning, operating and acquiring non-hazardous, solid waste
collection, transportation, transfer and disposal companies and facilities.
GeoWaste's solid waste services operations consist of a solid waste
collection and disposal company located in Valdosta, Georgia, a solid waste
collection, transfer, materials recovery facility and portable toilet company
based in Ocala, Florida, a solid waste collection business in Cordele,
Georgia, a solid waste collection and street sweeping business in
Jacksonville, Florida and a solid waste transfer and transportation service
under a contract with USA Waste Services, Inc. in the Bronx, New York. Solid
waste management and related services accounted for 100% of GeoWaste's total
consolidated revenue in 1997. No customer accounted for more than 10% of
GeoWaste's revenue in 1997. Fees paid to GeoWaste by its solid waste
collection customers (including charges
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<PAGE>
paid by such customers for disposal) accounted for approximately 61% of
GeoWaste's revenue during 1997. Transfer and disposal services provided to
municipalities, counties and other waste management companies accounted for
approximately 22% of such revenue and related sanitation services accounted
for approximately 17% of such revenue.
The operations of GeoWaste include the operations of its seven wholly-owned
subsidiaries. Three of these subsidiaries conduct GeoWaste's operations in
Georgia and Florida, one subsidiary conducts GeoWaste's business in New York
City, and the remaining subsidiaries are inactive.
GeoWaste was incorporated in the State of Delaware under the name Utah Shale
Land & Minerals Corporation in 1972. Its principal executive offices are
located at Suite 700, 100 West Bay Street, Jacksonville, Florida 32202, and
its telephone number is (904) 353-5033.
For additional information, reference is made to the 1997 GeoWaste Form 10-K
and the other documents incorporated herein by reference. See "AVAILABLE
INFORMATION," "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and "THE
MERGER AGREEMENT."
MARKET PRICES AND DIVIDEND INFORMATION
Superior Common Stock is traded on the Nasdaq National Market under the
symbol "SUPR," and GeoWaste Common Stock is traded on The Nasdaq Small-Cap
Market under the symbol "GEOW."
The following table sets forth, for the calendar periods indicated, the high
and low sales prices per share for Superior Common Stock as reported on the
Nasdaq National Market, the high and low sales prices per share of GeoWaste
Common Stock as reported on The Nasdaq Small-Cap Market.
<TABLE>
<CAPTION>
SUPERIOR GEOWASTE
COMMON STOCK COMMON STOCK
------------- -------------
HIGH LOW HIGH LOW
------ ------ ------ ------
<S> <C> <C> <C> <C>
1996
Quarter ended March 31*........................... $15.00 $12.75 $ 1.75 $ 1.00
Quarter ended June 30............................. 19.00 12.75 4.69 1.56
Quarter ended September 30........................ 17.75 13.25 4.50 2.62
Quarter ended December 31......................... 20.50 15.50 3.37 1.75
1997
Quarter ended March 31............................ 24.00 17.50 4.63 2.13
Quarter ended June 30............................. 23.75 20.13 3.31 1.75
Quarter ended September 30........................ 29.00 22.75 2.19 1.50
Quarter ended December 31......................... 29.50 20.88 2.03 1.06
1998
Quarter ended March 31............................ 32.38 24.69 3.75 1.13
Quarter ended June 30............................. 33.38 28.50 3.06 1.63
Quarter ending September 30 (through September 22,
1998)............................................ 30.38 23.50 2.25 1.50
</TABLE>
- --------
* Superior sold shares of Superior Common Stock to the public in an initial
public offering on March 8, 1996. Prior to that date, shares of Superior
Common Stock were not publicly traded.
GeoWaste stockholders are advised to obtain current market quotations for
GeoWaste Common Stock and Superior Common Stock. It is expected that the
market price of Superior Common Stock will fluctuate between the date of this
Proxy Statement/Prospectus and the date on which the Merger is consummated and
thereafter. Because the number of shares of Superior Common Stock to be
received by GeoWaste stockholders in the Merger depends upon average trading
price of Superior Common Stock over a ten trading day period ending on October
16, 1998 expressed as the Final Superior Stock Price (subject to possible
adjustment as set forth in the Merger Agreement), the number of shares of
Superior Common Stock that holders of GeoWaste Common Stock
29
<PAGE>
would receive in the Merger may increase or decrease prior to the Effective
Time in conjunction with any increases or decreases in the market price of
Superior Common Stock during that period. No assurance can be given concerning
the market price of Superior Common Stock before or after the Effective Time.
See "RISK FACTORS--Risks Relating to the Merger--Exchange Ratio Subject to
"Collar'," "THE MERGER AGREEMENT--Terms of the Merger" and "--Termination."
Neither Superior nor GeoWaste has paid any cash dividends on shares of its
common stock. Superior currently intends to retain earnings to provide funds
for the operation and expansion of its business and accordingly does not
anticipate paying cash dividends on shares of Superior Common Stock in the
foreseeable future. The payment of cash dividends on Superior Common Stock in
the future will be a business decision to be made by the Superior Board from
time to time based on such considerations as the Superior Board deems
relevant, including, but not limited to, Superior's financial condition,
earnings and capital requirements. The payment of cash dividends on Superior
Common Stock is currently limited by Superior's credit facilities and future
debt or equity instruments or securities of Superior may impose additional
restrictions on Superior ability to pay cash dividends.
COMPARATIVE UNAUDITED PER SHARE DATA OF SUPERIOR AND GEOWASTE
The following table presents: (i) the selected comparative per share data
for each of Superior and GeoWaste on a historical basis and (ii) the selected
unaudited pro forma comparative per share data reflecting the consummation of
the Merger. The unaudited pro forma comparative per share data assumes the
Merger had been consummated at the beginning of the periods presented. The
unaudited pro forma data have been prepared giving effect to the Merger as a
pooling of interests.
Under the pooling of interests method of accounting, the historical bases of
the assets and liabilities of Superior and GeoWaste will be combined at the
Effective Time and carried forward at their previously recorded amounts. The
stockholders' equity accounts of Superior and GeoWaste will be combined on
Superior's consolidated balance sheet and no goodwill or other intangible
assets will be created. Financial statements of Superior issued after the
Merger will be restated retroactively to reflect the consolidated operations
of Superior and GeoWaste as if the Merger had taken place prior to the periods
covered by such financial statements.
The unaudited pro forma basic earnings per share and diluted earnings per
share data do not reflect any expenses associated with the Merger such as
investment banking, accounting, legal and regulatory filing fees and other
Merger related expenses. The GeoWaste pro forma equivalent amounts are
presented with respect to each set of pro forma information, and have been
calculated by multiplying the corresponding pro forma combined amounts per
share of Superior Common Stock by assumed Exchange Ratios.
Superior and GeoWaste expect that the combined company will achieve benefits
from the Merger in the form of synergies and cost savings. However, the
unaudited pro forma comparative per share data do not reflect any synergies
and cost savings which are expected to result from the consolidation of
operations of Superior and GeoWaste, and therefore, do not purport to be
indicative of the results of future operations.
The comparative per share data presented herein are based on and derived
from, and should be read in conjunction with, the unaudited pro forma combined
financial information, including the notes thereto, appearing elsewhere herein
and the historical consolidated financial statements and the related notes
thereto of each of Superior and GeoWaste included in the documents
incorporated by reference herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE" and "COMBINED UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS."
Pro forma amounts are not necessarily indicative of the results of operations
or the combined financial position that would have resulted had the Merger
been consummated at the beginning of the periods indicated.
30
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -------------------------
1998 1997 1996 1995
---------- -------- ------- -------
<S> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE FROM
CONTINUING OPERATIONS
Superior
Historical.......................... $ 0.42 $ 0.81 $ 0.67 $ 0.49(4)
Pro forma combined.................. 0.40 0.73 0.69 0.53
GeoWaste
Historical.......................... 0.01 (0.02) 0.09 0.08
Pro forma equivalent at Average
Exchange Ratio(1).................. 0.04 0.06 0.06 0.05
Pro forma equivalent at Minimum
Exchange Ratio(2).................. 0.03 0.06 0.06 0.04
Pro forma equivalent at Maximum
Exchange Ratio(3).................. 0.04 0.07 0.07 0.05
DILUTED EARNINGS PER SHARE FROM
CONTINUING OPERATIONS
Superior
Historical.......................... 0.42 0.80 0.66 0.49(4)
Pro forma combined.................. 0.40 0.72 0.68 0.52
GeoWaste
Historical.......................... 0.01 (0.02) 0.08 0.07
Pro forma equivalent at Average
Exchange Ratio(1).................. 0.04 0.06 0.06 0.05
Pro forma equivalent at Minimum
Exchange Ratio(2).................. 0.03 0.06 0.06 0.04
Pro forma equivalent at Maximum
Exchange Ratio(3).................. 0.04 0.07 0.07 0.05
DIVIDENDS DECLARED PER COMMON SHARE
Superior
Historical.......................... -- -- -- --
Pro forma combined.................. -- -- -- --
GeoWaste
Historical.......................... -- -- -- --
Pro forma equivalent at Average
Exchange Ratio(1).................. -- -- -- --
Pro forma equivalent at Minimum
Exchange Ratio(2).................. -- -- -- --
Pro forma equivalent at Maximum
Exchange Ratio(3).................. -- -- -- --
BOOK VALUE PER COMMON SHARE AT PERIOD
END
Superior
Historical.......................... 10.51 11.51 N/A N/A
Pro forma combined.................. 10.38 11.28 N/A N/A
GeoWaste
Historical.......................... 0.76 0.75 N/A N/A
Pro forma equivalent at Average
Exchange Ratio(1).................. 0.92 1.00 N/A N/A
Pro forma equivalent at Minimum
Exchange Ratio(2).................. 0.85 0.92 N/A N/A
Pro forma equivalent at Maximum
Exchange Ratio(3).................. 1.00 1.09 N/A N/A
</TABLE>
- --------
(1) Pro forma equivalent amounts at Average Exchange Ratio for GeoWaste are
calculated by multiplying the pro forma combined amounts by an assumed
Exchange Ratio of 0.0883.
(2) Pro forma equivalent amounts at Minimum Exchange Ratio for GeoWaste are
calculated by multiplying the pro forma combined amounts by an assumed
Exchange Ratio of 0.0815.
(3) Pro forma equivalent amounts at Maximum Exchange Ratio for GeoWaste are
calculated by multiplying the pro forma combined amounts by an assumed
Exchange Ratio of 0.0964.
(4) Superior had basic earnings per share of $0.48 and diluted earnings per
share of $0.47 for the year ended December 31, 1995, which earnings per
share included a basic loss per share of $0.01 from discontinued
operations and a diluted loss per share of $0.02 from discontinued
operations.
31
<PAGE>
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to stockholders of
GeoWaste in connection with the solicitation of proxies by the GeoWaste Board
for use at the Special Meeting to be held on Monday, October 26, 1998, at the
offices of Stroock & Stroock & Lavan LLP located at 180 Maiden Lane, 36th
Floor, New York, New York 10038, at 10:00 a.m., local time.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, the holders of GeoWaste Common Stock will be asked
to approve and adopt the Merger Agreement, and the consummation of the
transactions contemplated thereby, which are more fully described herein (the
"Merger Proposal"). A copy of the Merger Agreement is attached as Annex A
hereto and incorporated herein by reference.
THE GEOWASTE BOARD HAS DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY ARE FAIR TO, AND IN THE BEST INTERESTS
OF, GEOWASTE AND ITS STOCKHOLDERS. ACCORDINGLY, THE GEOWASTE BOARD UNANIMOUSLY
RECOMMENDS THAT GEOWASTE STOCKHOLDERS VOTE "FOR" THE APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT. SEE "THE MERGER--Background of the Merger" and "--
GeoWaste's Reasons for the Merger; Unanimous Recommendation of the GeoWaste
Board of Directors." In considering the unanimous recommendation of the
GeoWaste Board with respect to the Merger Agreement, GeoWaste stockholders
should be aware that certain members of GeoWaste's management and of the
GeoWaste Board have interests in the Merger that are different from and in
addition to the interests of the stockholders of GeoWaste generally. See "THE
MERGER--Interests of Certain Persons in the Merger."
RECORD DATE; VOTING; SOLICITATION AND REVOCATION OF PROXIES
The GeoWaste Board has fixed the close of business on September 3, 1998 as
the Record Date for the determination of those stockholders entitled to notice
of and to vote at the Special Meeting. Holders of record of GeoWaste Common
Stock on the Record Date, which represents the only outstanding class of the
capital stock of GeoWaste, will be entitled to notice of the Special Meeting
and to vote with respect to the Merger Proposal. As of the Record Date, there
were 21,291,549 shares of GeoWaste Common Stock outstanding and entitled to
vote which were held by 4,639 holders of record. Each holder of record of
shares of GeoWaste Common Stock on the Record Date is entitled to cast one
vote per share on the Merger Proposal and on any other matter properly
submitted for the vote of GeoWaste stockholders at the Special Meeting. The
presence, either in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of GeoWaste Common Stock entitled to vote
at the Special Meeting is necessary to constitute a quorum at the Special
Meeting. Shares subject to abstentions will be treated as shares that are
present at the Special Meeting for purposes of determining the presence of a
quorum. If a broker or other nominee holder indicates on the proxy card that
it does not have discretionary authority to vote the shares it holds of record
on the Merger Proposal, those shares will be treated as shares that are
present at the Special Meeting for purposes of determining the presence of a
quorum, but will not be considered as voted for purposes of determining the
approval of stockholders of the Merger Proposal. Since the approval of the
Merger Proposal requires the affirmative vote of the holders of a majority of
the outstanding shares of GeoWaste Common Stock entitled to vote at the
Special Meeting (see "THE MERGER AGREEMENT--Conditions to the Merger"),
abstentions and broker non-votes will have the same effect as a vote against
the approval of the Merger Proposal.
As of the Record Date, certain persons, including the executive officers and
directors of GeoWaste and certain of their affiliates and a former executive
officer of GeoWaste beneficially owned an aggregate of 2,496,826 shares of
GeoWaste Common Stock (excluding shares issuable upon the exercise of options
held by such persons) or approximately 11.7% of the shares entitled to vote at
the Special Meeting. Each such person has informed GeoWaste that he or she
intends to vote or direct the vote of all such shares of GeoWaste Common Stock
in favor of the Merger Proposal, and all these persons have executed
Stockholder Support Agreements
32
<PAGE>
pursuant to which such person has agreed, among other things, to vote such
shares in favor of the Merger Proposal. In addition, each of Allen & Company,
Allen Value Partners, L.P., Allen Value Limited and Fields, who, as of the
Record Date, beneficially owned an aggregate of 5,010,000 shares of GeoWaste
Common Stock (excluding shares issuable upon the exercise of warrants held by
such persons) or approximately 23.5% of the shares of GeoWaste Common Stock
entitled to vote at the Special Meeting, have entered into Stockholder Support
Agreements with Superior pursuant to which they have agreed, among other
things, to vote the shares of GeoWaste Common Stock owned by them as of the
Record Date in favor of the Merger Proposal. See "ALLEN STOCKHOLDER SUPPORT
AGREEMENTS."
All shares of GeoWaste Common Stock which are entitled to be voted and are
represented at the Special Meeting by properly executed proxies received prior
to or at the Special Meeting, and not revoked, will be voted at the Special
Meeting, and any adjournments or postponements thereof, in accordance with the
instructions indicated on such proxies. If no instructions are indicated, such
proxies will be voted "FOR" the Merger Proposal.
The presence of a stockholder at the Special Meeting will not automatically
revoke such stockholder's proxy. However, any proxy given by a GeoWaste
stockholder pursuant to this solicitation may be revoked by the person giving
it at any time before it is exercised by (i) delivering to the Secretary of
GeoWaste a written notice of revocation bearing a later date than the proxy;
(ii) delivering to the Secretary of GeoWaste a duly executed proxy bearing a
later date; or (iii) attending the Special Meeting and voting in person. Any
written notice of revocation or subsequently executed proxy should be sent so
as to be delivered to GeoWaste Incorporated, Suite 700, 100 West Bay Street,
Jacksonville, Florida 32202, Attention: Raymond F. Chase, Secretary, or hand
delivered to GeoWaste's Secretary, at or before the taking of the vote at the
Special Meeting.
GEOWASTE STOCKHOLDERS SHOULD NOT FORWARD ANY GEOWASTE COMMON STOCK
CERTIFICATES WITH THEIR PROXY CARDS. IF THE MERGER IS CONSUMMATED, STOCK
CERTIFICATES SHOULD BE DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN
A LETTER OF TRANSMITTAL WHICH WILL BE SENT TO GEOWASTE STOCKHOLDERS BY THE
EXCHANGE AGENT (AS HEREINAFTER DEFINED) PROMPTLY AFTER THE EFFECTIVE TIME.
THE REQUIRED VOTE OF THE GEOWASTE STOCKHOLDERS WITH RESPECT TO THE MERGER
PROPOSAL IS BASED UPON THE TOTAL NUMBER OF OUTSTANDING SHARES OF GEOWASTE
COMMON STOCK AND NOT UPON THE NUMBER OF SHARES WHICH ARE ACTUALLY VOTED.
ACCORDINGLY, THE FAILURE TO SUBMIT A PROXY CARD OR TO VOTE IN PERSON AT THE
SPECIAL MEETING OR THE ABSTENTION FROM VOTING BY A STOCKHOLDER WILL HAVE THE
SAME EFFECT AS A VOTE "AGAINST" THE MERGER PROPOSAL.
GeoWaste will bear all expenses of this solicitation of proxies from the
holders of GeoWaste Common Stock, except that the cost of printing and mailing
this Proxy Statement/Prospectus will be borne by Superior, subject to
GeoWaste's obligation to reimburse Superior for its expenses in certain
limited circumstances. See "THE MERGER AGREEMENT." In addition to solicitation
by use of the mails, proxies may be solicited by directors, officers and
employees of GeoWaste in person or by telephone, telegram or other means of
communication. These persons will receive no additional compensation for
solicitation of proxies, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. GeoWaste has retained D.F. King
& Co., Inc., a proxy soliciting firm (the "Proxy Solicitor"), to assist in
such solicitation. The fees to be paid to the Proxy Solicitor are not expected
to exceed $4,500 plus reasonable out-of-pocket costs and expenses up to
$3,000. In addition, GeoWaste will make arrangements with brokerage firms and
other custodians, nominees and fiduciaries for forwarding proxy materials to
their principals and will reimburse such parties for reasonable expenses
incurred in connection therewith.
Stockholders may contact the Proxy Solicitor at its address and phone
numbers indicated on the back cover of this Proxy Statement/Prospectus for the
information about voting on the Merger Proposal or for additional copies of
this Proxy Statement/Prospectus, proxy cards or for documents incorporated
herein by reference.
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THE MERGER
BACKGROUND OF THE MERGER
In the last week of January 1998, the GeoWaste Board determined that
GeoWaste's growth strategy may be better accomplished through a business
combination with another company. This determination was based primarily on
the following considerations: (i) the increasingly competitive environment for
acquisitions of solid waste collection and disposal companies; (ii) GeoWaste's
historical inability to fully capitalize on potential growth opportunities due
primarily to limited financial and management resources; (iii) the rapid
consolidation of public companies in the solid waste management industry; and
(iv) unsolicited, informal expressions of interest in GeoWaste that had been
received from certain public and private companies.
During February 1998, GeoWaste commenced confidential, preliminary and
separate discussions with two privately held solid waste management companies.
These discussions focused on an examination of the strategic and financial
implications of a business combination with a rapidly growing company that
would contribute an aggressive new senior management team and where GeoWaste
would be the surviving corporation bringing increased financial flexibility
and better access to capital than its proposed partner.
On March 4, 1998, the GeoWaste Board met, and among other items of business,
reviewed formal proposals by, and listened to presentations from, three
investment banking firms. After a lengthy discussion, the GeoWaste Board voted
unanimously to retain the services of Deutsche Bank and authorized GeoWaste's
President and Chief Executive Officer, Amy C. MacF. Burbott, to negotiate the
terms of the engagement of Deutsche Bank within the parameters established by
the GeoWaste Board. Deutsche Bank was formally retained on March 5, 1998.
On March 16, 1998, as a consequence of unusually heavy trading volume in
GeoWaste Common Stock and a significant upward movement in the market price of
GeoWaste Common Stock, GeoWaste issued a press release disclosing that it had
retained the investment banking and advisory services of Deutsche Bank to
assist the GeoWaste Board in assessing and reviewing the broad range of
strategic alternatives available to GeoWaste, including the possible sale of
GeoWaste.
During the last two weeks of March 1998, Deutsche Bank and certain directors
of GeoWaste had discussions with, and performed due diligence on, the two
privately held companies that had been discussing strategic alternatives with
GeoWaste prior to the retention of Deutsche Bank.
On April 9, 1998, the GeoWaste Board met to discuss the progress of these
discussions and due diligence reviews and to consider Deutsche Bank's
assessment of the value to holders of GeoWaste Common Stock in pursuing a
business combination with either of the two privately held companies. Between
April 10 and April 19, 1998, Ms. Burbott and Deutsche Bank continued
discussions with these companies.
On April 20, 1998, the GeoWaste Board determined that GeoWaste's
stockholders' interests would be best served by expanding the list of possible
merger partners to include the broad base of industry participants and
instructed Deutsche Bank to immediately commence an auction process for
GeoWaste.
During the third week of April 1998, Deutsche Bank invited ten publicly
traded companies in the solid waste management industry, including Superior,
and one of the privately held companies previously contacted, to participate
in a formal auction process. The other privately held company with which
GeoWaste had been discussing a possible business combination determined not to
participate in the formal auction process because of the level of uncertainty
that it perceived in consummating a business combination between such company
and GeoWaste.
By April 29, 1998, Deutsche Bank had received executed confidentiality
agreements from eight of the ten publicly traded companies and from the
privately held company. Upon receipt of the confidentiality agreements,
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Deutsche Bank provided each of the interested parties a confidential
information memorandum describing GeoWaste and its operations (which included
projections of GeoWaste for fiscal 1998) and solicited non-binding indications
of interest from each of the interested parties.
On May 11 and 12, 1998, Deutsche Bank received seven non-binding indications
of interest, including from Superior, and invited six companies, including
Superior, to perform additional due diligence during the weeks of May 18 and
May 25, 1998. This additional due diligence included review of corporate
records, documents and information with respect to GeoWaste and accompanied
visits to certain of GeoWaste's operating locations.
By letter dated May 22, 1998, Deutsche Bank instructed each of the
interested parties to complete their due diligence, provide detailed comments
on the draft merger agreement previously provided by GeoWaste and submit final
binding offers no later than the close of business on Monday, June 9, 1998.
On or before June 9, 1998, Deutsche Bank received offers from five of the
interested parties.
During the week of June 15, 1998, Deutsche Bank and GeoWaste's legal
advisors sought and received clarification regarding certain of the offers,
including comments on the draft merger agreement, and confirmed that the bids
submitted were in fact the best and final bids. Also, during the week of June
15, 1998, Deutsche Bank and GeoWaste's legal advisors performed financial and
legal due diligence with respect to Superior. In conducting such review,
Deutsche Bank reviewed confidential projections and forecasts provided by
Superior's management, which projections and forecasts were subsequently used
by Deutsche Bank in preparing its various financial analyses. See "--Opinion
of GeoWaste's Financial Advisor."
On June 23, 1998, the GeoWaste Board, together with representatives of
Deutsche Bank and its legal advisors, held a meeting to review the proposed
bids. Representatives of Deutsche Bank reviewed the terms of each of the bids.
Several of the members of the GeoWaste Board requested that they be provided
with additional information regarding each of the two highest bidders,
including Superior. The GeoWaste Board authorized Ms. Burbott and Deutsche
Bank to continue negotiations of the terms of the draft merger agreement with
Superior, while further clarifying, the terms of the next highest bid.
From June 23, 1998 through the signing of the Merger Agreement on July 2,
1998, representatives of GeoWaste and Superior, their respective legal
advisors and Deutsche Bank continued to negotiate the final terms of the
definitive Merger Agreement and of the Stockholder Support Agreements.
From June 23, 1998 to June 25, 1998, representatives of GeoWaste, at the
direction of the GeoWaste Board, further clarified the next highest bid, while
confirming that such bid in fact represented such bidder's best and final bid.
On June 26, 1998, the GeoWaste Board held another meeting to consider the
terms of the proposed transaction. At the meeting, the GeoWaste Board
discussed with the senior management of GeoWaste and GeoWaste's financial and
legal advisors the status of the merger discussions with Superior and the next
highest bidder, as well as the proposed terms of the Merger. Deutsche Bank
delivered to the GeoWaste Board its oral opinion that the Exchange Ratio was
fair, from a financial point of view, to the holders of GeoWaste Common Stock.
For purposes of the GeoWaste Board's evaluation, representatives of Deutsche
Bank presented a financial overview of the terms of the proposed transaction
and certain financial analyses. GeoWaste's outside legal counsel reviewed with
the GeoWaste Board the principal terms and conditions of the definitive Merger
Agreement, regulatory aspects of the proposed Merger and conditions to the
proposed Merger and advised the GeoWaste Board as to its legal obligations in
considering whether to approve the proposed Merger. After discussion, the
GeoWaste Board unanimously approved the Merger Agreement and unanimously
recommended that the holders of GeoWaste Common Stock vote for the approval
and adoption of the Merger Agreement and the Merger at a special meeting of
the holders of GeoWaste Common Stock to be held for that purpose.
On July 2, 1998, the Merger Agreement and the Stockholder Support Agreements
were finalized, Deutsche Bank delivered its written fairness opinion to the
GeoWaste Board and, after the close of trading, the Merger Agreement and the
Stockholder Support Agreements were executed.
On July 6, 1998, the first business day following execution of the Merger
Agreement, GeoWaste and Superior issued a joint press release announcing the
Merger.
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GEOWASTE'S REASONS FOR THE MERGER; UNANIMOUS RECOMMENDATION OF THE GEOWASTE
BOARD OF DIRECTORS
The GeoWaste Board believes that the terms of the Merger Agreement, which
are the product of arm's-length negotiations between representatives of
Superior and GeoWaste, are fair to, and in the best interests of, GeoWaste and
its stockholders. In the course of reaching its determination, the GeoWaste
Board consulted with counsel with respect to its legal duties, the terms of
the Merger Agreement and the issues related thereto; and with its financial
advisor with respect to the financial aspects and fairness of the transaction.
In reaching its decision to approve the Merger Agreement and to recommend
that holders of GeoWaste Common Stock vote to approve and adopt the Merger
Agreement, the GeoWaste Board considered a number of factors, including the
following material factors (the order does not reflect relative significance):
(i) its knowledge of the historical and prospective business, operations,
properties, assets, financial condition and operating results of GeoWaste,
including certain factors that have hindered GeoWaste's growth and
operating profitability such as its limited financial and management
resources;
(ii) the financial terms of the Merger and the opinion of Deutsche Bank
dated July 2, 1998 as to the fairness of the Exchange Ratio, from a
financial point of view, to the holders of GeoWaste Common Stock. See "--
Opinion of GeoWaste's Financial Advisor";
(iii) the terms of the Merger Agreement, including provisions relating to
(a) the potential adjustment to the Exchange Ratio if the Final Superior
Stock Price was below $27.50, (b) the prohibition on the solicitation of
other offers and the circumstances under which GeoWaste would be able to
pursue unsolicited alternative proposals and (c) termination fees and
expenses;
(iv) the likelihood of completing the proposed transaction with Superior;
(v) its assessment of the historical and prospective business,
operations, properties, assets, financial condition and operating results
of Superior and the potential negative impact thereon of the matters
discussed above under "RISK FACTORS--Risks Relating to Superior." The
GeoWaste Board also considered Superior's management's favorable record
with respect to achieving synergies in connection with previous
acquisitions;
(vi) the historical trading prices for GeoWaste Common Stock, on the one
hand, and Superior Common Stock, on the other;
(vii) the relative liquidity of the shares of Superior Common Stock to be
received by holders of GeoWaste Common Stock as a result of the proposed
transaction;
(viii) the opportunity for GeoWaste stockholders to participate, as
holders of Superior Common Stock, in a larger, stronger, more
geographically diversified company, and to do so by means of a transaction
which is designed to be tax-free for federal income tax purposes to
GeoWaste's stockholders and is expected to be accounted for as a pooling of
interests transaction for accounting and financial reporting purposes; and
(ix) its consideration of the value of GeoWaste Common Stock assuming
GeoWaste continues as a stand-alone entity compared to the effect of
GeoWaste combining with Superior in light of the factors summarized above
and the current economic and financial environment, including, but not
limited to, other possible strategic alternatives, and the belief of the
GeoWaste Board and management that the Merger offered the best transaction
available to GeoWaste and its stockholders.
The foregoing discussion of the information and factors considered by the
GeoWaste Board is not intended to be exhaustive, but constitutes the material
factors considered by the GeoWaste Board. In view of the number and disparate
nature of the factors considered by the GeoWaste Board in connection with its
evaluation of the Merger and the Merger Agreement, the GeoWaste Board did not
find it practicable to and did not quantify or otherwise assign any relative
weights to the specific factors considered in reaching its determination. The
GeoWaste Board viewed its determination as being based on the totality of the
information presented to and considered by it and not on one particular
factor. In addition, individual members of the GeoWaste Board may have given
different weights to different factors. See "--Interests of Certain Persons in
the Merger." After deliberating with respect to the Merger and the other
transactions contemplated by the Merger Agreement,
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considering, among other things, the matters discussed above and the opinion
of Deutsche Bank referred to above, the GeoWaste Board unanimously approved
and adopted the Merger Agreement and the transactions contemplated thereby as
being fair to, and in the best interests of, GeoWaste and its stockholders.
FOR THE REASONS SET FORTH ABOVE, THE GEOWASTE BOARD HAS UNANIMOUSLY APPROVED
AND ADOPTED THE MERGER AGREEMENT AS BEING FAIR TO, AND IN THE BEST INTERESTS
OF, GEOWASTE AND ITS STOCKHOLDERS AND RECOMMENDS THAT THE STOCKHOLDERS OF
GEOWASTE VOTE "FOR" THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
In considering the unanimous recommendation of the GeoWaste Board with
respect to the Merger Agreement, GeoWaste stockholders should be aware that
certain members of GeoWaste's management and of the GeoWaste Board have
interests in the Merger that are different from and in addition to the
interests of the stockholders of GeoWaste generally. See "--Interests of
Certain Persons in the Merger."
OPINION OF GEOWASTE'S FINANCIAL ADVISOR
On July 2, 1998, Deutsche Bank delivered its written opinion to the GeoWaste
Board (the "Deutsche Bank Opinion") that, as of the date of such opinion, the
Exchange Ratio was fair, from a financial point of view, to the holders of
GeoWaste Common Stock.
THE FULL TEXT OF THE DEUTSCHE BANK OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN
CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS ANNEX B TO THIS PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. STOCKHOLDERS OF
GEOWASTE ARE URGED TO, AND SHOULD, READ THE DEUTSCHE BANK OPINION IN ITS
ENTIRETY.
In connection with its opinion, Deutsche Bank reviewed, among other things,
(i) the Merger Agreement; (ii) Annual Reports on Form 10-K of GeoWaste and
Superior; (iii) certain interim reports to stockholders and Quarterly Reports
on Form 10-Q of GeoWaste and Superior; and (iv) certain internal financial
analyses and forecasts for GeoWaste and Superior prepared by their respective
managements. Deutsche Bank also held discussions with members of the senior
management of GeoWaste and Superior regarding the strategic rationale for, and
potential benefits of, the Merger and the past and current business
operations, financial condition, and future prospects of their respective
companies. In addition, Deutsche Bank reviewed the reported price and trading
activity for GeoWaste Common Stock and Superior Common Stock, compared certain
financial and stock market information for GeoWaste and Superior with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations
in the waste management industry and performed such other studies and analyses
as it considered appropriate.
Deutsche Bank relied upon the accuracy and completeness of all the financial
and other information reviewed by it, including, without limitation, the
representations set forth in the Merger Agreement, and assumed such accuracy
and completeness for purposes of rendering its opinion. In that regard,
Deutsche Bank relied upon the management of each of GeoWaste and Superior as
to the reasonableness and achievability of the financial forecasts (and the
assumptions and bases thereof) provided to Deutsche Bank, and with the consent
of GeoWaste and Superior, assumed that such forecasts, including, without
limitation, projected cost savings from operating synergies resulting from the
Merger, reflect the best currently available estimates and judgments of such
respective managements. In addition, Deutsche Bank did not make an independent
evaluation or appraisal of the assets and liabilities of GeoWaste or Superior
or any of their subsidiaries and Deutsche Bank was not furnished with any such
evaluation or appraisal. DEUTSCHE BANK'S ADVISORY SERVICES AND OPINION WERE
PROVIDED FOR THE INFORMATION AND ASSISTANCE OF THE GEOWASTE BOARD IN
CONNECTION WITH ITS CONSIDERATION OF THE TRANSACTIONS CONTEMPLATED BY THE
MERGER AGREEMENT AND SUCH OPINION DOES NOT CONSTITUTE A RECOMMENDATION AS TO
HOW ANY HOLDER OF GEOWASTE COMMON STOCK SHOULD VOTE WITH RESPECT TO THE
MERGER.
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The following is a summary of the material financial analyses performed by
Deutsche Bank in connection with providing the Deutsche Bank Opinion to the
GeoWaste Board. All analyses discussed below, unless otherwise indicated,
exclude the estimated cost savings from operating synergies of the combined
company.
(i) Historical Stock Trading Analysis. Deutsche Bank reviewed the daily
historical trading prices and volumes for GeoWaste Common Stock and
Superior Common Stock for the period from March 8, 1996 to June 29, 1998.
In addition, Deutsche Bank reviewed the average exchange ratio of the
closing prices of GeoWaste Common Stock to the closing prices of Superior
Common Stock for the 1-trading day, 10-trading day, 20-trading day, 40-
trading day, 60-trading day, 120-trading day, and 240-trading day periods
immediately preceding June 29, 1998, which resulted in average exchange
ratios of 0.078, 0.075, 0.077, 0.075, 0.079, 0.074, and 0.068,
respectively.
(ii) Selected Companies Analysis. No company utilized in the Selected
Companies Analysis is identical to GeoWaste and Superior. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and
operating characteristics of GeoWaste and Superior and other factors that
could affect the public trading value of the Selected Companies or company
to which they are being compared. Mathematical analysis (such as
determining the mean or median) is not in itself a meaningful method of
using comparable company data.
Deutsche Bank reviewed and compared certain financial information
relating to GeoWaste and Superior to corresponding financial information,
ratios and public market multiples for five publicly traded corporations in
the waste management industry: Allied Waste Industries, Inc., American
Disposal Services, Inc., Casella Waste Systems, Inc., Eastern Environmental
Services, Inc. and Waste Industries, Inc. (the "Selected Companies"). The
Selected Companies were chosen by Deutsche Bank based on the availability
of research analysts' projections and on projected 1998 revenues not to
exceed $1.3 billion. Deutsche Bank calculated and compared various
financial multiples and ratios. The multiples of GeoWaste and Superior were
calculated using a price of $2.65 per share for GeoWaste Common Stock, the
proposed purchase price, and $28.875 per share of Superior Common Stock,
the closing price as of June 29, 1998. The multiples and ratios for the
Selected Companies were based on the most recent publicly available
information and published research reports. The multiples and ratios for
GeoWaste and Superior were based on the respective companies' management
forecasts.
Deutsche Bank considered (i) price as a multiple of earnings per share
("EPS") as estimated for 1998 ("1998 P/E Multiple") and 1999 ("1999 P/E
Multiple") calendar years based on calendarized median Institutional
Brokers Estimate System earnings estimates as of June 29, 1998; (ii)
aggregate value (i.e., market value of common equity plus book value of
debt plus preferred stock less cash and cash equivalents ("Aggregate
Value")) as a multiple of revenue as estimated for the 1998 ("Aggregate
Value/1998E Revenue Multiple") and 1999 ("Aggregate Value/1999E Revenue
Multiple") calendar years; (iii) Aggregate Value as a multiple of earnings
before interest, taxes, depreciation and amortization ("EBITDA") as
estimated for the 1998 ("Aggregate Value/1998E EBITDA Multiple") and 1999
("Aggregate Value/1999E EBITDA Multiple") calendar years; and (iv)
Aggregate Value as a multiple of earnings before interest and taxes
("EBIT") as estimated for the 1998 ("Aggregate Value/1998E EBIT Multiple")
and 1999 ("Aggregate Value/1999E EBIT Multiple") calendar years.
Deutsche Bank's analysis indicated (i) 1998 P/E Multiples for the
Selected Companies that ranged from 25.6x to 45.8x with a median of 34.9x,
compared to 47.5x for GeoWaste and 25.8x for Superior; (ii) 1999 P/E
Multiples for the Selected Companies that ranged from 20.1x to 33.3x with a
median of 24.8x, compared to 48.1x for GeoWaste and 20.2x for Superior;
(iii) Aggregate Value/1998E Revenue Multiples for the Selected Companies
that ranged from 1.82x to 4.73x with a median of 3.14x, compared to 2.88x
for GeoWaste and 2.72x for Superior; (iv) Aggregate Value/1999E Revenue
Multiples for the Selected Companies that ranged from 1.39x to 3.17x with a
median of 2.50x, compared to 2.93x for GeoWaste and 1.88x for Superior; (v)
Aggregate Value/1998E EBITDA Multiples for the Selected Companies that
ranged from 8.6x to 14.0x with a median of 9.0x, compared to 10.4x for
GeoWaste and 8.4x for Superior; (vi) Aggregate Value/1999E EBITDA Multiples
for the Selected Companies that ranged from 6.4x to 9.2x with a median of
7.1x, compared to 10.7x for GeoWaste and 5.8x for Superior; (vii) Aggregate
Value/1998E EBIT Multiples for the Selected Companies that ranged from
13.7x to 25.0x with a median of 19.8x,
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compared to 23.3x for GeoWaste and 13.9x for Superior; and (viii) Aggregate
Value/1999E EBIT Multiples for the Selected Companies that ranged from 9.8x
to 16.0x with a median of 12.1x, compared to 23.4x for GeoWaste and 9.6x
for Superior.
(iii) Selected Transactions Analysis. No transaction utilized in the
Selected Transactions Analysis is identical to the Merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and
operating characteristics of GeoWaste and Superior and other factors that
could affect the acquisition value of the companies to which they are being
compared. Mathematical analysis (such as determining the mean or median) is
not itself a meaningful method of using comparable transaction data.
Deutsche Bank analyzed certain information relating to the following
selected transactions in the waste management industry since 1996 (the
"Selected Transactions"): Grand Central Sanitation Inc. /USA Waste
Services, Inc.; Container Corporation of Carolina/Allied Waste Industries,
Inc.; Mid-American Waste Systems, Inc./USA Waste Services, Inc.; York Waste
Disposal, Inc./Republic Industries, Inc.; Pine Grove, Inc./Eastern
Environmental Services, Inc.; Fred Barbara Companies/American Disposal
Services, Inc.; and TransAmerican Waste Industries, Inc./USA Waste
Services, Inc. The Selected Transactions were chosen by Deutsche Bank based
on leveraged aggregate transaction value not to exceed $250 million. The
multiples of GeoWaste were calculated using a price of $2.65 per share of
GeoWaste Common Stock, the proposed purchase price, and were based on
reported GeoWaste latest twelve months ("LTM") results and GeoWaste
management projections. Deutsche Bank's analysis indicated that for the
Selected Transactions (i) levered aggregate transaction value as a multiple
of LTM revenue ranged from 1.31x to 3.85x with a median of 2.18x, as
compared to 3.41x (2.89x as a multiple of 1998 estimated revenue) for the
levered aggregate transaction value to be received in the Merger; (ii)
levered aggregate transaction value as a multiple of LTM EBITDA ranged from
6.8x to 14.5x with a median of 13.4x, as compared to 12.6x (10.4x as a
multiple of 1998 estimated EBITDA) for the levered aggregate transaction
value to be received in the Merger; (iii) levered aggregate transaction
value as a multiple of LTM EBIT ranged from 17.9x to 33.6x with a median of
23.5x, as compared to 43.5x (21.0x as a multiple of 1998 estimated EBIT)
for the levered aggregate transaction value to be received in the Merger;
and (iv) equity transaction value as a multiple of book value ranged from
3.56x to 14.51x with a median of 7.26x, as compared to 3.85x for the equity
transaction value to be received in the Merger.
(iv) Premium Analysis. No transaction utilized in the Premium Analysis is
identical to the Merger. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments
concerning differences in financial and operating characteristics of
GeoWaste and Superior and other factors that could affect the acquisition
value of the companies to which they are being compared. Mathematical
analysis (such as determining the mean or median) is not itself a
meaningful method of using comparable transaction data.
Deutsche Bank compared the premium represented by the Exchange Ratio
(based on the closing price of Superior on June 29, 1998) over the average
exchange ratio of the closing prices of GeoWaste Common Stock to the
closing prices of Superior Common Stock for the 1-trading day, 10-trading
days, 20-trading days, 40-trading days, and 60-trading days prior to such
date to the average premiums for the following selected stock-for-stock
transactions in the waste management industry (the "Selected Stock-for-
Stock Transactions"): Waste Management, Inc./USA Waste Services, Inc.;
TransAmerican Waste Industries, Inc./USA Waste Services, Inc.; United Waste
Systems, Inc./USA Waste Services, Inc.; and Sanifill, Inc./USA Waste
Services, Inc. The Selected Stock-for-Stock Transactions include all
announced stock-for-stock transactions involving publicly traded companies
in the waste management industry since 1996. This analysis showed that the
Exchange Ratio represented: (i) a 17.8% premium over the 1-trading day
prior exchange ratio compared to a 1-trading day prior average discount of
0.2% for the Selected Stock-for-Stock Transactions, (ii) a 22.4% premium
over the prior 10-trading day average exchange ratio compared to a 10-
trading day prior average premium of 3.4% for the Selected Stock-for-Stock
Transactions, (iii) a 19.5% premium over the prior 20-trading day average
exchange ratio compared to a 20-trading day prior average premium of 4.8%
for the Selected Stock-for-Stock Transactions, (iv) a 23.1% premium over
the prior 40-trading day average exchange ratio compared to a 40-trading
day prior average premium of 5.5% for the
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Selected Stock-for-Stock Transactions and (v) a 15.6% premium over the
prior 60-trading day average exchange ratio compared to a 60-trading day
prior average premium of 3.7% for the Selected Stock-for-Stock
Transactions.
(v) Contribution Analysis. Deutsche Bank reviewed certain historical and
projected operating and financial information (including revenues, EBITDA,
EBIT, net income, net tangible book value, equity market capitalization,
and aggregate value) for GeoWaste, Superior and the pro forma combined
entity resulting from the Merger based on GeoWaste's and Superior's
respective management financial forecasts. The analysis indicated that the
holders of GeoWaste Common Stock would contribute: (i) 8.0% of the revenue
of the combined company for the estimated 1998 calendar year; (ii) 7.0% of
the EBITDA of the combined company for the estimated 1998 calendar year;
(iii) 5.2% of EBIT of the combined company for the estimated 1998 calendar
year; (iv) 4.1% of the net income of the combined company for the estimated
1998 calendar year; (v) 2.7% of the net tangible book value of the combined
company (based on information as of May 31, 1998); (vi) 7.5% of the equity
market capitalization of the combined company (as of June 29, 1998 and
based on an Exchange Ratio of 0.092); and (vii) 8.5% of the aggregate value
of the combined company (as of June 29, 1998 and based on an Exchange Ratio
of 0.092).
(vi) Discounted Cash Flow Analysis. Deutsche Bank performed a discounted
cash flow analysis for both GeoWaste and Superior, using the respective
companies' management projections. Deutsche Bank calculated the estimated
"Free Cash Flow" for each company stand-alone based on projected unlevered
operating income adjusted for (i) taxes; (ii) certain projected non-cash
items (i.e., depreciation and amortization and closure/post-closure costs);
(iii) projected changes in non-cash working capital; and (iv) projected
capital expenditures. Deutsche Bank calculated a net present value of the
Free Cash Flow for GeoWaste and Superior, respectively, for the years 1998
through 2002 using discount rates ranging from 9.0% to 11.0%. To estimate
the present value of the terminal value of GeoWaste and Superior,
respectively, at the end of the forecast period, Deutsche Bank applied
terminal multiples of 8.0 to 10.0 to the projected fiscal period 2002
EBITDA and discounted such terminal value estimates to present value using
discount rates ranging from 9.0% to 11.0%. Deutsche Bank then aggregated
the present values of the Free Cash Flows and the present values of the
terminal values to derive a range of implied enterprise values for GeoWaste
and Superior. The range of implied enterprise values of GeoWaste and
Superior, respectively, were then adjusted for their respective Net Debt
and Closure/Post-Closure Reserves to yield implied equity values of
GeoWaste and Superior stand-alone. The range of implied equity values were
then divided by the respective stand-alone fully diluted shares to
determine a range of equity values per share for each company stand-alone.
The range of implied equity values per share for GeoWaste was $1.44 to
$2.00 per share. The range of implied equity values per share for Superior
was $42.24 to $61.18 per share.
(vii) Pro Forma Merger Analysis. Deutsche Bank prepared a pro forma
analysis of the financial impact of the Merger. Using earnings estimates
prepared by GeoWaste management and Superior management, respectively, for
the projected 1998 fiscal year period, Deutsche Bank compared the EPS of
Superior Common Stock, on a stand-alone basis, to the EPS of the common
stock of the combined company. Based on GeoWaste's and Superior's
respective management financial forecasts, this analysis assumed $2.2
million in pro forma pre-tax cost savings from operating synergies for the
combined company for 1998. Based on such analysis, the Merger would be
accretive to both Superior stockholders and GeoWaste stockholders on a pro
forma EPS basis in 1998. If the projected pro forma pre-tax cost savings
mentioned above are excluded from such analysis, the Merger would be
dilutive to Superior stockholders and accretive to GeoWaste stockholders on
a pro forma EPS basis in 1998.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete view of the
processes underlying the Deutsche Bank Opinion. In arriving at its fairness
determination, Deutsche Bank considered the results of all such analyses. No
company or transaction used in the above analyses as a comparison is identical
to GeoWaste or Superior or the contemplated transaction. The analyses were
prepared for purposes of Deutsche Bank providing its opinion to the GeoWaste
Board as to the fairness of the Exchange Ratio, from a financial point of
view, to the holders of
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GeoWaste Common Stock and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold.
Analyses based upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or less favorable
than suggested by such analyses. Because such analyses are inherently subject
to uncertainty, being based upon numerous factors or events beyond the control
of the parties or their respective advisors, none of GeoWaste, Superior,
Deutsche Bank or any other person assumes responsibility if future results are
materially different from those forecast. As described above, Deutsche Bank's
opinion to the GeoWaste Board was one of many factors taken into consideration
by the GeoWaste Board in making its determination to approve the Merger
Agreement. The foregoing summary does not purport to be a complete description
of the analysis performed by Deutsche Bank and is qualified by reference to
the written opinion of Deutsche Bank set forth as Annex B hereto.
Pursuant to a letter agreement dated April 2, 1998 (the "Deutsche Bank
Engagement Letter"), GeoWaste engaged Deutsche Bank to act as its financial
advisor in connection with the Merger. Pursuant to the terms of the Deutsche
Bank Engagement Letter, GeoWaste has agreed to pay Deutsche Bank upon
consummation of the Merger a transaction fee of $1.0 million. In addition,
GeoWaste has agreed to reimburse Deutsche Bank for certain out-of-pocket
expenses, including attorney's fees, and to indemnify Deutsche Bank against
certain liabilities, including certain liabilities under the federal
securities laws.
The forecasts and projections reviewed by Deutsche Bank in connection with
the rendering of its opinion were prepared by respective managements of
Superior and GeoWaste. Neither Superior nor GeoWaste publicly discloses
internal management projections of the type provided to Deutsche Bank in
connection with the preparation of its opinion and they were only provided to
Deutsche Bank under the express condition that they remain strictly
confidential. The projections were not prepared with a view toward public
disclosure or compliance with either the published guidelines of the
Commission regarding projections or forecasts or the American Institute of
Certified Public Accountants' Guide for Prospective Financial Statements. The
projections were not prepared in accordance with GAAP and were not audited or
reviewed by independent accountants.
The projections provided to Deutsche Bank by GeoWaste's management project
for GeoWaste for fiscal years 1998 and 1999, respectively, revenues of $24.4
million and $24.0 million, EBIT of $3.0 million and $3.0 million and diluted
earnings per share of $0.06 and $0.06. The 1998 and 1999 revenues and earnings
per share estimates provided to Deutsche Bank by Superior's management as part
of its projections were substantially similar to the then current range of
estimates published and disseminated by stock market research analysts who
follow Superior. In all other material respects, the forecasts and projections
provided by Superior to Deutsche Bank did not differ materially from the range
of then publicly available information with respect to Superior.
The assumptions and estimates underlying the projections are inherently
uncertain and, though considered reasonable by the managements of GeoWaste and
Superior, as the case may be, as of the date provided, are subject to a wide
variety of significant business, economic and competitive risks and
uncertainties that could cause actual results to differ materially from those
projected. Accordingly, there can be no assurance that projected results are
indicative of the future performance of GeoWaste or Superior or that actual
results will not be materially higher or lower than those projections.
Inclusion of this information in this Proxy Statement/Prospectus should not be
regarded as a representation by any person that the projected results will be
achieved. See the introductory paragraph to "RISK FACTORS" for information
regarding forward-looking information. Each of GeoWaste and Superior disclaims
any duty or obligation whatsoever, and neither intends, to update or
supplement these projections or forecasts in the future.
SUPERIOR'S REASONS FOR THE MERGER
In evaluating the Merger, the management and the Superior Board considered a
variety of factors in the context of Superior's strategic objectives.
Superior's principal strategy for future growth is through the acquisition of
additional solid waste disposal, transfer and collection operations, with the
objective of increasing its geographical presence as a fully integrated
provider of solid waste collection and disposal services in each market it
serves. The Superior Board concluded that, by acquiring GeoWaste in the
Merger, Superior would help further its strategic objectives.
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Superior believes that the Merger provides Superior with strong solid waste
disposal and collection operational entries into the Southern Georgia and
Northern Florida markets and the opportunity to continue its expansion into
the Southeastern United States. Superior believes that it will be able to
utilize GeoWaste's acquired operations as a base upon which to further expand
its disposal, transfer, collection and recycling operations and customer base
in these markets and surrounding areas. By successfully integrating GeoWaste's
business into Superior and by successfully acquiring additional complementary
solid waste operations, Superior believes that it may be able to achieve
further synergies and operational efficiencies, increased solid waste
internalization rates and internal growth in these markets.
Superior believes that the Merger will permit it to expand its operations in
GeoWaste's markets through the pursuit of additional complementary synergistic
acquisitions and attempting to achieve additional internal growth by pursuing
cross-selling opportunities and integrating operations. Superior believes that
operational efficiencies and cost savings may be achieved through routing
changes (specifically, route consolidation and the elimination of trucks),
reducing the number of duplicative personnel, reducing leachate treatment
costs by using local publicly-owned water treatment facilities, and reducing
interest costs through a reduction in long-term debt.
The foregoing discussion of the information and factors considered by the
Superior Board is not intended to be exhaustive. In view of the variety of
factors considered in connection with its evaluation of the Merger, the
Superior Board did not find it practicable and did not quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the Superior Board may have
given different weights to the different factors.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the GeoWaste Board with respect to the
Merger Agreement, GeoWaste stockholders should be aware that certain members
of GeoWaste's management and of the GeoWaste Board have interests in the
Merger that are in addition to their interests as stockholders of GeoWaste
generally. The GeoWaste Board was aware of these interests and considered
them, among other matters, in approving the Merger Agreement and the
transactions contemplated thereby.
Burbott Agreement
GeoWaste and Amy C. MacF. Burbott, President and Chief Executive Officer of
GeoWaste, have entered into a severance agreement (the "Burbott Agreement")
confirming Ms. Burbott's severance arrangements with GeoWaste. The Burbott
Agreement provides that upon the earlier of (i) the termination of her
employment with GeoWaste for any reason other than her voluntary resignation
or (ii) a "change of control," the earlier of which events is herein referred
to as the "Severance Event," Ms. Burbott will be entitled to (a) continuation
of salary for one year, at an annual rate equal to the greater of $175,000 or
the rate in effect on the date of the Severance Event, with payment to be made
not less frequently than monthly, (b) continued health benefits substantially
similar to those which Ms. Burbott was receiving immediately prior to the
Severance Event, at the expense of GeoWaste, for one year and (c) any bonus
which has been accrued but not paid prior to the Severance Event. The Merger
will constitute a "change of control" for purposes of the Burbott Agreement.
Chase Agreement
GeoWaste and Raymond F. Chase, acting Chief Financial Officer, Vice
President and Secretary of GeoWaste, entered into a severance agreement dated
May 8, 1998 (the "Chase Agreement"), which provides that in the event (i)
there is a "change of control" within one year of the date of the Chase
Agreement and (ii) a Termination Event (as defined below) occurs within the
two-year period beginning on the date of such Change of Control, GeoWaste will
(A) for eight months following the date of the Termination Event make monthly
payments to Mr. Chase, each such payment in an amount equal to eight-twelfths
of the greater of $82,000 or Mr. Chase's annual salary in effect on the date
of the Termination Event, (B) for a period of eight months following the date
of the Termination Event, make any and all payments necessary to continue the
health insurance coverage in place for Mr. Chase immediately prior to the
Termination Event and (C) pay to Mr. Chase any bonus accrued by Mr. Chase in
the calendar year in which the Termination Event occurs. The Merger will
constitute a "change of control" for purposes of the Chase Agreement.
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For purposes of the Chase Agreement, (i) a "Termination Event" includes the
following: (A) the termination of Mr. Chase's employment with GeoWaste without
Cause (as defined below), (B) a significant reduction in Mr. Chase's job
responsibilities or (C) a decrease in Mr. Chase's annual base salary and (ii)
"Cause" means (A) use for personal gain, or disclosure to an unauthorized
person of, any confidential or proprietary information or trade secrets of
GeoWaste or its subsidiaries, (B) acting in manner which materially and
detrimentally affects GeoWaste or its subsidiaries or (C) conduct that
violates applicable civil or criminal law or violates any rules of ethical
corporate conduct of, or fiduciary obligation to, GeoWaste or its
subsidiaries.
The Chase Agreement provides that during the term of his employment with
GeoWaste and for a period of one year following the termination of such
employment, Mr. Chase may not engage in certain activities deemed competitive
with GeoWaste's business. In addition, Mr. Chase has agreed that during the
term of his employment with GeoWaste, and for a period of one year following
the termination of such employment, he will not disclose any confidential
information of GeoWaste to any third party.
Paglia Agreements
Each of Michael D. Paglia, formerly a Vice President and a director of
GeoWaste, and John D. Paglia, formerly a Vice President of GeoWaste, had an
employment agreement dated August 12, 1996 with GeoWaste (collectively, the
"Paglia Agreements"). Each Paglia Agreement provided for a four year term of
employment.
Pursuant to the Paglia Agreements, in the event GeoWaste terminates the
employment of Michael Paglia or John Paglia, as the case may be, without
"cause," GeoWaste will (i) pay to Michael Paglia or John Paglia, as the case
may be, either in a lump sum or in monthly installments, the lesser of (A) 18
times $8,350 or (B) (x) 48 minus the number of months employed prior to
termination, multiplied by (y) $8,350; and (ii) for as long as GeoWaste is
making monthly severance payments as described in clause (i) above, pay the
premium necessary to continue the health insurance coverage in place for
Michael Paglia or John Paglia, as the case may be, immediately prior to the
date employment is terminated; provided, GeoWaste has no obligation to make
payments with respect to COBRA benefits after GeoWaste has ceased making
monthly severance payments.
Each of the Paglia Agreements provided that for a period of five years from
the date of such agreement, Michael Paglia or John Paglia, as the case may be,
may not engage in certain activities deemed competitive with GeoWaste's
business. In addition, each of Michael Paglia and John Paglia has agreed that
during the term of his employment with GeoWaste, and for a period of one year
following the termination of such employment, he will not disclose any
confidential information of GeoWaste to any third party; provided, that each
of Michael Paglia and John Paglia has agreed not to disclose during their
respective terms of employment and indefinitely thereafter, any trade secrets
of GeoWaste.
On September 1, 1998, GeoWaste entered into modifications of the Paglia
Agreements which each of Michael Paglia and John Paglia pursuant to which it
was agreed that (i) the term of employment for each of Michael Paglia and John
Paglia ended effective August 31, 1998, (ii) in lieu of the severance payments
described in the second preceding paragraph, (A) GeoWaste will pay or cause to
be paid to each of Michael Paglia and John Paglia the sum of $75,000, payable
in equal weekly installments for a 32-week period ending the week of April 5,
1999 and (B) during the 32-week period described in clause (A), GeoWaste will
pay the premium for any continuation of health coverage, (iii) all other
provisions of the Paglia Agreement will remain in full force and effect and
(iv) each of Michael Paglia and John Paglia release GeoWaste from all actions,
causes of action, suits, debts, controversies, bonds, bills, covenants,
agreements, damages, judgments, claims and demands, whatsoever, which they now
have, ever had or will ever have against GeoWaste.
Including the payments to be made to Michael Paglia and John Paglia
described in the preceding paragraph and assuming the termination of
employment following the Merger of all other employees of GeoWaste who are
parties to a severance arrangement with GeoWaste, the aggregate severance
obligations of Superior is not expected to exceed $750,000 in the aggregate.
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Stock Options and Warrants
As more fully described under "THE MERGER AGREEMENT--GeoWaste Stock Options
and Warrants," all options to purchase shares of GeoWaste Common Stock granted
to directors of GeoWaste (other than Ms. Burbott and Michael D. Paglia) prior
to the date of the Merger Agreement will convert into the right to receive
consideration to be paid in the Merger at the Effective Time reduced by such
number of shares of Superior Common Stock equal to (x) (1) the aggregate
exercise price for the shares of GeoWaste Common Stock then issuable upon
exercise of such options, and (2) the amount of any withholding taxes which
may be required thereon, times (y) the Exchange Ratio. Assuming no exercise of
any stock options prior to the Effective Time, the total number of options to
purchase shares of GeoWaste Common Stock to be converted as described above is
205,000 with a weighted average exercise price per option of $0.854. See
"MANAGEMENT AND PRINCIPAL STOCKHOLDERS OF GEOWASTE."
All other options to purchase shares of GeoWaste Common Stock will be
assumed by Superior and will be exercisable upon the same terms and conditions
as under the applicable plan and/or option agreements, except that (i) each
such option shall be exercisable for that whole number of shares of Superior
Common Stock (to the nearest share) equal to the product of (y) the number of
shares of GeoWaste Common Stock subject to the original option and (z) the
Exchange Ratio, and (ii) the option exercise price per share of Superior
Common Stock shall be an amount equal to (y) the option exercise price per
share of GeoWaste Common Stock under the original options, in effect
immediately prior to the Effective Time, divided by (z) the Exchange Ratio
(the option exercise price per share of GeoWaste Common Stock, as so
determined, being rounded to the nearest full cent). Consummation of the
Merger constitutes a "change in control" for purposes of these options causing
the acceleration of all of the unvested options. Pursuant to the plan under
which such options were granted, such options will remain exercisable during
the term of the option holder's employment, which, for purposes of such plan,
includes such period as the option holder is receiving severance benefits. As
of the Record Date, the executive officers of GeoWaste held a total of 822,324
vested stock options and 106,970 unvested stock options that will become 100%
vested at the Effective Time. Assuming no exercise of any stock options prior
to the Effective Time, the total number of options to purchase shares of
GeoWaste Common Stock to be assumed by Superior is 1,008,054 with a weighted
average exercise price per option of $0.725. See "MANAGEMENT AND PRINCIPAL
STOCKHOLDERS OF GEOWASTE."
All outstanding warrants issued by GeoWaste prior to the date of the Merger
Agreement to purchase shares of GeoWaste Common Stock (the "Warrants") will be
assumed by Superior and will be exercisable upon the same terms and conditions
as under the Warrants originally issued by GeoWaste, except that (i) the
Warrants shall be exercisable for that whole number of shares of Superior
Common Stock (to the nearest share) equal to the product of (y) the number of
shares of GeoWaste Common Stock subject to the original Warrants and (z) the
Exchange Ratio, and (ii) the exercise price per share of Superior Common Stock
shall be an amount equal to (y) the exercise price per share of GeoWaste
Common Stock under the original Warrants, in effect immediately prior to the
Effective Time, divided by (z) the Exchange Ratio (the Warrant exercise price
per share of GeoWaste Common Stock, as so determined, being rounded to the
nearest full cent). As of the Record Date, 2,000,000 shares of GeoWaste Common
Stock were reserved for issuance upon exercise of the Warrants.
As described below under "--Arrangements with Allen & Company and Affiliated
Entities and Persons" and under See "THE MERGER AGREEMENT--GeoWaste Stock
Options and Warrants," Superior has agreed to provide registration rights with
respect to the shares of Superior Common Stock to be issuable upon exercise of
the Warrants.
Directors' and Officers' Indemnification and Insurance
The Merger Agreement provides that for a period of six years after the
Effective Time, Superior will indemnify and hold harmless all past and present
officers and directors of GeoWaste and its subsidiaries to the same extent
such persons were indemnified as of the Effective Time by GeoWaste pursuant to
GeoWaste's certificate of incorporation, bylaws or agreements in existence as
of the Effective Time for acts or omissions occurring at or prior to the
Effective Time. Superior also agreed to provide, or to cause to be maintained,
for an
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aggregate period of not less than six years after the Effective Time, policies
of directors' and officers' liability insurance and fiduciary liability
insurance that have at least the same coverage limits and amounts and
containing terms and conditions that are no less advantageous for the officers
and directors and other persons covered thereby; provided, however, that if
such coverage is not obtainable at a cost less than or equal to 150% of the
amount per annum GeoWaste paid in its last fiscal year, Superior will cause to
be purchased such lesser amount of coverage, on terms as similar in coverage
as practicable to such coverage in effect on the date of the Merger Agreement,
as may be obtained having a cost not to exceed 150% of the amount per annum
GeoWaste paid in its last fiscal year. See "THE MERGER AGREEMENT--Directors'
and Officers' Indemnification and Insurance."
Other than as set forth above, no director or executive officer of GeoWaste
has any direct or indirect material interest in the Merger, except insofar as
the ownership of any shares of GeoWaste Common Stock or options to purchase
shares of GeoWaste Common Stock by such director or executive officer might be
deemed such an interest.
Arrangements with Allen & Company and Affiliated Entities and Persons
Each of Allen & Company, Allen Value Partners, L.P., Allen Value Limited and
Fields has entered into a Stockholder Support Agreements with Superior
pursuant to which they have agreed, among other things, to vote the shares of
GeoWaste Common Stock owned by them as of the Record Date in favor of the
approval and adoption of the Merger Agreement. See "ALLEN STOCKHOLDER SUPPORT
AGREEMENTS." In consideration for entering into such Stockholder Support
Agreements, in addition to the right to receive the consideration due to
holders of GeoWaste Common Stock generally under the Merger Agreement upon
consummation of the Merger, (i) Allen & Company and Fields, as holders of the
Warrants, received certain registration rights with respect to the shares of
Superior Common Stock to be issuable upon exercise of the Warrants and (ii)
Allen & Company received the right, if it is deemed to be a Pooling Affiliate,
to cause Superior to use its best efforts to publish, as soon as possible
after the Effective Time, financial results which are sufficient in accordance
with Accounting Series Release No. 135 to permit the disposition by all of the
stockholders of GeoWaste of the shares of Superior Common Stock received in
the Merger consistent with the requirements for treating the Merger as a
pooling of interests for financial reporting purposes. See "THE MERGER
AGREEMENT--GeoWaste Stock Options and Warrants" and "--Resales of Superior
Common Stock Received in the Merger; Restrictions on Affiliates."
REGULATORY APPROVALS
Antitrust
Under the HSR Act and the rules promulgated thereunder by the Federal Trade
Commission (the "FTC"), the Merger may not be consummated until notifications
have been given and certain information has been furnished to the FTC and the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
specified waiting period requirements have been satisfied. Superior and
GeoWaste filed notification and report forms under the HSR Act with the FTC
and the Antitrust Division on July 23, 1998. On August 3, 1998, Superior and
GeoWaste received notice of early termination of the waiting period under the
HSR Act. The FTC and the Antitrust Division frequently scrutinize the legality
under the antitrust laws of transactions such as the Merger. At any time
before or after the consummation of the Merger, the Antitrust Division or the
FTC could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the consummation
of the Merger or seeking divestiture of substantial assets of Superior and
GeoWaste. Private parties and state attorneys general may also bring an action
under the antitrust laws under certain circumstances.
Superior and GeoWaste believe that the Merger can be effected in compliance
with federal and state antitrust laws. However, there can be no assurance that
a challenge to the consummation of the Merger on
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antitrust grounds will not be made or that, if such a challenge were made,
Superior and GeoWaste would prevail or would not be required to accept certain
conditions, possibly including certain divestitures, in order to consummate
the Merger.
Other Governmental Approvals
Neither Superior nor GeoWaste is aware of any other material regulatory
requirements or approvals which have not been complied with or obtained or
which are not expected to be complied with or obtained prior to consummation
of the Merger.
NASDAQ LISTING OF SUPERIOR COMMON STOCK
Superior Common Stock is listed on the Nasdaq National Market. Superior has
agreed to use its best efforts to cause the shares of Superior Common Stock to
be issued in the Merger to be approved for listing on the Nasdaq National
Market prior to or at the Effective Time. The obligations of the parties to
consummate the Merger are subject to, among other things, approval for listing
by the Nasdaq National Market of such shares as of the Effective Time. See
"THE MERGER AGREEMENT--Conditions to the Merger."
CONDUCT OF THE BUSINESS OF GEOWASTE AFTER THE MERGER
Superior plans for the operations of GeoWaste in general to remain in its
current locations after the Effective Time, except for the closure of
GeoWaste's executive offices in Jacksonville, Florida. Superior intends to
integrate GeoWaste's business with its own and acquire additional solid waste
operations in the markets in which GeoWaste operates so as to achieve
operations efficiencies and internal growth in such markets. In addition,
Superior intends to seek to finance GeoWaste on a more efficient basis. There
can be no assurance that these benefits will be realized from the Merger. See
"RISK FACTORS--Risks Relating to the Merger--Expected Benefits of Merger May
Not Be Achieved."
FEDERAL SECURITIES LAW CONSEQUENCES
All shares of Superior Common Stock issued in connection with the Merger
will be freely transferable, except that any shares of Superior Common Stock
received by persons who are deemed to be "affiliates" (as such term is defined
under the Securities Act) of GeoWaste prior to the Merger may be sold by them
only in transactions registered under the Securities Act, permitted by the
resale provisions of Rule 145 promulgated under the Securities Act (or Rule
144 promulgated under the Securities Act if such persons who are or become
affiliates of Superior), or as otherwise permitted under the Securities Act.
Persons who may be deemed to be affiliates of GeoWaste generally include
individuals or entities that control, are controlled by or are under common
control with GeoWaste and generally include the executive officers and
directors as well as principal stockholders of GeoWaste.
In general, Rule 145 promulgated under the Securities Act provides that, for
one year following the Effective Time, an affiliate (together with certain
related persons) would be entitled to sell shares of Superior Common Stock
acquired in connection with the Merger only through unsolicited "broker
transactions" or in transactions directly with a "market maker," as such terms
are defined in Rule 144 under the Securities Act. In addition, the number of
shares to be sold by an affiliate (together with certain related persons and
certain persons acting in concert) within any three-month period for purposes
of Rule 145 under the Securities Act may not exceed the greater of 1% of the
outstanding shares of Superior Common Stock or the average weekly trading
volume of such shares during the four calendar weeks preceding such sale. Rule
145 under the Securities Act will remain available to affiliates if Superior
remains current with its informational filings with the Commission under the
Exchange Act. One year after the Effective Time, an affiliate will be able to
sell such shares of Superior Common Stock without being subject to such manner
of sale or volume limitations provided that Superior is current with its
Exchange Act informational filings and such affiliate is not then an affiliate
of Superior. Two years after the Effective Time, an affiliate will be able to
sell such shares of Superior Common Stock without any restrictions so long as
such affiliate had not been an affiliate of Superior for at least three months
prior to the date of such sale. See "--Anticipated Accounting Treatment."
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ANTICIPATED ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon the receipt by Superior of a
letter from Ernst & Young LLP, Superior's independent public accountants, and
the receipt by GeoWaste of a letter from PricewaterhouseCoopers LLP,
GeoWaste's independent public accountants, each such letter dated as of the
Effective Time and in form and substance reasonably satisfactory to Superior
and GeoWaste, stating that the Merger will qualify as a transaction to be
accounted for by Superior in accordance with the pooling of interests method
of accounting under the requirements of Opinion No. 16 "Business Combinations"
of the Accounting Principles Board of the American Institute of Certified
Public Accountants, as amended by applicable pronouncements by the Financial
Accounting Standards Board, and all related published rules, regulations and
policies of the Commission ("APB No. 16"). Neither party currently intends to
waive such condition. In the event that such condition is waived by both
Superior and GeoWaste, GeoWaste will recirculate a revised Proxy
Statement/Prospectus that discloses the waiver of this condition and contains
all related material disclosure, including revised financial information to
reflect the change in the accounting treatment. In such event, GeoWaste will
resolicit proxies from its stockholders. Pursuant to the Merger Agreement,
Superior, Merger Sub and GeoWaste have agreed not to take any action that
would, or would be reasonably likely to, prevent Superior from accounting for
the Merger in accordance with the pooling of interests method.
Under the pooling of interests method of accounting, the historical basis of
the assets and liabilities of GeoWaste and Superior will be combined at the
Effective Time and carried forward at their previously recorded amounts, the
stockholders' equity accounts of GeoWaste and Superior will be combined on
Superior's consolidated balance sheet and no goodwill or other intangible
assets will be created. Consolidated financial statements of Superior issued
after the Merger will be restated retroactively to reflect the consolidated
operations of Superior and GeoWaste as if the Merger had taken place prior to
the periods covered by such consolidated financial statements.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a summary of the material
federal income tax consequences of the Merger and does not purport to be a
complete analysis or listing of all potential tax effects relative to a
decision whether to vote for the approval of the Merger. The discussion does
not address all aspects of federal income taxation that may be applicable to
certain GeoWaste stockholders subject to special federal income tax treatment,
including, without limitation, non-U.S. persons, insurance companies, tax-
exempt entities, retirement plans, dealers in securities, persons holding
their GeoWaste Common Stock as a hedge or in a "straddle" transaction and
persons who acquired their GeoWaste Common Stock pursuant to the exercise of
employee stock options or otherwise as compensation. The discussion addresses
neither the effect of applicable state, local or non-U.S. tax laws, nor the
effect of any federal tax laws other than those pertaining to federal income
tax. The discussion also does not address the tax treatment of the conversion
or exchange of GeoWaste options or warrants pursuant to the Merger.
The discussion is based upon current provisions of the Code, existing,
temporary and final regulations thereunder and current administrative rulings
and court decisions, all of which are subject to change. Any such change,
which may or may not be retroactive, could alter the tax consequences
discussed herein.
Assuming that the Merger is consummated in accordance with the terms of the
Merger Agreement and as described in this Proxy Statement/Prospectus, under
current laws, for federal income tax purposes: (i) the Merger will constitute
a "reorganization" within the meaning of Section 368 of the Code, and
GeoWaste, Merger Sub and Superior will each be a party to such reorganization
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by Superior or GeoWaste as a result of the Merger; (iii) no gain or
loss will be recognized by the GeoWaste stockholders upon the exchange of
their shares of GeoWaste Common Stock solely for shares of Superior Common
Stock pursuant to the Merger, except with respect to cash, if any, received in
lieu of fractional shares of Superior Common Stock; (iv) the aggregate tax
basis of the shares of Superior Common Stock received in exchange for shares
of GeoWaste Common Stock pursuant to the Merger (including fractional shares
of Superior Common Stock for which cash is received) will be the same as the
aggregate tax
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basis of the shares of GeoWaste Common Stock exchanged therefor; (v) the
holding period for the shares of Superior Common Stock received for shares of
GeoWaste Common Stock pursuant to the Merger will include the holding period
of the shares of GeoWaste Common Stock exchanged therefor, provided such
shares of GeoWaste Common Stock were held as capital assets within the meaning
of Section 1221 of the Code by the stockholder at the Effective Time; and (vi)
a stockholder of GeoWaste who receives cash in lieu of a fractional share of
Superior Common Stock will recognize gain or loss equal to the difference, if
any, between such stockholder's tax basis in such fractional share (as
described in clause (iv) above) and the amount of cash received.
It is anticipated that, and it is a condition to the consummation of the
Merger that, opinions of Stroock & Stroock & Lavan LLP, counsel to GeoWaste,
and Foley & Lardner, counsel to Superior, will be rendered at the Effective
Time substantially to the effect that, for federal income tax purposes, the
Merger constitutes a reorganization within the meaning of Section 368 of the
Code.
In rendering such opinions, Stroock & Stroock & Lavan LLP and Foley &
Lardner may require and rely upon representations contained in certificates of
GeoWaste, Superior and stockholders of GeoWaste. GeoWaste stockholders should
be aware that such opinions of counsel are not binding on the Internal Revenue
Service ("IRS"), and no assurance is or will be given that the IRS would not
adopt a contrary position or that the IRS position would not be sustained by a
court. No rulings from the IRS have been or will be requested in connection
with the Merger.
THE FOREGOING DISCUSSION OF MATERIAL FEDERAL INCOME TAX CONSEQUENCES IS NOT
TAX ADVICE. THE FOREGOING DISCUSSION DOES NOT TAKE INTO ACCOUNT THE PARTICULAR
FACTS AND CIRCUMSTANCES OF EACH GEOWASTE STOCKHOLDER'S TAX STATUS AND
ATTRIBUTES. AS A RESULT, THE FEDERAL INCOME TAX CONSEQUENCES ADDRESSED IN THE
FOREGOING DISCUSSION MAY NOT APPLY TO EACH GEOWASTE STOCKHOLDER. ACCORDINGLY,
EACH GEOWASTE STOCKHOLDER SHOULD CONSULT HIS, HER OR ITS OWN TAX ADVISOR
REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE MERGER, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL, STATE, LOCAL AND OTHER TAX LAWS.
NO APPRAISAL RIGHTS
Section 262(b) of the DGCL provides that the stockholders of a constituent
corporation in a merger generally are not entitled to appraisal rights if the
shares of stock they own, as of the record date fixed to determine
stockholders entitled to notice of and to vote at the meeting to act upon the
agreement providing for such merger, are either listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. (a "Nasdaq National Market Security"), or held of record by more
than 2,000 stockholders. However, stockholders that would otherwise not have
appraisal rights pursuant to the provisions described in the previous sentence
are entitled to appraisal rights if such stockholders are required by the
terms of the merger agreement to accept for their stock anything except (i)
shares of the corporation surviving the merger; (ii) shares of stock which are
either listed on a national securities exchange or designated as a Nasdaq
National Market Security or held of record by more than 2,000 stockholders; or
(iii) cash in lieu of fractional shares of stock described in (i) and (ii)
above or any combination thereof. Accordingly, GeoWaste stockholders will not
be entitled to appraisal rights in connection with the Merger because, as of
the Record Date, there were more than 2,000 holders of record of GeoWaste
Common Stock, and because the shares of Superior Common Stock to be issued in
the Merger will be designated as a Nasdaq National Market Security at the
Effective Time.
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<PAGE>
MANAGEMENT AND PRINCIPAL STOCKHOLDERS OF GEOWASTE
The following table sets forth certain information with respect to
beneficial ownership of GeoWaste's Common Stock as of September 3, 1998, (i)
by each person who is known by GeoWaste to own beneficially more than 5% of
GeoWaste Common Stock; (ii) by each of GeoWaste's directors; (iii) by each of
GeoWaste's executive officers; and (iv) by all directors and executive
officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
------------------------------------
NAME NUMBER PERCENTAGE
- ---- ---------------- ----------------
<S> <C> <C>
Amy C. MacF. Burbott...................... 700,000(2) 3.2%
Raymond F. Chase.......................... 126,894(3) *
Michael D. Paglia......................... 1,001,246(4) 4.7%
Harve A. Ferrill.......................... 1,207,856(5) 5.6%
Steven M. Engel........................... 51,000(6) *
Walter H. Barandiaran..................... 111,400(6) *
Allen Holding Inc. ....................... 6,260,000(7) 27.5%
711 Fifth Avenue
New York, New York 10022
Emvest & Co............................... 2,000,000 9.4%
c/o Morrissey & Hawkins
One International Place
Boston, Massachusetts 02110
Kennedy Capital Management 10829.......... 1,488,500(8) 7.0%
Olive Blvd.
St. Louis, Missouri 63141
All directors and executive officers as 3,198,396(9) 14.4%
group (6 persons)........................
</TABLE>
- --------
* Less than 1%
(1) In computing the number of shares of GeoWaste Common Stock beneficially
owned by a person, shares of GeoWaste Common Stock subject to options and
warrants held by that person that are currently exercisable or that become
exercisable within 60 days of September 3, 1998 are deemed outstanding.
For purposes of computing the percentage of outstanding shares of GeoWaste
Common Stock beneficially owned by such person, such shares of stock
subject to options and/or warrants that are currently exercisable or that
become exercisable within 60 days are deemed to be outstanding for such
person but are not deemed to be outstanding for purposes of computing the
ownership percentage of any other person.
(2) All such shares are subject to options that are currently exercisable. An
additional 100,000 shares subject to options held by Ms. Burbott become
exercisable upon consummation of the Merger. See "THE MERGER AGREEMENT--
GeoWaste Stock Options and Warrants." Upon Ms. Burbott's exercise of the
stock options granted to her by GeoWaste on June 28, 1991 to purchase
400,000 shares of GeoWaste Common Stock, GeoWaste will pay Ms. Burbott
$.50 per share multiplied by the number of shares purchased by Ms. Burbott
upon exercise of the option, which payment will be made at the time of any
such exercise.
(3) Includes 122,324 shares subject to options that are currently exercisable.
An additional 6,970 shares subject to options held by Mr. Chase become
exercisable upon consummation of the Merger. See "THE MERGER AGREEMENT--
GeoWaste Stock Options and Warrants."
(4) Includes 1,246 shares subject to options that are currently exercisable.
An additional 3,738 shares subject to options held by Mr. Paglia become
exercisable upon consummation of the Merger. See "THE MERGER AGREEMENT--
GeoWaste Stock Options and Warrants."
(5) Includes 111,000 shares subject to options that are currently exercisable
and 26,080 shares beneficially owned by Mr. Ferrill, 18,000 of which he
has sole voting and investment power and 8,000 shares of which he shares
voting and investment power. Also includes 1,070,776 shares held by
Advance Ross Sub Company (of which Mr. Ferrill is Chief Executive
Officer), for which Mr. Ferrill disclaims any beneficial ownership. An
additional 24,000 shares subject to options held by Mr. Ferrill become
exercisable upon
49
<PAGE>
consummation of the Merger. See "THE MERGER AGREEMENT--GeoWaste Stock
Options and Warrants."
(6) Includes 11,000 shares subject to options that are currently exercisable.
An additional 24,000 shares subject to options held by each of Mr. Engel
and Mr. Barandiaran become exercisable upon consummation of the Merger.
See "THE MERGER AGREEMENT--GeoWaste Stock Options and Warrants."
(7) Includes 3,573,200 shares held by Allen Value Partners L.P., 760,000
shares held by Allen & Company and 426,800 shares issued to Allen Value
Limited. Allen Holding Inc. may be deemed to beneficially own the shares
of GeoWaste Common Stock held by Allen Value Partners L.P. and Allen Value
Limited. However, Allen Holding Inc. disclaims beneficial ownership except
to the extent represented by Allen Holding Inc.'s equity interest and
profit participation in such entities. Also includes warrants held by
Allen & Company to purchase 1,500,000 shares (the "Allen & Co. Warrants")
that are currently exercisable. The amount in the table excludes 709,425
shares and warrants to purchase 500,000 shares (together with the Allen &
Co. Warrants, the "Allen Warrants") held by officers and directors of
Allen & Company for which Allen & Company disclaims beneficial ownership.
(8) According to a Statement on Schedule 13G filed with the Commission on
February 10, 1998, Kennedy Capital Management holds sole dispositive power
over these shares, and holds sole voting power over 890,000 of these
shares.
(9) Includes 956,570 shares subject to options that are currently exercisable
or become exercisable within 60 days. An additional 182,708 shares subject
to options held by such persons become exercisable upon consummation of
the Merger. See "THE MERGER AGREEMENT--GeoWaste Stock Options and
Warrants."
50
<PAGE>
MANAGEMENT OF SUPERIOR
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth information, as of December 31, 1997,
regarding the directors, executive officers and certain key employees of
Superior:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Joseph P. Tate................... 54 Chairman and Director
G. William Dietrich.............. 52 President, Chief Executive Officer and Director
George K. Farr................... 40 Chief Financial Officer and Treasurer
Gary Blacktopp................... 50 Senior Vice President--Operations
Peter J. Ruud.................... 44 Vice President--Administration and Corporate Secretary
Scott S. Cramer.................. 45 Vice President, General Counsel and Assistant Secretary
Dale O. Nolder................... 45 Vice President--Market Development
B. Todd Watermolen............... 38 Vice President--Director of Environmental Engineering and
Chief Compliance Officer
John H. King..................... 41 Operating Vice President
Francis J. Podvin................ 56 Director
Donald Taylor.................... 70 Director
Walter G. Winding................ 56 Director
Warner C. Frazier................ 65 Director
</TABLE>
Joseph P. Tate is a co-founder of Superior. Mr. Tate has more than 30 years
of experience in the solid waste services industry. In 1967, Mr. Tate founded
the "Valley Group" of companies that was part of the original consolidation
which created Superior in 1993 and, prior to Superior's formation was a
shareholder, officer and director of each of these companies. Since Superior's
formation, he has continued to serve in various executive capacities with
certain of Superior's subsidiaries. From January 1993 until August 1994, Mr.
Tate served as Chief Executive Officer of Superior. Mr. Tate has been a member
of the Superior Board since Superior's original incorporation in July 1992 and
has been Chairman of the Superior Board since January 1993.
G. William Dietrich joined Superior in February 1994 as Vice President-Solid
Waste and was promoted to President and Chief Operating Officer in September
1994, with management responsibility for all of Superior's operations. Mr.
Dietrich was promoted to President and Chief Executive Officer in November
1995. Immediately prior to his employment by Superior, Mr. Dietrich was
employed for over two and one-half years by BFI, as a divisional vice
president responsible for BFI's solid waste collection, transportation and
disposal operations in Eastern and Northern Ontario. Prior thereto, Mr.
Dietrich was a district manager for Laidlaw (a national solid waste company)
for three years with principal responsibility for Laidlaw's solid waste
operations in a substantial portion of the Northeastern United States. Mr.
Dietrich has been a member of the Superior Board since September 1994.
George K. Farr joined Superior in February 1993 as Corporate Controller,
with financial reporting responsibility for all of Superior's operating
locations. In December 1994 he was promoted to Chief Financial Officer of
Superior, with responsibility for the oversight of all of Superior's financial
matters. Immediately prior to joining Superior, he served as the Market
Development Controller for Sanifill, Inc. (a solid waste service company),
Houston, Texas, from February 1991 to July 1992, where he was responsible for
supervising the financial due diligence process and subsequent integration of
Sanifill's major acquisitions. Prior thereto, he held various financial
management positions, including Executive Vice President-Finance and
Administration, as BancPlus Savings Association (a savings and loan
institution), Houston, Texas, for five years.
Gary Blacktopp has more than 11 years of experience in the solid waste
services industry. Mr. Blacktopp joined Superior in June 1994 in the dual role
of General Manager of the Superior-Sheboygan solid waste collection and
transfer operations and Vice President-Equipment/Maintenance. In November
1995, Mr.
51
<PAGE>
Blacktopp was promoted to the position of Operating Vice President-Lake
Region, with responsibility for
Superior's solid waste operations in Eastern and Southern Wisconsin and
Northern Illinois. In May 1997, Mr. Blacktopp's area of responsibility was
increased to include Superior's operations located in the Northwest Region,
including Northwest Wisconsin, Minnesota and Iowa. The Lake Region and
Northwest Region have been combined and are now known as the Midwest Region.
In August 1997 Mr. Blacktopp was promoted to the position of Senior Vice
President-Operations, with responsibility for all of Superior's operations.
Immediately prior to his employment by Superior, Mr. Blacktopp was employed
for two and one-half years by BFI as Assistant District Manager of its
Toronto, Canada District, overseeing operations, maintenance, three transfer
stations and various recycling facilities. Prior thereto, Mr. Blacktopp was
Regional Maintenance Manager for Laidlaw Waste Systems-Canada, a division of
Laidlaw, for one year, and Maintenance Manager for Waste Management, Inc. in
Toronto, Canada for seven years.
Peter J. Ruud joined Superior in September 1993 as Vice President-General
Counsel and Corporate Secretary. In November 1995, Mr. Ruud also assumed
oversight responsibility for Superior's human resources and health and safety
functions. In July 1997, Mr. Ruud became Vice President-Administration, with
responsibility for human resources, health and safety, administration, special
projects, public relations and governmental relations. Immediately prior to
joining Superior, Mr. Ruud was in private practice with the law firm of Davis
& Kuelthau, S.C., Milwaukee, Wisconsin, since 1978, specializing in
environmental and corporate law and regulatory compliance. Mr. Ruud also
served as a member of the firm's managing Board of Directors. While a
shareholder of Davis & Kuelthau, S.C., Mr. Ruud was actively involved in the
formation of Superior.
Scott S. Cramer joined Superior in July 1997 as Vice President-General
Counsel, with responsibility for all of Superior's legal matters. Immediately
prior to joining Superior, Mr. Cramer served in various legal capacities for
more than 13 years with BFI. Most recently Mr. Cramer was Senior Corporate
Counsel to BFI. Mr. Cramer also was European Regional Counsel, Vice President
and Director of Legal Affairs as well as Corporate Secretary for Browning-
Ferris Industries Europe, Inc. in Utrecht, The Netherlands from July 1989 to
January 1993. Prior to joining BFI, Mr. Cramer was counsel to Pennzoil Company
(a major oil and gas concern) which followed his tenure in private practice.
Dale O. Nolder has more than 12 years of experience in the solid waste
services industry. Mr. Nolder was named Vice President-Market Development for
Superior in November 1996 responsible for all external growth activities of
Superior. Immediately prior to joining Superior, Mr. Nolder headed BFI's
growth program in the Greater New York market with responsibility for all
market development activity in his region, including acquisitions, municipal
marketing, infrastructure development and marketplace planning. Prior thereto,
he was the southern regional market development manager for BFI. Mr. Nolder
also served in various financial and market development capacities with
Chambers Development Company, Inc. from May 1985 to November 1993.
B. Todd Watermolen joined Superior as Director of Environmental Engineering
and was promoted to Chief Compliance Officer in 1994, with responsibility for
environmental planning, management and compliance. Immediately prior to his
employment by Superior, Mr. Watermolen was employed for approximately three
years as senior environmental engineer at Creative Resource Ventures, Ltd. (a
solid waste landfill development company), Madison, Wisconsin. Prior thereto,
he was employed by RMT, Inc. (an engineering consulting firm), Madison,
Wisconsin, as a design Group Leader/Senior Project Engineer for four years.
John H. King has more than 13 years of experience in the solid waste
services industry. In June 1994, Mr. King joined Superior as Vice President-
Operations and was promoted to the position of Operating Vice President-
Special Services in September 1994, with responsibility for managing
Superior's other integrated waste services group. In April 1997, Mr. King's
area of responsibility was expanded to include solid waste operations in
Superior's central region. Immediately prior to his employment by Superior,
Mr. King was employed for five years by Laidlaw as Director of Operations for
its Ohio and Michigan regions, with responsibility for the management of
Laidlaw's collection operations throughout that territory. For six years prior
thereto, Mr. King served in various capacities with BFI.
52
<PAGE>
Francis J. Podvin has been a principal in the law firm of Nash, Podvin,
Tuchscherer, Huttenberg, Weymouth & Kryshak, S.C., Wisconsin Rapids,
Wisconsin, since 1965, currently serving as its President, and specializes in
business combinations, banking and corporate finance. Mr. Podvin has been a
director of Superior since Superior's original incorporation in July 1992.
Nash, Podvin, Tuchscherer, Huttenberg, Weymouth & Kryshak, S.C. has from time
to time performed, and is expected to continue to perform, legal services for
Superior.
Donald Taylor has been a principal in Sullivan Associates (specialists in
board of directors searches), Milwaukee, Wisconsin, since 1992. Mr. Taylor
served as Managing Director of U.S.A. Anatar Investments, Ltd. (a venture
capital firm) from 1989 to 1992, and prior thereto as Chairman and Chief
Executive Officer of Rexnord, Inc. (a manufacturer of power transmission
equipment), Milwaukee, Wisconsin. Mr. Taylor is a director of Johnson
Controls, Inc., Banta Corporation and Harnischfeger Industries, Inc. Mr.
Taylor has served as a member of the Superior Board since Superior's March
1996 initial public offering.
Walter G. Winding has been the owner and Chief Executive Officer of Winding
and Company (business consultants for closely-held companies), Hartland,
Wisconsin, since 1995. From January 1994 to January 1996 Mr. Winding was
Senior Vice President of HM Graphics Inc. (commercial printing company), West
Allis, Wisconsin. For six years prior thereto, Mr. Winding served as President
and Chief Executive Officer of Schweiger Industries, Inc. (furniture
manufacturer), Jefferson, Wisconsin, and prior thereto was Schweiger's Vice
President-Administration for four years. Prior thereto, Mr. Winding served in
various management positions with Jos. Schlitz Brewing Company, Milwaukee,
Wisconsin. Mr. Winding currently serves on numerous boards of directors of
privately-held companies. Mr. Winding has served as a member of the Superior
Board since Superior's March 1996 initial public offering.
Warner C. Frazier has been the Chairman and Chief Executive Officer of
Simplicity Manufacturing, Inc. (a manufacturer of lawn and garden power
equipment), Port Washington, Wisconsin, since 1983, and also served as
President of that firm from 1980 to 1996 and as Vice President of Marketing
from 1976 to 1980. Prior thereto, Mr. Frazier served in various management
positions with Allis-Chalmers, in Milwaukee, Wisconsin, Los Angeles,
California, and Seattle, Washington. Mr. Frazier currently serves on the board
of directors of Rexworks, Inc. and Northwestern Steel & Wire Co. and several
privately-held companies. Mr. Frazier was elected to the Superior Board at
Superior's 1997 annual shareholders meeting.
53
<PAGE>
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement,
which appears as Annex A hereto and is incorporated herein by reference. This
summary does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement. All stockholders of GeoWaste are encouraged
to read the Merger Agreement in its entirety.
TERMS OF THE MERGER
The Merger Agreement provides that, upon the terms and subject to the
conditions contained therein, including the approval and adoption of the
Merger Agreement by the holders of GeoWaste Common Stock, Merger Sub will
merge with and into GeoWaste at the Effective Time, and GeoWaste will continue
as the Surviving Corporation as a wholly owned subsidiary of Superior.
As promptly as practicable, and in no event later than three business days,
after the satisfaction or waiver of the conditions to the Merger (see "--
Conditions to the Merger"), the parties will cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger"),
together with any required related certificates, with the Secretary of State
of the State of Delaware, in such form as required by, and executed in
accordance with the applicable provisions of, the DGCL and in such form as
approved by GeoWaste and Superior prior to such filing. The Merger will become
effective at the time the original, properly executed Certificate of Merger is
filed with the Secretary of State of the State of Delaware in accordance with
the DGCL or at such other time which Superior, Merger Sub and GeoWaste have
agreed upon and designated in the Certificate of Merger as the Effective Time.
The time at which the Merger becomes effective is referred to herein as the
"Effective Time."
Each issued and outstanding share of the common stock, par value $.01 per
share, of Merger Sub, will be converted into one share of common stock, par
value $.01 per share, of the Surviving Corporation.
Pursuant to the Merger Agreement, all shares of GeoWaste Common Stock that
are owned, as of the Effective Time, by GeoWaste as treasury stock and all
shares of GeoWaste Common Stock owned, as of the Effective Time, by Superior,
Merger Sub or any other direct or indirect subsidiary of Superior, if any,
will be canceled and retired and will cease to exist (collectively, the
"Canceled Shares") and no stock of Superior or other consideration will be
delivered in exchange therefor.
At the Effective Time, each issued and outstanding share of GeoWaste Common
Stock, other than the Canceled Shares, will be converted into a number of
shares of Superior Common Stock equal to the quotient obtained (rounded to the
nearest ten-thousandth of a share) by dividing $2.65 by the Final Superior
Stock Price; provided, however, that if the Final Superior Stock Price is (i)
equal to or less than $27.50, then the Exchange Ratio will be 0.0964 or (ii)
equal to or greater than $32.50, then the Exchange Ratio will be 0.0815. If
the Final Superior Stock Price is less than $25.00, GeoWaste has the right to
terminate the Merger Agreement. See "--Termination."
"Final Superior Stock Price" is defined in the Merger Agreement as the
average per share closing price of Superior Common Stock quoted on the Nasdaq
National Market, as reported by Bloomberg L.P., for the ten consecutive
trading days (on which shares of Superior Common Stock are actually traded)
immediately preceding October 19, 1998.
The determination of the Exchange Ratio was arrived at through arm's-length
negotiations between GeoWaste and Superior. If between the date of the Merger
Agreement and the Effective Time the outstanding shares of Superior Common
Stock or GeoWaste Common Stock are changed into a different number of shares
or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
an appropriate adjustment to the Exchange Ratio will be made.
54
<PAGE>
It is expected that the market price of Superior Common Stock will fluctuate
between the date of this Proxy Statement/Prospectus and the date on which the
Merger is consummated and thereafter. Consequently, the number of shares of
Superior Common Stock into which each share of GeoWaste Common Stock will be
converted at the Effective Time cannot be established until the Final Superior
Stock Price is determined as described above. No assurance can be given
concerning the market price of Superior Common Stock before or after the
Effective Time. See "RISK FACTORS--Risks Relating to the Merger--Exchange
Ratio Subject to "Collar'."
No fractional shares of Superior Common Stock will be issued in connection
with the Merger. In lieu of any such fractional shares, each holder of
GeoWaste Common Stock who would otherwise have been entitled to a fraction of
a share of Superior Common Stock as a result of the Merger will be entitled to
receive a cash payment in an amount equal to such fractional interest
multiplied by the Final Superior Stock Price.
EXCHANGE OF CERTIFICATES REPRESENTING GEOWASTE COMMON STOCK
Following the Effective Time, Superior will deposit, or cause to be
deposited, with LaSalle National Bank (or such other bank or trust company
designated by Superior and reasonably acceptable to GeoWaste) (the "Exchange
Agent"), in trust for the benefit of the holders of shares of GeoWaste Common
Stock, for exchange as set forth herein, through the Exchange Agent,
certificates representing the shares of Superior Common Stock issuable
pursuant to the Merger in exchange for outstanding shares of GeoWaste Common
Stock which shares of Superior Common Stock will be deemed to be issued at the
Effective Time, together with cash to be paid in lieu of fractional shares
(such certificates representing such shares of Superior Common Stock, together
with any dividends or distributions declared with respect to such shares after
the Effective Time and not yet paid with respect thereto and cash in lieu of
fractional shares, if any, being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent will, pursuant to irrevocable instructions from
Superior, deliver the shares of Superior Common Stock contemplated to be
issued in connection with the Merger to holders of GeoWaste Common Stock and
cash payments for fractional shares, if any, out of the Exchange Fund. The
Exchange Fund will not be used for any other purpose.
As soon as practicable (and in any event not later than five business days)
after the Effective Time, Superior will cause the Exchange Agent to mail to
each holder of record of a certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of GeoWaste Common Stock
whose shares were converted into the right to receive shares of Superior
Common Stock (the "GeoWaste Stock Certificates"), (i) a letter of transmittal
(which will specify that delivery will be effected, and risk of loss and title
to the GeoWaste Stock Certificates will pass, only upon proper delivery of the
GeoWaste Stock Certificates to the Exchange Agent and will be in such other
form and have such other provisions as Superior and GeoWaste may reasonably
specify) and (ii) instructions for use in effecting the surrender of the
GeoWaste Stock Certificates in exchange for certificates representing shares
of Superior Common Stock and cash in lieu of fractional shares, if any. Upon
surrender of a GeoWaste Stock Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Superior,
together with such letter of transmittal, duly completed and properly executed
in accordance with instructions thereto and such other customary documents and
tax forms as may reasonably be required pursuant to such instructions, the
holder of such GeoWaste Stock Certificate will be entitled to receive in
exchange therefor (A) a certificate representing that number of whole shares
of Superior Common Stock, which such holder has the right to receive, (B) cash
in lieu of any fractional shares of Superior Common Stock to which such holder
is entitled, after giving effect to any required tax withholdings, and (C) any
dividends or distributions to which such holder is entitled, after giving
effect to any required tax withholding, and the GeoWaste Stock Certificate so
surrendered will forthwith be canceled. No interest will be paid on the cash
in lieu of fractional shares, if any, and unpaid dividends and distributions,
if any, payable to holders of shares of Superior Common Stock.
HOLDERS OF GEOWASTE COMMON STOCK SHOULD NOT SEND IN THEIR GEOWASTE STOCK
CERTIFICATES UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND
INSTRUCTIONS
55
<PAGE>
FROM THE EXCHANGE AGENT, AND SHOULD NOT RETURN THEIR GEOWASTE STOCK
CERTIFICATES WITH THE ENCLOSED PROXY.
DIVIDENDS
The Merger Agreement provides that no dividends or other distributions
declared or made after the Effective Time with respect to Superior Common
Stock with a record date after the Effective Time will be paid to the holder
of any unsurrendered GeoWaste Stock Certificate with respect to the shares of
Superior Common Stock which such holder is entitled to receive upon the due
and proper surrender thereof, until the holder of record of such GeoWaste
Stock Certificate surrenders such GeoWaste Stock Certificate. Subject to the
effect of applicable laws, following due and proper surrender of any such
GeoWaste Stock Certificate, there will be paid by Superior or the Exchange
Agent to the record holder of the certificates representing whole shares of
Superior Common Stock issued in exchange therefor, without interest, (i) at
the time of such surrender, the amount of any cash payable in lieu of any
fractional share of Superior Common Stock to which such holder is entitled and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Superior
Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to such surrender and a payment date after such surrender payable
with respect to such whole shares of Superior Common Stock.
NO FRACTIONAL SHARES
The Merger Agreement provides that no certificate or scrip representing
fractional shares of Superior Common Stock will be issued in the Merger. Any
such fractional share interests will not entitle the owner thereof to vote or
to any rights of a stockholder of Superior. In lieu of any such fractional
shares, each holder of GeoWaste Common Stock who would otherwise have been
entitled to a fraction of a share of Superior Common Stock upon due and proper
surrender of GeoWaste Stock Certificates for exchange will be entitled to
receive a cash payment in lieu of such fractional share in an amount equal to
such fractional interest multiplied by the Final Superior Stock Price.
UNCLAIMED AMOUNTS
The Merger Agreement provides that any portion of the Exchange Fund that has
not been paid to holders of GeoWaste Common Stock prior to that date which is
one year from the Effective Time will be delivered to Superior, and any
holders of GeoWaste Common Stock who have not theretofore complied with the
exchange provisions of the Merger Agreement shall thereafter look only to
Superior for payment of any claim to shares of Superior Common Stock, cash in
lieu of fractional shares thereof, or dividends and distributions, if any, in
respect thereof. Neither Superior nor the Surviving Corporation will be liable
to any holder of shares of GeoWaste Common Stock for any shares of Superior
Common Stock, cash in lieu of fractional shares thereof, or dividends and
distributions, if any, in respect thereof from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
GEOWASTE STOCK OPTIONS AND WARRANTS
At the Effective Time, all outstanding options (all such options, "1992 Plan
Options") to acquire shares of GeoWaste Common Stock granted to GeoWaste
employees under the GeoWaste Incorporated 1992 Stock Option Plan (the "1992
Plan"), all outstanding options issued prior to the date of the Merger
Agreement to the Chief Executive Officer and the Chief Financial Officer by
GeoWaste to acquire shares of GeoWaste Common Stock (all such options,
"CEO/CFO Options") issued other than pursuant to the 1992 Plan and the 1996
Plan (as defined below), and all of the Warrants will be assumed by Superior
and will be exercisable upon the same terms and conditions as under the
applicable Warrants, the 1992 Plan and option agreements issued thereunder or,
in the case of the CEO/CFO Options, the applicable option agreement, except
that (i) each such 1992 Plan Option, CEO/CFO Option or Warrant will be
exercisable for that whole number of shares of Superior Common Stock (to the
nearest share) equal to the product of (y) the number of shares of GeoWaste
Common Stock subject to
56
<PAGE>
the original 1992 Plan Option, CEO/CFO Option or Warrant and (z) the Exchange
Ratio, and (ii) the option exercise price or warrant exercise price per share
of Superior Common Stock will be an amount equal to (y) the option exercise
price or warrant exercise price per share of GeoWaste Common Stock under the
original 1992 Plan Option, CEO/CFO Option or Warrant, as applicable, in effect
immediately prior to the Effective Time divided by (z) the Exchange Ratio (the
option exercise price or warrant exercise price, as applicable, per share of
GeoWaste Common Stock, as so determined, being rounded upwards to the nearest
full cent). No payment will be made for fractional shares. The date of grant
or issuance, as applicable, will be the date the 1992 Plan Option, CEO/CFO
Option or Warrant was originally granted or issued, as applicable.
Superior will (i) reserve for issuance the number of shares of Superior
Common Stock that will become issuable upon the exercise of such 1992 Plan
Options, CEO/CFO Options and the Warrants and (ii) at the Effective Time,
execute a document evidencing the assumption by Superior of GeoWaste's
obligations with respect thereto.
As soon as practicable after the Effective Time, Superior will file a
registration statement on Form S-8 (or any successor form), or another
appropriate form, with respect to the shares of Superior Common Stock subject
to such 1992 Plan Options and CEO/CFO Options and will use its best efforts to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus contained therein) for so long as such 1992
Plan Options and CEO/CFO Options, as applicable, remain outstanding. It is the
intention of the parties that, subject to applicable law, the 1992 Plan
Options assumed by Superior qualify following the Effective Time as "incentive
stock options" (as defined in Section 422 of the Code) to the extent that the
1992 Plan Options qualified as incentive stock options prior to the Effective
Time.
As soon as practicable after the Effective Time, Superior will file a
registration statement on Form S-3 (or any successor form) (the "Shelf
Registration Statement") with respect to the shares of Superior Common Stock
issuable upon exercise of the Warrants and will use its best efforts to
maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus contained therein) for a period not to exceed
six months from the date of effectiveness of the Shelf Registration Statement
or, if earlier, 20 trading days after such time at which holders of the
Warrants hold (i) Warrants representing the right to receive a number of
shares of Superior Common Stock, and/or (ii) a number of shares of Superior
Common Stock previously issued upon exercise of the Warrants, which, in the
aggregate, represent 15% or less of the total number of shares of Superior
Common Stock issuable at the Effective Time upon exercise of all the Warrants;
provided, however, that when holders of the Warrants intend to sell shares of
Superior Common Stock under the Shelf Registration Statement, such holders
will provide written notice to Superior of such intention three days prior to
any sale. Superior will have the right to suspend the use of the prospectus
forming a part of the Shelf Registration Statement, for periods aggregating
not more than 20 trading days, when Superior reasonably believes, upon the
written advice of its regular legal counsel, a copy of which will be delivered
to the holders of the Warrants (subject to suitable confidentiality
arrangements) that such use would materially interfere with or require public
disclosure by Superior of any material financing, acquisition, corporate
reorganization or other material transactions involving Superior or any of its
subsidiaries; provided, however, that Superior will not suspend the use of
such prospectus for more than ten trading days in the aggregate during the
calendar month of January 1999 and the first two days of February 1999. The
holders of the Warrants will provide customary indemnification protections to
Superior with respect to written information furnished by such holders
specifically for use in the Shelf Registration Statement and will pay their
own expenses for any attorney, accountant or other advisor they retain and any
brokerage and sales commissions in connection with the sale of shares of
Superior Common Stock under the Shelf Registration Statement.
At the Effective Time, each option (each, a "1996 Plan Option") to acquire
shares of GeoWaste Common Stock granted to directors prior to the date of the
Merger Agreement under the GeoWaste Incorporated 1996 Stock Option Plan (the
"1996 Plan") and each option (each, a "Chairman Option" and together with the
CEO/CFO Options, the "Non-Plan Options") issued to the Chairman of the Board
by GeoWaste to acquire shares of GeoWaste Common Stock issued prior to the
date of the Merger Agreement other than pursuant to the 1992 Plan and the 1996
Plan outstanding immediately prior thereto will be converted into and
represent the right
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to receive (i) the consideration to be received in the Merger into which the
share or shares of GeoWaste Common Stock issuable upon exercise of such 1996
Plan Option or Chairman Option would have been converted if such 1996 Plan
Option or Chairman Option, as applicable, had been exercised immediately prior
to the Effective Time, reduced by (ii) such number of shares of Superior
Common Stock equal to (x) (1) the aggregate exercise price for the shares of
GeoWaste Common Stock then issuable upon exercise of such 1996 Plan Option or
Chairman Option, as applicable, and (2) the amount of any withholding taxes
which may be required thereon, times (y) the Exchange Ratio. All such 1996
Plan Options and Chairman Options will no longer be outstanding and will
automatically be canceled, retired and extinguished and will cease to exist,
and any certificate representing a 1996 Plan Option or a Chairman Option will
thereafter represent the right to receive the consideration to be received in
the Merger into which such 1996 Plan Options and Chairman Options have been
converted in accordance herewith. The holders of certificates representing
1996 Plan Options or Chairman Options will cease to have any rights with
respect thereto, except as required by law.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains customary representations and warranties of
Superior and Merger Sub, including, among other things, (a) that the documents
filed by Superior with the Commission since December 31, 1996 did not, at the
time they were filed, contain material misstatements or omissions; (b) that
the information supplied by Superior and Merger Sub to be included herein or
in the Registration Statement will be free from material misstatements and
omissions; (c) that since December 31, 1997 there has been no material adverse
change with respect to Superior and its subsidiaries except as disclosed in
its documents filed with the Commission; (d) with respect to actions and
proceedings pending against or involving Superior or its subsidiaries; (e) as
to governmental licenses and permits, and compliance with laws; (f) as to
compliance with relevant tax laws; (g) as to brokers; (h) as to actions taken
or not taken that would jeopardize the contemplated tax and accounting
treatment of the Merger; (i) as to compliance with environmental laws; (j) as
to intellectual property; and (k) as to Year 2000 compliance. In addition, the
Merger Agreement contains representations and warranties by each of Superior
and Merger Sub as to, among other things, its organization, capital structure,
authority to enter into the Merger Agreement and the binding effect of the
Merger Agreement.
The Merger Agreement contains customary representations and warranties of
GeoWaste, including, among other things, (a) that the documents filed by
GeoWaste with the Commission since December 31, 1996 did not, at the time they
were filed, contain material misstatements or omissions; (b) that the
information supplied by GeoWaste to be included herein or in the Registration
Statement will be free from material misstatements and omissions; (c) that
since December 31, 1997 there has been no material adverse change with respect
to GeoWaste and its subsidiaries except as disclosed in its documents filed
with the Commission or as disclosed in the exceptions set forth in the
separate disclosure schedule executed and delivered by GeoWaste concurrently
with the execution and delivery of the Merger Agreement (the "GeoWaste
Disclosure Schedule"); (d) as to employee benefit plans and labor matters; (e)
with respect to actions and proceedings pending against or involving GeoWaste
or its subsidiaries; (f) as to governmental licenses and permits, and
compliance with laws; (g) as to compliance with relevant tax laws; (h) as to
stockholder vote required for consummation of the transactions contemplated by
the Merger Agreement; (i) as to actions taken or not taken that would
jeopardize the contemplated tax and accounting treatment of the Merger; (j) as
to brokers; (k) as to the Deutsche Bank Opinion; (l) as to compliance with
environmental laws; (m) as to title to assets; (n) as to intellectual
property; (o) as to Year 2000 compliance; and (p) as to severance payments. In
addition, the Merger Agreement contains representations and warranties by
GeoWaste as to, among other things, its organization, capital structure,
authority to enter into the Merger Agreement and the binding effect of the
Merger Agreement.
RESALES OF SUPERIOR COMMON STOCK RECEIVED IN THE MERGER; RESTRICTIONS ON
AFFILIATES
GeoWaste has agreed to use commercially reasonable efforts to cause each
person who is reasonably likely to be at the date of the Special Meeting or
was on the date of the Merger Agreement an "affiliate" of GeoWaste (i) for
purposes of Rule 145 under the Securities Act (a "GeoWaste Affiliate") to
execute and deliver to Superior prior to September 23, 1998 an agreement
intended to ensure compliance with the Securities Act and/or (ii) for
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purposes of applicable accounting releases of the Commission with respect to
pooling of interests accounting treatment (a "Pooling Affiliate") to execute
and deliver to Superior prior to September 23, 1998 an agreement (a "Pooling
Affiliate Letter") containing a covenant that such Pooling Affiliate has not,
during the time period commencing 30 days prior to the Effective Time, sold,
transferred or otherwise disposed of, or reduced the Pooling Affiliate's risk
with respect to shares of GeoWaste Common Stock or shares of Superior Common
Stock that the Pooling Affiliate holds on the date of the Pooling Affiliate
Letter and, with respect to shares of Superior Common Stock the Pooling
Affiliate will hold after the Effective Time, the Pooling Affiliate will not
sell, transfer or otherwise dispose of or reduce the Pooling Affiliate's risk
with respect to such shares, until after such time as results covering at
least 30 days of combined operations of Superior and GeoWaste have been
published by Superior. See "THE MERGER--Federal Securities Law Consequences"
and "--Anticipated Accounting Treatment." Neither this Proxy
Statement/Prospectus nor the Registration Statement cover any resales of
Superior Common Stock received by affiliates of GeoWaste in the Merger.
Pursuant to the Merger Agreement, in the event Allen & Company is deemed to
be a Pooling Affiliate and if requested by Allen & Company, Superior will use
its best efforts to publish, as soon as possible after the Effective Time,
financial results which are sufficient in accordance with Accounting Series
Release No. 135 to permit the disposition by all of the stockholders of
GeoWaste of the shares of Superior Common Stock received in the Merger
consistent with the requirements for treating the Merger as a pooling of
interests for financial reporting purposes; provided, however, that such
financial results will be published no later than the fifteenth day after the
end of the first full calendar month after the Effective Time.
CONDUCT OF BUSINESS PENDING THE MERGER
Actions by GeoWaste
Pursuant to the Merger Agreement, GeoWaste has agreed that, prior to the
Effective Time, unless otherwise expressly contemplated by the Merger
Agreement or consented to in writing by Superior, which consent shall not be
unreasonably withheld, GeoWaste shall, and shall cause each of its
subsidiaries to, (i) operate its business in the usual and ordinary course
consistent with past practices and in accordance, in all material respects,
with applicable laws; (ii) preserve substantially intact its business
organization, maintain its rights and franchises, use its commercially
reasonable efforts to retain the services of its respective principal officers
and key employees and maintain its relationships with its respective principal
suppliers, contractors, distributors, customers and others having material
business relationships with it; (iii) maintain and keep its properties and
assets in as good repair and condition as at present, ordinary wear and tear
excepted; and (iv) keep in full force and effect insurance comparable in
amount and scope of coverage to that currently maintained; provided, however,
that the loss of any officers, employees, consultants, customers, payors or
suppliers prior to the Effective Time shall not constitute a breach of the
Merger Agreement unless such loss would have a GeoWaste Material Adverse
Effect.
Except as expressly contemplated by the Merger Agreement or otherwise
consented to in writing by Superior, GeoWaste will not, and will cause each of
its subsidiaries not to, do any of the following:
(i) (a) increase the compensation payable to or to become payable to any
of its directors, officers or employees, except for increases in salary,
wages or bonuses payable or to become payable in the ordinary course of
business and consistent with past practice; (b) grant any severance or
termination pay to, or enter into or modify any employment or severance
agreement with, any of its directors, officers or employees; or (c) adopt
or amend any employee benefit plan or arrangement, except as may be
required by applicable law;
(ii) declare, set aside or pay any dividend on, or make any other
distribution in respect of, any of its capital stock; provided, however,
that this shall not prohibit any wholly owned (directly or indirectly)
subsidiary of GeoWaste from declaring, setting aside or paying any dividend
on, or making any distribution in respect of, its capital stock;
(iii) (a) redeem, repurchase or otherwise reacquire any share of its
capital stock or any securities or obligations convertible into or
exercisable or exchangeable for any share of its capital stock, or any
options,
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warrants or conversion or other rights to acquire any shares of its capital
stock or any such securities or obligations (other than in connection with
the exercise of any 1992 Plan Options, 1996 Plan Options, Non-Plan Options
and Warrants and the delivery of GeoWaste Common Stock in payment of the
exercise price thereof); (b) effect any reorganization or recapitalization;
or (c) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of, or in substitution for, shares of its capital stock;
(iv) (a) issue, deliver, award, grant or sell, or authorize or propose
the issuance, delivery, award, grant or sale of, any shares of any class of
its capital stock (including shares held in treasury) or other equity
securities, any securities or obligations directly or indirectly
convertible into or exercisable or exchangeable for any such shares, or any
rights (including, without limitation, stock appreciation or stock
depreciation rights), warrants or options to acquire, any such shares or
securities or any rights, warrants or options directly or indirectly to
acquire any such shares or securities (except for the issuance of shares
upon the exercise of 1992 Plan Options, 1996 Plan Options, Non-Plan Options
and Warrants outstanding as of the date of the Merger Agreement); or (b)
amend or otherwise modify the terms of any such securities, obligations,
rights, warrants or options in a manner inconsistent with the provisions of
the Merger Agreement or the effect of which shall be to make such terms
more favorable to the holders thereof;
(v) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or
agree to acquire all or substantially all assets of any other Person (other
than the purchase of receivables in the ordinary course of business and
consistent with past practice);
(vi) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any of its assets, except for dispositions of
assets in the ordinary course of business;
(vii) propose or adopt any amendments to GeoWaste's certificate of
incorporation or bylaws;
(viii) (a) change any of its methods of accounting in effect at January
1, 1998, or (b) make or rescind any express or deemed election relating to
taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
taxes, or change any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ending December 31, 1997,
except, in the case of clause (a) or clause (b), as may be required by law
or GAAP, consistently applied;
(ix) prepay, before the scheduled maturity thereof, any of its long-term
debt, or incur any obligation for borrowed money, whether or not evidenced
by a note, bond, debenture or similar instrument, other than (a)
indebtedness incurred in the ordinary course of business under the existing
loan agreements described in the GeoWaste Disclosure Schedule and (b) trade
payables incurred in the ordinary course of business consistent with past
practice;
(x) take any action that would or could reasonably be expected to result
in any of its representations and warranties set forth in the Merger
Agreement being untrue in any material respect or in any of the conditions
to the Merger set forth in Merger Agreement not being satisfied in any
material respect that in any case would have a GeoWaste Material Adverse
Effect; or
(xi) agree in writing or otherwise to do any of the foregoing.
As used in this Proxy Statement/Prospectus, a "GeoWaste Material Adverse
Effect" means a material adverse effect on the business, properties, assets,
financial condition or results of operations of GeoWaste and its subsidiaries,
taken as a whole. Notwithstanding anything in the Merger Agreement to the
contrary, in no event will the loss of the receipt of processed metal
shredding material from the AmeriSteel location in Jacksonville, Florida be
considered a GeoWaste Material Adverse Effect.
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Actions by Superior
Except as expressly contemplated by the Merger Agreement or otherwise
consented to in writing by GeoWaste, from the date of the Merger Agreement
until the Effective Time, Superior shall not take any action (i) that would
prevent the Merger from being treated as a tax-free reorganization pursuant to
Section 368(a) of the Code; or (ii) that would or could reasonably be expected
to result in any of its representations or warranties set forth in the Merger
Agreement being untrue in any material respect or in any of the conditions to
the Merger set forth in the Merger Agreement not being satisfied in any
material respect that in any case would have a material adverse effect on the
business, properties, assets, financial condition or results of operations of
Superior and its subsidiaries, taken as a whole.
NO SOLICITATION
The Merger Agreement provides that GeoWaste will not, nor will it permit any
of its subsidiaries to, and it will use its best efforts to cause its
officers, directors, employees, agents or affiliates, including Deutsche Bank,
not to, directly or indirectly, (i) solicit, initiate or knowingly encourage
(including by way of furnishing information, other than the documents filed by
GeoWaste with the Commission), or knowingly take any other action to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal or (ii)
participate in any discussions or negotiations regarding any Acquisition
Proposal; provided, however, that if the GeoWaste Board determines in good
faith, after consultation with and based on the advice of outside counsel,
that it is required to do so in order to comply with its fiduciary duties to
the GeoWaste stockholders under applicable law, GeoWaste may, in response to
an unsolicited Acquisition Proposal, and subject to GeoWaste's obligation to
notify Superior of any request for information in respect of an Acquisition
Proposal, (x) furnish information with respect to GeoWaste to any person
making such Acquisition Proposal pursuant to an executed confidentiality
agreement with such person containing substantially the same terms as the
confidentiality agreement between Superior and GeoWaste and (y) participate in
negotiations regarding such Acquisition Proposal.
In addition, GeoWaste has agreed that neither the GeoWaste Board nor any
committee thereof will (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Superior, the approval or recommendation by the
GeoWaste Board or such committee of the Merger or the Merger Agreement; (ii)
approve or recommend, or propose to approve or recommend, any Acquisition
Proposal; or (iii) cause GeoWaste to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
(each, an "Acquisition Agreement") with respect to any Acquisition Proposal.
Notwithstanding the foregoing, in the event that the GeoWaste Board determines
in good faith, after consultation with and based on the advice of outside
counsel, that it is required to do so in order to comply with its fiduciary
duties to the GeoWaste stockholders under applicable law, the GeoWaste Board
may (subject to the following sentences) withdraw or modify the recommendation
of the GeoWaste Board to approve and adopt the Merger Agreement and the Merger
(or not to recommend the Merger and the Merger Agreement before this Proxy
Statement/Prospectus is sent to stockholders), approve or recommend a Superior
Proposal (as defined below) or terminate the Merger Agreement, but in each
case only at a time that is after the fifth business day following Superior's
receipt of written notice advising Superior that the GeoWaste Board has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the Person making such Superior
Proposal. In addition, if GeoWaste proposes to terminate the Merger Agreement,
it shall pay in accordance with the terms of the Merger Agreement to Superior
a fee of $1.5 million. For purposes of the Merger Agreement, a "Superior
Proposal" means any bona fide proposal made by a third party to acquire,
directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of GeoWaste Common Stock then outstanding or all or
substantially all the assets of GeoWaste and otherwise on terms which the
GeoWaste Board determines in its good faith judgment (based on the advice of
Deutsche Bank or such other investment banking firm of recognized national
standing selected by the GeoWaste Board) to be more favorable to the GeoWaste
stockholders than the Merger.
GeoWaste furthermore has agreed to advise Superior orally and in writing of
any request for information of a nature which would assist a potential bidder
in preparing an Acquisition Proposal (other than the documents
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filed by GeoWaste with the Commission) or of any Acquisition Proposal, the
material terms and conditions of such request or Acquisition Proposal and the
identity of the Person making such request or Acquisition Proposal. GeoWaste
has agreed to keep Superior fully informed of the status and details
(including amendments or proposed amendments) of any such request or
Acquisition Proposal.
Nothing contained in the Merger Agreement prohibits GeoWaste from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to the
GeoWaste stockholders if, in the good faith judgment of the GeoWaste Board,
after consultation with and based on the advice of outside counsel, failure so
to disclose would be inconsistent with its fiduciary duties to the GeoWaste
stockholders under applicable law. See "--Termination Fee and Expenses."
GeoWaste has agreed that except as required by the GeoWaste Board's
fiduciary duty to the GeoWaste stockholders, neither the GeoWaste Board nor
any committee thereof will withdraw or modify, or propose to withdraw or
modify, its position with respect to the Merger Agreement or the Merger or
approve or recommend, or propose to approve or recommend, an Acquisition
Proposal.
DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE
The Merger Agreement provides that from and after the Effective Time,
Superior has agreed to indemnify, defend and hold harmless to the fullest
extent permitted under Wisconsin law each person who on or prior to the
Effective Time was an officer, director, employee or agent of GeoWaste and its
subsidiaries or who on or prior to the Effective Time was entitled to
indemnification pursuant to GeoWaste's certificate of incorporation,
GeoWaste's bylaws or written indemnification agreements in effect at the
Effective Time (individually, an "Indemnified Party" and collectively, the
"Indemnified Parties"), against all losses, claims, damages, liabilities,
costs or expenses (including reasonable attorneys' fees), judgments, fines,
penalties and amounts paid in settlement of or otherwise in connection with
any claim, action, suit, proceeding or investigation (a "Claim") arising out
of or pertaining to acts or omissions, or alleged acts or omissions, by them
in their capacities as such occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by the Merger
Agreement). In the event of any such Claim, Superior has agreed to pay
reasonable expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the fullest extent permitted under the
DGCL, upon receipt from the Indemnified Party to whom expenses are advanced of
the undertaking to repay such advances contemplated by Section 145 of the
DGCL.
The Merger Agreement further provides that Superior has agreed to maintain
in effect for not less than six years after the Effective Time the current
policies of directors' and officers' liability insurance and fiduciary
liability insurance maintained by GeoWaste with respect to Claims arising from
facts or events which occurred prior to the Effective Time; provided, that
Superior may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions that are no less advantageous for the
officers, directors and other persons covered thereby or if such coverage is
not obtainable at a cost less than or equal to 150% of the amount per annum
GeoWaste paid in its last full fiscal year, Superior will purchase such lesser
amount of coverage, on terms as similar in coverage as practicable to such
coverage in effect on the date of the Merger Agreement as may be obtained
having a cost not to exceed 150% of the amount per annum GeoWaste paid in its
last full fiscal year.
The bylaws of the Surviving Corporation will contain the provisions with
respect to indemnification set forth in GeoWaste's bylaws on the date of the
Merger Agreement, which provisions will not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of Indemnified Parties under
GeoWaste's bylaws, in respect of actions or omissions occurring prior to the
Effective Time, unless such amendment, repeal or modification is required by
law. Without limiting the foregoing, Superior will cause the Surviving
Corporation to indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of GeoWaste and its subsidiaries
against all Claims arising out of actions or omissions in their capacity as
such occurring at or prior to the Effective Time to
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the full extent permitted under the DGCL, other applicable law, GeoWaste's
certificate of incorporation and GeoWaste's bylaws or written indemnification
agreements in effect as of the date of the Merger Agreement.
The Surviving Corporation's certificate of incorporation will contain the
provisions with respect to indemnification set forth in GeoWaste's Certificate
of Incorporation on the date of the Merger Agreement, which provisions will
not be amended, repealed or otherwise modified for a period of six years after
the Effective Time in any manner that would adversely affect any Indemnified
Party in respect of actions or omissions occurring prior to the Effective
Time, unless such amendment, repeal or modification is required by law.
The written indemnification agreements in effect on the date of the Merger
Agreement between GeoWaste and any Indemnified Party will not be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect any Indemnified Party in
respect of actions or omissions occurring prior to the Effective Time, unless
such amendment, repeal or modification is required by law.
The indemnification provisions set forth in the Merger Agreement will
survive the consummation of the Merger, and are intended to benefit the
Indemnified Parties and their respective heirs and personal representatives.
Such provisions will be binding on all successors and assigns of Superior and
the Surviving Corporation and will be enforceable by the foregoing parties as
third party beneficiaries. See "THE MERGER--Interests of Certain Persons in
the Merger."
EMPLOYEE MATTERS
The Merger Agreement provides that Superior will continue, or cause Merger
Sub to continue, the employee benefit plans that GeoWaste has in effect at the
Effective Time until such time as Superior determines to convert such employee
benefit plan to employee benefit plans maintained by Superior. Nothing in the
Merger Agreement requires Superior or Merger Sub to continue any such plan, or
to allow or guarantee participation therein, if participation in any such plan
is within the discretion of Superior or Merger Sub.
Each person employed by GeoWaste and its affiliates prior to the Effective
Time who remains an employee of Superior or its affiliates following the
Effective Time (each, a "Continued Employee") will be generally entitled to
continue to participate in the employee benefits plans maintained in
accordance with and subject to the limits of the preceding paragraph. Upon the
conversion of such benefit plans as contemplated by and subject to the limits
of the preceding paragraph, each Continued Employee (if still then employed by
Superior or its affiliates) will be generally entitled to participate in the
pension, benefit and similar plans, of Superior and its subsidiaries that are
generally available to employees of Superior and its affiliates.
Subject to the immediately preceding paragraph, pursuant to the Merger
Agreement, from and after the Effective Time, Superior and its affiliates will
honor in accordance with their terms and except to the extent amended in
accordance with such terms, all of GeoWaste's benefit plans and all contracts,
plans and programs providing for compensation or benefits for persons who are,
as of the Effective Time, employees of GeoWaste and any of its subsidiaries
("GeoWaste Employees") and former employees of GeoWaste and its subsidiaries
to the extent such GeoWaste Employees and former employees continue to be
covered by any of such benefit plans, contracts, plans or programs.
The Merger Agreement further provides that from and after the Effective
Time, Superior will treat all service by GeoWaste Employees with GeoWaste and
its affiliates and their respective predecessors prior to the Effective Time
for all purposes as service with Superior (except to the extent such treatment
would result in duplicative accrual on or after the Effective Time of benefits
for the same period of service), and, with respect to any medical or dental
benefit plan in which GeoWaste Employees participate after the Effective Time,
Superior will waive or cause to be waived any pre-existing condition
exclusions and actively-at-work requirements (provided, however, that no such
waiver will apply to a pre-existing condition of any GeoWaste Employee who
was, at the Effective Time, excluded from participation in a GeoWaste Benefit
Plan by virtue of such pre-existing
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condition and otherwise in accordance with the applicable benefit plan), and
will provide that any covered expenses incurred on or before the Effective
Time by a GeoWaste Employee or a GeoWaste Employee's covered dependent will be
taken into account for purposes of satisfying applicable deductive,
coinsurance and maximum out-of-pocket provisions after the Effective Time to
the same extent as such expenses are taken into account for the benefit of
similarly situated employees of Superior and subsidiaries of Superior.
CONDITIONS TO THE MERGER
The respective obligations of Superior, Merger Sub and GeoWaste to effect
the Merger and the other transactions contemplated in the Merger Agreement are
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) the Merger Agreement and the transactions contemplated thereby shall
have been approved and adopted by the requisite vote of the GeoWaste
stockholders in accordance with applicable law;
(b) no federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or other
regulatory authority or agency, domestic or foreign (a "Governmental
Entity"), or federal or state court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, judgment, injunction or other order
(whether temporary, preliminary or permanent), in any case which is in
effect and which prevents or prohibits consummation of the Merger or any
other transactions contemplated in the Merger Agreement; provided, however,
that Superior, Merger Sub and GeoWaste shall use their best efforts to
cause any such decree, judgment, injunction or other order to be vacated or
lifted;
(c) all regulatory approvals necessary to consummate the transactions
contemplated by the Merger Agreement, shall have been obtained and shall
remain in full force and effect and all statutory waiting periods
(including the applicable waiting period under the HSR Act) in respect
thereof shall have expired or been terminated;
(d) the Registration Statement shall have been declared effective by the
Commission under the Securities Act and shall not be the subject of any
stop order or proceeding by the Commission seeking a stop order;
(e) the shares of Superior Common Stock issuable pursuant to the Merger
shall have been authorized for quotation on the Nasdaq National Market;
(f) all permits and other authorizations under state securities laws
necessary to consummate the transactions contemplated hereby and to issue
the shares of Superior Common Stock to be issued in the Merger shall have
been received and be in full force and effect; and
(g) Superior shall have received a letter from Ernst & Young LLP,
Superior's independent public accountants, and GeoWaste shall have received
a letter from PricewaterhouseCoopers LLP, GeoWaste's independent public
accountants, each dated the date of this Proxy Statement/Prospectus, which
letters shall be confirmed in writing at the Effective Time, stating that
the business combination to be effected by the Merger will qualify as a
transaction to be accounted for by Superior in accordance with the pooling
of interests method of accounting under the requirements of APB No. 16.
The obligations of Superior and Merger Sub to effect the Merger and the
other transactions contemplated in the Merger Agreement are also subject to
the following conditions, any or all of which may be waived, in whole or in
part, to the extent permitted by applicable law:
(a) the representations and warranties of GeoWaste made in the Merger
Agreement that are qualified as to materiality shall be true and correct
and the representations and warranties not so qualified shall be true and
correct in all material respects, on and as of the Effective Time with the
same effect as though such representations and warranties had been made on
and as of the Effective Time, except for representations and warranties
that speak as of a specific date or time other than the Effective Time
(which need only be true and correct in all material respects as of such
date or time);
64
<PAGE>
(b) the agreements and covenants of GeoWaste required to be performed on
or before the Effective Time shall have been performed in all material
respects; and
(c) Superior shall have received an opinion of Foley & Lardner, counsel
to Superior, dated the Effective Date, to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, the
Merger constitutes a "reorganization" under Section 368 of the Code.
The obligations of GeoWaste to effect the Merger and the other transactions
contemplated in the Merger Agreement are also subject to the following
conditions any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) the representations and warranties of Superior and Merger Sub made in
the Merger Agreement that are qualified as to materiality shall be true and
correct and the representations and warranties not so qualified shall be
true and correct in all material respects, on and as of the Effective Time
with the same effect as though such representations and warranties had been
made on and as of the Effective Time, except for representations and
warranties that speak as of a specific date or time other than the
Effective Time (which need only be true and correct in all material
respects as of such date or time);
(b) the agreements and covenants of Superior and Merger Sub required to
be performed on or before the Effective Time shall have been performed in
all material respects; and
(c) GeoWaste shall have received an opinion of Stroock & Stroock & Lavan
LLP, counsel to GeoWaste, dated the Effective Date, to the effect that, on
the basis of facts, representations and assumptions set forth in such
opinion, the Merger constitutes a "reorganization" within the meaning of
Section 368 of the Code.
A period of time may elapse between the Special Meeting and the Effective
Time while the parties seek to obtain any required governmental approvals of
the Merger not received on or before the date of the Special Meeting.
Currently, management of both Superior and GeoWaste believe that all such
required governmental approvals not heretofore received will be received,
although no assurances can be given on this matter. Management of Superior and
GeoWaste do not currently anticipate that any conditions to consummation of
the Merger other than receipt of required governmental approvals would cause
substantial delay between stockholder approval of the Merger at the Special
Meeting and the Effective Time. However, there can be no assurance that the
Merger will not be challenged by a Governmental Entity or, if such a challenge
is made, as to the result thereof. See "THE MERGER--Regulatory Approvals." The
Merger Agreement may be terminated by either party if, among other reasons,
the Merger has not been consummated on or before October 30, 1998. See "--
Termination."
TERMINATION
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the Merger Agreement and the Merger
by the GeoWaste stockholders:
(a) by mutual written consent of Superior and GeoWaste; or
(b) by Superior, if GeoWaste shall have breached, or failed to comply
with, in any material respect any of its obligations under the Merger
Agreement or any representation or warranty made by GeoWaste in the Merger
Agreement shall have been incorrect in any material respect when made or
shall have since ceased to be true and correct in any material respect,
such that as a result of such breach, failure or misrepresentation the
conditions to the consummation of the Merger set forth in the Merger
Agreement would not be satisfied (a "GeoWaste Termination Breach");
provided, however, that if such GeoWaste Termination Breach is curable by
GeoWaste through the exercise of its reasonable efforts and for so long as
GeoWaste continues to exercise such reasonable efforts after notice of such
breach (but in no event longer than 30 days), Superior may not terminate
the Merger Agreement; or
(c) by GeoWaste, if Superior or Merger Sub shall have breached, or failed
to comply with, in any material respect any of its obligations under the
Merger Agreement or any representation or warranty made
65
<PAGE>
by Superior or Merger Sub shall have been incorrect in any material respect
when made or shall have since ceased to be true and correct in any material
respect, such that as a result of such breach, failure or misrepresentation
the conditions to consummation of the Merger set forth in the Merger
Agreement would not be satisfied (a "Superior Termination Breach");
provided, however, that if such Superior Termination Breach is curable by
Superior or Merger Sub through the breach is curable by Superior but in no
event longer than 30 days, GeoWaste may not terminate the Merger Agreement;
or
(d) by either Superior or GeoWaste, if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or
any Governmental Entity preventing or prohibiting such consummation of the
Merger shall have become final and nonappealable; or
(e) by either Superior or GeoWaste if the Merger Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of
GeoWaste at the Special Meeting or at any adjournment or postponement
thereof; or
(f) by Superior or Merger Sub, if the GeoWaste Board or any committee
thereof shall have withdrawn or modified in any manner materially adverse
to Superior or Merger Sub its approval or recommendation of the Merger or
the Merger Agreement or approved or recommended any Acquisition Proposal
(see "--No Solicitation"); or
(g) by GeoWaste in the event that the GeoWaste Board determines in good
faith, after consultation with and based on the advice of outside counsel,
that it must withdraw or modify its recommendation to the GeoWaste
stockholders to approve the Merger Agreement and the Merger in order to
comply with its fiduciary duties; or
(h) by GeoWaste, if the Final Superior Stock Price is less than $25.00;
or
(i) by either Superior or GeoWaste if the Merger shall not have been
consummated before October 30, 1998 (the "Termination Date"); provided,
however, that (a) the right to terminate the Merger Agreement shall not be
available to GeoWaste if GeoWaste's failure to fulfill any obligation under
the Merger Agreement has been the cause of, or resulted in, the failure of
the Effective Time to occur on or before the Termination Date, and (b) the
right to terminate the Merger Agreement shall not be available to Superior
if Superior or Merger Sub's failure to fulfill any obligation under the
Merger Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before the Termination Date.
TERMINATION FEE AND EXPENSES
Except as described below all Expenses (as hereinafter defined) incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such Expenses; provided, however, that
Superior will bear all Expenses relating to printing, filing and mailing the
Registration Statement, the Proxy Statement/Prospectus and any other filings
with the Commission and any other Governmental Entity and all Commission and
other regulatory filing fees, including filing fees under the HSR Act,
incurred in connection with such filings. Except as described below, GeoWaste
agreed to pay, and to indemnify, defend and hold Superior and Merger Sub
harmless from and against all Expenses of GeoWaste's legal, accounting,
investment banking and other professional counsel in connection with the
transactions contemplated by the Merger Agreement, including any fees and
Expenses of PricewaterhouseCoopers LLP, Stroock & Stroock & Lavan LLP, King &
Spalding and Deutsche Bank in connection with professional services rendered
in regard to the Merger, which fees and expenses will not exceed $1.75 million
in the aggregate.
As used in the Merger Agreement, "Expenses" include all reasonable out-of-
pocket costs and expenses (including, without limitation, the reasonable fees
and disbursements of counsel, accountants, investment bankers, experts and
consultants to a party to the Merger Agreement) incurred by a party or on its
behalf in connection with or related to, the authorization, preparation,
negotiation, execution and performance of the Merger Agreement and the
transactions contemplated thereby, the preparation, printing, filing and
mailing of the Registration Statement and this Proxy Statement/Prospectus, the
solicitation of stockholder approvals and all other matters related to the
closing of the transactions contemplated by the Merger Agreement.
66
<PAGE>
If (i) GeoWaste terminates the Merger Agreement in the event that the
GeoWaste Board determines in good faith, after consultation with and based on
the advice of outside counsel, that it must withdraw or modify its
recommendation to the GeoWaste stockholders to approve the Merger Agreement
and the Merger in order to comply with its fiduciary duties; (ii) Superior
terminates the Merger Agreement after the GeoWaste Board or any committee
thereof withdraws or modifies in any manner materially adverse to Superior or
Merger Sub its approval or recommendation of the Merger or the Merger
Agreement or approves or recommends any Acquisition Proposal following receipt
by GeoWaste of a proposal for an Acquisition Proposal (including a Superior
Proposal); (iii) within one year following termination of the Merger Agreement
by either Superior or GeoWaste if the Merger Agreement shall fail to receive
the requisite vote for approval and adoption by the stockholders of GeoWaste
at the Special Meeting or at any adjournment or postponement thereof, GeoWaste
enters into a definitive agreement with respect to a Superior Proposal
involving GeoWaste that had been publicly announced prior to or at the time of
the Special Meeting; or (iv) Superior terminates the Merger Agreement pursuant
to clause (b) under "--Termination" above as a result of a willful and
material misrepresentation by GeoWaste or the willful and material breach by
GeoWaste of any of its agreements and covenants set forth herein, then, within
three business days of, in the case of clause (i), (ii) or (iv), such
termination, or, in the case of clause (iii), consummation of the Superior
Proposal, GeoWaste will pay Superior a termination fee of $1.5 million (the
"Termination Fee").
If GeoWaste terminates the Merger Agreement pursuant to clause (c) under "--
Termination" above as a result of a willful and material misrepresentation by
Superior or Merger Sub or the willful and material breach by Superior or
Merger Sub of any of their respective agreements and covenants set forth
herein, then, within three business days of such termination, Superior will
pay GeoWaste the Termination Fee.
If the Merger Agreement is terminated by either Superior or GeoWaste as a
result of the Merger Agreement failing to receive the requisite vote for
approval and adoption by the stockholders of GeoWaste at the Special Meeting
or at any adjournment or postponement thereof as described in clause (e) under
"--Termination" above, then GeoWaste will (provided that neither Superior nor
Merger Sub is then in material breach of its obligations under the Merger
Agreement) reimburse Superior for all its Expenses, not to exceed $700,000 in
the aggregate.
Pursuant to the Merger Agreement, the parties agree that, notwithstanding
the provisions of the Merger Agreement described herein under "--Termination
Fee and Expenses," in no event will either GeoWaste or Superior pay to the
other party in excess of $1.5 million in the aggregate under the Merger
Agreement as described herein under "--Termination Fee and Expenses" (except
for additional amounts owing for collection of such amounts and interest on
any unpaid amounts).
WAIVER
At any time prior to the Effective Time, Superior, Merger Sub or GeoWaste
may (a) extend the time for the performance of any of the obligations or other
acts of the other party, (b) waive any inaccuracies in the representations and
warranties contained in the Merger Agreement or in any document delivered
pursuant to the Merger Agreement and (c) waive compliance by the other party
with any of the agreements or conditions contained in the Merger Agreement.
Any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. In the event that any material
conditions are waived or if there are other material changes to the terms of
the Merger, GeoWaste will recirculate a revised Proxy Statement/Prospectus
that discloses the waiver of the material conditions or other material changes
and contains all related material disclosure, including risks to investors. In
such event, GeoWaste will resolicit proxies from its stockholders.
AMENDMENT
The Merger Agreement may be amended by Superior or GeoWaste by action taken
by or on behalf of their respective Boards of Directors at any time prior to
the Effective Time; provided, however, that, after approval of the Merger
Agreement and the Merger by the GeoWaste stockholders, no amendment may be
made which would reduce the amount or change the type of consideration into
which each share of GeoWaste Common Stock will be converted pursuant to the
Merger Agreement upon consummation of the Merger. The Merger Agreement may not
be amended except by an instrument in writing signed by the parties.
67
<PAGE>
ALLEN STOCKHOLDER SUPPORT AGREEMENTS
In order to induce Superior to enter into the Merger Agreement, each of
Allen & Company, Allen Value Partners, L.P., Allen Value Limited and Fields,
has entered into a Stockholder Support Agreement, dated as of July 2, 1998
with Superior (collectively, the "Allen Stockholder Support Agreements"). The
Allen Stockholder Support Agreements were entered into as a condition to
Superior entering into the Merger Agreement and none of Allen & Company, Allen
Value Partners, L.P., Allen Value Limited or Fields received any consideration
for entering into the Allen Stockholder Support Agreements other than the
consideration due to holders of GeoWaste Common Stock generally under the
Merger Agreement upon consummation of the Merger, certain registration rights
with respect to the shares of Superior Common Stock to be issuable upon
exercise of the Warrants (see "THE MERGER AGREEMENT--GeoWaste Stock Options
and Warrants") and the right, if Allen & Company is deemed to be a Pooling
Affiliate, to cause Superior to use its best efforts to publish, as soon as
possible after the Effective Time, financial results which are sufficient in
accordance with Accounting Series Release No. 135 to permit the disposition by
all of the stockholders of GeoWaste of the shares of Superior Common Stock
received in the Merger consistent with the requirements for treating the
Merger as a pooling of interests for financial reporting purposes (see "THE
MERGER AGREEMENT--Resales of Superior Common Stock Received in the Merger;
Restrictions on Affiliates").
Under the Allen Stockholder Support Agreements, each of Allen & Company,
Allen Value Partners, L.P., Allen Value Limited and Fields has agreed that,
during the time the Allen Stockholder Support Agreements are in effect and for
so long as the GeoWaste Board has not withdrawn its recommendation for the
adoption of the Merger Agreement and approval of the Merger, at any meeting of
the stockholders of GeoWaste, however called, they will vote any and all
shares of GeoWaste Common Stock beneficially owned by them as of the Record
Date (i) in favor of the adoption of the Merger Agreement and approval of the
Merger and (ii) against any Acquisition Proposal.
The Allen Stockholder Support Agreements provide that none of Allen &
Company, Allen Value Partners, L.P., Allen Value Limited or Fields will,
directly or indirectly, solicit, initiate or knowingly encourage, or knowingly
take any other action to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal.
Under the Allen Stockholder Support Agreements, each Allen & Company, Allen
Value Partners, L.P., Allen Value Limited and Fields has agreed that in the
event it wishes to undertake any action with respect to the shares of GeoWaste
Common Stock owned on July 2, 1998 (including, without limitation, a
disposition of such shares), it will consult with Superior in advance of
taking such action. Each of Allen & Company, Allen Value Partners, L.P., Allen
Value Limited and Fields has agreed to provide Superior with a written
proposal describing such action and the reasonable basis upon which it
believes that such action would not prevent Superior from accounting for the
business combination to be effected pursuant to the Merger Agreement as a
pooling of interests, together, if requested by Superior, with documentation
from its attorneys and/or accountants supporting such belief.
Each of Allen & Company, Allen Value Partners, L.P., Allen Value Limited and
Fields further agreed not to take or agree to take any action that, upon
written advice of Superior's regularly retained auditing firm, a copy of which
advice shall be delivered to Allen & Company, Allen Value Partners, L.P.,
Allen Value Limited or Fields, as applicable, would prevent Superior from
accounting for the business combination to be effected pursuant to the Merger
Agreement as a pooling of interests.
The Allen Stockholder Support Agreements executed by Allen Value Partners,
L.P. and Allen Value Limited also contain a provision pursuant to which such
entities agreed that in the event either entity distributes shares of GeoWaste
Common Stock to its partners, as a condition precedent to such distribution,
such entity will have obtained from each partner receiving shares in such
distribution, an agreement, in form and substance reasonably acceptable to
Superior, substantially similar to the Allen Stockholder Support Agreements,
duly executed and delivered by each such partner.
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<PAGE>
The Allen Stockholder Support Agreements and the obligations of Allen &
Company, Allen Value Partners, L.P., Allen Value Limited and Fields thereunder
will terminate on the earliest of (i) the Effective Time; (ii) the termination
of the Merger Agreement in accordance with its terms; and (iii) an amendment,
supplement, replacement or waiver of a provision of the Merger Agreement that
materially affected the rights of Allen & Company, Allen Value Partners, L.P.,
Allen Value Limited or Fields, as the case may be.
As of the Record Date, Allen & Company, Allen Value Partners, L.P., Allen
Value Limited and Fields beneficially owned an aggregate of 5,010,000 shares
of GeoWaste Common Stock (excluding shares issuable upon the exercise of
warrants held by such persons), representing approximately 23.5% of the shares
of GeoWaste Common Stock entitled to vote at the Special Meeting.
The foregoing is a summary of the material terms of the Allen Stockholder
Support Agreements, a copy of each of which is filed as an exhibit to the
Registration Statement. See "AVAILABLE INFORMATION." This summary is qualified
in its entirety by reference to the Allen Stockholder Support Agreements, each
of which is incorporated herein by reference.
69
<PAGE>
COMBINED UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following combined unaudited pro forma condensed financial statements
are based upon the historical financial statements of Superior and of GeoWaste
and should be read in conjunction with those financial statements and related
notes. Such financial statements, as previously filed with the Commission
under the Exchange Act, are incorporated by reference in this Proxy
Statement/Prospectus. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
These combined unaudited pro forma condensed financial statements give
effect to the Merger by combining the balance sheets and results of operations
of Superior and GeoWaste using the pooling of interests method of accounting
as if the Merger had been effective at the beginning of the earliest period
presented. Under this method of accounting, the recorded assets, liabilities,
shareholders' investment, income and expenses of Superior and GeoWaste are
combined and reflected at their historical amounts.
The combined unaudited pro forma condensed financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the operating results or financial position that would have been achieved had
the Merger been consummated as of the beginning of the periods presented, nor
are they necessarily indicative of the future operating results or financial
position of Superior.
The combined unaudited pro forma condensed financial statements do not
include the nonrecurring costs directly related to the Merger, which are
expected to be included in operations of Superior within the twelve months
following the Merger. Such nonrecurring costs have yet to be determined.
70
<PAGE>
SUPERIOR AND GEOWASTE
COMBINED UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1998
The following combined unaudited pro forma condensed balance sheet presents
the combined financial position of Superior and GeoWaste as of June 30, 1998.
Such unaudited pro forma combined condensed balance sheet is based on the
historical balance sheets of Superior and GeoWaste as of June 30, 1998, after
giving effect to the Merger using the pooling of interests method of
accounting and to the pro forma adjustment described in the notes to the
combined unaudited pro forma condensed financial statements assuming the
Merger had been consummated at June 30, 1998.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
SUPERIOR GEOWASTE ADJUSTMENTS COMBINED
-------- -------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......... $ 12,418 $ 1,284 $ 13,702
Trade accounts receivable......... 44,249 2,833 47,082
Prepaid expenses and other current
assets........................... 5,737 956 6,693
-------- ------- --------
Total current assets............ 62,404 5,073 67,477
Property and equipment, net......... 244,272 15,177 259,449
Restricted funds held in trust...... 8,230 -- 8,230
Other assets........................ 3,874 243 4,117
Intangible assets, net.............. 79,141 11,011 90,152
-------- ------- --------
Total assets.................... $397,921 $31,504 $429,425
======== ======= ========
LIABILITIES AND SHAREHOLDERS' IN-
VESTMENT
Current liabilities:
Current maturities of long-term
debt............................. $ 1,623 $ 1,152 $ 2,775
Trade accounts payable............ 13,782 1,190 14,972
Accrued payroll and related
expenses......................... 4,077 164 4,241
Other accrued expenses............ 17,663 1,506 19,169
-------- ------- --------
Total current liabilities....... 37,145 4,012 41,157
Long-term debt, net of current matu-
rities............................. 4,021 7,860 11,881
Disposal site closure and long term
care obligation.................... 45,361 2,198 47,559
Deferred income taxes............... 19,100 895 19,995
Other liabilities................... 12,439 383 12,822
-------- ------- --------
Total liabilities............... 118,066 15,348 133,414
-------- ------- --------
Commitments and contingencies
Shareholders' investment:
Common stock...................... 268 2,129 $(2,110)(a) 287
Additional paid-in capital........ 223,896 13,233 2,110(a) 239,239
Retained earnings................. 55,691 794 56,485
-------- ------- --------
Total shareholders' investment.. 279,855 16,156 296,011
-------- ------- --------
Total liabilities and
shareholders' investment....... $397,921 $31,504 $429,425
======== ======= ========
</TABLE>
See notes to combined unaudited pro forma condensed financial statements.
71
<PAGE>
SUPERIOR AND GEOWASTE
COMBINED UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
The following combined unaudited pro forma condensed statement of operations
for the six months ended June 30, 1998 was prepared based on the historical
statements of operations of Superior and GeoWaste for such period, after
giving effect to the Merger using the pooling of interests method of
accounting and to the pro forma adjustment described in the notes to the
combined unaudited pro forma condensed financial statements assuming the
Merger had been consummated at the beginning of the period.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
SUPERIOR GEOWASTE ADJUSTMENTS COMBINED
----------- ----------- ------------ -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Revenues................ $ 114,119 $ 11,889 $ 126,008
Expenses:
Cost of operations.... 61,953 8,424 $ (1,838)(b) 68,539
Selling, general and
administrative
expenses............. 14,461 2,030 16,491
Merger costs.......... 1,493 365 1,858
Unusual charges....... -- -- --
Depreciation and
amortization......... 15,766 185 1,838 (b) 17,789
----------- ----------- -----------
93,673 11,004 104,677
----------- ----------- -----------
Operating income........ 20,446 885 21,331
Other income (expense):
Interest expense...... (684) (401) (1,085)
Other income.......... 675 16 691
----------- ----------- -----------
Income before income
taxes.................. 20,437 500 20,937
Provision for income
taxes.................. 9,155 251 9,406
----------- ----------- -----------
Net income.............. $ 11,282 $ 249 $ 11,531
=========== =========== ===========
MINIMUM EXCHANGE RATIO
Earnings per share--Ba-
sic.................... $ 0.42 $ 0.01 $ 0.41
=========== =========== ===========
Earnings per share--Di-
luted.................. $ 0.42 $ 0.01 $ 0.40
=========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding--Basic..... 26,628,693 21,287,709 (19,552,709)(c) 28,363,693
=========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding--Diluted... 27,100,671 23,186,779 (21,451,779)(c) 28,835,671
=========== =========== ===========
MAXIMUM EXCHANGE RATIO
Earnings per share--Ba-
sic.................... $ 0.42 $ 0.01 $ 0.40
=========== =========== ===========
Earnings per share--Di-
luted.................. $ 0.42 $ 0.01 $ 0.40
=========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding--Basic..... 26,628,693 21,287,709 (19,234,709)(d) 28,681,693
=========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding--Diluted... 27,100,671 23,186,779 (21,133,779)(d) 29,153,671
=========== =========== ===========
</TABLE>
See notes to combined unaudited pro forma condensed financial statements.
72
<PAGE>
SUPERIOR AND GEOWASTE
COMBINED UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
The following combined unaudited pro forma condensed statement of operations
for the year ended December 31, 1997 was prepared based on the historical
statements of operations of Superior and GeoWaste for such period, after
giving effect to the Merger using the pooling of interests method of
accounting and to the pro forma adjustment described in the notes to the
combined unaudited pro forma condensed financial statements assuming the
Merger had been consummated at the beginning of the period.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
SUPERIOR GEOWASTE ADJUSTMENTS COMBINED
----------- ----------- ------------ -----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Revenues................ $ 191,578 $ 19,397 $ 210,975
Expenses:
Cost of operations.... 103,894 13,536 $ (3,345)(b) 114,085
Selling, general and
administrative
expenses............. 29,457 3,954 33,411
Merger costs.......... 1,035 -- 1,035
Unusual charges....... -- 1,083 1,083
Depreciation and
amortization......... 25,851 358 3,345 (b) 29,554
----------- ----------- -----------
160,237 18,931 179,168
----------- ----------- -----------
Operating income........ 31,341 466 31,807
Other income (expense):
Interest expense...... (1,857) (578) (2,435)
Other income.......... 1,617 (69) 1,548
----------- ----------- -----------
Income before income
taxes.................. 31,101 (181) 30,920
Provision for income
taxes.................. 12,706 243 12,949
----------- ----------- -----------
Net income.............. $ 18,395 $ (424) $ 17,971
=========== =========== ===========
MINIMUM EXCHANGE RATIO
Earnings per share--Ba-
sic.................... $ 0.81 $ (0.02) $ 0.74
=========== =========== ===========
Earnings per share--Di-
luted.................. $ 0.80 $ (0.02) $ 0.72
=========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding--Basic..... 22,710,414 21,246,779 (19,511,779)(c) 24,445,414
=========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding--Diluted... 23,091,088 21,246,779 (19,511,779)(c) 24,826,088
=========== =========== ===========
MAXIMUM EXCHANGE RATIO
Earnings per share--Ba-
sic.................... $ 0.81 $ (0.02) $ 0.73
=========== =========== ===========
Earnings per share--Di-
luted.................. $ 0.80 $ (0.02) $ 0.71
=========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding--Basic..... 22,710,414 21,246,779 (19,193,779)(d) 24,763,414
=========== =========== ===========
Weighted average number
of common and common
equivalent shares
outstanding--Diluted... 23,091,088 21,246,779 (19,193,779)(d) 25,144,088
=========== =========== ===========
</TABLE>
See notes to combined unaudited pro forma condensed financial statements.
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SUPERIOR AND GEOWASTE
NOTES TO COMBINED UNAUDITED PRO FORMA CONDENSED
FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The combined unaudited pro forma condensed financial statements assume the
issuance of Superior Common Stock in exchange for all outstanding GeoWaste
Common Stock. Such financial statements also assume that the Merger will be
accounted for using the pooling of interests method of accounting pursuant to
Opinion No. 16 of the Accounting Principles Board. The pooling of interests
method of accounting assumes the combining companies have been merged from
their inception, and historical financial statements for periods prior to
consummation of the Merger are restated as though the companies had been
combined from their inception.
Pursuant to the rules and regulations of the Commission, the combined
unaudited pro forma condensed financial statements exclude the results of
operations associated with discontinued businesses, extraordinary items and
cumulative effects of accounting changes. The combined unaudited pro forma
condensed financial statements do not include the nonrecurring costs directly
related to the Merger, which are expected to be included in operations of
Superior within twelve months following the Merger. Such nonrecurrinng costs
have yet to be determined. In addition, no adjustment has been included in the
combined unaudited pro forma condensed financial statements for any cost
savings which may result from the integration of Superior's and GeoWaste's
operations.
Certain reclassifications have been made to the historical financial
statements of Superior and GeoWaste to conform to the pro forma presentation.
Such reclassifications are not material to the combined unaudited pro forma
condensed financial statements.
2. PRO FORMA ADJUSTMENTS
(a) The shareholders' investment accounts have been adjusted to reflect the
assumed issuance of 1,880,044 shares of Superior Common Stock for the
21,291,549 shares of GeoWaste Common Stock issued and outstanding based on an
Exchange Ratio of 0.0883. Assuming a minimum Exchange Ratio of 0.0815 and the
issuance of 1,735,261 shares of Superior Common Stock for the 21,291,549
shares of GeoWaste Common Stock issued and outstanding, the pro forma
adjustment to common stock would have been a decrease of $2,112,000 with a
corresponding increase in additional paid-in capital. Assuming a maximum
Exchange Ratio of 0.0964 and the issuance of 2,052,505 shares of Superior
Common Stock for the 21,291,549 shares of GeoWaste Common Stock issued and
outstanding, the pro forma adjustment to common stock would have been a
decrease of $2,108,000 with a corresponding increase in additional paid-in
capital.
(b) Adjustments have been made to reclassify GeoWaste's depreciation from
cost of operations to depreciation and amortization to conform to the
presentation of Superior as if the Merger had been consummated at the
beginning of the applicable periods.
(c) Weighted average number of common and common equivalent shares
outstanding have been adjusted to reflect the issuance of 0.0815 shares of
Superior Common Stock for each share of GeoWaste Common Stock or equivalent
(the "Minimum Exchange Ratio").
(d) Weighted average number of common and common equivalent shares
outstanding have been adjusted to reflect the issuance of 0.0964 shares of
Superior Common Stock for each share of GeoWaste Common Stock or equivalent
(the "Maximum Exchange Ratio").
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INFORMATION REGARDING SUPERIOR CAPITAL STOCK
GENERAL
The authorized capital stock of Superior consists of 100,000,000 shares of
Superior Common Stock and 500,000 shares of undesignated preferred stock, par
value $.01 per share. All currently outstanding and newly issued shares of
Superior Common Stock include an attached common stock purchase right which
trades with each such share of Superior Common Stock.
COMMON STOCK
As of May 31, 1998, there were 26,753,949 shares of Superior Common Stock
outstanding. Holders of Superior Common Stock are entitled to one vote for
each share of Superior Common Stock held by them on all matters properly
submitted to a vote of stockholders, subject to Section 180.1150 of the WBCL
described below. Stockholders have no cumulative voting rights, which means
that the holders of shares entitled to exercise more than 50% of the voting
power are able to elect all of the directors to be elected. The Superior
Restated Articles and the Superior Restated Bylaws provide that the Superior
Board is divided into three substantially equal classes, with staggered three-
year terms. Subject to the prior rights of the holders of any class or series
of preferred stock then outstanding, and any contractual restrictions on the
payment of dividends, the Superior Board may in its discretion declare and pay
dividends on the Superior Common Stock out of legally available earnings or
assets of Superior. Subject to the prior rights of the holders of any class or
series of preferred stock then outstanding, in the event Superior is
liquidated, any amounts remaining after the discharge of all outstanding debt
will be paid pro rata to the holders of Superior Common Stock. The outstanding
shares of Superior Common Stock are, and the shares of Superior Common Stock
to be issued pursuant to this Proxy Statement/Prospectus will be, legally
issued, fully paid and nonassessable, except for certain statutory liabilities
which may be imposed by Section 180.0622(2)(b) of the WBCL for unpaid employee
wages. Holders of Superior Common Stock have no preemptive rights to acquire
unissued shares of capital stock of Superior.
PREFERRED STOCK
The Superior Board is authorized to issue from time to time, without
shareholder authorization, up to 500,000 shares of preferred stock in one or
more designated series, with such voting, dividend, redemption, conversion and
exchange provisions as are provided in the particular series. No dividends or
other distributions are to be payable on the Superior Common Stock unless
dividends are paid in full on any then outstanding preferred stock and all
sinking fund obligations for any then outstanding preferred stock, if any, are
fully funded. In the event of a liquidation or dissolution of Superior, the
outstanding shares of any then outstanding preferred stock would have priority
over the Superior Common Stock to receive the amount specified in each
particular series out of the remaining assets of Superior. Any future issuance
of preferred stock may have the effect deferring, delaying or preventing a
change in control of Superior, or decreasing the market price of Superior
Common Stock, and may adversely affect the voting and other rights of the
holders of Superior Common Stock. No shares of preferred stock are
outstanding.
COMMON STOCK PURCHASE RIGHTS
On February 21, 1997, the Superior Board declared a dividend of one Right
for each outstanding share of Superior Common Stock. The dividend was paid on
March 24, 1997 to the shareholders of record on March 10, 1997. The
description and terms of the Rights are set forth in the Rights Agreement.
The Rights Agreement provides that, until the Distribution Date (defined as
the earlier to occur of (i) the public announcement that a person or group of
affiliated or associated persons (other than Superior, a subsidiary of
Superior, an employee benefit plan of Superior or a subsidiary, or certain
existing shareholders) (an "Acquiring Person") has acquired beneficial
ownership of 15% or more of the outstanding shares of Superior Common Stock
(the "Shares Acquisition Date") or (ii) 10 business days following the
commencement of, or
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announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group (other than Superior, a subsidiary of Superior, an employee benefit plan
of Superior or a subsidiary, or certain existing shareholders) of 15% or more
of such outstanding shares, the Rights will be transferred with and only with
the shares. The Rights are not exercisable until the Distribution Date. Upon a
Distribution Date, each Right entitles the registered holder to purchase from
Superior one share at a price of $90.00 per share, subject to adjustment (the
"Purchase Price").
In the event that any person becomes an Acquiring Person (a "Flip-In
Event"), each holder of a Right will thereafter generally have the right to
receive upon exercise that number of shares of Superior Common Stock having a
market value of two times the then current Purchase Price. Notwithstanding any
of the foregoing, following the occurrence of a Flip-In Event all Rights that
are, or (under certain circumstances specified in the Rights Agreement) were,
or subsequently becomes beneficially owned by an Acquiring Person, related
persons and transferees will be null and void.
In the event that (i) Superior is acquired in a merger or other business
combination transaction or (ii) 50% or more of its consolidated assets or
earnings power are sold (the events described in clauses (i) and (ii) are
herein referred to as "Flip-Over Events"), proper provision will be made so
that each holder of a Right will thereafter have the right to receive, upon
the exercise thereof at the then current Purchase Price, that number of shares
of common stock of the acquiring company which at the time of such transaction
will have a market value of two times the then current Purchase Price.
At any time after a person becomes an Acquiring Person and prior to the
acquisition by any Acquiring Person of 50% or more of the outstanding shares
of Superior Common Stock, the Board Directors of Superior may exchange the
Rights (other than Rights owned by any Acquiring Person which have become
void), in whole or in part, at an exchange ratio of one share, per Right
(subject to adjustment).
At any time prior to a person becoming an Acquiring Person, the Superior
Board may redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Superior
Board in its sole discretion may establish. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
Other than provisions relating to principal economic terms of the Rights,
the terms of the Rights may be amended by the Superior Board without the
consent of the holders of the Rights, including an amendment to lower the
threshold for exercisability of the Rights from 15% to not less than 10%, with
appropriate exceptions for any person then beneficially owning a percentage of
the number of shares of Superior Common Stock then outstanding equal to or in
excess of the new threshold, except that from and after the Distribution Date
no such amendment may adversely affect the interests of the holders of the
Rights. The Superior Board may also amend the Rights Agreement to exclude
certain potential acquirors proposing to acquire Superior in a transaction
that the Superior Board deems to be in the best interests of Superior, its
shareholders and other constituencies of Superior.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of Superior, without limitation, the right to vote or to
receive dividends.
CERTAIN STATUTORY AND OTHER PROVISIONS
Statutory Provisions
Section 180.1150 of the WBCL provides that the voting power of shares of
public Wisconsin corporations, such as Superior, held by any person or persons
acting as a group in excess of 20% of the voting power in the election of
directors is limited to 10% of the full voting power of those shares. This
statutory voting restriction does not apply to shares acquired directly from
Superior or shares for which full voting power has been restored pursuant to a
vote of shareholders.
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Sections 180.1140 to 180.1144 of the WBCL (the "Wisconsin Business
Combination Statute") regulate a broad range of "business combinations"
between a Wisconsin corporation and an "interested stockholder." The Wisconsin
Business Combination Statute defines a "business combination" to include a
merger or share exchange, sale, lease, exchange, mortgage, pledge, transfer or
other disposition of assets equal to at least 5% of the market value of the
stock or assets of a corporation or 10% of its earning power, issuance of
stock or rights to purchase stock with a market value equal to at least 5% of
the outstanding stock, adoption of a plan of liquidation, and certain other
transactions involving an "interested stockholder." An "interested
stockholder" is defined as a person who beneficially owns, directly or
indirectly, 10% of the voting power of the outstanding voting stock of a
corporation or who is an affiliate or associate of the corporation and
beneficially owned 10% of the voting power of the then outstanding voting
stock within the last three years. The Wisconsin Business Combination Statute
prohibits a corporation from engaging in a business combination (other than a
business combination of a type specifically excluded from the coverage of the
statute) with an interested stockholder for a period of three years following
the date such person becomes an interested stockholder, unless the board of
directors approved the business combination or the acquisition of the stock
that resulted in a person becoming an interested stockholder before such
acquisition. Business combinations after the three-year period following the
stock acquisition date are permitted only if (i) the board of directors
approved the acquisition of the stock prior to the acquisition date; (ii) the
business combination is approved by a majority of the outstanding voting stock
not beneficially owned by the interested stockholder; or (iii) the
consideration to be received by shareholders meets certain requirements of the
Wisconsin Business Combination Statute with respect to form and amount. The
Superior Restated Articles include a provision substantially identical to the
Wisconsin Business Combination Statute.
Sections 180.1130 to 180.1133 of the WBCL provide that certain "business
combinations" not meeting specified adequacy-of-price standards must be
approved by a vote of at least 80% of the votes entitled to be cast by all
shareholders and by two-thirds of the votes entitled to be cast by
shareholders other than a "significant shareholder" who is a party to the
transaction. The term "business combination" is defined to include, subject to
certain exceptions, a merger or consolidation of the corporation (or any
subsidiary thereof) with, or the sale or other disposition of substantially
all of the assets of the corporation to, any significant shareholder or
affiliate thereof. "Significant shareholder" is defined generally to include a
person that is the beneficial owner of 10% or more of the voting power of the
corporation.
Section 180.1134 of the WBCL (the "Wisconsin Defensive Action Restrictions")
provides that, in addition to the vote otherwise required by law or the
articles of incorporation of an issuing public corporation, the approval of
the holders of a majority of the shares entitled to vote is required before
such corporation can take certain action while a takeover offer is being made
or after a takeover offer has been publicly announced and before it is
concluded. Under the Wisconsin Defensive Action Restrictions, shareholder
approval is required for the corporation to (i) acquire more than 5% of its
outstanding voting shares at a price above the market price from any
individual or organization that owns more than 3% of the outstanding voting
shares and has held such shares for less than two years, unless a similar
offer is made to acquire all voting shares or (ii) sell or option assets of
the corporation which amount to at least 10% of the market value of the
corporation, unless the corporation has at least three independent directors
or a majority of the independent directors vote not to have this provision
apply to the corporation. The restrictions described in clause (i) above may
have the effect of deterring a stockholder from acquiring shares of Superior
with the goal of seeking to have Superior repurchase such shares at a premium
over the market price.
Restated Articles of Incorporation and Restated Bylaws of Superior
The Superior Restated Articles and the Superior Restated Bylaws divide the
Superior Board into three substantially equal classes with staggered terms.
The Superior Restated Articles provide that any vacancies on the Superior
Board may be filled only by the affirmative vote of the "requisite number" of
directors then in office, even if less than a quorum exists. Any director so
elected will serve until the next election of the class for which such
director is chosen and until his or her successor is duly elected. The
"requisite number" of directors is defined in the Superior Restated Articles
to constitute two-thirds of the then serving directors.
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The Superior Restated Articles incorporate the provisions of the Wisconsin
Business Combination Statute and require that, for the Wisconsin Business
Combination Statute provisions not to apply, the Superior Board must approve a
business combination with an "interested stockholder" before the stock
acquisition date. The affirmative vote of at least 66 2/3% of the voting power
of shares entitled to vote is required to amend, repeal or adopt any provision
inconsistent with the Wisconsin Business Combination Statute provisions
contained in the Superior Restated Articles.
In addition, the Superior Restated Bylaws establish a procedure which must
be satisfied by stockholders seeking to call a special meeting of
stockholders. This procedure involves notice to Superior, the receipt by
Superior of a written demand for a special meeting from holders of 10% or more
of the issued and outstanding shares of Superior Common Stock, a review of the
validity of any such demand by an independent inspector appointed by Superior
and the fixing of the record and meeting dates by the Superior Board. In
addition, stockholders demanding such a special meeting must deliver to
Superior a written agreement to pay the costs incurred by Superior in holding
a special meeting, including the costs of preparing and mailing the notice of
meeting and the proxy materials for the solicitation by Superior of proxies
for use at such meeting, in the event such shareholder are unsuccessful in
their proxy solicitation. The Superior Restated Bylaws also contain strict
time deadlines and procedures applicable to shareholders seeking to nominate a
person for election as a director or to otherwise bring business before a
meeting. A stockholder may nominate a person for election to the Superior
Board at an annual meeting or bring other business before an annual meeting
only by giving notice to the Secretary of Superior not less than 60 days nor
more than 90 days prior to the second Tuesday in the month of May and such
notice must also be received not earlier than the 90th day prior to the date
of such annual meeting and not later than the close of business or the later
of (i) the 60th day prior to such annual meeting and (ii) the tenth day
following the day on which public announcement of the date of such meeting is
first made. In order to nominate a person for election to the Superior Board
at a special meeting of stockholders, a stockholder must deliver written
notice to the Secretary of Superior not more than 90 days prior to the special
meeting and not later than the close of business on the later of (i) the
sixtieth day prior to such special meeting or (ii) the tenth day following the
date on which a public announcement is first made of such special meeting and
of the nominees proposed by the Superior Board to be elected at the meeting.
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COMPARISON OF STOCKHOLDER RIGHTS
The rights of Superior stockholders are governed by the Superior Restated
Articles, the Superior Restated Bylaws and the WBCL. The rights of GeoWaste
stockholders are governed by its Amended and Restated Certificate of
Incorporation (the "GeoWaste Certificate of Incorporation"), its amended
bylaws (the "GeoWaste Bylaws") and the DGCL. After the Effective Time, the
rights of GeoWaste stockholders who become Superior stockholders will be
governed by the Superior Restated Articles, the Superior Restated Bylaws and
the WBCL. The following is a summary of material differences between the
rights of Superior stockholders and the rights of GeoWaste stockholders.
Although it is not practical to compare all differences between (i)
Wisconsin law, the Superior Restated Articles and Superior Restated Bylaws and
(ii) Delaware law, the GeoWaste Certificate of Incorporation and the GeoWaste
Bylaws, the following is a summary of material differences which may
significantly affect the rights of stockholders. This discussion is not
intended to be complete and is qualified in its entirety by references to the
Superior Restated Articles, the Superior Restated Bylaws, the GeoWaste
Certificate of Incorporation and the GeoWaste Bylaws. Copies of the Superior
Restated Articles, the Superior Restated Bylaws, the GeoWaste Certificate of
Incorporation and the GeoWaste Bylaws are available for inspection at the
principal executive offices of Superior and GeoWaste respectively, and copies
will be sent to GeoWaste stockholders upon request. Although the WBCL uses the
term "shareholder" to reference holders of stock of a Wisconsin corporation,
for consistency such holders are referred to herein as "stockholders."
CLASSIFIED BOARD OF DIRECTORS
The WBCL permits a corporation to stagger terms of directors by dividing the
directors into two or three groups. The Superior Restated Articles and the
Superior Restated Bylaws divide the total number of directors into three
classes, with each group serving three-year terms. Similarly, the DGCL permits
a corporation to divide directors into one, two or three classes, the terms of
which expire in different years. The GeoWaste Certificate of Incorporation
does not provide for classes of directors.
NUMBER OF DIRECTORS; CUMULATIVE VOTING
Under the WBCL, the authorized number of directors constituting the Board of
Directors is specified in, or fixed in accordance with, the articles of
incorporation or bylaws and may be increased or decreased by amendment to, or
in a manner provided in, the articles of incorporation or the bylaws. Under
the Superior Restated Bylaws, the number of directors is determined by the
Superior Board, but shall not be less than seven. Superior currently has seven
directors each of whom serves for a three-year term and until his or her
successor has been elected and is qualified. The terms of Class III and Class
I Superior directors expire in each of 1999 and 2000, respectively, and the
terms of Class II Superior directors expire in 2001.
Under the DGCL, the number of directors shall be fixed by, or in the manner
provided by, the bylaws unless the certificate of incorporation fixes the
number of directors, in which case a change in the number of directors may be
made only by amendment of the certificate. Under the GeoWaste Certificate of
Incorporation and the GeoWaste Bylaws, the GeoWaste Board shall consist of not
less than four nor more than eleven directors the exact number to be
determined by the GeoWaste Board. The GeoWaste Board currently consists of
five members, each of whom serves a one-year term and until his or her
successor is elected and qualified.
Cumulative voting, which enhances the ability of minority stockholders to
elect directors, is not available under either the WBCL or the DGCL unless
provided for in the corporation's articles of incorporation or certificate of
incorporation, as the case may be. Neither the Superior Restated Articles nor
the GeoWaste Certificate of Incorporation provides for cumulative voting.
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REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Under the WBCL, a director may generally be removed by the stockholders,
with or without cause, if the number of votes cast to remove the director
exceeds the number of votes cast not to remove him or her, unless the articles
of incorporation, or bylaws adopted under authority granted in the articles of
incorporation, provide for a greater voting requirement. The Superior Restated
Articles provide that a director may be removed from office with or without
cause only by the affirmative vote of stockholders holding at least 66 2/3% of
the voting power of the then outstanding shares of all classes of capital
stock of Superior. If the Superior Board recommends removal of a director by
the affirmative vote of at least two-thirds of the directors then in office,
then the Superior stockholders may remove a director from office with or with
cause by a majority of such outstanding shares. Under the DGCL, in the case of
a corporation whose board is classified, a director may be removed only for
cause by the holders of a majority of the outstanding shares entitled to vote
for the election of directors, unless the certificate of incorporation
provides otherwise. The GeoWaste Bylaws provide that the entire GeoWaste Board
or any individual directors may be removed with or without cause at a
stockholders meeting called for that purpose by an affirmative vote of the
holders of no less than the number of shares entitled to elect such director
or directions.
Under the WBCL, the circuit court for the county where a corporation's
principal office or registered office is located may remove a director of the
corporation from office in a proceeding brought either by the corporation or
by its stockholders holding at least 10% of the outstanding shares of any
class, if the court finds that the director engaged in fraudulent or dishonest
conduct or gross abuse of authority or discretion with respect to the
corporation and that removal is in the best interest of the corporation. The
DGCL contains no similar provision.
Under the WBCL, unless the articles of incorporation provide otherwise a
vacancy occurring on the board of directors may be filled by the stockholders
or the directors remaining in office. The Superior Restated Articles and the
Superior Restated Bylaws provide that any vacancy on the Superior Board,
including a vacancy created by the removal or resignation of a director or an
increase in the number of directors, shall be filled by the affirmative vote
of a majority of the directors then in office, although less than a quorum of
the Superior Board. Any director so elected shall serve until the next
election of the class for which such director shall have been chosen and until
his successor shall be elected and qualified. Under the DGCL, unless otherwise
provided in the certificate of incorporation or bylaws, vacancies and newly
created directorships resulting from an increase in the authorized number of
directors elected by all of the stockholders having the right to vote as a
single class may be filled by a majority of the directors then in office or by
the sole remaining director. The GeoWaste Certificate of Incorporation and
GeoWaste Bylaws provide that a newly created directorship resulting from an
increase in the number of directors or any vacancy on the GeoWaste Board will
be filled by the affirmative vote of a majority of the remaining directors
then in office, although less than a quorum, by a plurality of the votes cast
at a meeting of the stockholders. Any director so elected will hold office for
the remainder of the full term of the class in which the new directorship was
created or the vacancy occurred and until such director's successor is elected
and qualified.
The DGCL further provides that, if at the time of filling any vacancy or
newly created directorship, the directors then in office constitute less than
a majority of the whole board (as constituted immediately prior to such
increase), the Delaware Court of Chancery may, upon application of any
stockholder(s) holding at least 10% of the outstanding shares having the right
to vote for directors, order an election to fill such vacancy or newly created
directorship, or to replace the directors chosen by the directors then in
office. The WBCL contains no similar provision.
LIMITATION ON DIRECTORS' LIABILITY; INDEMNIFICATION
The WBCL provides that a director is not liable to the corporation, its
stockholders, or any person asserting rights on behalf of the corporation or
its stockholders for liabilities arising from a breach of, or failure to
perform, any duty resulting solely from his or her status as director, unless
the person asserting liability proves that the
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breach or failure to perform constitutes: (i) willful failure to deal fairly
with the corporation or its stockholders in connection with a matter in which
the director has a material conflict of interest; (ii) a violation of criminal
law, unless the director had reasonable cause to believe that the conduct was
lawful or no reasonable cause to believe that the conduct was unlawful; (iii)
a transaction from which the director derived an improper personal profit; or
(iv) willful misconduct. The WBCL permits a corporation to limit the statutory
immunity from director liability in its articles of incorporation. The
Superior Restated Articles do not contain such limitation.
The WBCL provides that a corporation shall indemnify a director or officer,
to the extent that he or she has been successful on the merits or otherwise in
the defense of a proceeding, for all reasonable expenses incurred in the
proceeding if the director or officer was a party because of his or her status
as a director or officer. Additionally, a corporation shall indemnify a
director or officer against liability incurred by a director or officer in a
proceeding to which the director or officer was a party because he or she is a
director or officer of the corporation, unless liability was incurred because
the director or officer breached or failed to perform a duty that he or she
owes to the corporation and the breach or failure to perform constitutes any
of the conduct as enumerated above relating to liability of directors.
Further, a court of law may order that the corporation provide indemnification
to a director or officer if it finds that the director or officer is entitled
thereto under the applicable statutory provision or is fairly and reasonably
entitled thereto in view of all the relevant circumstances, whether or not
such indemnification is required under the applicable statutory provision.
The WBCL permits a corporation to provide additional rights to
indemnification under its articles of incorporation or bylaws, by written
agreement, by resolution of its board of directors or by a vote of the holders
of a majority of its outstanding shares, except that the corporation may not
indemnify a director or officer unless it is determined by or on behalf of the
corporation that the director or officer did not breach or fail to perform a
duty owed to the corporation which constitutes conduct as enumerated above
relating to liability of directors. The Superior Restated Bylaws provide for
indemnification and advancement of expenses to directors and officers to the
fullest extent required or permitted by the WBCL. This provision is not
exclusive of any other rights to indemnification or the advancement of
expenses to which a director or officer may be entitled to under any written
agreement, resolution of directors, vote of stockholders, by law or otherwise.
The DGCL provides that a corporation's certificate of incorporation may
contain a provision which eliminates or limits the personal liability of a
director to the corporation or its stockholders for monetary damages for a
breach of fiduciary duty as a director, except for (i) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (ii) any breach of the director's duty of loyalty to the corporation
or its stockholders, (iii) an unlawful dividend or stock purchase or
redemption, or (iv) any transaction from which the director derived an
improper personal benefit. The GeoWaste Certificate of Incorporation includes
such a provision eliminating and limiting the personal liability of its
directors to the extent permitted by the DGCL.
Under the DGCL, a corporation may generally indemnify its officers,
directors, employees and agents against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement of any proceedings (other than
proceedings by or in the right of the corporation), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in proceedings by or in the right of the
corporation, except that indemnification may be made only for expenses
(including attorneys' fees) and, in the event the person seeking
indemnification has been adjudicated liable, only to the extent an appropriate
court deems the indemnification for such expenses fair and reasonable. The
DGCL provides that to the extent such persons have been successful in the
defense of any proceeding, they must be indemnified by the corporation against
expenses actually and reasonably incurred in connection therewith. The
GeoWaste Certificate of Incorporation provides that a person who is or was a
director, officer, employee or agent of GeoWaste or is or was serving at the
request of GeoWaste as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise will be
indemnified to the fullest extent permitted by the DGCL, which right to
indemnification is not exclusive of any other right which any person may have
or acquire under any law or otherwise.
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MEETINGS OF STOCKHOLDERS
Under the WBCL, a corporation shall hold a special meeting of stockholders
if (i) a special meeting is called by the board of directors or any person
authorized by the articles of incorporation or bylaws to call a special
meeting, or (ii) the holders of at least 10% of all votes entitled to be cast
on any issue proposed to be considered at the proposed special meeting deliver
a written demand to the corporation describing one or more purposes for which
such meeting is to be held. The Superior Restated Bylaws provide that special
meetings of stockholders, for any purpose or purposes, may be called by (i)
the Chairman of the Board, (ii) the President, (iii) the Superior Board or
such officers as the Superior Board may authorize from time to time, or (iv)
the President or Secretary upon the written request of the holders of record
of at least one-tenth of all the outstanding shares of Superior entitled to
vote on any issue at the meeting.
Under the DGCL, special meetings of stockholders may be called by the board
of directors or by such persons as may be authorized by the certificate of
incorporation or the bylaws. The GeoWaste Bylaws provide that special meetings
of stockholders may be called at any time for any purpose or purposes by a
majority of the GeoWaste Board, the President of GeoWaste, or the GeoWaste
stockholders owning not less than 40% of all the shares entitled to vote in
the election of directors.
QUORUM FOR STOCKHOLDER MEETINGS
The WBCL provides that a majority of the votes entitled to be cast on a
matter by a voting group constitutes a quorum, unless the articles of
incorporation, bylaws adopted under authority granted in the articles of
incorporation, or the WBCL provide otherwise. Neither the Superior Restated
Articles nor the Superior Restated Bylaws deviate from the quorum requirement.
Under the DGCL, a corporation's certificate of incorporation or bylaws may
specify the percentage of votes which constitutes a quorum at a meeting of
stockholders, but no event may a quorum consist of less than one-third of the
shares entitled to vote. The GeoWaste Bylaws provide that a quorum exists when
the holders of a majority of the outstanding shares entitled to vote are
represented either in person or by proxy at such meeting.
STOCKHOLDER VOTING REQUIREMENTS GENERALLY
Under the WBCL, with respect to matters other than the election of
directors, unless a greater number of affirmative votes is required by the
WBCL, the articles of incorporation, or bylaws adopted under authority granted
in the articles of incorporation, if a quorum exists, action on any matter
generally is approved by the stockholders if the votes cast favoring the
action exceed the votes cast opposing the action. Unless otherwise provided in
the articles of incorporation, directors are elected by a plurality of the
votes cast by the shares entitled to vote. The Superior Restated Articles and
the Superior Restated Bylaws contain no provisions imposing greater voting
requirements for the election of officers and directors.
Under the DGCL, unless otherwise provided by the DGCL or a Delaware
corporation's certificate of incorporation or bylaws, if a quorum exists,
directors are elected by a plurality of votes of shares represented at meeting
and entitled to vote, and action on all other matters is approved by the
affirmative vote of a majority of the shares represented at a meeting and
entitled to vote on a particular matter. The GeoWaste Certificate of
Incorporation requires a greater vote on matters as discussed in "--
Supermajority Provisions" below. The GeoWaste Bylaws provide that if a quorum
is present, directors shall be elected by an affirmative vote of a plurality
of shares present in person or represented by proxy at the meeting and
entitled to vote on the election of directors. In all matters other than
election of directors, provided a quorum is present, the affirmative vote of a
majority of shares present in person represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the stockholders,
unless a greater vote is required by law, by the GeoWaste Certificate of
Incorporation or by the GeoWaste Bylaws.
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STOCKHOLDER ACTION BY WRITTEN CONSENT
The WBCL permits action otherwise required to be taken at a stockholders'
meeting to be taken without a meeting if (i) written consents are signed by
all stockholders entitled to vote on the action, or (ii) if the articles of
incorporation so provide, written consents are signed by stockholders having
not less than the minimum number of votes that would be necessary to authorize
the proposed action at a meeting at which all shares entitled to vote were
present and voted. The Superior Restated Bylaws provide that stockholders may
take actions by written consent in lieu of a meeting as described in (i) in
the preceding sentence.
Under the DGCL, unless otherwise provided in the certificate of
incorporation, any action required or which may be taken at any annual or
special meeting of stockholders may be taken without a meeting if written
consents are obtained from the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorized or take
such action at a meeting at which all shares entitled to vote thereat were
present and voted. The GeoWaste Certificate of Incorporation does not limit
this statutory provision.
SUPERMAJORITY PROVISIONS
Except as discussed above in "--Removal of Directors; Filling Vacancies on
the Board of Directors" and below in "--Stockholder Voting in Certain
Significant Transactions; Takeover Legislation," and "--Amendment or Repeal of
the Articles and Bylaws," neither the WBCL nor the Superior Restated Articles
and the Superior Restated Bylaws impose supermajority voting requirements.
Under the DGCL, the certificate of incorporation may provide for the vote of
a larger portion of the stock or of any class or series thereof, or of any
other securities having voting power, or a larger number of the directors,
than is required by the DGCL.
STOCKHOLDER VOTING IN CERTAIN SIGNIFICANT TRANSACTIONS; TAKEOVER LEGISLATION
Under the WBCL, a corporation may sell, lease, exchange or otherwise dispose
of all, or substantially all, of its property, other than in the usual and
regular course of business, if such disposition is approved by a majority of
all the votes entitled to be cast thereon. A merger or share exchange plan
must be approved by each voting group entitled to vote separately on the plan
by a majority of all the votes entitled to be cast on the plan by that voting
group.
The WBCL contains certain provisions that, unless a corporation elects not
to be covered by such provisions, and Superior has so elected, require
approval of a supermajority of stockholders for certain "business
combinations" involving persons who are "significant shareholders" before the
transaction or become "significant shareholders" after the transaction. A
"significant shareholder" is, among others, a person who is, or was within two
years of the transaction, a beneficial owner of 10% or more of the voting
power of the applicable corporation. In such case, unless the business
combination satisfies certain "fair price" criteria, the business combination
requires the approval of 80% of the votes entitled to be cast by the
outstanding voting shares of the corporation voting as a single class and two-
thirds of all such shares excluding the shares owned by a significant
stockholder.
The WBCL additionally regulates a broad range of "business combinations"
between a corporation and an "interested stockholder." "Business combination"
is defined as including a merger or a share exchange, sale of assets, issuance
of stock or rights to purchase stock and certain related party transactions.
An "interested stockholder" is a person who beneficially owns, directly or
indirectly, 10% of the outstanding voting stock of a corporation or who is an
affiliate or associate of the corporation and beneficially owned 10% of the
voting stock within the last three years. In certain cases, the WBCL prohibits
a corporation from engaging in a business combination with an interested
stockholder for a period of three years following the date on which the person
became an interested stockholder unless (i) the board of directors approved
the business combination or the acquisition of the stock prior to the
acquisition date; (ii) the business combination is approved by a majority of
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the outstanding voting stock not owned by the interested stockholder; (iii)
the consideration to be received by stockholders meets certain requirements of
the statute with respect to form and amount; or (iv) the business combination
is of a type specifically excluded from the coverage of the statute. The
Superior Restated Articles include a provision substantially identical to the
Wisconsin Business Combination Statute.
While a takeover offer is being made, or after a takeover offer has been
publicly announced and before it is concluded, the WBCL requires the approval
of the holders of a majority of shares entitled to vote before a public
corporation may acquire more than 5% of its voting shares at a price above
market value from a person who holds more than 3% of its voting shares and has
held such shares for less than two years, unless at least an "equal" offer is
made to acquire all voting shares and all securities which may be converted
into voting shares. Similar approval is required before a public corporation
may sell or option assets which amount to at least 10% of its market value
unless the corporation has at least three directors who are not either
officers or employees of the corporation and a majority of the directors who
are not either officers or employees vote not to be governed by this
provision.
The WBCL provides that in particular circumstances the voting of shares of
an "issuing public corporation" (a Wisconsin corporation which has at least
100 Wisconsin resident stockholders, 500 or more stockholders of record and
total assets exceeding $1 million) held by any person in excess of 20% of the
voting power is limited to 10% of the full voting power of such excess shares.
Full voting power may be restored if a majority of the voting power of shares
represented at a meeting, including those held by the party seeking
restoration, are voted in favor of such restoration.
The DGCL requires that a merger or consolidation or a sale, lease or
exchange of all or substantially all of the property and assets of a
corporation be approved by the holders of a majority of the outstanding stock
of the corporation entitled to vote thereon.
The DGCL generally prohibits a stockholder owing 15% or more of a
corporation's outstanding voting stock (an "interested stockholder") from
engaging in certain business combinations involving the corporation during the
three years after the time the person became an interested stockholder unless
(i) prior to such time, the board of directors approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder, (ii) upon the consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the
stockholder owned at least 85% of the voting stock outstanding at the time the
transaction commenced, (iii) at or subsequent to such time, the transaction is
approved by the board of directors and by the stockholders by a vote of two-
thirds of the disinterested outstanding voting stock, (iv) the corporation's
original certificate of incorporation provides that the corporation shall not
be governed by the statute or (v) a majority of shares entitled to vote
approve an amendment to the corporation's certificate of incorporation or
bylaws expressly electing not to be governed by the statute (but such
amendment may not be effective until one year after it was adopted and may not
apply to any business combination between the corporation and any person who
became an interested stockholder on or prior to such adoption). These business
combinations include, with certain exceptions, mergers, consolidations, sales
of assets and transactions benefiting the interested stockholder. The GeoWaste
Certificate of Incorporation and the GeoWaste Bylaws contain no provisions
electing not to be governed by this statute.
STATUTORY STOCKHOLDER LIABILITY
The WBCL provides that the stockholders of a corporation are personally
liable up to an amount equal to the par value of shares owned by them, and to
the consideration for which shares without par value were issued, for debts
owing to employees of the corporation for services performed for such
corporation, but not exceeding six months' service in any case. The liability
imposed by the predecessor to this statute was interpreted in a trial court
decision to extend to the original issue price for shares, rather than the
stated par value. Although affirmed by the Wisconsin Supreme Court, the case
offers no precedential value due to the fact that the decision was affirmed by
an equally divided court. The DGCL contains no comparable provision.
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DERIVATIVE ACTIONS
Under both the WBCL and the DGCL, a stockholder may bring a derivative
action if he or she was a stockholder at the time of the alleged wrongdoing,
or acquired the shares by operation of law from a person who was a stockholder
at such time. Under the WBCL, a stockholder may not commence a derivative
action until he makes a written demand on the corporation to take suitable
action and a period of ninety days expires, unless the stockholder is notified
that the corporation has rejected the demand or irreparable injury to the
corporation would result by waiting for the period to expire. Under Delaware
law, a stockholder has no right to bring a derivative action until he makes a
demand on the corporation to institute such action or demonstrates that demand
would be futile.
DISSENTERS' RIGHTS AND APPRAISAL RIGHTS
Under the WBCL, a stockholder of a corporation is generally entitled to
receive payment of the fair value of such stockholder's stock if such
stockholder dissents from a proposed merger or stock exchange or a sale or
exchange of all or substantially all of the property and assets of the
corporation. However, except with respect to business combinations involving
significant stockholders (as such terms are described in the first paragraph
under "--Stockholder Voting in Certain Significant Transactions; Takeover
Legislation" above), dissenters' rights are not available to holders of shares
that are registered on a national securities exchange or quoted on the Nasdaq
National Market. Currently, Superior Common Stock is quoted on the Nasdaq
National Market.
Under the DGCL, a stockholder of a corporation who has not voted for or
consented to a merger or consolidation is entitled to an appraisal by the
Delaware Court of Chancery of the fair value of his shares of stock. Such
appraisal rights are not available to a stockholder of a Delaware corporation
if the shares are (1) listed on a national securities exchange or designated
as a national market system security on an interdealer quotation system by the
National Association of Securities Dealers, or (2) held of record by more than
2,000 stockholders. Notwithstanding the foregoing, a stockholder does have
appraisal rights with respect to such shares if the stockholder is required by
the terms of the agreement of merger or consolidation to accept anything for
his shares other than (1) shares of stock of the corporation surviving or
resulting from the merger or consolidation, or depository receipts in respect
thereof, (2) shares of stock of any other corporation, or depository receipts
in respect thereof, which shares or receipts are so listed or designated or
held of record by more than 2,000 stockholders, (3) cash in lieu of fractional
shares or fractional depository receipts, or (4) any combination of the
foregoing.
Delaware law does not provide appraisal rights to stockholders who dissent
from the sale of all or substantially all of the corporation's assets unless
the corporation's certificate of incorporation provides otherwise. The
GeoWaste Certificate of Incorporation does not provide for appraisal rights in
the context of a sale of all or substantially all of GeoWaste's assets.
STOCKHOLDER INSPECTION OF BOOKS AND RECORDS
The WBCL allows a stockholder, upon giving the required notice, to inspect
and copy the corporation's bylaws during regular business hours at a
reasonable location specified by the corporation. A stockholder fulfilling
specified requirements may inspect and copy, during regular business hours at
a reasonable location specified by the corporation, excerpts of any minutes or
records that the corporation is required to keep as permanent records,
accounting records of the corporation, and the record of stockholders, except
that the corporation may provide the stockholder with a list of stockholders
compiled no earlier than the date of the stockholder's demand instead of
allowing the stockholder to inspect and copy the record of stockholders.
The DGCL permits any stockholder the right, during usual business hours, to
inspect and copy the corporation's stock ledger, stockholder list and other
books and records for any proper purpose upon written demand under oath
stating the purpose thereof.
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STOCKHOLDER RIGHTS PLAN
Superior stockholders have a Right for each share of Superior Common Stock
pursuant to the Rights Agreement as described in above "INFORMATION REGARDING
SUPERIOR CAPITAL STOCK--Common Stock Purchase Rights."
GeoWaste does not have a stockholder rights plan.
LOANS TO DIRECTORS
Under the WBCL, unless it is an advance or is made to defray expenses made
in the ordinary course of the corporation's business or an advance of expenses
with respect to indemnification, a corporation may not make loans to or
guaranty the obligation of a director unless the particular loan or guaranty
is approved by a majority of the votes represented by the voting shares of all
classes, voting as a single group, excluding votes owned or controlled by the
benefited director, or the board of directors determines that the loan or
guaranty benefits the corporation and either approves the specific loan or
guaranty or a general plan authorizing loans or guarantees.
Under the DGCL, a corporation may lend money to, or guaranty any obligation
of, or otherwise assist any officer or other employee of the corporation,
including any officer or employee who is a director of the corporation,
whenever, in the judgment of the directors, such loan, guaranty or assistance
may reasonably be expected to benefit the corporation. The loan, guaranty or
other assistance may be with or without interest, and may be unsecured, or
secured in such manner as the board of directors shall approve, including,
without limitation, a pledge of shares of stock of the corporation.
AMENDMENT OR REPEAL OF THE ARTICLES AND BYLAWS
In general, the WBCL provides that a corporation's articles of incorporation
may be amended through a proposal submitted by the board of directors to the
stockholders for their approval. Unless articles of incorporation or bylaws
provide otherwise, or unless class voting is required, or unless the WBCL
provides otherwise, the amendment may be approved by a majority vote of the
shares entitled to vote thereon. Class votes are required in certain
circumstances which, in general, affect a class of stock adversely or
uniquely. In certain very limited circumstances, either specified in the
corporation's articles of incorporation or which involve certain ministerial
actions which are likely to be immaterial to the stockholders, the WBCL
permits the articles of incorporation to be amended by action of the board of
directors without stockholder approval. In general, under Wisconsin law, the
bylaws of a corporation may be amended by the board of directors, except in
those instances in which the corporation's articles of incorporation or bylaws
provide otherwise. Action by stockholders to amend or repeal amendments to the
bylaws can overrule action taken by the board of directors. Except with
respect to the provisions creating a staggered board of directors (which can
only be amended by the affirmative vote of shareholders holding at least 66
2/3% of the voting power of the then outstanding shares of all classes of
Superior capital stock generally possessing voting rights in the election of
directors), the Superior Restated Bylaws provide that the Superior Board, by a
majority vote of directors then in office, may adopt, amended or repeal any
and all of the Superior Restated Bylaws and the Superior stockholders, by a
vote of a majority of the shares entitled to vote, may adopt, amend or repeal
any and all of the Superior Restated Bylaws.
Under the DGCL, a corporation's certificate of incorporation generally may
be amended only if approved by a majority of the outstanding stock entitled to
vote thereon. A corporation may confer the power to adopt, amend or repeal
bylaws on the directors, without divesting or limiting the powers of the
stockholders to adopt, amend or repeal bylaws. The GeoWaste Certificate of
Incorporation provides that in furtherance and not in limitation of the powers
conferred by the DGCL, the GeoWaste Board is expressly authorized to amend,
alter or repeal the GeoWaste Bylaws not adopted by the stockholders and to
adopt new bylaws so long as the new bylaws are not inconsistent with any
bylaws adopted by the stockholders. Notwithstanding anything to the contrary
in the GeoWaste Bylaws, the GeoWaste Bylaws which are adopted by an
affirmative vote of the stockholders may be subsequently altered, amended,
repealed or canceled only by the vote of holders of shares representing not
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less than a majority of the voting power entitled to vote generally for the
election of directors or such other percentage of the voting power as may be
stipulated by the stockholders at the time of the initial adoption of such
bylaws. Any new bylaw which is inconsistent with any other bylaw previously
adopted by a vote of the stockholders may be adopted only by a vote of the
stockholders.
DIVIDEND DECLARATIONS
Under the WBCL, no distribution may be made if, after giving it effect,
either (i) the corporation would not be able to pay its debts as they become
due in the usual course of business, or (ii) the corporation's total assets
would be less than the sum of its total liabilities plus, unless the articles
of incorporation permit otherwise, the amount that would be needed, if the
corporation were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution of stockholders whose preferential
rights are superior to those receiving the distribution. The Superior Restated
Articles provide that the Superior Board may, in its sole discretion, out of
funds legally available for the payment of dividends and at such times and in
such manner as determined by the Superior Board, declare and pay dividends on
Superior Common Stock and that in the event of an voluntary or involuntary
liquidation, dissolution or winding up of Superior, after there shall have
been paid to or set aside for the holders of preferred stock the full
preferential amounts, if any, to which they are entitled, the holders of
outstanding shares of Superior Common Stock shall be entitled to receive pro
rata, according to the number of shares held by each, the remaining assets of
Superior available for distributions.
Under the DGCL, the directors may, subject to any restrictions in a
corporation's certificate of incorporation, declare and pay dividends, either
(i) out of its surplus, or (ii) in case there shall be no surplus, out of the
net profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year. The directors may not declare a dividend out of net
profits, however, if the capital of the corporation is less than the aggregate
amount of capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets. The GeoWaste
Certificate of Incorporation contains no restrictions on such powers.
LEGAL MATTERS
The validity of the shares of Superior Common Stock to be issued in the
Merger and certain tax consequences of the Merger will be passed upon for
Superior by Foley & Lardner, Milwaukee, Wisconsin. Certain tax consequences of
the Merger will be passed upon for GeoWaste by Stroock & Stroock & Lavan LLP,
New York, New York.
EXPERTS
The consolidated financial statements of Superior appearing in the 1997
Superior Form 10-K have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidation financial statements are
incorporated by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of GeoWaste and its subsidiaries at
December 31, 1997 and 1996 and for each of the years in the three year period
ended December 31, 1997, included in the 1997 GeoWaste Form 10-K incorporated
by reference herein, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of PricewaterhouseCoopers
LLP, independent public accountants as stated in their report, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Special Meeting, will have the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
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STOCKHOLDER PROPOSALS
If the Merger is consummated, stockholders of GeoWaste who receive Superior
Common Stock in the Merger will become shareholders of Superior at the
Effective Time. Under applicable regulations of the Commission, all proposals
of stockholders to be considered for inclusion in Superior's proxy statement
for, and to be considered at, the 1999 annual meeting of Superior's
shareholders must have been received in writing at the offices of Superior,
c/o Secretary, Suite 200, 125 South 84th Street, Milwaukee, Wisconsin 53214 by
not later than December 5, 1998. The Superior Restated Bylaws also prescribe
certain time limitations on procedures regarding prior written notice to
Superior by shareholders, which limitations and procedures must be complied
with for proposals from shareholders to be included in Superior's proxy
statement for, and to be considered at, such annual meeting. Any shareholder
who wishes to make such a proposal should request a copy of the applicable
provisions of the Superior Restated Bylaws from the secretary of Superior.
Due to the contemplated consummation of the Merger, GeoWaste does not
currently expect to hold a 1999 annual meeting of GeoWaste's stockholders
because, following the Merger, GeoWaste will not be a publicly traded company.
In the event the Merger is not consummated and such a meeting is held,
proposals of stockholders to be considered for inclusion in GeoWaste's proxy
statement for, and to be considered at, such meeting, must have been received
in writing by GeoWaste a reasonable time before solicitation of proxies for
such meeting is made.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 2, 1998
BETWEEN
SUPERIOR SERVICES, INC.
AND
GEOWASTE INCORPORATED
<PAGE>
TABLE OF CONTENTS
ARTICLE I
The Merger
<TABLE>
<C> <S> <C>
Section 1.1. The Merger............................................... A-1
Section 1.2. Effective Time........................................... A-2
Section 1.3. Closing.................................................. A-2
Section 1.4. Effects of the Merger.................................... A-2
Section 1.5. Certificate of Incorporation and Bylaws.................. A-2
Section 1.6. Directors................................................ A-3
Section 1.7. Officers................................................. A-3
ARTICLE II
Conversion of Securities; Exchange of Certificates
Section 2.1. Effect on Capital Stock.................................. A-3
Section 2.2. Exchange Ratio........................................... A-3
Section 2.3. Exchange of Certificates................................. A-4
Section 2.4. Stock Options and Warrants............................... A-5
Section 2.5. Exchange Agent........................................... A-7
Section 2.6. Transfer of Shares After the Effective Time.............. A-7
Section 2.7. Further Assurances....................................... A-7
ARTICLE III
Representations and Warranties of the Company
Section 3.1. Organization............................................. A-8
Section 3.2. Subsidiaries............................................. A-8
Section 3.3. Capitalization........................................... A-8
Section 3.4. Authority................................................ A-9
Section 3.5. Consent and Approvals; No Violations..................... A-9
Section 3.6. SEC Reports and Financial Statements..................... A-9
Section 3.7. Absence of Certain Changes or Events..................... A-10
Section 3.8. No Undisclosed Liabilities............................... A-10
Section 3.9. Information Supplied..................................... A-11
Section 3.10. Benefit Plans............................................ A-11
Section 3.11. Litigation............................................... A-12
Section 3.12. Compliance with Applicable Law........................... A-12
Section 3.13. Tax Matters.............................................. A-12
Stockholder Vote; State Takeover Statutes; Appraisal
Section 3.14. Rights................................................... A-13
Section 3.15. Accounting Matters....................................... A-13
Section 3.16. Brokers; Schedule of Fees and Expenses................... A-13
Section 3.17. Opinion of Financial Advisor............................. A-13
Section 3.18. Environmental Matters.................................... A-14
Section 3.19. Labor Matters............................................ A-15
Section 3.20. Title to Assets.......................................... A-15
Section 3.21. Material Contracts....................................... A-15
Section 3.22. Intellectual Property.................................... A-15
Section 3.23. Certain Transactions..................................... A-15
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
Section 3.24. Indebtedness............................................. A-16
Section 3.25. Certain Business Practices............................... A-16
Section 3.26. Year 2000 Compliance..................................... A-16
Section 3.27. Tax Free Reorganization.................................. A-16
Section 3.28. Severance Payments....................................... A-16
ARTICLE IV
Representations and Warranties of Parent and Sub
Section 4.1. Organization............................................. A-16
Section 4.2. Capitalization........................................... A-17
Section 4.3. Authority................................................ A-17
Section 4.4. Consents and Approvals; No Violations.................... A-17
Section 4.5. SEC Reports and Financial Statements..................... A-18
Section 4.6. Absence of Certain Changes or Events..................... A-18
Section 4.7. No Undisclosed Liabilities............................... A-18
Section 4.8. Interim Operations of Sub................................ A-19
Section 4.9. Litigation............................................... A-19
Section 4.10. Compliance with Applicable Law........................... A-19
Section 4.11. Tax Matters.............................................. A-19
Section 4.12. Brokers.................................................. A-20
Section 4.13. Registration Statement................................... A-20
Section 4.14. Board Approval........................................... A-20
Section 4.15. Issuance of Parent Stock................................. A-20
Section 4.16. Company Stock............................................ A-20
Section 4.17. Tax Free Reorganization.................................. A-20
Section 4.18. Accounting Matters....................................... A-20
Section 4.19. Environmental Matters.................................... A-21
Section 4.20. Labor Matters............................................ A-21
Section 4.21. Material Contracts....................................... A-21
Section 4.22. Intellectual Property.................................... A-21
Section 4.23. Certain Transactions..................................... A-21
Section 4.24. Certain Business Practices............................... A-22
Section 4.25. Year 2000 Compliance..................................... A-22
ARTICLE V
Covenants
Section 5.1. Affirmative Covenants of the Company..................... A-22
Section 5.2. Negative Covenants of the Company........................ A-22
Section 5.3. Negative Covenants of Parent............................. A-24
ARTICLE VI
Additional Agreements
Section 6.1. Access and Information................................... A-24
Section 6.2. Confidentiality.......................................... A-24
Section 6.3. Registration Statement; Proxy Statement.................. A-24
Section 6.4. Stockholder Approval..................................... A-25
Further Action; Reasonable Best Efforts; Notice of
Section 6.5. Certain Events........................................... A-26
</TABLE>
<PAGE>
<TABLE>
<C> <S> <C>
Section 6.6. Public Announcements..................................... A-26
Section 6.7. Directors' and Officers' Insurance and Indemnification... A-26
Section 6.8. HSR Act Matters.......................................... A-27
Section 6.9. No Solicitation.......................................... A-28
Section 6.10. Affiliate Agreements..................................... A-29
Section 6.11. Listing of Parent Shares; Blue Sky Laws.................. A-29
Section 6.12. Expenses................................................. A-29
Section 6.13. Tax-Free Treatment....................................... A-31
Section 6.14. Pooling Accounting....................................... A-31
Section 6.15. No Action................................................ A-31
Section 6.16. Conduct of Business of Sub............................... A-31
Section 6.17. Employee Benefit Plans................................... A-31
Section 6.18. Compliance by Sub........................................ A-32
Section 6.19. Final Tax Returns........................................ A-32
Section 6.20. Press Release............................................ A-32
ARTICLE VII
Closing Conditions
Conditions to Obligations of Parent, Sub and the Company
Section 7.1. to Effect the Merger..................................... A-32
Section 7.2. Additional Conditions to Obligations of Parent and Sub... A-33
Section 7.3. Additional Conditions to Obligations of the Company...... A-34
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.1. Termination.............................................. A-34
Section 8.2. Effect of Termination.................................... A-35
Section 8.3. Amendment................................................ A-35
Section 8.4. Waiver................................................... A-35
ARTICLE IX
General Provisions
Nonsurvival of Representations, Warranties and
Section 9.1. Agreements............................................... A-35
Section 9.2. Notices.................................................. A-36
Section 9.3. Certain Definitions...................................... A-36
Section 9.4. Headings................................................. A-37
Section 9.5. Severability............................................. A-37
Section 9.6. Entire Agreement......................................... A-37
Section 9.7. Specific Performance..................................... A-37
Section 9.8. Assignment............................................... A-38
Section 9.9. No Third Party Beneficiaries............................. A-38
Section 9.10. Governing Law............................................ A-38
Section 9.11. Disclosure Schedule...................................... A-38
Section 9.12. Counterparts............................................. A-38
</TABLE>
<PAGE>
INDEX TO DEFINED TERMS
<TABLE>
<CAPTION>
TERM SECTION
- ---- -------
<S> <C>
Acquisition Proposal............................................... 6.9(a)
Acquisition Agreement.............................................. 6.9(b)
Affiliate.......................................................... 9.3(a)
Agreement.......................................................... Preamble
Allen & Company.................................................... Recitals
APB No. 16......................................................... Recitals
beneficial owner................................................... 9.3(b)
Blue Sky Laws...................................................... 9.3(c)
business day....................................................... 9.3(d)
Canceled Shares.................................................... 2.1(a)
CEO/CFO Options.................................................... 2.4(a)
CERCLA............................................................. 3.18(c)
Certificate of Merger.............................................. 1.2
Certificates....................................................... 2.3(b)
Chairman Option.................................................... 2.4(b)
Claim.............................................................. 6.7(a)
Closing............................................................ 1.3
Closing Date....................................................... 1.3
Code............................................................... Recitals
Company............................................................ Preamble
Company Affiliate.................................................. 6.10
Company Benefit Plans.............................................. 3.10(a)
Company Bylaws..................................................... 3.1
Company Certificate of Incorporation............................... 3.1
Company Common Stock............................................... 2.1
Company Disclosure Schedule........................................ Article III
Company Employee................................................... 6.17(e)
Company Material Adverse Effect.................................... 3.1
Company Multiemployer Pension Plans................................ 3.10(d)
Company Pension Plans.............................................. 3.10(a)
Company Permits.................................................... 3.12
Company Preferred Stock............................................ 3.3
Company Required Approvals......................................... 3.5
Company SEC Documents.............................................. 3.6
Company Stockholder Approval....................................... 3.4
Company Termination Breach......................................... 8.1(b)
Confidentiality Agreement.......................................... 6.2
Constituent Corporations........................................... 1.1
Continued Employee................................................. 6.17(b)
control............................................................ 9.3(e)
Deutsche Bank...................................................... 3.16
DGCL............................................................... Recitals
Effective Time..................................................... 1.2
Environmental Laws................................................. 3.18(i)
Environmental Permits.............................................. 3.18(i)
ERISA.............................................................. 3.10(b)
Exchange Act....................................................... 3.5
Exchange Agent..................................................... 2.3(a)
Exchange Fund...................................................... 2.3(a)
Exchange Ratio..................................................... 2.2(a)
Expenses........................................................... 6.12(f)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
- ---- -------
<S> <C>
Fairness Opinion...................................................... 3.17
Final Parent Stock Price.............................................. 2.2(b)
GAAP.................................................................. 3.6
GeoWaste Board Recommendation......................................... 3.4
Governmental Entity................................................... 3.5
Hazardous Material.................................................... 3.18(c)
HSR Act............................................................... 3.5
Indemnified Parties................................................... 6.7(a)
Indemnified Party..................................................... 6.7(a)
Intellectual Property................................................. 3.22
Liens................................................................. 3.2
Merger................................................................ Recitals
Merger Consideration.................................................. 2.3(b)
1992 Plan............................................................. 2.4(a)
1992 Plan Options..................................................... 2.4(a)
1996 Plan............................................................. 2.4(b)
1996 Plan Options..................................................... 2.4(b)
Non-Plan Options...................................................... 2.4(b)
Option Certificates................................................... 2.3(c)
Parent................................................................ Preamble
Parent Articles of Incorporation...................................... 4.4
Parent Bylaws......................................................... 4.4
Parent Material Adverse Effect........................................ 4.1
Parent Permits........................................................ 4.10
Parent Preferred Stock................................................ 4.3
Parent Required Consents.............................................. 4.4
Parent SEC Documents.................................................. 4.5
Parent Stock.......................................................... 2.1(b)
Parent Termination Breach............................................. 8.1(c)
Person................................................................ 9.3(f)
Pooling Affiliate..................................................... 6.10
Proxy Statement....................................................... 3.5
Registration Statement................................................ 4.13
Regulated Materials................................................... 3.18(c)
Representatives....................................................... 6.1
SEC................................................................... 3.5
Securities Act........................................................ 3.6
Shelf Registration Statement.......................................... 2.4(a)
Stock Certificates.................................................... 2.3(c)
Stockholders' Meeting................................................. 6.4
Sub................................................................... Preamble
Sub Bylaws............................................................ 4.4
Sub Certificate of Incorporation...................................... 4.4
Sub Common Stock...................................................... 2.1(c)
subsidiary............................................................ 9.3(g)
Surviving Corporation................................................. 1.1
Surviving Corporation Bylaws.......................................... 1.5(b)
Surviving Corporation Certificate of Incorporation.................... 1.5(a)
Surviving Corporation Common Stock.................................... 2.1(c)
Taxes................................................................. 3.13(e)
Termination Date...................................................... 8.1(i)
Termination Fee....................................................... 6.12(b)
Warrants.............................................................. 2.4
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger (this "Agreement") dated as of July 2, 1998
between Superior Services, Inc., a Wisconsin corporation ("Parent"), and
GeoWaste Incorporated, a Delaware corporation (the "Company").
Whereas, the respective Boards of Directors of Parent and the Company deem
it advisable, consistent with their respective long-term business strategies
and in the best interests of their respective stockholders, that a wholly-
owned subsidiary of Parent, which will be incorporated under the laws of the
State of Delaware promptly after the date hereof ("Sub"), merge with and into
the Company (the "Merger") pursuant to the terms and subject to the conditions
set forth in this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), and such Boards of Directors have approved the
Merger and this Agreement;
Whereas, for federal income tax purposes, it is intended that the Merger
will qualify as a tax-free reorganization pursuant to Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and this Agreement is
intended to be and is hereby adopted as a plan of reorganization;
Whereas, for financial accounting purposes, it is intended that the business
combination to be effected by the Merger be accounted for as a "pooling of
interests" pursuant to Opinion No. 16 "Business Combinations" of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, as amended by applicable pronouncements by the Financial
Accounting Standards Board, and all related published rules, regulations and
policies of the Securities and Exchange Commission ("APB No. 16");
Whereas, concurrently with the execution of this Agreement, and as an
inducement to Parent to enter into this Agreement, executive officers and
directors of the Company beneficially owning shares of Company Common Stock
(as defined herein) have entered into Stockholder Support Agreements with
Parent, pursuant to which such executive officers and directors have agreed,
among other things, to vote all such shares of Company Common Stock in favor
of approval and adoption of this Agreement and the Merger; and
Whereas, concurrently with the execution of this Agreement, and as an
inducement to the Parent to enter into this Agreement, Allen & Company
Incorporated ("Allen & Company") and certain Persons (as defined herein)
affiliated with Allen & Company, who are stockholders of the Company, have
each entered into a Stockholder Support Agreement with the Parent, pursuant to
which such Persons have agreed, among other things, to vote all shares of
Company Common Stock beneficially owned by them as of the record date for the
Stockholders' Meeting (as defined herein) in favor of approval and adoption of
this Agreement and the Merger.
Now, Therefore, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent and the Company hereby agree as
follows:
ARTICLE I
The Merger
Section 1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, at the Effective
Time (as defined in Section 1.2) the Company and Sub shall consummate the
Merger. At the Effective Time, the separate corporate existence of Sub shall
cease, Sub shall be merged with and into the Company, the Company shall
continue as the surviving corporation (Sub and the Company are sometimes
referred to herein as the "Constituent Corporations" and the Company is
sometimes referred to herein as the "Surviving Corporation") and the Company
shall succeed to and assume all the rights and obligations of Sub in
accordance with the DGCL. The name of the Surviving Corporation shall be
Superior-GeoWaste Incorporated.
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<PAGE>
Section 1.2. Effective Time. As promptly as practicable, and in no event
later than three (3) business days, after the satisfaction or waiver of the
conditions set forth in Article VII, the parties shall cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger"),
together with any required related certificates, with the Secretary of State
of the State of Delaware, in such form as required by, and executed in
accordance with the applicable provisions of, the DGCL and in such form as
approved by the Company and Parent prior to such filing. The Merger shall
become effective at the time the original, properly executed Certificate of
Merger is filed with the Secretary of State of the State of Delaware in
accordance with the DGCL or at such other time which the parties hereto shall
have agreed upon and designated in the Certificate of Merger as the Effective
Time. The Certificate of Merger shall be submitted for filing at the time of
the Closing and a draft thereof may be submitted prior thereto for pre-
clearance. The time at which the Merger shall become effective is referred to
herein as the "Effective Time."
Section 1.3. Closing. Upon the terms and subject to the conditions of this
Agreement, the closing of the Merger (the "Closing") will take place at 10:00
a.m., New York time, on a date to be mutually agreed by Parent and the Company
(or, failing such agreement, on the second business day) after satisfaction or
waiver of the conditions set forth in Article VII (the "Closing Date"), at the
offices of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, unless another date, time or place is agreed to in writing by the
parties hereto. Notwithstanding any provision of this Agreement to the
contrary, the Closing shall be deemed to be effective for all business,
accounting, tax, legal and other purposes as of the Effective Time.
Section 1.4. Effects of the Merger. The Merger shall have the effects set
forth in this Agreement, the Certificate of Merger and the applicable
provisions of the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public and of a
private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all of the rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as for stock
subscriptions, and all other things in action or belonging to each of the
Constituent Corporations shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest of the Constituent Corporations shall thereafter effectually be the
property of the Surviving Corporation as they were of the respective
Constituent Corporations, and the title to any real estate vested, by deed or
otherwise, in either of the Constituent Corporations, shall not revert or be
in any way impaired; but all rights of creditors and all liens upon any
property of either of the Constituent Corporations shall be preserved
unimpaired, and all debts, liabilities and duties of the respective
Constituent Corporations shall thereafter attach to the Surviving Corporation,
and may be enforced against it to the same extent as if said debts and
liabilities had been incurred or contracted by it.
Section 1.5. Certificate of Incorporation and Bylaws. At the Effective Time:
(a) The certificate of incorporation of the Company in effect immediately
prior to the Effective Time shall be amended and restated in its entirety
to read substantially the same as the certificate of incorporation of Sub
(which certificate of incorporation shall include the provisions required
by Section 6.7(d)), except that such certificate of incorporation shall
state the name of the Company as Superior-GeoWaste Incorporated and, as so
amended and restated, shall be the certificate of incorporation of the
Surviving Corporation (the "Surviving Corporation Certificate of
Incorporation") until amended in accordance with the terms thereof and
applicable law.
(b) The bylaws of the Company in effect immediately prior to the
Effective Time shall be amended and restated in their entirety to read
substantially the same as the bylaws of Sub (which bylaws shall include the
provisions required by Section 6.7(c)), and, as so amended and restated,
shall be the bylaws of the Surviving Corporation (the "Surviving
Corporation Bylaws") until amended in accordance with the terms thereof and
applicable law.
A-2
<PAGE>
Section 1.6. Directors. The directors of Sub at the Effective Time shall,
after the Effective Time, be the directors of the Surviving Corporation, each
to hold office from the Effective Time and until his or her successor is duly
appointed and qualified or until his or her earlier death, resignation or
removal in accordance with the Surviving Corporation Certificate of
Incorporation and Surviving Corporation Bylaws.
Section 1.7. Officers. The officers of Sub at the Effective Time shall,
after the Effective Time, be the officers of the Surviving Corporation, each
to hold office from the Effective Time and until his or her successor is duly
appointed and qualified or until his or her earlier death, resignation or
removal in accordance with the Surviving Corporation Certificate of
Incorporation and Surviving Corporation Bylaws.
ARTICLE II
Conversion of Securities; Exchange of Certificates
Section 2.1. Effect on Capital Stock. Subject to the provisions of this
Article II, at the Effective Time, by virtue of the Merger and without any
action on the part of Sub, the Company, or any holder of shares of the
Company's common stock, par value $.10 per share (the "Company Common Stock"),
or shares of the capital stock of Sub:
(a) Cancellation of Treasury Stock and Parent-Owned Stock. All shares of
Company Common Stock that are owned, as of the Effective Time, by the
Company as treasury stock and all shares of Company Common Stock owned, as
of the Effective Time, by Parent, Sub or any other direct or indirect
subsidiary of Parent, if any, shall be canceled and retired and shall cease
to exist (collectively, the "Canceled Shares") and no stock of Parent or
other consideration shall be delivered in exchange therefor.
(b) Exchange Ratio for Company Common Stock. Each share of Company Common
Stock which is issued and outstanding immediately prior to the Effective
Time (other than shares of Company Common Stock which constitute Canceled
Shares) shall be converted into and represent the right to receive a number
of shares of Parent Stock (as defined below) equal to the Exchange Ratio
(as defined in Section 2.2(a)). "Parent Stock" means validly issued, fully
paid, nonassessable (except as provided in Section 180.0622(2)(b) of the
Wisconsin Statutes) shares of Parent's common stock, par value $.01 per
share, including the common stock purchase rights associated therewith
under the Rights Agreement dated February 21, 1997, between Parent and
LaSalle National Bank, as rights agent. If between the date of this
Agreement and the Effective Time the outstanding shares of Parent Stock or
Company Common Stock shall have been changed to a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares, the Exchange Ratio shall be correspondingly adjusted to reflect
such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares. All of the shares of Company
Common Stock to be converted into Parent Stock pursuant to this Section
2.1(b) shall cease to be outstanding, shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive the number of
shares of Parent Stock issuable therefor upon the surrender of such
certificate in accordance with Section 2.3 hereof, without interest, and
cash in lieu of fractional shares as contemplated by Section 2.3(e).
(c) Conversion of Sub Common Stock. Each issued and outstanding share of
the common stock, par value $.01 per share ("Sub Common Stock"), of Sub,
shall be converted into one share of common stock, par value $.01 per share
("Surviving Corporation Common Stock"), of the Surviving Corporation and
shall constitute the only issued and outstanding Surviving Corporation
Common Stock.
Section 2.2. Exchange Ratio.
(a) Calculation of Exchange Ratio. The "Exchange Ratio" shall be equal to
the quotient obtained by dividing $2.65 by the Final Parent Stock Price;
provided, however, that if the Final Parent Stock Price is (i) equal to or
less than $27.50, then the Exchange Ratio shall be 0.0964 or (ii) equal to
or greater than
A-3
<PAGE>
$32.50, then the Exchange Ratio shall be 0.0815. If the Final Parent Stock
Price is less than $25.00, the Company shall have the right to terminate
this Agreement in accordance with Section 8.1(h).
(b) Final Parent Stock Price. For purposes hereof, the "Final Parent
Stock Price" shall mean the average per share closing price of the Parent
Stock quoted on the Nasdaq National Market, as reported by Bloomberg L.P.,
for the ten (10) consecutive trading days (on which shares of the Parent
Stock are actually traded) immediately preceding the fifth trading day
prior to the initially scheduled date of the meeting of the stockholders of
the Company at which the approval of the Merger by the Company's
stockholders is sought (exclusive of any adjournments or postponements
thereof).
(c) Press Release. Promptly after the close of trading on the Nasdaq
National Market on the tenth day of the ten (10) trading days referred to
in the immediately preceding paragraph, Parent and the Company shall issue
a joint press release publicly announcing the Exchange Ratio.
Section 2.3. Exchange of Certificates.
(a) Exchange Agent. Following the Closing Date, Parent shall deposit, or
cause to be deposited, with LaSalle National Bank (or such other bank or
trust company designated by Parent and reasonably acceptable to the
Company) (the "Exchange Agent"), in trust for the benefit of the holders of
shares of Company Common Stock, for exchange in accordance with this
Article II, through the Exchange Agent, certificates representing the
shares of Parent Stock issuable pursuant to Section 2.1(b) in exchange for
outstanding shares of Company Common Stock which shares of Parent Stock
shall be deemed to be issued at the Effective Time, together with cash to
be paid in lieu of fractional shares (such certificates representing such
shares of Parent Stock, together with any dividends or distributions with
respect thereto contemplated by Section 2.3(c) and cash in lieu of
fractional shares, if any, being hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall, pursuant to irrevocable instructions from
Parent, deliver the shares of Parent Stock contemplated to be issued
pursuant to Section 2.1 and cash payments for fractional shares, if any,
out of the Exchange Fund. The Exchange Fund shall not be used for any other
purpose.
(b) Exchange Procedures. As soon as practicable (and in any event not
later than five (5) business days) after the Effective Time, Parent shall
cause the Exchange Agent to mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock whose shares were converted
pursuant to Section 2.1 into the right to receive shares of Parent Stock
(the "Stock Certificates") and to each holder of record of a certificate or
instrument which immediately prior to the Effective Time evidenced any
outstanding 1996 Plan Options and Chairman Options (each, as defined in
Section 2.4(b)) (the "Option Certificates" and, collectively together with
the Stock Certificates, the "Certificates"), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such other form and have
such other provisions as Parent and the Company may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Stock and cash in
lieu of fractional shares, if any. Upon surrender of a Stock Certificate
for cancellation to the Exchange Agent or to such other agent or agents as
may be appointed by Parent, together with such letter of transmittal, duly
completed and properly executed in accordance with instructions thereto and
such other customary documents and tax forms as may reasonably be required
pursuant to such instructions, the holder of such Stock Certificate shall
be entitled to receive in exchange therefor (A) a certificate representing
that number of whole shares of Parent Stock, which such holder has the
right to receive pursuant to the provisions of this Article II, (B) cash in
lieu of any fractional shares of Parent Stock to which such holder is
entitled pursuant to Section 2.3(e) hereof, after giving effect to any
required tax withholdings, and (C) any dividends or distributions to which
such holder is entitled pursuant to Section 2.3(c), after giving effect to
any required tax withholding (the items referred to in clauses (A), (B) and
(C) being, collectively, the "Merger Consideration"), and the Stock
Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock which is not registered in
the transfer records of the Company, the Merger Consideration may be issued
to a transferee if the Certificate representing such Company Common Stock
is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by
A-4
<PAGE>
evidence that any applicable stock transfer taxes have been paid. No
interest will be paid on the cash in lieu of fractional shares, if any, and
unpaid dividends and distributions, if any, payable to holders of shares of
Parent Stock. Until surrendered as contemplated by this Section 2.3, each
Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon surrender the Merger
Consideration.
(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect
to Parent Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares
of Parent Stock which such holder is entitled to receive upon the surrender
thereof in accordance with this Section 2.3, and no other part of the
Merger Consideration shall be paid to any such holder pursuant hereto,
until the holder of record of such Certificate shall so surrender such
Certificate. Subject to the effect of applicable laws, following surrender
of any such Certificate, there shall be paid by Parent or the Exchange
Agent to the record holder of the certificates representing whole shares of
Parent Stock issued in exchange therefor, without interest, (i) at the time
of such surrender, the amount of any cash payable in lieu of any fractional
share of Parent Stock to which such holder is entitled pursuant to Section
2.3(e) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Parent Stock, and (ii) at the appropriate payment date, the
amount of dividends or other distributions with a record date after the
Effective Time but prior to such surrender and a payment date after such
surrender payable with respect to such whole shares of Parent Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares of
Parent Stock issued upon the surrender for exchange of shares of Company
Common Stock in accordance with the terms hereof (including any cash paid
pursuant to Section 2.3(c) or 2.3(e)) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of Company
Common Stock. There shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article II.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Stock shall be issued in the Merger. Any such fractional
share interests will not entitle the owner thereof to vote or to any rights
of a stockholder of Parent. In lieu of any such fractional shares, each
holder of Company Common Stock who would otherwise have been entitled to a
fraction of a share of Parent Stock upon surrender of Certificates for
exchange will be entitled to receive a cash payment in lieu of such
fractional share in an amount equal to such fractional interest multiplied
by the Final Parent Stock Price.
(f) Lost, Stolen or Destroyed Certificates. In the event any Certificate
evidencing shares of Company Common Stock shall have been lost, stolen or
destroyed, upon the making of an affidavit setting forth that fact by the
Person claiming such lost, stolen or destroyed Certificate(s) and, if
required by Parent, granting a reasonable indemnity against any claim that
may be made against Parent, the Surviving Corporation or the Exchange Agent
with respect to such Certificate(s), Parent shall cause the Exchange Agent
to pay to such Person the Merger Consideration with respect to such lost,
stolen or destroyed Certificate(s).
(g) Sub Certificates. Parent as the sole stockholder of Sub, shall, upon
surrender to the Surviving Corporation of certificates representing the Sub
Common Stock, receive a certificate representing the number of shares of
the Surviving Corporation Common Stock into which such Sub Common Stock
shall have been converted pursuant to Section 2.1.
Section 2.4. Stock Options and Warrants.
(a) At the Effective Time, all outstanding options (all such options,
"1992 Plan Options") to acquire shares of Company Common Stock granted to
employees under the GeoWaste Incorporated 1992 Stock Option Plan (the "1992
Plan"), all outstanding options issued prior to the date of this Agreement
to the Chief Executive Officer and the Chief Financial Officer by the
Company to acquire shares of Company Common Stock (all such options,
"CEO/CFO Options") issued other than pursuant to the 1992 Plan and the 1996
Plan and all outstanding warrants issued by the Company prior to the date
of this Agreement to
A-5
<PAGE>
purchase shares of Company Common Stock (the "Warrants"), shall be assumed
by Parent and shall be exercisable upon the same terms and conditions as
under the applicable Warrant, the 1992 Plan and option agreements issued
thereunder or, in the case of the CEO/CFO Options, the applicable option
agreement, except that (i) each such 1992 Plan Option, CEO/CFO Option or
Warrant shall be exercisable for that whole number of shares of Parent
Stock (to the nearest share) equal to the product of (y) the number of
shares of Company Common Stock subject to the original 1992 Plan Option,
CEO/CFO Option or Warrant and (z) the Exchange Ratio, and (ii) the option
exercise price or warrant exercise price per share of Parent Stock shall be
an amount equal to (y) the option exercise price or warrant exercise price
per share of Company Common Stock under the original 1992 Plan Option,
CEO/CFO Option or Warrant, as applicable, in effect immediately prior to
the Effective Time divided by (z) the Exchange Ratio (the option exercise
price or warrant exercise price, as applicable, per share of Company Common
Stock, as so determined, being rounded to the nearest full cent). No
payment shall be made for fractional interest. The date of grant or
issuance, as applicable, shall be the date the 1992 Plan Option, CEO/CFO
Option or Warrant was originally granted or issued, as applicable. Parent
shall (i) reserve for issuance the number of shares of Parent Stock that
will be come issuable upon the exercise of such 1992 Plan Options, CEO/CFO
Options and Warrants pursuant to this Section 2.4(a) and (ii) at the
Effective Time, execute a document evidencing the assumption by Parent of
the Company's obligations with respect thereto under this Section 2.4. As
soon as practicable after the Effective Time, Parent shall file a
registration statement on Form S-8 (or any successor form), or another
appropriate form, with respect to the shares of Parent Stock subject to
such 1992 Plan Options and CEO/CFO Options and shall use its best efforts
to maintain the effectiveness of such registration statement (and maintain
the current status of the prospectus contained therein) for so long as such
1992 Plan Options and CEO/CFO Options, as applicable, remain outstanding.
It is the intention of the parties that, subject to applicable law, the
1992 Plan Options assumed by Parent qualify following the Effective Time as
"incentive stock options" (as defined in Section 422 of the Code) to the
extent that the 1992 Plan Options qualified as incentive stock options
prior to the Effective Time. As soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-3 (or any
successor form) (the "Shelf Registration Statement") with respect to the
shares of Parent Stock issuable upon exercise of such Warrants and shall
use its best efforts to maintain the effectiveness of such registration
statement (and maintain the current status of the prospectus contained
therein) for a period not to exceed six months from the date of
effectiveness of the Shelf Registration Statement or, if earlier, twenty
(20) trading days after such time at which holders of the Warrants hold (i)
Warrants representing the right to receive a number of shares of Parent
Stock, and/or (ii) a number of shares of Parent Stock previously issued
upon exercise of the Warrants, which, in the aggregate, represent 15% or
less of the total number of shares of Parent Stock issuable at the
Effective Time upon exercise of all the Warrants; provided, however, that
when holders of the Warrants intend to sell shares of Parent Stock under
the Shelf Registration Statement, such holders shall provide written notice
to Parent of such intention three (3) days prior to any sale. Parent shall
have the right to suspend the use of the prospectus forming a part of the
Shelf Registration Statement, for periods aggregating not more than twenty
(20) trading days, when Parent reasonably believes, upon the written advice
of its regular legal counsel, a copy of which shall be delivered to the
holder(s) of the Warrants (subject to suitable confidentiality
arrangements) that such use would materially interfere with or require
public disclosure by Parent of any material financing, acquisition,
corporate reorganization or other material transactions involving Parent or
any of its subsidiaries; provided, however, that Parent shall not suspend
the use of such prospectus for more than ten (10) trading days in the
aggregate during the calendar month of January 1999 and the first two (2)
days of February 1999. The holders of the Warrants shall provide customary
indemnification protections to Parent with respect to written information
furnished by such holders specifically for use in the Shelf Registration
Statement and shall pay their own expenses for any attorney, accountant or
other advisor they retain and any brokerage and sales commissions in
connection with the sale of shares of Parent Stock under the Shelf
Registration Statement.
(b) At the Effective Time, each option (each, a "1996 Plan Option") to
acquire shares of Company Common Stock granted to directors prior to the
date of this Agreement under the GeoWaste Incorporated 1996 Stock Option
Plan (the "1996 Plan") and each option (each, a "Chairman Option" and
together with
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the CEO/CFO Options, the "Non-Plan Options") issued to the Chairman of the
Board by the Company to acquire shares of Company Common Stock issued prior
to the date of this Agreement other than pursuant to the 1992 Plan and the
1996 Plan outstanding immediately prior thereto shall be converted into and
represent the right to receive (i) the Merger Consideration into which the
share or shares of Company Common Stock issuable upon exercise of such
Company Option would have been converted if such 1996 Plan Option or
Chairman Option, as applicable, had been exercised immediately prior to the
Effective Time, reduced by (ii) such number of shares of Parent Stock equal
to (x) (1) the aggregate exercise price for the shares of Company Common
Stock then issuable upon exercise of such 1996 Plan Option or Chairman
Option, as applicable, and (2) the amount of any withholding taxes which
may be required thereon, times (y) the Exchange Ratio. All such 1996 Plan
Options and Chairman Options shall no longer be outstanding and shall
automatically be canceled, retired and extinguished and shall cease to
exist, and each Option Certificate shall thereafter represent the right to
receive, upon surrender of such Option Certificate in accordance with
Section 2.3, the Merger Consideration into which such 1996 Plan Options and
Chairman Options have been converted in accordance herewith. The holders of
Option Certificates shall cease to have any rights with respect thereto,
except as required by law. No fractional share of Parent Stock shall be
issued and, in lieu thereof, a cash payment shall be made in the same
manner as provided in Section 2.3(e) with respect to exchanges of Stock
Certificates.
Section 2.5. Exchange Agent. Parent shall cause the Exchange Agent to agree,
among other things, that (i) the Exchange Agent shall maintain the Exchange
Fund as a separate fund to be held for the benefit of the holders of the
Company Common Stock, which shall be promptly applied by the Exchange Agent to
making the payments provided for in Section 2.3, (ii) any portion of the
Exchange Fund that has not been paid to holders of the Company Common Stock
pursuant to Section 2.3 prior to that date which is one year from the
Effective Time shall be delivered to Parent, and any holders of Company Common
Stock who shall not have therefore complied with Section 2.3 shall thereafter
look only to Parent for the Merger Consideration; (iii) the Exchange Fund
shall not be used for any purpose that is not provided for herein, and (iv)
all expenses of the Exchange Agent (including taxes on any income earned by
the Exchange Fund) shall be paid directly by Parent. Promptly following the
date which is one year from the Effective Time, the Exchange Agent shall
return to Parent all cash, securities and any other instruments in its
possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of Stock
Certificates may surrender such Stock Certificates to Parent and (subject to
applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration payable with respect thereto, without
interest, but shall have no greater rights against Parent than may be accorded
to general creditors of Parent under the DGCL. The Exchange Agent shall not be
entitled to vote or exercise any rights of ownership with respect to the
Parent Stock held by it from time to time hereunder. Neither Parent nor the
Surviving Corporation shall be liable to any holder of shares of Company
Common Stock for any Merger Consideration from the Exchange Fund delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
Section 2.6. Transfer of Shares After the Effective Time. No transfers of
shares of Company Common Stock shall be made on the stock transfer books of
the Company after the Effective Time.
Section 2.7. Further Assurances. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary, desirable or
proper (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, the title to any property or right of the Company or
Sub acquired or to be acquired by reason of, or as a result of, the Merger, or
(b) otherwise to carry out the purposes of this Agreement, the Company and Sub
agree that the Surviving Corporation and its proper officers and directors
shall and will execute and deliver all such deeds, assignments and assurances
in law and do all acts necessary, desirable or proper to vest, perfect or
confirm title to such property or right in the Surviving Corporation and
otherwise to carry out the purposes of this Agreement, and that the proper
officers and directors of the Surviving Corporation are fully authorized in
the name of the Company and Sub or otherwise to take any and all such action.
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ARTICLE III
Representations and Warranties of the Company
The Company represents and warrants to Parent, subject to the exceptions set
forth in the separate disclosure schedule executed and delivered by the
Company concurrently with the execution and delivery of this Agreement (with a
substantially complete draft copy thereof provided to Parent in advance of
execution and delivery of this Agreement) (the "Company Disclosure Schedule"),
as follows:
Section 3.1. Organization. Each of the Company and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now being conducted. Each of
the Company and its subsidiaries is duly qualified or licensed to do business
and in good standing in each jurisdiction in which the property owned, leased
or operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not
have a material adverse effect on the business, properties, assets, financial
condition or results of operations of the Company and its subsidiaries, taken
as a whole (a "Company Material Adverse Effect") or prevent or materially
delay the consummation of the Merger. Notwithstanding anything herein to the
contrary, in no event shall the loss of the receipt of processed metal
shredding material from the AmeriSteel location in Jacksonville, Florida be
considered a Company Material Adverse Effect. The Company has delivered to
Parent complete and correct copies of its Amended and Restated Certificate of
Incorporation, as in effect on the date hereof (the "Company Certificate of
Incorporation"), and its Bylaws, as in effect on the date hereof (the "Company
Bylaws").
Section 3.2. Subsidiaries. Item 3.2 of the Company Disclosure Schedule lists
each subsidiary of the Company. Except as set forth in Item 3.2 of the Company
Disclosure Schedule, all the outstanding shares of capital stock of each such
subsidiary are owned, directly or indirectly, by the Company, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens"), and are duly
authorized, validly issued, fully paid and nonassessable. Except for the
capital stock of its subsidiaries and except as otherwise indicated in Item
3.2 of the Company Disclosure Schedule, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity.
Section 3.3. Capitalization. The authorized capital stock of the Company
consists of 50,000,000 shares of Company Common Stock and 5,000,000 shares of
Preferred Stock, par value $.01 per share (the "Company Preferred Stock"). At
the close of business on May 31, 1998, (i) 21,291,549 shares of Company Common
Stock were issued and outstanding, (ii) no shares of Company Preferred Stock
were issued and outstanding, (iii) no shares of Company Common Stock were held
by the Company in its treasury, (iv) 638,054 shares of Company Common Stock
were reserved for issuance upon exercise of 1992 Plan Options and 1996 Plan
Options, (v) 575,000 shares of Company Common Stock were reserved for issuance
upon exercise of Non-Plan Options and (vi) 2,000,000 shares of Company Common
Stock were reserved for issuance upon the exercise of the Warrants. Except as
set forth above, as of May 31, 1998, no shares of capital stock or other
voting securities of the Company are issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of the Company are, and
all shares which may be issued will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
There are no bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or exercisable or exchangeable
for, securities having the right to vote) on any matters on which stockholders
of the Company may vote. Except as set forth above, as of May 31, 1998, there
are no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other voting
securities of the Company or of any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement,
arrangement or undertaking. As of the date of this
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Agreement, there are no outstanding contractual obligations of the Company or
any of its subsidiaries (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or (ii) to vote or to dispose of any
shares of the capital stock of any of the Company's subsidiaries.
Section 3.4. Authority. The Board of Directors of the Company, at a meeting
duly called and held, at which all directors were present, has duly and
unanimously adopted resolutions approving this Agreement and the Merger,
determining that the terms of the Merger are fair to, and in the best
interests of the Company's stockholders and recommending that the Company's
stockholders approve and adopt this Agreement (the "GeoWaste Board
Recommendation"). The Company has the requisite corporate power and authority
to execute and deliver this Agreement and, subject to the approval and
adoption of this Agreement by the holders of a majority of the Company Common
Stock outstanding and entitled to vote thereon (the "Company Stockholder
Approval"), to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation by the Company
of the Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated (in
each case, other than, with respect to the Merger and the Company Stockholder
Approval). This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding obligation of
Parent and Sub, constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights generally and to general principles of equity.
Section 3.5. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (including the filing with the Securities and
Exchange Commission (the "SEC") of a proxy statement in definitive form
relating to any required Company Stockholder Approval (together with any
amendments thereof or supplements thereto, in each case in the form or forms
mailed to the Company's stockholders, the "Proxy Statement")), The Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the
DGCL, The Nasdaq Stock Market, the laws of other states in which the Company
is qualified to do or is doing business, state takeover laws and the other
matters referred to in Item 3.5 of the Company Disclosure Schedule
(collectively, the "Company Required Approvals"), neither the execution,
delivery or performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the Company Certificate of
Incorporation or Company Bylaws, (ii) require any filing with, or permit,
authorization, consent or approval of, any federal, state or local government
or any court, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, domestic or foreign (a
"Governmental Entity") (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not have a
Company Material Adverse Effect or would not reasonably be expected to prevent
or materially delay the consummation of the Merger), (iii) result in a
violation or 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, amendment,
cancellation or acceleration) under, any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise, license, contract,
agreement or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (iv) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its subsidiaries
or any of their respective properties or assets, except in the case of clauses
(iii) or (iv) for violations, breaches or defaults that would not,
individually or in the aggregate, have a Company Material Adverse Effect or
that would not, individually or in the aggregate, be reasonably expected to
prevent or materially delay the consummation of the Merger.
Section 3.6. SEC Reports and Financial Statements. The Company has filed
with the SEC, and has heretofore made available to Parent, true and complete
copies of, all forms, reports, schedules, statements and other documents
required to be filed by it since December 31, 1996, under the Exchange Act or
the Securities
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Act of 1933, as amended (the "Securities Act") (such forms, reports,
schedules, statements and other documents, including any financial statements
or schedules included therein, are referred to as the "Company SEC
Documents"). No subsidiary of the Company is subject to the reporting
requirements of the Exchange Act. Except to the extent revised or superseded
by a subsequently filed Company SEC Document (a copy of which has been made
available to Parent prior to the date hereof), the Company SEC Documents, at
the time filed, (i) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading and (ii) complied in all material
respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be, and the applicable rules and regulations
of the SEC thereunder. The financial statements of the Company included in the
Company SEC Documents complied, as of the time filed, as to form in all
material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
the unaudited statements, to normal, recurring, year-end audit adjustments)
the consolidated financial position of the Company and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods indicated therein.
Section 3.7. Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Documents filed and publicly available prior to the date of
this Agreement or as disclosed in Item 3.7 of the Company Disclosure Schedule,
since December 31, 1997, the Company and its subsidiaries have conducted their
respective businesses only in the ordinary course, and there has not been (i)
any material adverse change with respect to the business, properties, assets,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole (other than (1) changes generally affecting the
industries in which the Company or any of its subsidiaries operate, (2)
changes relating to the transaction contemplated by this Agreement or (3)
changes resulting from the loss of the receipt of processed metal shredding
material from the AmeriSteel location in Jacksonville, Florida), (ii) any
declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock or any redemption, purchase or other
acquisition of any of its capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (iv) (A) any granting
by the Company or any of its subsidiaries to any executive officer of the
Company or any of its subsidiaries of any increase in compensation, except in
the ordinary course of business (including in connection with promotions)
consistent with past practice or as was required under employment agreements
in effect as of December 31, 1997, (B) any granting by the Company or any of
its subsidiaries to any such executive officer of any increase in severance or
termination pay, except as part of a standard employment package to any Person
promoted or hired, or as was required under employment, severance or
termination agreements in effect as of December 31, 1997, or (C) any entry by
the Company or any of its subsidiaries into any employment, severance or
termination agreement with any such executive officer, (v) any damage,
destruction or loss, whether or not covered by insurance, that has or
reasonably could be expected to have a Company Material Adverse Effect, (vi)
any material revaluation by the Company of any of its material assets, or
(vii) any material change in accounting methods, principles or practices by
the Company.
Section 3.8. No Undisclosed Liabilities. Except as set forth in the
Company's audited, consolidated financial statements included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 filed
with the SEC under the Exchange Act, as of December 31, 1997 neither the
Company nor any of its subsidiaries had any material liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise,
that would be required by GAAP to be reflected on a consolidated balance sheet
of the Company and its subsidiaries (or disclosed in the notes thereto) as at
December 31, 1997. Since December 31, 1997, except as set forth in the Company
SEC Documents and except for liabilities incurred by the Company or its
subsidiaries in the ordinary course of business (none of which would
reasonably be expected to have a Company Material Adverse Effect), neither the
Company nor any of its subsidiaries has incurred any material liabilities of
any nature, whether or not accrued, contingent or otherwise, that would be
required by GAAP to be
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reflected on a consolidated balance sheet of the Company and its subsidiaries
(or disclosed in the notes thereto) and that would be reasonably expected to
have a Company Material Adverse Effect.
Section 3.9. Information Supplied. None of the information supplied or to be
supplied by the Company specifically for inclusion or incorporation by
reference in the Proxy Statement and the Registration Statement, will, at the
time the Proxy Statement is first mailed to the Company's stockholders or at
the time of the Stockholders' Meeting (as defined in Section 6.4) and at the
time the Registration Statement is declared effective, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading, except
that no representation or warranty is made by the Company with respect to
statements made or incorporated by reference therein based on information
supplied by Parent or Sub specifically for inclusion or incorporation by
reference therein.
Section 3.10. Benefit Plans.
(a) Except as disclosed in the Company SEC Documents or as disclosed in
Item 3.10 of the Company Disclosure Schedule, since the date of the most
recent audited financial statements included in the Company SEC Documents,
there has not been any adoption or amendment in any material respect by the
Company or any of its subsidiaries of any collective bargaining agreement
or any bonus, pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option, phantom stock,
retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) providing benefits to any current or
former employee, officer or director of the Company or any of its
subsidiaries (collectively, "Company Benefit Plans"). Except as disclosed
in the Company SEC Documents or in Item 3.10 of the Company Disclosure
Schedule, there exist no employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between the
Company or any of its subsidiaries and any current or former employee,
officer or director of the Company or any of its subsidiaries.
(b) Item 3.10 of the Company Disclosure Schedule contains a list of all
"employee pension benefit plans" (as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
(sometimes referred to herein as "Company Pension Plans"), "employee
welfare benefit plans" (as defined in Section 3(1) of ERISA) and all other
Company Benefit Plans maintained, or contributed to, by the Company or any
of its subsidiaries for the benefit of any current or former employees,
officers or directors of the Company or any of its subsidiaries. The
Company has delivered to Parent true, complete and correct copies of (i)
each Company Benefit Plan (or, in the case of any unwritten Company Benefit
Plans, descriptions thereof), (ii) the most recent annual report on Form
5500 filed with the Internal Revenue Service with respect to each Company
Benefit Plan (if any such report was required), (iii) the most recent
summary plan description for each Company Benefit Plan for which such
summary plan description is required and (iv) each trust agreement and
group annuity contract relating to any Company Benefit Plan.
(c) Except as disclosed in Item 3.10 of the Company Disclosure Schedule,
all Company Pension Plans have been the subject of determination letters
from the Internal Revenue Service to the effect that such Company Pension
Plans are qualified and exempt from Federal income taxes under Section
401(a) and 501(a), respectively, of the Code, and no such determination
letter has been revoked nor, to the best knowledge of the Company, has
revocation been threatened, nor has any such Company Pension Plan been
amended since the date of its most recent determination letter or
application therefor in any respect that would adversely affect its
qualification or materially increase its costs.
(d) No Company Pension Plan that is subject to Title IV of ERISA and that
the Company or any of its subsidiaries maintains, or to which the Company
or any of its subsidiaries is obligated to contribute, other than any
Company Pension Plan that is a "multiemployer plan" (as such term is
defined in Section 4001(a)(3) of ERISA; collectively, the "Company
Multiemployer Pension Plans"), had, as of the respective last annual
valuation date for each such Company Pension Plan, an "unfunded benefit
liability" (as such term is defined in Section 4001(a)(18) of ERISA), based
on actuarial assumptions which have been furnished to Parent. None of such
Company Pension Plans has an "accumulated funding deficiency" (as
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such term is defined in Section 302 of ERISA or Section 412 of the Code),
whether or not waived. None of the Company, any of its subsidiaries, any
officer of the Company or any of its subsidiaries or any of the Company
Benefit Plans which are subject to ERISA, including the Company Pension
Plans, any trusts created thereunder or any trustee or administrator
thereof, has engaged in a "prohibited transaction" (as such term is defined
in Section 406 of ERISA or Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject the Company, any of its
subsidiaries or any officer of the Company or any of its subsidiaries to
any material tax or penalty on prohibited transactions imposed by such
Section 4975 or to any material liability under Section 502(i) or (1) of
ERISA. None of such Company Benefit Plans or trusts has been terminated,
nor has there been any "reportable event" (as that term is defined in
Section 4043 of ERISA) with respect thereto, during the last five years.
Neither the Company nor any of its subsidiaries has suffered or otherwise
caused a "complete withdrawal," or a "partial withdrawal" (as such terms
are defined in Section 4203 and Section 4205, respectively, of ERISA) since
the effective date of such Sections 4203 and 4205 with respect to any of
the Company Multiemployer Pension Plans.
(e) With respect to any Company Benefit Plan that is an employee welfare
benefit plan, except as disclosed in Item 3.10 of the Company Disclosure
Schedule, (i) no such Company Benefit Plan is unfunded or funded through a
"welfare benefits fund," as such term is defined in Section 419(e) of the
Code, (ii) each such Company Benefit Plan that is a "group health plan," as
such term is defined in Section 5000(b)(1) of the Code, complies in all
material respects with the applicable requirements of Section 4980B(f) of
the Code and (iii) each such Company Benefit Plan (including any such
Company Benefit Plan covering retirees or other former employees) may be
amended or terminated without material liability to the Company or any of
its subsidiaries on or at any time after the consummation of the Merger.
Section 3.11. Litigation. Except as set forth in Item 3.11 of the Company
Disclosure Schedule, there is no suit, claim, action, proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against the Company or any of its subsidiaries that could reasonably be
expected to have, directly or indirectly or in the aggregate, a Company
Material Adverse Effect or prevent or materially delay the consummation of the
Merger. Neither the Company nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree that could reasonably be
expected to have, directly or indirectly or in the aggregate, a Company
Material Adverse Effect or prevent or materially delay the consummation of the
Merger.
Section 3.12. Compliance with Applicable Law. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders,
concessions, franchises, and approvals of all Governmental Entities necessary
for the lawful conduct of their respective businesses (the "Company Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders, concessions, franchises and approvals that would not have a Company
Material Adverse Effect or prevent or materially delay the consummation of the
Merger. The Company and its subsidiaries are in compliance with the terms of
the Company Permits, except where the failure so to comply would not have a
Company Material Adverse Effect or prevent or materially delay the
consummation of the Merger. Except as disclosed in the Company SEC Documents,
to the best knowledge of the Company, the businesses of the Company and its
subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any Governmental Entity, except for possible violations that
would not have a Company Material Adverse Effect or reasonably prevent or
materially delay the consummation of the Merger. As of the date of this
Agreement, to the best knowledge of the Company, no investigation or review by
any Governmental Entity with respect to the Company or any of its subsidiaries
is pending or threatened, nor has any Governmental Entity indicated an
intention to conduct any such investigation or review, other than, in each
case, those the outcome of which would not be reasonably expected to have a
Company Material Adverse Effect or prevent or materially delay the
consummation of the Merger.
Section 3.13. Tax Matters. Except as set forth in Item 3.13 of the Company
Disclosure Schedule:
(a) The Company and each of its subsidiaries has filed all Federal income
Tax returns and all other material Tax returns and reports required to be
filed by it. All such returns are complete and correct in all material
respects. The Company and each of its subsidiaries has paid (or the Company
has paid on its
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subsidiaries' behalf) all Taxes shown as due on such returns and all
material Taxes for which no return was required to be filed, and the most
recent financial statements contained in the Company SEC Documents reflect
an adequate reserve for all Taxes payable by the Company and its
subsidiaries for all taxable periods and portions thereof through the date
of such financial statements.
(b) No material Tax return of the Company or any of its subsidiaries is
under audit or examination by any taxing authority, and no written notice
of such an audit or examination has been received by the Company or any of
its subsidiaries. Each deficiency resulting from any audit or examination
relating to Taxes by any taxing authority has been paid, except for
deficiencies being contested in good faith. No material issues relating to
Taxes were raised in writing by the relevant taxing authority during any
presently pending audit or examination. None of the Federal income Tax
returns of the Company nor any of its subsidiaries consolidated in such
returns for any period have been examined by the Internal Revenue Service.
(c) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any Taxes
and no power of attorney with respect to any taxes has been executed or
filed with any taxing authority.
(d) No liens for Taxes exist with respect to any assets or properties of
the Company or any of its subsidiaries, except for statutory liens for
Taxes not yet due and liens that would not have a Company Material Adverse
Effect.
(e) As used in this Agreement, "Taxes" shall include all Federal, state,
local and foreign income, profits, franchise, gross receipts, payroll,
employment, property, sales, excise, withholding and other taxes, tariffs
or governmental charges of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts.
Section 3.14. Stockholder Vote; State Takeover Statutes; Appraisal
Rights. The only stockholder vote required for consummation of the
transactions contemplated by this Agreement is the approval of a majority of
the votes cast by those holders of Company Common Stock entitled to vote at
the Stockholders' Meeting. The action of the Board of Directors of the Company
in approving the Merger and this Agreement is sufficient to render
inapplicable to the Merger and this Agreement and the transactions
contemplated by this Agreement the provisions of Section 203 of the DGCL.
Holders of Company Common Stock do not have appraisal rights in connection
with the Merger.
Section 3.15. Accounting Matters. The Company has not taken or agreed to
take any action that would prevent Parent from accounting for the business
combination to be effected pursuant to this Agreement as a pooling of
interests.
Section 3.16. Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other Person, other than Deutsche Bank Securities
Inc. ("Deutsche Bank") (the fees and expenses of which will be paid by the
Company) is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company.
The Company has heretofore furnished Parent with a true and complete copy of
its engagement letter with Deutsche Bank (which letter sets forth the method
of calculation of any fees to be payable to Deutsche Bank).
Section 3.17. Opinion of Financial Advisor. The Company has received the
opinion of Deutsche Bank, dated the date of this Agreement, to the effect
that, as of the date of this Agreement, the Exchange Ratio is fair to the
Company's stockholders from a financial point of view (the "Fairness
Opinion"), and a complete and correct signed copy of such opinion has been, or
promptly upon receipt thereof will be, delivered to Parent. Deutsche Bank has
authorized the inclusion of the Fairness Opinion in the Proxy Statement and
the Registration Statement.
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Section 3.18. Environmental Matters.
(a) The Company and each of its subsidiaries has in effect all federal,
state and local governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights ("Environmental
Permits") under applicable statutes, laws, ordinances, rules, orders and
regulations which are administered, interpreted or enforced by the United
States Environmental Protection Agency or state and local agencies with
jurisdiction over pollution or protection of the environment (collectively,
"Environmental Laws") necessary for it to carry on its business as now
conducted, and there has occurred no material violation of any such
Environmental Permit, except in each case for those which, individually or
in the aggregate, have not had and are not reasonably expected to have a
Company Material Adverse Effect.
(b) Except as set forth in Item 3.18(b) of the Company Disclosure
Schedule, the Company and each of its subsidiaries is, and has been, in
compliance with all applicable Environmental Laws in all material respects.
Except as set forth in Item 3.18(b) of the Company Disclosure Schedule, the
Company and each of its subsidiaries is not subject to any liability,
penalty or expense (including legal fees) and will not hereafter suffer or
incur any loss, liability, penalty or expense (including legal fees) by
virtue of any violation of any Environmental Law occurring prior to the
Closing, any environmental activity conducted at or prior to the Closing or
any environmental condition existing on or with respect to any property at
or prior to the Closing, in each case whether or not the Company or its
subsidiaries permitted or participated in such act or omission, except in
each case for those which, individually or in the aggregate, have not had
and are not reasonably expected to have a Company Material Adverse Effect.
(c) There is no suit, claim, action, proceeding, investigation or inquiry
pending or, to the Company's knowledge, threatened before any court,
governmental agency or authority or other forum in which the Company or any
of its subsidiaries has been or, with respect to threatened suits, actions
and proceedings, may be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating
to the release or threatened release into the environment of any Hazardous
Material (as hereinafter defined), asbestos, polychlorinated biphenyls or
petroleum product (collectively, "Regulated Materials"), whether or not
occurring at, on, under or involving a site owned, leased or operated by
the Company or any of its subsidiaries, except in each case for those
which, individually or in the aggregate, have not had and are not
reasonably expected to have a Company Material Adverse Effect. "Hazardous
Material" shall mean any pollutant, contaminant, or hazardous substance
within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 6901 et seq., as amended
("CERCLA"), or any similar state or local law.
(d) Except as set forth in Item 3.18(d) of the Company Disclosure
Schedule, during the period of ownership, use or operation by the Company
and its subsidiaries of any of their respective current and previous
properties, there have been no underground storage tanks (whether currently
active or not) and no polychlorinated biphenyls in transformers or other
electrical equipment and there have been no releases of Regulated Materials
in, on, under or affecting such properties or from any such properties onto
any surrounding site, except in each case for those which individually or
in the aggregate have not had and cannot be reasonably expected to have a
Company Material Adverse Effect. Except as set forth in Item 3.18 of the
Company Disclosure Schedule, prior to the period of ownership, use or
operation by the Company and its subsidiaries of any of their respective
current and previous properties, to the Company's knowledge, there were no
releases of Regulated Materials in, on, under or affecting any such
property or any surrounding site, except in each case for those which
individually or in the aggregate have not had, and cannot be reasonably
expected to have, a Company Material Adverse Effect.
(e) Except as set forth in Item 3.18(e) of the Company Disclosure
Schedule, the Company and each of its subsidiaries has not transported any
Regulated Material or arranged for the transportation of any Regulated
Material to any location that is listed or known to the Company to be
proposed for listing on the National Priorities List pursuant to CERCLA, or
any other location that is the subject of federal, state or local
enforcement action or other investigation that, to the Company's knowledge,
may lead to claims against the Company or its subsidiaries for cleanup
costs, remedial action, damages to natural resources, or
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to other property or for personal injury including claims under CERCLA.
None of the real property owned or leased by the Company is listed or known
to the Company as being proposed for listing on the National Priorities
List pursuant to CERCLA or any state or local list of sites requiring
investigation or cleanup. Item 3.18(e) of the Company Disclosure Schedule
sets forth a list of all solid waste disposal, transfer and storage
facilities utilized by the Company and its subsidiaries.
Section 3.19. Labor Matters. Except as set forth in Item 3.19 of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a
party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is
the Company or any of its subsidiaries subject to any material proceeding
asserting that it or any subsidiary has committed an unfair labor practice or
is seeking to compel it to bargain with any labor union or labor organization,
nor is there any strike or other material labor dispute involving the Company
or any of its subsidiaries pending or, to the Company's knowledge, threatened.
Section 3.20. Title to Assets. Each of the Company and its subsidiaries has
good and marketable title to its properties and assets (other than property as
to which it is lessee) free and clear of any Lien other than (i) Liens for
current Taxes and assessments not yet due and payable and Taxes the validity
of which are being contested in good faith, (ii) easements, rights-of-way,
servitudes, minor imperfections of real property title and similar charges or
encumbrances on real property, in each case, not interfering in any material
respect with the ordinary conduct of the Company's business and (iii)
statutory Liens of laborers, carriers, warehousemen, mechanics and materialmen
for current wages or accounts payable that are not yet delinquent incurred in
the ordinary course of business or which are being contested in good faith.
All buildings, plants and other structures owned or otherwise utilized by the
Company or any of its subsidiaries are in good working order, ordinary wear
and tear excepted, and are in a physical state of repair that is sufficient
for the Company or the applicable subsidiary to conduct its business as
currently conducted without material interference.
Section 3.21. Material Contracts. None of the Company or its subsidiaries,
nor any of their respective assets, business or operations, is a party to, or
is bound or affected by, or receives benefits under, any contract or agreement
or amendment thereto that in each case is required to be filed as an exhibit
to an Annual Report on Form 10-K filed by the Company that has not been filed
as an exhibit to the Company's Annual Report on Form 10-K filed for the fiscal
year ended December 31, 1997 or as an exhibit to another filed Company SEC
Document. Except as disclosed in the Company SEC Documents or Item 3.21 of the
Company Disclosure Schedule, neither the Company nor any subsidiary is subject
to, or bound by, any contract containing covenants which (i) limit the ability
of the Company or any subsidiary to compete in any line of business or with
any person, or (ii) involve any restriction of geographical area in which, or
method by which, the Company or any subsidiary may carry on its business
(other than as may be required by law or any applicable Governmental Entity).
Section 3.22. Intellectual Property. Neither the Company nor any of its
subsidiaries has, as of the date hereof, received written notice from any
other person pertaining to or challenging the right of the Company or its
subsidiaries to use any patents, trademarks, trade names, service marks,
service names, copyrights, other proprietary intellectual property rights,
applications therefor and licenses or other rights in respect thereof
("Intellectual Property") or any trade secrets, proprietary information,
inventions, know-how, processes and procedures owned or used by or licensed to
the Company or any of its subsidiaries, except with respect to rights the loss
of which, individually or in the aggregate, have not had and are not
reasonably likely to have a Company Material Adverse Effect.
Section 3.23. Certain Transactions. Except as set forth in Item 3.23 of the
Company Disclosure Schedule (all of such transactions being on terms no less
favorable to the Company and its subsidiaries than could have been obtained
from independent third parties), none of the officers or directors of the
Company or any of its subsidiaries nor any affiliate of the Company, and to
the Company's knowledge, none of the Company's employees or the employees of
any of its subsidiaries is a party to any transaction with the Company
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or any of its subsidiaries (other than for services as an employee, officer or
director and other than transactions between the Company and one or more of
its direct or indirect wholly owned subsidiaries or between such
subsidiaries), including, without limitation, any contract, agreement or other
arrangement (i) providing for the furnishing of services to or by, (ii)
providing for rental of real or personal property to or from, or (iii)
otherwise requiring payments to or from, any such officer, director, affiliate
or employee, any member of the family of any such officer, director or
employee or any corporation, partnership, trust or other entity in which any
such officer, director or employee or any corporation, partnership, trust or
other entity in which any such officer, director or employee has a substantial
interest or which is an affiliate of such officer, director or employee.
Section 3.24. Indebtedness. Set forth in Item 3.24 of the Company Disclosure
Schedule, as of the date of this Agreement, is (i) a list of all agreements,
instruments and other obligations pursuant to which any indebtedness for
borrowed money or capitalized lease obligations of the Company or any of its
subsidiaries is outstanding or may be incurred and (ii) the respective
principal amounts outstanding thereunder as of May 31, 1998.
Section 3.25. Certain Business Practices. Except for such actions which
would not have a Company Material Adverse Effect, neither the Company nor any
of its subsidiaries has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or
(iii) to the Company's knowledge, made any other unlawful payment.
Section 3.26. Year 2000 Compliance. The Company has initiated a review and
assessment of all areas within its and each of its subsidiaries' business and
operations that could be adversely affected by the "Year 2000 Problem" (that
is, the risk that computer applications used by the Company or any of its
subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999). Based on the foregoing, except as set forth in Item 3.26 of the Company
Disclosure Schedule, the Company believes that the computer applications that
are currently material to its or any of its subsidiaries' business and
operations are reasonably expected to be able to perform properly date-
sensitive functions for all dates before and after January 1, 2000, except to
the extent that a failure to do so would not reasonably be expected to have a
Company Material Adverse Effect.
Section 3.27. Tax Free Reorganization. The Company is aware of no
circumstances or events that would prevent the Merger from being treated as a
tax-free reorganization pursuant to Section 368(a) of the Code.
Section 3.28. Severance Payments. Item 3.28 of the Company Disclosure
Schedule sets forth a true and complete schedule of all severance, bonus,
termination or other similar payments to employees or consultants of the
Company or its subsidiaries which are triggered or become due and payable as a
result of the Merger.
ARTICLE IV
presentations and Warranties
of Parent and Sub
Parent represents and warrants to the Company, and Sub will represent and
warrant to the Company, as follows:
Section 4.1. Organization. Parent is, and, at the Effective Time, Sub will
be, a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now being conducted.
Parent is, and, at the Effective Time, Sub will be, duly qualified or licensed
to do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such
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qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not
have a material adverse effect on the business, properties, assets, financial
condition or results of operation of Parent and its subsidiaries taken as a
whole (a "Parent Material Adverse Effect") or prevent or materially delay the
consummation of the Merger. Parent has delivered to the Company complete and
correct copies of the Parent Articles of Incorporation and the Parent Bylaws
(as such terms are defined in Section 4.4 hereof) and, promptly upon
organization, Sub will deliver to the Company complete and correct copies as
of the Sub Certificate of Incorporation and the Sub Bylaws (as such terms are
defined in Section 4.4 hereof).
Section 4.2. Capitalization. The authorized capital stock of Parent consists
of 100,000,000 shares of Parent Stock and 5,000,000 shares of the preferred
stock, par value $.01 per share, of Parent ("Parent Preferred Stock"). At the
close of business on May 31, 1998, (i) 26,753,949 shares of Parent Stock were
issued and outstanding, (ii) no shares of Parent Preferred Stock were issued
and outstanding, (iii) no shares of Parent Stock or Parent Preferred Stock
were held by Parent in its treasury, (iv) 1,833,027 shares of Parent Stock
were reserved for issuance upon exercise of options to purchase shares issued
pursuant to Parent's stock option plans, and (v) 30,288,449 shares of Parent
Stock were reserved for issuance pursuant to the Rights. Except as set forth
above or otherwise pursuant to the terms of pending business acquisitions, as
of May 31, 1998, no shares of capital stock or other voting securities of
Parent are issued, reserved for issuance or outstanding. All outstanding
shares of capital stock of Parent are, and all shares which may be issued will
be, when issued, duly authorized, validly issued, fully paid and nonassessable
(except as provided in Section 180.0622(2)(b) of the Wisconsin Statutes) and
not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of Parent having the right to vote (or convertible into, or
exercisable or exchangeable for, securities having the right to vote) on any
matters on which stockholders of Parent may vote. Except as set forth above or
otherwise pursuant to the terms of pending business acquisitions, as of May
31, 1998 there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Parent or Sub is a party or by which either of them is bound obligating Parent
or Sub to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of Parent or Sub
or obligating Parent or Sub to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no outstanding
contractual obligations of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Parent.
Section 4.3. Authority. Parent has and, upon organization, Sub will have
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation by Parent and
Sub of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent (including approval of the
Merger and this Agreement by the Board of Directors of Parent) and, upon
organization, will be duly authorized by all necessary corporation action on
the part of Sub and no other corporate proceedings on the part of Parent or
Sub are necessary to authorize this Agreement or to consummate such
transactions. No vote of Parent stockholders is required to approve this
Agreement or the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and, will be duly executed and delivered
by Sub, and, assuming this Agreement constitutes a valid and binding
obligation of the Company, in the case of the Company, constitutes and, in the
case of Sub, will constitute, a valid and binding obligation of each of Parent
and Sub, enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights generally and to general principles of equity.
Section 4.4. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, the
HSR Act, the DGCL, the Nasdaq National Market, the laws of other states in
which Parent is incorporated or qualified to do or is doing business and state
takeover laws (collectively, the "Parent Required Consents"), neither the
execution, delivery or performance of this Agreement by Parent and Sub nor the
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consummation by Parent and Sub of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the articles of
incorporation (the "Parent Articles of Incorporation") or bylaws (the "Parent
Bylaws") of Parent, (ii) conflict with or result in any breach of any
provision of the certificate of incorporation (the "Sub Certificate of
Incorporation") or bylaws (the "Sub Bylaws") of Sub, (iii) require any filing
with, or permit, authorization, consent or approval of, any Governmental
Entity (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not have a Parent Material
Adverse Effect or would not be reasonably expected to prevent or materially
delay the consummation of the Merger), (iv) result in a violation or 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, amendment, cancellation or
acceleration) under, any loan or credit agreement, note, bond, mortgage,
indenture, permit, concession, franchise, license, lease, contract, agreement
or other instrument or obligation to which Parent or any of its subsidiaries
is a party or by which any of them or any or their properties or assets may be
bound or (v) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent, any of its subsidiaries or any of their
properties or assets, except in the case of clauses (iv) and (v) for
violations, breaches or defaults which would not, individually or in the
aggregate, have a Parent Material Adverse Effect or that would not,
individually or in the aggregate, be reasonably expected to prevent or
materially delay the consummation of the Merger.
Section 4.5. SEC Reports and Financial Statements. Parent has filed with the
SEC, and has heretofore made available to the Company true and complete copies
of, all forms, reports, schedules, statements and other documents required to
be filed by it since December 31, 1996 under the Exchange Act or the
Securities Act (such forms, reports, schedules, statements and other
documents, including any financial statements or schedules included therein,
are referred to as the "Parent SEC Documents"). No subsidiary of Parent is
subject to the reporting requirements of the Exchange Act. Except to the
extent revised or superseded by a subsequently filed Parent SEC Document (a
copy of which has been made available to the Company prior to the date
hereof), the Parent SEC Documents, at the time filed, (i) did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading and
(ii) complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. The financial statements of
Parent included in the Parent SEC Documents complied, as of the time filed, as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Form 10-Q of the SEC) and
fairly present (subject, in the case of the unaudited statements, to normal,
recurring, year-end audit adjustments) the consolidated financial position of
Parent and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods
indicated therein.
Section 4.6. Absence of Certain Changes or Events. Except as disclosed in
the Parent SEC Documents filed and publicly available prior to the date of
this Agreement, since December 31, 1997, there has not been (i) any material
adverse change with respect to the business, properties, assets, financial
condition or results of operations of Parent and its subsidiaries taken as a
whole (other than changes generally affecting the industries in which Parent
or any of its subsidiaries operate or changes relating to the transactions
contemplated by the Agreement), (ii) any declaration, setting aside or payment
of any dividend or other distribution with respect to its capital stock or any
redemption, purchase or other acquisition of any of its capital stock, (iii)
any split, combination or reclassification of any of its capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock,
(iv) any damage, destruction or loss, whether or not covered by insurance,
that has or reasonably could be expected to have a Parent Material Adverse
Effect, (v) any revaluation by Parent of any of its material assets, or (vi)
any material change in accounting methods, principles or practices by Parent.
Section 4.7. No Undisclosed Liabilities. Except as set forth in Parent's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997
previously filed with the SEC under the Exchange Act, as of
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December 31, 1997, neither Parent nor any of its subsidiaries had any material
liabilities or obligations of any nature, whether or not accrued, contingent
or otherwise, that would be required by GAAP to be reflected on a consolidated
balance sheet of Parent and its subsidiaries (or disclosed in the notes
thereto) as at December 31, 1997. Since December 31, 1997, except as set forth
in the Parent SEC Documents and except for liabilities incurred by Parent and
its subsidiaries in the ordinary course of business (none of which would
reasonably be expected to have a Parent Material Adverse Effect), neither
Parent nor any of its subsidiaries has incurred any material liabilities of
any nature, whether or not accrued, contingent or otherwise, that would be
required by GAAP to be reflected on a consolidated balance sheet of Parent and
its subsidiaries (or disclosed in the notes thereto) and that would be
reasonably expected to have a Parent Material Adverse Effect.
Section 4.8. Interim Operations of Sub. Sub will be formed solely for the
purpose of engaging in the transactions contemplated hereby, will not engage
in any other business activities and will conduct its operations only as
contemplated hereby.
Section 4.9. Litigation. Except as disclosed in the Parent SEC Documents,
there is no suit, claim, action, proceeding or investigation pending or, to
the best knowledge of Parent, threatened against Parent or any of its
subsidiaries that could reasonably be expected to have, directly or indirectly
or in the aggregate, a Parent Material Adverse Effect or prevent or materially
delay the consummation of the Merger. Except as disclosed in the Parent SEC
Documents, neither Parent nor any of its subsidiaries is subject to any
outstanding order, writ, injunction or decree that could reasonably be
expected to have, directly or indirectly or in the aggregate, a Parent
Material Adverse Effect or prevent or materially delay the consummation of the
Merger.
Section 4.10. Compliance with Applicable Law. Parent and its subsidiaries
hold all permits, licenses, variances, exemptions, orders, concessions,
franchises, and approvals of all Governmental Entities necessary for the
lawful conduct of their respective businesses (the "Parent Permits"), except
for failures to hold such permits, licenses, variances, exemptions, orders,
concessions, franchises and approvals that would not have a Parent Material
Adverse Effect or prevent or materially delay the consummation of the Merger.
Parent and its subsidiaries are in compliance with the terms of the Parent
Permits, except where the failure so to comply would not have a Parent
Material Adverse Effect or prevent or materially delay the consummation of the
Merger. Except as disclosed in the Parent SEC Documents, to the best knowledge
of Parent, the businesses of Parent and its subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity, except for possible violations that would not have a Parent Material
Adverse Effect or reasonably prevent or materially delay the consummation of
the Merger. Except as disclosed in the Parent SEC Documents, as of the date of
this Agreement, to the best knowledge of Parent, no investigation or review by
any Governmental Entity with respect to Parent or any of its subsidiaries is
pending or threatened, nor has any Governmental Entity indicated an intention
to conduct any such investigation or review, other than, in each case, those
the outcome of which would not be reasonably expected to have a Parent
Material Adverse Effect or prevent or materially delay the consummation of the
Merger.
Section 4.11. Tax Matters. Except as disclosed in the Parent SEC Documents:
(a) Parent and each of its subsidiaries has filed all Federal income Tax
returns and all other material Tax returns and reports required to be filed
by it. All such returns are complete and correct in all material respects.
Parent and each of its subsidiaries has paid (or Parent has paid on its
subsidiaries' behalf) all Taxes shown as due on such returns and all
material taxes for which no return was required to be filed, and the most
recent financial statements contained in the Parent SEC Documents reflect
an adequate reserve for all Taxes payable by Parent and its subsidiaries
for all taxable periods and portions thereof through the date of such
financial statements.
(b) No material Tax return of Parent or any of its subsidiaries is under
audit or examination by any taxing authority, and no written notice of such
an audit or examination has been received by Parent or any of its
subsidiaries. Each deficiency resulting from any audit or examination
relating to Taxes by any taxing authority has been paid, except for
deficiencies being contested in good faith. No material issues relating to
Taxes were raised in writing by the relevant taxing authority during any
presently pending audit or
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examination. None of the Federal income Tax returns of Parent nor any of
its subsidiaries consolidated in such returns for any period have been
examined by the Internal Revenue Service.
(c) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any taxes
and no power of attorney with respect to any Taxes has been executed or
filed with any taxing authority.
(d) No liens for Taxes exist with respect to any assets or properties of
Parent or any of its subsidiaries, except for statutory liens for taxes not
yet due and liens that would not have a Parent Material Adverse Effect.
Section 4.12. Brokers. No broker, investment banker, financial advisor or
other Person is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Sub.
Section 4.13. Registration Statement. The prospectus forming part of the
registration statement on Form S-4 to be filed under the Securities Act with
the SEC by Parent for the purpose of registering the shares of Parent Stock to
be issued in the Merger (together with any amendments thereto, the
"Registration Statement") will not at the time it becomes effective and at the
Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they are made, not misleading or necessary to correct any statement in any
earlier filing with the SEC of such Registration Statement or any amendment or
supplement thereto. The Registration Statement will comply as to form in all
material respects with all applicable laws, including the provisions of the
Securities Act and the rules and regulations promulgated thereunder.
Notwithstanding the foregoing, no representation is made by Parent or Sub with
respect to information supplied by the Company or its representatives
specifically for inclusion therein.
Section 4.14. Board Approval. The Board of Directors of Parent has
determined that the transactions contemplated by this Agreement are in the
best interests of Parent and its stockholders. No vote of the stockholders of
Parent is necessary to approve any of the transactions contemplated hereby.
Section 4.15. Issuance of Parent Stock. The shares of Parent Stock to be
issued in connection with the Merger have been duly authorized and, when
issued as contemplated by this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable (except as provided under Section
180.0622(2)(b) of the Wisconsin Statutes), free of all Liens (except those
created by the recipients thereof), free of any preemptive rights created by
statute, the Parent Articles of Incorporation, the Parent Bylaws or any
agreement to which Parent is a party or by which Parent is bound and will be
registered under the Securities Act and registered or exempt from registration
under applicable Blue Sky laws and listed on the Nasdaq National Market.
Neither the filing of the Registration Statement nor the offering or sale of
any of the shares of Parent Stock as contemplated by this Agreement gives rise
to any rights, other than those which have been waived or satisfied, for or
relating to the registration of any securities of Parent.
Section 4.16. Company Stock. Neither Parent, Sub nor any subsidiary of
Parent or Sub owns any capital stock of any class of the Company, either
directly or indirectly, or any rights to acquire or dispose of any capital
stock of any class of the Company.
Section 4.17. Tax Free Reorganization. Neither Parent nor Sub is aware of
any circumstance or event that would prevent the Merger from being treated as
a tax-free reorganization pursuant to Section 368(a) of the Code.
Section 4.18. Accounting Matters. Neither Parent nor any of its subsidiaries
or affiliates has taken or agreed to take any action that would prevent Parent
from accounting for the business combination to be effected pursuant to this
Agreement as a pooling of interests.
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Section 4.19. Environmental Matters.
(a) Parent and each of its subsidiaries has in effect all its
Environmental Permits under applicable Environmental Laws necessary for it
to carry on its business as now conducted, and there has occurred no
material violation of any such Environmental Permit, except in each case
for those which, individually or in the aggregate, have not had and are not
reasonably expected to have a Parent Material Adverse Effect.
(b) Except as disclosed in the Parent SEC Documents, Parent and each of
its subsidiaries is, and has been, in compliance with all applicable
Environmental Laws in all respects, except in each case for those which,
individually or in the aggregate, have not had and are not reasonably
expected to have a Parent Material Adverse Effect. Except as disclosed in
the Parent SEC Documents, Parent and each of its subsidiaries is not
subject to any liability, penalty or expense (including legal fees) and
will not hereafter suffer or incur any loss, liability, penalty or expense
(including legal fees) by virtue of any violation of any Environmental Law
occurring prior to the Closing, any environmental activity conducted at or
prior to the Closing or any environmental condition existing on or with
respect to any property at or prior to the Closing, in each case whether or
not Parent or its subsidiaries permitted or participated in such act or
omission, except in each case for those which, individually or in the
aggregate, have not had and are not reasonably expected to have a Parent
Material Adverse Effect.
(c) Except as disclosed in the Parent SEC Documents, there is no suit,
claim, action, proceeding, investigation or inquiry pending or, to Parent's
knowledge, threatened before any court, governmental agency or authority or
other forum in which Parent or any of its subsidiaries has been or, with
respect to threatened suits, actions and proceedings, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release or threatened release
into the environment of any Hazardous Material or Regulated Materials,
whether or not occurring at, on, under or involving a site owned, leased or
operated by Parent or any of its subsidiaries, except in each case for
those which, individually or in the aggregate, have not had and are not
reasonably expected to have a Parent Material Adverse Effect.
Section 4.20. Labor Matters. Except as disclosed in the Parent SEC
Documents, neither Parent nor any of its subsidiaries is a party to, or bound
by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization, nor is Parent or any
of its subsidiaries subject to any material proceeding asserting that it or
any subsidiary has committed an unfair labor practice or is seeking to compel
it to bargain with any labor union or labor organization, nor is there any
strike or other material labor dispute involving Parent or any of its
subsidiaries pending or, to Parent's knowledge, threatened.
Section 4.21. Material Contracts. None of Parent or its subsidiaries, nor
any of their respective assets, business or operations, is a party to, or is
bound or affected by, or receives benefits under, any contract or agreement or
amendment thereto that in each case is required to be filed as an exhibit to
an Annual Report on Form 10-K filed by Parent that has not been filed as an
exhibit to Parent's Annual Report on Form 10-K filed for the fiscal year ended
December 31, 1997 or as an exhibit to another filed Parent SEC Document.
Section 4.22. Intellectual Property. Neither Parent nor any of its
subsidiaries has, as of the date hereof, received written notice from any
other person pertaining to or challenging the right of Parent or its
subsidiaries to use Intellectual Property or any trade secrets, proprietary
information, inventions, know-how, processes and procedures owned or used by
or licensed to Parent or any of its subsidiaries, except with respect to
rights the loss of which, individually or in the aggregate, have not had and
are not reasonably likely to have a Parent Material Adverse Effect.
Section 4.23. Certain Transactions. Except as disclosed in the Parent SEC
Documents (all of such transactions being on terms no less favorable to Parent
and its subsidiaries than could have been obtained from independent third
parties), none of the officers or directors of Parent or any of its
subsidiaries nor any affiliate of Parent, and to Parent's knowledge, none of
Parent's employees or the employees of any of its subsidiaries is a party to
any transaction with Parent or any of its subsidiaries (other than for
services as an employee, officer or
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director and other than transactions between Parent and one or more of its
direct or indirect wholly owned subsidiaries or between such subsidiaries),
including, without limitation, any contract, agreement or other arrangement
(i) providing for the furnishing of services to or by, (ii) providing for
rental of real or personal property to or from, or (iii) otherwise requiring
payments to or from, any such officer, director, affiliate or employee, any
member of the family of any such officer, director or employee or any
corporation, partnership, trust or other entity in which any such officer,
director or employee or any corporation, partnership, trust or other entity in
which any such officer, director or employee has a substantial interest or
which is an affiliate of such officer, director or employee.
Section 4.24. Certain Business Practices. As of the date of this Agreement,
except for such actions which would not have a Parent Material Adverse Effect,
neither Parent nor any of its subsidiaries has (i) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties
or campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) to Parent's knowledge, made any other unlawful
payment.
Section 4.25. Year 2000 Compliance. Parent has initiated a review and
assessment of all areas within its and each of its subsidiaries' business and
operations that could be adversely affected by the "Year 2000 Problem" (that
is, the risk that computer applications used by the Company or any of its
subsidiaries may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999). Based on the foregoing, except as disclosed in the Parent SEC
Documents, Parent believes that the computer applications that are currently
material to its or any of its subsidiaries' business and operations are
reasonably expected to be able to perform properly date-sensitive functions
for all dates before and after January 1, 2000, except to the extent that a
failure to do so would not reasonably be expected to have a Parent Material
Adverse Effect.
ARTICLE V
Covenants
Section 5.1. Affirmative Covenants of the Company. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
which consent shall not be unreasonably withheld, the Company shall, and shall
cause each of its subsidiaries to, (a) operate its business in the usual and
ordinary course consistent with past practices and in accordance, in all
material respects, with applicable laws; (b) preserve substantially intact its
business organization, maintain its rights and franchises, use its
commercially reasonable efforts to retain the services of its respective
principal officers and key employees and maintain its relationships with its
respective principal suppliers, contractors, distributors, customers and
others having material business relationships with it; (c) maintain and keep
its properties and assets in as good repair and condition as at present,
ordinary wear and tear excepted; and (d) keep in full force and effect
insurance comparable in amount and scope of coverage to that currently
maintained; provided, however, that the loss of any officers, employees,
consultants, customers, payors or suppliers prior to the Effective Time shall
not constitute a breach of this Section 5.1 unless such loss would have a
Company Material Adverse Effect.
Section 5.2. Negative Covenants of the Company. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent,
from the date hereof until the Effective Time, the Company shall not, and
shall cause each of its subsidiaries not to, do any of the following:
(a) (i) increase the compensation payable to or to become payable to any
of its directors, officers or employees, except for increases in salary,
wages or bonuses payable or to become payable in the ordinary course of
business and consistent with past practice; (ii) grant any severance or
termination pay to, or enter into or modify any employment or severance
agreement with, any of its directors, officers or employees; or (iii) adopt
or amend any employee benefit plan or arrangement, except as may be
required by applicable law;
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(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of, any of its capital stock; provided, however,
that this Section 5.2(b) shall not prohibit any wholly owned (directly or
indirectly) subsidiary of the Company from declaring, setting aside or
paying any dividend on, or making any distribution in respect of, its
capital stock.
(c) (i) redeem, repurchase or otherwise reacquire any share of its
capital stock or any securities or obligations convertible into or
exercisable or exchangeable for any share of its capital stock, or any
options, warrants or conversion or other rights to acquire any shares of
its capital stock or any such securities or obligations (other than in
connection with the exercise of any 1992 Plan Options, 1996 Plan Options,
Non-Plan Options and Warrants and the delivery of Company Common Stock in
payment of the exercise price thereof); (ii) effect any reorganization or
recapitalization; or (iii) split, combine or reclassify any of its capital
stock or issue or authorize or propose the issuance of any other securities
in respect of, in lieu of, or in substitution for, shares of its capital
stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of any class of its
capital stock (including shares held in treasury) or other equity
securities, any securities or obligations directly or indirectly
convertible into or exercisable or exchangeable for any such shares, or any
rights (including, without limitation, stock appreciation or stock
depreciation rights), warrants or options to acquire, any such shares or
securities or any rights, warrants or options directly or indirectly to
acquire any such shares or securities (except for the issuance of shares
upon the exercise of 1992 Plan Options, 1996 Plan Options, Non-Plan Options
and Warrants outstanding as of the date hereof); or (ii) amend or otherwise
modify the terms of any such securities, obligations, rights, warrants or
options in a manner inconsistent with the provisions of this Agreement or
the effect of which shall be to make such terms more favorable to the
holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or
agree to acquire all or substantially all assets of any other Person (other
than the purchase of receivables in the ordinary course of business and
consistent with past practice);
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any of its assets, except for dispositions of
assets in the ordinary course of business;
(g) propose or adopt any amendments to the Company Certificate of
Incorporation or the Company Bylaws;
(h) (i) change any of its methods of accounting in effect at January 1,
1998, or (ii) make or rescind any express or deemed election relating to
Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes, or change any of its methods of reporting income or deductions for
Federal income Tax purposes from those employed in the preparation of the
Federal income Tax returns for the taxable year ending December 31, 1997,
except, in the case of clause (i) or clause (ii), as may be required by law
or GAAP, consistently applied;
(i) prepay, before the scheduled maturity thereof, any of its long-term
debt, or incur any obligation for borrowed money, whether or not evidenced
by a note, bond, debenture or similar instrument, other than (i)
indebtedness incurred in the ordinary course of business under the existing
loan agreements described in Item 3.24 of the Company Disclosure Schedule
and (ii) trade payables incurred in the ordinary course of business
consistent with past practice;
(j) take any action that would or could reasonably be expected to result
in any of its representations and warranties set forth in this Agreement
being untrue in any material respect or in any of the conditions to the
Merger set forth in Article VII not being satisfied in any material respect
that in any case would have a Company Material Adverse Effect; or
(k) agree in writing or otherwise to do any of the foregoing.
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Section 5.3. Negative Covenants of Parent. Except as expressly contemplated
by this Agreement or otherwise consented to in writing by the Company, from
the date hereof until the Effective Time, Parent shall not take any action:
(a) that would prevent the Merger from being treated as a tax-free
reorganization pursuant to Section 368(a) of the Code; or
(b) that would or could reasonably be expected to result in any of its
representations or warranties set forth in this Agreement being untrue in
any material respect or in any of the conditions to the Merger set forth in
Article VII not being satisfied in any material respect that in any case
would have a Parent Material Adverse Effect.
ARTICLE VI
Additional Agreements
Section 6.1. Access and Information. From the date hereof to the Effective
Time, each party shall, and shall cause its subsidiaries to, afford to the
other party and its officers, employees, accountants, consultants, legal
counsel and other representatives of the other party (collectively, the
"Representatives"), reasonable access during normal business hours to the
properties, executive personnel and all information concerning the business,
properties, contracts, records and personnel of such party and its
subsidiaries as the other party may reasonably request; provided, however,
that no investigation pursuant to this Section 6.1 shall alter any
representation or warranty of any party hereto or the conditions to the
obligations of the parties hereto.
Section 6.2. Confidentiality. Any information received from the Company or
its representatives by Parent, its subsidiaries or any of its Representative
on or after the date hereof shall be considered Evaluation Material (as
defined in the letter agreement dated April 27, 1998 (the "Confidentiality
Agreement"), between Parent and the Company), and such information shall be
held in confidence by Parent and Sub in accordance with the terms of the
Confidentiality Agreement, which continues in full force and effect and which
shall survive any termination of this Agreement.
Section 6.3. Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
Parent and the Company shall jointly prepare and file with the SEC subject
to the prior approval of the other party, which approval shall not be
unreasonably withheld, preliminary proxy materials of the Company which
shall consist of the preliminary Proxy Statement in connection with the
vote of the Company's stockholders with respect to the Merger and the other
transactions contemplated hereby, and a preliminary prospectus of Parent in
connection with the registration under the Securities Act of Parent Stock
to be issued in connection with the Merger as promptly as practicable after
all comments are received from the SEC with respect to the preliminary
proxy materials and after the furnishing by Parent and the Company of all
information required to be contained therein, the Company shall file with
the SEC subject to the prior approval of the other party, which approval
shall not be unreasonably withheld, the definitive Proxy Statement to be
sent or given in connection with the vote of the Company's stockholders at
the Stockholders' Meeting and Parent shall file with the SEC subject to the
prior approval of the other party, which approval shall not be unreasonably
withheld, the Registration Statement containing the Proxy Statement and
form of prospectus to be sent or given in connection with the registration
under the Securities Act of the Parent Stock to be issued in connection
with the Merger. Each of Parent and the Company shall use commercially
reasonable efforts to have or cause the Registration Statement to become
effective as promptly as practicable, and Parent shall take any
commercially reasonable action required to be taken under any applicable
Federal or state securities or Blue Sky laws in connection with the
issuance of shares of Parent Stock in the Merger. Each of Parent and the
Company shall furnish all information concerning it and the holders of its
capital stock as the other may reasonably request in connection with such
actions. Promptly after the Registration Statement has
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become effective and all applicable Blue Sky laws have been complied with,
the Company shall mail the proxy statement/prospectus included in the
Registration Statement to its stockholders.
(b) The information supplied by the Company for inclusion in the
Registration Statement shall not, at the time the Registration Statement is
declared effective (or at the time any amendment thereof or supplement
thereto is sent or given to the Company's stockholders), contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
The information supplied by the Company for inclusion in the Proxy
Statement to be sent to the stockholders of the Company in connection with
the Stockholders' Meeting shall not, at the date the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to
stockholders of the Company or, except to the extent amended or
supplemented, at the time of the Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
If at any time prior to the Stockholders' Meeting any event or circumstance
relating to the Company or any of its affiliates, or its or their
respective officers or directors, should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, the Company shall promptly inform
Parent. All documents that the Company is responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as
to form and substance in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
(c) The information supplied by Parent for inclusion in the Registration
Statement shall not, at the time the Registration Statement is declared
effective (or at the time any amendment thereof or supplement thereto is
sent or given to the Company's stockholders), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they are made, not misleading. The
information supplied by Parent for inclusion in the Proxy Statement to be
sent to the stockholders of the Company in connection with the
Stockholders' Meeting shall not, at the date the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to stockholders of
the Company or, except to the extent amended or supplemented, at the time
of the Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time
prior to the Stockholders' Meeting any event or circumstance relating to
Parent or any of its respective affiliates, or its or their respective
officers or directors, should be discovered by Parent which should be set
forth in an amendment to the Registration Statement or a supplement to the
Proxy Statement, Parent shall promptly inform the Company. All documents
that Parent is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in
all material respects with the applicable requirements of the Securities
Act and the Exchange Act.
(d) Notwithstanding the foregoing, no party makes any representations or
warranties with respect to any information that has been supplied by the
other party or by its auditors, attorneys, financial advisors, other
consultants or advisors specifically for use in the Registration Statement,
any Blue Sky filing, the Proxy Statement, or any other documents to be
filed with the SEC or any regulatory agency in connection with the
transactions contemplated hereby.
Section 6.4. Stockholder Approval. The Company, acting through its Board of
Directors, shall, in accordance with applicable law and the Company
Certificate of Incorporation and the Company Bylaws (a) duly call, give notice
of, convene and hold one or more meetings of the Company's stockholders as
soon as practicable following the date on which the Registration Statement
becomes effective, to approve and adopt this Agreement and the Merger (the
"Stockholders' Meeting"), and (b) include in the Proxy Statement the GeoWaste
Board Recommendation to the extent not previously withdrawn in compliance with
Section 6.9 and the Fairness Opinion. Except as provided in Section 6.9, the
Company shall use its commercially reasonable efforts, including the retention
of a professional proxy solicitation firm, to solicit from stockholders of the
Company proxies in
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favor of the approval and adoption of this Agreement and the Merger and to
take all other actions reasonably necessary or in Parent's reasonable judgment
advisable to secure such vote as promptly as practicable.
Section 6.5. Further Action; Commercially Reasonable Efforts; Notice of
Certain Events.
(a) Each of the parties shall use commercially reasonable efforts to
take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable under applicable laws or
otherwise to consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable, including, without limitation,
using its best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Entities and parties to contracts with the Company and Parent as are
necessary for the transactions contemplated herein.
(b) From the date hereof until the Effective Time, each of the parties
shall promptly notify the other in writing of any pending or, to the
knowledge of such party, threatened action, proceeding or investigation by
any Governmental Entity or any other Person (i) challenging or seeking
damages in connection with the Merger or (ii) seeking to restrain or
prohibit the consummation of the Merger or otherwise limit the right of
Parent to own or operate all or any portion of the business or assets of
the Company.
(c) The Company shall give prompt written notice to Parent, and Parent
and Sub shall give prompt written notice to the Company, of the occurrence,
or failure to occur, of any event, which occurrence or failure to occur
would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Effective Time. Each party shall use
its best efforts to not take any action, or enter into any transaction,
which would cause any of its representations or warranties contained in
this Agreement to be untrue or result in a breach of any covenant made by
it in this Agreement.
(d) From the date hereof until the Effective Time, the Company shall
promptly notify Parent in writing of any (i) suit, claim, action,
proceeding or investigation commenced or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries which, if pending
on the date of this Agreement, would have been required to have been
disclosed in Item 3.11 of the Company Disclosure Schedule pursuant to
Section 3.11 or (ii) any change or event (other than changes generally
affecting the industries in which the Company or any of its subsidiaries
operate) (x) having or which would reasonably be expected to have a Company
Material Adverse Effect or (y) impairing the ability of the Company to
consummate the transactions contemplated hereby.
(e) The Company shall provide to Parent interim consolidated monthly
financial statements within twenty (20) days of the end of each month
during the term of this Agreement and the Company shall consult with Parent
before filing with the SEC or mailing to its stockholders any reports or
communications.
Section 6.6. Public Announcements. Parent and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except
as may be required by law or any listing agreement of Parent or the Company
with any exchange on which the securities of the Company or Parent are traded.
Section 6.7. Directors' and Officers' Insurance and Indemnification.
(a) From and after the Effective Time, Parent shall indemnify, defend and
hold harmless to the fullest extent permitted under Wisconsin law each
person who on or prior to the Effective Time was an officer, director,
employee or agent of the Company and its subsidiaries or who on or prior to
the Effective Time was entitled to indemnification pursuant to the Company
Certificate of Incorporation, Company Bylaws or written indemnification
agreements in effect at the Effective Time (individually, an "Indemnified
Party"
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and collectively, the "Indemnified Parties"), against all losses, claims,
damages, liabilities, costs or expenses (including reasonable attorneys'
fees), judgments, fines, penalties and amounts paid in settlement of or
otherwise in connection with any claim, action, suit, proceeding or
investigation (a "Claim") arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their capacities as
such occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement). In the event
of any such Claim, Parent shall pay reasonable expenses in advance of the
final disposition of any such action or proceeding to each Indemnified
Party to the fullest extent permitted under the DGCL, upon receipt from the
Indemnified Party to whom expenses are advanced of the undertaking to repay
such advances contemplated by Section 145 of the DGCL.
(b) Parent shall cause to be maintained in effect for not less than six
(6) years after the Effective Time the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained
by the Company with respect to Claims arising from facts or events which
occurred prior to the Effective Time; provided, however, that Parent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions that are no less advantageous for the
officers, directors and other persons covered thereby; provided, further,
however, that if such coverage is not obtainable at a cost less than or
equal to 150% of the amount per annum the Company paid in its last full
fiscal year, Parent shall cause to be purchased such lesser amount of
coverage, on terms as similar in coverage as practicable to such coverage
in effect on the date hereof, as may be obtained having a cost not to
exceed 150% of the amount per annum the Company paid in its last full
fiscal year, which amount has been disclosed to Parent.
(c) The Surviving Corporation Bylaws shall contain the provisions with
respect to indemnification set forth in the Company Bylaws on the date
hereof, which provisions shall not be amended, repealed or otherwise
modified for a period of six (6) years after the Effective Time in any
manner that would adversely affect the rights thereunder of Indemnified
Parties under the Company Bylaws, in respect of actions or omissions
occurring prior to the Effective Time, unless such amendment, repeal or
modification is required by law. Without limiting the foregoing, Parent
shall cause the Surviving Corporation to indemnify, defend and hold
harmless the present and former officers, directors, employees and agents
of the Company and its subsidiaries against all Claims arising out of
actions or omissions in their capacity as such occurring at or prior to the
Effective Time to the full extent permitted under the DGCL, other
applicable law, the Company Certificate of Incorporation and the Company
Bylaws or written indemnification agreements in effect as of the date
hereof.
(d) The Surviving Corporation Certificate of Incorporation shall contain
the provisions with respect to indemnification set forth in the Company
Certificate of Incorporation on the date hereof, which provisions shall not
be amended, repealed or otherwise modified for a period of six (6) years
after the Effective Time in any manner that would adversely affect any
Indemnified Party in respect of actions or omissions occurring prior to the
Effective Time, unless such amendment, repeal or modification is required
by law.
(e) The written indemnification agreements in effect on the date hereof
between the Company and any Indemnified Party shall not be amended,
repealed or otherwise modified for a period of six (6) years after the
Effective Time in any manner that would adversely affect any Indemnified
Party in respect of actions or omissions occurring prior to the Effective
Time, unless such amendment, repeal or modification is required by law.
(f) This Section 6.7 shall survive the consummation of the Merger, is
intended to benefit the Indemnified Parties and their respective heirs and
personal representatives, shall be binding on all successors and assigns of
Parent and the Surviving Corporation and shall be enforceable by the
foregoing parties as third party beneficiaries.
Section 6.8. HSR Act Matters. Parent, Sub and the Company (as may be
required pursuant to the HSR Act) promptly will complete all documents
required to be filed with the Federal Trade Commission and the United States
Department of Justice in order to comply with the HSR Act and, not later than
fifteen (15) days after the date hereof, together with the Persons who are
required to join in such filings, shall file the same with the appropriate
Governmental Entities. Parent, Sub and the Company shall promptly furnish all
materials
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thereafter required by any of the Governmental Entities having jurisdiction
over such filings, and shall take all reasonable actions and shall file and
use best efforts to have declared effective or approved all documents and
notifications with any such Governmental Entity, as may be required under the
HSR Act or other Federal antitrust laws for the consummation of the Merger and
the other transactions contemplated hereby.
Section 6.9. No Solicitation.
(a) The Company and its subsidiaries and their respective officers,
directors, employees, representatives, agents or affiliates, including
Deutsche Bank, shall immediately cease any discussion or negotiations with
any parties that may be ongoing with respect to an Acquisition Proposal (as
hereinafter defined) and shall as promptly as practicable request the
immediate return or destruction of all confidential information of the
Company previously provided to such parties and to not waive any existing
standstill restrictions applicable to such other parties. The Company shall
not, nor shall it permit any of its subsidiaries to, and it shall use its
best efforts to cause its officers, directors, employees, agents or
affiliates, including Deutsche Bank, not to, directly or indirectly, (i)
solicit, initiate or knowingly encourage (including by way of furnishing
information, other than the Company SEC Documents), or knowingly take any
other action to facilitate, any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined in this Section 6.9(a)) or (ii)
participate in any discussions or negotiations regarding any Acquisition
Proposal; provided, however, that if the Board of Directors of the Company
determines in good faith, after consultation with and based on the advice
of outside counsel, that it is required to do so in order to comply with
its fiduciary duties to the Company's stockholders under applicable law,
the Company may, in response to an unsolicited Acquisition Proposal, and
subject to compliance with Section 6.9(c), (x) furnish information with
respect to the Company to any Person making such Acquisition Proposal
pursuant to an executed confidentiality agreement with such Person
containing substantially the same terms as the Confidentiality Agreement
(except as provided below) and (y) participate in negotiations regarding
such Acquisition Proposal. For purposes of this Agreement, "Acquisition
Proposal" means any bona fide proposal or offer from any Person relating to
any merger, consolidation, business combination, sale of a significant
amount of assets outside of the ordinary course of business, sale of shares
of capital stock outside of the ordinary course of business, tender or
exchange offer or similar transaction involving 50% or more of the capital
stock or assets of the Company and its subsidiaries, taken as a whole.
(b) Except as set forth in this Section 6.9, neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent,
the approval or recommendation by such Board of Directors or such committee
of the Merger or this Agreement, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) cause the Company
to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement (each, an "Acquisition Agreement")
with respect to any Acquisition Proposal. Notwithstanding the foregoing, in
the event that the Board of Directors of the Company determines in good
faith, after consultation with and based on the advice of outside counsel,
that it is required to do so in order to comply with its fiduciary duties
to the Company's stockholders under applicable law, the Board of Directors
of the Company may (subject to the following sentences) withdraw or modify
the GeoWaste Board Recommendation (or not to recommend the Merger and this
Agreement before the Proxy Statement is sent to stockholders), approve or
recommend a Superior Proposal (as defined below) or terminate this
Agreement, but in each case only at a time that is after the fifth business
day following Parent's receipt of written notice advising Parent that the
Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the Person making such Superior Proposal. In addition, if the
Company proposes to terminate this Agreement by exercising its termination
right under Section 8.1(g), it shall upon such terms set forth in Section
6.12(b) pay to Parent the Termination Fee (as defined in Section 6.12(b)).
For purposes of this Agreement, a "Superior Proposal" means any bona fide
proposal made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the
Company Common Stock then outstanding or all or substantially all the
assets of the Company and otherwise on terms which the Board of Directors
of the
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Company determines in its good faith judgment (based on the advice of
Deutsche Bank or such other investment banking firm of recognized national
standing selected by the Board of Directors) to be more favorable to the
Company's stockholders than the Merger.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 6.9, the Company shall immediately advise
Parent orally and in writing of any request for information of a nature
which would assist a potential bidder in preparing an Acquisition Proposal
(other than the Company SEC Documents) or of any Acquisition Proposal, the
material terms and conditions of such request or Acquisition Proposal and
the identity of the Person making such request or Acquisition Proposal. The
Company will keep Parent fully informed of the status and details
(including amendments or proposed amendments) of any such request or
Acquisition Proposal.
(d) Nothing contained in this Section 6.9 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders if, in the good faith judgment of the Board
of Directors of the Company, after consultation with and based on the
advice of outside counsel, failure so to disclose would be inconsistent
with its fiduciary duties to the Company's stockholders under applicable
law; provided, however, neither the Company, its Board of Directors nor any
committee thereof shall, except as permitted by Section 6.9(b), withdraw or
modify, or propose to withdraw or modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose to approve or
recommend, an Acquisition Proposal.
Section 6.10. Affiliate Agreements.
(a) Not later than the 15th day prior to the mailing of the Proxy
Statement, the Company shall deliver to Parent a schedule of each Person
that, to the best of the Company's knowledge, is or is reasonably likely to
be, as of the date of the Stockholders' Meeting, deemed to be an
"affiliate" of the Company (i) as that term is used in Rule 145 under the
Securities Act (each, a "Company Affiliate") and (ii) under applicable SEC
accounting releases with respect to pooling of interests accounting
treatment (each, a "Pooling Affiliate").
(b) The Company shall use commercially reasonable efforts to cause each
Person who may be deemed to be (i) a Company Affiliate to execute and
deliver to Parent on or before the date of mailing of the Proxy Statement
an agreement in the form attached hereto as Exhibit A and (ii) a Pooling
Affiliate to execute and deliver to Parent on or before the date of mailing
of the Proxy Statement an agreement in the form attached hereto as Exhibit
B. Such Company Affiliates and Pooling Affiliates will not receive
certificates representing Parent Stock until such agreement or agreements
are delivered to Parent.
Section 6.11. Listing of Parent Shares; Blue Sky Laws. Parent shall use its
best efforts to obtain the listing on the Nasdaq National Market, at or before
the Effective Time, of the shares of Parent Stock to be issued pursuant to the
Merger. Parent shall take such steps as may be necessary to comply with the
Blue Sky Laws of all jurisdictions which are applicable to the issuance of
Parent Stock pursuant hereto.
Section 6.12 Expenses.
(a) Except as otherwise provided in this Section 6.12, all Expenses (as
defined below) incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
Expenses; provided, however, that all Expenses relating to printing, filing
and mailing the Registration Statement, the Proxy Statement and any other
filings with the SEC and any other Governmental Entity and all SEC and
other regulatory filing fees, including filing fees under the HSR Act,
incurred in connection with such filings shall be borne by Parent. Except
as otherwise provided in this Section 6.12, the Company shall pay, and
shall indemnify, defend and hold Parent and Sub harmless from and against
all Expenses of the Company's legal, accounting, investment banking and
other professional counsel in connection with the transactions contemplated
hereby, including any fees and expenses of PricewaterhouseCoopers LLP,
Stroock & Stroock & Lavan LLP, King & Spalding and Deutsche Bank in
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connection with professional services rendered in regard to the Merger,
which fees and expenses shall not exceed $1.75 million in the aggregate.
(b) If (i) the Company terminates this Agreement pursuant to Section
8.1(g), (ii) Parent terminates this Agreement pursuant to Section 8.1(f)
following receipt by the Company of a proposal for an Acquisition Proposal
(including a Superior Proposal), or (iii) within one year following
termination of this Agreement pursuant to Section 8.1(e), the Company
enters into a definitive agreement with respect to a Superior Proposal
involving the Company that had been publicly announced prior to or at the
time of the Stockholders' Meeting or (iv) Parent terminates this Agreement
pursuant to Section 8.1(b) as a result of a willful and material
misrepresentation by the Company or the willful and material breach by the
Company of any of its agreements and covenants set forth herein, then,
within three (3) business days of, in the case of clause (i), (ii) or (iv),
such termination, or, in the case of clause (iii), consummation of the
Superior Proposal, the Company shall pay Parent by wire transfer in
immediately available funds to an account designated by Parent in writing a
fee of $1.5 million (the "Termination Fee").
(c) If the Company terminates this Agreement pursuant to Section 8.1(c)
as a result of a willful and material misrepresentation by Parent or Sub or
the willful and material breach by Parent or Sub of any of their respective
agreements and covenants set forth herein, then, within three (3) business
days of such termination, Parent shall pay the Company by wire transfer in
immediately available funds to an account designated by the Company in
writing the Termination Fee.
(d) If this Agreement is terminated pursuant to Section 8.1(e), then the
Company shall (provided that neither Parent nor Sub is then in material
breach of its obligations under this Agreement) reimburse Parent for all
its Expenses, not to exceed $700,000 in the aggregate. Any payment required
to be made pursuant to this Section 6.12(d) shall be made to Parent by wire
transfer of immediately available funds to an account designated by Parent
in writing not later than three (3) business days after delivery to the
Company of written notice of demand for payment and an itemization setting
forth in reasonable detail all Expenses in such notice of demand for
payment,
(e) "Expenses", as used in this Agreement, shall include all reasonable
out-of-pocket costs and expenses (including, without limitation, the
reasonable fees and disbursements of counsel, accountants, investment
bankers, experts and consultants to a party hereto) incurred by a party or
on its behalf in connection with or related to, the authorization,
preparation, negotiation, execution and performance of this Agreement and
the transactions contemplated hereby, the preparation, printing, filing and
mailing of the Registration Statement and the Proxy Statement, the
solicitation of stockholder approvals and all other matters related to the
closing of the transactions contemplated herein.
(f) If a party fails to pay any amount due to another party pursuant to
this Section 6.12 when due and the party purportedly required to pay such
amount does not dispute the payment of such amount or it is finally
determined that such amount is due and owing, the amount of any such
payment shall be increased to include the costs and expenses actually
incurred by the other (including, without limitation, reasonable fees and
expenses of counsel) in connection with the collection under and
enforcement of this Section 6.12, together with interest on such unpaid
amount, commencing on the date such amount became due, at a rate per annum
equal to the rate of interest publicly announced by Citibank, N.A., from
time to time, in The City of New York, from time to time, as such bank's
base rate plus 5.00%. If a party disputes the payment of an amount under
this Section 6.12 and it is finally determined that such party is not
required to make a payment under this Section 6.12, the other party shall
reimburse such party for any costs and expenses (including reasonable fees
and expenses of counsel) incurred in disputing the claim for payment under
this Section 6.12 together with interest on such costs and expenses,
commencing on the date such amounts become are paid, at a rate per annum
equal to the rate of interest publicly announced by Citibank, N.A., from
time to time, in The City of New York, from time to time, as such bank's
base rate plus 5.00%.
(g) The parties agree that, notwithstanding the provisions of this
Section 6.12, in no event shall either the Company or Parent pay to the
other party in excess of $1.5 million in the aggregate under this Section
6.12 (except for additional amounts due under Section 6.12(f)).
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Section 6.13. Tax-Free Treatment. This Agreement is intended to constitute a
"plan of reorganization" within the meaning of Section 1.368-2(g) of the
income tax regulations promulgated under the Code. From and after the date of
this Agreement, each party hereto shall use its reasonable best efforts to
cause the Merger to qualify, and shall not, without the prior written consent
of the other parties hereto, knowingly take any actions or cause any actions
to be taken which could reasonably be expected to prevent the Merger from
qualifying as a reorganization under the provisions of Section 368 of the
Code. In the event that the Merger shall fail to qualify as a reorganization
under the provisions of Section 368, then the parties hereto agree to
negotiate in good faith to restructure the Merger in order that it shall
qualify as a tax-free transaction under the Code. Each party shall provide the
other party with such representations as shall be reasonably requested in
order to enable the respective counsel of such parties to render the opinions
set forth in Sections 7.2(c) and 7.3(c). In the event counsel for either
Parent or the Company is unable to render the opinion described in Section
7.2(c) or 7.3(c), respectively, then the parties hereto agree to negotiate in
good faith to restructure the Merger in order to permit each such counsel to
render such opinion. Following the Effective Time, and consistent with any
such consent, neither the Surviving Corporation nor Parent nor any of their
respective affiliates knowingly and voluntarily shall take any action or cause
any action to be taken which could reasonably be expected to cause the Merger
to fail to qualify as a reorganization under Section 368 of the Code.
Section 6.14. Pooling Accounting. Each of Parent and the Company shall use
commercially reasonable efforts to cause the business combination to be
effected by the Merger to be accounted for as a pooling of interests. Each of
Parent and the Company shall use commercially reasonable efforts to cause its
affiliates not to take any action that would adversely affect the ability of
Parent to account for such business combination as a pooling of interests.
Section 6.15. No Action. Except as contemplated by this Agreement, no party
hereto will, nor will either such party permit any of its subsidiaries to,
take or agree or commit to take any action that is reasonably likely to make
any of its representations or warranties hereunder inaccurate in any material
respect at the date made (to the extent so limited) or as of the Effective
Time.
Section 6.16. Conduct of Business of Sub. Parent shall, as promptly as
practicable, cause Sub to be duly organized and to execute and deliver an
addendum to this Agreement making it a party hereto and take all other action
necessary to cause Sub to perform it obligations hereunder (including, but not
limited to, consummation of the Merger) and to otherwise comply with the terms
hereof. Sub shall not conduct any business from the date of this Agreement,
other than to consummate the Merger and the transactions contemplated by this
Agreement.
Section 6.17. Employee Benefit Plans.
(a) Subject to Section 6.17(b), Parent will continue, or cause Sub to
continue, the employee benefit plans that the Company has in effect at the
Effective Time until such time as Parent determines to convert such
employee benefit plan to employee benefit plans maintained by Parent
(provided that nothing in this Section 6.17 shall be deemed to be or
construed as requiring Parent or Sub to continue any such plan, or to allow
or guarantee participation therein if under any such plan such
participation is determined in the discretion of a person or committee of
Parent or Sub).
(b) Each person employed by the Company and its affiliates prior to the
Effective Time who remains an employee of Parent or its affiliates
following the Effective Time (each, a "Continued Employee") shall be
generally entitled to continue to participate in the employee benefits
plans maintained in accordance with and subject to the limits of Section
6.17(a). Upon the conversion of such benefit plans as contemplated by and
subject to the limits of Section 6.17(a), each Continued Employee (if still
then employed by Parent or its affiliates) will be generally entitled to
participate in the pension, benefit and similar plans, of Parent and its
subsidiaries that are generally available to employees of Parent and its
affiliates. All such participation shall be subject to such terms of such
plans as may be in effect from time to time, subject to Sections 6.17(a)
and (d).
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(c) Subject to Section 6.17(b), from and after the Effective Time, Parent
and its affiliates shall honor in accordance with their terms and except to
the extent amended in accordance with such terms, all Company Benefit Plans
and all contracts, plans and programs providing for compensation or
benefits for Company Employees and former employees of the Company and its
subsidiaries to the extent such Company Employees and former employees
continue to be covered by any of such Company Benefit Plans, contracts,
plans or programs.
(d) From and after the Effective Time, Parent shall treat all service by
Company Employees with the Company and its affiliates and their respective
predecessors prior to the Effective Time for all purposes as service with
Parent (except to the extent such treatment would result in duplicative
accrual on or after the Closing Date of benefits for the same period of
service), and, with respect to any medical or dental benefit plan in which
Company Employees participate after the Effective Time, Parent shall waive
or cause to be waived any pre-existing condition exclusions and actively-
at-work requirements (provided, however, that no such waiver shall apply to
a pre-existing condition of any Company Employee who was, at the Effective
Time, excluded from participation in a Company Benefit Plan by virtue of
such pre-existing condition and otherwise in accordance with the applicable
benefit plan), and shall provide that any covered expenses incurred on or
before the Effective Time by a Company Employee or a Company Employee's
covered dependent shall be taken into account for purposes of satisfying
applicable deductive, coinsurance and maximum out-of-pocket provisions
after the Effective Time to the same extent as such expenses are taken into
account for the benefit of similarly situated employees of Parent and
subsidiaries of Parent.
(e) Nothing in this Section 6.17 shall be construed to impose upon Parent
and its affiliates any obligation to continue the employment of any Company
Employee following the Effective Time. For purposes of this Section 6.17,
"Company Employee" shall mean persons who are, as of the Effective Time,
employees of the Company and any of its subsidiaries.
(f) Nothing in this Section 6.17 shall be interpreted as preventing
Parent or Sub from amending, modifying or terminating any Company Benefit
Plans or other contracts, arrangements, commitments or understandings, in
accordance with their terms and applicable law.
Section 6.18. Compliance by Sub. Parent shall take all action necessary to
cause Sub to perform its obligations hereunder (including, but not limited to,
consummation of the Merger) and to otherwise comply with the terms hereof.
Section 6.19. Final Tax Returns. Parent shall cause the Surviving
Corporation to timely prepare and file all federal, state and local income Tax
returns required to be filed by the Surviving Corporation for all Tax periods
ending on or including the Closing Date, and each of the parties shall fully
cooperate with Parent with respect thereto.
Section 6.20. Press Release. In the event Allen & Company is a Pooling
Affiliate and if requested by Allen & Company, Parent shall use its best
efforts to publish, as soon as possible after the Effective Time, financial
results which are sufficient in accordance with Accounting Series Release No.
135 to permit the disposition by all of the stockholders of the Company of the
shares of Parent Stock received in the Merger consistent with the requirements
for treating the Merger as a pooling of interests for financial reporting
purposes; provided, however, that such financial results shall be published no
later than the fifteenth day after the end of the first full calendar month
after the Effective Time.
ARTICLE VII
Closing Conditions
Section 7.1. Conditions to Obligations of Parent, Sub and the Company to
Effect the Merger. The respective obligations of Parent, Sub and the Company
to effect the Merger and the other transactions
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contemplated herein shall be subject to the satisfaction at or prior to the
Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the
Company in accordance with applicable law.
(b) No Order. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in
any case which is in effect and which prevents or prohibits consummation of
the Merger or any other transactions contemplated in this Agreement;
provided, however, that the parties shall use their best efforts to cause
any such decree, judgment, injunction or other order to be vacated or
lifted.
(c) Regulatory Approvals. All regulatory approvals necessary to
consummate the transactions contemplated hereby, shall have been obtained
and shall remain in full force and effect and all statutory waiting periods
(including the applicable waiting period under the HSR Act) in respect
thereof shall have expired or been terminated.
(d) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act and shall not be the subject of any stop order or proceeding
by the SEC seeking a stop order.
(e) Quotation. The shares of Parent Stock issuable pursuant to the Merger
shall have been authorized for quotation on the Nasdaq National Market.
(f) Blue Sky Approvals. All permits and other authorizations under state
securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Parent Stock to be issued in the Merger
shall have been received and be in full force and effect.
(g) Pooling Letters. Parent shall have received a letter from Ernst &
Young LLP, Parent's independent public accountants, and the Company shall
have received a letter from PricewaterhouseCoopers LLP, the Company's
independent public accountants, each dated the date of the Proxy Statement,
which letters shall be confirmed in writing at the Effective Time, stating
that the business combination to be effected by the Merger will qualify as
a transaction to be accounted for by Parent in accordance with the pooling
of interests method of accounting under the requirements of APB No. 16.
Section 7.2. Additional Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger and the other transactions
contemplated in this Agreement are also subject to the following conditions,
any or all of which may be waived, in whole or in part, to the extent
permitted by applicable law:
(a) Representations and Warranties. The representations and warranties of
the Company made in this Agreement that are qualified as to materiality
shall be true and correct and the representations and warranties not so
qualified shall be true and correct in all material respects, on and as of
the Effective Time with the same effect as though such representations and
warranties had been made on and as of the Effective Time, except for
representations and warranties that speak as of a specific date or time
other than the Effective Time (which need only be true and correct in all
material respects as of such date or time). Parent shall have received a
certificate of the Chief Executive Officer or the Chief Financial Officer
of the Company to that effect.
(b) Agreements and Covenants. The agreements and covenants of the Company
required to be performed on or before the Effective Time shall have been
performed in all material respects. Parent shall have received a
certificate of the Chief Executive Officer or the Chief Financial Officer
of the Company to that effect.
(c) Opinion of Parent's Counsel. Parent shall have received an opinion of
Foley & Lardner, counsel to Parent, dated the Effective Date, to the effect
that, on the basis of facts, representations and assumptions set forth in
such opinion, the Merger constitutes a "reorganization" under Section 368
of the Code. In
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rendering its opinion, Foley & Lardner may require and rely upon
representations contained in letters from the Company, Parent and
stockholders of the Company.
Section 7.3. Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger and the other transactions
contemplated in this Agreement are also subject to the following conditions
any or all of which may be waived, in whole or in part, to the extent
permitted by applicable law:
(a) Representations and Warranties. The representations and warranties of
Parent and Sub made in this Agreement that are qualified as to materiality
shall be true and correct and the representations and warranties not so
qualified shall be true and correct in all material respects, on and as of
the Effective Time with the same effect as though such representations and
warranties had been made on and as of the Effective Time, except for
representations and warranties that speak as of a specific date or time
other than the Effective Time (which need only be true and correct in all
material respects as of such date or time). The Company shall have received
a certificate of the Chief Executive Officer or the Chief Financial Officer
of Parent to that effect.
(b) Agreements and Covenants. The agreements and covenants of Parent and
Sub required to be performed on or before the Effective Time shall have
been performed in all material respects. The Company shall have received a
certificate of the Chief Executive Officer or the Chief Financial Officer
of Parent to that effect.
(c) Opinion of the Company's Counsel. The Company shall have received an
opinion of Stroock & Stroock & Lavan LLP, counsel to the Company, dated the
Effective Date, to the effect that, on the basis of facts, representations
and assumptions set forth in such opinion, the Merger constitutes a
"reorganization" within the meaning of Section 368 of the Code. In
rendering its opinion, Stroock & Stroock & Lavan LLP, may require and rely
upon representations contained in letters from the Company, Parent and
stockholders of the Company.
ARTICLE VIII
Termination, Amendment and Waiver
Section 8.1. Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and
the Merger by the stockholders of the Company:
(a) by mutual written consent of each of Parent and the Company; or
(b) by Parent, if the Company shall have breached, or failed to comply
with, in any material respect any of its obligations under this Agreement
or any representation or warranty made by the Company in this Agreement
shall have been incorrect in any material respect when made or shall have
since ceased to be true and correct in any material respect, such that as a
result of such breach, failure or misrepresentation the conditions set
forth in Section 7.2(a) or 7.2(b) would not be satisfied (a "Company
Termination Breach"); provided, however, that if such Company Termination
Breach is curable by the Company through the exercise of its reasonable
efforts and for so long as the Company continues to exercise such
reasonable efforts after notice of such breach (but in no event longer than
thirty (30) days), Parent may not terminate this Agreement pursuant to this
Section 8.1(b); or
(c) by the Company, if Parent or Sub shall have breached, or failed to
comply with, in any material respect any of its obligations under this
Agreement or any representation or warranty made by Parent or Sub shall
have been incorrect in any material respect when made or shall have since
ceased to be true and correct in any material respect, such that as a
result of such breach, failure or misrepresentation the conditions set
forth in Section 7.3(a) or 7.3(b) would not be satisfied (a "Parent
Termination Breach"); provided, however, that if such Parent Termination
Breach is curable by Parent or Sub through the exercise of its reasonable
efforts and for so long as Parent continues to exercise such reasonable
efforts after notice of such breach (but in no event longer than thirty
(30) days), the Company may not terminate this Agreement pursuant to this
Section 8.1(c); or
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(d) by either Parent or the Company, if any decree, permanent injunction,
judgment, order or other action by any court of competent jurisdiction or
any Governmental Entity preventing or prohibiting consummation of the
Merger shall have become final and nonappealable; or
(e) by either Parent or the Company, if the Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of
the Company at the Stockholders' Meeting or at any adjournment or
postponement thereof; or
(f) by Parent or Sub, if the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in any manner materially
adverse to Parent or Sub its approval or recommendation of the Merger or
this Agreement or approved or recommended any Acquisition Proposal; or
(g) by the Company in accordance with Section 6.9(b), provided it has
complied with the provisions thereof and that it complies with the
provisions of Section 6.12(b) related thereto; or
(h) by the Company, if the Final Parent Stock Price is less than $25.00;
or
(i) by either the Company or Parent, if the Merger shall not have been
consummated before October 30, 1998 (the "Termination Date"); provided,
however, that (i) the right to terminate this Agreement under this Section
8.1(i) shall not be available to the Company if the Company's failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the
Termination Date, and (ii) the right to terminate this Agreement under this
Section 8.1(i) shall not be available to Parent if Parent's or Sub's
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before
the Termination Date.
Section 8.2. Effect Of Termination. In the event of the termination of this
Agreement pursuant to Section 8.1, this Agreement shall forthwith become void,
there shall be no liability on the part of Parent, Sub or the Company or any
of their respective officers or directors to the other parties hereto and all
rights and obligations of any party hereto shall cease except as otherwise
provided in Sections 6.12 and 9.1; provided, however, that nothing herein
shall relieve any party from liability for the willful breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, or from any obligation under the Confidentiality Agreement;
provided, further, that in the event that any Termination Fee or reimbursement
for Expenses is paid pursuant to Section 6.12, notwithstanding any other
provision of this Agreement, it is understood that such Termination Fee or
Expense reimbursement, as the case may be, shall be the exclusive remedy for
any act or omission in the termination of this Agreement or other claim
arising out of this Agreement or the transactions contemplated hereby as a
result of a termination of this Agreement in the circumstances described in
Section 6.12.
Section 8.3. Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval of
this Agreement and the Merger by the stockholders of the Company, no amendment
may be made which would reduce the amount or change the type of consideration
into which each share of Company Common Stock shall be converted pursuant to
this Agreement upon consummation of the Merger. This Agreement may not be
amended except by an instrument in writing signed by the parties.
Section 8.4. Waiver. At any time prior to the Effective Time, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of the other party, (b) waive any inaccuracies in the representations and
warranties contained in this Agreement or in any document delivered pursuant
to this Agreement and (c) waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE IX
General Provisions
Section 9.1. Nonsurvival of Representations, Warranties and Agreements. The
representations, warranties and agreements in this Agreement (and in any
certificate delivered in connection with the Closing)
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shall be deemed to be conditions to the Merger and shall not survive the
Effective Time or termination of this Agreement, except for the agreements set
forth in Articles I (the Merger) and II (Conversion of Securities; Exchange of
Certificates), Sections 6.7 (Indemnification and Insurance), 6.17 (Employee
Benefit Plans) and 6.20 (Press Release), each of which shall survive the
Effective Time indefinitely, and Sections 6.2 (Confidentiality), 6.12 (Fees
and Expenses) and 8.2 (Effect of Termination), each of which shall survive
termination of this Agreement indefinitely. Nothing set forth in this Section
9.1 shall relieve Parent of liability for violations by Parent of the
securities laws with respect to Parent Stock issued in the Merger.
Section 9.2. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like changes of address) or sent by electronic transmission to
the telecopier number specified below:
(a) If to Parent:
Superior Services, Inc.
One Honey Creek Corporate Center
125 South 84th Street, Suite 200
Milwaukee, Wisconsin 53214
Telecopier: (414) 479-7400
Attention: Corporate Secretary
With a copy (which shall not constitute notice) to:
Foley & Lardner
Firstar Center
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5367
Telecopier: (414) 297-4900
Attention: Steven R. Barth, Esq.
(b) If to the Company:
GeoWaste Incorporated
100 West Bay Street
Suite 700
Jacksonville, Florida 32202
Telecopier: (904) 353-2661
Attention: Chief Executive Officer
With a copy (which shall not constitute notice) to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982
Telecopier: (212) 806-6006
Attention: Mark A. Rosenbaum, Esq.
Section 9.3. Certain Definitions. Except as specifically set forth in this
Agreement, for purposes of this Agreement, the term:
(a) "affiliate" means a Person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned Person;
A-36
<PAGE>
(b) "beneficial owner" means with respect to any shares of Company Common
Stock a Person who shall be deemed to be the beneficial owner of such
shares (i) which such Person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such Person or any of
its affiliates or associates (as such term is defined in Rule 12b-2 of the
Exchange Act) has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding, (iii) which are beneficially owned, directly
or indirectly, by any other Person with whom such Person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any such
shares or (iv) pursuant to Section 13(d) of the Exchange Act and any rules
or regulations promulgated thereunder;
(c) "Blue Sky Laws" shall mean state securities or "blue sky" laws;
(d) "business day" shall mean any day other than a day on which banks in
the State of New York, are authorized or obligated to be closed;
(e) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock
or as trustee or executor, by contract or credit arrangement or otherwise;
(f) "Person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d) of the Exchange Act); and
(g) "subsidiary" means, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, of which (i)
such party or any other subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by
such party or any subsidiary of such party do not have a majority of the
voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party and/or by any one
or more of its subsidiaries.
Section 9.4. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.5. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
Section 9.6. Entire Agreement. This Agreement (together with the Exhibits,
the Schedules and the other documents delivered pursuant hereto) and the
Confidentiality Agreement constitute the entire agreement of the parties and
supersedes all prior agreements and undertakings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof
and thereof.
Section 9.7. Specific Performance. The transactions contemplated by this
Agreement are unique. Accordingly, each of the parties acknowledges and agrees
that, in addition to all other remedies to which it may be entitled, each of
the parties hereto is entitled to a decree of specific performance, provided
such party is not in material default hereunder.
A-37
<PAGE>
Section 9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party; provided, however, that Parent and Sub shall have
the right to assign this Agreement for collateral purposes without the prior
written consent of the Company. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 9.9. No Third Party Beneficiaries. Except as otherwise provided in
Sections 6.7, 6.17 and 6.20 hereof, this Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
Section 9.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
giving effect to applicable principles of conflicts of law.
Section 9.11. Disclosure Schedule. The disclosures made on the Company
Disclosure Schedule refers to the specific Section of this Agreement to which
such information is responsive and such information shall not be deemed to
have been disclosed with respect to any other Section of this Agreement. The
Company Disclosure Schedule includes a table of contents and/or index as to
all of the items contained therein. The inclusion of any matter on the Company
Disclosure Schedule shall not be deemed an admission by the Company that such
listed matter is material or that such listed matter has or would have a
Company Material Adverse Effect.
Section 9.12. Counterparts. This Agreement may be executed and delivered in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered shall be deemed to be
an original but all of which taken together shall constitute one and the same
agreement.
In Witness Whereof, the parties hereto have caused this Agreement and Plan
of Merger to be executed and delivered as of the date first written above.
Superior Services, Inc.
/s/ George K. Farr
By:__________________________________
Name: George K. Farr
Title: Chief Financial Officer
GeoWaste Incorporated
/s/ Amy C. MacF. Burbott
By:__________________________________
Name: Amy C. MacF. Burbott
Title: President and Chief
Executive Officer
A-38
<PAGE>
EXHIBIT A
FORM OF COMPANY AFFILIATE LETTER
, 1998
Superior Services, Inc.
One Honey Creek Corporate Center
125 South 84th Street, Suite 200
Milwaukee, Wisconsin 53214
Ladies and Gentlemen:
The undersigned has been advised that as of the date of this letter the
undersigned may be deemed to be an "affiliate" of GeoWaste Incorporated, a
Delaware corporation (the "Company"), as the term "affiliate" is defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations of
the Securities and Exchange Commission (the "SEC") under the Securities Act of
1933, as amended (the "Securities Act").
Pursuant to the terms of the Agreement and Plan of Merger dated as of July
2, 1998 (the "Merger Agreement"), between Superior Services, Inc. ("Parent")
and the Company, the Company will be merged (the "Merger") with and into a
wholly owned subsidiary of Parent ("Sub").
As a result of the Merger, the undersigned may receive shares of common
stock, par value $.01 per share ("Parent Stock"), of Parent in exchange for
shares of common stock, $.10 par value ("Company Common Stock").
The undersigned hereby represents, warrants and covenants with and to Parent
that in the event the undersigned receives any Parent Stock as a result of the
Merger:
(A) The undersigned will not sell, transfer or otherwise dispose of such
Parent Stock unless (i) such sale, transfer or other disposition has been
registered under the Securities Act, (ii) such sale, transfer or other
disposition is made in conformity with the provisions of Rule 145 under the
Securities Act (as such rule may be hereafter from time to time be
amended), (iii) in the opinion of counsel in form and substance
satisfactory to Parent, or under a "no action" letter obtained by the
undersigned from the staff of the SEC, such sale, transfer or other
disposition will not violate or is otherwise exempt from registration under
the Securities Act.
(B) The undersigned understands that Parent is under no obligation to
register the sale, transfer or other disposition of shares of Parent Stock
by the undersigned or on the undersigned's behalf under the Securities Act
or to take any other action necessary in order to make compliance with an
exemption from such registration available.
(C) The undersigned also understands that stop transfer instructions will
be given to Parent's transfer agent with respect to the shares of Parent
Stock issued to the undersigned as a result of the Merger and that there
will be placed on the certificates for such shares, or any substitution
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF A LETTER
AGREEMENT BETWEEN THE REGISTERED HOLDER HEREOF AND THE ISSUER, A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF THE ISSUER."
(D) The undersigned also understands that, unless the transfer by the
undersigned of the Parent Stock issued to the undersigned as a result of
the Merger have been registered under the Act or a sale made in
A-39
<PAGE>
conformity with the provisions of Rule 145 under the Act, Parent reserves
the right, in its sole discretion, to place the following legend on the
certificates issued to any transferee of such Parent Stock from the
undersigned:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO
WHICH RULE 145 PROMULGATED UNDER THE ACT APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE ACT AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT."
It is understood and agreed that the legends set forth in paragraphs (C)
and (D) above shall be removed by delivery of substitute certificates
without such legend if such legend is not required for purposes of the Act
or this Agreement. It is also understood that such legends and the stop
orders referred to above shall be removed if (i) one year shall have
elapsed from the date the undersigned acquired the Parent Stock received in
the Merger and the provisions of Rule 145(d)(2) are then available to the
undersigned, (ii) two years shall have elapsed from the date the
undersigned acquired the Parent Stock received in the Merger and the
provisions of Rule 145(d)(3) are then available to the undersigned or (iii)
the undersigned shall have delivered to Parent a copy of an opinion of
counsel, in form and substance reasonable satisfactory to Parent, or a "no
action" letter from the staff of the SEC, to the effect that the
restrictions imposed by Rule 145 under the Act no longer apply to the
undersigned.
(E) The undersigned understands and agrees that this letter agreement
shall apply to all shares of Company Common Stock and Parent Stock that are
deemed to be beneficially owned by the undersigned pursuant to applicable
federal securities laws.
(F) The undersigned has carefully read this letter and the Merger
Agreement and discussed the requirements of such documents and other
applicable limitations upon the undersigned's ability to sell, transfer or
otherwise dispose of Parent Stock to the extent the undersigned deemed
necessary, with the undersigned's counsel or counsel for the Company.
(G) Execution of this letter should not be considered an admission on the
undersigned's part that the undersigned is an "affiliate" of the Company as
described in the first paragraph of this letter or as a waiver of any
rights the undersigned may have to object to any claim that the undersigned
is such an affiliate on or after the date of this letter.
Very truly yours,
_____________________________________
Name:
A-40
<PAGE>
[add below the signature of all
registered owners of shares deemed
beneficially owned by the affiliate]
_____________________________________
Name:
_____________________________________
Name:
_____________________________________
Name:
Acknowledged this day of ,
1998
Superior Services, Inc.
By: _________________________________
Name:
Title:
A-41
<PAGE>
EXHIBIT B
FORM OF POOLING AFFILIATE LETTER
, 1998
Superior Services, Inc.
One Honey Creek Corporate Center
125 South 84th Street, Suite 200
Milwaukee, Wisconsin 53214
Ladies and Gentlemen:
The undersigned has been advised that as of the date of this letter the
undersigned may be deemed to be an "affiliate" of GeoWaste Incorporated, a
Delaware corporation (the "Company"), as used in and for purposes of
Accounting Series, Releases 130 and 135, as amended, of the Securities and
Exchange Commission.
Pursuant to the terms of the Agreement and Plan of Merger dated as of July
2, 1998 (the "Merger Agreement"), between Superior Services, Inc. ("Parent")
and the Company, the Company will be merged (the "Merger") with and into a
wholly owned subsidiary of Parent ("Sub").
As a result of the Merger, the undersigned may receive shares of common
stock, par value $.01 per share ("Parent Stock"), of Parent in exchange for
shares of common stock, $.10 par value ("Company Common Stock").
In connection therewith, the undersigned hereby represents, warrants and
covenants with and to Parent that the undersigned has not, during the time
period commencing 30 days prior to the Effective Time (as defined in the
Merger Agreement), sold, transferred or otherwise disposed of, or reduced the
undersigned's risk with respect to Company Common Stock or shares of Parent
Stock that the undersigned now holds and, with respect to shares of Parent
Stock the undersigned will hold after the Effective Time, the undersigned will
not sell, transfer or otherwise dispose of or reduce the undersigned's risk
with respect to such shares, until after such time as results covering at
least 30 days of combined operations of the Company and Parent have been
published by Parent. Parent shall notify the "affiliates" of the publication
of such results.
In addition, the undersigned understands there will be placed on the
certificates for Parent Stock issued to the undersigned, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF, AND SUPERIOR SERVICES,
INC. SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY ATTEMPTED SALE,
TRANSFER, ASSIGNMENT OR OTHER DISPOSITION PRIOR TO THE PUBLICATION AND
DISSEMINATION OF FINANCIAL STATEMENTS BY SUPERIOR SERVICES, INC. WHICH
INCLUDE THE RESULTS OF AT LEAST 30 DAYS OF COMBINED OPERATIONS OF
SUPERIOR SERVICES, INC. AND GEOWASTE INCORPORATED, THE COMPANY ACQUIRED
BY SUPERIOR SERVICES, INC. FOR WHICH THESE SHARES WERE ISSUED."
A-42
<PAGE>
Execution of this letter should not be considered an admission on the
undersigned's part that the undersigned is an "affiliate" of the Company as
described in the first paragraph of this letter or as a waiver of any rights
the undersigned may have to object to any claim that the undersigned is such
an affiliate on or after the date of this letter.
Very truly yours,
_____________________________________
Name:
[add below the signature of all
registered owners of shares deemed
beneficially owned by the affiliate]
_____________________________________
Name:
_____________________________________
Name:
_____________________________________
Name:
Acknowledged this day of ,
1998
Superior Services, Inc.
By: _________________________________
Name:
Title:
A-43
<PAGE>
ANNEX B
Deutsche Bank Securities [LOGO]
Deutsche Bank Securities Inc.
31 West 52nd Street
New York NY 10019
Tel 212-469-5000
July 2, 1998
Board of Directors
GeoWaste Incorporated
100 West Bay Street
Suite 700
Jacksonville, FL 32202
Members of the Board of Directors:
We understand that GeoWaste Incorporated ("GeoWaste" or the "Company") and
Superior Services, Inc. ("Superior Services") have executed an Agreement and
Plan of Merger dated as of July 2, 1998 (the "Merger Agreement"), pursuant to
which a wholly owned subsidiary of Superior Services ("Sub") will be merged with
and into the Company (the "Merger") and each outstanding share of common stock,
par value $.10 per share, of GeoWaste ("GeoWaste Common Stock"), will be
converted into the right and represent the right to receive a number of shares
of common stock, par value $.01 per share, of Superior Services ("Superior
Services Common Stock"), equal to the Exchange Ratio (as defined below). The
"Exchange Ratio" is equal to the quotient obtained by dividing $2.65 by the
Final Parent Stock Price (as defined in the Merger Agreement); provided,
however, that if the Final Parent Stock Price is (i) equal to or less than
$27.50, then the Exchange Ratio is 0.0964 or (ii) equal to or greater than
$32.50, then the Exchange Ratio is 0.0815. If the Final Parent Stock Price is
less than $25.00, then the Company may terminate the Merger Agreement. The
Merger is anticipated to be tax-free to the stockholders of GeoWaste.
You have asked for our opinion as to the fairness, from a financial point of
view, of the Exchange Ratio to the stockholders of GeoWaste.
For purposes of the opinion set forth herein, we have:
1. reviewed the Merger Agreement;
2. analyzed certain publicly available financial statements and other
information of GeoWaste and Superior Services including, but not
limited to, each of Superior Services' and GeoWaste's Annual Reports
on Form 10-K for the year ended December 31, 1997 and their
respective Quarterly Reports on Form 10-Q for the quarter ended March
31, 1998;
<PAGE>
GeoWaste Incorporated
July 2, 1998
Page 2 Deutsche Bank Securities [LOGO]
3. reviewed and analyzed certain financial projections of GeoWaste
provided by the Company and reviewed and analyzed certain financial
projections (including estimates of expected synergies associated
with the merger) of Superior Services provided by Superior Services
(together, the "Projections");
4. discussed with senior management of GeoWaste and Superior Services
the current operations, financial condition and prospects of each
company;
5. reviewed the reported stock prices and trading activity for the
GeoWaste Common Stock and Superior Services Common Stock;
6. compared the historical financial performance of GeoWaste and
Superior Services with that of certain other publicly traded
companies and their securities;
7. reviewed the financial terms, to the extent publicly available, of
certain mergers and acquisition transactions;
8. based on the Projections, performed a discounted cash flow analysis
of GeoWaste and Superior Services;
9. reviewed the pro forma effects of the merger on Superior Services'
projected earnings per share;
10. reviewed the pro forma contribution of GeoWaste and Superior
Services, respectively, with regard to equity value, aggregate value,
projected revenues, projected earnings before interest, tax,
depreciation and amortization, projected earnings before interest and
taxes, projected net income and net tangible book value; and
11. performed such other financial analyses and examinations and
considered such other factors as we have deemed appropriate.
We have assumed and relied upon, without independent verification, the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the Projections supplied by the Company and Superior
Services, we have further assumed that such Projections represent the best
currently available estimates and judgment of the respective managements of the
Company and Superior Services as to the expected future financial performance of
the Company or Superior Services, as applicable. We have not made any
independent verification of information supplied by or confirmed by GeoWaste or
Superior Services to us and have not undertaken any independent valuation or
appraisal of the assets or liabilities of GeoWaste or Superior Services, nor
have we been furnished with such appraisals. Our opinion is necessarily based on
economic, market, financial and other conditions as in effect on, and the
information made available to us as of, the date hereof. It should be understood
that, although subsequent developments may affect this opinion, we do not have
any obligation to update, revise or reaffirm this opinion.
<PAGE>
GeoWaste Incorporated
July 2, 1998
Page 3 DEUTSCHE BANK SECURITIES [LOGO]
Deutsche Bank Securities Inc. has acted as financial advisor to the Company in
connection with this transaction and will receive a fee for services rendered.
It is understood that this letter is for the information of the Board of
Directors of GeoWaste and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any proxy statement/prospectus to be distributed to the holders of GeoWaste
Common Stock in connection with the Merger.
Based on the foregoing, we are of the opinion that, as of the date hereof, the
Exchange Ratio is fair, from a financial point of view, to the holders of
GeoWaste Common Stock.
Very truly yours,
Deutsche Bank Securities Inc.
By: /s/ Alex Vitale
--------------------
Alex Vitale
Director
By: /s/ Jonathan Wendell
--------------------
Jonathan Wendell
Managing Director
<PAGE>
ANNEX C
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ________________
Commission File Number 0-9278
--------------------------
GeoWaste Incorporated
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-2751684
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
Suite 700, 100 West Bay Street, Jacksonville, Florida 32202
(Address of principal executive offices)
Registrant's telephone number, including area code: (904) 353-5033
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 Par Value
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [_] No [_]
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $72,359,241 at March 20, 1998. Exclusion of
shares held by any person should not be construed to indicate that such person
possesses the power, direct or indirect, to direct or cause the direction of
management policies of the registrant, or that such person is controlled by or
under common control with the registrant.
At March 20, 1998, the registrant had issued and outstanding an aggregate
of 21,286,549 shares of its common stock.
<PAGE>
PART I
ITEM 1. Business
General
GeoWaste Incorporated (the "Company" or "GeoWaste") is a holding company which
was incorporated in the State of Delaware under the name Utah Shale Land &
Minerals Corporation in 1971. The Company, through its subsidiaries, is in the
business of owning, operating and acquiring non-hazardous, solid waste
collection, transportation and transfer companies and disposal facilities.
GeoWaste's solid waste services operations consist of a solid waste
collection and disposal company located in Valdosta, Georgia, a solid waste
collection, transfer, materials recovery facility and portable toilet company
based in Ocala, Florida, a solid waste collection business in Cordele, Georgia,
a solid waste collection and street sweeping business in Jacksonville, Florida
and, as of February 1, 1998, a solid waste transfer and transportation services
under a contract with USA Waste Services, Inc. ("USA Waste") in the Bronx, New
York. Solid waste management and related services accounted for 100% of the
Company's total consolidated revenue in 1997. No customer accounted for more
than 10% of GeoWaste's revenue in 1997. Fees paid to GeoWaste by its solid
waste collection customers (including charges paid by such customers for
disposal) accounted for approximately 61% of GeoWaste's revenue during 1997.
Transfer and disposal services provided to municipalities, counties and other
waste management companies accounted for approximately 22% of such revenue and
related sanitation services accounted for approximately 17%.
On January 10, 1997, GeoWaste of GA, Inc. ("GEOW/GA"), a subsidiary of the
Company, acquired the assets used in the solid waste business of Air-Sweep-A-
Lot, Inc. ("ASAL"), a solid waste and sweeping company based in Valdosta,
Georgia. On November 7, 1997, GEOW/GA purchased the assets used in the solid
waste business of T.F. Mitchell & Sons, Inc. d/b/a Mitchell Refuse ("Mitchell"),
a solid waste company based in Cordele, Georgia.
The operations of the Company include the operations of its seven wholly-
owned subsidiaries. Four of these subsidiaries conduct the Company's operations
in Georgia and Florida, one subsidiary conducts the Company's business in New
York City, and the remaining subsidiaries are inactive. The Company does not
have any subsidiaries which are not wholly-owned and the Company is not involved
in any joint ventures or partnerships.
Unless the context indicates to the contrary, all statistical and financial
information under Item 1 of this report is given for the year ended December 31,
1997.
COLLECTION
Through its subsidiaries, GEOW/GA, GeoWaste of Florida, Inc. ("GEOW/FL")
and Spectrum Group d/b/a United Sanitation ("United Sanitation"), the Company
provides solid waste collection services to residential, commercial and
industrial customers in South Georgia and Northern Florida.
Commercial and industrial collection services are generally performed under
one to three-year service agreements and fees are determined by such
considerations as market factors, collection frequency, type of equipment
furnished, the type and volume or weight of the waste collected, the distance to
the disposal facility and cost of disposal.
Most of the Company's residential solid waste collection services are
performed under contracts with municipalities giving the Company exclusive
rights to service all or a portion of the homes in their respective
jurisdictions. Such contracts or franchises usually range in duration from one
to five years. The fees received by GeoWaste are based primarily on market
factors, frequency and type of service, the distance to the disposal facility
and cost of disposal. Residential collection fees are paid by the residential
customers receiving the service.
<PAGE>
TRANSFER
The Company, through United Sanitation, operates a solid waste transfer
facility in Ocala, Florida. The facility holds a permit from the Florida
Department of Environmental Protection to accept, process and transfer up to 600
tons per day of solid waste and under its zoning approval from Marion County,
Florida, may accept solid waste generated from the Florida Counties of Marion,
Lake, Flagler, Levy, Alachua, Sumter, Volusia and Citrus.
As of February 1, 1998, the Company, through its wholly-owned subsidiary,
GeoWaste Transfer, Inc., provides solid waste transfer and transportation
services to various transfer stations and to a rail loading facility owned by
USA Waste. The Company's five year contract with USA Waste requires GeoWaste to
provide the personnel and equipment necessary to transport solid waste that has
been loaded into rail containers to USA Waste's rail loading facility in the
Bronx, New York or to USA Waste's landfill located in Pennsylvania.
RECYCLING
United Sanitation operates a materials recovery facility in Ocala, Florida
which accepts, processes, and sells corrugated cardboard ("OCC"), newsprint
("ONP"), office paper ("OFP"), ferrous and non-ferrous metals. These recyclable
materials are brought to the facility either by recycling collection vehicles
operated by United Sanitation or under contractual arrangements with third
parties. After delivery, all non-recyclable material is removed and the
remaining recyclables are baled and stored until shipped to end users which are
under long term agreements with the Company.
STREET SWEEPING
The Company, through its wholly owned subsidiary GEOW/FL, provides street
sweeping services in Jacksonville, Florida. Substantially all of the street
sweeping activities are performed under contracts with city, county or State
public works or transportation departments. The Company expects to discontinue
its street sweeping operations as of April 15, 1998.
DISPOSAL
GEOW/GA operates one solid waste disposal facility, the Pecan Row Landfill,
in Valdosta, Lowndes County, Georgia. The landfill commenced operation on
November 5, 1991. The landfill was constructed and is operated pursuant to a
solid waste handling permit issued by the Georgia Environmental Protection
Division. The permit authorizes the disposal of nonhazardous solid waste on the
site and has no termination date, places no restriction on daily volumes, nor
restricts the geographical origin of the waste which may be disposed of at the
landfill.
In February 1998, the Company received a modification to the permit of
Pecan Row Landfill which, by increasing the footprint of the landfill to 58
acres, increased the available airspace to 5,421,640 cubic yards of capacity,
resulting in, as of February 1, 1998, over 3,870,000 tons of remaining airspace
for the disposal of solid waste. Based upon 1997 tonnages and compaction
ratios, the Company believes remaining life of the Pecan Row Landfill will be 17
years.
On March 25, 1996, GeoWaste, through its wholly-owned subsidiary, Low Brook
Development, Inc. ("Low Brook"), entered into an option to purchase 420 acres of
land near GEOW/GA's Pecan Row Landfill. The initial option term expired on
March 24, 1998 and pursuant to the terms of the option, was extended for one
additional term to March 24, 2000. On March 11, 1997, Low Brook received
confirmation from the local zoning authority for Lowndes County, Georgia, that
the development of the 420 acres as municipal solid waste landfill is a
permitted use and conforms to local zoning ordinances. In April 1997, the
Company filed for site suitability approval from the Georgia Department of
Natural Resources, Environmental Protection Division ("GA/EPD"). In March 1998,
the Company received comments from GA/EPD regarding its site suitability
application. The Company is presently addressing GA/EPD's comments. Low Brook
is currently
2
<PAGE>
reviewing the costs and timing associated with the permitting of this property,
which, if obtained, would yield over 20 million tons of capacity for the
disposal of solid waste.
Suitable sanitary landfill facilities have become increasingly difficult to
obtain because of land scarcity, local resident opposition and expanding
governmental regulation. As GeoWaste's Pecan Row Landfill or future facilities
become filled, the solid waste disposal operations of the Company are and will
continue to be materially dependent on its ability to purchase, lease or obtain
operating rights for additional sites and obtain the necessary permits from
regulatory authorities to operate them. There can be no assurance that permit
modifications to the Pecan Row Landfill or new permits for additional sites,
including the property under option by Low Brook, can be obtained.
PERMITTING AND CONSTRUCTION PROCESS
When appropriate, the Company pursues obtaining permits for expansion
and/or modification of the Pecan Row Landfill. Permit expansions and
modifications generally take the form of vertical expansions of existing
disposal capacity, lateral expansions of permitted disposal acreage or
modifications of operating restrictions to allow increased disposal volume or
additional waste streams.
Although the permitting process varies from state to state, the following
summary (which is based on Georgia law) sets forth the typical steps in the
permitting process.
Local Approval. In most instances, some form of local zoning or planning
--------------
approval, commonly referred to as siting approval, is required to permit a site
and may be required to expand or modify a landfill. This process usually
requires complying with city or county zoning regulations through a separate
application process to a zoning or planning board. An applicant generally files
various reports or drawings which describe the project and public hearings are
held. In most instances, significant, organized community opposition will be
present and many local zoning authorities will consider community opposition in
deciding whether to grant zoning approval. Following hearings, a decision is
made. Generally, both the applicant and any opposition have the right to appeal
such decision. Although not always required, the local zoning approval process
is usually completed prior to applying for a state permit.
State Approval. Upon receipt of local approval, an applicant must then
--------------
submit detailed construction and operating plans for state approval. Most
states require an applicant to evidence that a new, modified or expanded
facility will meet or exceed state regulations regarding disposal facility
siting and design specifications. States generally consider the technical
merits of an application, particularly such matters as geology, hydrogeology,
ecology, archaeology, soil characteristics, surface drainage, the presence of,
or location relative to, airports, wetlands and local water supply systems and
the adequacy of local road systems.
Engineering consultants design the project to meet state regulations and
standards. This design is reviewed by state officials, comments are issued and,
possibly after negotiations between the applicant and the state officials,
revisions are made by the applicant. Once the design is approved, public notice
is given and a hearing held. Depending on the issues presented at the hearing,
an applicant may wait nine months or more before receiving a decision. Both the
applicant and any opposition generally have the right to appeal the decision.
REGULATION
The Company and the waste services industry in general are subject to
extensive, expansive and evolving regulation by federal, state and local
authorities. In particular, the regulatory process requires firms in the
industry to obtain and retain numerous governmental permits to conduct various
aspects of their operations, any of which may be subject to revocation,
modification or denial. The continually shifting policies and attitudes of the
regulatory agencies relating to the industry may impact the Company's ability to
obtain applicable permits from governmental authorities on a timely basis and to
retain such permits. The Company is not in a position to assess the extent of
any such impact, but it could be significant.
3
<PAGE>
State and local governments have also from time to time proposed or adopted
other types of laws, regulations or initiatives with respect to the
environmental services industry. Included among these are laws, regulations and
initiatives to ban or restrict the interstate or inter-county shipment of
wastes, impose higher taxes on out-of-state waste shipments than in-state
shipments and regulate disposal facilities as public utilities.
The Company makes a continuing effort to anticipate regulatory, political
and legal developments that might affect operations, but cannot predict the
extent to which any legislation or regulation that may be enacted or enforced in
the future may affect its operations.
Operating permits are generally required at the state and local level for
landfills and collection vehicles. Operating permits need to be renewed
periodically and may be subject to revocation, modification, denial or non-
renewal for various reasons, including failure of the Company to satisfy
regulatory concerns. In the solid waste collection phase, regulation takes such
forms as permitting of transfer stations, licensing of collection vehicles,
truck safety requirements, vehicular weight limitations and, in certain
localities, limitations on rates, area and time and frequency of collection. In
the solid waste disposal phase, regulation covers various matters, including
methane gas emission, liquid runoff and rodent, pest, litter and traffic
control. Zoning and land use requirements and limitations are encountered in
the solid waste collection and disposal phases of the Company's business. In
addition, the Company's operations may be subject to water pollution laws and
regulations; air and noise pollution laws and regulations; and safety standards
under the Occupational Safety and Health Act ("OSHA"). Governmental authorities
have the power to enforce compliance with these various laws and regulations and
violators are subject to injunctions, fines and revocation of permits. Private
individuals may also have the right to sue to enforce compliance.
Regulatory or technological developments relating to the environment may
require GeoWaste (as well as others in the solid waste management business) to
modify, supplement or replace equipment and facilities at costs which may be
substantial. Because GeoWaste is engaged in a business intrinsically connected
with the protection of the environment and the potential discharge of materials
into the environment, a material portion of the Company's capital expenditures
are, directly or indirectly, related to such items. The Company does not expect
such expenditures, which are incurred in the ordinary course of business, to
have a materially adverse impact on its earnings or competitive position in the
foreseeable future because GeoWaste's business is based upon compliance with
environmental laws and regulations and its services are priced accordingly.
Although the Company intends to conduct its operations in compliance with
applicable laws and regulations, the Company believes that heightened political
and citizen sensitivity causes companies in the solid waste management industry
to be faced, in the normal course of operating their businesses, with the
possibility of expending funds for fines, penalties and expenses incurred as a
result of changes to environmental compliance regulations. While the Company
has expended no such funds to date, the possibility remains that technological,
regulatory or enforcement developments, the results of environmental studies or
other factors could materially alter this expectation at any time. In any
event, such matters could have a material impact on earnings for a particular
fiscal quarter.
The Company believes that it is in compliance with all environmental
regulations promulgated by federal, state and local governments. The Company
monitors and regularly updates the permits required to conduct the Company's
operations. The Company's solid waste disposal facility undergoes periodic
inspections by state officials to ensure its compliance with environmental
regulations. The Company has met all requirements during each such inspection.
Resource Conservation and Recovery Act ("RCRA"). RCRA regulates the
-----------------------------------------------
generation, treatment, storage, handling, transportation and disposal of
hazardous and solid waste and requires states to develop programs to ensure the
safe disposal of solid waste in sanitary landfills. RCRA divides solid waste
into two groups, hazardous and nonhazardous. Wastes are generally classified as
hazardous wastes if they: (i) either (a) are specifically included on a list of
hazardous wastes or (b) exhibit certain characteristics; and (ii) are not
specifically designated as nonhazardous. Wastes classified as hazardous under
RCRA are subject to much stricter regulation than wastes classified as
nonhazardous. Among the wastes that are specifically
4
<PAGE>
designated as nonhazardous waste are household waste and various types of
special waste. These wastes, which will be accepted at the Company's landfills,
may contain incidental hazardous substances.
On October 9, 1991, the United States Environmental Protection Agency (the
"EPA") promulgated new regulations pursuant to Subtitle D of RCRA. These new
regulations include location standards, facility design standards, operating
criteria, closure and post-closure requirements, financial assurance standards
and groundwater monitoring requirements as well as corrective action standards,
all of which have not previously been uniformly applied at landfills within the
fifty states. In addition, the new regulations require new landfills which
received municipal solid waste for disposal after April 9, 1994 to have one or
more liners (typically high-density polyethylene liners) to keep leachate out of
groundwater and have extensive systems to collect leachate for handling and
treatment. In addition, after October 9, 1996 groundwater wells must also be
installed at virtually all landfills to monitor groundwater quality and the
leachate collection system operation. The regulations also require (where
threshold test levels are met) that methane gas generated at landfills be
controlled in a manner that will protect human health and the environment.
Because some states have already adopted regulations at least as stringent as
the new federal regulations, the new Subtitle D regulations will cause greater
changes in the landfill regulation of certain states than of others.
The Company's Pecan Row Landfill was designed and constructed in accordance
with the requirements of Subtitle D.
The Federal Water Pollution Control Act (the "Clean Water Act"). The Clean
---------------------------------------------------------------
Water Act established rules regulating the discharge of pollutants from a
variety of sources, including solid waste disposal sites, into waters of the
United States. For any discharge, the Clean Water Act would require the Company
to apply for and obtain a discharge permit, conduct sampling and monitoring and,
under certain circumstances, reduce the quantity of pollutants in those
discharges. Also, virtually all landfills are required to comply with the new
federal storm water regulations, which are designed to prevent possibly
contaminated storm water from flowing into surface waters.
Comprehensive Environmental Response, Compensation and Liability Act
--------------------------------------------------------------------
("CERCLA"). CERCLA addresses problems created by the release of any hazardous
- ----------
substance into the environment. CERCLA's primary mechanism for remedying such
problems is to impose strict joint and several liability for cleanup of
facilities among all past and current owners and operators of the site as well
as the generators and the transporters who arranged for disposal and
transportation of hazardous substances. The costs of CERCLA cleanup can be very
substantial. Liability under CERCLA does not depend upon the existence or
disposal of "hazardous waste" but can also be founded upon the existence of even
very small amounts of the more than 1,000 "hazardous substances" listed by the
EPA.
The Clean Air Act, as amended (the "Clean Air Act"). The Clean Air Act
---------------------------------------------------
provides for federal, state and local regulation of the emission of air
pollutants and is applicable to landfills. The EPA has proposed new source
performance standards regulating overall air emissions from solid waste
landfills. The EPA may also issue regulations controlling the emissions of
particular air pollutants from solid waste landfills. Moreover, landfills
located in areas with air pollution problems may be subject to even more
extensive air pollution controls.
State and Local Regulations. The States of Georgia, Florida and New York
----------------------------
as well as those states in which the Company may operate in the future, have
laws and regulations governing the generation, handling, transfer,
transportation and disposal of solid waste, water and air pollution and, in most
cases, the design, operation, maintenance, closure and post-closure maintenance
of landfills.
Public opposition to the siting and operation of landfills has led many
states, including Georgia, to enact legislation at the state and/or local level
which attempts to prohibit or restrict the movement of solid waste. Decisions by
the United States Supreme Court recognize that the Commerce Clause of the United
States Constitution imposes substantial limits upon the ability of state and
local governments to restrict the movement of solid waste across state lines.
Since 1986, many different forms of legislation have been introduced in the
United States Congress which attempt to restrict interstate and intrastate waste
transportation. The Company, like all other companies in the solid waste
industry, faces uncertainty regarding
5
<PAGE>
the circumstances under which it will be able to accept out-of-state waste for
disposal at its facility. A significant portion of the solid waste volume
disposed of at the Company's Pecan Row Landfill is generated from outside the
State of Georgia.
COMPETITION
GeoWaste encounters competition, primarily in the pricing and rendering of
services, from various sources in all phases of its operations. In solid waste
collection operations, competition is encountered, for the most part, from
national, regional and local collection companies, some of which have
substantially greater financial, marketing and other resources than the Company.
Additionally, solid waste collection competition is encountered from
municipalities and counties which, through use of tax revenues, may be able to
provide services at lower direct charges to the customer than those charged by
private sector companies. In the solid waste disposal operations, competition
is encountered primarily from municipalities, counties, local governmental
agencies, and other national or regional waste management companies, some of
which have substantially greater financial, marketing and other resources than
the Company. In the street sweeping business, competition is encountered
primarily from municipalities and local or regional street sweeping companies.
The Company's solid waste collection operation in Valdosta, Georgia competes
with approximately eight private firms and thirteen municipalities, while the
solid waste collection operation in Ocala, Florida competes with approximately
twelve private firms and three municipalities. The Company believes that it is
one of the largest service providers in these geographic areas. The
sweeping/collection operation in Jacksonville, Florida competes with
approximately eighteen private firms and four municipalities. The Company has a
relatively small market share in this geographic area.
INSURANCE
The Company currently maintains liability insurance coverage for
occurrences under various environmental impairment, primary casualty and excess
liability insurance policies.
The Company has secured Environmental Impairment Liability Insurance in
amounts believed to be sufficient to offset an unforeseen occurrences. The
Company currently maintains $1,000,000 of loss coverage. However, in the event
an environmental impairment exceeds the loss coverage, the Company's financial
condition could be adversely affected.
Operating expenses include the estimated costs of closure and post-closure
care for the Pecan Row Landfill. Such costs are based upon actual landfill
capacity utilized in each operating period.
From time to time, the Company may be required to post performance bonds,
financial assurances or bank letters of credit issued by surety companies which
act as a financial guarantee of the Company's performance.
EMPLOYEES
At December 31, 1997, GeoWaste and its subsidiaries employed a total of 155
persons in its operations. None of GeoWaste's employees are represented by
labor unions under collective bargaining agreements. The Company believes it
maintains good employee relations.
ITEM 2. PROPERTIES
The Company's principal real estate interest is its Pecan Row Landfill in
Valdosta, Georgia.
The Company leases 2,000 square feet of executive office space at Suite
700, 100 West Bay Street, Jacksonville, Florida. The Company is also party to a
lease for approximately 155,000 square feet of land and buildings in Ocala,
Florida which is used for the operations of United Sanitation and various short
term
6
<PAGE>
leases for smaller parcels of property in Bronx, New York and Cordele, Georgia
which are used for the parking of solid waste management trucks, tractors,
trailers and other equipment.
The principal fixed assets of the Company consist of land which is owned,
land improvements and heavy equipment at the Pecan Row Landfill, the collection
and transportation company in Valdosta, Georgia, and the collection and street
sweeping company in Jacksonville, Florida. The heavy equipment, which is owned
or leased, includes collection vehicles, refuse compactors, bulldozers,
scrapers, backhoes, loaders, transfer trailers, and miscellaneous other
equipment used in transfer and disposal operations.
As of December 31, 1997, aggregate annual rental payments on real estate
leased by the Company and its subsidiaries was $247,000.
ITEM 3. LEGAL PROCEEDINGS
On March 21, 1996, the Company acquired all of the capital stock of NFS, a
street sweeping and roll-off collection company based in Jacksonville, Florida.
In December 1996, the Company discovered that NFS, under its former owners, had
been improperly disposing street sweepings in unpermitted locations.
Accordingly, on December 31, 1996, the Company filed suit in the United States
District Court for the Middle District of Florida, Jacksonville Division (the
"Court"), against the former shareholders of NFS (the "Former Shareholders")
seeking recission, abrogation and annulment of the transaction and damages. At
the time of the filing the suit, the Company was not aware of the full extent of
the improper actions taken at NFS.
On October 9, 1997, the Company settled its suit against the Former
Shareholders which settlement included, on October 14, 1997, the Court entering
a judgment declaring the acquisition of NFS to be completely abrogated and
annulled, including the merger of NFS and a subsidiary of the Company and the
transfer of capital stock of NFS to the Company. As a result of the foregoing,
the Company received a $50,000 cash payment, retained the assets of NFS and
canceled outstanding warrants to purchase shares of the Company's common stock
at an exercise price of $1.25 which were issued to the Former Shareholders in
connection with the nullified transaction.
The business in which the Company is engaged is intrinsically connected
with the protection of the environment and the potential discharge of materials
into the environment. In the ordinary course of conducting its business
activities, the Company may become involved in judicial and administrative
proceedings involving governmental authorities at the federal, state and local
level including, in certain instances, proceedings instituted by citizens or
local governmental authorities seeking to overturn governmental action where
governmental officials or agencies are named as defendants together with the
Company or one or more of its subsidiaries, or both.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. Market For the Registrant's Common Equity and Related Stockholder
Matters.
The Company's Common Stock is traded over-the-counter on The Nasdaq Small-
Cap Market under the symbol "GEOW". The following table set forth for the
periods indicated the high and low bid prices on The Nasdaq Small-Cap Market.
7
<PAGE>
<TABLE>
<CAPTION>
Low Bid High Bid
1997 Prices Prices
------- --------
<S> <C> <C>
First Quarter $2.13 $4.63
Second Quarter 1.75 3.31
Third Quarter 1.50 2.19
Fourth Quarter 1.06 2.03
1996
First Quarter $1.00 $1.75
Second Quarter 1.56 4.69
Third Quarter 2.62 4.50
Fourth Quarter 1.75 3.37
</TABLE>
As of March 20, 1998, there were 4,707 stockholders of record of the Company's
Common Stock.
The Company did not pay any dividends in 1997, 1996 or 1995, nor does the
Company expect to pay any dividends in the foreseeable future.
Pursuant to the terms of the Credit Facility (as defined herein), the Company
is prohibited from paying dividends in cash on its Common Stock. Under the
Credit Facility the Company and its subsidiaries may pay dividends solely in
shares of Common Stock, except that subsidiaries of the Company may pay cash
dividends to the Company.
Due in part to the high level of public awareness of the business in which the
Company is engaged, regulatory enforcement proceedings or other potentially
unfavorable developments involving the Company's operations or facilities,
including those in the ordinary course of business, may be expected to engender
publicity which could from time to time have an adverse impact upon the market
price for the Company's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA OF THE REGISTRANT
SELECTED FINANCIAL DATA OF THE REGISTRANT
The following selected consolidated financial data are derived from the
Company's audited consolidated financial statements and should be read in
conjunction with the consolidated financial statements and the notes thereto
included at Item 8 herein.
8
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------------------------------------------------------------------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Total revenue................................ $19,397 $13,703 $ 8,933 $ 6,967 $ 4,806
------- ------- ------- ------- -------
Net (loss) income............................ (424) 1,708 1,462 1,189 (218)
======= ======= ======= ======= =======
Basic earnings (loss) per common share....... $ (.02) $ .09 $ .08 $ .06 $ (.01)
======= ======= ======= ======= =======
Weighted average number of common shares
outstanding................................. 21,247 19,659 18,663 20,988 22,560
December 31,
------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------------------------------------------------------------------
(in thousands)
Balance Sheet Data:
Cash......................................... $ 739 $ 3,058 $ 3,985 $ 1,633 $ 1,209
Working capital (deficit).................... (212) (3,023) 3,708 1,150 1,126
Total assets................................. 32,109 30,618 15,637 14,528 11,293
Long-term debt............................... 11,870 5,776 6,785 6,538 5,800
Shareholders' equity......................... 15,905 15,983 7,386 5,848 4,667
</TABLE>
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
1997 Compared with 1996
Net revenues for the year ended December 31, 1997 consisted of collection
revenues of $12,257,000, disposal revenues of $3,172,000, transfer station
revenues of $1,090,000, recycling revenues of $1,660,000, and sweeping revenues
of $1,218,000. Collection revenues increased 103%, disposal revenues decreased
33%, transfer revenues increased 18% and sweeping revenues decreased 15%, in
each case, as compared to 1996. Prior to the acquisition of United Sanitation
in August 1996, the Company was not engaged in the recycling business. Of the
increase in collection revenues, 68% is attributable to the operations of
Standard Disposal Services of Florida, Inc. ("Standard") and United Sanitation,
which were acquired in 1996, 21% is attributable to the operations of ASAL and
Mitchell, which were acquired in 1997, and the remainder is attributable
primarily to new collection contracts. All of the increase in transfer revenue
is attributable to the operations of Standard and United Sanitation The
reduction in sweeping revenues was primarily due to the sale by the Company, on
June 10, 1997, of its lawn care and certain of its sweeping contracts in Florida
to Sweeping Corp. of America. Lower disposal revenues reflect decreased volumes
at the Pecan Row Landfill combined with more competitive pricing. Daily tonnage
at the landfill decreased 6% to 817 tons per day (TPD). However, lower pricing
for special waste customers accounted for 23% of the total 33% decrease. All
intercompany activity has been eliminated.
Operating expenses related to collection, disposal, transfer, recycling and
sweeping activities for 1997 consisted of collection expenses of $7,356,000,
disposal expenses of $2,991,000, transfer station expenses of $535,000,
recycling expenses of $1,341,000 and sweeping expenses of $1,313,000.
Collection expenses increased 128%, disposal expenses decreased 3%, transfer
expenses increased 27%, recycling expenses increased 147% and sweeping expenses
increased 17%, in each case, as compared to 1996. Of the increase in collection
expenses, 43% was attributable to the operations of Standard and United
Sanitation and 27% was attributable to the operations of ASAL and Mitchell. The
decrease in disposal expenses resulted from decreased volumes. The increase in
both the transfer and recycling expenses is attributable to the full year effect
of the operations of Standard and United Sanitation.
9
<PAGE>
Unusual charges for the year ended December 31, 1997 relate to litigation and
certain other developments related to North Florida Sweeping, Inc. ("NFS")
occurring in the first quarter of 1997. During this period, the Company
concluded a full review of the operating practices of NFS and determined that
NFS (i) had not fully complied with the performance specifications of its
highway and street sweeping contracts, (ii) had improperly disposed of street
sweepings in violation of applicable requirements, and (iii) was obligated to
continue to perform services under the terms of its highway and street sweeping
contracts until their expirations. In response to these findings, in the first
quarter of 1997 the Company implemented certain remedial actions with respect to
the operations of NFS, including additional, and in some instances multiple,
resweeps to meet performance standards set out in NFS' contracts, and
rectification of the waste disposal practices of NFS. As a result of such
remedial actions, the Company (i) estimated and accrued losses on the sweeping
contracts, (ii) concluded that goodwill associated with the NFS acquisition was
not recoverable and (iii) that NFS' land and building were not recoverable above
their appraised value. Additionally, during the first quarter of 1997, the
Company and the City of St. Augustine, Florida mutually agreed to terminate
their existing transfer, transportation and disposal agreement and, accordingly,
the Company wrote off certain design and permitting costs which had been
previously deferred. As a result of the foregoing, the Company recorded
$1,083,000 of unusual charges for 1997 which consisted of $282,000 of legal and
consulting fees relating to NFS, $68,000 of additional sweeping costs incurred
and paid in the first quarter of 1997, $96,000 of accrued losses on sweeping
contracts, $436,000 of write-off of NFS' goodwill, $110,000 of write-down of
land and building and $91,000 of write-off of transfer station development
costs.
Selling, general and administration expenses for collection, disposal,
transfer, recycling and sweeping activities (excluding corporate administrative
expenses) for 1997, were $1,816,000, $272,000, $45,000, $147,000 and $371,000,
respectively. Corporate administrative expenses were $1,302,000 for the year
ended December 31, 1997. Selling, general and administrative expenses increased
117% for collection operations, decreased 26% for disposal operations, increased
96% for transfer operations, increased 188% for recycling and increased 40% for
sweeping, in each case, as compared to 1996. Selling, general and
administrative expenses increased principally due to the full year effect of the
acquisitions of Standard and United Sanitation.
There was a net loss of $424,000 for the year ended December 31, 1997 compared
with net income of $1,708,000 in 1996. This decrease principally reflects the
unusual charges described above and losses incurred with respect to the
Company's Florida operations, including United Sanitation and NFS.
1996 Compared with 1995
Net revenues for the year ended December 31, 1996 consisted of collection
revenues of $6,049,000, disposal revenues of $4,762,000, transfer station
revenues of $924,000, recycling revenues of $529,000 and sweeping revenues of
$1,438,000. Collection revenues increased 120%, disposal revenues decreased 12%,
and transfer revenues increased 14%. There were no related recycling or sweeping
revenues in 1995. Of the 120% increase in collection revenues, 82% was
attributable to the operations of NFS, United Sanitation and Standard Disposal
Services of Florida, Inc. which were acquired during 1996. Of the 14% increase
in transfer station revenues, 9% was associated with the newly acquired
companies. Lower disposal revenues reflect the decreased volumes at the Pecan
Row Landfill combined with more competitive pricing. Daily tonnage at the
landfill decreased 2% to 868 TPD. However, lower pricing for special waste
customers accounted for 9% of the total 12% decrease. All intercompany activity
has been eliminated.
Operating expenses related to the collection, disposal, transfer, recycling
and sweeping activities for 1996, consisted of collection expenses of
$3,231,000, disposal expenses of $2,913,000, transfer station expenses of
$421,000, recycling expenses of $542,000, and sweeping expenses of $1,122,000.
Collection expenses increased 166% over 1995, disposal expenses decreased 20%,
and transfer expenses increased 26%. There were no related recycling or
sweeping expenses in 1995. Of the 166% increase in collection expenses, 137%
was attributable to the acquisitions in 1996. Of the 26% increase in transfer
station expenses, 21% was associated with the acquired companies. The decrease
in disposal expenses resulted from a combination of decreased volumes and a
reduction in cell related amortization rates due to the
10
<PAGE>
Company's obtaining a permit modification in the first quarter of 1996 to
vertically expand the landfill. Cell related amortization rates refer to the
total amortization associated with costs used in constructing solid waste
landfill areas. The rates are calculated on a per ton basis and are determined
by estimating the total costs associated with the construction of the landfill
and relating such costs to the total airspace available at the site. Current
waste compaction factors and up-to-date cost information is utilized to ensure
rates are constantly evaluated and adjusted.
Selling, general and administrative expenses for collection, disposal,
transfer, recycling and sweeping activities (excluding corporate administrative
expenses) for 1996, were $839,000, $369,000, $23,000, $51,000 and $265,000,
respectively. Corporate administrative expenses were $1,078,000 for the year
ended December 31, 1996. Selling, general and administrative expenses for
collection operations increased 211%, for disposal operations increased 17% and
for transfer station operations increased 360%, in each case over such expenses
for 1995. There were no related selling, general and administrative expenses
for sweeping or recycling operations in 1995. Of the 211% increase in selling,
general and administrative expenses for collection operations, 159% was
attributable to acquisitions in 1996. Increases in selling, general and
administrative expenses for transfer station operations were also associated
with acquisitions in 1996.
Net income for the year ended December 31, 1996 was $1,708,000 compared to
$1,462,000 in 1995. This improvement was principally due to the sale of the
Uintah Basin Limited Partnership land in the fourth quarter of 1996. The gain
on the sale of the Uintah Basin Limited Partnership land amounted to $433,000.
There was limited activity associated with this partnership. The partnership
employed one person and generated minimal amounts of income and expenses. The
Company's share of net losses with respect to this partnership was $6,000,
$16,000 and $8,000 for 1995, 1994 and 1993, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company is in a service industry and has neither significant inventory nor
seasonal variations in receivables. At December 31, 1997, the Company had
negative working capital of $212,000 as compared with negative working capital
of $3,023,000 at December 31, 1996. The increase in working capital is
primarily as a result of the retirement of the Debentures (as defined herein)
with borrowings under the Credit Facility.
Historically, the Company has relied primarily on the private placement of
debt and equity securities, bank borrowings and cash generated from operating
activities in order to provide it with the cash required for capital
expenditures, acquisitions and operating activities.
The Company's operating performance was sufficient to support corporate
overhead and other expenses during 1997. Management believes that current
working capital and internally generated funds will be sufficient to meet the
Company's working capital requirements for fiscal year 1998.
The Company expects to make capital expenditures on an ongoing basis for
improvements to, and expansion of, its landfill and for equipment purchases.
The Company estimates that the capital expenditures required for its existing
operations will amount to approximately $3,200,000, of which approximately
$1,700,000 will be used to construct a new cell at the Pecan Row Landfill. The
Company expects that it will fund such estimated capital expenditures from
existing cash, cash generated from operations, equipment lease financing, and
other financing.
The Company's 8.5% convertible subordinated debentures (the "Debentures"),
which were convertible into shares of common stock at $1.40 per share, matured
in March 1997, at which time the Company and the holder of the Debentures
mutually agreed to extend the due date of the Debentures to September 1997. In
March 1997, the holder of the Debentures also converted $280,000 of the
Debentures into 200,000 shares of common stock. In October 1997, the Company
repaid the remaining $3,604,265 of principal and accrued interest on the
Debentures from borrowings under the Credit Facility.
11
<PAGE>
On October 9, 1997, the Company entered into a $5 million revolving credit
facility (the "Credit Facility") with BankBoston, N.A. (the "Bank") and borrowed
$4.8 million under the Credit Facility to repay the principal and accrued
interest on the Debentures and to finance the cash portion of the purchase price
for Mitchell. Borrowings under the Credit Facility may be used for working
capital, refinancing of outstanding debt, capital expenditures and other general
corporate purposes. Interest on borrowings under the Credit Facility is payable
at a rate, of one-quarter of one percent plus the higher of (i) the Bank's base
rate or (ii) one percent above the overnight federal funds effective rate, as
published by the Board of Governors of the Federal Reserve System, as in effect
from to time. The interest rate at December 31, 1997 was 8.75%. Borrowings
under the Credit Facility mature on October 9, 2000 and are collateralized by
the stock of the Company's subsidiaries. Under the terms of the Credit
Facility, the Company must maintain certain financial covenants on a quarterly
basis of which the most significant is the interest coverage ratio. The
financial covenant relating to the interest coverage ratio with which the
Company must comply requires the Company not to allow its interest coverage
ratio to be less than 2.25 to 1 through September 30, 1998 or less than 2.50 to
1 thereafter.
On January 10, 1997, GEOW/GA purchased the solid waste assets of ASAL. The
total purchase price of approximately $1,028,000 consisted of cash in the amount
of $200,000, acquisition costs of $19,000, assumption of debt in the amount of
$487,000 and the issuance of an 8% promissory note with a principal amount of
$322,000 to the sellers of ASAL. On November 7, 1997, GEOW/GA purchased the
solid waste assets of Mitchell. The total purchase price of $1,519,000
consisted of cash in the amount of $1,000,000, which was paid from borrowings
under the Credit Facility, a payable of $306,000 due in February 1998,
acquisition costs of $19,000, and assumption of $194,000 in debt.
The Company's business strategy includes the acquisition of or combination
with other solid waste management companies. Such acquisitions may be
accomplished through borrowings under the Credit Facility, the issuance of
shares of the Company's common stock, cash on hand, or may require cash in
excess of the Company's current cash available or available borrowings under the
Credit Facility. Although GeoWaste's operating results and financial
performance are expected to provide access to any additional financing which may
be necessary to acquire such businesses, there can be no assurance that such
additional financing can be obtained on terms acceptable to the Company.
In March 1998, the Company retained an investment banking firm to assist in
evaluating a broad range of strategic alternatives available to the Company in
order to maximize shareholder value. These alternatives could include a
business combination, strategic alliance or merger with a third party. There
can be no assurance that the Company will consummate any of these strategic
alternatives.
The development and permitting of new disposal facilities requires significant
capital expenditures over an extended period. Any growth of the Company through
the permitting of new disposal facilities or the lateral expansion of its
existing disposal facility would require substantial capital expenditures. The
Company intends to pursue the further expansion of the Pecan Row Landfill. See
Note 2 of the Notes to the Consolidated Financial Statements for a discussion of
closure and post-closure reserves.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, computer systems and/or software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.
The Company is currently in the process of evaluating its information technology
infrastructure for Year 2000 compliance. The Company does not expect that the
cost to modify its information technology infrastructure to be Year 2000
compliant will be material to its financial condition or results of operations.
The Company does not anticipate any material disruption in its operations as a
result of any failure by the Company to be in compliance. The Company's Year
2000 issues relate not only to its own systems but also to those of its
customers and suppliers. The Company does not currently have any information
concerning Year 2000 compliance status of its customers and suppliers. In the
event that any of the
12
<PAGE>
Company's significant customers or suppliers does not successfully and timely
achieve Year 2000 compliance, the Company's business or operations could be
adversely affected.
RECENT ACCOUNTING DEVELOPMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Both statements are
effective for fiscal years beginning December 15, 1997. The Company has not yet
determined the effect, if any, of these statements on its financial statements.
INFLATION
The Company does not consider inflation to have a material impact on its
results of operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data required by Part II, Item 8,
are included in Part IV, as indexed at Item 14(a).
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
The following table sets forth the name, age and position held by each
director and each executive officer of the Company as of December 31, 1997.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Amy C. MacF. Burbott 47 President, Chief Executive Officer and Director
Raymond F. Chase 42 Vice President, Chief Financial Officer,
Treasurer and Secretary
John A. Paglia 36 Vice President
Michael D. Paglia 35 Vice President and Director
Harve A. Ferrill 65 Chairman of the Board
Steven M. Engel 45 Director
Walter H. Barandiaran 45 Director
</TABLE>
Amy C. MacF. Burbott has served as President and Chief Executive Officer of
GeoWaste since May 1996 and has served as Director since July 1991 (including
having served as Chairman of the Board from February 1995 to May 1996). Ms.
Burbott also served as President and Chief Executive Officer of the Company from
July 1991 until February 1995. From January 1991 to July 1991, Ms. Burbott was
engaged in the development of various solid waste projects through a corporation
she controlled. Prior to January 1991, Ms. Burbott served as Eastern Region
Vice President and General Counsel of Waste Management, Inc., a national waste
services company.
13
<PAGE>
Raymond F. Chase joined the Company as Controller and Treasurer in July
1991. He was named a Vice President of the Company in April 1994 and was named
Secretary and Chief Financial Officer on February 1, 1995. From January 1990
through June 1991 he served as the Controller of a national solid waste
equipment leasing company, Olympic Compactor Rentals. From 1987 to 1990 he was
the Controller for Waste Management of North America, Inc.'s collection and
transportation subsidiary based in Southeastern Massachusetts.
John A. Paglia joined the Company as a Vice President in August 1996 upon
the Company's acquisition of United Sanitation. From July 1993 to August 1996,
Mr. Paglia had served as an officer and owner of United Sanitation. From 1989
to July 1993, he was a general manager for Commercial Metals Company. Mr.
Paglia is the brother of Michael D. Paglia.
Michael D. Paglia joined the Company as a Vice President and Director in
August 1996 upon the Company's acquisition of United Sanitation. From July 1993
to August 1996, Mr. Paglia had served as an officer and owner of United
Sanitation. From 1989 to July 1993, he was the general manager for the Northern
Florida operations of Commercial Metals Company. Mr. Paglia is the brother of
John A. Paglia.
Harve A. Ferrill has served as Chairman of the Board of the Company from
August 1991 until February 1, 1995, and from May 1997 to the present. Mr.
Ferrill has served as a director of the Company and its predecessor, Utah Shale
Land & Minerals Corporation, since 1980. Since November 1992, Mr. Ferrill has
served as Chairman and Chief Executive Officer of Advance Ross Corporation, a
value-added tax refund service, and as its President from November 1990 through
June 1993. Mr. Ferrill also serves as a director of Gaylord Container
Corporation, a paper and container manufacturer, since 1992. Mr. Ferrill has
been President of Ferrill-Plauche Co., Inc., a private investment company, since
1982.
Steven M. Engel was elected to the Company's Board of Directors in October
1992. Since April, 1996 Mr. Engel has served as the President of Engel Brothers
Media, Inc., a television production company. From 1991 to April, 1996 Mr.
Engel served as President of Hambro Resource Development, Incorporated, an
investment banking firm. From 1989 to 1991, Mr. Engel served as the President
of John Hancock Resource Development and was a Managing Director in the
Corporate Finance Department and Municipal Finance Department at Drexel Burnham
Lambert, an investment banking firm, founded in 1987.
Walter H. Barandiaran was elected to the Company's Board of Directors in
April 1997. Mr. Barandiaran is a general partner and co-founder of The Argentum
Group, a New-York based private investment firm founded in 1987. Mr.
Barandiaran also is a director of Conner Industries, Inc. and Lanxide Precision,
Inc.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors, and persons who own more than 10% of
the Company's Common Stock, to file initial reports of ownership and reports of
change in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than 10% beneficial owners are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. During 1997, John A. Paglia, an officer of the Company,
failed to file with the SEC one required report on Form 4 relating to a total of
six transactions. Except as described in the preceding sentence, to the
Company's knowledge, based solely on review of copies of such reports furnished
to the Company, all of these filing requirements were satisfied.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION
The following table sets forth the aggregate remuneration paid or accrued
during the years 1997, 1996 and 1995 for the chief executive officer and other
executive officers of the Company whose total annual
14
<PAGE>
salary and bonus exceeded $100,000 for the year ended December 31, 1997
(collectively, the "Named Executive Officers").
15
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------
Long Term
Compensation
Securities
Other Annual Underlying
Name and Principal Position Year Salary Compensation Options
- --------------------------- ------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
Amy C. MacF. Burbott 1997 $175,000 $ -- --
President and Chief 1996 $105,833 $ 40,083(1) 400,000
Executive Officer 1995 $ 10,833 $121,129(1) --
Michael D. Paglia (2) 1997 $102,117 $ -- --
Vice President 1996 $ 51,425 $ -- 4,984
1995 $ -- $ -- --
John A. Paglia (2) 1997 $102,320 $ -- --
Vice President 1996 $ 51,315 $ -- 4,984
1995 $ -- $ -- --
</TABLE>
(1) Consulting payments made to Ms. Burbott when she was not employed by the
Company.
(2) Former owner of United Sanitation which was purchased by the Company on
August 12, 1996.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has furnished the following report on executive
compensation:
The Company's fundamental philosophy for compensating executive officers is
to offer competitive compensation opportunities which are based on each
individual executive officer's contribution and personal performance. This
philosophy is designed to attract, retain, motivate and reward key executive
officers in the Company's highly competitive industry.
The compensation of the Company's executive officers is reviewed and
approved by the Board of Directors which utilizes compensation analyses for
similar type and size companies based on information contained in public
documents to ensure that the compensation is both reasonable and competitive,
and also is directly linked to the Company's financial performance and
stockholder interest.
There are three elements in the Company's executive compensation program,
as determined by individual and corporate performance.
- Base salary compensation is determined by the potential impact of the
individual on the Company's performance, the skill and experience required
by the job, and the performance and potential of the incumbent in the job.
- Annual incentive compensation is discretionary and based on overall
performance of the Company and its pre-tax earnings.
- Long term incentive compensation consists of eligibility under the
Company's 1996 Stock Option Plan (the "1996 Plan"). Stock option grants
are awarded based on individual performance and the Company's performance.
16
<PAGE>
The Board of Directors does not allocate a fixed percentage of compensation to
each of these three elements, nor does the Board of Directors use any specific
qualitative or quantitative measures or factors in assessing individual
performance.
Ms. Burbott's and Messrs. Paglia's compensation for 1997 was based on the
same performance and other criteria as summarized in the preceding paragraphs
relative to all executive officers. Ms. Burbott also maintains a significant
long-term stock ownership position in the Company's Common Stock. This
ownership position creates a strong linkage between the Company's management and
its stockholders' interests.
THE BOARD OF DIRECTORS
Harve A. Ferrill
Amy C. MacF. Burbott
Walter H. Barandiaran
Steven M. Engel
Michael D. Paglia
COMPENSATION OF DIRECTORS
Directors of the Company are not paid for their services as such but are
reimbursed reasonable expenses incurred for Company business or attendance at
Board of Directors meetings. Directors are also eligible to receive grants
under the 1996 Plan. In July 1997, Messrs. Ferrill, Barandiaran and Engel were
each granted 35,000 stock options under the 1996 Plan at an exercise price of
$1.81 per share (the price for the Company's Common Stock on the date of grant).
AGREEMENTS RELATING TO EMPLOYMENT
Amy C. MacF. Burbott, the Company's President and Chief Executive Officer, has
a severance agreement which provides that her employment may be terminated with
or without cause, but if her employment is terminated without cause, she is to
receive severance payments equal to six months of her current annual salary. In
the event Ms. Burbott is terminated she is also entitled to a payment equal to
the product of (i) $.50 and (ii) the number of shares of Common Stock of the
Company purchased by her prior to June 28, 2001 pursuant to options on 400,000
shares of Common Stock granted to her on June 28, 1991. The agreement also
specifies the continuation of certain health and insurance benefits during the
period severance payments are being made.
Raymond F. Chase, a Vice President of the Company, has a severance agreement
which provides that his employment may be terminated with or without cause, but
if his employment is terminated without cause following a change of control of
the Company, he is to receive severance payments equal to one-third of the
greater of $82,000 or his annual base salary at the time of termination.
In connection with the acquisition of United Sanitation in August 1996,
Michael D. Paglia and John A. Paglia, Vice Presidents of the Company, entered
into four-year employment agreements. The agreements provide that their
employment may be terminated with or without cause, but if employment is
terminated without cause the Company will pay the lesser of (i) $150,300 or (ii)
48 minus the number of months worked prior to termination times $8,350.
OPTIONS GRANTED
No stock options were granted to the Named Executive Officers during the
fiscal year ended December 31, 1997. In July 1997, the Board of Directors
reduced the exercise price with respect to 100,000 options granted to Ms.
Burbott in 1996, which options vest on April 23, 1999, from $3.50 per share to
$2.75 per share.
17
<PAGE>
The table below sets forth information for the Named Executive Officers
concerning option exercises during 1997 and outstanding options at December 31,
1997.
AGGREGATE OPTION EXERCISES DURING 1997
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON OPTIONS AT END OF 1997 (#) AT END OF 1997($)
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Amy C. MacF. Burbott
Chief Executive Officer 600,000 $225,000 (2)
and President -0- $-0- 200,000 -0-
Michael D. Paglia 1,246 -0-
Vice President -0- -0- 3,738 -0-
John A. Paglia 1,246 -0-
Vice President -0- -0- 3,738 -0-
- -------------------------------------------------------------------------------------------------------------
</TABLE>
______________________
(1) Calculated using $1.0625 per share, the last sale price of the Company's
Common Stock on December 31, 1997.
(2) Includes 400,000 shares at an exercise price of $.50 per share for which
the Company must reimburse the exercise price.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During its most recent fiscal year, the Company did not have a formal
Compensation Committee. However, Amy C. MacF. Burbott and Michael D. Paglia
participated in deliberations of the Company's Board of Directors concerning
executive officer compensation relating to executives of the Company other than
Ms. Burbott and Mr. Paglia.
18
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to beneficial
ownership of the Company's Common Stock as of March 20, 1998, (i) by each person
who is known by the Company to own beneficially more than five percent of the
Common Stock, (ii) by each of the Company's current directors, (iii) by each of
the Named Executive Officers and (iv) by all current directors and executive
officers as a group.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES BENEFICIALLY OWNED(1)
----------------------------
Name NUMBER Percentage
---- ------ ----------
- --------------------------------------------------------------------------------
<S> <C> <C>
Amy C. MacF. Burbott 700,000(2) 3.2%
Michael D. Paglia 1,001,246(3) 4.7%
John A. Paglia 256,246(4) 1.2%
Harve A. Ferrill 1,207,856(5) 5.6%
Steven M. Engel 51,000(6) *
Walter H. Barandiaran 111,400(6) *
Allen Holding Inc.
711 Fifth Avenue
New York, New York 10022 6,260,000(7) 27.5%
Emvest & Co.
c/o Morrissey & Hawkins
One International Place
Boston, Massachusetts 02110 2,000,000 9.4%
Kennedy Capital Management
10829 Olive Blvd.
St. Louis, Missouri 63141 1,488,500(8) 6.8%
All directors and executive
officers as group (7 persons) 3,454,642(9) 15.5%
- --------------------------------------------------------------------------------
</TABLE>
- ------------------------
* Less than 1%
(1) In computing the number of shares of Common Stock beneficially owned by a
person, shares of Common Stock subject to options and warrants held by that
person that are currently exercisable or that become exercisable within 60
days of March 20, 1998 are deemed outstanding. For purposes of computing
the percentage of outstanding shares of Common Stock beneficially owned by
such person, such shares of stock subject to options and/or warrants that
are currently exercisable or that become exercisable within 60 days are
deemed to be outstanding for such person but are not deemed to be
outstanding for purposes of computing the ownership percentage of any other
person.
(2) All such shares are subject to options that are currently exercisable or
become exercisable within 60 days.
(3) Includes 1,246 shares subject to options that are currently exercisable.
(4) Includes 1,246 shares subject to options that are currently exercisable.
19
<PAGE>
(5) Includes 111,000 shares subject to options that are currently exercisable
and 26,080 shares beneficially owned by Mr. Ferrill, 18,000 of which he has
sole voting and investment power and 8,000 shares of which he shares voting
and investment power. Also includes 1,070,776 shares held by Advance Ross
Corporation (of which Mr. Ferrill is Chief Executive Officer), for which
Mr. Ferrill disclaims any beneficial ownership.
(6) Includes 11,000 shares subject to options that are currently exercisable.
(7) Includes 3,573,200 shares held by Allen Value Partners L.P., 760,000 shares
held by Allen & Company Incorporated ("Allen & Co.") and 426,800 shares
issued to Allen Value Limited Incorporated. Allen Holding Inc. may be
deemed to beneficially own the shares of Common Stock held by Allen Value
Partners L.P. and Allen Value Limited Incorporated. However, Allen Holding
Inc. disclaims beneficial ownership except to the extent represented by
Allen Holding Inc.'s equity interest and profit participation in such
entities. Also includes warrants held by Allen & Co. to purchase 1,500,000
shares (the "Allen & Co. Warrants") that are currently exercisable. The
amount in the table excludes 709,425 shares and warrants to purchase
500,000 shares (together with the Allen & Co. Warrants, the "Allen
Warrants") held by officers and directors of Allen & Co. for which Allen &
Co. disclaims beneficial ownership.
(8) According to a Statement on Schedule 13G filed with the SEC on February 10,
1998, Kennedy Capital Management holds sole dispositive power over these
shares, and holds sole voting power over 890,000 of these shares.
(9) Includes 957,816 shares subject to options that are currently exercisable
or become exercisable within 60 days.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, through its wholly owned subsidiary United Sanitation, leases
approximately 155,000 square feet of land and buildings in Ocala, Florida which
is used for the operations of United Sanitation's collection, transfer,
recycling and portable toilet business. The property is leased from a real
estate company which is controlled by Michael D. Paglia, a Vice President and
Director of the Company, and John A. Paglia, a Vice President of the Company.
The lease has a term of 20 years expiring in August 2016, grants the Company an
option to purchase the property at any time after the fifth year of the lease at
fair market value and has annual rent of $210,000 with yearly increases related
to increases in the Florida Consumer Price Index. The Company believes the
lease to be reasonable, fair and on terms and conditions typical for commercial
leases in the Ocala, Florida area.
In November 1997, the Company and Allen & Co. agreed to settle claims relating
to the Company's previous engagement of Allen & Co. for investment banking and
financial advisory services. Under the terms of the settlement, Allen & Co.
agreed to waive any claims against the Company and the parties mutually agreed
to modify the terms of the Allen Warrants. The exercise period for the Allen
Warrants was extended for an additional year to February 2, 1999 and the
exercise price was increased from $.55 per share to $.61 per share.
20
<PAGE>
PART IV
ITEM 14. Financial Statement, Exhibits and Reports on Form 8-K
(a) Financial Statements
(i) Report of Independent Accountants.
(ii) Consolidated Balance Sheets as of December 31, 1997 and 1996.
(iii) Consolidated Statements of Operations for the years ended December
31, 1997, 1996 and 1995.
(iv) Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995.
(v) Consolidated Statements of Cash Flows for the years ended December
31, 1997, 1996 and 1995.
(vi) Notes to Consolidated Financial Statements.
(b) Reports on Form 8-K
None.
(c) Exhibits. Each Exhibit is listed according to the number assigned to it in
the Exhibit Table of Item 601 of Regulation S-K.
EXHIBIT
Number DESCRIPTION
- ------ -----------
2.1 Asset Purchase Agreement dated January 10, 1997 by and among GeoWaste of
GA, Inc., Air-Sweep-A-Lot, Inc., Todd Griffin and Tim Griffin.
2.2 Asset Purchase Agreement dated November 7, 1997 by and among GeoWaste of
GA, Inc., T.F. Mitchell & Sons, Inc. and Stephen F. Mitchell.
3.1 Certificate of Incorporation of GeoWaste Incorporated, as amended and
restated (Incorporated by reference from Exhibit A to the Proxy filed
November 25, 1991 (File No. 0-9278)).
3.2 Bylaws of GeoWaste Incorporated, as amended.
3.3 Amendment to Amended and Restated Certificate of Incorporation of GeoWaste
Incorporated (Incorporated by reference from Exhibit 3.4 to the Annual
Report on Form 10-K for the year ended December 31, 1992 (File No. 0-
9278)).
4.1 Registration Rights Agreement, dated August 2, 1991, by and between
GeoWaste Incorporated and each of the entities listed on Exhibit A thereto
(Incorporated by reference from Exhibit 4(D) to the Current Report on Form
8-K filed August 19, 1991 (File No. 0-9278)).
4.2 First Escrow Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, Frederick J. Iseman, James Swistock, Matthew Fulton, Brian
Russell, James R. Jones, Paul Thomas Cohen, William vanden Heuvel, Balis &
Zorn, Inc. and IBJ Schroder Bank & Trust Company (Incorporated by reference
from Exhibit 4(B) to the Current Report on Form 8-K filed August 19, 1991
(File No. 0-9278)).
4.3 Second Escrow Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, the parties listed on Schedule A thereto, Kurt Wilkening and
IBJ Schroder Bank & Trust Company (Incorporated by reference from Exhibit
4(C) to the Current Report on Form 8-K filed August 19, 1991 (File No.
0-9278)).
21
<PAGE>
4.4 Equivest First Convertible Debt Exchange Agreement, dated August 2, 1991,
by and between GeoWaste Incorporated the parties listed on Schedule A
thereto (Incorporated by reference from Exhibit 2(B) to the Current Report
on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.5 Equivest Second Convertible Debt Exchange Agreement, dated August 2, 1991,
by and between GeoWaste Incorporated the parties listed on Schedule A
thereto (Incorporated by reference from Exhibit 2(C) to the Current Report
on Form 8-K filed August 19, 1991 (File No. 0-9278)).
4.6 Stockholders' Agreement, dated August 2, 1991, by and between GeoWaste
Incorporated, Advance Ross Corporation, Allen & Company Incorporated,
Frederick J. Iseman, Harve Ferrill, Gian Caterine, Kurt Wilkening, their
persons or entities listed on Schedule A thereto and the persons or
entities listed on Schedule B thereto (Incorporated by reference from
Exhibit 4(A) to the Current Report on Form 8-K filed August 19, 1991 (File
No. 0-9278)).
4.7 Voting Agreement, dated March 5,1992, by and between GeoWaste Incorporated,
the Delaware State Employees' Retirement Fund and the Trust for Defined
Benefit Plan of ICI American Holdings Inc., Frederick J. Iseman, Gian
Caterine, Amy C. MacF. Burbott, Harve Ferrill, James Swistock, Advance Ross
Corporation and Allen & Company Incorporated (Incorporated by reference
from Exhibit 4.4 to the Current Report on Form 8-K filed March 13, 1992
(File No. 0-9278)).
4.8 Voting Agreement dated as of August 12, 1996, among John A. Paglia, Michael
D. Paglia, Advance Ross Corporation, Allen & Company Incorporated, Allen
Value Partners L.P. and Allen Value Limited Incorporated (Incorporated by
reference from Exhibit 4.11 to the Current Report on Form 8-K filed August
27, 1997 (File No. 0-9278)).
10.1 Revolving Credit Agreement dated October 9, 1997 by and among GeoWaste
Incorporated and its subsidiaries listed therein and BankBoston, N.A.
10.2 1996 Stock Option Plan of the Company dated November 18, 1996.
10.3 Warrant Purchase Agreement by and between GeoWaste Incorporated and Allen
& Company Incorporated (Incorporated by reference from Exhibit 10.1 to the
Annual Report on Form 10-K for the year ended December 31, 1991 (File No.
0-9278)).
10.4 Amendment to Warrant Purchase Agreement, dated November 4, 1997, by and
between GeoWaste Incorporated and Allen & Company Incorporated.
10.5 Severance Agreement, dated as of December 21, 1995, by and between
GeoWaste Incorporated and Raymond F. Chase (Incorporated by reference from
Exhibit 10.6 to the Annual Report on Form 10-K for the year ended December
31, 1995 (File No. 0-9278)).
10.6 Letter Agreement, dated as of April 23, 1996, by and between GeoWaste
Incorporated and Amy C. MacF. Burbott. (Incorporated by reference from
Exhibit 10.9 to the Annual Report on Form 10-K for the year ended December
31, 1996 (File No. 0-9278)).
10.7 Employment Agreement, dated as of August 12, 1996, by and between GeoWaste
Incorporated and John A. Paglia. (Incorporated by reference from Exhibit
10.10 to the Annual Report on Form 10-K for the year ended December 31,
1996 (File No. 0-9278)).
10.8 Employment Agreement, dated as of August 12, 1996, by and between GeoWaste
Incorporated and Michael D. Paglia. (Incorporated by reference from
Exhibit 10.11 to the Annual Report on Form 10-K for the year ended December
31, 1996 (File No. 0-9278)).
21 Subsidiaries of the Registrant.
22
<PAGE>
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Restated Financial Data Schedule for the year ended December 31, 1996.
27.3 Restated Financial Data Schedule for the year ended December 31, 1995.
27.4 Restated Financial Data Schedule for the three months ended March 30,
1997.
27.5 Restated Financial Data Schedule for the six months ended June 30, 1997.
27.6 Restated Financial Data Schedule for the nine months ended September 30,
1997.
27.7 Restated Financial Data Schedule for the three months ended March 30,
1996.
27.8 Restated Financial Data Schedule for the six months ended June 30, 1996.
27.9 Restated Financial Data Schedule for the nine months ended September 30,
1996.
(d) Financial Statement Schedules
Description
-----------
Schedule II. Valuation and Qualifying Accounts
All other schedules have been omitted since the information is not applicable,
is not required or is included in the Consolidated Financial Statements listed
under section (a) of this Item 14.
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
GeoWaste Incorporated:
We have audited the consolidated financial statements and the financial
statement schedule of GeoWaste Incorporated and Subsidiaries listed in Item
14(a) and 14(d) of this Form 10-K. These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of GeoWaste
Incorporated and Subsidiaries as of December 31, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Jacksonville, Florida
March 24, 1998
F-1
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS
1997 1996
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 738,790 $ 3,058,067
Accounts receivable, net of allowance of $269,000 in 1997
and $174,000 in 1996 2,449,994 2,214,061
Income tax receivable 416,196 -
Prepaid expenses 376,154 343,461
Deferred tax asset 140,000 221,000
----------- -----------
Total current assets 4,121,134 5,836,589
----------- -----------
Property and equipment:
Land, primarily disposal site 13,125,733 11,078,454
Buildings and improvements 605,441 433,025
Vehicles and equipment 11,910,630 8,830,438
Construction in progress 2,382,807 2,127,429
----------- -----------
28,024,611 22,469,346
Less - accumulated depreciation 11,535,911 8,613,446
----------- -----------
Net property and equipment 16,488,700 13,855,900
----------- -----------
Other assets:
Cost in excess of net assets of acquired businesses and
other intangibles, net of accumulated amortization of
$680,000 in 1997 and $322,000 in 1996 11,195,943 10,598,463
Investments 236,328 318,000
Other 66,794 9,139
----------- -----------
Total other assets 11,499,065 10,925,602
----------- -----------
Total assets $32,108,899 $30,618,091
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial satements.
F-2
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31, 1997 and 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 1,341,439 $ 4,672,950
Current portion of accrued royalties 231,139 245,530
Accounts payable 1,029,944 1,573,707
Accounts payable to related party 306,037 400,000
Accrued payroll 134,457 198,619
Accrued fees 290,979 145,008
Accrued income taxes - 700,000
Accrued other 246,249 46,929
Deferred revenue 753,248 876,624
----------- -----------
Total current liabilities 4,333,492 8,859,367
Long-term debt, less current maturities 8,531,395 2,522,311
Accrued royalties, less current portion 499,783 716,531
Closure and post closure obligations 2,047,815 1,787,136
Deferred tax liability 791,000 750,000
----------- -----------
Total liabilities 16,203,485 14,635,345
----------- -----------
Commitments and contingencies (Notes 9 and 16)
Stockholders' equity:
Preferred stock, authorized 5,000,000 shares,
$.01 par value; none issued or outstanding - -
Common stock, authorized 50,000,000 shares,
$.10 par value; issued and outstanding 21,286,549 and
21,028,634 shares in 1997 and 1996, respectively 2,128,655 2,102,863
Additional paid-in capital 13,231,202 12,910,437
Retained earnings 545,557 969,446
----------- -----------
Total stockholders' equity 15,905,414 15,982,746
----------- -----------
Total liabilities and stockholders' equity $32,108,899 $30,618,091
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial satements.
F-3
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ -----------
<S> <C> <C> <C>
Net revenues $19,396,772 $13,702,708 $8,932,528
Costs and expenses:
Operating 13,535,937 8,228,849 5,207,250
Unusual charges 1,083,000 - -
Selling, general and administrative 3,953,545 2,618,571 1,459,197
Amortization of intangibles 358,159 144,868 71,180
----------- ----------- ----------
Income from operations 466,131 2,710,420 2,194,901
Other income (expense):
Other income, primarily interest 10,185 200,461 175,655
Interest expense (577,998) (443,912) (368,338)
Gain (loss) on sale of assets (79,207) 432,623 7,092
Gain on sale of investments - 82,913 -
----------- ----------- ----------
Income (loss) before income taxes (180,889) 2,982,505 2,009,310
Income tax provision 243,000 1,275,000 547,000
----------- ----------- ----------
Net (loss) income $ (423,889) $ 1,707,505 $1,462,310
=========== =========== ==========
Basic (losses) earnings per common share $ (.02) $ .09 $ .08
=========== =========== ==========
Diluted (losses) earnings per common share $ (.02) $ .08 $ .07
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial satements.
F-4
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
COMMON STOCK NET UNREALIZED
NUMBER OF $.01 PAR ADDITIONAL GAINS (LOSSES) RETAINED EARNINGS TOTAL STOCKHOLDERS'
SHARES VALUE PAID IN CAPITAL ON INVESTMENTS (DEFICIT) EQUITY
---------- ------------ --------------- --------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 18,662,605 $1,866,260 $ 6,191,110 $ (8,179) $(2,200,369) $ 5,848,822
Change in net unrealized gains - - - 75,225 - 75,225
Net income - - - - 1,462,310 1,462,310
---------- ---------- ----------- ------------ ----------- -----------
Balance at December 31, 1995 18,662,605 1,866,260 6,191,110 67,046 (738,059) 7,386,357
Issuance of stock for
acquisitions 2,233,946 223,395 6,306,605 - - 6,530,000
Stock options exercised,
including tax benefit of
$114,134 132,083 13,208 172,722 - - 185,930
Extension of warrants - - 240,000 - - 240,000
Change in unrealized gains - - - (67,046) - (67,046)
Net income - - - - 1,707,505 1,707,505
---------- ---------- ----------- ------------ ----------- -----------
Balance at December 31, 1996 21,028,634 2,102,863 12,910,437 - 969,446 15,982,746
Conversion of 8.5% Convertible
Debentures 200,000 20,000 260,000 - - 280,000
Stock options exercised,
including tax benefit of
$33,000 57,915 5,792 60,765 - - 66,557
Net loss - - - - (423,889) (423,889)
---------- ---------- ----------- ------------ ----------- -----------
Balance at December 31, 1997 21,286,549 $2,128,655 $13,231,202 $ - $ 545,557 $15,905,414
========== ========== =========== ============ =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial satements.
F-5
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ (423,889) $ 1,707,505 $ 1,462,310
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 3,698,558 2,555,863 2,505,103
Deferred income taxes 168,000 36,000 323,000
Non cash interest expense - - 80,823
Goodwill write-off 436,000 - -
Impairment of property 202,121 - -
Provision for closure and post closure costs 260,679 275,489 620,472
Provision for doubtful accounts 298,699 163,129 28,400
Gain on sale of investments - (82,913) -
Amortization of discount (18,600) (18,000) -
(Gain) loss on sale of assets 79,207 (432,623) (7,092)
Changes in assets and liabilities:
Accounts receivable (534,632) (686,534) 112,861
Income tax (1,083,196) 550,682 59,318
Prepaid expenses (32,693) (93,437) (62,238)
Other assets - 54,919 -
Accounts payable and accrued liabilities (720,288) 417,859 (95,029)
Deferred revenue (123,376) 192,090 (123,012)
----------- ----------- -----------
Net cash provided by operating activities 2,206,590 4,640,029 4,904,916
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of limited partnership - 656,920 -
Proceeds from sale of investments 100,272 701,402 -
Cash paid for business acquisitions (1,379,224) (2,420,228) -
Purchases of property and equipment (3,972,117) (3,613,967) (1,820,033)
Proceeds from the sale of equipment 379,248 57,000 19,670
Purchase of investments - - (313,445)
Proceeds from sale of business 204,761 - -
----------- ----------- -----------
Net cash used in investing activities (4,667,060) (4,618,873) (2,113,808)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 33,557 71,795 -
Proceeds from debt issuance 5,187,000 - -
Payment of debt, capital lease obligations,
and accrued royalties (5,079,364) (1,020,343) (439,047)
----------- ----------- -----------
Net cash provided by (used in) financing activities 141,193 (948,548) (439,047)
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,319,277) (927,392) 2,352,061
Cash and cash equivalents, beginning of year 3,058,067 3,985,459 1,633,398
----------- ----------- -----------
Cash and cash equivalents, end of year $ 738,790 $ 3,058,067 $ 3,985,459
=========== =========== ===========
</TABLE>
Note: See Note 15 for supplemental cash flow information.
The accompanying notes are an integral part of these
consolidated financial satements.
F-6
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
GeoWaste Incorporated (the "Company") is in the business of owning, operating
and acquiring non-hazardous, solid waste collection, transportation and transfer
companies and disposal facilities. The Company operates a landfill in southern
Georgia, collection companies in southern Georgia and northern Florida, a
transfer station in northern Florida and a sweeping company in northern Florida.
The Company also sells recyclable paper and rents and services portable toilets.
The Company's customers include governments, commercial entities and residences
located in the southeastern United States.
Revenue Recognition
Collection revenues are recognized as services are performed. Certain
commercial and residential customers are billed in advance, and these revenues
are deferred until recorded as income in the period in which the related service
is rendered. Disposal and transfer revenues are recognized with the performance
of the service. Sales of recyclable paper are recognized upon delivery of the
product. No customer accounted for more than 10% of the Company's revenue in
1997. One customer accounted for approximately 14% and 21% of the Company's
revenue in 1996 and 1995, respectively.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany transactions and
balances have been eliminated. Unitah Basin Limited Partnership, a former
majority-owned subsidiary, was sold during 1996 and the Company recognized a
gain of $432,623.
Cash and Cash Equivalents
Cash equivalents consist of money market funds primarily invested in short-
term debt securities and other highly liquid investments with maturities of
three months or less from the date they were purchased. These securities are
stated at cost which approximates market value.
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is provided over the estimated useful lives, ranging from 5 to 10
years for buildings and improvements and 2 to 8 years for vehicles and
equipment, using the straight-line method.
The disposal site is carried at cost. To the extent cost exceeds estimated net
realizable value upon closure of the disposal site, such excess is amortized
over the estimated life of the disposal site based on the ratio of tons of solid
waste placed in the landfill over the estimated total capacity of the disposal
site. Disposal site improvements are capitalized and charged to operations based
on the estimated remaining capacity of the site; operating costs are expensed as
incurred. Statement of Financial Accounting Standards No. 121 is applied to
the Company's sole solid waste disposal facility by considering historical,
current and forecasted operating results. Due to the relationship of the
landfill's operating costs to current and forecasted landfill revenues and the
resulting operating margins, the Company has not experienced a situation where
the landfill costs are not recoverable.
Depreciation expense for property and equipment was approximately $3,345,000,
$2,411,000, and $2,418,000, for the years ended December 31, 1997, 1996, and
1995, respectively.
F-7
<PAGE>
Capitalized Interest
Interest is capitalized on construction of Company's landfill during the
periods of construction. For the year ended December 31, 1997, total interest
costs capitalized was $93,000. No interest was capitalized in 1996 or 1995 due
to immateriality.
Cost in Excess of Net Assets of Acquired Businesses and Other Intangibles
The cost in excess of net assets of acquired businesses is being amortized on
a straight-line basis over forty years. The carrying value of intangible assets
is periodically reviewed for impairment by the Company based on the expected
future undiscounted cash flows of the related business unit. (See Notes 11 and
17.) Other intangibles include non-compete agreements and customer lists and
are being amortized on a straight line basis over five years.
Investments
The Company accounts for investments in accordance with Statement of Financial
Accounting Standards No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" (SFAS 115). Investments are classified as available-for-sale
or held-to-maturity as applicable. Available-for-sale securities are recorded
at fair value and held-to-maturity investments are recorded at amortized cost.
Amortized cost is adjusted for amortization of discount to maturity. Such
amortization is included in other income. Realized gains and losses are
included in other income and are determined on the specific identification
basis.
Income Taxes
Deferred income tax liabilities and assets are determined using currently
enacted tax rates applicable to the period in which deferred tax liability or
assets are expected to be settled or realized. The deferred tax liability or
asset is determined based on the difference between the financial statement and
tax bases of assets and liabilities. The tax benefits recognized must be reduced
by a valuation allowance to the extent it is more likely than not the benefits
may not be realized.
Earnings (Losses) Per Common Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). SFAS
128 is effective for financial statements issued for periods ending after
December 15, 1997. All earnings (losses) per share and related weighted average
shares outstanding have been restated.
Basic earnings (losses) per common share are computed by dividing net income
(losses) by the weighted average number of common shares outstanding for the
period. Diluted earnings (losses) per common share reflect the maximum dilution
that would have resulted from the exercise of common stock equivalents which
consists of stock options and warrants (see Note 8) and convertible debentures
(see Note 5). Diluted earnings (losses) per common share are computed by
dividing net income (losses), after adding back the after-tax interest on the
convertible debentures, by the weighted average number of common shares and all
dilutive securities. Diluted earnings (losses) per common share does not
consider the conversion of any common stock equivalents that would have an
antidilutive effect on diluted earnings (losses) per share.
F-8
<PAGE>
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities (such as allowance for
doubtful accounts, depreciation lives, costs in excess of net assets of acquired
businesses, and closure and post closure reserves) and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could materially differ from those estimates.
Long-Lived Assets
In 1996, the Company adopted Statement of Financial Accounting Standards
(SFAS) 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of." SFAS 121 requires that long-lived assets and
certain identifiable intangibles to be held and used or disposed of by an entity
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. SFAS 121 also
requires losses to be accrued, if any, on long-lived assets to be disposed.
See Notes 11 and 17 for impairment losses recognized in 1997. There were no
impairment losses recognized in 1996.
Environmental Costs
The Company accrues for losses associated with environmental remediation
obligations when such losses are probable and reasonably estimable. Accruals
for estimated losses from environmental remediation obligations generally are
recognized no later than completion of the remedial feasibility study. Such
accruals are adjusted as further information develops or circumstances change.
No accruals were necessary for the years ended December 31, 1997, 1996 or 1995.
Reclassification
Certain items in prior years' financial statements have been reclassified to
conform with the current year presentation.
2. CLOSURE AND POST-CLOSURE RESERVES
The Company will have material financial obligations with respect to the
closure and post closure of its landfill. Disposal site closure and post-closure
costs, which includes final capping of the site, site inspections, ground-water
monitoring, leachate management, methane gas control and recovery, and operation
and maintenance costs to be incurred during the thirty year post-closure period,
are accrued and charged to expense over the estimated useful life of the
landfill. Requirements for closure and post-closure are established by Subtitle
D of the EPA.
While the precise amount of these future obligations cannot be determined, it
is estimated that the total cost for final closure and post-closure will
approximate $3,600,000 when the landfill reaches its capacity. These amounts
are based on estimates obtained from an independent engineering firm. Amounts
accrued for closure and post-closure costs are $2,047,815 and $1,787,136 as of
December 31, 1997 and 1996, respectively, and are accrued based on capacity
used. The liability is not present valued, however the Company uses a 3%
inflation factor when estimating the ultimate costs of closure and post closure
costs. Actual, ultimate costs could materially differ from these estimates.
In February 1996 and February 1998 the Company was granted modifications to
its permit for the Company's landfill by the Georgia Environmental Protection
Division which increased the total capacity of the landfill by approximately
1,500,000 and 1,100,000 tons of solid waste, respectively. As a result of the
modification to the Company's permit in 1998, the Company received new estimates
of the final closure and post closure costs. It is estimated that total costs
will approximate $8,700,000. As a result of the 1996 capacity increase, the
estimated amortization rate of the disposal site and the estimated accrual rate
of closure and post closure reserves have been adjusted. The 1996 net income
and earnings per share were
F-9
<PAGE>
$430,000 and $0.02 higher as a result of this change in estimate. The pro forma
effect of the 1998 modification and new cost estimates on 1997 net loss and
losses per share is an additional loss of $36,000 and no change in the losses
per share.
3. ACQUISITIONS
During 1997 and 1996, the Company acquired the entities described below, which
were accounted for by the purchase method of accounting.
(a) In January 1997, the Company acquired the waste related assets of Air
Sweep-A-Lot, Inc. ("ASAL") a solid waste collection and sweeping company located
in Valdosta, Georgia. The total purchase price of approximately $1,028,000
consisted of cash in the amount of $200,000, acquisition costs of $19,000,
assumption of debt in the amount of $487,000 and the issuance of an 8%
promissory note with a principal amount of $322,000 to the sellers of ASAL. The
value of the non-competition agreement assigned to this transaction was $85,000
and is being amortized over 5 years. The excess of the purchase price over the
net assets acquired of approximately $367,000 is being amortized over forty
years. The operations of ASAL are not material to the Company's consolidated
operations.
(b) In November 1997, the Company purchased the assets of T.F. Mitchell &
Sons, Inc. d/b/a Mitchell Refuse ("Mitchell"), located in Cordele, Georgia. The
total purchase price of $1,519,000 consisted of cash in the amount of
$1,000,000, a payable of $306,000 due in February 1998, acquisition costs of
$19,000, and assumption of $194,000 in debt. The payable was paid in February
1998 and is classified as accounts payable to a related party in the
accompanying balance sheet. A value of $150,000 was assigned to Mitchell's
customer lists and $100,000 to the non-competition agreement associated with
this transaction. The value of both the customer lists and the non-competition
agreement are being amortized over five years. The excess of the purchase price
over the assets acquired of approximately $672,000 is being amortized over forty
years. The operations of Mitchell are not material to the Company's consolidated
operations.
(c) In March 1996, the Company acquired all of the outstanding shares of North
Florida Sweeping, Inc. ("NFS"), a street sweeping and solid waste rolloff
collection company located in Jacksonville, Florida. The consideration given of
$1,732,000 consisted of $280,000 of common stock (233,946 shares of the
Company's stock valued at $1.197 per share), cash of $350,000, assumption of NFS
liabilities in the amount of $862,000 and 75,000 common stock warrants that are
exercisable at $1.25 per share. The Company also extended the exercise date for
2,000,000 warrants issued pursuant to a certain warrant agreement with a related
party, to February 2, 1998 as consideration for investment advisory services
provided to the Company in connection with the purchase of NFS. The Company
assigned a value of $240,000 to this modification in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting For Stock Based
Compensation" (SFAS 123). The excess of the purchase price over the fair value
of the assets acquired was approximately $597,000 and has been recorded as
goodwill, which is being amortized on a straight-line basis over forty years.
(See Note 11 for recission of purchase.)
(d) In August 1996, the Company acquired all of the outstanding shares of
Spectrum Group, Inc. (d/b/a United Sanitation), a collection recycling and
transfer company located in Ocala, Florida. The purchase price of $11,592,000
was comprised of 2,000,000 shares of common stock valued at $3.125 per share,
cash of $954,000, acquisition costs of $680,000 and assumption of liabilities of
$3,708,000. The excess of the purchase price over the fair value of assets
acquired was approximately $8,217,000 and has been recorded as goodwill, which
is being amortized on a straight-line basis over forty years.
(e) In August 1996, the Company acquired certain equipment and accounts
receivable of Standard Disposal Service of Florida, Inc., a collection company
located in Marion County, Florida, for $1,296,000. The purchase price consisted
of $720,000 cash and assumption of $576,000 of debt. The excess of the purchase
price over the fair value of assets acquired was $732,000, which is being
amortized over forty years.
The Company also had other acquisitions during 1996 which were not
significant.
F-10
<PAGE>
The purchase prices of all of the Company's acquisitions have been allocated
to the assets purchased and the liabilities assumed based upon the fair values
on the dates of acquisition, as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Current assets $ - $ 910,000
Property and equipment 1,172,000 4,143,000
Other assets - 8,000
Goodwill and intangibles 1,374,000 9,676,000
Current liabilities - (1,217,000)
Long-term liabilities (681,000) (3,930,000)
---------- -----------
$1,865,000 $ 9,590,000
========== ===========
</TABLE>
The operating results of these business acquisitions have been included in
the consolidated statements of operations from the dates of acquisition.
The following unaudited pro forma information presents a summary of
consolidated results of operations of the Company and the acquired businesses as
if the acquisitions had occurred at the beginning of the year preceding the year
of acquisition.
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net sales $20,652,433 $20,386,000 $16,272,000
Net income (loss) (293,000) 1,745,000 1,388,000
Earnings (losses) per common share $ (0.01) $ .09 $ .07
</TABLE>
These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional depreciation
expense as a result of a step-up in the basis of fixed assets, additional
amortization expense for goodwill, decrease in disposal charges for disposing
waste at the Company's landfill and increase in officers' salaries of the
acquired business that have become employees of the Company. These unaudited pro
forma results are not necessarily indicative of what the actual consolidated
results of operations might have been if the acquisitions had been effective at
the beginning of the year preceding the year of acquisition.
4. SALE OF ASSETS
In June 1997, the Company sold its lawn care and certain of its sweeping
businesses in Florida to Sweeping Corp. of America. The assets sold included
selected lawn care and parking lot sweeping equipment together with contracts
obtained since April 1996 with the Florida Department of Transportation for
highway sweeping and lawn edging in Dade, Leon, Holmes, Washington, Jackson,
Bay, Gulf, Calhoon, Escambia and Santa Rosa counties. All of these contracts
involved work being performed in geographically dispersed locations, which were
remote to the Company's existing service areas of South/Central Georgia,
Northeast Florida and North Central Florida and which the Company believed had
limited market share growth opportunities in the near future. The aggregate
sale price was $210,000 and resulted in a gain of approximately $120,000 which
is included in gain on sale of assets in the accompanying consolidated
statements of operations.
5. LONG-TERM DEBT
Long-term debt at December 31, 1997 and 1996 consists of the following:
<TABLE>
1997 1996
---- ----
<S> <C> <C>
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Note payable to bank under $5 million revolving credit facility, due October 2000 $ 4,800,000 $ -
8.5% convertible subordinated debentures, due 1997 - 3,884,265
Notes payable to banks at fixed interest rates ranging from 8.5% to 10.5% and variable interest
rates ranging from prime to prime plus 2.09% (weighted average interest rate of 9.1% as of
December 31, 1997) through 2010 collateralized by vehicle, equipment and other assets 1,600,719 1,248,838
Uncollateralized notes payable to individuals at fixed interest rates ranging from 8% to 9%
(weighted average interest rate of 8.5%) through 2005 1,417,169 1,209,394
Notes payable to finance institutions at fixed interest rates ranging from 8% to 13.4% and variable
interest rates ranging from prime plus 1.5% to prime plus 2% (weighted average interest rate of
9.4%) through 2003, collateralized by equipment 1,593,130 671,801
Capitalized lease obligations at fixed interest rates ranging from 8% to 10.5% (weighted average
interest rate of 8.5%) through 2001, collateralized by equipment and vehicles 410,875 102,735
Other notes payable 50,941 78,228
----------- -----------
9,872,834 7,195,261
Less current portion (1,341,439) (4,672,950)
----------- -----------
$ 8,531,395 $ 2,522,311
=========== ===========
</TABLE>
Aggregate maturities of long-term debt including capital leases at December
31, 1997 were as follows:
YEAR ENDING
DECEMBER 31
-----------
1998 $ 1,341,439
1999 1,037,141
2000 5,672,078
2001 569,728
2002 411,192
Thereafter 841,256
-----------
$ 9,872,834
===========
The Company's 8.5% convertible subordinated debentures (the "Debentures"),
which were convertible into shares of common stock at $1.40 per share, matured
in March 1997, at which time the Company and the holder of the Debentures
mutually agreed to extend the due date of the Debentures to September 1997. In
March 1997, the holder of the Debentures also converted $280,000 of the
Debentures into 200,000 shares of common stock. In October 1997, the Company
repaid the remaining $3,604,265 of principal and accrued interest on the
Debentures from borrowings under the revolving credit facility discussed below.
On October 9, 1997, the Company entered into a $5 million revolving credit
facility (the "Credit Facility") with BankBoston, N.A. (the "Bank") and borrowed
$4.8 million under the Credit Facility to repay the principal and accrued
interest on the Debentures and to finance the cash portion of the purchase price
for Mitchell. Borrowings under the Credit Facility may be used for working
capital, refinancing of outstanding debt, capital expenditures and other general
corporate purposes. Interest on borrowings under the Credit Facility is payable
at a rate of one-quarter of one percent plus the higher of (i) the Bank's
F-12
<PAGE>
base rate or (ii) one percent above the overnight federal funds effective rate,
as published by the Board of Governors of the Federal Reserve System, as in
effect from time to time. The interest rate at December 31, 1997 was 8.75%.
Borrowings under the Credit Facility mature on October 9, 2000 and are
collateralized by the stock of the Company's subsidiaries. Under the terms of
the Credit Facility, the Company is prohibited from paying cash dividends on its
Common Stock and the Company must maintain certain financial covenants on a
quarterly basis of which the most significant is the interest coverage ratio.
The financial covenant relating to the interest coverage ratio with which the
Company must comply requires the Company not to allow its interest coverage
ratio to be less than 2.25 to 1 through September 30, 1998 or less than 2.50 to
1 thereafter.
6. ACCRUED ROYALTIES
Royalty obligations, payable to the former stockholder of an acquired company,
amounted to $730,922 and $962,061 at December 31, 1997 and 1996, respectively.
The Company has estimated $231,139 and $245,530 will be paid in 1998 and 1997
respectively, and accordingly has classified these amounts as a current
liability. The Company pays the former stockholder $1 per ton of waste disposed
in the Company's landfill.
7. EARNINGS (LOSSES) PER SHARE
The following is the reconciliation of the numerator and denominator of the
basic and diluted earnings (losses) per share for the years ended December 31,
1997, 1996 and 1995:
<TABLE>
<CAPTION>
Income Shares Per-Share
1997 (Numerator) (Denominator) Amounts
---- ----------- ------------- ----------
<S> <C> <C> <C>
BASIC LOSSES PER SHARE
Losses available to
common stockholders $(423,889) 21,246,779 $ (0.02)
========
Effect of dilutive securities - -
--------- ----------
DILUTED LOSSES PER SHARE
Losses available to common stockholders
and assumed conversions $(423,889) 21,246,779 $ (0.02)
========= ========== ========
</TABLE>
Options and warrants to purchase 3,318,054 shares of common stock at prices
ranging from $.50 to $3.50 were outstanding during 1997 but were not included in
the computation of diluted losses per share. The Company also had convertible
subordinated debentures outstanding of $3,604,265 for the first three quarters
of 1997 which was convertible into shares of common stock at $1.40 per share.
All of the above securities were not included in diluted losses per share due to
cumulative losses by the Company in 1997.
<TABLE>
<CAPTION>
Income Shares Per-Share
1996 (Numerator) (Denominator) Amounts
---- ----------- ------------- ---------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE
Income available to
common stockholders $1,707,505 19,659,044 $ 0.09
=========
EFFECT OF DILUTIVE SECURITIES
Options and warrants - 2,180,439
8.5% Convertible subordinated debentures 214,606 2,774,475
---------- ----------
DILUTED EARNINGS PER SHARE
Income available to common stockholders
and assumed conversions $1,922,111 24,613,958 $ 0.08
========== ========== =========
</TABLE>
F-13
<PAGE>
Option to purchase 200,000 shares of common stock at prices ranging from $2.75
to $3.50 were outstanding during the last three quarters of 1996 but were not
included in the computation of diluted earnings per share since the exercise
price was greater than the average stock price during 1996.
<TABLE>
<CAPTION>
Income Shares Per-Share
1995 (Numerator) (Denominator) Amounts
- ---- ----------- ------------- ---------
<S> <C> <C> <C>
BASIC EARNINGS PER SHARE
Income available to
common stockholders $1,462,310 18,662,505 $0.08
=====
EFFECT OF DILUTIVE SECURITIES
Options and warrants - 1,130,882
---------- ----------
DILUTED EARNINGS PER SHARE
Income available to common stockholders
and assumed conversions $1,462,310 19,793,387 $0.07
========== ========== =====
</TABLE>
Options to purchase 61,500 shares of common stock at a price of $1.19 were
outstanding during the last quarter of 1995 but were not included in the
computation of diluted earnings per share since the exercise price was greater
than the average stock price during 1995. The Company also had convertible
subordinated debentures outstanding of $3,884,265 during 1995 which is
convertible into shares of common stock of the Company at $1.40 per share.
These securities were not included in diluted earnings per share as they were
considered antidilutive.
8. Management Options and Common Stock Warrants
In 1991, the Company granted to certain key management options to acquire an
aggregate of 1,854,945 shares of common stock at a purchase prices ranging from
$.50 to $1.37 per share. The Company has also adopted two Stock Option Plans,
which provided for the granting of a total of 1,803,000 shares to key
employees. All options must be exercised on or prior to the tenth anniversary of
the grant. The options vest to key management and employees over a three year
period based upon length of service with the Company.
A summary of the status of the Company's options outstanding as of December
31, 1997, 1996 and 1995 and changes during the periods ended on those dates are
presented below:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------------- -------------------------------- ---------------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE WEIGHTED-AVERAGE
SHARES EXERCISE SHARES EXERCISE SHARES EXERCISE
(IN 000) PRICE (IN 000) PRICE (IN 000) PRICE
--------------- ---------------- -------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of period 1,171 $1.32 1,597 $0.53 1,535 $0.50
Granted 325 2.10 465 2.51 62 1.19
Exercised 58 .58 132 0.54 - -
Cancelled 120 3.18 759 0.50 - -
----- ----- -----
Outstanding at
end of period 1,318 $1.38 1,171 $1.32 1,597 $0.53
===== ===== ===== ===== ===== =====
Options exercisable
at end of period 916 $0.97 789 $0.73 753 $0.52
===== ===== ===== ===== ===== =====
</TABLE>
The following table summarizes information about fixed stock options
outstanding at December 31, 1997:
F-14
<PAGE>
<TABLE>
<CAPTION>
OPTIONS OPTIONS
OUTSTANDING EXERCISABLE
----------------------------------------------- ---------------------------
WEIGHTED WEIGHTED
WEIGHTED-REMAINING AVERAGE AVERAGE
RANGE OF SHARES CONTRACTUAL EXERCISE SHARES EXERCISE
EXERCISE PRICE (IN 000) LIFE PRICE (IN 000) PRICE
-------------- -------- ------------------ -------- -------- --------
<S> <C> <C> <C> <C> <C>
$.50 605 3.5 years $0.50 605 $0.50
$1.19 to 1.75 39 8.0 years 1.30 36 1.27
$1.81 to $2.13 474 9.0 years 1.92 275 1.96
$2.75 200 8.5 years 2.75 - -
----- ---
Total 1,318 6.5 years $1.38 916 $0.97
===== ===
</TABLE>
The Company applies APB Opinion 25 and related interpretations in accounting
for the stock option plans. Accordingly, no compensation cost has been
recognized for the two stock option plans. Had compensation cost been
determined based on the estimated fair value at the grant dates for awards under
those plans since January 1, 1995, consistent with the method of SFAS 123, the
Company's net income (loss) and earnings (losses) per share for the years ended
December 31, 1997, 1996 and 1995 would have been the pro forma amounts indicated
below:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Net income (loss):
As reported $(423,889) $1,707,505 $1,462,310
Pro forma $(457,372) $1,465,472 $1,449,431
Earnings (losses) per share:
As reported $ (.02) $ .09 $ .08
Pro forma $ (.02) $ .07 $ .08
</TABLE>
For purposes of computing the pro forma amounts above, the Black-Scholes
option-pricing model was used with the following assumptions:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Estimated lives of plan options 4-7 years 2-5 years 3 years
Risk-free interest rates 5.87% - 5.99% 6.0% 5.38%
Expected volatility 76% 80% 80%
Dividend yield None None None
</TABLE>
The weighted-average estimated fair value of options granted during 1997, 1996
and 1995 was $1.17, $1.12 and $0.65, respectively.
There are 400,000 options granted to an executive pursuant to which the
Company will pay the exercise price of $200,000 to the executive in the event
options are exercised.
In addition, the Company has issued warrants to acquire up to 2,000,000 shares
of the Company's common stock at $.55 per share through February 1998 to a
related party for investment advisory services rendered to the Company. In
November 1997, the Company extended these warrants to February 1999 at an
exercise price of $0.61 per share. No expense was recognized as a result of
this extension. These warrants are subject to anti-dilution rights and are
adjustable for stock splits, stock dividends and similar events.
F-15
<PAGE>
9. LEASES
The Company leases its office facilities and certain equipment under various
operating lease agreements some of which contain renewal options. Future
minimum commitments at December 31, 1997 under various noncancelable operating
leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31
-----------
<S> <C>
1998 $ 574,197
1999 485,010
2000 444,062
2001 429,945
2002 267,308
Thereafter 2,850,323
----------
Total minimum lease payments $5,050,845
==========
</TABLE>
Rental expense for all operating leases amounted to $663,427, $452,881 and
$243,359 for the years ended December 31, 1997, 1996 and 1995, respectively.
10. INVESTMENTS
The Company holds a surety bond for the closure/post closure care costs
which required a collateral deposit of $200,000 and $300,000 as of December 31,
1997 and 1996, respectively.
Investments at December 31, 1997 and 1996 consists of the following:
<TABLE>
<CAPTION>
1997 1996
--------------------- --------------------
Amortized Amortized
Cost Fair Value Cost Fair Value
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Available-for-sale investments
U.S. Government securities $236,328 $ 236,328 $ - $ -
======== ========== ======== ========
Held-to-maturity investments
U.S. Government securities $ - $ - $318,000 $271,560
======== ========== ======== ========
</TABLE>
The U.S. Government securities held at December 31, 1997 and 1996 mature in
2016. These investments were classified as held to maturity at December 31,
1996. However, during 1997 the Company received a refund from the surety
company reducing the amount of collateral deposit required. As a result, the
remaining investments were transferred to available for sale during 1997. The
amortized cost of the investments sold and transferred was $100,272 and
$236,328, respectively. Proceeds from the sale of investments was $100,272.
Gross realized gains from the sale of securities classified as available for
sale for the years ended December 31, 1996, and 1995 were $82,913 and $12,149,
respectively. Gross realized gains for the year ended December 31, 1997 were
immaterial.
F-16
<PAGE>
11. UNUSUAL CHARGES
In March 1996 the Company acquired all of the capital stock of NFS, a street
sweeping and roll-off collection company based in Jacksonville, Florida. On
December 31, 1996, the Company filed suit in the United States District Court
for the Middle District of Florida, Jacksonville Division (the "Court"), against
the former shareholders of NFS seeking recission, abrogation and annulment of
the transaction and damages.
During the second quarter of 1997 the Company conducted a review of certain
operating practices of NFS and determined that NFS: (i) had not fully complied
with the performance specifications of its highway and street sweeping
contracts; (ii) had not fully conformed with all applicable requirements in its
disposal of street sweepings; and (iii) is required to continue to perform under
the terms of the highway and street sweeping contracts until their expirations.
In response to these findings the Company implemented certain remedial actions
with respect to the operations of NFS, including additional, and in some
instances multiple, re-sweeps in order to meet the performance standards of the
contracts and rectification of NFS's waste disposal practices.
As a result of the remedial actions taken with respect to the operations of
NFS the Company: (a) estimated and accrued the losses on the sweeping
contracts; and (b) in accordance with Statement of Financial Accounting Standard
No. 121 "Accounting for The Impairment of Long-Lived Assets And For Long-Lived
Assets To Be Disposed Of", concluded that the goodwill associated with the NFS
acquisition is not recoverable. Accordingly, the Company took a charge of
$436,000 to earnings.
Additionally, during the first quarter of 1997, the Company and the City of
St. Augustine, Florida mutually agreed to terminate the existing transfer,
transportation and disposal agreement. In connection with such termination the
Company has agreed to transport and dispose of the solid waste generated from
the City of St. Augustine through October 31, 1997. The Company is no longer
required, however, to construct a permanent transfer station and accordingly,
wrote-off certain design and permitting costs which had been previously
deferred.
All of the above asset write-offs and expenses have been classified as
"Unusual Charges" in the 1997 Consolidated Statement of Operations, and are
summarized as follows:
<TABLE>
<S> <C>
Additional sweeping costs paid $ 68,000
Legal and consulting expenses 282,000
Accrued Loss on sweeping contracts 96,000
Write-off of NFS goodwill 436,000
Write-down of NFS real estate 110,000
Write-off of transfer station development costs 91,000
----------
Total $1,083,000
==========
</TABLE>
The Company settled the suit with the former shareholders of NFS on October 9,
1997. Pursuant to the settlement, on October 14, 1997 the Court entered a
judgment declaring the acquisition of NFS "to be completely abrogated and
annulled, so as to never have had any force and effect whatsoever," including
the merger of NFS and a subsidiary of the Company and the transfer of the
capital stock of NFS to the Company. As part of the settlement, the Company
received a $50,000 cash payment, retained the assets of NFS and canceled
warrants to purchase 75,000 shares of the Company's common stock at an exercise
price of $1.25 which were issued to the NFS shareholders in connection with the
nullified transaction.
12. INCOME TAXES
F-17
<PAGE>
The provision (benefit) for income taxes for 1997, 1996, and 1995 consists
of the following:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Current:
Federal $(100,000) $ 972,000 $130,000
State 175,000 267,000 94,000
--------- ---------- --------
75,000 1,239,000 224,000
--------- ---------- --------
Deferred:
Federal 150,000 32,000 293,000
State 18,000 4,000 30,000
--------- ---------- --------
168,000 36,000 323,000
--------- ---------- --------
Income tax provision $ 243,000 $1,275,000 $547,000
========= ========== ========
</TABLE>
The difference between the actual income tax provision and the tax
provision computed by applying the statutory federal income tax rate to income
before taxes is attributable to the following:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------- ----------------------- -----------------------
AMOUNT PERCENTAGE AMOUNT PERCENTAGE AMOUNT PERCENTAGE
-------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Tax computed using federal
statutory rate $(62,000) (34) $1,015,000 34 $ 703,000 35
Utilization of operating
loss carryforward - - - - (195,000) (10)
State income taxes, net of
federal income tax effect 21,000 12 128,000 4 80,000 4
Other 61,000 33 132,000 5 (41,000) (2)
Goodwill write off 223,000 123 - - - -
-------- --- ---------- -------- --------- ===
$243,000 134 $1,275,000 43 $ 547,000 27
======== === ========== ======== ========= ===
</TABLE>
The components of deferred tax assets and liabilities, as of December 31, 1997
and 1996, were as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Current deferred tax assets:
Reserve for bad debts $ 102,000 $ 64,000
Deferred revenue - 157,000
Other 38,000 -
----------
Total current deferred tax assets 140,000 221,000
========== ==========
Long-term net deferred tax (liabilities) assets:
Depreciation (980,000) (912,000)
Amortization of intangible assets (382,000) (283,000)
State net operating loss carryforward 176,000 84,000
Closure reserves 395,000 361,000
---------- ----------
Total long-term net deferred tax liabilities $ (791,000) $ (750,000)
========== ==========
</TABLE>
The Company has recorded a current deferred tax asset of $140,000 for which
realization is dependent on generating sufficient taxable income. Although
realization is not assured, management believes it is more likely than not that
all of the deferred tax asset will be realized.
F-18
<PAGE>
13. FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Company to
concentrations of credit risk are cash, investments and accounts receivable. The
Company places its cash investments with what management believes to be high-
credit-quality financial institutions and currently invests primarily in U.S.
Treasury mutual funds. Accounts receivable represents amounts from commercial
and residential customers in southern Georgia and northern Florida.
At December 31, 1997, in management's opinion, the Company had no
significant concentration of credit risk.
Fair values of financial instruments is as follows at December 31, 1997 and
1996:
<TABLE>
<CAPTION>
Carrying Value Fair Value
---------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 738,790 $3,058,067 $ 738,790 $3,058,067
Convertible debentures $ - $3,884,265 $ - $5,910,000
Other long-term debt $9,461,959 $3,208,261 $9,674,000 $2,469,000
Accrued royalties $ 730,922 $ 962,061 $ 592,000 $ 771,000
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:
Cash and cash equivalents. The carrying amount approximates fair value
-------------------------
because of the short maturity of those instruments.
Convertible debentures. The fair value is estimated based on the market
----------------------
value of the stock if converted. If the stock price is less than the conversion
price, then the fair value of the instrument is estimated as the present value
of the debt instrument.
Other long-term debt. The fair value is estimated as the net present value
--------------------
of the future cash flows over the term of the loans.
Accrued royalties. The fair value is estimated at the net present value of
-----------------
expected royalty payments.
14. RELATED PARTY TRANSACTIONS
During 1996, the Company became party to an operating lease of office and
warehouse space with a company controlled by a director and an officer of the
Company. The non-cancelable lease expires in 2016 and is adjusted for inflation
on an annual basis. Management believes the rent paid for the office and
warehouse space reasonably approximates fair market cost. The Company incurred
rent expense of approximately $189,000 and $86,000 under this lease during 1997
and 1996, respectively.
15. SUPPLEMENTAL CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash paid for interest $ 589,000 $ 434,000 $202,000
Cash paid for taxes 1,113,000 557,000 62,000
Significant non-cash transactions:
- Stock issued for acquired companies - 6,530,000 -
- Debt assumed from acquired companies 1,002,715 3,504,686 -
- Payable to related party for acquisition 306,037 - -
- Extension of warrants to related party - 240,000 -
- Deferred taxes established on acquired companies - 466,000 -
- Purchase of equipment financed by capital lease 374,000 - 104,000
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- Purchase of vehicles and equipment financed by
notes payable 1,263,000 265,000 -
- Capital expenditures included in year-end accounts
payable but not yet paid 171,000 285,000 -
- Conversion of convertible subordinated debentures 280,000 - -
- Accrued debt issue cost 50,000 - -
</TABLE>
16. COMMITMENTS
The Company has entered into employment agreements with certain of its
executive officers. The agreements contain non-compete clauses ranging from one
to five years after termination of the executive's employment. In consideration
for these clauses, the Company has agreed to pay severance pay based on various
formulas and for certain individuals, to pay premiums for the continuation of
health insurance coverage for four months following termination.
17. SUBSEQUENT EVENTS
During the last quarter of 1997, the Company entered into negotiations to
sell its street sweeping and certain of its rolloff collection assets. During
March 1998 an agreement was finalized with an aggregate sales price of
approximately $709,000 resulting in a loss of approximately $100,000.
Accordingly, in accordance with SFAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of" the Company has
accrued $100,000 to write down the assets to be disposed of to fair value at
December 31, 1997.
18. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
-------- ------- ------------ -----------
1997
<S> <C> <C> <C> <C>
Net revenues $4,877,556 $4,844,636 $4,914,420 $4,760,160
Income (loss) from operations (375,742) 164,015 581,626 96,232
Net (loss) income (507,517) 45,346 214,854 (176,572)
Net (loss) income per share $ (0.02) $ 0.00 $ 0.01 $ (0.01)
1996
Net revenues $2,256,873 $2,981,818 $3,776,099 $4,687,918
Income from operations 754,725 842,390 771,021 342,284
Net income 427,041 573,284 477,063 230,117
Net income per share $ 0.02 $ 0.03 $ 0.03 $ 0.01
</TABLE>
19. NEW PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Both statements are
effective for fiscal years beginning December 15, 1997. The Company has not yet
determined the effect, if any, of these statements on its financial statements.
F-20
<PAGE>
GEOWASTE INCORPORATED AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
Additions
Balance at Charged To
Beginning of Costs and Deductions Other Balance At
Description Year Expenses (1) (2) End of Year
----------- ------------ ---------- --------- ------- --------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Allowance for doubtful
accounts deducted from
asset account $174,000 $299,000 $(204,000) $ 0 $269,000
======== ======== ========= ======= ========
Year ended December 31, 1996:
Allowance for doubtful
accounts deducted from
asset account (3) $ 17,897 $163,129 $ (31,026) $24,000 $174,000
======== ======== ========= ======= ========
Year ended December 31, 1995:
Allowance for doubtful
accounts deducted from
asset account $ 16,356 $ 28,400 $ (26,859) $ 0 $ 17,897
======== ======== ========= ======= ========
</TABLE>
_____________________
(1) Uncollectible accounts written off, net of recoveries.
(2) Acquired from United Sanitation in acquisition.
(3) The year ended December 31, 1996 information has been restated to reflect
actual additions charged to cost and expenses.
F-21
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf of the undersigned, thereunto duly authorized in Jacksonville,
Florida on the 30th day of March, 1998.
GEOWASTE INCORPORATED
By: /s/ Amy C. MacF. Burbott
------------------------
Amy C. MacF. Burbott
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- --------------
<S> <C> <C>
/s/ Amy C. MacF. Burbott President, Chief Executive March 30, 1998
- -------------------------------- Officer & Director
Amy C. MacF. Burbott (Principal Executive Officer)
/s/ Harve A. Ferrill Chairman of the Board March 30, 1998
- --------------------------------
Harve A. Ferrill
/s/ Raymond F. Chase Vice President, Chief March 30, 1998
- -------------------------------- Financial Officer,
Raymond F. Chase Treasurer & Secretary
(Principal Accounting and
Financial Officer)
/s/ Steven M. Engel Director March 30, 1998
- --------------------------------
Steven M. Engel
/s/ Michael D. Paglia Vice President & Director March 30, 1998
- --------------------------------
Michael D. Paglia
</TABLE>
F-22
<PAGE>
/s/ Walter H. Barandiaran Director March 30, 1998
- -------------------------
Walter H. Barandiaran
F-23
<PAGE>
GEOWASTE INCORPORATED
IMPORTANT
FOR INFORMATION REGARDING THE PROCEDURES TO BE FOLLOWED IN CONNECTION WITH
VOTING ON THE MERGER PROPOSAL, SEE "THE SPECIAL MEETING."
The Proxy Solicitor is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(212) 269-5550 (call collect)
or
CALL TOLL FREE (800) 714-3310
ADDITIONAL COPIES
Requests for additional copies of this Proxy Statement/Prospectus or proxies
should be directed to the Proxy Solicitor. You may also contact your broker,
dealer, commercial bank or trust company for assistance concerning the Merger.
