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Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-40185
SUPPLEMENT TO
AMENDED PROSPECTUS
SUPPLEMENT TO
AMENDED OFFER TO EXCHANGE EACH OUTSTANDING
COMMON SHARE
(INCLUDING THE ASSOCIATED SHARE PURCHASE RIGHTS)
OF
SAFETY-KLEEN CORP.
FOR
$18.30 NET PER SHARE IN CASH
AND
2.8 SHARES OF COMMON STOCK
OF
LAIDLAW ENVIRONMENTAL SERVICES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON MARCH 31, 1998, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION
DATE"). SHARES WHICH ARE TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY
TIME PRIOR TO THE EXPIRATION DATE.
------------------------
The following information amends and supplements the Amended Prospectus,
dated January 28, 1998 (the "Prospectus") of Laidlaw Environmental Services,
Inc., a Delaware corporation ("Laidlaw Environmental"). Except as otherwise set
forth in this Supplement, the terms and conditions previously set forth in the
Prospectus are applicable in all respects. The information set forth herein
should be read in conjunction with the Prospectus and, unless the context
otherwise requires, capitalized terms used herein and not defined herein shall
have the meanings ascribed to them in the Prospectus.
SEE "RISK FACTORS" BEGINNING ON PAGE 19 OF THE PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY SAFETY-KLEEN SHAREHOLDERS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DEALER MANAGER FOR THE OFFER IS:
BEAR, STEARNS & CO. INC.
245 PARK AVENUE
NEW YORK, NEW YORK 10167
THE DATE OF THIS SUPPLEMENT IS MARCH 18, 1998.
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THE AMENDED LAIDLAW ENVIRONMENTAL OFFER
1. AMENDED TERMS OF THE LAIDLAW ENVIRONMENTAL OFFER.
Laidlaw Environmental, and LES Acquisition, have increased the price per
Share to be exchanged pursuant to the Laidlaw Environmental Offer to $18.30 net
in cash (the "Cash Consideration") and 2.8 shares (the "Stock Consideration"
and, together with the Cash Consideration, the "Laidlaw Environmental Offer
Consideration") of Common Stock, par value $1.00 per share, of Laidlaw
Environmental ("Laidlaw Environmental Common Stock"). Laidlaw Environmental will
accept for exchange all Shares validly tendered on or prior to the Expiration
Date and not properly withdrawn. All Safety-Kleen Shareholders whose Shares are
accepted for payment will receive the increased Laidlaw Environmental Offer
Consideration. SAFETY-KLEEN SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
THIS SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS, COPIES
OF WHICH MAY BE OBTAINED IN THE MANNER SET FORTH ON THE BACK COVER OF THIS
SUPPLEMENT. THE PROSPECTUS AND THIS SUPPLEMENT CONTAIN IMPORTANT INFORMATION
THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE
LAIDLAW ENVIRONMENTAL OFFER.
THE LAIDLAW ENVIRONMENTAL OFFER IS CONDITIONED UPON SATISFACTION OF THE
MINIMUM TENDER CONDITION AND OTHER CONDITIONS SET FORTH IN THIS SUPPLEMENT.
EXCEPT AS SET FORTH HEREIN, THE LAIDLAW ENVIRONMENTAL OFFER IS NO LONGER SUBJECT
TO THE CONDITIONS TO THE LAIDLAW ENVIRONMENTAL OFFER SET FORTH IN THE
PROSPECTUS.
2. MERGER AGREEMENT.
On March 16, 1998, Laidlaw Environmental, LES Acquisition and Safety-Kleen
entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant
to the terms of the Merger Agreement, among other things, upon consummation of
the Merger each Share issued and outstanding prior to the Merger will be
converted into the right to receive $18.30 net in cash and 2.8 shares of Laidlaw
Environmental Common Stock. A copy of the Merger Agreement is attached hereto as
Annex A, and Safety-Kleen Shareholders are urged to carefully read the Merger
Agreement.
3. RECOMMENDATION OF SAFETY-KLEEN BOARD OF DIRECTORS.
The Board of Directors of Safety-Kleen has unanimously approved the Laidlaw
Environmental Offer, has determined that the terms of the Laidlaw Environmental
Offer and the Merger are fair to, and in the best interests of, Safety-Kleen's
Shareholders and recommends that Safety-Kleen Shareholders accept the Laidlaw
Environmental Offer and tender their Shares. See Safety-Kleen's Schedule 14D-9
amendment filed March 17, 1998 for a complete discussion and analysis of the
bases for the Safety-Kleen Board of Directors' recommendation. A copy of the
Schedule 14D-9 amendment is being delivered with this Supplement.
4. TENDER OF SHARES.
Shares may continue to be tendered in accordance with the YELLOW Letter of
Transmittal and the GREEN Notice of Guaranteed Delivery previously distributed
with the Prospectus, or the revised PINK Letter of Transmittal and the revised
GRAY Notice of Guaranteed Delivery distributed with this Supplement. Although
the Letter of Transmittal previously distributed with the Prospectus refers to
Laidlaw Environmental's offer of $18.00 net in cash and $12.00 in stock (subject
to variation), Safety-Kleen Shareholders using such document to tender their
Shares will nevertheless receive $18.30 net in cash and 2.8 shares of Laidlaw
Environmental Common Stock for each Share validly tendered and not properly
withdrawn, subject to the Minimum Tender Condition and the other conditions set
forth herein. Except as set forth herein, the directions set forth under the
caption "The Laidlaw Environmental Offer -- Procedure for Tendering" in the
Prospectus are applicable in all respects.
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Questions and requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Supplement. Requests for additional
copies of this Supplement, the Prospectus and the Letter of Transmittal may be
directed to the Information Agent or to brokers, dealers, commercial banks or
trust companies.
SHARES PREVIOUSLY TENDERED AND NOT WITHDRAWN CONSTITUTE VALID TENDERS FOR
PURPOSES OF THE LAIDLAW ENVIRONMENTAL OFFER. THEREFORE, SAFETY-KLEEN
SHAREHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED SHARES AND NOT WITHDRAWN SUCH
TENDERS AND WHO WISH TO HAVE SUCH SHARES PURCHASED PURSUANT TO THE LAIDLAW
ENVIRONMENTAL OFFER ARE NOT REQUIRED TO TAKE ANY FURTHER ACTION TO RECEIVE,
SUBJECT TO THE CONDITIONS TO THE LAIDLAW ENVIRONMENTAL OFFER, THE CONSIDERATION
BEING OFFERED IN THIS SUPPLEMENT, EXCEPT AS MAY BE REQUIRED BY THE GUARANTEED
DELIVERY PROCEDURE IF SUCH PROCEDURE WAS UTILIZED.
SEE "THE LAIDLAW ENVIRONMENTAL OFFER -- WITHDRAWAL RIGHTS" IN THE
PROSPECTUS FOR THE PROCEDURES FOR WITHDRAWING SHARES TENDERED PURSUANT TO THE
LAIDLAW ENVIRONMENTAL OFFER.
5. THE LAIDLAW ENVIRONMENTAL OFFER AND BACKGROUND OF THE MERGER AGREEMENT.
At a special meeting of Safety-Kleen Shareholders on March 9, 1998,
Safety-Kleen failed to receive the necessary two-thirds vote to approve a
proposed merger of Safety-Kleen with SK Acquisition Corp., an affiliate of
Philip Services Corp., Apollo Advisors, L.P. and Blackstone Management
Associates II, L.P. (the "Philip Merger"), and subsequently terminated its
proposed merger agreement therewith.
On March 10, 1998, Donald W. Brinckman, Chief Executive Officer, Edgar D.
Jannotta, a director, and Joseph Chalhoub, President, of Safety-Kleen met with
Kenneth Winger, Chief Executive Officer of Laidlaw Environmental, and a
representative from Laidlaw Environmental's financial advisor to discuss
reaching mutually agreeable terms for the acquisition of Safety-Kleen by Laidlaw
Environmental. A further meeting was held on March 11 with Mr. Winger and
representatives of Laidlaw Environmental's financial and legal advisors and
Messrs. Jannotta and Chalhoub and representatives of Safety-Kleen's legal
advisors to continue the discussion of the previous day. These meetings led to
further conversations about the Laidlaw Environmental Offer and the terms on
which Safety-Kleen's Board of Directors would be willing to accept and enter
into a merger agreement with Laidlaw Environmental. From March 11, 1998 through
March 15, 1998, Safety-Kleen and Laidlaw Environmental, through their respective
legal advisors, continued to discuss the proposed terms of a merger agreement.
On March 15, 1998, Laidlaw Environmental and Safety-Kleen agreed to the
amended terms of the Laidlaw Environmental Offer set forth herein and the Merger
Agreement, subject to the approval of their respective Boards of Directors. The
Boards of Directors of Laidlaw Environmental and Safety-Kleen each approved the
Merger Agreement on March 15, 1998. On March 16, 1998, the parties executed the
Merger Agreement and issued press releases announcing the execution of the
Merger Agreement. The Safety-Kleen Board of Directors unanimously approved the
Merger Agreement and recommends that Safety-Kleen Shareholders tender their
shares to the Laidlaw Environmental Offer. Pursuant to the Merger Agreement,
each Share would be exchanged for $18.30 net in cash and 2.8 shares of Laidlaw
Environmental Common Stock, subject to the Minimum Tender Condition and the
other conditions set forth herein.
6. THE MERGER AGREEMENT.
Set forth below is a brief description of the material terms of the Merger
Agreement and related matters. This description does not purport to be complete
and is qualified in its entirety by reference to the Merger Agreement, which is
attached hereto as Annex A and is incorporated herein by reference.
The Merger Agreement provides that LES Acquisition has extended until March
27, 1998 at Midnight EST the Laidlaw Environmental Offer to exchange $18.30 in
cash and 2.8 shares of Laidlaw Environmental
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Common Stock for each outstanding Share and that, upon the terms and subject to
the prior satisfaction or waiver (except that the Minimum Tender Condition and
the Solvency Opinion Condition, each as defined below, may not be waived) of the
conditions of the Laidlaw Environmental Offer, LES Acquisition will purchase all
Shares validly tendered pursuant to the Laidlaw Environmental Offer.
Notwithstanding the proposed March 27, 1998 expiration date set forth in the
Merger Agreement, the parties have acknowledged that the Laidlaw Environmental
Offer will be extended until March 31, 1998 the date ten business days from the
date hereof. The Merger Agreement provides that if all conditions to the Laidlaw
Environmental Offer shall not have been satisfied or waived at the scheduled or
extended expiration date of the Laidlaw Environmental Offer, Laidlaw
Environmental may, without the consent of the Safety-Kleen, extend the Laidlaw
Environmental Offer until the earlier of June 30, 1998 or satisfaction or waiver
of such conditions. In addition, the Laidlaw Environmental Offer can be extended
for up to five (5) business days (but only twice) if at its scheduled or
extended expiration, more than two thirds, but fewer than 90%, of the issued and
outstanding Shares have been tendered. See paragraph 7, "Conditions of the
Laidlaw Environmental Offer" for a description of the conditions to Laidlaw
Environmental's obligation to purchase Shares pursuant to the Laidlaw
Environmental Offer.
THE MERGER -- GENERAL
The Merger Agreement provides that LES Acquisition will be merged with and
into Safety-Kleen, with Safety-Kleen becoming a wholly owned subsidiary of
Laidlaw Environmental. In the Merger, each outstanding Share (other than Shares
held by Laidlaw Environmental and its affiliates and treasury Shares) will be
converted at the Effective Time (as defined below) into the right to receive
$18.30 net in cash and 2.8 shares of Laidlaw Environmental Common Stock. Laidlaw
Environmental will also make certain payments necessary to satisfy
Safety-Kleen's outstanding debt obligations. Immediately prior to the Effective
Time (as defined below) Safety-Kleen will make certain payments with respect to
outstanding options under Safety-Kleen's stock option plans.
As soon as practicable after the conditions to consummation of the Merger
described below have been satisfied or waived, and unless the Merger Agreement
has been terminated as provided below, articles of merger (the "Articles of
Merger") will be filed with the Secretary of State of the State of Wisconsin in
accordance with the relevant provisions of the Wisconsin Business Corporation
Law ("WBCL"), a certificate of merger (the "Certificate of Merger") will be
filed with the Secretary of State of the State of Delaware in accordance with
the relevant provisions of the General Corporation Law of the State of Delaware
("DGCL") and the parties will make such other filings, recordings or
publications required under the WBCL and the DGCL in connection with the Merger.
The Merger will become effective upon the date on which the Articles of Merger
have been received for filing by the Secretary of the State of Wisconsin and the
Certificate of Merger has been received for filing by the Secretary of State of
the State of Delaware, or such later date as is agreed upon by the parties and
specified in the Certificate of Merger and Articles of Merger, and the time of
such effectiveness is hereinafter referred to as the "Effective Time." As a
result of the Merger, the separate corporate existence of LES Acquisition will
cease and Safety-Kleen will continue as the Surviving Corporation under the name
"Safety-Kleen Corp.," and will become a wholly-owned subsidiary of Laidlaw
Environmental.
CONVERSION OF SECURITIES
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than Shares owned by Laidlaw Environmental, LES
Acquisition or any subsidiary thereof or held in the treasury of Safety-Kleen or
any subsidiary of Safety-Kleen, which will be canceled without payment) will be
canceled and converted at the Effective Time into the right to receive $18.30
net in cash and 2.8 shares of Laidlaw Environmental Common Stock (the "Merger
Consideration").
Pursuant to the Merger Agreement, each share of common stock, par value
$.0l per share, of LES Acquisition issued and outstanding immediately prior to
the Effective Time shall be automatically converted into and become at the
Effective Time one share of common stock, par value $.0l per share, of the
Surviving Corporation.
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STOCK OPTIONS
The Merger Agreement provides that Safety-Kleen will (a) terminate its 1985
Stock Option Plan, 1993 Stock Option Plan and 1988 Non-Qualified Stock Option
Plan for Outside Directors (collectively the "Option Plans"), immediately prior
to the Effective Time without prejudice to the rights of the holders of options
awarded pursuant thereto and (b) grant no additional options or similar rights
under the Option Plans or otherwise on or after the date of the Merger
Agreement. "Options" is defined under the Merger Agreement to include each stock
option granted by Safety-Kleen, whether pursuant to the Option Plans or
otherwise.
Safety-Kleen agrees in the Merger Agreement to cancel all Options (whether
or not then exercisable) that Safety-Kleen has the right to cancel, and to use
its best efforts to obtain the consent of each holder of any Options (whether or
not then exercisable) that it does not have the right to cancel, to the
cancellation of his Options, with all such cancellations to take effect
immediately prior to the Effective Time. For Options which may be settled at
exercise by issuance of Shares or cash payment pursuant to the terms of the
applicable Option Plan, Safety-Kleen agrees, in consideration of such
cancellation, to pay to the holders of such Options, immediately after the
purchase of Shares pursuant to the Laidlaw Environmental Offer, for each Share
subject to such Option, an amount in cash equal to the excess, if any, of the
Merger Consideration (valued for this purpose at $30.30) over the per Share
exercise price of such Option, reduced by the amount of withholding or other
taxes required by law to be withheld. In the case of Options related to limited
stock appreciation rights ("LSARs"), for each Share subject to such Option,
Safety-Kleen agrees to pay (consistent with the rights under the Option Plans)
upon cancellation of such Options, an amount in cash equal to the excess, if
any, of the change of control value (generally, the highest price at which the
Shares trade in the 180 days prior to closing of the Laidlaw Environmental Offer
or, if greater, the Laidlaw Environmental Offer Consideration valued for this
purpose at $30.30), over the per Share exercise price of such Option, reduced by
the amount of withholding or other taxes required by law to be withheld. As of
March 16, 1998, directors, executive officers and other employees held in the
aggregate Options to purchase 2,375,614 Shares, 2,180,614 of which were Options
related to LSARs.
DIRECTORS AND OFFICERS; ARTICLES OF INCORPORATION AND BYLAWS; SEVERANCE
AGREEMENTS
The Merger Agreement provides that the directors of LES Acquisition
immediately prior to the Effective Time will be the initial directors of the
Surviving Corporation and that the officers of Safety-Kleen immediately prior to
the Effective Time will be the initial officers of the Surviving Corporation
except to the extent that Laidlaw Environmental designates other or additional
officers, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified. Although Laidlaw
Environmental anticipates making significant changes in the Safety-Kleen senior
management and executive officer team, Laidlaw Environmental has not yet
addressed specific changes in Safety-Kleen management. The Merger Agreement
provides that, at the Effective Time, the Articles of Incorporation and Bylaws
of the Surviving Corporation will be amended and restated as set forth in the
Merger Agreement.
The Merger Agreement provides that promptly following the purchase by
Laidlaw Environmental and LES Acquisition of shares pursuant to the Laidlaw
Environmental Offer, but subject to compliance with Exchange Act Rule 14f-1,
Laidlaw Environmental shall be entitled to designate at its option up to that
number of directors, rounded to the nearest whole number, of Safety-Kleen's
Board of Directors, as will make the percentage of Safety-Kleen's directors
designated by Laidlaw Environmental approximately equal to the aggregate voting
power of the Shares held by Laidlaw Environmental (and LES Acquisition).
Following the election or appointment of Laidlaw Environmental's designees and
prior to the Effective Time, any amendment to the Restated Articles of
Incorporation or Bylaws of Safety-Kleen, any termination of the Merger Agreement
by Safety-Kleen, any extension by Safety-Kleen of the time for the performance
of any of the obligations or other acts of Laidlaw Environmental or waiver or
assertion of any of Safety-Kleen's rights under the Merger Agreement, and any
other consent or action by the Board of Directors with respect to the Merger
Agreement, will require the concurrence of a majority of the directors (if any)
not appointed by Laidlaw Environmental. After purchase of Shares pursuant to the
Laidlaw Environmental Offer but before Laidlaw Environmental designees are named
as Safety-Kleen directors, the Safety-Kleen Board of Directors has agreed not to
act without notice to and the participation of Laidlaw Environmental.
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Based on publicly available information previously filed by Safety-Kleen,
Laidlaw Environmental believes that in August, 1997, Safety-Kleen entered into
Change of Control Severance Agreements with its 14 executive officers and five
other employees of Safety-Kleen who are not executive officers. The Board of
Directors of Safety-Kleen approved the Change of Control Severance Agreements in
order to close the gap between the prior change of control agreements adopted by
Safety-Kleen in 1990 and current competitive practices for change of control
agreements. Each Change of Control Severance Agreement provides for, among other
things: (a) a three-year employment period, beginning on the date of a Change of
Control at a guaranteed annual base salary equal to at least 12 times the
highest base monthly salary payable during the 12-month period immediately
preceding the Change of Control, with increases consistent with increases in
base salary awarded to other peer executives of Safety-Kleen; (b) a guaranteed
bonus for each bonus plan performance period (under each bonus arrangement)
ending within such three year employment period; (c) continued participation in
the incentive, savings, retirement, welfare and other fringe benefit plans
sponsored by Safety-Kleen; (d) full vesting on the date of the Change of Control
of all stock options (or a lump sum payment of the spread of all non-vested,
forfeited options); and (e) full payment on the date of the Change of Control,
of the value of the executive's accrued benefits under Safety-Kleen's excess
benefit, supplemental retirement and any other nonqualified retirement plans.
If, during the three-year employment period, the executive's employment is
terminated by Safety-Kleen (other than for Cause (as defined in such agreements)
or by reason of the executive's death or disability), or if the executive
terminates employment for Good Reason (as defined in such agreements), the
executive will receive: (i) guaranteed annual base salary, guaranteed bonus and
accrued vacation pay through the date of termination; (ii) previously deferred
and unpaid compensation; (iii) an amount equal to three times the sum of the
executive's guaranteed base salary and guaranteed bonus in the year in which the
termination occurs; (iv) the value of the unvested portion of the executive's
accounts under qualified Safety-Kleen plans; (v) reimbursement for unpaid
benefits which would have accrued if the executive had remained employed by
Safety-Kleen until three years after the Change of Control under Safety-Kleen's
excess benefit and supplemental plans; and (vi) continuation of all medical,
life insurance and other welfare benefits for a period of three years from
termination. The sum of the amounts referred to in clauses (i) and (ii) is
referred to as the "Accrued Obligations".
If, during the three-year employment period, the executive's employment is
terminated (i) by the surviving corporation after the Change of Control for
Cause, as defined, the executive is entitled only to his guaranteed base salary
through the date of termination, plus any deferred compensation and accrued
vacation pay not previously paid; (ii) by the executive other than for Good
Reason, the executive is entitled only to the Accrued Obligations, (iii) by
Safety-Kleen for disability, the executive is entitled to receive the Accrued
Obligations and disability and other benefits at least equal to the greater of
those provided to peer executives by the surviving corporation immediately prior
to the executive's termination and those provided to peer executives by
Safety-Kleen at any time during the 90 day period immediately preceding the date
of the Change of Control; and (iv) by the executive's death, his estate is
entitled to the Accrued Obligations and benefits at least equal to the most
favorable benefits provided top survivors of peer executives, and at least as
favorable in the aggregate as the most favorable provided to the executive
during the 90 days preceding the Change of Control.
Each of the Change of Control Severance Agreements provides that if it is
determined that benefits received by the executive thereunder (or otherwise) are
subject to any excise tax under Section 4999 of the Internal Revenue Code or any
similar excise taxes, then Safety-Kleen will also pay the executive an amount
(the "Gross-up Payment") such that, after the payment of all income and excise
taxes, the executive will be in the same after-tax position that he would have
been in had no excise tax been imposed.
Each Change of Control Severance Agreement contains a non-compete provision
that during the period of the executive's employment and for one year thereafter
prohibits the executive from certain participation in the business of any
company engaged in business that directly or materially competes with
Safety-Kleen, and certain other competitive activity. Each such agreement also
obligates the executive to maintain the confidentiality of Safety-Kleen's
Confidential Information (as defined in such agreement).
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Laidlaw Environmental believes that payments that would be made to the
persons who are parties to the Change of Control Severance Agreements in the
event of their termination during the three-year employment period after the
Change of Control (other than for Cause or by reason of the executive's death or
disability) are approximately $46,036,306 for all officers with Change of
Control Severance Agreements, including approximately $3,845,937 for Mr.
Brinckman.
REPRESENTATIONS AND WARRANTIES
Safety-Kleen, Laidlaw Environmental and LES Acquisition have made certain
representations and warranties to each other in the Merger Agreement.
Safety-Kleen represents and warrants, among other things, as to the organization
and qualifications to do business of Safety-Kleen and its significant
subsidiaries, its capitalization, its corporate authority to enter into and
perform the Merger Agreement and the absence of conflict of such actions with
its other obligations, and its ownership of its subsidiaries. Safety-Kleen also
makes certain representations and warranties concerning its financial reports,
the absence of certain changes and liabilities, employee benefit plans,
litigation and legal matters, labor matters, tax matters, environmental matters
and title to its properties. Laidlaw Environmental and LES Acquisition represent
and warrant, among other things, as to their respective organization and
qualification, capital stock, corporate authority to enter into and perform the
Merger Agreement and the absence of conflict of such actions with its other
obligations, and interim operations of Laidlaw Environmental and LES
Acquisition. Laidlaw Environmental also makes certain representations and
warranties concerning its financial reports, employee benefit plans, litigation
and legal matters, labor matters, tax matters, environmental matters and title
to its properties. The representations and warranties of Laidlaw Environmental,
LES Acquisition and Safety-Kleen will terminate upon consummation of the Merger.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, Safety-Kleen has agreed that unless
Laidlaw Environmental shall otherwise agree in writing (which agreement shall
not be unreasonably withheld), prior to the Effective Time:
(a) the business of Safety-Kleen and its subsidiaries will be
conducted in the ordinary and usual course of business, and Safety-Kleen
will use its reasonable best efforts to maintain and preserve intact its
and its subsidiaries' business organization, assets, employees, officers
and consultants and advantageous business relationships;
(b) neither Safety-Kleen nor any of its subsidiaries will directly or
indirectly do any of the following: (i) except in the ordinary course of
business, sell, pledge, dispose of or encumber any assets of Safety-Kleen
or of any of its subsidiaries; (ii) amend its charter or by-laws or similar
organizational documents; (iii) split, combine or reclassify any shares of
its capital stock or declare, set aside, make or pay any dividend or
distribution payable in cash, stock, property or otherwise with respect to
any of its capital stock (except as contemplated by the Rights Agreement
and except for (x) cash dividends to shareholders of Safety-Kleen declared
in the ordinary course of business and consistent with past practice and
(y) dividends by wholly owned subsidiaries of Safety-Kleen); (iv) redeem,
purchase or otherwise acquire or offer to redeem, purchase or otherwise
acquire any capital stock of Safety-Kleen; (v) adopt a plan of liquidation
or resolutions providing for the liquidation, dissolution, merger,
consolidation or other reorganization of Safety-Kleen; or (vi) authorize or
propose any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing;
(c) neither Safety-Kleen nor any of its subsidiaries will, directly or
indirectly, (i) except for Shares (and the associated Rights) issuable upon
exercise of options outstanding under the Option Plans on the date of the
Merger Agreement, issue, sell, pledge, dispose of or encumber, or
authorize, propose or agree to the issuance, sale, pledge, disposition or
encumbrance of, any shares of, or any options, warrants or rights of any
kind to acquire any shares of or any securities convertible into or
exchangeable or exercisable for any shares of, its capital stock of any
class or any other securities in respect of, in lieu of, or in substitution
for Shares outstanding on the date hereof; (ii) make any material
acquisition, by means of merger, consolidation or otherwise, or material
disposition (other than disposition of assets in the ordinary
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course of business), of assets or securities, or make any loans, advances
or capital contributions to, or investment in, any individual or entity
(other than to Safety-Kleen or a wholly owned subsidiary of Safety-Kleen);
(iii) except in the ordinary course of business, and other than
indebtedness to or guarantees for the benefit of Safety-Kleen or any
affiliate of Safety-Kleen and borrowings to fund payments to holders of
Options as contemplated by the Merger Agreement, incur any indebtedness or
issue any debt securities or assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for,
the obligations of any other individual or entity; (iv) change the
capitalization of Safety-Kleen (other than the incurrence of indebtedness
otherwise permitted in the Merger Agreement); (v) except in the ordinary
course, change any assumption underlying, or method of calculating, any bad
debt, contingency or other reserve; (vi) pay, discharge or satisfy any
claims, liabilities or obligations (absolute, accrued, contingency or
otherwise), other than the payment, discharge or satisfaction of
liabilities in the ordinary course of business or as required by applicable
law; (vii) waive, release, grant or transfer any rights of value or modify
or change in any material respect any existing license, lease, contract or
other document, other than in the ordinary course of business; or (viii)
authorize any of the foregoing, or enter into or modify any contract,
agreement, commitment or arrangement to do any of the foregoing;
(d) except for the payment to holders of Options as contemplated by
the Merger Agreement, neither Safety-Kleen nor any of its subsidiaries will
(except for salary increases or other employee benefit arrangements in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to Safety-Kleen and its subsidiaries, taken as a whole, or as may
be required pursuant to any agreements in effect at the date of the Merger
Agreement) adopt or amend or take any actions to accelerate any rights or
benefits under (except as may be required by law) any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred
compensation, employment, severance, termination or other employee benefit
plan, agreement, trust, fund or other arrangement for the benefit or
welfare of any employee or any officer or director or former employee or,
in the ordinary course of business, consistent with past practice, increase
the compensation or fringe benefits of any employee or former employee or
pay any benefit not permitted by any existing plan, arrangement or
agreement;
(e) except in the ordinary course of business, neither Safety-Kleen
nor any of its subsidiaries will make any tax election or settle or
compromise any federal, state, local or foreign income tax liability;
(f) except in the ordinary course of business, neither Safety-Kleen
nor any of its subsidiaries will permit any insurance policy naming it as
beneficiary or a loss payee to be cancelled or terminated without notice to
Laidlaw Environmental; and
(g) neither Safety-Kleen nor any of its subsidiaries will agree, in
writing or otherwise, to take any of the foregoing actions or any action
which would make any representation or warranty of Safety-Kleen in the
Merger Agreement untrue or incorrect so as to result in any change(s) or
effect(s) that, individually, or in the aggregate, are materially adverse
to the financial condition, properties, business of Safety-Kleen and its
subsidiaries taken as a whole, or that would prevent or materially delay
Safety-Kleen from performing its obligations under the Merger Agreement (a
"Material Adverse Effect").
NO SOLICITATION OF PROPOSALS
The Merger Agreement provides that Safety-Kleen (and its subsidiaries and
affiliates) will not, and will use their best efforts to ensure that their
respective directors, officers, employees, representatives and agents do not,
directly or indirectly, solicit or initiate inquiries or proposals from, or
provide any confidential information to, or participate in any discussions or
negotiations with, any person or entity (other than Laidlaw Environmental and
its subsidiaries and their respective directors, officers, employees,
representatives and agents) concerning (a) any merger, sale of assets not in the
ordinary course (except for any sale of assets otherwise permitted under the
terms of the Merger Agreement), or other similar transaction involving Safety-
Kleen or any subsidiary or division of Safety-Kleen, or the sale of any equity
interest in Safety-Kleen or any subsidiary, or (b) any sale by Safety-Kleen or
its subsidiaries of authorized but unissued Shares or of any
7
<PAGE> 9
shares (whether or not outstanding) of any of Safety-Kleen's subsidiaries (all
such inquiries and proposals being referred to herein as "Acquisition
Proposals"), provided, however, that nothing contained in such provisions of the
Merger Agreement prohibits Safety-Kleen or its Board of Directors from (i)
subject to certain duties to consult with Laidlaw Environmental and LES
Acquisition, issuing a press release or otherwise publicly disclosing the terms
of the Merger Agreement; (ii) proceeding with the transactions contemplated by
the Merger Agreement; (iii) communicating to Safety-Kleen's shareholders a
position as contemplated by Rule 14e-2 promulgated under the Exchange Act; (iv)
making any disclosure to Safety-Kleen's shareholders which, in the judgment of
the Board of Directors of Safety-Kleen, with the advice of outside counsel,
should reasonably be made under applicable law (including, without limitation,
laws relating to the fiduciary duties of directors) or (v) taking any
non-appealable, final action ordered to be taken by Safety-Kleen by any court of
competent jurisdiction; and, provided, further, that the Board of Directors of
Safety-Kleen may, on behalf of Safety-Kleen, furnish or cause to be furnished
information and may direct Safety-Kleen, its directors, officers, employees,
representatives or agents to information, in each case pursuant to appropriate
confidentiality agreements, and to participate in discussions or negotiations
with any person or entity commencing any Acquisition Proposal which was not
solicited by Safety-Kleen or any of its subsidiaries or affiliates or any of
their respective directors, officers, employees, representatives or agents, or
which did not otherwise result from a breach of such non-solicitation provisions
of the Merger Agreement, if (x) the Board of Directors of Safety-Kleen concludes
in good faith, after consultation with its financial advisor, that such person
or entity has made or is reasonably likely to make a bona fide Acquisition
Proposal for a transaction more favorable to Safety-Kleen's Shareholders from a
financial point of view than the transactions contemplated hereby, and (y), in
the opinion of the Board of Directors of Safety-Kleen, only after receipt of
advice from its independent legal counsel, the failure to provide such
information or access or to engage in such discussions or negotiations would
cause the Board of Directors of Safety-Kleen to violate its fiduciary duties to
Safety-Kleen's Shareholders under applicable law (an Acquisition Proposal which
satisfies clauses (x) and (y) being hereinafter referred to as a "Superior
Proposal").
Safety-Kleen has agreed pursuant to the Merger Agreement to immediately
notify Laidlaw Environmental of the terms of any proposal, discussion,
negotiation or inquiry (and to disclose any written materials received by
Safety-Kleen in connection with such proposal, discussion negotiation, or
inquiry) and the identity of the party making such proposal or inquiry which it
may receive in respect of any such transaction unless the Board of Directors of
Safety-Kleen determines, based on the advice of outside legal counsel to
Safety-Kleen, that giving such notice would cause the Board of Directors of
Safety-Kleen to violate its fiduciary duties to Safety-Kleen's shareholders
under applicable law. Safety-Kleen agrees pursuant to the Merger Agreement to,
and to cause each subsidiary to, immediately cease and cause to be terminated
any existing activities, discussions or negotiations by Safety-Kleen, its
subsidiaries or any officer, director or employee of, or investment banker,
attorney, accountant or other advisor or representative of, Safety-Kleen or any
subsidiary with parties conducted prior to the date of the Merger Agreement with
respect to any of the foregoing.
The Merger Agreement also provides that, except as set forth therein,
neither the Board of Directors of Safety-Kleen nor any committee thereof shall
(a) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Laidlaw Environmental or LES Acquisition, the approval or recommendation by the
Board of Directors of Safety-Kleen or any such committee of the Merger Agreement
or the Merger, (b) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal, or (c) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, the Board of Directors of
Safety-Kleen may (subject to the terms of this and the following sentence)
withdraw or modify its approval or recommendation of the Merger Agreement or the
Merger, approve or recommend a Superior Proposal or enter into an agreement with
respect to a Superior Proposal at any time after the second business day
following Laidlaw Environmental's receipt of written notice advising Laidlaw
Environmental that the Board of Directors of Safety-Kleen has received a
Superior Proposal, specifying the material terms and conditions of such Superior
Proposal and identifying the person making such Superior Proposal; provided that
Safety-Kleen shall not enter into an agreement with respect to a Superior
Proposal unless Safety-Kleen has furnished Laidlaw Environmental with written
notice not later than noon (New York time) two business days in advance of any
date that it intends to enter into such agreement and caused its financial and
legal advisors to negotiate with Laidlaw Environmental to make such amendments
to the terms and conditions of the Merger
8
<PAGE> 10
Agreement as would make the Merger Agreement as so amended at least as favorable
to Safety-Kleen's shareholders from a financial point of view as the Superior
Proposal. In addition, the Merger Agreement provides that if Safety-Kleen
proposes to enter into an agreement with respect to any Acquisition Proposal, it
shall concurrently with entering into such agreement pay, or cause to be paid,
to Laidlaw Environmental the Termination Amount (as defined and described in
"-- Fees and Expenses" below). The Merger Agreement also includes a provision
authorizing the Safety-Kleen Board of Directors to withdraw or modify the
approval or recommendation by the Board of Directors of Safety-Kleen of the
Laidlaw Environmental Offer or the Merger if their is a material adverse change
in the business or financial condition of Laidlaw Environmental prior to
consummation of the exchange pursuant to the Laidlaw Environmental Offer.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of the parties to cause the Merger to be
consummated are subject to the satisfaction or waiver of certain conditions,
including, among other things: (a) the approval of the Merger Agreement by the
vote of the holders of two-thirds of Safety-Kleen's outstanding Shares; (b) no
statute, rule, order, decree or regulation shall have been enacted or
promulgated by any domestic government or any agency or authority of competent
jurisdiction which prohibits the consummation of the Merger; (c) consummation of
the Merger shall not result in violation of any applicable United States federal
or state law providing for criminal penalties; and (d) no preliminary or
permanent injunction or other order issued by any federal or state court of
competent jurisdiction in the United States preventing the consummation of the
Merger shall be in effect; provided, however, that the parties to the Merger
Agreement shall have used their best efforts to have any such injunction or
order vacated.
The obligations of Laidlaw Environmental to effect the Merger are further
subject to the condition that Laidlaw Environmental and LES Acquisition shall
have purchased all Shares duly tendered and not withdrawn pursuant to the terms
of the Laidlaw Environmental Offer, provided that this condition does not apply
if the failure to purchase the Shares constitutes a breach of the Merger
Agreement by Laidlaw Environmental or LES Acquisition.
The obligation of Safety-Kleen to effect the Merger is further subject to
the condition that Safety-Kleen shall have received an opinion or certificate of
a reputable expert firm confirming the solvency of the Surviving Corporation
after the Merger and related financings addressed to or for the benefit of the
Board of Directors of Safety-Kleen so that the Board of Directors of
Safety-Kleen is entitled to rely thereon.
TERMINATION, AMENDMENT AND WAIVER
Termination. The Merger Agreement may be terminated, and the Merger
abandoned, prior to the Effective Time, either before or after its approval by
Safety-Kleen's shareholders, as follows: (a) by the mutual written consent of
Safety-Kleen and Laidlaw Environmental; (b) by either Laidlaw Environmental or
Safety-Kleen if any governmental body or regulatory authority of the United
States of America shall have issued an order, decree or ruling or taken any
other action, in each case permanently enjoining, restraining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and non-appealable; provided that such right to terminate the
Merger Agreement shall not be available to any party that has breached its
obligations under the Merger Agreement to use its commercially reasonable best
efforts to take such actions as are necessary to consummate the transactions
contemplated by the Merger Agreement; (c) by either Laidlaw Environmental or
Safety-Kleen if the Shares tendered pursuant to the Laidlaw Environmental Offer
have not been acquired by Laidlaw Environmental or LES Acquisition on or before
June 30, 1998; (d) by the Board of Directors of Laidlaw Environmental, (i) if
prior to the exchange of tendered Shares pursuant to the Laidlaw Environmental
Offer Safety-Kleen shall have breached any of its representations and warranties
or failed to comply with any of the covenants or agreements (without, in each
instance, giving effect to any limitation as to "materiality" or "material
adverse effect" set forth therein) contained in the Merger Agreement to be
complied with or performed by Safety-Kleen at or prior to consummation of the
Merger and such breach or failure shall have resulted in a Material Adverse
Effect, or (ii) Safety-Kleen shall have received from a third party a bona fide
Acquisition Proposal, and the Board of Directors of Safety-Kleen, shall have
accepted such a proposal or (iii) the Board of Directors of Safety-Kleen
9
<PAGE> 11
shall have withdrawn or modified in a manner adverse to Laidlaw Environmental or
LES Acquisition its approval or recommendation with respect to the Merger; or
(e) by the Board of Directors of Safety-Kleen, if (i) prior to the exchange of
tendered Shares pursuant to the Laidlaw Environmental Offer, Laidlaw
Environmental or LES Acquisition shall have breached in any material respect any
of its representations and warranties or failed to comply in any material
respect with any of the covenants or agreements contained in the Merger
Agreement to be complied with or performed by Laidlaw Environmental or LES
Acquisition, or (ii) if Safety-Kleen enters into a written agreement concerning
a transaction that constitutes a Superior Proposal, provided that Safety-Kleen
shall have complied with the provisions described under "-- No Solicitation of
Proposals" above (including the payment of the Termination Amount).
In the event of termination of the Merger Agreement by either Safety-Kleen
or Laidlaw Environmental, no party to the Merger Agreement (or any of its
directors, officers, employees, agreements, legal and financial advisors or
other representatives) shall have any liability or further obligation to any
other party to the Merger Agreement, except with respect to the covenants in the
Merger Agreement relating to confidential information and payment of expenses.
In addition, Laidlaw Environmental, LES Acquisition and Safety-Kleen will each
remain liable for any wilful breach by it of the Merger Agreement.
Amendment. Subject to the applicable provisions of the WBCL and the DGCL,
the Merger Agreement may be amended by the parties thereto, at any time before
or after any required approval of matters presented in connection with the
Merger by the shareholders of Safety-Kleen; provided, however, that after any
such approval, there shall be made no amendment that by law requires further
approval by such shareholders without the further approval of such shareholders.
The Merger Agreement may not be amended except by an instrument in writing
signed by the parties thereto. After the purchase of Shares pursuant to the
Laidlaw Environmental Offer but prior to the Effective Time, any amendment to
the Merger Agreement requires the concurrence of a majority of the Safety-Kleen
directors (if any) not appointed by Laidlaw Environmental.
Waiver. Subject to the applicable provisions of the WBCL and the DGCL, at
any time prior to the Effective Time, any party to the Merger Agreement may (a)
extend the time for the performance of any of the obligations or other acts of
the other parties thereto, or (b) subject to certain limitations after
shareholder approval has been obtained, waive compliance with any of the
agreements or conditions contained herein. In addition to the provisions
contained in the Merger Agreement regarding the failure to object to notice of
certain defaults, at any time prior to consummation of the Merger any party
thereto may waive any inaccuracies in the representations and warranties
contained herein or in any documents delivered pursuant thereto. Any agreement
on the part of a party to the Merger Agreement to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by such
party. After the purchase of Shares pursuant to the Laidlaw Environmental Offer
but prior to the Effective Time, any waiver by Safety-Kleen under the Merger
Agreement requires the concurrence of a majority of the Safety-Kleen directors
(if any) not appointed by Laidlaw Environmental.
FEES AND EXPENSES
The Merger Agreement provides that Safety-Kleen and Laidlaw Environmental
will each pay its own expenses in connection with the Merger Agreement and the
transactions contemplated thereby, but that if Laidlaw Environmental terminates
the Merger Agreement prior to the purchase of Shares pursuant to the Laidlaw
Environmental Offer because, (i) Safety-Kleen has accepted an Acquisition
Proposal from a third party, (ii) the Safety-Kleen Board of Directors has failed
to recommend approval of the Merger to the Safety-Kleen Shareholders (if
shareholder approval is required), (iii) the Safety-Kleen Board of Directors
withdraws or modifies its approval or recommendation with respect to the Merger,
or (iv) Safety-Kleen has breached a representation or warranty or failed to
comply with a covenant included in the Merger Agreement and such breach or
failure has resulted in a material adverse effect on Safety-Kleen's business or
financial condition, Laidlaw Environmental shall be entitled to reimbursement of
up to $25 million in expenses incurred in connection with the Laidlaw
Environmental Offer or the Merger Agreement. The Merger Agreement also provides
that if Safety-Kleen terminates the Merger Agreement because of a breach of a
Laidlaw Environmental representation or warranty or failure to satisfy a
covenant or agreement, Safety-Kleen shall be
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<PAGE> 12
entitled to reimbursement of up to $25 million in expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby.
EFFECT ON BENEFIT PLANS AND RELATED MATTERS
The Merger Agreement provides that for a period of two years following the
Effective Time, Laidlaw Environmental intends to cause the Surviving Corporation
to provide employee benefit plans and programs for the benefit of employees of
the Surviving Corporation and its subsidiaries that are in the aggregate no less
favorable to such employees than the employee benefit plans of the Company and
its affiliates existing on the date of the Merger Agreement. All service
credited to each employee by Safety-Kleen through the Effective Time shall be
recognized by Laidlaw Environmental or the Surviving Corporation for purposes of
eligibility and vesting under any employee benefit plan provided directly or
indirectly by Laidlaw Environmental or the Surviving Corporation for the benefit
of the employees and in which the respective employees participate.
The Merger Agreement also provides that Laidlaw Environmental shall cause
the Surviving Corporation: (i) to honor (without modification) and assume
Safety-Kleen's written employment agreements, severance agreements and
consulting agreements, all as in effect on the date of the Merger Agreement; and
(ii) not to terminate or adversely amend in any manner which adversely affects
the benefits that participants in such plans are entitled to thereunder with
respect to any periods prior to and including the Effective Time. The Merger
Agreement also states that Laidlaw Environmental intends to cause the Surviving
Corporation to continue to maintain an office in Elgin, Illinois for two years
after the Effective Time.
NOTICES
Safety-Kleen, Laidlaw Environmental and LES Acquisition agree pursuant to
the Merger Agreement to give prompt notice to each other at any time from the
date of the Merger Agreement to the Effective Time of the obtaining by it of
actual knowledge as to the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause a breach of any covenant,
representation or warranty contained in the Merger Agreement so as to result in
a Material Adverse Effect or in a material adverse effect upon Laidlaw
Environmental or any of its affiliates. If any party receiving a notice shall
not object thereto within five business days after receiving such Default
Notice, then such party shall be deemed to have waived all rights accruing to it
as a result of such breach. A party shall object to such a Default Notice by
giving timely notice of such party's objection thereto as provided herein to the
party giving such notice. For purposes of this provision, the "actual knowledge"
of a party to the Merger Agreement means the best actual knowledge of its
chairman of the board, president and chief financial officer.
EXCHANGE OF SHARES FOR MERGER CONSIDERATION
Promptly after the Effective Time, each shareholder of record of
Safety-Kleen will be provided with written instruction from a payment agent
designated by Laidlaw Environmental, with the prior approval of Safety-Kleen
(the "Exchange Agent") as to how Shares may be surrendered and exchanged for
payment of the Merger Consideration. Certificates evidencing Shares should not
be surrendered for payment prior to receipt of written instructions from the
Exchange Agent. As of the Effective Time, Laidlaw Environmental will deposit
with the Exchange Agent cash and Laidlaw Environmental Common Stock sufficient
to pay the Merger Consideration.
7. CONDITIONS OF THE LAIDLAW ENVIRONMENTAL OFFER.
Minimum Tender Condition. The Laidlaw Environmental Offer is conditioned
upon, among other things, there being validly tendered and not withdrawn prior
to the Expiration Date a number of Shares which, together with Shares owned by
Laidlaw Environmental and its affiliates, will constitute at least two-thirds of
the total number of outstanding Shares on a fully diluted basis (as though all
outstanding options or other outstanding securities convertible into or
exercisable or exchangeable for Shares, other than the Rights, had been so
converted, exercised or exchanged) as of the date the Shares are accepted for
exchange by Laidlaw Environmental pursuant to the Laidlaw Environmental Offer.
Under the terms of the Merger Agreement, this
11
<PAGE> 13
condition cannot be waived by Laidlaw Environmental without the consent of
Safety-Kleen. Based upon information set forth in the Safety-Kleen Form 10-Q for
the quarter ended September 6, 1997, as of September 6, 1997, there were
58,400,729 Shares outstanding. As of March 16, 1998, Laidlaw Environmental owned
601,100 Shares, or approximately 1.03% of the outstanding Shares. Based on the
foregoing, Laidlaw Environmental believes that the Minimum Tender Condition
would be satisfied if at least an aggregate of 42,302,789 Shares (or 66 2/3%) of
the Shares expected to be outstanding immediately prior to the consummation of
the Laidlaw Environmental Offer had been validly tendered pursuant to the
Laidlaw Environmental Offer and not withdrawn.
Solvency Opinion Condition. Under the terms of the Merger Agreement,
Laidlaw Environmental has agreed that it will not purchase Shares pursuant to
the Laidlaw Environmental Offer unless, prior to such purchase, Laidlaw
Environmental has delivered to Safety-Kleen an opinion or certificate of a
reputable expert firm confirming the solvency of the surviving corporation after
the Merger (which opinion may assume that the purchase of Shares pursuant to the
Offer and the Merger are consummated simultaneously) and related financings,
addressed to or for the benefit of the Board of Directors of Safety-Kleen. This
condition cannot be waived without the consent of the Safety-Kleen Board of
Directors.
Certain Other Conditions of the Laidlaw Environmental
Offer. Notwithstanding any other provision of the Laidlaw Environmental Offer
and subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) under the Exchange Act (relating to Laidlaw Environmental's
obligation to exchange or return tendered Shares promptly after the termination
or withdrawal of the Laidlaw Environmental Offer), and subject to Laidlaw
Environmental's obligation under the Merger Agreement to use its commercially
reasonable best efforts to consummate the transactions contemplated by the
Merger Agreement (the "Best Efforts Obligation"), Laidlaw Environmental shall
not be required to accept for exchange or exchange any Shares, may postpone the
acceptance for exchange or exchange for tendered Shares and may, in its sole
discretion, terminate or amend the Laidlaw Environmental Offer as to any Shares
not then exchanged, if at the Expiration Date the Minimum Tender Condition has
not been satisfied or waived or if on or after the date of this Supplement and
on or prior to the Expiration Date any of the following events shall not have
occurred:
(a) The shares of Laidlaw Environmental Common Stock (and accompanying
Rights) which shall be issued to the Safety-Kleen Shareholders in the
Laidlaw Environmental Offer and the Merger shall have been authorized for
listing on the NYSE, subject to official notice of issuance.
(b) The Registration Statement shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
(c) No order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Laidlaw Environmental Offer and/or the Merger or
any of the other transactions contemplated by this Prospectus shall be in
effect. No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any court,
administrative agency or commission or other governmental authority or
instrumentality which prohibits, restricts or makes illegal the
consummation of the Laidlaw Environmental Offer and/or the Merger.
(d) There shall not have occurred or been threatened (i) any general
suspension of trading in, or limitation on times or prices for, securities
on any national securities exchange or in the over-the-counter market in
the United States, (ii) any significant adverse change in interest rates,
the financial markets or major stock exchange indices in the United States
or abroad or in the market price of Shares, including, without limitation,
a decline of at least 10% in either the Dow Jones Average of Industrial
Stocks or the Standard & Poor's 500 Index from that existing at the close
of business on January 14, 1998, (iii) any change in the general political,
market, economic, regulatory or financial conditions in the United States
or abroad that could, in the reasonable judgment of Laidlaw Environmental,
have a material adverse effect upon the business, properties, assets,
liabilities, capitalization, stockholders' equity, condition (financial or
otherwise), operations, license or franchises, results of operations or
prospects of Safety-Kleen or any of its subsidiaries or the trading in, or
value of, the Shares, (iv) any material change in
12
<PAGE> 14
United States currency exchange rates or any other currency exchange rates
or a suspension of, or limitation on, the markets therefor, (v) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (vi) any limitation (whether or not
mandatory) by any government, domestic, foreign or supranational, or
governmental entity on, or other event that in the reasonable judgment of
Laidlaw Environmental might affect, the extension of credit by banks or
other lending institutions, (vii) a commencement of a war or armed
hostilities or other national or international calamity directly or
indirectly involving the United States or (viii) in the case of any of the
foregoing existing at the time of the commencement of the Laidlaw
Environmental Offer, a material acceleration or worsening thereof.
(e) The representations and warranties of Safety-Kleen set forth in
the Merger Agreement shall be true and correct in all material respects.
(f) Safety-Kleen shall have performed all obligations and complied
with any agreement or covenant of Safety-Kleen to be performed or complied
with by it under the Merger Agreement.
(g) The Merger Agreement shall not have been terminated in accordance
with its terms.
The foregoing conditions (a) through (g) are for the sole benefit of
Laidlaw Environmental and, subject to the Best Efforts Obligation, may be
asserted by Laidlaw Environmental regardless of the circumstances giving rise to
any such conditions or may be waived by Laidlaw Environmental in whole or in
part (other than the condition relating to effectiveness of this Registration
Statement). Laidlaw Environmental reserves the right to assert the failure of a
condition following expiration of the Laidlaw Environmental Offer but prior to
acceptance for exchange in order to delay exchange or avoid the obligation to
exchange properly tendered Shares. Laidlaw Environmental will either promptly
exchange such Shares or promptly return such Shares.
8. CERTAIN LEGAL MATTERS.
Pursuant to the terms of the Merger Agreement, each of Safety-Kleen, LES
Acquisition and Laidlaw Environmental have agreed to dismiss all pending
litigation relating to the Laidlaw Environmental Offer and the actions of
Safety-Kleen and Laidlaw Environmental and each of their respective officers,
directors, employees and advisors in connection therewith.
The following supplements the information set forth in the Prospectus under
the caption "Background of the Laidlaw Environmental Offer -- Litigation."
On January 28, 1998, the parties commenced an evidentiary hearing on
Laidlaw Environmental's second Motion for Preliminary Injunction. On the first
day of trial, Laidlaw Environmental voluntarily dismissed its claims with
respect to the break-up fee and, as a consequence, SK Parent and SK Acquisition
voluntarily withdrew as intervening parties. The hearing concluded on February
3, 1998. On February 4, 1998, the United States District Court for the Northern
District of Illinois denied Laidlaw Environmental's second Motion for
Preliminary Injunction in an opinion read from the bench, but not otherwise
issued in written form.
On February 5, 1998, Laidlaw Environmental filed an Emergency Motion to
Compel Compliance with Securities Exchange Act of 1934 Rules 14-9(b) and
14e-2(b). That motion sought an order compelling the Safety-Kleen Board of
Directors to respond immediately to Laidlaw Environmental's Amended Exchange
Offer dated January 28, 1998, and file an amended Schedule 14D-9 with respect to
that Amended Offer. The United States District Court for the Northern District
of Illinois denied that motion the same day.
On February 26, 1998, Laidlaw Environmental filed a new Motion for
Preliminary Injunction in which Laidlaw Environmental sought an order compelling
the Director Defendants (i) to amend the Rights Plan to make it inapplicable to
the Laidlaw Environmental Offer or to redeem the rights; and (ii) to make the
Wisconsin Business Combination Statute, Wis Stat. sec. 180.1140, et seq.
inapplicable to the Laidlaw Environmental Offer. The United States District
Court for the Northern District of Illinois scheduled an argument for March 2,
1998, on the issue of when that motion should be heard. On March 2, 1998, the
Court set the motion for oral argument on Thursday, March 5, 1998.
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<PAGE> 15
On March 5, 1998, the United States District Court for the Northern
District of Illinois denied Laidlaw Environmental's Motion for Preliminary
Injunction without prejudice, and set the motion for a full evidentiary hearing
at 10:30 a.m. on March 12, 1998. On March 12, 1998, the parties appeared in
court and jointly requested a postponement of the hearing. The Court held a
telephonic status hearing at 4:00 p.m. that same day. At that time, the parties
requested that the Court continue the status to March 13, 1998, at 2:25 p.m.
Prior to that time, the parties requested that the Court again reschedule the
status hearing for 2:00 p.m. on March 16, 1998.
9. EXPIRATION DATE.
Laidlaw Environmental and LES Acquisition hereby extend the Expiration Date
of the Laidlaw Environmental Offer to 12:00 midnight, New York City time, on
March 31, 1998.
EXCEPT AS AMENDED AND SUPPLEMENTED HEREBY, ALL PROVISIONS OF THE PROSPECTUS
REMAIN UNAFFECTED.
14
<PAGE> 16
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each Safety-Kleen Shareholder
or his or her broker, dealer, commercial bank, trust company or other nominee to
the Exchange Agent at one of its addresses set forth below.
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
BY HAND BY FACSIMILE TRANSMISSION BY MAIL
OR OVERNIGHT COURIER
One State Street (for Eligible Institutions only) P.O. Box 84
New York, New York 10004 (212) 858-2611 Bowling Green Station
Attn: Reorg. Dept. Confirm by telephone: New York, New York 10274-0084
Securities Processing (212) 858-2103 Attn: Reorg. Dept.
Window SC-1
Telephone Number
For Information:
(212) 858-2100
</TABLE>
Any questions or requests for assistance or additional copies of this
Supplement, the Prospectus or the Supplement, the Letter of Transmittal and the
Notice of Guaranteed Delivery may be directed to the Information Agent or the
Dealer Manager at their respective telephone numbers and locations listed below.
You may also contact your local broker, commercial bank, trust company or
nominee for assistance concerning the Laidlaw Environmental Offer.
The Information Agent for the Laidlaw Environmental Offer is:
MORROW & CO., INC.
909 Third Avenue
20th Floor
New York, NY 10022
(212) 754-8000
Toll Free (800) 566-9061
Banks and Brokerage Firms please call:
(800) 662-5200
The Dealer Manager for the Laidlaw Environmental Offer is:
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, NY 10167
(212) 499-2403
or
Toll Free (888) 285-3977
<PAGE> 17
ANNEX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 16, 1998,
BY AND AMONG
LAIDLAW ENVIRONMENTAL SERVICES, INC.
LES ACQUISITION INC.
AND
SAFETY-KLEEN CORP.
<PAGE> 18
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE I.
THE OFFER AND THE MERGER
1.1. The Offer and the Merger.................................... A-1
1.2. Closing..................................................... A-2
1.3. Effective Time.............................................. A-2
1.4. Effects of the Merger....................................... A-2
1.5. Articles of Incorporation; By-laws; Purposes................ A-2
1.6. Directors................................................... A-3
1.7. Officers.................................................... A-3
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS
2.1. Conversion of Shares........................................ A-3
2.2. Employee Stock Options...................................... A-3
2.3. Surrender of Certificates................................... A-3
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.1. Organization and Qualifications............................. A-5
3.2. Capitalization.............................................. A-6
3.3. Authority and Absence of Conflict........................... A-6
3.4. Reports..................................................... A-7
3.5. Absence of Certain Changes; Liabilities..................... A-7
3.6. Employee Benefit Plans...................................... A-7
3.7. Litigation; Violation of Law................................ A-9
3.8. Labor....................................................... A-10
3.9. Taxes....................................................... A-10
3.10. Environmental Matters....................................... A-10
3.11. Brokers..................................................... A-11
3.12. Title to Properties......................................... A-11
3.13. Information Supplied........................................ A-12
3.14. Opinion of Financial Advisor................................ A-12
3.15. Board Approval and Recommendation........................... A-12
3.16. Required Company Vote....................................... A-12
3.17. Rights Agreement............................................ A-12
3.18. Proxy Statement and Schedule 14D-9.......................... A-12
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF LAIDLAW
ENVIRONMENTAL AND LES ACQUISITION
4.1. Organization and Qualification.............................. A-13
4.2. Capital Stock of Laidlaw Environmental and LES
Acquisition................................................. A-13
4.3. Authority and Absence of Conflict........................... A-13
4.4. Reports..................................................... A-14
4.5. Absence of Certain Changes; Liabilities..................... A-14
4.6. Interim Operations of LES Acquisition....................... A-15
4.7. Brokers..................................................... A-15
4.8. Proxy Statement............................................. A-15
4.9. No Litigation............................................... A-15
4.10. Employee Benefit Plans...................................... A-15
</TABLE>
i
<PAGE> 19
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
4.11. Labor....................................................... A-17
4.12. Taxes....................................................... A-17
4.13. Environmental Matters....................................... A-18
4.14. Title to Properties......................................... A-18
ARTICLE V.
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
5.1. Conduct of Business of the Company.......................... A-18
ARTICLE VI.
ADDITIONAL AGREEMENTS
6.1. Preparation of Proxy Statement; Shareholders Meeting........ A-20
6.2. Access to Information....................................... A-21
6.3. Filings; Commercially Reasonable Best Efforts............... A-21
6.4. Public Announcements........................................ A-21
6.5. Notification of Certain Matters............................. A-21
6.6. Indemnification and Insurance............................... A-22
6.7. Solicitation................................................ A-22
6.8. Board of Directors.......................................... A-24
6.9 Employee Benefits, Etc. .................................... A-24
6.10. Purchase of Shares Pursuant to Offer; Solvency Opinion...... A-24
6.11. Dismissal of Lawsuits....................................... A-25
ARTICLE VII.
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation to Effect the
Merger...................................................... A-25
7.2. Conditions to Obligations of Laidlaw Environmental.......... A-25
7.3. Conditions to Obligation of the Company..................... A-25
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
8.1. Termination................................................. A-26
8.2. Effect of Termination....................................... A-26
ARTICLE IX.
GENERAL PROVISIONS
9.1. Nonsurvival of Representations and Warranties............... A-27
9.2. Payment of Certain Fees and Expenses........................ A-27
9.3. Notices..................................................... A-27
9.4. Certain Definitions; Interpretation......................... A-28
9.5. Entire Agreement............................................ A-28
9.6. Counterparts................................................ A-28
9.7. Severability................................................ A-28
9.8. Captions.................................................... A-28
9.9. Amendment................................................... A-28
9.10. Waiver...................................................... A-29
9.11. No Third-Party Beneficiaries; Assignability................. A-29
9.12. Best Knowledge.............................................. A-29
9.13. Governing Law............................................... A-29
</TABLE>
ii
<PAGE> 20
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of March 16,
1998, is by and among Laidlaw Environmental Services, Inc., a Delaware
corporation ("Laidlaw Environmental"), LES Acquisition Inc., a Delaware
corporation and an indirect wholly-owned subsidiary of Laidlaw Environmental
("LES Acquisition"), and Safety-Kleen Corp., a Wisconsin corporation (the
"Company").
RECITALS
A. Laidlaw Environmental and LES Acquisition have commenced an offer to
exchange (the "Offer") $18.30 per share net to the seller in cash and 2.8 shares
of common stock, par value $1.00 per share, of Laidlaw Environmental (the
"Laidlaw Environmental Common Stock") (together, the "Offer Consideration"), for
each outstanding common share, par value $0.10 per share, of the Company,
including the Rights (as defined in Section 3.2) associated therewith (the
"Shares").
B. The respective Boards of Directors of the Company, Laidlaw Environmental
and LES Acquisition have determined that the merger of LES Acquisition with and
into the Company (the "Merger"), upon the terms and subject to the conditions
set forth in this Agreement, would be fair and in the best interests of their
respective stockholders, and such Boards of Directors have approved such Merger,
pursuant to which each issued and outstanding Share (other than Shares owned,
directly or indirectly, by the Company or any subsidiary (as defined in Section
9.4) of the Company or by Laidlaw Environmental or any of its affiliates) will
be converted into the right to receive the Offer Consideration (the "Merger
Consideration").
C. Laidlaw Environmental has caused LES, Inc., the sole stockholder of LES
Acquisition, to vote all of its Shares by a consent of sole stockholder, dated
March 15, 1998, in favor of the Merger.
D. Laidlaw Environmental, LES Acquisition and the Company desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger.
AGREEMENTS
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I.
THE OFFER AND THE MERGER
1.1. The Offer and the Merger. (a) Promptly after the execution and
delivery of this Agreement, Laidlaw Environmental and LES Acquisition shall
extend the Offer until midnight (New York city time) on March 27, 1998 (or such
later date as may be required by the Securities and Exchange Commission (the
"SEC")) and upon expiration of the Offer, subject only to the conditions set
forth in Schedule 1.1 hereto (the "Offer Conditions") and Section 6.10, Laidlaw
Environmental shall pay for all of the Shares validly tendered and not withdrawn
as soon as legally permissible. Notwithstanding the foregoing, Laidlaw
Environmental may, without the consent of the Company, (i) extend the Offer, if
at the scheduled or extended expiration date of the Offer, any of the conditions
to Offer shall not be satisfied or waived, until such time as such conditions
are satisfied or waived, (ii) extend the Offer for any period required by any
rule, regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer, or (iii) extend the Offer for a period of up to five
Business Days, but only twice, if, on any scheduled expiration date on which the
Offer Conditions shall have been satisfied or waived, the number of Shares which
have been validly tendered and not withdrawn represent more than 66 2/3% of the
aggregate outstanding Shares, but less than 90% of the then issued and
outstanding Shares, provided, however, that Laidlaw Environmental acknowledges
and agrees that Laidlaw Environmental will not waive or attempt to waive Section
6.10 or the Offer Condition set forth in paragraph 1 of Schedule 1.1 without the
prior written consent of the Company.
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<PAGE> 21
(b) The Company hereby approves of and consents to the Offer and represents
and warrants that the Board of Directors of the Company, at a meeting duly
called and held, has (i) unanimously determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to and in the best interest of the Company's shareholders, (ii) unanimously
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, and (iii) unanimously resolved to recommend acceptance of
the Offer and approval and adoption of this Agreement and the Merger by its
shareholders. The Company further represents and warrants that William Blair &
Company has delivered to the Company Board of Directors its written opinion that
the consideration to be received by the Company's shareholders pursuant to the
Offer and the Merger is fair to such shareholders from a financial point of
view, and a complete and correct copy of such opinion has been delivered by the
Company to Laidlaw Environmental.
(c) Not later than the third business day after the date of this Agreement,
the Company will file with the SEC an amended Solicitation/ Recommendation
Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9,
together with all amendments and supplements thereto, the "Schedule 14D-9")
containing the recommendations described in subparagraph 1.1(b)) above and will
disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Laidlaw
Environmental and its counsel shall be given a reasonable opportunity to review
and comment on such amendment to Schedule 14D-9 prior to its filing with the
SEC. Each of the Company and Laidlaw Environmental will promptly correct any
information provided by it for use in the Schedule 14D-9 that becomes false or
misleading in any material respect, and the Company will further take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and disseminated to the Company's shareholders, in each case as and to the
extent required by applicable law.
(d) As promptly as practicable following the consummation of the Offer and
the satisfaction or waiver of the conditions set forth in Article VII hereof,
and in accordance with the provisions of this Agreement and the provisions of
the Wisconsin Business Corporation Law (the "WBCL") and the Delaware General
Corporation Law (the "DGCL"), LES Acquisition shall be merged with and into the
Company at the Effective Time (as defined in Section 1.3). Upon the Effective
Time, the separate existence of LES Acquisition shall cease, and the Company
shall continue as the surviving corporation (the "Surviving Corporation") under
the name "Safety-Kleen Corp.," to be governed by the laws of the State of
Wisconsin.
1.2. Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.1 and subject to the satisfaction or waiver of the conditions set forth in
Article VII, the closing of the Merger (the "Closing") will take place at 10:00
a.m. on the second business day after satisfaction of the conditions set forth
in Article VII (the "Closing Date"), at the offices of Katten Muchin & Zavis,
525 West Monroe Street, Chicago, Illinois 60661, unless another date, time or
place is agreed to in writing by the parties hereto.
1.3. Effective Time. As soon as practicable following the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall file
appropriate Articles of Merger (the "Wisconsin Articles of Merger") and a
Certificate of Merger (the "Delaware Certificate of Merger") as provided in the
WBCL and the DGCL, respectively, and shall make such other filings, recordings
or publications required under the WBCL and DGCL in connection with the Merger.
The Merger shall become effective upon the date on which the Wisconsin Articles
of Merger have been received for filing by the Secretary of the State of
Wisconsin, which shall be the date when the Delaware Certificate of Merger has
been duly filed with the Secretary of State of Delaware, or such later date as
is agreed upon by the parties and specified in the Wisconsin Articles of Merger
and the Delaware Certificate of Merger, and the time of such effectiveness is
hereinafter referred to as the "Effective Time."
1.4. Effects of the Merger. The Merger shall have the effects set forth in
Section 180.1106 of the WBCL and in Section 259 of DGCL.
1.5. Articles of Incorporation; By-laws; Purposes. (a) At the Effective
Time of the Merger, and without any further action on the part of the Company,
Laidlaw Environmental or LES Acquisition, the
A-2
<PAGE> 22
Articles of Incorporation of the Surviving Corporation shall be in the form of
Exhibit A attached hereto, until thereafter amended as provided therein and
under the WBCL.
(b) At the Effective Time of the Merger, and without any further action on
the part of the Company or Laidlaw Environmental or LES Acquisition, the By-laws
of the Surviving Corporation shall be in the form of Exhibit B attached hereto,
until thereafter amended as provided therein or by applicable law.
1.6. Directors. The directors of LES Acquisition at the Effective Time
shall be the initial directors of the Surviving Corporation, until the earlier
of their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
1.7. Officers. The officers of the Company at the Effective Time shall be
the initial officers of the Surviving Corporation except to the extent that
Laidlaw Environmental designates other or additional officers, until the earlier
of their resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be.
ARTICLE II.
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1. Conversion of Shares. At the Effective Time and by virtue of the
Merger, and without any action on the part of the holders thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares to be canceled pursuant to Subsection
2.1(b) below) shall be converted into the right to receive the Merger
Consideration. All such Shares, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to
receive the Merger Consideration therefor, without interest, upon the
surrender of such certificate in accordance with Section 2.3.
(b) Each Share held in the treasury of the Company, if any, and each
Share owned by Laidlaw Environmental, LES Acquisition or the Company, or by
any direct or indirect subsidiary of any of them, shall be canceled and
retired without payment of any consideration therefor.
(c) Each share of common stock, par value $.01 per share, of LES
Acquisition issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and non-assessable
(except for certain statutory personal liability which may be imposed on
shareholders under Section 180.0622(2)(b) of the WBCL) share of Common
Stock of the Surviving Corporation.
2.2. Employee Stock Options. The Company shall (i) terminate its 1985
Stock Option Plan, 1993 Stock Option Plan and 1988 Non-Qualified Stock Option
Plan for Outside Directors (collectively the "Option Plans"), immediately prior
to the Effective Time without prejudice to the rights of the holders of options
awarded pursuant thereto and (ii) grant no additional options or similar rights
under the Option Plans or otherwise on or after the date hereof. As used
hereafter in this Section 2.2, "Options" shall include each stock option granted
by the Company, whether pursuant to the Option Plans or otherwise.
The Company shall use its best efforts to obtain the consent of each holder
of any Options (whether or not then exercisable) that it does not have the right
to cancel to the cancellation of his Options (irrespective of their exercise
price), and upon obtaining such consent, shall cancel the options covered by
such consent or, in the case of Options that the Company has the right to
cancel, shall cancel such Options, such cancellation (whether or not consent is
required therefor) to take effect immediately prior to the Effective Time. In
consideration of each cancellation of Options, the holders of such Options shall
receive from the Company the consideration set forth for such Options in the
Company Disclosure Schedule.
2.3. Surrender of Certificates. (a) From and after the Effective Time, a
bank or trust company to be designated by Laidlaw Environmental, with the prior
approval of the Company (the "Exchange Agent"), shall
A-3
<PAGE> 23
act as exchange agent in effecting the exchange, for the Merger Consideration
multiplied by the number of Shares formerly represented thereby, of certificates
(the "Certificates") that, prior to the Effective Time, represented Shares
entitled to payment pursuant to Section 2.1. As of the Effective Time, Laidlaw
Environmental shall, for the benefit of the holders of Shares (excluding any
Shares described in Section 2.1(b)), on behalf of LES Acquisition, deposit with
the Exchange Agent cash, and shall promptly make available to the Exchange Agent
certificates representing the shares of Laidlaw Environmental Common Stock, for
the payment in accordance with this Article II, through the Exchange Agent, in
an aggregate amount equal to the Merger Consideration multiplied by the number
of outstanding Shares immediately prior to the Effective Time (excluding any
Shares described in Section 2.1(b)) (such cash and certificates for shares of
Laidlaw Environmental Common Stock being hereinafter referred to as the
"Exchange Fund"). Laidlaw Environmental shall cause the Exchange Agent, pursuant
to irrevocable instructions, to deliver the Merger Consideration contemplated to
be paid pursuant to Section 2.1(a) out of the Exchange Fund. The Exchange Fund
shall not be used for any other purpose. Upon the surrender of each Certificate
and the delivery by the Exchange Agent of the Merger Consideration in exchange
therefor, such Certificate shall forthwith be canceled. Until so surrendered and
exchanged, each such Certificate (other than Certificates representing Shares
held by Laidlaw Environmental, LES Acquisition or the Company or any direct or
indirect subsidiary of Laidlaw Environmental, LES Acquisition or the Company)
shall represent solely the right to receive the Merger Consideration applicable
to the Shares represented by such Certificate multiplied by the number of Shares
represented by such Certificate. No interest shall be paid or shall accrue on
any amount payable on and after the Effective Time by reason of the Merger upon
the surrender of any such Certificate. Upon the surrender and exchange of such
an outstanding Certificate, the holder shall receive the Merger Consideration
applicable to the Shares represented thereby, without any interest thereon. If
the Merger Consideration is to be paid to a person other than the person in
whose name the Certificate representing Shares surrendered in exchange therefor
is registered, it shall be a condition to such payment or exchange that such
Certificate so surrendered be properly endorsed or otherwise be in proper form
for transfer, and that the person requesting such payment or exchange shall pay
to the Exchange Agent any transfer or other taxes required by reason of the
payment of such Merger Consideration to a person other than the registered
holder of the Certificate surrendered, or such person shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of Shares for any Merger Consideration
or interest delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(b) Promptly following the date of the first anniversary of the Effective
Time, the Exchange Agent shall return to the Surviving Corporation all cash in
its possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a
Certificate formerly representing Shares may surrender such Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat or
similar laws) receive in exchange therefor, without any interest thereon, (i)
the Merger Consideration applicable to the Shares represented thereby; (ii) the
amount of any dividends or other distributions theretofore paid with respect to
the shares of Laidlaw Environmental Common Stock represented by such new
certificate and having a record date on or after the Effective Time and a
payment date prior to such surrender; (iii) the amount of any dividends or other
distributions payable with respect to such shares of Laidlaw Environmental
Common Stock and having a record date on or after the Effective Time but prior
to such surrender and a payment date on or subsequent to such surrender; and
(iv) the amount of any cash payable with respect to a fractional share of
Laidlaw Environmental Common Stock to which such holder is entitled. Holders of
Certificates shall have no greater rights against the Surviving Corporation than
may be accorded to general creditors of the Surviving Corporation under
applicable law.
(c) Promptly after the Effective Time, the Exchange Agent shall mail, to
each record holder of Certificates that immediately prior to the Effective Time
represented Shares, a form of letter of transmittal and instructions, approved
by Laidlaw Environmental, for use in surrendering such Certificates and
receiving the Merger Consideration therefor.
(d) At and after the Effective Time, holders of Certificates shall cease to
have any rights as shareholders of the Company except for the right to surrender
such Certificates in exchange for the Merger Consideration
A-4
<PAGE> 24
(and the other amounts, if any, due under Section 2.3(b)), and there shall be no
transfers on the stock transfer books of the Company or the Surviving
Corporation of any Shares that were outstanding immediately prior to the Merger.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent, they shall be canceled and exchanged for the
Merger Consideration, as provided in Section 2.1 hereof, and the other amounts,
if any, due under Section 2.3(b).
(e) The Exchange Agent shall invest any cash included in the Exchange Fund,
as directed by the Surviving Corporation, provided that such investment shall be
(i) securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than six months from the Effective Time, (ii) certificates of deposit,
eurodollar time deposits and bankers' acceptances with maturities not exceeding
six months and overnight bank deposits with any commercial bank, depository
institution or trust company incorporated or doing business under the laws of
the United States of America, any state thereof or the District of Columbia,
provided that such commercial bank, depository institution or trust company has,
at the time of investment, (A) capital and surplus exceeding $250 million and
(B) outstanding short-term debt securities which are rated at least A-1 by
Standard & Poor's Rating Group Division of The McGraw-Hill Companies, Inc. or at
least P-1 by Moody's Investors Services, Inc. or carry an equivalent rating by a
nationally recognized rating agency if both of the two named rating agencies
cease to publish ratings of investment, (iii) repurchase obligations with a term
of not more than 30 days for underlying securities of the types described in
clauses (i) and (ii) above entered into with any financial institution meeting
the qualifications specified in clause (ii) above, (iv) commercial paper having
a rating in the highest rating categories from Standard & Poor's Rating Group
Division of The McGraw-Hills Companies, Inc. or Moody's Investors Services, Inc.
or carrying an equivalent rating by a nationally recognized rating agency if
both of the two named rating agencies cease to publish ratings of investments
and in each case maturing within six months of the Effective Time and (v) money
market mutual or similar funds having assets in excess of $1 billion. Any
interest and other income resulting from such investments shall be paid to the
Surviving Corporation.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Laidlaw Environmental and LES
Acquisition that, as of November 20, 1997 (except where such representations and
warranties are specifically stated to be as of a different date), except as
specifically disclosed or reflected (including, in the case of financial
statements, provided for) in the Company Disclosure Schedule delivered herewith
to Laidlaw Environmental and LES Acquisition, or in the Company's Form 10-K for
the fiscal year ended December 28, 1996 ("Form 10-K") as filed with the SEC, any
subsequently filed Forms 10-Q and Forms 8-K, the annual report to shareholders
for the fiscal year ended December 28, 1996 delivered to Laidlaw Environmental
(the "Annual Report"), and the proxy statement for the 1997 Annual Meeting (such
Forms, the Annual Report and such proxy statement, including without limitation
any financial statements and related notes or schedules included in such
documents and all exhibits and schedules included or incorporated by reference
therein, are herein collectively referred to as the "SEC Reports"):
3.1. Organization and Qualifications. Each of the Company and its
Significant Subsidiaries (as defined in Section 9.4) is a corporation duly
incorporated, validly existing and in good standing 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
by it, or the business conducted by it, requires such qualification and where
failure to so qualify or be in good standing would have a Company Material
Adverse Effect (as defined in Section 9.4). Each of the Company and its
Significant Subsidiaries has the corporate power to carry on its respective
businesses as they are now being conducted. Copies of the charter and by-laws of
each of the Company and its Significant Subsidiaries, and all amendments thereto
as presently in effect, have been delivered to Laidlaw Environmental, and such
copies are complete and correct as of the date hereof.
A-5
<PAGE> 25
3.2. Capitalization. (a) The authorized capital stock of the Company
consists of (i) 300,000,000 Shares of which, as of February 28, 1998, 59,930,589
Shares were issued and outstanding and (ii) 1,000,000 Shares of preferred stock,
par value $.10 per share, of the Company (the "Preferred Stock"), none of which
is issued and outstanding. As of February 28, 1998, (i) 3,910,158 Shares were
reserved for issuance upon the exercise of outstanding options granted pursuant
to the Option Plans, 116,449 Shares are reserved for issuance under the Employee
Stock Purchase Plan and 120,000 Shares are reserved for issuance under the
Company's 1988 Non-Qualified Stock Option Plan for outside directors and (ii)
64,077,196 Shares were reserved for issuance in connection with the Common Stock
Purchase Rights (the "Rights") issued pursuant to the Rights Agreement dated as
of November 9, 1988, as amended by a First Amendment to Rights Agreement dated
as of August 10, 1990, Second Amendment to Rights Agreement dated as of November
20, 1997, Third Amendment to Rights Agreement dated as of March 11, 1998, and
the Fourth Amendment to the Rights Agreement dated as of March 16, 1998 (as so
amended, the "Rights Agreement"), between the Company and The First National
Bank of Chicago, as Rights Agent. Except as set forth above, and except for
warrants dated January 27, 1995 issued to H. Wayne Huizenga to purchase up to
200,000 Shares, there are no outstanding options, warrants, agreements,
contracts, calls, commitments or demands of any character, preemptive or
otherwise, other than this Agreement, relating to any of the capital stock of
the Company. All of the outstanding Shares are duly authorized, validly issued,
fully paid and non-assessable (except as provided in Section 180.0622(2)(b) of
the WBCL and judicial interpretations thereof). The Company Disclosure Schedule
lists each subsidiary of the Company and the ownership interest therein of the
Company. All outstanding shares of capital stock of the Company's subsidiaries
are owned by the Company or a direct or indirect wholly owned subsidiary of the
Company, free and clear of all liens, charges, encumbrances, claims and options
of any nature.
(b) There are no voting trusts or other agreements or understandings to
which the Company or any of its subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of the subsidiaries. None of
the Company or its subsidiaries is required to redeem, repurchase or otherwise
acquire shares of capital stock of the Company, or any of its subsidiaries.
3.3. Authority and Absence of Conflict. (a) The Company has the requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly and unanimously
authorized by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby, other than, if required in order to consummate the Merger under the
WBCL, the approval and adoption of this Agreement and the Merger by holders of
sixty-six and two-thirds percent of the outstanding Shares (the "Company
Shareholder Approval") at a meeting of the shareholders of the Company held for
this purpose (the "Shareholder Meeting"). This Agreement has been duly executed
and delivered by the Company and (assuming due authorization, execution and
delivery by Laidlaw Environmental and LES Acquisition) constitutes a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally or by general equitable principles.
(b) Neither the execution and delivery of this Agreement by the Company,
nor the consummation by the Company of the transactions contemplated hereby, nor
compliance by the Company with any of the provisions hereof, will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance or payment required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
of its subsidiaries under, any of the terms, conditions or provisions of (x) the
charter or by-laws of the Company or any of its Significant Subsidiaries, (y)
the charter or by-laws of any of its Subsidiaries that are not Significant
Subsidiaries, or (z) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Company
or
A-6
<PAGE> 26
any of its subsidiaries is a party or to which any of them or any of their
respective properties or assets may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next subsection, violate
any judgment, ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to the Company and its subsidiaries or any of their
respective properties or assets; except, in the case of each of clauses (i)(y),
(i)(z), and (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances which would not have a Company Material Adverse Effect.
(c) Other than in connection with or in compliance with the provisions of
the WBCL, the DGCL, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the Exchange Act, the laws of any foreign country in
which the Company or any of its subsidiaries conducts any business or owns any
property or assets, the federal, state and local environmental, health or safety
laws or regulations, and to the best knowledge of the Company, certain state
securities or "takeover" statutes, no notice to, filing with, or authorization,
consent or approval of, any domestic or foreign public body or authority is
necessary for the consummation by the Company of the transactions contemplated
by this Agreement, except where the failure to give such notices, make such
filings or obtain such authorizations, consents or approvals would not have a
Company Material Adverse Effect.
3.4. Reports. The Company has filed all forms, reports and documents
required under Section 13(a) under the Exchange Act with the SEC since December
31, 1995, and none of such forms, reports or documents, including without
limitation any financial statements or schedules included therein, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. The consolidated balance sheet (including the related
notes) included in the Form 10-K and in the Form 10-Q for the thirty-six weeks
ended September 6, 1997 (the "Form 10-Q") fairly presented the consolidated
financial position of the Company and its consolidated subsidiaries as of the
date thereof, and the other related statements (including the related notes)
included therein fairly presented the consolidated results of operations and the
changes in consolidated financial position of the Company and its consolidated
subsidiaries for the fiscal period set forth therein. Each of the financial
statements (including the related notes) included in the Form 10-K and in the
Form 10-Q has been prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as otherwise
noted therein and except that the quarterly financial statements do not contain
all footnotes required by generally accepted accounting principles. The
information contained in the financial statements included in the Company's Form
10-K for the year ended January 3, 1998 will conform in all material respects
with the Company's year end financial results disclosed in the Company's
February 13, 1998 press release. The representations and warranties set forth in
this Section 3.4 shall not apply to any noncompliance, non-filings,
misstatements, omissions or failures to present fairly or conform to generally
accepted accounting principles which either (i) were corrected in a subsequent
form, report or document filed with the SEC prior to the date of this Agreement,
or (ii) would not have a Company Material Adverse Effect or prevent or delay in
any material respect the consummation of the Merger. None of the Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC.
3.5. Absence of Certain Changes; Liabilities. Since December 28, 1996,
except for entering into and terminating the Agreement and Plan of Merger, dated
as of November 20, 1997, between and among SK Parent, SK Acquisition and the
Company (the "Buyout Merger Agreement") and except in connection with the Offer
and the Merger (i) the Company and its Subsidiaries have conducted their
respective businesses and operations only in the ordinary and usual course, (ii)
there has not been any change in the financial condition, properties, business
or results of operations of the Company and its subsidiaries that has had a
Company Material Adverse Effect, (iii) neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations (secured or unsecured
and whether accrued, absolute, contingent, direct, indirect or otherwise) (the
"Liabilities") except Liabilities that do not have a Company Material Adverse
Effect, and (iv) neither the Company nor any of its subsidiaries has taken any
of the actions contemplated by Section 5 hereof.
3.6. Employee Benefit Plans. (a) With respect to all employees and former
employees of the Company, neither the Company nor any of its affiliates
presently maintains, sponsors, contributes to, is required to contribute to or
has any liability under: (i) any bonus, incentive compensation, profit sharing,
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retirement, pension, group insurance, death benefit, cafeteria, flexible
spending account, medical, dependent care, stock option, stock purchase, stock
appreciation rights, savings, deferred compensation, employment, consulting,
severance or termination pay, funded vacation pay, welfare or other employee
compensation, benefit or fringe benefit plan, program, agreement, or
arrangement, the existence of which or the failure of the Company or any of its
affiliates to comply with which or to satisfy such liability would have, either
individually or in the aggregate, a Company Material Adverse Effect; or (ii) any
plan, program, agreement, or arrangement which is an "employee pension benefit
plan" as such term is defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or an "employee welfare benefit
plan" as defined in Section 3(1) of ERISA, the existence of which or the failure
of the Company or any of its affiliates to comply with which or to satisfy such
liability would have, either individually or in the aggregate, a Company
Material Adverse Effect. The Company Disclosure Schedule includes a list of all
plans, programs, agreements, and arrangements set forth in clauses (i) and (ii)
of the preceding sentence which are maintained, sponsored, contributed to or
required to be contributed to by the Company or any of its affiliates (the
"Employee Benefit Plans"). The term "affiliate" for purposes of this Section 3.6
means any organization that would be aggregated with the Company under Section
414(b), (c) or (m) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code").
(b) Each Employee Benefit Plan which is intended to comply with the
provisions of Section 401(a) of the Internal Revenue Code has been submitted to
the Internal Revenue Service (the "IRS") and received a determination letter
which states that such Employee Benefit Plan is so qualified, and to the best of
the Company's knowledge no event has occurred since the date of such letter
which would (i) cause such Employee Benefit Plan not to be so qualified or (ii)
cause any trust maintained under such Employee Benefit Plan not to be exempt
from taxation under Section 501(a) of the Internal Revenue Code.
(c) To the best knowledge of the Company, with respect to each Employee
Benefit Plan which is subject to Title I of ERISA, neither the Company nor any
of its affiliates has failed to comply with any applicable reporting, disclosure
or other requirements of ERISA and the Internal Revenue Code, except for such
failures to comply which would not have, either individually or in the
aggregate, a Company Material Adverse Effect, and there has been no "prohibited
transaction" as described in Section 4975 of the Internal Revenue Code or
Section 406 of ERISA the failure to correct which would have, either
individually or in the aggregate, a Company Material Adverse Effect.
(d) Neither the Company nor any affiliate maintains any Employee Benefit
Plans subject to the minimum funding standards of ERISA and the Internal Revenue
Code.
(e) Neither the Company nor any of its affiliates presently maintains,
contributes to or has any liability (including current or potential withdrawal
liability) with respect to any "multiemployer plan" as such term is defined in
Section 3(37) of ERISA.
(f) Neither the Company nor any of its affiliates has maintained an
employee pension benefit plan subject to Title IV of ERISA.
(g) There is no pending or, to the best knowledge of the Company,
threatened legal action, proceeding or investigation against or involving any
Employee Benefit Plan (other than routine claims for benefits), the adverse
resolution of which would have, either individually or in the aggregate, a
Company Material Adverse Effect.
(h) With respect to any employee or former employee of the Company, except
as required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA"), neither the Company nor any of its affiliates presently
sponsors, maintains, contributes to, is required to contribute to or has any
liability under any funded or unfunded medical, health or life insurance plan or
similar arrangement for present or future retirees or present or future
terminated employees the existence of which or the failure to satisfy which
would have, either individually or in the aggregate, a Company Material Adverse
Effect. Neither the Company nor any subsidiary or affiliate of the Company
maintains or contributes to a trust, organization or association described in
any of Sections 501(c)(9), 501(c)(17) or 501(c)(20) of the Internal Revenue
Code.
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(i) With respect to each of the Employee Benefit Plans, the Company will
deliver or make reasonably available to Laidlaw Environmental true and complete
copies of: (i) the plan documents, including any related trust agreements,
insurance contracts or other funding arrangements, or a written summary of the
terms and conditions of the plan if there is no written plan document; (ii) the
most recent IRS Form 5500; (iii) the most recent financial statement; (iv) the
most recent Summary Plan Description required under ERISA; (v) the most recent
actuarial report, if required under ERISA and (vi) the most recent determination
letter received from the IRS with respect to each Employee Benefit Plan intended
to qualify under Section 401 of the Internal Revenue Code.
(j) To the best of the Company's knowledge, each Employee Benefit Plan has
been operated and administered in all material respects in accordance with its
terms and applicable law, including but not limited to ERISA and the Internal
Revenue Code.
(k) No liability under Title IV or Section 302 of ERISA has been incurred
by the Company or any affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any affiliate
of incurring any such liability (other than for premiums due the Pension Benefit
Guaranty Corporation ("PBGC") (which premiums have been paid when due)). Insofar
as the representation made in this section 3.6(k) applies to Sections 4064, 4069
or 4204 of Title IV of ERISA, it is made with respect to any employee benefit
plan, program, agreement or arrangement subject to Title IV of ERISA to which
the Company or any affiliate made, or was required to make, contributions during
the five (5)-year period ending on the last day of the most recent plan year
ended prior to the Effective Time.
(l) The PBGC has not instituted proceedings to terminate any Employee
Benefit Plan subject to Title IV of ERISA ("Title IV Plan") and to the best of
the Company's knowledge no condition exists that presents a risk that such
proceedings will be instituted.
(m) With respect to the Title IV Plans, the present value of the
accumulated benefit obligation under such plan, calculated based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such plan's actuary with respect to such plan did not exceed,
as of its latest valuation date, the then fair value of the assets of such plans
in the aggregate as calculated pursuant to FAS 87.
(n) No Title IV Plan or any trust established thereunder has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Internal Revenue Code), whether or not waived, as of the last day of
the most recent fiscal year of each Title IV Plan ended prior to the Effective
Time. All contributions required to be made with respect to any Employee Benefit
Plan on or prior to the Effective Time have been (or will have been) timely
made.
(o) The consummation of the transactions contemplated by this Agreement
will not, either alone or in combination with another event, entitle the current
and former employees and current and former officers of the Company and any
affiliates to severance pay, which, in the aggregate, will exceed $45,744,000
unless the Surviving Corporation does not offer employment to an employee who is
an eligible employee who is eligible for severance pay under the Safety-Kleen
Corp. Severance Pay Plan in a position with total compensation that is within 15
percent of the employee's current total compensation and at a location that is
within a 30 mile radius of the employee's current work location.
(p) All actions will have been taken, or which have failed to be taken,
with respect to the Employee Benefit Plans, would not, in the aggregate, have a
Company Material Adverse Effect.
3.7. Litigation; Violation of Law. (a) There are no claims, actions, suits
or proceedings or investigations pending or, to the best knowledge of the
Company, threatened against the Company or any of its subsidiaries, nor is the
Company or any of its subsidiaries subject to any order, judgment, writ,
injunction or decree, except in either case for matters which would not have a
Company Material Adverse Effect or materially impair the ability of the Company
to consummate the Merger, and as of the date of this Agreement there are no such
matters involving a contingent liability, within the meaning of that term in
Financial Accounting Standards Bulletin No. 5, of more than $20,000,000.
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(b) To the best knowledge of the Company, the businesses of the Company and
its subsidiaries are not being conducted in violation of any applicable law,
ordinance, rule, regulation, decree or order of any court or governmental
entity, except for violations which do not have a Company Material Adverse
Effect.
3.8. Labor. There is no material dispute, grievance, controversy, strike
or request for union representation pending, or, to the best knowledge of the
Company, threatened, against either the Company or any of its Significant
Subsidiaries.
3.9. Taxes. (a) The Company and each subsidiary of the Company have timely
filed (or have had timely filed on their behalf) or will file or cause to be
timely filed, all Tax Returns required by applicable law to be filed by any of
them prior to or as of the Effective Time, except where the failure to do so
would not have a Company Material Adverse Effect. All material Tax Returns are,
or will be at the time of filing, true, complete and correct in all material
respects.
(b) The Company and each subsidiary of the Company have paid (or have had
paid on their behalf) or, where payment is not yet due, have established (or
have had established on their behalf and for their sole benefit and recourse) or
will establish or cause to be established on or before the Effective Time an
adequate accrual for the payment of all Taxes due, except where the failure to
pay or establish adequate reserves would not have a Company Material Adverse
Effect.
(c) No deficiencies for any material Taxes have been proposed, asserted or
assessed against the Company or any subsidiary of the Company, and no requests
for waivers of the time to assess any such material Taxes are pending. The
Federal Income Tax Returns of the Company and each subsidiary of the Company
consolidated in such Tax Returns are not currently being examined for years
prior to the year ended December 31, 1992 and the statute of limitations has run
for years prior to December 31, 1992.
(d) There are no material Liens for Taxes upon the assets of the Company
except (i) with respect to matters beings contested in good faith and (ii) Liens
for Taxes not yet due.
(e) There are no material United States federal, state, local or foreign
audits or other administrative proceedings or court proceedings presently
pending with regard to any Taxes or Tax Returns of the Company.
(f) The Company is not a party to any agreement or arrangement (written or
oral) providing for the allocation or sharing of Taxes.
(g) The Company has not filed a consent pursuant to Section 341(f)(2) of
the Internal Revenue Code or agreed to have Section 341(f)(2) of the Internal
Revenue Code apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Internal Revenue Code) owned by the Company.
(h) The Company is a corporation within the meaning of (S)7701(a)(3) of the
Internal Revenue Code.
(i) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Taxes" shall mean all United States Federal, state, territorial,
local and foreign taxes, and other assessments of a similar nature (whether
imposed directly or through withholding), including any interest, additions
to tax, or penalties applicable thereto.
(ii) "Tax Returns" shall mean all United States Federal, state,
territorial, local and foreign tax returns, declarations, statements,
reports, schedules, forms and information returns and any amended tax
return relating to Taxes.
3.10. Environmental Matters. (a) Except for violations of the following
clauses (i) through (vii) that would not have a Company Material Adverse Effect
on the Company, to the best knowledge of the Company, (i) the Company and its
subsidiaries have conducted their respective businesses in compliance with all
applicable Environmental Laws and are currently in compliance with all such
laws, including, without limitation, having all permits, licenses and other
approvals and authorizations necessary for the operation of their respective
businesses as presently conducted, (ii) none of the properties currently or
formerly owned or operated by the Company or any of its subsidiaries contains
any Hazardous Substance in amounts exceeding
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the levels permitted by applicable Environmental Laws, (iii) neither the Company
nor any of its subsidiaries has received any notices, demand letters or requests
for information from any court or governmental entity or third party indicating
that the Company or any of its subsidiaries may be in violation of, or liable
under, any Environmental Law in connection with the ownership or operation of
their businesses, including, without limitation, liability relating to sites not
owned or operated by the Company or any of its subsidiaries, (iv) there are no
civil, criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings, pending or threatened, against the Company or any
subsidiaries relating to any violation of or liability under, or alleged
violation of or liability under, any Environmental Law, (v) all reports that are
required to be filed by the Company or any of its subsidiaries concerning the
release of any Hazardous Substance or the threatened or actual violation of any
Environmental Law have been so filed, (vi) no Hazardous Substance has been
disposed of, released or transported in violation of or under circumstances that
could create liability under any applicable Environmental Law from any
properties owned by the Company or any of its subsidiaries as a result of any
activity of the Company or any of its subsidiaries during the time such
properties were owned, leased or operated by the Company or any subsidiaries,
(vii) neither the Company, any of its subsidiaries nor any of their respective
properties are subject to any material liabilities or expenditures (fixed or
contingent) relating to any suit, settlement, court order, administrative order,
regulatory requirement, judgment or claim asserted or arising under any
Environmental Law, and (viii) the Company will provide or make available to
Laidlaw Environmental each environmental audit, test or analysis performed
within the last three years of any property currently or formerly owned or
operated by the Company or any of its subsidiaries (x) sufficient to put Laidlaw
Environmental on notice of any condition of environmental impairment which would
give rise to a Company Material Adverse Effect and (y) of which the Company has
knowledge.
(b) As used herein, "Environmental Law" means any United States Federal,
territorial, state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any governmental
entity relating to (i) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource) or to human health or safety or (ii)
the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as amended and as in effect on the date
hereof. The term "Environmental Law" includes, without limitation, (i) the
Federal Comprehensive Environmental Response Compensation and Liability Act of
1980, the Superfund Amendments and Reauthorization Act, the Federal Water
Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including
the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste
Disposal Act and the Federal Toxic Substances Control Act, the Federal
Insecticide, Fungicide and Rodenticide Act, and the Federal Occupational Safety
and Health Act of 1970, each as amended and as in effect on the date hereof, and
(ii) any common law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance, trespass and
strict liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of, effects of or
exposure to any Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance presently
listed, defined, designated or classified as hazardous, toxic, radioactive, or
dangerous, or otherwise regulated, under any Environmental Law. Hazardous
Substance includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance or petroleum or any
derivative or by-product thereof, radon, radioactive material, asbestos, or
asbestos containing material, urea formaldehyde foam insulation, lead or
polychlorinated byphenyls.
3.11. Brokers. No agent, broker, investment banker, financial advisor or
other person or entity is or will be entitled to any brokerage commission,
finder's fee or like payment in connection with any of the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company.
3.12. Title to Properties. The Company and its subsidiaries have good,
valid and marketable title to the properties and assets listed on the most
recent consolidated balance sheet included in the SEC Reports (the
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"Balance Sheet") as owned by it (other than properties and assets disposed of in
the ordinary course of business since the date of the Balance Sheet), and all
such properties and assets are free and clear of any liens, except as described
in the SEC Reports and the financial statements included therein or in the
Company Disclosure Schedule and other than liens for current taxes not yet due
and other liens, security interests, charges, encumbrances, easements,
covenants, restrictions or title imperfections that do not have a Company
Material Adverse Effect.
3.13. Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the Proxy
Statement (as defined in Section 6.1(a)), if any, will, at the date it is first
mailed to the Company's shareholders or at the time of the Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Proxy Statement, if any, will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation is made by the Company
with respect to statements made or incorporated by reference therein based on
information supplied in writing by or on behalf of Laidlaw Environmental or LES
Acquisition specifically for inclusion therein.
3.14. Opinion of Financial Advisor. The Company has received the opinion
of William Blair & Company L.L.C. to the effect that the consideration to be
received in the Merger by the Company's shareholders (other than Laidlaw
Environmental or any affiliate thereof) is fair to such holders of Shares from a
financial point of view.
3.15. Board Approval and Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has duly and unanimously, subject to
the terms and conditions set forth herein, (i) determined that this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
are fair to and in the best interests of the shareholders of the Company, and
(ii) subject to the other provisions hereof, resolved to approve the Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
for purposes of Section 180.1141 of the WBCL and as a result rendered
inapplicable to the Offer and the Merger the restrictions on business
combinations set forth therein, and (iii) subject to the provisions hereof,
resolved to recommend that the holders of Shares accept the Offer and approve
this Agreement and the transactions contemplated herein, including the Merger.
Notwithstanding anything to the contrary herein, the Board of Directors of the
Company shall have the right to modify or withdraw its recommendation if an
event or circumstance resulting in a Laidlaw Environmental Material Adverse
Effect occurs prior to the Effective Time.
3.16. Required Company Vote. The Company Shareholder Approval, if required
by applicable law, is the only vote of the holders of any class or series of the
Company's securities that may be necessary to approve this Agreement, the Merger
and the other transactions contemplated hereby.
3.17. Rights Agreement. The Board of Directors of the Company has amended
the Rights Agreement prior to the execution of this Agreement so that neither
the execution nor the delivery of this Agreement nor the consummation of the
Merger will (i) cause any Rights issued pursuant to the Rights Agreement to
become exercisable or to separate from the stock certificates to which they are
attached, (ii) cause Laidlaw Environmental or any of its affiliates to be an
Acquiring Person (as such term is defined in the Rights Agreement) or (iii)
trigger other provisions of the Rights Agreement, including giving rise to a
Distribution Date (as such term is defined in the Rights Agreement).
3.18. Proxy Statement and Schedule 14D-9. None of the information supplied
in writing by the Company specifically for inclusion in the Schedule 14D-9 or
the Proxy Statement (if any), will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF LAIDLAW ENVIRONMENTAL AND LES ACQUISITION
Laidlaw Environmental and LES Acquisition each represent and warrant,
jointly and severally, to the Company that, except as disclosed or reflected in
the Laidlaw Environmental Disclosure Schedule delivered herein to the Company:
4.1. Organization and Qualification. Each of Laidlaw Environmental and LES
Acquisition is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and is in good
standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated by it, or the business conducted by it, requires such
qualification and where failure to so qualify or be in good standing would have
a Laidlaw Environmental Material Adverse Effect. Each of Laidlaw Environmental
and LES Acquisition has the corporate power to carry on its respective
businesses as they are now being conducted. Copies of the respective charter
documents and by-laws of Laidlaw Environmental and LES Acquisition have
heretofore been delivered to the Company, and such copies are complete and
correct as of the date hereof.
4.2. Capital Stock of Laidlaw Environmental and LES Acquisition. (a) As of
the date hereof, and at all times thereafter up to and including the Effective
Time, all of the outstanding shares of common stock, par value $.01 per share,
of LES Acquisition shall be duly authorized, validly issued, fully paid,
non-assessable and owned indirectly by Laidlaw Environmental, free and clear of
all liens, claims and encumbrances, except as provided by (i) the Credit
Agreement among Laidlaw Chem-Waste, Inc., Laidlaw Environmental Services
(Canada) Ltd., The Several Lenders from Time to time Parties thereto, Toronto
Dominion (Texas) Inc., as General Administrative Agent, TD Securities (USA),
Inc., as Arranger, The Bank of Nova Scotia, NationsBank, N.A. and The First
National Bank of Chicago, as Managing Agents and NationsBank, N.A. as
Syndication Agent, dated as of May 9, 1997 and (ii) a new credit agreement for
the facility being arranged by the TD Securities (USA), Inc. in connection with
the Offer and the Merger (the "New Credit Facility").
(b) The authorized capital stock of Laidlaw Environmental consists of (i)
750,000,000 shares of Laidlaw Environmental Common Stock, par value $1.00 per
share of which, as of January 30, 1998, there were 182,282,097 shares issued and
outstanding, and (ii) 1,000,000 shares of Laidlaw Environmental Preferred Stock,
par value $1.00 per share, none of which is issued and outstanding. All of the
outstanding shares of Laidlaw Environmental Common Stock, have been duly
authorized, validly issued, fully paid and non-assessable. Except as set forth
in Laidlaw Environmental's Form 10-K for the fiscal year ended August 31, 1997
or as issued since that date in accordance with the terms of Laidlaw
Environmental stock option plans referenced therein, there are no outstanding
options, warrants, agreements, contracts, calls, commitments or demands of any
character, preemptive or otherwise, other than the Offer and this Agreement,
relating to any of the capital stock of the Company.
4.3. Authority and Absence of Conflict. (a) Each of Laidlaw Environmental
and LES Acquisition has the requisite corporate power and authority to enter
into this Agreement and to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Laidlaw Environmental and LES Acquisition and the consummation by
Laidlaw Environmental and LES Acquisition of the transactions contemplated
hereby have been duly authorized by the respective Boards of Directors of
Laidlaw Environmental and LES Acquisition, and by LES, Inc. as sole shareholder
of LES Acquisition, and no other corporate proceedings on the part of Laidlaw
Environmental or LES Acquisition are necessary to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Laidlaw
Environmental and LES Acquisition and (assuming due authorization, execution and
delivery by the Company) constitutes a valid and binding obligation of each of
them, enforceable against each of them in accordance with its terms except to
the extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles.
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(b) Neither the execution and delivery of this Agreement by Laidlaw
Environmental or LES Acquisition, nor the consummation by them of the
transactions contemplated hereby, nor compliance by Laidlaw Environmental or LES
Acquisition with any of the provisions hereof, will (i) violate, conflict with,
or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of Laidlaw Environmental or LES Acquisition or any other
direct or indirect subsidiary or affiliate of Laidlaw Environmental under any of
the terms, conditions or provisions of (x) the charter documents or by-laws of
Laidlaw Environmental or LES Acquisition or any other direct or indirect
subsidiary or affiliate of Laidlaw Environmental or (y) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Laidlaw Environmental or LES Acquisition or
any other direct or indirect subsidiary of Laidlaw Environmental is a party, or
to which any of them, or any of their respective properties or assets, may be
subject, or (ii) subject to compliance with the statutes and regulations
referred to in the next subsection, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to Laidlaw
Environmental or LES Acquisition or any other direct or indirect subsidiary or
affiliate of Laidlaw Environmental or any of their respective properties or
assets; except, in the case of each of clauses (i)(y) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances which, in the
aggregate, would not have a Laidlaw Environmental Material Adverse Effect.
(c) Other than in connection with or in compliance with the provisions of
the WBCL, the DGCL, the HSR Act, the Exchange Act, the Securities Act of 1933,
as amended, certain antitrust or competition approvals from foreign
jurisdictions, certain state securities or "takeover" statutes and the
environmental, health or safety laws or regulations of various states, no notice
to, filing with, or authorization, consent or approval of, any domestic or
foreign public body or authority is necessary for the consummation by Laidlaw
Environmental and LES Acquisition of the transactions contemplated by this
Agreement, except where the failure to give such notices, make such filings, or
obtain authorizations, consents or approvals would, in the aggregate, have a
Laidlaw Environmental Material Adverse Effect.
4.4. Reports. Laidlaw Environmental has filed all forms, reports and
documents required under Section 13(a) under the Exchange Act with the SEC since
August 31, 1997, and none of such forms, reports or documents, including without
limitation any financial statements or schedules included therein, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. The consolidated balance sheet (including the related
notes) included in the Form 10-K for the fiscal year ended August 31, 1997 (the
"Laidlaw Form 10-K") and in the Form 10-Q for the quarterly period ended
November 30, 1997 (the "Laidlaw Form 10-Q") fairly presented the consolidated
financial position of Laidlaw Environmental and its consolidated subsidiaries as
of the date thereof, and the other related statements (including the related
notes) included therein fairly presented the consolidated results of operations
and the changes in consolidated financial position of Laidlaw Environmental and
its consolidated subsidiaries for the fiscal period set forth therein. Each of
the financial statements (including the related notes) included in the Laidlaw
Form 10-K and in the Laidlaw Form 10-Q has been prepared in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as otherwise noted therein and except that the quarterly
financial statements do not contain all footnotes required by generally accepted
accounting principles. The representations and warranties set forth in this
Section 4.4 shall not apply to any noncompliance, non-filings, misstatements,
omissions or failures to present fairly or conform to generally accepted
accounting principles which either (i) were corrected in a subsequent form,
report or document filed with the SEC prior to the date of this Agreement, or
(ii) would not have a Laidlaw Environmental Material Adverse Effect or prevent
or delay in any material respect the consummation of the Merger. None of Laidlaw
Environmental's subsidiaries is required to file any forms, reports or other
documents with the SEC.
4.5. Absence of Certain Changes; Liabilities. Except in connection with
the Offer and the Merger, including the payment of fees and expenses incurred in
connection with the New Credit Facility and the purchase and payment for Shares
pursuant to the Offer, since August 31, 1997, (i) Laidlaw Environmental
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and its Subsidiaries have conducted their respective businesses and operations
only in the ordinary and usual course, (ii) there has not been any change in the
financial condition, properties, business or results of operations of Laidlaw
Environmental and its subsidiaries that has had a Laidlaw Environmental Material
Adverse Effect, (iii) neither Laidlaw Environmental nor any of its subsidiaries
has incurred any liabilities or obligations (secured or unsecured and whether
accrued, absolute, contingent, direct, indirect or otherwise) (the "Laidlaw
Liabilities") except Laidlaw Liabilities that do not have a Laidlaw
Environmental Material Adverse Effect, and (iv) neither Laidlaw Environmental
nor any of its subsidiaries has taken any of the actions contemplated by Section
5 hereof.
4.6. Interim Operations of LES Acquisition. LES Acquisition was formed on
November 12, 1997 solely for the purpose of engaging in the transactions
contemplated hereby, has engaged in no other business activities and has
conducted its operations only as contemplated hereby.
4.7. Brokers. Except as set forth in the Offer, no agent, broker,
investment banker, financial advisor or other person or entity is or will be
entitled to any brokerage commission, finder's fee or like payment in connection
with any of the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Laidlaw Environmental or LES Acquisition.
4.8. Proxy Statement. None of the information supplied in writing by
Laidlaw Environmental or LES Acquisition specifically for inclusion in the Proxy
Statement, if any, or the Schedule 14D-9 will, at the date it is first mailed to
the shareholders of the Company or at the time of the Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.9. No Litigation. (a) There are no claims, actions, suits or proceedings
or investigations pending or, to the best knowledge of Laidlaw Environmental,
threatened against Laidlaw Environmental, LES Acquisition or any of their
respective affiliates, nor is Laidlaw Environmental, LES Acquisition or any of
their respective affiliates subject to any order, judgment, writ, injunction or
decree, in either case which would have a Laidlaw Environmental Material Adverse
Effect.
(b) To the best knowledge of Laidlaw Environmental, the businesses of
Laidlaw Environmental and its subsidiaries are not being conducted in violation
of any applicable law, ordinance, rule, regulation, decree or order of any court
or governmental entity, except for violations which do not have a Laidlaw
Environmental Material Adverse Effect.
4.10. Employee Benefit Plans. (a) With respect to all employees and former
employees of Laidlaw Environmental, neither Laidlaw Environmental nor any of its
affiliates presently maintains, sponsors, contributes to, is required to
contribute to or has any liability under: (i) any bonus, incentive compensation,
profit sharing, retirement, pension, group insurance, death benefit, cafeteria,
flexible spending account, medical, dependent care, stock option, stock
purchase, stock appreciation rights, savings, deferred compensation, employment,
consulting, severance or termination pay, funded vacation pay, welfare or other
employee compensation, benefit or fringe benefit plan, program, agreement, or
arrangement, the existence of which or the failure of Laidlaw Environmental or
any of its affiliates to comply with which or to satisfy such liability would
have, either individually or in the aggregate, a Laidlaw Environmental Material
Adverse Effect; or (ii) any plan, program, agreement, or arrangement which is an
"employee pension benefit plan" as such term is defined in Section 3(2) of
ERISA, or an "employee welfare benefit plan" as defined in Section 3(1) of
ERISA, the existence of which or the failure of Laidlaw Environmental or any of
its affiliates to comply with which or to satisfy such liability would have,
either individually or in the aggregate, a Laidlaw Environmental Material
Adverse Effect. Laidlaw Environmental plans, programs, agreements, and
arrangements set forth in clauses (i) and (ii) of the preceding sentence which
are maintained, sponsored, contributed to or required to be contributed to by
the Company or any of its affiliates are referred to as the "Laidlaw
Environmental Employee Benefit Plans". The term "affiliate" for purposes of this
Section 4.10 means any organization that would be aggregated with the Company
under Section 414(b), (c) or (m) of the Internal Revenue Code.
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(b) Each Laidlaw Environmental Employee Benefit Plan which is intended to
comply with the provisions of Section 401(a) of the Internal Revenue Code has
been submitted to the Internal Revenue Service (the "IRS") and received a
determination letter which states that such Laidlaw Environmental Employee
Benefit Plan is so qualified, and to the best of Laidlaw Environmental's
knowledge no event has occurred since the date of such letter which would (i)
cause such Laidlaw Environmental Employee Benefit Plan not to be so qualified or
(ii) cause any trust maintained under such Laidlaw Environmental Employee
Benefit Plan not to be exempt from taxation under Section 501(a) of the Internal
Revenue Code.
(c) To the best knowledge of Laidlaw Environmental, with respect to each
Laidlaw Environmental Employee Benefit Plan which is subject to Title I of
ERISA, neither Laidlaw Environmental nor any of its affiliates has failed to
comply with any applicable reporting, disclosure or other requirements of ERISA
and the Internal Revenue Code, except for such failures to comply which would
not have, either individually or in the aggregate, a Laidlaw Environmental
Material Adverse Effect, and there has been no "prohibited transaction" as
described in Section 4975 of the Internal Revenue Code or Section 406 of ERISA
the failure to correct which would have, either individually or in the
aggregate, a Laidlaw Environmental Material Adverse Effect.
(d) There is no pending or, to the best knowledge of Laidlaw Environmental,
threatened legal action, proceeding or investigation against or involving any
Laidlaw Environmental Employee Benefit Plan (other than routine claims for
benefits), the adverse resolution of which would have, either individually or in
the aggregate, a Laidlaw Environmental Material Adverse Effect.
(e) To the best of Laidlaw Environmental's knowledge, each Laidlaw
Environmental Employee Benefit Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Internal Revenue Code.
(f) No liability under Title IV or Section 302 of ERISA has been incurred
by Laidlaw Environmental or any affiliate that has not been satisfied in full,
and no condition exists that presents a material risk to Laidlaw Environmental
or any affiliate of incurring any such liability (other than for premiums due
the PBGC (which premiums have been paid when due)). Insofar as the
representation made in this section 4.10(e) applies to Sections 4064, 4069 or
4204 of Title IV of ERISA, it is made with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which Laidlaw
Environmental or any affiliate made, or was required to make, contributions
during the five (5)-year period ending on the last day of the most recent plan
year ended prior to the Effective Time.
(g) The PBGC has not instituted proceedings to terminate any Laidlaw
Environmental Employee Benefit Plan subject to Title IV of ERISA (a "Laidlaw
Environmental Title IV Plan") and to the best of Laidlaw Environmental's
knowledge no condition exists that presents a risk that such proceedings will be
instituted.
(h) Neither Laidlaw Environmental nor any affiliate maintains any Laidlaw
Environmental Employee Benefit Plans subject to the minimum funding standards of
ERISA and the Internal Revenue Code.
(i) Neither Laidlaw Environmental nor any of its affiliates presently
maintains, contributes to or has any liability (including current or potential
withdrawal liability) with respect to any "multiemployer plan" as such term is
defined in Section 3(37) of ERISA.
(j) Neither Laidlaw Environmental nor any of its affiliates has maintained
an employee pension benefit plan subject to Title IV of ERISA.
(k) With respect to any employee or former employee of Laidlaw
Environmental, except as required by COBRA, neither Laidlaw Environmental nor
any of its affiliates presently sponsors, maintains, contributes to, is required
to contribute to or has any liability under any funded or unfunded medical,
health or life insurance plan or similar arrangement for present or future
retirees or present or future terminated employees the existence of which or the
failure to satisfy which would have, either individually or in the aggregate, a
Laidlaw Environmental Material Adverse Effect. Neither Laidlaw Environmental nor
any subsidiary or affiliate of
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Laidlaw Environmental maintains or contributes to a trust, organization or
association described in any of Sections 501(c)(9), 501(c)(17) or 501(c)(20) of
the Internal Revenue Code.
(l) With respect to each of the Laidlaw Environmental Employee Benefit
Plans, Laidlaw Environmental will deliver or make reasonably available to the
Company true and complete copies of: (i) the plan documents, including any
related trust agreements, insurance contracts or other funding arrangements, or
a written summary of the terms and conditions of the plan if there is no written
plan document; (ii) the most recent IRS Form 5500; (iii) the most recent
financial statement; (iv) the most recent Summary Plan Description required
under ERISA; (v) the most recent actuarial report, if required under ERISA and
(vi) the most recent determination letter received from the IRS with respect to
each Laidlaw Environmental Employee Benefit Plan intended to qualify under
Section 401 of the Internal Revenue Code.
(m) With respect to the Laidlaw Environmental Title IV Plans, the present
value of the accumulated benefit obligation under such plan, calculated based
upon the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such plan's actuary with respect to such plan did
not exceed, as of its latest valuation date, the then fair value of the assets
of such plans in the aggregate as calculated pursuant to FAS 87.
(n) No Laidlaw Environmental Title IV Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Internal Revenue Code), whether or
not waived, as of the last day of the most recent fiscal year of each Laidlaw
Environmental Title IV Plan ended prior to the Effective Time. All contributions
required to be made with respect to any Laidlaw Environmental Employee Benefit
Plan on or prior to the Effective Time have been (or will have been) timely
made.
(o) All actions will have been taken, or which have failed to be taken,
with respect to the Laidlaw Environmental Employee Benefit Plans, would not, in
the aggregate, have a Laidlaw Environmental Material Adverse Effect.
4.11. Labor. There is no material dispute, grievance, controversy, strike
or request for union representation pending, or, to the best knowledge of
Laidlaw Environmental, threatened, against either Laidlaw Environmental or any
of its subsidiaries.
4.12. Taxes. (a) Laidlaw Environmental and each subsidiary of Laidlaw
Environmental have timely filed (or have had timely filed on their behalf) or
will file or cause to be timely filed, all Tax Returns required by applicable
law to be filed by any of them prior to or as of the Effective Time, except
where the failure to do so would not have a Laidlaw Environmental Material
Adverse Effect. All material Tax Returns are, or will be at the time of filing,
true, complete and correct in all material respects.
(b) Laidlaw Environmental and each subsidiary of Laidlaw Environmental have
paid (or have had paid on their behalf) or, where payment is not yet due, have
established (or have had established on their behalf and for their sole benefit
and recourse) an adequate accrual for the payment of all Taxes due, except where
the failure to pay or establish adequate reserves would not have a Laidlaw
Environmental Material Adverse Effect.
(c) No deficiencies for any material Taxes have been proposed, asserted or
assessed against Laidlaw Environmental or any subsidiary of Laidlaw
Environmental, and no requests for waivers of the time to assess any such
material Taxes are pending. The Federal Income Tax Returns of Laidlaw
Environmental and each subsidiary of Laidlaw Environmental consolidated in such
Tax Returns are not currently being examined for years prior to the year ended
December 31, 1992 and the statute of limitations has run for years prior to
December 31, 1992.
(d) There are no material Liens for Taxes upon the assets of Laidlaw
Environmental except (i) with respect to matters beings contested in good faith
and (ii) Liens for Taxes not yet due.
(e) There are no material United States federal, state, local or foreign
audits or other administrative proceedings or court proceedings presently
pending with regard to any Taxes or Tax Returns of Laidlaw Environmental.
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4.13. Environmental Matters. Except for violations of the following
clauses (i) through (vii) that would not have a Laidlaw Environmental Material
Adverse Effect on Laidlaw Environmental, to the best knowledge of Laidlaw
Environmental, (i) Laidlaw Environmental and its subsidiaries have conducted
their respective businesses in compliance with all applicable Environmental Laws
and are currently in compliance with all such laws, including, without
limitation, having all permits, licenses and other approvals and authorizations
necessary for the operation of their respective businesses as presently
conducted, (ii) none of the properties currently or formerly owned or operated
by Laidlaw Environmental or any of its subsidiaries contains any Hazardous
Substance in amounts exceeding the levels permitted by applicable Environmental
Laws, (iii) neither Laidlaw Environmental nor any of its subsidiaries has
received any notices, demand letters or requests for information from any court
or governmental entity or third party indicating that Laidlaw Environmental or
any of its subsidiaries may be in violation of, or liable under, any
Environmental Law in connection with the ownership or operation of their
businesses, including, without limitation, liability relating to sites not owned
or operated by Laidlaw Environmental or any of its subsidiaries, (iv) there are
no civil, criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings, pending or threatened, against Laidlaw
Environmental or any subsidiaries relating to any violation of or liability
under, or alleged violation of or liability under, any Environmental Law, (v)
all reports that are required to be filed by Laidlaw Environmental or any of its
subsidiaries concerning the release of any Hazardous Substance or the threatened
or actual violation of any Environmental Law have been so filed, (vi) no
Hazardous Substance has been disposed of, released or transported in violation
of or under circumstances that could create liability under any applicable
Environmental Law from any properties owned by Laidlaw Environmental or any of
its subsidiaries as a result of any activity of Laidlaw Environmental or any of
its subsidiaries during the time such properties were owned, leased or operated
by Laidlaw Environmental or any subsidiaries, (vii) neither Laidlaw
Environmental, any of its subsidiaries nor any of their respective properties
are subject to any material liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law,
and (viii) Laidlaw Environmental will provide or make available to the Company
each environmental audit, test or analysis performed within the last three years
of any property currently or formerly owned or operated by Laidlaw Environmental
or any of its subsidiaries (x) sufficient to put the Company on notice of any
condition of environmental impairment which would give rise to a Laidlaw
Environmental Material Adverse Effect and (y) of which Laidlaw Environmental has
knowledge.
4.14. Title to Properties. Laidlaw Environmental and its subsidiaries have
good, valid and marketable title to the properties and assets listed on the most
recent consolidated balance sheet included in the Laidlaw Environmental SEC
Reports (the "Laidlaw Environmental Balance Sheet") as owned by it (other than
properties and assets disposed of in the ordinary course of business since the
date of the Laidlaw Environmental Balance Sheet), and all such properties and
assets are free and clear of any liens, except as described in the Laidlaw
Environmental SEC Reports and the financial statements included therein and
other than liens for current taxes not yet due and other liens, security
interests, charges, encumbrances, easements, covenants, restrictions or title
imperfections that do not have a Laidlaw Environmental Material Adverse Effect.
ARTICLE V.
COVENANTS RELATING TO CONDUCT
OF BUSINESS PRIOR TO MERGER
5.1. Conduct of Business of the Company. Except as otherwise contemplated
hereby or as set forth in the Disclosure Schedule, the Company covenants and
agrees that, unless Laidlaw Environmental shall otherwise agree in writing
(which agreement shall not be unreasonably withheld), prior to the Effective
Time:
(a) The business of the Company and its subsidiaries shall be
conducted only in, and the Company and its subsidiaries shall not take any
action except in, the ordinary and usual course of business, and the
Company shall use its reasonable best efforts to maintain and preserve
intact its and its subsidiaries'
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business organization, assets, employees, officers and consultants and
advantageous business relationships.
(b) Neither the Company nor any of its subsidiaries shall directly or
indirectly do any of the following: (i) except in the ordinary course of
business, sell, pledge, dispose of or encumber any assets of the Company or
of any of its subsidiaries; (ii) amend its charter or by-laws or similar
organizational documents; (iii) split, combine or reclassify any shares of
its capital stock or declare, set aside, make or pay any dividend or
distribution payable in cash, stock, property or otherwise with respect to
any of its capital stock (except as contemplated by the Rights Agreement
and except for (x) cash dividends to shareholders of the Company declared
in the ordinary course of business and consistent with past practice and
(y) dividends by wholly-owned subsidiaries of the Company); (iv) redeem,
purchase or otherwise acquire or offer to redeem, purchase or otherwise
acquire any capital stock of the Company; (v) adopt a plan of liquidation
or resolutions providing for the liquidation, dissolution, merger,
consolidation or other reorganization of the Company; or (vi) authorize or
propose any of the foregoing, or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(c) Neither the Company nor any of its subsidiaries shall, directly or
indirectly, (i) except for Shares (and the associated Rights) issuable upon
exercise of options outstanding under the Option Plans on the date hereof,
issue, sell, pledge, dispose of or encumber, or authorize, propose or agree
to the issuance, sale, pledge, disposition or encumbrance of, any shares
of, or any options, warrants or rights of any kind to acquire any shares of
or any securities convertible into or exchangeable or exercisable for any
shares of, its capital stock of any class or any other securities in
respect of, in lieu of, or in substitution for Shares outstanding on the
date hereof; (ii) make any material acquisition, by means of merger,
consolidation or otherwise, or material disposition (other than disposition
of assets in the ordinary course of business), of assets or securities, or
make any loans, advances or capital contributions to, or investment in, any
individual or entity (other than to the Company or a wholly-owned
subsidiary of the Company); (iii) except in the ordinary course of
business, and other than (A) indebtedness to or guarantees for the benefit
of the Company or any affiliate of the Company and (B) borrowings to fund
payments contemplated in Section 2.2 hereof, incur any indebtedness or
issue any debt securities or assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for,
the obligations of any other individual or entity; (iv) change the
capitalization of the Company (other than the incurrence of indebtedness
otherwise permitted in this Agreement); (v) except in the ordinary course,
change any assumption underlying, or method of calculating, any bad debt,
contingency or other reserve; (vi) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingency or otherwise),
other than the payment, discharge or satisfaction of liabilities in the
ordinary course of business or as required by applicable law; (vii) waive,
release, grant or transfer any rights of value or modify or change in any
material respect any existing license, lease, contract or other document,
other than in the ordinary course of business; or (viii) authorize any of
the foregoing, or enter into or modify any contract, agreement, commitment
or arrangement to do any of the foregoing.
(d) Subject to Section 2.2, neither the Company nor any of its
subsidiaries shall (except for salary increases or other employee benefit
arrangements in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company and its subsidiaries, taken
as a whole, or as may be required pursuant to any agreements in effect at
the date hereof) adopt or amend or take any actions to accelerate any
rights or benefits under (except as may be required by law) any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment, severance, termination or other employee benefit
plan, agreement, trust, fund or other arrangement for the benefit or
welfare of any employee or any officer or director or former employee or,
except in the ordinary course of business, consistent with past practice,
increase the compensation or fringe benefits of any employee or former
employee or pay any benefit not permitted by any existing plan, arrangement
or agreement.
(e) Except in the ordinary course of business, neither the Company nor
any of its subsidiaries shall make any tax election or, except in the
ordinary course of business, settle or compromise any federal, state, local
or foreign income tax liability.
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(f) Except in the ordinary course of business, neither the Company nor
any of its subsidiaries shall permit any insurance policy naming it as
beneficiary or a loss payee to be canceled or terminated without notice to
Laidlaw Environmental.
(g) Neither the Company nor any of its subsidiaries shall agree, in
writing or otherwise, to take any of the foregoing actions or any action
which would make any representation or warranty in Article III hereof
untrue or incorrect so as to result in a Company Material Adverse Effect.
ARTICLE VI.
ADDITIONAL AGREEMENTS
6.1. Preparation of Proxy Statement; Shareholders Meeting. (a) If the
Shareholders Meeting referred to in Section 6.1(c) below is required by
applicable law to consummate the Merger, as soon as practicable following the
purchase of the Shares pursuant to the Offer, the Company shall prepare a proxy
statement relating to the Shareholders Meeting (the "Proxy Statement"), and the
Company shall prepare and file with the SEC the Proxy Statement. Laidlaw
Environmental will cooperate with the Company in connection with the preparation
of the Proxy Statement including, but not limited to, furnishing to the Company
any and all information regarding Laidlaw Environmental or LES Acquisition and
their affiliates as may be required to be disclosed therein. The information
provided and to be provided by Laidlaw Environmental and the Company,
respectively, for use in the Proxy Statement shall, at the date it is first
mailed to the Company's shareholders and on the date of the Shareholders Meeting
referred to below, be true and correct in all material respects and shall not
omit to state any material fact required to be stated therein or necessary in
order to make such information not misleading, and the Company and Laidlaw
Environmental each agree to correct any information provided by it for use in
the Proxy Statement which shall have become false or misleading. At such
meeting, Laidlaw Environmental will vote, or cause to be voted, all Shares
acquired in the Offer in favor of the approval of the Merger and adoption of
this Agreement and the transactions contemplated hereby.
(b) The Company will as promptly as practicable notify Laidlaw
Environmental of (i) the receipt of any comments from the SEC and (ii) any
request by the SEC for any amendment to the Proxy Statement or for additional
information. All filings by the Company with the SEC, including the Proxy
Statement and any amendment thereto, and all mailings to the Company's
shareholders in connection with the Merger, including the Proxy Statement, shall
be subject to the prior review, comment and approval of Laidlaw Environmental
(such approval not to be unreasonably withheld or delayed). Laidlaw
Environmental will furnish to the Company the information relating to it and its
affiliates, including LES Acquisition, required by the Exchange Act and the
rules and regulations promulgated thereunder to be set forth in the Proxy
Statement.
(c) If required under the WBCL and the Company's Restated Articles of
Incorporation, the Company will: (i) as promptly as practicable following the
date of this Agreement, duly call, give notice of, convene and hold the
Shareholders Meeting for the purpose of approving this Agreement and the
transactions contemplated hereby; (ii) through its Board of Directors, and
subject to the other provisions hereof, recommend to its shareholders approval
of the foregoing matters; and (iii) use its reasonable best efforts to obtain
the necessary approval of this Agreement and the transactions contemplated
hereby by its shareholders; provided, however, that, subject to Section 6.7(b),
the Company may fail to make or withdraw or modify such recommendation and shall
not be obligated to use its reasonable best efforts or take any action pursuant
to this Section 6.1 if the Company shall have concluded in good faith, based on
advice from outside legal counsel to the Company, that such actions would be in
breach of the Company's Board and Directors' fiduciary duties under applicable
law. Any such recommendation, together with a copy of the opinion referred to in
Section 3.14, shall be included in the Proxy Statement.
(d) If the Shareholders Meeting is not required in order to consummate the
Merger, Laidlaw Environmental shall cause LES Acquisition to, and LES
Acquisition shall, take the actions provided in Section 180.1104 of the WBCL in
order to consummate the Merger as promptly as reasonably practical after the
purchase of Shares pursuant to the Offer.
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6.2. Access to Information. (a) From and after the date of this Agreement
and until the earlier of the Effective Time or termination of this Agreement,
(i) the Company shall, and shall cause its subsidiaries, officers, directors,
employees and agents to, afford to Laidlaw Environmental, and to the officers,
employees and agents of Laidlaw Environmental, complete access at all reasonable
times to the officers, employees, agents, properties, books, records and
contracts of the Company and its subsidiaries, and shall furnish Laidlaw
Environmental and its respective officers, employees and agents, all financial,
operating and other data and information as Laidlaw Environmental may reasonably
request; and (ii) Laidlaw Environmental shall, and shall cause its subsidiaries,
officers, directors, employees and agents to, afford to the Company, and to the
officers, employees and agents of the Company, complete access at all reasonable
times to the officers, employees, agents, properties, books, records and
contracts of the Laidlaw Environmental and its subsidiaries, and shall furnish
the Company and its respective officers, employees and agents, all financial,
operating and other data and information as the Company may reasonably request.
(b) Each of the Company and Laidlaw Environmental hereby confirms to the
other that the confidentiality agreement dated as of March 13, 1998 by and
between the Company and Laidlaw Environmental ("the Confidentiality Agreement")
is in full force and effect.
6.3. Filings; Commercially Reasonable Best Efforts. (a) Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
its commercially reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations or otherwise to consummate and
effect the transactions contemplated by this Agreement, including but not
limited to (i) determining whether any filings are required to be made or
consents, approvals, waivers, licenses, permits or authorizations are required
to be obtained (or, which if not obtained, would result in an event of default,
termination or acceleration of any agreement) under any applicable law or
regulation or from any governmental entities or third parties, including parties
to loan agreements or other debt instruments, in connection with the
transactions contemplated by this Agreement, including the Merger and the
transactions contemplated thereby, (ii) promptly making any such filings,
furnishing information required in connection therewith and timely seeking to
obtain any such consents, approvals, permits or authorizations and (iii) doing
all things necessary, proper or advisable to remove any injunctions or other
impediments or delays, legal or otherwise, to the consummation of the Merger and
the other transactions contemplated by this Agreement. Notwithstanding the
foregoing, the Company will not be required to commit to a divestiture
transaction that is to be consummated prior to the Effective Time.
(b) Notwithstanding the foregoing, none of Laidlaw Environmental, LES
Acquisition or the Company shall be obligated to use its commercially reasonable
best efforts or take any action pursuant to this Section 6.3 if it determines in
good faith, based on the advice of outside legal counsel, that such actions
would be in breach of its Board of Directors' fiduciary duties under applicable
law.
6.4. Public Announcements. Laidlaw Environmental, LES Acquisition and the
Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to the Offer, the Merger,
and this Agreement, and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
any listing agreement with a national securities exchange.
6.5. Notification of Certain Matters. The Company, Laidlaw Environmental
and LES Acquisition each agree to give prompt notice (a "Default Notice") to
each other at any time from the date hereof to the Effective Time of the
obtaining by it of actual knowledge as to the occurrence, or failure to occur,
of any event which occurrence or failure would be likely to cause a breach of
any covenant, representation or warranty contained in this Agreement so as to
result in a Company Material Adverse Effect or in a Laidlaw Environmental
Material Adverse Effect upon Laidlaw Environmental or any of its affiliates. If
any party receiving a Default Notice shall not object thereto within 5 business
days after receiving such Default Notice, then such party shall be deemed to
have waived all rights accruing to it as a result of such breach. A party shall
object to a Default Notice by giving timely notice of such party's objection
thereto as provided herein to the party giving such Default Notice. For purposes
of this Section 6.5, "actual knowledge" of a party to this
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Agreement shall mean the best actual knowledge of its chairman of the board,
president and chief financial officer.
6.6. Indemnification and Insurance. (a) Laidlaw Environmental agrees that
all rights to indemnification (including, without limitation, rights to advances
and related rights) existing in favor of the present or former directors,
officers, employees and agents of the Company or any of the Company subsidiaries
(collectively, the "Indemnified Parties") as provided in the Company's Restated
Articles of Incorporation or By-laws or the articles of incorporation or by-laws
or similar organizational documents of any of the Company's subsidiaries as in
effect as of the date hereof, shall survive the Merger and shall continue in
full force and effect for a period of six years after the Effective Time.
Laidlaw Environmental shall cause to be maintained in effect for not less than 6
years after the Effective Time the current policies of directors' and officers'
liability insurance maintained by the Company and the Company's subsidiaries on
the date hereof (provided that the Company may substitute therefor policies
having at least substantially the same coverage and containing terms and
conditions which are no less advantageous in any material respect to the persons
currently covered by such policies as insureds) with respect to matters existing
or occurring at or prior to the Effective Time; provided, however, that if the
aggregate annual premiums for such insurance at any time during such period
shall exceed 300% of the per annum rate of premium currently paid by the Company
and its subsidiaries for such insurance on the date of this Agreement, then
Laidlaw Environmental shall cause the Company (or the Surviving Corporation if
after the Effective Time) to, and the Company (or the Surviving Corporation if
after the Effective Time) shall, provide the maximum coverage that shall then be
available at an annual premium equal to 300% of such rate. The Company
represents to Laidlaw Environmental that such per annum rate of premium
currently paid by the Company and its subsidiaries is approximately $400,000.
Without limiting the foregoing, in the event any Indemnified Party becomes
involved in any capacity in any action, proceeding or investigation based in
whole or in part on, or arising in whole or in part out of, any matter,
including the transactions contemplated hereby, existing or occurring at or
prior to the Effective Time, then to the extent permitted by law, Laidlaw
Environmental shall cause the Company (or the Surviving Corporation if after the
Effective Time) to, and the Company (or the Surviving Corporation if after the
Effective Time) shall, periodically advance to such Indemnified Party its legal
and other expenses (including the cost of any investigation and preparation
incurred in connection therewith), subject to the provision by such Indemnified
Party of an undertaking to reimburse the amounts so advanced in the event of a
final determination by a court of competent jurisdiction that such Indemnified
Party is not entitled thereto. Laidlaw Environmental shall cause the Company (or
the Surviving Corporation if after the Effective Time) to, and the Company (or
the Surviving Corporation if after the Effective Time) shall, pay all expenses,
including attorneys' fees, that may be incurred by any Indemnified Party in
enforcing the indemnity and other obligations provided for in this Section 6.6.
(b) The provisions of this Section 6.6 are intended for the benefit of, and
shall be enforceable by, the respective Indemnified Parties and shall be binding
on all successors and assigns of Laidlaw Environmental, LES Acquisition, the
Company and the Surviving Corporation.
(c) Notwithstanding anything herein to the contrary, if any claim, action,
suit, proceeding or investigation (whether arising before, at or after the
Effective Time) is made or threatened against any Indemnified Party on or prior
to the sixth anniversary of the Effective Time, the provisions of this Section
6.6 shall continue in effect until the final disposition of such claim, action,
suit, proceeding or investigation.
6.7. Solicitation. (a) The Company (and its subsidiaries and affiliates)
will not, and the Company (and its subsidiaries and affiliates) will use their
best efforts to ensure that their respective directors, officers, employees,
representatives and agents do not, directly or indirectly, solicit or initiate
inquiries or proposals from, or provide any confidential information to, or
participate in any discussions or negotiations with, any person or entity (other
than Laidlaw Environmental and its subsidiaries and their respective directors,
officers, employees, representatives and agents) concerning (i) any merger, sale
of assets not in the ordinary course (except for any sale of assets otherwise
permitted under the terms of this Agreement), or other similar transaction
involving the Company or any subsidiary or division of the Company, or the sale
of any equity interest in the Company or any subsidiary, or (ii) any sale by the
Company or its subsidiaries of authorized but unissued Shares or of any shares
(whether or not outstanding) of any of the Company's subsidiaries (all
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such inquiries and proposals being referred to herein as "Acquisition
Proposals"), provided, however, that nothing contained in this Section 6.7 shall
prohibit the Company or its Board of Directors from (i) subject to the
provisions of Section 6.4, issuing a press release or otherwise publicly
disclosing the terms of this Agreement, including, without limitation, this
Section 6.7; (ii) proceeding with the transactions contemplated by this
Agreement; (iii) communicating to the Company's shareholders a position as
contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act; (iv)
making any disclosure to the Company's shareholders which, in the judgment of
the Board of Directors of the Company, with the advice of outside counsel,
should reasonably be made under applicable law (including, without limitation,
laws relating to the fiduciary duties of directors) or (v) taking any
non-appealable, final action ordered to be taken by the Company by any court of
competent jurisdiction; and, provided, further, that the Board of Directors of
the Company may, on behalf of the Company, furnish or cause to be furnished
information and may direct the Company, its directors, officers, employees,
representatives or agents to furnish information, in each case pursuant to
appropriate confidentiality agreements, and to participate in discussions or
negotiations with any person or entity concerning any Acquisition Proposal which
was not solicited by the Company or any of its subsidiaries or affiliates or any
of their respective directors, officers, employees, representatives or agents,
or which did not otherwise result from a breach of this Section 6.7, if (x) the
Board of Directors of the Company shall conclude in good faith, after
consultation with its financial advisor, that such person or entity has made or
is reasonably likely to make a bona fide Acquisition Proposal for a transaction
more favorable to the Company's shareholders from a financial point of view than
the transactions contemplated hereby, and (y), in the opinion of the Board of
Directors of the Company, only after receipt of advice from independent legal
counsel to the Company, the failure to provide such information or access or to
engage in such discussions or negotiations would cause the Board of Directors of
the Company to violate its fiduciary duties to the Company's stockholders under
applicable law (an Acquisition Proposal which satisfies clauses (x) and (y)
being referred to herein as a "Superior Proposal"). The Company will immediately
notify Laidlaw Environmental of the terms of any proposal, discussion,
negotiation or inquiry (and will disclose any written materials received by the
Company in connection with such proposal, discussion negotiation, or inquiry)
and the identity of the party making such proposal or inquiry which it may
receive in respect of any such transaction unless the Board of Directors of the
Company determines, based on the advice of outside legal counsel to the Company,
that giving such notice would cause the Board of Directors of the Company to
violate its fiduciary duties to the Company's shareholders under applicable law.
The Company shall, and shall cause each subsidiary to, immediately cease and
cause to be terminated any existing activities, discussions or negotiations by
the Company, any subsidiary of the Company or any officer, director or employee
of, or investment banker, attorney, accountant or other advisor or
representative of, the Company or any subsidiary with parties conducted
heretofore with respect to any of the foregoing.
(b) Except as set forth herein, neither the Board of Directors of the
Company nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Laidlaw Environmental or the LES
Acquisition, the approval or recommendation by the Board of Directors of the
Company or any such committee of this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal, or
(iii) enter into any agreement with respect to any Acquisition Proposal.
Notwithstanding the foregoing, the Board of Directors of the Company may
(subject to the terms of this and the following sentence) withdraw or modify its
approval or recommendation of this Agreement or the Merger, approve or recommend
a Superior Proposal or enter into an agreement with respect to a Superior
Proposal at any time after the second business day following Laidlaw
Environmental's receipt of written notice advising Laidlaw Environmental that
the Board of Directors of the Company has received a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal; provided that the Company
shall not enter into an agreement with respect to a Superior Proposal unless the
Company shall have furnished Laidlaw Environmental with written notice not later
than noon (New York time) two business days in advance of any date that it
intends to enter into such agreement and shall have caused its financial and
legal advisors to negotiate with Laidlaw Environmental to make such amendments
to the terms and conditions of this Agreement as would make this Agreement as so
amended at least as favorable to the Company's shareholders from a financial
point of view as the Superior Proposal. In addition, if the Company proposes to
enter into an agreement with respect to any
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Acquisition Proposal, it shall concurrently with entering into such agreement
pay, or cause to be paid, to Laidlaw Environmental the Termination Amount (as
defined in Section 9.2) subject to the provisions of Section 9.2.
6.8. Board of Directors. Promptly following the purchase by Laidlaw
Environmental and LES Acquisition of Shares pursuant to the Offer, but subject
to compliance with Rule 14f-1, Laidlaw Environmental shall be entitled to
designate at its option up to that number of directors, rounded to the nearest
whole number, of the Company's Board of Directors, as will make the percentage
of the Company's directors designated by Laidlaw Environmental approximately
equal to the aggregate voting power of the Shares held by Laidlaw Environmental.
The Company shall take all actions requested by Laidlaw Environmental which are
reasonably necessary to effect the election or appointment of any such designee.
In connection with the foregoing, the Company will promptly, at the option of
Laidlaw Environmental, either increase the size of the Company's Board of
Directors and/or request the resignation of such number of its current directors
as is necessary to enable Laidlaw Environmental's designees to be elected or
appointed to the Company's Board of Directors as provided above. Following the
election or appointment of Laidlaw Environmental's designees pursuant to this
Section 6.8 and prior to the Effective Time, any amendment to the Restated
Articles of Incorporation or Bylaws of the Company, any 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 Laidlaw Environmental or
waiver or assertion of any of the Company's rights hereunder, and any other
consent or action by the Board of Directors with respect to this Agreement, will
require the concurrence of a majority of the directors (if any) not appointed by
Laidlaw Environmental. Laidlaw Environmental agrees to assist the Company in
complying with Exchange Act Rule 14f-1 in connection with the replacement of
directors pursuant to this Section 6.8, and the Company agrees to use its
reasonable best efforts to comply with Rule 14f-1 as promptly as possible after
the date hereof, which efforts shall include, but are not limited to, the
Company requesting that the SEC shorten the notice period required under Rule
14f-1. After purchase of Shares pursuant to the Offer but before Laidlaw
Environmental designees are named as Safety-Kleen directors pursuant to this
Section 6.8, the Safety-Kleen Board of Directors will not act without notice to
and the participation of Laidlaw Environmental.
6.9. Employee Benefits, etc. (a) For a period of two years following the
Effective Time, Laidlaw Environmental intends to cause the Surviving Corporation
to, and upon being so caused, the Surviving Corporation shall, provide employee
benefit plans and programs for the benefit of employees of the Surviving
Corporation and its subsidiaries that are in the aggregate no less favorable to
such employees than the terms of such Employee Benefit Plans as described in the
Company Disclosure Schedule. All service credited to each employee by the
Company through the Effective Time shall be recognized by Laidlaw Environmental
or the Surviving Corporation for purposes of eligibility and vesting under any
employee benefit plan provided directly or indirectly by Laidlaw Environmental
or the Surviving Corporation for the benefit of the employees and in which the
respective employees participate.
(b) Notwithstanding anything in this Agreement to the contrary, Laidlaw
Environmental shall cause the Surviving Corporation to honor (without
modification) and assume the written employment agreements, severance agreements
and other agreements listed on the Disclosure Schedule, all as in effect on the
date of this Agreement.
(c) Laidlaw Environmental shall cause the Surviving Corporation not to, and
the Surviving Corporation shall not, terminate or adversely amend in any manner
which adversely affects the benefits described in the Company Disclosure
Schedule that participants in such Plans are entitled to thereunder with respect
to any periods prior to and including the Effective Time.
(d) For a period of two years from the Effective Time, Laidlaw
Environmental intends to cause the Surviving Corporation to continue to maintain
an office in Elgin, Illinois.
6.10. Purchase of Shares Pursuant to Offer; Solvency Opinion. Laidlaw
Environmental agrees that it will not purchase Shares pursuant to the Offer
unless, prior to such purchase, Laidlaw Environmental has delivered to the
Company an opinion or certificate of a reputable expert firm confirming the
solvency of the Surviving Corporation after the Merger (which opinion may assume
that the purchase of Shares pursuant to the Offer and the Merger are consummated
simultaneously) and related financings addressed to or for the
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benefit of the Board of Directors of the Company so that the Board of Directors
of the Company is entitled to rely thereon.
6.11. Dismissal of Lawsuits. Upon the closing of the Share purchases
contemplated by the Offer, each of Laidlaw Environmental and the Company shall
take all actions necessary, and shall cause their respective subsidiaries and
affiliates to take all actions necessary, to dismiss with prejudice all pending
litigation between such parties.
ARTICLE VII.
CONDITIONS PRECEDENT
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Company Shareholder Approval. The Company Shareholder Approval
shall have been obtained, if required by applicable law, or the
requirements of Section 180.1104 of the WBCL (other than the filing of
Articles of Merger) shall have been satisfied.
(b) Antitrust. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated by this Agreement under the HSR
Act shall have been terminated or shall have expired. Any consents,
approvals and filings required under the Competition Act (Canada) and any
other applicable foreign law shall have been obtained or made, as
applicable.
(c) Statutes. No statute, rule, order, decree or regulation shall
have been enacted or promulgated by any domestic government or any
governmental agency or authority of competent jurisdiction which prohibits
the consummation of the Merger.
(d) Violation of Law. Consummation of the Merger shall not result in
violation of any applicable United States federal or state law providing
for criminal penalties.
(e) Litigation. No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the
United States preventing the consummation of the Merger shall be in effect;
provided, however, that the parties hereto shall use their best efforts to
have any such injunction or order vacated.
7.2. Conditions to Obligations of Laidlaw Environmental. The obligations
of Laidlaw Environmental to effect the Merger are further subject to the
condition that Laidlaw Environmental and LES Acquisition shall have purchased
all Shares duly tendered and not withdrawn pursuant to the terms of the Offer
and subject to the terms thereof; provided that the obligation of Laidlaw
Environmental and LES Acquisition to effect the Merger shall not be conditioned
on the fulfillment of the condition set forth in this subsection (a) if the
failure of Laidlaw Environmental and LES Acquisition to purchase the Shares
pursuant to the Offer shall have constituted a breach of the Offer or of this
Agreement.
7.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the condition that the
Company shall have received an opinion or certificate of a reputable expert firm
confirming the solvency of the Surviving Corporation after the Merger and
related financings addressed to or for the benefit of the Board of Directors of
the Company so that the Board of Directors of the Company is entitled to rely
thereon.
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ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
8.1. Termination. This Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the shareholders of the Company:
(a) by mutual written consent of Laidlaw Environmental and the
Company; or
(b) by either Laidlaw Environmental or the Company if the Offer shall
expire or terminate in accordance with its terms without any Shares having
been purchased thereunder and, in the case of termination by Laidlaw
Environmental, Laidlaw Environmental shall not have been required by the
terms of the Offer or this Agreement to purchase any Shares pursuant to the
Offer; or
(c) by either Laidlaw Environmental or the Company if any governmental
body or regulatory authority of the United States of America shall have
issued an order, decree or ruling or taken any other action, in each case
permanently enjoining, restraining or otherwise prohibiting the Offer or
the Merger and such order, decree, ruling or other action shall have become
final and non-appealable; provided that the right to terminate this
Agreement pursuant to this Section 8.1(c) shall not be available to any
party that has breached its obligations under Section 6.3; or
(d) by either Laidlaw Environmental or the Company if the Offer shall
not have been consummated on or before June 30, 1998 (other than due to the
failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to
the Effective Time); or
(e) prior to the purchase of Shares pursuant to the Offer, by the
Board of Directors of Laidlaw Environmental, (i) if the Company shall have
breached any of its representations and warranties or failed to comply with
any of the covenants or agreements (without, in each instance, giving
effect to any limitation as to "materiality" or "material adverse effect"
set forth therein) contained in this Agreement to be complied with or
performed by the Company at or prior to consummation of the Merger and such
breach or failure shall have resulted in a Material Adverse Effect, or (ii)
the Company shall have received from a third party a bona fide Acquisition
Proposal, and the Board of Directors of the Company, shall have accepted
such a proposal or (iii) if Company Shareholder Approval is required, the
Board of Directors of the Company shall have failed to recommend to the
Company Shareholders that they give the Company Shareholder Approval or
shall have withdrawn or modified in a manner adverse to Laidlaw
Environmental or LES Acquisition its approval or recommendation with
respect to the Merger, or
(f) prior to the purchase of Shares pursuant to the Offer, by the
Board of Directors of the Company, if (i) Laidlaw Environmental or LES
Acquisition shall have breached in any material respect any of its
representations and warranties or failed to comply in any material respect
with any of the covenants or agreements contained in this Agreement to be
complied with or performed by Laidlaw Environmental or LES Acquisition, or
(ii) if the Company enters into a written agreement concerning a
transaction that constitutes a Superior Proposal, provided that the Company
shall have complied with the provisions of Section 6.7(a) and (b) hereof
(including the payment of the Termination Amount).
8.2. Effect of Termination. In the event of termination of this Agreement
by either the Company or Laidlaw Environmental as provided in Section 8.1, no
party hereto (or any of its directors, officers, employees, agents, legal and
financial advisors or other representatives) shall have any liability or further
obligation to any other party to this Agreement, except as provided in this
Section 8.2 and Sections 9.1 and 9.2 of this Agreement, and except that nothing
herein will relieve any party from liability for its wilful breach of this
Agreement.
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ARTICLE IX.
GENERAL PROVISIONS
9.1. Nonsurvival of Representations and Warranties. The representations
and warranties in this Agreement or in any instrument delivered pursuant to this
Agreement shall expire with, and be terminated and extinguished upon,
consummation of the Merger. This Section 9.1 shall have no effect upon any other
obligation of the parties hereto, whether to be performed before or after the
Effective Time. The Confidentiality Agreement shall survive the termination of
this Agreement and the provisions of such Confidentiality Agreement shall apply
to all information and material delivered by any party hereunder.
9.2. Payment of Certain Fees and Expenses. (a) All costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby and thereby shall be paid by the party incurring such expenses.
(b) Notwithstanding the foregoing, if this Agreement is terminated pursuant
to Section 8.1(e) or Section 8.1(f)(ii) hereof, then the Company shall pay to
Laidlaw Environmental, no later than two business days after being furnished
documentation in respect thereto by Laidlaw Environmental, Laidlaw
Environmental's or its affiliates' out-of-pocket fees and expenses (including
legal, investment banking, financing commitment fees, and commercial banking
fees and expenses) actually incurred in connection with the Offer and the
Merger, due diligence investigation, the negotiation and execution of this
Agreement and the transactions contemplated hereby, up to a maximum amount of
$25 million (the "Termination Amount").
(c) Notwithstanding the foregoing, if this Agreement is terminated pursuant
to Section 8.1(f)(i) hereof, then Laidlaw Environmental shall pay to the
Company, no later than two business days after being furnished documentation in
respect thereto by the Company, the Company's or its affiliates' out-of-pocket
fees and expenses (including legal and investment banking fees and expenses)
actually incurred in connection with the negotiation and execution of this
Agreement, due diligence investigation related to this Agreement, and the
transactions contemplated hereby, up to a maximum amount of $25 million. The
Company acknowledges and agrees that it shall not under any circumstances be
entitled to reimbursement by Laidlaw Environmental or LES Acquisition of any
expenses incurred in connection with the Buyout Merger Agreement.
9.3. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses or at such other
addresses as shall be specified by the parties by like notice:
(a) If to Laidlaw Environmental or LES Acquisition:
Laidlaw Environmental Services, Inc.
1301 Gervais
Suite 300
Columbia, SC 29201
Attention: Kenneth W. Winger
Telecopy No.: (803) 933-4345
With a copy to:
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, IL 60611-3693
Attention: Herb S. Wander
Telecopy: (312) 577-8885
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(b) If to the Company:
Safety-Kleen Corp.
One Brinckman Way
Elgin, Illinois 60123
Attention: Chairman
Telecopy No.: (847) 468-8561
with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Donald G. Lubin
Telecopy No.: (312) 876-7934
9.4. Certain Definitions; Interpretation. When a reference is made in this
Agreement to subsidiaries of Laidlaw Environmental, LES Acquisition or the
Company, the word "subsidiaries" means any corporation 50 percent or more of
whose outstanding voting securities, or any partnership, joint venture or other
entity 50 percent or more of whose total equity interest, is directly or
indirectly owned by Laidlaw Environmental, LES Acquisition or the Company, as
the case may be. The words "Significant Subsidiaries" shall have the meaning
ascribed to it under Rule 1-02 of Regulation S-X of the SEC. As used in this
Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule
12b-2 under the Exchange Act. As used in this Agreement, "Company Material
Adverse Effect" means any change(s) or effect(s) that, individually, or in the
aggregate, are materially adverse to the financial condition, properties,
business of the Company and its subsidiaries, taken as a whole, or that would
prevent or materially delay the Company from performing its obligations under
this Agreement. As used in this Agreement, "Laidlaw Environmental Material
Adverse Effect" means any change(s) or effect(s) that, individually, or in the
aggregate, are materially adverse to the financial condition, properties,
business of Laidlaw Environmental and its subsidiaries, taken as a whole, or
that would prevent or materially delay Laidlaw Environmental from performing its
obligations under this Agreement. Whenever this Agreement requires LES
Acquisition to take any action, such requirement shall be deemed to include an
undertaking on the part of Laidlaw Environmental to cause LES Acquisition to
take such performance and a guarantee of the performance thereof.
9.5. Entire Agreement. This Agreement (including the Disclosure Schedule
and the exhibits hereto) and the Confidentiality Agreement contain the entire
agreement between the parties with respect to the transactions contemplated
hereby, and supersedes all written or oral negotiations, representations,
warranties, commitments, offers, bids, bid solicitations, and other
understandings prior to the date hereof, except to the extent expressly
confirmed or provided herein.
9.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.7. Severability. If any provision hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect of any other provision hereof.
9.8. Captions. The captions of the various Articles and Sections of this
Agreement have been inserted only for convenience of reference and shall not be
deemed to modify, explain, enlarge or restrict any provision of this Agreement
or affect the construction hereof.
9.9. Amendment. Subject to the applicable provisions of the WBCL, this
Agreement may be amended by the parties hereto, at any time before or after any
required approval of matters presented in connection with the Merger by the
shareholders of the Company; provided, however, that after any such approval,
there shall be made no amendment that by law requires further approval by such
shareholders without the further approval of such shareholders. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
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<PAGE> 48
9.10. Waiver. Subject to the applicable provisions of the WBCL, at any
time prior to the Effective Time, any party hereto may (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, or (b) subject to the proviso of Section 9.9, waive compliance with any
of the agreements or conditions contained herein. In addition to the provisions
contained in Section 6.5 hereof, at any time prior to consummation of the Merger
any party hereto may waive any inaccuracies in the representations and
warranties contained herein or in any documents delivered pursuant hereto. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by such party.
9.11. No Third-Party Beneficiaries; Assignability. Except for Sections
2.2, 2.3, 6.6 and 6.9 (which are intended for the benefit of, and may be
enforced by, the persons or entities specified therein), this Agreement is not
intended to confer or impose upon any person not a party hereto any rights,
remedies, obligations or liabilities hereunder. This Agreement shall not be
assigned by any party hereto, by operation of law or otherwise. Subject to the
preceding two sentences, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and assigns.
9.12. Best Knowledge. When used with respect to the Company in this
Agreement, the term "best knowledge" shall mean to the best actual knowledge of
any of the Company's Chairman of the Board, President and chief financial
officer.
9.13. Governing Law. (a) The validity, interpretation and effect of this
Agreement shall be governed exclusively by the laws of the State of Wisconsin,
without giving effect to the principles of conflict of laws thereof.
(b) Each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Illinois or
any Illinois state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated hereby in any
court other than a federal or state court sitting in the State of Illinois.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, Laidlaw Environmental, LES Acquisition and the Company
have caused this Agreement to be executed as of the date first written above by
their respective officers thereunder duly authorized.
Safety-Kleen Corp.
By: /s/ DONALD W. BRINCKMAN
------------------------------------
Donald W. Brinckman
Chairman and Chief
Executive Officer
Laidlaw Environmental Services, Inc.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President and Chief Executive
Officer
LES Acquisition Inc.
By: /s/ KENNETH W. WINGER
------------------------------------
Kenneth W. Winger
President
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SCHEDULE 1.1
TO
AGREEMENT AND PLAN OF MERGER
CONDITIONS TO ACCEPTING SHARES FOR EXCHANGE PURSUANT TO THE OFFER
1. Minimum Tender Condition. There shall have been validly tendered and
not withdrawn prior to the Expiration Date a number of Shares which, together
with Shares owned by Laidlaw Environmental and its affiliates, will constitute
at least two-thirds of the total number of outstanding Shares on a fully diluted
basis (as though all outstanding options or other outstanding securities
convertible into or exercisable or exchangeable for Shares had been so
converted, exercised or exchanged) as of the date the Shares are accepted for
exchange by Laidlaw Environmental pursuant to the Offer.
2. NYSE Listing of Laidlaw Environmental Shares. The shares of Laidlaw
Environmental Common Stock (and accompanying Rights) which shall be issued to
the Safety-Kleen Shareholders in the Offer and the Merger shall have been
authorized for listing on the NYSE, subject to official notice of issuance.
3. Effective Registration Statement. The Registration Statement covering
the Laidlaw Environmental Common Stock shall have become effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
4. Legal Prohibition. No order, injunction or decree shall have been
issued by any court or agency of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Offer and/or the Merger shall
have occurred. No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any court, administrative
agency or commission or other governmental authority or instrumentality which
prohibits, restricts or makes illegal the consummation of the Offer and/or the
Merger.
5. Adverse Change. There shall not have occurred or been threatened (i)
any general suspension of trading in, or limitation on times or prices for,
securities on any national securities exchange or in the over-the-counter market
in the United States, (ii) any significant adverse change in interest rates, the
financial markets or major stock exchange indices in the United States or abroad
or in the market price of Shares, including, without limitation, a decline of at
least 10% in either the Dow Jones Average of Industrial Stocks or the Standard &
Poor's 500 Index from that existing at the close of business on January 14,
1998, (iii) any change in the general political, market, economic, regulatory or
financial conditions in the United States or abroad that could, in the
reasonable judgment of Laidlaw Environmental, have a material adverse effect
upon the business, properties, assets, liabilities, capitalization,
stockholders' equity, condition (financial or otherwise), operations, license or
franchises, results of operations or prospects of Safety-Kleen or any of its
subsidiaries or the trading in, or value of, the Shares, (iv) any material
change in United States currency exchange rates or any other currency exchange
rates or a suspension of, or limitation on, the markets therefor, (v) a
declaration of a banking moratorium or any suspension of payments in respect of
banks in the United States, (vi) any limitation (whether or not mandatory) by
any government, domestic, foreign or supranational, or governmental entity on,
or other event that in the reasonable judgment of Laidlaw Environmental might
affect, the extension of credit by banks or other lending institutions, (vii) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or (viii) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof.
6. Merger Agreement Representations and Warranties. The representations
and warranties of Safety-Kleen set forth in the Merger Agreement shall be true
and correct in all material respects as of the date Shares are accepted for
exchange pursuant to the Offer.
7. Merger Agreement Covenants. Safety-Kleen shall have in all material
respects performed all obligations and complied with any agreement or covenant
of Safety-Kleen to be performed or complied with by it under the Merger
Agreement as of the date Shares are accepted for exchange pursuant to the Offer.
8. Termination of Merger Agreement. The Merger Agreement shall not have
been terminated in accordance with its terms.
