<PAGE>
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
(Amendment No. )
------
Check the appropriate box:
/ / Preliminary Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
/X/ Definitive Information Statement
SUPERIOR SERVICES, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/X/ Fee computed on a table below per Exchange Act Rules 14c-5(g)
and 0-11.
1) Title of each class of securities to which transaction applies: Common
Stock, $.01 par value per share (including the associated Common Stock
Purchase Rights)
2) Aggregate number of securities to which transaction applies: 3,128,643
(including 955,223 subject to outstanding stock options)
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): $27.00
4) Proposed maximum aggregate value of transaction: $84,473,361
5) Total fee paid: $16,895*
/ / Fee paid previously with preliminary materials.
/X/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid: $193,438*
2) Form Schedule or Registration Statement No.: Schedule 14D-1
3) Filing Party: Vivendi and Onyx Solid Waste Acquisition Corp.
4) Date Filed: June 18, 1999
- --------
* The amount previously paid assumed the purchase of 35,821,857 shares of
Common Stock, $.01 par value per share, of Superior Services, Inc. (the
"Company"), including the associated
<PAGE>
Common Stock Purchase Rights (collectively, the "Shares"), 32,365,094 of which
were outstanding as of June 7, 1999 and 3,456,763 of which were then subject to
outstanding options, at $27.00 per Share. As of October 5, 1999 (the record date
for the special meeting), there were 32,488,590 Shares outstanding (representing
30,315,170 Shares purchased by Purchaser and 2,173,420 Shares held by persons
other than Purchaser) and 955,223 Shares subject to outstanding options, which
total number of Shares (including the Shares subject to outstanding options) is
less than the number of Shares for which a filing fee was paid on June 18, 1999
pursuant to the Schedule 14D-1 of Vivendi and Onyx Solid Waste Acquisition Corp.
The total fee with respect to the securities to which this transaction applies
is $16,895, which was previously paid as part of the $193,438 paid in connection
with the June 18, 1999 Schedule 14D-1 filing.
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
Superior Services, Inc.
One Honey Creek Corporate Center
125 South 84th Street, Suite 200
Milwaukee, WI 53214
(414) 479-7800
FAX (414) 479-7400
October 12, 1999
Dear Shareholders:
As announced on June 14, 1999, Superior Services, Inc. (the "Company")
entered into an Agreement and Plan of Merger (the "Merger Agreement"), dated as
of June 11, 1999, with Vivendi, a SOCIETE ANONYME organized under the laws of
France ("Parent"), and Onyx Solid Waste Acquisition Corp., a Wisconsin
corporation and an indirect wholly-owned subsidiary of Parent ("Purchaser"),
which provides for the acquisition of the Company by Parent in two steps. The
first step was a cash tender offer by Purchaser to acquire all of the
outstanding shares of common stock of the Company (including the associated
common stock purchase rights) at $27.00 per share, net to the seller in cash.
The tender offer was completed on July 16, 1999 and Purchaser purchased
approximately 30.3 million shares, or approximately 93% of the Company's issued
and outstanding shares, pursuant to the tender offer. The merger of Purchaser
with and into the Company (the "Merger"), in which the Company will be the
surviving corporation, is the second and final step in the acquisition of the
Company by Parent and is intended to complete the acquisition of any shares of
common stock of the Company not acquired by Purchaser pursuant to the tender
offer. As a result of the Merger, the Company will become an indirect
wholly-owned subsidiary of Parent. In the Merger, each outstanding share of
common stock of the Company (other than shares owned by Parent, Purchaser or any
other subsidiary of Parent, held in the treasury of the Company or owned by any
wholly-owned subsidiary of the Company, and other than shares as to which the
holder has properly exercised dissenters' rights) will be converted into the
right to receive $27.00 in cash, without interest thereon, all as more fully set
forth and described in the accompanying Information Statement and the Merger
Agreement, a copy of which is attached as Annex I to the Information Statement.
On Tuesday, November 9, 1999, a special meeting of shareholders will be held
for the purpose of approving the Merger Agreement. The affirmative vote of a
majority of the aggregate voting power of the outstanding shares of common stock
of the Company will be necessary to approve the Merger Agreement. As a result of
the consummation of Purchaser's tender offer, Purchaser owns and has the right
to vote a sufficient number of outstanding shares such that approval of the
Merger Agreement at the special meeting is assured without the affirmative vote
of any other shareholder.
You are welcome to attend the special meeting; however, you are not being
asked for a proxy and are requested not to send one. The accompanying
Information Statement explains the terms of the Merger. Please read the
accompanying Information Statement carefully.
We appreciate your loyalty and support as a shareholder of our Company in
the past and as we move forward with this transition to new ownership.
Sincerely,
[LOGO]
G. William Dietrich
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
SUPERIOR SERVICES, INC.
125 SOUTH 84(TH) STREET, SUITE 200
MILWAUKEE, WISCONSIN 53214
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 9, 1999
------------------------
TO THE SHAREHOLDERS OF
SUPERIOR SERVICES, INC.
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Special Meeting") of
Shareholders of Superior Services, Inc. (the "Company") will be held on Tuesday,
November 9, 1999, at 4:00 p.m., local time, at the offices of Foley & Lardner,
777 East Wisconsin Avenue, 40(th) Floor, Milwaukee, Wisconsin 53202, for the
following purposes:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Merger, dated as of June 11, 1999 (the "Merger Agreement"), by and
among the Company, Vivendi, a SOCIETE ANONYME organized under the laws of
France ("Parent"), and Onyx Solid Waste Acquisition Corp., a Wisconsin
corporation and an indirect wholly-owned subsidiary of Parent
("Purchaser"). The Merger Agreement provides, among other things, for (i)
the merger of Purchaser with and into the Company (the "Merger"), with
the Company to continue as the surviving corporation, and (ii) the
conversion of all of the issued and outstanding shares of common stock,
$.01 par value per share (the "Common Stock"), of the Company, including
the associated Common Stock Purchase Rights issued pursuant to the Rights
Agreement, dated as of February 21, 1997, as amended, between the Company
and LaSalle Bank National Association (f/k/a LaSalle National Bank), as
Rights Agent (the "Rights" and, together with the Common Stock, the
"Shares") (other than Shares owned by Parent, Purchaser or any other
subsidiary of Parent, held in the treasury of the Company or owned by any
wholly-owned subsidiary of the Company and other than Shares as to which
the holder has properly exercised dissenters' rights) into the right to
receive $27.00 per Share in cash, without interest thereon, all as more
fully described in the accompanying Information Statement and the Merger
Agreement, a copy of which is attached as Annex I to the Information
Statement.
2. To consider and act upon any other business which may be properly
brought before the Special Meeting or any adjournment or postponement
thereof.
Only holders of record of the Shares at the close of business on October 5,
1999 (the "Record Date") will be entitled to receive notice of, and to vote at,
the Special Meeting.
You are cordially invited to attend the Special Meeting; however, proxies
are not being solicited for the Special Meeting. If you wish to vote your
Shares, you or your representative must be present in person at the Special
Meeting.
SHAREHOLDERS AND BENEFICIAL SHAREHOLDERS WILL BE ENTITLED TO ASSERT
DISSENTERS' RIGHTS UNDER SECTIONS 180.1301 THROUGH 180.1331 OF THE WISCONSIN
BUSINESS CORPORATION LAW. SHAREHOLDERS SHOULD READ THE INFORMATION STATEMENT AND
ANNEX IV THERETO FOR A DESCRIPTION OF ALL STATUTORY PROVISIONS RELATED TO
DISSENTERS' RIGHTS.
You should not send any Share certificates at this time. After the Merger is
completed, you will receive a letter of transmittal containing instructions on
where to send your Share certificates.
NEITHER THE COMPANY NOR ITS MANAGEMENT IS SOLICITING YOUR PROXY.
On Behalf of the Board of Directors,
Peter J. Ruud
SENIOR VICE PRESIDENT AND SECRETARY
Milwaukee, Wisconsin
October 12, 1999
<PAGE>
SUPERIOR SERVICES, INC.
125 SOUTH 84(TH) STREET, SUITE 200
MILWAUKEE, WISCONSIN 53214
------------------------
INFORMATION STATEMENT
---------------------
This Information Statement is being furnished to holders of common stock,
$.01 par value per share (the "Common Stock"), of Superior Services, Inc., a
Wisconsin corporation (the "Company"), including the associated Common Stock
Purchase Rights issued pursuant to the Rights Agreement, dated as of February
21, 1997, as amended, between the Company and LaSalle Bank National Association
(f/k/a LaSalle National Bank), as Rights Agent (the "Rights" and, together with
the Common Stock, the "Shares"), in connection with the proposed merger (the
"Merger") of Onyx Solid Waste Acquisition Corp., a Wisconsin corporation
("Purchaser") and an indirect wholly-owned subsidiary of Vivendi, a SOCIETE
ANONYME organized under the laws of France ("Parent"), with and into the Company
as contemplated by that certain Agreement and Plan of Merger, dated as of June
11, 1999, among Parent, Purchaser and the Company (the "Merger Agreement"). The
Merger, in which the Company will be the surviving corporation, is the second
and final step in the acquisition of the Company by Parent. The first step was a
cash tender offer by Purchaser to acquire all outstanding Shares at $27.00 per
Share, net to the seller in cash (the "Offer"). The Offer was completed on July
16, 1999 and Purchaser purchased approximately 30.3 million Shares, or
approximately 93% of the issued and outstanding Shares, pursuant to the Offer.
As a result of the Merger, the Company will become an indirect wholly-owned
subsidiary of Parent. In the Merger, each outstanding Share (other than Shares
owned by Parent, Purchaser or any other subsidiary of Parent, held in the
treasury of the Company or owned by any wholly-owned subsidiary of the Company,
and other than Shares as to which the holder has properly exercised dissenters'
rights) will be converted into the right to receive $27.00 in cash, without
interest thereon. A copy of the Merger Agreement is attached hereto as Annex I.
The Special Meeting of shareholders of the Company (including any and all
adjournments or postponements thereof, the "Special Meeting") will be held on
Tuesday, November 9, 1999, at 4:00 p.m., local time, at the offices of Foley &
Lardner, 777 East Wisconsin Avenue, 40(th) Floor, Milwaukee, Wisconsin 53202.
Shareholders are welcome to attend the Special Meeting; however, proxies are
not being solicited for the Special Meeting. Shareholders who wish to vote their
Shares must be present in person or be represented by a duly authorized
representative at the Special Meeting.
Only holders of record of the Shares at the close of business on October 5,
1999 are entitled to receive notice of, and to vote at, the Special Meeting. On
such date, there were 32,488,590 Shares issued and outstanding. The presence in
person or by proxy of the holders of a majority of the aggregate voting power of
the issued and outstanding Shares will be necessary to constitute a quorum for
the transaction of business at the Special Meeting. The affirmative vote of a
majority of the aggregate voting power of the issued and outstanding Shares will
be necessary to approve the Merger Agreement. Each Share is entitled to one
vote, except that the voting power of Shares held by Parent and Purchaser (other
than Shares acquired directly from the Company) in excess of 20% of the
aggregate voting power of the outstanding Shares is limited to 10% of the full
voting power of such Shares pursuant to Section 180.1150 of the Wisconsin
Business Corporation Law (the "WBCL"). As a result of the consummation of the
Offer, Purchaser owns approximately 93% of the issued and outstanding Shares, or
approximately 80% of the aggregate voting power of the issued and outstanding
Shares, and intends to vote all such Shares in favor of the Merger Agreement.
ACCORDINGLY, THE APPROVAL OF THE MERGER AGREEMENT AT THE SPECIAL MEETING IS
ASSURED WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER SHAREHOLDER.
YOU ARE URGED TO REVIEW THIS INFORMATION STATEMENT CAREFULLY TO DECIDE
WHETHER TO ACCEPT THE $27.00 IN CASH, WITHOUT INTEREST, OR TO EXERCISE
DISSENTER'S RIGHTS UNDER SECTIONS 180.1301 THROUGH 180.1331 OF THE WBCL. SEE
"DISSENTERS' RIGHTS" BELOW AND ANNEX IV ATTACHED HERETO FOR A DESCRIPTION OF ALL
STATUTORY PROVISIONS RELATED TO DISSENTERS' RIGHTS.
This Information Statement is first being mailed to shareholders on or about
October 12, 1999, to the holders of record of the Shares at the close of
business on October 5, 1999.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. PLEASE DO NOT SEND IN ANY SHARE CERTIFICATES AT THIS TIME.
This Information Statement is dated October 12, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SUMMARY.................................................................................................... 1
The Companies.............................................................................................. 1
General.................................................................................................... 1
Procedure for Receipt of Merger Consideration.............................................................. 2
Dissenters' Rights......................................................................................... 2
The Merger................................................................................................. 2
Source and Amount of Funds................................................................................. 3
Selected Financial Information of the Company.............................................................. 3
Price Range of the Shares; Dividends....................................................................... 5
Recent Developments........................................................................................ 5
GENERAL.................................................................................................... 6
THE SPECIAL MEETING........................................................................................ 6
PROCEDURE FOR RECEIPT OF THE MERGER CONSIDERATION.......................................................... 7
Surrender And Payment For Shares........................................................................... 7
Backup Withholding......................................................................................... 8
DISSENTERS' RIGHTS......................................................................................... 8
THE MERGER................................................................................................. 10
Background of the Offer and the Merger..................................................................... 10
Recommendation of the Company Board........................................................................ 13
Opinion of Baird; Financial Advisors....................................................................... 15
Purpose of the Merger...................................................................................... 16
Certain Effects of the Offer and the Merger................................................................ 16
Plans For the Company...................................................................................... 16
Interests of Certain Persons in the Merger................................................................. 16
Certain Federal Income Tax Consequences.................................................................... 22
Accounting Treatment of the Merger......................................................................... 23
Regulatory and Other Approvals............................................................................. 23
CERTAIN INFORMATION CONCERNING THE COMPANY................................................................. 24
CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER........................................................ 26
THE MERGER AGREEMENT....................................................................................... 26
The Offer.................................................................................................. 26
The Merger................................................................................................. 27
Vote Required to Approve the Merger Agreement.............................................................. 27
Conditions to the Merger................................................................................... 27
Directors.................................................................................................. 28
Conduct of Business of the Company......................................................................... 28
No Solicitation............................................................................................ 30
Termination................................................................................................ 31
Fees and Expenses.......................................................................................... 32
THE STOCK OPTION AGREEMENT................................................................................. 33
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SHAREHOLDER TENDER AGREEMENT............................................................................... 34
SOURCE AND AMOUNT OF FUNDS................................................................................. 34
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT................................................... 34
AVAILABLE INFORMATION...................................................................................... 35
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................................................... 36
</TABLE>
<TABLE>
<S> <C>
ANNEXES:
Annex I Agreement and Plan of Merger
Annex II Fairness Opinion of Robert W. Baird & Co. Incorporated
Annex III Directors Designated by Parent
Annex IV Sections 180.1301 through 180.1331 of the
Wisconsin Business Corporation Law
</TABLE>
iii
<PAGE>
SUMMARY
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS INFORMATION STATEMENT, INCLUDING THE ANNEXES HERETO, OR IN THE DOCUMENTS
INCORPORATED HEREIN REFERENCE. REFERENCE IS MADE TO, AND THIS SUMMARY IS
QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED IN THIS
INFORMATION STATEMENT, IN THE ANNEXES HERETO AND THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN. CAPITALIZED TERMS USED IN THIS SUMMARY AND NOT DEFINED HEREIN
HAVE THE MEANINGS ASCRIBED TO THEM ELSEWHERE IN THIS INFORMATION STATEMENT.
SHAREHOLDERS ARE URGED TO READ THIS INFORMATION STATEMENT AND THE ANNEXES HERETO
IN THEIR ENTIRETY.
THE COMPANIES
THE COMPANY. The Company is an acquisition-oriented fully-integrated solid
waste services company providing solid waste collection, transfer, recycling and
disposal services to more than 750,000 residential, commercial and industrial
customers in 12 states. The Company is a Wisconsin corporation with its
principal executive offices at 125 South 84th Street, Suite 200, Milwaukee,
Wisconsin 53214. The telephone number of the Company at such location is (414)
479-7800. For further information concerning the Company, see "Certain
Information Concerning the Company," "Available Information" and "Incorporation
of Certain Information by Reference."
PARENT. Parent is a SOCIETE ANONYME organized under the laws of France.
Through its subsidiaries and affiliates, Parent engages in a variety of
businesses, including water, energy, waste management, construction and
telecommunications. Parent has approximately 235,000 employees, annual sales of
approximately $40 billion and a market capitalization of approximately $41
billion.
PURCHASER. Purchaser is a Wisconsin corporation and an indirect
wholly-owned subsidiary of Parent. To date, Purchaser has engaged in no
activities other than those incident to its formation and the Offer.
The principal offices of Parent are located at 42, Avenue de Friedland,
75380 Paris Cedex 08, France. The telephone number of Parent at such location is
(33) 1-71-71-10-00. The principal offices of Purchaser are located at 800 Third
Avenue, 38th Floor, New York, New York 10022. The telephone number of Purchaser
at such location is (212) 753-2000. For further information concerning Parent
and Purchaser, see "Certain Information Concerning Parent and Purchaser."
GENERAL
This Information Statement is being delivered in connection with the Merger
of Purchaser with and into the Company, with the Company as the surviving
corporation in the Merger (the "Surviving Corporation"). As a result of the
Merger, the Company will become an indirect wholly-owned subsidiary of Parent.
In the Merger, each outstanding Share (other than Shares owned by Parent,
Purchaser or any other subsidiary of Parent, held in the treasury of the Company
or owned by any wholly-owned subsidiary of the Company, and other than Shares as
to which the holder has properly exercised dissenters' rights) will be converted
into the right to receive $27.00 in cash, without interest thereon (the "Merger
Consideration"). A copy of the Merger Agreement is attached hereto as Annex I.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on June 18,
1999 for all outstanding Shares at a price of $27.00 per Share, net to the
seller in cash. The Offer expired at 12:00 midnight, New York City time, on
Friday, July 16, 1999. Pursuant to the Offer, Purchaser purchased approximately
30.3 million Shares. This amount represents approximately 93% of the issued and
outstanding Shares.
1
<PAGE>
PROCEDURE FOR RECEIPT OF MERGER CONSIDERATION
Following the consummation of the Merger, a Letter of Transmittal and
Instructions for use in effecting the surrender of the Shares for payment of the
Merger Consideration will be sent under separate cover to all holders of Shares
outstanding immediately prior to the Merger. The Letter of Transmittal must be
completed as directed and returned with certificates representing Shares. Checks
for the Merger Consideration will be sent to shareholders as soon as practicable
after receipt of the Letter of Transmittal and the certificates. See "Procedure
For Receipt of the Merger Consideration."
DISSENTERS' RIGHTS
Under the WBCL, holders of Shares who do not vote to approve the Merger
Agreement and who otherwise strictly comply with the applicable requirements of
the WBCL have the right to dissent and demand payment in cash of the "fair
value" of their Shares. See "Dissenters' Rights" and Annex IV hereto.
THE MERGER
BACKGROUND TO THE OFFER AND THE MERGER. For a description of events leading
to the approval of the Merger Agreement by the Board of Directors of the Company
(the "Company Board"), see "The Merger--Background of the Offer and the Merger."
APPROVAL OF THE BOARD. On June 11, 1999, the Company Board unanimously
approved the Merger Agreement, the Offer and the Merger and determined that the
terms of the Offer and the Merger are in the best interests of the Company and
its shareholders. Accordingly, the Company Board unanimously recommended that
the Company's shareholders accept the Offer and tender their Shares pursuant
thereto and the Company Board unanimously recommends that the Company's
shareholders approve the Merger Agreement and the transactions contemplated
thereby, including the Merger. See "The Merger--Recommendation of the Company
Board."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Certain existing and former
members of the Company's management and the Company Board (as well as employees
of the Company) have interests in the Merger that are different from, or in
addition to, the interests of the Company's shareholders generally. These
interests relate to, among other things, (i) the acceleration of the
exercisability of outstanding options to purchase Shares and the exchange of
outstanding options for a cash payment and (ii) the terms of certain severance
agreements and/or employment agreements between the Company and certain
executive officers, providing for cash payments and other benefits upon a change
of control of the Company (which would include the Offer and the Merger). See
"The Merger--Interests of Certain Persons in the Merger."
OPINION OF BAIRD. Robert W. Baird & Co. Incorporated ("Baird") acted as one
of the financial advisors to the Company in connection with the Offer and the
Merger and Baird delivered its written opinion, dated as of June 11, 1999, to
the Company that, as of the date of such opinion, the $27.00 per Share cash
consideration to be received by the shareholders of the Company in the Offer and
the Merger was fair, from a financial point of view, to the holders of Shares
(other than Parent and its affiliates). The full text of the Baird's opinion is
set forth in Annex II hereto and is incorporated herein by reference.
Shareholders are urged to read the Baird opinion carefully and in its entirety.
See "The Merger--Opinion of Baird; Financial Advisors" and Annex II hereto.
PURPOSE OF THE MERGER. The purpose of the Merger is to enable Parent,
through Purchaser, to acquire the remaining equity interest in the Company not
currently owned by Purchaser. The first step in the acquisition of the Company
was the Offer by Purchaser to acquire all of the outstanding Shares. The Merger
is intended to complete the acquisition of any Shares not acquired by Purchaser
in the Offer. See "The Merger--Purpose of the Merger."
2
<PAGE>
CONDITIONS TO THE MERGER. The respective obligations of Parent, Purchaser
and the Company to consummate the Merger and the transactions contemplated
thereby are subject to the fulfillment or waiver in whole or in part of certain
conditions, including: (a) the shareholders of the Company shall have duly
approved the Merger Agreement, (b) all filings required to be made prior to the
effective time of the Merger (the "Effective Time") by the Company with, and all
necessary consents, approvals and authorizations required to be obtained prior
to the Effective Time by the Company from, any governmental entity shall have
been made or obtained (as the case may be), except where the failure to so make
or obtain is not reasonably likely to have a Material Adverse Effect on the
Company and (c) no United States or state court or other governmental entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order which is in effect and prohibits consummation of the transactions
contemplated by the Merger Agreement or imposes material restrictions on Parent
or the Company in connection with the consummation of the Merger or with respect
to their business operations which is reasonably likely to have a Material
Adverse Effect. See "The Merger Agreement--Conditions to the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The exchange of Shares for cash
pursuant to the Merger will be a taxable transaction for U.S. federal income tax
purposes and may also be taxable under applicable state, local, foreign or other
tax laws. See "The Merger--Certain Federal Income Tax Consequences."
REGULATORY MATTERS. The waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), terminated on
July 14, 1999. However, certain state solid waste regulatory approvals are
required before the Merger may be consummated. See "The Merger-- Regulatory and
Other Approvals."
SOURCE AND AMOUNT OF FUNDS
Parent and Purchaser have estimated that the total amount of funds required
to purchase all of the outstanding Shares pursuant to the Offer and the Merger
and to pay related fees and expenses will be approximately $1.0 billion. Of such
amount, approximately $819 million was used to purchase Shares pursuant to the
Offer. The funding of the Offer has been, and the funding of the Merger will be,
obtained from Parent's available cash on hand and Parent's available lines of
credit. See "Source and Amount of Funds."
SELECTED FINANCIAL INFORMATION OF THE COMPANY
Set forth below is certain summary consolidated financial information for
the Company's last three fiscal years, as contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, and for the three
months ended June 30, 1998 and June 30, 1999, as contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999. More
comprehensive financial information is included in such reports (including
management's discussion and analysis of financial condition and results of
operations) and other documents filed by the Company with the Securities and
Exchange Commission (the "Commission") and incorporated herein by reference, and
the following summary consolidated financial information is qualified in its
entirety by reference to such reports and such other documents and all the
financial information and notes contained therein. Such reports and other
documents are available for inspection, and copies thereof are obtainable in the
manner set forth below under "Available Information" and "Incorporation of
Certain Documents by Reference."
3
<PAGE>
SUPERIOR SERVICES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
---------------------------------- ----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $ 180,720 $ 253,241 $ 319,673 $ 149,625 $ 179,003
Cost of operations.......................................... 99,150 144,377 184,964 86,704 102,119
Selling, general and administrative expenses................ 30,416 38,458 40,224 19,536 21,751
Merger costs................................................ -- 1,035 10,599 1,858 --
Unusual charges............................................. -- 2,873 -- -- --
Depreciation and amortization............................... 24,389 32,397 39,121 19,271 23,780
---------- ---------- ---------- ---------- ----------
Operating income............................................ 26,765 34,101 44,765 22,256 31,353
Interest expense............................................ (2,617) (3,440) (3,116) (1,925) (2,429)
Other income................................................ 2,069 1,888 912 998 724
---------- ---------- ---------- ---------- ----------
Income before income taxes.................................. 26,217 32,549 42,561 21,329 29,648
Income taxes................................................ (9,814) (12,912) (22,060) (9,363) (12,230)
---------- ---------- ---------- ---------- ----------
Net income.................................................. $ 16,403 $ 19,637 $ 20,501 $ 11,966 $ 17,418
Earnings per share:
Basic....................................................... $ 0.65 $ 0.70 $ 0.64 $ 0.38 $ 0.54
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Diluted..................................................... $ 0.64 $ 0.69 $ 0.63 $ 0.37 $ 0.53
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
------------------------------- --------------------
1996 1997 1998 1998 1999
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................................. $ 23,657 $ 44,955 $ 9,715 $ 12,877 $ 4,447
Property and equipment net................................. 149,226 251,414 312,497 272,085 338,321
Total assets............................................... 256,183 442,855 526,842 457,121 619,489
Long-term debt, net of current maturities.................. 18,815 27,215 66,284 23,398 132,836
Total common shareholders' investment...................... 133,271 285,384 316,742 303,782 334,884
</TABLE>
See Notes to Selected Consolidated Financial Information under "Certain
Information Concerning the Company" below.
4
<PAGE>
PRICE RANGE OF THE SHARES; DIVIDENDS
The Shares are currently is traded on the Nasdaq National Market under the
symbol "SUPR." The following table sets forth the range of high and low sale
prices for the Shares for each of the periods indicated. The prices below may
reflect intraday trading prices and may include intradealer prices without
retail mark up, mark down or commission and may not reflect actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1997
First Quarter............................................... $ 24 $ 17
Second Quarter.............................................. 233/4 201/8
Third Quarter............................................... 29 223/4
Fourth Quarter.............................................. 291/2 207/8
1998
First Quarter............................................... $ 317/8 $ 2411/16
Second Quarter.............................................. 333/8 281/2
Third Quarter............................................... 303/8 247/8
Fourth Quarter.............................................. 271/4 171/4
1999
First Quarter............................................... $ 207/8 $ 131/2
Second Quarter.............................................. 2613/16 161/8
Third Quarter............................................... 273/4 263/8
Fourth Quarter (through October 8, 1999).................... 267/8 263/8
</TABLE>
On June 11, 1999, the last full trading day prior to the public announcement
of the execution of the Merger Agreement by the Company, Parent and Purchaser,
the closing sales price of the Shares on the Nasdaq National Market was $23.75
per Share. On June 17, 1999, the last full trading day prior to the commencement
of the Offer, the closing sales price of the Shares on the Nasdaq National
Market was $26.6875 per Share and on October 8, 1999, the last full trading day
prior to the printing of this Information Statement, the closing sales price of
the Shares on The Nasdaq National Market was $26.50 per Share.
The Company has never paid cash dividends on its Shares. The Merger
Agreement also provides that, without the prior written consent of Parent, the
Company will not declare, set aside or pay any dividend payable in cash, stock
or property with respect to its capital stock.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
RECENT DEVELOPMENTS
On August 5, 1999, the Company and certain of its subsidiaries entered into
purchase and sale agreements with Allied Waste Industries, Inc. ("Allied").
Pursuant to these agreements, certain of the Company's subsidiaries will
purchase certain of Allied's assets with combined reported revenue of
approximately $40 million. These assets include one landfill and three
collection operations in Milwaukee, Wisconsin, Decatur, Illinois and Clarion,
Pennsylvania. The Company's subsidiaries will also purchase from Allied certain
waste services assets with combined reported revenue of approximately $15
million, including collection, transfer and landfill operations in Evansville,
Indiana and St. Louis, Missouri. These agreements also provide that Allied will
purchase certain of the Company's waste services assets with combined reported
revenue of approximately $40 million. These assets, which include four
collection and three landfill operations, are located in Columbus/Mansfield,
Ohio, Uniontown, Pennsylvania, Columbia, Missouri and Hurricane, West Virginia.
Subject to antitrust and other regulatory clearances, these transactions are
expected to close in the fourth quarter of 1999.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
CERTAIN MATTERS DISCUSSED IN THIS INFORMATION STATEMENT ARE "FORWARD-LOOKING
STATEMENTS" INTENDED TO QUALIFY FOR THE SAFE HARBORS 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 COMPANY, PARENT OR PURCHASER
"BELIEVES," "ANTICIPATES," "EXPECTS" OR WORDS OF SIMILAR IMPORT. SIMILARLY,
STATEMENTS THAT DESCRIBE THE COMPANY'S FUTURE PLANS ARE ALSO FORWARD-LOOKING
STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES WHICH ARE EITHER DESCRIBED IN CLOSE PROXIMITY TO SUCH STATEMENTS
OR INCLUDE THE FOLLOWING (I) THE COMPANY'S ABILITY TO MANAGE ITS GROWTH; (II)
THE AVAILABILITY TO THE COMPANY OF ADDITIONAL ACQUISITION OPPORTUNITIES AT
FAVORABLE PRICING LEVELS AND THE ABILITY OF THE COMPANY TO EFFECTIVELY INTEGRATE
ITS EXISTING AND POTENTIAL FUTURE ACQUISITIONS; (III) THE CONTINUING SEASONALITY
OF ITS BUSINESS; AND (IV) COMPETITION FOR BOTH COLLECTION AND DISPOSAL SERVICES
AND ACQUISITIONS. ALL OF THESE FACTORS, OR OTHERS, COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED. SHAREHOLDERS AND OTHER
READERS ARE URGED TO CONSIDER THESE FACTORS CAREFULLY IN EVALUATING THE
FORWARD-LOOKING STATEMENTS AND ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS MADE HEREIN ARE ONLY
MADE AS OF THE DATE OF THIS INFORMATION STATEMENT AND EACH OF THE COMPANY,
PARENT AND PURCHASES UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE SUCH
FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS OR CIRCUMSTANCES.
GENERAL
This Information Statement is being delivered to shareholders of the Company
in connection with the Merger of Purchaser with and into the Company, with the
Company as the Surviving Corporation. As a result of the Merger, the Company
will become an indirect wholly-owned subsidiary of Parent, and each outstanding
Share (other than Shares owned by Parent, Purchaser or any other subsidiary of
Parent, held in the treasury of the Company or owned by any wholly-owned
subsidiary of the Company (which Shares, by virtue of the Merger and without any
action on the part of the holder thereof, shall be canceled and retired without
payment of any consideration therefor and shall cease to exist) and other than
Shares as to which the holder has properly exercised dissenters' rights) will be
converted into the right to receive, without interest, the Merger Consideration.
A copy of the Merger Agreement is attached hereto as Annex I.
The Merger is the second and final step in the acquisition of the Company by
Parent. The first step was a cash tender offer by Purchaser to acquire all of
the outstanding Shares at $27.00 per Share, net to the seller in cash. The Offer
has been completed, and Purchaser has purchased approximately 30.3 million
Shares pursuant to the Offer. This amount represents approximately 93% of the
issued and outstanding Shares. The Merger is intended to complete the
acquisition of any Shares not acquired by Purchaser pursuant to the Offer.
THE SPECIAL MEETING
The Special Meeting will be held on Tuesday, November 9, 1999, at 4:00 p.m.,
local time, at the offices of Foley & Lardner, 777 E. Wisconsin Avenue, 40th
Floor, Milwaukee, Wisconsin 53202, for the purpose of approving the Merger
Agreement.
As of the date of this Information Statement, the Company Board does not
know of any business to be brought before the Special Meeting, and the Company's
By-laws specifically prohibit any other business to be conducted at the Special
Meeting other than as set forth in the Notice of Special Meeting accompanying
this Information Statement.
Only holders of record of Shares outstanding at the close of business on
October 5, 1999 (the "Record Date") are entitled to receive notice of, and to
vote at, the Special Meeting. On the Record Date, there were approximately 527
holders of record, with 32,488,590 Shares issued and outstanding.
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<PAGE>
The presence in person or by proxy of the holders of a majority of the
aggregate voting power of the issued and outstanding Shares will be necessary to
constitute a quorum for the transaction of business at the Special Meeting.
Abstentions and broker non-votes, if any, will be considered present for the
purpose of establishing a quorum. Assuming a quorum is present, the affirmative
vote of a majority of the aggregate voting power of the issued and outstanding
Shares will be necessary to approve the Merger Agreement. In determining whether
the Merger Agreement has received the requisite number of affirmative votes
under Wisconsin law, abstentions and broker non-votes, if any, will have the
same effect as votes cast against approval of the Merger Agreement.
Each Share is entitled to one vote, except that the voting power of Shares
held by Parent and Purchaser (other than Shares acquired directly from the
Company) in excess of 20% of the aggregate voting power of the outstanding
Shares is limited to 10% of the full voting power of such Shares pursuant to
Section 180.1150 of the WBCL. As a result of the consummation of the Offer,
Purchaser owns approximately 93% of the outstanding Shares, or approximately 80%
of the aggregate voting power of the issued and outstanding Shares, and intends
to vote all such Shares in favor of the Merger Agreement. Accordingly, the
approval of the Merger Agreement at the Special Meeting is assured without the
affirmative vote of any other shareholder.
SHAREHOLDERS ARE ENTITLED TO EXERCISE DISSENTERS' RIGHTS UNDER THE WBCL AS A
RESULT OF THE MERGER. SEE "DISSENTERS' RIGHTS" AND ANNEX IV HERETO.
Representatives of Ernst & Young LLP, the Company's independent auditors for
the current year as well as for all years since the Company began operations in
1993, are not expected to be present, make a statement or be available to
respond to appropriate questions at the Special Meeting.
PROCEDURE FOR RECEIPT OF THE MERGER CONSIDERATION
SURRENDER AND PAYMENT FOR SHARES
Parent has appointed ChaseMellon Shareholder Services, L.L.C. to act as
paying agent (the "Paying Agent") under the Merger Agreement. At the Effective
Time of the Merger, Parent will make available or cause to be made available to
the Paying Agent the funds necessary for the Paying Agent to make the payments
due to the holders of outstanding Shares immediately prior to the Effective
Time.
Promptly (but not later than ten business days) after the Effective Time,
the Surviving Corporation will cause to be mailed to each person who was, at the
Effective Time, a holder of record of issued and outstanding Shares a letter of
transmittal (the "Letter of Transmittal") and instructions (the "Instructions")
for use in effecting the surrender of the certificates which, immediately prior
to the Effective Time, represented such Shares (the "Certificates") in exchange
for payment therefor. For a shareholder to validly surrender Shares pursuant to
the Merger, a Certificate for surrendered Shares, together with a properly
completed and duly executed Letter of Transmittal and any other required
documents, must be received by the Paying Agent at one of its addresses set
forth on the Letter of Transmittal. Until surrendered, such Certificates will
represent solely the right to receive the Merger Consideration with respect to
each of the Shares represented thereby. Upon valid surrender to the Paying
Agent, the Surviving Corporation will promptly (but not later than five business
days after receipt of all required documents) cause to be paid to the persons
entitled thereto a check in the amount to which such persons are entitled, after
giving effect to any required tax withholdings. To the extent that amounts are
so withheld, such amounts will be treated for all purposes as having been paid
to the shareholder in respect of whom such deduction and withholding was made by
the Surviving Corporation or the Paying Agent. No interest will be paid or will
accrue on the amount payable upon the surrender of any such Certificate. If
payment is to be made to a person other than the registered holder of the
Certificate surrendered, it will be a condition of such payment that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person
7
<PAGE>
requesting such payment shall pay any transfer or other taxes required by reason
of the payment to a person other than the registered holder of the Certificate
surrendered or establish to the satisfaction of the Surviving Corporation or the
Paying Agent that such tax has been paid or is not applicable. None of the
Paying Agent, the Surviving Corporation or Parent will be liable to any holder
of Certificates formerly representing Shares for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificate has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, posting by such person of a bond
in such reasonable amount as Parent may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
or the Surviving Corporation will cause to be issued in exchange for such lost,
stolen or destroyed Certificate, the Merger Consideration to which the holder is
entitled to receive pursuant to the Merger Agreement.
Pursuant to the Merger Agreement, any portion of the funds made available to
the Paying Agent for the payment of Merger Consideration which remains unclaimed
by the holders of Certificates 180 days following the Effective Time, will be
delivered to Parent or the Surviving Corporation upon demand of Parent, and
thereafter such former shareholders of the Company will be entitled to look to
the Surviving Corporation only as general creditors thereof with respect to the
cash payable upon due surrender of their Certificates.
At the Effective Time, the stock transfer books of the Company will be
closed, and no transfer of Shares will thereafter be made. Subject to any
applicable abandoned property, escheat or similar laws, if, after the Effective
Time, Certificates are presented to the Surviving Corporation for transfer, they
will be canceled and exchanged as described in the preceding paragraphs.
BACKUP WITHHOLDING
In order to avoid "backup withholding" of federal income tax on payments of
cash pursuant to the Merger, a shareholder surrendering Certificates in the
Merger must, unless an exemption applies, provide the Paying Agent with such
shareholder's correct taxpayer identification number ("TIN") on a Substitute
Form W-9 and certify under penalties of perjury that such TIN is correct and
that such shareholder is not subject to backup withholding. If a shareholder
does not provide such shareholder's correct TIN or fails to provide the
certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such shareholder and payment of cash to such shareholder
pursuant to the Merger may be subject to backup withholding of 31%. All
shareholders surrendering Certificates pursuant to the Merger should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to Parent and the Paying Agent). Certain shareholders
(including, among others, certain corporations and certain foreign individuals
and entities) are not subject to backup withholding. Non-corporate foreign
shareholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the Paying
Agent, in order to avoid backup withholding.
DISSENTERS' RIGHTS
Under Sections 180.1301 through 180.1331 of the WBCL, dissenters' rights may
be available to holders and beneficial owners of Shares (each a "Dissenting
Shareholder"), subject to the procedures described therein. Dissenters' rights
permit a shareholder to object to the Merger and demand payment of the "fair
value" of their Shares in cash in connection with the consummation of the
Merger.
Under the WBCL, dissenters' rights are available to shareholders of a
company in a merger if (i) a Wisconsin corporation is a party to the merger,
(ii) shareholder approval of the merger is required
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<PAGE>
under the WBCL and (iii) either the merger is a "business combination" (as
defined in Section 180.1130(3) of the WBCL) or the shares of stock being
converted in the merger are not registered on a national securities exchange or
quoted on the Nasdaq National Market on the record date for notice to the
shareholders of a special meeting to vote on the merger.
If a merger constitutes a "business combination" and dissenters' rights are
available, the "fair value" of shares is determined pursuant to Section
180.1130(9)(a) of the WBCL with reference to the shares' "market value." In the
case of shares quoted on the Nasdaq National Market (as is the case with respect
to the Shares), "fair value" is deemed to be the highest closing sales price per
share reported on the Nasdaq National Market during the 30-day period preceding
the date on which the fair value is determined) or, if no quote is available, as
determined in good faith by the board of directors of the corporation. The "fair
value", as so determined, could be more or less than the value per Share to be
paid pursuant to the Merger.
On the Record Date, the Merger qualified as a "business combination" under
the WBCL and shareholders of the Company therefore have the right to dissent
from the Merger. To receive in cash the fair value of their Shares in lieu of
the Merger Consideration, such Dissenting Shareholders are required to follow
certain procedures set forth in the WBCL. The following is a brief summary of
such procedures, which does not purport to be complete and is qualified in its
entirety by reference to the statutory provisions of the WBCL governing
dissenters' rights. HOLDERS OF SHARES SHOULD READ ANNEX IV HERETO FOR A
DESCRIPTION OF ALL STATUTORY PROVISIONS RELATED TO DISSENTERS' RIGHTS.
Pursuant to Section 180.1321 of the WBCL, any owner or beneficial owner of
Shares desiring to assert dissenters' rights shall do all of the following: (i)
deliver to the Company by mail or by delivery in person to the principal office
of the Company, before the vote to approve the Merger Agreement is taken at the
Special Meeting, written objection to the Merger Agreement which includes such
Dissenting Shareholder's intent to demand payment for such Shares if the
proposed Merger is effectuated and (ii) not vote in favor of the Merger
Agreement. A Dissenting Shareholder who fails to satisfy both (i) and (ii) above
will waive his or her rights under Sections 180.1301 through 1331 of the WBCL
and will not be entitled to payment of the fair value of such Shares by the
Company under such Sections. A Dissenting Shareholder may object to the Merger
Agreement with respect to less than all of his or her Shares. Within ten (10)
days after the Merger Agreement is approved at the Special Meeting, the Company
will deliver a written dissenters' notice to each of its shareholders who has
dissented to the Merger Agreement in accordance with Section 180.1321 of the
WBCL. Upon receipt of such notice, each Dissenting Shareholder has 30 days to
demand payment in writing and surrender the Certificate or Certificates formerly
representing such Shares with respect to which he or she has dissented. A
Dissenting Shareholder who does not demand payment within the designated time
period will waive his or her rights under Sections 180.1301 through 180.1331 of
the WBCL, will not be entitled to payment for his or her Shares under such
Sections and shall be bound by the terms of the Merger Agreement. Upon receipt
of a payment demand or on the day of the consummation of the Merger, whichever
is later, the Company shall pay each Dissenting Shareholder who has demanded
payment the amount that the Company estimates to be the fair value of such
Shares, plus accrued interest. A Dissenting Shareholder who does not agree with
the Company's estimation of the fair value of his or her shares or the amount of
interest due, must notify the Company of his or her estimate within 30 days
after the Company made or offered payment for such Shares. If the Dissenting
Shareholder and the Company cannot agree upon the fair value of the Shares or
amount of interest due, the Company must file a petition in any court of
competent jurisdiction in the county in which its principal office is located,
requesting a finding and determination of the fair value of such Shares and the
accrued interest thereon. If the Company fails to institute such a proceeding
within 60 days after the Dissenting Shareholder notifies the Company of his or
her disagreement, the Company shall pay each of its dissenters whose demand
remains unsettled, the amount demanded by such shareholder.
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THE MERGER
BACKGROUND OF THE OFFER AND THE MERGER
During the summer of 1998, the Company actively pursued a merger-of-equals
business combination with another similarly-sized domestic solid waste services
company and explored other strategic alternatives to maximize shareholder value.
Shortly after such other company announced that it had agreed to be acquired by
another solid waste services company, the Company engaged Deutsche Banc Alex.
Brown ("Alex. Brown") to begin exploring the level of interest that other
domestic solid waste companies might have in acquiring or merging with the
Company. Thereafter, through the fall of 1998, preliminary discussions were held
with a number of potentially interested parties; however, adverse conditions and
stock market valuations for companies in the United States solid waste industry
resulted in those discussions being terminated.
In late January 1999, Alex. Brown, on behalf of the Company, again began
exploring the potential renewed interest of other domestic solid waste companies
in acquiring or merging with the Company. Alex. Brown also began exploring
whether several foreign companies, one of which included Parent, might have an
interest in acquiring the Company.
In mid-February 1999, after being contacted by Alex. Brown, Parent expressed
an interest in exploring a potential acquisition of the Company and entered into
a confidentiality agreement with the Company on March 3, 1999.
On March 5, 1999, the Company's Chief Executive Officer, G. William
Dietrich, and Chief Financial Officer, George K. Farr, together with
representatives from Alex. Brown, met in New York, New York with Parent's
Executive Vice President of its Water and Wastewater Management Division, Henri
Proglio, and other senior officers of Parent, together with Parent's financial
advisor, Lazard Freres, to discuss the Company's business and prospects, as well
as the two companies' respective business philosophies and cultures, as well as
the parties' potential interest in exploring a business combination between the
two companies.
From March 9, 1999 through March 11, 1999, Messrs. Dietrich and Farr visited
several of Parent's facilities and operations in France and, together with a
representative of Alex. Brown, met in Paris, France with Mr. Proglio and other
senior officers of Parent, together with representatives of Lazard Freres, to
further discuss the two companies' business, philosophies and cultures, as well
as the potential benefits of Parent acquiring the Company and facilitating the
Company's business strategy.
On March 18, 1999, Mr. Proglio expressed to Mr. Dietrich Parent's interest
in further pursuing the potential acquisition of the Company. Based on an
indicated price range, Mr. Proglio and Mr. Dietrich agreed to a limited
exclusivity period to permit Parent to conduct a due diligence investigation of
the Company to further determine its level of price interest.
On March 23, 1999, a special meeting of the Company Board was held to
discuss Parent's level of interest in pursuing an acquisition of the Company. At
that meeting, the Company Board discussed the background of Parent and other
potential strategic alternatives that might maximize shareholder value,
including remaining independent and executing its long-term strategic plan,
taking the Company private through a self-tender offer, effecting a substantial
share repurchase program or being acquired by another domestic solid waste
services company. Mr. Dietrich reported on the Company's discussions with other
potential acquirers and the circumstances that appeared to be limiting the
ability of such potential acquirors from actively pursuing an acquisition of the
Company at a price to the Company's shareholders that would reflect the
Company's intrinsic value. At the meeting, the Company's legal counsel, Foley &
Lardner, advised the Company Board with respect to its fiduciary duties in
exploring a potential sale of the Company and evaluating other strategic
alternatives and discussed the terms and conditions of the business combinations
in the solid waste industry.
10
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From late March 1999 through mid-April 1999, representatives of Parent and
its financial advisor, legal counsel and various consultants conducted a due
diligence investigation of the Company. During this period, further discussions
were held on a regular basis between representatives of the Company, Alex. Brown
and Foley & Lardner, on the one hand, and representatives of Parent and its
financial advisor and legal counsel, on the other hand. Additionally, during
this period, Parent's legal counsel and Foley & Lardner negotiated various
non-financial terms and conditions of the proposed form of Merger Agreement
between the Company and Parent.
On April 6, 1999 and April 15, 1999, the Company Board held special meetings
at which it was apprised of the progress of the ongoing investigation of, and
discussions and negotiations with, Parent and its representatives and the
proposed non-financial terms and conditions of the proposed form of Merger
Agreement. At each of these meetings, the Company Board received advice from
Alex. Brown and Foley & Lardner and reviewed drafts and summaries of the
proposed form of Merger Agreement.
Based on the recommendation of Foley & Lardner, on April 7, 1999, the
Company engaged Baird to provide the Company Board with an opinion, independent
from Alex. Brown, the Company's financial advisor, on the fairness, from a
financial point of view, of the consideration to be paid to the holders of
Shares (other than Parent and its affiliates) in the Offer and Merger.
In late April 1999, representatives of Lazard Freres indicated to
representatives of Alex. Brown that Parent would be willing to acquire the
Company for a specified price per Share in cash if the Company's senior
management team agreed to continue to manage the Company after the acquisition.
The Company rejected this indication of interest as being inadequate due to the
price offered and thereafter further discussions ceased between the parties.
On April 30, 1999, the Company Board met to discuss the status of
discussions with Parent. After advising the Company Board that such discussions
had terminated based on the indicated level of price interest from Parent, the
Company's management directed Alex. Brown to re-explore the level of interest
that other potential domestic solid waste service companies may have in
acquiring the Company.
During the first week of May 1999, Messrs. Proglio and Dietrich held several
telephone discussions in which Mr. Proglio reaffirmed Parent's interest in
continuing to pursue an acquisition of the Company. Mr. Proglio indicated that
Parent might be willing to pay a higher price than indicated in late April, if
the Company's senior management team continued to remain with the Company after
any such acquisition and continued to pursue its business strategy.
On May 11, 1999, the Company Board held its regularly scheduled annual Board
of Directors meeting and was provided with a status report from Mr. Dietrich on
his discussions with Parent and Alex. Brown's discussions with other potential
acquirers. The Company Board also discussed and considered other potential
strategic alternatives and received additional advice from Foley & Lardner.
During May 1999, Alex. Brown and Mr. Dietrich held further discussions with
several other potential acquirers of the Company. All parties contacted
indicated that they were either not at that time interested in, or in a position
to consider, acquiring the Company or indicated a level of price interest that
was below $27.00 per Share.
On June 2, 1999, Mr. Proglio telephoned Mr. Dietrich to arrange for a
meeting in New York, New York on June 7, 1999 and on June 4, 1999, Mr. Proglio
telephoned Mr. Dietrich to indicate that Parent's final indication of interest
with respect to acquiring the Company's shares was $27.00 per Share. Mr.
Dietrich indicated that he believed the two parties should meet in New York on
June 7 to hold further discussions on the other material terms and conditions of
the transaction.
On June 7, 1999, Messrs. Dietrich and Farr, as well as Peter J. Ruud, the
Company's Senior Vice President, together with representatives of Alex. Brown
and Foley & Lardner, met with Mr. Proglio and
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other senior officers of Parent and their financial advisor and legal counsel in
New York to discuss the other material terms and conditions of the transaction,
including the proposed terms of employment after the acquisition for Messrs.
Dietrich, Farr, Ruud and the other members of the Company's management team.
Immediately after that meeting, the Company's and Parent's legal counsel
continued to negotiate the remaining terms and conditions of the Merger
Agreement and the ancillary agreements.
On June 8, 1999, Messrs. Dietrich, Farr and Ruud, together with
representatives of Alex. Brown, met in New York with senior officers of Parent
and its financial advisor to allow Parent to conduct an updated financial due
diligence inquiry of the Company and, separately, Foley & Lardner and Parent's
legal counsel continued to negotiate the remaining terms and conditions of the
Merger Agreement, the Stock Option Agreement and the ancillary agreements.
On June 9 and 10, 1999, further discussions and negotiations were held
between the Company, Alex. Brown and Foley & Lardner, on the one hand, and
Parent, its financial advisor and legal counsel, on the other hand, on the final
terms and conditions of the Merger Agreement, the Stock Option Agreement (as
hereinafter defined) and the ancillary agreements.
On June 11, 1999, the Company Board held a special meeting at which it
considered the proposed final terms and conditions of the Offer and the Merger.
At that meeting, Foley & Lardner again reviewed the directors' fiduciary duties
in considering the proposed transaction and the principal terms and conditions
of the proposed transaction, including the principal terms and conditions of the
proposed Merger Agreement, the Stock Option Agreement, the Shareholder Tender
Agreement (as hereinafter defined), the Employment Agreements (as hereinafter
defined) and the matters described under "Interests of Certain Persons in the
Merger" below. Alex. Brown further updated and advised the Company Board on the
results of its discussions with other potential acquirers and the history and
scope of the negotiations with Parent. Baird provided the Company Board with its
opinion that the $27.00 per Share price to be paid to shareholders in the Offer
and the Merger was fair, from a financial point of view, to the holders of
Shares (other than Parent and its affiliates). The Company Board then discussed
the presentations it had received at this and other Board meetings, the drafts
and summaries of the various documents received in advance of the meeting and
further discussed thereat, other strategic alternatives, the terms and
conditions of other business combinations in the solid waste industry deemed
relevant, the scope and history of negotiations and the other matters described
below under "Recommendation of the Company Board." The Company Board then
unanimously approved the Merger Agreement, the Stock Option Agreement and the
Employment Agreements and unanimously recommended that the Company's
shareholders tender their Shares in the Offer and approve the Merger Agreement
and the transactions contemplated thereby, including the Merger and the Charter
Amendment.
On June 11, 1999, the Merger Agreement, the Stock Option Agreement, the
Shareholder Tender Agreement and the Employment Agreements were executed.
On June 14, 1999, the Company and Parent jointly announced the acquisition.
On June 18, 1999, Parent and Purchaser commenced the Offer.
The Offer expired at 12:00 midnight, New York City time, on Friday, July 16,
1999. Pursuant to the Offer, Purchaser purchased 30.3 million Shares, at a price
of $27.00 per Share. As a result of the Offer, Purchaser owns of record
approximately 93% of the issued and outstanding Shares, which includes all the
Shares held by the directors and executive officers of the Company prior to the
Offer.
Following the consummation of the Offer, pursuant to the Merger Agreement,
Joseph P. Tate, Francis J. Podvin, Donald Taylor and Warner C. Frazier resigned
as directors of the Company, the size of the Company Board was reduced to five
members and Henri Proglio, Denis Gasquet and Michel Gourvennec, each an officer
of Parent and/or Purchaser, were appointed to the Company Board to fill the
resulting vacancies. Biographical data for Henri Proglio, Denis Gasquet and
Michel Gourvennec are set forth in Annex III hereto. G. William Dietrich and
Walter G. Winding each remain directors of the Company.
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RECOMMENDATION OF THE COMPANY BOARD
As described under "Background of the Offer and the Merger" above, the
Company Board unanimously approved the Merger Agreement, the Stock Option
Agreement, the Offer and the Merger and determined that the terms of the Offer
and the Merger are in the best interests of the Company and its shareholders.
Accordingly, the Company Board unanimously recommended that the shareholders of
the Company accept the Offer and tender their Shares pursuant thereto and the
Company Board unanimously recommends that the Company's shareholders approve the
Merger Agreement and the transactions contemplated thereby, including the
Merger. In reaching its conclusions and recommendations, the Company Board
considered the following factors:
1. The terms and conditions of the Offer, the Merger Agreement, the Stock
Option Agreement, the Shareholder Tender Agreement and the Employment
Agreements;
2. The financial condition, results of operations, business and prospects
of the Company;
3. The oral opinion of Baird, which was later confirmed in a written
opinion, dated as of June 11, 1999, to the effect that, as of the date of the
opinion, the $27.00 per Share cash consideration to be paid to the Company's
shareholders in the Offer and the Merger was fair, from a financial point of
view, to the holders of Shares (other than Parent and its affiliates). The full
text of Baird's written opinion which sets forth the procedures followed, the
factors considered and the assumptions made by Baird is attached as Annex II
hereto and is incorporated herein by reference. SHAREHOLDERS ARE URGED TO READ
THE OPINION OF BAIRD CAREFULLY AND IN ITS ENTIRETY;
4. The trading history of the Shares since the Company's initial public
stock offering in March 1996, a comparison of that trading history with the
stock trading histories of other companies in the solid waste industry and stock
market indices that were deemed relevant;
5. The general composition and estimated average purchase costs of various
groups of the Company's shareholders and the perceived market "overhang" that
the Company believed existed within a price range that might make it more
difficult for the Shares to trade at a price comparable to the Merger
Consideration (which is the same $27.00 per Share paid in the Offer);
6. A comparison of the historical financial results and present financial
condition of the Company with those of other companies in the solid waste
industry that were deemed relevant;
7. A comparison of the financial terms of the Offer and the Merger with the
financial terms of certain other transactions in the solid waste industry that
were deemed relevant;
8. The current and prospective conditions and trends in the stock market
valuations and ongoing consolidation activity in the solid waste industry and
the anticipated effects of those conditions and trends on the Company and its
shareholders;
9. The fact that, in the view of Alex. Brown and the Company's management,
an extensive search for other potential acquirors of the Company had taken place
and the nature of the responses from, and expressed levels of interest of, such
other third parties who were contacted by or on behalf of the Company regarding
a possible acquisition of, or other business combination with, the Company;
10. The fact that the Chairman of the Company Board, co-founder and largest
shareholder was willing to enter into the Shareholder Tender Agreement with
Parent pursuant to which such shareholder agreed, among other things, to tender
and not withdraw all Shares owned by him pursuant to the Offer;
11. The representation of Parent and Purchaser that they will have and will
make available sufficient funds to consummate the Offer and the Merger and the
fact that the Offer is not subject to a financing condition;
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12. The extensive scope and detail of the negotiating process with Parent
and its advisors that led to the finalization of the Merger Agreement and the
related agreements and the significant progress made in those negotiations for
the benefit of the Company and its shareholders;
13. The likelihood of consummation of the Offer and the Merger and the
limited conditions to consummation of the Offer;
14. The tax impact on the Company's shareholders from their sale of Shares
in the Offer or exchange of Shares pursuant to the Merger;
15. The availability of, and the comparative risks and benefits to the
Company's shareholders from pursuing, other strategic alternatives to maximize
shareholder value, including remaining independent and executing the Company's
long-term strategic plan, going private through a self tender offer transaction
or effecting a substantial share repurchase program;
16. The favorable impact of the acquisition on the Company's non-shareholder
constituencies, including employees, customers and the various communities in
which it operates;
17. The severance payments, employment agreements, treatment of stock
options, benefit plans, rights to indemnification and insurance and other
matters discussed under "Interests of Certain Persons in the Merger" below,
including a cost comparison thereof to other similar costs in certain other
business combinations in the solid waste industry that were deemed relevant;
18. The expected timing of the Merger based on prior receipt of all
necessary state solid waste regulatory approvals;
19. The fact that the Merger Agreement, while prohibiting the Company from
knowingly soliciting or engaging in any negotiations concerning any Acquisition
Proposal (as hereinafter defined), does permit the Company to furnish
information concerning its business, properties or assets to, and enter into
discussions or negotiations with, any third party in response to a written
Superior Proposal (as hereinafter defined), as discussed under "The Merger
Agreement--No Solicitation";
20. The provisions in the Merger Agreement that require the Company to pay
to Parent a termination fee of $26 million and reimburse Parent for its
documented out-of-pocket expenses not to exceed $4 million if the Merger
Agreement is terminated under certain circumstances, which (together with the
Stock Option Agreement and the related total profit cap described under "The
Stock Option Agreement" and paragraph 21 below) the Company Board recognized
would potentially foreclose competing offers at approximately the same price
level as, or at slightly higher levels than, the Offer and the Merger, but,
based in significant part on the advice of both Alex. Brown and Baird, was
within the range of termination fees and profit caps payable in comparable
transactions in the solid waste industry and in other transactions of similar
size and should not be a significant deterrent to competing offers at price
levels somewhat higher than the Offer and the Merger; and
21. In exchange for the Parent agreeing to substantially narrow the
conditions to the Offer, the insistence of Parent on the Company executing the
Stock Option Agreement pursuant to which, among other things, the Company agreed
to grant Parent an irrevocable option to purchase up to 6,440,653 shares at
$23.75 per Share, exercisable in certain circumstances, and subject to a total
profit cap (together with the termination fee and expense reimbursement) of
$31.5 million, which the Company Board recognized would potentially foreclose
any subsequent bidder from being able to effect an acquisition of the Company
accounted for as a pooling-of-interests.
The Company Board did not assign relative weights to the foregoing factors
or determine that any factor was of particular importance. Rather, the Company
Board viewed its position and recommendations as being based on the totality of
the information presented to and considered by it. In addition, individual
members of the Company Board may have given different weight to different
factors.
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The Company Board recognized that, while the consummation of the Offer and
the Merger gives the Company's shareholders the opportunity to realize a premium
over the prices at which the Shares were traded prior to the public announcement
of the Merger and Offer, tendering in the Offer or exchanging Shares in the
Merger would eliminate the opportunity for shareholders to participate in the
potential future growth and profits of the Company.
OPINION OF BAIRD; FINANCIAL ADVISORS
As described under "Background of the Offer and the Merger" and
"Recommendation of the Company Board" above, Baird delivered its oral opinion to
the Company Board on June 11, 1999 (that was later confirmed in a written
opinion dated such date), that, based upon and subject to the matters set forth
therein and as of the date thereof, the $27.00 per Share cash consideration to
be received by the shareholders of the Company in the Offer and the Merger was
fair, from a financial point of view, to the holders of Shares (other than
Parent and its affiliates).
THE FULL TEXT OF BAIRD'S WRITTEN OPINION, WHICH SETS FORTH THE PROCEDURES
FOLLOWED, THE FACTORS CONSIDERED AND THE ASSUMPTIONS MADE BY BAIRD, IS ATTACHED
AS ANNEX II HERETO AND IS INCORPORATED HEREIN BY REFERENCE.
Pursuant to a letter agreement, dated April 7, 1999 (the "Baird Engagement
Letter"), between the Company and Baird, the Company engaged Baird to act as its
financial advisor to evaluate the Offer and to render an opinion as to the
fairness, from a financial point of view, to the Company's shareholders (other
than Parent and its affiliates) of the consideration to be paid in the Offer and
the Merger. Pursuant to the Baird Engagement Letter, the Company will pay Baird
for its services in connection with the Offer and the Merger a fee of $500,000.
In addition, the Company agreed to reimburse Baird up to a maximum of $25,000
(unless approved by the Company) for its reasonable out-of-pocket expenses,
including reasonable fees and expenses of its legal counsel, incurred by Baird
in connection with providing its services pursuant to the Baird Engagement
Letter and to indemnify Baird against certain liabilities, including liabilities
arising under federal securities laws.
The Company retained Baird based on its experience and expertise. Baird, as
part of its investment banking business, is engaged in the evaluation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. In the ordinary course of its business, Baird and
its affiliates may from time to time trade the securities of the Company or
Parent for its own account or the accounts of customers and, accordingly, may at
any time hold long or short positions in such securities.
Pursuant to a letter agreement, dated as of September 2, 1998 (the "Alex.
Brown Engagement Letter"), between the Company and Alex. Brown, the Company
engaged Alex. Brown to act as its exclusive financial advisor to assist in the
negotiation of the Merger Agreement, solicit and review strategic alternatives
to maximize the Company's value and, if requested, to render an opinion
regarding the fairness from a financial point of view of the terms of any
Transaction (as defined in the Alex. Brown Engagement Letter). Pursuant to the
Alex. Brown Engagement Letter, the Company paid Alex. Brown a retainer advisory
fee of $50,000 upon execution of the Alex. Brown Engagement Letter (to be
credited against any transaction fee payment to Alex. Brown) and a transaction
fee, payable upon consummation of a Transaction, equal to 0.70% of the Aggregate
Consideration (as defined in the Alex. Brown Engagement Letter), which will be
approximately $7.1 million in connection with the Offer and the Merger. In
addition, the Company agreed to reimburse Alex. Brown up to a maximum of $35,000
(unless approved by the Company) for its reasonable out-of-pocket expenses,
including reasonable fees and expenses of its legal counsel, incurred by Alex.
Brown in connection with providing its services pursuant to the Alex. Brown
Engagement Letter and to indemnify Alex. Brown against certain liabilities,
including liabilities arising under federal securities laws.
The Company retained Alex. Brown based on its experience and expertise.
Alex. Brown is an internationally recognized investment banking and advisory
firm. Alex. Brown, as part of its investment
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banking business, is continuously engaged in the evaluation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In the ordinary course of its business, Alex. Brown and its affiliates
may actively trade the debt and equity securities of both the Company and Parent
for its and its affiliates' own accounts and for accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
PURPOSE OF THE MERGER
The purpose of the Merger is to enable Parent, through Purchaser, to acquire
the remaining equity interest in the Company not currently owned by Purchaser.
As a result of the Merger, the Company will become an indirect wholly-owned
subsidiary of Parent. The Merger is the second and final step in the acquisition
of the Company by Parent. The Offer was the first step which resulted in
Purchaser owning approximately 93% of the outstanding Shares.
The acquisition of the Company has been structured as a cash tender offer
and a cash merger in order to provide a prompt and orderly transfer of ownership
of the Company from the public shareholders of the Company to Parent. The
purchase of Shares pursuant to the Offer increased the likelihood that the
Merger will be consummated.
CERTAIN EFFECTS OF THE OFFER AND THE MERGER
As a result of the Merger, Parent will own indirectly the entire equity
interest in the Company. Therefore, following the Merger, present holders of
Shares will no longer have an equity interest in the Company and will no longer
share in future earnings and potential growth of the Company, if any. Instead,
each holder of Shares immediately prior to the Effective Time (other than
Parent, Purchaser, any other subsidiary of Parent, the Company or wholly-owned
subsidiary of the Company, and other than holders who have properly exercised
dissenters' rights) will have the right to receive the Merger Consideration to
which such holder is entitled under the Merger Agreement.
Upon completion of the Merger, the Shares will no longer be included on the
Nasdaq National Market and will be deregistered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). The deregistration of the Shares
under the Exchange Act will result in the suspension of the Company's obligation
to file reports pursuant to Section 15(d) thereunder.
PLANS FOR THE COMPANY
Upon the consummation of the Merger, the separate existence of Purchaser
will cease and the Company will continue its existence as the Surviving
Corporation. The Surviving Corporation will retain the name of the Company and,
under the WBCL, will possess all the rights, privileges, immunities, powers,
liabilities and duties of the Company.
Parent plans to continue to operate the Company substantially as the Company
has operated in the past.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain existing and former members of the Company's management and the
Company Board (as well as other employees of the Company) have certain interests
in the Merger that are different from, or in addition to, the interests of the
Company's shareholders generally. The Company Board took these interests into
account in approving the Merger Agreement and the transactions contemplated
thereby.
COMPANY STOCK PLANS
In accordance with the Merger Agreement, the Company has taken all
appropriate actions so that, with respect to certain holders of outstanding
options to purchase Shares (individually, an "Option"
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and collectively, "Options"), on the date the Purchaser irrevocably accepted for
payment Shares tendered pursuant to the Offer (the "Acceptance Date"), and with
respect to all other holders of Options, at the Effective Time, (a) each
outstanding Option granted under the Company's 1993 Incentive Stock Option Plan,
the 1996 Equity Incentive Plan, the 1998 Broad-Based Stock Option Plan, certain
individual nonqualified stock option and employment agreements, the Geowaste
1992 Stock Option Plan and the Geowaste 1996 Stock Option Plan (collectively,
the "Stock Plans"), whether or not then exercisable, were or will be canceled,
as the case may be, and (b) in consideration of such cancellation, the Company
paid or the Surviving Corporation will pay, as the case may be, to such holders
of Options an amount in respect thereof equal to the product of (i) the excess
of $27.00 over the exercise price thereof and (ii) the number of Shares
previously subject thereto.
CERTAIN AGREEMENTS AND PLANS
Parent required, as a material precondition and inducement for Parent and
Purchaser to enter into the Merger Agreement, that the Company modify or
terminate certain existing agreements with affiliates of the Company, as well as
enter into several new arrangements. These arrangements are described below.
EMPLOYMENT AGREEMENTS. The Company, together with Parent, has entered into
new employment agreements (individually, an "Employment Agreement" and
collectively, the "Employment Agreements") with each of G. William Dietrich
(President and Chief Executive Officer of the Company), George K. Farr (Chief
Financial Officer and Treasurer of the Company) and Peter J. Ruud (Senior Vice
President and Secretary of the Company) (individually an "Employee" and
collectively, the "Employees"). Each Employment Agreement became effective on
the Acceptance Date and terminates on December 31, 2003, unless mutually
extended. Pursuant to the terms of the Employment Agreements, each Employee has
the same position, duties and responsibilities as he had immediately prior to
the Acceptance Date. Each employee is being paid an initial base salary equal to
the annual salary payable to the Employee immediately prior to the Acceptance
Date. Each Employee's base salary will be reviewed at least annually and may, in
the discretion of the Company Board, be increased but not decreased, taking into
account any change in the Employee's responsibilities, increases in the cost of
living, performance by the Employee and other pertinent factors. In addition to
the Employees' base salaries, the Employees participate in an annual bonus plan
no less favorable to the Employees than their participation in the Company's
historic Management Incentive Plan (but substituting pre-tax earnings in the
formula for earnings per share and increasing the amount of cash bonus payable
to take into account the fact that Options will not be granted thereunder). The
Employees have been designated as participants in the Company's Long-Term
Performance Award Plan and are entitled to participate in the Company's employee
benefit plans, as in effect on June 11, 1999 or as modified or added to by the
Company thereafter, provided that such benefits shall be no less favorable than
those provided to the Employees prior to the Acceptance Date and provided
further that the Company will provide for the specific continuation of certain
insurance benefits for each Employee. Finally, to the extent practicable, Parent
will endeavor to include the Employees in Parent's equity-based compensation
plans to the extent comparable participation is available to other similarly
situated employees of Parent's non-French subsidiaries.
In addition to the foregoing, Parent and the Company agreed (pursuant to the
terms of the Employment Agreements) to pay, and the Company paid on the
Acceptance Date, all amounts payable to the Employees under the KEESAs (as
hereinafter defined) as if their employment had been terminated, as well as the
present value of certain consulting payments that the Employees would otherwise
have been entitled to as a result of a change in control under the terms of
their prior employment agreements.
Under the terms of the Employment Agreements, in the event any Employee's
employment is terminated by the Company without Cause (as such term is defined
in the Employment Agreements) or if any Employee terminates his employment as a
result of (a) the relocation of the Company's principal offices more than 25
miles from its location immediately prior to the Acceptance Date or the Company
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requires the Employee to be based at any location other than such principal
offices, (b) a breach by the Company of any material provision of the Employment
Agreements which is not cured within five business days following written
notification of such breach or (c) a change in control or sale of the Company or
Parent, the Company is required to pay such Employee an amount equal to (i) the
unpaid base salary due the Employee, the pro-rated approximate amount of the
Employee's annual bonus accrued through the termination date, the amount of any
previously vested benefits and any deferred compensation, any accrued vacation
pay and any reimbursement for expenses incurred but not yet paid; (ii) a lump
sum cash payment equal to the number of years (including fractions thereof)
remaining in the term of the Employee's employment multiplied by the sum of (x)
his then current base salary plus (y) his annual bonus received for the year
prior to the date of his termination; and (iii) a payment under the Long-Term
Performance Award Plan equal to the amount the Employee would have received if
his Retirement Date (as defined therein) was the date of his termination of
employment.
The Employment Agreements also provide that if an Employee terminates his
employment for any reason other than as specified in clauses (a), (b) or (c) of
the immediately preceding paragraph, the Company terminates an Employee's
employment for Cause or employment is terminated as a result of death or
disability, the Employee will be entitled to be paid (a) his current base salary
and accrued annual bonus through the end of the month in which such termination
occurs and (b) if termination is a result of the Employee's death or disability,
an immediate lump sum cash payment equal to the sum of 150% of his prior year's
annual bonus and 150% of his then current base salary.
As part of the Employment Agreements, each Employee has agreed to a two-year
noncompete following the termination of his employment with the Company and a
one-year restriction from hiring or seeking to hire any employee of the Company.
The foregoing is a summary of certain provisions of the Employment
Agreements. This summary is not a complete description of the terms and
conditions of the Employment Agreements and is qualified in its entirety by
reference to the full text of the Employment Agreements, which are incorporated
herein by reference to, and copies of which have been filed with the Commission
as exhibits to, the Schedule 14D-9 filed by the Company on June 18, 1999, and
amended on July 7, 1999 (as so amended, the "Schedule 14D-9").
The Company has also entered into new employment agreements with certain
other members of the Company's management team, including John H. King, Scott S.
Cramer, Philip J. Auld, James M. Dancy, Jr., Paul R. Jenks and Larry E. Goswick,
on terms and conditions substantially similar to the terms and conditions of the
Employment Agreements, except that such employees are subject to a one-year
noncompete following termination of his employment with the Company.
AMENDMENT TO 1999 MANAGEMENT INCENTIVE PLAN. The Company has amended its
1999 Management Incentive Plan (the "MIP") to provide that all eligible
participants in the MIP (including executive officers) who remain employed by
the Company (or a subsidiary of the Company) as of December 31, 1999 ("Eligible
Participants") will receive a bonus amount in cash equal to (a) the amount of
cash and (b) the fair market value of stock options, in each case, which such
person otherwise would have been entitled to receive under the MIP for the year
ending December 31, 1999 (the "Bonus Amount"). The first component of the Bonus
Amount will be (i) calculated based on the financial results of the Company and
its subsidiaries for the six-month period ending June 30, 1999, as compared to
the financial results of the Company and its subsidiaries for the six-month
period ended June 30, 1998, (ii) divided by two and (iii) paid no later than
February 14, 2000. The second component of the Bonus Amount shall be (i)
calculated based on the percentage increase in the "pre-tax earnings" (as
defined in the Company's Long-Term Performance Award Plan) of the Company and
its subsidiaries for the six-month period ending December 31, 1999, as compared
to the pre-tax earnings of the Company and its subsidiaries for the six-month
period ended December, 1998, (ii) divided by two and (iii) paid no later than
February 14, 2000. The fair market value of stock options referred to in the
calculation of the Bonus Amount will be deemed to be one-half of the excess of
(x) the Offer Price over (y) $23.375 per Share (the closing sales price of the
Shares on June 10,
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1999, the last business day preceding the date of the Merger Agreement as
reported by the Nasdaq National Market).
LONG-TERM PERFORMANCE AWARD PLAN. The Company has established a new
Long-Term Performance Award Plan to provide additional incentives and rewards to
certain key employees of the Company after consummation of the Offer and the
Merger. The plan is administered by a committee designated by Parent and the
Chief Executive Officer of the Company (the "Committee") and became effective as
of the Acceptance Date.
If the Company meets its earnings goal, eligible key employees will receive
awards pursuant to the Long-Term Performance Award Plan. The earnings goal is
based on the sum of the Adjusted Pre-Tax Earnings (as defined in the Long-Term
Performance Award Plan) from June 30, 1999 to December 31, 2003. If the earnings
goal is met, $10 million in the aggregate will be distributed to the eligible
key employees (including executive officers); PROVIDED, HOWEVER, that if the
Company exceeds its earnings goal, the amount distributed to the eligible key
employees will be increased, but in no case will be greater than $20 million in
the aggregate. If a key employee's employment terminates prior to December 31,
2003 due to death, retirement, disability, a termination without Cause or a
voluntary termination for Good Reason (as such terms are defined in the
Long-Term Performance Award Plan), he or she shall receive a pro-rated award at
the same time as awards are paid to other participants in the Long-Term
Performance Award Plan. If a key employees' employment is terminated for any
reason other than those listed in the preceding sentence, he or she shall
forfeit his or her award under the Long-Term Performance Award Plan.
The foregoing is a summary of certain provisions of the Long-Term
Performance Award Plan. This summary is not a complete description of the terms
and conditions of the Long-Term Performance Award Plan and is qualified in its
entirety by reference to the full text of the Long-Term Performance Award Plan,
which is incorporated herein by reference to, and a copy of which has been filed
with the Commission as an exhibit to, the Schedule 14D-9.
SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS. The Company had Key Executive
Employment and Severance Agreements, as amended ("KEESAs"), with Joseph P. Tate
(the former Chairman of the Company Board) and with Messrs. Dietrich, Farr and
Ruud. Under the terms of the KEESAs, following a change in control (which
occurred on the Acceptance Date) such officers were entitled to receive
compensation during the officer's employment period following the change in
control at the same rate in effect as of the date such change in control occurs
(subject to increase by the Compensation Committee of the Company Board) and
will be included in the Company's benefit plans available to employees of
comparable status. If during such employment period the officer's employment is
terminated by the Company, other than for "cause" (as defined in the KEESAs), or
if the officer's duties are changed substantially without his written consent
and the officer terminates his employment as a result thereof, or the officer
terminates his employment at any time within 12 months after the change in
control, either voluntarily or as a result of his death or disability, the
officer is entitled to receive a lump sum payment equal to three times the
officer's average annual total compensation for the five years prior to the
change in control. In addition to the foregoing, immediately upon a change in
control all Options held by such officers automatically vest and are cashed out.
In the event the officers are required to pay an excise tax on "excess parachute
payments" received from the Company upon a change in control, the KEESAs provide
that the officers are entitled to receive from the Company an amount necessary
to place the officer in the same after-tax financial position as the officer
would have been in had the officer not incurred such tax. The Acceptance Date
constituted a change in control for purposes of the KEESAs, and Parent and the
Company agreed (pursuant to the Employment Agreements for Messrs. Dietrich, Farr
and Ruud) to pay, and the Company has paid, all amounts payable to these
officers under the KEESAs, on the Acceptance Date, as if their employment had
been terminated.
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Under the terms of the prior employment agreements the Company had with
Messrs. King, Cramer Auld, Dancy, Jenks and Goswick, which were replaced with
new agreements as discussed under "Employment Agreements" above, if any of those
officers were terminated due to a "change in control" (as defined in such
employee's employment agreements) (which occurred on the Acceptance Date) the
terminated officer was entitled to receive a lump sum severance payment equal to
two times his base salary in effect on the effective date of the change in
control. In addition to the foregoing, the prior employment agreements with
Messrs. King and Cramer provided for automatic vesting and cash out of all
Options held by such officers immediately upon a change of control. The
Acceptance Date constituted a change in control for purposes of these employment
agreements, and Parent and the Company accelerated all payments due such
officers under their prior employment agreements as if their employment had been
terminated. As a result thereof, Messrs. King and Cramer received a lump sum
payment on the Acceptance Date equal to all amounts payable to them under their
employment agreements and Messrs. Auld, Dancy, Jenks and Goswick are entitled to
receive, in four equal annual installments commencing on December 31, 2000, the
severance payments provided for under their employment agreements (provided that
no current or future installment is required to be paid if the intended
recipient is not employed by the Company on the date the annual severance
installment is to be made).
Based on the compensation paid to the foregoing executives, the total
amounts paid or payable, as the case may be, to each of Messrs. Tate, Dietrich,
Farr, Ruud, King, Cramer, Auld, Dancy, Jenks and Goswick under their KEESAs or
employment agreements (excluding the value of the Options cashed out or to be
cashed out, as the case may be, and the amount required to be paid under the
KEESAs to satisfy any excise tax on excess parachute payments) are $904,347,
$3,291,093, $1,615,818, $2,254,517, $299,200, $282,000, $352,000, $316,000,
$326,000 and $302,000, respectively.
EMPLOYEE BENEFIT ARRANGEMENTS
Pursuant to the Merger Agreement, Parent agreed that, during the period
commencing at the Effective Time and ending on the first anniversary thereof,
the employees of the Company and its subsidiaries will continue to be provided
with benefits under employee benefits plans (other than plans involving the
issuance of securities of the Company) which in the aggregate are substantially
comparable to those currently provided by the Company and its subsidiaries to
such employees; PROVIDED, HOWEVER, that employees covered by collective
bargaining agreements need not be provided such benefits. Parent also agreed to
cause each employee benefit plan of Parent in which employees of the Company and
its subsidiaries are eligible to participate to take into account for purposes
of eligibility and vesting thereunder the service of such employees with the
Company and its subsidiaries as if such service were with Parent. Such employees
will also be given credit for any deductible or co-payment amounts paid in
respect of the plan year in which the Effective Time occurs, to the extent that,
in the plan year following the Effective Time, they participate in any medical,
health or dental plan of Parent for which deductibles or co-payments are
required. In addition, Parent will cause each medical, health or dental plan of
Parent, in which such employees are eligible to participate after the Effective
Time, to waive (i) any pre-existing condition restriction, eligibility waiting
period and evidence of insurability requirements which was waived under the
terms of any analogous employee benefit plan of the Company immediately prior
the Effective Time or (ii) waiting period limitation which would otherwise be
applicable to an employee on or after the Effective Time to the extent such
employee had satisfied any similar waiting period limitation under an analogous
employee benefit plan of the Company prior to the Effective Time. Finally,
Parent will, and will cause the Surviving Corporation to, timely and fully honor
(without modification) all employee benefit plan obligations to current and
former employees of the Company and its subsidiaries accrued as of the Effective
Time and, to the extent set forth in the Company Reports (as defined in the
Merger Agreement) and the Merger Agreement, all employee severance plans (or
policies), employment agreements and severance agreements in existence on June
11, 1999.
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INDEMNIFICATION AND INSURANCE
The Merger Agreement provides that from and after the Effective Time, Parent
will cause the Surviving Corporation and its subsidiaries (as appropriate) to
indemnify and hold harmless each present and former director and officer of the
Company and its subsidiaries, determined as of the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorneys' fees and disbursements), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that the Company would have been
permitted or required under the WBCL and its Restated Articles of Incorporation
or By-Laws in effect on June 11, 1999 to indemnify such person (and Parent shall
also advance expenses as incurred to the fullest extent permitted or required
under the WBCL, provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
person is not entitled to indemnification under the WBCL, the Company's Restated
Articles of Incorporation or By-Laws in effect on June 11, 1999); PROVIDED that
any determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under the WBCL and the
restated Articles of Incorporation and By-Laws as in effect on June 11, 1999
shall be made by independent counsel mutually selected by the Surviving
Corporation and the person seeking indemnification and otherwise in accordance
with the provisions and procedures set forth in the Company's By-Laws in effect
as of June 11, 1999.
Any Indemnified Party wishing to claim indemnification under the provisions
of the immediately preceding paragraph, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent or the Surviving
Corporation thereof, but the failure to so notify shall not relieve Parent or
the Surviving Corporation of any liability it may have to such Indemnified Party
if such failure does not materially prejudice the indemnifying party and then
only to the extent so materially prejudiced. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) Parent or the Surviving Corporation shall have the right to
assume and control the defense thereof (PROVIDED, that if either does so, then
the standards of conduct set forth under the WBCL shall be irrevocably deemed to
be satisfied by the Indemnified Parties) and Parent shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Parent or the Surviving Corporation elects
not to assume such defense or counsel for the Indemnified Parties advises that,
in such counsel's reasonable judgment, there are material issues that constitute
conflicts of interest between Parent or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Parent or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; PROVIDED, HOWEVER, that Parent shall be obligated to pay
for only one firm of counsel (licensed in such jurisdiction) chosen by them for
all Indemnified Parties in any jurisdiction unless the use of one such counsel
for such Indemnified Parties would present such counsel with a conflict of
interest, (ii) the Indemnified Parties will cooperate in the defense of any such
matter and (iii) Parent shall not be liable for any settlement effected without
its prior written consent; and PROVIDED FURTHER that, in the event Parent or the
Surviving Corporation shall not have assumed such defense, Parent shall not have
any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.
In addition, the Parent and the Surviving Corporation have agreed to
maintain in full effect, without lapse or modification, the Company's existing
officers' and directors' liability insurance ("D&O Insurance") for a period of
six years after the Effective Time, so long as the annual premium therefor
21
<PAGE>
is not in excess of 200% of the last annual premium paid by the Company prior to
June 11, 1999 (the "Current Premium"); PROVIDED, HOWEVER, if the existing D&O
Insurance expires, is terminated or canceled during such six-year period, the
Parent and the Surviving Corporation will use its reasonable best efforts to
obtain as much D&O Insurance as can be obtained for the remainder of such period
for a premium not in excess (on an annualized basis) of 200% of the Current
Premium.
Any rights of an Indemnified Party set forth above are not exclusive of any
other rights an Indemnified Party may have under applicable law.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Merger will be a taxable
transaction for U.S. federal income tax purposes and also may be taxable under
applicable state, local, foreign or other tax laws. Accordingly, a shareholder
who receives cash in exchange for Shares in the Merger (including as a result of
perfecting his or her dissenters' rights under the WBCL) will recognize gain or
loss for federal income tax purposes equal to the difference, if any, between
the amount of cash received and the shareholder's tax basis in the Shares sold
or exchanged. Gain or loss will be determined separately for each block of
Shares (i.e., Shares acquired at the same time and price) exchanged pursuant to
the Merger. Such gain or loss generally will be capital gain or loss if the
Shares disposed of were held as capital assets by the shareholder, and will be
long-term capital gain or loss if the Shares disposed of were held for more than
one year, and will be short-term capital gain or loss if held for one year or
less. Net long-term capital gains are taxed at rates which are less than
ordinary tax rates. Net short-term capital gains are taxed at ordinary tax
rates.
A shareholder (other than certain exempt shareholders including, among
others, certain corporations and certain foreign individuals) that surrenders
Shares in the Merger may be subject to 31% backup withholding unless such
shareholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN. A shareholder that does not
furnish its TIN may be subject to a penalty imposed by the IRS. Each shareholder
should complete and sign the Substitute Form W-9 included as part of the Letter
of Transmittal so as to provide the information and certification necessary to
avoid backup withholding. See "Procedure for Receipt of the Merger
Consideration--Backup Withholding."
If backup withholding applies to a shareholder, the Paying Agent is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is filed with the IRS on a
timely basis. If backup withholding results in an overpayment of tax, a refund
can be obtained by the shareholder upon filing an income tax return on a timely
basis.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Merger without regard to the particular
facts and circumstances of each shareholder of the Company and is based on the
provisions of the Internal Revenue Code of 1986, as amended, Treasury Department
Regulations issued pursuant thereto and published rulings and court decisions in
effect as of the date hereof, all of which are subject to change, possibly with
retroactive effect. Special tax consequences not described herein may be
applicable to certain shareholders subject to special tax treatment (including
insurance companies, tax-exempt organizations, financial institutions or broker
dealers, foreign shareholders and shareholders who have acquired their Shares
pursuant to the exercise of employee stock options or otherwise as
compensation). ALL SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO SPECIFIC TAX EFFECTS APPLICABLE TO THEM OF THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND FOREIGN TAX LAWS.
22
<PAGE>
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for under the "purchase" method of accounting,
whereby the purchase price for the Company will be allocated to the identifiable
assets and liabilities of the Company and its subsidiaries based on their
respective fair values.
REGULATORY AND OTHER APPROVALS
ANTITRUST
The HSR Act provides that certain acquisition transactions may not be
consummated until information has been furnished to the Antitrust Division of
the Department of Justice and to the Pre-merger Notification Office of the
Federal Trade Commission and certain waiting period requirements have been
satisfied. On July 14, 1999, the waiting period requirements under the HSR Act
were satisfied.
EXON-FLORIO
Under Section 721 of Title VII of the United States Defense Production Act
of 1950, as amended by Section 5021 of the Omnibus Trade and Competitiveness Act
of 1988 ("Exon-Florio"), the President of the United States is authorized to
prohibit or suspend acquisitions, mergers or takeovers by foreign persons of
persons engaged in interstate commerce in the United States if the President
determines, after investigation, that such foreign persons in exercising control
of such acquired persons might take action that threatens to impair the national
security of the United States and that other provisions of existing law do not
provide adequate authority to protect national security. Pursuant to
Exon-Florio, notice of an acquisition by a foreign person is to be made to the
Committee on Foreign Investment in the United States ("CFIUS"), which is
comprised of representatives of the Departments of the Treasury, State,
Commerce, Defense and Justice, the Office of Management and Budget, the United
States Trade Representative's Office and the Council of Economic Advisors and
which has been selected by the President to administer Exon-Florio, either
voluntarily by the parties to such proposed acquisition, merger or takeover or
by any member of CFIUS.
A determination that an investigation is called for must be made within 30
days after notification of a proposed acquisition, merger or takeover is first
filed with CFIUS. Any such investigation must be completed within 45 days of
such determination. Any decision by the President to take action must be
announced within 15 days of the completion of the investigation. Although
Exon-Florio does not require the filing of a notification, nor does it prohibit
the consummation of an acquisition, merger or takeover if notification is not
made, such an acquisition, merger or takeover thereafter remains indefinitely
subject to divestment should the President subsequently determine that the
national security of the United States has been threatened or impaired.
Purchaser does not believe that the Offer or the Merger threatens to impair the
national security of the United States and has not, and does not intend to,
notify CFIUS of the proposed transaction.
STATE SOLID WASTE REGULATORY APPROVALS
Parent currently believes that prior to the consummation of the Merger,
state solid waste regulatory approvals are required to be obtained from the
States of New Jersey, Ohio, Pennsylvania and West Virginia in connection with
Parent's acquisition of the Company as a result of the Offer and the Merger.
Depending upon the jurisdiction, these approvals may involve notice filings,
submission of compliance histories and background investigations of the
acquiring company and individuals associated with it. Receipt of such approvals
is a condition to the Merger, except where the failure to obtain such approvals
is not reasonably likely to have a material adverse effect on the Company.
23
<PAGE>
While Purchaser anticipates that it will have made all necessary regulatory
filings prior to the end of 1999, no assurances can be given. In addition, the
Company cannot anticipate when the respective regulatory authorities will
complete any background checks and their review of the filings of Parent and
Purchaser.
OTHER FEDERAL AND STATE STATUTES
Except as described above and except for the filing of Articles of Merger
with the Department of Financial Institutions of the State of Wisconsin to
effectuate the Merger, there are no other federal or state regulatory
requirements which remain to be complied with in order for the Merger to be
consummated in accordance with the terms of the Merger Agreement.
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Wisconsin corporation with its principal executive offices
located at 125 South 84th Street, Suite 200, Milwaukee, Wisconsin. The telephone
number of the Company at such location is (414) 479-7800.
The Company is an acquisition-oriented integrated solid waste services
company providing a range of collection, transfer, transportation, disposal and
recycling services to generators of solid waste and special waste. The Company
provides solid waste collection, transfer, transportation, recycling and
disposal services to over 750,000 residential, commercial and industrial
customers in Alabama, Florida, Georgia, Illinois, Michigan, Minnesota, Missouri,
New Jersey, Ohio, Pennsylvania, West Virginia and Wisconsin. The Company also
provides other integrated waste services, most of which are project-based and
many of which provide additional waste volumes to the Company's landfills and
recycling facilities. As of December 31, 1998, the Company owned and operated 19
landfills (including a greenfield landfill), 45 solid waste collection
operations, 15 recycling facilities and 19 solid waste transfer stations. The
Company also manages four other third-party owned landfills.
Set forth below is certain summary consolidated financial information for
the Company's last three fiscal years, as contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, and for the three
months ended June 30, 1998 and June 30, 1999, as contained in the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1999. More
comprehensive financial information is included in such reports (including
management's discussion and analysis of financial condition and results of
operations) and other documents filed by the Company with the Commission and
incorporated herein by reference, and the following summary consolidated
financial information is qualified in its entirety by reference to such reports
and other documents and all of the financial information and notes contained
therein. Such reports and other documents are available for inspection, and
copies thereof are obtainable in the manner set forth below under "Available
Information."
24
<PAGE>
SUPERIOR SERVICES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,(1) SIX MONTHS ENDED JUNE 30,
---------------------- ----------------------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $ 180,720 $ 253,241 $ 319,673 $ 149,625 $ 179,003
Cost of operations.......................................... 99,150 144,377 184,964 86,704 102,119
Selling, general and administrative expenses................ 30,416 38,458 40,224 19,536 21,751
Merger costs(2)............................................. -- 1,035 10,599 1,858 --
Unusual charges(3).......................................... -- 2,873 -- -- --
Depreciation and amortization............................... 24,389 32,397 39,121 19,271 23,780
---------- ---------- ---------- ---------- ----------
Operating income............................................ 26,765 34,101 44,765 22,256 31,353
Interest expense............................................ (2,617) (3,440) (3,116) (1,925) (2,429)
Other income................................................ 2,069 1,888 912 998 724
---------- ---------- ---------- ---------- ----------
Income before income taxes.................................. 26,217 32,549 42,561 21,329 29,648
Income taxes................................................ (9,814) (12,912) (22,060) (9,363) (12,230)
---------- ---------- ---------- ---------- ----------
Net income.................................................. $ 16,403 $ 19,637 $ 20,501 $ 11,966 $ 17,418
Earnings per share:
Basic..................................................... $ 0.65 $ 0.70 $ 0.64 $ 0.38 $ 0.54
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Diluted(4)................................................ $ 0.64 $ 0.69 $ 0.63 $ 0.37 $ 0.53
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------------------- ----------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 23,657 $ 44,955 $ 9,715 $ 12,877 $ 4,447
Property and equipment net........................... 149,226 251,414 312,497 272,085 338,321
Total assets......................................... 256,183 442,855 526,842 457,121 619,489
Long-term debt, net of current maturities............ 18,815 27,215 66,284 23,398 132,836
Total common shareholders' investment................ 133,271 285,384 316,742 303,782 334,884
</TABLE>
- ------------------------
(1) All financial data for 1996 through 1998 have been restated and give
retroactive effect to reflect the Company's merger with Resource Recovery
Transfer & Transportation, Inc. ("R(2)T(2)") completed on June 27, 1997;
Alabama Waste Services, Inc. and ACMAR Regional Landfill, Inc. (collectively
"AWS") completed on March 31, 1998; South Lake Refuse Service, Inc. and
Commercial Refuse, Inc. (collectively "South Lake") completed on August 17,
1998; Gopher Disposal, Inc., Eagle Environmental, Inc., Materials Recovery,
Ltd., Newport Properties and Watson's Rochester Disposal, Inc. (collectively
"Gopher") completed on August 26, 1998; Wilson Waste Systems, Inc.
("Wilson") completed on August 31, 1998; PenPac, Inc., Heritage Recycling,
Inc., Iorio Carting, Inc., ACS Services, Inc., Recycling Techniques, Inc.,
Advanced Waste Technologies, Inc., Baray, Inc. and Nicholas Enterprises,
Inc. (collectively "PenPac") completed on September 30, 1998; and GeoWaste
Incorporated ("GeoWaste") completed on October 30, 1998, and all accounted
for using the pooling of interests method.
(2) During 1998, the Company incurred nonrecurring merger costs totaling
$10,599,000 in connection with its mergers with TWR, AWS, PenPac, Gopher,
Wilson, South Lake and GeoWaste. These mergers were accounted for as
poolings of interest. In 1997, the Company completed its merger
25
<PAGE>
with R(2)T(2)accounted for as a pooling of interest. The Company incurred
nonrecurring merger costs of $1,035,000 during 1997 as a result of the
merger with R(2)T(2).
(3) Prior to their acquisition by the Company, AWS and GeoWaste incurred charges
classified as unusual. 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, its probation was terminated as a result of the
payment of the fine and its merger with the Company on March 31, 1998.
Additionally, AWS incurred legal fees included in selling, general and
administrative costs of $342,000 during 1997 in connection with this matter.
During 1997, GeoWaste terminated an existing transfer, transportation and
disposal agreement with the City of St. Augustine. Due to the termination of
the agreement, assets related specifically to the project for the City of
St. Augustine were impaired and the related expense of $436,000 was
classified as an unusual charge. Additionally, the Company incurred legal,
consulting and other costs to terminate the agreement of $647,000 which were
classified as unusual charges. These unusual charges amounted to
approximately $0.10 per share in 1997.
(4) The earnings per share excluding the merger costs and unusual charges
described above; excluding cumulative deferred tax provisions for those
companies that were S Corporations prior to acquisition by the Company; and
including Federal and State income tax provisions as if the companies
reported as C Corporations would be $0.75 in 1997 and $0.96 in 1998.
Additional non-financial information regarding the Company is also included
in the Company's Annual Report on Form 10-K for year ended December 31, 1998.
Such report, as well as other documents filed by the Company with the
Commission, are available for inspection and copies thereof should be obtainable
in the manner set forth under "Available Information" and "Incorporation of
Certain Information by Reference."
CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER
Purchaser is a Wisconsin corporation and, to date, has engaged in no
activities other than those incident to its formation and the Offer. Purchaser
is an indirect wholly-owned subsidiary of Parent.
Parent is a SOCIETE ANONYME organized under the laws of France. Through its
subsidiaries and affiliates, Parent engages in a variety of businesses,
including water, energy, waste management, construction and telecommunications.
Parent has approximately 235,000 employees, annual sales of approximately $40
billion and a market capitalization of approximately $41 billion.
The principal offices of Parent are located at 42, Avenue de Friedland,
75380 Paris Cedex 08, France. The telephone number of Parent at such location is
(33) 1-71-71-10-00. The principal offices of Purchaser are located at 800 Third
Avenue, 38(th) Floor, New York, New York 10022. The telephone number of
Purchaser at such location is (212) 753-2000.
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
of the Merger Agreement, which is attached hereto as Annex I and is incorporated
herein by reference. Capitalized terms used but not defined in this summary of
the Merger Agreement have the meanings given to such terms in the Merger
Agreement.
THE OFFER
The Merger Agreement provided for the commencement of the Offer and
Purchaser commenced the Offer on June 18, 1999. The Offer expired at 12:00
midnight, New York City time, on Friday,
26
<PAGE>
July 16, 1999. At such time, Purchaser accepted for payment approximately 30.3
million Shares validly tendered and not withdrawn. This amount represents
approximately 93% of the issued and outstanding Shares.
THE MERGER
The Merger Agreement provides that, subject to the terms and conditions
thereof and in accordance with the applicable provisions of the WBCL, at the
Effective Time, Purchaser will be merged with and into the Company, the separate
corporate existence of Purchaser will thereupon cease and the Company will
continue as the Surviving Corporation. The Merger will be effected by the filing
at the time of Closing of appropriate articles of merger relating to the Merger
with the Department of Financial Institutions of the State of Wisconsin.
The Merger Agreement provides that, at the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares owned by Parent, Purchaser or any other subsidiary of Parent, held in the
treasury of the Company or owned by any wholly-owned subsidiary of the Company
(which Shares, by virtue of the Merger and without any action on the part of the
holder thereof, shall be canceled and retired without the payment of any
consideration therefor and shall cease to exist) and other than Shares as to
which the holder has properly exercised dissenters' rights) will be converted
into the right to receive the Merger Consideration in cash, without interest
thereon, promptly upon surrender of the certificate formerly representing such
Shares. At the Effective Time, each share of common stock, par value $.01 per
share, of Purchaser issued and outstanding immediately prior to the Effective
Time will, by virtue of the Merger and without any action on the part of
Purchaser or the holders thereof, be converted into and become one validly
issued, fully paid and nonassessable (except as provided in Section
180.0622(2)(b) of the WBCL) share of common stock of the Surviving Corporation.
The Merger Agreement provides that the Restated Articles of Incorporation of
the Company in effect immediately prior to the Effective Time will be the
Restated Articles of Incorporation of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and the WBCL,
except that Article II of the Company's Restated Articles of Incorporation will
be amended to reduce the classes and number of authorized shares to 1,000 shares
of Common Stock. The By-Laws of Purchaser in effect at the Effective Time will
be the By-Laws of the Surviving Corporation, until thereafter amended in
accordance with the provisions thereof and the WBCL.
VOTE REQUIRED TO APPROVE THE MERGER AGREEMENT
The Merger Agreement provides that at the Special Meeting, all of the Shares
then owned by Parent, Purchaser and any other subsidiary of Parent will be voted
in favor of the Merger Agreement. Consequently, since Purchaser owns
approximately 80% of the aggregate voting power of the issued and outstanding
Shares (after giving effect to the limitation of voting rights for certain large
shareholders like Purchaser in Section 180.1150 of the WBCL), approval of the
Merger Agreement will be assured without the affirmative vote of any other
shareholder of the Company.
CONDITIONS TO THE MERGER
The respective obligations of Parent, Purchaser and the Company to
consummate the Merger and the transactions contemplated thereby are subject to
the fulfillment or waiver in whole or in part of certain conditions, including:
(a) the shareholders of the Company must approve the Merger Agreement (provided
that Parent and Purchaser shall have voted their Shares at such meeting in favor
of the Merger Agreement); (b) the waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated and all
filings required to be made prior to the Effective Time by the Company with, and
all necessary consents, approvals and authorizations required to be obtained
prior to the Effective Time by the Company from, any Governmental Entity shall
have
27
<PAGE>
been made or obtained (as the case may be), except where the failure to so make
or obtain is not reasonably likely to have a Material Adverse Effect on the
Company; (c) no United States or state court or other Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order which is in effect and prohibits consummation of the transactions
contemplated by the Merger Agreement or imposes material restrictions on Parent
or the Company in connection with the consummation of the Merger or with respect
to their business operations which is reasonably likely to have a Material
Adverse Effect; and (d) Purchaser shall have purchased Shares pursuant to the
Offer.
DIRECTORS
The Merger Agreement provides that if requested by Parent in writing,
promptly following the purchase by Purchaser of Shares pursuant to the Offer,
Parent will be entitled to designate such number of directors, rounded up to the
next whole number, on the Company Board as is equal to the product of the total
number of directors on the Company Board multiplied by the percentage that the
aggregate number of Shares beneficially owned by Purchaser or its affiliates
bears to the total number of Shares then outstanding, and the Company will,
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, promptly take all actions necessary to cause Parent's
designees to be so elected or appointed, including increasing the size of the
Company Board or using its reasonable best efforts to secure the resignations of
one or more existing directors, or both; PROVIDED, HOWEVER, that prior to the
Effective Time, the Company Board shall always have at least two members who are
neither officers, directors, shareholders or designees of Parent or any of its
affiliates ("Parent Insiders"). If, prior to the Effective Time, the number of
directors who are not Parent Insiders is reduced below two for any reason, then
the remaining director who is not a Parent Insider will be entitled to designate
a person (or persons) who is not a Parent Insider or any affiliate of such
Parent Insider to fill such vacancy (or vacancies) and such designee will be
deemed to not be a Parent Insider for all purposes of the Merger Agreement. At
such time, the Company will, if requested by Parent in writing, use its
reasonable best efforts to also cause persons designated by Parent to constitute
the same proportionate representation (as it exists on the Company Board after
giving effect to the foregoing) of each committee of the Company Board, each
board of directors of each subsidiary of the Company and each committee of each
such board (in each case to the extent of the Company's ability to elect such
persons); PROVIDED, HOWEVER, that prior to the Effective Time, each committee of
the Company Board, each board of directors of each subsidiary of the Company and
each committee of each such board shall have at least one member who is not a
Parent Insider. The Company's obligation to appoint Parent's designees to the
Company Board is subject to Section 14(f) of the Exchange Act and Rule 14f-1
thereunder. The Company will promptly take all actions required pursuant to such
Section and Rule in order to fulfill its obligations thereunder. From and after
the election or appointment of Parent's designees and prior to the Effective
Time, any amendment or termination of the Merger Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser or waiver of any of the
Company's rights under the Merger Agreement, will require the affirmative vote
of at least a majority of the directors of the Company then in office who are
not Parent Insiders.
In accordance with the foregoing, following the consummation of the Offer,
Joseph P. Tate, Francis J. Podvin, Donald Taylor and Warner C. Frazier resigned
as directors of the Company, the size of the Company Board was reduced to five
members and Henri Proglio, Denis Gasquet and Michel Gourvennec, each an officer
of Parent and/or Purchaser, were appointed to the Company Board to fill the
resulting vacancies. G. William Dietrich and Walter G. Winding each remain
directors of the Company.
CONDUCT OF BUSINESS OF THE COMPANY
Pursuant to the Merger Agreement, the Company covenanted and agreed, as to
itself and its subsidiaries, that, prior to the Effective Time (unless Parent
shall otherwise agree in writing and except
28
<PAGE>
as otherwise contemplated by the Merger Agreement): (a) the business of the
Company and its subsidiaries shall be conducted only in the ordinary and usual
course and, to the extent consistent therewith, each of the Company and its
subsidiaries will use its reasonable best efforts to preserve its business
organization intact and maintain its existing relations with customers,
suppliers, employees and business associates; (b) the Company will not (i) amend
its Restated Articles of Incorporation or By-Laws or amend, modify or terminate
the Rights Agreement, (ii) split, combine or reclassify the outstanding Shares
or Preferred Shares, or (iii) declare, set aside or pay any dividend payable in
cash, stock or property with respect to the capital stock of the Company; (c)
neither the Company nor any of its subsidiaries will (i) issue, sell, pledge,
dispose of, agree to sell or pledge or encumber any additional shares, or
securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or its subsidiaries or any other property or assets other
than, in the case of the Company, Shares issuable pursuant to Options
outstanding on June 11, 1999 under the Stock Plans, the terms of the Completed
Acquisitions, the terms of the pending acquisitions set forth in Schedule 6.1(b)
of the Merger Agreement or the Stock Option Agreement, (ii) transfer, lease,
license, guarantee, sell, mortgage, pledge, dispose of or encumber any assets or
incur any other liability other than in the ordinary and usual course of
business, (iii) acquire directly or indirectly by redemption or otherwise any
shares of the capital stock of the Company other than pursuant to the terms of
existing acquisition agreements or escrow agreements or (iv) authorize capital
expenditures in excess of $15 million in the aggregate, or make any acquisition
of, or investment in, assets or stock of any other Person or entity with
estimated annualized revenues in excess of $50 million. Notwithstanding any
limitations in (c)(i) through (c)(iv) above, the Company may enter into or
consummate an acquisition proposed by it (a "Proposed Acquisition") if such
acquisition has been approved in writing by Parent, which approval may be
denied, withheld or conditioned in its sole and absolute discretion. Parent
agreed to advise the Company in writing whether it has approved the Proposed
Acquisition within five business days after receipt of information regarding the
Proposed Acquisition that is the same in all material respects as the
information that was provided (whether orally, in writing or otherwise) to the
executive officers of the Company or the Company Board in connection with its
approval of the Proposed Acquisition, including, without limitation, all
material economic and other terms (the "Proposed Terms"). If Parent approves the
Proposed Acquisition, the Company may consummate the Proposed Acquisition on the
Proposed Terms and other customary terms; (d) neither the Company nor any of its
subsidiaries shall grant any severance or termination pay to, or enter into any
employment or severance agreement with any director, officer or other employee
of the Company or such subsidiaries (other than (A) normal scheduled increases
in compensation and (B) entering into customary employment arrangements in the
ordinary and usual course of business with newly hired employees), and neither
the Company nor any of its subsidiaries shall establish, adopt, terminate, enter
into, make any new grants or awards under or amend, any Compensation and Benefit
Plans (other than the MIP and normal scheduled increases in compensation); (e)
neither the Company nor any of its subsidiaries shall settle, negotiate to
settle or compromise any material claims or litigation except for such
settlements or negotiations that are not reasonably likely to have a Material
Adverse Effect; (f) neither the Company nor any of its subsidiaries shall make
any tax election or permit any insurance policy naming it as a beneficiary or a
loss payable payee to be canceled or terminated without notice to Parent, except
in the ordinary and usual course of business; (g) neither the Company nor any of
its subsidiaries shall (i) incur, assume or prepay any long-term debt or incur
or assume any short-term debt, except that the Company and its subsidiaries may
incur or prepay debt in the ordinary and usual course of business in amounts and
for purposes consistent with past practice under existing lines of credit, and
may incur debt in connection with the Completed Acquisitions, but in any event,
such incurrences, assumptions or prepayments may not exceed $75 million in the
aggregate, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any third-party except in the ordinary and usual course of business, (iii)
accelerate or delay collection of notes or accounts receivable in advance of or
beyond their regular due dates or the dates consistent with past practice or
(iv) change any accounting principle, practice or method in a manner that is
inconsistent with past practice, except to the extent
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<PAGE>
required by generally accepted accounting principles as advised by the Company's
regular independent accountants; (h) neither the Company nor any of its
subsidiaries shall, other than in the ordinary and usual course of business or
except as is not reasonably likely to have a Material Adverse Effect, (i)
modify, amend or terminate any contract, (ii) waive, release, relinquish or
assign any contract (or any of the rights of the Company or any of its
subsidiaries thereunder), right or claim, or (iii) cancel or forgive any
indebtedness owed to the Company or any of its subsidiaries; PROVIDED, HOWEVER,
that neither the Company nor any of its subsidiaries may under any circumstances
waive or release any of its rights under any confidentiality agreement to which
it is a party; (i) neither the Company nor any of its subsidiaries shall enter
into any material contract or agreement other than in the ordinary and usual
course of business; (j) neither the Company nor any of its subsidiaries shall,
except as specifically permitted in connection with an Acquisition Proposal (as
hereinafter defined), take or fail to take any action that is reasonably likely
to result in any failure of the conditions to the Offer or any of the conditions
to the Merger set forth in "Conditions to the Merger" above, not being
satisfied, or is reasonably likely to make any representation or warranty of the
Company contained in the Merger Agreement inaccurate in any material respect at,
or as of any time prior to, the Effective Time, or that is reasonably likely to
have a Material Adverse Effect; (k) neither the Company nor any of its
subsidiaries shall adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization;
and (l) neither the Company or any of its subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
NO SOLICITATION
Pursuant to the Merger Agreement, the Company covenanted and agreed with
Parent and Purchaser that neither the Company nor any of its subsidiaries shall,
and that the Company will direct and use its reasonable best efforts to cause
its and its subsidiaries' officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by the Company or any of its subsidiaries
("Representatives")) not to knowingly (a) initiate, solicit or encourage,
directly or indirectly, any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to shareholders of the
Company) from any Person with respect to a merger, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company or any of its subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or (b) engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any Person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal; PROVIDED, HOWEVER, that
nothing shall prevent the Company or the Company Board from complying with Rules
14d-9 and 14e-2 under the Exchange Act, and that prior to the purchase of Shares
pursuant to the Offer (which event has already occurred), the Company and its
Representatives may engage in the actions set forth in clause (b) above if (i)
any Person delivers a bona fide written Acquisition Proposal for which all
necessary financing is then in the judgment of the Board of Directors of the
Company readily obtainable, (ii) the Company enters into a customary
confidentiality agreement with such Person that is no more favorable to such
Person than the Confidentiality Agreement, dated as of March 3, 1999, as amended
as of June 11, 1999, between Parent and the Company (the "Confidentiality
Agreement") (as determined by the Company after consultation with its outside
counsel), (iii) the Company Board determines in good faith by a vote of a
majority of the members of the full Company Board after receipt of advice from
outside legal counsel that such action is necessary in order for its directors
to comply with their respective fiduciary duties under applicable law and (iv)
the Company Board determines in good faith (after consultation with its
financial advisor) that such Acquisition Proposal, if accepted, is reasonably
likely to be consummated (taking into account all legal, financial and
regulatory aspects of the proposal, the Person making the proposal and all other
relevant factors) and would, if consummated, result in a transaction more
favorable to the Company's shareholders from a financial point of view than the
transaction contemplated by the Merger Agreement (any such more favorable
Acquisition Proposal being referred to as a "Superior Proposal").
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<PAGE>
The Merger Agreement also provides that the Company will: (a) immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any Person conducted heretofore with respect to any
Acquisition Proposal; (b) take the necessary steps to inform the Persons
referred to in the first sentence of the immediately preceding paragraph of the
obligations undertaken in such paragraph and in this paragraph; (c) notify
Parent promptly if any such Acquisition Proposal is received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with the Company; (d) further identify the
offeror and furnish to Parent a copy of any such inquiry or proposal, if it is
in writing, or shall inform Parent of the details of any such inquiry or
proposal, if it is oral, and shall promptly advise Parent of any material
development relating to such inquiry or proposal; and (e) promptly request each
Person that has heretofore executed a confidentiality agreement in connection
with its consideration of acquiring the Company to return all confidential
information heretofore furnished to such Person by or on behalf of the Company.
TERMINATION
The Merger Agreement provides that the Merger Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by holders of the Shares:
(a) By the mutual consent of Parent and the Company, by action of their
respective Boards of Directors;
(b) By action of the Board of Directors of either Parent or the Company (in
accordance with the Merger Agreement) if (i) Purchaser shall have terminated the
Offer without purchasing any Shares pursuant thereto in accordance with the
Merger Agreement; (ii) the approval of shareholders required under the terms of
the Merger Agreement shall not have been obtained at a meeting duly convened
therefore (provided Purchaser complied with the requirements regarding such
meeting set forth under the terms of the Merger Agreement); or (iii) any court
of competent jurisdiction or other Governmental Entity located or having
jurisdiction within the United States or the Republic of France, shall have
issued a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Offer or the Merger and such
order, decree, ruling or other action is or shall have become final and
nonappealable and which is reasonably likely to have a Material Adverse Effect
(PROVIDED, HOWEVER, that before invoking its ability to terminate under this
clause (iii), the party invoking this clause (iii) shall use its reasonable best
efforts to prevent, vacate, overturn, repeal or limit any such order, decree,
ruling or other action so that it is not reasonably likely to have a Material
Adverse Effect);
(c) By action of the Board of Directors of Parent, if (i) prior to the
purchase of Shares pursuant to the Offer in accordance with the Merger
Agreement, the Company shall have failed to perform in any respect any of the
covenants or agreements contained in the Merger Agreement to be complied with or
performed by the Company at or prior to such date of termination, which failure
is reasonably likely to have a Material Adverse Effect on the Company and which
failure shall not have been reasonably cured prior to the later of (A) ten
business days following the giving of written notice to the Company of such
failure (provided that Parent and Purchaser shall be required to extend only the
initially scheduled expiration date of the Offer pursuant to this clause) and
(B) two business days prior to the date on which the Offer is then scheduled to
expire, (ii) the Company Board (or a special committee thereof) shall have
amended, withdrawn or modified in a manner adverse to Parent or Purchaser its
approval or recommendation of the Offer, the Merger Agreement or the Merger or
the Company Board shall have failed to reaffirm such approval or recommendation
within two business days of the written request by Parent or Purchaser to do so,
shall have publicly endorsed, approved or recommended any other Acquisition
Proposal or shall have publicly announced it has resolved to do any of the
foregoing or (iii) if the Company or any of the other Persons or entities take
any actions that would be prohibited under the terms of the Merger Agreement
(see "No Solicitation" above) but
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<PAGE>
for an exception therein allowing such actions to be taken if required by
fiduciary obligations under applicable law as advised by outside counsel; or
(d) By action of the Company, (i) if Parent or Purchaser (or another Parent
Company) (A) shall have failed to perform in any respect any of the covenants or
agreements contained in the Merger Agreement to be complied with or performed by
Parent or Purchaser at or prior to such date of termination, and which failure
shall not have been reasonably cured prior to the later of (x) five business
days following the giving of written notice to Parent of such failure and (y)
two business days prior to the date on which the Offer is then scheduled to
expire, or (B) shall have failed to commence the Offer within the time required
under the terms of the Merger Agreement or (ii) if (A) the Company is not in
material breach of any of the terms of the Merger Agreement, (B) the Company
Board authorizes the Company, subject to complying with the terms of the Merger
Agreement, to enter into a binding written agreement concerning a transaction
that constitutes a Superior Proposal and the Company notifies Parent in writing
that it intends to enter into such an agreement, attaching the most current
version of such agreement (which shall include all of the material terms,
including the price proposed to be paid for Shares pursuant thereto) to such
notice, (C) Parent does not make, within three business days of receipt of the
Company's written notification of its intention to enter into a binding
agreement for a Superior Proposal, an offer that the Company Board determines,
in good faith after consultation with its financial advisors, is at least as
favorable, from a financial point of view, to the shareholders of the Company as
the Superior Proposal and (D) the Company, prior to such termination, pays to
Parent in immediately available funds the fees required to be paid as described
in "Fees and Expenses" below.
FEES AND EXPENSES
The Merger Agreement provides that, except as described below, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with the Offer, the Merger Agreement, the Stock Option Agreement and the
transactions contemplated by the Merger Agreement and the Stock Option Agreement
will be paid by the party incurring such expenses. The Merger Agreement also
provides that:
(a) In the event of termination of the Merger Agreement and abandonment of
the Merger in a manner described under "Termination" above, no party to the
Merger Agreement (or any of its directors or officers) shall have any liability
or further obligation to any other party to the Merger Agreement, except as
provided in paragraph (b) below and as otherwise provided in the Merger
Agreement and except that nothing in the Merger Agreement will relieve any party
thereto from liability for any willful breach of the Merger Agreement, PROVIDED,
HOWEVER, that if the Merger Agreement is terminated by Parent pursuant to
subsection (c)(i) under "Termination" above or the Company pursuant to
subsection (d)(i)(A) under "Termination" above, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
(b) If (i)(A) the Offer shall have remained open for a minimum of at least
20 business days, (B) after June 11, 1999 any corporation, partnership, person,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act and
the rules promulgated thereunder) other than Parent or Purchaser or any of their
respective subsidiaries or affiliates (collectively, a "Person") shall have
become the beneficial owner (as defined in Section 13(d) of the Exchange Act and
the rules promulgated thereunder) of 15% or more of the outstanding Shares
(other than for bona fide arbitrage purposes), shall have publicly announced an
Acquisition Proposal or any Person shall have commenced, or shall have publicly
announced an intention to commence, a tender offer or exchange offer for 15% or
more of the outstanding Shares and (C) the Minimum Condition shall not have been
satisfied as of the expiration date of the Offer and the Offer is terminated
without the purchase of any Shares thereunder (which event did not occur), (ii)
Parent shall have terminated the Merger Agreement pursuant to subsection (c)(ii)
or (c)(iii) under "Termination" above or (iii) the Company shall have
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<PAGE>
terminated the Merger Agreement pursuant to subsection (d)(ii) under
"Termination" above, then the Company shall promptly, but in no event later than
two business days after the date of such termination, pay Parent a fee of $26
million (the "Termination Fee"), and shall reimburse Parent and Purchaser (not
later than two business days after written request by Parent or Purchaser to do
so) for all of the out-of-pocket charges and expenses, including financing fees
(which out-of-pocket charges and expenses shall be set forth with reasonable
specificity in written documentation provided to the Company), actually incurred
by Parent or Purchaser through the date of termination in connection with the
Merger Agreement and the transactions contemplated by the Merger Agreement, up
to a maximum amount of $4 million (the "Reimbursement Fee"), in each case
payable by wire transfer in same day funds; PROVIDED, THAT, in the event the
Company shall have terminated the Merger Agreement pursuant to subsection
(d)(ii) under "Termination" above, the Company shall pay the amount due pursuant
to this subsection (b) prior to any such termination. The Company acknowledges
that the agreements contained in this paragraph are an integral part of the
transactions contemplated in the Merger Agreement, and that, without these
agreements, Parent and Purchaser would not enter into the Merger Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant to
this paragraph, and, in order to obtain such payment, Parent or Purchaser
commences a suit which results in a judgment against the Company for the fees
set forth in this paragraph (b), the Company shall pay to Parent or Purchaser
its costs and expenses (including attorneys' fees) in connection with such suit,
together with interest on the amount of the fees at the prime rate of Citibank,
N.A. on the date such payment was required to be made. If Parent or Purchaser,
or the Company, as the case may be, commences a suit against any other party
hereto which suit does not result in a judgment against the other party, the
party commencing such suit shall pay to the other the other party's costs and
expenses (including attorneys' fees) incurred in connection with such suit.
THE STOCK OPTION AGREEMENT
The following is a summary of certain provisions of the Stock Option
Agreement, dated as of June 11, 1999, by and among Parent and the Company (the
"Stock Option Agreement"). This summary is not a complete description of the
terms and conditions of the Stock Option Agreement and is qualified in its
entirety by reference to the full text of the Stock Option Agreement, which is
incorporated herein by reference to, and a copy of which has been filed with the
Commission as an exhibit to, the Schedule 14D-9.
Subject to the terms and conditions set forth in the Stock Option Agreement,
the Company granted to Parent an irrevocable option (the "Stock Option") to
purchase up to 6,440,653 Shares (the "Option Shares") at a purchase price equal
to $23.75 per Share (the closing sales price of the Shares on June 11, 1999, the
last full trading day prior to the public announcement of the execution of the
Merger Agreement). The Stock Option will expire upon the earliest of (a) the
Effective Time, (b) 12 months after the first occurrence of a Purchase Event (as
hereinafter defined) or (c) termination of the Merger Agreement in accordance
with its terms prior to the occurrence of a Purchase Event.
The Stock Option becomes exercisable by Parent after the occurrence of any
event as a result of which Parent is entitled to receive the Termination Fee
pursuant to the terms of the Merger Agreement (a "Purchase Event"). See the "The
Merger Agreement--Termination". Any purchase of Option Shares upon exercise of
the Stock Option is subject to compliance with the HSR Act and any other
necessary regulatory approvals.
The Stock Option Agreement provides that at any time that the Stock Option
is exercisable, Parent may require the Company to pay to Parent, in exchange for
the cancellation of the Stock Option with respect to such number of Option
Shares subject to the Stock Option as Parent specifies, an amount in cash equal
to such number of Option Shares multiplied by the difference between (a) an
average closing price (as determined in the Stock Option Agreement) and (b)
$23.75 per Share.
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<PAGE>
The Stock Option Agreement provides that Parent's total profit arising under
the Stock Option Agreement, the Termination Fee and the Reimbursement Fee will
in no event exceed $31.5 million.
The Stock Option Agreement provides that for a period of two years following
the first exercise of the Stock Option by Parent, Parent will have certain
registration rights in respect of the Option Shares received upon the exercise
of the Stock Option.
SHAREHOLDER TENDER AGREEMENT
The following is a summary of certain terms of the Shareholder Tender
Agreement, dated as of June 11, 1999 (the "Shareholder Tender Agreement"), by
and among Parent, Purchaser and Joseph P. Tate (the "Selling Shareholder"). This
summary is not a complete description of the Shareholder Tender Agreement and is
qualified in its entirety by reference to the full text of the Shareholder
Tender Agreement, which is incorporated herein by reference to, and a copy of
which has been filed with the Commission as an exhibit to, the Schedule 14D-9.
Concurrently with the execution of the Merger Agreement, Parent and
Purchaser entered into the Shareholder Tender Agreement with the Selling
Shareholder with respect to 2,539,931 Shares then beneficially owned by such
Selling Shareholder, representing approximately 8% of the Shares issued and
outstanding on June 11, 1999. Pursuant to the terms and subject to the
conditions of the Shareholder Tender Agreement, the Selling Shareholder validly
tendered in the Offer and did not withdraw all Shares then beneficially owned by
him and any additional Shares with respect to which the Selling Shareholder
became the beneficial owner (whether by purchase, including, without limitation,
by the exercise of options, or otherwise) after June 11, 1999 (collectively, the
"Selling Shareholder's Shares").
Subject to Purchaser's performance in full of each of its obligations in the
Shareholder Tender Agreement, the Selling Shareholder agreed that, until the
Effective Time or the termination of the Merger Agreement, he will not, nor will
he permit any of his investment bankers, financial advisors, attorneys,
accountants or other representatives or agents, to directly or indirectly, (a)
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any Acquisition Proposal or (b) engage in any negotiations concerning,
or provide any confidential information or data to, or have any discussions
with, any person relating to, an Acquisition Proposal, or otherwise facilitate
any effort or attempt to make or implement an Acquisition Proposal.
SOURCE AND AMOUNT OF FUNDS
Parent and the Purchaser estimate that the total amount of funds required to
purchase all of the outstanding Shares pursuant to the Offer and the Merger and
to pay related fees and expenses will be approximately $1.0 billion. Of such
amount, approximately $819 million was used to purchase Shares tendered pursuant
to the Offer. Purchaser has and will obtain the remaining necessary funds from
Parent by means of capital contributions, loans or a combination thereof. Parent
has and will obtain such funds for such capital contributions or loans from
available cash on hand and the issuance by Parent of commercial paper secured by
its outstanding credit facilities.
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of the Record Date
with respect to the beneficial ownership of Shares by (a) all persons or
entities known to the Company to be the beneficial owner of five percent or more
of the Shares; (b) each executive officer of the Company named in the Summary
Compensation Table set forth in the Company's Proxy Statement, dated April 2,
1999, relating to its 1999 Annual Meeting of Shareholders held on May 11, 1999;
(c) each of the current directors of the Company; and (d) all executive officers
and directors of the Company as a group. Unless otherwise noted, each person has
sole investment and voting power with respect to the shares
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<PAGE>
indicated (subject to applicable marital property laws). According to
information available to the Company as of the Record Date, all current
executive officers of the Company and all directors of the Company prior to the
consummation of the Offer tendered their Shares (other than any Shares issuable
upon the exercise of stock options, which they are deemed to beneficially own)
pursuant to the Offer.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
- ------------------------------------------------------------------------------------------- ------------ -----------
<S> <C> <C>
Parent and Purchaser....................................................................... 30,315,170 93.3%
Henri Proglio(1)........................................................................... 30,315,170 93.3
Denis Gasquet(1)........................................................................... 30,315,170 93.3
Michel Gourvennec(1)....................................................................... 30,315,170 93.3
G. William Dietrich........................................................................ 0 0.0
George K. Farr............................................................................. 0 0.0
Walter G. Winding(2)....................................................................... 32,500 *
Gary Blacktopp............................................................................. 0 0.0
John King.................................................................................. 0 0.0
Scott Cramer............................................................................... 0 0.0
Paul M. Burke(3)........................................................................... 1,915,658 5.9
All executive officers and directors as a group (8 persons)(1)(2).......................... 30,527,670 93.4
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) Messrs. Proglio, Gasquet and Gourvennec, as officers of Parent and/or
Purchaser, may be deemed to beneficially own the Shares owned by Parent and
Purchaser. Each of these individuals disclaims beneficial ownership of such
Shares.
(2) The Shares listed for Mr. Winding are subject to acquisition upon the
exercise of stock options currently exercisable. The Shares listed for all
executive officers and directors as a group include 212,500 Shares subject
to acquisition upon exercise of stock options currently exercisable or
exercisable within 60 days of the Record Date. See "The Merger--Interests of
Certain Persons in the Merger--Company Stock Plans."
(3) Address is 2806 Juniper Hill Court, Louisville, Kentucky 40206. The
information with respect to Mr. Burke is as of February 12, 1999, as
reported by Mr. Burke in his Schedule 13G/A dated February 10, 1999.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Commission. The Tender Offer Statement and Schedule 14D-1,
as amended, filed by Parent and Purchaser in connection with the Offer and the
Schedule 14D-9 filed by the Company in connection with the Offer, as well as
such reports, proxy statements and other information filed by the Company, can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the regional offices of the Commission located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition, such reports, proxy statements and other
information concerning the Company can be inspected at the offices of the Nasdaq
National Market, 1735 K Street, NW, Washington, D.C. 20006.
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In addition, the Commission maintains a Web site that includes reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such Web site is
http://www.sec.gov.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company (under File No. 0-27508) with
the Commission pursuant to the Exchange Act are incorporated herein by
reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1998.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1999 and June 30, 1999.
3. The Company's Current Reports on Form 8-K, as amended, dated June 11, 1999
and July 16, 1999.
All other documents and reports filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this Information Statement and prior to the date of the Special
Meeting shall be deemed to be incorporated herein by reference in this
Information Statement and to be part hereof from the date of filing of such
documents or reports. Any statement contained herein or in a document all or a
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Information Statement to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Information Statement.
THIS INFORMATION STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE)
ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO
WHOM THIS INFORMATION STATEMENT IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST
OF SUCH PERSON. REQUESTS SHOULD BE DIRECTED TO SUPERIOR SERVICES, INC., 125
SOUTH 84(TH) STREET, SUITE 200, MILWAUKEE, WISCONSIN 53214, ATTENTION: PETER J.
RUUD (TELEPHONE NUMBER (414) 479-7800).
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ANNEX I
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "AGREEMENT"), dated as
of June 11, 1999, among SUPERIOR SERVICES, INC., a Wisconsin corporation (the
"COMPANY"), VIVENDI, a SOCIETE ANONYME organized under the laws of France
("PURCHASER"), and ONYX SOLID WASTE ACQUISITION CORP., a Wisconsin corporation
and an indirect wholly-owned subsidiary of Purchaser ("MERGER SUB"). The Company
and Merger Sub are sometimes hereinafter collectively referred to as the
"CONSTITUENT CORPORATIONS".
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each have
determined that it is in the best interests of their respective shareholders for
Purchaser to acquire the Company upon the terms and subject to the conditions
set forth herein; and
WHEREAS, pursuant to this Agreement, Merger Sub has agreed to commence a
tender offer (as it may be amended as permitted under this Agreement, the
"OFFER") to purchase all of the outstanding shares of the Company's common
stock, par value $.01 per share (the "COMMON STOCK"), including the associated
common stock purchase rights (the "RIGHTS") issued pursuant to the Rights
Agreement (including as amended pursuant to this Agreement) (the "RIGHTS
AGREEMENT"), dated as of February 21, 1997, between the Company and LaSalle
National Bank, as Rights Agent (the Common Stock, together with the Rights, are
hereinafter referred to as the "SHARES"), at a price per Share of $27.00 in cash
net to the seller (such price, or any higher price per Share paid in the Offer,
the "OFFER PRICE"); and
WHEREAS, the Board of Directors of the Company (the "COMPANY BOARD") has (i)
approved the Offer and (ii) approved and adopted this Agreement and is
recommending that the Company's shareholders accept the Offer, tender their
Shares to Merger Sub and approve this Agreement; and
WHEREAS, each of the Board of Directors of Merger Sub and the Company Board
have approved and adopted the merger and the sole shareholder of Merger Sub has
approved the merger of Merger Sub with and into the Company, as set forth below,
in accordance with the Wisconsin Business Corporation Law (the "WBCL") and upon
the terms and subject to the conditions set forth in this Agreement, whereby
each issued and outstanding Share not owned directly or indirectly by Purchaser,
Merger Sub or the Company will be converted into the right to receive the Offer
Price in cash; and
WHEREAS, to induce Purchaser to enter into this Agreement, the Company has
entered into a Stock Option Agreement dated as of the date of this Agreement
with Purchaser (the "STOCK OPTION AGREEMENT"), pursuant to which the Company
will grant to Purchaser an option to purchase Shares pursuant to the terms and
conditions set forth in the Stock Option Agreement; and
WHEREAS, as a condition and inducement to Purchaser's and Merger Sub's
willingness to enter into this Agreement, the individuals set forth on Annex B
have agreed to enter into and deliver the Employment Agreements attached as
Annex B-1 hereto; and
WHEREAS, as a condition and inducement to Purchaser's and Merger Sub's
willingness to enter into this Agreement, Purchaser and one shareholder of the
Company are simultaneously entering into a Shareholder Tender Agreement; and
WHEREAS, the Company, Purchaser and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
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NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein and in
the Stock Option Agreement the parties hereto hereby agree as follows:
ARTICLE I
THE TENDER OFFER
1.1. TENDER OFFER. (a) Provided that this Agreement shall not have been
terminated in accordance with Article IX hereof, within five business days of
the date hereof, Purchaser shall cause Merger Sub to, and Merger Sub shall,
commence (within the meaning of Rule 14d-2(a) promulgated under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) the Offer (for all
outstanding Shares), subject only to the satisfaction or waiver of the
conditions set forth in Annex A hereto (the "OFFER CONDITIONS") and will file
with the SEC (as defined below) all necessary documents (including the Offer
Documents, as defined in Section 1.1(c)) in connection with the Offer. The
initial expiration date of the Offer shall be the date twenty business days from
and including the date (the "COMMENCEMENT DATE") the Offer Documents are first
filed with the Securities and Exchange Commission (the "SEC"). Purchaser and
Merger Sub expressly reserve the right, in their sole discretion, to waive any
condition (other than the Minimum Condition, as defined in the Offer Conditions
(except that the Minimum Condition may be reduced as contemplated by this
Agreement)) and to set forth or change any other term and condition of the
Offer; PROVIDED, that, unless previously approved by the Company in writing
(which approval may be denied, withheld or conditioned in its discretion for any
reason), no provision may be set forth or changed which (i) decreases the Offer
Price; (ii) changes the form of consideration payable in the Offer (other than
by adding consideration); (iii) reduces the maximum number of Shares sought to
be purchased in the Offer; (iv) imposes conditions to the Offer in addition to
the Offer Conditions; or (v) amends or modifies any term or condition of the
Offer in a manner adverse to the holders of Shares. Merger Sub covenants and
agrees that, subject to the terms and conditions of the Offer, including but not
limited to the Offer Conditions, it will accept for payment and pay for Shares
as soon as practicable after the expiration date of the Offer. Notwithstanding
the foregoing, Purchaser shall cause Merger Sub to, and Merger Sub shall, extend
the Offer for at least an additional five business days if, on the initially
scheduled expiration date of the Offer, the Shares validly tendered and not
withdrawn pursuant to the Offer constitute at least 50%, but less than 61%, of
the then outstanding Shares (determined on a fully-diluted basis, but excluding
Shares subject to the option granted under the Stock Option Agreement) and all
other Offer Conditions are satisfied or waived. In addition, and without
limiting the foregoing, if, on the initially scheduled expiration date of the
Offer, the Shares validly tendered and not withdrawn pursuant to the Offer
constitute at least 61% of the then outstanding Shares (determined on a
fully-diluted basis, but excluding Shares subject to the option granted under
the Stock Option Agreement) but are not sufficient to satisfy the Minimum
Condition (the "TENDERED AMOUNT") and all other Offer Conditions are satisfied
or waived, Purchaser shall cause Merger Sub to, and Merger Sub shall, reduce the
Minimum Condition to the Tendered Amount, and shall extend the Offer for an
additional ten business days. In addition, and without limiting the foregoing,
Purchaser shall cause Merger Sub to, and Merger Sub shall, extend the Offer up
to twenty business days in the aggregate, in one or more periods of not more
than ten business days, if, at the initially scheduled expiration date of the
Offer, or any extension thereof, any one or more Offer Conditions set forth in
paragraphs (a), (c) or (d) of Annex A is not then satisfied or waived; PROVIDED,
HOWEVER, that Merger Sub shall not be required to extend the Offer as provided
in this sentence unless, in Purchaser's reasonable and objective judgment, (i)
each such Offer Condition is reasonably capable of being satisfied and (ii) the
Company is in material compliance with all of its covenants under this
Agreement. It is agreed that the terms and conditions set forth in the Offer,
including but not limited to the Offer Conditions, are for the sole benefit of
Purchaser and Merger Sub and, subject to the terms of this Agreement, may be
asserted by Purchaser and Merger Sub regardless of the circumstances (including
any action or inaction
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by Purchaser or Merger Sub, provided neither Purchaser nor Merger Sub is in
violation of this Agreement) giving rise to any such condition. When used in
this Agreement, the term "BUSINESS DAY" shall have the meaning ascribed to such
term in Rule 14d-1 under the Exchange Act.
(b) The Company hereby approves of and consents to the Offer and the Merger
(as defined in Section 2.1). The Company hereby represents, warrants and agrees
(as applicable) that: (i) the Company Board, at a meeting duly called and held
on June 11, 1999, has unanimously (A) determined that this Agreement and the
Stock Option Agreement and the transactions contemplated hereby and thereby,
including each of the Offer and the Merger, are in the best interests of the
holders of Shares, (B) approved and adopted this Agreement and approved the
Stock Option Agreement and the transactions contemplated hereby and thereby,
including each of the Offer and the Merger, and (C) resolved to recommend in a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "SCHEDULE 14D-9") to be filed with the
SEC upon commencement of the Offer that the shareholders of the Company accept
the Offer, tender their Shares to Merger Sub thereunder and approve this
Agreement and the transactions contemplated hereby, including the Merger; (ii)
the Company Board has taken all action necessary to render Sections 180.1140 to
180.1144 of the WBCL, Article IV of the Restated Articles (as defined in Section
3.1) and the Rights Agreement inapplicable to the Offer and the Merger; (iii)
the Schedule 14D-9 will set forth the information contained in this Section
1.1(b)(i) and (ii); and (iv) Robert W. Baird & Co. Incorporated (the "FINANCIAL
ADVISOR") has delivered to the Company Board its written opinion that, as of the
date hereof, the $27.00 per Share in cash to be received by holders of Shares,
other than Purchaser and Merger Sub, pursuant to each of the Offer and the
Merger is fair to such holders from a financial point of view. The Company has
been authorized by the Financial Advisor to permit the inclusion of such
fairness opinion (and a reference thereto) in the Schedule 14D-9 and in the
Proxy Statement referred to in Section 7.3, subject to review and reasonable
approval thereof by the Financial Advisor. Subject to the terms and conditions
of this Agreement, the Company hereby consents to the inclusion in the Offer
Documents of the recommendations of the Company Board described herein.
(c) Purchaser shall disseminate to the holders of Shares the Offer Documents
to the extent required by law upon the commencement of the Offer. Purchaser
agrees, as to the Offer to Purchase and related Letter of Transmittal (which
together, including any amendments and supplements thereto, constitute the
"OFFER DOCUMENTS") and the Company agrees, as to the Schedule 14D-9, that such
documents shall, in all material respects, comply with the requirements of the
Exchange Act and the rules and regulations thereunder and other applicable laws.
The Company and its counsel, as to the Offer Documents, and Purchaser and Merger
Sub and its counsel, as to the Schedule 14D-9, shall be given an opportunity to
review such documents a reasonable time prior to their being filed with the SEC.
Each of the Company, on the one hand, and Purchaser and Merger Sub, on the other
hand, agree promptly to correct any information provided by either of them for
use in the Schedule 14D-9 if and to the extent that it shall have become false
or misleading, and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be
disseminated to the holders of Shares, in each case, as and to the extent
required by applicable federal securities laws. The Company will provide
Purchaser and Merger Sub, and their counsel, with a copy of any written comments
or telephonic notification of any oral comments the Company may receive from the
SEC or its staff with respect to the Schedule 14D-9 promptly after the receipt
thereof, and will provide Purchaser and Merger Sub and their counsel with an
opportunity to review any written responses and telephonic notification of any
oral responses of the Company or its counsel.
(d) In connection with the Offer, the Company will cause its Transfer Agent
to furnish promptly to Merger Sub a list, as of a recent date, of the record
holders of Shares and their addresses, as well as mailing labels containing the
names and addresses of all record holders of Shares and lists of security
positions of Shares held in stock depositories. In connection with the Offer,
the Company will furnish
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Merger Sub with such additional information (including, but not limited to,
updated lists of holders of Shares and their addresses, mailing labels and lists
of security positions) and such other assistance as Purchaser or Merger Sub or
their agents may reasonably request in communicating the Offer and the Merger to
the record and beneficial holders of Shares. Subject to the requirements of
applicable law, and except for such actions as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Purchaser, Merger Sub, and their affiliates, associates, agents and
advisors shall use the information contained in any such labels, listings and
files only in connection with the Offer and the Merger, and, if this Agreement
shall be terminated, will promptly thereafter deliver to the Company all copies
of such information then in their possession.
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. THE MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 2.3) Merger Sub shall be merged with
and into the Company and the separate corporate existence of Merger Sub shall
thereupon cease (the "MERGER"). The Company shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "SURVIVING CORPORATION")
and shall continue to be governed by the laws of the State of Wisconsin, and the
separate corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in Section 3.1. The Merger shall have the effects specified
in the WBCL.
2.2. CLOSING. The closing of the Merger (the "CLOSING") shall take place
(i) at the offices of Sullivan & Cromwell, 125 Broad Street, New York, New York
at 10:00 A.M. on the third business day after the date on which the last to be
fulfilled or waived of the conditions set forth in Article VIII hereof shall be
fulfilled or waived in accordance with this Agreement or (ii) at such other
place and time and/or on such other date as the Company and Purchaser may agree.
2.3. EFFECTIVE TIME. In connection with and as part of the Closing, the
Company and Purchaser will, in the manner required by the WBCL, cause Articles
of Merger (the "ARTICLES OF MERGER") to be delivered to the Department of
Financial Institutions of the State of Wisconsin as provided in Section 180.1105
of the WBCL. The Merger shall become effective on the date on which the Articles
of Merger, in the manner required by the WBCL, have been duly filed with the
Department of Financial Institutions of the State of Wisconsin, and such time is
hereinafter referred to as the "EFFECTIVE TIME."
ARTICLE III
RESTATED ARTICLES OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
3.1. RESTATED ARTICLES OF INCORPORATION. The Restated Articles of
Incorporation of the Company (the "RESTATED ARTICLES") in effect at the
Effective Time shall be the Restated Articles of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
WBCL, except that Article II of the Company's Restated Articles shall be amended
to read in its entirety as follows:
"The aggregate number of shares which the Corporation shall have the
authority to issue is 1,000 shares of Common Stock, par value $.01 per share."
3.2. THE BY-LAWS. The By-Laws of Merger Sub in effect at the Effective
Time shall be the By-Laws of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the WBCL.
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ARTICLE IV
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
4.1. OFFICERS AND DIRECTORS. The directors of Merger Sub and the officers
of the Company at the Effective Time shall, from and after the Effective Time,
be the directors and officers, respectively, of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Restated Articles of Incorporation and By-Laws.
4.2. BOARDS OF DIRECTORS; COMMITTEES. If requested by Purchaser in
writing, the Company will, subject to compliance with applicable law and
promptly following the purchase by Merger Sub of Shares pursuant to the Offer,
take all actions necessary to cause Persons (as defined in Section 9.5(b))
designated by Purchaser to become directors of the Company so that the total
number of directors designated by Purchaser equals the number, rounded up to the
next whole number, which is the product of (i) the total number of directors on
the Company Board multiplied by (ii) a fraction, the numerator of which is the
aggregate number of Shares beneficially owned by Merger Sub or any affiliate of
Merger Sub and the denominator of which is the total number of Shares then
outstanding; PROVIDED, HOWEVER, that prior to the Effective Time, the Company
Board shall always have at least two members who are not officers, directors,
shareholders or designees of Purchaser or any of Purchaser's affiliates
("PURCHASER INSIDERS"). If, prior to the Effective Time, the number of directors
who are not Purchaser Insiders is reduced below two for any reasons, then the
remaining director who is not a Purchaser Insider shall be entitled to designate
a Person (or Persons) who is not a Purchaser Insider or any affiliate of such
Purchaser Insider to fill such vacancy (or vacancies) and such designee shall be
deemed to not be a Purchaser Insider for all purposes of this Agreement. In
furtherance thereof, the Company will increase the size of the Company Board, or
use its reasonable best efforts to secure the resignation of directors, or both,
as is necessary to permit Purchaser's designees to be elected or appointed to
the Company Board. At such time, the Company, if requested by the Purchaser in
writing, will use its reasonable best efforts to cause Persons designated by
Purchaser to constitute the same proportionate representation (as it exists on
the Company Board after giving effect to the foregoing) of each committee of the
Company Board, each board of directors of each subsidiary of the Company and
each committee of each such board (in each case to the extent of the Company's
ability to elect such Persons); PROVIDED, HOWEVER, that prior to the Effective
Time, each committee of the Company Board, each board of directors of each
subsidiary of the Company and each committee thereof shall have at least one
member who is not a Purchaser Insider. The Company's obligations to appoint
Purchaser's designees to the Company Board shall be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to such Section and Rule in order to
fulfill its obligations under this Section 4.2 and shall include in the Schedule
14D-9, or in a separate Rule 14f-1 information statement provided to
shareholders, such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 4.2. Purchaser shall provide the Company in
writing with true and correct information with respect to itself and its
officers, directors and affiliates required by such Section and Rule.
4.3. ACTIONS BY DIRECTORS. From and after the election or appointment of
the Purchaser Insiders pursuant to Section 4.2 and prior to the Effective Time,
any amendment or termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the obligations or other
acts of Purchaser or Merger Sub, or waiver of any of the Company's rights
hereunder will require the affirmative vote of at least a majority of the
directors of the Company then in office who are not Purchaser Insiders.
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ARTICLE V
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
5.1. CONVERSION OR CANCELLATION OF SHARES. The manner of converting or
canceling Shares and shares of Merger Sub in the Merger shall be as follows:
(a) At the Effective Time, each Share issued and outstanding immediately
prior to the Effective Time (other than Shares owned by Purchaser, Merger Sub,
any other subsidiary of Purchaser (collectively, the "PURCHASER COMPANIES") or
held in the treasury of the Company or owned by any wholly-owned subsidiary of
the Company) or Shares which are held by shareholders ("DISSENTING
SHAREHOLDERS") exercising appraisal rights pursuant to Sections 180.1301 to
180.1331 of the WBCL) shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into the right to receive, without
interest, an amount in cash equal to $27.00 or such greater amount which may be
paid pursuant to the Offer (the "MERGER CONSIDERATION"). All such Shares, by
virtue of the Merger and without any action on the part of the holders thereof,
shall no longer be outstanding and shall be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such Shares shall
thereafter cease to have any rights with respect to such Shares, except the
right to receive the Merger Consideration for such Shares upon the surrender of
such certificate in accordance with Section 5.2 or the right, if any, to receive
payment from the Surviving Corporation of the "fair value" of such Shares as
determined in accordance with Sections 180.1301 to 180.1331 of the WBCL.
(b) At the Effective Time, each Share issued and outstanding at the
Effective Time and owned by any of the Purchaser Companies (as defined in
Section 5.1(a)), and each Share issued and held in the treasury of the Company
or owned by any wholly owned subsidiary of the Company, shall, by virtue of the
Merger and without any action on the part of the holder thereof, cease to be
outstanding, shall be canceled and retired without payment of any consideration
therefor and shall cease to exist.
(c) At the Effective Time, each share of common stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of Merger
Sub or the holders of such shares, be converted into and become one validly
issued, fully paid and non-assessable (except as provided in Section
180.0622(2)(b) of the WBCL) share of common stock, par value $.01 per share, of
the Surviving Corporation.
5.2. PAYMENT FOR SHARES. At the Effective Time, Purchaser shall make
available or cause to be made available to the paying agent appointed by
Purchaser with the Company's prior approval, which shall not be unreasonably
withheld (the "PAYING AGENT"), amounts sufficient in the aggregate to provide
all funds necessary for the Paying Agent to make payments pursuant to Section
5.1(a) hereof to holders of all Shares issued and outstanding immediately prior
to the Effective Time (other than Shares owned by any of the Purchaser Companies
or any Shares issued and held in the treasury of the Company or owned by any
wholly-owned subsidiary of the Company). Such funds shall be invested by the
Paying Agent as directed by Purchaser in United States treasury securities and
shall not be used for any other purpose than paying for the Merger Consideration
(other than as provided below). Any net profit resulting from, or interest or
income produced by, such investments will be payable to the Surviving
Corporation or Purchaser, as Purchaser directs. Promptly (but not later than ten
business days) after the Effective Time, the Surviving Corporation shall cause
to be mailed to each Person who was, at the Effective Time, a holder of record
(other than any of the Purchaser Companies) of issued and outstanding Shares a
form (mutually agreed to by Purchaser and the Company) of letter of transmittal
and instructions for use in effecting the surrender of the certificates which,
immediately prior to the Effective Time, represented such Shares in exchange for
payment therefor. Upon surrender to the Paying Agent of such certificates,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the Surviving Corporation shall
promptly (but not later than five business days after receipt) cause to be paid
to the Persons entitled thereto a check in the amount to which such Persons are
entitled, after giving effect to any required tax withholdings. No
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interest will be paid or will accrue on the amount payable upon the surrender of
any such certificate. If payment is to be made to a Person other than the
registered holder of the certificate surrendered, it shall be a condition of
such payment that the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the Person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a Person other than the registered holder of the certificate surrendered or
establish to the satisfaction of the Surviving Corporation or the Paying Agent
that such tax has been paid or is not applicable. One hundred and eighty days
following the Effective Time, the Purchaser shall be entitled to cause the
Paying Agent to deliver to it or to the Surviving Corporation any funds
(including any net profit, interest and income produced with respect thereto)
made available to the Paying Agent which have not been disbursed to holders of
certificates formerly representing Shares outstanding on the Effective Time, and
thereafter such holders shall be entitled to look to the Surviving Corporation
only as general creditors thereof with respect to the cash payable upon due
surrender of their certificates. Notwithstanding the foregoing, neither the
Paying Agent nor any party hereto shall be liable to any holder of certificates
formerly representing Shares for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar law. The Surviving
Corporation shall pay all charges and expenses, including those of the Paying
Agent, in connection with the exchange of cash for Shares and Purchaser shall
reimburse the Surviving Corporation for such charges and expenses.
5.3. DISSENTERS' RIGHTS. If any Dissenting Shareholder shall be entitled
to be paid the "fair value" of his or her Shares, as provided in Sections
180.1301 to 180.1331 of the WBCL, the Company shall give Purchaser notice
thereof and Purchaser shall have the right to conduct all negotiations and
proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Purchaser,
voluntarily make any payment with respect to, or negotiate, settle or offer to
settle, any such demand for payment. If any Dissenting Shareholder shall fail to
perfect or shall have effectively withdrawn or lost the right to dissent and
demand payment under the WBCL, the Shares held by such Dissenting Shareholder
shall thereupon be treated as though such Shares had been converted into the
Merger Consideration pursuant to Section 5.1.
5.4. TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of Shares
shall be made on the stock transfer books of the Surviving Corporation at or
after the Effective Time.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Purchaser and Merger Sub that:
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Each of the Company and its
subsidiaries is a corporation duly organized, validly existing and in good
standing (to the extent such concept is recognized under applicable law) under
the laws of its respective jurisdiction of incorporation and is in good standing
as a foreign corporation in each jurisdiction where the properties owned, leased
or operated, or the business conducted, by it require such qualification, except
for such failure to so qualify or be in such good standing, which, individually
or in the aggregate with all other such failures, is not reasonably likely to
have a Material Adverse Effect (as defined below). Each of the Company and its
subsidiaries has the requisite corporate power and authority to carry on its
respective businesses as they are now being conducted. The Company has made
available to Purchaser a complete and correct copy of the Company's Restated
Articles and By-Laws, each as amended to date, and complete and correct copies
of the organizational documents of each of the Company's subsidiaries. The
Company's Restated Articles and By-Laws as made available are in full force and
effect. As used in this Agreement, the term "MATERIAL ADVERSE EFFECT" shall mean
with respect to either Purchaser or the Company, a material adverse effect on
the financial condition, properties, business or results of
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operations of the Company or Purchaser, as applicable, and its respective
subsidiaries, taken as a whole.
(b) AUTHORIZED CAPITAL. The authorized capital stock of the Company
consists of 100,000,000 Shares, of which 32,365,094 Shares were outstanding on
June 7, 1999, and 500,000 shares of Preferred Stock, par value $.01 per share
(the "PREFERRED SHARES"), of which there were no shares outstanding on June 7,
1999. All of the outstanding Shares have been duly authorized and are validly
issued, fully paid and nonassessable (except as provided in Section
180.0622(2)(b) or the WBCL). Other than Shares reserved for issuance pursuant to
the Stock Option Agreement, the Company has no Shares or Preferred Shares
reserved for issuance, except that, as of June 7, 1999, there were 3,456,763
Shares reserved for issuance pursuant to outstanding options granted (and
1,431,056 Shares reserved for future option grants) under the 1993 Incentive
Stock Option Plan, the 1996 Equity Incentive Plan, the 1998 Broad-Based Stock
Option Plan, certain individual nonqualified stock option and employment
agreements, the Geowaste 1992 Stock Option Plan and the Geowaste 1996 Stock
Option Plan (collectively, the "STOCK PLANS"), 544,991 Shares reserved for
issuance pursuant to the terms of the acquisition agreements listed on Schedule
6.1(b) to this Agreement (the "COMPLETED ACQUISITIONS"), 1,296,297 Shares
reserved for issuance pursuant to the terms of pending acquisitions listed on
Schedule 6.1(b) and 39,094,201 Shares reserved for issuance pursuant to the
Rights Agreement. Schedule 6.1(b) sets forth all outstanding Options (as defined
in Section 7.8(a)) and the number, exercise prices and expiration dates of each
grant. Except as set forth in Schedule 6.1(b) and except for the Stock Option
Agreement, since December 31, 1998, the Company has not granted any Options or
issued any shares of capital stock except pursuant to the terms of any Stock
Plan or the exercise of Options outstanding as of such date. All Shares which
may be issued pursuant to (i) the exercise of outstanding Options and (ii) the
Completed Acquisitions, will be, when issued and paid for in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable (except as provided in Section 180.0622(2)(b) of the WBCL) and are
not subject to, nor were they issued in violation of, any preemptive rights.
Except as set forth in Schedule 6.1(b), each of the outstanding shares of
capital stock of each of the Company's subsidiaries is duly authorized, validly
issued, fully paid and nonassessable (except, in the case of subsidiaries
incorporated in the State of Wisconsin, as provided in Section 180.0622(2)(b) of
the WBCL) and owned, either directly or indirectly, by the Company, free and
clear of all liens, pledges, security interests, claims or other encumbrances.
Except as set forth above or on Schedule 6.1(b), there are no shares of capital
stock of the Company authorized, issued or outstanding and except as set forth
above and as provided in the Stock Option Agreement and in the Rights Agreement,
there are no preemptive rights nor any outstanding subscriptions, options,
warrants, rights, convertible securities or other agreements or commitments of
any character relating to the issued or unissued capital stock or other
securities of the Company or any of its subsidiaries. Except as set forth in
Schedule 6.1(b) or as contemplated by this Agreement, there are no outstanding
contractual obligations of the Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of the capital stock of the Company or
any of its subsidiaries. Immediately prior to the consummation of the Offer, no
Shares, Preferred Shares or any other securities of the Company will be subject
to issuance pursuant to the Rights Agreement, no Distribution Date (as defined
in the Rights Agreement) shall have occurred and, at or after the Effective
Time, the Surviving Corporation will have no obligation to issue, transfer or
sell any Shares or common stock pursuant to any Benefit Plan (as defined in
Section 7.1(d)).
(c) CORPORATE AUTHORITY. Subject only to approval of this Agreement by the
holders of a majority of the outstanding Shares, the Company has the requisite
corporate power and authority and has taken all corporate action necessary in
order to execute and deliver this Agreement and the Stock Option Agreement and
to consummate the transactions contemplated hereby and thereby. This Agreement
and the Stock Option Agreement is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, assuming the due
authorization, execution and delivery hereof by Purchaser and Merger Sub.
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(d) GOVERNMENTAL FILINGS; NO VIOLATIONS. (i) Other than the filings
provided for in Section 2.3, as required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR ACT"), the Exchange Act and such material
filings, consents, registrations, approvals, permits or authorizations, if any,
as set forth on Schedule 6.1(d)(i) (the "REGULATORY APPROVALS"), no notices,
reports or other filings are required to be made by the Company with, nor are
any consents, registrations, approvals, permits or authorizations required to be
obtained by the Company from, any governmental or regulatory authority, agency,
commission or other entity, domestic or foreign ("GOVERNMENTAL ENTITY"), in
connection with the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby, except
for such failure to make or obtain that, individually or in the aggregate, is
not reasonably likely to (x) have a Material Adverse Effect or (y) prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement.
(ii) Except as to matters set forth in Schedule 6.1(d)(ii), the execution
and delivery of this Agreement by the Company do not, and the consummation by
the Company of the transactions contemplated by this Agreement will not,
constitute or result in (A) a breach or violation of, or a default under, the
Restated Articles or By-Laws of the Company or the comparable organizational
documents of any of its subsidiaries, (B) except as disclosed in the Company
Reports (as defined in Section 6.1(e)) or as set forth in Schedule 6.1(b) or
Schedule 6.1(d)(i), a breach or violation of, a default under or the triggering
of any payment or other material obligations pursuant to, any of the Company's
existing Benefit Plans or any grant or award made under any of the foregoing,
(C) a breach or violation of, or a default under, the acceleration of or the
creation of a lien, pledge, security interest or other encumbrance on assets
(with or without the giving of notice or the lapse of time) pursuant to any
provision of any agreement, lease, contract (including, without limitation,
municipal waste collection franchise agreements ("MUNICIPAL CONTRACTS")), note,
mortgage, indenture, arrangement or other obligation ("CONTRACTS") of the
Company or any of its subsidiaries or any law, rule, ordinance or regulation or
judgment, decree, order, award or governmental or non-governmental permit or
license to which the Company or any of its subsidiaries is subject or (D) any
change in the rights or obligations of any party under any of the Contracts,
except, in the case of clause (C) or (D) above, for such breaches, violations,
defaults, accelerations or changes that, individually or in the aggregate, are
not reasonably likely to (x) have a Material Adverse Effect or (y) prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement. Schedule 6.1(d)(ii) sets forth,
to the knowledge of the Company, a list of any consents required under any
Contracts to be obtained prior to consummation of the transactions contemplated
by this Agreement (whether or not subject to the exception set forth with
respect to clause (C) above). The Company will use its reasonable best efforts
to obtain the consents referred to in Schedule 6.1(d)(ii). The term "KNOWLEDGE"
when used in this Agreement with respect to the Company shall mean the actual
present knowledge of Peter J. Ruud, George K. Farr and Scott S. Cramer, without
refreshment of their recollections and memory by way of any review or inquiry.
(e) COMPANY REPORTS; FINANCIAL STATEMENTS. The Company has delivered to
Purchaser (x) each registration statement, schedule, report, proxy statement or
information statement prepared by it since December 31, 1998 ("AUDIT DATE"),
including, without limitation, (i) the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, (ii) the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1999, and (iii) the Company's
proxy statement for the Annual Meeting of Shareholders held on May 11, 1999, and
(y) the Company's registration statement on Form S-4 filed on May 30, 1997, and
the Company's registration statement on Form S-3, filed on August 7, 1997, each
in the form (including exhibits and any amendments thereto) filed with the SEC
(collectively, the "COMPANY REPORTS"). As of their respective dates, the Company
Reports complied in all material respects with the applicable requirements under
the Exchange Act and did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not, as of its date, 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 made therein, in
light of the circumstances under which they were made, not misleading. Each of
the consolidated balance sheets included in or incorporated by reference into
the Company Reports (including the related notes and schedules) presents fairly
in all
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material respects the consolidated financial position of the Company and its
subsidiaries as of its date and each of the consolidated statements of income,
shareholders' investment and cash flow included in or incorporated by reference
into the Company Reports (including any related notes and schedules) presents
fairly in all material respects the results of operations, retained earnings and
changes in financial position, as the case may be, of the Company and its
subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein.
(f) ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Company Reports
filed with the SEC prior to the date hereof or otherwise disclosed in Schedule
6.1(f), since December 31, 1998, the Company and its subsidiaries have conducted
their respective businesses only in, and have not engaged in any material
transaction other than according to, the ordinary and usual course of such
businesses and there has not been (i) any event or occurrence that is reasonably
likely to have a Material Adverse Effect or any development or combination of
developments of which the Company has knowledge which is reasonably likely to
result in a Material Adverse Effect; (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to the capital stock
of the Company; (iii) any change by the Company in accounting principles,
practices or methods, except as provided for herein or as disclosed in the
Company Reports filed with the SEC prior to the date hereof; or (iv) any
increase in the compensation payable or which could become payable by the
Company and its subsidiaries to their officers or key employees, or any
adoption, amendment or termination of any Benefit Plans (other than (A) normal
scheduled increases in compensation and (B) entering into customary employment
arrangements in the ordinary and usual course of business with newly hired
employees).
(g) LITIGATION AND LIABILITIES. Except as disclosed in the Company Reports
filed with the SEC prior to the date hereof, reserved against in the
consolidated balance sheets included in or incorporated by reference into the
Company Reports, or as set forth on Schedule 6.1(g), there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the Company, threatened in writing
against the Company or any of its subsidiaries or (ii) obligations or
liabilities (whether absolute, fixed, accrued, contingent or otherwise,
including, without limitation, those relating to matters involving any
Environmental Law (as defined in Section 6.1(l)), or any other facts or
circumstances of which the Company has knowledge that could result in any claims
against or obligations or liabilities of the Company or any of its subsidiaries,
that individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect. Except as disclosed in the Company Reports filed with the SEC
prior to the date hereof or on Schedule 6.1(g), neither the Company nor any of
its subsidiaries is subject to any outstanding order, writ, injunction or decree
that, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect or could prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by this
Agreement.
(h) EMPLOYEE BENEFITS. (i) The Company Reports, together with Schedule
6.1(h), accurately describe all material bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock and stock option plans, all material
employment or severance contracts, other material employee benefit plans and any
applicable "change of control" or similar provisions in any plan, contract or
arrangement (regardless of whether they are funded or unfunded) which cover
current or former employees of the Company and its subsidiaries (the
"EMPLOYEES"), including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")(the "COMPENSATION AND BENEFIT PLANS"). True and complete
copies of all Compensation and Benefit Plans, including any trust instruments
and/or insurance contracts, if any, forming a part of any such plans and
agreements, and all amendments thereto have been provided or made available to
Purchaser.
(ii) All Compensation and Benefit Plans, other than "multiemployer plans"
within the meaning of Sections 3(37) or 4001(a)(3) of ERISA, covering Employees
and maintained in the United States (the
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"PLANS"), to the extent subject to ERISA, are in substantial compliance with
ERISA. Each Plan which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA ("PENSION PLAN") and which is intended to be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"CODE"), has received a favorable determination letter from the Internal Revenue
Service, and the Company is not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no material
pending, or to the Company's knowledge threatened in writing, litigation
relating to the Compensation and Benefit Plans. Neither the Company nor any of
its subsidiaries has engaged in a transaction with respect to any Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject the Company or any of its subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA in an amount which
would be material to the Company and its subsidiaries taken as a whole.
(iii) Except as disclosed in Schedule 6.1(h)(iii), no liability under
Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by
the Company or any of its subsidiaries with respect to any ongoing, frozen or
terminated "single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414 of the Code (an "ERISA AFFILIATE"), which
liability is reasonably likely to have a Material Adverse Effect. The Company
and its subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a multiemployer plan under Subtitle E of Title IV of
ERISA (regardless of whether based on contributions of an ERISA Affiliate),
which liability is reasonably likely to have a Material Adverse Effect. No
notice of a "reportable event", within the meaning of Section 4043 of ERISA for
which the 30-day reporting requirement has not been waived, has been required to
be filed for any Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof.
(iv) All material contributions required to be made under the terms of any
Plan and any contribution required to be made under the terms of any Plan which
is subject to the funding standards of Section 412 the Internal Revenue Code,
have been timely made or have been reflected in the financial statements
included in or incorporated by reference into the Company Reports. Neither any
Pension Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of ERISA. Neither the Company nor any of
its subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of the last
day of the most recent plan year ended prior to the date hereof, the actuarially
determined present value of all "benefit liabilities", within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions contained in the Plan's most recent actuarial valuation), did not
exceed the then current value of the assets of such Plan by more than $100,000,
and there has been no material change in the financial condition of such Plan
since the last day of the most recent Plan Year.
(vi) Neither the Company nor any of its subsidiaries have any obligations
for retiree health and life benefits under any Plan, except as disclosed in the
Company Reports or as set forth on Schedule 6.1(h).
(vii) Except as set forth in the Company Reports or Schedule 6.1(b), the
consummation of the transactions contemplated by this Agreement will not (x)
entitle any employees of the Company or any of its subsidiaries to severance
pay, (y) accelerate the time of payment or vesting or trigger any payment or
funding (through a grantor trust or otherwise) of compensation or benefits
under, increase the amount payable or trigger any other material obligation
pursuant to, any of the Compensation and Benefit Plans or (z) result in payments
under any of the Benefit Plans which would not be deductible under Section
162(m) or Section 280G of the Internal Revenue Code of 1986, as amended (the
"CODE").
(viii) All Compensation and Benefit Plans maintained outside of the United
States comply in all material respects with applicable local law. The Company
and its subsidiaries have no material unfunded liabilities with respect to any
such Compensation and Benefit Plan.
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(i) BROKERS AND FINDERS. Neither the Company nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection with
the transactions contemplated herein, except that the Company has employed each
of the Financial Advisor and BT Alex. Brown Incorporated as its financial
advisors, the arrangements with which have been disclosed in writing to
Purchaser prior to the date hereof.
(j) RIGHTS AGREEMENT. The Company has taken all necessary action,
including, without limitation, amending the Rights Agreement, with respect to
all of the outstanding Rights issued pursuant to the Rights Agreement, (A) to
render the Rights Agreement inapplicable to this Agreement, the Stock Option
Agreement, the Offer, the Merger and the other transactions contemplated hereby
and thereby, (B) to ensure that (1) Purchaser and Merger Sub, or either of them,
are not deemed to be an Acquiring Person (as defined in the Rights Agreement)
pursuant to the Rights Agreement and (2) neither a Distribution Date nor a
Shares Acquisition Date (as such terms are defined in the Rights Agreement)
occur by reason of the execution and delivery of this Agreement, the Stock
Option Agreement, or the consummation of the Offer or the Merger or the
consummation of the other transactions contemplated by this Agreement and the
Stock Option Agreement and (C) so that the Company will have no obligations
under the Rights or the Rights Agreement (in connection with the Offer and the
Merger) and the holders of Shares will have no rights under the Rights or the
Rights Agreement (in connection with the Offer and the Merger). The Rights
Agreement, as so amended, has not been further amended or modified. Copies of
all such amendments to the Rights Agreement have been previously provided to
Purchaser.
(k) TAKEOVER STATUTES. The Company Board has taken any and all necessary
and appropriate action to render inapplicable to the Offer, the Merger and the
other transactions contemplated by this Agreement and the Stock Option
Agreement, the provisions of Sections 180.1140 to 180.1144 of the WBCL and
Article IV of the Company's Restated Articles. Other than Section 180.1150 of
the WBCL and the potential application of Sections 180.1130 to 180.1134 of the
WBCL, no "fair price", "moratorium", "control share acquisition" or other
similar antitakeover statute or regulation (each a "TAKEOVER STATUTE"), is
applicable to the Company, the Shares, the Offer, the Merger, the Stock Option
Agreement or the transactions contemplated hereby. The Company makes no
representation or warranty concerning the applicability of any Takeover Statute
other than those Takeover Statutes existing under the WBCL. The registration
provisions of Wis. Stat. 552.05 are not applicable to the Company, the Shares,
the Offer, the Merger or the other transactions contemplated hereby or by the
Stock Option Agreement.
(l) ENVIRONMENTAL MATTERS. Except as disclosed in the Company Reports
filed prior to the date hereof, Schedule 6.1(g) and except for those matters
that are not reasonably likely to have a Material Adverse Effect: (i) the
Company and its subsidiaries have complied at all times with all applicable
Environmental Laws; (ii) no property currently or formerly owned or operated by
the Company or any subsidiary (including soils, groundwater, surface water,
buildings or other structures) has been contaminated with any Hazardous
Substance that would reasonably be expected to require investigation or
remediation under any Environmental Law; (iii) neither the Company nor any
subsidiary is subject to any liability for any release of any Hazardous
Substance on any third party property; (iv) neither the Company nor any
subsidiary has received any notice, demand, letter, claim or request for
information indicating that it may be in violation of or subject to liability
under any Environmental Law; (v) neither the Company nor any subsidiary is
subject to any order, decree or injunction with any Governmental Entity or any
indemnity or other agreement with any third party relating to liability under
any Environmental Law; (vi) the Company and its subsidiaries have accrued
adequate reserves in accordance with generally accepted accounting principles
for all landfill closure and post closure requirements and have posted all bonds
and financial assurances required under any Environmental Laws; and (vii) the
Company has made available to Purchaser copies of all environmental reports,
studies, assessments, sampling data, closure estimates and other material
environmental information in its possession relating to Company or any
subsidiary or any of their current or former properties or operations.
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As used herein, the term "ENVIRONMENTAL LAW" means any published federal,
state or local law, regulation, order, decree, permit, authorization, common law
or agency requirement relating to: (A) the protection, investigation or
restoration of the environment, health, safety, or natural resources, (B) the
handling, use, presence, disposal, release or threatened release of any solid
waste or Hazardous Substance or (C) noise, odor, landfill closure, employee
exposure, wetlands, pollution, contamination or any injury or threat of injury
to Persons or property relating to any Hazardous Substance.
As used herein, the term "HAZARDOUS SUBSTANCE" means any substance that is:
(A) listed, classified or regulated pursuant to any Environmental Law; (B) any
petroleum product or by-product, asbestos-containing material, lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive materials or radon; or
(C) any other substance which is the subject of published regulatory action by
any Governmental Authority in connection with any Environmental Law.
(m) TAX MATTERS. The Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for tax purposes of which the
Company or any of its subsidiaries is a member, have timely filed all material
Tax Returns (as hereinafter defined) required to be filed (taking into account
any extensions of time within which to file) by it in the manner provided by
law. All such Tax Returns are true, correct and complete in all material
respects. The Company and each of its subsidiaries have timely paid all Taxes
(including interest and penalties) due or required to be withheld from amounts
owing to any employee, creditor or third party (whether or not shown as being
due on any returns), except where the failure to pay, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect, and have
provided adequate reserves in accordance with generally accepted accounting
principles in their financial statements for any Taxes not yet due and payable.
Except as has been disclosed to Purchaser in Schedule 6.1(m), and except for
those matters that, individually or in the aggregate, are not reasonably likely
to have a Material Adverse Effect: (i) no material claim for unpaid Taxes has
become a lien or encumbrance of any kind against the property of the Company or
any of its subsidiaries or is being asserted against the Company or any of its
subsidiaries (except for Taxes not yet due and payable); (ii) no audit,
examination, investigation or other proceeding in respect of Taxes is pending
or, to the knowledge of the Company, threatened in writing or being conducted by
a Tax authority; (iii) all deficiencies asserted or assessments made as a result
of any Tax examinations have been settled or paid in full (or are being
contested in good faith); (iv) no extension or waiver of the statute of
limitations on the assessment of any Taxes has been granted by the Company or
any of its subsidiaries and is currently in effect; (v) neither the Company nor
any of its subsidiaries is a party to, is bound by, or has any obligation under,
or potential liability with regards to, any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement (except by and
among themselves); (vi) no power of attorney has been granted by or with respect
to the Company or any of its subsidiaries with respect to any matter relating to
Taxes; (vii) neither the Company nor any of its subsidiaries is a party to any
agreement, plan, contract or arrangement (whether oral or in writing) that,
individually or in the aggregate, is reasonably likely to result in the payment
of any "excess parachute payments" within the meaning of Section 280G of the
Code; (viii) neither the Company nor any of its subsidiaries has any deferred
intercompany gain or loss arising as a result of a deferred intercompany
transaction within the meaning of Treasury Regulation Section 1.1502-13 (or
similar provision under state, local or foreign law) or any excess loss accounts
within the meaning of Treasury Regulation Section 1.1502-19; (ix) the Company is
not and has not been a United States real property holding corporation (as
defined in Section 897(c)(2) of the Code) during the applicable period specified
in Section 897(c)(1)(ii) of the Code; (x) neither the Company nor any of its
subsidiaries has been the subject of a Tax ruling that has continuing effect;
(xi) neither the Company nor any of its subsidiaries has been the subject of a
closing agreement with any Tax authority that has continuing effect; (xii)
neither the Company nor any of its subsidiaries has agreed to include, or is
required to include, in income any adjustment under either Section 481(a) or 482
of the Code (or an analogous provision of state, local or foreign law) by reason
of a change in accounting method or otherwise. As used herein, "TAXES" shall
mean any taxes of any kind, including but not limited to those on or measured by
or referred to as income, gross receipts, capital, sales, use, ad valorem,
franchise, profits, license, withholding, employment, payroll premium, value
added, property or windfall profits taxes, environmental, transfer, customs,
duties or similar fees, assessments or charges of any kind
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whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any Governmental Entity. For purposes of this
Agreement, "Taxes" also includes any obligations under any agreements or
arrangements with any Person with respect to the liability for, or sharing of,
Taxes (including, without limitation, pursuant to Treas. Reg. 1.1502-6 or
comparable provisions of state, local or foreign Tax law) and including, without
limitation, any liability for Taxes as a transferee or successor, by contract or
otherwise. As used herein, "TAX RETURN" shall mean any return, report or
statement required to be filed with any governmental authority with respect to
Taxes.
(n) INTELLECTUAL PROPERTY. (i) Except as set forth in Schedule 6.1(n), the
Company and/or each of its subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use all patents, trademarks, trade
names, service marks, copyrights (and applications therefor), technology,
know-how, computer software programs or applications, and tangible and
intangible proprietary information or materials that are used in the business of
the Company and its subsidiaries as currently conducted or proposed to be
conducted, except for any such failures to own, be licensed or possess that,
individually or in the aggregate, are not reasonably likely to have a Material
Adverse Effect, and all patents, trademarks, trade names, service marks and
copyrights held and used in the business currently conducted by the Company
and/or its subsidiaries are valid, enforceable and subsisting, other than those
which, if not valid, enforceable and subsisting, are not reasonably likely to
have a Material Adverse Effect.
(ii) Except as has not had or is not reasonably likely to have a Material
Adverse Effect:
(A) the Company is not, nor will it be as a result of the execution, delivery
or performance of this Agreement by it, in violation of any licenses,
sublicenses and other agreements as to which the Company is a party and pursuant
to which the Company is authorized to use any third-party patents, trademarks,
service marks or copyrights ("THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS");
(B) no claims with respect to (I) the patents, registered and material
unregistered trademarks and service marks, registered copyrights, computer
software programs, trade names, and any applications therefor owned by the
Company or any of its subsidiaries (the "COMPANY INTELLECTUAL PROPERTY RIGHTS");
(II) any trade secret material to the Company; or (III) Third-Party Intellectual
Property Rights are currently pending or, to the knowledge of the Company,
threatened by any Person;
(C) the Company does not know of any valid grounds for any bona fide claims
(I) to the effect that the making, use, sale or licensing of any product as now
made, used, sold or licensed or proposed for making, use, sale or license by the
Company or any of its subsidiaries, infringes on any copyright, patent,
trademark, service mark or trade secret; (II) against the use by the Company or
any of its subsidiaries, of any trademarks, trade names, trade secrets,
copyrights, patents, technology, know-how or computer software programs and
applications used in the business of the Company or any of its subsidiaries as
currently conducted or as proposed to be conducted; (III) challenging the
ownership, validity or effectiveness of any of the Company Intellectual Property
Rights or other trade secret material to the Company; or (IV) challenging the
license or legally enforceable right to use of the Third-Party Intellectual
Rights by the Company or any of its subsidiaries; and
(D) to the knowledge of the Company, there is no unauthorized use,
infringement or misappropriation of any of the Company Intellectual Property
Rights by any third party, including any employee or former employee of the
Company or any of its subsidiaries.
(o) COMPLIANCE WITH APPLICABLE LAWS. The Company and its subsidiaries hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities (the "COMPANY PERMITS") required in order to own their
respective assets and to conduct their respective businesses as currently
conducted, except where the failure to hold such Company Permits, individually
or in the aggregate with all other such failures, is not reasonably likely to
have a Material Adverse Effect. The Company and its subsidiaries are in
compliance with the terms of the Company Permits and the operations of the
Company (including, without limitation, the obtaining of any Company Permits)
and its subsidiaries have been conducted in compliance with all applicable laws,
ordinances and regulations of any Governmental Entity, except where the failure
to comply or the violation, individually or in the aggregate with all other such
failures, is not reasonably likely to have a Material Adverse Effect.
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(p) OPINION OF FINANCIAL ADVISOR. The Company has received the written
opinion of the Financial Advisor that (subject to the terms and conditions of
such opinion) as of the date hereof, the Offer Price is fair to such
shareholders from a financial point of view. The Company has delivered to
Purchaser a copy of such opinion.
(q) LABOR RELATIONS. Except as set forth in Schedule 6.1(q), there is no
work stoppage involving the Company or any of its subsidiaries pending or
threatened in writing and neither the Company nor any of its subsidiaries is
involved in, threatened in writing with, or affected by any labor dispute,
arbitration, lawsuit or administrative proceeding that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect. Except as
disclosed in the Company Reports or in Schedule 6.1(q), none of the employees of
the Company or of any of its subsidiaries is represented by any labor union or
any collective bargaining organization and, to the best knowledge of the
Company, no labor union is attempting to organize employees of the Company or
any of its subsidiaries. Except as set forth in Schedule 6.1(q), there is no
pending charge or complaint against the Company or any of its subsidiaries by
the National Labor Relations Board or any comparable state agency.
(r) MATERIAL CONTRACTS. Except as identified in the Company Reports or as
set forth in Schedule 6.1(r), neither the Company nor any of its subsidiaries is
party to, nor is the Company or any of its subsidiaries (or their respective
assets) bound by, any Contract that, individually or in the aggregate, is
material to the Company and its subsidiaries taken as a whole. Except as
identified in the Company Reports or as set forth on Schedule 6.1(r), there are
no (i) Contracts between the Company or any subsidiary, on the one hand, and any
current or former director, officer, employee or 5% or greater shareholder of
the Company or any of their affiliates or family members, on the other hand, or
(ii) material non-competition agreements or any other agreements or obligations
which purports to limit in any respect the manner in which, or the localities in
which, the business of the Company and its subsidiaries, is or can be conducted.
All Contracts to which the Company or any of the subsidiaries is a party or by
which any of their respective assets is bound, and any Contract between
third-parties that has been assigned to the Company or any of its subsidiaries,
have been legally assigned, if applicable, and are valid and binding, in full
force and effect in accordance with its terms and enforceable against the
parties (or, if applicable, assignees) thereto in accordance with their
respective terms, except for such failures to be so assigned, valid and binding,
in full force and effect or enforceable that, individually or in the aggregate,
are not reasonably likely to have a Material Adverse Effect. There is not under
any such Contract any existing default, or event, which after notice or lapse of
time, or both, would constitute a default, by the Company or any of its
subsidiaries, or to the Company's knowledge, any other party, except to the
extent any such defaults or events, individually or in the aggregate, is not
reasonably likely to have a Material Adverse Effect.
(s) YEAR 2000. Except to the extent described in any Company Report filed
prior to the date hereof, all computer systems and computer software used by the
Company or any of its subsidiaries (i) recognize or are being adapted so that,
prior to December 31, 1999, they shall recognize the advent of the year A.D.
2000 without any adverse change in operation associated with such recognition,
(ii) can correctly recognize or are being adapted so that they can correctly
recognize and manipulate date information relating to dates before, on or after
January 1, 2000, including but not limited to, accepting date input, performing
calculations on dates or portion of dates and providing date output, and the
operation and functionality of such computer systems and such computer software
will not be adversely affected by the advent of the year A.D. 2000 or any
manipulation of data featuring information relating to dates before, on or after
January 1, 2000, and (iii) can suitably interact with other computer systems and
computer software in a way that does not compromise (y) its ability to correctly
recognize the advent of the year A.D. 2000 or (z) its ability to correctly
recognize and manipulate date information relating to dates before, on or after
January 1, 2000 (the operations of clauses (i), (ii) and (iii) together,
"MILLENNIUM FUNCTIONALITY"), except in each case for such computer systems and
computer software, the failure of which to achieve Millennium Functionality,
individually
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or in the aggregate, is not reasonably likely to have a Material Adverse Effect.
To the knowledge of the Company, as of the date hereof, the costs of the
adaptions necessary to achieve Millennium Functionality are not reasonably
likely to have a Material Adverse Effect.
6.2. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB. Purchaser
and Merger Sub jointly and severally represent and warrant to the Company that:
(a) CORPORATE ORGANIZATION AND QUALIFICATION. Purchaser is a Societe
Anonyme organized under the laws of France. Merger Sub is a corporation duly
organized, validly existing and in good standing (to the extent such concept is
recognized under applicable law) under the laws of Wisconsin. Each of Purchaser
and Merger Sub is in good standing as a foreign corporation in each jurisdiction
where the properties owned, leased or operated, or the business conducted, by it
require such qualification, except for such failure to so qualify or to be in
such good standing, which, individually or in the aggregate with all other such
failures, is not reasonably likely to have a material adverse effect on the
financial condition, prospects, properties, business or results of operations of
Purchaser and its subsidiaries, taken as a whole.
(b) CORPORATE AUTHORITY. Purchaser and Merger Sub each has the requisite
corporate power and authority and has taken all corporate action necessary in
order to execute and deliver this Agreement and, in the case of Purchaser, the
Stock Option Agreement and to consummate the transactions contemplated hereby.
This Agreement is a valid and binding agreement of Purchaser and Merger Sub
enforceable against each of Purchaser and Merger Sub in accordance with its
terms, assuming the due authorization, execution and delivery hereof by the
Company. The Stock Option Agreement is a valid and binding agreement of
Purchaser enforceable against Purchaser in accordance with its terms, assuming
the due authorization, execution and delivery thereof by the Company.
(c) GOVERNMENTAL FILINGS; NO VIOLATIONS. (i) Other than the filings
provided for in Section 2.3, as required under the HSR Act and the Exchange Act,
no notices, reports or other filings are required to be made by Purchaser and
Merger Sub with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by Purchaser and Merger Sub from, any
Governmental Entity in connection with the execution and delivery of this
Agreement by Purchaser and Merger Sub and the consummation of the transactions
contemplated hereby by Purchaser and Merger Sub, except for such failure to make
or obtain that, individually or in the aggregate, is not reasonably likely to
prevent, materially delay or materially burden the transactions contemplated by
this Agreement.
(ii) The execution and delivery of this Agreement by Purchaser and Merger
Sub do not, and the consummation of the transactions contemplated hereby by
Purchaser and Merger Sub will not, constitute or result in (i) a breach or
violation of, or a default under, the organizational documents of Purchaser or
the Articles of Incorporation or By-Laws of Merger Sub or (ii) a breach or
violation of, a default under, the acceleration of or the creation of a lien,
pledge, security interest or other encumbrance on assets (with or without the
giving of notice or the lapse of time) pursuant to any provision of any Contract
of Purchaser or Merger Sub or any law, ordinance, rule or regulation or
judgment, decree, order, award or governmental or non-governmental permit or
license to which Purchaser or Merger Sub is subject, except, in the case of
clause (ii) above, for such breaches, violations, defaults or accelerations
that, individually or in the aggregate, would not prevent or materially delay
the transactions contemplated by this Agreement.
(d) FUNDS. Purchaser has or will have at the expiration of the Offer and
the Effective Time (and will make available to Merger Sub at the expiration of
the Offer and the Effective Time) the funds necessary to consummate the Offer
and the Merger, respectively.
(e) MERGER SUB'S ACTIVITIES. Merger Sub was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement and has not
engaged in any business activities or conducted any operations other than in
connection with such transactions.
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(f) STOCK OWNERSHIP. As of the date hereof, none of Purchaser or any of
its "affiliates" or "associates" (as those terms are defined in Rule 12b-2 under
the Exchange Act) beneficially own any Shares.
ARTICLE VII
COVENANTS
7.1. INTERIM OPERATIONS OF THE COMPANY. The Company covenants and agrees,
as to itself and its subsidiaries, that, prior to the Effective Time (unless
Purchaser shall otherwise agree in writing and except as otherwise contemplated
by this Agreement):
(a) the business of the Company and its subsidiaries shall be conducted only
in the ordinary and usual course and, to the extent consistent therewith, each
of the Company and its subsidiaries shall use its reasonable best efforts to
preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees and business associates;
(b) the Company shall not(i) amend its Restated Articles or By-Laws or
amend, modify or terminate the Rights Agreement; (ii) split, combine or
reclassify the outstanding Shares or Preferred Shares; or (iii) declare, set
aside or pay any dividend payable in cash, stock or property with respect to the
capital stock of the Company;
(c) neither the Company nor any of its subsidiaries shall (i) issue, sell,
pledge, dispose of, agree to sell or pledge or encumber any additional shares,
or securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock of any
class of the Company or its subsidiaries or any other property or assets other
than, in the case of the Company, Shares issuable pursuant to Options
outstanding on the date hereof under the Stock Plans, or pursuant to the terms
of the Completed Acquisitions, pending acquisitions set forth on Schedule 6.1(b)
or pursuant to the Stock Option Agreement; (ii) transfer, lease, license,
guarantee, sell, mortgage, pledge, dispose of or encumber any assets or incur
any other liability other than in the ordinary and usual course of business;
(iii) acquire directly or indirectly by redemption or otherwise any shares of
the capital stock of the Company other than pursuant to the terms of existing
acquisition agreements or escrow agreements or (iv) authorize capital
expenditures in excess of $15 million in the aggregate, or make any acquisition
of, or investment in, assets or stock of any other Person or entity with
estimated annualized revenues in excess of $50 million. Notwithstanding any
limitations in this Section 7.1(c), the Company may enter into or consummate an
acquisition proposed by it (a "PROPOSED ACQUISITION"), if such acquisition has
been approved in writing by Purchaser, which approval may be denied, withheld or
conditioned in its sole and absolute discretion. Purchaser agrees to advise the
Company in writing whether it has approved the Proposed Acquisition within five
business days after receipt of information regarding the Proposed Acquisition
that is the same in all material respects as the information that was provided
(whether orally, in writing or otherwise) to the executive officers of the
Company or the Company Board in connection with its approval of the Proposed
Acquisition, including, without limitation, all material economic and other
terms (the "PROPOSED TERMS"). If Purchaser approves the Proposed Acquisition,
the Company may consummate the Proposed Acquisition on the Proposed Terms and
other customary terms.
(d) neither the Company nor any of its subsidiaries shall grant any
severance or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of the Company or such
subsidiaries (other than (A) normal scheduled increases in compensation and (B)
entering into customary employment arrangements in the ordinary and usual course
of business with newly hired employees); and neither the Company nor any of its
subsidiaries shall establish, adopt, terminate, enter into, make any new grants
or awards under or amend, any Compensation and Benefit Plans (other than (i)
pursuant to Section 7.8(c) and (ii) normal scheduled increases in compensation).
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(e) neither the Company nor any of its subsidiaries shall settle, negotiate
to settle or compromise any material claims or litigation except for such
settlements or negotiations that are not reasonably likely to have a Material
Adverse Effect;
(f) neither the Company nor any of its subsidiaries shall make any tax
election or permit any insurance policy naming it as a beneficiary or a loss
payable payee to be canceled or terminated without notice to Purchaser, except
in the ordinary and usual course of business; and
(g) (i) neither the Company nor any of its subsidiaries shall incur, assume
or prepay any long-term debt or incur or assume any short-term debt, except that
the Company and its subsidiaries may incur or prepay debt in the ordinary and
usual course of business in amounts and for purposes consistent with past
practice under existing lines of credit, and may incur debt in connection with
the Completed Acquisitions but in any event such incurrences, assumptions or
prepayments not to exceed $75 million in the aggregate, (ii) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any third-party except in the
ordinary and usual course of business, (iii) accelerate or delay collection of
notes or accounts receivable in advance of or beyond their regular due dates or
the dates consistent with past practice, or (iv) change any accounting
principle, practice or method in a manner that is inconsistent with past
practice, except to the extent required by generally accepted accounting
principles as advised by the Company's regular independent accountants;
(h) neither the Company nor any of its subsidiaries shall, other than in the
ordinary and usual course of business or except as is not reasonably likely to
have a Material Adverse Effect, (i) modify, amend or terminate any contract,
(ii) waive, release, relinquish or assign any contract (or any of the rights of
the Company or any of its subsidiaries thereunder), right or claim, or (iii)
cancel or forgive any indebtedness owed to the Company or any of its
subsidiaries; PROVIDED, HOWEVER, that neither the Company nor any of its
subsidiaries may under any circumstance waive or release any of its rights under
any confidentiality agreement to which it is a party;
(i) neither the Company nor any of its subsidiaries shall enter into any
material contract or agreement other than in the ordinary and usual course of
business;
(j) neither the Company nor any of its subsidiaries shall, except as
specifically permitted in Section 7.2, take or fail to take any action that is
reasonably likely to result in any failure of the Offer Conditions or any of the
conditions to the Merger set forth in Article VIII not being satisfied, or is
reasonably likely to make any representation or warranty of the Company
contained herein inaccurate in any material respect at, or as of any time prior
to, the Effective Time, or that is reasonably likely to have a Material Adverse
Effect;
(k) neither the Company nor any of its subsidiaries shall adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization; and
(l) neither the Company nor any of its subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
7.2. ACQUISITION PROPOSALS. The Company agrees that neither the Company
nor any of its subsidiaries shall, and the Company shall direct and use its
reasonable best efforts to cause its and its subsidiaries' officers, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
subsidiaries ("REPRESENTATIVES")) not to knowingly (i) initiate, solicit or
encourage, directly or indirectly, any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to shareholders
of the Company) from any Person with respect to a merger, consolidation or
similar transaction involving, or any purchase of all or any significant portion
of the assets or any equity securities of, the Company or any of its
subsidiaries (any such proposal or offer being hereinafter
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referred to as an "ACQUISITION PROPOSAL") or (ii) engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
PROVIDED, HOWEVER, that nothing shall prevent the Company or the Company Board
from complying with Rules 14d-9 and 14e-2 under the Exchange Act, and that prior
to the purchase of Shares pursuant to the Offer, the Company and its
Representatives may engage in the actions set forth in clause (ii) above if (A)
any Person delivers a bona fide written Acquisition Proposal for which all
necessary financing is then in the judgment of the Company Board readily
obtainable, (B) the Company enters into a customary confidentiality agreement
with such Person that is no more favorable to such Person than the
Confidentiality Agreement, dated as of March 3, 1999, as amended as of June 11,
1999, between Purchaser and the Company (the "CONFIDENTIALITY AGREEMENT") (as
determined by the Company after consultation with its outside counsel), (C) the
Company Board determines in good faith by a vote of a majority of the members of
the full Company Board after receipt of advice from outside legal counsel that
such action is necessary in order for its directors to comply with their
respective fiduciary duties under applicable law and (D) the Company Board
determines in good faith (after consultation with its financial advisor) that
such Acquisition Proposal, if accepted, is reasonably likely to be consummated
(taking into account all legal, financial and regulatory aspects of the
proposal, the Person making the proposal and all other relevant factors) and
would, if consummated, result in a transaction more favorable to the Company's
shareholders from a financial point of view than the transaction contemplated by
this Agreement (any such more favorable Acquisition Proposal being referred to
in this Agreement as a "SUPERIOR PROPOSAL"). The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any Person conducted heretofore with respect to any Acquisition Proposal.
The Company will take the necessary steps to inform the Persons referred to in
the first sentence hereof of the obligations undertaken in this Section 7.2. The
Company will notify Purchaser promptly if any such Acquisition Proposal is
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with the Company. The
Company will further identify the offeror and furnish to Purchaser a copy of any
such inquiry or proposal, if it is in writing, or shall inform Purchaser of the
details of any such inquiry or proposal, if it is oral, and shall promptly
advise Purchaser of any material development relating to such inquiry or
proposal. The Company also will promptly request each Person that has heretofore
executed a confidentiality agreement in connection with its consideration of
acquiring the Company to return all confidential information heretofore
furnished to such Person by or on behalf of the Company.
7.3. MEETING OF THE COMPANY'S SHAREHOLDERS. If required following
termination of the Offer, the Company will take, consistent with applicable law
and its Restated Articles and By-Laws, all action necessary to convene a meeting
of holders of Shares as promptly as practicable to consider and vote upon the
approval of this Agreement and the Merger. Subject to fiduciary requirements of
applicable law, the Company Board shall recommend such approval and the Company
shall take all lawful action to solicit such approval. At any such meeting of
the Company, all of the Shares then owned by the Purchaser Companies will be
voted in favor of this Agreement. The Company's proxy or information statement
with respect to such meeting of shareholders (the "PROXY STATEMENT"), at the
date thereof and at the date of such meeting, will comply in all material
respects with the applicable requirements under the Exchange Act and will not
include an 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 light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that the foregoing shall not apply to the extent
that any such untrue statement of a material fact or omission to state a
material fact was made by the Company in reliance upon and in conformity with
written information concerning the Purchaser Companies furnished to the Company
by Purchaser specifically for use in the Proxy Statement. The Proxy Statement
shall not be filed, and no amendment or supplement to the Proxy Statement will
be made by the Company, without consultation with Purchaser and its counsel.
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7.4. EFFORTS; FILINGS AND OTHER ACTIONS. (a) Subject to the terms and
conditions herein provided, each of Purchaser, Merger Sub and the Company shall,
and the Company shall cause each of its subsidiaries to, and Purchaser shall
cause Merger Sub to, cooperate and use their respective reasonable best efforts
to take or cause to be made, all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including but not limited to,
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Proxy Statement, any required filings or requests for additional
information under the HSR Act, and any amendments to any thereof.
(b) Subject to the terms and conditions herein provided, the Company and
Purchaser shall, and Purchaser shall cause Merger Sub to, use all reasonable
best efforts to promptly take, or cause to be taken, all other action and do, or
cause to be done, all other things necessary, proper or appropriate under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable.
(c) The Company and Purchaser each shall keep the other appraised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Purchaser or the Company, as the case may be, or any
of their subsidiaries, from the SEC or any Governmental Entity with respect to
the Offer Documents, the Schedule 14D-9, the Offer or the Merger or any of the
other transactions contemplated by this Agreement.
7.5. ACCESS. Upon reasonable notice, the Company shall (and shall cause
each of its subsidiaries to) afford Purchaser's officers, employees, counsel,
accountants and other authorized representatives access, during normal business
hours throughout the period prior to the Effective Time, to its properties,
books, Contracts and records and, during such period, the Company shall (and
shall cause each of its subsidiaries to) furnish promptly to Purchaser all
information concerning its business, properties and personnel as Purchaser or
its Representatives may reasonably request; PROVIDED that no investigation
pursuant to this Section 7.5 shall affect or be deemed to modify any
representation or warranty made by the Company; PROVIDED, FURTHER, that the
foregoing shall not require the Company to permit any inspection, or to disclose
any information, which in the reasonable judgment of the Company would result in
the disclosure of any trade secrets of third parties or violate any obligation
of the Company with respect to confidentiality if the Company shall have used
reasonable best efforts to obtain the consent of such third party to such
inspection or disclosure or which would violate applicable law. Purchaser agrees
that it will not, and will use its reasonable best efforts to cause its
representatives and affiliates not to, use any of the information obtained
hereunder for any purpose unrelated to the consummation of the Offer and the
Merger and, until the consummation of the Offer, the terms of the
Confidentiality Agreement shall apply to such information which otherwise meets
the definition of "Confidential Information" under the Confidentiality
Agreement. All requests for information made pursuant to this Section shall be
directed to an executive officer of the Company or such Person as may be
designated by any such officer. The Company shall furnish promptly to Purchaser
and Merger Sub a copy of each report, schedule, registration statement and other
document filed by it or its subsidiaries during such period pursuant to the
requirements of federal or state securities laws. The Company shall cause its
independent auditors to allow the review of the work papers of such auditors
relating to the Company and its subsidiaries. Upon any termination of this
Agreement, Purchaser will collect and deliver to the Company all documents
obtained by it or any of its representatives then in their possession and any
copies thereof.
7.6. NOTIFICATION OF CERTAIN MATTERS. The Company shall give prompt notice
to Purchaser of, and, with respect to clause (c) below only, Purchaser and
Merger Sub shall give prompt notice to the Company of: (a) any material notice
of, or other material communication relating to, any environmental matter, a
cancellation or termination, a default or event that, with notice or lapse of
time or both, would become a default, received by the Company or any of its
subsidiaries subsequent to
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the date of this Agreement and prior to the Effective Time, under (i) any
Contract material to the financial condition, properties, businesses or results
of operations of the Company and its subsidiaries taken as a whole to which the
Company or any of its subsidiaries is a party or is subject or (ii) any
Municipal Contract, which, in any such case is reasonably likely to have a
Material Adverse Effect; (b) any material adverse change in the financial
condition, properties, business or results of operations of the Company and its
subsidiaries taken as a whole or the occurrence of any event (other than general
economic conditions or general conditions in the United States securities
markets) which, so far as reasonably can be foreseen at the time of its
occurrence, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect; and (c)(i) the occurrence or non-occurrence of any fact
or event which is reasonably likely (A) 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 hereof to the Effective Time or (B) to cause any
covenant, condition or agreement under this Agreement not to be complied with or
satisfied in any material respect and (ii) any failure to comply with or to
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder in any material respect; PROVIDED, HOWEVER, that no such
notification shall modify the representations or warranties of any party or the
conditions to the obligations of any party hereunder. Each of the Company and
Purchaser shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, if the failure to obtain such consent, individually or in the
aggregate with all other such failures, is reasonably likely to (x) have a
Material Adverse Effect or (y) prevent, materially delay or materially impair
the ability of the Company to consummate the transactions contemplated by this
Agreement. The Company agrees to provide Purchaser with copies of any
information that was provided to the Company Board in connection with its
approval of any acquisition permitted under Section 7.1(c)(iv) of this
Agreement.
7.7. PUBLICITY. The initial press release concerning this Agreement and
the transactions contemplated hereby shall be a joint press release and
thereafter the Company and Purchaser shall consult with each other prior to
issuing any press releases or otherwise making public statements with respect to
the transactions contemplated hereby and prior to making any filings with any
Governmental Entity or with any national securities exchange with respect
thereto.
7.8. OPTIONS AND BENEFITS. (a) STOCK OPTIONS. AT THE EFFECTIVE TIME, EACH
STOCK OPTION OUTSTANDING PURSUANT TO THE STOCK PLANS (THE "OPTIONS"), whether or
not then exercisable, shall be canceled and only entitle the holder thereof to
receive from the Surviving Corporation a single lump sum amount in cash equal to
the result of multiplying (i) the excess of the Merger Consideration over the
exercise price per Share of such Option by (ii) the number of Shares previously
subject to such Option. The Company shall, prior to the Effective Time, take all
appropriate action to accomplish the foregoing. Notwithstanding the foregoing,
on the date the Merger Sub irrevocably accepts for payment Shares tendered
pursuant to the Offer, Options held by the employees designated on Schedule 7.8
hereto (the "COVERED EMPLOYEES"), whether or not then exercisable, shall be
cancelled and the Covered Employees shall be entitled to receive in lieu thereof
a lump sum payment in cash equal to the number obtained by multiplying (i) the
excess of the Offer Price over the exercise price per Share of such Option by
(ii) the number of Shares subject to Options, which sum shall be payable as
promptly as practicable.
(b) EMPLOYEE BENEFITS. Purchaser agrees that, during the period commencing
at the Effective Time and ending on the first anniversary thereof, the employees
of the Company and its subsidiaries will continue to be provided with benefits
under employee benefit plans (other than plans involving the issuance of
securities of the Company) which in the aggregate are substantially comparable
to those currently provided by the Company and its subsidiaries to such
employees; PROVIDED, HOWEVER, that employees covered by collective bargaining
agreements need not be provided such benefits. Purchaser will cause each
employee benefit plan of Purchaser in which employees of the Company and its
subsidiaries are eligible to participate to take into account for purposes of
eligibility and vesting
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thereunder the service of such employees with the Company and its subsidiaries
as if such service were with Purchaser. Such employees shall also be given
credit for any deductible or co-payment amounts paid in respect of the plan year
in which the Effective Time occurs, to the extent that, in the plan year
following the Effective Time, they participate in any medical, health or dental
plan of Purchaser for which deductibles or co-payments are required. Purchaser
shall also cause each medical, health or dental plan of Purchaser, in which such
employees are eligible to participate after the Effective Time, to waive (i) any
pre-existing condition restriction, eligibility waiting period and evidence of
insurability requirements which was waived under the terms of any analogous
employees benefit plan of the Company immediately prior to the Effective Time or
(ii) waiting period limitation which would otherwise be applicable to an
employee on or after the Effective Time to the extent such employee had
satisfied any similar waiting period limitation under an analogous employee
benefit plan of the Company prior to the Effective Time. Purchaser will, and
will cause the Surviving Corporation to, timely and fully honor (without
modification) all employee benefit obligations to current and former employees
of the Company and its subsidiaries accrued as of the Effective Time and, to the
extent set forth in the Company Reports and Schedule 6.1(b), all employee
severance plans (or policies), employment agreements and severance agreements in
existence on the date hereof.
(c) 1999 MANAGEMENT INCENTIVE PLAN. It is understood and agreed that the
Company shall amend its 1999 Management Incentive Plan (the "MIP") to provide
that all eligible participants in such plan who remain employed by the Company
(or a subsidiary of the Company) as of December 31, 1999 ("ELIGIBLE
PARTICIPANTS"), will receive a bonus amount (as determined and adjusted as set
forth in the next succeeding sentence) in cash equal to (i) the amount of cash
and (ii) the fair market value of stock options (which shall be calculated in
the manner set forth below), in each case, which such persons otherwise would
have been entitled to receive under the MIP for the year ending December 31,
1999 (the "FIRST BONUS AMOUNT"). The First Bonus Amount shall be (a) calculated
based on the financial results of the Company and its subsidiaries for the
six-month period ending June 30, 1999, as compared to the financial results of
the Company and its subsidiaries for the six-month period ended June 30, 1998
(and assuming a satisfactory rating on personal and departmental goals and
objectives at the Company's headquarters for such six-month period in 1999), (b)
divided by 2, and (c) paid no later than February 14, 2000. It is also
understood and agreed that the Company shall further amend the MIP to provide
that all Eligible Participants will receive a bonus amount (as determined and
adjusted as set forth in the next succeeding sentence) in cash equal to (i) the
amount of cash and (ii) the fair market value of stock options (which shall be
calculated in the manner set forth below), in each case, which such persons
otherwise would have been entitled to receive under the MIP for the year ending
December 31, 1999 (the "SECOND BONUS AMOUNT"). The Second Bonus Amount shall be
(a) calculated based on the percentage increase in the "pre-tax earnings" (as
defined in the Company's Long Term Performance Award Plan) of the Company and
its subsidiaries for the six-month period ending December 31, 1999, as compared
to the pre-tax earnings of the Company and its subsidiaries for the six-month
period ended December, 1998 (and assuming a satisfactory rating on personal and
departmental goals and objectives at the Company's headquarters for such
six-month period in 1999), (b) divided by 2, and (c) paid no later than February
14, 2000. The fair market value of stock options referred to in this section
shall be deemed to be one-half of the excess of (x) the Merger Consideration
over (y) the closing sale price for the Shares on the last business day
preceding the date of this Agreement as reported by the Nasdaq National Market.
7.9. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. (a) From and
after the Effective Time, Purchaser agrees that it will cause the Surviving
Corporation and its subsidiaries (as appropriate) to indemnify and hold harmless
each present and former director and officer of the Company and its
subsidiaries, determined as of the Effective Time (the "INDEMNIFIED PARTIES"),
against any costs or expenses (including reasonable attorneys' fees and
disbursements), judgments, fines, losses, claims, damages or liabilities
(collectively, "COSTS") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of
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matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent that the Company would have been permitted or required under the WBCL and
its Restated Articles or By-Laws in effect on the date hereof to indemnify such
Person (and Purchaser shall also advance expenses as incurred to the fullest
extent permitted or required under the WBCL, provided the Person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Person is not entitled to indemnification under
the WBCL, the Company's Restated Articles or By-Laws in effect on the date
hereof); PROVIDED that any determination required to be made with respect to
whether an officer's or director's conduct complies with the standards set forth
under the WBCL and the Restated Articles and By-Laws as in effect on the date
hereof shall be made by independent counsel mutually selected by the Surviving
Corporation and the Person seeking indemnification and otherwise in accordance
with the provisions and procedures currently set forth in the Company's By-Laws
in effect as of the date hereof.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of Section 7.9, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Purchaser or the Surviving Corporation
thereof, but the failure to so notify shall not relieve Purchaser or the
Surviving Corporation of any liability it may have to such Indemnified Party if
such failure does not materially prejudice the indemnifying party and then only
to the extent so materially prejudiced. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), (i) Purchaser or the Surviving Corporation shall have the right to assume
and control the defense thereof (PROVIDED, that if either does so, then the
standards of conduct set forth under the WBCL shall be irrevocably deemed to be
satisfied by the Indemnified Parties) and Purchaser shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Purchaser or the Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Parties advises
that, in such counsel's reasonable judgment, there are material issues that
constitute conflicts of interest between Purchaser or the Surviving Corporation
and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Purchaser or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; PROVIDED, HOWEVER, that Purchaser
shall be obligated pursuant to this paragraph (b) to pay for only one firm of
counsel (licensed in such jurisdiction) chosen by them for all Indemnified
Parties in any jurisdiction unless the use of one such counsel for such
Indemnified Parties would present such counsel with a conflict of interest, (ii)
the Indemnified Parties will cooperate in the defense of any such matter and
(iii) Purchaser shall not be liable for any settlement effected without its
prior written consent; and PROVIDED FURTHER that, in the event Purchaser or the
Surviving Corporation shall not have assumed such defense, Purchaser shall not
have any obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law.
(c) The Purchaser and the Surviving Corporation shall maintain in full
effect, without lapse or modification, the Company's existing officers' and
directors' liability insurance ("D&O INSURANCE") for a period of six years after
the Effective Time, so long as the annual premium therefor is not in excess of
200% of the last annual premium paid by the Company prior to the date hereof
(the "CURRENT PREMIUM"); PROVIDED, HOWEVER, if the existing D&O Insurance
expires, is terminated or canceled during such six-year period, the Purchaser
and the Surviving Corporation will use its reasonable best efforts to obtain as
much D&O Insurance as can be obtained for the remainder of such period for a
premium not in excess (on an annualized basis) of 200% of the Current Premium.
(d) The rights under this Section 7.9 are not exclusive of any other rights
an Indemnified Party may have under applicable law.
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7.10. OTHER ACTIONS BY THE COMPANY.
(a) RIGHTS AGREEMENT. The Company covenants and agrees that it will not
(i) redeem the Rights, (ii) amend the Rights Agreement or (iii) take any action
that would allow any Person (as defined in the Rights Agreement) other than
Purchaser or Merger Sub to acquire beneficial ownership of 15% or more of the
Shares without causing a Distribution Date or a Shares Acquisition Date.
(b) STATE TAKEOVER LAWS. If any Takeover Statute shall become applicable
to the transactions contemplated hereby, the Company and the members of the
Company Board shall grant such approvals and take such actions as are necessary
so that the transactions contemplated hereby and the Stock Option Agreement may
be consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or regulation
on the transactions contemplated hereby. The Company shall, upon the request of
the Purchaser, take all reasonable steps to assist in any challenge by the
Purchaser to the validity or applicability to the transactions contemplated by
this Agreement and the Stock Option Agreement, including the Offer and the
Merger, of any Takeover Statute.
ARTICLE VIII
CONDITIONS
8.1. CONDITIONS TO OBLIGATIONS OF PURCHASER AND MERGER SUB. The respective
obligations of Purchaser and Merger Sub to consummate the Merger are subject to
the fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by Purchaser or Merger Sub, as the case may be, to
the extent permitted by applicable law:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been duly approved by
the requisite affirmative vote of holders of Shares, in accordance with
applicable law and the Restated Articles and By-Laws of the Company (provided
that Purchaser and Merger Sub shall have voted their Shares (and shall have been
represented for quorum purposes) at such meeting in accordance with Section 7.3;
(b) PURCHASE OF SHARES. Merger Sub shall have purchased Shares pursuant to
the Offer;
(c) GOVERNMENTAL AND REGULATORY CONSENTS. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than the filings provided for in Section 2.3, all filings
required to be made prior to the Effective Time by the Company with, and all
consents, approvals and authorizations required to be obtained prior to the
Effective Time by the Company from, any Governmental Entity in connection with
the execution and delivery of this Agreement by the Company and the consummation
of the transactions contemplated hereby by the Company, Purchaser and Merger Sub
shall have been made or obtained (as the case may be), except where the failure
to so make or obtain is not reasonably likely to have a Material Adverse Effect
on the Company;
(d) INJUNCTION. No United States or state court or other Governmental
Entity of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree, injunction
or other order (whether temporary, preliminary or permanent) which is in effect
and prohibits consummation of the transactions contemplated by this Agreement or
imposes material restrictions on Purchaser or the Company in connection with
consummation of the Merger or with respect to their business operations, either
prior to or subsequent to the Merger (collectively, an "ORDER") which is
reasonably likely to have a Material Adverse Effect (PROVIDED, HOWEVER, that
before invoking this condition, Purchaser and Merger Sub shall use its
reasonable best efforts to prevent, vacate, overturn, repeal or limit any such
Order so that it is not reasonably likely to have a Material Adverse Effect);
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(e) OTHER OBLIGATIONS. The Company shall have fulfilled its obligations
under Section 7.8(a) and the representations and warranties contained in
Sections 6.1(j) and 6.1(k) shall be true and correct as of the Effective Time as
if made on such date.
8.2. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the Merger are subject to the fulfillment of each of the
following conditions, any or all of which may be waived in whole or in part by
the Company to the extent permitted by applicable law:
(a) SHAREHOLDER APPROVAL. This Agreement shall have been duly approved by
the requisite affirmative vote of holders of Shares, in accordance with
applicable law and the Restated Articles and By-Laws of the Company (provided
that the Purchaser and Merger Sub shall have voted their Shares (and shall have
been represented for quorum purposes) at such meeting in accordance with Section
7.3;
(b) PURCHASE OF SHARES. Merger Sub shall have purchased Shares pursuant to
the Offer;
(c) GOVERNMENTAL AND REGULATORY CONSENTS. The waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated and, other than the filings provided for in Section 2.3, all filing
required to be made prior to the Effective Time by Purchaser and Merger Sub
with, and all consents, approvals, permits and authorizations required to be
obtained prior to the Effective Time by Purchaser and Merger Sub from, any
Governmental Entity in connection with the execution and delivery of this
Agreement by Purchaser and Merger Sub and the consummation of the transactions
contemplated hereby by Purchaser, Merger Sub and the Company shall have been
made or obtained (as the case may be), except where the failure to so make or
obtain is not reasonably likely to have a Material Adverse Effect on the
Company; and
(d) ORDER. No Order shall be in effect which is reasonably likely to have
a Material Adverse Effect (PROVIDED, HOWEVER, that before invoking this
condition, the Company shall use its reasonable best efforts to prevent, vacate,
overturn, repeal or limit any such Order so that it is not reasonably likely to
have a Material Adverse Effect).
ARTICLE IX
TERMINATION
9.1. TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by holders of Shares, by the mutual consent of Purchaser and
the Company, by action of their respective Boards of Directors.
9.2. TERMINATION BY EITHER PURCHASER OR THE COMPANY. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval by holders of Shares, by action of the Board
of Directors of either Purchaser or the Company (in accordance with Section 4.3)
if (i) Merger Sub shall have terminated the Offer without purchasing any Shares
pursuant thereto in accordance with this Agreement; (ii) the approval of
shareholders required by Section 8.1(a) shall not have been obtained at a
meeting duly convened therefor (PROVIDED Merger Sub complies with Section 7.3);
or (iii) any court of competent jurisdiction or other Governmental Entity
located or having jurisdiction within the United States or the Republic of
France, shall have issued a final order, decree or ruling or taken any other
final action restraining, enjoining or otherwise prohibiting the Offer or the
Merger and such order, decree, ruling or other action is or shall have become
final and nonappealable and which is reasonably likely to have a Material
Adverse Effect (PROVIDED, HOWEVER, that before invoking this Section 9.2(iii),
the party invoking this Section shall use its reasonable best efforts to
prevent, vacate, overturn, repeal or limit any such order, decree, ruling or
other action so that it is not reasonably likely to have a Material Adverse
Effect).
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9.3. TERMINATION BY PURCHASER. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by holders of Shares, by action of the Board of Directors of
Purchaser, if (x) prior to the purchase of Shares pursuant to the Offer in
accordance with this Agreement, the Company shall have failed to perform in any
respect any of the covenants or agreements contained in this Agreement to be
complied with or performed by the Company at or prior to such date of
termination, which failure is reasonably likely to have a Material Adverse
Effect on the Company and which failure shall not have been reasonably cured
prior to the later of (A) ten business days following the giving of written
notice to the Company of such failure (provided that Purchaser and Merger Sub
shall be required to extend only the initially scheduled expiration date of the
Offer pursuant to this clause) and (B) two business days prior to the date on
which the Offer is then scheduled to expire, (y) the Company Board (or a special
committee thereof) shall have amended, withdrawn or modified in a manner adverse
to Purchaser or Merger Sub its approval or recommendation of the Offer, this
Agreement or the Merger or the Company Board shall have failed to reaffirm such
approval or recommendation within two business days of the written request by
Purchaser or Merger Sub to do so, shall have publicly endorsed, approved or
recommended any other Acquisition Proposal or shall have publicly announced it
has resolved to do any of the foregoing, or (z) if the Company or any of the
other Persons or entities described in Section 7.2 shall take any actions that
would be proscribed by Section 7.2 but for the exception therein allowing
certain actions to be taken if required by fiduciary obligations under
applicable law as advised by outside counsel.
9.4. TERMINATION BY THE COMPANY. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval by holders of Shares by action of the Company Board, (i) if
Purchaser or Merger Sub (or another Purchaser Company) (x) shall have failed to
perform in any respect any of the covenants or agreements contained in this
Agreement to be complied with or performed by Purchaser or Merger Sub at or
prior to such date of termination, and which failure shall not have been
reasonably cured prior to the later of (A) five business days following the
giving of written notice to Purchaser of such failure and (B) two business days
prior to the date on which the Offer is then scheduled to expire, or (y) shall
have failed to commence the Offer within the time required in Section 1.1 or
(ii) if (w) the Company is not in material breach of any of the terms of this
Agreement, (x) the Company Board authorizes the Company, subject to complying
with the terms of this Agreement, to enter into a binding written agreement
concerning a transaction that constitutes a Superior Proposal and the Company
notifies Purchaser in writing that it intends to enter into such an agreement,
attaching the most current version of such agreement (which shall include all of
the material terms, including the price proposed to be paid for Shares pursuant
thereto) to such notice, (y) Purchaser does not make, within three business days
of receipt of the Company's written notification of its intention to enter into
a binding agreement for a Superior Proposal, an offer that the Company Board
determines, in good faith after consultation with its financial advisors, is at
least as favorable, from a financial point of view, to the stockholders of the
Company as the Superior Proposal and (z) the Company, prior to such termination,
pays to Purchaser in immediately available funds the fees required to be paid
pursuant to Section 9.5(b).
9.5. EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of
termination of this Agreement and abandonment of the Merger pursuant to this
Article IX, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except as
provided in Section 9.5(b) below and Section 10.2 and except that nothing herein
will relieve any party from liability for any willful breach of this Agreement,
PROVIDED, HOWEVER, that if this Agreement is terminated by Purchaser pursuant to
Section 9.3(x) or the Company pursuant to Section 9.4(i)(x), the terminating
party's right to pursue all legal remedies will survive such termination
unimpaired.
(b) If (x)(i) the Offer shall have remained open for a minimum of at least
20 business days, (ii) after the date hereof any corporation, partnership,
person, other entity or group (as defined in
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<PAGE>
Section 13(d)(3) of the Exchange Act and the rules promulgated thereunder) other
than Purchaser or Merger Sub or any of their respective subsidiaries or
affiliates (collectively, a "PERSON") shall have become the beneficial owner (as
defined in Section 13(d) of the Exchange Act and the rules promulgated
thereunder) of 15% or more of the outstanding Shares (other than for bona fide
arbitrage purposes), shall have publicly announced an Acquisition Proposal or
any Person shall have commenced, or shall have publicly announced an intention
to commence, a tender offer or exchange offer for 15% or more of the outstanding
Shares, and (iii) the Minimum Condition shall not have been satisfied as of the
expiration date of the Offer and the Offer is terminated without the purchase of
any Shares thereunder, (y) Purchaser shall have terminated this Agreement
pursuant to Section 9.3(y) or (z) hereof, or (z) the Company shall have
terminated this Agreement pursuant to Section 9.4(ii) hereof, then the Company
shall promptly, but in no event later than two business days after the date of
such termination, pay Purchaser a fee of $26 million (the "TERMINATION FEE"),
and shall reimburse Purchaser and Merger Sub (not later than two business days
after written request by Purchaser or Merger Sub to do so) for all of the
out-of-pocket charges and expenses, including financing fees (which
out-of-pocket charges and expenses shall be set forth with reasonable
specificity in written documentation provided to the Company), actually incurred
by Purchaser or Merger Sub through the date of termination in connection with
this Agreement and the transactions contemplated by this Agreement, up to a
maximum amount of $4 million (the "REIMBURSEMENT FEE"), in each case payable by
wire transfer in same day funds; PROVIDED, THAT, in the event the Company shall
have terminated this Agreement pursuant to Section 9.4(ii) hereof, the Company
shall pay the amount due pursuant to this Section 9.5(b) prior to any such
termination. The Company acknowledges that the agreements contained in this
Section 9.5(b) are an integral part of the transactions contemplated in this
Agreement, and that, without these agreements, Purchaser and Merger Sub would
not enter into this Agreement; accordingly, if the Company fails to promptly pay
the amount due pursuant to this Section 9.5(b), and, in order to obtain such
payment, Purchaser or Merger Sub commences a suit which results in a judgment
against the Company for the fees set forth in this paragraph (b), the Company
shall pay to Purchaser or Merger Sub its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on the
amount of the fees at the prime rate of Citibank, N.A. on the date such payment
was required to be made. If Purchaser or Merger Sub, or the Company, as the case
may be, commences a suit against any other party hereto which suit does not
result in a judgment against the other party, the party commencing such suit
shall pay to the other the other party's costs and expenses (including
attorneys' fees) incurred in connection with such suit.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1. PAYMENT OF EXPENSES. Whether or not the Merger shall be consummated,
each party hereto shall, subject to Section 9.5(b), pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the Merger.
10.2. SURVIVAL. The agreements of the Company, Purchaser and Merger Sub
contained in Sections 5.2 (Payment for Shares) (but only to the extent that such
Section expressly relates to actions to be taken after the Effective Time), 5.3
(Dissenters' Rights), 5.4 (Transfer of Shares After the Effective Time), 7.8
(Options and Benefits), 7.9 (Indemnification; Directors' and Officers'
Insurance), and 10.1 (Payment of Expenses) shall survive the consummation of the
Merger. The agreements of the Company, Purchaser and Merger Sub contained in the
Confidentiality Agreement, 6.1(c) (Corporate Authority), 6.2(b) (Corporate
Authority), Section 9.5 (Effect of Termination and Abandonment) and Sections
10.1 (Payment of Expenses), 10.6 (Governing Law), 10.7 (Notices), 10.9 (Entire
Agreement), 10.10 (Definition of "Subsidiary"), 10.11 (Obligations of Purchaser)
and 10.12 (Captions) shall survive the termination of this Agreement. All other
representations, warranties, agreements and covenants in
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<PAGE>
this Agreement shall not survive the consummation of the Merger or the
termination of this Agreement.
10.3. MODIFICATION OR AMENDMENT. Subject to the applicable provisions of
the WBCL, at any time prior to the Effective Time, the parties hereto may modify
or amend this Agreement, by written agreement executed and delivered by duly
authorized officers of the respective parties.
10.4. WAIVER OF CONDITIONS. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.5. COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
10.6. GOVERNING LAW.
(a) GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE
DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE APPLICABLE
TO CONTRACTS TO BE PERFORMED WHOLLY IN SUCH STATE. The parties hereby
irrevocably submit to the jurisdiction of the courts of the State of Delaware
and the Federal courts of the United States of America located in the State of
Delaware solely in respect of the interpretation and enforcement of the
provisions of this Agreement and the Stock Option Agreement and of the documents
referred to in this Agreement and the Stock Option Agreement, and in respect of
the transactions contemplated hereby and thereby, and hereby waive, and agree
not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement and the Stock Option Agreement or any such document may
not be enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard and
determined in such a Delaware State or Federal court. The parties hereby consent
to and grant any such court jurisdiction over the person of such parties and
over the subject matter of such dispute and agree that mailing of process or
other papers in connection with any such action or proceeding in the manner
provided in Section 10.7 or in such other manner as may be permitted by law
shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT OR THE STOCK OPTION AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE STOCK OPTION AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR THE STOCK OPTION AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE STOCK OPTION AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.6.
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<PAGE>
10.7. NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
IF TO PURCHASER OR MERGER SUB
Vivendi
42, Avenue de Friedland
75380 Paris Cedex 08
France
Attention: Henri Proglio
fax: (011) 33-171-71-1179
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: David M. Kies, Esq. and
Keith A. Pagnani, Esq.
fax: (212) 558-3588
IF TO THE COMPANY
Superior Services, Inc.,
125 South 84th Street, Suite 200
Milwaukee, Wisconsin 53214
Attention: Peter J. Ruud and
Scott S. Cramer
fax: (414) 479-7400
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Steven R. Barth, Esq.
fax: (414) 297-4900
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
10.8. 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. 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 the transactions contemplated hereby are fulfilled to the fullest
extent possible.
10.9. ENTIRE AGREEMENT, ETC. (a) This Agreement (including any exhibits,
Schedules or Annexes hereto) and the Confidentiality Agreement (i) constitutes
the entire agreement, and supersedes all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof, and (ii) shall not be assignable by
operation of law or otherwise and, subject to Section 10.9(b), is not intended
to create any obligations to, or rights in respect of, any Persons other than
the parties hereto; PROVIDED, HOWEVER, that Purchaser may
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<PAGE>
designate, by written notice to the Company, another wholly-owned direct or
indirect subsidiary to be a Constituent Corporation in lieu of Merger Sub, in
the event of which, all references herein to Merger Sub shall be deemed
references to such other subsidiary, except that all representations and
warranties made herein with respect to Merger Sub as of the date of this
Agreement shall be deemed representations and warranties made with respect to
such other subsidiary as of the date of such designation.
(b) It is expressly agreed that all of the Persons (and their successors and
assigns) who are beneficiaries of Section 7.9 (whether as individuals or members
of a class or group) shall be entitled to enforce such Sections against
Purchaser or the Surviving Corporation and such Sections shall be binding on all
successors and assigns of the Surviving Corporation or of Purchaser.
10.10. DEFINITION OF "SUBSIDIARY". When a reference is made in this
Agreement to a subsidiary of a party, the word "subsidiary" means any
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or other Persons performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries.
10.11. OBLIGATION OF PURCHASER. Whenever this Agreement requires Merger
Sub to take any action, such requirement shall be deemed to include an
undertaking on the part of Purchaser to cause Merger Sub to take such action.
10.12. CAPTIONS. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first hereinabove
written.
SUPERIOR SERVICES, INC.
By: /s/ G. William Dietrich
--------------------------------------
Name: G. William Dietrich
Title: President and Chief
Executive Officer
VIVENDI
By: /s/ Henri Proglio
--------------------------------------
Name: Henri Proglio
Title: Directeur General
ONYX SOLID WASTE ACQUISITION CORP.
By: /s/ Denis Gasquet
--------------------------------------
Name: Denis Gasquet
Title: President and Chief
Executive Officer
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Annex A
CERTAIN CONDITIONS OF THE OFFER. The capitalized terms used in this Annex A
have the respective meanings ascribed to such terms in the annexed Agreement.
Notwithstanding any other provision of the Offer, but subject to its obligations
under Section 1.1(a) of the annexed Agreement, Merger Sub shall not be obligated
to accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, or may delay the acceptance for payment of or
payment for, any tendered Shares, or may, in its sole discretion, terminate or
amend the Offer as to any Shares not then paid for if, (i) prior to the
expiration of the Offer, (x) a number of Shares which, together with any Shares
owned by Purchaser or Merger Sub, constitutes 75% or more of the Shares then
outstanding as of the expiration date of the Offer (determined on a
fully-diluted basis, but excluding Shares subject to the option granted under
the Stock Option Agreement) shall not have been validly tendered and not
withdrawn (the "MINIMUM CONDITION") or (y) any waiting periods under the HSR Act
applicable to the purchase of Shares pursuant to the Offer or the Merger shall
not have expired or been terminated, or any Regulatory Approvals (other than
Regulatory Approvals set forth on Schedule A hereto) applicable to the Offer and
the Merger shall not have been obtained on terms satisfactory to Purchaser in
its sole judgment or (ii) on or after the date of the Agreement, and at or
before the time of payment for any of such Shares (whether or not any Shares
have theretofore been accepted for payment), any of the following events shall
occur:
(a) there shall have occurred and be continuing as of the scheduled
expiration date of the Offer (i) any general suspension of, or limitation on
prices for, trading in securities on the New York Stock Exchange, Inc. or
the NASDAQ National Market (excluding any coordinated trading halt triggered
as a result of any decrease in any market indices and any general suspension
or limitation caused by physical damage, computer or system malfunction, in
each case not related to market conditions), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States,(iii) any material limitation (whether or not mandatory) by any
Governmental Entity, on the extension of credit by banks or other lending
institutions in the United States, (iv) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof that is continuing as of the scheduled
termination date of the Offer, or (v) any material adverse change in the
business or regulatory environment specific to the solid waste industry in
the United States;
(b) the Company shall have breached or failed to perform in any respect
any of its obligations, covenants or agreements under the Agreement or the
Stock Option Agreement and which breach or failure to perform, individually
or in the aggregate with all other breaches, is reasonably likely to have a
Material Adverse Effect on the Company or any representation or warranty of
the Company set forth in the Agreement or the Stock Option Agreement shall
have been inaccurate or incomplete in any respect when made or thereafter
shall become inaccurate or incomplete in any respect, if such inaccuracy or
incompleteness, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect (excluding for purposes of this paragraph (b)
only, any Material Adverse Effect qualifier contained in any such
representation or warranty); PROVIDED, HOWEVER, that any breach or failure
that is capable of being cured without a Material Adverse Effect, shall not
be deemed a breach or failure if, such breach or failure is reasonably cured
by the Company within the later of (A) ten business days after written
notice thereof by Purchaser is provided (provided that Purchaser and Merger
Sub shall be required to extend only the initially scheduled expiration date
of the Offer pursuant to this clause) and (B) two business days prior to the
date on which the Offer is then scheduled to expire;
(c) there shall be instituted, pending and continuing as of the
scheduled expiration date of the Offer, any action, litigation, proceeding,
investigation or other application (hereinafter, an
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<PAGE>
"ACTION") before any United States court or other Governmental Entity by any
Governmental Entity or by any other Person, domestic or foreign (other than
an Action brought by a shareholder of the Company): (i) challenging the
acquisition by Purchaser or Merger Sub of Shares pursuant to the Offer,
seeking to restrain or prohibit the consummation of the transactions
contemplated by the Offer, the Merger or the Stock Option Agreement or
seeking to obtain, from the Company, Purchaser, or Merger Sub, any damages
that are reasonably likely to have a Material Adverse Effect on the Company
or Purchaser or to prevent, materially delay or materially impair the
ability of the Company to consummate the transactions contemplated by the
Agreement or the Stock Option Agreement; (ii) seeking to prohibit, or impose
any material limitations on, Purchaser's or Merger Sub's ownership or
operation of all or any material portion of Purchaser's or the Company's
business or assets (including the business or assets of their respective
affiliates and subsidiaries taken as a whole), or to compel Purchaser or
Merger Sub to dispose of or hold separate all or any material portion of
Purchaser's or the Company's business or assets (including the business or
assets of their respective affiliates and subsidiaries taken as a whole) as
a result of the transactions contemplated by the Offer, the Merger or the
Stock Option Agreement; (iii) seeking to make the acceptance for payment,
purchase of, or payment for, some or all of the Shares illegal or render
Merger Sub unable to, or result in a delay of more than 10 business days in,
or materially restrict, the ability of Merger Sub to accept for payment,
purchase or pay for some or all of the Shares pursuant to the Offer or the
Merger (exclusive of actions under Sections 180.1301 to 180.1331 of the
WBCL); or (iv) seeking to impose material limitations on the ability of
Purchaser or Merger Sub effectively to acquire, hold or exercise full rights
of ownership of the Shares (to the extent allowed under Section 180.1150 of
the WBCL) including, without limitation, the right to vote the Shares
purchased by them on an equal basis with all other Shares on all matters
properly presented to the Company's shareholders;
(d) any statute, rule, regulation, order or injunction shall be enacted,
promulgated, entered, enforced or deemed or become applicable to the Offer
or the Merger, or any other action shall have been taken, and in each case
be in existence as of the scheduled expiration date of the Offer, by any
court or other Governmental Entity (other than the application to the Offer
or the Merger of waiting periods under the HSR Act), that is reasonably
likely to result in any of the effects of, or have any of the consequences
sought to be obtained or achieved in, any Action referred to in clauses (i)
through (iv) of paragraph (c) above;
(e) a tender or exchange offer for at least fifteen percent of the
Shares shall have been commenced or publicly proposed to be made by another
Person (including the Company or its subsidiaries), or it shall have been
publicly disclosed that (i) any Person (including the Company or its
subsidiaries) shall have become the beneficial owner (as defined in Section
13(d) of the Exchange Act and the rules promulgated thereunder) of fifteen
percent or more of any class or series of capital stock of the Company
(including the Shares) (other than for bona fide arbitrage purposes); or
(ii) any Person, entity or group shall have entered into (with the Company
or any agent or Representative of the Company) a definitive agreement or a
written agreement in principle with respect to an Acquisition Proposal
(excluding a confidentiality agreement allowed under Section 7.2);
(f) any change shall have occurred or be threatened and be continuing as
of the scheduled expiration date of the Offer, in the financial condition,
properties, businesses or results of operations of the Company or any of its
subsidiaries that is or is reasonably likely to have a Material Adverse
Effect on the Company;
(g) the Company Board (or a special committee thereof) shall have
amended, withdrawn or modified, in a manner adverse to Purchaser or Merger
Sub, its approval or recommendation of the Offer, the Agreement or the
Merger, or shall fail to reaffirm such approval or recommendation within two
business days of the written request by Purchaser or Merger Sub to do so, or
shall have
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<PAGE>
endorsed, approved or recommended any other Acquisition Proposal, or shall
have publicly announced it has resolved to do any of the foregoing; or
(h) the Agreement shall have been terminated by the Company or Purchaser
or Merger Sub in accordance with its terms or Purchaser or Merger Sub shall
have reached an agreement or understanding in writing with the Company
providing for termination or amendment of the Offer or delay in payment for
the Shares;
which, in the reasonable judgment of Purchaser and Merger Sub, in any such
case, and regardless of the circumstances (including any action or inaction by
Purchaser or Merger Sub, PROVIDED Purchaser and Merger Sub are not in violation
of the Agreement) giving rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for payment of or payment for
Shares.
The foregoing conditions are for the sole benefit of Purchaser and Merger
Sub and, subject to the terms of the Agreement, may be asserted by Purchaser or
Merger Sub regardless of the circumstances (including any action or inaction by
Purchaser or Merger Sub, PROVIDED Purchaser and Merger Sub are not in violation
of the Agreement) giving rise to any such condition or may be waived by
Purchaser or Merger Sub, by express and specific action to that effect, in whole
or in part at any time and from time to time in its sole discretion in
compliance with the Agreement. The failure of Merger Sub at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
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<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
ROBERT W BAIRD & CO. INCORPORATED 777 EAST WISCONSIN AVENUE MILWAUKEE, WI
53202-5391 414-765-3758
INVESTMENT BANKING June 11, 1999
ANNEX II
BOARD OF DIRECTORS
SUPERIOR SERVICES, INC.
125 SOUTH 84TH STREET, SUITE 200
MILWAUKEE, WI 53214
Dear Members of the Board:
Superior Services, Inc. (the "Company") proposes to enter into an Agreement
and Plan of Merger (the "Agreement") with Vivendi ("Purchaser") and Onyx Solid
Waste Acquisition Corp. ("Merger Sub"), an indirect wholly owned subsidiary of
Purchaser. Pursuant to the Agreement: (i) Merger Sub will commence a tender
offer (the "Offer") to purchase all of the outstanding shares of common stock,
par value $.01 per share (the "Company Common Stock"), including the associated
common stock purchase rights, at a purchase price per share of $27.00 in cash
(the "Consideration"), net to the seller and (ii) following completion of the
Offer, Merger Sub will be merged (the "Merger" and together with the Offer, the
"Transaction") with and into the Company. At the Effective Time (as defined in
the Agreement), each issued and outstanding share of Company Common Stock (other
than shares owned by Purchaser, Merger Sub, any other subsidiary of Purchaser,
or held in the Company's treasury or owned by any wholly owned subsidiary of the
Company, or held by any Dissenting Shareholder (as defined in the Agreement))
will be converted into the right to receive the Consideration.
You have requested our opinion as to the fairness, from a financial point of
view, of the Consideration to the holders of the Company Common Stock (other
than Purchaser and its affiliates).
Robert W. Baird & Co. Incorporated ("Baird"), as part of its investment
banking business, is engaged in the evaluation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.
In conducting our investigation and analysis and in arriving at our opinion
herein, we have reviewed such information and taken into account such financial
and economic factors as we have deemed relevant under the circumstances. In that
connection, we have, among other things: (i) reviewed certain internal
information, primarily financial in nature, including projections, concerning
the business and operations of the Company furnished to us for purposes of our
analysis, as well as publicly available information including but not limited to
the Company's recent filings with the Securities and Exchange Commission and
equity analyst research reports prepared by various investment banking firms
including Baird; (ii) reviewed the draft Agreement in the form presented to the
Company's Board of Directors; (iii) compared the historical market prices and
trading activity of the Company Common Stock with those of certain other
publicly traded companies we deemed relevant; (iv) compared the financial
position and operating results of the Company with those of other publicly
traded companies we deemed relevant; and (v) compared the proposed financial
terms of the Transaction with the financial terms of certain other business
combinations we deemed relevant. We have held discussions with members of the
Company's senior management concerning the Company's historical and current
financial condition and operating results, as well as the future prospects of
the Company. Although as a part of our engagement we were not requested to, and
did not, solicit third party indications of interest in acquiring all or any
part of the Company, we understand that such
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<PAGE>
Superior Services
June 11, 1999
Page 2
solicitations were made by the Company and its financial advisor. We have also
considered such other information, financial studies, analysis and
investigations and financial, economic and market criteria which we deemed
relevant for the preparation of this opinion.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of all of the financial and other information that was publicly
available or provided us by or on behalf of the Company, and have not been
engaged to independently verify any such information. We have assumed, with your
consent, that: (i) all material assets and liabilities (contingent or otherwise,
known or unknown) of the Company are as set forth in the Company's financial
statements, (ii) the Transaction will be accounted for under the purchase method
and (iii) the Transaction will be consummated in accordance with the terms of
the Agreement without any amendment thereto and without waiver by any party of
any condition of their respective obligations. We have also assumed that the
financial forecasts examined by us (including estimates of cost savings and
operating benefits) were reasonably prepared on bases reflecting the best
available estimates and good faith judgments of the Company's senior management
as to future performance of the Company. In conducting our review, we have not
undertaken nor obtained an independent evaluation or appraisal of any of the
assets or liabilities (contingent or otherwise) of the Company nor have we made
a physical inspection of the properties or facilities of the Company. Our
opinion necessarily is based upon economic, monetary and market conditions as
they exist and can be evaluated on the date hereof, and does not predict or take
into account any changes which may occur, or information which may become
available, after the date hereof.
Our opinion has been prepared at the request and for the information of the
Board of Directors of the Company, and shall not be used for any other purpose
or disclosed to any other party without the prior written consent of Baird;
provided, however, that this letter may be reproduced in full in the Schedule
14D-9 to be filed in connection with the Offer and in any Proxy Statement to be
provided to the Company's shareholders in connection with the Merger. This
opinion does not address the relative merits of the Transaction and any other
potential transactions or business strategies considered by the Company's Board
of Directors, and does not constitute a recommendation to any shareholder of the
Company as to how any such shareholder should vote with respect to the
Transaction. Baird will receive a fee for rendering this opinion. In the past,
we have provided investment banking services to the Company, including acting as
co-manager of the Company's initial public offering and a subsequent offering of
Company Common Stock, for which we received our customary compensation.
In the ordinary course of our business, we may from time to time trade the
securities of the Company or Purchaser for our own account or the accounts of
our customers and, accordingly, may at any time hold long or short positions in
such securities.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Consideration is fair, from a financial point of view, to
the holders of Company Common Stock (other than Purchaser and its affiliates).
Very truly yours,
ROBERT W. BAIRD & CO. INCORPORATED
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<PAGE>
ANNEX III
DIRECTORS DESIGNATED BY PARENT
The following table sets forth the name, present principal occupation or
employment and five-year employment history for each of the directors of the
Company designated by Parent. All such directors are citizens of France and
their principal business address is Vivendi, 42, Avenue de Friedland, 75380
Paris Cedex 08, France.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME 5-YEAR EMPLOYMENT HISTORY; DIRECTORSHIP
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Henri Proglio........................................... Senior Executive Vice President of Parent
Denis Gasquet........................................... President and CEO of Purchaser and CEO of CGEA
Michel Gourvennec....................................... Vice President of Purchaser and President and CEO of
Montenay International Corp.
</TABLE>
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<PAGE>
ANNEX IV
DISSENTERS' RIGHTS
SUBCHAPTER XIII
SECTIONS 180.1301 THROUGH 180.1331
OF THE
WISCONSIN BUSINESS CORPORATION LAW
180.1301 DEFINITIONS. IN ss. 180.1301 TO 180.1331:
(1) "Beneficial shareholder" means a person who is a beneficial owner of
shares held by a nominee as the shareholder.
(1m) "Business combination" has the meaning given in s. 180.1130(3).
(2) "Corporation" means the issuer corporation or, if the corporate action
giving rise to dissenters' rights under s. 180.1302 is a merger or share
exchange that has been effectuated, the surviving domestic corporation or
foreign corporation of the merger or the acquiring domestic corporation or
foreign corporation of the share exchange.
(3) "Dissenter" means a shareholder or beneficial shareholder who is
entitled to dissent from corporate action under s. 180.1302 and who exercises
that right when and in the manner required by ss. 180.1320 to 180.1328.
(4) "Fair value", with respect to a dissenter's shares other than in a
business combination, means the value of the shares immediately before the
effectuation of the corporate action to which the dissenter objects, excluding
any appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable. "Fair value", with respect to a dissenter's
shares in a business combination, means market value, as defined in s.
180.1130(9)(a) 1 to 4.
(5) "Interest" means interest from the effectuation date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all of the circumstances.
(6) "Issuer corporation" means a domestic corporation that is the issuer of
the shares held by a dissenter before the corporate action.
HISTORY: 1989 a. 303; 1991 a. 16.
180.1302 RIGHT TO DISSENT.
(1) Except as provided in sub. (4) and s. 180.1008(3), a shareholder or
beneficial shareholder may dissent from, and obtain payment of the fair value of
his or her shares in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the issuer corporation is
a party if any of the following applies:
1. Shareholder approval is required for the merger by s. 180.1103
or by the articles of incorporation.
2. The issuer corporation is a subsidiary that is merged with its
parent under s. 180.1104.
(b) Consummation of a plan of share exchange if the issuer corporation's
shares will be acquired, and the shareholder or the shareholder holding
shares on behalf of the beneficial shareholder is entitled to vote on the
plan.
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(c) Consummation of a sale or exchange of all, or substantially all, of
the property of the issuer corporation other than in the usual and regular
course of business, including a sale in dissolution, but not including any
of the following:
1. A sale pursuant to court order.
2. A sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the
shareholders within one year after the date of sale.
(d) Except as provided in sub. (2), any other corporate action taken
pursuant to a shareholder vote to the extent that the articles of
incorporation, bylaws or a resolution of the board of directors provides
that the voting or nonvoting shareholder or beneficial shareholder may
dissent and obtain payment for his or her shares.
(2) Except as provided in sub. (4) and s. 180.1008(3), the articles of
incorporation may allow a shareholder or beneficial shareholder to dissent from
an amendment of the articles of incorporation and obtain payment of the fair
value of his or her shares if the amendment materially and adversely affects
rights in respect of a dissenter's shares because it does any of the following:
(a) Alters or abolishes a preferential right of the shares.
(b) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares.
(c) Alters or abolishes a preemptive right of the holder of shares to
acquire shares or other securities.
(d) Excludes or limits the right of the shares to vote on any matter or
to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights.
(e) Reduces the number of shares owned by the shareholder or beneficial
shareholder to a fraction of a share if the fractional share so created is
to be acquired for cash under s. 180.0604.
(3) Notwithstanding sub. (1)(a) to (c), if the issuer corporation is a
statutory close corporation under ss. 180.1801 to 180.1837, a shareholder of the
statutory close corporation may dissent from a corporate action and obtain
payment of the fair value of his or her shares, to the extent permitted under
sub. (1)(d) or (2) or s. 180.1803, 180.1813(1)(d) or (2)(b), 180.1815(3) or
180.1829(1)(c).
(4) Except in a business combination or unless the articles of incorporation
provide otherwise, subs. (1) and (2) do not apply to the holders of shares of
any class or series if the shares of the class or series are registered on a
national securities exchange or quoted on the National Association of Securities
Dealers, Inc., automated quotations system on the record date fixed to determine
the shareholders entitled to notice of a shareholders meeting at which
shareholders are to vote on the proposed corporate action.
(5) Except as provided in s. 180.1833, a shareholder or beneficial
shareholder entitled to dissent and obtain payment for his or her shares under
ss. 180.1301 to 180.1331 may not challenge the corporate action creating his or
her entitlement under the action is unlawful or fraudulent with respect to the
shareholder, beneficial shareholder or issuer corporation.
HISTORY: 1989 a. 303; 1991 a. 16.
180.1303 DISSENT BY SHAREHOLDERS AND BENEFICIAL SHAREHOLDERS.
(1) A shareholder may assert dissenters' rights as to fewer than all of the
shares registered in his or her name only if the shareholder dissents with
respect to all shares beneficially owned by any one
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<PAGE>
person and notifies the corporation in writing of the name and address of each
person on whose behalf he or she asserts dissenters' rights. The rights of a
shareholder who under this subsection asserts dissenters' rights as to fewer
than all of the shares registered in his or her name are determined as if the
shares as to which he or she dissents and his or her other shares were
registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares held
on his or her behalf only if the beneficial shareholder does all of the
following:
(a) Submits to the corporation the shareholder's written consent to the
dissent not later than the time that the beneficial shareholder asserts
dissenters' rights.
(b) Submits the consent under par. (a) with respect to all shares of
which he or she is the beneficial shareholder.
HISTORY: 1989 a. 303.
180.1320 NOTICE OF DISSENTERS' RIGHTS.
(1) If proposed corporate action creating dissenters' rights under s.
180.1302 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders and beneficial shareholders are or may be entitled
to assert dissenters' right under ss. 180.1301 to 180.1331 and shall be
accompanied by a copy of those sections.
(2) If corporate action creating dissenters' rights under s. 180.1302 is
authorized without a vote of shareholders, the corporation shall notify, in
writing and in accordance with s. 180.0141, all shareholders entitled to assert
dissenters' rights that the action was authorized and send them the dissenters'
notice described in s. 180.1322.
HISTORY: 1989 a. 303.
180.1321 NOTICE OF INTENT TO DEMAND PAYMENT.
(1) If proposed corporate action creating dissenters' rights under s.
180.1302 is submitted to vote at a shareholders' meeting, a shareholder or
beneficial shareholder who wishes to assert dissenters' rights shall do all of
the following:
(a) Deliver to the issuer corporation before the vote is taken written
notice that complies with s. 180.0141 of the shareholder's or beneficial
shareholder's intent to demand payment for his or her shares if the proposed
action is effectuated.
(b) Not vote his or her shares in favor of the proposed action.
(2) A shareholder or beneficial shareholder who fails to satisfy sub. (1) is
not entitled to payment for his or her shares under ss. 180.1301 to 180.1331.
HISTORY: 1989 a. 303.
180.1322 DISSENTERS' NOTICE.
(1) If proposed corporate action creating dissenters' rights under s.
180.1302 is authorized at a shareholders' meeting, the corporation shall deliver
a written dissenters' notice to all shareholders and beneficial shareholders who
satisfied s. 180.1321.
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<PAGE>
(2) The dissenters' notice shall be sent no later than 10 days after the
corporate action is authorized at a shareholders' meeting or without a vote of
shareholders, whichever is applicable. The dissenters' notice shall comply with
s. 180.0141 and shall include or have attached all of the following:
(a) A statement indicating where the shareholder or beneficial
shareholder must send the payment demand and where and when certificates for
certified shares must be deposited.
(b) For holders of uncertificated shares, an explanation of the extent
to which transfer of the shares will be restricted after the payment demand
is received.
(c) A form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and that requires the shareholder or beneficial shareholder
asserting dissenters' rights to certify whether he or she acquired
beneficial ownership of the shares before that date.
(d) A date by which the corporation must receive the payment demand,
which may not be fewer than 30 days nor more than 60 days after the date on
which the dissenters' notice is delivered.
(e) A copy of ss. 180.1301 to 180.1331.
HISTORY: 1989 a. 303.
180.1323 DUTY TO DEMAND PAYMENT.
(1) A shareholder or beneficial shareholder who is sent a dissenters' notice
described in s. 180.1322, or a beneficial shareholder whose shares are held by a
nominee who is sent a dissenters' notice described in s. 180.1322, must demand
payment in writing and certify whether he or she acquired beneficial ownership
of the shares before the date specified in the dissenters' notice under s.
180.1322(2)(c). A shareholder or beneficial shareholder with certificated shares
must also deposit his or her certificates in accordance with the terms of the
notice.
(2) A shareholder or beneficial shareholder with certificated shares who
demands payment and deposits his or her share certificates under sub. (1)
retains all other rights of a shareholder or beneficial shareholder until these
rights are canceled or modified by the effectuation of the corporate action.
(3) A shareholder or beneficial shareholder with certificated or
uncertificated shares who does not demand payment by the date set in the
dissenters' notice, or a shareholder or beneficial shareholder with certificated
shares who does not deposit his or her share certificates where required and by
the date set in the dissenters' notice is not entitled to payment for his or her
shares under ss. 180.1301 to 180.1331.
HISTORY: 1989 a. 303.
180.1324 RESTRICTIONS ON UNCERTIFICATED SHARES.
(1) The issuer corporation may restrict the transfer of uncertificated
shares from the date that the demand for payment for those shares is received
until the corporate action is effectuated or the restrictions released under s.
180.1326.
(2) The shareholder or beneficial shareholder who asserts dissenters' rights
as to uncertificated shares retains all of the rights of a shareholder or
beneficial shareholder, other than those restricted under sub. (1), until these
rights are canceled or modified by the effectuation of the corporate action.
HISTORY: 1989 a. 303.
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<PAGE>
180.1325 PAYMENT.
(1) Except as provided in s. 180.1327, as soon as the corporate action is
effectuated or upon receipt of a payment demand, whichever is later, the
corporation shall pay each shareholder or beneficial shareholder who has
complied with s. 180.1323 the amount that the corporation estimates to be the
fair value of his or her shares, plus accrued interest.
(2) The payment shall be accompanied by all of the following:
(a) The corporation's latest available financial statements, audited and
including footnote disclosure if available, but including not less than a
balance sheet as of the end of a fiscal year ending not more than 16 months
before the date of payment, an income statement for that year, a statement
of changes in shareholders' equity for that year and the latest available
interim financial statements, if any.
(b) A statement of the corporation's estimate of the fair value of the
shares.
(c) An explanation of how the interest was calculated.
(d) A statement of the dissenter's right to demand payment under s.
180.1328 if the dissenter is dissatisfied with the payment.
(e) A copy of ss. 180.1301 to 180.1331.
HISTORY: 1989 a. 303.
180.1326 FAILURE TO TAKE ACTION.
(1) If an issuer corporation does not effectuate the corporate action within
60 days after the date set under s. 180.1322 for demanding payment, the issuer
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the issuer corporation effectuates the corporate action, the
corporation shall deliver a new dissenters' notice under s. 180.1322 and repeat
the payment demand procedure.
HISTORY: 1989 a. 303.
180.1327 AFTER-ACQUIRED SHARES.
(1) A corporation may elect to withhold payment required by s. 180.1325 from
a dissenter unless the dissenter was the beneficial owner of the shares before
the date specified in the dissenters' notice under s. 180.1322(2)(c) as the date
of the first announcement to news media or to shareholders of the terms of the
proposed corporate action.
(2) To the extent that the corporation elects to withhold payment under sub.
(1) after effectuating the corporate action, it shall estimate the fair value of
the shares, plus accrued interest, and shall pay this amount to each dissenter
who agrees to accept it in full satisfaction of his or her demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenter's right to demand under s. 180.1328 if the dissenter
is dissatisfied with the offer.
HISTORY: 1989 a. 303.
180.1328 PROCEDURE IF DISSENTER DISSATISFIED WITH PAYMENT OR OFFER.
(1) A dissenter may, in the manner provided in sub. (2), notify the
corporation of the dissenter's estimate of the fair value of his or her shares
and amount of interest due, and demand payment of his
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or her estimate, less any payment received under s. 180.1325, or reject the
offer under s. 180.1327 and demand payment of the fair value of his or her
shares and interest due, if any of the following applies:
(a) The dissenter believes that the amount paid under s. 180.1325 or
offered under s. 180.1327 is less than the fair value of his or her shares
or that the interest due is incorrectly calculated.
(b) The corporation fails to make payment under s. 180.1325 within 60
days after the date set under s. 180.1322 for demanding payment.
(c) The issuer corporation, having failed to effectuate the corporate
action, does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after the date
set under s. 180.1322 for demanding payment.
(2) A dissenter waives his or her right to demand payment under this section
unless the dissenter notifies the corporation of his or her demand under sub.
(1) in writing within 30 days after the corporation made or offered payment for
his or her shares. The notice shall comply with s. 180.0141.
HISTORY: 1989 a. 303.
180.1330 COURT ACTION.
(1) If a demand for payment under s. 180.1328 remains unsettled, the
corporation shall bring a special proceeding within 60 days after receiving the
payment demand under s. 180.1328 and petition the court to determine the fair
value of the shares and accrued interest. If the corporation does not bring the
special proceeding within the 60-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(2) The corporation shall bring the special proceeding in the circuit court
for the county where its principal office or, if none in this state, its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall bring the special proceeding
in the county in this state in which was located the registered office of the
issuer corporation that merged with or whose shares were acquired by the foreign
corporation.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the special proceeding.
Each party to the special proceeding shall be served with a copy of the petition
as provided in s. 801.14.
(4) The jurisdiction of the court in which the special proceeding is brought
under sub. (2) is plenary and exclusive. The court may appoint one or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. An appraiser has the power described in the order appointing him
or her or in any amendment to the order. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the special proceeding is entitled to
judgment for any of the following:
(a) The amount, if any, by which the court finds the fair value of his
or her shares, plus interest, exceeds the amount paid by the corporation.
(b) The fair value, plus accrued interest, of his or her shares acquired
on or after the date specified in the dissenter's notice under s.
180.1322(2)(c), for which the corporation elected to withhold payment under
s. 180.1327.
HISTORY: 1989 a. 303.
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180.1331 COURT COSTS AND COUNSEL FEES.
(1) (a) Notwithstanding ss. 814.01 to 814.04, the court in a special
proceeding brought under s. 180.1330 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court and shall assess the costs against the corporation,
except as provided in par. (b).
(b) Notwithstanding ss. 814.01 and 814.04, the court may assess costs
against all or some of the dissenters, in amounts that the court finds to be
equitable, to the extent what the court finds the dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment under s.
180.1328.
(2) The parties shall bear their own expenses of the proceeding, except
that, notwithstanding ss. 814.01 to 814.04, the court may also assess the fees
and expenses of counsel and experts for the respective parties, in amounts that
the court finds to be equitable, as follows:
(a) Against the corporation and in favor of any dissenter if the court
finds that the corporation did not substantially comply with ss. 180.1320 to
180.1328.
(b) Against the corporation or against a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith
with respect to the rights provided by this chapter.
(3) Notwithstanding ss. 814.01 to 814.04, if the court finds that the
services of counsel and experts for any dissenter were of substantial benefit to
other dissenters similarly situated, the court may award to these counsel and
experts reasonable fees to be paid out of the amounts awarded the dissenters who
were benefited.
HISTORY: 1989 a. 303.
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