<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 19, 1996
REGISTRATION NO. 333-08161
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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USA WASTE SERVICES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 4953 73-1309529
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of incorporation or organization) Classification Number) Identification Number)
GREGORY T. SANGALIS
USA WASTE SERVICES, INC. USA WASTE SERVICES, INC.
5400 LBJ FREEWAY 5400 LBJ FREEWAY
SUITE 300-TOWER ONE SUITE 300-TOWER ONE
DALLAS, TEXAS 75240 DALLAS, TEXAS 75240
(214) 383-7900 (214) 383-7900
(Name, address, including zip code, (Name, address, including zip code,
and telephone number, including and telephone number, including
area code, of registrant) area code, of agent for service)
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Copies to:
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STEPHEN A. MASSAD WILLIAM N. FINNEGAN, IV
BAKER & BOTTS, L.L.P. ANDREWS & KURTH L.L.P.
910 LOUISIANA STREET, 31ST FLOOR 4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 229-1234 (713) 220-4200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and the
satisfaction or waiver of all other conditions to the merger (the "Merger") of
Quatro Acquisition Corp. ("Acquisition") with and into Sanifill, Inc.
("Sanifill") pursuant to the Agreement and Plan of Merger dated as of June 22,
1996, among USA Waste Services, Inc., Acquisition and Sanifill, described in the
enclosed Joint Proxy Statement/Prospectus.
If the securities being registered on the Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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CROSS-REFERENCE SHEET
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ITEM NUMBER IN FORM S-4 LOCATION IN JOINT PROXY STATEMENT AND PROSPECTUS
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A. Information About the Transaction
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................. Facing Page
2. Inside Front and Outside Back Cover Pages of
Prospectus..................................... Cover Page; Available Information; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed Charges
and Other Information.......................... Summary; The Merger and Related Transactions
4. Terms of the Transaction......................... The Meetings; The Merger and Related Transactions; The
Plan of Merger and Terms of the Merger; Description of
USA Waste Capital Stock; Comparison of Rights of
Stockholders of USA Waste and Sanifill
5. Pro forma Financial Information.................. Summary; USA Waste and Sanifill Combined Unaudited Pro
Forma Condensed Financial Statements
6. Material Contacts with the Company Being
Acquired....................................... The Merger and Related Transactions
7. Additional Information Required for Reoffering by
Persons and Parties Deemed to be
Underwriters................................... *
8. Interests of Named Experts and Counsel........... *
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.................................... *
B. Information About the Registrant
10. Information with Respect to S-3 Registrants...... Incorporation of Certain Information by Reference;
Summary; Risk Factors; The Merger and Related
Transactions; Description of USA Waste Capital Stock;
The Plan of Merger and Terms of the Merger
11. Incorporation of Certain Information by
Reference...................................... Incorporation of Certain Information by Reference
12. Information with Respect to S-2 or S-3
Registrants.................................... *
13. Incorporation of Certain Information by
Reference...................................... *
14. Information with Respect to Registrants Other
Than S-2 or S-3 Registrants.................... *
C. Information About the Company Being Acquired
15. Information with Respect to S-3 Companies........ Incorporation of Certain Information by Reference;
Summary; The Merger and Related Transactions; Comparison
of Rights of Stockholders of USA Waste and Sanifill
16. Information with Respect to S-2 or S-3
Companies...................................... *
17. Information with Respect to Companies Other than
S-2 or S-3 Companies........................... *
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations are to be Solicited............. Summary; The Merger and Related Transactions; The
Meetings
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in an
Exchange Offer................................. *
</TABLE>
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* Omitted because the item is inapplicable or the answer thereto is negative.
<PAGE> 3
USA WASTE SERVICES, INC.
5400 LBJ FREEWAY
SUITE 300 -- TOWER ONE
DALLAS, TEXAS 75240
July 19, 1996
Dear Stockholder of USA Waste Services, Inc.:
You are invited to attend a Special Meeting of Stockholders (the "Special
Meeting") of USA Waste Services, Inc. ("USA Waste") to be held on August 27,
1996 at 2:00 p.m., Central time. The Special Meeting will be held at The Four
Seasons Hotel, 1300 Lamar Street, Houston, Texas.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Merger dated as of June
22, 1996 (the "Merger Agreement"), by and among USA Waste, Quatro Acquisition
Corp., a wholly owned subsidiary of USA Waste ("Acquisition"), and Sanifill,
Inc. ("Sanifill") and a proposal to approve an amendment to USA Waste's Restated
Certificate of Incorporation to increase the number of authorized shares of USA
Waste common stock, par value $.01 per share ("USA Waste Common Stock"), to
300,000,000 shares.
The Merger Agreement provides, among other things, for the merger of
Acquisition with and into Sanifill (the "Merger"), pursuant to which Sanifill
would become a wholly owned subsidiary of USA Waste. Each outstanding share of
common stock of Sanifill would be converted into 1.70 shares of USA Waste Common
Stock (the "Exchange Ratio"). Based upon the number of shares of Sanifill common
stock outstanding as of July 18, 1996, USA Waste would issue approximately 43.1
million shares of USA Waste Common Stock to the stockholders of Sanifill
pursuant to the Merger. These shares would represent approximately 33% of the
total shares of USA Waste Common Stock expected to be outstanding immediately
after the Merger. The Merger is subject to a number of conditions, including
obtaining the approval of the stockholders of USA Waste and Sanifill and
obtaining any necessary regulatory waivers or approvals. The Merger is also
conditioned on the approval of the proposal to increase the number of authorized
shares of USA Waste Common Stock. A summary of the basic terms and conditions of
the Merger, certain financial and other information relating to USA Waste and
Sanifill and a copy of the Merger Agreement are set forth in the accompanying
Joint Proxy Statement and Prospectus. Please review and consider the enclosed
materials carefully.
Your Board of Directors has approved the Merger Agreement. In addition, the
Board of Directors of USA Waste has received an opinion dated June 21, 1996 from
Donaldson, Lufkin & Jenrette Securities Corporation (a copy of which is included
in the accompanying Joint Proxy Statement and Prospectus) that the Exchange
Ratio is fair to USA Waste from a financial point of view. THE BOARD OF
DIRECTORS OF USA WASTE BELIEVES THAT THE PROPOSED MERGER AND THE OTHER PROPOSAL
DESCRIBED ABOVE ARE IN THE BEST INTERESTS OF USA WASTE AND ITS STOCKHOLDERS AND
RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
THE OTHER PROPOSAL SET FORTH IN THE JOINT PROXY STATEMENT AND PROSPECTUS.
Regardless of the number of shares you hold or whether you plan to attend
the Special Meeting, we urge you to complete, sign, date and return the enclosed
proxy card immediately. If you attend the Special Meeting, you may vote in
person if you wish, even if you have previously returned your proxy card.
Sincerely,
/s/ JOHN E. DRURY
John E. Drury
Chairman of the Board
<PAGE> 4
USA WASTE SERVICES, INC.
5400 LBJ FREEWAY
SUITE 300 -- TOWER ONE
DALLAS, TEXAS 75240
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 27, 1996
To the Stockholders of USA Waste Services, Inc.:
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of USA Waste Services, Inc. ("USA Waste") will be held at The Four
Seasons Hotel, 1300 Lamar Street, Houston, Texas, on August 27, 1996, at 2:00
p.m., Central time, to consider and act upon the following proposals:
1. To approve and adopt the Agreement and Plan of Merger dated as of June
22, 1996, by and among USA Waste, Quatro Acquisition Corp., a wholly owned
subsidiary of USA Waste ("Acquisition"), and Sanifill, Inc. ("Sanifill")
providing for, among other things, the merger of Acquisition with and into
Sanifill and the conversion of each outstanding share of Sanifill common stock,
par value $.01 per share, into 1.70 shares of USA Waste common stock, par value
$.01 per share ("USA Waste Common Stock").
2. To approve an amendment to the Restated Certificate of Incorporation of
USA Waste to increase the authorized shares of USA Waste Common Stock from
150,000,000 shares to 300,000,000 shares.
The implementation of Proposal No. 1 is conditioned on the approval of
Proposal No. 2.
The meeting may be recessed from time to time, and actions with respect to
the matters specified in this notice may be taken at any reconvened meeting
without further notice to stockholders unless required by the Bylaws of USA
Waste.
Only stockholders of record at the close of business on July 18, 1996, are
entitled to notice of and to vote on all matters at the Special Meeting and any
adjournments thereof. A list of all stockholders will be available at the
Special Meeting and, during the 10-day period immediately prior to the Special
Meeting, at the offices of USA Waste, located at 5400 LBJ Freeway, Suite
300 -- Tower One, Dallas, Texas 75240, during ordinary business hours.
By Order of the Board of Directors,
/s/ GREGORY T. SANGALIS
Gregory T. Sangalis
Corporate Secretary
Dallas, Texas
July 19, 1996
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED PREPAID ENVELOPE. IF YOU ATTEND THE SPECIAL MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE> 5
SANIFILL, INC.
2777 ALLEN PARKWAY
SUITE 700
HOUSTON, TEXAS 77019
July 19, 1996
Dear Stockholder of Sanifill, Inc.:
You are invited to attend a Special Meeting of Stockholders (the "Special
Meeting") of Sanifill, Inc. ("Sanifill") to be held August 27, 1996 at 11:00
a.m., Central time. The Special Meeting will be held at The Four Seasons Hotel,
1300 Lamar Street, Houston, Texas.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Merger dated as of June
22, 1996 (the "Merger Agreement"), by and among USA Waste Services, Inc. ("USA
Waste"), Quatro Acquisition Corp., a wholly owned subsidiary of USA Waste
("Acquisition"), and Sanifill.
The Merger Agreement provides, among other things, for the merger of
Acquisition with and into Sanifill (the "Merger"), pursuant to which Sanifill
would become a wholly owned subsidiary of USA Waste. Each outstanding share of
common stock of Sanifill would be converted into 1.70 shares (the "Exchange
Ratio") of USA Waste common stock, par value $.01 per share ("USA Waste Common
Stock"). Based upon the number of shares of Sanifill common stock outstanding as
of July 18, 1996, USA Waste would issue approximately 43.1 million shares of USA
Waste Common Stock to the stockholders of Sanifill pursuant to the Merger. These
shares would represent approximately 33% of the total shares of USA Waste Common
Stock expected to be outstanding immediately after the Merger. The Merger is
subject to a number of conditions, including obtaining the approval of the
stockholders of USA Waste and Sanifill and obtaining any necessary regulatory
waivers or approvals. A summary of the basic terms and conditions of the Merger,
certain financial and other information relating to USA Waste and Sanifill and a
copy of the Merger Agreement are set forth in the accompanying Joint Proxy
Statement and Prospectus. Please review and consider the enclosed materials
carefully.
Your Board of Directors has approved the Merger Agreement. In addition, the
Board of Directors of Sanifill has received an opinion dated June 21, 1996 from
Merrill Lynch, Pierce, Fenner & Smith Incorporated (a copy of which is included
in the accompanying Joint Proxy Statement and Prospectus) that, as of such date,
the Exchange Ratio is fair to the stockholders of Sanifill from a financial
point of view. THE BOARD OF DIRECTORS OF SANIFILL BELIEVES THAT THE PROPOSED
MERGER IS IN THE BEST INTERESTS OF SANIFILL AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Regardless of the number of shares you hold or whether you plan to attend
the Special Meeting, we urge you to complete, sign, date and return the enclosed
proxy card immediately. If you attend the Special Meeting, you may vote in
person if you wish, even if you have previously returned your proxy card.
Sincerely,
/s/ LORNE D. BAIN
Lorne D. Bain
Chairman of the Board
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SANIFILL, INC.
2777 ALLEN PARKWAY
SUITE 700
HOUSTON, TEXAS 77019
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 27, 1996
To the Stockholders of Sanifill, Inc.:
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Sanifill, Inc. ("Sanifill") will be held at The Four Seasons Hotel,
1300 Lamar Street, Houston, Texas, on August 27, 1996, at 11:00 a.m., Central
time, to consider and act upon the following proposal:
To approve and adopt the Agreement and Plan of Merger dated as of June 22,
1996, by and among Sanifill, USA Waste Services, Inc. ("USA Waste") and Quatro
Acquisition Corp., a wholly owned subsidiary of USA Waste ("Acquisition"),
providing, among other things, for the merger of Acquisition with and into
Sanifill and the conversion of each outstanding share of Sanifill common stock,
par value $.01 per share, into 1.70 shares of USA Waste common stock, par value
$.01 per share.
The meeting may be recessed from time to time, and actions with respect to
the matters specified in this notice may be taken at any reconvened meeting
without further notice to stockholders unless required by the Bylaws of
Sanifill.
Only stockholders of record at the close of business on July 18, 1996, are
entitled to notice of and to vote on the Merger proposal at the Special Meeting
and any adjournments thereof. A list of all stockholders will be available at
the Special Meeting and, during the 10-day period prior to the Special Meeting,
at the offices of Sanifill, located at 2777 Allen Parkway, Suite 700, Houston,
Texas 77019, during ordinary business hours.
By Order of the Board of Directors,
/s/ H. STEVEN WALTON
H. Steven Walton
Secretary
Houston, Texas
July 19, 1996
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE SPECIAL MEETING,
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENCLOSED PREPAID ENVELOPE. IF YOU ATTEND THE SPECIAL MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE> 7
USA WASTE SERVICES, INC. SANIFILL, INC.
JOINT PROXY STATEMENT AND PROSPECTUS
This Joint Proxy Statement and Prospectus is being furnished to the
stockholders of USA Waste Services, Inc., a Delaware corporation ("USA Waste"),
in connection with the solicitation of proxies by its Board of Directors to be
voted at the Special Meeting of Stockholders of USA Waste (the "USA Waste
Special Meeting") scheduled to be held on August 27, 1996, at 2:00 p.m., Central
time, at The Four Seasons Hotel, 1300 Lamar Street, Houston, Texas, and at any
adjournment or postponement thereof, and to the stockholders of Sanifill, Inc.,
a Delaware corporation ("Sanifill"), in connection with the solicitation of
proxies by its Board of Directors to be voted at the Special Meeting of
Stockholders of Sanifill (the "Sanifill Special Meeting") scheduled to be held
on August 27, 1996, at 11:00 a.m., Central time, at The Four Seasons Hotel, 1300
Lamar Street, Houston, Texas, and at any adjournment or postponement thereof.
At the USA Waste Special Meeting and the Sanifill Special Meeting, the
holders of USA Waste common stock, par value $.01 per share ("USA Waste Common
Stock"), and the holders of Sanifill common stock, par value $.01 per share
("Sanifill Common Stock"), will be asked to consider and vote upon a proposal to
approve and adopt the Agreement and Plan of Merger dated as of June 22, 1996
(the "Merger Agreement"), among USA Waste, Quatro Acquisition Corp., a wholly
owned subsidiary of USA Waste ("Acquisition"), and Sanifill providing, among
other things, for the merger of Acquisition with and into Sanifill (the
"Merger"). Such approvals are a condition to consummating the Merger. Upon
consummation of the Merger, Sanifill will become a wholly owned subsidiary of
USA Waste and the holders of the issued and outstanding shares of Sanifill
Common Stock will receive, at the effective time of the Merger, 1.70 shares of
USA Waste Common Stock for each share of Sanifill Common Stock held by them. See
"The Plan of Merger and Terms of the Merger." A copy of the Merger Agreement is
attached hereto as Annex A and incorporated herein by reference.
On July 18, 1996, the closing sale price of USA Waste Common Stock on the
New York Stock Exchange was $27 1/4 per share. Based upon such closing price,
the consideration to be received by stockholders of Sanifill pursuant to the
Merger would be $46.325 per share of Sanifill Common Stock. Based upon the
number of shares of Sanifill Common Stock outstanding as of July 18, 1996,
approximately 132.3 million shares of USA Waste Common Stock are expected to be
outstanding immediately after the Merger is consummated, of which approximately
33% will be owned by former stockholders of Sanifill and approximately 67% will
be owned by current stockholders of USA Waste.
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR CERTAIN CONSIDERATIONS RELEVANT
TO THE DECISION ON WHETHER TO VOTE FOR THE MERGER.
This Joint Proxy Statement and Prospectus also constitutes the prospectus
of USA Waste that is a part of the Registration Statement (as hereinafter
defined) of USA Waste filed with the Securities and Exchange Commission with
respect to the issuance and exchange of up to approximately 54.6 million shares
of USA Waste Common Stock to be issued pursuant to the Merger (which includes
shares underlying options and warrants to purchase Sanifill Common Stock
currently held by Sanifill employees and shares issuable upon the conversion of
outstanding convertible debentures of Sanifill). This Joint Proxy Statement and
Prospectus is first being mailed to the stockholders of USA Waste and the
stockholders of Sanifill on or about July 23, 1996.
THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE MERGER HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS JOINT PROXY STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS JOINT PROXY STATEMENT AND PROSPECTUS IS JULY 19, 1996.
<PAGE> 8
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY STATEMENT AND PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY USA WASTE OR SANIFILL. THIS JOINT PROXY STATEMENT AND
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, USA WASTE COMMON STOCK, OR A SOLICITATION OF A PROXY, IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT AND
PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF USA WASTE OR SANIFILL SINCE THE DATE HEREOF OR THAT THE INFORMATION
IN THIS JOINT PROXY STATEMENT AND PROSPECTUS IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF. ALL INFORMATION HEREIN WITH RESPECT TO USA WASTE
AND ACQUISITION HAS BEEN FURNISHED BY USA WASTE, AND ALL INFORMATION HEREIN WITH
RESPECT TO SANIFILL HAS BEEN FURNISHED BY SANIFILL.
AVAILABLE INFORMATION
USA Waste and Sanifill are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the offices of
the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and the Regional Offices of the Commission in Chicago, Illinois at
CitiCorp Center, 500 W. Madison, Suite 1400, Chicago, Illinois 60661-2511 and in
New York, New York at 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such materials may be obtained from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Commission maintains an Internet
web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
(http://www.sec.gov). Furthermore, USA Waste's and Sanifill's securities are
listed on the New York Stock Exchange (the "NYSE"), and the reports, proxy
statements and other information of USA Waste and Sanifill described above may
also be inspected at the NYSE at 20 Broad Street, New York, New York 10005. Upon
consummation of the Merger, listing of the Sanifill Common Stock on the NYSE
will be terminated.
USA Waste has filed with the Commission a registration statement (the
"Registration Statement") on Form S-4 under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Joint Proxy Statement and Prospectus also constitutes the Prospectus of USA
Waste filed as part of the Registration Statement and does not contain all of
the information set forth in the Registration Statement and the exhibits
thereto, certain parts of which are omitted in accordance with the rules of the
Commission. Statements made in this Joint Proxy Statement and Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete; with respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be qualified in its entirety by such reference. The
Registration Statement and any amendments thereto, including exhibits filed as a
part thereof, are available for inspection and copying at the Commission's
offices as described above. After the Merger, registration of the Sanifill
Common Stock under the Exchange Act will be terminated.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
USA Waste incorporates herein by reference the following documents filed by
it with the Commission (File No. 1-12154) pursuant to the Exchange Act: (i) its
Annual Report on Form 10-K for the year ended December 31, 1995, (ii) its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, (iii) its
Current Report on Form 8-K dated January 9, 1996, its Current Report on Form 8-K
dated May 22, 1996, as amended by its Form 8-K/A (Amendment No. 1) filed on May
29, 1996, its Form 8-K/A (Amendment No. 2) filed June 28, 1996 and its Form
8-K/A (Amendment No. 3) filed July 1, 1996, and its Current Report on Form 8-K
dated June 22, 1996 and (iv) the description of USA Waste Common Stock contained
in its Registration Statement on Form 8-A dated July 1, 1993, as amended by Form
8-B dated July 13, 1995.
i
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Sanifill incorporates herein by reference the following documents filed by
it with the Commission (File No. 1-10490) pursuant to the Exchange Act: (i) its
Annual Report on Form 10-K for the year ended December 31, 1995, (ii) its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, and (iii)
its Current Reports on Form 8-K dated February 5, 1996, February 11, 1996,
February 23, 1996, March 4, 1996, March 20, 1996, March 28, 1996, June 5, 1996
and June 22, 1996.
All documents filed by USA Waste and Sanifill pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Joint
Proxy Statement and Prospectus and prior to the date of the USA Waste Special
Meeting and the Sanifill Special Meeting shall be deemed to be incorporated by
reference in this Joint Proxy Statement and Prospectus and to be part hereof
from the date of filing of such document. All information appearing in this
Joint Proxy Statement and Prospectus is qualified in its entirety by the
information and financial statements (including notes thereto) appearing in the
documents incorporated by reference herein. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
modified or superseded, for purposes of this Joint Proxy Statement and
Prospectus, to the extent that a statement contained herein or in any
subsequently filed document that is deemed to be incorporated herein modifies or
supersedes any such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Joint Proxy Statement and Prospectus.
THIS JOINT PROXY STATEMENT AND PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. USA WASTE AND
SANIFILL HEREBY UNDERTAKE TO PROVIDE, BY FIRST CLASS MAIL OR OTHER EQUALLY
PROMPT MEANS WITHIN ONE BUSINESS DAY OF RECEIPT OF A REQUEST, WITHOUT CHARGE TO
EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS JOINT PROXY
STATEMENT AND PROSPECTUS HAS BEEN DELIVERED, ON WRITTEN OR ORAL REQUEST OF ANY
SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS REFERRED TO ABOVE THAT HAVE
BEEN OR MAY BE INCORPORATED INTO THIS JOINT PROXY STATEMENT AND PROSPECTUS BY
REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). DOCUMENTS RELATING
TO USA WASTE ARE AVAILABLE UPON REQUEST FROM USA WASTE SERVICES, INC., 5400 LBJ
FREEWAY, SUITE 300 -- TOWER ONE, DALLAS, TEXAS 75240, ATTENTION: CORPORATE
SECRETARY, TELEPHONE NUMBER 214-383-7900. DOCUMENTS RELATING TO SANIFILL ARE
AVAILABLE UPON REQUEST FROM SANIFILL, INC., 2777 ALLEN PARKWAY, SUITE 700,
HOUSTON, TEXAS 77019, ATTENTION: CORPORATE SECRETARY, TELEPHONE NUMBER
713-942-6200. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY AUGUST 20, 1996.
ii
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TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION....................... i
INCORPORATION OF CERTAIN INFORMATION BY
REFERENCE................................. i
SUMMARY..................................... 1
The Companies............................. 1
The Meetings.............................. 1
The Merger................................ 2
Stockholders' Comparative Rights.......... 7
Market Price Data......................... 8
Summary Financial Information............. 9
Additional Proposal to be Presented at the
USA Waste Special Meeting............... 13
RISK FACTORS................................ 14
Forward-Looking Statements May Not Prove
Accurate................................ 14
Expected Benefits of Combined Business May
Not be Achieved......................... 14
Stock Prices May Vary in Response to
Changes in Business and Economic
Conditions.............................. 14
No Assurance of Successful Management and
Maintenance of Growth................... 14
Need for Capital; Debt Financing.......... 15
Profitability May be Affected by
Competition............................. 15
Potential Adverse Effect of Government
Regulation.............................. 15
Potential Environmental Liability......... 15
Shares Eligible for Future Sale May
Adversely Affect Market Price of
Stock................................... 16
THE MEETINGS................................ 17
Date, Time and Place of the Meetings...... 17
Purpose of the Meetings................... 17
Record Date and Outstanding Shares........ 17
Voting and Revocation of Proxies.......... 17
Vote Required for Approval................ 18
Solicitation of Proxies................... 18
THE MERGER AND RELATED TRANSACTIONS......... 19
General Description of the Merger......... 19
Background of the Merger.................. 19
USA Waste's Reasons for the Merger........ 21
Recommendation of the Board of Directors
of USA Waste............................ 22
Sanifill's Reasons for the Merger......... 22
Recommendation of the Board of Directors
of Sanifill............................. 23
Opinion of Financial Advisor to USA
Waste................................... 23
Opinion of Financial Advisor to
Sanifill................................ 28
Conflicts of Interest..................... 32
Certain Federal Income Tax Consequences... 34
No Appraisal or Dissenters' Rights........ 35
Accounting Treatment...................... 35
Government and Regulatory Approvals....... 36
Restrictions on Resales by Affiliates..... 36
Board of Directors After the Merger....... 36
Meetings, Committees and Compensation..... 39
Officers.................................. 40
AMENDMENT TO USA WASTE RESTATED CERTIFICATE
OF INCORPORATION.......................... 40
THE PLAN OF MERGER AND TERMS OF THE
MERGER.................................... 41
Effective Time of the Merger.............. 41
Manner and Basis for Converting Shares.... 41
Assumption of Sanifill Options and
Sanifill Warrants....................... 42
Treatment of Sanifill Convertible
Debentures.............................. 42
Conditions to the Merger.................. 43
Representations and Warranties of USA
Waste and Sanifill...................... 45
<CAPTION>
PAGE
----
<S> <C>
Survival of Representations, Warranties
and Agreements.......................... 45
Conduct of the Business of USA Waste and
Sanifill Prior to the Merger............ 45
No Solicitation of Acquisition
Transactions............................ 48
Conduct of the Business of the Combined
Companies Following the Merger.......... 48
Termination or Amendment.................. 48
Termination Fees.......................... 49
Expenses.................................. 50
Office Relocation......................... 50
Indemnification and Insurance............. 50
Other Agreements.......................... 50
Voting Agreements......................... 52
COMPARISON OF RIGHTS OF STOCKHOLDERS OF USA
WASTE AND SANIFILL........................ 53
General................................... 53
Number of Directors; Removal of Directors;
Filling of Vacancies on the Board of
Directors............................... 53
Voting.................................... 53
Stockholder Nominations and Proposals..... 53
Fair Price Provision...................... 54
Amendment of Certain Charter Provisions... 55
Sanifill Rights Plan...................... 55
USA WASTE AND SANIFILL COMBINED UNAUDITED
PRO FORMA CONDENSED FINANCIAL
STATEMENTS................................ 56
USA WASTE AND SANIFILL NOTES TO COMBINED
UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS................................ 62
Basis of Presentation..................... 62
Pro Forma Adjustments..................... 62
SUPPLEMENTALLY PROVIDED INFORMATION RELATING
TO THE COMBINED UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS............ 63
PRINCIPAL STOCKHOLDERS OF USA WASTE AND
SANIFILL.................................. 68
USA Waste................................. 68
Sanifill.................................. 69
MARKET PRICE DATA........................... 71
Market Information........................ 71
Dividend Information...................... 71
DESCRIPTION OF USA WASTE CAPITAL STOCK...... 72
Common Stock.............................. 72
Preferred Stock........................... 72
Authorized But Unissued Shares............ 72
Transfer Agent and Registrar.............. 72
Limited Liability and Indemnification of
Officers and Directors.................. 72
PROPOSAL OF STOCKHOLDERS FOR ANNUAL
MEETING................................... 73
OTHER MATTERS............................... 74
LEGAL MATTERS............................... 74
EXPERTS..................................... 74
INDEPENDENT AUDITORS........................ 74
ANNEX A -- Agreement and Plan of Merger..... A-1
Amendment No. 1 to Agreement
and Plan of Merger............... A-36
ANNEX B -- Opinion of Donaldson, Lufkin &
Jenrette Securities Corporation........... B-1
ANNEX C -- Opinion of Merrill Lynch, Pierce,
Fenner & Smith Incorporated............... C-1
</TABLE>
iii
<PAGE> 11
SUMMARY
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Joint Proxy Statement and Prospectus. The
information contained in this summary is qualified in its entirety by, and
should be read in conjunction with, the more detailed information appearing
elsewhere in this Joint Proxy Statement and Prospectus and the documents
incorporated herein by reference.
THE COMPANIES
USA WASTE SERVICES, INC. AND QUATRO ACQUISITION CORP.
USA Waste Services, Inc. is the third largest integrated solid waste
management company in North America and serves municipal, commercial, industrial
and residential customers in 24 states. USA Waste's solid waste management
services include collection, transfer and disposal operations and, to a lesser
extent, recycling and certain other waste management services. USA Waste owns or
operates 39 landfills, 26 transfer stations and 72 collection operations and
serves more than 1.3 million customers. Quatro Acquisition Corp. is a wholly
owned subsidiary of USA Waste organized for the purpose of effecting the Merger
pursuant to the Merger Agreement. Acquisition has no material assets and has not
engaged in and prior to the Merger will not engage in any activities except
those required to effectuate the Merger. The principal executive offices of USA
Waste and Acquisition are located at 5400 LBJ Freeway, Suite 300 -- Tower One,
Dallas, Texas 75240, and their telephone number is (214) 383-7900.
Pursuant to the terms of the Merger Agreement, USA Waste has agreed to
transfer its principal executive offices to Houston, Texas, as soon as
practicable after the Effective Time (as hereinafter defined).
Additional information concerning USA Waste is included in USA Waste's
reports filed under the Exchange Act that are incorporated by reference in this
Joint Proxy Statement and Prospectus. See "Available Information" and
"Incorporation of Certain Information by Reference."
SANIFILL, INC.
Sanifill, Inc. owns and operates nonhazardous waste disposal, treatment,
collection, transfer and recycling businesses and complementary operations.
Since it was founded in 1989, Sanifill has completed the acquisition of 142
disposal, collection and related businesses. As of June 30, 1996, Sanifill
operated 50 disposal and treatment facilities, 26 transfer stations and 36
collection operations. In addition, Sanifill provides sludge treatment and
organic recycling services. The principal executive offices of Sanifill are
located at 2777 Allen Parkway, Suite 700, Houston, Texas 77019, and its
telephone number is (713) 942-6200.
Additional information concerning Sanifill is included in Sanifill's
reports filed under the Exchange Act that are incorporated by reference in this
Joint Proxy Statement and Prospectus. See "Available Information" and
"Incorporation of Certain Information by Reference."
THE MEETINGS
The USA Waste Special Meeting will be held at 2:00 p.m., Central time on
August 27, 1996, at The Four Seasons Hotel, 1300 Lamar Street, Houston, Texas,
for the purpose of considering and acting upon proposals to (i) approve and
adopt the Merger Agreement ("Proposal No. 1") and (ii) approve an amendment to
the USA Waste Restated Certificate of Incorporation to increase the number of
authorized shares of USA Waste Common Stock to 300,000,000 shares ("Proposal No.
2"). The implementation of Proposal No. 1 is conditioned on the approval of
Proposal No. 2. The Sanifill Special Meeting will be held at 11:00 a.m., Central
time on August 27, 1996, at The Four Seasons Hotel, 1300 Lamar Street, Houston,
Texas, for the sole purpose of voting on the Merger Agreement. The USA Waste
Special Meeting and the Sanifill Special Meeting are sometimes referred to
collectively hereinafter as the "Meetings."
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<PAGE> 12
Only those stockholders of USA Waste and of Sanifill of record at the close
of business on July 18, 1996 (the "Record Date") are entitled to notice of, and
to vote at, the USA Waste Special Meeting and the Sanifill Special Meeting,
respectively.
Pursuant to the rules of the NYSE, approval and adoption of the Merger
Agreement requires the affirmative vote of a majority of the shares of USA Waste
Common Stock voted, in person or by proxy, at the USA Waste Special Meeting,
provided that the total vote cast on the proposal represents over 50% in
interest of all shares of USA Waste Common Stock entitled to vote on the
proposal. However, the implementation of the Merger is conditioned on the
approval of Proposal No. 2, which, pursuant to Delaware law, requires the
affirmative vote of a majority of the outstanding shares of USA Waste Common
Stock. At the close of business on the Record Date, there were approximately
89.2 million shares of USA Waste Common Stock outstanding and entitled to vote
at the USA Waste Special Meeting. In connection with the execution of the Merger
Agreement, John E. Drury, Donald F. Moorehead, Jr., Alexander W. Rangos, John G.
Rangos, Sr., John Rangos Development Corporation, Inc., Kosti Shirvanian and
David Sutherland-Yoest each executed a voting agreement and irrevocable proxy
pursuant to which they (i) agreed to vote an aggregate of 18,700,112 shares of
USA Waste Common Stock (or approximately 21% of the shares of USA Waste Common
Stock outstanding on the Record Date) held by them for approval and adoption of
the Merger Agreement and (ii) granted irrevocable proxies with respect to such
shares, which proxies permit Sanifill to vote such shares in favor of approval
and adoption of the Merger Agreement. See "The Plan of Merger and Terms of the
Merger -- Voting Agreements." All executive officers and directors of USA Waste
who are stockholders of USA Waste, who together with their affiliates own
approximately 20 million shares of USA Common Stock (including shares subject to
the voting agreements and irrevocable proxies discussed above) representing
approximately 22.5% of the shares of USA Waste Common Stock outstanding as of
the Record Date, have indicated to USA Waste that they intend to vote the shares
of USA Waste Common Stock over which they have voting control in favor of
approval and adoption of the Merger Agreement. See "The Meetings -- Vote
Required for Approval."
Pursuant to Delaware law approval and adoption of the Merger Agreement
requires the affirmative vote of a majority of the shares of Sanifill Common
Stock outstanding on the Record Date. At the close of business on the Record
Date, there were approximately 25.4 million shares of Sanifill Common Stock
outstanding and entitled to vote at the Sanifill Special Meeting. In connection
with the execution of the Merger Agreement, Lorne D. Bain, Larry J. Martin,
Rodney R. Proto and Alfred C. Warrington, IV each executed a voting agreement
and irrevocable proxy pursuant to which they (i) agreed to vote an aggregate of
1,292,717 shares of Sanifill Common Stock (or approximately 5.1% of the shares
of Sanifill Common Stock outstanding on the Record Date) held by them for
approval and adoption of the Merger Agreement and (ii) granted irrevocable
proxies with respect to such shares, which proxies permit certain officers of
USA Waste to vote such shares in favor of approval and adoption of the Merger
Agreement. See "The Plan of Merger and Terms of the Merger -- Voting
Agreements." All executive officers and directors of Sanifill who are
stockholders of Sanifill, who collectively have the right to vote approximately
1.4 million shares of Sanifill Common Stock (including shares subject to the
voting agreements and irrevocable proxies discussed above), representing
approximately 5.5% of the shares of Sanifill Common Stock outstanding as of the
Record Date, have indicated to Sanifill that they intend to vote such shares in
favor of approval and adoption of the Merger Agreement. See "The
Meetings -- Vote Required for Approval."
THE MERGER
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS
The Board of Directors of USA Waste has approved the Merger Agreement and
has directed that it be submitted to the stockholders of USA Waste for their
consideration. The Board of Directors of USA Waste recommends that the
stockholders of USA Waste approve and adopt the Merger Agreement. See "The
Merger and Related Transactions -- Background of the Merger," "-- USA Waste's
Reasons for the Merger," "-- Recommendation of the Board of Directors of USA
Waste" and "-- Conflicts of Interest." The implementation of the Merger
Agreement, if it is approved and adopted, is conditioned on the approval of
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<PAGE> 13
Proposal No. 2 by the stockholders of USA Waste. The Board of Directors of USA
Waste also recommends adoption of such proposal.
The Board of Directors of Sanifill has approved the Merger Agreement and
has directed that it be submitted to the stockholders of Sanifill for their
consideration. The Board of Directors of Sanifill unanimously recommends that
the stockholders of Sanifill approve and adopt the Merger Agreement. See "The
Merger and Related Transactions -- Background of the Merger," "-- Sanifill's
Reasons for the Merger" and "-- Recommendation of the Board of Directors of
Sanifill." In considering the recommendation of the Board of Directors of
Sanifill with respect to the Merger, Sanifill stockholders should be aware that
certain officers and directors of Sanifill have direct or indirect interests in
recommending approval and adoption of the Merger Agreement, apart from their
interests as stockholders of Sanifill, which are separate from those of
unaffiliated stockholders of Sanifill. See "The Merger and Related
Transactions -- Conflicts of Interest."
CONFLICTS OF INTEREST
Certain members of the Board of Directors and management of Sanifill have
certain interests separate from their interests as stockholders. Such interests
include the following: (i) certain officers of Sanifill will become officers and
employees of USA Waste upon consummation of the Merger, including Mr. Rodney R.
Proto, Sanifill's President and Chief Operating Officer, who will serve as USA
Waste's President and Chief Operating Officer to be effective at the Effective
Time and who is expected to enter into an employment agreement with USA Waste on
terms substantially similar to those contained in employment agreements between
USA Waste and its current executive officers and Mr. Lorne D. Bain, Sanifill's
Chairman and Chief Executive Officer, and Mr. J. Chris Brewster, Sanifill's Vice
President and Chief Financial Officer, who have each executed an employment
agreement with USA Waste and Sanifill for a renewable one-year term to be
effective at the Effective Time, (ii) Mr. Bain and Mr. Brewster will also
receive certain payments under their prior employment agreements with Sanifill
as a result of the Merger, (iii) Mr. Proto and two non-officer designees of
Sanifill will be elected to the USA Waste Board of Directors and one of such
persons will be elected to the Executive Committee of the USA Waste Board of
Directors, (iv) any person elected to the USA Waste Board of Directors pursuant
to the Merger Agreement who is not an employee of USA Waste will receive an
annual grant of options to purchase 10,000 shares of USA Waste Common Stock
pursuant to USA Waste's Non-Employee Director Plan, (v) certain officers and
directors of Sanifill hold options and warrants to acquire shares of Sanifill
Common Stock, which will become options and warrants to acquire shares of USA
Waste Common Stock upon consummation of the Merger and (vi) certain officers,
directors and employees of Sanifill will be indemnified by USA Waste against
certain liabilities. For more information on such conflicts of interest, see
"The Merger and Related Transactions -- Conflicts of Interest" and "The Plan of
Merger and Terms of the Merger -- Other Agreements."
OPINIONS OF FINANCIAL ADVISORS
On June 21, 1996, the Board of Directors of USA Waste received a written
opinion from Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to the
effect that, as of such date, the Exchange Ratio (as hereinafter defined) is
fair to USA Waste from a financial point of view. On June 21, 1996, the Board of
Directors of Sanifill received a written opinion from Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") that, as of such date, the
Exchange Ratio is fair to the stockholders of Sanifill from a financial point of
view. The full texts of the written opinions of DLJ and Merrill Lynch are
attached to this Joint Proxy Statement and Prospectus as Annex B and Annex C,
respectively. See "The Merger and Related Transactions -- Opinion of Financial
Advisor to USA Waste" and "-- Opinion of Financial Advisor to Sanifill."
CERTAIN TERMS OF THE MERGER
Exchange Ratio. At the Effective Time, Acquisition will merge with and into
Sanifill, and Sanifill will become a wholly owned subsidiary of USA Waste. In
the Merger, each outstanding share of Sanifill Common Stock (other than shares
of Sanifill Common Stock held by USA Waste) will be converted into 1.70 shares
of USA Waste Common Stock (the "Exchange Ratio").
3
<PAGE> 14
Based upon the number of shares of USA Waste Common Stock and Sanifill
Common Stock outstanding as of the Record Date, approximately 132.3 million
shares of USA Waste Common Stock are expected to be outstanding immediately
after the Effective Time, of which approximately 43.1 million shares,
representing approximately 33% of the total, will be held by former holders of
Sanifill Common Stock.
Fractional Shares. No fractional shares of USA Waste Common Stock will be
issued pursuant to the Merger. In lieu of such fractional shares, each holder
who would otherwise receive a fractional share will receive cash (without
interest) in an amount equal to the product of such fractional part of a share
of USA Waste Common Stock multiplied by the average closing price per share of
USA Waste Common Stock on the NYSE during the 10 trading days immediately
preceding the Effective Time.
Effective Time of the Merger. The Merger will become effective at such time
as shall be stated in a certificate of merger to be filed with the Secretary of
State of the State of Delaware (the "Effective Time"). Assuming the requisite
stockholder approval of the Merger Agreement is obtained, it is anticipated that
the Effective Time of the Merger will occur as soon as practicable following the
Meetings. If all other conditions to the Merger have not been satisfied prior to
the Meetings, however, it is expected that the Merger will occur as soon as
practicable after such conditions have been satisfied or waived.
Exchange of Sanifill Common Stock Certificates. Promptly after consummation
of the Merger, Boston EquiServe (the "Exchange Agent") will mail a letter of
transmittal with instructions to each holder of record of Sanifill Common Stock
for use in exchanging certificates representing shares of Sanifill Common Stock
for certificates representing shares of USA Waste Common Stock and cash in lieu
of any fractional shares. CERTIFICATES SHOULD NOT BE SURRENDERED BY THE HOLDERS
OF SANIFILL COMMON STOCK UNTIL THEY HAVE RECEIVED THE LETTER OF TRANSMITTAL FROM
THE EXCHANGE AGENT. See "The Plan of Merger and Terms of the Merger -- Manner
and Basis for Converting Shares."
Assumption of Sanifill Options and Sanifill Warrants. Pursuant to the
Merger Agreement and at the Effective Time, USA Waste will assume the
obligations under each outstanding option and warrant to purchase Sanifill
Common Stock (a "Sanifill Option" or a "Sanifill Warrant," respectively) that
remains unexpired and unexercised in whole or in part. Accordingly, each
Sanifill Option and Sanifill Warrant will remain outstanding as an option or
warrant to purchase, in place of the shares of Sanifill Common Stock previously
subject to such Sanifill Option or Sanifill Warrant, that number of shares of
USA Waste Common Stock equal to the product of the number of shares of Sanifill
Common Stock subject to the Sanifill Option or Sanifill Warrant multiplied by
the Exchange Ratio. The exercise price per share of USA Waste Common Stock will
be equal to the previous exercise price per share under the Sanifill Option or
Sanifill Warrant divided by the Exchange Ratio. See "The Plan of Merger and
Terms of the Merger -- Assumption of Sanifill Options and Sanifill Warrants." As
of the Record Date, 13 individuals, representing all executive officers and
directors of Sanifill, held options and warrants to acquire approximately 1.5
million shares of Sanifill Common Stock at exercise prices ranging from $10.88
to $44.88 per share. See "The Merger and Related Transactions -- Conflicts of
Interest."
Treatment of Sanifill Convertible Debentures. The 5% Convertible
Subordinated Debentures Due March 1, 2006 of Sanifill (the "Sanifill Convertible
Debentures") that are outstanding immediately prior to the Effective Time will
remain outstanding subsequent to the Effective Time as debt instruments of
Sanifill, Inc. as the survivor to the Merger (in such capacity, the "Surviving
Corporation"). After the Effective Time, each outstanding Sanifill Convertible
Debenture will be convertible into the number of shares of USA Waste Common
Stock (and cash amount in lieu of fractional shares) that the holder thereof
would have had the right to receive upon the Merger if such Sanifill Convertible
Debenture had been converted immediately prior to the Effective Time, subject to
subsequent anti-dilution adjustments as provided by the terms of the Sanifill
Convertible Debentures. After the Merger, Sanifill, as the Surviving
Corporation, must enter into a supplemental indenture with Texas Commerce Bank
National Association, as Trustee (the "Trustee"), providing for such conversion
right into shares of USA Waste Common Stock. As of March 31, 1996, $115 million
in aggregate principal amount of Sanifill Convertible Debentures were
outstanding.
Indemnification and Insurance. The Merger Agreement provides that the
officers, directors, employees and agents of Sanifill will be indemnified by USA
Waste against certain liabilities and costs, including those
4
<PAGE> 15
arising out of, relating to or in connection with any action or omission
occurring prior to the Effective Time or arising out of or pertaining to the
transactions contemplated by the Merger Agreement. In addition, pursuant to the
terms of the Merger Agreement, USA Waste has agreed to maintain in effect, for a
period of six years after the Effective Time, the current policies of directors'
and officers' liability insurance maintained by Sanifill and its subsidiaries
(or substantially equivalent policies) with respect to matters arising prior to
the Effective Time; provided, however, that USA Waste is only required to obtain
as much coverage as can be obtained by paying an annual premium less than or
equal to two times the current annual premiums for such insurance coverage. In
connection with the execution of the Merger Agreement, USA Waste and Sanifill
entered into a letter agreement dated as of June 22, 1996 (the "Indemnification
Letter Agreement") which provides that the Certificate of Incorporation of the
Surviving Corporation as of the Effective Time will contain provisions for the
indemnification of officers and directors and related matters identical to the
provisions governing such matters contained in the USA Waste Restated
Certificate of Incorporation as of June 22, 1996. See "The Plan of Merger and
Terms of the Merger -- Indemnification and Insurance."
CONDITIONS TO THE MERGER
Certain Federal Income Tax Consequences. It is a condition precedent to the
closing of the Merger (i) that USA Waste receive an opinion of its counsel to
the effect that no gain or loss will be recognized by USA Waste or Acquisition
for U.S. federal income tax purposes as a result of the Merger and (ii) that
Sanifill receive an opinion of its counsel to the effect that, in general, no
gain or loss will be recognized by Sanifill or holders of Sanifill Common Stock
as a result of consummation of the Merger. See "The Merger and Related
Transactions -- Certain Federal Income Tax Consequences."
Accounting Treatment. It is a condition precedent to the closing of the
Merger that USA Waste and Sanifill receive letters from Coopers & Lybrand L.L.P.
and Arthur Andersen LLP, respectively, dated as of the Effective Time, affirming
the appropriateness of "pooling of interests" accounting for the Merger under
Accounting Principles Board Opinion No. 16 if consummated in accordance with the
Merger Agreement. See "The Merger and Related Transactions -- Accounting
Treatment."
Governmental and Regulatory Approvals. Consummation of the Merger is
conditioned upon the expiration or termination of the waiting period applicable
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"). On July 1, 1996, USA Waste and Sanifill filed notification reports
under the HSR Act with the Federal Trade Commission and the Antitrust Division
of the Department of Justice. The waiting period will expire at 11:59 p.m., on
July 31, 1996 unless extended or earlier terminated. See "The Merger and Related
Transactions -- Government and Regulatory Approvals." USA Waste and Sanifill are
aware of no other governmental or regulatory approvals required for consummation
of the Merger, other than as required to comply with applicable federal and
state securities laws and as may be required with respect to environmental
permits held by Sanifill subsidiaries in certain states that would deem the
Merger to be a transfer of those permits.
No Injunction Preventing Merger. Consummation of the Merger is subject to
the condition that no injunction or decree by any federal or state court that
prevents the consummation of the Merger shall have been issued and remain in
effect.
Other Conditions to the Merger. In addition to the approval and adoption of
the Merger Agreement by the requisite votes of USA Waste stockholders and
Sanifill stockholders and the satisfaction of the conditions described above,
the respective obligations of USA Waste and Sanifill to effect the Merger are
subject to the satisfaction or waiver, where permissible, of certain other
conditions, including, without limitation, (i) the shares of USA Waste Common
Stock issuable in the Merger and those to be reserved for issuance upon exercise
of stock options or warrants or the conversion of convertible securities shall
have been authorized for listing on the NYSE, subject to official notice of
issuance, and (ii) the Registration Statement shall have become effective and no
stop order suspending such effectiveness (or any proceeding for that purpose)
shall be in effect. It is also a condition to the implementation of the Merger
that Proposal No. 2 to amend USA Waste's Restated Certificate of Incorporation
to increase the number of authorized shares of USA Waste Common Stock to
300,000,0000 shares be approved by the stockholders of USA Waste. In addition,
the
5
<PAGE> 16
obligation of USA Waste to effect the Merger is subject to the receipt of
letters from affiliates of USA Waste and Sanifill to the effect that such
persons will not dispose of USA Waste Common Stock except pursuant to an
effective registration statement or in compliance with Rule 145 (or an otherwise
exempt transaction) and, in any case, until after the results covering 30 days
of post-Merger combined operations of USA Waste and Sanifill have been filed
with the Commission, sent to USA Waste's stockholders or otherwise publicly
issued. See "The Plan of Merger and Terms of the Merger -- Conditions to the
Merger."
NO SOLICITATION
The Merger Agreement provides that Sanifill will not, and will not permit
any of its subsidiaries to, initiate, solicit, negotiate, encourage or provide
non-public or confidential information to facilitate, and Sanifill will, and
will cause each of its subsidiaries to, cause any officer, director or employee,
or any attorney, accountant, investment banker, financial advisor or other agent
retained by it, not to initiate, solicit, negotiate, encourage or provide
non-public or confidential information to facilitate, any proposal or offer to
acquire all or any substantial part of the business and properties or any
capital stock of Sanifill (any such transaction being referred to as an
"Acquisition Transaction"). Notwithstanding the foregoing, Sanifill may, under
certain circumstances, furnish to a financially capable corporation,
partnership, person or other entity or group (a "Potential Acquirer")
confidential or non-public information concerning its business, properties or
assets in response to an unsolicited written proposal or indication of interest
with respect to a potential or proposed Acquisition Transaction. Sanifill may
negotiate with a Potential Acquirer if its Board of Directors, after consulting
with its legal counsel, determines in good faith that the failure to provide
such confidential or non-public information to or negotiate with such Potential
Acquirer would constitute a breach of the Board's fiduciary duty to Sanifill's
stockholders. See "The Merger Agreement and Terms of the Merger -- No
Solicitation of Acquisition Transactions."
TERMINATION OR AMENDMENT OF MERGER AGREEMENT
Termination. The Merger Agreement may be terminated under certain
circumstances, including (a) with the mutual written consent of USA Waste and
Sanifill or (b) by either USA Waste or Sanifill at any time prior to the
consummation of the Merger if (i) the Merger is not completed by December 31,
1996, for reasons other than delay on the part of the party requesting
termination (the "Terminating Party"), (ii) (x) the representations and
warranties of the non-Terminating Party shall fail to be true and correct in all
material respects on and as of the date made or, except in the case of any such
representations and warranties made as of a specified date, on and as of any
subsequent date as if made at and as of such subsequent date and (y) such
failure shall not have been cured within 30 days after written notice of such
failure is given to the non-Terminating Party by the Terminating Party, (iii)
the Merger is enjoined by a final, unappealable court order not entered at the
request or with the support of the party requesting termination, (iv) the non-
Terminating Party (x) fails to perform in any material respect any of its
material covenants in the Merger Agreement and (y) does not cure such default in
all material respects within 30 days after notice of such default is given to
the non-Terminating Party by the Terminating Party, or (v) the stockholders of
the non-Terminating Party fail to approve the Merger at a duly held meeting of
the stockholders called for such purpose or any adjournment thereof.
Additionally, Sanifill may terminate the Merger Agreement if (i) (x) Sanifill
receives an offer or proposal from any Potential Acquirer (excluding any
affiliate of Sanifill or any group of which any affiliate of Sanifill is a
member) with respect to a merger, sale of substantial assets or other business
combination involving Sanifill, (y) Sanifill's Board of Directors determines, in
good faith and after consultation with an independent financial advisor, that
such offer or proposal (if consummated pursuant to its terms) would result in an
Acquisition Transaction more favorable to Sanifill's stockholders than the
Merger (any such offer or proposal being referred to as a "Superior Proposal")
and resolves to accept such Superior Proposal and (z) Sanifill shall have given
USA Waste two days' prior written notice of its intention to terminate or (ii)
(x) a tender or exchange offer is commenced by a Potential Acquirer (excluding
any affiliate of Sanifill or any group of which any affiliate of Sanifill is a
member) for all outstanding shares of Sanifill Common Stock, (y) Sanifill's
Board of Directors determines, in good faith and after consultation with an
independent financial advisor, that such offer constitutes a Superior Proposal
and resolves to accept such Superior Proposal or recommend to the stockholders
that they tender their shares in such tender or exchange
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<PAGE> 17
offer and (z) Sanifill shall have given USA Waste two days' prior written notice
of its intention to terminate. Similarly, USA Waste may terminate the Merger
Agreement if the Board of Directors of Sanifill shall have resolved to accept a
Superior Proposal or shall have recommended to Sanifill's stockholders that they
tender their shares in a tender or an exchange offer commenced by a third party
(excluding any affiliate of USA Waste or any group of which any affiliate of USA
Waste is a member).
Amendment. The Merger Agreement may be amended or supplemented by an
instrument in writing signed on behalf of each party and in compliance with
applicable law. Such amendment may occur at any time before the Merger,
including after the Merger Agreement has been approved by the stockholders of
USA Waste and the stockholders of Sanifill at the Meetings. See "The Plan of
Merger and Terms of the Merger -- Termination or Amendment."
Termination Fees; Expenses. Under certain circumstances, USA Waste or
Sanifill may be required to pay the other a fee of $39 million upon termination
of the Merger Agreement. Certain expenses incurred in connection with this Joint
Proxy Statement and Prospectus will be shared equally by USA Waste and Sanifill.
All other costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated thereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated. See "The Plan of Merger
and Terms of the Merger -- Termination Fees" and "-- Expenses."
NO APPRAISAL OR DISSENTERS' RIGHTS
Delaware law does not require that holders of USA Waste Common Stock or
Sanifill Common Stock who object to the Merger and who vote against or abstain
from voting in favor of the Merger be afforded any appraisal or dissenters'
rights or the right to receive cash for their shares. Neither USA Waste nor
Sanifill intends to make available any such rights to its stockholders.
STOCKHOLDERS' COMPARATIVE RIGHTS
The rights of stockholders of Sanifill are currently governed by Delaware
law, the Sanifill Certificate of Incorporation and the Sanifill Bylaws. The
rights of stockholders of USA Waste are governed by Delaware law and the USA
Waste Restated Certificate of Incorporation and the USA Waste Bylaws. Upon
consummation of the Merger, stockholders of Sanifill will become stockholders of
USA Waste and, as such, their rights thereafter will be governed by Delaware
law, the USA Waste Restated Certificate of Incorporation and the USA Waste
Bylaws. See "Comparison of Rights of Stockholders of USA Waste and Sanifill."
7
<PAGE> 18
MARKET PRICE DATA
USA Waste Common Stock is traded on the NYSE under the symbol "UW."
Sanifill Common Stock is traded on the NYSE under the symbol "FIL." The
following table sets forth the range of high and low sale prices for USA Waste
Common Stock and Sanifill Common Stock as reported on the NYSE for the calendar
quarters indicated.
<TABLE>
<CAPTION>
USA WASTE SANIFILL
COMMON STOCK COMMON STOCK
-------------- ---------------
HIGH LOW HIGH LOW
---- ---- ---- ----
<S> <C> <C> <C> <C>
1994
First Quarter..................................... $ 15 $ 11 3/8 $ 25 $ 20 1/2
Second Quarter.................................... 13 3/8 10 3/8 25 5/8 20
Third Quarter..................................... 15 1/8 11 1/2 25 1/2 21 1/2
Fourth Quarter.................................... 15 1/8 11 25 20 1/2
1995
First Quarter..................................... $ 12 3/8 $ 10 $ 27 $ 22 3/8
Second Quarter.................................... 16 5/8 11 1/2 31 5/8 24
Third Quarter..................................... 21 7/8 14 5/8 34 1/8 29 3/4
Fourth Quarter.................................... 22 1/2 17 34 29 1/8
1996
First Quarter..................................... $ 25 5/8 $ 17 1/4 $ 39 1/4 $ 33
Second Quarter.................................... 32 1/2 24 50 1/8 37 7/8
Third Quarter (through July 18)................... 30 23 49 7/8 38
</TABLE>
On June 21, 1996, the last trading day prior to announcement by USA Waste
and Sanifill that they had reached an agreement concerning the Merger, the
closing sale price of USA Waste Common Stock as reported on the NYSE was $27 1/4
per share, and the closing sale price of Sanifill Common Stock as reported on
the NYSE was $47 7/8 per share. The equivalent per share price of Sanifill
Common Stock on June 21, 1996, calculated by multiplying the closing sale price
of USA Waste Common Stock on the same date by the Exchange Ratio, was $47.3875.
On July 18, 1996, the closing sale price of USA Waste Common Stock as
reported on the NYSE was $27 1/4 per share, and the closing sale price of
Sanifill Common Stock as reported on the NYSE was $45 7/8 per share. Following
the Merger, USA Waste Common Stock will continue to be traded on the NYSE under
the symbol "UW," and the listing of Sanifill Common Stock on the NYSE will be
terminated.
8
<PAGE> 19
SUMMARY FINANCIAL INFORMATION
SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data of USA Waste for each of
the three years in the period ended December 31, 1995 were derived from USA
Waste's audited supplemental consolidated financial statements and for the three
months ended March 31, 1995 and 1996, were derived from USA Waste's unaudited
supplemental consolidated financial statements. These supplemental consolidated
financial statements have been prepared to give retroactive effect to USA
Waste's merger with Western Waste Industries on May 7, 1996 using the "pooling
of interests" method of accounting for business combinations. The following
summary historical consolidated financial data of Sanifill for the three years
ended December 31, 1995 were derived from Sanifill's historical consolidated
audited financial statements and for the three months ended March 31, 1995 and
1996 were derived from Sanifill's historical unaudited consolidated financial
statements. Such unaudited data for USA Waste and Sanifill include all
adjustments, consisting of normal recurring accruals, which their respective
managements consider necessary to present fairly the information for such
periods. The financial data is not necessarily indicative of results to be
expected after the Merger is consummated. The financial data should be read in
conjunction with the separate audited and unaudited consolidated financial
statements and the notes thereto incorporated by reference herein.
USA WASTE SERVICES, INC.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31
------------------------------------------ --------------------------
1993 1994 1995 1995 1996
------------- ------------- ---------- ------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues........................ $ 639,239 $ 705,165 $ 731,000 $ 168,880 $ 201,525
------------- ------------- ---------- ------------- ----------
Costs and expenses:
Operating............................... 388,727 428,701 428,331 101,450 118,101
General and administrative.............. 104,121 108,885 101,268 26,163 24,743
Depreciation and amortization........... 74,223 83,044 83,519 19,343 21,874
Merger costs............................ -- 3,782 25,073 -- --
Unusual items........................... 2,672 8,863 4,733 693 --
------------- ------------- ---------- ------------- ----------
569,743 633,275 642,924 147,649 164,718
------------- ------------- ---------- ------------- ----------
Income from operations.................... 69,496 71,890 88,076 21,231 36,807
------------- ------------- ---------- ------------- ----------
Other income (expense):
Stockholder litigation settlement and
other litigation related costs........ (5,500) (79,400) -- -- --
Interest expense:
Nonrecurring interest................. -- (1,254) (10,994) (3,512) --
Other................................. (39,809) (38,153) (35,437) (9,687) (6,765)
Interest income......................... 4,338 4,183 4,222 1,253 1,721
Other income, net....................... 1,148 1,249 3,220 1,069 567
------------- ------------- ---------- ------------- ----------
(39,823) (113,375) (38,989) (10,877) (4,477)
------------- ------------- ---------- ------------- ----------
Income (loss) before income taxes......... 29,673 (41,485) 49,087 10,354 32,330
Provision for income taxes................ 16,112 17,610 1,744 5,816 5,558
------------- ------------- ---------- ------------- ----------
Net income (loss)......................... 13,561 (59,095) 47,343 4,538 26,772
Preferred dividends....................... 582 565 -- -- --
------------- ------------- ---------- ------------- ----------
Income (loss) from continuing operations
available to common stockholders........ $ 12,979 $ (59,660) $ 47,343 $ 4,538 $ 26,772
============= ============= ========== ============= ==========
Income (loss) from continuing operations
available to common stockholders per
common share............................ $ 0.19 $ (0.82) $ 0.60 $ 0.06 $ 0.29
============= ============= ========== ============= ==========
Weighted average number of common and
common equivalent shares outstanding.... 68,457 72,968 78,912 74,305 93,281
============= ============= ========== ============= ==========
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital........................... $ 46,392 $ 10,687 $ 33,525 $ 30,350 $ 54,750
Intangible assets, net.................... 99,419 118,469 142,791 120,459 147,203
Total assets.............................. 1,030,038 1,075,508 1,190,364 1,085,880 1,262,990
Long-term debt, including current
maturities.............................. 496,190 490,904 450,840 513,345 487,813
Stockholders' equity...................... 360,152 321,089 557,387 315,735 597,792
</TABLE>
9
<PAGE> 20
SANIFILL, INC.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------ --------------------------
1993 1994 1995 1995 1996
------------- ------------- ---------- ------------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (Restated)(1) (Restated)(1) (Restated)(1)
Revenues.................................. $ 139,727 $ 192,479 $ 256,705 $ 54,064 $ 81,000
Cost of operations........................ 90,397 122,274 160,088 35,038 51,895
------------- ------------- ---------- ------------- ----------
Gross profit............................ 49,330 70,205 96,617 19,026 29,105
Selling, general and administrative
expenses................................ 22,599 30,633 39,669 8,118 12,247
Pooling costs............................. -- -- 566
------------- ------------- ---------- ------------- ----------
Operating income........................ 26,731 39,572 56,382 10,908 16,858
Interest expense.......................... 6,223 9,525 13,121 2,903 4,462
Interest income........................... (497) (487) (1,260) (226) (209)
Other income, net......................... (13) (1,321) (1,923) (328) (648)
------------- ------------- ---------- ------------- ----------
Income before income taxes.............. 21,018 31,855 46,444 8,559 13,253
Income taxes.............................. 8,048 12,622 18,531 3,387 5,301
------------- ------------- ---------- ------------- ----------
Net income.............................. $ 12,970 $ 19,233 $ 27,913 $ 5,172 $ 7,952
========== ========== ======== ========== ========
Earnings per common and common equivalent
share................................... $ 0.80 $ 1.07 $ 1.38 $ 0.28 $ 0.35
========== ========== ======== ========== ========
Weighted average number of common and
common equivalent shares outstanding.... 16,118 17,914 20,216 18,626 22,989
========== ========== ======== ========== ========
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital (deficit)................. $ (587) $ (716) $ (3,416) $ 9,849 $ (416)
Intangible assets, net.................... 52,738 66,597 119,414 71,962 136,865
Total assets.............................. 420,918 510,865 775,929 543,080 934,379
Long-term debt, including current
maturities.............................. 154,141 197,769 280,901 212,342 373,478
Stockholders' equity...................... 148,245 182,115 315,591 196,738 377,177
</TABLE>
- ---------------
(1) Restated to give effect to the merger of Metropolitan Disposal and Recycling
Corporation, which closed in May 1995, using the "pooling of interests"
method of accounting.
10
<PAGE> 21
SUMMARY COMBINED UNAUDITED PRO FORMA CONDENSED
FINANCIAL INFORMATION
The following summary combined unaudited pro forma condensed financial
information of USA Waste and Sanifill gives effect to the Merger under the
"pooling of interests" method of accounting as if the Merger had been
consummated as of the beginning of the periods presented. The pro forma
information for the years ended December 31, 1993, 1994 and 1995 was prepared
based on the audited supplemental and audited historical financial information
of USA Waste and Sanifill, respectively, for such years. The pro forma
information for the three months ended March 31, 1995 and 1996 was prepared
based on the unaudited supplemental and unaudited historical financial
information of USA Waste and Sanifill, respectively, for such periods. In
addition to the pro forma adjustments in the combined unaudited pro forma
condensed financial statements (which in effect are a restatement of the
financial statements as if the Merger were consummated), the impact of certain
transactions occurring in 1995 and 1996 is presented supplementally. This
supplementally provided information does not include the impact of certain cost
and expense savings and other economic benefits that are expected to be realized
as a result of the Merger or additional cost reductions relating to landfill and
collection operations or additional revenues that may result from volume or
price increases. See "Supplementally Provided Information Relating to Combined
Unaudited Pro Forma Condensed Financial Statements."
<TABLE>
<CAPTION>
USA WASTE AND SANIFILL
COMBINED UNAUDITED PRO FORMA SUPPLEMENTALLY
CONDENSED FINANCIAL INFORMATION PROVIDED INFORMATION
---------------------------------------------- ---------------------------
THREE MONTHS THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED YEAR ENDED ENDED
------------------------------- MARCH 31, DECEMBER 31, MARCH 31,
1993 1994 1995 1996 1995 1996
-------- --------- -------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Operating revenues................. $778,966 $ 897,644 $987,705 $282,525 $1,178,126 $307,757
-------- --------- -------- -------- ---------- --------
Costs and expenses:
Operating........................ 455,282 520,255 551,305 158,956 672,438 174,794
General and administrative....... 126,347 138,819 140,051 36,704 169,291 40,042
Depreciation and amortization.... 96,861 112,860 119,570 32,701 140,785 35,643
Merger costs..................... -- 3,782 25,639 -- 25,639 --
Unusual items.................... 2,672 8,863 4,733 -- 4,733 --
-------- --------- -------- -------- ---------- --------
681,162 784,579 841,298 228,361 1,012,886 250,479
-------- --------- -------- -------- ---------- --------
Income from operations............. 97,804 113,065 146,407 54,164 165,240 57,278
-------- --------- -------- -------- ---------- --------
Other income (expense):
Stockholder litigation settlement
and other litigation related
costs.......................... (5,500) (79,400) -- -- -- --
Interest expense:
Nonrecurring interest.......... -- (1,254) (10,994) -- (10,994) --
Other.......................... (46,032) (47,678) (48,558) (11,227) (47,307) (11,761)
Interest income.................. 4,835 4,670 5,482 1,930 6,271 1,930
Other income, net................ 1,161 2,570 5,143 1,215 5,838 1,566
-------- --------- -------- -------- ---------- --------
(45,536) (121,092) (48,927) (8,082) (46,192) (8,265)
-------- --------- -------- -------- ---------- --------
Income (loss) before income
taxes............................ 52,268 (8,027) 97,480 46,082 119,048 49,013
Provision for (benefit from) income
taxes............................ 30,317 (19,315) 64,437 18,433 70,433 19,606
-------- --------- -------- -------- ---------- --------
Income from continuing
operations....................... 21,951 11,288 33,043 27,649 48,615 29,407
Preferred dividends................ 582 565 -- -- -- --
-------- --------- -------- -------- ---------- --------
Income from continuing operations
available to common
stockholders..................... $ 21,369 $ 10,723 $ 33,043 $ 27,649 $ 48,615 $ 29,407
======== ========= ======== ======== ========== ========
Income from continuing operations
available to common stockholders
per common share................. $ 0.22 $ 0.10 $ 0.29 $ 0.21 $ 0.37 $ 0.21
======== ========= ======== ======== ========== ========
Weighted average shares
outstanding...................... 95,858 103,422 113,279 132,362 131,131 136,906
======== ========= ======== ======== ========== ========
</TABLE>
11
<PAGE> 22
<TABLE>
<CAPTION>
COMBINED UNAUDITED
PRO FORMA CONDENSED SUPPLEMENTALLY
FINANCIAL PROVIDED
INFORMATION AS OF INFORMATION AS OF
MARCH 31, 1996 MARCH 31, 1996
------------------- -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit).......................................... $ 54,334 $ 48,298
Intangible assets, net............................................. 284,068 326,819
Total assets....................................................... 2,157,901 2,190,285
Long-term debt, including current maturities....................... 861,291 929,044
Stockholders' equity............................................... 1,005,759 965,294
</TABLE>
COMPARATIVE UNAUDITED PER SHARE DATA
The following table sets forth (a) the income (loss) from continuing
operations available to common stockholders per common share and the book value
per share of USA Waste Common Stock, (b) the income from continuing operations
per common share and the book value per share of Sanifill Common Stock, (c) the
combined unaudited pro forma income from continuing operations available to
common stockholders per common share and the unaudited pro forma book value per
share data of USA Waste Common Stock after giving effect to the Merger on a
pooling of interests basis with Sanifill and (d) the Sanifill equivalent
combined unaudited pro forma income from continuing operations per common share
and the unaudited pro forma book value per share attributable to 1.70 shares of
USA Waste Common Stock that will be received by Sanifill stockholders for each
share of Sanifill Common Stock. The information presented in the table should be
read in conjunction with the combined unaudited pro forma condensed financial
statements and the separate consolidated financial statements of USA Waste and
Sanifill and the notes thereto appearing elsewhere herein or incorporated by
reference in this Joint Proxy Statement and Prospectus. In addition to the pro
forma adjustments in the combined unaudited pro forma condensed financial
statements (which in effect are a restatement of the financial statements as if
the Merger were consummated), the impact of certain transactions occurring in
1995 and 1996 is presented supplementally. See "USA Waste and Sanifill Combined
Unaudited Pro Forma Condensed Financial Statements."
<TABLE>
<CAPTION>
SUPPLEMENTALLY
PRO FORMA PROVIDED INFORMATION
--------------------- ---------------------
SANIFILL SANIFILL
EQUIVALENT EQUIVALENT
USA WASTE SANIFILL COMBINED COMBINED COMBINED COMBINED
--------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations available to common
stockholders per common share:
Years ended December 31:
1993............................. $ 0.19 $ 0.80 $ 0.22 $ 0.37 NA NA
1994............................. (0.82) 1.07 0.10 0.17 NA NA
1995............................. 0.60 1.38 0.29 0.49 0.37 0.63
Book value per share:
March 31, 1996................... $ 6.68 $ 16.19 $ 7.79 $13.24 $ 7.33 $12.46
</TABLE>
12
<PAGE> 23
ADDITIONAL PROPOSAL TO BE PRESENTED AT THE USA WASTE SPECIAL MEETING
At the USA Waste Special Meeting, stockholders of USA Waste will also be
asked to consider and act upon a proposal to approve an amendment to the USA
Waste Restated Certificate of Incorporation to increase the number of authorized
shares of USA Waste Common Stock to 300,000,000 shares. The Board of Directors
of USA Waste believes that this amendment to increase the number of authorized
shares of USA Waste Common Stock is necessary in order to ensure that (i) there
will be sufficient authorized, unissued and unreserved shares of USA Common
Stock available to effect the Merger (and reserve shares for issuance pursuant
to the Sanifill Options, the Sanifill Warrants and the Sanifill Convertible
Debentures) and (ii) after the Merger, USA Waste will have shares available for
issuance at the Board of Directors' discretion for future acquisitions, stock
splits, stock dividends, equity financings, employee benefit plans and other
corporate purposes. The implementation of the Merger is conditioned on, among
other things, the adoption of this proposal.
Proposal No. 2. To approve an amendment to the Restated Certificate of
Incorporation of USA Waste to increase the authorized shares of USA Waste Common
Stock from 150,000,000 to 300,000,000 shares. THE BOARD OF DIRECTORS OF USA
WASTE RECOMMENDS THAT THE STOCKHOLDERS OF USA WASTE VOTE FOR THE AMENDMENT.
13
<PAGE> 24
RISK FACTORS
In addition to the other information set forth in this Joint Proxy
Statement and Prospectus, the following factors should be considered by the USA
Waste stockholders and the Sanifill stockholders before voting on the proposals
herein.
FORWARD-LOOKING STATEMENTS MAY NOT PROVE ACCURATE
When used or incorporated by reference in this Joint Proxy Statement and
Prospectus, the words "anticipate," "estimate," "expect," "project" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks, uncertainties and assumptions. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
estimated, expected or projected.
Among the key factors that have a direct bearing on USA Waste's ability to
attain its goals are the level and nature of competition from other waste
companies, evaluation of the current regulatory environment and the costs
associated with such regulations, the availability of attractive acquisition
opportunities, successful integration of acquired businesses, improvement of
operating efficiencies, availability of working capital, ability to maintain
margins and the management of costs in a changing regulatory environment. USA
Waste has also made certain assumptions relating to the outcome of various
commercial, legal and regulatory proceedings relating to USA Waste's operations
and the industry generally. These and other risk factors are discussed below.
EXPECTED BENEFITS OF COMBINED BUSINESS MAY NOT BE ACHIEVED
There can be no assurance that the expected benefits of the Merger relative
to the combined business as described under "The Merger and Related
Transactions -- USA Waste's Reasons for the Merger" and "The Merger and Related
Transactions -- Sanifill's Reasons for the Merger" will be achieved. Whether the
anticipated benefits of the Merger are ultimately achieved will depend on a
number of factors, including the ability of the combined companies to achieve
administrative cost savings, rationalization of collection routes, insurance and
bonding cost reductions, general economies of scale and, generally, to
capitalize on the combined asset base and strategic position of the combined
entity.
STOCK PRICES MAY VARY IN RESPONSE TO CHANGES IN BUSINESS AND ECONOMIC CONDITIONS
The relative stock prices of USA Waste Common Stock and Sanifill Common
Stock at the Effective Time may vary significantly from the prices as of the
date of execution of the Merger Agreement or the date hereof or the date on
which stockholders vote on the Merger due to, among other factors, changes in
the business, operations and prospects of USA Waste or Sanifill, market
assessments of the likelihood that the Merger will be consummated and the timing
thereof and general market and economic conditions. The Exchange Ratio is fixed
and will not be adjusted based on changes in the relative stock prices of USA
Waste Common Stock and Sanifill Common Stock.
NO ASSURANCE OF SUCCESSFUL MANAGEMENT AND MAINTENANCE OF GROWTH
USA Waste has experienced rapid growth, primarily through acquisitions. USA
Waste's financial results and prospects depend in large part on its ability to
successfully manage and improve the operating efficiencies and productivity of
these acquired operations. In particular, there can be no assurance that USA
Waste will be able to successfully integrate the operations of Western Waste
Industries, USA Waste's most recent large acquisition (the "Western Merger"), or
that USA Waste will be able to successfully integrate the operations of Sanifill
if the Merger is consummated. Moreover, the ability of USA Waste to continue to
grow will depend on a number of factors, including competition from other waste
management companies, availability of attractive acquisition opportunities,
availability of working capital, ability to maintain margins and the management
of costs in a changing regulatory environment. USA Waste is continually seeking
acquisition opportunities and believes that there exist a substantial number of
potentially attractive consolidation opportunities in the solid waste management
industry. USA Waste may pursue significant acquisitions if they
14
<PAGE> 25
can be achieved on acceptable terms. There can be no assurance that USA Waste
will be able to continue to expand and successfully integrate operations.
NEED FOR CAPITAL; DEBT FINANCING
The long-term debt of the combined company, including current maturities,
on a pro forma basis as of March 31, 1996 was approximately $861.3 million. See
"USA Waste and Sanifill Combined Unaudited Pro Forma Condensed Financial
Statements." USA Waste expects to require additional capital from time to time
to pursue its acquisition strategy and to fund internal growth. A portion of USA
Waste's future capital requirements may be provided through future debt
incurrences or issuances of equity securities. There can be no assurance that
USA Waste will be successful in obtaining additional capital through such debt
incurrences or issuances of additional equity securities.
In addition, approximately $488 million of USA Waste's existing
indebtedness at March 31, 1996 and approximately $52 million of Sanifill's
existing indebtedness at March 31, 1996 is priced at variable interest rates
that fluctuate as general interest rates change. Approximately $149 million of
USA Waste's variable indebtedness is subject to interest rate swap agreements
which fix the interest rate on $125 million of such indebtedness through August
1998 and the remainder through October 2000. As a result, an increase in
interest rates could adversely affect USA Waste's earnings in the future.
PROFITABILITY MAY BE AFFECTED BY COMPETITION
The waste management industry is highly competitive and requires
substantial capital resources. The industry consists of a few large national
waste management companies, as well as numerous local and regional companies of
varying sizes and financial resources. The two largest national waste management
companies have significantly greater financial resources than would the combined
company after the Merger. Competition may also be affected by the increasing
national emphasis on recycling, composting, incineration and other waste
reduction programs that could reduce the volume of solid waste collected or
deposited in landfills.
POTENTIAL ADVERSE EFFECT OF GOVERNMENT REGULATION
USA Waste's operations are, and the combined company's operations will be,
subject to, and substantially affected by, extensive federal, state and local
laws, regulations, orders and permits, which govern environmental protection,
health and safety, zoning and other matters. These regulations may impose
restrictions on operations that could adversely affect the combined company's
results, such as limitations on the expansion of disposal facilities,
limitations on or the banning of disposal of out-of-state waste or certain
categories of waste or mandates regarding the disposal of solid waste. Because
of heightened public concern, companies in the waste management business may
become subject to judicial and administrative proceedings involving federal,
state or local agencies. These governmental agencies may seek to (i) impose
fines on the combined company, (ii) revoke or deny renewal of operating permits
or licenses for violations of environmental laws or regulations or (iii) require
remediation of environmental problems at sites or nearby properties, or
resulting from transportation or predecessors' transportation and collection
operations, any of which could have a material adverse effect on the combined
company. Liability may also arise from actions brought by individuals or
community groups in connection with the permitting or licensing of operations,
any alleged violations of such permits and licenses or other matters.
POTENTIAL ENVIRONMENTAL LIABILITY
USA Waste is, and the combined company will be, subject to liability for
environmental damage that its landfills, transfer stations and collection
operations have caused or may cause nearby landowners, particularly as a result
of the contamination of drinking water sources or soil, including damage
resulting from conditions existing prior to the acquisition of such assets or
operations. Liability may also arise from any off-site environmental
contamination caused by pollutants or hazardous substances, the transportation,
treatment or disposal of which was arranged for by USA Waste, Sanifill or their
predecessor owners of operations or assets
15
<PAGE> 26
acquired by such companies. Any substantial liability for environmental damage
could materially adversely affect operating results and financial condition.
SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT MARKET PRICE OF STOCK
Sales of substantial amounts of USA Waste Common Stock in the public market
could adversely affect the market price of such stock. USA Waste currently has a
shelf registration statement for the benefit of certain stockholders relating to
4 million shares of USA Waste Common Stock. In connection with the Merger, USA
Waste entered into an agreement with these stockholders which provides that if
the number of shares of USA Waste Common Stock so registered and unsold falls
below 2 million shares, such stockholders shall be entitled at their request to
have the Company register additional shares of USA Waste Common Stock; provided
that at no time shall more than 4 million shares of USA Waste Common Stock be
registered. All of the initial 4 million shares of USA Waste Common Stock remain
available to be sold pursuant to such registration statement. Such shares are
immediately saleable in the open market. In addition, USA Waste has a shelf
registration statement covering approximately 2.5 million shares of USA Waste
Common Stock that may be used for acquisitions and anticipates filing a shelf
registration statement in the near future covering the sale of approximately
130,000 shares of USA Waste Common Stock by certain stockholders. In the event
that the market price of USA Waste Common Stock were adversely affected by such
sales, USA Waste's access to equity capital markets could be adversely affected,
and issuances of stock by USA Waste in connection with acquisitions, or
otherwise, could dilute earnings per share.
16
<PAGE> 27
THE MEETINGS
DATE, TIME AND PLACE OF THE MEETINGS
The USA Waste Special Meeting will be held at 2:00 p.m., Central time, on
August 27, 1996, at The Four Seasons Hotel, 1300 Lamar Street, Houston, Texas.
The Sanifill Special Meeting will be held at 11:00 a.m., Central time, on August
27, 1996, at The Four Seasons Hotel, 1300 Lamar Street, Houston, Texas.
PURPOSE OF THE MEETINGS
The purpose of the USA Waste Special Meeting is to consider and act upon
proposals to (i) approve and adopt the Merger Agreement ("Proposal No. 1") and
(ii) amend the USA Waste Restated Certificate of Incorporation to increase the
number of authorized shares of USA Waste Common Stock ("Proposal No. 2"). The
implementation of Proposal No. 1 is conditioned on the approval of Proposal No.
2. USA Waste stockholder approval of the Merger is required in accordance with
the rules of the NYSE since the USA Waste Common Stock to be issued in
connection with the Merger will be in excess of 20% of the number of shares of
USA Waste Common Stock outstanding before such issuance.
The sole purpose of the Sanifill Special Meeting is to consider and act
upon a proposal to approve and adopt the Merger Agreement.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of USA Waste Common Stock and Sanifill Common Stock
at the close of business on the Record Date are entitled to notice of, and to
vote at, the USA Waste Special Meeting and the Sanifill Special Meeting,
respectively.
On the Record Date, there were 3,846 holders of record of USA Waste Common
Stock with 89,176,731 shares of USA Waste Common Stock issued and outstanding.
Each share of USA Waste Common Stock entitles the holder thereof to one vote on
each matter submitted for stockholder approval. See "Principal Stockholders of
USA Waste and Sanifill" for information regarding persons known to management of
USA Waste to be the beneficial owners of more than 5% of the outstanding shares
of USA Waste Common Stock.
On the Record Date, there were 349 holders of record of Sanifill Common
Stock with 25,376,281 shares of Sanifill Common Stock issued and outstanding.
Each share of Sanifill Common Stock entitles the holder thereof to one vote on
each matter submitted for stockholder approval. See "Principal Stockholders of
USA Waste and Sanifill" for information regarding persons known to management of
Sanifill to be the beneficial owners of more than 5% of the outstanding shares
of Sanifill Common Stock.
If a share is represented for any purpose at a Meeting, it is deemed to be
present for all other matters. Abstentions and shares held of record by a broker
or its nominee that are voted on any matter are included in determining the
number of votes present. Broker non-votes on any matter will not be included in
determining whether a quorum is present. In all cases, shares with respect to
which authority to vote is withheld, abstentions and broker non-votes will not
be included in determining the number of votes cast.
VOTING AND REVOCATION OF PROXIES
All properly executed proxies that are not revoked will be voted at the USA
Waste Special Meeting or the Sanifill Special Meeting, as applicable, in
accordance with the instructions contained therein. If a holder of USA Waste
Common Stock executes and returns a proxy and does not specify otherwise, the
shares represented by such proxy will be voted FOR (i) approval and adoption of
the Merger Agreement and (ii) approval of the amendment to the USA Waste
Restated Certificate of Incorporation to increase the number of authorized
shares of USA Waste Common Stock. If a holder of Sanifill Common Stock executes
and returns a proxy and does not specify otherwise, the shares represented by
such proxy will be voted FOR approval and adoption of the Merger Agreement. A
stockholder of USA Waste or Sanifill who has executed and returned a proxy may
revoke it at any time before it is voted at the respective meeting by (a)
executing and returning a
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proxy bearing a later date, (b) filing a written notice of such revocation with
the Secretary of USA Waste or Sanifill, as appropriate, stating that the proxy
is revoked or (c) attending the meeting and voting in person.
VOTE REQUIRED FOR APPROVAL
USA Waste. Insofar as adoption of the Merger Agreement and the amendment of
the USA Waste Restated Certificate of Incorporation are concerned, USA Waste's
Bylaws provide that the presence at the USA Waste Special Meeting, in person or
by proxy, of holders of a majority of the outstanding shares of USA Waste Common
Stock entitled to vote at the meeting will constitute a quorum for the
transaction of business. Under the rules of the NYSE, approval of the Merger
requires the affirmative vote of the holders of a majority of the shares of USA
Waste Common Stock voted, in person or by proxy, at the USA Waste Special
Meeting provided that the total vote cast on the proposal represents over 50% in
interest of all shares entitled to vote on the proposal. For purposes of the
Merger proposal, abstentions and broker non-votes will not count as shares
voted. At the close of business on the Record Date, there were approximately
89.2 million shares of USA Waste Common Stock outstanding and entitled to vote
at the USA Waste Special Meeting. On the Record Date, the directors and
executive officers of USA Waste and their affiliates held approximately 20
million shares of USA Waste Common Stock, representing approximately 22.5% of
the outstanding shares. Such persons have indicated to USA Waste that they
intend to vote their shares in favor of approval and adoption of the Merger
Agreement. See "Principal Stockholders of USA Waste and Sanifill." For
information relating to certain voting agreements entered into in connection
with the Merger Agreement, see "The Plan of Merger and Terms of the
Merger -- Voting Agreements."
Approval of the amendment to USA Waste's Restated Certificate of
Incorporation requires the affirmative vote of the holders of a majority of the
outstanding shares of USA Waste Common Stock entitled to vote on such proposal.
Abstentions from the proposal to amend USA Waste's Restated Certificate of
Incorporation as well as broker non-votes and the failure of USA Waste
stockholders to sign and return their proxy will each have the same effect as
voting against such proposal.
Sanifill. Insofar as adoption of the Merger Agreement is concerned,
Sanifill's Bylaws provide that the presence at the Sanifill Special Meeting, in
person or by proxy, of holders of a majority of the issued and outstanding
shares of Sanifill Common Stock entitled to vote at the meeting will constitute
a quorum for the transaction of business. At the close of business on the Record
Date, there were approximately 25.4 million shares of Sanifill Common Stock
outstanding and entitled to vote at the Sanifill Special Meeting. Pursuant to
Delaware law and the provisions of the Certificate of Incorporation of Sanifill,
approval and adoption of the Merger Agreement requires the affirmative vote of
the holders of a majority of the shares of Sanifill Common Stock outstanding on
the Record Date, or approximately 12.7 million shares. On the Record Date, the
directors and executive officers of Sanifill and their affiliates held
approximately 1.4 million shares of Sanifill Common Stock, representing
approximately 5.5% of the outstanding voting power. Such persons have indicated
to Sanifill that they intend to vote their shares in favor of approval and
adoption of the Merger Agreement. See "Principal Stockholders of USA Waste and
Sanifill." For information relating to certain voting agreements entered into in
connection with the Merger Agreement, see "The Plan of Merger and Terms of the
Merger -- Voting Agreements."
SOLICITATION OF PROXIES
In addition to solicitation by mail, the directors, officers and employees
of each of USA Waste and Sanifill may solicit proxies from their respective
stockholders by personal interview, telephone, telegram, facsimile or otherwise.
USA Waste and Sanifill will each bear the costs of the solicitation of proxies
from their respective stockholders, except that USA Waste and Sanifill will
share equally the cost of printing this Joint Proxy Statement and Prospectus.
USA Waste has engaged Corporate Investor Communications, Inc., a proxy
solicitation firm, to assist in the solicitation of proxies of USA Waste
stockholders. USA Waste will pay the fees in connection with the solicitation by
such firm which are anticipated to be $5,000 plus such firm's out-of-pocket
expenses. Sanifill has engaged Morrow & Co., a proxy solicitation firm, to
assist in the solicitation of proxies from Sanifill stockholders. Sanifill will
pay the fees in connection with the solicitation by such firm which are
anticipated to be $5,000 (plus additional charges if such firm is requested to
contact non-objecting
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beneficial owners), plus such firm's out-of-pocket expenses. Arrangements will
be made with brokerage firms and other custodians, nominees and fiduciaries who
hold the voting securities of record for the forwarding of solicitation
materials to the beneficial owners thereof. USA Waste and Sanifill will
reimburse brokers, custodians, nominees and fiduciaries for the reasonable
out-of-pocket expenses incurred by them in connection therewith.
THE MERGER AND RELATED TRANSACTIONS
The detailed terms and conditions relating to the consummation of the
Merger are contained in the Merger Agreement, which is attached hereto as Annex
A and incorporated herein by reference. The following discussion sets forth a
description of certain material terms and conditions of the Merger Agreement.
The description in this Joint Proxy Statement and Prospectus of the terms and
conditions relating to the consummation of the Merger is qualified in its
entirety by reference to the Merger Agreement.
GENERAL DESCRIPTION OF THE MERGER
The Merger Agreement provides that, at the Effective Time, Acquisition will
merge with and into Sanifill, whereupon Sanifill will become a wholly owned
subsidiary of USA Waste and each outstanding share of Sanifill Common Stock
(other than shares of Sanifill Common Stock held by USA Waste) will be converted
into 1.70 shares of USA Waste Common Stock.
Based upon the number of shares of USA Waste Common Stock and Sanifill
Common Stock outstanding as of the Record Date, approximately 132.3 million
shares of USA Waste Common Stock are expected to be outstanding immediately
following the Effective Time, of which approximately 43.1 million shares,
representing approximately 33% of the total, will be held by former holders of
Sanifill Common Stock.
BACKGROUND OF THE MERGER
In June 1994, Mr. John E. Drury, USA Waste's Chief Executive Officer, met
with Mr. Lorne D. Bain, Chairman of the Board and Chief Executive Officer of
Sanifill, in Houston, Texas to discuss the possibility of a strategic alliance
between USA Waste and Sanifill as part of USA Waste's strategy of expanding its
waste management services through selective acquisitions of waste management
operations that complemented existing operations or otherwise contributed to USA
Waste's participation in the consolidation trend within the solid waste
management industry. No economic terms of any potential combination were
discussed at this meeting. In August 1994, Mr. Drury once again met with Mr.
Bain to resume a general discussion concerning a possible merger of USA Waste
and Sanifill. Shortly after this meeting, discussions between USA Waste and
Sanifill were discontinued.
In January 1996, Mr. Rodney R. Proto, Sanifill's Chief Operating Officer,
was Mr. Drury's guest at a social engagement at which Mr. Drury suggested that
the parties again discuss the potential for a combination of USA Waste and
Sanifill. On April 8, 1996, at Mr. Drury's request, Messrs. Drury and Bain met
in Houston, Texas. At this meeting, Mr. Drury expressed USA Waste's continuing
interest in the possibility of combining USA Waste and Sanifill. Messrs. Drury
and Bain discussed, among other things, recent developments in the waste
management industry, including USA Waste's acquisition of Chambers Development
Company, Inc. ("Chambers"), completed in June 1995, and USA Waste's then-pending
acquisition of Western Waste Industries ("Western"), the management teams of the
two companies and possible synergies that might result from a combination of USA
Waste and Sanifill. Following this meeting, Mr. Drury sent to Mr. Bain certain
information concerning USA Waste's completed acquisition of Chambers and
then-pending acquisition of Western.
On April 30, 1996, Messrs. Drury, Proto and Bain met in Houston, Texas to
discuss the operations of USA Waste and Sanifill and potential synergies which
could result from a combination of the companies' operations.
On June 3, 1996, Messrs. Drury, Donald F. Moorehead, Vice Chairman and
Chief Development Officer of USA Waste, Bain and Proto met in Houston, Texas to
continue the discussion of potential synergies that
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could result from a combination of the two companies' operations and to discuss
potential terms for a combination of USA Waste and Sanifill. On June 7, 1996,
these same individuals, as well as Mr. Earl E. DeFrates, USA Waste's Executive
Vice President and Chief Financial Officer, met in Houston, Texas to continue
their discussions and to consider more specifically the synergies of combining
the companies' operations. The next morning, the same parties met to discuss
potential exchange ratios for a stock-for-stock transaction.
During a telephone conversation on Monday, June 10, 1996, Messrs. Drury and
Bain decided that an exchange ratio of 1.70 shares of USA Waste Common Stock for
each share of Sanifill Common Stock would be an appropriate exchange ratio to
present to their respective Boards of Directors if an agreement could be reached
on other terms of a transaction and if the results of the parties' due diligence
investigations were satisfactory.
Beginning on June 13, 1996, Mr. Bain, Mr. Proto, or both of them conducted
a series of individual meetings, conference calls and individual calls with
members of the Sanifill Board of Directors and Sanifill senior management. The
potential terms of the transaction, the status of negotiations and related
matters were discussed in these meetings and calls.
On June 13, 1996, USA Waste and DLJ executed an engagement letter whereby
DLJ agreed to act as USA Waste's financial advisor with respect to the potential
merger. On the following day, Sanifill engaged Merrill Lynch to act as its
financial advisor in connection with the potential merger. Mr. J. Chris
Brewster, Vice President and Chief Financial Officer of Sanifill, and Merrill
Lynch then began their review of the financial conditions, results of operations
and prospects of USA Waste and the combined companies.
On June 15, 1996, Messrs. Gregory T. Sangalis and H. Steven Walton, Vice
President, General Counsel and Secretary of USA Waste and Sanifill,
respectively, together with outside counsel for each company, met to negotiate
the terms of the proposed merger agreement and to discuss the timing of due
diligence reviews of both companies.
On June 17, 1996, Sanifill disseminated to each member of its Board of
Directors information about USA Waste, the potential transaction and the
operations of both companies, and a draft of the proposed merger agreement as it
stood on that date.
Also on June 17, 1996, USA Waste and Sanifill executed confidentiality
agreements with respect to the exchange of financial and operational information
for purposes of evaluating a potential merger transaction. On that same date,
members of the USA Waste Board of Directors participated in a conference call at
which time Mr. Drury informed such members of the potential terms of the
transaction with Sanifill and the status of the negotiations with Sanifill and
discussed with such members informational materials relating to Sanifill which
had been previously distributed to them. Throughout the week, Messrs. Drury,
Moorehead, DeFrates, or all of them, conducted a series of individual meetings
and telephone calls with members of USA Waste's Board of Directors to continue
discussions of the potential terms of the transaction and the status of the
negotiations.
During the period from June 17, 1996 to June 22, 1996, the management teams
from both companies and their respective financial advisors and outside legal
counsel conducted due diligence investigations and further negotiated the terms
of the potential merger agreement.
At an evening meeting on June 20, 1996, the Board of Directors of Sanifill
began its consideration of the proposed Merger. At such meeting, members of the
senior management of USA Waste made a presentation to the Board of Directors of
Sanifill, including such management's view of the benefits of combining the two
companies and the business plan and strategy for the combined companies. At this
meeting, Sanifill's Board was provided with the Merger Agreement in
substantially complete form, the forms of the proposed voting agreements and
irrevocable proxies to be executed by certain stockholders of Sanifill and USA
Waste (see "The Plan of Merger and Terms of the Merger -- Voting Agreements"),
and additional information regarding the proposed transaction.
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On June 21, 1996, the respective Boards of Directors of USA Waste and
Sanifill met separately to consider the proposed Merger. At the meeting of
Sanifill's Board of Directors, Sanifill's management presented a draft form of
the Merger Agreement and related documents to the Sanifill Board. The terms of
the Merger were reviewed in detail, and management provided the Sanifill Board
with its assessment of the transaction from operating, financial and regulatory
standpoints, as well as the results of its due diligence investigation of USA
Waste. Representatives of Merrill Lynch presented certain financial and
operating data relating to USA Waste and other publicly held solid waste
management companies and its financial analysis of the proposed Merger. Merrill
Lynch then delivered its written opinion dated June 21, 1996 that, as of such
date, the Exchange Ratio was fair to the stockholders of Sanifill from a
financial point of view. After discussion by the Sanifill Board of Directors,
the Board approved the Merger Agreement and related transactions and voted to
recommend approval of the Merger Agreement to Sanifill's stockholders subject to
satisfactory resolution of certain remaining issues.
At the June 21, 1996, USA Waste Board of Directors meeting, USA Waste's
management presented a draft form of the Merger Agreement and related documents
to the USA Waste Board. The Board reviewed the terms of the Merger and the
results of the due diligence investigation of Sanifill conducted by USA Waste's
management team, counsel and independent auditors. Representatives of DLJ then
reviewed with the USA Waste Board of Directors certain financial and operating
data relating to Sanifill and other publicly held solid waste companies, as well
as certain pro forma financial information reflecting the Merger. After making
this presentation and responding to questions, the DLJ representatives delivered
a written opinion, as of such date, to the effect that the Exchange Ratio was
fair, from a financial point of view, to USA Waste. Following such review and
discussion, the USA Waste Board of Directors approved the Merger Agreement and
related transactions and voted to recommend approval of the Merger Agreement to
USA Waste's stockholders subject to satisfactory resolution of certain remaining
issues.
On June 22, 1996, the parties continued the negotiation of open matters
relating to the Merger, and signed the definitive Merger Agreement later that
day. On the next business day, June 24, 1996, the parties jointly announced the
Merger.
USA WASTE'S REASONS FOR THE MERGER
In evaluating the Merger, management and the Board of Directors of USA
Waste considered a variety of factors in the context of USA Waste's strategic
objectives. A key element of USA Waste's strategy is to expand solid waste
management services through the acquisition of additional solid waste
collection, transfer and recycling operations and landfills, with the objective
of becoming a national integrated solid waste management company with a broad
geographic base of operations. USA Waste anticipates that added service
requirements, increased regulation and heightened public concern over the
environment, all of which have contributed to dramatically higher costs
associated with providing waste management services generally, will cause
continued industry consolidation as well as increased privatization of municipal
services, affording attractive future opportunities for growth. In evaluating
the Merger, USA Waste's Board of Directors considered the desirability of
potential savings from the synergies between USA Waste and Sanifill and the
integration of the companies' operations, including administrative cost savings
through elimination of duplicative administrative positions, the rationalization
of collection routes and reductions in insurance and bonding costs. USA Waste's
Board of Directors also considered the significant permitted landfill airspace
of Sanifill, the additional markets served by Sanifill and the management and
employee resources of Sanifill. USA Waste's Board concluded that by combining
operations of USA Waste and Sanifill, USA Waste would further its strategic
objectives and that the combined entity could participate more effectively in
the ongoing consolidation of the solid waste services industry. In addition, the
USA Waste Board of Directors and management concluded that (i) a larger asset
and revenue base resulting from the Merger would provide USA Waste better access
to capital to pursue its strategic objectives and achieve economies of scale
associated with a larger base of operations, (ii) certain of the members of
Sanifill's management would complement USA Waste's existing management team in
managing the growth of USA Waste in a consolidating industry and (iii) assuming
the achievement of certain operating synergies, the Merger would result in
accretion to USA Waste's earnings.
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At the June 21, 1996 meeting, the USA Waste Board of Directors received a
written opinion from DLJ that the Exchange Ratio was fair as of such date, from
a financial point of view, to USA Waste. See "-- Opinion of Financial Advisor to
USA Waste."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF USA WASTE
For the reasons set forth under "-- USA Waste's Reasons for the Merger,"
the Board of Directors of USA Waste believes that the terms of the Merger
Agreement and the Merger are fair to, and in the best interests of, USA Waste
and the holders of USA Waste Common Stock. The Board of Directors has approved
the Merger Agreement and the Merger and recommends that the holders of USA Waste
Common Stock vote FOR adoption and approval of the Merger Agreement and the
Merger. In considering the recommendation of the USA Waste Board of Directors
with respect to the Merger, USA Waste stockholders should be aware that certain
members of the Board of Directors and management of USA Waste have direct and
indirect interests in the consummation of the Merger apart from their interests
as stockholders of USA Waste. See "-- Conflicts of Interest."
SANIFILL'S REASONS FOR THE MERGER
In evaluating the transaction with USA Waste, the Sanifill Board of
Directors determined that the Merger would result in a strong combined company
that largely would reflect Sanifill's strategy of being a disposal-based company
with activities centered around nonhazardous waste disposal. The Board
considered the potential for significant synergies from the combination of the
two companies at the operating level and at the management and staff levels. The
managements of the two companies identified potential cost savings and increased
opportunities and efficiencies that may be made available by the complementary
assets and operations of both entities. In particular, the Board considered that
the asset placement and areas of operations of the two companies have the
potential to enhance regional or large area service capability and allow for
significant financial and operating efficiencies.
The Board also considered the Merger's potential for utilizing each
company's respective skills to increase efficiency and margins in the combined
company and in particular noted that USA Waste has relative strengths in
collection and logistics and Sanifill has relative strengths in disposal,
engineering and cost containment for regulatory compliance. The Board also
placed weight on the favorable personnel mix of the combined company. In
particular, the Board considered that the combined company's management would
enjoy a combination of skills and capabilities that are needed in a growth
company in a consolidating industry and that such combination would increase the
breadth and depth of each company's management team.
Sanifill's long-term objective has been to achieve for its stockholders
consistent growth over time through acquisitions and internal development. The
waste industry has been consolidating over time as the owners of many
privately-held companies have elected to sell their businesses and governmental
entities have privatized waste collection and disposal. This consolidation was
accelerated by recent environmental regulations that have increased the
technical complexity and capital and operating costs associated with disposal
activities in the United States. The Board believes that the Merger will provide
Sanifill stockholders with an interest in a combined company that will be one of
the strongest competitors in this environment.
In reaching its conclusion to recommend approval of the Merger Agreement
and the Merger to Sanifill's stockholders, the Sanifill Board of Directors also
considered a number of other factors, including, without limitation, the
following:
1. The consideration to be received by Sanifill's stockholders in the
Merger.
2. The presentation of Merrill Lynch delivered to the Sanifill Board
of Directors on June 21, 1996, including Merrill Lynch's written opinion
that, as of such date, the Exchange Ratio was fair to Sanifill's
stockholders from a financial point of view. See "-- Opinion of Financial
Advisor to Sanifill."
3. The terms and conditions of the Merger Agreement, including the
amount and the form of the consideration, the parties' representations,
warranties, covenants and agreements, and the conditions to their
respective obligations set forth in the Merger Agreement.
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4. The terms of the Merger Agreement that permit the Sanifill Board of
Directors, in the exercise of its fiduciary duties and subject to certain
conditions, (i) to respond to written indications of interest and proposals
regarding potential alternative business combination transactions, and to
provide information to, and negotiate with, third parties making such
indications or proposals (although Sanifill is not permitted by the Merger
Agreement to actively solicit third-party bids) and (ii) to terminate the
Merger Agreement in order to accept or recommend an alternative transaction
if the Board determines it to be more favorable to stockholders than the
Merger. In this regard, the Sanifill Board of Directors noted that the
Merger Agreement provides that if Sanifill terminates the Merger Agreement
in favor of an alternative transaction, Sanifill would be obligated to pay
USA Waste $39 million. The Sanifill Board of Directors did not view the fee
provisions of the Merger Agreement as unreasonably impeding any interested
third party from proposing a superior transaction.
5. The presentation by members of management of USA Waste, including
such management's view of the benefits of combining the two companies and
its business plans and strategy for the combined company.
6. The proposed inclusion on the USA Waste Board of Directors after
the Merger of representatives familiar with Sanifill's businesses and
operations.
7. The structure of the Merger, which is intended to permit the
Sanifill stockholders to exchange their Sanifill Common Stock on a tax-free
basis and to permit the Merger to be accounted for as a pooling of
interests.
8. The matters related to officers and directors of Sanifill described
under "-- Conflicts of Interest."
9. Certain factors relating to the combined company, including the
fact that USA Waste is still in the process of integrating Western into its
operations; the potential for disruptions from the relocation of USA
Waste's headquarters to Houston; the ability of the combined company to
maintain the recent growth levels and earnings multiples achieved by each
of the two companies; and the effect of potential future revisions of
federal and state regulations on the combined company.
In view of the wide variety of factors considered in connection with their
evaluation of the terms of the Merger, the Sanifill Board of Directors did not
find it practicable to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors considered in reaching its
determination.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF SANIFILL
For the reasons set forth under "-- Sanifill's Reasons for the Merger," the
Board of Directors of Sanifill believes that the Merger Agreement is fair to,
and in the best interests of, Sanifill and the holders of Sanifill Common Stock.
The Board of Directors has approved the Merger Agreement and the Merger and
unanimously recommends that the holders of Sanifill Common Stock vote FOR
adoption and approval of the Merger Agreement and the Merger. In considering the
recommendation of the Sanifill Board of Directors with respect to the Merger,
Sanifill stockholders should be aware that certain officers and directors of
Sanifill have direct and indirect interests in the consummation of the Merger
apart from their interests as stockholders of Sanifill. See "-- Conflicts of
Interest."
OPINION OF FINANCIAL ADVISOR TO USA WASTE
The definitions of terms provided in this section "-- Opinion of Financial
Advisor to USA Waste" shall apply only to this section and shall not apply to
the use of such capitalized terms in any other section of this Joint Proxy
Statement and Prospectus.
In its role as financial advisor to USA Waste, DLJ was asked by USA Waste
to render an opinion (the "DLJ Opinion") to the Board of Directors of USA Waste
(the "USA Waste Board") as to the fairness to USA Waste, from a financial point
of view, of the Exchange Ratio. On June 21, 1996, DLJ delivered a written
opinion to the USA Waste Board that the Exchange Ratio was fair to USA Waste
from a financial point of view.
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A COPY OF THE DLJ OPINION IS ATTACHED HERETO AS ANNEX B. USA WASTE
STOCKHOLDERS ARE URGED TO READ THE DLJ OPINION IN ITS ENTIRETY FOR ASSUMPTIONS
MADE, PROCEDURES FOLLOWED, OTHER MATTERS CONSIDERED AND LIMITS OF THE REVIEW BY
DLJ.
The DLJ Opinion was prepared for the USA Waste Board of Directors and is
directed only to the fairness of the Exchange Ratio to USA Waste from a
financial point of view and does not constitute a recommendation to any USA
Waste stockholder as to how such stockholder should vote at the USA Waste
Special Meeting.
As more fully described under "The Merger and Related
Transactions -- Background of the Merger," the USA Waste Board of Directors
selected DLJ as its financial advisor because it is a nationally recognized
investment banking firm that has substantial experience in the solid waste
industry and is familiar with USA Waste and its businesses. DLJ was not retained
as an advisor or agent to the stockholders of USA Waste or any other person. As
part of its investment banking business, DLJ is regularly engaged in the
valuation of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
The DLJ Opinion does not constitute an opinion as to the price at which the
USA Waste Common Stock will actually trade at any time. DLJ did not, and was not
requested by the USA Waste Board to, make any recommendation as to the form or
amount of consideration to be paid to holders of Sanifill Common Stock in the
Merger, which issues were resolved in arm's-length negotiations between USA
Waste and Sanifill, in which negotiations DLJ advised USA Waste. No restrictions
or limitations were imposed by USA Waste upon DLJ with respect to the
investigations made or the procedures followed by DLJ in rendering its opinion.
USA Waste did not authorize DLJ to solicit, and DLJ did not solicit, any third
party indications of interest in a purchase of, or business combination with,
USA Waste or Sanifill.
In arriving at its opinion, DLJ reviewed a draft of the Merger Agreement
(which did not substantively differ from the executed Merger Agreement). DLJ
also reviewed financial and other information that was publicly available or
furnished to it by USA Waste and Sanifill including information provided during
discussions with their respective managements, which consisted of certain
financial projections of USA Waste prepared by the management of USA Waste,
certain financial projections of Sanifill prepared by the management of Sanifill
and certain financial information of USA Waste and Sanifill on a combined basis
prepared by the management of USA Waste. In addition, DLJ compared certain
financial and securities data of USA Waste and Sanifill with various other
companies whose securities are traded in public markets, reviewed the historical
stock prices and trading volumes of USA Waste Common Stock and Sanifill Common
Stock, reviewed prices and premiums paid in certain other selected business
combinations and conducted such other financial studies, analyses and
investigations as DLJ deemed appropriate for purposes of rendering its opinion.
In rendering its opinion, DLJ relied upon and assumed the accuracy,
completeness and fairness of all of the financial and other information that was
available to it from public sources, that was provided to it by USA Waste and
Sanifill or their respective representatives, or that was otherwise reviewed by
it. DLJ relied upon the estimates of the managements of USA Waste and Sanifill
of the operating synergies achievable as a result of the Merger and its
discussion of such synergies with the respective managements of USA Waste and
Sanifill. DLJ did not make any independent evaluation of the assets or
liabilities of USA Waste or Sanifill, nor did DLJ independently verify the
information reviewed by it. DLJ also assumed that the financial projections
supplied to it were reasonably prepared on bases reflecting the best currently
available estimates and judgments of the respective managements of USA Waste and
Sanifill as to the future operating and financial performance of USA Waste and
Sanifill, respectively. DLJ did not perform any procedures or analysis regarding
potential environmental liabilities of either USA Waste or Sanifill, nor did it
consider the impact of changes in the regulatory environment in which USA Waste
and Sanifill operate.
The DLJ Opinion was necessarily based on economic, market, financial and
other conditions as they existed on, and on the information made available to it
as of, the date of its opinion. It should be understood that, although
subsequent developments may affect its opinion, DLJ does not have any obligation
to update, revise or reaffirm the DLJ Opinion.
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The following is a summary of the presentation made by DLJ to the USA Waste
Board in connection with the DLJ Opinion.
Pro Forma Merger Analysis. DLJ analyzed certain pro forma effects resulting
from the Merger. DLJ reviewed the operating synergies contemplated to result
from the Merger in 1997 by combining the operations of Sanifill and USA Waste as
projected by the managements of Sanifill and USA Waste. DLJ analyzed the pro
forma effect of such operating synergies on net income and earnings per share
(both with a tax rate of 40% and assuming application of USA Waste's net
operating loss ("NOL") to the combined companies pretax income) for USA Waste.
The analysis indicated that the pro forma earnings per share ("EPS") of USA
Waste on a fully taxed basis, assuming the annual operating synergies
contemplated to result from the Merger, would be higher in the fiscal year
ending 1997 than comparable projections for USA Waste as a stand-alone company
during the same period. The analysis also indicated that the pro forma EPS of
USA Waste on a reported basis (assuming application of the USA Waste NOL),
assuming the annual operating synergies contemplated to result from the Merger,
would be higher in the fiscal year ending 1997 than comparable projections for
USA Waste as a stand-alone company during the same period.
Contribution Analysis. DLJ analyzed USA Waste's and Sanifill's relative
contribution to the combined companies with respect to total revenues; earnings
before interest, taxes, depreciation and amortization ("EBITDA"); earnings
before interest and taxes ("EBIT"); and total assets and total debt. Its
analysis was made for the year ended December 31, 1996 based on actual results
for the first fiscal quarter of 1996 and the projected results (based on USA
Waste and Sanifill management projections) for the final three fiscal quarters
of 1996. As a result of the Merger, USA Waste stockholders will own
approximately 68% of the common stock of the combined companies. This compares
with USA Waste's contribution to the combined companies' pro forma results for
the period ended December 31, 1996 (prior to taking into account any operating
synergies which may result from the Merger) of approximately 69% of revenues,
66% of EBITDA, 68% of EBIT, 56% of total assets, and 57% of total debt.
Analysis of Certain Other Publicly Traded Companies. To provide contextual
data and comparative market information, DLJ compared selected historical share
price, earnings and operating and financial ratios for Sanifill to the
corresponding data and ratios of USA Waste and certain other companies whose
securities are publicly traded (collectively, the "Public Companies"). The
Public Companies were chosen because they possess general business, operating
and financial characteristics representative of companies in the industry in
which USA Waste and Sanifill operate. The Public Companies consisted of: Allied
Waste Industries, Inc., Browning-Ferris Industries, Inc., Continental Waste
Industries, Inc., Laidlaw, Inc., United Waste Systems, Inc., USA Waste and WMX
Technologies, Inc. DLJ determined that United Waste Systems, Inc. and USA Waste
(collectively, the "Comparable Companies") were the most representative of the
Public Companies because in DLJ's view these companies possessed general
business, operating and financial characteristics most similar to Sanifill. Such
data and ratios included Enterprise Value ("Enterprise Value" is defined as the
product of the stock price and total shares outstanding plus Net Debt ("Net
Debt" is defined as total debt plus preferred stock less cash and cash
equivalents, which for Sanifill was assumed to be $355.3 million, the amount
outstanding at May 31, 1996)) as a multiple of revenues, EBITDA and EBIT for the
latest reported twelve months ("LTM"), growth rates of each of such items for
the three most recent fiscal years and operating margins for the three most
recent fiscal years. The average multiple of Enterprise Value to LTM revenues
("LTM revenue multiple") for the Comparable Companies was 4.9. The average LTM
revenue multiple was then multiplied by Sanifill's LTM revenues, for the period
ending March 31, 1996, to arrive at an implied total Enterprise Value for
Sanifill of $1,389.1 million. The implied Enterprise Value for Sanifill was then
adjusted for Net Debt to yield an implied equity value, which was then divided
by Sanifill's common shares outstanding on a fully diluted basis of 25.9 million
shares as of May 31, 1996 to arrive at an implied price of $39.92 per fully
diluted share. The average multiple of Enterprise Value to LTM EBITDA ("LTM
EBITDA multiple") for the Comparable Companies was 15.2. The average LTM EBITDA
multiple was then multiplied by Sanifill's LTM EBITDA, for the period ending
March 31, 1996, to arrive at an implied total Enterprise Value for Sanifill of
$1,569.0 million. The implied Enterprise Value for Sanifill was then adjusted
for Net Debt to yield an implied equity value, which was then divided by
Sanifill's common shares outstanding on a fully diluted basis as of May 31, 1996
to arrive at an implied price of $46.86 per fully diluted share. The
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average multiple of Enterprise Value to LTM EBIT ("LTM EBIT multiple") for the
Comparable Companies was 23.8. The average LTM EBIT multiple was then multiplied
by Sanifill's LTM EBIT, for the period ending March 31, 1996, to arrive at an
implied total Enterprise Value for Sanifill of $1,498.9 million. The implied
Enterprise Value for Sanifill was then adjusted for Net Debt to yield an implied
equity value, which was then divided by Sanifill common shares outstanding on a
fully diluted basis as of May 31, 1996 to arrive at an implied price of $44.15
per fully diluted share.
In addition, DLJ examined the ratios of current stock prices (based on a
reported closing price on June 19, 1996 for United Waste Systems, Inc. and a
reported closing price on June 14, 1996 for USA Waste) to estimated fiscal year
1996 and 1997 EPS (as estimated by First Call Real Time Earnings Estimates); and
current stock prices to book value for the Comparable Companies and compared
such ratios with those of Sanifill. The average multiple of current stock price
to estimated fiscal year 1996 EPS for the Comparable Companies was 27.2. The
average multiple of estimated fiscal year 1996 EPS was then multiplied by
Sanifill's estimated fiscal 1996 net income to arrive at an implied total Equity
Value, which was then divided by Sanifill's common shares outstanding on a fully
diluted basis as of May 31, 1996 to arrive at an implied price of $47.79 per
fully diluted share. The average multiple of current stock price to estimated
fiscal year 1997 EPS for the Comparable Companies was 21.8. The average multiple
of estimated fiscal year 1997 EPS was then multiplied by Sanifill's estimated
fiscal 1997 net income to arrive at an implied total Equity Value, which was
then divided by Sanifill's common shares outstanding on a fully diluted basis as
of May 31, 1996 to arrive at an implied price of $50.56 per fully diluted share.
The average multiple of stock price to latest available book value for the
Comparable Companies was 4.5. The average multiple of latest available book
value was then multiplied by Sanifill's book value as of March 31, 1996, which
was adjusted to reflect the impact of the conversion of Sanifill's $60.0 million
7.50% Convertible Subordinated Debentures, to arrive at an implied total Equity
Value, which was then divided by Sanifill's common shares outstanding on a fully
diluted basis as of May 31, 1996 to arrive at an implied price of $73.37 per
fully diluted share.
Transaction Analysis. DLJ reviewed publicly available information for six
selected transactions involving the combination of selected solid waste
management companies. The six transactions reviewed (the "Comparative
Transactions") were: (i) Republic Industries, Inc./Addington Resources, Inc.;
(ii) Republic Industries, Inc./Continental Waste Industries, Inc.; (iii) USA
Waste/Western Waste Industries; (iv) USA Waste/Chambers Development Company,
Inc.; (v) Browning-Ferris Industries, Inc./Attwoods Group PLC; and (vi) USA
Waste/Envirofil Inc. The six transactions selected are not intended to represent
the complete list of solid waste management transactions which have occurred
during the last three years; rather they include only transactions involving
combinations of companies with operating characteristics, size or financial
performance characteristics which DLJ believed to be comparable to those of
Sanifill and USA Waste. DLJ reviewed the consideration paid in such transactions
in terms of the Equity Purchase Price (as hereinafter defined) plus total debt
less cash and cash equivalents ("Adjusted Purchase Price") as a multiple of LTM
revenues, LTM EBITDA and LTM EBIT. The ratio of Adjusted Purchase Price to
revenues, computed for the Comparative Transactions, had an average of 3.1. The
ratio of Adjusted Purchase Price to EBITDA, computed for the Comparative
Transactions, had an average of 12.6. The ratio of Adjusted Purchase Price to
EBIT, computed for the Comparative Transactions, had an average of 20.0. DLJ
also reviewed the consideration paid in each of the Comparative Transactions in
terms of the offer price per share multiplied by total common shares outstanding
(the "Equity Purchase Price") as a multiple of the book value. The ratio of
Equity Purchase Price to book value, computed for the Comparative Transactions,
had an average of 3.6. DLJ determined that the analysis of the Comparative
Transactions purchase price multiples described above was of limited relevance.
In its presentation to the USA Waste Board of Directors, DLJ noted that this
analysis was of limited relevance in its view because such analysis was based on
publicly available historical information, whereas prices paid in transactions
in the solid waste industry are generally based on future financial
expectations, for which data is unavailable.
Stock Trading History. To provide contextual data and comparative market
data, DLJ examined the history of the trading prices and their relative
relationships for both USA Waste Common Stock and Sanifill Common Stock for the
latest 12 month period ended June 19, 1996. DLJ also reviewed the daily closing
prices of USA Waste Common Stock and Sanifill Common Stock and compared the
Sanifill closing stock prices
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with an index of selected waste companies. The index of selected companies
included Allied Waste Industries, Inc., Browning-Ferris Industries, Inc.,
Laidlaw, Inc., Sanifill, United Waste Systems, Inc., USA Waste and WMX
Technologies, Inc. This information was presented solely to provide the Board of
Directors of USA Waste with background information regarding the stock prices of
Sanifill and USA Waste over the period indicated. DLJ noted the high and low
prices for USA Waste over the twelve-month period ended June 19, 1996 was $32.63
and $14.63, respectively, and the high and low prices for Sanifill over the
twelve-month period ended June 19, 1996 was $46.88 and $29.13, respectively.
Discounted Cash Flow Analysis. DLJ also performed a discounted cash flow
analysis to evaluate the Exchange Ratio. In conducting its analysis, DLJ relied
on certain assumptions, financial projections and other information provided by
Sanifill and USA Waste management. Using the information set forth in the
Sanifill and USA Waste projections, DLJ performed stand-alone discounted cash
flow analyses for USA Waste and Sanifill. DLJ calculated the estimated "Free
Cash Flow" for each company stand-alone based on projected unleveraged operating
income adjusted for: (i) taxes; (ii) certain projected non-cash items (i.e.,
depreciation and amortization); (iii) projected changes in non-cash working
capital; and (iv) projected capital expenditures. DLJ analyzed the Sanifill and
USA Waste stand-alone projections and discounted the stream of free cash flows
from fiscal 1997 to fiscal 2001, provided in such projections, back to June 30,
1996 using discount rates ranging from 11% to 12%. To estimate the residual
values of Sanifill and USA Waste stand-alone at the end of the forecast period,
DLJ applied terminal multiples of 8.0 to 12.0 to the projected fiscal 2001
EBITDA and discounted such value estimates back to June 30, 1996 using discount
rates ranging from 11% to 12%. DLJ then aggregated the present values of the
free cash flows and the present values of the residual values to derive a range
of implied enterprise values for Sanifill and USA Waste stand-alone. The range
of implied enterprise values of Sanifill and USA Waste stand-alone were then
adjusted for their respective Net Debt to yield implied equity values of
Sanifill and USA Waste stand-alone. The range of equity values were then divided
by the respective stand-alone fully diluted shares to determine a range of
equity values per share for each company stand-alone. The range of implied
equity values per share for Sanifill, based on the range of discount rates of
11.0% to 12.0% and the range of terminal multiples of 8.0 to 12.0, was $45.37 to
$85.88 per share. The range of implied equity values per share for USA Waste,
based on the range of discount rates of 11.0% to 12.0% and the range of terminal
multiples of 8.0 to 12.0, was $28.72 to $48.03 per share.
DLJ derived ranges of implied exchange ratios by dividing the high and low
equity values per share of Sanifill by the high and low equity values per share
of USA Waste, respectively. Based on this analysis, using the range of discount
rates of 11.0% to 12.0% and the range of terminal multiples of 8.0 to 12.0 and
without taking into account the potential impact of any synergies, DLJ
calculated a range of implied exchange ratios of 1.58 to 1.79.
The summary set forth above does not purport to be a complete description
of the analyses performed by DLJ. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
summary description. Accordingly, notwithstanding the separate factors
summarized above, DLJ believes that its analyses must be considered as a whole
and that selecting portions of its analysis and the factors considered by it,
without considering all analyses and factors, could create an incomplete or
misleading view of the evaluation process underlying its opinions. In performing
its analyses, DLJ made numerous assumptions with respect to industry
performance, business and economic conditions and other matters. The analyses
performed by DLJ are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses.
Pursuant to the terms of an engagement letter dated June 13, 1996, USA
Waste has agreed to pay DLJ a fee of $600,000 upon delivery of the DLJ Opinion
and an additional fee of $900,000 to be paid upon consummation of the Merger.
USA Waste has also agreed to reimburse DLJ promptly for all out-of-pocket
expenses (including the reasonable fees and out-of-pocket expenses of counsel)
incurred by DLJ in connection with its engagement, and to indemnify DLJ and
certain related persons against certain liabilities in connection with its
engagement, including liabilities under the federal securities laws. The terms
of the fee arrangement with DLJ, which DLJ and USA Waste believe are customary
in transactions of this nature, were
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negotiated at arm's length between USA Waste and DLJ and the USA Waste Board of
Directors was aware of such arrangement, including the fact that a significant
portion of the aggregate fee payable to DLJ is contingent upon consummation of
the Merger.
In the ordinary course of business, DLJ may actively trade the securities
of both USA Waste and Sanifill for its own account and for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities. DLJ has provided financial advisory and investment banking
services to USA Waste in the past, including (i) acting as USA Waste's financial
advisor in connection with USA Waste's merger with Western Waste completed in
May 1996, (ii) acting as USA Waste's financial advisor in connection with USA
Waste's merger with Chambers completed in June 1995 and (iii) acting as the lead
manager in a public offering of USA Waste Common Stock completed in October
1995, and has in each case received usual and customary fees for rendering such
services. DLJ has provided financial advisory and investment banking services to
Sanifill in the past, including (i) acting as a co-manager in a public offering
of Sanifill common stock completed in August 1995 and (ii) acting as the lead
manager in a public offering of Sanifill convertible subordinated debentures
completed in March 1996, and has in each case received usual and customary fees
for rendering such services.
OPINION OF FINANCIAL ADVISOR TO SANIFILL
The definitions of terms provided in this section "-- Opinion of Financial
Advisor to Sanifill" shall apply only to this section and shall not apply to the
use of such capitalized terms in any other section of this Joint Proxy Statement
and Prospectus.
Merrill Lynch delivered its written opinion dated June 21, 1996 to the
Board of Directors of Sanifill that, as of such date, the Exchange Ratio was
fair to the stockholders of Sanifill from a financial point of view. A copy of
the opinion of Merrill Lynch, which sets forth the assumptions made, matters
considered and limitations on the review undertaken, is attached as Annex C to
this Joint Proxy Statement and Prospectus and is incorporated herein by
reference.
THE SUMMARY OF THE OPINION OF MERRILL LYNCH SET FORTH IN THIS JOINT PROXY
STATEMENT AND PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL
TEXT OF THE OPINION ATTACHED AS ANNEX C HERETO. SANIFILL'S STOCKHOLDERS ARE
URGED TO READ SUCH OPINION IN ITS ENTIRETY FOR ASSUMPTIONS MADE, MATTERS
CONSIDERED, SCOPE AND LIMITS OF THE REVIEW AND PROCEDURES FOLLOWED BY MERRILL
LYNCH IN CONNECTION WITH SUCH OPINION.
Merrill Lynch's opinion is directed only to the fairness from a financial
point of view of the Exchange Ratio to the stockholders of Sanifill and does not
constitute a recommendation to any stockholder as to how such stockholder should
vote at the Sanifill Special Meeting. The Exchange Ratio was determined through
negotiations between Sanifill and USA Waste and was approved by the Board of
Directors of Sanifill. Merrill Lynch did not make a recommendation with respect
to the amount of the Exchange Ratio.
In arriving at its opinion, Merrill Lynch, among other things, (i) reviewed
Sanifill's Annual Reports, Forms 10-K and related financial information for the
three fiscal years ended December 31, 1995, and Sanifill's Form 10-Q and the
related unaudited financial information for the quarterly period ended March 31,
1996; (ii) reviewed USA Waste's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended December 31, 1995, USA Waste's Form
10-Q and the related unaudited financial information for the quarterly period
ended March 31, 1996 and certain other filings, including registration
statements, Forms 8-K and proxy statements, with the Commission made by USA
Waste during the last three years; (iii) reviewed certain information, including
financial forecasts, relating to the business, earnings, cash flow, assets and
prospects of Sanifill and USA Waste, furnished to Merrill Lynch by Sanifill and
USA Waste; (iv) conducted discussions with members of senior management of
Sanifill and USA Waste concerning their respective businesses and prospects; (v)
reviewed the historical market prices and trading activity for Sanifill Common
Stock and USA Waste Common Stock and compared them with those of certain
publicly traded companies which Merrill Lynch deemed to be reasonably similar to
Sanifill and USA Waste, respectively; (vi) compared the results of operations of
Sanifill and USA Waste with those of certain companies which
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Merrill Lynch deemed to be reasonably similar to Sanifill and USA Waste,
respectively; (vii) compared the proposed financial terms of the transactions
contemplated by the Merger Agreement with the financial terms of certain other
mergers and acquisitions which Merrill Lynch deemed to be relevant; (viii)
reviewed a draft of the Merger Agreement dated June 19, 1996; (ix) reviewed a
draft of the form of Voting Agreement dated June 15, 1996; and (x) reviewed such
other financial studies and analyses and performed such other investigations and
took into account such other matters as Merrill Lynch deemed necessary,
including Merrill Lynch's assessment of general economic, market and monetary
conditions.
In preparing its opinion, Merrill Lynch relied on the accuracy and
completeness of all information supplied or otherwise made available to it by
Sanifill and USA Waste, and Merrill Lynch did not independently verify such
information or undertake an independent appraisal of the assets or liabilities
of Sanifill or USA Waste nor was Merrill Lynch furnished with any such
appraisals. No special instructions were given to Merrill Lynch related to its
review, and no limitations were imposed by Sanifill with respect to the
investigations made or procedures followed by Merrill Lynch in rendering its
opinion. With respect to the financial forecasts furnished by Sanifill and USA
Waste, Merrill Lynch assumed that they were reasonably prepared and reflected
the best currently available estimates and judgment of Sanifill's or USA Waste's
management as to the expected future financial performance of Sanifill or USA
Waste, as the case may be.
Merrill Lynch's opinion is necessarily based upon general economic, market,
monetary and other conditions as they existed and could be evaluated, and the
information made available to Merrill Lynch, as of the date of its opinion.
The following is a summary of certain analyses performed by Merrill Lynch
in connection with its opinion dated June 21, 1996, which it presented to the
Board of Directors of Sanifill on such date. To the extent the following
analyses utilized stock price information of Sanifill or USA Waste, such
information consisted of information through the close of trading on June 14,
1996.
(i) Discounted Cash Flow Analysis. Merrill Lynch calculated ranges of
equity value for Sanifill based upon the value discounted to the present of its
annualized five-year stream of projected unlevered free cash flow and its
projected calendar year 2001 terminal values based upon a range of multiples of
its projected calendar year 2001 earnings before interest, taxes, depreciation
and amortization ("EBITDA") less its debt (including out of the money
convertible debentures) and plus option and warrant proceeds and cash. In
conducting its analysis, Merrill Lynch relied upon two sets of assumptions and
financial projections provided by the management of Sanifill: the "Sanifill Case
One" and a second case that provided for the consummation of additional
unidentified acquisitions (beyond those contemplated by the Sanifill Case One)
by Sanifill (the "Sanifill Case Two"). Merrill Lynch applied discount rates
reflecting a weighted average cost of capital ranging from 11.0% to 14.0% and
multiples of terminal EBITDA ranging from 7.5x to 9.5x. The range of discount
rates was selected based on a theoretical analysis of Sanifill's weighted
average cost of capital, and the range of EBITDA multiples was selected based on
a review of the EBITDA multiples of (A) Allied Waste Industries, Inc.,
Browning-Ferris Industries, Inc., Continental Waste Industries, Inc., United
Waste Systems, Inc. and WMX Technologies, Inc. (collectively, the "Comparable
Companies") and Sanifill and USA Waste and (B) the Acquisition Comparables (as
defined below). Based on this analysis, Merrill Lynch calculated per share
equity values of Sanifill ranging from $29.88 to $55.35 with a midpoint of
$42.61, for the Sanifill Case One, and from $37.04 to $68.61 with a midpoint of
$52.83, for the Sanifill Case Two.
Merrill Lynch calculated ranges of equity value for USA Waste based upon
the value discounted to the present of its five year stream of projected
unlevered free cash flow and its projected fiscal year 2001 terminal value based
upon a range of multiples of its projected fiscal year 2001 EBITDA less its debt
and plus option proceeds and cash. In conducting its analysis, Merrill Lynch
relied upon two sets of assumptions and financial projections: the "USA Waste
Case One" and a second case that provided for the consummation of additional
unidentified acquisitions (beyond those contemplated by the USA Case One) by USA
Waste (the "USA Waste Case Two"). Merrill Lynch applied discount rates
reflecting a weighted average cost of capital ranging from 11.0% to 14.0% and
multiples of terminal EBITDA ranging from 7.5x to 9.5x. The range of discount
rates was selected based on a theoretical analysis of USA Waste's weighted
average cost of capital, and the range of multiples of terminal EBITDA was
selected based on a review of the EBITDA multiples of (A) the
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Comparable Companies, Sanifill and USA Waste and (B) the Acquisition
Comparables. Based on this analysis, Merrill Lynch calculated per share equity
values of USA Waste ranging from $24.37 to $ 37.69 with a midpoint of $31.03,
for the USA Waste Case One, and $29.29 to $46.82 with a midpoint of $38.06, for
the USA Waste Case Two.
Merrill Lynch derived implied exchange ratios by dividing the low, midpoint
and high per share equity values of Sanifill by the low, midpoint and high per
share equity values of USA Waste, respectively. Based on this analysis, Merrill
Lynch calculated implied exchange ratios of (i) 1.23, 1.37 and 1.47,
respectively, in the case of the Sanifill Case One and the USA Waste Case One,
(ii) 1.02, 1.12 and 1.18, respectively, in the case of the Sanifill Case One and
the USA Waste Case Two, (iii) 1.52, 1.70 and 1.82, respectively, in the case of
the Sanifill Case Two and the USA Waste Case One and (iv) 1.26, 1.39 and 1.47,
respectively, in the case of the Sanifill Case Two and the USA Waste Case Two.
Merrill Lynch also calculated ranges of equivalent equity value for the
combined company by applying the above methodology to the five year stream of
projected unlevered pro forma free cash flow and projected calendar year 2001
pro forma terminal value of the combined company with and without $30 million in
assumed synergies. Based on this analysis and the Exchange Ratio of 1.70,
Merrill Lynch calculated ranges of implied equivalent equity value for the
combined company per Sanifill share of (i) $37.87 to $61.01 and $39.97 to
$63.78, in the case of the Sanifill Case One and the USA Waste Case One, without
and with synergies, respectively, and (ii) $45.63 to $75.74 and $47.72 to
$78.50, in the case of the Sanifill Case Two and the USA Waste Case Two, without
and with synergies, respectively.
(ii) Analysis of Selected Comparable Publicly Traded Companies. Merrill
Lynch compared certain financial information for each of Sanifill and USA Waste
to the corresponding publicly available financial information of the Comparable
Companies. Merrill Lynch calculated multiples for such companies of market value
to LTM EPS, estimated calendar 1996 EPS and estimated calendar 1997 EPS and of
market capitalization to LTM revenue, LTM EBITDA, LTM EBIT, estimated calendar
1996 EBITDA and estimated calendar 1996 EBIT.
Based on this analysis, Merrill Lynch calculated per share equity values of
Sanifill ranging from $35.96 to $48.62 and per share equity values of USA Waste
ranging from $24.06 to $32.55. Merrill Lynch derived implied exchange ratios
based on this analysis by dividing the low, midpoint and high per share equity
values of Sanifill by the low, midpoint and high per share equity values of USA
Waste, respectively. Based on this analysis, Merrill Lynch calculated implied
exchange ratios of 1.49, 1.49 and 1.49, respectively.
(iii) Analysis of Selected Comparable Acquisition Transactions. Merrill
Lynch also reviewed the financial terms of nine transactions (the "Acquisition
Comparables") in which waste management companies were acquired. The Acquisition
Comparables reviewed, in reverse chronological order of announcement date, were
the following: (a) the pending acquisition of Continental Waste Industries, Inc.
by Republic Waste Industries, Inc., (b) the acquisition of Western Waste
Industries, Inc. by USA Waste, (c) the acquisition of Southland Environmental
Services Inc. by Republic Waste Industries, Inc., (d) the acquisition of
Resource Recycling Technologies Inc. by Waste Management Inc., (e) the
acquisition of Chambers Development Company, Inc. by USA Waste, (f) the
acquisition of Attwoods Plc by Browning-Ferris Industries, Inc., (g) the
acquisition of Envirofil Inc. by USA Waste, (h) the acquisition of Environmental
Waste of America by Envirofil Inc. and (i) the acquisition of a controlling
interest in Wheelabrator Technologies Inc. by Waste Management Inc.
Merrill Lynch analyzed offer value and transaction value multiples. In
particular, Merrill Lynch calculated transaction value as a multiple of LTM
revenue, EBITDA and EBIT and offer value as a multiple of LTM net income and
last fiscal quarter common equity. Based on this analysis, Merrill Lynch
calculated per share equity values of Sanifill ranging from $43.21 to $56.97
with a midpoint of $50.09 and per share equity values of USA Waste ranging from
$28.31 to $34.67 with a midpoint of $31.49. Merrill Lynch derived implied
exchange ratios based on this analysis by dividing the low, midpoint and high
per share equity values of Sanifill by the low, midpoint and high per share
equity values of USA Waste, respectively. Based on this analysis, Merrill Lynch
calculated implied exchange ratios of 1.53, 1.59 and 1.64, respectively.
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(iv) Contribution Analysis. Merrill Lynch analyzed and compared the
respective contribution of 1996 and 1997 estimated EBITDA, EBIT and net income
of Sanifill and USA Waste to the combined company following consummation of the
proposed Merger based upon, in the case of estimated 1997 results, the Sanifill
Case One and the USA Waste Case One, on the one hand, and on the Sanifill Case
Two and the USA Waste Case Two, on the other hand, in each case without taking
into account any potential synergies resulting from the Merger. This analysis
showed that Sanifill would contribute to the combined company 34.1%, 35.6% and
35.6% of EBITDA and 32.4%, 34.2% and 34.2% of EBIT, in each case for 1996, 1997
Case One and 1997 Case Two, respectively, compared to the Exchange Ratio of 1.70
which would result in Sanifill stockholders contributing 33.2% of the combined
company's enterprise value. This analysis also showed that Sanifill would
contribute to the combined company 29.6%, 29.8% and 29.8% of net income for
1996, 1997 Case One and 1997 Case Two, respectively, compared to the Exchange
Ratio of 1.70 which would result in Sanifill stockholders owning approximately
32.5% of the combined company.
(v) Pro Forma Analysis. Merrill Lynch analyzed certain pro forma effects
resulting from the Merger based on the different combinations of the Sanifill
Case One and the Sanifill Case Two with the USA Waste Case One and the USA Waste
Case Two, in each case with and without assumed synergies of $30 million,
including the effect on 1996, 1997 and 1998 EPS of USA Waste and the pre-tax
synergies required for breakeven EPS. The analysis indicated that (a) in the
case of the Sanifill Case One and the USA Waste Case One, the Merger would lead
to 4.6%, 5.3% and 4.5% dilution and require $12.2 million, $18.7 million and
$19.2 million in pre-tax synergies for breakeven EPS, without synergies, and
6.6%, 3.2% and 2.6% accretion, with synergies, in 1996, 1997 and 1998,
respectively, (b) in the case of the Sanifill Case Two and the USA Waste Case
Two, the Merger would lead to 4.6%, 5.6% and 2.9% dilution and require $12.2
million, $21.3 million and $13.2 million in pre-tax synergies for breakeven EPS,
without synergies, and 6.6%, 2.3% and 3.6% accretion, with synergies, in 1996,
1997 and 1998, respectively, (c) in the case of the Sanifill Case One and the
USA Waste Case Two, the Merger would lead to 4.6%, 6.6% and 6.5% dilution and
require $12.2 million, $24.7 million and $29.6 million in pre-tax synergies for
breakeven EPS, without synergies, and 6.6%, 1.4% and 0.1% accretion, with
synergies, in 1996, 1997 and 1998, respectively, and (d) in the case of the
Sanifill Case Two and the USA Waste Case One, the Merger would lead to 4.6%,
4.2% and 0.6% dilution and require $12.3 million, $15.2 million and $2.6 million
in pre-tax synergies for breakeven EPS, without synergies, and 6.6%, 4.1% and
6.4% accretion, with synergies, in 1996, 1997 and 1998, respectively.
(vi) Premium Analysis. Merrill Lynch compared the premium represented by
the Exchange Ratio (based on the closing prices of USA Waste Common Stock and
Sanifill Common Stock on June 14, 1996) one day, one week and one month prior to
such date to the comparable average premiums for greater than $1 billion to $2
billion stock for stock transactions since January 1, 1990. This analysis showed
that (a) the Exchange Ratio represented a 20.8% premium over the one day prior
closing price compared to first quartile, median and third quartile one day
prior premiums of 19.1%, 30.1% and 40.5%, respectively, (b) the Exchange Ratio
represented a 25.0% premium over the one week prior closing price compared to
first quartile, median and third quartile one week prior premiums of 23.8%,
30.6% and 45.8%, respectively, and (c) the Exchange Ratio represented a 20.8%
premium over the one month prior closing price compared to first quartile,
median and third quartile one month prior premiums of 22.1%, 37.3% and 51.2%,
respectively.
Merrill Lynch also compared such premiums represented by the Exchange Ratio
to the analogous premiums in the pending Republic Industries, Inc./Continental
Waste Industries, Inc. transaction (the "Republic Transaction") and the USA
Waste/Western Waste Industries, Inc. transaction (the "Western Transaction").
This comparison showed that (a) the Exchange Ratio represented a 20.8% one day
prior premium compared to 21.5% and 16.2% one day prior premiums for the
Republic Transaction and the Western Transaction, respectively, (b) the Exchange
Ratio represented a 25.0% one week prior premium compared to 18.2% and 21.8% one
week prior premiums for the Republic Transaction and the Western Transaction,
respectively, and (c) the Exchange Ratio represented a 20.8% one month prior
premium compared to 32.7% and 47.1% one month prior premiums for the Republic
Transaction and the Western Transaction, respectively.
(vii) Stock Trading History. Merrill Lynch reviewed and analyzed the
history of the trading prices for Sanifill Common Stock and USA Waste Common
Stock and the ratio of the former to the latter during the
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<PAGE> 42
twelve month period ended June 14, 1996. This information was presented
primarily to give the Board of Directors of Sanifill background information
regarding the stock prices of Sanifill and USA Waste over the period indicated.
In addition, the analysis of the daily closing price ratio indicated that the
mean daily closing price ratio over the period indicated equaled 1.69 and that
the closing price ratio on June 14, 1996 equaled 1.41, compared to the Exchange
Ratio of 1.70.
While the foregoing summary describes the material analyses and factors
presented by Merrill Lynch to the Board of Directors of Sanifill, it does not
purport to be a complete description of the analyses conducted by Merrill Lynch
or Merrill Lynch's presentation to the Board of Directors of Sanifill. Merrill
Lynch believes that its analyses must be considered as a whole and that
selecting portions of its analyses and the factors considered by it, without
considering all factors and analyses, could create an incomplete view of the
process underlying its opinions. Merrill Lynch did not assign relative weights
to its analyses in preparing its opinions. None of the Comparable Entities is
identical to Sanifill or USA Waste, and none of the Acquisition Comparables is
identical to the Merger. Accordingly, an analysis of the results of the
comparable companies and comparable transactions analyses is not purely
mathematical. Rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
comparable companies and other factors that could affect the public trading
value of the comparable companies or company to which they are being compared.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. In
performing its analyses, Merrill Lynch made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Sanifill or USA Waste. Any
estimates contained in the analyses performed by Merrill Lynch are not
necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. In
addition, analyses relating to the value of the businesses do not purport to be
appraisals or to reflect the prices at which businesses may actually be sold.
Because such estimates are inherently subject to uncertainty, neither Sanifill,
Merrill Lynch nor any other person assumes responsibility for their accuracy.
Sanifill has engaged Merrill Lynch as its financial advisor in connection
with the Merger because it is an internationally recognized investment banking
firm engaged in the valuation of businesses and their securities in connection
with mergers and acquisitions and for other purposes and has substantial
experience in transactions similar to the Merger. For Merrill Lynch's financial
advisory services, Sanifill has agreed to pay Merrill Lynch (i) a fee of
$100,000 upon signing its engagement letter dated as of June 14, 1996 (the
"Engagement Letter"), (ii) a fee of $650,000 upon the delivery of Merrill
Lynch's fairness opinion and (iii) a fee of $750,000 at the Effective Time. In
addition, the Engagement Letter provides that Sanifill will reimburse Merrill
Lynch for its reasonable out-of-pocket expenses (including reasonable fees and
expenses of its legal counsel) and will indemnify Merrill Lynch and certain
related persons against certain liabilities, including liabilities under
securities laws, arising out of its engagement. In the ordinary course of its
securities business, Merrill Lynch may actively trade debt or equity securities
of Sanifill and USA Waste for its own account and the accounts of its customers,
and Merrill Lynch therefore may hold a long or short position in such
securities.
CONFLICTS OF INTEREST
In considering the recommendation of the Boards of Directors of USA Waste
and Sanifill with respect to the Merger, holders of USA Waste Common Stock and
Sanifill Common Stock should be aware that certain members of the Boards of
Directors and management of USA Waste and Sanifill have certain interests apart
from their interests as stockholders, including those referred to below.
After the Merger is consummated, Mr. Rodney R. Proto, an officer and
director of Sanifill, and two other designees of Sanifill will become directors
of the USA Waste Board of Directors, and one of such persons will be elected to
the Executive Committee of the USA Waste Board of Directors. In addition, Mr.
Proto will serve as President and Chief Operating Officer of USA Waste. It is
expected that Mr. Proto will enter into an employment agreement with USA Waste
at a salary to be agreed upon and on other terms substantially similar to those
contained in employment agreements between USA Waste and its current executive
officers.
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<PAGE> 43
Further, Mr. Lorne D. Bain, Sanifill's Chairman and Chief Executive Officer, has
entered into an employment agreement with USA Waste and Sanifill which provides
for a renewable term of one year at an annual salary of $500,000. Mr. Bain will
also receive certain payments under his prior employment agreement with Sanifill
as a result of the Merger. Mr. J. Chris Brewster, Vice President and Chief
Financial Officer of Sanifill, has also entered into an employment agreement
with USA Waste and Sanifill for a term of one year from the date of consummation
of the Merger at an annual salary of $100,000. Mr. Brewster will also receive
certain payments under his prior employment agreement with Sanifill as a result
of the Merger. For more information about such employment agreements, see "The
Plan of Merger and Terms of the Merger -- Other Agreements."
Any person elected to the USA Waste Board of Directors pursuant to the
Merger Agreement who is not an employee of USA Waste will receive an annual
grant of options to purchase 10,000 shares of USA Waste Common Stock pursuant to
USA Waste's 1996 Stock Option Plan for Non-Employee Directors.
Kosti Shirvanian and USA Waste have entered into a letter agreement
amending in certain respects an earlier letter agreement between Mr. Shirvanian
and USA Waste regarding Mr. Shirvanian's right to sit on the Board of Directors
of USA Waste and designate other individuals to sit on the Board of Directors of
USA Waste. See "The Plan of Merger and Terms of the Merger -- Other Agreements."
In addition, in connection with the Merger Agreement, USA Waste has entered
into an agreement with Donald F. Moorehead, Jr., John E. Drury, John G. Rangos,
Sr., John G. Rangos, Jr., Alexander W. Rangos and John Rangos Development
Corporation, Inc. with whom USA Waste had previously executed an agreement in
connection with its merger with Chambers Development Company, Inc. ("Chambers"),
terminating such prior agreement. In consideration for the termination of the
prior agreement, USA Waste has agreed, among other things, to issue to John G.
Rangos, Sr., John G. Rangos, Jr. and Alexander W. Rangos warrants to purchase in
the aggregate 700,000 shares of USA Waste Common Stock at an exercise price of
$29 per share. See "The Plan of Merger and Terms of the Merger -- Other
Agreements."
Thirteen individuals, representing all executive officers and directors of
Sanifill, hold options and warrants to acquire an aggregate of approximately 1.5
million shares of Sanifill Common Stock pursuant to the terms of certain stock
option and warrant agreements, at exercise prices ranging from $10.88 to $44.88
per share. In addition, as of the Record Date, there were outstanding other
options and warrants to acquire approximately 1.1 million shares of Sanifill
Common Stock, of which approximately 0.4 million were exercisable. At the
Effective Time, all of the outstanding Sanifill Options and Sanifill Warrants
will be automatically converted into options or warrants, as the case may be, to
purchase a number of shares of USA Waste Common Stock equal to the number of
shares of Sanifill Common Stock underlying such options or warrants multiplied
by the Exchange Ratio, at an exercise price equal to the exercise price of the
Sanifill Option or Sanifill Warrant, as the case may be, divided by the Exchange
Ratio. All other terms and conditions of the options and warrants will be the
same as before the Effective Time. The options and warrants exercisable by the
executive officers and directors of Sanifill for approximately 1.5 million
shares of Sanifill Common Stock will be converted into options or warrants, as
the case may be, to acquire approximately 2.5 million shares of USA Waste Common
Stock. The exercise prices will be converted from a range of $10.88 to $44.88
per share of Sanifill Common Stock to a range of $6.40 to $26.40 per share of
USA Waste Common Stock. Based upon the closing sale price of $27 1/4 per share
of USA Waste Common Stock on July 18, 1996, the total value based upon the
excess of the market price of the shares of USA Waste Common Stock over the
exercise price of the options and warrants that would become exercisable upon
consummation of the Merger by (i) the five most highly paid executive officers
of Sanifill (with respect to an aggregate of approximately 1,475,067 shares of
USA Waste Common Stock) would be approximately $29.1 million and (ii) all
officers and directors of Sanifill (with respect to an aggregate of
approximately 1,643,792 shares of USA Waste Common Stock) would be approximately
$31.5 million. See "The Plan of Merger and Terms of the Merger -- Assumption of
Sanifill Options and Sanifill Warrants."
The Merger Agreement provides for indemnification by USA Waste of the
officers and directors of Sanifill against all costs or expenses (including
reasonable attorney's fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or
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<PAGE> 44
investigation, whether civil, criminal, administrative or investigative, arising
out of, relating to, or in connection with any action or omission occurring
prior to the Effective Time (including acts or omissions in connection with such
persons serving as an officer, director, or other fiduciary in any entity if
such service was at the request of Sanifill) or arising out of or pertaining to
the transactions contemplated by the Merger Agreement. In addition, pursuant to
the terms of the Merger Agreement, USA Waste has agreed to maintain in effect,
for a period of six years after the Effective Time, the current policies of
directors' and officers' liability insurance maintained by Sanifill and its
subsidiaries (or substantially equivalent policies) with respect to matters
arising prior to the Effective Time; provided, however, that USA Waste is only
required to obtain as much coverage as can be obtained by paying an annual
premium less than or equal to two times the current annual premiums for such
insurance coverage. In connection with the execution of the Merger Agreement,
USA Waste and Sanifill entered into the Indemnification Letter Agreement which
provides that the Certificate of Incorporation of the Surviving Corporation as
of the Effective Time will contain provisions for the indemnification of
officers and directors and related matters identical to the provisions governing
such matters contained in the USA Waste Restated Certificate of Incorporation on
June 22, 1996.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. Federal income tax
consequences of the Merger which are generally applicable to holders of Sanifill
Common Stock under the Internal Revenue Code of 1986, as amended (the "Code").
Tax consequences which are different from or in addition to those described
herein may apply to Sanifill stockholders who are subject to special treatment
under the U.S. Federal income tax laws, such as foreign persons, persons who
acquired their shares in compensatory transactions and persons who have a
contingent right to receive additional Sanifill stock as a result of contingency
or earn-out provisions in prior acquisitions by Sanifill. Furthermore, the
discussion does not address foreign, state or local tax considerations.
THIS SUMMARY IS NOT A SUBSTITUTE FOR AN INDIVIDUAL ANALYSIS OF THE TAX
CONSEQUENCES OF THE MERGER TO A SANIFILL STOCKHOLDER. EACH SANIFILL STOCKHOLDER
SHOULD CONSULT A TAX ADVISER REGARDING THE PARTICULAR FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF THE MERGER IN LIGHT OF SUCH STOCKHOLDER'S OWN
SITUATION.
It is a condition precedent to the closing of the Merger that USA Waste
receive from its counsel, Andrews & Kurth L.L.P., an opinion to the effect that
USA Waste and Acquisition will not recognize any gain or loss for U.S. Federal
income tax purposes as a result of the Merger. It is a condition precedent to
the closing of the Merger that Sanifill receive from its counsel, Baker & Botts,
L.L.P., an opinion to the effect that Sanifill will not recognize any gain or
loss as a result of the merger of Acquisition into it and that holders of
Sanifill Common Stock will not recognize any gain or loss upon the receipt of
USA Waste Common Stock in exchange for their shares of Sanifill Common Stock.
The opinions of Andrews & Kurth L.L.P. and Baker & Botts, L.L.P. are
collectively referred to as the "Opinions."
The Opinions will be subject to certain qualifications and assumptions as
noted therein and will rely upon certain representations of USA Waste,
Acquisition and Sanifill which have been provided to counsel as a basis for the
Opinions. The Opinions will be based upon counsel's interpretation of the Code,
applicable Treasury regulations, judicial authority and administrative rulings
and practice, all as of the date of the Opinions. There can be no assurance that
future legislative, judicial or administrative changes or interpretations will
not adversely affect the accuracy of the conclusions set forth herein. The
Opinions will not be binding upon the Internal Revenue Service (the "Service"),
and the Service will not be precluded from adopting a contrary position.
Assuming the Merger qualifies as a reorganization under Section 368(a) of
the Code, the following U.S. Federal income tax consequences will occur:
(a) No gain or loss will be recognized by USA Waste or Acquisition as
a result of the Merger;
(b) No gain or loss will be recognized by Sanifill as a result of the
merger of Acquisition into Sanifill;
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<PAGE> 45
(c) No gain or loss will be recognized by holders of Sanifill Common
Stock solely upon their receipt in the Merger of USA Waste Common Stock in
exchange therefor;
(d) The tax basis of the shares of USA Waste Common Stock received by
a Sanifill stockholder in the Merger (including any fractional share not
actually received) will be the same as the tax basis of the Sanifill Common
Stock surrendered in exchange therefor;
(e) The holding period of the shares of USA Waste Common Stock
received by a Sanifill stockholder in the Merger will include the holding
period of the shares of Sanifill Common Stock surrendered in exchange
therefor, provided that such shares of Sanifill Common Stock are held as
capital assets at the Effective Time; and
(f) A cash payment in lieu of a fractional share will be treated as if
a fractional share of USA Waste Common Stock had been received in the
Merger and then redeemed by USA Waste. Such redemption should qualify as a
distribution in full payment in exchange for the fractional share rather
than as a distribution of a dividend. Accordingly, a Sanifill stockholder
receiving cash in lieu of a fractional share will recognize gain or loss
upon such payment in an amount equal to the difference, if any, between
such stockholder's basis in the fractional share (as described in paragraph
(d) above) and the amount of cash received. Such gain or loss will be a
capital gain or loss if the Sanifill Common Stock is held as a capital
asset at the Effective Time.
Even if the Merger qualifies as a tax-free reorganization, a recipient of
USA Waste Common Stock could recognize gain to the extent that such shares were
considered by the Service to be received in exchange for consideration other
than Sanifill Common Stock. All or a portion of such gain may be taxable as
ordinary income. In addition, gain would be recognized to the extent that a
Sanifill stockholder was treated by the Service as receiving (directly or
indirectly) consideration other than USA Waste Common Stock in exchange for his
or her Sanifill Common Stock.
If the Service successfully challenged the status of the Merger as a
tax-free reorganization, a Sanifill stockholder would recognize gain or loss in
an amount equal to the difference between the stockholder's basis in his or her
shares and the fair market value, as of the Effective Date, of the USA Waste
Common Stock received in exchange therefor. In such event, the stockholder's
basis in the USA Waste Common Stock so received would be equal to its fair
market value as of the Effective Date and the holding period for such stock
would begin on the day after the Effective Date.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL
INFORMATION ONLY. EACH SANIFILL STOCKHOLDER SHOULD CONSULT A TAX ADVISER AS TO
THE PARTICULAR CONSEQUENCES OF THE MERGER THAT MAY APPLY TO SUCH STOCKHOLDER,
INCLUDING THE APPLICATION OF STATE, LOCAL, FOREIGN AND OTHER FEDERAL TAX LAWS.
For more information on the tax opinions to be delivered by counsel to USA
Waste and Sanifill as a condition to the closing of the Merger, see "The Plan of
Merger and Terms of the Merger -- Conditions to the Merger."
NO APPRAISAL OR DISSENTERS' RIGHTS
Delaware law does not require that holders of USA Waste Common Stock or
Sanifill Common Stock who object to the Merger and who vote against or abstain
from voting in favor of the Merger be afforded any appraisal or dissenters'
rights or the right to receive cash for their shares. Neither USA Waste nor
Sanifill intends to make available any such rights to its stockholders.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for using the "pooling
of interests" method of accounting pursuant to Opinion No. 16 of the Accounting
Principles Board. The "pooling of interests" method of accounting assumes that
the combining companies have been merged from inception, and the historical
financial statements for periods prior to consummation of the Merger are
restated as though the companies had been combined from inception.
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<PAGE> 46
One of the conditions to the Merger is the receipt by USA Waste and
Sanifill of a letter and memorandum, dated as of the Effective Time, from their
independent auditors, Coopers & Lybrand L.L.P. and Arthur Andersen LLP,
respectively, regarding such firms' concurrence with USA Waste management's and
Sanifill management's conclusions, respectively, as to the appropriateness of
"pooling of interests" accounting for the Merger under Accounting Principles
Board Opinion No. 16 if consummated in accordance with the Merger Agreement.
GOVERNMENT AND REGULATORY APPROVALS
Transactions such as the Merger are reviewed by the Antitrust Division of
the Department of Justice (the "Department of Justice") and the Federal Trade
Commission (the "FTC") to determine whether they comply with applicable
antitrust laws. Under the provisions of the HSR Act, the Merger may not be
consummated until such time as the specified waiting period requirements of the
HSR Act have been satisfied. USA Waste and Sanifill filed notification reports
with the Department of Justice and FTC under the HSR Act on July 1, 1996, and
the waiting period will expire at 11:59 p.m. on July 31, 1996 unless extended or
earlier terminated.
At any time before or after the Effective Time, the Department of Justice
and FTC or a private person or entity could seek under the antitrust laws, among
other things, to enjoin the Merger or to cause USA Waste to divest itself, in
whole or in part, of Sanifill or of other businesses conducted by USA Waste.
There can be no assurance that a challenge to the Merger will not be made or
that, if such a challenge is made, USA Waste and Sanifill will prevail.
USA Waste and Sanifill are not aware of any other governmental or
regulatory approvals required for consummation of the Merger, other than
compliance with applicable federal and state securities laws and as may be
required with respect to environmental permits held by Sanifill subsidiaries in
certain states that would deem the Merger to be a transfer of those permits.
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of USA Waste Common Stock received by Sanifill stockholders in
connection with the Merger have been registered under the Securities Act and,
except as set forth below, may be traded without restriction. The shares of USA
Waste Common Stock issued in the Merger and received by persons who are deemed
to be "affiliates" (as that term is defined in Rule 144 under the Securities
Act) of Sanifill prior to the Merger may be resold by them only in transactions
permitted by the resale provisions of Rule 145 under the Securities Act (or, in
the case of persons who become affiliates of USA Waste, Rule 144 under the
Securities Act) or as otherwise permitted under the Securities Act. The Merger
Agreement provides that Sanifill and USA Waste will use their reasonable best
efforts to cause each of their principal executive officers, directors and
affiliates to deliver to USA Waste and/or Sanifill, on or prior to the Effective
Time, a written agreement to the effect that such persons will not offer to
sell, sell or otherwise dispose of any shares of USA Waste Common Stock issued
in the Merger except, in each case, pursuant to an effective registration
statement or in compliance with Rule 145 or in a transaction which, in the
opinion of legal counsel satisfactory to USA Waste, is exempt from the
registration requirements of the Securities Act and, in any case, until after
the results covering 30 days of post-Merger combined operations of USA Waste and
Sanifill have been filed with the Commission, sent to stockholders of USA Waste
or otherwise publicly issued.
Under Commission guidelines interpreting generally accepted accounting
principles, the sale of USA Waste Common Stock or Sanifill Common Stock by an
affiliate of either USA Waste or Sanifill generally within 30 days prior to the
Effective Time or thereafter prior to the publication of financial statements
that include a minimum of at least 30 days of combined operations of USA Waste
and Sanifill after the Effective Time could preclude "pooling of interests"
accounting treatment for the Merger.
BOARD OF DIRECTORS AFTER THE MERGER
The USA Waste Restated Certificate of Incorporation and the USA Waste
Bylaws provide that, subject to the rights of holders of any class or series of
USA Waste Preferred Stock to elect additional directors under
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<PAGE> 47
specified circumstances, the number of directors will be fixed from time to time
by resolution of the USA Waste Board of Directors; provided, however, that
unless approved by at least two-thirds of the incumbent directors, the number of
directors which shall constitute the whole USA Waste Board of Directors shall be
no fewer than three and no more than nine. The Board of Directors of USA Waste
currently consists of 11 members and one vacancy for a total of 12 seats on the
Board of Directors. The USA Waste Restated Certificate of Incorporation and the
USA Waste Bylaws also provide that the Board of Directors of USA Waste be
divided into three classes of directors, as nearly equal in number as possible.
At each annual meeting of the stockholders, one class of directors is elected
for a three-year term. The terms of the existing Class I directors expire at the
annual meeting of the stockholders of USA Waste to be held in 1999, the terms of
the existing Class II directors expire at the annual meeting of the stockholders
of USA Waste to be held in 1997 and the terms of the existing Class III
directors expire at the annual meeting of the stockholders of USA Waste to be
held in 1998.
Pursuant to the terms of the Merger Agreement, USA Waste has agreed to take
such action as is necessary to cause its Board of Directors to consist of 12
members immediately after the Effective Time, including three members designated
by Sanifill prior to the Effective Time. Sanifill has designated Rodney R.
Proto, and will designate two non-officers of Sanifill and its subsidiaries
reasonably acceptable to USA Waste, as the individuals to serve on the Board of
Directors of USA Waste. There is currently one vacancy on the Board of Directors
in Class III. In order to provide a sufficient number of vacancies on the Board
of Directors of USA Waste, two members of USA Waste's Board of Directors will
resign from the Board of Directors prior to or as of the Effective Time.
Pursuant to the terms of the Merger Agreement, Sanifill has the right to
designate which of its designees shall fill each vacancy on the Board of
Directors of USA Waste. In addition, pursuant to the terms of the Merger
Agreement, USA Waste has agreed to appoint one of the three designees of
Sanifill, to be designated by Sanifill and reasonably acceptable to USA Waste,
to the Executive Committee of USA Waste's Board of Directors. In order to
provide a vacancy on the Executive Committee, David Sutherland-Yoest will resign
from his position as a member of the Executive Committee effective as of the
Effective Time.
Set forth below is certain information about each person who is currently a
member of the Board of Directors of USA Waste as well as Rodney R. Proto, one of
Sanifill's designees who will be appointed to the USA Waste Board of Directors
effective as of the Effective Time. Two additional persons will be designated by
Sanifill to serve on the USA Waste Board of Directors following consummation of
the Merger, to fill the vacancies created by the resignations of the two members
of USA Waste's Board of Directors in connection with the Merger.
<TABLE>
<CAPTION>
DIRECTOR DIRECTOR
NAME DESCRIPTION AGE SINCE CLASS
- --------------------------------- --------------------------------- --- -------- --------
<S> <C> <C> <C> <C>
John E. Drury(1)................. Chairman of the Board and Chief
Executive Officer 52 1994 III
Donald F. Moorehead, Jr.(1)...... Vice Chairman of the Board 46 1990 II
David Sutherland-Yoest(1)(2)..... President and Director 40 1994 I
George L. Ball(3)(4)............. Director 57 1991 III
Peter J. Gibbons(3)(4)........... Director 60 1995 I
Richard J. Heckmann(4)........... Director 52 1994 I
William E. Moffett(3)............ Director 65 1995 II
Alexander W. Rangos(1)........... Vice Chairman of the Board 36 1995 III
John G. Rangos, Sr.(1)........... Director 66 1995 II
Kosti Shirvanian(1).............. Vice Chairman of the Board 66 1996 I
Savey Tufenkian.................. Director 67 1996 II
Rodney R. Proto(5)............... President, Chief Operating
Officer and Director 47 1996 (6)
</TABLE>
- ---------------
(1) Member of the Executive Committee
(2) To resign from his positions as President and a member of the Executive
Committee as of the Effective Time and to become Regional Vice
President -- Atlantic Region and Vice Chairman of the Board
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<PAGE> 48
(3) Member of the Compensation and Stock Incentive Plan Committee
(4) Member of the Audit Committee
(5) To be appointed to the Board of Directors and elected President and Chief
Operating Officer as of the Effective Time
(6) If appointed to Class II, USA Waste has agreed to take such action as may be
necessary to renominate Mr. Proto to the Board of Directors with a term
expiring in the year 2000 or thereafter
John E. Drury (Class III) has been Chief Executive Officer since 1994 and
Chairman of the Board since 1995. From 1992 to May 1994, Mr. Drury served as a
Managing Director of Sanders Morris Mundy Inc. ("SMMI"), a Houston based
investment banking firm. Mr. Drury served as President and Chief Operating
Officer of Browning-Ferris Industries, Inc. ("BFI") from 1982 to 1991, during
which time he had chief responsibility for worldwide operations.
Donald F. Moorehead, Jr. (Class II) has been Vice Chairman since 1995.
Prior to such time, Mr. Moorehead served as Chairman of the Board and Chief
Development Officer since 1994. From October 1, 1990 to May 27, 1994, he was
also Chief Executive Officer. Mr. Moorehead was Chairman of the Board and Chief
Executive Officer of Mid-American Waste Systems Inc. ("Mid-American") from the
inception of Mid-American in December 1985 until August 1990 and continued as a
director until February 1991. From 1977 until 1984, Mr. Moorehead served in
various management positions with Waste Management Inc.
David Sutherland-Yoest (Class I) has been President since May 27, 1994.
Prior to joining USA Waste, he was President, Chief Executive Officer and a
director of Envirofil. He joined Envirofil in January 1993 and was elected a
director in March 1993. From September 1989 to June 1992, Mr. Sutherland-Yoest
served as President of Browning-Ferris Industries, Ltd. ("BFI Ltd."), the
Canadian subsidiary of BFI. From January through September 1989, Mr.
Sutherland-Yoest served as Vice-President, Corporate Development, for Laidlaw
Waste Systems, Inc. From 1987 to September 1989, Mr. Sutherland-Yoest was
Laidlaw's Regional Vice-President -- Atlantic Region, located in Columbus, Ohio.
From 1981 to 1987, Mr. Sutherland-Yoest served as District Manager -- Vancouver
and District Manager -- Calgary for BFI Ltd.
George L. Ball (Class III) has been non-executive Chairman of the Board and
a director of SMMI since May 1992. From September 1992 to January 1994, Mr. Ball
was a Senior Executive Vice President of Smith Barney Shearson Inc. From
September 1991 to September 1992, Mr. Ball was a consultant to J. & W. Seligman
& Co. Incorporated. In 1982, Mr. Ball was elected President and Chief Executive
Officer of Prudential-Bache Securities, Inc. and in 1986 was elected Chairman of
the Board, serving in such position until his resignation in 1991. He also
served as a member of the Executive Office of Prudential Insurance Company of
America. Prior to joining Prudential, Mr. Ball served as President of E.F.
Hutton Group, Inc. Mr. Ball is also a director of American Ecology Corporation,
Leviathan Gas Pipeline Company, L.P., and BioMedical Waste Systems, Inc. Mr.
Ball is a trustee emeritus of Brown University, a director of the National
Symphony Orchestra, a trustee of the Joint Council on Economic Education, and a
director of the Jefferson Awards.
Peter J. Gibbons (Class I) has served as a director of USA Waste since June
1995. He was affiliated in various capacities with the accounting firm of Price
Waterhouse from 1961 until his retirement therefrom as a partner in July 1993.
Richard J. Heckmann (Class I) is Chairman, President, and Chief Executive
Officer of United States Filter Corporation ("U.S. Filter"), a position he
assumed in July 1990. Prior to joining U.S. Filter, Mr. Heckmann was a Senior
Vice President -- Investments and Branch Manager of Prudential-Bache Securities
in Rancho Mirage, California. Mr. Heckmann is also a director of Air Cure, Inc.
William E. Moffett (Class II) has served as a director of USA Waste since
June 1995. In 1992, Mr. Moffett retired as Chairman of the Board and Chief
Executive Officer of Chatham Enterprises, Inc. (real estate development) and
Hazmed, Inc. (environmental services). In May 1985, he retired as President of
Gulf Oil Foundation and as Vice President -- Public Affairs of Gulf Oil
Corporation, having joined Gulf Oil
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Corporation in 1969 and served in a number of managerial assignments for that
company and its subsidiaries. Mr. Moffett also serves as a director of Calvin
Exploration Company, Inc.
Alexander W. Rangos (Class III) has been a director of USA Waste since June
1995. From June 1995 to December 1995, he was Executive Vice
President -- Corporate Development of USA Waste. Prior to such time, he served
as President and Chief Operating Officer of Chambers since January 1994. Prior
thereto, he served with Chambers as Executive Vice President -- Operations and
Corporate Development from 1990 to 1994, as Executive Vice
President -- Corporate Development from 1985 to 1990, and as Manager of the
Southern Region from 1984 to 1985. Mr. Rangos is a son of John G. Rangos, Sr.
John G. Rangos, Sr. (Class III) served as Vice Chairman of the Board of
Directors of USA Waste from June 1995 until December 1995. Prior to such time,
Mr. Rangos served as Chief Executive Officer of Chambers from 1973 to June 1995.
Mr. Rangos is the father of Alexander W. Rangos, a Vice Chairman of USA Waste.
In connection with the settlement of the Commission's investigation with respect
to Chambers' accounting method and the accuracy of its financial statements, the
Commission, in May 1995, instituted administrative proceedings against Chambers
and certain of its employees and outside auditors whose conduct the Commission
found has caused Chambers' violations of the reporting, internal controls and
recordkeeping provisions of the Exchange Act. The Commission, while not finding
that Mr. Rangos knew of those violations, found that he had not exercised
sufficient oversight over the company's recordkeeping, internal accounting
controls, and financial reporting functions to assure that Chambers complied
with the applicable provisions of the Exchange Act. Mr. Rangos consented to the
issuance of a cease and desist order without admitting or denying the
Commission's findings.
Kosti Shirvanian (Class I) founded Western in 1955 as a sole
proprietorship. He has served as Western's Chairman of the Board of Directors,
President and Chief Executive Officer since Western's incorporation in 1964 and
has been a director of USA Waste since May 1996.
Savey Tufenkian (Class II) helped to establish Western in 1955 and has
served as the Secretary and Treasurer of Western since its incorporation in
1964. In 1988, she was elected as Executive Vice President, Secretary and
Treasurer of Western and served in those positions until May 1996, at which time
she became a director of USA Waste.
Rodney R. Proto is President, Chief Operating Officer and a Director of
Sanifill. Mr. Proto joined Sanifill in February 1992. Prior to such time, he was
employed by Browning-Ferris Industries, Inc. for 12 years where he served, among
other positions, as Chairman of BFI Overseas from 1985 to 1987 and President of
Browning-Ferris Industries Europe, Inc. from 1987 through 1991. Mr. Proto is one
of the three Sanifill designees to be appointed to the Board of Directors of USA
Waste as of the Effective Time. Mr. Proto will also be elected President and
Chief Operating Officer of USA Waste as of the Effective Time.
MEETINGS, COMMITTEES AND COMPENSATION
The USA Waste Board of Directors held seven meetings in 1995. Each director
attended all of the Board of Directors' meetings in 1995 held during the period
in which he served. For 1995, directors who are not employed by USA Waste
received (i) an annual fee of $18,000 and (ii) a bonus of USA Waste Common Stock
valued at $5,000. At the 1996 annual meeting of the stockholders of USA Waste,
the stockholders approved a proposal designated "Director Plan" which provides
that non-employee directors will receive an annual grant of options to purchase
10,000 shares of USA Waste Common Stock. Such directors will not receive any
cash compensation or stock bonus as in prior years. In addition, USA Waste
reimburses directors for their travel and out-of-pocket expenses incurred in
attending Board or committee meetings.
The USA Waste Board of Directors has an Audit Committee, a Compensation and
Stock Incentive Plan Committee (the "Compensation Committee") and an Executive
Committee. The Audit Committee reviews external and internal audit plans and
activities, annual financial statements, and the system of internal financial
controls, and approves all significant fees for audit, audit-related and
non-audit services provided by independent auditors. The Audit Committee met
once in 1995. The Compensation Committee reviews and recommends compensation for
USA Waste officers and employees and recommends to the Board of Directors
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changes in USA Waste's incentive compensation plans. The Compensation Committee
met twice in 1995. The Executive Committee may act for the Board of Directors
when action is required between Board meetings and may act on behalf of the
Board on all but major corporate matters. All actions taken by the Executive
Committee must be reported at the Board's next meeting. The Executive Committee
met three times in 1995. All of the directors attended all committee meetings
during 1995 of the committees of which they were members.
OFFICERS
Each of the nine executive officers (including the chief executive officer
and the other four most highly compensated executive officers of USA Waste) will
continue as an executive officer of USA Waste after the Merger. David
Sutherland-Yoest will resign as President of USA Waste effective as of the
Effective Time and will become Regional Vice President -- Atlantic Region.
Rodney R. Proto, Sanifill's President and Chief Operating Officer, will serve as
USA Waste's President and Chief Operating Officer after the Merger. Each of the
executive officers serves at the discretion of the Board of Directors.
AMENDMENT TO USA WASTE RESTATED CERTIFICATE OF INCORPORATION
The authorized capital stock of USA Waste currently consists of 150,000,000
shares of Common Stock, par value $.01 per share, and 10,000,000 shares of
Preferred Stock, par value $.01 per share. On the Record Date, approximately
89.2 million shares of USA Waste Common Stock were issued and outstanding,
approximately 4.4 million shares were reserved for issuance pending conversion
of shares of acquired companies and approximately 13.1 million shares were
reserved for issuance upon exercise of outstanding options and warrants.
Based upon the number of shares of Sanifill Common Stock outstanding as of
the Record Date, the Merger will require the issuance of approximately 43.1
million shares of USA Waste Common Stock and the reservation for issuance of up
to approximately 5.1 million additional shares pursuant to outstanding options,
warrants and convertible securities of Sanifill, the sum of which exceeds the
number of shares of USA Waste Common Stock currently authorized, unissued and
not reserved for other purposes. In addition to the shares to be issued in
connection with the Merger, the USA Waste Board of Directors believes that it is
in the best interests of USA Waste to have additional shares of USA Waste Common
Stock available for issuance at its discretion for future acquisitions, stock
splits, stock dividends, equity financings, employee benefit plans and other
corporate purposes. Accordingly, the USA Waste Board of Directors has proposed
an amendment to the Restated Certificate of Incorporation of USA Waste to
increase the number of shares of USA Waste Common Stock available for issuance
from 150,000,000 to 300,000,000. The implementation of the Merger is conditioned
on the approval of this proposal; however, this proposal is not conditioned on
the consummation of the Merger, and, if approved by the stockholders of USA
Waste, it is the present intent of the USA Waste Board of Directors to implement
this proposal even if the Merger is not consummated.
If the proposal is approved by the stockholders of USA Waste as described
below, the additional shares of USA Waste Common Stock may be issued from time
to time upon authorization of the Board of Directors, without further approval
by the stockholders unless required by applicable law or NYSE rules, which
generally require the approval of a majority of USA Waste's stockholders when
USA Waste Common Stock is to be issued if such USA Waste Common Stock has voting
power equal to or in excess of 20% of the voting power outstanding, and for such
consideration as the USA Waste Board of Directors may determine and as may be
permitted by applicable law. The availability of additional shares of USA Waste
Common Stock for issuance will afford USA Waste greater flexibility in acting
upon proposed transactions.
The increase in authorized shares is not being proposed as a means of
preventing or dissuading a change in control or takeover of USA Waste. However,
use of these shares for such a purpose is possible. Shares of authorized but
unissued or unreserved USA Waste Common Stock and Preferred Stock, for example,
could be issued in an effort to dilute the stock ownership and voting power of
persons seeking to obtain control of USA Waste or could be issued to purchasers
who would support the Board of Directors in opposing a takeover
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proposal. In addition, the increase in authorized shares, if approved, may have
the effect of discouraging a challenge for control or making it less likely that
such a challenge, if attempted, would be successful.
The proposed amendment does not change the terms of the USA Waste Common
Stock, which does not have preemptive rights. The additional shares of USA Waste
Common Stock for which authorization is sought will have the same voting rights,
the same rights to dividends and distribution and will be identical in all other
respects to the shares of USA Waste Common Stock now authorized.
Recommendation of the Board of Directors. The Board of Directors of USA
Waste recommends that the stockholders of USA Waste vote FOR the amendment,
which is being proposed by the Board of Directors in order to ensure that (i)
there will be sufficient authorized, unissued and unreserved shares of USA Waste
Common Stock available to effect the Merger (and reserve shares for issuance
pursuant to the Sanifill Options, the Sanifill Warrants and the Sanifill
Convertible Debentures) and (ii) after the Merger, USA Waste will have shares
available for issuance at the Board of Directors' discretion for future
acquisitions, stock splits, stock dividends, equity financings, employee benefit
plans and other corporate purposes.
Vote Required for Approval. Approval of the amendment to the USA Waste
Restated Certificate of Incorporation requires the affirmative vote of a
majority of the outstanding shares of USA Waste Common Stock. If approved by the
stockholders of USA Waste, it is anticipated that this amendment to the Restated
Certificate of Incorporation will become effective as soon as practicable after
the USA Waste Special Meeting. See "The Meetings -- Vote Required for Approval."
THE PLAN OF MERGER AND TERMS OF THE MERGER
EFFECTIVE TIME OF THE MERGER
The Merger will become effective at such time as shall be stated in a
certificate of merger to be filed with the Secretary of State of the State of
Delaware. It is anticipated that if the Merger Agreement is approved at the USA
Waste Special Meeting and the Sanifill Special Meeting and all other conditions
to the Merger have been satisfied or waived, the Effective Time will occur as
soon as possible after the Meetings. If all other conditions to the Merger have
not been satisfied prior to the Meetings, however, it is anticipated that the
Effective Time will occur as soon as practicable after the date on which the
last of the conditions to closing contained in the Merger Agreement is fulfilled
or waived. See "-- Conditions to the Merger."
MANNER AND BASIS FOR CONVERTING SHARES
At the Effective Time, each outstanding share of Sanifill Common Stock will
be converted into 1.70 shares of USA Waste Common Stock.
Promptly after the Effective Time, USA Waste will cause the Exchange Agent
to mail to each record holder of Sanifill Common Stock immediately prior to the
Effective Time, a letter of transmittal and other information advising such
holder of the consummation of the Merger and instructions for use in effecting
the surrender of Sanifill Common Stock certificates in exchange for USA Waste
Common Stock certificates and cash in lieu of fractional shares. Letters of
transmittal will also be available following the Effective Time at the offices
of the Exchange Agent. After the Effective Time, there will be no further
registration of transfers on the stock transfer books of Sanifill of shares of
Sanifill Common Stock that were outstanding immediately prior to the Effective
Time. SHARE CERTIFICATES SHOULD NOT BE SURRENDERED FOR EXCHANGE BY STOCKHOLDERS
OF SANIFILL PRIOR TO APPROVAL OF THE MERGER AND THE RECEIPT OF A LETTER OF
TRANSMITTAL.
No fractional shares of USA Waste Common Stock will be issued in the
Merger. Each stockholder of Sanifill otherwise entitled to a fractional share
will receive an amount in cash equal to the value of such fractional share based
upon the average closing sale price of USA Waste Common Stock on the NYSE during
the 10 trading days preceding the Effective Time. No interest will be paid on
such amount, and all shares of Sanifill Common Stock held by a record holder
will be aggregated for purposes of computing the number of shares of USA Waste
Common Stock to be issued in the Merger.
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Until such time as a holder of Sanifill Common Stock surrenders his
outstanding stock certificates to the Exchange Agent, together with the letter
of transmittal, the shares of Sanifill Common Stock represented thereby will be
deemed from and after the Effective Time, for all corporate purposes, to
evidence the ownership of the number of full shares of USA Waste Common Stock
into which such shares shall have been converted. Unless and until such
outstanding certificates are surrendered, no dividends payable to the holders of
USA Waste Common Stock, as of any time on or after the Effective Time, will be
paid to the holders of such outstanding certificates. Upon surrender of the
certificates previously representing shares of Sanifill Common Stock, the holder
thereof will receive certificates representing the whole number of shares of USA
Waste Common Stock to which he or she is entitled, cash in lieu of fractional
shares and the amount of any dividends payable which theretofore became payable
to holders of USA Waste Common Stock on or after the Effective Time with respect
to such shares, without interest thereon.
ASSUMPTION OF SANIFILL OPTIONS AND SANIFILL WARRANTS
The Merger Agreement provides that USA Waste and Sanifill will take such
actions as may be necessary to cause each unexpired and unexercised Sanifill
Option and Sanifill Warrant to be automatically converted at the Effective Time
into an option or warrant, as the case may be, to purchase a number of shares of
USA Waste Common Stock equal to the number of shares of Sanifill Common Stock
that could have been purchased under the Sanifill Option or Sanifill Warrant
multiplied by the Exchange Ratio, at a price per share of USA Waste Common Stock
equal to the exercise price determined pursuant to the Sanifill Option or
Sanifill Warrant divided by the Exchange Ratio, and subject to the same terms
and conditions as the Sanifill Option or Sanifill Warrant (including
anti-dilution provisions). USA Waste will assume all of Sanifill's obligations
with respect to the Sanifill Options and Sanifill Warrants as so amended and
shall, from and after the Effective Time, make available for issuance upon
exercise of any such Sanifill Options and Sanifill Warrants all shares of USA
Waste Common Stock covered thereby.
TREATMENT OF SANIFILL CONVERTIBLE DEBENTURES
The Sanifill Convertible Debentures that are outstanding immediately prior
to the Effective Time will remain outstanding subsequent to the Effective Time
as debt instruments of the Surviving Corporation, subject to their respective
terms and conditions and the execution and delivery of a supplemental indenture
in the form required thereby. After the Effective Time, each outstanding
Sanifill Convertible Debenture will be convertible into the amount of shares of
USA Waste Common Stock (and cash in lieu of fractional shares) that the holder
thereof would have had the right to receive if such Sanifill Convertible
Debenture had been converted immediately prior to the Effective Time, subject to
subsequent anti-dilution adjustments as provided in the terms of the Sanifill
Convertible Debentures. After the Merger, Sanifill must enter into a
supplemental indenture with the Trustee providing for such conversion right into
shares of USA Waste Common Stock. As of March 31, 1996, $115 million in
aggregate principal amount of Sanifill Convertible Debentures were outstanding
(which are convertible into 2,389,610 shares of Sanifill Common Stock). In
connection with or after the Merger, USA Waste may become a co-obligor under or
a guarantor of the Sanifill Convertible Debentures but no definitive decision in
this regard has been made by USA Waste.
The Indenture governing the Sanifill Convertible Debentures and the
resolutions of the Board of Directors of Sanifill creating such series
(collectively, the "Indenture") provide that the holders of Sanifill Convertible
Debentures have the right to convert the Sanifill Convertible Debentures into
Sanifill Common Stock at any time at a conversion price of $48 1/8 per share.
The Indenture also provides that Sanifill may redeem the Sanifill Convertible
Debentures at any time after March 15, 1999 at 102.5% of the principal amount
thereof (declining annually to par on March 1, 2002). Finally, the Indenture
provides that Sanifill must offer to purchase all of the outstanding Sanifill
Convertible Debentures upon a Change in Control (as hereinafter defined) at 100%
of the principal amount thereof plus accrued interest. Under the Indenture a
"Change in Control" means (i) the acquisition by any person of 50% of the voting
power of the capital stock of Sanifill or (ii) any merger involving Sanifill;
provided, however, that a Change in Control shall not be deemed to have occurred
if either (a) all the consideration paid for Sanifill Common Stock (excluding
cash for fractional shares) in the transaction consists of shares of common
stock listed on the NYSE or other
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national securities exchange or quoted on The Nasdaq Stock Market, Inc. and as a
result of the transactions the Sanifill Convertible Debentures become
convertible solely into such common stock or (b) the closing price per share for
specified periods equals or exceeds 105% of the conversion price then in effect.
The Merger will not constitute a "Change in Control" because it will meet the
conditions in clause (a) of the proviso.
CONDITIONS TO THE MERGER
The respective obligations of USA Waste and Sanifill to consummate the
Merger are subject to the satisfaction of the following conditions: (a) the
Merger Agreement and the transactions contemplated thereby shall have been
approved and adopted by the requisite vote of the stockholders of USA Waste and
the stockholders of Sanifill under applicable law and applicable listing
requirements; (b) the USA Waste Common Stock issuable in the Merger and to be
reserved for issuance upon exercise of stock options or warrants or the
conversion of convertible securities shall have been authorized for listing on
the NYSE upon official notice of issuance; (c) the waiting period applicable to
consummation of the Merger under the HSR Act shall have expired or been
terminated; (d) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect and no
proceeding for that purpose shall have been instituted by the Commission or any
state regulatory authorities; (e) no preliminary or permanent injunction or
other order or decree by any federal or state court which prevents the
consummation of the Merger shall have been issued and remain in effect (each
party agreeing to use its reasonable efforts to have any such injunction, order
or decree lifted); (f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the consummation of
the Merger or make the consummation of the Merger illegal; (g) all governmental
waivers, consents, orders and approvals legally required for the consummation of
the Merger and the transactions contemplated hereby, and all consents from
lenders required to consummate the Merger, shall have been obtained and be in
effect at the Effective Time, except where failure to obtain the same would not
be reasonably likely to have a material adverse effect on the business,
operations, properties, assets, liabilities, condition (financial or other) or
results of operations of Sanifill and its subsidiaries, taken as a whole,
following the Effective Time; (h) Coopers & Lybrand L.L.P., certified public
accountants for USA Waste, shall have delivered a letter, dated the Closing Date
(as hereinafter defined), addressed to USA Waste, in form and substance
satisfactory to USA Waste, to the effect that the Merger will qualify for a
"pooling of interests" accounting treatment if consummated in accordance with
the Merger Agreement; and (i) Arthur Andersen LLP, certified public accountants
for Sanifill, shall have delivered a memorandum, dated the Closing Date,
addressed to Sanifill, in form and substance reasonably satisfactory to
Sanifill, stating that the Merger will qualify for a "pooling of interests"
accounting treatment if consummated in accordance with the Merger Agreement.
The obligation of Sanifill to effect the Merger is further subject to the
fulfillment of the following additional conditions: (a) USA Waste and
Acquisition shall have performed in all material respects their agreements
contained in the Merger Agreement required to be performed on or prior to the
date on which the transactions contemplated by the Merger Agreement are
consummated (the "Closing Date"), and the representations and warranties of USA
Waste and Acquisition contained in the Merger Agreement shall be true and
correct in all material respects on and as of the date made and (except to the
extent that such representations and warranties speak as of an earlier date) on
and as of the Closing Date as if made at and as of such date, and Sanifill shall
have received a certificate of the Chairman of the Board and Chief Executive
Officer, the President or a Vice President of USA Waste and of the President and
Chief Executive Officer or a Vice President of Acquisition to that effect; (b)
Sanifill shall have received an opinion of its legal counsel, Baker & Botts,
L.L.P., in form and substance reasonably satisfactory to Sanifill, dated the
Closing Date, to the effect that Sanifill and the holders of Sanifill Common
Stock (except to the extent any stockholders receive cash in lieu of fractional
shares) will recognize no gain or loss for federal income tax purposes as a
result of consummation of the Merger; (c) since June 22, 1996, there shall have
been no changes that constitute, and no event or events (including, without
limitation, litigation developments) shall have occurred which have resulted in
or constitute, a material adverse change in the business, operations,
properties, assets, condition (financial or other) or results of operations of
USA Waste and its subsidiaries, taken as a whole, except for
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changes that affect the industries in which USA Waste and its subsidiaries
operate generally; and (d) all governmental waivers, consents, orders and
approvals legally required for the consummation of the Merger and the
transactions contemplated by the Merger Agreement shall have been obtained and
be in effect at the Closing Date, except for such waivers, consents, orders and
approvals the failure of which to have been obtained would not have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of USA Waste and its subsidiaries,
taken as a whole, following the Effective Time and no governmental authority
shall have promulgated after June 22, 1996 any statute, rule or regulation
which, when taken together with all other such promulgations, would materially
impair the value to Sanifill of the Merger.
The obligation of USA Waste and Acquisition to effect the Merger is further
subject to the fulfillment of the following additional conditions: (a) Sanifill
shall have performed in all material respects its agreements in the Merger
Agreement required to be performed on or prior to the Closing Date, and the
representations and warranties of Sanifill contained in the Merger Agreement
shall be true and correct in all material respects on and as of the date made
and on and as of the Closing Date as if made at and as of such date, and USA
Waste shall have received a certificate of the President and Chief Executive
Officer or of a Vice President of Sanifill to that effect; (b) USA Waste shall
have received an opinion of its counsel, Andrews & Kurth L.L.P., in form and
substance reasonably satisfactory to USA Waste, dated the Closing Date, to the
effect that USA Waste and Acquisition will recognize no gain or loss for federal
income tax purposes as a result of consummation of the Merger; (c) USA Waste
shall have received from each principal executive officer, each director, and
each other person who is an "affiliate," as that term is defined in paragraphs
(c) and (d) of Rule 145 under the Securities Act, of USA Waste or Sanifill, as
the case may be, written agreements to the effect that such person will not
offer to sell, sell or otherwise dispose of any shares of USA Waste Common Stock
issued in the Merger, except, in each case, pursuant to an effective
registration statement or in compliance with Rule 145, as amended from time to
time, or in a transaction which, in the opinion of legal counsel satisfactory to
USA Waste, is exempt from the registration requirements of the Securities Act
and, in any case, until after the results covering 30 days of post-Merger
combined operations of USA Waste and Sanifill have been filed with the
Commission, sent to stockholders of USA Waste or otherwise publicly issued; (d)
since June 22, 1996, there shall have been no changes that constitute, and no
event or events (including, without limitation, litigation developments) shall
have occurred which have resulted in or constitute, a material adverse change in
the business, operations, properties, assets, condition (financial or other) or
results of operations of Sanifill and its subsidiaries, taken as a whole, except
for changes that affect the industries in which Sanifill and its subsidiaries
operate generally; and (e) all governmental waivers, consents, orders and
approvals legally required for the consummation of the Merger and the
transactions contemplated by the Merger Agreement shall have been obtained and
be in effect at the Closing Date, except for such waivers, consents, orders and
approvals the failure of which to have been obtained would not have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of Sanifill and its subsidiaries,
taken as a whole, following the Effective Time, and no governmental authority
shall have promulgated after June 22, 1996 any statute, rule or regulation
which, when taken together with all other such promulgations, would materially
impair the value to USA Waste of the Merger.
Neither USA Waste nor Acquisition has any obligation to consummate the
Merger if any condition to its obligation to consummate the Merger is not
satisfied on or prior to the Closing Date of the Merger, and Sanifill has no
obligation to consummate the Merger if any condition to its obligation to
consummate the Merger is not satisfied on or prior to the Closing Date of the
Merger. However, termination of the Merger Agreement will not relieve either
party from liability for any willful or intentional breach of the Merger
Agreement. At any time prior to the Effective Time, USA Waste, Acquisition or
Sanifill may (a) extend the time for the performance of any of the obligations
or other acts of the other party or parties, (b) waive any inaccuracies in the
representations and warranties contained in the Merger Agreement or in any
document delivered pursuant thereto and (c) waive compliance with any of the
agreements or conditions contained in the Merger Agreement.
In connection with the consummation of the Merger, USA Waste will seek to
obtain any consent or amendment as may be necessary pursuant to USA Waste's
Revolving Credit Agreement, dated as of May 7,
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1996, by and among USA Waste and The First National Bank of Boston, Bank of
America Illinois, Morgan Guaranty Trust Company of New York and other financial
institutions.
Under the terms of an Indenture (the "Indenture"), dated as of March 1,
1996, between Sanifill and Texas Commerce Bank National Association, as trustee,
relating to the Sanifill Convertible Debentures, Sanifill is required to deliver
to the trustee an officers' certificate and an opinion of counsel, each stating
that the Merger complies with the terms of the Indenture and that all conditions
precedent provided for in the Indenture relating thereto have been complied
with. The Indenture also requires Sanifill to give written notice to all holders
of convertible debt issued under the Indenture at least 20 days before the
Effective Time of the Merger.
Implementation of the Merger is also conditioned on approval by the
stockholders of USA Waste of Proposal No. 2 to amend the Restated Certificate of
Incorporation of USA Waste to increase the number of authorized shares of USA
Waste Common Stock to 300,000,000 shares and the filing and effectiveness of the
Certificate of Amendment with respect thereto. See "Amendment to USA Waste
Restated Certificate of Incorporation."
REPRESENTATIONS AND WARRANTIES OF USA WASTE AND SANIFILL
In the Merger Agreement, USA Waste and Sanifill have made various
representations and warranties relating to, among other things, their respective
businesses and financial condition, the accuracy of their various filings with
the Commission, the satisfaction of certain legal requirements for the Merger
and the absence of undisclosed liabilities or material litigation matters. In
addition, Sanifill has represented that the Sanifill Board of Directors has
taken all necessary action to amend the Sanifill Preferred Stock Rights
Agreement so that none of the triggering events under such agreement will occur
or cause such rights to become exercisable.
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS
None of the representations, warranties and agreements contained in the
Merger Agreement will survive the consummation of the Merger with the exception
of the obligations of USA Waste to (i) take such action as is necessary to cause
its Board of Directors immediately following the Effective Time to be composed
of 12 members, three of which are to be designated by Sanifill prior to the
Effective Time, and one of which is to be appointed to the Executive Committee
of the Board of Directors of USA Waste (see "The Merger and Related
Transactions -- Board of Directors After the Merger"), (ii) appoint Rodney R.
Proto as President and Chief Operating Officer of USA Waste effective as of the
Effective Time (see "The Merger and Related Transactions -- Board of Directors
After the Merger"), (iii) transfer its principal executive office to Houston,
Texas as soon as practicable after the Effective Time (see "-- Office
Relocation"), (iv) appoint an Exchange Agent and provide the Exchange Agent with
a sufficient number of shares of USA Waste Common Stock and cash in lieu of
fractional shares for delivery upon surrender of the certificates representing
shares of Sanifill Common Stock (see "-- Manner and Basis for Converting
Shares"), (v) assume the obligations of Sanifill in connection with its
outstanding options and warrants (as amended to provide for the issuance of USA
Waste Common Stock upon the exercise thereof), make available for issuance upon
exercise of the same all shares of USA Waste Common Stock to be covered thereby
and amend its registration statement on Form S-8 or file a new registration
statement to cover the additional shares of USA Waste Common Stock to be issued
upon the exercise thereof (see "-- Assumption of Sanifill Options and Sanifill
Warrants"), and (vi) provide indemnification and directors' and officers'
liability insurance to certain directors and officers of Sanifill (see
"-- Indemnification and Insurance").
CONDUCT OF THE BUSINESS OF USA WASTE AND SANIFILL PRIOR TO THE MERGER
Pursuant to the Merger Agreement, Sanifill has agreed that, prior to the
Effective Time, and except as otherwise agreed to in writing by USA Waste and
except as set forth in the Merger Agreement or disclosed to USA Waste before
execution of the Merger Agreement, it shall, and shall cause each of its
subsidiaries to: (a) conduct their respective businesses in the ordinary and
usual course of business and consistent with past
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practice; (b) not (i) amend or propose to amend their respective charter or
bylaws, (ii) split, combine or reclassify their outstanding capital stock or
(iii) declare, set aside or pay any dividend or distribution payable in cash,
stock, property or otherwise, except for the payment of dividends or
distributions by a wholly owned subsidiary of Sanifill; (c) not issue, sell,
pledge or dispose of, or agree to issue, sell, pledge or dispose of, any
additional shares of, or any options, warrants or rights of any kind to acquire
any shares of, their capital stock of any class or any debt or equity securities
convertible into or exchangeable for such capital stock, except that (i)
Sanifill may issue shares upon conversion of convertible securities and exercise
of options and warrants outstanding on the date of the Merger Agreement and (ii)
Sanifill may issue shares of Sanifill Common Stock in connection with
acquisitions of assets or businesses pursuant to the proviso contained in clause
(d) below; (d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary course
of business, (B) borrowings to refinance existing indebtedness on terms which
are reasonably acceptable to USA Waste or (C) as set forth in the proviso
contained in this clause (d), (ii) redeem, purchase, acquire or offer to
purchase or acquire any shares of their capital stock, or any options, warrants
or rights to acquire any of their capital stock, or any security convertible
into or exchangeable for their capital stock, (iii) take any action that would
jeopardize the treatment of the Merger as a "pooling of interests" under
Accounting Principles Board Opinion No. 16, (iv) take or fail to take any action
which action or failure to take action would cause Sanifill or its stockholders
(except to the extent that any stockholders receive cash in lieu of fractional
shares and except to the extent of stockholders in special circumstances) to
recognize any gain or loss for federal income tax purposes as a result of the
consummation of the Merger or would otherwise cause the Merger not to qualify as
a reorganization under Section 368 of the Code, (v) make any acquisition of any
assets or businesses other than expenditures for current assets in the ordinary
course of business and expenditures for fixed or capital assets in the ordinary
course of business and consistent with Sanifill's capital budget disclosed in
its disclosure schedule and other than as set forth in the proviso of this
clause (d), (vi) sell, pledge, dispose of or encumber any material assets or
businesses other than sales in the ordinary course of business or (vii) enter
into any binding contract, agreement, commitment or arrangement with respect to
any of the foregoing; provided, however, that notwithstanding the foregoing,
(other than subsections (iii) and (iv) of this clause (d)) Sanifill shall not be
prohibited from acquiring any assets or businesses or issuing Sanifill Common
Stock or incurring or assuming indebtedness in connection with such acquisitions
so long as (x) the aggregate value of consideration paid or payable in
connection with all such acquisitions, including any funded indebtedness assumed
and any Sanifill Common Stock (valued for purposes of this limitation at a price
per share equal to the price of Sanifill Common Stock on the date an agreement
in respect of an acquisition is entered into) issued or issuable in connection
with such acquisitions, does not exceed $80 million (excluding any acquisitions
for which a letter of intent has been executed and which were disclosed to USA
Waste before the execution of the Merger Agreement), (y) the aggregate value of
consideration paid or payable for any one such acquisition, including any funded
indebtedness assumed and any Sanifill Common Stock (valued for purposes of this
limitation at a price per share equal to the price of Sanifill Common Stock on
the date an agreement in respect of an acquisition is entered into) issued or
issuable in connection with such acquisition, does not exceed $20 million
(excluding any acquisitions for which a letter of intent has been executed and
which are identified on Sanifill's disclosure schedule) and (z) Sanifill will
not acquire or agree to acquire any assets or business if such acquisition or
agreement may reasonably be expected to delay the consummation of the Merger;
(e) use all reasonable efforts to preserve intact their respective business
organizations and goodwill, keep available the services of their respective
present officers and key employees, preserve the goodwill and business
relationships with customers and others having business relationships with them
and not engage in any action, directly or indirectly, with the intent to
adversely impact the transactions contemplated by the Merger Agreement; (f)
subject to restrictions imposed by applicable law, confer on a regular and
frequent basis with one or more representatives of USA Waste to report
operational matters of materiality and the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay arrangement
with respect to termination of employment or other similar arrangements or
agreements with any directors, officers or key employees, except in the ordinary
course and consistent with past practice; provided, however, that Sanifill and
its subsidiaries shall in no event enter into any written employment agreement;
(h) not adopt, enter into or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, health care,
employment or other employee benefit plan, agreement, trust, fund or arrangement
for the benefit or welfare of any employee or
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retiree, except as required to comply with changes in applicable law; (i) use
commercially reasonable efforts to maintain with financially responsible
insurance companies insurance on their tangible assets and their businesses in
such amounts and against such risks and losses as are consistent with past
practice; and (j) not make, change or revoke any material tax election or make
any material agreement or settlement regarding taxes with any taxing authority.
Pursuant to the Merger Agreement, USA Waste has agreed that, prior to the
Effective Time, and except as otherwise agreed to in writing by Sanifill, it
shall, and shall cause each of its subsidiaries to: (a) conduct their respective
businesses in the ordinary and usual course of business and consistent with past
practice; (b) not (i) amend or propose to amend their respective charter (except
for the amendment to USA Waste's Restated Certificate of Incorporation to
increase the number of authorized shares of USA Waste Common Stock) or bylaws,
(ii) split, combine or reclassify (whether by stock dividend or otherwise) their
outstanding capital stock or (iii) declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise, except for the
payment of dividends or distributions by a wholly owned subsidiary of USA Waste;
(c) not issue, sell, pledge, or dispose of, or agree to issue, sell, pledge or
dispose of, any additional shares of, or any options, warrants or rights of any
kind to acquire any shares of, their capital stock of any class or any debt or
equity securities convertible into or exchangeable for such capital stock,
except that (i) USA Waste may issue shares upon conversion of convertible
securities and exercise of options outstanding on the date hereof, (ii) USA
Waste may issue options (and shares upon exercise of such options) pursuant to
its employee stock option plans in effect on the date hereof in the ordinary
course of business and consistent with past practices and (iii) USA Waste may
issue shares of capital stock (or warrants or options to acquire capital stock)
in connection with acquisitions of assets or businesses pursuant to the proviso
contained in clause (d) below; (d) not (i) incur or become contingently liable
with respect to any indebtedness for borrowed money other than (A) borrowings in
the ordinary course of business, (B) borrowings to refinance existing
indebtedness on terms which are reasonably acceptable to Sanifill or (C) as set
forth in the proviso in this clause (d), (ii) redeem, purchase, acquire or offer
to purchase or acquire any shares of their capital stock, or any options,
warrants or rights to acquire any of their capital stock, or any security
convertible into or exchangeable for their capital stock, (iii) take any action
which would jeopardize the treatment of the Merger as a "pooling of interests"
under Accounting Principles Board Opinion No. 16, or (iv) take or fail to take
any action which action or failure to take action would cause USA Waste or its
stockholders to recognize gain or loss for federal income tax purposes as a
result of the consummation of the Merger or would otherwise cause the Merger not
to qualify as a reorganization under Section 368 of the Code, (v) sell, pledge,
dispose of or encumber any material assets or businesses other than sales in the
ordinary course of business, (vi) make any acquisition of any assets or
businesses other than expenditures for current assets in the ordinary course of
business and expenditures for fixed or capital assets in the ordinary course of
business and other than as set forth in the proviso of this clause (d), or (vii)
enter into any binding contract, agreement, commitment or arrangement with
respect to any of the foregoing; provided, however, that notwithstanding the
foregoing (other than subsections (iii) and (iv) of this clause (d)), USA Waste
shall not be prohibited from acquiring any assets or businesses or issuing
capital stock (or warrants or options to acquire capital stock) or incurring or
assuming indebtedness in connection with such acquisitions so long as (x) the
aggregate value of consideration paid or payable in connection with all such
acquisitions, including any funded indebtedness assumed and any USA Waste Common
Stock (valued for purposes of this limitation at a price per share equal to the
price of USA Waste Common Stock on the date an agreement in respect of an
acquisition is entered into) issued or issuable in connection with such
acquisitions, does not exceed $160 million (excluding any acquisitions for which
a letter of intent has been executed and which were disclosed to Sanifill before
the execution of the Merger Agreement), (y) the aggregate value of consideration
paid or payable for any one such acquisition, including any funded indebtedness
assumed and any USA Waste Common Stock (valued for purposes of this limitation
at a price per share equal to the price of USA Waste Common Stock on the date an
agreement in respect of an acquisition is entered into) issued or issuable in
connection with such acquisition, does not exceed $40 million (excluding any
acquisitions for which a letter of intent has been executed and which were
disclosed to Sanifill before the execution of the Merger Agreement) and (z) USA
Waste will not acquire or agree to acquire any assets or business if such
acquisition or agreement may reasonably be expected to delay the consummation of
the Merger; (e) use all reasonable efforts to preserve intact their respective
business organizations and
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goodwill, keep available the services of their respective present officers and
key employees, preserve the goodwill and business relationships with customers
and others having business relationships with them and not engage in any action,
directly or indirectly, with the intent to adversely impact the transactions
contemplated by the Merger Agreement; (f) subject to restrictions imposed by
applicable law, confer on a regular and frequent basis with one or more
representatives of Sanifill to report operational matters of materiality and the
general status of ongoing operations; and (g) use commercially reasonable
efforts to maintain with financially responsible insurance companies insurance
on their tangible assets and their businesses in such amounts and against such
risks and losses as are consistent with past practice.
NO SOLICITATION OF ACQUISITION TRANSACTIONS
The Merger Agreement further provides that prior to the Effective Date or
earlier termination of the Merger Agreement, Sanifill shall not, and shall not
permit any of its subsidiaries to, initiate, solicit, negotiate, encourage or
provide non-public confidential information to facilitate, and Sanifill shall,
and shall cause each of its subsidiaries to, cause any officer, director or
employee of, or any attorney, accountant, investment banker, financial advisor
or other agent retained by it, not to initiate, solicit, negotiate, encourage or
provide non-public or confidential information to facilitate, any proposal or
offer to acquire all or any substantial part of the business and properties of
Sanifill or any capital stock of Sanifill, whether by merger, purchase of
assets, tender offer or otherwise, whether for cash, securities or any other
consideration or combination thereof (any such transactions being referred to
herein as an "Acquisition Transaction"); provided, however, that (i) Sanifill
may, in response to an unsolicited written proposal or indication of interest
with respect to a potential or proposed Acquisition Transaction ("Acquisition
Proposal"), furnish (subject to the execution of a confidentiality agreement and
standstill agreement containing provisions substantially similar to the
confidentiality and standstill provisions of the confidentiality agreements
executed by USA Waste and Sanifill) confidential or non-public information to a
financially capable corporation, partnership, person or other entity or group (a
"Potential Acquirer") and negotiate with such Potential Acquirer if Sanifill's
board of directors, after consulting with its outside legal counsel, determines
in good faith that the failure to provide such confidential or non-public
information to or negotiate with such Potential Acquirer would constitute a
breach of its fiduciary duty to its stockholders and (ii) Sanifill's Board of
Directors may take and disclose to Sanifill's stockholders a position
contemplated by Rule 14e-2 under the Exchange Act. Sanifill shall immediately
notify USA Waste after receipt of any Acquisition Proposal or any request for
non-public information relating to Sanifill or its subsidiaries in connection
with an Acquisition Proposal or for access to the properties, books or records
of Sanifill or any subsidiary by any person or entity that informs the Board of
Directors of Sanifill or such subsidiary that it is considering making, or has
made, an Acquisition Proposal. Such notice to USA Waste shall be made orally and
in writing and shall indicate in reasonable detail the identity of the Potential
Acquirer and the terms and conditions of such proposal, inquiry or contact.
CONDUCT OF THE BUSINESS OF THE COMBINED COMPANIES FOLLOWING THE MERGER
Following the Merger, Sanifill will be a wholly owned subsidiary of USA
Waste. Pursuant to the Merger Agreement, the Certificate of Incorporation and
the Bylaws of Acquisition, as in effect immediately prior to the Effective Time,
will be the Certificate of Incorporation and Bylaws of the surviving corporation
and thereafter may be amended in accordance with their terms and as provided in
the DGCL. In connection with the execution of the Merger Agreement, USA Waste
and Sanifill entered into the Indemnification Letter Agreement which provides
that the Certificate of Incorporation of the Surviving Corporation as of the
Effective Time will contain provisions for the indemnification of officers and
directors and related matters identical to the provisions governing such matters
contained in the USA Waste Restated Certificate of Incorporation as of June 22,
1996.
TERMINATION OR AMENDMENT
Termination. The Merger Agreement may be terminated under certain
circumstances, including (a) with the mutual written consent of USA Waste and
Sanifill or (b) either by USA Waste or Sanifill at any time prior to the
consummation of the Merger (i) if the Merger is not completed by December 31,
1996, for
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reasons other than delay on the part of the party requesting termination (the
"Terminating Party"); (ii) if the representations and warranties of the
non-Terminating Party shall fail to be true and correct in all material respects
on and as of the date made or, except in the case of any such representations
and warranties made as of a specified date, on and as of any subsequent date as
if made at and as of such subsequent date and such failure shall not have been
cured within 30 days after written notice of such failure is given to the non-
Terminating Party by the Terminating Party; (iii) if the Merger is enjoined by a
final, unappealable court order not entered at the request or with the support
of the party requesting termination; (iv) if the non-Terminating Party (x) fails
to perform in any material respect any of its material covenants in the Merger
Agreement and (y) does not cure such default in all material respects within 30
days after notice of such default is given to the non-Terminating Party by the
Terminating Party; and (v) if the stockholders of the non-Terminating Party fail
to approve the Merger at a duly held meeting of the stockholders called for such
purpose or any adjournment thereof. Additionally, Sanifill may terminate the
Merger Agreement (i) if (x) Sanifill receives an offer or proposal from any
Potential Acquirer (excluding any affiliate of Sanifill or any group of which
any affiliate of Sanifill is a member) with respect to a merger, sale of
substantial assets or other business combination involving Sanifill, (y)
Sanifill's Board of Directors determines, in good faith and after consultation
with an independent financial advisor, that such offer or proposal (if
consummated pursuant to its terms) would result in an Acquisition Transaction
more favorable to Sanifill's stockholders than the Merger (any such offer or
proposal being referred to as a "Superior Proposal") and resolves to accept such
Superior Proposal and (z) Sanifill shall have given USA Waste two days' prior
written notice of its intention to terminate; (ii) if (x) a tender or exchange
offer is commenced by a Potential Acquirer (excluding any affiliate of Sanifill
or any group of which any affiliate of Sanifill is a member) for all outstanding
shares of Sanifill Common Stock; (y) Sanifill's Board of Directors determines,
in good faith and after consultation with an independent financial advisor, that
such offer constitutes a Superior Proposal and resolves to accept such Superior
Proposal or recommend to the stockholders that they tender their shares in such
tender or exchange offer and (z) Sanifill shall have given USA Waste two days'
prior written notice of its intention to terminate. Similarly, USA Waste may
terminate the Merger Agreement if the Board of Directors of Sanifill shall have
resolved to accept a Superior Proposal or shall have recommended to Sanifill's
stockholders that they tender their shares in a tender or an exchange offer
commenced by a third party (excluding any affiliate of USA Waste or any group of
which any affiliate of USA Waste is a member). However, termination of the
Merger Agreement will not relieve either party from liability for any breach of
the Merger Agreement.
The Merger Agreement may not be amended except by action taken by the
respective Boards of Directors of the parties or duly authorized committees
thereof and then only by an instrument in writing signed on behalf of each party
and in compliance with applicable law. Such amendment may take place at any time
prior to the Closing Date, whether before or after approval by the stockholders
of USA Waste, Sanifill or Acquisition.
TERMINATION FEES
Sanifill and USA Waste have each agreed to pay a termination fee to the
other party should certain of the termination rights described in
"-- Termination or Amendment" above be exercised under certain circumstances.
Sanifill has agreed to pay USA Waste a fee of $39 million if (a) Sanifill
terminates the Merger Agreement in connection with a Superior Proposal as
described in "-- Termination or Amendment" above or (b) USA Waste terminates the
Merger Agreement as described in clause (b)(iv) of "-- Termination or Amendment"
above; provided, however, that USA Waste shall not be entitled to receive such
termination fee if the standstill provisions contained in the Confidentiality
Agreement between USA Waste and Sanifill have lapsed and are no longer in force
and effect because (a) (i) a third party, other than a third party who is an
affiliate or is acting in concert with USA Waste, commences a tender or exchange
offer for 20% or more of the Sanifill Common Stock, (ii) a third party, other
than a third party who is an affiliate or is acting in concert with USA Waste,
acquires beneficial ownership of 20% or more of the Sanifill Common Stock or
(iii) Sanifill has agreed to a merger, consolidation or other acquisition of
Sanifill or an acquisition of all or substantially all of the assets of Sanifill
and (b) USA Waste has, following the occurrence of an event described in (a)(i),
(ii) or (iii) above, taken actions that would otherwise be prohibited by the
standstill provisions of the Confidentiality Agreement. See "-- Other
Agreements." USA Waste has agreed to pay a fee of $39 million if
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Sanifill terminates the Merger Agreement as described in clause (b)(iv) of
"-- Termination or Amendment" above.
EXPENSES
The Merger Agreement provides that all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
shall be paid by the party incurring such expenses, except that those expenses
incurred in connection with the printing and filing of this Joint Proxy
Statement and Prospectus shall be shared equally by USA Waste and Sanifill and
except as provided in "-- Termination Fees."
OFFICE RELOCATION
Pursuant to the terms of the Merger Agreement, USA Waste has agreed to
transfer its principal executive offices to Houston, Texas, as soon as
practicable after the Effective Time.
INDEMNIFICATION AND INSURANCE
The Merger Agreement provides for the indemnification by USA Waste, to the
fullest extent permitted under applicable law, of the present and former
directors, officers, employees and agents of Sanifill or any of its subsidiaries
against any costs or expenses (including attorneys fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened claim, action, suit, proceeding or
investigation, whether civil or criminal, administrative or investigative,
arising out of, relating to, or in connection with any action or omission
occurring prior to the Effective Time (including, without limitation, acts or
omissions in connection with such persons serving as an officer, director or
other fiduciary in any entity if such service was at the request or for the
benefit of Sanifill) or arising out of or pertaining to the transactions
contemplated by the Merger Agreement. In connection with the execution of the
Merger Agreement, USA Waste and Sanifill entered into the Indemnification Letter
Agreement which provides that the Certificate of Incorporation of the Surviving
Corporation as of the Effective Time will contain provisions for the
indemnification of officers and directors and related matters identical to the
provisions governing such matters contained in the USA Waste Restated
Certificate of Incorporation as of June 22, 1996. In addition, the Merger
Agreement provides that the indemnification provisions of the Certificate of
Incorporation of the Surviving Corporation as in effect at the Effective Time,
shall not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at the Effective Time were directors, officers,
employees or agents of Sanifill, unless such modification is required by law.
Finally, pursuant to the terms of the Merger Agreement, USA Waste has agreed to
maintain in effect, for a period of six years after the Effective Time, the
current policies of directors' and officers' liability insurance maintained by
Sanifill and its subsidiaries (or substantially equivalent policies) with
respect to matters arising prior to the Effective Time; provided, however, that
USA Waste is only required to obtain as much coverage as can be obtained by
paying an annual premium less than or equal to two times the current annual
premiums for such insurance coverage.
OTHER AGREEMENTS
In connection with the Merger, USA Waste and Sanifill have entered into
confidentiality agreements (the "Confidentiality Agreements") whereby each of
USA Waste and Sanifill have agreed to keep all confidential information with
respect to each other confidential and not to disclose or reveal any such
information to any third parties, subject to certain exceptions. In addition,
the Confidentiality Agreements prohibit each party and its affiliates, for a
period of two years, from (i) acquiring or offering to acquire beneficial
ownership of more than 1% of the voting securities of the other party, (ii)
soliciting or encouraging others to solicit proxies with respect to the election
of directors of the other party or otherwise for the purpose of acquiring
control of the other party, or communicate with or seek to advise or influence
any entity or person with respect to the other party's voting securities or
(iii) making a public proposal to the other party concerning a merger or
consolidation with, or acquisition of, the other party or take any action which
would require the other party to make certain public announcements; (iv)
otherwise join or form a group for the
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purpose of acquiring, holding, voting or disposing of any voting securities of
the other party or encourage, advise or provide certain assistance to others to
do any of the foregoing; or (v) request that the board of directors of the other
party waive any of the foregoing provisions. The Confidentiality Agreements
include provisions stating that if (x) a third party, other than a third party
who is an affiliate or is acting in concert with a party subject to the
Confidentiality Agreement, (1) commences a tender offer for 20% or more of the
outstanding shares of the other party's common stock or (2) acquires beneficial
ownership of more than 20% of the outstanding shares of the other party's common
stock or (y) the other party agrees to a merger, consolidation or other
acquisition of such party or an acquisition of all or substantially all of the
assets of such party, then provisions (i) through (v) above shall lapse and be
of no effect.
After the consummation of the Merger, Rodney R. Proto, the President and
Chief Operating Officer of Sanifill, will become the President and Chief
Operating Officer and a director of USA Waste. In addition, Mr. Proto and USA
Waste expect to enter into an employment agreement at a salary to be agreed upon
and on other terms substantially similar to those contained in employment
agreements between USA Waste and its current executive officers.
Lorne D. Bain, the Chairman and Chief Executive Officer of Sanifill, has
entered into an employment and non-competition agreement with USA Waste and
Sanifill pursuant to which Mr. Bain will continue as an employee of USA Waste
and Sanifill after the Effective Time, providing advice and services to assist
with the integration of the companies and other services as reasonably requested
by the chief executive officer of USA Waste. For these services, Mr. Bain will
be paid a salary of $500,000 per annum and will continue to participate in
insurance plans. His employment will continue for at least one year following
the Effective Time, unless terminated earlier by Mr. Bain. In addition, Mr. Bain
has agreed, for a period of 10 years following the Effective Time, (a) not to be
affiliated with any business engaged in substantial competition with USA Waste
or any of its affiliates within a 75-mile radius of the home offices of USA
Waste or any of its affiliates or any location where they do business or which
acquires or attempts to acquire a business considered for acquisition by USA
Waste during such 10-year period which USA Waste is continuing to pursue, and
(b) not to solicit any customers or employees of USA Waste. In consideration of
such non-competition agreements of Mr. Bain, USA Waste has agreed (a) to pay Mr.
Bain $25,000 per month from August 2001 (when Mr. Bain becomes 60 years old)
until he dies and (b) to pay Mr. Bain's spouse $12,500 per month from the later
of his death or the date on which he would have turned 60, until his spouse
dies. USA Waste has also agreed to pay Mr. Bain an additional amount necessary
to eliminate the effects of any disparate tax treatment under Section 4999 of
the Code. In addition, USA Waste, Sanifill and Mr. Bain have agreed that,
pursuant to his prior employment agreement with Sanifill, Sanifill shall, for a
period of three years after the Effective Time, pay or provide to Mr. Bain his
current base salary, participation in insurance plans and an annual bonus
payment equal to the average of the bonus payments made to Mr. Bain in respect
of 1993, 1994 and 1995. The parties also agreed that Mr. Bain's unvested options
for Sanifill Common Stock will vest and become exercisable, as contemplated by
his prior employment agreement, when his employment under his new employment
agreement terminates.
J. Chris Brewster, Vice President and Chief Financial Officer of Sanifill,
has entered into an employment agreement with USA Waste and Sanifill pursuant to
which Mr. Brewster will continue as an employee of USA Waste and Sanifill after
the Effective Time, providing advice and services to assist with the integration
of the companies, as well as such other services as reasonably requested from
time to time by the chief financial officer of USA Waste. For these services,
Mr. Brewster will receive a salary of $100,000 per annum and will continue to be
provided with insurance coverage. His employment will continue for at least one
year following the Effective Time, unless earlier terminated by Mr. Brewster.
USA Waste has also agreed to pay Mr. Brewster an additional amount necessary to
eliminate the effects of any disparate tax treatment under Section 4999 of the
Code. In addition, USA Waste, Sanifill and Mr. Brewster have agreed that,
pursuant to his prior employment agreement with Sanifill, Sanifill shall
continue to pay Mr. Brewster his current base salary for a period of one year
after the Effective Time and shall allow Mr. Brewster and/or his surviving
spouse to continue to participate in Sanifill's health insurance plan for a
period of 18 months after the Effective Time. The parties also agreed that Mr.
Brewster's unvested options for Sanifill Common Stock shall vest and become
exercisable at the Effective Time and shall remain exercisable until three
months after his employment under his new employment agreement terminates.
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Kosti Shirvanian and USA Waste have entered into a letter agreement (the
"Amendment Letter") amending in certain respects that certain letter agreement
dated December 18, 1995 between Mr. Shirvanian and USA Waste (the "Prior
Letter"). Under the Prior Letter, Mr. Shirvanian was entitled to sit on the
Board of Directors of USA Waste and designate two other individuals to sit on
the Board of Directors of USA Waste for a five-year period. The Amendment Letter
amends the Prior Letter to provide that Mr. Shirvanian will be entitled to sit
on the Board of Directors of USA Waste and designate one other individual to sit
on the Board of Directors of USA Waste for the remainder of such five-year
period.
In connection with USA Waste's merger agreement with Chambers Development
Company, Inc. in November 1994, a shareholders agreement (the "Shareholders
Agreement") was executed among USA Waste and Donald F. Moorehead, Jr., John E.
Drury, John G. Rangos, Sr., John G. Rangos, Jr., Alexander W. Rangos and John
Rangos Development Corporation, Inc. (John G. Rangos, Sr., John G. Rangos, Jr.,
Alexander W. Rangos and John Rangos Development Corporation, Inc. are
collectively referred to as the "Rangos Stockholders"), pursuant to which, among
other things, the Rangos Stockholders had the right to designate three members
of the USA Waste Board of Directors. In connection with the Merger Agreement,
USA Waste and the Rangos Stockholders agreed to terminate the Shareholders
Agreement as of the date of the Merger Agreement. In consideration for such
termination, (i) John G. Rangos, Sr., John G. Rangos, Jr. and Alexander W.
Rangos received warrants to purchase an aggregate of 700,000 shares of USA Waste
Common Stock at an exercise price of $29 per share, (ii) USA Waste agreed to use
its best efforts to cause the nomination of John G. Rangos, Sr. to another term
as a director of USA Waste expiring in the year 2000 provided that John G.
Rangos, Sr. agreed to not seek re-election thereafter, (iii) USA Waste agreed
that if Alexander W. Rangos ceases to be a director, USA Waste will release him
from the provisions of his non-competition agreement and (iv) USA Waste agreed
to provide the Rangos Stockholders with certain registration rights that provide
for a shelf registration statement covering up to 4 million shares of USA Waste
Common Stock owned by the Rangos Stockholders, which shelf registration
statement shall be supplemented by additional shelf registration statements to
the extent that the then effective shelf registration statements cover less than
2 million shares; provided that at no time shall more than 4 million shares of
USA Waste Common Stock be registered. In addition, USA Waste and the Rangos
Stockholders agreed to use their best efforts to cause a merger of John Rangos
Development Corporation, Inc. with and into USA Waste at any time after which
such merger will qualify as a tax free reorganization (subject to certain
exceptions) (collectively, the "New Rangos Agreement").
VOTING AGREEMENTS
In connection with the execution of the Merger Agreement, John E. Drury,
Donald F. Moorehead, Jr., Alexander W. Rangos, John G. Rangos, Sr., Kosti
Shirvanian, David Sutherland-Yoest and John Rangos Development Corporation, Inc.
each executed a voting agreement and irrevocable proxy, dated June 22, 1996,
pursuant to which they (i) agreed to vote an aggregate of 18,700,112 shares of
USA Waste Common Stock (or approximately 21% of the shares of USA Waste Common
Stock outstanding on the Record Date) held by them for approval of the Merger
and (ii) granted irrevocable proxies with respect to such shares, which proxies
permit Sanifill to vote such shares in favor of the Merger (the "USA Waste
Voting Agreements"). The USA Waste Voting Agreements terminate on the earliest
of (i) the Effective Time, (ii) the date of termination of the Merger Agreement
in accordance with its terms or (iii) the giving of written termination notice
by Sanifill.
In connection with the execution of the Merger Agreement, Lorne D. Bain,
Larry J. Martin, Rodney R. Proto and Alfred C. Warrington, IV each executed a
voting agreement and irrevocable proxy, dated June 22, 1996, pursuant to which
they (i) agreed to vote an aggregate of 1,292,717 shares of Sanifill Common
Stock (or approximately 5.1% of the shares of Sanifill Common Stock outstanding
on the Record Date) held by them for approval of the Merger and (ii) granted
irrevocable proxies with respect to such shares, which proxies permit certain
officers of USA Waste to vote such shares in favor of the Merger (the "Sanifill
Voting Agreements" and together with the USA Waste Voting Agreements, the
"Voting Agreements"). The Sanifill Voting Agreements terminate on the earliest
of (i) the Effective Time, (ii) the date of termination of the Merger Agreement
in accordance with its terms or (iii) the giving of written termination notice
by USA Waste.
52
<PAGE> 63
COMPARISON OF RIGHTS OF STOCKHOLDERS OF USA WASTE AND SANIFILL
GENERAL
As a result of the Merger, holders of Sanifill Common Stock will become
stockholders of USA Waste, and the rights of such former Sanifill stockholders
will thereafter be governed by the USA Waste Restated Certificate of
Incorporation, the USA Waste Bylaws and the General Corporation Law of the State
of Delaware (the "DGCL"). The rights of holders of Sanifill Common Stock are
currently governed by the Sanifill Certificate of Incorporation, the Sanifill
Bylaws and the DGCL. The following summary, which does not purport to be a
complete description of the differences between the rights of the stockholders
of USA Waste and the rights of the stockholders of Sanifill, sets forth certain
differences between the USA Waste Restated Certificate of Incorporation and the
Sanifill Certificate of Incorporation and the USA Waste Bylaws and the Sanifill
Bylaws. This summary is qualified in its entirety by reference to the full text
of each of such documents and the DGCL. For more information on how such
documents may be obtained, see "Available Information."
NUMBER OF DIRECTORS; REMOVAL OF DIRECTORS; FILLING OF VACANCIES ON THE BOARD OF
DIRECTORS
The USA Waste Restated Certificate of Incorporation and the USA Waste
Bylaws provide that, subject to the rights of holders of any class or series of
USA Waste Preferred Stock to elect additional directors under specified
circumstances, the number of directors will be fixed from time to time by
resolution of the USA Waste Board of Directors; provided, however, that unless
approved by at least two-thirds of the incumbent directors, the number of
directors which shall constitute the whole USA Waste Board of Directors shall be
no fewer than three and no more than nine. The Sanifill Certificate of
Incorporation and the Sanifill Bylaws provide that the number of directors will
be fixed by resolution passed by a majority of the Sanifill Board of Directors.
The Board of Directors of USA Waste currently consists of 12 members (with one
vacancy), and the Board of Directors of Sanifill currently consists of nine
members.
The USA Waste Restated Certificate of Incorporation and the USA Waste
Bylaws provide that, subject to the rights of holders of any class or series of
USA Waste Preferred Stock to elect additional directors under specified
circumstances, any director may be removed at any time, with cause, by its
stockholders, but only upon the affirmative vote of two-thirds of the total
number of votes of the then outstanding shares of capital stock of USA Waste;
provided, that the notice of the meeting at which such action is taken contained
notice of such proposal to remove a director. The Sanifill Bylaws provide that
the stockholders may, at any special meeting called for that purpose, remove
with cause any director and fill the vacancy; provided that when any director
has been elected by the holders of any class of stock of Sanifill voting
separately as a class under the provisions of the Sanifill Certificate of
Incorporation, such director may be removed, and the vacancy filled, only by the
holders of that class of stock.
VOTING
The USA Waste Bylaws provide that all voting by stockholders must be taken
by written ballot. The Sanifill Bylaws provide that, when directed by the
presiding officer of the meeting or upon the demand of any stockholder, the vote
upon any matter before a meeting of stockholders shall be by written ballot.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The USA Waste Bylaws establish advance notice procedures with regard to the
nomination (other than by or at the direction of the Board of Directors of USA
Waste or a committee thereof) of candidates for election as directors and with
regard to certain matters to be brought before an annual or special meeting of
the stockholders of USA Waste. These procedures provide that the notice of
proposed stockholder nominations for the election of directors must be timely
given in writing to the Secretary or the Board of Directors of USA Waste prior
to the meeting at which directors are to be elected. The procedures also provide
that at any meeting of the stockholders, and subject to any other applicable
requirements, only such business may be conducted as has been brought before the
meeting by, or at the direction of the Board of Directors or
53
<PAGE> 64
by a stockholder who has timely given prior written notice to the Secretary or
the Board of Directors of USA Waste of such stockholder's intention to bring
such business before the meeting. To be timely, a notice given with respect to
the nomination of directors or any other matter to be considered at an annual
meeting of the stockholders must be received at the principal executive offices
of USA Waste not less than 120 days nor more than 150 days in advance of the
date on which USA Waste's proxy statement was released to its stockholders in
connection with the previous year's annual meeting of the stockholders;
provided, however, that if no annual meeting was held the previous year or the
date of the annual meeting has been changed by more than 30 days from the date
contemplated at the time of the previous year's proxy statement, such notice
must be received by USA Waste at least 80 days prior to the date that USA Waste
intends to distribute its proxy statement with respect to such annual meeting.
To be timely, a notice given with respect to a special meeting of the
stockholders must be received at the principal executive offices of USA Waste
not less than 60 days nor more than 90 days prior to the meeting; provided,
however, that if less than 70 days' notice or prior public disclosure of the
meeting date is given or made by USA Waste, such notice must be received by USA
Waste not later than the fifth day following the day on which the notice was
mailed or such public disclosure was made. The notice must contain certain
specified information specified in the USA Waste Bylaws. The USA Waste Bylaws
further provide that USA Waste is not obligated to include any stockholder
proposal in its proxy materials if the Board of Directors of USA Waste believes
the proponent thereof has not complied with Sections 13 and 14 of the Exchange
Act and the rules and regulations thereunder and that USA Waste is not required
to include in its proxy materials any stockholder proposal not required to be
included therein under the Exchange Act and the rules and regulations
thereunder.
The Sanifill Bylaws establish advance notice procedures with regard to the
nomination (other than by or at the direction of the Board of Directors of
Sanifill or a committee thereof) of candidates for election as directors and
with regard to certain matters to be brought before an annual or special meeting
of the stockholders of Sanifill. These procedures provide that the notice of
proposed stockholder nominations for the election of directors must be timely
given in writing to the Board of Directors of Sanifill prior to the meeting at
which directors are to be elected. The procedures also provide that at an annual
meeting, and subject to any other applicable requirements, only such business
may be conducted as has been brought before the meeting by, or at the direction
of the Board of Directors or by a stockholder who has timely given prior written
notice to the Board of Directors of Sanifill of such stockholder's intention to
bring such business before the meeting. In all cases, to be timely given, notice
must be received at the principal executive offices of Sanifill not less than 80
days prior to the meeting; provided, however, that if less than 90 days' notice
or prior public disclosure of the meeting date is given or made by Sanifill,
such notice must be received by Sanifill not later than the 10th day following
the day on which the notice was mailed or such public disclosure was made. The
notice must contain certain specified information specified in the Sanifill
Bylaws.
FAIR PRICE PROVISION
The Sanifill Certificate of Incorporation contains a "fair price" provision
that requires the approval of holders of not less than 66 2/3% of the
outstanding shares of voting stock of Sanifill, excluding shares owned, directly
or indirectly, by persons who are Control Persons (as hereinafter defined), as a
condition for mergers, consolidations and certain other business combinations
involving Sanifill and any Control Person; provided that the 66 2/3% voting
requirement is not applicable if the business combination is approved by the
affirmative vote of 80% of the directors then in office. "Control Persons"
include the holder of 5% or more of Sanifill's Common Stock (including shares
held by such holder's affiliates and associates) and any affiliates or
associates of such holder. The 66 2/3% voting requirement is also not applicable
to a business combination if all of the following are satisfied: (i) the cash or
fair market value of the property, securities or other consideration to be
received per share by holders of Sanifill Common Stock is not less than the
higher of (a) the highest price per share paid by such Control Person in
acquiring any of its holdings of Sanifill Common Stock and (b) the highest per
share market price of Sanifill Common Stock during the three-month period
immediately preceding the date of the proxy statement described below; (ii)
after becoming a Control Person and prior to the consummation of such business
transaction, such Control Person has not acquired any newly issued shares of
Sanifill Common Stock from Sanifill and such person has not received the benefit
of any loan, advance, guaranty, pledge or other financial assistance or tax
credit from Sanifill or made any major changes in Sanifill's
54
<PAGE> 65
business or equity capital structure; and (iii) a proxy statement satisfying the
requirements of the Exchange Act is mailed to the stockholders for the purpose
of soliciting the approval of such stockholders for such business combination.
The USA Waste Restated Certificate of Incorporation does not contain any similar
provision.
AMENDMENT OF CERTAIN CHARTER PROVISIONS
The USA Waste Certificate of Incorporation requires the affirmative vote of
the holders of at least 66 2/3% of the outstanding shares of capital stock
entitled to vote for the approval of any amendment of the article of the USA
Waste Certificate of Incorporation providing for the staggered Board of
Directors, and then only if the notice of the meeting at which such proposal is
acted upon provides notice of such proposed amendment. In addition, the USA
Waste Restated Certificate of Incorporation prohibits the Board of Directors of
USA Waste from amending or repealing any provision of the Bylaws which was
adopted, amended or repealed by the stockholders.
The Sanifill Certificate of Incorporation provides that the article of the
Sanifill Certificate of Incorporation pertaining to the 66 2/3% vote of
stockholders in connection with the approval of business combinations with
Control Persons may only be amended or repealed upon the affirmative vote of at
least 66 2/3% of the issued and outstanding shares of Sanifill Common Stock;
provided, however, that if there is a Control Person at the time in question,
such amendment must be approved by at least 66 2/3% of the issued and
outstanding shares of Sanifill Common Stock, excluding shares owned by such
Control Person.
SANIFILL RIGHTS PLAN
Sanifill has in place a Stockholder Rights Plan (the "Plan") pursuant to
which one Preferred Share Purchase Right (a "Right") was distributed with
respect to each outstanding share of Sanifill Common Stock. The Plan provides
that, unless the Rights have been redeemed, one Right is granted for each
additional share of Sanifill Common Stock issued by Sanifill after the date that
the Plan was adopted and prior to the earlier of the time that the Rights become
exercisable or December 31, 2001 (the termination date of the Plan). The Rights
are not currently exercisable and trade in tandem with the shares of Sanifill
Common Stock. The Rights will become exercisable and trade separately from the
shares of Sanifill Common Stock ten days after a person or group acquires 15% or
more of the outstanding shares of Sanifill Common Stock. Upon their becoming
exercisable, each Right will entitle the holder thereof to purchase one
three-hundredth of a share of a series of Preferred Stock of Sanifill at a price
of $100. If a 15% stockholder (determined as provided in the Rights documents)
either acquires Sanifill by means of a merger in which Sanifill survives or
engages in certain other transactions with Sanifill, each Right (other than
Rights held by the 15% stockholder) may be exercised to purchase shares of
Sanifill Common Stock at a price equal to 50% of the market value of such
shares. In addition, if Sanifill were to be acquired in a merger or business
combination after the Rights became exercisable, each Right could be exercised
to purchase common stock of the acquiring company at a 50% discount. The Rights
are redeemable by Sanifill for $.01 per Right at any time prior to their
becoming exercisable. In connection with the Merger, Sanifill has amended the
Plan in such a manner that the Rights will expire at the Effective Time and the
execution of the Merger Agreement and the Voting Agreements and the consummation
of the Merger did not, and will not, trigger a distribution of Rights under the
Plan. USA Waste does not have a rights plan.
55
<PAGE> 66
USA WASTE AND SANIFILL
COMBINED UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The following combined unaudited pro forma condensed financial statements
are based upon the supplemental and historical consolidated financial statements
of USA Waste and of Sanifill, respectively, each as previously filed with the
Commission under the Exchange Act, are incorporated by reference in this Joint
Proxy Statement and Prospectus, and should be read in conjunction with those
consolidated financial statements and related notes. These combined unaudited
pro forma condensed financial statements are not necessarily indicative of the
operating results that would have been achieved had the Merger been consummated
as of the beginning of the periods presented and should not be construed as
representative of future operating results. These combined unaudited pro forma
condensed financial statements give effect to the Merger by combining the
results of operations of USA Waste and Sanifill using the "pooling of interests"
method of accounting as if the companies had been combined since their
inception.
The supplemental consolidated financial statements of USA Waste have been
prepared to give retroactive effect to the merger of USA Waste with Western
Waste Industries on May 7, 1996 using the "pooling of interests" method of
accounting.
56
<PAGE> 67
USA WASTE AND SANIFILL
COMBINED UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
MARCH 31, 1996
The following combined unaudited pro forma condensed balance sheet presents
the combined financial position of USA Waste and Sanifill as of March 31, 1996.
Such unaudited pro forma combined information is based on the unaudited
supplemental and unaudited historical consolidated balance sheets of USA Waste
and Sanifill, respectively, as of March 31, 1996 after giving effect to the
Merger using the "pooling of interests" method of accounting and to the pro
forma adjustments described in the notes to combined unaudited pro forma
condensed financial statements.
<TABLE>
<CAPTION>
PRO FORMA COMBINED
USA WASTE SANIFILL ADJUSTMENTS PRO FORMA
---------- -------- ----------- ----------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 29,919 $ 2,620 $ -- $ 32,539
Accounts receivable, net............................. 92,142 52,945 -- 145,087
Notes and other receivables.......................... 13,133 -- -- 13,133
Deferred income taxes................................ 20,101 -- -- 20,101
Prepaid expenses and other........................... 34,626 8,173 -- 42,799
---------- -------- -------- ----------
Total current assets.......................... 189,921 63,738 -- 253,659
Notes and other receivables............................ 17,208 2,287 -- 19,495
Property and equipment, net............................ 830,115 702,629 (52,688)d 1,480,056
Excess of cost over net assets of acquired businesses,
net.................................................. 112,908 115,786 -- 228,694
Other intangible assets, net........................... 34,295 21,079 -- 55,374
Other assets........................................... 78,543 28,860 -- 107,403
Deferred income taxes.................................. -- -- 13,220d 13,220
---------- -------- -------- ----------
Total assets.................................. $1,262,990 $934,379 $ (39,468) $2,157,901
========== ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................... $ 42,136 $ 20,115 $ -- 62,251
Accrued liabilities.................................. 40,258 24,393 -- 64,651
Deferred revenues.................................... 6,508 6,162 -- 12,670
Current maturities of long-term debt................. 46,269 13,484 -- 59,753
---------- -------- -------- ----------
Total current liabilities..................... 135,171 64,154 -- 199,325
Long-term debt......................................... 441,544 359,994 -- 801,538
Closure, post-closure and other liabilities............ 85,213 66,066 -- 151,279
Deferred income taxes.................................. 3,270 66,988 (70,258)d --
---------- -------- -------- ----------
Total liabilities............................. 665,198 557,202 (70,258) 1,152,142
---------- -------- -------- ----------
Commitments and contingencies.......................... -- -- -- --
Stockholders' equity:
Preferred stock:
USA Waste: $1.00 par value; 10,000,000 shares
authorized; none issued.......................... -- -- -- --
Sanifill: $10.00 par value; 500,000 shares
authorized; none issued.......................... -- -- -- --
Common stock:
USA Waste: $.01 par value; 150,000,000 shares
authorized; 89,596,573 historical shares issued
(129,204,873 combined pro forma shares issued)... 896 -- 396b 1,292
Sanifill: $.01 par value; 100,000,000 shares
authorized; 23,299,000 shares issued and
outstanding...................................... -- 233 (233)b --
Additional paid-in capital........................... 807,049 298,879 (163)b 1,105,765
Retained earnings (accumulated deficit).............. (207,999) 92,613 30,790d (84,596)
Foreign currency adjustment.......................... -- (14,548) -- (14,548)
Less treasury stock, at cost, 144,975 shares......... (2,154) -- -- (2,154)
---------- -------- -------- ----------
Total stockholders' equity.................... 597,792 377,177 30,790 1,005,759
---------- -------- -------- ----------
Total liabilities and stockholders' equity.... $1,262,990 $934,379 $ (39,468) $2,157,901
========== ======== ======== ==========
</TABLE>
See notes to combined unaudited pro forma condensed financial statements.
57
<PAGE> 68
USA WASTE AND SANIFILL
COMBINED UNAUDITED PRO FORMA CONDENSED
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
The following combined unaudited pro forma condensed statement of
operations for the three months ended March 31, 1996 was prepared based upon the
unaudited supplemental and unaudited historical statements of operations for USA
Waste and Sanifill, respectively, for such period and after giving effect to the
Merger using the "pooling of interests" method of accounting and to the pro
forma adjustments described in the notes to combined unaudited pro forma
condensed financial statements.
<TABLE>
<CAPTION>
PRO FORMA COMBINED
USA WASTE SANIFILL ADJUSTMENTS PRO FORMA
--------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating revenues............................... $201,525 $ 81,000 $ -- $ 282,525
-------- ------- -------- --------
Costs and expenses:
Operating...................................... 118,101 51,895 (11,040)a 158,956
General and administrative..................... 24,743 12,247 (286)a 36,704
Depreciation and amortization.................. 21,874 -- 10,827a,d 32,701
-------- ------- -------- --------
164,718 64,142 (499) 228,361
-------- ------- -------- --------
Income from operations........................... 36,807 16,858 499 54,164
-------- ------- -------- --------
Other income (expense):
Interest expense............................... (6,765) (4,462) -- (11,227)
Interest income................................ 1,721 209 -- 1,930
Other income, net.............................. 567 648 -- 1,215
-------- ------- -------- --------
(4,477) (3,605) -- (8,082)
-------- ------- -------- --------
Income before income taxes....................... 32,330 13,253 499 46,082
Provision for income taxes....................... 5,558 5,301 7,574d 18,433
-------- ------- -------- --------
Income from continuing operations................ $ 26,772 $ 7,952 $ (7,075) $ 27,649
======== ======= ======== ========
Income from continuing operations per common
share.......................................... $ 0.29 $ 0.35 $ 0.21c
======== ======= ========
Weighted average number of common and common
equivalent shares outstanding.................. 93,281 22,989 16,092b 132,362
======== ======= ======== ========
</TABLE>
See notes to combined unaudited pro forma condensed financial statements.
58
<PAGE> 69
USA WASTE AND SANIFILL
COMBINED UNAUDITED PRO FORMA CONDENSED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
The following combined unaudited pro forma condensed statement of
operations for the year ended December 31, 1995 was prepared based upon the
audited supplemental and audited historical statements of operations for USA
Waste and Sanifill, respectively, for such year after giving effect to the
Merger using the "pooling of interests" method of accounting and to the pro
forma adjustments described in the notes to combined unaudited pro forma
condensed financial statements.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
USA WASTE SANIFILL ADJUSTMENTS COMBINED
--------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating revenues.......................... $731,000 $256,705 $ -- $ 987,705
--------- -------- ----------- ---------
Costs and expenses:
Operating................................. 428,331 160,088 (37,114)a 551,305
General and administrative................ 101,268 39,669 (886)a 140,051
Depreciation and amortization............. 83,519 -- 36,051a,d 119,570
Merger costs.............................. 25,073 566 -- 25,639
Unusual items............................. 4,733 -- -- 4,733
--------- -------- ----------- ---------
642,924 200,323 (1,949) 841,298
--------- -------- ----------- ---------
Income from operations...................... 88,076 56,382 1,949 146,407
--------- -------- ----------- ---------
Other income (expense):
Interest expense:
Nonrecurring interest.................. (10,994) -- -- (10,994)
Other.................................. (35,437) (13,121) -- (48,558)
Interest income........................... 4,222 1,260 -- 5,482
Other income, net......................... 3,220 1,923 -- 5,143
--------- -------- ----------- ---------
(38,989) (9,938) (48,927)
--------- -------- ----------- ---------
Income before income taxes.................. 49,087 46,444 1,949 97,480
Provision for income taxes.................. 1,744 18,531 44,162d 64,437
--------- -------- ----------- ---------
Income from continuing operations........... $ 47,343 $ 27,913 $ (42,213) $ 33,043
========= ======== ========= ========
Income from continuing operations per
common share.............................. $ 0.60 $ 1.38 $ 0.29c
========= ======== ========
Weighted average number of common and common
equivalent shares outstanding............. 78,912 20,216 14,151b 113,279
========= ======== ========= ========
</TABLE>
See notes to combined unaudited pro forma condensed financial statements.
59
<PAGE> 70
USA WASTE AND SANIFILL
COMBINED UNAUDITED PRO FORMA CONDENSED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
The following combined unaudited pro forma condensed statement of
operations for the year ended December 31, 1994 was prepared based upon the
audited supplemental and audited historical statements of operations of USA
Waste and Sanifill, respectively, for such year after giving effect to the
Merger using the "pooling of interests" method of accounting and to the pro
forma adjustments described in the notes to combined unaudited pro forma
condensed financial statements.
<TABLE>
<CAPTION>
PRO FORMA COMBINED
USA WASTE SANIFILL ADJUSTMENTS PRO FORMA
--------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating revenues.......................... $ 705,165 $192,479 $ -- $ 897,644
--------- -------- -------- ---------
Costs and expenses:
Operating................................. 428,701 122,274 (30,720)a 520,255
General and administrative................ 108,885 30,633 (699)a 138,819
Depreciation and amortization............. 83,044 -- 29,816a,d 112,860
Merger costs.............................. 3,782 -- -- 3,782
Unusual items............................. 8,863 -- -- 8,863
--------- -------- -------- ---------
633,275 152,907 (1,603) 784,579
--------- -------- -------- ---------
Income from operations...................... 71,890 39,572 1,603 113,065
--------- -------- -------- ---------
Other income (expense):
Stockholder litigation settlement and
other litigation related costs......... (79,400) -- -- (79,400)
Interest expense:
Nonrecurring interest.................. (1,254) -- -- (1,254)
Other.................................. (38,153) (9,525) -- (47,678)
Interest income........................... 4,183 487 -- 4,670
Other income, net......................... 1,249 1,321 -- 2,570
--------- -------- -------- ---------
(113,375) (7,717) -- (121,092)
--------- -------- -------- ---------
Income (loss) before income taxes........... (41,485) 31,855 1,603 (8,027)
Provision for (benefit from) income taxes... 17,610 12,622 (49,547)d (19,315)
--------- -------- -------- ---------
Income (loss) from continuing operations.... (59,095) 19,233 51,150 11,288
Preferred dividends......................... 565 -- -- 565
--------- -------- -------- ---------
Income (loss) from continuing operations.... $ (59,660) $ 19,233 $ 51,150 $ 10,723
========= ======== ======== =========
Income (loss) from continuing operation per
common share.............................. $ (0.82) $ 1.07 $ 0.10c
========= ======== =========
Weighted average number of common and common
equivalent shares outstanding............. 72,968 17,914 12,540b 103,422
========= ======== ======== =========
</TABLE>
See notes to combined unaudited pro forma condensed financial statements.
60
<PAGE> 71
USA WASTE AND SANIFILL
COMBINED UNAUDITED PRO FORMA CONDENSED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1993
The following combined unaudited pro forma condensed statement of
operations for the year ended December 31, 1993 was prepared based upon the
audited supplemental and audited historical statements of operations of USA
Waste and Sanifill, respectively, for such year, after giving effect to the
Merger using the "pooling of interests" method of accounting and to the pro
forma adjustments described in the notes to combined unaudited pro forma
condensed financial statements.
<TABLE>
<CAPTION>
PRO FORMA COMBINED
USA WASTE SANIFILL ADJUSTMENTS PRO FORMA
--------- -------- ----------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating revenues............................ $639,239 $139,727 $ -- $ 778,966
-------- -------- -------- --------
Costs and expenses:
Operating................................... 388,727 90,397 (23,842)a 455,282
General and administrative.................. 104,121 22,599 (373)a 126,347
Depreciation and amortization............... 74,223 -- 22,638a,d 96,861
Unusual items............................... 2,672 -- -- 2,672
-------- -------- -------- --------
569,743 112,996 (1,577) 681,162
-------- -------- -------- --------
Income from operations........................ 69,496 26,731 1,577 97,804
-------- -------- -------- --------
Other income (expense):
Stockholder litigation related costs........ (5,500) -- -- (5,500)
Interest expense............................ (39,809) (6,223) -- (46,032)
Interest income............................. 4,338 497 -- 4,835
Other income, net........................... 1,148 13 -- 1,161
-------- -------- -------- --------
(39,823) (5,713) -- (45,536)
-------- -------- -------- --------
Income before income taxes.................... 29,673 21,018 1,577 52,268
Provision for income taxes.................... 16,112 8,048 6,157d 30,317
-------- -------- -------- --------
Income from continuing operations............. 13,561 12,970 (4,580) 21,951
Preferred dividends........................... 582 -- -- 582
-------- -------- -------- --------
Income from continuing operations available to
common stockholders......................... $ 12,979 $ 12,970 $ (4,580) $ 21,369
======== ======== ======== ========
Income from continuing operations available to
common stockholders per common share........ $ 0.19 $ 0.80 $ 0.22c
======== ======== ========
Weighted average number of common and common
equivalent shares outstanding............... 68,457 16,118 11,283b 95,858
======== ======== ======== ========
</TABLE>
See notes to combined unaudited pro forma condensed financial statements.
61
<PAGE> 72
USA WASTE AND SANIFILL
NOTES TO COMBINED UNAUDITED PRO FORMA CONDENSED
FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The combined unaudited pro forma condensed financial statements assume the
issuance of USA Waste Common Stock in exchange for all outstanding Sanifill
Common Stock. Such financial statements also assume that the Merger will be
accounted for using the "pooling of interests" method of accounting pursuant to
Opinion No. 16 of the Accounting Principles Board. The "pooling of interests"
method of accounting assumes that the combining companies have been merged from
their inception, and the financial statements for periods prior to consummation
of the Merger are restated as though the companies had been combined from their
inception.
Pursuant to the rules and regulations of the Commission, the combined
unaudited pro forma condensed statements of operations exclude the results of
operations associated with discontinued businesses, extraordinary items and
cumulative effects of accounting changes. In addition, the combined unaudited
pro forma condensed financial statements do not include any adjustment for
estimated nonrecurring costs directly related to the Merger and USA Waste's
merger with Western which are expected to be included in operations of USA Waste
within the twelve months succeeding the consummation of the two mergers. Such
costs are currently estimated to be approximately $89.8 million.
Certain reclassifications have been made to the financial statements of USA
Waste and Sanifill to conform to the pro forma presentation. Such
reclassifications are not material to the combined unaudited pro forma condensed
financial statements.
PRO FORMA ADJUSTMENTS
(a) Adjustments have been made to reclassify Sanifill's depreciation and
amortization from operating expenses and general and administrative expenses to
a separate line item to conform to the presentation of USA Waste as if the
companies had been combined since their inception.
(b) The stockholders' equity accounts have been adjusted to reflect the
assumed issuance of USA Waste Common Stock for all issued and outstanding shares
of Sanifill Common Stock (based on the exchange ratio of 1.70 shares of USA
Waste Common Stock for each share of Sanifill Common Stock outstanding as of the
date of the applicable balance sheet). The number of shares of USA Waste Common
Stock to be issued pursuant to the Merger will be based upon the number of
shares of Sanifill Common Stock issued and outstanding immediately prior to the
consummation of the Merger.
(c) Pro forma income from continuing operations available to common
stockholders per share for each period is based on the combined weighted average
number of shares outstanding, after giving effect to the issuance of 1.70 shares
of USA Waste Common Stock for each share of Sanifill Common Stock. Fully diluted
earnings per share are considered equal to primary earnings per share for all
periods presented because the addition of potentially dilutive securities that
are not common stock equivalents would have been either antidilutive or not
material.
(d) Adjustments have been made for the impact of restating deferred taxes
of the combined company as though the companies had been combined from their
inception.
62
<PAGE> 73
SUPPLEMENTALLY PROVIDED INFORMATION RELATING
TO THE COMBINED UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS
The following combined unaudited pro forma condensed financial information
as of and for the three months ended March 31, 1996 and for the year ended
December 31, 1995 gives effect to certain pro forma adjustments described in the
notes to such information. In addition to the pro forma adjustments in the
combined unaudited pro forma condensed financial statements (which in effect are
a restatement of the financial statements as if the Merger were consummated),
the impact of certain transactions occurring in 1995 and 1996 is presented
supplementally. This supplementally provided information does not include the
impact of certain cost and expense savings and other economic benefits that are
expected to be realized as a result of the Merger or additional cost reductions
relating to landfill and collection operations or additional revenues that may
result from volume or price increases.
63
<PAGE> 74
USA WASTE AND SANIFILL
COMBINED SUPPLEMENTALLY PROVIDED BALANCE SHEET INFORMATION
MARCH 31, 1996
<TABLE>
<CAPTION>
SUPPLEMENTALLY SUPPLEMENTALLY
COMBINED PROVIDED PROVIDED
PRO FORMA ADJUSTMENTS INFORMATION
---------- -------------- --------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE
DATA)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................... $ 32,539 $(32,539)c $ --
Accounts receivable, net............................ 145,087 2,175c 147,262
Notes and other receivables......................... 13,133 -- 13,133
Deferred income taxes............................... 20,101 -- 20,101
Prepaid expenses and other.......................... 42,799 135c 42,934
---------- -------- --------
Total current assets........................ 253,659 (30,229) 223,430
Notes and other receivables........................... 19,495 -- 19,495
Property and equipment, net........................... 1,480,056 19,862c 1,499,918
Excess of cost over net assets of acquired businesses,
net................................................. 228,694 36,071c 264,765
Other intangible assets, net.......................... 55,374 6,680c 62,054
Other assets.......................................... 107,403 -- 107,403
Deferred income taxes................................. 13,220 -- 13,220
---------- -------- --------
Total assets................................ $2,157,901 $ 32,384 $2,190,285
========== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................... $ 62,251 $ -- $ 62,251
Accrued liabilities................................. 64,651 2,507c 67,158
Deferred revenues................................... 12,670 -- 12,670
Current maturities of long-term debt................ 59,753 (26,700)c,h 33,053
---------- -------- --------
Total current liabilities................... 199,325 (24,193) 175,132
Long-term debt........................................ 801,538 94,453c,d,f,h 895,991
Closure, post-closure and other liabilities........... 151,279 2,589c 153,868
---------- -------- --------
Total liabilities........................... 1,152,142 72,849 1,224,991
---------- -------- --------
Commitments and contingencies......................... -- -- --
Stockholders' equity:
Preferred stock:
USA Waste: $1.00 par value; 10,000,000 shares
authorized; none issued........................ -- -- --
Common stock:
USA Waste: $.01 par value; 150,000,000 shares
authorized; 129,204,873 combined pro forma
shares issued; 131,904,873 supplemental shares
issued......................................... 1,292 27c,f 1,319
Additional paid-in capital.......................... 1,105,765 49,308c,f 1,155,073
Accumulated deficit................................. (84,596) (89,800)d (174,396)
Foreign currency adjustment......................... (14,548) -- (14,548)
Less treasury stock, at cost, 144,975 shares........ (2,154) -- (2,154)
---------- -------- --------
Total stockholders' equity.................. 1,005,759 (40,465) 965,294
---------- -------- --------
Total liabilities and stockholders'
equity.................................... $2,157,901 $ 32,384 $2,190,285
========== ======== ========
</TABLE>
64
<PAGE> 75
USA WASTE AND SANIFILL COMBINED
SUPPLEMENTALLY PROVIDED STATEMENT OF OPERATIONS INFORMATION
THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
SUPPLEMENTALLY SUPPLEMENTALLY
COMBINED PROVIDED PROVIDED
PRO FORMA ADJUSTMENTS INFORMATION
--------- -------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Operating revenues............................... $ 282,525 $ 25,232c $307,757
-------- ------- --------
Costs and expenses:
Operating...................................... 158,956 15,838c 174,794
General and administrative..................... 36,704 3,338c 40,042
Depreciation and amortization.................. 32,701 2,942c 35,643
-------- ------- --------
228,361 22,118 250,479
-------- ------- --------
Income from operations........................... 54,164 3,114 57,278
-------- ------- --------
Other income (expense):
Interest expense............................... (11,227) (534)c,f,g (11,761)
Interest income................................ 1,930 -- 1,930
Other income, net.............................. 1,215 351c 1,566
-------- ------- --------
(8,082) (183) (8,265)
-------- ------- --------
Income before income taxes....................... 46,082 2,931 49,013
Provision for income taxes....................... 18,433 1,173c,f,g 19,606
-------- ------- --------
Income from continuing operations................ $ 27,649 $ 1,758 $ 29,407
======== ======= ========
Income from continuing operations per common
share.......................................... $ 0.21 $ 0.21
======== ========
Weighted average number of common and common
equivalent shares outstanding.................. 132,362 4,544 c,f 136,906
======== ======= ========
</TABLE>
65
<PAGE> 76
USA WASTE AND SANIFILL COMBINED
SUPPLEMENTALLY PROVIDED STATEMENT OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
SUPPLEMENTALLY SUPPLEMENTALLY
COMBINED PROVIDED PROVIDED
PRO FORMA ADJUSTMENTS INFORMATION
--------- -------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Operating revenues............................... $ 987,705 $190,421c $1,178,126
--------- -------- ----------
Costs and expenses:
Operating...................................... 551,305 121,133c 672,438
General and administrative..................... 140,051 29,240c 169,291
Depreciation and amortization.................. 119,570 21,215 140,785
Merger costs................................... 25,639 -- 25,639
Unusual items.................................. 4,733 -- 4,733
--------- -------- ----------
841,298 171,588 1,012,886
--------- -------- ----------
Income from operations........................... 146,407 18,833 165,240
--------- -------- ----------
Other income (expense):
Interest expense:
Nonrecurring interest....................... (10,994) -- (10,994)
Other....................................... (48,558) 1,251a,b,c,e,f,g (47,307)
Interest income................................ 5,482 789c 6,271
Other income, net.............................. 5,143 695c 5,838
--------- -------- ----------
(48,927) 2,735 (46,192)
--------- -------- ----------
Income before income taxes....................... 97,480 21,568 119,048
Provision for income taxes....................... 64,437 5,996a,b,c,e,f,g 70,433
--------- -------- ----------
Income from continuing operations................ $ 33,043 $ 15,572 $ 48,615
======== ======== ==========
Income from continuing operations per common
share.......................................... $ 0.29 $ 0.37
======== ==========
Weighted average number of common and common
equivalent shares outstanding.................. 113,279 17,852c,e,f 131,131
======== ======== ==========
</TABLE>
66
<PAGE> 77
SUPPLEMENTAL ADJUSTMENTS
(a) Reduction of interest expense as a result of USA Waste's public offering of
6,345,625 shares of its common stock on October 6, 1995, the net proceeds
of which were used for the repayment of approximately $118,000,000 of debt,
as if the transactions had occurred on January 1, 1995.
(b) Reduction of interest expense as a result of USA Waste's conversion of
$42,300,000 of its 8 1/2% convertible subordinated debentures into its
common stock at $13.25 per share between November 3, 1995 and December 1,
1995, as if the conversion had occurred on January 1, 1995.
(c) Increase in results of operations and changes in balance sheet accounts
assuming the 1995 and 1996 business combinations accounted for as purchases
had occurred on January 1, 1995.
(d) Increase in accumulated deficit and increase in long-term debt related to
estimated nonrecurring costs of $89,800,000, consisting of $50,000,000 and
$39,800,000 of costs related to the mergers with Sanifill and Western,
respectively. Actual merger costs may vary from such estimates.
(e) Reduction of interest expense as a result of Sanifill's public offering of
2,098,750 shares of common stock on August 23, 1995, certain net proceeds
of which were used for repayment of approximately $40,000,000 of debt, as
if the transactions had occurred on January 1, 1995.
(f) Reduction of interest expense and balance sheet effect of Sanifill's
conversion of $59,800,000 of its 7 1/2% convertible subordinated debentures
into its common stock at $28.82 per share between March 19, 1996 and April
10, 1996, as if the conversion occurred at the beginning of the period
presented.
(g) Reduction of interest expense and balance sheet effect of Sanifill's
issuance of $115 million of 5% subordinated debentures on March 4, 1996,
all of the net proceeds of which were used for the repayment of debt, as if
the transaction occurred at the beginning of the period presented.
(h) Due to the refinancing of the USA Waste credit facility in connection with
the Western merger, there is no current maturity of this credit facility,
as principal reductions are not required for a three-year period.
67
<PAGE> 78
PRINCIPAL STOCKHOLDERS OF USA WASTE AND SANIFILL
The following tables set forth information with respect to the beneficial
ownership of USA Waste Common Stock and Sanifill Common Stock as of the Record
Date by (1) each owner of more than 5% of such common stock, (2) each director
of USA Waste and Sanifill, (3) certain executive officers of USA Waste and
Sanifill, including the Chief Executive Officers and four most highly
compensated officers other than the Chief Executive Officer who were serving as
officers at December 31, 1995, and (4) all executive officers and directors of
USA Waste and Sanifill as a group. Except as otherwise indicated below, each of
the entities and persons named in the tables has sole voting and investment
power with respect to all shares of common stock beneficially owned. Unless
otherwise indicated, the address for each of the individuals or entities named
in the tables below is the principal executive offices of USA Waste or Sanifill,
as applicable.
USA WASTE
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE PERCENTAGE
NAME BENEFICIAL OWNERSHIP(1) BEFORE THE MERGER AFTER THE MERGER
- ----------------------------------------- ----------------------- ----------------- ----------------
<S> <C> <C> <C>
Alliance Capital Management L.P.......... 5,221,466(2) 5.9 3.9
1345 Avenue of the Americas
New York, New York 10105
John E. Drury............................ 1,570,114(3) 1.7 1.2
Donald F. Moorehead, Jr.................. 2,277,753(4) 2.5 1.7
David Sutherland-Yoest................... 447,013(5) * *
Earl E. DeFrates......................... 136,754(6) * *
Charles A. Wilcox........................ 36,000(7) * *
George L. Ball........................... 72,931(8) * *
Peter J. Gibbons......................... 4,499(9) * *
Richard J. Heckmann...................... 10,439 * *
William E. Moffett....................... 6,665(10) * *
John G. Rangos, Sr....................... 7,663,911 8.6 5.8
Alexander W. Rangos...................... 2,082,131(11) 2.5 1.6
Kosti Shirvanian......................... 9,051,061(12) 9.9 6.7
Savey Tufenkian.......................... 1,086,579(13) 1.2 *
All directors and executive.............. 24,498,365(14) 26.2 17.9
officers as a group (17 persons)
</TABLE>
- ---------------
* Less than 1%.
(1) Includes shares over which such person shares voting or disposition power
and shares in which such person has the right to acquire beneficial
ownership within 60 days, including upon exercise of a stock option or
conversion of a convertible security.
(2) According to a Schedule 13F on file with the Commission.
(3) Includes 510,000 shares issuable pursuant to options exercisable within 60
days and 5,176 shares owned by Mr. Drury's spouse.
(4) Includes 286,500 shares issuable pursuant to options exercisable within 60
days and 228,632 shares owned by Mr. Moorehead's spouse and children.
(5) Includes 209,029 shares issuable pursuant to options exercisable within 60
days and 2,000 shares owned by Mr. Sutherland-Yoest's daughter.
(6) Includes 99,000 shares issuable pursuant to options exercisable within 60
days.
(7) Includes 36,000 shares issuable pursuant to options exercisable within 60
days.
(8) Includes 10,000 shares issuable pursuant to options exercisable within 60
days and 32,135 shares owned by Mr. Ball's spouse and an investment
partnership for her children and 3,600 shares owned by Mr. Ball's
stepdaughter.
(9) Includes 2,499 shares issuable pursuant to options exercisable within 60
days.
68
<PAGE> 79
(10) Includes 6,665 shares issuable pursuant to options exercisable within 60
days.
(11) Includes 210,709 shares issuable pursuant to options exercisable within 60
days and 1,210,008 shares held by John Rangos Development Corporation, Inc.
(12) Includes 2,337,000 shares issuable pursuant to options exercisable within
60 days and 6,581,680 shares held by a trust over which Mr. Shirvanian and
his wife share voting and investment power.
(13) Includes 686,250 shares issuable pursuant to options exercisable within 60
days, and 363,880 shares and options exercisable within 60 days owned by
Ms. Tufenkian's husband.
(14) Includes 4,445,652 shares issuable pursuant to options exercisable within
60 days.
SANIFILL
<TABLE>
<CAPTION>
SANIFILL USA WASTE
COMMON STOCK COMMON STOCK
NAME BEFORE THE MERGER(1) PERCENTAGE AFTER THE MERGER(1) PERCENTAGE
- ------------------------------------- -------------------- ---------- ------------------- ----------
<S> <C> <C> <C> <C>
Lorne D. Bain........................ 437,703(2) 1.8 744,095 *
Larry J. Martin...................... 924,300(3) 3.7 1,624,643(17) 1.2
Rodney R. Proto...................... 354,029(4) 1.4 603,265(18) *
Alfred C. Warrington, IV............. 307,935(5) 1.2 523,489 *
William L. Lynch..................... 57,850(7) * 98,345 *
Robert G. Jones...................... 50,100(6) * 85,170 *
Ralph F. Cox......................... 25,000(8) * 42,500 *
Raymond C. Loehr..................... 15,000(9) * 25,500 *
William J. Razzouk................... 10,000(10) * 17,000 *
J. Chris Brewster.................... 114,873(11) * 233,534(19) *
Charles E. Williams.................. 23,945(12) * 40,706 *
H. Steven Walton..................... 23,780(13) * 40,426 *
American Express Financial Corp...... 2,164,500(14) 8.5 3,679,650 2.8
Pilgrim Baxter & Associates.......... 1,901,600(15) 7.5 3,232,720 2.4
T. Rowe Price & Associates, Inc...... 1,459,900(16) 5.8 2,481,830 1.9
All officers and directors as a group
(13 persons)....................... 2,354,272 9.3 4,095,259 3.1
</TABLE>
- ---------------
* Less than 1%
(1) Includes shares over which such person shares voting or disposition power
and shares in which such person has the right to acquire beneficial
ownership within 60 days, including upon exercise of a stock option or
conversion of a convertible security.
(2) Share ownership amount for Mr. Bain includes 398,750 shares issuable
pursuant to options exercisable within 60 days.
(3) Share ownership amount for Mr. Martin includes 5,000 shares owned by Mr.
Martin's minor daughter.
(4) Share ownership amount for Mr. Proto includes 217,500 shares issuable
pursuant to options exercisable within 60 days and 100,000 shares issuable
upon exercise of common stock warrants.
(5) Share ownership amount for Mr. Warrington includes 15,000 shares issuable
pursuant to options exercisable within 60 days and 3,435 shares issuable
upon the conversion of the Company's convertible subordinated debentures,
485 of which may be acquired by Mr. Warrington's former wife. Share
ownership amount for Mr. Warrington also includes 68,000 shares held by a
limited partnership in which Mr. Warrington is a general partner; Mr.
Warrington disclaims beneficial ownership of such shares.
(6) Share ownership amount for Mr. Jones includes 15,000 shares issuable
pursuant to options exercisable within 60 days. Share ownership amount for
Mr. Jones excludes 300 shares owned by Mr. Jones' minor daughter, as to
which Mr. Jones disclaims beneficial ownership.
69
<PAGE> 80
(7) Share ownership amount for Mr. Lynch includes 15,000 shares issuable
pursuant to options exercisable within 60 days.
(8) Share ownership amount for Mr. Cox includes 20,000 shares issuable pursuant
to options exercisable within 60 days.
(9) Share ownership amount for Mr. Loehr includes 15,000 shares issuable
pursuant to options exercisable within 60 days.
(10) Share ownership amount for Mr. Razzouk includes 10,000 shares issuable
pursuant to options exercisable within 60 days.
(11) Share ownership amount for Mr. Brewster includes 102,500 shares issuable
pursuant to options exercisable within 60 days.
(12) Share ownership amount for Mr. Williams includes 9,937 shares issuable
pursuant to options exercisable within 60 days.
(13) Share ownership amount for Mr. Walton includes 16,500 shares issuable
pursuant to options exercisable within 60 days.
(14) The address of American Express Financial Corp. is IDS Tower 10,
Minneapolis, Minnesota 55140.
(15) The address of Pilgrim Baxter & Associates is 1255 Drummers Lane, Suite
300, Wayne, Pennsylvania 19087.
(16) The address of T. Rowe Price & Associates, Inc. is 100 E. Pratt Street,
Baltimore, Maryland 21202. These securities are owned by various individual
and institutional investors, which T. Rowe Price & Associates, Inc. ("Price
Associates") serves as investment adviser with power to direct investments
and/or sole power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price Associates is
deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial owner of
such securities.
(17) Includes 53,333 shares of USA Waste Common Stock currently owned by Mr.
Martin.
(18) Includes 1,416 shares of USA Waste Common Stock currently owned by Mr.
Proto.
(19) Includes shares receivable in respect of an option for an additional 22,500
shares of Sanifill Common Stock that will become exercisable in connection
with the Merger.
As a result of the Voting Agreements, each of USA Waste and Sanifill may be
deemed to beneficially own over 5% of the other's outstanding voting securities.
See "The Plan of Merger and Terms of the Merger -- Voting Agreements." Each of
USA Waste and Sanifill disclaims beneficial ownership with respect to such
shares.
70
<PAGE> 81
MARKET PRICE DATA
MARKET INFORMATION
USA Waste Common Stock is traded on the NYSE under the symbol "UW."
Sanifill Common Stock is traded on the NYSE under the symbol "FIL." The
following table sets forth the range of high and low sale prices for the USA
Waste Common Stock and the Sanifill Common Stock, as reported on the NYSE.
<TABLE>
<CAPTION>
USA WASTE SANIFILL
COMMON STOCK COMMON STOCK
---------------- --------------
HIGH LOW HIGH LOW
----- ----- ----- -----
<S> <C> <C> <C> <C>
1994
First Quarter................................... $ 15 $ 11 3/8 $ 25 $ 20 1/2
Second Quarter.................................. 13 3/8 10 3/8 25 5/8 20
Third Quarter................................... 15 1/8 11 1/2 25 1/8 21 1/8
Fourth Quarter.................................. 15 1/8 11 25 20 1/8
1995
First Quarter................................... $ 12 3/8 $ 10 $ 27 $ 22 3/8
Second Quarter.................................. 16 5/8 11 1/2 31 5/8 24
Third Quarter................................... 21 7/8 14 5/8 34 1/8 29 3/4
Fourth Quarter.................................. 22 1/8 17 34 29 1/8
1996
First Quarter................................... $ 25 5/8 $ 17 1/4 $ 39 1/4 $ 33
Second Quarter.................................. 32 1/8 24 50 1/8 37 7/8
Third Quarter (through July 18)................. 30 23 49 7/8 38
</TABLE>
On June 21, 1996, the last trading day prior to announcement by USA Waste
and Sanifill that they had reached an agreement concerning the Merger, the
closing sale price of USA Waste Common Stock as reported on the NYSE was $27 7/8
per share, and the closing sale price of Sanifill Common Stock as reported on
the NYSE was $47 7/8 per share. The equivalent per share price of Sanifill
Common Stock on June 21, 1996, calculated by multiplying the closing sale price
of USA Waste Common Stock on the same date by the Exchange Ratio, was $47.3875.
On July 18, 1996, the closing sale price of USA Waste Common Stock as
reported on the NYSE was $27 1/4 per share, and the closing sale price of
Sanifill Common on the NYSE was $45 7/8 per share. Following the Merger, USA
Waste Common Stock will continue to be traded on the NYSE under the symbol "UW,"
and the listing of Sanifill Common Stock on the NYSE will be terminated.
DIVIDEND INFORMATION
USA Waste has never paid cash dividends on its Common Stock. Envirofil paid
stock dividends on its preferred stock prior to its acquisition by USA Waste;
the holders of such preferred stock received USA Waste Common Stock in that
acquisition, and no dividends have been paid by USA Waste. In addition, Chambers
paid a dividend on its Class A common stock in November 1990; the holders of
Chambers' Class A common stock received USA Waste Common Stock in the merger
with Chambers, and no dividends have been paid by USA Waste. The Board of
Directors of USA Waste presently intends to retain any earnings in the
foreseeable future for USA Waste's business. In addition, payment of dividends
on the USA Waste Common Stock is restricted by the terms of USA Waste's bank
credit agreement.
Sanifill has never paid cash dividends on its Common Stock. In addition,
payment of dividends on the Sanifill Common Stock is restricted by the terms of
its credit facility.
71
<PAGE> 82
DESCRIPTION OF USA WASTE CAPITAL STOCK
USA Waste is currently authorized to issue 150,000,000 shares of its Common
Stock, par value $.01 per share, of which 89,176,731 shares were outstanding on
the Record Date and 10,000,000 shares of Preferred Stock, none of which are
outstanding. If the amendment to the Restated Certificate of Incorporation of
USA Waste is approved, the number of authorized shares of USA Waste Common Stock
will be increased to 300,000,000.
COMMON STOCK
Each holder of USA Waste Common Stock is entitled to one vote per share
held of record on each matter submitted to stockholders. Cumulative voting for
the election of directors is not permitted, and the holders of a majority of
shares voting for the election of directors can elect all members of the USA
Waste Board of Directors.
Subject to the rights of any holders of Preferred Stock, holders of record
of shares of USA Waste Common Stock are entitled to receive ratably dividends
when and if declared by the USA Waste Board of Directors out of funds of USA
Waste legally available therefor. In the event of a voluntary or involuntary
winding up or dissolution, liquidation or partial liquidation of USA Waste,
holders of USA Waste Common Stock are entitled to participate ratably in any
distribution of the assets of USA Waste, subject to any prior rights of holders
of any outstanding Preferred Stock.
Holders of USA Waste Common Stock have no conversion, redemption or
preemptive rights. All outstanding shares of USA Waste Common Stock are validly
issued, fully paid and nonassessable.
PREFERRED STOCK
The USA Waste Board of Directors is authorized, without further approval of
the stockholders, to issue the Preferred Stock in series and with respect to
each series, to fix its designations, relative rights (including voting,
dividend, conversion, sinking fund and redemption rights), preferences
(including with respect to dividends and upon liquidation), privileges and
limitations. The Board of Directors of USA Waste, without stockholder approval,
may issue Preferred Stock with voting and conversion rights, both of which could
adversely affect the voting power of the holders of USA Waste Common Stock, and
dividend or liquidation preferences that would restrict Common Stock dividends
or adversely affect the assets available for distribution to holders of shares
of Common Stock upon USA Waste's dissolution.
AUTHORIZED BUT UNISSUED SHARES
Authorized but unissued shares of USA Waste Common Stock or Preferred Stock
can be reserved for issuance by the Board of Directors of USA Waste from time to
time without further stockholder action for proper corporate purposes, including
stock dividends or stock splits, raising equity capital and structuring future
corporate transactions, including acquisitions.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the USA Waste Common Stock is Boston
EquiServe, Boston, Massachusetts.
LIMITED LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Certificate of Incorporation of USA Waste provides that the directors
of USA Waste shall not be liable to USA Waste or its stockholders for monetary
damages for breach of fiduciary duty as a director to the fullest extent
permitted by the DGCL. The foregoing limitation does not eliminate or limit the
liability of a director for any breach of a director's duty of loyalty to USA
Waste or its stockholders, for acts or omissions not in good faith or which
involved intentional misconduct or a knowing violation of law, for any
transaction from which the director derived an improper personal benefit, or for
approval of the unlawful payment of a dividend or an unlawful stock purchase or
redemption. The Certificate of Incorporation of USA Waste also
72
<PAGE> 83
provides that USA Waste shall indemnify, and advance litigation expenses to, its
officers, directors, employees, and agents to the fullest extent permitted by
the DGCL and all other laws of the State of Delaware.
The DGCL provides that USA Waste has the power to indemnify any person who
is sued or threatened to be made a named party in a proceeding, other than an
action by or in the right of USA Waste, because such person is or was a
director, officer, employee, or agent of USA Waste or is or was serving at the
request of USA Waste as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses actually and reasonably incurred by such person in connection with such
proceeding. In order to be indemnified, the person must have (1) acted in good
faith; (2) acted in a manner he reasonably believed to be in or not opposed to
the best interests of USA Waste; and (3) with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The indemnification includes attorneys' fees, judgments, fines and
amounts paid in settlement.
The DGCL also provides that USA Waste may indemnify any person who is sued
or threatened to be made a named party in a proceeding by or in the right of USA
Waste to procure a judgment in its favor because such person is or was a
director, officer, employee or agent of USA Waste, or is or was serving at the
request of USA Waste as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise. In order to
be indemnified, the person must have conducted himself or herself in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interests of USA Waste. No indemnification may be made, however, with
respect to any claim, issue or matter as to which such person shall have been
judged to be liable to USA Waste unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnification for
such expenses which the court shall deem proper.
Indemnification by USA Waste is subject to a determination that the
director, officer, employee or agent has met the applicable standard of conduct.
The determination must be made (1) by a majority vote of a quorum of the USA
Waste Board of Directors, consisting only of directors who were not parties to
such action, suit or proceeding; (2) if such a quorum cannot be obtained, or
even if obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion; or (3) by the stockholders of
USA Waste.
USA Waste maintains an officers and directors liability insurance policy
insuring officers and directors of USA Waste and its subsidiaries against
certain liabilities, including liabilities under the Securities Act. The effect
of such policy is to indemnify the officers and directors of USA Waste against
losses incurred by them while acting in such capacities.
Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers, or persons controlling USA Waste pursuant to
the foregoing provisions, USA Waste had been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in such
Act and is therefore unenforceable.
PROPOSALS OF STOCKHOLDERS FOR ANNUAL MEETING
The Board of Directors of USA Waste will consider proposals of stockholders
intended to be presented for action at the 1997 Annual Meeting of Stockholders.
A stockholder proposal must be submitted in writing and be received at USA
Waste's principal executive offices, 5400 LBJ Freeway, Suite 300 -- Tower One,
Dallas, Texas 75240, no later than December 3, 1996, to be considered for
inclusion in USA Waste's proxy statement and form of proxy relating to the 1997
Annual Meeting of Stockholders. Submission of a stockholder proposal does not
assure inclusion in the proxy statement or form of proxy because proposals must
meet certain Commission rules.
73
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OTHER MATTERS
The Boards of Directors of USA Waste and Sanifill do not know of any other
matters to be presented for action at the Meetings other than those listed in
each company's respective Notice of Meeting and referred to herein.
LEGAL MATTERS
The validity of the USA Waste Common Stock to be issued in connection with
the Merger and certain legal issues and tax consequences of the Merger will be
passed upon by Andrews & Kurth L.L.P., Houston, Texas. Certain legal issues and
tax consequences of the Merger will be passed upon for Sanifill by Baker &
Botts, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of USA Waste and subsidiaries as of
December 31, 1994 and 1995, and for each of the three years in the period ended
December 31, 1995, which are included in USA Waste's Annual Report on Form 10-K
for the fiscal year ended December 31, 1995, and the supplemental consolidated
balance sheets of USA Waste as of December 31, 1994 and 1995 and the
supplemental consolidated statements of operations, retained earnings and cash
flows for each of the years in the three-year period ended December 31, 1995,
and the consolidated financial statements of USA Waste Services, Inc. appearing
in USA Waste Services, Inc.'s Current Report on Form 8-K/A (Amendment No. 3)
filed July 1, 1996 incorporated by reference in this Joint Proxy Statement and
Prospectus, have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The consolidated financial statements of Sanifill appearing in Sanifill's
Annual Report on Form 10-K for the year ended December 31, 1995 and the
financial statements of various companies acquired by Sanifill appearing in
Sanifill's Current Reports on Form 8-K dated February 5, 1996, February 11, 1996
and March 20, 1996 incorporated by reference in this Joint Proxy Statement and
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated herein by reference in reliance upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Western Waste Industries at June
30, 1995 and 1994, and for each of the three years in the period ended June 30,
1995, included in USA Waste's Current Report on Form 8-K dated January 9, 1996,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon and included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
INDEPENDENT AUDITORS
Representatives of Coopers & Lybrand L.L.P., USA Waste's independent
auditors, are expected to be present at the USA Waste Special Meeting and will
have the opportunity to make a statement if they so desire. Such representatives
are also expected to be available to respond to appropriate questions.
Representatives of Arthur Andersen LLP, Sanifill's independent auditors,
are expected to be present at the Sanifill Special Meeting and will have the
opportunity to make a statement if they so desire. Such representatives are also
expected to be available to respond to appropriate questions.
74
<PAGE> 85
ANNEX A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 22, 1996
BY AND AMONG
USA WASTE SERVICES, INC.,
QUATRO ACQUISITION CORP.
AND
SANIFILL, INC.
<PAGE> 86
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C> <C>
ARTICLE I THE MERGER.......................................................... A-1
Section 1.1. The Merger........................................... A-1
Section 1.2. Effective Time of the Merger......................... A-1
ARTICLE II THE SURVIVING AND PARENT CORPORATIONS............................... A-2
Section 2.1. Certificate of Incorporation......................... A-2
Section 2.2. By-Laws.............................................. A-2
Section 2.3. Directors............................................ A-2
Section 2.4. Officers............................................. A-2
Section 2.5. Corporate Offices.................................... A-2
ARTICLE III CONVERSION OF SHARES................................................ A-2
Section 3.1. Conversion of Company Shares in the Merger........... A-2
Section 3.2. Conversion of Subsidiary Shares...................... A-3
Section 3.3. Exchange of Certificates............................. A-3
Section 3.4. No Fractional Securities............................. A-4
Section 3.5. Closing.............................................. A-4
Section 3.6. Closing of the Company's Transfer Books.............. A-4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY............. A-5
Section 4.1. Organization and Qualification....................... A-5
Section 4.2. Capitalization....................................... A-5
Section 4.3. Subsidiaries......................................... A-5
Section 4.4. Authority; Non-Contravention; Approvals.............. A-6
Section 4.5. Reports and Financial Statements..................... A-7
Section 4.6. Absence of Undisclosed Liabilities................... A-7
Section 4.7. Absence of Certain Changes or Events................. A-8
Section 4.8. Litigation........................................... A-8
Section 4.9. Registration Statement and Proxy Statement........... A-8
Section 4.10. No Violation of Law.................................. A-8
Section 4.11. Compliance with Agreements........................... A-9
Section 4.12. Taxes................................................ A-9
Section 4.13. Employee Benefit Plans; ERISA........................ A-10
Section 4.14. Labor Controversies.................................. A-11
Section 4.15. Environmental Matters................................ A-11
Section 4.16. Non-competition Agreements........................... A-12
Section 4.17. Title to Assets...................................... A-12
Section 4.18. Reorganization and Pooling of Interests.............. A-13
Section 4.19. Parent Stockholders' Approval........................ A-13
Section 4.20. Brokers and Finders.................................. A-13
Section 4.21. Opinion of Financial Advisor......................... A-13
Section 4.22. Ownership of Company Common Stock.................... A-13
Section 4.23. Parent Disclosure Schedule........................... A-13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................... A-13
Section 5.1. Organization and Qualification....................... A-13
Section 5.2. Capitalization....................................... A-14
Section 5.3. Subsidiaries......................................... A-14
Section 5.4. Authority; Non-Contravention; Approvals.............. A-15
Section 5.5. Reports and Financial Statements..................... A-16
Section 5.6. Absence of Undisclosed Liabilities................... A-16
Section 5.7. Absence of Certain Changes or Events................. A-16
</TABLE>
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<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C> <C>
Section 5.8. Litigation........................................... A-16
Section 5.9. Registration Statement and Proxy Statement........... A-17
Section 5.10. No Violation of Law.................................. A-17
Section 5.11. Compliance with Agreements........................... A-17
Section 5.12. Taxes................................................ A-18
Section 5.13. Employee Benefit Plans; ERISA........................ A-18
Section 5.14. Labor Controversies.................................. A-19
Section 5.15. Environmental Matters................................ A-19
Section 5.16. Non-competition Agreements........................... A-20
Section 5.17. Title to Assets...................................... A-20
Section 5.18. Reorganization and Pooling of Interests.............. A-21
Section 5.19. Company Stockholders' Approval....................... A-21
Section 5.20. Brokers and Finders.................................. A-21
Section 5.21. Opinion of Financial Advisor......................... A-21
Section 5.22. Amendment to Preferred Stock Rights Agreement........ A-21
Section 5.23. Company Disclosure Schedule.......................... A-21
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER.............................. A-21
Section 6.1. Conduct of Business by the Company Pending the
Merger............................................. A-21
Section 6.2. Conduct of Business by Parent and Subsidiary Pending
the Merger......................................... A-23
Section 6.3. Control of the Company's Operations.................. A-24
Section 6.4. Control of Parent's Operations....................... A-24
Section 6.5. Acquisition Transactions............................. A-24
ARTICLE VII ADDITIONAL AGREEMENTS............................................... A-25
Section 7.1. Access to Information................................ A-25
Section 7.2. Registration Statement and Proxy Statement........... A-26
Section 7.3. Stockholders' Approvals.............................. A-26
Section 7.4. Compliance with the Securities Act................... A-26
Section 7.5. Exchange Listing..................................... A-27
Section 7.6. Expenses and Fees.................................... A-27
Section 7.7. Agreement to Cooperate............................... A-27
Section 7.8. Public Statements.................................... A-28
Section 7.9. Option Plans......................................... A-28
Section 7.10. Notification of Certain Matters...................... A-28
Section 7.11. Directors' and Officers' Indemnification............. A-28
Section 7.12. Corrections to the Joint Proxy Statement/Prospectus
and Registration Statement......................... A-29
Section 7.13. Effect on Accounting Treatment....................... A-29
Section 7.14. Amendment of Certain Acquisition Agreements.......... A-30
ARTICLE VIII CONDITIONS.......................................................... A-30
Section 8.1. Conditions to Each Party's Obligation to Effect the
Merger............................................. A-30
Section 8.2. Conditions to Obligation of the Company to Effect the
Merger............................................. A-31
Section 8.3. Conditions to Obligations of Parent and Subsidiary to
Effect the Merger.................................. A-31
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER................................... A-32
Section 9.1. Termination.......................................... A-32
Section 9.2. Effect of Termination................................ A-33
Section 9.3. Amendment............................................ A-33
Section 9.4. Waiver............................................... A-33
</TABLE>
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<TABLE>
<CAPTION>
PAGE NO.
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<S> <C> <C> <C>
ARTICLE X GENERAL PROVISIONS.................................................. A-34
Section 10.1. Non-Survival of Representations and Warranties....... A-34
Section 10.2. Notices.............................................. A-34
Section 10.3. Interpretation....................................... A-34
Section 10.4. Miscellaneous........................................ A-35
Section 10.5. Counterparts......................................... A-35
Section 10.6. Parties In Interest.................................. A-35
</TABLE>
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<PAGE> 89
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 22, 1996 (this
"Agreement"), by and among USA Waste Services, Inc., a Delaware corporation
("Parent"), Quatro Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Subsidiary"), and Sanifill, Inc., a Delaware corporation
(the "Company");
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Subsidiary and the Company have
approved the merger of Subsidiary with and into the Company on the terms set
forth in this Agreement (the "Merger"); and
WHEREAS, Parent, Subsidiary and the Company intend the Merger to qualify as
a tax-free reorganization under the provisions of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder;
WHEREAS, in connection with the Merger and as an inducement to the Company
to enter into this Agreement, the Company, Parent and the shareholders of Parent
listed on the Parent Disclosure Schedule (as defined in Article IV) have
executed as of the date hereof a voting agreement in favor of the Company with
respect to, among other things, the voting of shares of capital stock of Parent
held or to be held by them in favor of the Merger; and
WHEREAS, in connection with the Merger and as an inducement to Parent to
enter into this Agreement, Parent, the Company and the shareholders of the
Company listed on the Company Disclosure Schedule (as defined in Article V) have
executed as of the date hereof a voting agreement in favor of Parent with
respect to, among other things, the voting of shares of capital stock of the
Company held or to be held by such shareholder in favor of the Merger.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.2) in accordance
with the General Corporation Law of the State of Delaware (the "DGCL"),
Subsidiary shall be merged with and into the Company and the separate existence
of Subsidiary shall thereupon cease. The Company shall be the surviving
corporation in the Merger and is hereinafter sometimes referred to as the
"Surviving Corporation."
SECTION 1.2. EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "Effective Time") as shall be stated in a
certificate of merger, in a form mutually acceptable to Parent and the Company,
to be filed with the Secretary of State of the State of Delaware in accordance
with the DGCL (the "Merger Filing"). The Merger Filing shall be made
simultaneously with or as soon as practicable after the closing of the
transactions contemplated by this Agreement in accordance with Section 3.5. The
parties acknowledge that it is their mutual desire and intent to consummate the
Merger as soon as practicable after the date hereof. Accordingly, the parties
shall, subject to the provisions hereof and to the fiduciary duties of their
respective boards of directors, use all reasonable efforts to consummate, as
soon as practicable, the transactions contemplated by this Agreement in
accordance with Section 3.5.
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<PAGE> 90
ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
SECTION 2.1. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation
of Subsidiary as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time, and thereafter may be amended in accordance with its terms and as provided
in the DGCL.
SECTION 2.2. BY-LAWS. The By-laws of Subsidiary as in effect immediately
prior to the Effective Time shall be the By-laws of the Surviving Corporation
after the Effective Time, and thereafter may be amended in accordance with their
terms and as provided by the Certificate of Incorporation of the Surviving
Corporation and the DGCL.
SECTION 2.3. DIRECTORS. (a) The Board of Directors of Parent shall take
such action as may be necessary to cause Parent's Board of Directors immediately
following the Effective Time to be composed of twelve members, including three
members designated by the Board of Directors of the Company prior to the Closing
(the "Company Designees"). One of the Company Designees shall be Rodney R. Proto
and the remaining two Company Designees shall be non-officers of the Company and
its subsidiaries reasonably acceptable to Parent. If the Board positions are of
different terms, the Company shall have the right to designate which of the
Company Designees shall fill each Board position. Rodney R. Proto shall have an
initial term of office expiring in 1997 or thereafter and the remaining two
Company Designees shall have initial terms of office expiring in 1998 or
thereafter. If the initial term of Rodney R. Proto shall expire in 1997, the
Board of Directors of the Company shall take such action as may be necessary to
renominate Rodney R. Proto to the Board of Directors of the Company with a term
of office expiring in 2000 or thereafter. All of the Company Designees shall
serve in accordance with the charter and bylaws of Parent until their respective
successors are duly elected or appointed and qualified. One of the Company
Designees (to be designated by the Board of Directors of the Company prior to
the Closing and reasonably acceptable to Parent) shall be appointed by the Board
of Directors of Parent to the Executive Committee of Parent's Board of Directors
to serve in accordance with the By-laws of Parent.
(b) The directors of Subsidiary in office immediately prior to the
Effective Time shall be the directors of the Surviving Corporation after the
Effective Time, and such directors shall serve in accordance with the By-laws of
the Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
SECTION 2.4. OFFICERS. (a) Immediately following the Effective Time, the
Board of Directors of Parent shall elect Rodney R. Proto as President and Chief
Operating Officer of Parent to serve in accordance with the By-laws of Parent.
(b) The officers of Subsidiary in office immediately prior to the Effective
Time shall be the officers of the Surviving Corporation after the Effective
Time, and such officers shall serve in accordance with the By-laws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
SECTION 2.5. CORPORATE OFFICES. As soon as practicable following the
Effective Time, Parent shall transfer Parent's principal executive offices to
Houston, Texas.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1. CONVERSION OF COMPANY SHARES IN THE MERGER. At the Effective
Time, by virtue of the Merger and without any action on the part of any holder
of any capital stock of Parent or the Company:
(a) each share of the common stock, par value $.01 per share, of the
Company (the "Company Common Stock") shall, subject to Sections 3.3 and
3.4, be converted into the right to receive, without interest, 1.70 (the
"Exchange Ratio") shares of the common stock, par value $.01 per share, of
Parent ("Parent Common Stock");
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(b) each share of capital stock of the Company, if any, owned by
Parent or any subsidiary of Parent or held in treasury by the Company or
any subsidiary of the Company immediately prior to the Effective Time shall
be canceled and no consideration shall be paid in exchange therefor and
shall cease to exist from and after the Effective Time; and
(c) subject to and as more fully provided in Section 7.9, each
unexpired option or warrant to purchase Company Common Stock that is
outstanding at the Effective Time, whether or not exercisable, shall
automatically and without any action on the part of the holder thereof be
converted into an option or warrant to purchase a number of shares of
Parent Common Stock equal to the number of shares of Company Common Stock
that could be purchased under such option or warrant multiplied by the
Exchange Ratio, at a price per share of Parent Common Stock equal to the
per share exercise price of such option or warrant divided by the Exchange
Ratio.
SECTION 3.2. CONVERSION OF SUBSIDIARY SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent as the sole
stockholder of Subsidiary, each issued and outstanding share of common stock,
par value $.01 per share, of Subsidiary ("Subsidiary Common Stock") shall be
converted into one share of common stock, par value $.01 per share, of the
Surviving Corporation.
SECTION 3.3. EXCHANGE OF CERTIFICATES. (a) From and after the Effective
Time, each holder of an outstanding certificate which immediately prior to the
Effective Time represented shares of Company Common Stock shall be entitled to
receive in exchange therefor, upon surrender thereof to an exchange agent
reasonably satisfactory to Parent and the Company (the "Exchange Agent"), a
certificate or certificates representing the number of whole shares of Parent
Common Stock to which such holder is entitled pursuant to Section 3.1(a).
Notwithstanding any other provision of this Agreement, (i) until holders or
transferees of certificates theretofore representing shares of Company Common
Stock have surrendered them for exchange as provided herein, no dividends shall
be paid with respect to any shares represented by such certificates and
no payment for fractional shares shall be made and (ii) without regard to when
such certificates representing shares of Company Common Stock are surrendered
for exchange as provided herein, no interest shall be paid on any dividends or
any payment for fractional shares. Upon surrender of a certificate which
immediately prior to the Effective Time represented shares of Company Common
Stock, there shall be paid to the holder of such certificate the amount of any
dividends which theretofore became payable, but which were not paid by reason of
the foregoing, with respect to the number of whole shares of Parent Common Stock
represented by the certificate or certificates issued upon such surrender.
(b) If any certificate for shares of Parent Common Stock is to be issued in
a name other than that in which the certificate for shares of Company Common
Stock surrendered in exchange therefor is registered, it shall be a condition of
such exchange that the person requesting such exchange shall pay any applicable
transfer or other taxes required by reason of such issuance.
(c) Promptly after the Effective Time, Parent shall make available to the
Exchange Agent the certificates representing shares of Parent Common Stock
required to effect the exchanges referred to in paragraph (a) above and cash for
payment of any fractional shares referred to in Section 3.4.
(d) Promptly after the Effective Time, the Exchange Agent shall mail to
each holder of record of a certificate or certificates that immediately prior to
the Effective Time represented outstanding shares of Company Common Stock (the
"Company Certificates") (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon actual delivery of the Company Certificates
to the Exchange Agent) and (ii) instructions for use in effecting the surrender
of the Company Certificates in exchange for certificates representing shares of
Parent Common Stock. Upon surrender of Company Certificates for cancellation to
the Exchange Agent, together with a duly executed letter of transmittal and such
other documents as the Exchange Agent shall reasonably require, the holder of
such Company Certificates shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock into
which the shares of Company Common Stock theretofore represented by the Company
Certificates so surrendered shall have been converted pursuant to the provisions
of Section 3.1(a), and the Company Certificates so surrendered shall be
canceled. Notwithstanding
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the foregoing, neither the Exchange Agent nor any party hereto shall be liable
to a holder of shares of Company Common Stock for any shares of Parent Common
Stock or dividends or distributions thereon delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine months after the Effective
Date, the Exchange Agent shall deliver to Parent all cash, certificates
(including any Parent Common Stock) and other documents in its possession
relating to the transactions described in this Agreement, and the Exchange
Agent's duties shall terminate. Thereafter, each holder of a Company Certificate
may surrender such Company Certificate to the Surviving Corporation and (subject
to applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Parent Common Stock, without any interest thereon. Notwithstanding
the foregoing, none of the Exchange Agent, Parent, Subsidiary, the Company or
the Surviving Corporation shall be liable to a holder of shares of Company
Common Stock for any shares of Parent Common Stock delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(f) In the event any Company Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Company Certificate to be lost, stolen or destroyed, the Surviving
Corporation shall issue in exchange for such lost, stolen or destroyed Company
Certificate the Parent Common Stock deliverable in respect thereof determined in
accordance with this Article III. When authorizing such issuance in exchange
therefor, the Board of Directors of the Surviving Corporation may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Company Certificate to give the
Surviving Corporation such indemnity as it may reasonably direct as protection
against any claim that may be made against the Surviving Corporation with
respect to the Company Certificate alleged to have been lost, stolen or
destroyed.
SECTION 3.4. NO FRACTIONAL SECURITIES. Notwithstanding any other provision
of this Agreement, no certificates or scrip for fractional shares of Parent
Common Stock shall be issued in the Merger and no Parent Common Stock dividend,
stock split or interest shall relate to any fractional security, and such
fractional interests shall not entitle the owner thereof to vote or to any other
rights of a security holder. In lieu of any such fractional shares, each holder
of shares of Company Common Stock who would otherwise have been entitled to
receive a fraction of a share of Parent Common Stock upon surrender of Company
Certificates for exchange pursuant to this Article III shall be entitled to
receive from the Exchange Agent a cash payment equal to such fraction multiplied
by the average closing price per share of Parent Common Stock on the New York
Stock Exchange, as reported by the Wall Street Journal, during the 10 trading
days immediately preceding the Effective Time.
SECTION 3.5. CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at a location mutually agreeable
to Parent and the Company as promptly as practicable following the date on which
the last of the conditions set forth in Article VIII is fulfilled or waived, or
at such other time and place as Parent and the Company shall agree. The date on
which the Closing occurs is referred to in this Agreement as the "Closing Date."
SECTION 3.6. CLOSING OF THE COMPANY'S TRANSFER BOOKS. At and after the
Effective Time, holders of Company Certificates shall cease to have any rights
as stockholders of the Company, except for the right to receive shares of Parent
Common Stock pursuant to Section 3.1 and the right to receive cash for payment
of fractional shares pursuant to Section 3.4. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock which were outstanding immediately prior to the Effective
Time shall thereafter be made. If, after the Effective Time, subject to the
terms and conditions of this Agreement, Company Certificates formerly
representing shares of Company Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for shares of Parent Common
Stock in accordance with this Article III.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to the Company that,
except as set forth in the Disclosure Schedule dated as of the date hereof and
signed by an authorized officer of Parent (the "Parent Disclosure Schedule"),
each of which exceptions shall specifically identify the relevant Section hereof
to which it relates:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Each of Parent and Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation and has the requisite power and authority
to own, lease and operate its assets and properties and to carry on its business
as it is now being conducted. Each of Parent and Subsidiary is qualified to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing will not, when taken together with all other such failures,
have a material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole. True, accurate and complete copies of each of
Parent's and Subsidiary's charters and By-laws, in each case as in effect on the
date hereof, including all amendments thereto, have heretofore been delivered to
the Company.
SECTION 4.2. CAPITALIZATION. (a) As of June 15, 1996, the authorized
capital stock of Parent consisted of 150,000,000 shares of Parent Common Stock
and 10,000,000 shares of preferred stock, par value $.01 per share ("Parent
Preferred Stock"). As of June 15, 1996, (i) 88,330,623 shares of Parent Common
Stock were issued and outstanding, all of which were validly issued and are
fully paid, nonassessable and free of preemptive rights, (ii) no shares of
Parent Preferred Stock were issued and outstanding, (iii) 26,310 shares of
Parent Common Stock and no shares of Company Preferred Stock were held in the
treasury of Parent and (iv) 13,136,521 shares of Parent Common Stock were
reserved for issuance pursuant to the exercise of outstanding options and
warrants to purchase Parent Common Stock. Assuming the exercise of all
outstanding options and warrants to purchase Parent Common Stock, as of June 15,
1996, there would be 101,467,144 shares of Parent Common Stock issued and
outstanding. In addition, as of June 15, 1996, 4,364,152 shares of Parent Common
Stock were reserved and unissued pending conversion of shares of acquired
companies.
(b) The authorized capital stock of Subsidiary consists of 1,000 shares of
Subsidiary Common Stock, of which 100 shares are issued and outstanding, which
shares are owned beneficially and of record by Parent.
(c) Except as disclosed in the Parent SEC Reports (as defined in Section
4.5), as of the date hereof, there are no outstanding subscriptions, options,
calls, contracts, commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement and also including any
rights plan or other anti-takeover agreement, obligating Parent or any
subsidiary of Parent to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of the capital stock of Parent or obligating Parent
or any subsidiary of Parent to grant, extend or enter into any such agreement or
commitment. Except as otherwise disclosed in the Parent SEC Reports, there are
no voting trusts, proxies or other agreements or understandings to which Parent
or any subsidiary of Parent is a party or is bound with respect to the voting of
any shares of capital stock of Parent other than voting agreements executed in
connection with this Agreement. The Shareholders Agreement dated as of December
18, 1995 between Parent and Donald F. Moorehead, Jr., John E. Drury, John G.
Rangos, Sr., John G. Rangos, Jr., Alexander W. Rangos and John Rangos
Development Corporation, Inc. has been terminated in connection with the
execution of this Agreement. The shares of Parent Common Stock issued to
stockholders of the Company in the Merger will be at the Effective Time duly
authorized, validly issued, fully paid and nonassessable and free of preemptive
rights.
SECTION 4.3. SUBSIDIARIES. Each direct and indirect corporate subsidiary of
Parent is duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the requisite power and authority
to own, lease and operate its assets and properties and to carry on its business
as it is now
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being conducted. Each subsidiary of Parent is qualified to do business, and is
in good standing, in each jurisdiction in which the properties owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing would not, when taken together with all such other failures, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole. All of the outstanding shares of capital stock
of each corporate subsidiary of Parent are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned directly or
indirectly by Parent, free and clear of any liens, claims or encumbrances,
except that such shares are pledged to secure Parent's credit facilities. There
are no subscriptions, options, warrants, rights, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements relating to the issuance, sale, voting, transfer, ownership or
other rights with respect to any shares of capital stock of any corporate
subsidiary of Parent, including any right of conversion or exchange under any
outstanding security, instrument or agreement. As used in this Agreement, the
term "subsidiary" shall mean, when used with reference to any person or entity,
any corporation, partnership, joint venture or other entity of which such person
or entity (either acting alone or together with its other subsidiaries) owns,
directly or indirectly, 50% or more of the stock or other voting interests, the
holders of which are entitled to vote for the election of a majority of the
board of directors or any similar governing body of such corporation,
partnership, joint venture or other entity.
SECTION 4.4. AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) Parent and
Subsidiary each have full corporate power and authority to enter into this
Agreement and, subject to the Parent Stockholders' Approval (as defined in
Section 7.3(b)) and the Parent Required Statutory Approvals (as defined in
Section 4.4(c)), to consummate the transactions contemplated hereby. This
Agreement has been approved by the Boards of Directors of Parent and Subsidiary,
and no other corporate proceedings on the part of Parent or Subsidiary are
necessary to authorize the execution and delivery of this Agreement or, except
for the Parent Stockholders' Approval, the consummation by Parent and Subsidiary
of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by each of Parent and Subsidiary, and, assuming the due
authorization, execution and delivery hereof by the Company, constitutes a valid
and legally binding agreement of each of Parent and Subsidiary enforceable
against each of them in accordance with its terms, except that such enforcement
may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles. Without limitation of the
foregoing, each of the covenants and obligations of Parent set forth in Sections
6.2, 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.10 and 7.12 is valid, legally binding and
enforceable (subject as aforesaid) notwithstanding the absence of the Parent
Stockholders' Approval.
(b) The execution and delivery of this Agreement by each of Parent and
Subsidiary do not 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 Parent or any of
its subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of Parent or any of its subsidiaries, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
Parent or any of its subsidiaries or any of their respective properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Parent or any of its subsidiaries is now a
party or by which Parent or any of its subsidiaries or any of their respective
properties or assets may be bound or affected. The consummation by Parent and
Subsidiary of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Parent Required Statutory Approvals and the Parent
Stockholder's Approval and (y) in the case of the terms, conditions or
provisions described in clause (iii) above, to obtaining (prior to the Effective
Time) consents required from commercial lenders, lessors or other third parties
as specified on the Parent Disclosure Schedule. Excluded from the foregoing
sentences of this paragraph (b), insofar as they apply to the terms, conditions
or provisions described in clauses (ii) and
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(iii) of the first sentence of this paragraph (b), are such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) results of operations of
Parent and its subsidiaries, taken as a whole.
(c) Except for (i) the filings by Parent required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing
of the Joint Proxy Statement/Prospectus (as defined in Section 4.9) with the
Securities and Exchange Commission (the "SEC ") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Securities Act of
1933, as amended (the "Securities Act"), and the declaration of the
effectiveness thereof by the SEC and filings with various state blue sky
authorities, (iii) the making of the Merger Filing with the Secretary of State
of the State of Delaware in connection with the Merger, and (iv) any required
filings with or approvals from applicable state environmental authorities,
public service commissions and public utility commissions (the filings and
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Parent Required Statutory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by Parent or Subsidiary or the consummation by Parent
or Subsidiary of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole.
SECTION 4.5. REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1994,
Parent has filed with the SEC all forms, statements, reports and documents
(including all exhibits, post-effective amendments and supplements thereto)
required to be filed by it under each of the Securities Act, the Exchange Act
and the respective rules and regulations thereunder, all of which, as amended if
applicable, complied when filed in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder.
Parent has previously delivered to the Company copies (including all exhibits,
post-effective amendments and supplements thereto) of its (a) Annual Reports on
Form 10-K for the fiscal year ended December 31, 1995 and for the immediately
preceding fiscal year, as filed with the SEC, (b) proxy and information
statements relating to (i) all meetings of its stockholders (whether annual or
special) and (ii) actions by written consent in lieu of a stockholders' meeting
from January 1, 1994, until the date hereof, and (c) all other reports,
including quarterly reports, and registration statements filed by Parent with
the SEC since January 1, 1994 (other than registration statements filed on Form
S-8) (the documents referred to in clauses (a), (b) and (c) filed prior to the
date hereof are collectively referred to as the "Parent SEC Reports"). The
Parent SEC Reports are identified on the Parent Disclosure Schedule. As of their
respective dates, the Parent SEC Reports did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The audited consolidated financial
statements and unaudited interim consolidated financial statements of Parent
included in such reports (collectively, the "Parent Financial Statements") have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of Parent and its
subsidiaries as of the dates thereof and the results of their operations and
changes in financial position for the periods then ended, subject, in the case
of the unaudited interim financial statements, to normal year-end and audit
adjustments and any other adjustments described therein.
SECTION 4.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the
Parent SEC Reports or as heretofore disclosed to the Company in writing with
respect to acquisitions or potential transactions or commitments, neither Parent
nor any of its subsidiaries had at December 31, 1995, or has incurred since that
date, any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature, except: (a) liabilities, obligations or contingencies
(i) which are accrued or reserved against in the Parent Financial Statements or
reflected in the notes thereto or (ii) which were incurred after December 31,
1995, and were incurred in the ordinary course of business and consistent with
past practices; (b) liabilities, obligations or
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contingencies which (i) would not, in the aggregate, have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of Parent and its subsidiaries, taken as a
whole, or (ii) have been discharged or paid in full prior to the date hereof;
and (c) liabilities and obligations which are of a nature not required to be
reflected in the consolidated financial statements of Parent and its
subsidiaries prepared in accordance with generally accepted accounting
principles consistently applied and which were incurred in the ordinary course
of business.
SECTION 4.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
most recent Parent SEC Report that contains consolidated financial statements of
Parent, there has not been any material adverse change in the business,
operations, properties, assets, liabilities, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole, except
for changes that affect the industries in which Parent and its subsidiaries
operate generally.
SECTION 4.8. LITIGATION. Except as disclosed in the Parent SEC Reports,
there are no claims, suits, actions or proceedings pending or, to the knowledge
of Parent, threatened against, relating to or affecting Parent or any of its
subsidiaries, before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seek to restrain or enjoin
the consummation of the Merger or which could reasonably be expected, either
alone or in the aggregate with all such claims, actions or proceedings, to
materially and adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole. Except as set forth in the Parent SEC Reports,
neither Parent nor any of its subsidiaries is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would have
any material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole.
SECTION 4.9. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by Parent or its subsidiaries for inclusion in (a)
the Registration Statement on Form S-4 to be filed under the Securities Act with
the SEC by Parent in connection with the Merger for the purpose of registering
the shares of Parent Common Stock to be issued in the Merger (the "Registration
Statement") or (b) the proxy statement to be distributed in connection with the
Company's and Parent's meetings of their respective stockholders to vote upon
this Agreement and the transactions contemplated hereby (the "Proxy Statement"
and, together with the prospectus included in the Registration Statement, the
"Joint Proxy Statement/ Prospectus") will, in the case of the Proxy Statement or
any amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement and any amendments or supplements thereto, and at the time of
the meetings of stockholders of the Company and Parent to be held in connection
with the transactions contemplated by this Agreement, or, in the case of the
Registration Statement, as amended or supplemented, at the time it becomes
effective and at the time of such meetings of the stockholders of the Company
and Parent, 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 Joint Proxy Statement/Prospectus will, as of its mailing
date, comply as to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, except that no representation is
made by Parent or Subsidiary with respect to information supplied by the Company
or the stockholders of the Company for inclusion therein.
SECTION 4.10. NO VIOLATION OF LAW. Except as disclosed in the Parent SEC
Reports, neither Parent nor any of its subsidiaries is in violation of, or has
been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance, or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole. Except
as disclosed in the Parent SEC Reports, as of the date of this Agreement, to the
knowledge of Parent, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated an
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intention to conduct the same, other than, in each case, those the outcome of
which, as far as reasonably can be foreseen, will not have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of Parent and its subsidiaries, taken as a
whole. Parent and its subsidiaries have all permits, licenses, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct their businesses as presently conducted
(collectively, the "Parent Permits"), except for permits, licenses, franchises,
variances, exemptions, orders, authorizations, consents and approvals the
absence of which, alone or in the aggregate, would not have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of Parent and its subsidiaries, taken as a
whole. Parent and its subsidiaries are not in violation of the terms of any
Parent Permit, except for delays in filing reports or violations which, alone or
in the aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.11. COMPLIANCE WITH AGREEMENTS. Except as disclosed in the Parent
SEC Reports, Parent and each of its subsidiaries are not in breach or violation
of or in default in the performance or observance of any term or provision of,
and no event has occurred which, with lapse of time or action by a third party,
could result in a default under (a) the respective charter, by-laws or other
similar organizational instruments of Parent or any of its subsidiaries or (b)
any contract, commitment, agreement, indenture, mortgage, loan agreement, note,
lease, bond, license, approval or other instrument to which Parent or any of its
subsidiaries is a party or by which any of them is bound or to which any of
their property is subject, other than, in the case of clause (b) of this Section
4.11, breaches, violations and defaults which would not have, in the aggregate,
a material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole.
SECTION 4.12. TAXES. (a) Parent and its subsidiaries have (i) duly filed
with the appropriate governmental authorities all Tax Returns (as defined in
Section 4.12(c)) required to be filed by them for all periods ending on or prior
to the Effective Time, other than those Tax Returns the failure of which to file
would not have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole, and such Tax Returns are true,
correct and complete in all material respects and (ii) duly paid in full or made
adequate provision for the payment of all Taxes (as defined in Section 4.12(b))
for all past and current periods. The liabilities and reserves for Taxes
reflected in the Parent balance sheet included in the latest Parent SEC Report
are adequate to cover all Taxes for all periods ending at or prior to the date
of such balance sheet and there is no liability for Taxes for any period
beginning after such date other than Taxes arising in the ordinary course of
business. There are no material liens for Taxes upon any property or assets of
Parent or any subsidiary thereof, except for liens for Taxes not yet due. There
are no unresolved issues of law or fact arising out of a notice of deficiency,
proposed deficiency or assessment from the Internal Revenue Service (the "IRS")
or any other governmental taxing authority with respect to Taxes of the Parent
or any of its subsidiaries which, if decided adversely, singly or in the
aggregate, would have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole. Neither Parent nor its
subsidiaries has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency other
than waivers and extensions which are no longer in effect. Neither Parent nor
any of its subsidiaries is a party to any agreement providing for the allocation
or sharing of Taxes with any entity that is not, directly or indirectly, a
wholly-owned corporate subsidiary of Parent other than agreements the
consequences of which are fully and adequately reserved for in the Parent
Financial Statements. Neither Parent nor any of its corporate subsidiaries has,
with regard to any assets or property held, acquired or to be acquired by any of
them, filed a consent to the application of Section 341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall mean all taxes,
including, without limitation, income, gross receipts, excise, property, sales,
withholding, social security, occupation, use, service, license, payroll,
franchise, transfer and recording taxes, fees and charges, windfall profits,
severance, customs, import, export, employment or similar taxes, charges, fees,
levies or other assessments imposed by the United States, or any state, local or
foreign government or subdivision or agency thereof, whether computed on a
separate,
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consolidated, unitary, combined or any other basis, and such term shall include
any interest, fines, penalties or additional amounts and any interest in respect
of any additions, fines or penalties attributable or imposed or with respect to
any such taxes, charges, fees, levies or other assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall mean any
return, report or other document or information required to be supplied to a
taxing authority in connection with Taxes.
SECTION 4.13. EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as disclosed in the
Parent SEC Reports, at the date hereof, Parent and its subsidiaries do not
maintain or contribute to or have any obligation or liability to or with respect
to any material employee benefit plans, programs, arrangements or practices
(such plans, programs, arrangements or practices of Parent and its subsidiaries
being referred to as the "Parent Plans"), including employee benefit plans
within the meaning set forth in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or other similar material
arrangements for the provision of benefits (excluding any "Multi-employer Plan"
within the meaning of Section 3(37) of ERISA or a "Multiple Employer Plan"
within the meaning of Section 413(c) of the Code). The Parent Disclosure
Schedule lists all Multi-employer Plans to which any of them makes contributions
or has any obligation or liability to make contributions. Neither Parent nor any
of its subsidiaries maintains or has any liability with respect to any Multiple
Employer Plan. Neither Parent nor any of its subsidiaries has any obligation to
create or contribute to any additional such plan, program, arrangement or
practice or to amend any such plan, program, arrangement or practice so as to
increase benefits or contributions thereunder, except as required under the
terms of the Parent Plans, under existing collective bargaining agreements or to
comply with applicable law.
(b) Except as disclosed in the Parent SEC Reports, (i) there have been no
prohibited transactions within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code with respect to any of the Parent Plans that could
result in penalties, taxes or liabilities which, singly or in the aggregate,
could have a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of Parent and
its subsidiaries, taken as a whole, (ii) except for premiums due, there is no
outstanding material liability, whether measured alone or in the aggregate,
under Title IV of ERISA with respect to any of the Parent Plans, (iii) neither
the Pension Benefit Guaranty Corporation nor any plan administrator has
instituted proceedings to terminate any of the Parent Plans subject to Title IV
of ERISA other than in a "standard termination" described in Section 4041(b) of
ERISA, (iv) none of the Parent Plans has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most recent fiscal year of each
of the Parent Plans ended prior to the date of this Agreement, (v) the current
present value of all projected benefit obligations under each of the Parent
Plans which is subject to Title IV of ERISA did not, as of its latest valuation
date, exceed the then current value of the assets of such plan allocable to such
benefit liabilities by more than the amount, if any, disclosed in the Parent SEC
Reports as of March 31, 1996, based upon reasonable actuarial assumptions
currently utilized for such Parent Plan, (vi) each of the Parent Plans has been
operated and administered in all material respects in accordance with applicable
laws during the period of time covered by the applicable statute of limitations,
(vii) each of the Parent Plans which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has been determined by the Internal
Revenue Service to be so qualified and such determination has not been modified,
revoked or limited by failure to satisfy any condition thereof or by a
subsequent amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain the
"qualified" status of such Parent Plans, and the period for making any such
necessary retroactive amendments has not expired, (viii) with respect to
Multi-employer Plans, neither Parent nor any of its subsidiaries has made or
suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203, 4204 and 4205 of ERISA and, to the best
knowledge of Parent and its subsidiaries, no event has occurred or is expected
to occur which presents a material risk of a complete or partial withdrawal
under said Sections 4203, 4204 and 4205, (ix) to the best knowledge of Parent
and its subsidiaries, there are no material pending, threatened or anticipated
claims involving any of the Parent Plans other than claims for benefits in the
ordinary course, (x) Parent and its subsidiaries have no current material
liability under Title IV of ERISA, and Parent and its subsidiaries do not
reasonably anticipate that any such liability will be asserted against Parent or
any of its subsidiaries, and
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(xi) no act, omission or transaction (individually or in the aggregate) has
occurred with respect to any Parent Plan that has resulted or could result in
any material liability (direct or indirect) of Parent or any subsidiary under
Sections 409 or 502(c)(i) or (l) of ERISA or Chapter 43 of Subtitle (A) of the
Code. None of the Parent Controlled Group Plans has an "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code) or
is required to provide security to a Parent Plan pursuant to Section 401(a)(29)
of the Code. Each Parent Plan can be unilaterally terminated by Parent or a
subsidiary at any time without material liability, other than for amounts
previously reflected in the financial statements (or notes thereto) included in
the Parent SEC Reports.
(c) The Parent SEC Reports contain a true and complete summary or list of
or otherwise describe all material employment contracts and other employee
benefit arrangements with "change of control" or similar provisions and all
severance agreements with executive officers.
(d) There are no agreements which will or may provide payments to any
officer, employee, stockholder, or highly compensated individual which will be
"parachute payments" under Code Section 280G that are nondeductible to Parent or
subject to tax under Code Section 4999 for which Parent or any ERISA Affiliate
would have withholding liability.
SECTION 4.14. LABOR CONTROVERSIES. Except as disclosed in the Parent SEC
Reports, (a) there are no significant controversies pending or, to the knowledge
of Parent, threatened between Parent or its subsidiaries and any representatives
of any of their employees and (b) to the knowledge of Parent, there are no
material organizational efforts presently being made involving any of the
presently unorganized employees of Parent and its subsidiaries except for such
controversies and organizational efforts which, singly or in the aggregate,
could not reasonably be expected to materially and adversely affect the
business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.15. ENVIRONMENTAL MATTERS. (a) Except as disclosed in the Parent
SEC Reports, (i) Parent and its subsidiaries have conducted their respective
businesses in compliance with all applicable Environmental Laws (defined in
Section 4.15(b)), 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 owned
by Parent or any of its subsidiaries contain any Hazardous Substance (defined in
Section 4.15(c)) as a result of any activity of Parent or any of its
subsidiaries in amounts exceeding the levels permitted by applicable
Environmental Laws, (iii) neither Parent nor any of its subsidiaries has
received any notices, demand letters or requests for information from any
Federal, state, local or foreign governmental entity or third party indicating
that Parent 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, (iv) there are no civil, criminal or administrative actions, suits,
demands, claims, hearings, investigations or proceedings pending or threatened,
against Parent or any of its subsidiaries relating to any violation, or alleged
violation, of any Environmental Law, (v) no reports have been filed, or are
required to be filed, by Parent or any of its subsidiaries concerning the
release of any Hazardous Substance or the threatened or actual violation of any
Environmental Law, (vi) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law from any properties
owned by Parent or any of its subsidiaries as a result of any activity of Parent
or any of its subsidiaries during the time such properties were owned, leased or
operated by Parent or any of its subsidiaries, (vii) no underground storage
tanks have been installed, closed or removed from any properties owned by Parent
or any of its subsidiaries during, in the case of Parent, the time such
properties were owned, leased or operated by Parent and during, in the case of
each subsidiary, the time such subsidiary has been owned by Parent, (viii) there
is no asbestos or asbestos containing material present in any of the properties
owned by Parent and its subsidiaries, and no asbestos has been removed from any
of such properties during the time such properties were owned, leased or
operated by Parent or any of its subsidiaries, and (ix) neither Parent, its
subsidiaries nor any of their respective properties are subject to any
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, except for violations
of the foregoing clauses (i) through (ix) that, singly or in the aggregate,
would not reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole.
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(b) As used herein, "Environmental Law" means any Federal, 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
(x) 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 (y) 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 Closing Date. 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 Closing Date, 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 or
hereafter 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 biphenyls.
SECTION 4.16. NON-COMPETITION AGREEMENTS. Neither Parent nor any subsidiary
of Parent is a party to any agreement which purports to restrict or prohibit in
any material respect any of them from, directly or indirectly, engaging in any
business involving the collection, interim storage, transfer, recovery,
processing, recycling, marketing or disposal of rubbish, garbage, paper, textile
wastes, chemical or hazardous wastes, liquid and other wastes or any other
material business currently engaged in by Parent or the Company, or any
corporations affiliated with either of them. None of Parent's officers,
directors or key employees is a party to any agreement which, by virtue of such
person's relationship with Parent, restricts in any material respect Parent or
any subsidiary of Parent from, directly or indirectly, engaging in any of the
businesses described above.
SECTION 4.17. TITLE TO ASSETS. Parent and each of its subsidiaries has good
and marketable title in fee simple to all its real property and good title to
all its leasehold interests and other properties as reflected in the most recent
balance sheet included in the Parent Financial Statements, except for such
properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i) the
lien for current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Parent's business
operations (in the manner presently carried on by the Parent), or (iii) as
disclosed in the Parent SEC Reports, and except for such matters which, singly
or in the aggregate, could not reasonably be expected to materially and
adversely affect the business, operations, properties, assets, condition
(financial or other) or results of operations of Parent and its subsidiaries,
taken as a whole. All leases under which Parent leases any real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event which with notice or lapse of time or both would become a
default other than failures to be in good standing, valid and effective and
defaults under such leases which in the aggregate will not materially and
adversely affect the
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business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.18. REORGANIZATION AND POOLING OF INTERESTS. None of the Parent,
Subsidiary or, to their knowledge, any of their affiliates has taken or agreed
or intends to take any action or has any knowledge of any fact or circumstance
that would prevent the Merger from (a) constituting a reorganization qualifying
under the provisions of Section 368(a) of the Code or (b) being treated for
financial accounting purposes as a "pooling of interests" in accordance with
generally accepted accounting principles and the rules, regulations and
interpretations of the SEC (a "Pooling Transaction").
SECTION 4.19. PARENT STOCKHOLDERS' APPROVAL. The affirmative vote of
stockholders of Parent required for approval and adoption of this Agreement and
the Merger is a majority of the shares of Parent Common Stock present in person
or by proxy at a meeting of such stockholders and entitled to vote thereat.
SECTION 4.20. BROKERS AND FINDERS. Except for the fees and expenses payable
to Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ "), which fees are
reflected in its agreement with Parent (a copy of which has been delivered to
the Company), Parent has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of
Parent to pay any finder's fees, brokerage or agent commissions or other like
payments in connection with the transactions contemplated hereby. Except for the
fees and expenses paid or payable to DLJ, there is no claim for payment by
Parent of any investment banking fees, finder's fees, brokerage or agent
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
SECTION 4.21. OPINION OF FINANCIAL ADVISOR. The financial advisor of
Parent, DLJ, has rendered a written opinion to the Board of Directors of Parent
to the effect that the Exchange Ratio is fair from a financial point of view to
Parent.
SECTION 4.22. OWNERSHIP OF COMPANY COMMON STOCK. Neither Parent nor any of
its subsidiaries beneficially owns any shares of Company Common Stock as of the
date hereof.
SECTION 4.23. PARENT DISCLOSURE SCHEDULE. The information set forth in the
Parent Disclosure Schedule does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary that, except
as set forth in the disclosure schedule dated as of the date hereof and signed
by an authorized officer of the Company (the "Company Disclosure Schedule"),
each of which exceptions shall specifically identify the relevant Section hereof
to which it relates:
SECTION 5.1. ORGANIZATION AND QUALIFICATION. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. The Company is qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified and in good standing will
not, when taken together with all other such failures, have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its subsidiaries, taken as a
whole. True, accurate and complete copies of the Company's Articles of
Incorporation and By-laws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been delivered to Parent.
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SECTION 5.2. CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock and 500,000
shares of preferred stock, par value $10.00 per share ("Company Preferred
Stock"). As of June 15, 1996, (i) 25,030,471 shares of Company Common Stock were
issued and outstanding, all of which were validly issued and are fully paid,
nonassessable and free of preemptive rights, (ii) no shares of Company Common
Stock and no shares of Company Preferred Stock were held in the treasury of the
Company, (iii) 1,001,866 shares of Company Common Stock were reserved for
issuance upon exercise of options issued and outstanding pursuant to the
Company's 1989 Stock Option Plan, as amended, (iv) 1,461,360 shares of Company
Common Stock were reserved for issuance upon exercise of options issued and
outstanding pursuant to the Company's 1994 Long-Term Incentive Plan, (v) 607,266
shares of Company Common Stock were reserved for issuance pursuant to the
Company's 1991 Employee Stock Purchase Plan, (vi) 2,389,610 shares of Company
Common Stock were reserved for issuance upon conversion of outstanding
convertible debentures of the Company, (vii) 103,264 shares of Company Common
Stock were reserved for issuance upon exercise of outstanding warrants, (viii)
no shares of Company Preferred Stock were issued and outstanding and (ix) 83,435
shares of Company Preferred Stock were reserved for issuance upon exercise of
Rights ("Preferred Stock Purchase Rights") issued pursuant to that certain
Rights Agreement dated as of December 1, 1991 between the Company and First
City, Texas -- Houston, N.A., a national banking association, as amended by
Amendment No. 1 thereto between the Company and Chemical Bank, a New York State
banking corporation, (the "Preferred Stock Rights Agreement"). Except as set
forth in the preceding sentence, no other Awards (as such term is defined in the
Company's 1994 Long-Term Incentive Plan) were issued and outstanding as of June
15, 1996. A true and correct copy of the Preferred Stock Rights Agreement has
been made available to Parent. Assuming conversion of all outstanding
convertible debentures of the Company and the exercise of all outstanding
options, warrants or rights (other than the Preferred Stock Purchase Rights
issued under the Preferred Stock Rights Agreement) to purchase Company Common
Stock, as of June 15, 1996, there would be 29,988,071 shares of Company Common
Stock issued and outstanding.
(b) Except as disclosed in the Company SEC Reports (as defined in Section
5.5), as of the date hereof there were no outstanding subscriptions, options,
calls, contracts, commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement and also including any
rights plan or other anti-takeover agreement, obligating the Company or any
subsidiary of the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of the Company or
obligating the Company or any subsidiary of the Company to grant, extend or
enter into any such agreement or commitment. There are no voting trusts, proxies
or other agreements or understandings to which the Company or any subsidiary of
the Company is a party or is bound with respect to the voting of any shares of
capital stock of the Company other than voting agreements executed in connection
with this Agreement.
SECTION 5.3. SUBSIDIARIES. Each direct and indirect corporate subsidiary of
the Company is duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the requisite power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. Each subsidiary of the Company is
qualified to do business, and is in good standing, in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified and in good standing will not, when taken together with all such
other failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole. All of the outstanding
shares of capital stock of each corporate subsidiary of the Company are validly
issued, fully paid, nonassessable and free of preemptive rights and are owned
directly or indirectly by the Company free and clear of any liens, claims,
encumbrances, security interests, equities, charges and options of any nature
whatsoever. There are no subscriptions, options, warrants, rights, calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions or arrangements relating to the issuance, sale, voting, transfer,
ownership or other rights with respect to any shares of capital stock of any
corporate subsidiary of the Company, including any right of conversion or
exchange under any outstanding security, instrument or agreement.
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SECTION 5.4. AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) The Company has
full corporate power and authority to enter into this Agreement and, subject to
the Company Stockholders' Approval (as defined in Section 7.3(a)) and the
Company Required Statutory Approvals (as defined in Section 5.4(c)), to
consummate the transactions contemplated hereby. The Board of Directors of the
Company has at a meeting duly called and held and at which a quorum was present
and acting throughout, by the requisite affirmative vote of the directors of the
Company, (i) determined that the Merger is in the best interests of the Company
and its stockholders, (ii) approved this Agreement and the Merger and (iii)
determined that such approval satisfies the requirements of subparagraph A.2 of
Article Eighth of the Company's Certificate of Incorporation and, as a result,
renders inapplicable to the Merger and this Agreement the other provisions of
paragraph A of Article Eighth. No other corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of this Agreement
or, except for the Company Stockholders' Approval, the consummation by the
Company of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company, and, assuming the due authorization,
execution and delivery hereof by Parent and Subsidiary, constitutes a valid and
legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be subject to (a)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (b)
general equitable principles. Without limitation of the foregoing, each of the
covenants and obligations of the Company set forth in Sections 6.1, 6.5, 7.1,
7.2, 7.3, 7.6, 7.7, 7.8, 7.10, 7.12 and 7.14 is valid, legally binding and
enforceable (subject as aforesaid) notwithstanding the absence of the Company
Stockholders' Approval.
(b) The execution and delivery of this Agreement by the Company do not
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 the Company or any of its
subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of the Company or any of its subsidiaries, (ii)
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company or any of
its subsidiaries is now a party or by which the Company or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected. The consummation by the Company of the transactions contemplated
hereby will not result in any violation, conflict, breach, termination,
acceleration or creation of liens under any of the terms, conditions or
provisions described in clauses (i) through (iii) of the preceding sentence,
subject (x) in the case of the terms, conditions or provisions described in
clause (ii) above, to obtaining (prior to the Effective Time) the Company
Required Statutory Approvals and the Company Stockholders' Approval and (y) in
the case of the terms, conditions or provisions described in clause (iii) above,
to obtaining (prior to the Effective Time) consents required from commercial
lenders, lessors or other third parties as specified in the Company Disclosure
Schedule. Excluded from the foregoing sentences of this paragraph (b), insofar
as they apply to the terms, conditions or provisions described in clauses (ii)
and (iii) of the first sentence of this paragraph (b), are such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
(c) Except for (i) the filings by the Company required by the HSR Act, (ii)
the filing of the Joint Proxy Statement/Prospectus with the SEC pursuant to the
Exchange Act, (iii) the making of the Merger Filing with the Secretary of State
of the State of Delaware in connection with the Merger and (iv) any required
filings with or approvals from applicable state environmental authorities,
public service commissions and public utility commissions (the filings and
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Company Required Statutory Approvals"), no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by the Company or the consummation by the
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Company of the transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals which, if
not made or obtained, as the case may be, would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
SECTION 5.5. REPORTS AND FINANCIAL STATEMENTS. Since January 1, 1994, the
Company has filed with the SEC all material forms, statements, reports and
documents (including all exhibits, post-effective amendments and supplements
thereto) required to be filed by it under each of the Securities Act, the
Exchange Act and the respective rules and regulations thereunder, all of which,
as amended if applicable, complied when filed in all material respects with all
applicable requirements of the appropriate act and the rules and regulations
thereunder. The Company has previously delivered to Parent copies (including all
exhibits, post-effective amendments and supplements thereto) of its (a) Annual
Reports on Form 10-K for the year ended December 31, 1995, and for the
immediately preceding fiscal year, as filed with the SEC, (b) proxy and
information statements relating to (i) all meetings of its stockholders (whether
annual or special) and (ii) actions by written consent in lieu of a
stockholders' meeting from January 1, 1994, until the date hereof, and (c) all
other reports, including quarterly reports, and registration statements filed by
the Company with the SEC since January 1, 1994 (other than registration
statements filed on Form S-8) (the documents referred to in clauses (a), (b) and
(c) filed prior to the date hereof are collectively referred to as the "Company
SEC Reports"). The Company SEC Reports are identified on the Company Disclosure
Schedule. As of their respective dates, the Company SEC Reports did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim consolidated
financial statements of the Company included in such reports (collectively, the
"Company Financial Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may be
indicated therein or in the notes thereto) and fairly present the financial
position of the Company and its subsidiaries as of the dates thereof and the
results of their operations and changes in financial position for the periods
then ended, subject, in the case of the unaudited interim financial statements,
to normal year-end and audit adjustments and any other adjustments described
therein.
SECTION 5.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in the
Company SEC Reports or as heretofore disclosed to Parent in writing with respect
to acquisitions or potential transactions or commitments, neither the Company
nor any of its subsidiaries had at December 31, 1995, or has incurred since that
date, any liabilities or obligations (whether absolute, accrued, contingent or
otherwise) of any nature, except (a) liabilities, obligations or contingencies
(i) which are accrued or reserved against in the Company Financial Statements or
reflected in the notes thereto or (ii) which were incurred after December 31,
1995, and were incurred in the ordinary course of business and consistent with
past practices, (b) liabilities, obligations or contingencies which (i) would
not, in the aggregate, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole or (ii) have
been discharged or paid in full prior to the date hereof, and (c) liabilities
and obligations which are of a nature not required to be reflected in the
consolidated financial statements of the Company and its subsidiaries prepared
in accordance with generally accepted accounting principles consistently applied
and which were incurred in the ordinary course of business.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
most recent Company SEC Report that contains consolidated financial statements
of the Company, there has not been any material adverse change in the business,
operations, properties, assets, liabilities, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole,
except for changes that affect the industries in which the Company and its
subsidiaries operate generally.
SECTION 5.8. LITIGATION. Except as referred to in the Company SEC Reports,
there are no claims, suits, actions or proceedings pending or, to the knowledge
of the Company, threatened against, relating to or affecting the Company or any
of its subsidiaries, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator that seek to restrain
the consummation of the Merger or which could reasonably be expected, either
alone or in the aggregate with all such claims, actions or
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proceedings, to materially and adversely affect the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole. Except as referred to in the
Company SEC Reports, neither the Company nor any of its subsidiaries is subject
to any judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
SECTION 5.9. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by the Company or its subsidiaries for inclusion in
(a) the Registration Statement or (b) the Proxy Statement will, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the meetings of stockholders of the Company and
Parent to be held in connection with the transactions contemplated by this
Agreement or, in the case of the Registration Statement, as amended or
supplemented, at the time it becomes effective and at the time of such meetings
of the stockholders of the Company and Parent, 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 Joint Proxy
Statement/Prospectus will comply, as of its mailing date, as to form in all
material respects with all applicable laws, including the provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by the Company with respect to
information supplied by Parent, Subsidiary or any stockholder of Parent for
inclusion therein.
SECTION 5.10. NO VIOLATION OF LAW. Except as disclosed in the Company SEC
Reports, neither the Company nor any of its subsidiaries is in violation of or
has been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole.
Except as disclosed in the Company SEC Reports, as of the date of this
Agreement, to the knowledge of the Company, no investigation or review by any
governmental or regulatory body or authority is pending or threatened, nor has
any governmental or regulatory body or authority indicated an intention to
conduct the same, other than, in each case, those the outcome of which, as far
as reasonably can be foreseen, will not have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole. The
Company and its subsidiaries have all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted (collectively, the
"Company Permits"), except for permits, licenses, franchises, variances,
exemptions, orders, authorizations, consents and approvals the absence of which,
alone or in the aggregate, would not have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole. The
Company and its subsidiaries are not in violation of the terms of any Company
Permit, except for delays in filing reports or violations which, alone or in the
aggregate, would not have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations of the
Company and its subsidiaries, taken as a whole.
SECTION 5.11. COMPLIANCE WITH AGREEMENTS. Except as disclosed in the
Company SEC Reports, the Company and each of its subsidiaries are not in breach
or violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, could result in a default under, (a) the respective charter,
by-laws or similar organizational instruments of the Company or any of its
subsidiaries or (b) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which the Company or any of its subsidiaries is a party or by which any of them
is bound or to which any of their property is subject, other than, in the case
of clause (b) of this Section 5.11, breaches, violations and defaults which
would not have, in the
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aggregate, a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole.
SECTION 5.12. TAXES. The Company and its subsidiaries have (i) duly filed
with the appropriate governmental authorities all Tax Returns required to be
filed by them for all periods ending on or prior to the Effective Time, other
than those Tax Returns the failure of which to file would not have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, and such Tax Returns are true, correct and
complete in all material respects, and (ii) duly paid in full or made adequate
provision for the payment of all Taxes for all past and current periods. The
liabilities and reserves for Taxes reflected in the Company balance sheet
included in the latest Company SEC Report are adequate to cover all Taxes for
all periods ending at or prior to the date of such balance sheet and there is no
liability for Taxes for any period beginning after such date other than Taxes
arising in the ordinary course of business. There are no material liens for
Taxes upon any property or asset of the Company or any subsidiary thereof,
except for liens for Taxes not yet due. There are no unresolved issues of law or
fact arising out of a notice of deficiency, proposed deficiency or assessment
from the IRS or any other governmental taxing authority with respect to Taxes of
the Company or any of its subsidiaries which, if decided adversely, singly or in
the aggregate, would have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole. Neither the Company nor its
subsidiaries has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency other
than waivers and extensions which are no longer in effect. Neither the Company
nor any of its subsidiaries is a party to any agreement providing for the
allocation or sharing of Taxes with any entity that is not, directly or
indirectly, a wholly-owned corporate subsidiary of Company other than agreements
the consequences of which are fully and adequately reserved for in the Company
Financial Statements. Neither the Company nor any of its corporate subsidiaries
has, with regard to any assets or property held, acquired or to be acquired by
any of them, filed a consent to the application of Section 341(f) of the Code.
SECTION 5.13. EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as disclosed in the
Company SEC Reports, at the date hereof, the Company and its subsidiaries do not
maintain or contribute to or have any obligation or liability to or with respect
to any material employee benefit plans, programs, arrangements or practices
(such plans, programs, arrangements or practices of the Company and its
subsidiaries being referred to as the "Company Plans"), including employee
benefit plans within the meaning set forth in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or other similar
material arrangements for the provision of benefits (excluding any
"Multi-employer Plan" within the meaning of Section 3(37) of ERISA or a
"Multiple Employer Plan" within the meaning of Section 413(c) of the Code). The
Company Disclosure Schedule lists all Multi-employer Plans to which any of them
makes contributions or has any obligation or liability to make contributions.
Neither the Company nor any of its subsidiaries maintains or has any liability
with respect to any Multiple Employer Plan. Neither the Company nor any of its
subsidiaries has any obligation to create or contribute to any additional such
plan, program, arrangement or practice or to amend any such plan, program,
arrangement or practice so as to increase benefits or contributions thereunder,
except as required under the terms of the Company Plans, under existing
collective bargaining agreements or to comply with applicable law.
(b) Except as disclosed in the Company SEC Reports, (i) there have been no
prohibited transactions within the meaning of Section 406 or 407 of ERISA or
Section 4975 of the Code with respect to any of the Company Plans that could
result in penalties, taxes or liabilities which, singly or in the aggregate,
could have a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole, (ii) except for premiums due, there is
no outstanding material liability, whether measured alone or in the aggregate,
under Title IV of ERISA with respect to any of the Company Plans, (iii) neither
the Pension Benefit Guaranty Corporation nor any plan administrator has
instituted proceedings to terminate any of the Company Plans subject to Title IV
of ERISA other than in a "standard termination" described in Section 4041(b) of
ERISA, (iv) none of the Company Plans has incurred any "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, as of the last day of the most recent fiscal year of each
of the
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Company Plans ended prior to the date of this Agreement, (v) the current present
value of all projected benefit obligations under each of the Company Plans which
is subject to Title IV of ERISA did not, as of its latest valuation date, exceed
the then current value of the assets of such plan allocable to such benefit
liabilities by more than the amount, if any, disclosed in the Company SEC
Reports as of March 31, 1996, based upon reasonable actuarial assumptions
currently utilized for such Company Plan, (vi) each of the Company Plans has
been operated and administered in all material respects in accordance with
applicable laws during the period of time covered by the applicable statute of
limitations, (vii) each of the Company Plans which is intended to be "qualified"
within the meaning of Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified and such determination has not been
modified, revoked or limited by failure to satisfy any condition thereof or by a
subsequent amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain the
"qualified" status of such Company Plans, and the period for making any such
necessary retroactive amendments has not expired, (viii) with respect to
Multi-employer Plans, neither the Company nor any of its subsidiaries has made
or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are
respectively defined in Sections 4203, 4204 and 4205 of ERISA and, to the best
knowledge of the Company and its subsidiaries, no event has occurred or is
expected to occur which presents a material risk of a complete or partial
withdrawal under said Sections 4203, 4204 and 4205, (ix) to the best knowledge
of the Company and its subsidiaries, there are no material pending, threatened
or anticipated claims involving any of the Company Plans other than claims for
benefits in the ordinary course, (x) the Company and its subsidiaries have no
current material liability under Title IV of ERISA, and the Company and its
subsidiaries do not reasonably anticipate that any such liability will be
asserted against the Company or any of its subsidiaries, and (xi) no act,
omission or transaction (individually or in the aggregate) has occurred with
respect to any Company Plan that has resulted or could result in any material
liability (direct or indirect) of the Company or any subsidiary under Sections
409 or 502(c)(i) or (l) of ERISA or Chapter 43 of Subtitle (A) of the Code. None
of the Company Controlled Group Plans has an "accumulated funding deficiency"
(as defined in Section 302 of ERISA and Section 412 of the Code) or is required
to provide security to a Company Plan pursuant to Section 401(a)(29) of the
Code. Each Company Plan can be unilaterally terminated by the Company or a
subsidiary at any time without material liability, other than for amounts
previously reflected in the financial statements (or notes thereto) included in
the Company SEC Reports.
(c) The Company SEC Reports contain a true and complete summary or list of
or otherwise describe all material employment contracts and other employee
benefit arrangements with "change of control" or similar provisions and all
severance agreements with executive officers.
(d) There are no agreements which will or may provide payments to any
officer, employee, stockholder, or highly compensated individual which will be
"parachute payments" under Code Section 280G that are nondeductible to the
Company or subject to tax under Code Section 4999 for which the Company or any
ERISA Affiliate would have withholding liability.
SECTION 5.14. LABOR CONTROVERSIES. Except as disclosed in the Company SEC
Reports, (a) there are no significant controversies pending or, to the knowledge
of the Company, threatened between the Company or its subsidiaries and any
representatives of any of their employees and (b) to the knowledge of the
Company, there are no material organizational efforts presently being made
involving any of the presently unorganized employees of the Company or its
subsidiaries, except for such controversies and organizational efforts, which,
singly or in the aggregate, could not reasonably be expected to materially and
adversely affect the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
SECTION 5.15. ENVIRONMENTAL MATTERS. Except as disclosed in the Company SEC
Reports, (i) the Company and its subsidiaries have conducted their respective
businesses in compliance with all applicable Environmental 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 owned by the Company or any of
its subsidiaries contain any Hazardous Substance as a result of any activity of
the Company or any of its subsidiaries in amounts exceeding the levels permitted
by applicable Environmental Laws, (iii) neither the Company nor any of its
subsidiaries has received any notices, demand
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letters or requests for information from any Federal, state, local or foreign
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, (iv) there are
no civil, criminal or administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or threatened, against the Company or any
of its subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no reports have been filed, or 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, (vi) no Hazardous Substance has been disposed of, released or transported
in violation of 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 of its subsidiaries, (vii) no
underground storage tanks have been installed, closed or removed from any
properties owned by the Company or any of its subsidiaries during, in the case
of the Company, the time such properties were owned, leased or operated by the
Company and during, in the case of each subsidiary, the time such subsidiary has
been owned by the Company, (viii) there is no asbestos or asbestos containing
material present in any of the properties owned by the Company and its
subsidiaries, and no asbestos has been removed from any of such properties
during the time such properties were owned, leased or operated by the Company or
any of its subsidiaries, and (ix) neither the Company, 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, except for violations of the foregoing
clauses (i) through (ix) that, singly or in the aggregate, would not reasonably
be expected to have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
SECTION 5.16. NON-COMPETITION AGREEMENTS. Except as disclosed in the
Company SEC Reports, neither the Company nor any subsidiary of the Company is a
party to any agreement which purports to restrict or prohibit in any material
respect any of them or any corporation affiliated with any of them from,
directly or indirectly, engaging in any business involving the collection,
interim storage, transfer, recovery, processing, recycling, marketing or
disposal of rubbish, garbage, paper, textile wastes, chemical or hazardous
wastes, liquid and other wastes or any other material business currently engaged
in by Parent or the Company, or any corporations affiliated with either of them.
None of the Company's officers, directors or key employees is a party to any
agreement which, by virtue of such person's relationship with the Company,
restricts in any material respect the Company or any subsidiary or affiliate of
the Company from, directly or indirectly, engaging in any of the businesses
described above.
SECTION 5.17. TITLE TO ASSETS. The Company and each of its subsidiaries has
good and marketable title in fee simple to all its real property and good title
to all its leasehold interests and other properties, as reflected in the most
recent balance sheet included in the Company Financial Statements, except for
properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i) the
lien for current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations (in the manner presently carried on by the Company) or (iii) as
disclosed in the Company SEC Reports, and except for such matters which, singly
or in the aggregate, could not reasonably be expected to materially and
adversely affect the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. All leases under which the Company or any of its
subsidiaries leases any real or personal property are in good standing, valid
and effective in accordance with their respective terms, and there is not, under
any of such leases, any existing default or event which with notice or lapse of
time or both would become a default other than failures to be in good standing,
valid and effective and defaults under such leases which in the aggregate will
not materially and adversely affect the business, operations, properties,
assets, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole.
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SECTION 5.18. REORGANIZATION AND POOLING OF INTERESTS. Neither the Company
nor, to the knowledge of the Company, any of its affiliates has taken or agreed
or intends to take any action or has any knowledge of any fact or circumstance
that would prevent the Merger from (a) constituting a reorganization qualifying
under the provisions of Section 368(a) of the Code or (b) being treated for
financial accounting purposes as a Pooling Transaction.
SECTION 5.19. COMPANY STOCKHOLDERS' APPROVAL. The affirmative vote of
stockholders of the Company required for approval and adoption of this Agreement
and the Merger is a majority of the outstanding shares of Company Common Stock
entitled to vote thereon.
SECTION 5.20. BROKERS AND FINDERS. Except for the fees and expenses payable
to Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill"), which fees
are reflected in its agreement with the Company (a copy of which has been
delivered to Parent), the Company has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
the Company to pay any finder's fees, brokerage or agent commissions or other
like payments in connection with the transactions contemplated hereby. Except
for the fees and expenses paid or payable to Merrill, there is no claim for
payment by the Company of any investment banking fees, finder's fees, brokerage
or agent commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
SECTION 5.21. OPINION OF FINANCIAL ADVISOR. The financial advisor of the
Company, Merrill, has rendered a written opinion to the Board of Directors of
the Company to the effect that the Exchange Ratio is fair from a financial point
of view to the stockholders of the Company.
SECTION 5.22. AMENDMENT TO PREFERRED STOCK RIGHTS AGREEMENT. (a) The Board
of Directors of the Company has taken all necessary action to amend the
Preferred Stock Rights Agreement so that none of the execution and delivery of
this Agreement, the conversion of shares of Company Common Stock into the right
to receive Parent Common Stock in accordance with Article III of this Agreement,
and the consummation of the Merger or any other transaction contemplated hereby
(but specifically not including any acquisition of beneficial ownership of
Common Stock other than through the execution and delivery of this Agreement,
the consummation of the Merger or the execution of the voting agreements
described in the recitals to this Agreement) will cause (i) the Preferred Stock
Purchase Rights issued pursuant to the Preferred Stock Rights Agreement to
become exercisable under the Preferred Stock Rights Agreement, (ii) Parent or
any of Parent's direct or indirect subsidiaries to be deemed an "Acquiring
Person" (as such term is defined in the Preferred Stock Rights Agreement), (iii)
any such event to be deemed a "Section 11(a)(ii) Event" or a "Section 13 Event"
(as such terms are defined in the Preferred Stock Rights Agreement) or (iv) the
"Stock Acquisition Date" (as such term is defined in the Preferred Stock Rights
Agreement) to occur upon any such event.
(b) The "Expiration Date" (as such term is defined in the Preferred Stock
Rights Agreement) of the Preferred Stock Purchase Rights will occur immediately
prior to the Effective Time.
(c) The "Distribution Date" (as such term is defined in the Preferred Stock
Rights Agreement) has not occurred.
SECTION 5.23. COMPANY DISCLOSURE SCHEDULE. The information set forth in the
Company Disclosure Schedule does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Except
as otherwise contemplated by this Agreement or disclosed in Section 6.1 of the
Company Disclosure Schedule, after the
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date hereof and prior to the Closing Date or earlier termination of this
Agreement, unless Parent shall otherwise agree in writing, the Company shall,
and shall cause its subsidiaries to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charter or
by-laws, (ii) split, combine or reclassify their outstanding capital stock
or (iii) declare, set aside or pay any dividend or distribution payable in
cash, stock, property or otherwise, except for the payment of dividends or
distributions by a wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants or
rights of any kind to acquire any shares of their capital stock of any
class or any debt or equity securities convertible into or exchangeable for
such capital stock, except that (i) the Company may issue shares upon
conversion of convertible securities and exercise of options and warrants
outstanding on the date hereof and (ii) the Company may issue shares of
Company Common Stock in connection with acquisitions of assets or
businesses pursuant to the proviso of Section 6.1(d);
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary
course of business or (B) borrowings to refinance existing indebtedness on
terms which are reasonably acceptable to Parent or (C) as set forth in the
proviso in this Section 6.1(d), (ii) redeem, purchase, acquire or offer to
purchase or acquire any shares of its capital stock or any options,
warrants or rights to acquire any of its capital stock or any security
convertible into or exchangeable for its capital stock, (iii) take any
action that would jeopardize the treatment of the Merger as a pooling of
interests under Opinion No. 16 of the Accounting Principles Board ("APB No.
16"), (iv) take or fail to take any action which action or failure to take
action would cause the Company or its stockholders (except to the extent
that any stockholders receive cash in lieu of fractional shares and except
to the extent of Stockholders in special circumstances) to recognize gain
or loss for federal income tax purposes as a result of the consummation of
the Merger or would otherwise cause the Merger not to qualify as a
reorganization under Section 368 of the Code, (v) make any acquisition of
any assets or businesses other than expenditures for current assets in the
ordinary course of business and expenditures for fixed or capital assets in
the ordinary course of business and consistent with the Company's capital
budget disclosed in Section 6.1 of the Company Disclosure Schedule and
other than as set forth in the proviso in this Section 6.1(d), (vi) sell,
pledge, dispose of or encumber any material assets or businesses other than
sales in the ordinary course of business or (vii) enter into any binding
contract, agreement, commitment or arrangement with respect to any of the
foregoing; provided, however, that notwithstanding the foregoing (other
than subsections (iii) and (iv) of this Section 6.1(d)), the Company shall
not be prohibited from acquiring any assets or businesses or issuing
Company Common Stock or incurring or assuming indebtedness in connection
with such acquisitions so long as (x) the aggregate value of consideration
paid or payable in connection with all such acquisitions, including any
funded indebtedness assumed and any Company Common Stock (valued for
purposes of this limitation at a price per share equal to the price of the
Company Common Stock on the date an agreement in respect of an acquisition
is entered into) issued or issuable in connection with such acquisitions,
does not exceed $80 million (excluding any acquisitions for which a letter
of intent has been executed and which are identified on the Company
Disclosure Schedule), (y) the aggregate value of consideration paid or
payable for any one such acquisition, including any funded indebtedness
assumed and any Company Common Stock (valued for purposes of this
limitation at a price per share equal to the price of the Company Common
Stock on the date an agreement in respect of an acquisition is entered
into) issued or issuable in connection with such acquisition, does not
exceed $20 million (excluding any acquisitions for which a letter of intent
has been executed and which are identified on the Company Disclosure
Schedule) and (z) the Company will not acquire or agree to acquire any
assets or businesses if such acquisition or agreement may reasonably be
expected to delay the consummation of the Merger;
(e) use all reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the
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goodwill and business relationships with customers and others having
business relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(f) subject to restrictions imposed by applicable law, confer on a
regular and frequent basis with one or more representatives of Parent to
report operational matters of materiality and the general status of ongoing
operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees,
except in the ordinary course and consistent with past practice; provided,
however, that the Company and its subsidiaries shall in no event enter into
any written employment agreement;
(h) not adopt, enter into or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
health care, employment or other employee benefit plan, agreement, trust,
fund or arrangement for the benefit or welfare of any employee or retiree,
except as required to comply with changes in applicable law;
(i) use commercially reasonable efforts to maintain with financially
responsible insurance companies insurance on its tangible assets and its
businesses in such amounts and against such risks and losses as are
consistent with past practice; and
(j) not make, change or revoke any material Tax election or make any
material agreement or settlement regarding Taxes with any taxing authority.
SECTION 6.2. CONDUCT OF BUSINESS BY PARENT AND SUBSIDIARY PENDING THE
MERGER. Except as otherwise contemplated by this Agreement, after the date
hereof and prior to the Closing Date or earlier termination of this Agreement,
unless the Company shall otherwise agree in writing, Parent shall, and shall
cause its subsidiaries to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charter (except
for the amendment by Parent of its Certificate of Incorporation to increase
the number of authorized shares of Parent Common Stock) or by-laws, (ii)
split, combine or reclassify (whether by stock dividend or otherwise) their
outstanding capital stock, or (iii) declare, set aside or pay any dividend
or distribution payable in cash, stock, property or otherwise, except for
the payment of dividends or distributions by a wholly-owned subsidiary of
Parent;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants or
rights of any kind to acquire any shares of their capital stock of any
class or any debt or equity securities convertible into or exchangeable for
such capital stock, except that (i) Parent may issue shares upon conversion
of convertible securities and exercise of options outstanding on the date
hereof, (ii) Parent may issue options (and shares upon exercise of such
options) pursuant to its employee stock option plans in effect on the date
hereof in the ordinary course of business and consistent with past
practices and (iii) Parent may issue shares of capital stock (or warrants
or options to acquire capital stock) in connection with acquisitions of
assets or businesses pursuant to the proviso of Section 6.2(d);
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary
course of business, (B) borrowings to refinance existing indebtedness on
terms which are reasonably acceptable to the Company, or (C) as set forth
in the proviso in this Section 6.2(d), (ii) redeem, purchase, acquire or
offer to purchase or acquire any shares of its capital stock or any
options, warrants or rights to acquire any of its capital stock or any
security convertible into or exchangeable for its capital stock, (iii) take
any action that would jeopardize the treatment of the Merger as a pooling
of interests under APB No. 16, (iv) take or fail to take any action
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which action or failure to take action would cause Parent or its
stockholders to recognize gain or loss for federal income tax purposes as a
result of the consummation of the Merger or would otherwise cause the
Merger not to qualify as a reorganization under Section 368 of the Code,
(v) sell, pledge, dispose of or encumber any material assets or businesses
other than sales in the ordinary course of business, (vi) make any
acquisition of any assets or businesses other than expenditures for current
assets in the ordinary course of business and expenditures for fixed or
capital assets in the ordinary course of business and other than as set
forth in the proviso of this Section 6.2(d) or (vii) enter into any binding
contract, agreement, commitment or arrangement with respect to any of the
foregoing; provided, however, that notwithstanding the foregoing (other
than subsections (iii) and (iv) of this Section 6.2(d)), Parent shall not
be prohibited from acquiring any assets or businesses or issuing capital
stock (or warrants or options to acquire capital stock) or incurring or
assuming indebtedness in connection with such acquisitions so long as (x)
the aggregate value of consideration paid or payable in connection with all
such acquisitions, including any funded indebtedness assumed and any Parent
Common Stock (valued for purposes of this limitation at a price per share
equal to the price of Parent Common Stock on the date an agreement in
respect of an acquisition is entered into) issued or issuable in connection
with such acquisitions, does not exceed $160 million (excluding any
acquisitions for which a letter of intent has been executed and which are
identified on the Parent Disclosure Schedule), (y) the aggregate value of
consideration paid or payable for any one such acquisition, including any
funded indebtedness assumed and any Parent Common Stock (valued for
purposes of this limitation at a price per share equal to the price of
Parent Common Stock on the date an agreement in respect of an acquisition
is entered into) issued or issuable in connection with such acquisition,
does not exceed $40 million (excluding any acquisitions for which a letter
of intent has been executed and which are identified on the Parent
Disclosure Schedule) and (z) Parent will not acquire or agree to acquire
any assets or businesses if such acquisition or agreement may reasonably be
expected to delay the consummation of the Merger;
(e) use all reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill
and business relationships with customers and others having business
relationships with them and not engage in any action, directly or
indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement.
(f) subject to restrictions imposed by applicable law, confer on a
regular and frequent basis with one or more representatives of the Company
to report operational matters of materiality and the general status of
ongoing operations; and
(g) use commercially reasonable efforts to maintain with financially
responsible insurance companies insurance on its tangible assets and its
businesses in such amounts and against such risks and losses as are
consistent with past practice.
SECTION 6.3. CONTROL OF THE COMPANY'S OPERATIONS. Nothing contained in this
Agreement shall give to Parent, directly or indirectly, rights to control or
direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
SECTION 6.4. CONTROL OF PARENT'S OPERATIONS. Nothing contained in this
Agreement shall give to the Company, directly or indirectly, rights to control
or direct Parent's operations prior to the Effective Time. Prior to the
Effective Time, Parent shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision of its operations.
SECTION 6.5. ACQUISITION TRANSACTIONS. (a) After the date hereof and prior
to the Effective Time or earlier termination of this Agreement, the Company
shall not, and shall not permit any of its subsidiaries to, initiate, solicit,
negotiate, encourage or provide confidential information to facilitate, and the
Company shall, and shall cause each of its subsidiaries to, cause any officer,
director or employee of, or any attorney, accountant, investment banker,
financial advisor or other agent retained by it, not to initiate, solicit,
negotiate, encourage or provide non-public or confidential information to
facilitate, any proposal or offer to acquire all or
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any substantial part of the business and properties of the Company or any
capital stock of the Company, whether by merger, purchase of assets, tender
offer or otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as an
"Acquisition Transaction").
(b) Notwithstanding the provisions of paragraph (a) above, (i) the Company
may, in response to an unsolicited written proposal or indication of interest
with respect to a potential or proposed Acquisition Transaction ("Acquisition
Proposal"), furnish (subject to the execution of a confidentiality agreement and
standstill agreement containing provisions substantially similar to the
confidentiality and standstill provisions of the Confidentiality Agreements, as
defined in Section 10.4) confidential or non-public information to a financially
capable corporation, partnership, person or other entity or group (a "Potential
Acquirer") and negotiate with such Potential Acquirer if the Board of Directors
of the Company after consulting with its outside legal counsel, determines in
good faith that the failure to provide such confidential or non-public
information to or negotiate with such Potential Acquirer would constitute a
breach of its fiduciary duty to the Company's stockholders and (ii) the
Company's Board of Directors may take and disclose to the Company's stockholders
a position contemplated by Rule 14e-2 under the Exchange Act. It is understood
and agreed that negotiations conducted in accordance with this paragraph (b)
shall not constitute a violation of paragraph (a) of this Section 6.5.
(c) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal or any request for nonpublic information relating to the
Company or its subsidiaries in connection with an Acquisition Proposal or for
access to the properties, books or records of the Company or any subsidiary by
any person or entity that informs the Board of Directors of the Company or such
subsidiary that it is considering making, or has made, an Acquisition Proposal.
Such notice to Parent shall be made orally and in writing and shall indicate in
reasonable detail the identity of the offeror and the terms and conditions of
such proposal, inquiry or contact.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. ACCESS TO INFORMATION. (a) The Company and its subsidiaries
shall afford to Parent and Subsidiary and their respective accountants, counsel,
financial advisors and other representatives (the "Parent Representatives") and
Parent and its subsidiaries shall afford to the Company and its accountants,
counsel, financial advisors and other representatives (the "Company
Representatives") full access during normal business hours throughout the period
prior to the Effective Time to all of their respective properties, books,
contracts, commitments and records (including, but not limited to, Tax Returns)
and, during such period, shall furnish promptly to one another (i) a copy of
each report, schedule and other document filed or received by any of them
pursuant to the requirements of federal or state securities laws or filed by any
of them with the SEC in connection with the transactions contemplated by this
Agreement and (ii) such other information concerning their respective
businesses, properties and personnel as Parent or Subsidiary or the Company, as
the case may be, shall reasonably request; provided, however, that no
investigation pursuant to this Section 7.1 shall amend or modify any
representations or warranties made herein or the conditions to the obligations
of the respective parties to consummate the Merger. Parent and its subsidiaries
shall hold and shall use their reasonable best efforts to cause the Parent
Representatives to hold, and the Company and its subsidiaries shall hold and
shall use their reasonable best efforts to cause the Company Representatives to
hold, in strict confidence all non-public documents and information furnished to
Parent and Subsidiary or to the Company, as the case may be, in connection with
the transactions contemplated by this Agreement, except that (i) Parent,
Subsidiary and the Company may disclose such information as may be necessary in
connection with seeking the Parent Required Statutory Approvals and Parent
Stockholders' Approval, the Company Required Statutory Approvals and the Company
Stockholders' Approval and (ii) each of Parent, Subsidiary and the Company may
disclose any information that it is required by law or judicial or
administrative order to disclose.
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(b) In the event that this Agreement is terminated in accordance with its
terms, each party shall promptly redeliver to the other all non-public written
material provided pursuant to this Section 7.1 and shall not retain any copies,
extracts or other reproductions in whole or in part of such written material. In
such event, all documents, memoranda, notes and other writings prepared by
Parent or the Company based on the information in such material shall be
destroyed (and Parent and the Company shall use their respective reasonable best
efforts to cause their advisors and representatives to similarly destroy their
documents, memoranda and notes), and such destruction (and reasonable best
efforts) shall be certified in writing by an authorized officer supervising such
destruction.
(c) The Company shall promptly advise Parent and Parent shall promptly
advise the Company in writing of any change or the occurrence of any event after
the date of this Agreement having, or which, insofar as can reasonably be
foreseen, in the future may have, any material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries or Parent and its subsidiaries,
as the case may be, taken as a whole.
SECTION 7.2. REGISTRATION STATEMENT AND PROXY STATEMENT. Parent and the
Company shall file with the SEC as soon as is reasonably practicable after the
date hereof the Joint Proxy Statement/Prospectus and shall use all reasonable
efforts to have the Registration Statement declared effective by the SEC as
promptly as practicable. Parent shall also take any action required to be taken
under applicable state blue sky or securities laws in connection with the
issuance of Parent Common Stock pursuant hereto. Parent and the Company shall
promptly furnish to each other all information, and take such other actions, as
may reasonably be requested in connection with any action by any of them in
connection with the preceding sentence. The information provided and to be
provided by Parent and the Company, respectively, for use in the Joint Proxy
Statement/Prospectus shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 7.3. STOCKHOLDERS' APPROVALS. (a) The Company shall, as promptly as
practicable, submit this Agreement and the transactions contemplated hereby for
the approval of its stockholders at a meeting of stockholders and, subject to
the fiduciary duties of the Board of Directors of the Company under applicable
law, shall use its reasonable best efforts to obtain stockholder approval and
adoption (the "Company Stockholders' Approval") of this Agreement and the
transactions contemplated hereby. Such meeting of stockholders shall be held as
soon as practicable following the date upon which the Registration Statement
becomes effective. Subject to the fiduciary duties of the Board of Directors of
the Company under applicable law, the Company shall, through its Board of
Directors, recommend to its stockholders approval of the transactions
contemplated by this Agreement.
(b) Parent shall, as promptly as practicable, submit this Agreement and the
transactions contemplated hereby for the approval of its stockholders at a
meeting of stockholders and, subject to the fiduciary duties of the Board of
Directors of Parent under applicable law, shall use its reasonable best efforts
to obtain stockholder approval and adoption (the "Parent Stockholders'
Approval") of this Agreement and the transactions contemplated hereby. Such
meeting of stockholders shall be held as soon as practicable following the date
on which the Registration Statement becomes effective. Parent shall, through its
Board of Directors, subject to the fiduciary duties of the members thereof, (i)
recommend to its stockholders approval of the transactions contemplated by this
Agreement and (ii) authorize and cause an officer of Parent to vote Parent's
shares of Subsidiary Common Stock for adoption and approval of this Agreement
and the transactions contemplated hereby and shall take all additional actions
as the sole stockholder of Subsidiary necessary to adopt and approve this
Agreement and the transactions contemplated hereby.
SECTION 7.4. COMPLIANCE WITH THE SECURITIES ACT. Parent and the Company
shall each use its reasonable best efforts to cause each principal executive
officer, each director and each other person who is an "affiliate," as that term
is used in paragraphs (c) and (d) of Rule 145 under the Securities Act, of
Parent or the Company, as the case may be, to deliver to Parent and the Company
on or prior to the Effective Time a written agreement (an "Affiliate Agreement")
to the effect that such person will not offer to sell, sell or otherwise dispose
of any shares of Parent Common Stock issued in the Merger, except, in each case,
pursuant
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to an effective registration statement or in compliance with Rule 145, as
amended from time to time, or in a transaction which, in the opinion of legal
counsel satisfactory to Parent, is exempt from the registration requirements of
the Securities Act and, in any case, until after the results covering 30 days of
post-Merger combined operations of Parent and the Company have been filed with
the SEC, sent to stockholders of Parent or otherwise publicly issued.
SECTION 7.5. EXCHANGE LISTING. Parent shall use its reasonable best efforts
to effect, at or before the Effective Time, authorization for listing on the New
York Stock Exchange Inc. (the "NYSE"), upon official notice of issuance, of the
shares of Parent Common Stock to be issued pursuant to the Merger or to be
reserved for issuance upon exercise of stock options or warrants or the
conversion of convertible securities.
SECTION 7.6. EXPENSES AND FEES. (a) All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, except that those expenses incurred
in connection with printing and filing the Joint Proxy Statement/Prospectus
shall be shared equally by Parent and the Company.
(b) The Company agrees to pay to Parent a fee equal to $39,000,000 if:
(i) the Company terminates this Agreement pursuant to clause (iv) or
(v) of Section 9.1(a); or
(ii) Parent terminates this Agreement pursuant to clause (v) of
Section 9.1(b);
provided, however, that if the provisions of paragraph 5 of the Confidentiality
Agreement between Parent as Recipient and the Company as Protected Party have
lapsed and are no longer in force and effect as a result of the proviso set
forth in paragraph 5 of such Confidentiality Agreement and Parent has taken
actions that would otherwise be prohibited by paragraph 5 of such
Confidentiality Agreement prior to the time that Parent is entitled to receive
the payment required by this Section 7.6(b), Parent shall not be entitled to
receive such payment if such payment shall later become payable pursuant to the
terms of this Section 7.6(b); and, provided, further, that if Parent has
received the payment required by this Section 7.6(b), the proviso set forth in
paragraph 5 of such Confidentiality Agreement shall no longer be effective.
(c) Parent agrees to pay to the Company a fee equal to $39,000,000 if the
Company terminates this Agreement pursuant to clause (vi) of Section 9.1(a).
SECTION 7.7. AGREEMENT TO COOPERATE. (a) Subject to the terms and
conditions herein provided and subject to the fiduciary duties of the respective
boards of directors of the Company and Parent, each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including using its reasonable efforts to obtain
all necessary or appropriate waivers, consents or approvals of third parties
required in order to preserve material contractual relationships of the Company
and its subsidiaries, all necessary or appropriate waivers, consents and
approvals and SEC "no-action" letters to effect all necessary registrations,
filings and submissions and to lift any injunction or other legal bar to the
Merger (and, in such case, to proceed with the Merger as expeditiously as
possible).
(b) Without limitation of the foregoing, each of Parent and the Company
undertakes and agrees to file as soon as practicable after the date hereof a
Notification and Report Form under the HSR Act with the Federal Trade Commission
(the "FTC ") and the Antitrust Division of the Department of Justice (the
"Antitrust Division"). Each of Parent and the Company shall (i) use its
reasonable efforts to comply as expeditiously as possible with all lawful
requests of the FTC or the Antitrust Division for additional information and
documents and (ii) not extend any waiting period under the HSR Act or enter into
any agreement with the FTC or the Antitrust Division not to consummate the
transactions contemplated by this Agreement, except with the prior written
consent of the other parties hereto.
(c) In the event any litigation is commenced by any person or entity
relating to the transactions contemplated by this Agreement, including any
Acquisition Transaction, Parent shall have the right, at its own
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expense, to participate therein, and the Company will not settle any such
litigation without the consent of Parent, which consent will not be unreasonably
withheld.
SECTION 7.8. PUBLIC STATEMENTS. The parties shall consult with each other
prior to issuing any press release or any written public statement with respect
to this Agreement or the transactions contemplated hereby and shall not issue
any such press release or written public statement prior to such consultation.
SECTION 7.9. OPTION PLANS. Prior to the Effective Time, the Company and
Parent shall take such action as may be necessary to cause each unexpired and
unexercised option to purchase shares of Company Common Stock (each a "Company
Option") to be automatically converted at the Effective Time into an option
(each a "Parent Option") to purchase a number of shares of Parent Common Stock
equal to the number of shares of Company Common Stock that could have been
purchased under the Company Option multiplied by the Exchange Ratio, at a price
per share of Parent Common Stock equal to the option exercise price determined
pursuant to the Company Option divided by the Exchange Ratio and subject to the
same terms and conditions as the Company Option. The date of grant of a
substituted Parent Option shall be the date on which the corresponding Company
Option was granted. At the Effective Time, all references in the stock option
agreements to the Company shall be deemed to refer to Parent. Parent shall
assume all of the Company's obligations with respect to Company Options as so
amended and shall, from and after the Effective Time, make available for
issuance upon exercise of the Parent Options all shares of Parent Common Stock
covered thereby and amend its Registration Statement on Form S-8 or file a new
registration statement to cover the additional shares of Parent Common Stock
subject to Parent Options granted in replacement of Company Options.
SECTION 7.10. NOTIFICATION OF CERTAIN MATTERS. Each of the Company, Parent
and Subsidiary agrees to give prompt notice to each other of, and to use their
respective reasonable best efforts to prevent or promptly remedy, (i) the
occurrence or failure to occur or the impending or threatened occurrence or
failure to occur, of any event which occurrence or failure to occur would be
likely to cause any of its representations or warranties in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time and (ii) any material failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 7.10 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 7.11. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) The
indemnification provisions of the Certificate of Incorporation of the Surviving
Corporation as in effect at the Effective Time shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers, employees or agents of the Company,
unless such modification is required by law.
(b) After the Effective Time, each of Parent and the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee and agent of the
Company or any of its subsidiaries (each, together with such person's heirs,
executors or administrators, an "indemnified Party" and collectively, the
"indemnified Parties") against any costs or expenses (including attorneys fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any actual or threatened claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of, relating to or in connection with any action or
omission occurring prior to the Effective Time (including, without limitation,
acts or omissions in connection with such persons serving as an officer,
director or other fiduciary in any entity if such service was at the request or
for the benefit of the Company) or arising out of or pertaining to the
transactions contemplated by this Agreement. In the event of any such actual or
threatened claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) the Company or Parent and the Surviving
Corporation, as the case may be, shall pay the reasonable fees and expenses of
counsel selected by the indemnified Parties, which counsel shall be reasonably
satisfactory to the Parent and the Surviving Corporation, promptly after
statements therefor are received and shall pay all other reasonable expenses in
advance of the final disposition of such action, (ii) the Parent and the
Surviving Corporation will cooperate
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and use all reasonable efforts to assist in the vigorous defense of any such
matter, and (iii) to the extent any determination is required to be made with
respect to whether an indemnified Party's conduct complies with the standards
set forth under the DGCL and the Parent's or the Surviving Corporation's
respective charters or By-Laws such determination shall be made by independent
legal counsel acceptable to the Parent or the Surviving Corporation, as the case
may be, and the indemnified Party; provided, however, that neither Parent nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld) and,
provided, further, that if Parent or the Surviving Corporation advances or pays
any amount to any person under this paragraph (b) and if it shall thereafter be
finally determined by a court of competent jurisdiction that such person was not
entitled to be indemnified hereunder for all or any portion of such amount, such
person shall repay such amount or such portion thereof, as the case may be, to
Parent or the Surviving Corporation, as the case may be. The indemnified Parties
as a group may not retain more than one law firm to represent them with respect
to each matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two or
more indemnified Parties.
(c) In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations set forth in this Section
7.11.
(d) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company and its subsidiaries (provided
that Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions that are no less advantageous in any
material respect to the indemnified Parties and which coverages and amounts
shall be no less than the coverages and amounts provided at that time for
Parent's directors and officers) with respect to matters rising before the
Effective Time, provided that Parent shall not be required to pay an annual
premium for such insurance in excess of two times the current annual premium
paid by the Company for its existing coverage (the "Cap"); and provided,
further, that if equivalent coverage cannot be obtained, or can be obtained only
by paying an annual premium in excess of the Cap, Parent shall only be required
to obtain as much coverage as can be obtained by paying an annual premium equal
to the Cap.
(e) Parent shall pay all reasonable expenses, including reasonable
attorneys' fees, that may be incurred by any indemnified Person in enforcing the
indemnity and other obligations provided in this Section 7.11.
(f) The rights of each indemnified Party hereunder shall be in addition to
any other rights such indemnified Party may have under the charter or bylaws of
the Company, under the DGCL or otherwise. The provisions of this Section 7.11
shall survive the consummation of the Merger and expressly are intended to
benefit each of the indemnified Parties.
SECTION 7.12. CORRECTIONS TO THE JOINT PROXY STATEMENT/PROSPECTUS AND
REGISTRATION STATEMENT. Prior to the date of approval of the Merger by their
respective stockholders, each of the Company, Parent and Subsidiary shall
correct promptly any information provided by it to be used specifically in the
Joint Proxy Statement/Prospectus and Registration Statement that shall have
become false or misleading in any material respect and shall take all steps
necessary to file with the SEC and have declared effective or cleared by the SEC
any amendment or supplement to the Joint Proxy Statement/Prospectus or the
Registration Statement so as to correct the same and to cause the Joint Proxy
Statement/Prospectus as so corrected to be disseminated to the stockholders of
the Company and Parent, in each case to the extent required by applicable law.
SECTION 7.13. EFFECT ON ACCOUNTING TREATMENT. Each of the parties hereto
agrees that, notwithstanding anything to the contrary contained in the
Agreement, nothing contained in or contemplated by this Agreement shall require
any of the parties hereto to take any action which would jeopardize the
treatment of the Merger as a pooling of interests under APB No. 16.
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SECTION 7.14. AMENDMENT OF CERTAIN ACQUISITION AGREEMENTS. The Company
shall use its reasonable best efforts to amend the agreements listed on Schedule
5.2 of the Company Disclosure Schedule to eliminate the rights of the other
parties to such agreements to receive Company Common Stock, such amendments to
be on terms that are reasonably acceptable to Parent.
ARTICLE VIII
CONDITIONS
SECTION 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) this Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the stockholders of the
Company and Parent under applicable law and applicable listing
requirements;
(b) the shares of Parent Common Stock issuable in the Merger and those
to be reserved for issuance upon exercise of stock options or warrants or
the conversion of convertible securities shall have been authorized for
listing on the NYSE upon official notice of issuance;
(c) the waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated;
(d) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect
and no proceeding for that purpose shall have been instituted by the SEC or
any state regulatory authorities;
(e) no preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the Merger
shall have been issued and remain in effect (each party agreeing to use its
reasonable efforts to have any such injunction, order or decree lifted);
(f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the
consummation of the Merger or make the consummation of the Merger illegal;
(g) all governmental waivers, consents, orders and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby, and all consents from lenders required to consummate
the Merger, shall have been obtained and be in effect at the Effective
Time, except where the failure to obtain the same would not be reasonably
likely to have a material adverse effect on the business, operations,
properties, assets, liabilities, condition (financial or other) or results
of operations of the Company and its subsidiaries, taken as a whole,
following the Effective Time;
(h) Coopers & Lybrand L.L.P., certified public accountants for Parent,
shall have delivered a letter, dated the Closing Date, addressed to Parent,
in form and substance reasonably satisfactory to Parent, to the effect that
the Merger will qualify for a pooling of interests accounting treatment if
consummated in accordance with this Agreement; and
(i) Arthur Andersen LLP, certified public accountants for the Company,
shall have delivered a memorandum dated the Closing Date, addressed to the
Company, in form and substance reasonably satisfactory to the Company,
stating that the Merger will qualify for a pooling of interests accounting
treatment if consummated in accordance with this Agreement.
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SECTION 8.2. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE MERGER.
Unless waived by the Company, the obligation of the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Closing Date of the
following additional conditions:
(a) Parent and Subsidiary shall have performed in all material
respects their agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and
warranties of Parent and Subsidiary contained in this Agreement shall be
true and correct in all material respects on and as of the date made and
(except to the extent that such representations and warranties speak as of
an earlier date) on and as of the Closing Date as if made at and as of such
date, and the Company shall have received a certificate of the Chairman of
the Board and Chief Executive Officer, the President or a Vice President of
Parent and of the President and Chief Executive Officer or a Vice President
of Subsidiary to that effect;
(b) the Company shall have received an opinion of Baker & Botts,
L.L.P., in form and substance reasonably satisfactory to the Company, dated
the Closing Date, to the effect that the Company and holders of Company
Common Stock (except to the extent any stockholders receive cash in lieu of
fractional shares) will recognize no gain or loss for federal income tax
purposes as a result of consummation of the Merger;
(c) since the date hereof, there shall have been no changes that
constitute, and no event or events (including, without limitation,
litigation developments) shall have occurred which have resulted in or
constitute, a material adverse change in the business, operations,
properties, assets, condition (financial or other) or results of operations
of Parent and its subsidiaries, taken as a whole, except for changes that
affect the industries in which Parent and its subsidiaries operate
generally; and
(d) all governmental waivers, consents, orders, and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the
Closing Date except for such waivers, consents, orders and approvals the
failure of which to have been obtained would not have a material adverse
effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole, following the Effective Time, and no
governmental authority shall have promulgated after the date hereof any
statute, rule or regulation which, when taken together with all such
promulgations, would materially impair the value to Parent of the Merger.
SECTION 8.3. CONDITIONS TO OBLIGATIONS OF PARENT AND SUBSIDIARY TO EFFECT
THE MERGER. Unless waived by Parent and Subsidiary, the obligations of Parent
and Subsidiary to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the additional following conditions:
(a) the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior
to the Closing Date and the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects on and as of the date made and on and as of the Closing Date as if
made at and as of such date, and Parent shall have received a Certificate
of the President and Chief Executive Officer or of a Vice President of the
Company to that effect;
(b) Parent shall have received an opinion of Andrews & Kurth L.L.P.,
in form and substance reasonably satisfactory to Parent, dated the Closing
Date, to the effect that Parent and Subsidiary will recognize no gain or
loss for federal income tax purposes as a result of consummation of the
Merger;
(c) the Affiliate Agreements required to be delivered to Parent
pursuant to Section 7.4 shall have been furnished as required by Section
7.4;
(d) since the date hereof, there shall have been no changes that
constitute, and no event or events (including, without limitation,
litigation developments) shall have occurred which have resulted in or
constitute, a material adverse change in the business, operations,
properties, assets, condition (financial or other) or results of operations
of the Company and its subsidiaries, taken as a whole, except for changes
that affect the industries in which the Company and its subsidiaries
operate generally; and
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(e) all governmental waivers, consents, orders and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the
Closing Date except for such waivers, consents, orders and approvals the
failure of which to have been obtained would not have a material adverse
effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, following the Effective Time, and no
governmental authority shall have promulgated after the date hereof any
statute, rule or regulation which, when taken together with all such
promulgations, would materially impair the value to Parent of the Merger.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the stockholders
of the Company or Parent, by the mutual written consent of the Company and
Parent or as follows:
(a) The Company shall have the right to terminate this Agreement:
(i) if the representations and warranties of Parent and Subsidiary
shall fail to be true and correct in all material respects on and as of
the date made or, except in the case of any such representations and
warranties made as of a specified date, on and as of any subsequent date
as if made at and as of such subsequent date and such failure shall not
have been cured in all material respects within 30 days after written
notice of such failure is given to Parent by the Company;
(ii) if the Merger is not completed by December 31, 1996 (unless
due to a delay or default on the part of the Company);
(iii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of the Company and
if the Company shall have used reasonable efforts to prevent the entry
of such order;
(iv) if (A) the Company receives an offer or proposal from any
Potential Acquirer (excluding any affiliate of the Company or any group
of which any affiliate of the Company is a member) with respect to a
merger, sale of substantial assets or other business combination
involving the Company, (B) the Company's Board of Directors determines,
in good faith and after consultation with an independent financial
advisor, that such offer or proposal (if consummated pursuant to its
terms) would result in an Acquisition Transaction more favorable to the
Company's stockholders than the Merger (any such offer or proposal being
referred to as a "Superior Proposal") and resolves to accept such
Superior Proposal and (C) the Company shall have given Parent two days'
prior written notice of its intention to terminate pursuant to this
provision; provided, however, that such termination shall not be
effective until such time as the payment required by Section 7.6(b)
shall have been received by Parent;
(v) if (A) a tender or exchange offer is commenced by a Potential
Acquirer (excluding any affiliate of the Company or any group of which
any affiliate of the Company is a member) for all outstanding shares of
Company Common Stock, (B) the Company's Board of Directors determines,
in good faith and after consultation with an independent financial
advisor, that such offer constitutes a Superior Proposal and resolves to
accept such Superior Proposal or recommend to the stockholders that they
tender their shares in such tender or exchange offer and (C) the Company
shall have given Parent two days' prior written notice of its intention
to terminate pursuant to this provision; provided, however, that such
termination shall not be effective until such time as the payment
required by Section 7.6(b) shall have been received by Parent;
(vi) if Parent (A) fails to perform in any material respect any of
its material covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after notice of such
default is given to Parent by the Company; or
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(vii) if the stockholders of Parent fail to approve the Merger at a
duly held meeting of stockholders called for such purpose or any
adjournment thereof.
(b) Parent shall have the right to terminate this Agreement:
(i) if the representations and warranties of the Company shall fail
to be true and correct in all material respects on and as of the date
made or, except in the case of any such representations and warranties
made as of a specified date, on and as of any subsequent date as if made
at and as of such subsequent date and such failure shall not have been
cured in all material respects within 30 days after written notice of
such failure is given to the Company by Parent;
(ii) if the Merger is not completed by December 31, 1996 (unless
due to a delay or default on the part of Parent);
(iii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of Parent and if
Parent shall have used reasonable efforts to prevent the entry of such
order;
(iv) if the Board of Directors of the Company shall have resolved
to accept a Superior Proposal or shall have recommended to the
stockholders of the Company that they tender their shares in a tender or
an exchange offer commenced by a third party (excluding any affiliate of
Parent or any group of which any affiliate of Parent is a member);
(v) if the Company (A) fails to perform in any material respect any
of its material covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after notice of such
default is given to the Company by Parent; or
(vi) if the stockholders of the Company fail to approve the Merger
at a duly held meeting of stockholders called for such purpose or any
adjournment thereof.
(c) As used in this Section 9.1, (i) "affiliate" has the meaning
assigned to it in Section 7.4 and (ii) "group" has the meaning set forth in
Section 13(d) of the Exchange Act and the rules and regulations thereunder.
SECTION 9.2. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company pursuant to the provisions of Section
9.1, this Agreement shall forthwith become void and there shall be no further
obligation on the part of the Company, Parent, Subsidiary or their respective
officers or directors (except as set forth in this Section 9.2, in the second
sentence of Section 7.1(a) and in Sections 7.1(b) and 7.6, all of which shall
survive the termination). Nothing in this Section 9.2 shall relieve any party
from liability for any willful or intentional breach of this Agreement.
SECTION 9.3. AMENDMENT. This Agreement may not be amended except by action
taken by the parties' respective Boards of Directors or duly authorized
committees thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law. Such amendment
may take place at any time prior to the Closing Date, whether before or after
approval by the stockholders of the Company, Parent or Subsidiary.
SECTION 9.4. WAIVER. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant thereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party.
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ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. No
representations, warranties or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger, and after
effectiveness of the Merger neither the Company, Parent, Subsidiary or their
respective officers or directors shall have any further obligation with respect
thereto except for the representations, warranties and agreements contained in
Articles II, III and X, the last sentence of Section 7.9, and Section 7.11.
SECTION 10.2. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Parent or Subsidiary to:
USA Waste Services, Inc.
5400 LBJ Freeway
Suite 300 -- Tower One
Dallas, Texas 75240
Attention: Chief Executive Officer
Telecopy: 214-383-7919
with a copy to:
Gregory T. Sangalis
5400 LBJ Freeway
Suite 300 -- Tower One
Dallas, Texas 75240
Telecopy: 214-383-7919
(b) If to the Company, to:
Sanifill, Inc.
Suite 700
2777 Allen Parkway
Houston, Texas 77019
Attention: Chief Executive Officer
Telecopy: 713-942-6277
with a copy to:
Steve Walton
Suite 700
2777 Allen Parkway
Houston, Texas 77019
Telecopy: 713-942-6277
SECTION 10.3. INTERPRETATION. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement, unless a contrary intention
appears, (i) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision and (ii) reference to any Article or
Section means such Article or Section hereof. No provision of this Agreement
shall be interpreted or construed against any party hereto solely because such
party or its legal representative drafted such provision.
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<PAGE> 123
SECTION 10.4. MISCELLANEOUS. This Agreement (including the documents and
instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof
(provided, that the provisions of those two certain agreements dated June 17,
1996 by and between the Company and Parent concerning confidentiality and
related matters (the "Confidentiality Agreements"), shall remain in effect), (b)
is not intended to confer upon any other person any rights or remedies
hereunder, except for rights of indemnified Parties under Section 7.11 and (c)
shall not be assigned by operation of law or otherwise, except that Subsidiary
may assign this Agreement to any other wholly-owned subsidiary of Parent. THIS
AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION
AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
SECTION 10.5. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 10.6. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and except as set forth in
Sections 7.9 and 7.11, nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused this
Agreement to be signed by their respective officers and attested to as of the
date first written above.
<TABLE>
<S> <C>
USA WASTE SERVICES, INC.
Attest:
/s/ GREGORY T. SANGALIS By: /s/ JOHN E. DRURY
- -------------------------------- ---------------------------------
Secretary Name: John E. Drury
Title: Chief Executive Officer
QUATRO ACQUISITION CORP.
Attest:
/s/ GREGORY T. SANGALIS By: /s/ JOHN E. DRURY
- -------------------------------- ---------------------------------
Secretary Name: John E. Drury
Title: Chief Executive Officer
SANIFILL, INC.
Attest:
/s/ H. STEVEN WALTON By: /s/ LORNE D. BAIN
- -------------------------------- ---------------------------------
Secretary Name: Lorne D. Bain
Title: Chairman of the Board and
Chief Executive Officer
</TABLE>
Page A-35
<PAGE> 124
AMENDMENT NO. 1
TO
AGREEMENT AND PLAN OF MERGER
This Amendment No. 1 to Agreement and Plan of Merger ("Amendment No. 1") is
made and entered this 18th day of July, 1996 by and among USA Waste Services,
Inc., a Delaware corporation ("Parent"), Quatro Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Subsidiary"), and
Sanifill, Inc., a Delaware corporation (the "Company").
WHEREAS, Parent, Subsidiary and the Company have previously entered into an
Agreement and Plan of Merger dated as of June 22, 1996 (the "Merger Agreement")
relating to the merger of Subsidiary with and into the Company; and
WHEREAS, Parent, Subsidiary and the Company desire to amend the Merger
Agreement as set forth below.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein and in the Merger
Agreement, the parties hereto, intending to be legally bound, agree as follows:
1. The following sentence is to be added to the end of SECTION 4.19 of
the Merger Agreement:
"The affirmative vote of stockholders of Parent required for approval
and adoption of the Charter Amendment (as defined in Section 8.1(j)) is
a majority of the outstanding shares of Parent Common Stock entitled to
vote thereon."
2. SECTION 7.3(b) of the Merger Agreement shall be amended in its
entirety to read as follows:
"Parent shall, as promptly as practicable, submit the Charter Amendment,
this Agreement and the transactions contemplated hereby for the approval
of its stockholders at a meeting of stockholders and, subject to the
fiduciary duties of the Board of Directors of Parent under applicable
law, shall use its reasonable best efforts to obtain stockholder
approval and adoption (the "Parent Stockholders' Approval") of the
Charter Amendment, this Agreement and the transactions contemplated
hereby. Such meeting of stockholders shall be held as soon as
practicable following the date on which the Registration Statement
becomes effective. Parent shall, through its Board of Directors, subject
to the fiduciary duties of the members thereof, (i) recommend to its
stockholders approval of the Charter Amendment and the transactions
contemplated by this Agreement and (ii) authorize and cause an officer
of Parent to vote Parent's shares of Subsidiary Common Stock for
adoption and approval of this Agreement and the transactions
contemplated hereby and shall take all additional actions as the sole
stockholder of Subsidiary necessary to adopt and approve this Agreement
and the transactions contemplated hereby."
3. SECTION 8.1 of the Merger Agreement shall be amended by adding
thereto a new paragraph (j) that will read in its entirety as follows:
"(j) the amendment to Parent's Restated Certificate of Incorporation
(the "Charter Amendment") to increase the number of authorized shares of
Parent Common Stock in order to ensure that there will be sufficient
authorized, unissued and unreserved shares of Parent Common Stock to
enable Parent to (i) effect the Merger and (ii) have available shares of
Parent Common Stock for issuance upon (A) the exercise of options and
warrants of Parent issued as provided in Sections 3.1(c) and 7.9 in
conversion of unexpired options and warrants to purchase Company Common
Stock that are outstanding at the Effective Time and (B) the conversion
of the Company's 5% Convertible Subordinated Debentures due March 1,
2006, shall have been approved and adopted by the requisite vote of the
stockholders of Parent under applicable law, and the Charter Amendment
shall have been filed with the Secretary of State of the State of
Delaware and become effective."
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<PAGE> 125
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
signed by their duly authorized representatives as of the day and year first
above written.
USA WASTE SERVICES, INC.
<TABLE>
<S> <C>
Attest:
/s/ GREGORY T. SANGALIS By: /s/ JOHN E. DRURY
- ------------------------------------ -----------------------------------------
Secretary John E. Drury, Chairman of the Board
and Chief Executive Officer
QUATRO ACQUISITION CORP.
Attest:
/s/ GREGORY T. SANGALIS By: /s/ JOHN E. DRURY
- ------------------------------------ -----------------------------------------
Secretary John E. Drury, Chief Executive Officer
SANIFILL, INC.
Attest:
/s/ H. STEVEN WALTON By: /s/ LORNE D. BAIN
- ------------------------------------ -----------------------------------------
Secretary Lorne D. Bain, Chairman of the Board
and Chief Executive Officer
</TABLE>
Page A-37
<PAGE> 126
ANNEX B
[DONALDSON, LUFKIN & JENRETTE LETTERHEAD]
June 21, 1996
Board of Directors
USA Waste Services, Inc.
5400 LBJ Freeway
Tower One, Suite 300
Dallas, TX 75240
Dear Sirs:
You have requested our opinion as to the fairness from a financial point of
view to USA Waste Services, Inc. ("USA Waste" or the "Company") of the Exchange
Ratio (as defined below) provided for in the Agreement and Plan of Merger (the
"Agreement") to be entered into by and among USA Waste, Quatro Acquisition Corp.
and Sanifill, Inc. ("Sanifill") pursuant to which Quatro Acquisition Corp. will
be merged with and into Sanifill.
Pursuant to the Agreement, each share of common stock of Sanifill will be
converted into the right to receive 1.70 shares of common stock, $.01 par value
per share of the Company (the "Exchange Ratio").
In arriving at our opinion, we have reviewed the draft of the Agreement
dated June 19, 1996 as well as financial and other information that was publicly
available or furnished to us by the Company and Sanifill including information
provided during discussions with their respective managements. Included in the
information provided during discussions with the respective managements were
certain financial projections of the Company prepared by the management of the
Company, certain financial projections of Sanifill prepared by the management of
Sanifill and certain financial information of the Company and Sanifill on a
combined basis prepared by the Company. In addition, we have compared certain
financial and securities data of the Company and Sanifill with various other
companies whose securities are traded in public markets, reviewed the historical
stock prices and trading volumes of the common stock of the Company, reviewed
prices and premiums paid in other business combinations and conducted such other
financial studies, analyses and investigations as we deemed appropriate for
purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy,
completeness and fairness of all of the financial and other information that was
available to us from public sources, that was provided to us by the Company, and
Sanifill and their respective representatives, or that was otherwise reviewed by
us. In particular, we have relied upon the estimates of the managements of the
Company and Sanifill of the operating synergies achievable as a result of the
proposed merger and upon our discussion of such synergies with the managements
of the Company and Sanifill. With respect to the financial projections supplied
to us, we have assumed that they have been reasonably prepared on the basis
reflecting the best currently available estimates and judgments of the
management of the Company and Sanifill as to the future operating and financial
performance of the Company and Sanifill.
We have not assumed any responsibility for making any independent
evaluation of assets or liabilities of the Company or Sanifill or for
independently verifying any of the information reviewed by us. In rendering our
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<PAGE> 127
opinion, we did not perform any procedures or analysis regarding potential
environmental liabilities of either the Company or Sanifill, nor did we consider
the impact of changes in the regulatory environment in which the Company and
Sanifill operate. We have relied as to all legal matters on advice of counsel to
the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter and does not represent an opinion as to the price at
which shares of the Company will trade following the consummation of the
Agreement. It should be understood that, although subsequent developments may
affect this opinion, we do not have any obligation to update, revise or reaffirm
this opinion. Our opinion addresses only the fairness of the Exchange Ratio to
the Company from a financial point of view. Our opinion does not constitute a
recommendation to any shareholder as to how such shareholder should vote on the
proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placement and
valuations for estate, corporate and other purposes. DLJ has performed
investment banking and other services for the Company in the past, including (i)
acting as USA Waste's financial advisor in connection with USA Waste's merger
with Chambers Development Co., Inc. completed in June 1995; (ii) acting as the
lead manager in a public offering of USA Waste common stock completed in October
1995; and (iii) acting as USA Waste's financial advisor in connection with USA
Waste's merger with Western Waste Industries completed in May 1996. DLJ has
performed investment banking and other services for Sanifill in the past,
including (i) acting as a co-manager in a public offering of Sanifill common
stock completed in August 1995 and (ii) acting as the lead manager in a public
offering of Sanifill convertible subordinated debentures completed in March
1996. In addition, in the ordinary course of our business, we trade the
securities of the Company and Sanifill for our own account and for the accounts
of customers, and, accordingly, may at any time hold a long or short position in
such securities.
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the Exchange Ratio is fair to the Company from a financial
point of view.
Very truly yours,
/s/ DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
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<PAGE> 128
ANNEX C
[MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED LETTERHEAD]
June 21, 1996
Board of Directors
Sanifill, Inc.
2777 Allen Parkway
Suite 700
Houston, Texas 77019-2155
Gentlemen:
Sanifill, Inc. (the "Company"), USA Waste Services, Inc. (the "Issuer") and
a wholly owned subsidiary of the Issuer (the "Merger Sub") propose to enter into
an agreement (the "Agreement") pursuant to which Merger Sub will be merged with
the Company in a transaction (the "Merger") in which each outstanding share of
the Company's common stock, par value $.01 per share (the "Shares"), will be
converted into the right to receive 1.7 shares (the "Exchange Ratio") of the
common stock of the Issuer, par value $.01 per share (the "Issuer Shares"). In
connection with the Merger, the parties also propose to enter into a voting
agreement with each of certain stockholders of the Issuer and certain
stockholders of the Company (each, a "Voting Agreement") pursuant to which such
stockholders will agree, among other things, to vote shares held by them in
favor of the Merger.
You have asked us whether, in our opinion, the Exchange Ratio is fair to
the stockholders of the Company from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
1. Reviewed the Company's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended December 31, 1995 and the
Company's Form 10-Q and the related unaudited financial information for
the quarterly period ending March 31, 1996;
2. Reviewed the Issuer's Annual Reports, Forms 10-K and related financial
information for the three fiscal years ended December 31, 1995 and the
Issuer's Form 10-Q and the related unaudited financial information for
the quarterly period ending March 31, 1996 and certain other filings,
including registration statements, Form 8-Ks and proxy statements, with
the Securities and Exchange Commission made by the Issuer during the
last three years;
3. Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets and prospects of the
Company and the Issuer, furnished to us by the Company and the Issuer;
4. Conducted discussions with members of senior management of the Company
and the Issuer concerning their respective businesses and prospects;
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<PAGE> 129
5. Reviewed the historical market prices and trading activity for the
Shares and the Issuer Shares and compared them with that of certain
publicly traded companies which we deemed to be reasonably similar to
the Company and the Issuer, respectively;
6. Compared the results of operations of the Company and the Issuer with
that of certain companies which we deemed to be reasonably similar to
the Company and the Issuer, respectively;
7. Compared the proposed financial terms of the transactions contemplated
by the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
8. Reviewed a draft of the Agreement dated June 19, 1996;
9. Reviewed a draft of the Voting Agreement dated June 15, 1996; and
10. Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have relied on the accuracy and completeness
of all information supplied or otherwise made available to us by the Company and
the Issuer, and we have not independently verified such information or
undertaken an independent appraisal of the assets or liabilities of the Company
or the Issuer nor have we been furnished with any such appraisals. With respect
to the financial forecasts furnished by the Company and the Issuer, we have
assumed that they have been reasonably prepared and reflect the best currently
available estimates and judgment of the Company's or the Issuer's management as
to the expected future financial performance of the Company or the Issuer, as
the case may be.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, nor have we
solicited, third-party indications of interest for the acquisition of all or any
part of the Company.
We have acted as financial advisor to the Company in connection with the
Merger and will receive fees for such services, a portion of which is contingent
upon consummation of the Merger. In the ordinary course of our securities
business, we may actively trade debt or equity securities of the Issuer and the
Company for our own account and the accounts of our customers, and we therefore
may from time to time hold a long or short position in such securities.
On the basis of, and subject to the foregoing, we are of the opinion that
the Exchange Ratio is fair to the stockholders of the Company from a financial
point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By /s/ MARK SHAFIR
------------------------------
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<PAGE> 130
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") provides that
a corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, other than
an action by or in the right of the corporation, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or was
serving at its request in such capacity in another corporation or business
association, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his conduct was unlawful. With respect to actions by
or in the right of the corporation, a person may not be indemnified if he has
been adjudged to be liable to the corporation, except where, besides meeting the
requirements described in the preceding sentence, the court in which such action
was brought determines upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above, he shall be indemnified against
expenses, including attorneys' fees, actually and reasonably incurred by him in
connection therewith. A corporation shall have the power to purchase insurance
on behalf of the persons referred to above against any liability asserted
against them and incurred by them in such capacities referred to whether or not
the corporation would have the power to indemnify them against such liability.
Section 102(b)(7) of the DGCL provides that the certificate of
incorporation of a corporation may contain a provision eliminating or limiting
the personal liability of a director to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director for (i) any
breach of the director's duty of loyalty to the corporation or its shareholders,
(ii) acts or omissions not in good faith or which involved intentional
misconduct or a knowing violation of law, (iii) unlawful dividend payment or
stock purchase or redemption under Section 174 of the DGCL, (iv) any transaction
from which the director derived an improper personal benefit, or (v) any act or
omission occurring prior to the date when such provision becomes effective.
The Registrant's Certificate of Incorporation provides that (i) the
Registrant shall indemnify, and advance litigation expenses to, its officers,
directors, employees and agents to the fullest extent permitted by the DGCL and
all other laws of the State of Delaware, (ii) to the fullest extent that the
DGCL permits the limitation or elimination of the liability of directors, no
director of the Registrant shall be personally liable to the Registrant or its
shareholders for monetary damages for breach of fiduciary duty as a director,
(iii) no amendment to or repeal of the provision of the Certificate of
Incorporation described in clause (ii) shall apply to or have any effect on the
liability or alleged liability of any director of the Registrant for or with
respect to any acts or omission of such director occurring prior to the time of
such amendment or repeal and (iv) any amendment to the DGCL which further limits
or eliminates the liability of directors shall be fully applicable to the
Registrant's directors.
USA Waste has indemnification agreements with its directors.
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<PAGE> 131
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
- --------------------
<C> <S>
*2.1 -- Agreement and Plan of Merger dated as of June 22, 1996, among USA
Waste Services, Inc. ("USA Waste"), Quatro Acquisition Corporation,
a wholly owned subsidiary of USA Waste ("Acquisition"), and
Sanifill, Inc. ("Sanifill"), as amended by Amendment No. 1 to
Agreement and Plan of Merger dated as of July 18, 1996 among USA
Waste, Acquisition and Sanifill -- included as Annex A to the Joint
Proxy Statement and Prospectus herein.
3.1 -- Restated Certificate of Incorporation -- incorporated by reference
to Exhibit 3.1(b) of the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1996.
3.2 -- Bylaws -- incorporated by reference to Exhibit 3.2 of the
Registrant's Registration Statement on Form S-4, File No. 33-60103.
4.1 -- Specimen Stock Certificate -- incorporated by reference to Exhibit
4.3 of the Registrant's Registration Statement on Form S-3, File
No. 33-76224.
*5.1 -- Opinion of Andrews & Kurth L.L.P. as to the legality of the
securities being registered.
*8.1 -- Opinion of Baker & Botts, L.L.P. as to certain federal income tax
matters.
**10.1 -- Agreement among USA Waste, D. Moorehead, Jr., J. Drury, J. Rangos,
Sr., A. Rangos, J. Rangos, Jr. and John Rangos Development
Corporation, Inc. dated June 21, 1996.
**10.2 -- Employment and Noncompetition Agreement among Sanifill, USA Waste
and Lorne D. Bain, dated June 22, 1996.
**10.3 -- Letter Agreement between USA Waste and Kosti Shirvanian, dated
December 18, 1995.
**10.4 -- Letter Agreement between USA Waste and Kosti Shirvanian, dated June
21, 1996.
**10.5 -- Letter Agreement between USA Waste and Sanifill, dated June 22,
1996, regarding indemnification provisions of certificate of
incorporation.
**10.6 -- Confidentiality Agreement, dated June 17, 1996, between USA Waste
Services, Inc., as the Protected Party, and Sanifill, Inc., as the
Recipient.
**10.7 -- Confidentiality Agreement, dated June 17, 1996, between Sanifill,
Inc., as the Protected Party, and USA Waste Services, Inc., as the
Recipient.
*10.8 -- Employment and Noncompetition Agreement among USA Waste, Sanifill
and J. Chris Brewster, dated July 19, 1996.
**21.1 -- Subsidiaries of the Registrant.
*23.1 -- Consent of Coopers & Lybrand L.L.P.
*23.2 -- Consent of Deloitte & Touche LLP.
*23.3 -- Consent of Ernst & Young LLP.
*23.4 -- Consent of Arthur Andersen LLP.
*23.5 -- Consent of Andrews & Kurth L.L.P. -- included in Exhibit 5.1.
*23.6 -- Consent of Baker & Botts, L.L.P. -- included in Exhibit 8.1.
*23.7 -- Consent of Donaldson, Lufkin & Jenrette Securities Corporation.
*23.8 -- Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
**24.1 -- Powers of Attorney -- included on the signature pages in Part II of
this Registration Statement.
*99.1 -- Form of USA Waste Services, Inc's Proxy Card
*99.2 -- Form of Sanifill, Inc's Proxy Card
*99.3 -- Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation -- included as Annex B to the Joint Proxy Statement and
Prospectus herein.
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
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<PAGE> 132
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that, prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The undersigned Registrant hereby undertakes that every prospectus: (i)
that is filed pursuant to the immediately preceding paragraph, or (ii) that
purports to meet the requirements of Section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE> 133
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT TO THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF DALLAS,
STATE OF TEXAS, ON THE 19TH DAY OF JULY, 1996.
USA WASTE SERVICES, INC.
By: /s/ JOHN E. DRURY
-------------------------------
John E. Drury
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON JULY 19, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ----------------------------------------- ----------------------------------------------
<C> <S>
/s/ JOHN E. DRURY Chairman of the Board and Chief Executive
- ----------------------------------------- Officer (Principal executive officer)
John E. Drury
/s/ EARL E. DEFRATES Executive Vice President and Chief Financial
- ----------------------------------------- Officer (Principal financial officer)
Earl E. DeFrates
/s/ BRUCE E. SNYDER Vice President and Controller (Principal
- ----------------------------------------- accounting officer)
Bruce E. Snyder
* Vice Chairman
- -----------------------------------------
Donald F. Moorehead, Jr.
* President and Director
- -----------------------------------------
David Sutherland-Yoest
* Director
- -----------------------------------------
George L. Ball
* Director
- -----------------------------------------
Petern J. Gibbons
* Director
- -----------------------------------------
Richard J. Heckmann
* Director
- -----------------------------------------
William E. Moffett
* Director
- -----------------------------------------
John G. Rangos, Sr.
* Vice Chairman and Director
- -----------------------------------------
Alexander W. Rangos
* Director
- -----------------------------------------
Kosti Shirvanian
* Director
- -----------------------------------------
Savey Tufenkian
*By: /s/ JOHN E. DRURY
------------------------------------
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 134
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
- --------------------
<C> <S>
*2.1 -- Agreement and Plan of Merger dated as of June 22, 1996, among USA
Waste Services, Inc. ("USA Waste"), Quatro Acquisition Corporation, a
wholly owned subsidiary of USA Waste ("Acquisition"), and Sanifill,
Inc. ("Sanifill"), as amended by Amendment No. 1 to Agreement and
Plan of Merger dated as of July 18, 1996 among USA Waste, Acquisition
and Sanifill -- included as Annex A to the Joint Proxy Statement and
Prospectus herein.
3.1 -- Restated Certificate of Incorporation -- incorporated by reference to
Exhibit 3.1(b) of the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1996.
3.2 -- Bylaws -- incorporated by reference to Exhibit 3.2 of the
Registrant's Registration Statement on Form S-4, File No. 33-60103.
4.1 -- Specimen Stock Certificate -- incorporated by reference to Exhibit
4.3 of the Registrant's Registration Statement on Form S-3, File No.
33-76224.
*5.1 -- Opinion of Andrews & Kurth L.L.P. as to the legality of the
securities being registered.
*8.1 -- Opinion of Baker & Botts, L.L.P. as to certain federal income tax
matters.
**10.1 -- Agreement among USA Waste, D. Moorehead, Jr., J. Drury, J. Rangos,
Sr., A. Rangos, J. Rangos, Jr. and John Rangos Development
Corporation, Inc. dated June 21, 1996.
**10.2 -- Employment and Noncompetition Agreement among Sanifill, USA Waste and
Lorne D. Bain, dated June 22, 1996.
**10.3 -- Letter Agreement between USA Waste and Kosti Shirvanian, dated
December 18, 1995.
**10.4 -- Letter Agreement between USA Waste and Kosti Shirvanian, dated June
21, 1996.
**10.5 -- Letter Agreement between USA Waste and Sanifill, dated June 22, 1996,
regarding indemnification provisions of certificate of incorporation.
**10.6 -- Confidentiality Agreement, dated June 17, 1996, between USA Waste
Services, Inc., as the Protected Party, and Sanifill, Inc., as the
Recipient.
**10.7 -- Confidentiality Agreement, dated June 17, 1996, between Sanifill,
Inc., as the Protected Party, and USA Waste Services, Inc., as the
Recipient.
*10.8 -- Employment and Noncompetition Agreement among USA Waste, Sanifill and
J. Chris Brewster, dated July 19, 1996.
**21.1 -- Subsidiaries of the Registrant.
*23.1 -- Consent of Coopers & Lybrand L.L.P.
*23.2 -- Consent of Deloitte & Touche LLP.
*23.3 -- Consent of Ernst & Young LLP.
*23.4 -- Consent of Arthur Andersen LLP.
*23.5 -- Consent of Andrews & Kurth L.L.P. -- included in Exhibit 5.1.
*23.6 -- Consent of Baker & Botts, L.L.P. -- included in Exhibit 8.1.
*23.7 -- Consent of Donaldson, Lufkin & Jenrette Securities Corporation.
*23.8 -- Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
**24.1 -- Powers of Attorney -- included on the signature pages in Part II of
this Registration Statement.
*99.1 -- Form of USA Waste Services, Inc's Proxy Card
*99.2 -- Form of Sanifill, Inc's Proxy Card
*99.3 -- Opinion of Donaldson, Lufkin & Jenrette Securities
Corporation -- included as Annex B to the Joint Proxy
*99.4 -- Statement and Prospectus herein. Opinion of Merrill Lynch, Pierce,
Fenner & Smith Incorporated -- included as Annex C to the Joint Proxy
Statement and Prospectus herein.
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
<PAGE> 1
EXHIBIT 5.1
ANDREWS & KURTH L.L.P.
4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002
July 18, 1996
Board of Directors
USA Waste Services, Inc.
5400 LBJ Freeway
Suite 300 - Tower One
Dallas, Texas 75240
Ladies and Gentlemen:
We have acted as counsel to USA Waste Services, Inc., a Delaware
corporation ("USA Waste"), in connection with the offer by USA Waste of up to
54,656,422 shares (the "Shares") of Common Stock, par value $.01 per share, of
USA Waste (the "Common Stock"). This opinion is being delivered in connection
with USA Waste's Registration Statement on Form S-4 (the 'Registration
Statement') relating to the registration of the offering and sale of the Shares
under the Securities Act of 1933, as amended. The Shares are being offered to
holders of common stock of Sanifill, Inc. ("Sanifill") in connection with the
merger of Quatro Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of USA Waste ("Merger Sub"), with and into Sanifill (the "Merger"),
pursuant to the Agreement and Plan of Merger dated June 22, 1996 among USA
Waste, Merger Sub and Sanifill (the "Merger Agreement").
As the basis for the opinion hereinafter expressed, we have examined such
statutes, regulations, corporate records and documents, certificates of
corporate and public officials and other instruments as we have deemed necessary
or advisable for the purposes of this opinion. In such examination, we have
assumed the authenticity of all documents submitted to us as originals and the
conformity with the original documents of all documents submitted to us as
copies.
Based upon the foregoing and on such legal considerations as we deem
relevant, we are of the opinion that the Shares to which the Registration
Statement relates, when issued as described in the Registration Statement, will
be duly authorized, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Registration Statement.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.
<PAGE> 1
EXHIBIT 8.1
BAKER & BOTTS, L.L.P.
ONE SHELL PLAZA
910 LOUISIANA
HOUSTON, TEXAS 77002-4995
July 19, 1996
Sanifill, Inc.
Suite 700
2777 Allen Parkway
Houston, Texas 77019
We have acted as counsel to Sanifill, Inc. ("Sanifill") in connection with
the planned merger (the "Merger") into Sanifill of Quatro Acquisition Corp.
("Subsidiary"), which is a newly formed, wholly owned subsidiary of USA Waste
Services, Inc. ("USA Waste"), pursuant to an Agreement and Plan of Merger dated
as of June 22, 1996 (the "Merger Agreement"). Defined terms used in the Merger
Agreement have the same meaning when used herein, except that the terms
"Sanifill" and "USA Waste" are sometimes used in place of the terms "the
Company" and "Parent," respectively.
In rendering this opinion, we have examined and are relying upon (without
any independent investigation or review thereof) the truth and accuracy at all
relevant times of the statements, covenants, and representations contained in
(i) the Merger Agreement (including the Parent Disclosure Schedule and the
Company Disclosure Schedule thereto), (ii) the Joint Proxy Statement/Prospectus
(which was included in Registration Statement No. 333-08161, as amended, filed
by Sanifill and USA Waste with the Securities and Exchange Commission (the
"Registration Statement")), (iii) certain of the Company SEC Reports, and (iv)
the officers' certificates dated July 19, 1996 which were provided to us by USA
Waste and Sanifill and which are attached hereto. In addition, we assume that
the Merger will be consummated in accordance with the Merger Agreement and as
described in the Joint Proxy Statement/Prospectus. Any inaccuracy in any of the
aforementioned statements, representations, and assumptions or breach of any of
the aforementioned covenants could adversely affect our opinion.
On the basis of and subject to the foregoing and subject to the limitations
set forth below, it is our opinion that, under presently applicable federal
income tax law, the Merger will be a tax-free reorganization within the meaning
of section 368(a)(2)(E) of the Code. As a result, the following U.S. federal
income tax consequences will occur:
(a) No gain or loss will be recognized by Sanifill as a result of the
merger of Subsidiary into it.
(b) No gain or loss will be recognized by holders of Sanifill Common
Stock solely upon their receipt in the Merger of USA Waste Common Stock in
exchange therefor.
(c) The tax basis of the shares of USA Waste Common Stock received by
a Sanifill stockholder in the Merger (including any fractional share not
actually received) will be the same as the tax basis of the Sanifill Common
Stock surrendered in exchange therefor.
(d) The holding period of the shares of USA Waste Common Stock
received by a Sanifill stockholder in the Merger will include the holding
period of the shares of Sanifill Common Stock surrendered in exchange
therefor, provided that such shares of Sanifill Common Stock are held as
capital assets at the Effective Time.
(e) A cash payment in lieu of a fractional share will be treated as if
a fractional share of USA Waste Common Stock had been received in the
Merger and then redeemed by USA Waste. Such redemption should qualify as a
distribution in full payment in exchange for the fractional share rather
<PAGE> 2
than as a distribution of a dividend. Accordingly, a Sanifill stockholder
receiving cash in lieu of a fractional share will recognize gain or loss
upon such payment in an amount equal to the difference, if any, between
such stockholder's basis in the fractional share (as described in paragraph
(c) above) and the amount of cash received. Such gain or loss will be a
capital gain or loss if the Sanifill Common Stock is held as a capital
asset at the Effective Time.
Our opinion is based on our interpretation of the Code, applicable Treasury
regulations, judicial authority, and administrative rulings and practice, all as
of the date hereof. There can be no assurance that future legislative, judicial
or administrative changes or interpretations will not adversely affect the
accuracy of the conclusions set forth herein. We do not undertake to advise you
as to any such future changes or interpretations unless we are specifically
retained to do so. Our opinion will not be binding upon the Internal Revenue
Service (the "Service"), and the Service will not be precluded from adopting a
contrary position.
No opinion is expressed as to any matter not specifically addressed above
including, without limitation, the tax consequences to Sanifill of the
assumption by USA Waste of liability on, or the guarantee by USA Waste of,
Sanifill's 5% convertible subordinated debentures and the tax consequences of
the Merger under any foreign, state, or local tax law. Moreover, tax
consequences which are different from or in addition to those described herein
may apply to Sanifill stockholders who are subject to special treatment under
the U.S. federal income tax laws, such as foreign persons, persons who acquired
their shares in compensatory transactions, and persons who have a contingent
right to receive additional Sanifill stock as a result of contingency or
earn-out provisions in prior acquisitions by Sanifill.
Notwithstanding the qualification of the Merger as a tax-free
reorganization, a recipient of USA Waste Common Stock could recognize gain to
the extent that such shares were considered by the Service to be received in
exchange for consideration other than Sanifill Common Stock. All or a portion of
such gain might be taxable as ordinary income. In addition, gain would be
recognized to the extent that a Sanifill stockholder was treated by the Service
as receiving (directly or indirectly) consideration other than USA Waste Common
Stock in exchange for his or her Sanifill Common Stock.
If the Service successfully challenged the status of the Merger as a
tax-free reorganization, a Sanifill stockholder would recognize gain or loss in
an amount equal to the difference between the stockholder's basis in his or her
shares and the fair market value, as of the Effective Date, of the USA Waste
Common Stock received in exchange therefor. In such event, the stockholder's
basis in the USA Waste Common Stock so received would be equal to its fair
market value as of the Effective Date and the holding period for such stock
would begin on the day after the Effective Date.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. This opinion is being delivered to you solely for that
purpose. It may not be relied upon or used for any other purpose and may not
otherwise be distributed or made available to anyone without our prior written
consent.
Sincerely,
/s/ BAKER & BOTTS, L.L.P.
Enclosures
2
<PAGE> 3
ATTACHMENT I
SANIFILL, INC.
OFFICER'S CERTIFICATE
The undersigned officer of Sanifill, Inc., a Delaware corporation (the
"Company"), in connection with the opinions to be delivered by Baker & Botts,
L.L.P. and Andrews & Kurth L.L.P. pursuant to the Agreement and Plan of Merger
by and among the Company, USA Waste Services, Inc., a Delaware corporation
("Parent"), and Quatro Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Subsidiary"), dated as of June 22, 1996 (the
"Merger Agreement"), and recognizing that said law firms will rely on this
Certificate in delivering such opinion, hereby certifies that the facts
described in this Officer's Certificate relating to the proposed merger of
Subsidiary with and into the Company (the "Merger") pursuant to the Merger
Agreement and any transactions related thereto are true, correct, and complete
in all respects and will be true, correct, and complete in all respects at the
Effective Time of the Merger, and further certifies as follows (unless otherwise
specified, capitalized terms used herein shall have the meaning assigned to them
in the Merger Agreement):
1. I certify to you that I am the Vice President -- Government Affairs,
General Counsel and Secretary of the Company. I am familiar with the
transactions contemplated by, and the terms and provisions of, the Merger
Agreement, have personal knowledge of the matters covered by the following
representations, and am authorized to make the following representations on
behalf of the Company.
2. The fair market value of Parent Common Stock received by each holder of
Company Common Stock (a "Company Stockholder") will be approximately equal to
the fair market value of Company Common Stock exchanged for such Parent Common
Stock in the Merger.
3. There is no plan or intention by Company Stockholders who own 5% or more
of the Company Common Stock, and, to the best knowledge of the management of the
Company, there is no plan or intention on the part of the remaining Company
Stockholders, to sell, exchange, or otherwise dispose of a number of shares of
Parent Common Stock received in the Merger that would reduce the Company
Stockholders' ownership of Parent Common Stock to a number of shares having a
value, as of the date of the Merger, of less than 50% of the value of all of the
formerly outstanding stock of the Company as of the same date. For purposes of
this representation, shares of Company Common Stock exchanged for cash or other
property or exchanged for cash in lieu of fractional shares of Parent Common
Stock will be treated as outstanding Company Common Stock on the date of the
Merger. Moreover, shares of Company Common Stock and shares of Parent Common
Stock held by Company Stockholders and otherwise sold, redeemed, or disposed of
prior or subsequent to the Merger have been considered in making this
representation.
4. Following the Merger, the Company will hold at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets held by the Company immediately prior to the Merger and at least
90% of the fair market value of the net assets and at least 70% of the fair
market value of the gross assets held by Subsidiary immediately prior to the
Merger.
For purposes of this representation, amounts paid by the Company or
Subsidiary to Company Stockholders who receive cash or other property, amounts
used by the Company or Subsidiary to pay reorganization expenses, and all
redemptions and distributions (except for regular, normal dividends, if any)
made by the Company have been included as assets of the Company or Subsidiary,
respectively, immediately prior to the Merger.
5. The Company has made no redemptions of stock or distributions with
respect to its stock at any time on or after the date when a possible business
combination of the Company and Parent was first considered.
6. The Company has no plan or intention to issue additional shares of its
stock that would result in Parent losing control of the Company.
<PAGE> 4
For purposes of this representation and the following representations, and
in accordance with Section 368(c) of the Internal Revenue Code of 1986, as
amended (the "Code"), control means the ownership of stock possessing at least
80% of the total combined voting power of all classes of stock entitled to vote
and at least 80% of the total number of shares of all other classes of stock of
the corporation.
7. Following the Merger, the Company will continue its historic business or
use a significant portion of its historic business assets in a business.
8. The Company and the Company Stockholders will each pay their respective
expenses, if any, incurred in connection with the Merger. Neither the Company
nor any of the Company Stockholders will pay any expenses of Parent or
Subsidiary incurred in connection with the Merger.
9. There is no intercorporate indebtedness existing between Parent and the
Company or between Subsidiary and the Company that was issued, acquired or will
be settled at a discount.
10. The only outstanding stock of the Company is Company Common Stock. The
only outstanding rights to acquire stock from the Company are those listed in
Section 5.2 of the Merger Agreement and in Schedule 5.2 of the Company
Disclosure Schedule. In the Merger, shares of Company Common Stock representing
control of the Company will be exchanged solely for voting stock of Parent.
For purposes of this representation, shares of Company Common Stock
exchanged for cash or other property originating with Parent will be treated as
outstanding stock of the Company on the date of the Merger.
11. At the Effective Time, the Company will not have outstanding any
warrants, options, convertible securities, or any other type of right pursuant
to which any person could acquire stock in the Company that, if exercised or
converted, would affect Parent's acquisition or retention of control of the
Company.
12. The Company is not an investment company.
For purposes of this representation, (a) an investment company means a
regulated investment company (as defined in the Code), a real estate investment
trust (as defined in the Code), or a corporation 50% or more of the value of
whose total assets are stock and securities and 80% or more of the value of
whose total assets are assets held for investment, (b) in making the 50% and 80%
determinations just described, stock and securities in any subsidiary
corporation shall be disregarded and the parent corporation shall be deemed to
own its ratable share of the subsidiary's assets, and a corporation shall be
considered a subsidiary if the parent owns 50% or more of the combined voting
power of all classes of stock entitled to vote, or 50% or more of the total
value of all classes of stock outstanding, and (c) in determining total assets
there shall be excluded cash and cash items (including receivables), government
securities, and any assets acquired for purposes of ceasing to be an investment
company.
13. On the date of the Merger, the fair market value of the assets of the
Company will exceed the sum of its liabilities, plus the amount of liabilities,
if any, to which its assets are subject.
14. The Company is not under the jurisdiction of a court in a case under
Title 11 of the United States Code, or a receivership, foreclosure, or similar
proceeding in a Federal or State court.
15. Cash payments by Parent or Subsidiary to Company Stockholders in lieu
of fractional shares of Parent Common Stock are solely for the purpose of
avoiding the expense and inconvenience to Parent of issuing fractional shares
and do not represent separately bargained for consideration. These payments will
not be made pro rata to all Company Stockholders. The total cash consideration
that will be paid in the transaction to Company Stockholders instead of issuing
fractional shares of Parent Common Stock will not exceed 1% of the total
consideration that will be issued in the transaction to Company Stockholders in
exchange for their shares of Company Common Stock. The fractional share
interests of each Company Stockholder will be aggregated, and no Company
Stockholder will receive cash in an amount equal to or greater than the value of
one full share of Parent Common Stock.
16. None of the compensation received by any shareholder-employees of the
Company will be separate consideration for, or allocable to, any of their shares
of Company Common Stock; none of the shares of Parent
2
<PAGE> 5
Common Stock received by any shareholder-employees will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any shareholder-employees will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's-length for similar services.
17. The business reasons for consummating the Merger are set forth in the
section entitled "THE MERGER AND RELATED TRANSACTIONS" of the Joint Proxy
Statement/Prospectus.
SANIFILL, INC.
/s/ H. STEVEN WALTON
------------------------------------
Name: H. Steven Walton
Title: Vice President-- Government
Affairs,
General Counsel and Secretary
Dated: July 19, 1996
3
<PAGE> 6
ATTACHMENT II
USA WASTE SERVICES, INC.
AND
QUATRO ACQUISITION CORP.
OFFICER'S CERTIFICATE
The undersigned officers of USA Waste Services, Inc., a Delaware
corporation ("Parent"), and Quatro Acquisition Corp., a Delaware corporation and
a wholly owned subsidiary of Parent ("Subsidiary"), in connection with the
opinions to be delivered by Baker & Botts, L.L.P. and Andrews & Kurth L.L.P.
pursuant to the Agreement and Plan of Merger by and among Sanifill, Inc., a
Delaware corporation (the "Company"), Subsidiary and Parent, dated as of June
22, 1996 (the "Merger Agreement"), and recognizing that said law firms will rely
on this Certificate in delivering such opinions, hereby certify that the facts
described in this Officer's Certificate relating to the proposed merger of
Subsidiary with and into the Company (the "Merger") pursuant to the Merger
Agreement and any transactions related thereto are true, correct, and complete
in all respects and will be true, correct, and complete in all respects at the
Effective Time of the Merger, and further certify as follows (unless otherwise
specified, capitalized terms used herein shall have the meaning assigned to them
in the Merger Agreement):
1. I certify to you that I am the Executive Vice President and Chief
Financial Officer of Parent and Subsidiary. I am familiar with the transactions
contemplated by, and the terms and provisions of, the Merger Agreement, have
personal knowledge of the matters covered by the representations made herein,
and I am authorized to make these representations on behalf of Parent and
Subsidiary.
2. The fair market value of Parent Common Stock received by each holder of
Company Common Stock (a "Company Stockholder") will be approximately equal to
the fair market value of Company Common Stock exchanged for such Parent Common
Stock in the Merger.
3. Following the Merger, the Company will hold at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets held by the Company immediately prior to the Merger and at least
90% of the fair market value of the net assets and at least 70% of the fair
market value of the gross assets held by Subsidiary immediately prior to the
Merger.
For purposes of this representation, amounts paid by the Company or
Subsidiary to Company Stockholders who receive cash or other property, amounts
used by the Company or Subsidiary to pay reorganization expenses, and all
redemptions and distributions (except for regular, normal dividends, if any)
made by the Company have been included as assets of the Company or Subsidiary,
respectively, immediately prior to the Merger.
4. Prior to the Merger, Parent will own 100 percent of the stock of
Subsidiary and therefore will be in control of Subsidiary.
For purposes of this representation and the following representations, and
in accordance with Section 368(c) of the Internal Revenue Code of 1986, as
amended (the "Code"), control means the ownership of stock possessing at least
80% of the total combined voting power of all classes of stock entitled to vote
and at least 80% of the total number of shares of all other classes of stock of
the corporation.
5. Parent has no plan or intention to cause the Company to issue additional
shares of its stock that would result in Parent losing control of the Company.
6. Parent has no plan or intention to reacquire any of the stock issued in
the Merger.
7. Parent has no plan or intention to liquidate the Company, to merge the
Company with or into another corporation, to sell or otherwise dispose of the
stock of the Company (except for transfers of stock to corporations controlled
by Parent), or to cause the Company to sell or otherwise dispose of its assets
or any assets acquired from Subsidiary, except for dispositions made in the
ordinary course of business or transfers of assets to corporations controlled by
the Company.
<PAGE> 7
8. Subsidiary will have no liabilities assumed by the Company, and will not
transfer to the Company any assets subject to liabilities, in the Merger.
9. Following the Merger, Parent will cause the Company to continue, and the
Company will continue, the historic business of the Company or use a significant
portion of the Company's historic business assets in a business.
10. Parent and Subsidiary will pay their respective expenses, if any,
incurred in connection with the Merger. Neither Parent, Subsidiary nor any of
their affiliates will pay expenses of the Company or the Company Stockholders
incurred in connection with the Merger.
11. There is no intercorporate indebtedness existing between Parent and the
Company or between Subsidiary and the Company that was issued, acquired, or will
be settled at a discount.
12. In the Merger, shares of the common stock of Company representing
control of the Company will be exchanged solely for voting stock of Parent.
For purposes of this representation, shares of stock of the Company
exchanged for cash or other property originating with Parent will be treated as
outstanding stock of the Company on the date of the Merger.
13. Parent does not own, nor has it owned during the past five years, any
shares of stock of the Company.
14. Neither Parent nor Subsidiary is an investment company.
For purposes of this representation, (a) an investment company means a
regulated investment company (as defined in the Code), a real estate investment
trust (as defined in the Code), or a corporation 50% or more of the value of
whose total assets are stock and securities and 80% or more of the value of
whose total assets are assets held for investment, (b) in making the 50% and 80%
determinations just described, stock and securities in any subsidiary
corporation shall be disregarded and the parent corporation shall be deemed to
own its ratable share of the subsidiary's assets, and a corporation shall be
considered a subsidiary if the parent owns 50% or more of the combined voting
power of all classes of stock entitled to vote, or 50% or more of the total
value of all classes of stock outstanding, and (c) in determining total assets
there shall be excluded cash and cash items (including receivables), government
securities, and any assets acquired for purposes of ceasing to be an investment
company.
15. Cash payments by Parent or Subsidiary to Company Stockholders in lieu
of fractional shares of Parent Common Stock are solely for the purpose of
avoiding the expense and inconvenience to Parent of issuing fractional shares
and do not represent separately bargained for consideration. These payments will
not be made pro rata to all Company Stockholders. The total cash consideration
that will be paid in the transaction to Company Stockholders instead of issuing
fractional shares of Parent Common Stock will not exceed 1% of the total
consideration that will be issued in the transaction to Company Stockholders in
exchange for their shares of Company Common Stock. The fractional share
interests of each Company Stockholder will be aggregated, and no Company
Stockholder will receive cash in an amount equal to or greater than the value of
one full share of Parent Common Stock.
16. None of the compensation received by any shareholder-employees of the
Company will be separate consideration for, or allocable to, any of their shares
of Company Common Stock; none of the shares of Parent Common Stock received by
any shareholder-employees will be separate consideration for, or allocable to,
any employment agreement; and the compensation paid to any shareholder-employees
will be for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's-length for similar services.
2
<PAGE> 8
17. Parent's business reasons for consummating the Merger are set forth in
the section entitled "The Merger and Related Transactions" of the Joint Proxy
Statement/Prospectus.
USA WASTE SERVICES, INC.
/s/ EARL E. DEFRATES
------------------------------------
Name: Earl E. DeFrates
Title: Executive Vice President and
Chief Financial Officer
Dated: July 19, 1996
QUATRO ACQUISITION CORP.
/s/ EARL E. DEFRATES
------------------------------------
Name: Earl E. Defrates
Title: Executive Vice President and
Chief Financial Officer
Dated: July 19, 1996
3
<PAGE> 1
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated July 19, 1996 by and among Sanifill, Inc., a Delaware
corporation ("Sanifill"), USA Waste Services, Inc., a Delaware corporation
("USA"), and J. Chris Brewster, an individual residing in Houston, Texas
("Brewster").
R E C I T A L S :
USA is acquiring through merger into one of its wholly-owned subsidiaries
all of the stock of Sanifill; and
Brewster is the Vice President and Chief Financial Officer of Sanifill; and
USA and Sanifill desire to retain the services and assistance of Brewster
as an employee for a significant period after consummation of the acquisition of
Sanifill by USA; and
Brewster is willing to provide services and assistance to USA and Sanifill
for such a significant period; and
Brewster has certain contractual relationships with Sanifill concerning his
employment and compensation; and
USA, Sanifill and Brewster desire to enter into this Agreement which will
amend, as specifically stated herein, certain contractual agreements between
Brewster and Sanifill.
NOW, THEREFORE, it is hereby covenanted and agreed by and among the parties
as follows:
1. Employment: USA and Sanifill (the "Companies") hereby retain and engage
Brewster as an employee to provide services and advice during the term of this
Agreement hereinafter stated and subject to the further terms and conditions of
this Agreement. Brewster hereby agrees to provide such services during the term
of this Agreement hereinafter stated and subject to the further terms and
conditions of this Agreement.
2. Employment Term: The employment period ("Employment Period") shall
commence upon the consummation of the acquisition of the stock of Sanifill by
USA through merger of Sanifill with a wholly-owned subsidiary of USA (the
"Merger") pursuant to that certain Agreement and Plan of Merger of even date
herewith ("Merger Agreement") by and among USA, Quatro Acquisition Corp., and
Sanifill ("Employment Commencement Date") and shall end on the earlier of (i)
the first anniversary of the Employment Commencement Date or such subsequent
anniversary thereof as may be selected by the Companies provided they give
Brewster notice thereof at least 60 days prior to the then-scheduled termination
of the Employment Period or (ii) such earlier date, if any, as may be selected
by Brewster provided he gives 30 days' notice thereof to the Companies
("Employment Termination Date").
3. Employment Duties and Services: During the Employment Period Brewster
shall provide advice and services to assist with the integration of the
Companies following the consummation of the Merger, as well as such other
services as reasonably requested from time to time by the chief financial
officer of USA. The services to be provided shall be commensurate with
Brewster's training, background and experience as an experienced and highly
sophisticated executive in the waste management business, and shall be of a type
that might reasonably be expected to be provided by a senior executive of a
publicly traded company (such duties and services are hereinafter sometimes
referred to as "Employment Services"). In providing the Employment Services,
Brewster shall not be called upon to travel excessively or remain apart from his
principal place of residence (which is presently in Houston, Texas and may be
changed by Brewster in his sole discretion) for unreasonably extended periods
and the parties contemplate that in the usual course the Employment Services
will be performed either at the location of Brewster's choice (including from
his residence) or at USA's principal executive offices (which are being
relocated to Houston, Texas to the present executive offices of Sanifill). All
services provided by Brewster hereunder shall be in the capacity of a common law
employee of USA, and in connection therewith Brewster shall be subject to the
direction of the chief financial officer of
<PAGE> 2
USA with respect to both the manner in which he performs his duties hereunder
and the results to be accomplished thereby.
4. Compensation: For and in consideration of the agreement by Brewster to
provide the Employment Services and to be available to perform such services,
USA and Sanifill hereby jointly and severally agree to provide the following
compensation:
(i) During the Employment Period, Brewster shall be paid $8,333.33 on
a monthly basis (or $3,846.15 on a biweekly basis), in arrears.
(ii) During the Employment Period, Brewster shall be provided health,
hospitalization and major medical insurance or equivalent coverage not less
favorable to Brewster and his family than that presently available to
Brewster under Sanifill's medical benefits plans, at no premium cost to
Brewster; provided, Brewster shall not be required to participate, as a
condition to maximum medical benefits, in any health maintenance
organization, preferred provider arrangement or any other similar program
or practice that might restrict Brewster's selection of medical services
providers. Such coverage shall be continued for the entire period for the
benefit of Brewster's family even should Brewster die prior to the
Employment Termination Date.
5. Office and Secretary: During the Employment Period, Brewster shall be
provided with appropriate office space and secretarial assistance.
6. Expenses: Brewster shall be promptly reimbursed for all reasonable
expenses incurred in performing Employment Services.
7. [Intentionally omitted.]
8. Certain Additional Payments by the Companies: (a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by or on behalf of any of the Companies or any
of their affiliates to or for the benefit of Brewster (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this paragraph 8) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended ("Code"), or
any interest or penalties are incurred by Brewster with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then Brewster shall
be entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by Brewster of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, Brewster retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of paragraph 8 (c), all determinations
required to be made under this paragraph 8, including whether and when Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized accounting firm selected by USA (the "Accounting Firm"); provided,
however, that the Accounting Firm shall not determine that no Excise Tax is
payable by Brewster unless it delivers to Brewster a written opinion (the
"Accounting Opinion") that failure to report the Excise Tax on Brewster's
applicable federal income tax return would not result in the imposition of a
negligence or similar penalty. All fees and expenses of the Accounting Firm
shall be borne solely by the Companies. Within 15 business days of the receipt
of notice from Brewster that there has been a Payment, or such earlier time as
is requested by the Companies, the Accounting Firm shall make all determinations
required under this paragraph 8, shall provide to the Companies and Brewster a
written report setting forth such determinations, together with detailed
supporting calculations, and, if the Accounting Firm determines that no Excise
Tax is payable, shall deliver the Accounting Opinion to Brewster. Any Gross-Up
Payment, as determined pursuant to this paragraph 8, shall be paid by the
Companies to Brewster within five days of the receipt of the Accounting Firm's
determination. Subject to the remainder of this paragraph 8, any determination
by the Accounting Firm shall be binding upon the Companies and Brewster. As a
result of the uncertainty in the application of Section
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<PAGE> 3
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have been made
by the Companies should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that it is ultimately
determined in accordance with the procedures set forth in paragraph 8(c) that
Brewster is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Companies to or for the benefit of
Brewster.
(c) Brewster shall notify the Companies in writing of any claims by the
Internal Revenue Service that, if successful, would require the payment by the
Companies of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 30 days after Brewster actually receives notice in
writing of such claim and shall apprise the Companies of the nature of such
claim and the date on which such claim is requested to be paid; provided,
however, that the failure of Brewster to notify the Companies of such claim (or
to provide any required information with respect thereto) shall not affect any
rights granted to Brewster under this paragraph 8 except to the extent that the
Companies are materially prejudiced in the defense of such claim as a direct
result of such failure. Brewster shall not pay such claim prior to the
expiration of the 30-day period following the date on which he gives such notice
to the Companies (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Companies notify Brewster in
writing prior to the expiration of such period that it desires to contest such
claim, Brewster shall:
(i) give the Companies any information reasonably requested by the
Companies relating to such claim;
(ii) take such action in connection with contesting such claim as the
Companies shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney selected by the Companies and reasonably acceptable to
Brewster;
(iii) cooperate with the Companies in good faith in order effectively
to contest such claim; and
(iv) if the Companies elects not to assume and control the defense of
such claim, permit the Companies to participate in any proceedings relating
to such claim;
provided, however, that the Companies shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Brewster harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this paragraph 8(c), the Companies shall have the right, at their sole option,
to assume the defense of and control all proceedings in connection with such
contest, in which case it may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may either direct Brewster to pay the tax claimed and
sue for a refund or contest the claim in any permissible manner, and Brewster
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Companies shall determine; provided, however, that if the
Companies direct Brewster to pay such claim and sue for a refund, the Companies
shall advance the amount of such payment to Brewster, on an interest-free basis
and shall indemnify and hold Brewster harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of Brewster
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Companies's right to assume
the defense of and control the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and Brewster shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Brewster of an amount advanced by the
Companies pursuant to paragraph 8(c) Brewster becomes entitled to receive any
refund with respect to such claim, Brewster shall (subject to the Companies's
complying with the requirements of paragraph 8(c) promptly pay to the Companies
the
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<PAGE> 4
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by Brewster of an amount
advanced by the Companies pursuant to paragraph 8(c), a determination is made
that Brewster shall not be entitled to any refund with respect to such claim and
the Companies do not notify Brewster in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
9. Scope of Agreement: (a) This Agreement constitutes the entire
understanding of the parties with respect to Employment Services and
compensation to be paid to or in respect of Brewster during or after the
Employment Term in respect of the covenants and services provided by Brewster
herein. This Agreement does not supersede, override or replace or impact any
employee benefit plan, program, practice or arrangement of Sanifill as such may
apply to Brewster, except as is specifically provided for herein. The terms and
conditions of any (i) stock options granted to Brewster by either Sanifill or
USA, (ii) any restricted stock grant to Brewster by either Sanifill or USA and
(iii) any deferred compensation arrangement between Brewster and either USA or
Sanifill are not modified, amended or superseded by this Agreement.
Indemnification provided to Brewster by Sanifill or its successors or pursuant
to the Merger Agreement shall not be modified, amended or superseded by this
Agreement.
(b) Notwithstanding the continuation of Brewster's employment after the
consummation of the Merger as contemplated hereby, and notwithstanding any
provision of the Employment Agreement between Brewster and Sanifill dated as of
April 3, 1992, as amended (the "1992 Agreement") to the contrary, Sanifill shall
begin making payments and providing benefits pursuant to Section 6(a) of the
1992 Agreement immediately upon consummation of the Merger and shall thereafter
continue to make such payments and provide such benefits pursuant to and in
accordance with the terms of such Section 6(a).
(c) Without limiting the generality of paragraph 9(a) above, it is
specifically agreed that the Merger shall constitute a "'change of control' of
the Company" as contemplated by Section 3(b) of the 1992 Agreement, that the
title, job description and level of responsibility contemplated hereby shall
constitute a material diminution of Brewster's title, job description and/or
level of responsibility as contemplated by such Section 3(b) and, accordingly,
that all employee stock options granted by Sanifill to Brewster and held by him
on the date of the Merger shall, as contemplated by such Section 3(b), become
fully vested and exercisable on the date of the Merger. Such options shall
remain exercisable, as provided by the terms of such options, until 3 months
after termination of Brewster's employment under this Agreement.
10. Successors: (a) This Agreement is personal to Brewster and without the
prior written consent of USA shall not be assignable by Brewster otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by Brewster's heirs, executors and other legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Companies and may only be assigned to a successor only as described in paragraph
10(c).
(c) USA will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of USA to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that USA would be required
to perform it if no such succession had taken place.
11. Miscellaneous: (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, without reference to
principles of conflict of laws that would require the application of the laws of
any other state or jurisdiction.
(b) The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect.
(c) This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective successors
and heirs, executors and other legal representatives.
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<PAGE> 5
(d) All notices and other communications hereunder shall be in writing and
shall be given by telecopy or facsimile transmission, by hand delivery or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to such address as either party shall have furnished to the other in
writing. Notices to the Companies shall be to the attention of the chief
executive officer. Notice and communications shall be effective when actually
received by the addressee.
(e) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(f) Brewster's or the Companies' failure to insist upon strict compliance
with any provision hereof or any other provision of this Agreement or the
failure to assert any right Brewster or the Companies may have hereunder, shall
not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.
(g) This Agreement shall become effective as of the date hereof.
IN WITNESS WHEREOF, Brewster has hereunto set his hand and, pursuant to the
authorization from their boards of directors, each of Sanifill and USA has
caused these presents to be executed in its name on its behalf, as of the date
first written above.
USA WASTE SERVICES, INC.
By: /s/ EARL E. DEFRATES
---------------------------------
EARL E. DEFRATES
SANIFILL, INC.
By: /S/ LORNE D. BAIN
---------------------------------
LORNE D. BAIN
/s/ J. CHRIS BREWSTER
---------------------
J. CHRIS BREWSTER
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<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of USA Waste Services, Inc. on Form S-4 of our report dated March 1, 1996, on
our audits of the consolidated financial statements of USA Waste Services, Inc.
and subsidiaries as of December 31, 1995 and 1994, and for each of the three
years in the period ended December 31, 1995, which is included in USA Waste
Services, Inc.'s Annual Report on Form 10-K for the fiscal year ended December
31, 1995, and our report dated May 23, 1996, on our audits of the supplemental
consolidated balance sheets of USA Waste Services, Inc. and subsidiaries as of
December 31, 1995 and 1994, and the related supplemental consolidated statements
of operations, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1995, which is included in USA Waste
Services, Inc.'s Current Report on Form 8-K/A filed on July 1, 1996 with the
Securities and Exchange Commission. We also consent to the reference to our firm
under the caption "Experts."
COOPERS & LYBRAND L.L.P.
/s/ COOPERS & LYBRAND L.L.P.
Dallas, Texas
July 19, 1996
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-08161 of USA Waste Services, Inc. on Form S-4 of
our report dated March 30, 1995 (relating to the consolidated financial
statements of Chambers Development Company, Inc. and subsidiaries) appearing in
USA Waste Services, Inc.'s Current Report on Form 8-K/A, Amendment No. 3, dated
May 7, 1996.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
July 19, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4, Amendment No. 1, No. 333-08161) and related
prospectus of USA Waste Services, Inc. and to the incorporation by reference
therein of our reports (a) dated August 25, 1995 (except Note 8, as to which the
date is September 12, 1995) with respect to the consolidated financial
statements of Western Waste Industries at June 30, 1995 and 1994, and for each
of the three years in the period ended June 30, 1995 included in USA Waste
Services, Inc.'s Current Report on Form 8-K dated January 9, 1996, and (b) dated
August 25, 1995 (except Note 8, as to which the date is September 12, 1995) with
respect to the consolidated financial statements of Western Waste Industries at
June 30, 1995 and 1994, and for each of the two years in the period ended June
30, 1995 (which consolidated financial statements are not presented separately
therein) included in USA Waste Services, Inc.'s Current Report on Form 8-K/A
(Amendment No. 3), dated July 1, 1996, both filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Long Beach, California
July 18, 1996
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of USA Waste Services, Inc. on Form
S-4 and the Joint Proxy Statement/Prospectus which forms a part thereof of (a)
our report dated February 23, 1996 (except with respect to the matters discussed
in Note 15, as to which the dates are March 4, 1996 and March 18, 1996 as
indicated) with respect to the consolidated balance sheets of Sanifill, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' investment and cash flows for each of
the three years in the period ended December 31, 1995 which is included in
Sanifill, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1995; (b) our reports dated (i) August 1, 1995 with respect to the combined
balance sheets of Metropolitan Disposal and Recycling Corporation, Energy
Reclamation, Inc., and EE Equipment, Inc. as of December 31, 1994 and 1993, and
the related combined statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1994, (ii)
January 9, 1996 with respect to the balance sheet of Falcon Disposal Services,
Inc. as of December 31, 1994, and the related statements of operations,
stockholders' equity and cash flows for the year then ended, (iii) February 2,
1996 with respect to the combined balance sheet of Garnet of Virginia, Inc., and
Garnet of Maryland, Inc. as of December 31, 1995 and the related combined
statements of operations, stockholders' deficit and cash flows for the year then
ended, (iv) January 13, 1996 with respect to the combined balance sheet of the
Combined Companies, as defined, as of December 31, 1994 and the related combined
statement of operations, stockholders' equity and partners' capital and cash
flows for the year then ended which are included in Sanifill, Inc.'s Current
Report on Form 8-K dated February 5, 1996; (c) our report dated February 8, 1996
with respect to the consolidated balance sheets of Sanifill, Inc. and
subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of operations, stockholders' investment and cash flows for each of
the three years in the period ended December 31, 1994 which is included in
Sanifill, Inc.'s Current Report on Form 8-K dated February 11, 1996; (d) our
report dated November 17, 1995 (except with respect to the matters discussed in
Note 11, as to which the date is March 18, 1996) with respect to the combined
balance sheets of PST Reclamation, Inc., and Taylor Land Resources, Inc. as of
December 31, 1994 and 1993, and the related combined statements of operations
and retained earnings and cash flows for the years then ended which is included
in Sanifill, Inc.'s Current Report on Form 8-K dated March 20, 1996; and (e) to
all references to our Firm included in this Registration Statement of USA Waste
Services, Inc. on Form S-4 and the Joint Proxy Statement/Prospectus which forms
a part thereof.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
July 19, 1996
<PAGE> 1
EXHIBIT 23.7
CONSENT OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
We hereby consent to the references to our firm in the letter to USA Waste
Services, Inc. shareholders and under the captions "SUMMARY -- The
Merger -- Opinions of Financial Advisors," "THE MERGER AND RELATED
TRANSACTIONS -- Background of the Merger," "THE MERGER AND RELATED
TRANSACTIONS -- USA Waste's Reasons for the Merger" and "THE MERGER AND RELATED
TRANSACTIONS -- Opinion of Financial Advisor to USA Waste" in the Joint Proxy
Statement and Prospectus, each included in Amendment No. 1 to the Registration
Statement on Form S-4 relating to the proposed merger of a subsidiary of USA
Waste Services, Inc. with and into Sanifill, Inc., and to the inclusion of our
opinion letter as Annex B in the Joint Proxy Statement/Prospectus. In giving
this consent, we do not admit that we come within the category of persons whose
consent is required and we do not admit and we disclaim that we are experts with
respect to any part of such Amendment to the Registration Statement within the
meaning of "experts" as used in the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ DOUGLAS V. BROWN
----------------------------
July 19, 1996
<PAGE> 1
EXHIBIT 23.8
CONSENT OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
We hereby consent to the use of our opinion letter, dated June 21, 1996, to
the Board of Directors of Sanifill, Inc. included as Annex C to the Joint Proxy
Statement/Prospectus which forms a part of Amendment No. 1 to the Registration
Statement on Form S-4 related to the proposed merger of Quatro Acquisition
Corp., a wholly owned subsidiary of USA Waste Services, Inc., with and into
Sanifill, Inc. and to the references to such opinion in the letter to Sanifill,
Inc. shareholders and under the captions "SUMMARY -- The Merger -- Opinions of
Financial Advisors," "THE MERGER AND RELATED TRANSACTIONS -- Background of the
Merger," "THE MERGER AND RELATED TRANSACTIONS -- Sanifill's Reasons for the
Merger" and "THE MERGER AND RELATED TRANSACTIONS -- Opinion of Financial Advisor
to Sanifill" in the Joint Proxy Statement/Prospectus. In giving such consent, we
do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder, nor do we
admit that we are experts with respect to any part of such Amendment to the
Registration Statement within the meaning of the term "experts" as used in the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By: /s/ MARK G. SHAFIR
July 19, 1996
<PAGE> 1
EXHIBIT 99.1
(front of card)
USA WASTE SERVICES, INC.
SPECIAL MEETING OF STOCKHOLDERS
, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
USA WASTE SERVICES, INC
The undersigned holder of common stock ("Common Stock"), par value
$0.01 per share, of USA Waste Services, Inc., a Delaware corporation ("USA
Waste"), hereby appoints John E. Drury, Earl E. DeFrates and Gregory T.
Sangalis, and each of them acting individually, with full power of substitution
and revocation, as proxies for the undersigned to act and vote at the Special
Meeting of stockholders of USA Waste to be held on August 27, 1996, at 2:00
p.m., local time, at The Four Seasons Hotel, 1300 Lamar Street, Houston, Texas
77010 (the "Special Meeting"), and any adjournments and postponements thereof,
and thereat to cast all votes of all shares of Common Stock that the undersigned
would be entitled to cast if then personally present for the purposes listed on
the reverse side hereof.
HOLDERS OF SHARES OF COMMON STOCK ARE NOT ENTITLED TO DISSENTERS'
APPRAISAL RIGHTS UNDER THE DELAWARE GENERAL CORPORATION LAW IN CONNECTION WITH
THE PROPOSED MERGER OF USA WASTE TO BE CONSIDERED AND VOTED UPON AS SET FORTH
ON THE REVERSE SIDE HEREOF.
This Proxy, when properly executed, will be voted in the manner
directed on the reverse side by the undersigned stockholder(s). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS SET FORTH ON THE
REVERSE SIDE OF THIS PROXY. This Proxy may be revoked at any time before it is
voted at the Special Meeting by either (i) (a) executing and returning a proxy
bearing a later date or (b) filing written notice of such revocation with USA
Waste, at 5400 LBJ Freeway, Suite 300 - Tower One, Dallas, Texas 75240, fax
number (214) 383-7919, Attention: Gregory T. Sangalis, or (ii) attending the
Special Meeting and voting in person.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
<PAGE> 2
(reverse side of card)
(continued from the reverse side)
<TABLE>
<S> <C> <C> <C>
THE BOARD OF DIRECTORS OF USA WASTE SERVICES, INC. RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
1. Proposal to approve and adopt the Agreement and Plan of Merger dated as FOR AGAINST ABSTAIN
of June 22, 1996, by and among USA Waste, Quatro Acquisition Corp., a / / / / / /
Delaware corporation, and Sanifill, Inc., a Delaware corporation.
2. Proposal to amend the Restated Certificate of Incorporation of USA Waste FOR AGAINST ABSTAIN
to increase its authorized shares of Common Stock from 150,000,000 to / / / / / /
300,000,000.
MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
Please mark, date and sign exactly as
your name(s) appear(s) at left and return
in the enclosed envelope. If acting as attorney,
executor, administrator, trustee, guardian, etc.,
please give full title. If the signer is a
corporation, please sign the full corporate name,
by fully authorized officer. If shares are held
jointly, each stockholder named should sign.
Signature: _________________________ Date: ___________________ Signature: ____________________________ Date: ________________
</TABLE>
<PAGE> 1
EXHIBIT 99.2
(front of card)
SANIFILL, INC.
SPECIAL MEETING OF STOCKHOLDERS
, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SANIFILL, INC
The undersigned holder of common stock ("Common Stock"), par value
$0.01 per share, of Sanifill, Inc., a Delaware corporation ("Sanifill"), hereby
appoints Lorne D. Bain, Rodney R. Proto and Steve Walton, and each of them
acting individually, with full power of substitution and revocation, as proxies
for the undersigned to act and vote at the Special Meeting of stockholders of
Sanifill to be held on , 1996, at a.m., local time, at (the
"Special Meeting"), and any adjournments and postponements thereof, and thereat
to cast all votes of all shares of Common Stock that the undersigned would be
entitled to cast if then personally present for the purposes listed on the
reverse side hereof.
HOLDERS OF SHARES OF COMMON STOCK ARE NOT ENTITLED TO DISSENTERS'
APPRAISAL RIGHTS UNDER THE DELAWARE GENERAL CORPORATION LAW IN CONNECTION WITH
THE PROPOSED MERGER OF SANIFILL TO BE CONSIDERED AND VOTED UPON AS SET FORTH ON
THE REVERSE SIDE HEREOF.
This Proxy, when properly executed, will be voted in the manner
directed on the reverse side by the undersigned stockholder(s). IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL SET FORTH ON THE
REVERSE SIDE OF THIS PROXY. This Proxy may be revoked at any time before it is
voted at the Special Meeting by either (i) (a) executing and returning a proxy
bearing a later date or (b) filing written notice of such revocation with
Sanifill, at 2777 Allen Parkway, Suite 700, Houston, Texas 77019, fax number
(713) 942-6277, Attention: Steve Walton or (ii) attending the Special Meeting
and voting in person.
(Continued and to be signed on the reverse side)
<PAGE> 2
(reverse side of card)
(continued from the reverse side)
THE BOARD OF DIRECTORS OF SANIFILL, INC. UNANIMOUSLY RECOMMENDS A VOTE FOR
THE FOLLOWING PROPOSAL.
To consider and vote upon a proposal to (i) approve and adopt the Agreement and
Plan of Merger dated as of June 22, 1996 (the "Merger Agreement"), by and among
Sanifill, USA Waste Services, Inc., a Delaware corporation, and Quatro
Acquisition Corp., a Delaware corporation ("Acquisition"), and (ii) approve the
transactions contemplated by the Merger Agreement, including, but not limited
to, the merger of Acquisition with and into Sanifill.
For Against Abstain
[ ] [ ] [ ]
Date , 1996
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Signature
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Signature if held jointly
Please mark, date and sign exactly as your name(s) appear(s) above
on the face side hereof and return in the enclosed envelope.
If acting as attorney, executor, administrator, trustee, guardian, etc.,
please give full title. If the signer is a corporation, please sign the
full corporate name, by fully authorized officer. If shares are held
jointly, each stockholder named should sign.
