<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
USA WASTE SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4953 73-1309529
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
USA WASTE SERVICES, INC.
1001 FANNIN, SUITE 4000
HOUSTON, TEXAS 77002
(713) 512-6200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GREGORY T. SANGALIS
USA WASTE SERVICES, INC.
1001 FANNIN, SUITE 4000
HOUSTON, TEXAS 77002
(713) 512-6200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
MARCUS A. WATTS JEFF DODD
LIDDELL, SAPP, ZIVLEY, HILL & MAYOR, DAY, CALDWELL & KEETON,
LABOON, L.L.P. L.L.P.
3400 CHASE TOWER 1900 NATIONSBANK BUILDING
600 TRAVIS 700 LOUISIANA
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 226-1200 (713) 225-7000
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
TransAmerican Acquisition Corp. ("Acquisition") with and into TransAmerican
Waste Industries, Inc. ("TransAmerican") pursuant to the Agreement and Plan of
Merger dated as of January 26, 1998, among USA Waste Services, Inc. ("USA
Waste"), Acquisition and TransAmerican, described in the enclosed 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. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE
AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
TITLE OF EACH CLASS REGISTERED(1) PER SHARE(2) PRICE(3) FEE(4)
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<S> <C> <C> <C> <C>
Common Stock, $.01 par
value.................. 2,000,000 $1.65625 $73,404,176 $21,654.23
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</TABLE>
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(1) Based upon the registrant's estimate of the maximum number of shares of
USA Waste Common Stock that will be issued in connection with the Merger.
(2) Estimated solely for purposes of determining the registration fee in
accordance with Rule 457(f). Calculated pursuant to Rule 457(f) based upon
the average of the high and low sale prices for shares of TransAmerican
Common Stock on the Nasdaq SmallCap Market on March 30, 1998.
(3) Calculated pursuant to Rule 457(f) based upon the average of the high and
low sale prices for shares of TransAmerican Common Stock on the Nasdaq
SmallCap Market on March 30, 1998 ($1.65625) multiplied by the 44,319,503
million shares of TransAmerican Common Stock and common stock equivalents
to be exchanged in connection with the Merger.
(4) Pursuant to Rule 457(b), the calculated fee of $21,654.23 shall be offset
by the fee of $12,022.00 paid in connection with the Preliminary Proxy
Statement of TransAmerican filed with the Securities and Exchange
Commission on February 11, 1998. Accordingly, the balance of the
registration fee of $9,632.23 is filed herewith.
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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<PAGE>
TRANSAMERICAN WASTE INDUSTRIES, INC.
10554 TANNER ROAD
HOUSTON, TEXAS 77041
April , 1998
Dear Stockholder of TransAmerican Waste Industries, Inc.:
A special meeting (the "Meeting") of stockholders of TransAmerican Waste
Industries, Inc. ("TransAmerican") will be held on May 6, 1998 at 9:00 a.m.,
Central Time. The Meeting will be held at the Houstonian Hotel and Conference
Center, 111 North Post Oak Lane, Houston, Texas.
At this very important meeting you will be asked to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Merger (the "Merger
Agreement"), by and among USA Waste Services, Inc. ("USA Waste"),
TransAmerican Acquisition Corp. ("Acquisition"), a wholly owned subsidiary of
USA Waste, and TransAmerican. The Merger Agreement provides, among other
things, for the merger of Acquisition with and into TransAmerican (the
"Merger"), pursuant to which TransAmerican would become a wholly owned
subsidiary of USA Waste and each outstanding share of common stock of
TransAmerican would be converted into 0.045232 shares of common stock of USA
Waste (as adjusted, the "Exchange Ratio"). Based upon this Exchange Ratio and
upon the number of shares of common stock of USA Waste and TransAmerican
outstanding as of March 31, 1998, USA Waste would issue approximately two
million shares of its common stock to the stockholders of TransAmerican in
connection with the Merger, representing approximately 0.9% of the total
shares of USA Waste's common stock to be outstanding immediately after the
Merger. The Exchange Ratio is, however, subject to adjustment based upon the
extent to which the "Net Debt" of TransAmerican as of the end of the calendar
month immediately preceding the Meeting exceeds $43,200,000. The "Net Debt"
definition and the method of its computation, are more fully described in the
accompanying Proxy Statement/Prospectus. See "The Plan of Merger and Terms of
the Merger--Manner and Basis for Converting Shares." Based on the level of Net
Debt (including an estimate of $1,705,000 for retirement of tax exempt debt)
as of February 28, 1998, the Exchange Ratio would have been 0.043954. However,
the Net Debt on April 30, 1998 (the end of the calendar month immediately
preceding the Meeting) may be higher or lower than the Net Debt as of February
28, 1998, and the actual Exchange Ratio will be adjusted accordingly. The
Merger is also subject to a number of conditions, including obtaining
necessary regulatory waivers or approvals.
A summary of the basic terms and conditions of the Merger, certain financial
and other information relating to TransAmerican and USA Waste and a copy of
the Merger Agreement are set forth in the accompanying Proxy
Statement/Prospectus. As the terms of the proposed Merger are complex, I urge
you to review and consider the enclosed materials carefully.
TransAmerican's Board of Directors has unanimously approved the Merger
Agreement. In addition, the Board of Directors has received an opinion dated
January 26, 1998 from Dain Rauscher Incorporated to the effect that the
Exchange Ratio is fair to TransAmerican from a financial point of view. Dain
Rauscher subsequently confirmed by delivery to the Board of Directors of
TransAmerican of its written opinion, dated as of the date hereof (a copy of
which is included in the accompanying Proxy Statement/ Prospectus), that as of
such date the Exchange Ratio pursuant to the Merger Agreement is fair to the
holders of shares of TransAmerican common stock. THE BOARD OF DIRECTORS OF
TRANSAMERICAN BELIEVES THAT THE PROPOSED MERGER IS IN THE BEST INTERESTS OF
TRANSAMERICAN AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
All executive officers and directors of TransAmerican have executed a voting
agreement pursuant to which each such executive officer or director has agreed
to vote all shares of TransAmerican common stock held by him in favor of the
Merger Agreement. As of the close of business on March 31, 1998, such
individuals collectively had the right to vote approximately 7.9 million
shares of TransAmerican common stock, representing approximately 17.8% of the
shares outstanding as of such date.
<PAGE>
Regardless of the number of shares you hold or whether you plan to attend
the Meeting, we urge you to complete, sign, date, and return the enclosed
proxy card immediately. If you attend the Meeting, you may vote in person if
you wish, even if you have previously returned your proxy card.
Sincerely,
Tom J. Fatjo, Jr.
Chairman & Chief Executive Officer
<PAGE>
TRANSAMERICAN WASTE INDUSTRIES, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1998
To the Stockholders of TransAmerican Waste Industries, Inc.:
Notice is hereby given that a special meeting (the "Meeting") of
stockholders of TransAmerican Waste Industries, Inc. ("TransAmerican") will be
held at the Houstonian Hotel and Conference Center, 111 North Post Oak Lane,
Houston, Texas, on May 6, 1998 at 9:00 a.m., Central Time, to consider and act
upon the following:
(1) Approval and adoption of the Agreement and Plan of Merger dated as of
January 26, 1998 (the "Merger Agreement"), by and among TransAmerican, USA
Waste Services, Inc. ("USA Waste") and TransAmerican Acquisition Corp.
("Acquisition"), a wholly owned subsidiary of USA Waste, providing for,
among other things, the merger of Acquisition with and into TransAmerican,
with TransAmerican being the Surviving Corporation (the "Merger") and the
conversion of each outstanding share of TransAmerican common stock, par
value $.001 per share, into 0.045232 shares of USA Waste common stock, par
value $.01 per share, subject to adjustment as provided therein; and
(2) Such other business as may properly come before the Meeting or any
adjournment or postponement thereof.
The Meeting may be postponed or adjourned from time to time, and at any
reconvened meeting actions with respect to the matters specified in this
notice may be taken without further notice to stockholders unless required by
the Bylaws of TransAmerican or by law.
Only stockholders of record at the close of business on April 1, 1998, (the
"Record Date") are entitled to notice of and to vote on the Merger Agreement
at the Meeting and any postponements or adjournments thereof. The approval and
adoption of the Merger Agreement requires the affirmative vote of a majority
of the shares of TransAmerican common stock outstanding on the Record Date. At
the close of business on the Record Date, there were approximately 44.3
million shares of TransAmerican common stock outstanding and entitled to vote
at the Meeting. The Merger and other related matters are more fully described
in the accompanying Proxy Statement/Prospectus and the Appendices thereto,
which form a part of this notice and should be read carefully by all
stockholders. See "The Meeting--Vote Required for Approval."
Holders of TransAmerican's Common Stock who do not vote in favor of the
Merger will be entitled to dissenters' rights of appraisal under Section 262
of Delaware General Corporation Law; for a more complete description of
dissenters' rights, see "The Merger--Appraisal Rights" in the accompanying
Proxy Statement/ Prospectus.
By Order of the Board of Directors,
J. David Green
Corporate Secretary
Houston, Texas
April , 1998
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED PREPAID ENVELOPE. IF YOU
ATTEND THE MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE>
TRANSAMERICAN WASTE INDUSTRIES, INC.
PROXY STATEMENT
----------------
USA WASTE SERVICES, INC.
PROSPECTUS
This Proxy Statement/Prospectus is being furnished to the stockholders of
TransAmerican Waste Industries, Inc., a Delaware corporation
("TransAmerican"), in connection with the solicitation of proxies by its Board
of Directors to be voted at the meeting of stockholders of TransAmerican (the
"Meeting") scheduled to be held on May 6, 1998, at 9:00 a.m., Central Time, at
the Houstonian Hotel and Conference Center, 111 North Post Oak Lane, Houston,
Texas, and at any adjournment or postponement thereof.
At the Meeting, the holders of TransAmerican common stock, par value $.001
per share (the "TransAmerican 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 January 26, 1998 (the "Merger Agreement"), among USA Waste
Services, Inc., a Delaware corporation ("USA Waste"), TransAmerican
Acquisition Corp., a Delaware corporation and wholly owned subsidiary of USA
Waste ("Acquisition"), and TransAmerican providing for the merger of
Acquisition with and into TransAmerican (the "Merger"). Such approval is a
condition to consummating the Merger. Upon consummation of the Merger,
TransAmerican will become a wholly owned subsidiary of USA Waste and the
holders of the issued and outstanding shares of TransAmerican Common Stock
will have the right to receive, at the effective time of the Merger, 0.045232
shares of USA Waste common stock, par value $.01 per share (the "USA Waste
Common Stock"), for each share of TransAmerican Common Stock held by them,
subject to adjustment as set forth in the Merger Agreement (as adjusted, the
"Exchange Ratio"). See "The Plan of Merger and Terms of the Merger." A copy of
the Merger Agreement is attached hereto as Appendix A and incorporated herein
by reference.
On March 31, 1998, the closing sale price of USA Waste Common Stock on the
New York Stock Exchange was $44.56 per share. Based on such closing price and
the Exchange Ratio based upon the Net Debt calculated as of February 28, 1998,
the consideration to be received by stockholders of TransAmerican pursuant to
the Merger would be approximately $1.96 per share of TransAmerican Common
Stock. Based upon the number of shares of USA Waste Common Stock outstanding
as of March 31, 1998, approximately 221 million shares of USA Waste Common
Stock will be outstanding after the Merger is consummated, of which
approximately 2 million shares will be owned by former stockholders of
TransAmerican.
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN USA WASTE COMMON STOCK.
This Proxy Statement/Prospectus also constitutes the prospectus of USA Waste
that is a part of the Registration Statement of USA Waste filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to 2 million shares
of USA Waste Common Stock to be issued in connection with the Merger.
This Proxy Statement/Prospectus is first being mailed to the stockholders of
TransAmerican on or about April , 1998.
THE USA WASTE COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER HAS
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is April , 1998.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY USA WASTE OR TRANSAMERICAN. THIS PROXY STATEMENT/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 PROXY STATEMENT/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 TRANSAMERICAN SINCE THE DATE HEREOF OR THAT THE INFORMATION IN THIS
PROXY STATEMENT/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
TRANSAMERICAN HAS BEEN FURNISHED BY TRANSAMERICAN.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION..................................................... 1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... 2
FORWARD-LOOKING STATEMENTS................................................ 3
SUMMARY................................................................... 4
The Companies........................................................... 4
The Meeting............................................................. 5
The Merger.............................................................. 5
Other Conditions to the Merger.......................................... 8
Stockholders' Comparative Rights........................................ 11
Market Price Data....................................................... 11
Selected Historical Consolidated Financial Data......................... 12
Pro Forma Financial Information......................................... 13
RISK FACTORS.............................................................. 14
Impact of WMI Merger.................................................... 14
Stock Prices May Vary in Response to Changes in Business and Economic
Conditions............................................................. 14
Interests of Certain Persons in the Merger.............................. 14
Acquisition Strategy.................................................... 14
Need For Capital; Debt Financing........................................ 15
International Expansion................................................. 15
Profitability May Be Affected By Factors Beyond USA Waste's Control,
Including Competition.................................................. 15
Capitalized Expenditures................................................ 15
Potential Adverse Effect of Government Regulation....................... 16
Potential Environmental Liability and Limited Insurance Coverage........ 16
Alternatives To Landfill Disposal....................................... 17
No Dividends............................................................ 17
Potential Effect Of Certain USA Waste Anti-Takeover Provisions.......... 17
THE MEETING............................................................... 18
Date, Time, and Place of the Meeting.................................... 18
Purpose of the Meeting.................................................. 18
Record Date and Outstanding Shares...................................... 18
Voting and Revocation of Proxies........................................ 18
Vote Required for Approval.............................................. 18
Solicitation of Proxies................................................. 19
Other Matters........................................................... 19
THE MERGER................................................................ 20
General Description of the Merger....................................... 20
Background of the Merger................................................ 20
TransAmerican's Reasons for the Merger.................................. 22
Recommendation of the Board of Directors of TransAmerican............... 23
Opinion of Financial Advisor to TransAmerican........................... 23
Interests of Certain Persons in the Merger.............................. 25
Material Federal Income Tax Consequences................................ 26
Accounting Treatment.................................................... 27
Government and Regulatory Approvals..................................... 28
Appraisal Rights........................................................ 28
Restrictions On Resales By Affiliates................................... 31
</TABLE>
i
<PAGE>
<TABLE>
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PAGE
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THE PLAN OF MERGER AND TERMS OF THE MERGER................................ 33
Effective Time of the Merger............................................ 33
Manner and Basis for Converting Shares.................................. 33
Conversion of TransAmerican Options..................................... 34
Conversion of TransAmerican Warrants.................................... 34
Conversion of TransAmerican Convertible Debentures...................... 34
Employee Plans and Benefits and Employment Contracts.................... 34
Conditions to the Merger................................................ 35
Cooperation............................................................. 36
Representations and Warranties of USA Waste and TransAmerican........... 36
Conduct of the Business of USA Waste and TransAmerican Prior to the
Merger................................................................. 36
No Solicitation of Acquisition Transactions............................. 37
Termination or Amendment................................................ 38
Termination Fees........................................................ 39
Expenses................................................................ 39
Indemnification......................................................... 39
COMPARATIVE RIGHTS OF STOCKHOLDERS OF USA WASTE AND TRANSAMERICAN......... 41
General................................................................. 41
Classified Board of Directors........................................... 41
Number of Directors; Removal of Directors............................... 41
Special Meetings of Stockholders........................................ 42
Stockholder Nominations and Proposals................................... 42
Amendment of Certain Charter Provisions................................. 42
Voting.................................................................. 43
Amendment of Bylaws..................................................... 43
Authorized Capital Stock................................................ 43
MARKET PRICE DATA......................................................... 44
Market Information...................................................... 44
Dividend Information.................................................... 44
DESCRIPTION OF USA WASTE CAPITAL STOCK.................................... 45
Common Stock............................................................ 45
Preferred Stock......................................................... 45
Authorized But Unissued Shares.......................................... 45
Transfer Agent and Registrar............................................ 45
LEGAL MATTERS............................................................. 46
EXPERTS................................................................... 46
STOCKHOLDER PROPOSALS..................................................... 46
APPENDIX A--Agreement and Plan of Merger
APPENDIX B--Fairness Opinion of Financial Advisor
APPENDIX C--Section 262 of the Delaware General Corporation Law
</TABLE>
ii
<PAGE>
AVAILABLE INFORMATION
USA Waste and TransAmerican 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 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).
USA Waste's securities are listed on the New York Stock Exchange (the "NYSE")
and the reports, proxy statements and other information of USA Waste described
above may also be inspected at the NYSE at 20 Broad Street, New York, New York
10005. The TransAmerican Common Stock is listed on the Nasdaq SmallCap Market
(the "Nasdaq SmallCap Market"). Upon consummation of the Merger, listing of
the TransAmerican Common Stock on the Nasdaq SmallCap Market will be
terminated.
USA Waste has filed with the Commission a registration statement (the
"Registration Statement") on Form S-4 under the Securities Act with respect to
the securities offered hereby. This Proxy Statement/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 Proxy Statement/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 part thereof, are available
for inspection and copying at the Commission's offices as described above.
After the Merger, registration of the TransAmerican Common Stock under the
Exchange Act will be terminated.
1
<PAGE>
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, 1997; (ii) its
Current Report on Form 8-K dated March 10, 1998; and (iii) 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.
This Proxy Statement/Prospectus is accompanied by a copy of TransAmerican's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, which
also constitutes the annual report that is being furnished to stockholders of
TransAmerican with respect to such year. All information included in such
Annual Report on Form 10-K is incorporated in this Proxy Statement/Prospectus.
All documents filed by USA Waste and TransAmerican pursuant to Section
13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this
Proxy Statement/Prospectus and prior to the date the Merger is consummated
shall be deemed to be incorporated by reference in this Proxy
Statement/Prospectus and to be part hereof from the date of filing of such
documents. All information appearing in this Proxy Statement/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 Proxy Statement/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 Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. USA WASTE AND TRANSAMERICAN 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 PROXY
STATEMENT/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 PROXY STATEMENT/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., FIRST CITY TOWER, 1001 FANNIN, SUITE 4000, HOUSTON, TEXAS 77002,
ATTENTION: CORPORATE SECRETARY, TELEPHONE NUMBER (713) 512-6200. DOCUMENTS
RELATING TO TRANSAMERICAN ARE AVAILABLE UPON REQUEST FROM TRANSAMERICAN WASTE
INDUSTRIES, INC., 10554 TANNER ROAD, HOUSTON, TEXAS 77041, ATTENTION:
CORPORATE SECRETARY, TELEPHONE NUMBER (713) 956-1212. IN ORDER TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY APRIL 20,
1998.
2
<PAGE>
FORWARD-LOOKING STATEMENTS
Certain statements in the Summary and under the captions "Risk Factors,"
"The Merger--TransAmerican's Reasons for the Merger," "--Recommendation of the
Board of Directors of TransAmerican," and elsewhere in this Proxy
Statement/Prospectus, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such forward-
looking statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance, or achievements of
the combined company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These forward-looking statements were based on various factors and
were derived utilizing numerous important assumptions and other important
factors that could cause actual results to differ materially from those in the
forward-looking statements. Important assumptions and other important factors
that could cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to: uncertainty as to
USA Waste's future profitability; USA Waste's ability to develop and implement
operational and financial systems to manage rapidly growing operations;
competition in USA Waste's existing and potential future lines of business;
USA Waste's ability to integrate and successfully operate acquired businesses
and the risks associated with such businesses; USA Waste's ability to obtain
financing on acceptable terms to finance its growth strategy and for it to
operate within the limitations imposed by financing arrangements; uncertainty
as to the future profitability of acquired businesses; trends in the solid
waste management industry; competitive pressures; changes in relationships
with customers; changes in the regulatory environment; outcome of pending
litigation and regulatory inquiries; and the impact of accounting policies
required to be adopted in the near future. In addition, TransAmerican
stockholders should consider carefully the information set forth herein under
"Risk Factors" and under the captions "Business--Regulation," "--Factors
Influencing Future Results and Accuracy of Forward-Looking Statements," "Legal
Proceedings" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Parts I and II of USA Waste's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, which is incorporated
by reference herein, and the information set forth under the captions
"Business--Environmental Regulation," "Legal Proceedings," "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and
"Private Securities Litigation Reform Act Disclosure" in Parts I and II of
TransAmerican's Annual Report on Form 10-K for the fiscal year ended December
31, 1997, a copy of which accompanies this Proxy Statement/Prospectus. Other
factors and assumptions not identified above were also involved in the
derivation of these forward-looking statements, and the failure of such other
assumptions to be realized as well as other factors may also cause actual
results to differ materially from those projected. Neither USA Waste nor
TransAmerican assume any obligation to update these forward-looking statements
to reflect actual results, changes in assumptions or changes in other factors
affecting such forward-looking statements.
3
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere or
incorporated by reference in this Proxy Statement/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
Proxy Statement/Prospectus and the documents incorporated herein by reference.
THE COMPANIES
USA Waste and Acquisition
USA Waste is the third largest integrated nonhazardous solid waste management
company in North America, as measured by revenues for the 1997 fiscal year, and
currently serves the full spectrum of commercial, industrial, municipal and
residential customers in 48 states, the District of Columbia, Canada and Puerto
Rico. 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. At December 31, 1997, USA Waste owned or operated an
extensive network of landfills, transfer stations and collection operations and
had a diversified customer base in excess of seven million with no single
customer accounting for more than 5% of USA Waste's operating revenues during
1997. USA Waste employed more than 17,700 people as of December 31, 1997.
Acquisition is a wholly owned subsidiary of USA Waste organized for the
purpose of effecting a transaction such as the Merger. Acquisition has no
material assets and has not engaged in any activities except in connection with
the Merger. The principal executive offices of USA Waste and Acquisition are
located at First City Tower, 1001 Fannin, Suite 4000, Houston, Texas 77002, and
the telephone number is (713) 512-6200.
On March 10, 1998, USA Waste entered into a definitive agreement and plan of
merger pursuant to which a subsidiary of USA Waste will be merged with and into
Waste Management, Inc. ("WMI"), and WMI will become a wholly owned subsidiary
of USA Waste (the "WMI Merger"). As of the effective time of the WMI Merger,
each outstanding share of WMI, other than shares held in WMI's treasury or
owned by WMI, USA Waste or any of their wholly owned subsidiaries, will be
converted into the right to receive 0.725 shares of USA Waste Common Stock. It
is anticipated that USA Waste will issue approximately 345,000,000 shares of
its common stock related to this transaction and that the WMI Merger will be
accounted for as a pooling of interests. This transaction, which is expected to
close during 1998, is subject to regulatory approval and approval of the
stockholders of USA Waste and WMI. There can be no assurance that the WMI
Merger will be consummated or that the expected benefits of the combined
business will be achieved. See "Risk Factors."
Additional information concerning USA Waste is included in USA Waste's
reports filed under the Exchange Act that are incorporated by reference in this
Proxy Statement/Prospectus. See "Available Information" and "Incorporation of
Certain Information by Reference."
TransAmerican
TransAmerican is engaged in the collection, processing and disposal of
nonhazardous industrial and municipal solid waste. TransAmerican currently owns
or operates sixteen collection, processing and disposal facilities consisting
of five municipal solid waste collection operations, nine landfills and two
solid waste transfer stations. During the past four years, TransAmerican has
concentrated on acquiring selective collection operations, landfills and
obtaining management contracts for permitted disposal sites in the southern
region of the United States, and divesting all of TransAmerican's operations
unrelated to the collection, processing or disposal of non-hazardous solid
waste. TransAmerican has expanded its operation primarily through the
acquisition of existing businesses and by obtaining long-term contracts to
manage existing municipal landfills.
Additional information concerning TransAmerican is included in
TransAmerican's reports filed under the Exchange Act that are incorporated by
reference in this Proxy Statement/Prospectus. See "Available Information" and
"Incorporation of Certain Information by Reference."
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<PAGE>
THE MEETING
The Meeting will be held at 9:00 a.m., Central Time on May 6, 1998, at the
Houstonian Hotel and Conference Center, 111 North Post Oak Lane, Houston, Texas
for the purpose of considering and acting upon a proposal to approve and adopt
the Merger Agreement. Only those stockholders of TransAmerican of record at the
close of business on April 1, 1998, (the "Record Date"), are entitled to notice
of, and to vote at, the Meeting.
Pursuant to Delaware law, approval and adoption of the Merger Agreement
requires the affirmative vote of the holders of a majority of the shares of
TransAmerican Common Stock outstanding on the Record Date. At the close of
business on the Record Date, there were approximately 44.3 million shares of
TransAmerican Common Stock outstanding and entitled to vote at the Meeting. All
executive officers and directors of TransAmerican have executed a voting
agreement pursuant to which each such executive officer or director has agreed
to vote shares of TransAmerican Common Stock held by him in favor of the Merger
Agreement. As of the Record Date, such individuals collectively had the right
to vote approximately 7.9 million shares of TransAmerican Common Stock,
representing approximately 17.8% of the shares outstanding as of such date. See
"The Meeting--Vote Required for Approval."
THE MERGER
Recommendations of the Board of Directors
The Board of Directors of TransAmerican has unanimously approved the Merger
Agreement and has directed that it be submitted to the stockholders of
TransAmerican for approval. The Board of Directors of TransAmerican recommends
that the stockholders of TransAmerican approve and adopt the Merger Agreement.
See "The Merger--Background of the Merger," "--TransAmerican's Reasons for the
Merger," and "--Recommendation of the Board of Directors of TransAmerican." In
considering the recommendation of TransAmerican's Board of Directors with
respect to the Merger, TransAmerican stockholders should be aware that certain
officers and directors of TransAmerican have direct or indirect interests in
recommending the Merger, apart from their interests as stockholders of
TransAmerican, which are separate from those of unaffiliated stockholders of
TransAmerican. See "The Merger--Interests of Certain Persons in the Merger."
Interests of Certain Persons in the Merger
Certain officers and directors of TransAmerican have direct or indirect
interests in recommending the Merger, apart from their interests as
stockholders of TransAmerican, which are separate from those of unaffiliated
stockholders of TransAmerican. Such interests include: (i) USA Waste has
offered to enter into one or more consulting and non-competition agreements
with certain officers and/or directors of TransAmerican, such agreement or
agreements to be effective at the Effective Time; (ii) all officers and
directors of TransAmerican hold vested and unvested TransAmerican stock
options, all of which vest at the Effective Time and, unless exercised prior to
the Merger, will be automatically converted at the Effective Time into options
to purchase a number of shares of USA Waste Common Stock; (iii) pursuant to the
terms of their respective severance agreements with TransAmerican, certain
officers of TransAmerican will have the right to receive severance payments
upon consummation of the Merger; (iv) any vesting requirements set forth in the
stock participation plan pursuant to which officers and directors were to
receive shares of TransAmerican Common Stock over a five-year period shall
lapse and the shares issuable thereunder shall automatically vest; and (v)
pursuant to the Merger Agreement, officers, directors and employees of
TransAmerican will be indemnified by USA Waste and TransAmerican against
certain liabilities.
Opinion of Financial Advisor
On January 26, 1998, Dain Rauscher Incorporated ("Dain Rauscher") delivered
its opinion to the Board of Directors of TransAmerican that, as of the date of
such opinion, the Exchange Ratio was fair to the holders of shares of
TransAmerican Common Stock. Dain Rauscher subsequently delivered to the Board
of
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<PAGE>
Directors of TransAmerican its written opinion, dated as of April 1, 1998, that
confirmed that as of such date the Exchange Ratio is fair to the holders of
shares of TransAmerican Common Stock. The full text of the written opinion of
Dain Rauscher dated as of April 1, 1998, which sets forth assumptions made,
matters considered and limitations on the review undertaken in connection with
the opinion, is attached hereto as Appendix B and is incorporated herein by
reference. Holders of TransAmerican Common Stock are urged to, and should, read
such opinion in its entirety. See "The Merger--Opinion of Financial Advisor to
TransAmerican."
Certain Terms of The Merger
EXCHANGE RATIO. At the Effective Time, Acquisition will merge with and into
TransAmerican, and TransAmerican will become a wholly owned subsidiary of USA
Waste. In the Merger, each outstanding share of TransAmerican Common Stock will
be converted into the right to receive, without interest, 0.045232 shares of
USA Waste Common Stock. The Exchange Ratio is subject to adjustment based on
the extent to which "Net Debt" of TransAmerican calculated as of the last day
of the calendar month immediately preceding the Meeting exceeds $43.2 million.
Based on the level of Net Debt (including an estimate of $1,705,000 for
retirement of tax exempt debt) as of February 28, 1998, the Exchange Ratio
would have been 0.043954. However, the Net Debt on April 30, 1998 (the end of
the calendar month immediately preceding the Meeting) may be higher or lower
that the Net Debt as of February 28, 1998, and the actual Exchange Ratio will
be adjusted accordingly. In addition, at the Effective Time, each issued and
outstanding share of Acquisition common stock, par value $.01 per share
("Acquisition Common Stock"), will be converted into one share of common stock,
par value $.001 per share of the corporation surviving the Merger (the
"Surviving Corporation"). See "The Plan of Merger and Terms of the Merger--
Manner and Basis for Converting Shares."
Based upon the number of shares of common stock of USA Waste and
TransAmerican outstanding as of the Record Date, approximately 221 million
shares of USA Waste Common Stock will be outstanding immediately after the
Effective Time, of which approximately 2 million shares, representing 0.9% of
the total number of outstanding shares, will be held by former holders of
TransAmerican Common Stock. See "The Plan of Merger and Terms of the Merger--
Manner and Basis for Converting Shares."
If the WMI Merger is consummated in accordance with its terms, based upon the
number of shares of common stock of USA Waste, WMI and TransAmerican
outstanding as of the Record Date, approximately 565 million shares of USA
Waste Common Stock will be outstanding immediately after the effective date of
the WMI Merger, of which approximately 2 million shares, representing 0.35% of
the total number of outstanding shares, will be held by former holders of
TransAmerican 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
of shares of TransAmerican Common Stock who would otherwise have been entitled
to receive a fraction of a share of USA Waste Common Stock will be entitled to
receive from the Exchange Agent a cash payment equal to such fraction
multiplied by $38.00.
EFFECTIVE TIME OF THE MERGER. The Merger will become effective at such time
(the "Effective Time") as shall be stated in a certificate of merger to be
filed with the Secretary of State of the State of Delaware (the "Certificate of
Merger") in accordance with the Delaware General Corporation Law (the "DGCL").
Assuming the requisite TransAmerican 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 Meeting. If all other
conditions to the Merger have not been satisfied or waived prior to the
Meeting, however, it is expected that the Merger will occur as soon as
practicable after such conditions have been satisfied or waived.
EXCHANGE OF TRANSAMERICAN COMMON STOCK CERTIFICATES. Promptly after
consummation of the Merger, the Exchange Agent will mail a letter of
transmittal with instructions to each holder of record of TransAmerican Common
Stock for use in exchanging certificates representing shares of TransAmerican
Common Stock for
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<PAGE>
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
TransAmerican 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."
CONVERSION OF TRANSAMERICAN OPTIONS, WARRANTS, AND CONVERTIBLE DEBENTURES.
The Merger Agreement provides that, prior to the Effective Time, TransAmerican
shall use reasonable efforts to cause each of its holders of stock options (the
"TransAmerican Options"), warrants (the "TransAmerican Warrants") and
convertible debentures to exercise or convert such securities into shares of
TransAmerican Common Stock effective as of the Closing Date. In the event that
some holders of TransAmerican Options fail to exercise such options,
TransAmerican and USA Waste shall, prior to the Effective Time, take such
action as may be necessary to cause each unexpired and unexercised
TransAmerican Option to be automatically converted at the Effective Time into
an option to purchase a number of shares of USA Waste Common Stock (the "USA
Waste Options") equal to the number of shares of TransAmerican Common Stock
that could have been purchased under the TransAmerican Option multiplied by the
Exchange Ratio, as adjusted, at a price per share of USA Waste Common Stock
equal to the per share exercise price of such TransAmerican Option divided by
the Exchange Ratio, as adjusted. See "The Plan of Merger and Terms of the
Merger--Conversion of TransAmerican Options." The Merger Agreement also
provides that at the Effective Time, each unexpired TransAmerican Warrant that
is outstanding at the Effective Time, whether or not exercisable, will
automatically be converted into a warrant to purchase a number of shares of USA
Waste Common Stock (the "USA Waste Warrants") equal to the number of shares of
TransAmerican Common Stock that could have been purchased under the
TransAmerican Warrant multiplied by the Exchange Ratio, as adjusted, at a price
per share of USA Waste Common Stock equal to the per share exercise price of
such TransAmerican Warrant divided by the Exchange Ratio, as adjusted. See "The
Plan of Merger and Terms of the Merger--Conversion of TransAmerican Warrants."
The Merger Agreement further provides that each TransAmerican convertible
debenture that is outstanding at the Effective Time, whether or not
convertible, shall automatically be convertible into a number of shares of USA
Waste Common Stock equal to the number of shares of TransAmerican Common Stock
that could be issued upon conversion of the convertible debenture multiplied by
the Exchange Ratio, as adjusted, at a price per share of USA Waste Common Stock
equal to the per share conversion price of the debenture divided by the
Exchange Ratio, as adjusted. See "The Plan of Merger and Terms of the Merger--
Conversion of TransAmerican Convertible Debentures." As of the Record Date, the
outstanding TransAmerican Options and TransAmerican Warrants included options
and warrants held by officers and directors of TransAmerican to acquire
7,946,116 shares of TransAmerican Common Stock pursuant to the terms of certain
stock option and warrant agreements, at exercise prices ranging from $0.5625 to
$6.25 per share. If such TransAmerican Stock Options and TransAmerican Warrants
were converted into USA Waste Options and USA Waste Warrants on the Record
Date, assuming an Exchange Ratio of 0.045232, such options and warrants would
entitle the holders thereof to acquire approximately 359,418 shares of USA
Waste Common Stock pursuant to the terms of the respective stock option and
warrant agreements, at exercise prices ranging from $12.44 to $138.18. See "The
Merger and Related Transactions--Interests of Certain Persons in the Merger."
INDEMNIFICATION. The Merger Agreement provides that the officers, directors,
employees and agents of TransAmerican or any of its subsidiaries will be
indemnified by USA Waste against certain liabilities and costs, including those
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. The Merger Agreement further
provides that the indemnification provisions of the Certificate of
Incorporation of the Surviving Corporation as in effect at the Effective Time
will not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would materially and adversely
affect the rights thereunder of individuals who, at the Effective Time, were
directors, officers, employees or agents of TransAmerican. See "The Plan of
Merger and Terms of the Merger--Indemnification."
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<PAGE>
Conditions to the Merger
MATERIAL FEDERAL INCOME TAX CONSEQUENCES. It is a condition to
TransAmerican's obligation to consummate the Merger that TransAmerican shall
have received an opinion of its counsel to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and (ii) USA Waste,
Acquisition and TransAmerican will each be a "party to a reorganization" within
the meaning of Section 368(b) of the Code with respect to the Merger. See "The
Merger--Material Federal Income Tax Consequences.
ACCOUNTING TREATMENT. It is a condition to each party's obligation to
consummate the Merger that USA Waste shall have received a letter from Coopers
& Lybrand L.L.P., dated as of the date on which the transactions contemplated
by the Merger Agreement are consummated (the "Closing Date"), to the effect
that the Merger will qualify for pooling of interests accounting treatment if
closed and consummated in accordance with the Merger Agreement. Furthermore, it
is a condition to each party's obligation to consummate the Merger that
TransAmerican shall have received a letter from Arthur Andersen LLP dated the
Closing Date regarding such firm's concurrence with TransAmerican's
management's conclusions that no conditions exist related to TransAmerican that
would preclude USA Waste's accounting for the Merger with TransAmerican as a
pooling of interests under Accounting Principles Board Opinion No. 16 if closed
and consummated in accordance with the Merger Agreement. See "The Merger--
Accounting Treatment."
GOVERNMENT AND REGULATORY APPROVALS. Consummation of the Merger is
conditioned upon the expiration or termination of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"). On February 4, 1998 and February 5, 1998, TransAmerican and USA
Waste, respectively, filed notification reports under the HSR Act with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division"). On March 6, 1998, the
Antitrust Division issued to USA Waste and TransAmerican requests for
additional information and documents under the HSR Act (the "Second Request").
The Second Request extends the waiting period under the HSR Act to 20 days from
the date that the Antitrust Division receives the requested information and
documents, unless the waiting period is terminated earlier. The waiting period
may then be extended only by court order or with the consent of the parties.
USA Waste and TransAmerican have held discussions with the Antitrust Division
regarding its concerns with respect to the Merger, and USA Waste and
TransAmerican are in the process of preparing a response to the Second Request.
USA Waste and TransAmerican expect to submit their responses to the Second
Request no later than April 8, 1998, and thus, the waiting period under the HSR
Act should expire prior to the date of the Meeting.
At any time before or after the Merger, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the Merger or
seeking divestiture of substantial assets of USA Waste or TransAmerican or
their subsidiaries. TransAmerican previously acquired landfill and collection
assets in Houston, Texas from USA Waste in January 1997 pursuant to a consent
decree entered into by USA Waste which remains binding on USA Waste and
TransAmerican. There can be no assurance that these landfill and collection
assets will not have to be divested in connection with the Merger. Private
parties and state attorneys general may also bring an action under the
antitrust laws under certain circumstances. There can be no assurance that a
challenge to the Merger on antitrust grounds will not be made or, if such a
challenge is made, of the result. See "The Plan of Merger and Terms of the
Merger--Cooperation."
Consummation of the Merger is also conditioned upon receipt, prior to the
Effective Time, of all necessary material governmental waivers, consents,
orders and approvals and all necessary material consents from lenders. See "The
Merger--Government and Regulatory Approvals."
NO STATUTE OR INJUNCTION PREVENTING MERGER. Consummation of the Merger is
subject to the condition that no statute, rule or regulation shall have been
enacted by any state or federal government or governmental
8
<PAGE>
agency in the United States which would prevent the consummation of the Merger
or make the Merger illegal, and no injunction, preliminary or permanent, 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.
RETIREMENT OF DEBT. Consummation of the Merger is subject to the condition
that TransAmerican shall have entered into binding agreements to retire in its
entirety all of its tax exempt debt and any other debt which requires a
prepayment penalty, cost or fee and removed itself from all guarantees of debt
in excess of an aggregate of $300,000.
OTHER CONDITIONS TO THE MERGER. In addition to the approval and adoption of
the Merger Agreement by the requisite votes of TransAmerican stockholders and
the satisfaction of the conditions described above, the respective obligations
of USA Waste and TransAmerican to effect the Merger are subject to the
satisfaction or waiver, where permissible, of certain other conditions,
including, without limitation, (i) conditions relating to the accuracy of each
party's representations and warranties and compliance with each party's
covenants, and (ii) a condition to the effect that the shares of USA Waste
Common Stock issuable in the Merger and those to be reserved for issuance upon
the 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. See "The Plan of Merger and Terms of the Merger--Conditions
to the Merger."
No Solicitation
The Merger Agreement provides that, after the date of the Merger Agreement
and prior to the Effective Time or earlier termination of the Merger Agreement,
TransAmerican will not, and will not permit its subsidiaries to, initiate,
solicit, negotiate, encourage, or provide confidential information to
facilitate, and TransAmerican will, and will cause each of its subsidiaries to,
cause any officer, director, or employee of TransAmerican, or any attorney,
accountant, investment banker, financial advisor or other agent retained by
TransAmerican or any of its subsidiaries 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 or
properties or any capital stock of TransAmerican whether by merger, purchase of
assets, tender offer or otherwise, whether for cash, securities or any other
consideration or any combination thereof (an "Acquisition Transaction").
Notwithstanding the foregoing, TransAmerican may, in response to an unsolicited
written offer or proposal with respect to a potential or proposed Acquisition
Transaction ("Acquisition Proposal") that TransAmerican's Board of Directors
determines in good faith would result (if consummated pursuant to its terms) in
an Acquisition Transaction more favorable to TransAmerican's stockholders than
the Merger (any such offer or proposal being referred to as a "Superior
Proposal"), furnish (subject to the execution of a confidentiality agreement
substantially similar to the confidentiality provisions of the Merger
Agreement), 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 TransAmerican, 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 be reasonably
likely to constitute a breach of its fiduciary duty to TransAmerican's
stockholders. In addition, TransAmerican's Board of Directors may take and
disclose to TransAmerican stockholders a position with respect to a tender
offer by a third party or make any other disclosures required under applicable
laws. See "The Plan of Merger 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) by the mutual written consent of USA Waste and
TransAmerican or (b) either by USA Waste or TransAmerican at any time prior to
the Closing Date (i) upon a material breach of a representation or warranty by
the other party (the "Non-Terminating Party") which is not cured in all
material respects; (ii) if the Merger is not completed by
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May 15, 1998, (unless due to a delay or default on the part of the party
requesting termination (the "Terminating Party")); (iii) if the Non-Terminating
Party (A) fails to perform in any material respect any of its material
covenants in the Merger Agreement and (B) does not cure such default in all
material respects within 30 days after written notice of such default
specifying such default in reasonable detail is given to the Non-Terminating
Party by the Terminating Party; and (iv) if the stockholders of TransAmerican
fail to approve the Merger at the Meeting. Additionally, TransAmerican may
terminate the Merger Agreement if (i) the Merger is enjoined by a final,
unappealable court order; (ii) it receives a Superior Proposal, resolves to
accept such Superior Proposal and it shall have given USA Waste two (2) days
prior written notice of its intention to terminate (provided that such
termination shall not be effective until such time as certain termination fees
shall have been received by USA Waste); or (iii) a tender or exchange offer is
commenced by a Potential Acquirer (excluding any affiliate of TransAmerican or
any group of which any affiliate of TransAmerican is a member) for all
outstanding shares of TransAmerican Common Stock, TransAmerican's Board of
Directors determines in good faith 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 TransAmerican shall have given USA Waste two (2) days prior written notice
of its intention to terminate (provided that such termination shall not be
effective until such time as certain termination fees shall have been received
by USA Waste). USA Waste may terminate the Merger Agreement if the Board of
Directors of TransAmerican shall have resolved to accept a Superior Proposal or
shall have recommended to the stockholders of TransAmerican that they tender
their shares in a tender or 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). See "The Plan of Merger and Terms of the Merger--
Termination or Amendment."
AMENDMENT. The Merger Agreement may not be amended except by action taken by
the parties' respective Boards of Directors 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, and,
subject to applicable law, whether before or after approval by the stockholders
of TransAmerican, but after any such stockholder approval, no amendment shall
be made which decreases the Exchange Ratio or which adversely affects the
rights of the TransAmerican stockholders under the Merger Agreement without the
approval of the stockholders of TransAmerican. See "The Plan of Merger and
Terms of the Merger--Termination or Amendment."
TERMINATION FEES; EXPENSES. TransAmerican and USA Waste have each agreed to
pay a termination fee to the other party should certain of the termination
rights described above be exercised under certain circumstances. TransAmerican
has agreed to pay USA Waste a fee equal to $3 million under certain
circumstances. USA Waste has agreed to pay TransAmerican (i) its reasonable,
actual, verified expenses (not in excess of $375,000, plus certain other
expenses) related to the transaction contemplated by the Merger Agreement if
USA Waste terminates the Merger Agreement because it is required to sell,
divest, dispose or hold separate assets or businesses with aggregate 1997
revenues in excess of $6.25 million or (ii) a fee equal to $1 million if
TransAmerican terminates the Merger Agreement because of a material breach of a
covenant by USA Waste. The Merger Agreement provides that all costs and
expenses incurred with the Merger Agreement and the transactions contemplated
thereby shall be paid by the party incurring such expenses, except that (i) the
filing fee and expenses incurred in connection with the HSR filing shall be
paid by USA Waste; (ii) all filing fees incurred in connection with the filing
of the Proxy and Registration Statement, including any filing required under
state blue sky or securities laws, shall be paid by USA Waste; and (iii) those
expenses incurred in connection with printing the Proxy Statement/Prospectus
shall be shared equally by USA Waste and TransAmerican. See "The Plan of Merger
and Terms of the Merger--Termination Fees" and "--Expenses."
Appraisal Rights
Delaware law requires that holders of TransAmerican Common Stock who object
to the Merger and who vote against or abstain from voting in favor of the
Merger be afforded appraisal or dissenters' rights. See "The Merger--Appraisal
Rights."
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STOCKHOLDERS' COMPARATIVE RIGHTS
The rights of stockholders of TransAmerican are currently governed by
Delaware law, the Certificate of Incorporation and Bylaws of TransAmerican. The
rights of stockholders of USA Waste are governed by Delaware law and the
Certificate of Incorporation and Bylaws of USA Waste. See "Comparative Rights
of Stockholders of USA Waste and TransAmerican."
MARKET PRICE DATA
USA Waste Common Stock is traded on the NYSE under the symbol "UW."
TransAmerican Common Stock is traded on the Nasdaq SmallCap Market under the
symbol "WSTE." The following table sets forth the range of high and low per
share sale prices since January 1, 1996 for the USA Waste Common Stock and the
TransAmerican Common Stock as reported on the NYSE Composite Tape and the
Nasdaq SmallCap Market, respectively.
<TABLE>
<CAPTION>
USA WASTE TRANSAMERICAN
COMMON STOCK COMMON STOCK
------------- -------------
HIGH LOW HIGH LOW
------ ------ -------------
<S> <C> <C> <C> <C>
1996
First Quarter..................................... $25.63 $17.25 $2.31 $ 1.38
Second Quarter.................................... 32.63 24.00 2.84 1.31
Third Quarter..................................... 34.13 22.75 3.06 1.38
Fourth Quarter.................................... 34.25 28.63 1.75 0.88
1997
First Quarter..................................... $38.88 $28.63 $ 1.66 $ 1.00
Second Quarter.................................... 39.25 29.50 1.53 1.03
Third Quarter..................................... 44.13 38.00 1.56 1.06
Fourth Quarter.................................... 41.75 32.63 1.63 1.00
1998
First Quarter..................................... $46.88 $34.44 $ 1.78 $ 1.28
</TABLE>
On January 26, 1998, the last trading day prior to announcement by USA Waste
and TransAmerican that they had reached an agreement concerning the Merger, the
closing sale price of USA Waste Common Stock as reported on the NYSE Composite
Tape was $34.75 per share, and the closing sale price of TransAmerican Common
Stock as reported on the Nasdaq SmallCap Market was $1.38 per share. Assuming
the Merger had occurred on such date, the equivalent market value per share of
TransAmerican Common Stock, calculated by multiplying the closing sale price of
USA Waste Common Stock by the Exchange Ratio, would have been $1.57.
On March 31, 1998, the closing sale price of USA Waste Common Stock as
reported on the NYSE Composite Tape was $44.56 per share, and the closing sale
price of TransAmerican Common Stock as reported on the Nasdaq SmallCap Market
was $1.78 per share. The market prices of shares of USA Waste Common Stock and
TransAmerican Common Stock are subject to fluctuation. The market price of USA
Waste Common Stock on the Closing Date, the date shares of USA Waste Common
Stock are received by holders of TransAmerican Common Stock, or the date on
which such shares of USA Waste Common Stock are eventually sold, may be more or
less than the price of USA Waste Common Stock as of the date of this Proxy
Statement/Prospectus. As a result, stockholders are urged to obtain current
market quotations. TransAmerican has never declared or paid cash dividends on
its common stock. USA Waste has never declared or paid cash dividends on its
common stock. Although payment of dividends on USA Waste Common Stock is
currently restricted by the terms of USA Waste's revolving credit facility, the
Board of Directors of USA Waste may review its dividend policy in the future.
See "Market Price Data--Dividend Information."
Following the Merger, USA Waste Common Stock will continue to be traded on
the NYSE under the symbol "UW", and the listing of TransAmerican Common Stock
on the Nasdaq SmallCap Market will be terminated.
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<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following selected historical financial information of USA Waste for each
of the five years in the period ended December 31, 1997, has been derived from
historical audited financial statements. The historical 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 financial statements and the notes thereto incorporated by reference
herein. See "Available Information."
USA WASTE SERVICES, INC.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Operating revenues...... $ 887,972 $1,043,687 $1,216,082 $1,649,131 $2,613,768
---------- ---------- ---------- ---------- ----------
Costs and expenses:
Operating (exclusive of
depreciation and
amortization shown
below)................ 514,483 596,868 672,117 881,401 1,345,769
General and
administrative........ 144,623 159,097 169,686 200,101 284,946
Depreciation and
amortization.......... 108,024 127,108 143,878 191,044 303,241
Merger costs........... -- 3,782 26,539 126,626 109,411
Unusual items.......... 2,672 8,863 4,733 63,800 24,720
---------- ---------- ---------- ---------- ----------
769,802 895,718 1,016,953 1,462,972 2,068,087
---------- ---------- ---------- ---------- ----------
Income from operations.. 118,170 147,969 199,129 186,159 545,681
---------- ---------- ---------- ---------- ----------
Other income (expense):
Shareholder litigation
settlement and other
litigation related
costs................. (5,500) (79,400) -- -- --
Interest expense:
Nonrecurring.......... -- (1,254) (10,994) -- --
Other................. (50,737) (54,102) (58,619) (60,497) (104,261)
Interest income........ 5,072 5,085 6,682 6,699 7,634
Other income, net...... 1,749 2,629 4,891 6,376 14,213
---------- ---------- ---------- ---------- ----------
(49,416) (127,042) (58,040) (47,422) (82,414)
---------- ---------- ---------- ---------- ----------
Income before income
taxes and extraordinary
item................... 68,754 20,927 141,089 138,737 463,267
Provision for income
taxes.................. 29,170 8,959 60,313 70,398 189,944
---------- ---------- ---------- ---------- ----------
Income before
extraordinary item..... 39,584 11,968 80,776 68,339 273,323
Extraordinary item, net
of taxes............... -- -- -- -- (6,293)
---------- ---------- ---------- ---------- ----------
Net income.............. $ 39,584 $ 11,968 $ 80,776 $ 68,339 $ 267,030
========== ========== ========== ========== ==========
Basic earnings per
common share:
Income before
extraordinary item.... $ 0.32 $ 0.08 $ 0.56 $ 0.39 $ 1.31
Extraordinary item..... -- -- -- -- (0.03)
---------- ---------- ---------- ---------- ----------
Net income............. $ 0.32 $ 0.08 $ 0.56 $ 0.39 $ 1.28
========== ========== ========== ========== ==========
Diluted earnings per
common share:
Income before
extraordinary item.... $ 0.32 $ 0.08 $ 0.54 $ 0.37 $ 1.26
Extraordinary item..... -- -- -- -- (0.03)
---------- ---------- ---------- ---------- ----------
Net income............. $ 0.32 $ 0.08 $ 0.54 $ 0.37 $ 1.23
========== ========== ========== ========== ==========
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital......... $ 37,565 $ 1,901 $ 26,134 $ 31,842 $ 86,736
Intangible assets, net.. 196,353 250,551 433,944 804,251 1,645,985
Total assets............ 1,617,422 1,833,099 2,455,102 3,631,547 6,622,845
Long-term debt,
including current
maturities............. 711,014 759,123 909,050 1,504,888 2,763,729
Stockholders' equity.... 623,510 688,603 1,149,885 1,473,990 2,628,976
</TABLE>
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<PAGE>
The following selected historical financial information with respect to
TransAmerican's balance sheets as of August 31, 1993, 1994 and 1995, and
December 31, 1995, 1996 and 1997, and TransAmerican's statements of operations
and cash flows for the years ended August 31, 1993, 1994 and 1995, four months
ended December 31, 1995, and the years ended December 31, 1996 and 1997, has
been derived from the historical audited consolidated financial statements of
TransAmerican. The historical 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 consolidated financial
statements and the notes thereto incorporated by reference herein.
TransAmerican prospectively changed its fiscal year end from August 31 to
December 31, therefore the four month transition period ended December 31, 1995
has been presented. The selected historical financial information with respect
to TransAmerican's balance sheets as of August 31, 1993, 1994 and 1995, and
TransAmerican's statements of operations and cash flows for the years ended
August 31, 1993 and 1994 has been derived from financial statements of
TransAmerican which are not included herein. See "Available Information."
TRANSAMERICAN WASTE INDUSTRIES, INC.
<TABLE>
<CAPTION>
FOUR
MONTHS
ENDED
DECEMBER YEAR ENDED
YEAR ENDED AUGUST 31, 31, DECEMBER 31,
------------------------- -------- ----------------
1993 1994 1995 1995 1996 1997
------- ------- ------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW DATA:
Net cash provided (used)
by:
Costs and expenses:
Operating activities... $ 620 $(1,602) $ (514) $ 429 $ 1,977 $ 3,909
Investment activities.. (3,961) (7,245) (8,310) (3,030) (6,738) (25,079)
Financing activities... 11,658 3,055 6,648 1,863 4,563 22,543
------- ------- ------- ------ ------- -------
Total................. $ 8,317 $(5,792) $(2,176) $ (738) $ (198) $ 1,373
======= ======= ======= ====== ======= =======
INCOME STATEMENT DATA:
Revenue................ $ 8,775 $11,061 $ 7,350 $4,493 $16,022 $35,039
Operating income
(loss)................ 754 (10,217) (2,409) 123 2,421 5,726
Net income (loss)...... 8 (11,747) (6,939) (528) (6,917) 1,310
Earning (loss) per
common share.......... -- (.75) (.34) (.02) (.23) .03
Weighted average common
shares................ 15,030 15,574 20,507 29,580 30,281 42,615
Diluted earnings (loss)
per common and common
equivalent share...... -- (.75) (.34) (.02) (.23) .03
Weighted average common
and common equivalent
shares outstanding.... 15,030 15,574 20,507 29,580 30,281 44,129
Dividends per share.... -- -- -- -- -- --
<CAPTION>
AUGUST 31, DECEMBER 31,
------------------------- -------------------------
1993 1994 1995 1995 1996 1997
------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital
(deficit)............. $ 7,699 $ 593 $ 769 $ 471 $ 140 $(1,025)
Restricted cash, net... -- 10,361 6,153 8,931 13,400 15,929
Property and equipment,
net................... 1,683 8,505 18,499 20,927 27,052 43,075
Total assets........... 29,370 38,601 41,938 46,071 52,674 91,875
Long-term debt,
including current
maturities............ 10,978 28,152 24,425 29,603 38,107 58,659
Stockholders' equity... 12,561 1,415 7,879 7,433 1,636 11,781
</TABLE>
PRO FORMA FINANCIAL INFORMATION
No pro forma financial information relating to the Merger is presented herein
because the Merger is not considered a significant business combination to USA
Waste under Regulation S-X of the Exchange Act.
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<PAGE>
RISK FACTORS
In addition to the other information set forth in this Proxy
Statement/Prospectus, the following factors should be considered by the
TransAmerican stockholders before voting on the proposals contained herein.
IMPACT OF WMI MERGER
Successful consummation of the WMI Merger will initially alter the nature of
USA Waste's business by significantly expanding USA Waste's domestic and
international operations and by adding operations, such as hazardous waste
disposal, waste to energy operations and environmental engineering activities.
If the WMI Merger is consummated, USA Waste's financial position is expected
to become more leveraged, which may limit its ability to incur additional
indebtedness and maintain its financial flexibility and strength. The success
of the WMI Merger will depend upon a number of factors, most importantly the
ability of USA Waste to realize expected synergies from the combined
operations of WMI and USA Waste. The consummation of the WMI Merger is subject
to numerous conditions, and there can be no assurance that the WMI Merger will
occur as planned.
STOCK PRICES MAY VARY IN RESPONSE TO CHANGES IN BUSINESS AND ECONOMIC
CONDITIONS
The relative stock prices of the USA Waste Common Stock and the
TransAmerican Common Stock at the Effective Time may vary significantly from
the prices as of the date of execution of the Merger Agreement, the date
hereof, the date on which TransAmerican stockholders vote on the Merger, the
date that shares of USA Waste Common Stock are received by holders of
TransAmerican Common Stock or the date on which such shares of USA Waste
Common Stock are eventually sold due to, among other factors, changes in the
business, operations and prospects of USA Waste or TransAmerican, as the case
may be, market assessments of the likelihood that the Merger will be
consummated and the timing thereof and general market and economic conditions.
The Exchange Ratio will not be adjusted based on changes in the relative stock
prices of the USA Waste Common Stock and the TransAmerican Common Stock.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Merger by the Board of Directors of
TransAmerican, TransAmerican stockholders should be aware that the directors
and executive officers of TransAmerican have certain interests in the Merger
that are different from, or in addition to, the interests of TransAmerican
stockholders generally; such interests, together with other relevant factors,
were considered by the Board of Directors of TransAmerican in making its
recommendation and approving the Merger Agreement. See "The Merger--Interests
of Certain Persons in the Merger."
ACQUISITION STRATEGY
USA Waste regularly pursues opportunities to expand its services through the
acquisition of additional solid waste management businesses and operations
that can be effectively integrated with USA Waste's existing operations. In
addition, USA Waste regularly pursues mergers and acquisition transactions,
some of which are significant, in new markets where USA Waste believes that it
can successfully become a provider of integrated solid waste management
services. Since 1990, USA Waste has consummated mergers with five publicly
traded companies, purchased assets from several other publicly traded
companies, and acquired hundreds of privately owned entities in the solid
waste industry. As one of the leading industry consolidators, USA Waste could
announce other transactions with either publicly or privately owned businesses
at any time. USA Waste's acquisition strategy involves certain potential risks
associated with assessing, acquiring and integrating the operations of
acquired companies. Although USA Waste has generally been successful in
implementing its acquisition strategy, there can be no assurance that
attractive acquisition opportunities will continue to be available to USA
Waste, that USA Waste will have access to the capital required to finance
potential acquisitions
14
<PAGE>
on satisfactory terms, or that any business acquired will prove profitable.
Future acquisitions may result in the incurrence of additional indebtedness or
the issuance of additional equity securities.
NEED FOR CAPITAL; FUTURE DEBT AND EQUITY FINANCINGS
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.
USA Waste has historically used variable rate debt under revolving bank
credit arrangements as one method of financing its rapid growth. Although
recent financings by USA Waste have reduced the amount of variable rate debt
currently outstanding, USA Waste intends to continue to use variable rate debt
as a financing alternative. To the extent that variable interest rates tend to
fluctuate as general interest rates change, an increase in interest rates
could have a material adverse effect on USA Waste's earnings in the future.
INTERNATIONAL OPERATIONS AND EXPANSION
Significant portions of USA Waste's current operations are conducted in
Canada, and USA Waste intends to continue to expand its Canadian operations.
USA Waste's international operations will also significantly expand upon the
consummation of the WMI Merger. Operations in foreign countries generally are
subject to a number of risks inherent in any business operating in foreign
countries, including political, social and economic instability, general
strikes, nationalization of assets, currency restrictions and exchange rate
fluctuations, nullification, modification or renegotiation of contracts, and
governmental regulation, all of which are beyond the control of USA Waste. No
prediction can be made as to how existing or future foreign governmental
regulations in any jurisdiction may affect USA Waste in particular or the
solid waste management industry in general.
PROFITABILITY MAY BE AFFECTED BY FACTORS BEYOND USA WASTE'S CONTROL, INCLUDING
COMPETITION
The waste management industry is highly competitive and requires substantial
capital resources. The industry consists of two other large national waste
management companies, WMI and Browning-Ferris Industries, Inc., as well as
numerous local and regional companies of varying sizes and financial
resources. USA Waste competes with numerous waste management companies, some
of which have significantly larger operations and greater resources than USA
Waste. On March 10, 1998, USA Waste and WMI entered into an agreement and plan
of merger pursuant to which WMI will become a wholly owned subsidiary of USA
Waste. USA Waste also competes with those counties and municipalities that
maintain their own waste collection and disposal operations. These counties
and municipalities may have financial advantages due to the availability to
them of tax revenues and tax exempt financing. In addition, competitors may
reduce the price of their services in an effort to expand sales volume or to
win competitively bid municipal contracts. Profitability 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.
CAPITALIZED EXPENDITURES
In accordance with generally accepted accounting principles, USA Waste
capitalizes certain expenditures and advances relating to its acquisitions,
pending acquisitions and landfill development and expansion projects. Indirect
acquisition costs, such as executive salaries, general corporate overhead,
public affairs and other corporate services, are expenses as incurred. USA
Waste's policy is to charge against earnings any unamortized capitalized
expenditures and advances (net of any portion thereof that USA Waste estimates
will be recoverable, through sale or otherwise) relating to any operation that
is permanently shut down, any pending acquisition that is not consummated, and
any landfill development or expansion project that is not successfully
completed. There
15
<PAGE>
can be no assurance that USA Waste in future periods will not be required to
incur a charge against earnings in accordance with such policy, which charge,
depending upon the magnitude thereof, could have a material adverse effect on
USA Waste's financial position or results of operations.
POTENTIAL ADVERSE EFFECT OF GOVERNMENT REGULATION
USA Waste's operations are, and will be, subject to and substantially
affected by 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 USA Waste'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. In particular, USA Waste is subject to extensive and evolving
environmental and land use laws and regulations, which have become
increasingly stringent. These laws and regulations affect USA Waste's
businesses in a variety of ways. In order to develop and operate a landfill or
other solid waste management facility, it is necessary to obtain and maintain
in effect various facility permits and other governmental approvals, including
those related to zoning, environmental protection and land use. These permit
approvals are difficult, time consuming and costly to obtain and may be
subject to community opposition by various local officials or citizens,
regulatory delays, subsequent modifications and other uncertainties. There can
be no assurance that USA Waste will be successful in obtaining and maintaining
in effect permits and approvals required for the successful operation and
growth of its business, including permits and approvals required for the
development of additional disposal capacity needed to replace existing
capacity that is exhausted. The siting, design, operation and closure of
landfills are also subject to extensive federal and state regulations. These
regulations could also require USA Waste to undertake investigatory or
remedial activities, to curtail operations or to close a landfill temporarily
or permanently. Furthermore, future changes in these regulations may require
USA Waste to modify, supplement or replace equipment or facilities at costs
which could be substantial.
POTENTIAL ENVIRONMENTAL LIABILITY AND LIMITED INSURANCE COVERAGE
USA Waste may be subject to liability for environmental damage that its
landfills, transfer stations and collection operations may 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 hazardous
substances, the transportation, treatment or disposal of which was arranged
for by USA Waste, TransAmerican or the predecessor owners of operations or
assets acquired by such companies. Any substantial liability for environmental
damage could materially adversely affect the operating results and financial
condition of USA Waste.
In the ordinary course of its businesses, USA Waste may become involved in a
variety of legal and administrative proceedings relating to land use and
environmental laws and regulations. These may include proceedings by federal,
state or local agencies seeking to impose civil or criminal penalties on USA
Waste for violations of such laws and regulations, or to impose liability on
USA Waste under federal or state statutes, or to revoke, or deny renewal of, a
permit; actions brought by citizens' groups, adjacent landowners or
governmental entities opposing the issuance of a permit or approval to USA
Waste or alleging violations of the permits pursuant to which USA Waste
operates or laws or regulations to which USA Waste is subject; and actions
seeking to impose liability on USA Waste for any environmental damage at its
owned or operated facilities (or at facilities formerly owned by TransAmerican
or USA Waste or its predecessors) or damage that those facilities or other
properties may have caused to adjacent landowners or others, including
groundwater or soil contamination. The adverse outcome of one or more of these
proceedings could have a material adverse effect on USA Waste's financial
position, results of operations or cash flows.
During the ordinary course of its operations, USA Waste has from time to
time received, and expects that it may in the future from time to time
receive, citations or notices from governmental authorities that its
operations are not in compliance with its permits or certain applicable
environmental or land use laws and regulations. USA
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<PAGE>
Waste generally seeks to work with the authorities to resolve the issues
raised by such citations or notices. There can be no assurance, however, that
USA Waste will always be successful in this regard or that such future
citations or notices will not have a material adverse effect on USA Waste's
financial position, results of operations or cash flows.
USA Waste's insurance for environmental liability is very limited because
USA Waste believes that the cost for such insurance is high relative to the
coverage it would provide. Due to the limited nature of such insurance
coverage for environmental liability, if USA Waste were to incur liability for
environmental damage, such liability could have a material adverse effect on
USA Waste's financial position, results of operations or cash flows.
ALTERNATIVES TO LANDFILL DISPOSAL
Alternatives to landfill disposal, such as recycling and composting, are
increasingly being used. In addition, in certain of USA Waste's markets,
incineration is an alternative to landfill disposal. There also has been an
increasing trend at the state and local levels to mandate recycling and waste
reduction at the source and to prohibit the disposal of certain types of
wastes, such as yard wastes, at landfills. These developments may result in
the volume of waste going to landfills being reduced in certain areas, which
may affect USA Waste's ability to operate its landfills at full capacity and
the prices that can be charged for landfill disposal services.
NO DIVIDENDS
USA Waste has never paid cash dividends on its common stock. Although
payment of dividends on USA Waste Common Stock is currently restricted by the
terms of USA Waste's revolving credit facility, the Board of Directors of USA
Waste may review its dividend policy in the future. See "Market Price Data--
Dividend Information."
POTENTIAL EFFECT OF CERTAIN USA WASTE ANTI-TAKEOVER PROVISIONS
Certain provisions of the USA Waste Restated Certificate of Incorporation
(the "USA Waste Certificate") and USA Waste By-laws may have the effect of
making more difficult an acquisition of USA Waste in a transaction that is not
approved by the USA Waste Board of Directors. For example, the USA Waste Board
of Directors is given the power to issue up to 10,000,000 shares of Preferred
Stock of USA Waste in one or more series, and to fix the rights and
preferences as to any such series, without further authorization of the
holders of USA Waste Common Stock. In addition, the USA Waste Board of
Directors is divided into three classes, each of which serves for a staggered
three-year term, making it more difficult for a third party to gain control of
the USA Waste Board of Directors. These provisions generally are designed to
permit USA Waste to develop its businesses and foster its long-term growth
without the disruption caused by the threat of a takeover not deemed by the
USA Waste Board of Directors to be in the best interests of USA Waste and its
stockholders. They may also have the effect of discouraging a third party from
making a tender offer or otherwise attempting to gain control of USA Waste
even though such an attempt might be economically beneficial to USA Waste and
its stockholders. See "Comparative Rights of Stockholders of USA Waste and
TransAmerican," and "Description of USA Waste Capital Stock--Preferred Stock."
17
<PAGE>
THE MEETING
DATE, TIME, AND PLACE OF THE MEETING
The Meeting will be held at 9:00 a.m., Central Time, on May 6, 1998, at the
Houstonian Hotel and Conference Center, 111 North Post Oak Lane, Houston,
Texas.
PURPOSE OF THE MEETING
The purpose of the Meeting is to consider and act upon a proposal to approve
and adopt the Merger Agreement.
RECORD DATE AND OUTSTANDING SHARES
Holders of record of TransAmerican Common Stock at the close of business on
the Record Date are entitled to notice of, and to vote at, the Meeting. On the
Record Date, there were 353 holders of record of TransAmerican Common Stock
and 44,319,503 shares of TransAmerican Common Stock issued and outstanding.
Each share of TransAmerican Common Stock entitles the holder thereof to one
vote on each matter submitted for stockholder approval. See "Security
Ownership of Certain Beneficial Owners and Management" in TransAmerican's
Annual Report on Form 10-K which accompanies this Proxy Statement/Prospectus,
for information regarding persons known to management of TransAmerican to be
the beneficial owners of more than 5% of the outstanding TransAmerican Common
Stock.
An automated system administered by the transfer agent of TransAmerican will
be used to tabulate the votes at the Meeting. Abstentions and broker non-votes
are counted as shares present in the determination of whether the shares of
stock represented at the Meeting constitute a quorum. Both abstentions and
broker non-votes will be counted as part of the total number of votes cast on
the Merger proposal in determining whether the proposal has been approved by
the stockholders. Thus, both abstentions and broker non-votes will have the
same effect as a vote against such proposal.
VOTING AND REVOCATION OF PROXIES
All properly executed proxies that are not revoked will be voted at the
Meeting in accordance with the instructions contained therein. If a holder of
TransAmerican 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 TransAmerican who has
executed and returned a proxy may revoke it at any time before it is voted at
the Meeting by (a) executing and returning a proxy bearing a later date, (b)
filing a written notice of such revocation with the Secretary of TransAmerican
stating that the proxy is revoked or (c) attending the Meeting and voting in
person.
Delaware law requires that holders of TransAmerican Common Stock who object
to the Merger and who vote against or abstain from voting in favor of the
Merger be afforded any appraisal rights or the right to receive cash for their
shares. See "The Merger--Appraisal Rights."
VOTE REQUIRED FOR APPROVAL
The presence at the Meeting, in person or by proxy, of holders of a majority
of the issued and outstanding shares of TransAmerican Common Stock entitled to
vote at the Meeting will constitute a quorum for the transaction of business.
Pursuant to Delaware law, approval and adoption of the Merger Agreement
requires the affirmative vote of the holders of a majority of the shares of
TransAmerican Common Stock entitled to vote thereon. All executive officers
and directors of TransAmerican have entered into voting agreements pursuant to
which each such executive officer or director has agreed to vote the shares of
TransAmerican Common Stock held by him in favor of the Merger Agreement. As of
the Record Date, such individuals collectively had the
18
<PAGE>
right to vote approximately 7.9 million shares of TransAmerican Common Stock,
representing approximately 17.8% of the outstanding shares of TransAmerican
Common Stock on such date. See "Security Ownership of Certain Beneficial
Owners and Management" in TransAmerican's Annual Report on Form 10-K which
accompanies this Proxy Statement/Prospectus.
SOLICITATION OF PROXIES
In addition to solicitation by mail, the directors, officers, and employees
of TransAmerican may solicit proxies from the TransAmerican stockholders by
personal interview, telephone, telegram, facsimile, or otherwise.
TransAmerican will bear the costs of the solicitation of proxies from its
stockholders, except that USA Waste will bear equally the cost of printing
this Proxy Statement/Prospectus. Arrangements will be made with brokerage
firms and other custodians, nominees, and fiduciaries who hold TransAmerican
Common Stock of record for the forwarding of solicitation materials to the
beneficial owners thereof. TransAmerican will reimburse brokers, custodians,
nominees and fiduciaries for the reasonable out-of-pocket expenses incurred by
them in connection therewith.
OTHER MATTERS
At the date of this Proxy Statement/Prospectus, the Board of Directors of
TransAmerican does not know of any business to be presented at the Meeting,
other than as set forth in its notice accompanying this Proxy
Statement/Prospectus.
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<PAGE>
THE MERGER
The detailed terms and conditions of the Merger, including conditions to
consummation of the Merger, are contained in the Merger Agreement, which is
attached hereto as Appendix A and incorporated herein by reference. The
following discussion sets forth a description of material terms and conditions
of the Merger Agreement. The description in this Proxy Statement/Prospectus of
the terms and conditions 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 TransAmerican, whereupon TransAmerican will become a
wholly owned subsidiary of USA Waste and each outstanding share of
TransAmerican Common Stock will be converted into 0.045232 shares of USA Waste
Common Stock, subject to adjustment as provided in the Merger Agreement. In
addition, at the Effective Time, each issued and outstanding share of
Acquisition Common Stock shall be converted into one share of common stock,
par value $.001 per share, of the Surviving Corporation.
Based upon the number of shares of USA Waste Common Stock and TransAmerican
Common Stock outstanding as of March 31, 1998, and assuming approximately 2
million shares of USA Waste Common Stock will be issued pursuant to the Merger
Agreement, approximately 221 million shares of USA Waste Common Stock will be
outstanding immediately following the Effective Time.
If the WMI Merger is consummated in accordance with its terms, based upon
the number of shares of common stock of USA Waste, WMI and TransAmerican
outstanding as of March 31, 1998, approximately 565 million shares of USA
Waste Common Stock will be outstanding immediately after the effective date of
the WMI Merger, of which approximately 2 million shares, representing 0.35% of
the total number of outstanding shares, will be held by former holders of
TransAmerican Common Stock.
BACKGROUND OF THE MERGER
As a result of the acquisition of certain assets from USA Waste in January
1997, TransAmerican and USA Waste each became familiar with the activities and
business of the other party.
In October 1997, USA Waste approached TransAmerican with a proposal to
exchange certain assets of USA Waste for certain assets of TransAmerican.
TransAmerican and USA Waste entered into discussions regarding the possibility
of entering into some type of business combination or asset exchange.
In addition, representatives of TransAmerican had discussions regarding a
possible business combination with a potential strategic buyer in the solid
waste industry. The parties engaged in preliminary discussions from time to
time in which they considered whether or not a merger or other business
combination would be advisable and whether potential negotiations on material
terms might be successful.
On October 29, 1997, at a meeting of the Board of Directors of
TransAmerican, the management team of TransAmerican briefed the Board of
Directors on strategic alternatives for the future growth of TransAmerican,
including but not limited to, a business combination with a publicly traded
company or raising debt or equity capital. The Board of Directors directed the
management team to continue to explore and investigate the strategic
alternatives.
Pursuant to the Board of Directors' instructions in the October 29, 1997
meeting of the Board, on November 11, 1997, the management teams of USA Waste
and TransAmerican met to review the operations of the two companies and
discuss the potential synergies, cost-savings and other benefits that would
result from a business combination. USA Waste and TransAmerican executed a
confidentiality agreement at this meeting.
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<PAGE>
On November 15, 1997, the management teams again met and continued to
discuss a potential business combination and TransAmerican provided additional
information related to its operations to USA Waste.
On November 25, 1997, the management teams of USA Waste and TransAmerican
met to negotiate the basic terms of a potential business combination.
TransAmerican continued to provide to USA Waste information related to its
operations. The management team of USA Waste continued to analyze the
individual properties held by TransAmerican and discussed the potential
synergies of a business combination.
On December 15, 1997 and continuing on December 16, 1997, TransAmerican
provided, and USA Waste received, due diligence materials related to the
operations, assets, liabilities and contracts of TransAmerican. TransAmerican
developed a term sheet setting forth the proposed terms of the business
combination based on its discussion with USA Waste.
On December 16, 1997, certain members of the Board of Directors of
TransAmerican held a meeting at which they reviewed the status of the
discussions with USA Waste and the status of discussions with other business
combination candidates. The directors engaged in a detailed discussion of the
relative merits of the proposed transactions. At the conclusion of the
meeting, the Board of Directors directed the management team to continue to
pursue each of the alternative transactions simultaneously.
After the Board of Directors' meeting, the management teams of USA Waste and
TransAmerican met to discuss the proposed terms of the business combination
and the schedule for completing a definitive agreement.
On December 18, 1997, TransAmerican received the first draft of the proposed
Agreement and Plan of Merger.
On December 19, 1997, following the meeting described above, TransAmerican
asked Dain Rauscher to act as its financial advisor in connection with a
possible business combination with USA Waste.
Between December 19, 1997 and January 10, 1998, the parties continued
negotiating the Merger Agreement.
On January 6 and 7, 1998, representatives of USA Waste conducted site visits
to TransAmerican's facilities to review the status and certain due diligence
matters with respect to such facilities.
On January 10, 1998, the Board of Directors of TransAmerican held a special
meeting at which the Board members discussed the proposed Merger. The Board of
Directors: (i) reviewed with TransAmerican's management and legal and
financial advisors the proposed terms of the Merger and Merger Agreement; (ii)
reviewed the strategic alternatives to the Merger; (iii) reviewed the
procedures employed by management to pursue the most beneficial transaction
for TransAmerican's stockholders; (iv) received presentations from
TransAmerican's senior management and TransAmerican's financial and legal
advisors; and (v) received a preliminary opinion from Dain Rauscher that the
Exchange Ratio pursuant to the Merger Agreement was fair to the holders of
TransAmerican's Common Stock. At such meeting, TransAmerican's Board
unanimously approved the Merger Agreement subject to final approval of certain
amendments by a committee established by the Board (such committee in its sole
discretion could call a meeting of the entire Board to review and approve
subsequent amendments to the Merger Agreement). Prior to entering into the
Merger Agreement, the Board of Directors of TransAmerican evaluated the
advisability of contacting the other potential strategic buyer with respect to
its possible interest in a business combination. The TransAmerican Board of
Directors weighed the likelihood of reaching a desirable agreement with USA
Waste and the risks to the proposed USA Waste transaction of approaching the
other potential merger partner at that time, against the Board's view that the
other party was unlikely to propose or agree to a superior transaction and the
Board's belief that, although the Merger Agreement would provide for a $3
million termination fee, such party would not be prevented from making a
proposal following execution of an agreement with USA Waste. The Board of
Directors concluded that it was not advisable for the Board to authorize
management to contact the other potential merger partner.
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Between January 10, 1998 and January 26, 1998, certain members of senior
management of USA Waste and TransAmerican negotiated further the terms and
conditions of the Merger Agreement.
On January 26, 1998, the TransAmerican Board held a special meeting, at
which (i) the Board reviewed with TransAmerican's management and legal and
financial advisors the proposed terms of the Merger and Merger Agreement and
the anticipated effects of the Merger on TransAmerican and USA Waste, (ii)
members of TransAmerican's senior management and TransAmerican's financial and
legal advisors made presentations concerning the Merger, and (iii) Dain
Rauscher rendered its opinion that, as of such date, the Exchange Ratio
pursuant to the Merger Agreement was fair to the holders of TransAmerican
Common Stock. At such meeting, the TransAmerican Board unanimously approved
the Merger Agreement and recommended that the stockholders of TransAmerican
vote in favor of the Merger.
The Merger Agreement was executed late in the evening of January 26, 1998. A
joint public announcement was made by the parties on the morning of January
27, 1998.
TRANSAMERICAN'S REASONS FOR THE MERGER
In reaching its decision to approve the Merger Agreement and to recommend
that TransAmerican's stockholders vote to approve and adopt the Merger
Agreement, TransAmerican's Board of Directors considered, among other things,
the following factors:
(i) its knowledge of the historical and prospective business, operations,
properties, assets, financial condition and operating results of
TransAmerican including certain factors that limit TransAmerican's growth
opportunities and operating profitability including (a) the high cost of
capital limiting acquisition opportunities, (b) certain permit issues with
respect to existing facilities, (c) mandated compliance with Subtitle D,
and (d) certain liquidity needs combined with the high cost of satisfying
the need for additional capital;
(ii) presentations by TransAmerican's management with respect to the
estimated synergies and benefits contemplated to be obtained in the Merger
and the likely favorable impact of the proposed Merger on continued
prospects for growth and acquisitions;
(iii) the likelihood of completing the proposed transaction with USA
Waste and USA Waste's historical record with respect to completion of
similar transactions with publicly traded companies;
(iv) the financial terms of the Merger and the opinion of Dain Rauscher
dated January 26, 1998 and the opinion dated as of the date of this Proxy
Statement/Prospectus as to the fairness of the Exchange Ratio pursuant to
the Merger Agreement to the holders of TransAmerican Common Stock. See "--
Opinion of Financial Advisor to TransAmerican";
(v) the terms of the Merger Agreement, including provisions regarding (a)
the prohibition on the solicitation of other offers and the circumstances
under which TransAmerican would be able to pursue unsolicited alternative
proposals, (b) the potential adjustment to the Exchange Ratio resulting
from the Net Debt calculation, and (c) the commitments that USA Waste had
made with respect to actions that might be necessary in order to obtain
approval under the HSR Act. See "The Plan of Merger and Terms of the
Merger";
(vi) the matters set forth herein under "--Interests of Certain Persons
in the Merger." The Board noted that such factors gave certain directors
and officers interests in the Merger in addition to their interests as
stockholders of TransAmerican;
(vii) its assessment of the historical and prospective business,
operations, properties, assets, financial condition and operating results
of USA Waste and the potential negative impact thereon of the matters
discussed above under "Risk Factors." In that regard, the Board of
Directors considered the financial presentation to the Board of Directors
by Dain Rauscher summarized below under "--Opinion of Financial Advisor to
TransAmerican." The Board also considered USA Waste's management's
favorable record with respect to achieving synergies in connection with
previous acquisitions;
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(viii) the historical trading prices for TransAmerican Common Stock, on
the one hand, and USA Waste Common Stock, on the other;
(ix) the time required to prepare and finalize a definitive merger
agreement, receive all necessary approvals and complete the transaction;
(x) the relative liquidity of the shares to be received by
TransAmerican's stockholders as a result of the proposed transactions. USA
Waste is traded on the NYSE with an average trading volume of approximately
1 million shares per day;
(xi) the compatibility of the respective business strategies of USA Waste
and TransAmerican; and
(xii) the opportunity for TransAmerican stockholders to participate, as
holders of USA Waste Common Stock, in a larger, stronger, more
geographically diversified company, and to do so by means of a transaction
which is designed to be tax-free to TransAmerican's stockholders and
accounted for as a pooling of interests.
The foregoing discussion of the information and factors considered by the
TransAmerican Board is not intended to be exhaustive. In view of the variety
of factors considered in connection with its evaluation of the Merger, the
TransAmerican Board did not find it practicable to and did not quantify or
otherwise assign relative weights to the specific factors considered in
reaching its determination. The TransAmerican Board viewed its determination
as being based on the totality of the information presented to and considered
by it and not on one particular factor. In addition, individual members of the
TransAmerican Board may have given different weights to different factors. See
"--Interests of Certain Persons in the Merger."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF TRANSAMERICAN
The Board of Directors of TransAmerican has unanimously approved the Merger
Agreement and has directed that it be submitted to the stockholders of
TransAmerican. THE TRANSAMERICAN BOARD UNANIMOUSLY RECOMMENDS THAT THE HOLDERS
OF TRANSAMERICAN COMMON STOCK VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT. See "--Background of the Merger" and "--TransAmerican's Reasons for
the Merger." In considering the recommendation of TransAmerican's Board of
Directors with respect to the Merger, TransAmerican stockholders should be
aware that certain officers and directors of TransAmerican have direct or
indirect interests in recommending the Merger, apart from their interests as
stockholders of TransAmerican, which are separate from those of unaffiliated
stockholders of TransAmerican. See "--Interests of Certain Persons in the
Merger."
OPINION OF FINANCIAL ADVISOR TO TRANSAMERICAN
The Board of Directors of TransAmerican engaged Dain Rauscher to evaluate
the fairness, from a financial point of view, to the stockholders of
TransAmerican Common Stock of the consideration to be received by them in
connection with the Merger and, in such regard, to conduct such investigations
as Dain Rauscher deemed appropriate.
On January 26, 1998, Dain Rauscher rendered its opinion to the Board of
Directors of TransAmerican that, as of such date, the consideration to be
received by the holders of TransAmerican Common Stock pursuant to the Merger
Agreement was fair from a financial point of view. Dain Rauscher confirmed, by
delivery of its written opinion dated April 1, 1998, its opinion of January
26, 1998.
The full text of Dain Rauscher's written opinion, which contains a
description of the assumptions made, matters considered by Dain Rauscher, and
the limits of its review undertaken in connection with its opinion, is
attached hereto as Appendix B, and is incorporated herein by reference.
Holders of TransAmerican Common Stock are urged to read such opinion in its
entirety.
Dain Rauscher, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements, and valuations for estate,
corporate and other
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purposes. TransAmerican selected Dain Rauscher as its financial advisors
because it is a recognized regional investment banking firm. Also, Dain
Rauscher is familiar with TransAmerican, having prepared a fairness opinion
relating to a January 1997 private placement of TransAmerican Common Stock.
In connection with its opinion, Dain Rauscher reviewed certain internal
financial information and certain publicly available information. Dain
Rauscher also held discussions with members of the senior management of
TransAmerican regarding the business and prospects of TransAmerican. In
addition, Dain Rauscher reviewed the reported price and trading activity for
TransAmerican Common Stock and USA Waste Common Stock, compared certain
financial and stock market information for TransAmerican and USA Waste with
similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent business
combinations in the waste management industry and performed such other studies
and analyses as it considered appropriate. Dain Rauscher also reviewed the
Merger Agreement.
Dain Rauscher did not independently verify the information described above
and, for purposes of its opinion, assumed the accuracy and completeness
thereof. With respect to information relating to the prospects of
TransAmerican, Dain Rauscher assumed that statements from management reflected
the best currently available estimates and judgements of management of
TransAmerican as to the likely future financial performance of TransAmerican.
In addition, Dain Rauscher has not made an independent appraisal of specific
assets of TransAmerican or any of its subsidiaries, and Dain Rauscher has not
been furnished with any such appraisal. Dain Rauscher's opinion was provided
for the information and assistance of the Board of Directors of TransAmerican
in connection with its consideration of the transaction contemplated by the
Merger Agreement, and such opinion does not constitute a recommendation as to
how any holder of TransAmerican Common Stock should vote with respect to the
Merger. Dain Rauscher's opinion was based on market, economic and other
conditions as they existed and could be evaluated as of the date of Dain
Rauscher's opinion.
The following paragraphs summarize the principal analyses conducted by Dain
Rauscher as a basis for its fairness opinion. Dain Rauscher's analysis noted
that the initial stated consideration to be received by holders of
TransAmerican Common Stock pursuant to the Merger Agreement was approximately
0.045 shares of USA Waste Common Stock. In rendering its opinion, Dain
Rauscher took into account the likely downward adjustment to this exchange
ratio based on TransAmerican's "Net Debt" (as defined) as of December 31,
1997, which TransAmerican's management had indicated would result in a likely
final exchange ratio of approximately 0.0442.
(i) Historical Stock Trading Analysis. Dain Rauscher reviewed the
historical daily closing market prices, trading volumes and actual exchange
ratios of TransAmerican Common Stock and USA Waste Common Stock for the
period from January 2, 1996 to January 26, 1998. Dain Rauscher also
reviewed the average monthly market closing prices and the exchange ratio
of TransAmerican Common Stock and USA Waste Common Stock for the period
from January 1997 to December 1997. Dain Rauscher noted that an exchange
ratio of approximately 0.45 shares of USA Waste Common Stock for each share
of TransAmerican Common Stock resulted in a 27% premium based on the
closing market prices of TransAmerican Common Stock and USA Waste Common
Stock on January 26, 1998. Dain Rauscher also noted that an exchange ratio
of approximately 0.0442 shares of USA Waste Common Stock for each share of
TransAmerican Common Stock resulted in a 16% premium based on the closing
market prices of TransAmerican Common Stock and USA Waste Common Stock on
January 26, 1998. In addition, Dain Rauscher noted that an exchange ratio
of 0.045x has equaled or exceeded the actual exchange ratios based on the
daily closing market prices between TransAmerican Common Stock and USA
Waste Common Stock for the period from November 1996 to January 26, 1998,
with the exception of one day.
(ii) Selection Transaction Analysis. Dain Rauscher analyzed certain
information relating to the following five selected transactions in the
waste management industry for the period form September 1996 to September
1997: Sanifill/USA Waste, Continental Waste/Republic Industries, AAA
Disposal Services/Republic Industries, Taormina Industries/Republic
Industries and United Waste Systems/USA Waste (collectively the "Selected
Transactions"). Based on aggregate enterprise consideration of $113.95
million ($70.75 million for TransAmerican's Common Stock plus $43.2 million
in assumed debt) for
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TransAmerican, Dain Rauscher's analysis indicated the following multiples
to TransAmerican's revenues, EBITDA, EBIT and net income for the trailing
twelve months ended September 30, 1997: 4.0x, 16.3x, 26.5x and not
meaningful, respectively. For the Selected Transaction, the transaction
enterprise value to the respective targets' trailing twelve month revenues,
EBITDA, EBIT and net income resulted in the following ranges of multiples:
3.3x to 6.6x, 12.1x to 25.6x, 19.8x to 76.3x, and 32.0x to 80.0x,
respectively.
(iii) Price/Earnings Comparisons. Dain Rauscher considered a possible
Merger value of $1.60 per share as a multiple of TransAmerican's earnings
per share ("EPS") as estimated for 1997 ("1997E P/E Multiple") and 1998
("1998E P/E Multiple") by TransAmerican management. Based on such
information, the possible $1.60 Merger value was approximately 80 times
estimated EPS for 1997 and 53-27 times estimated EPS for 1998. Dain
Rauscher also took into account the price/earnings ratio of USA Waste
Common Stock of 37 times trailing twelve months earnings, based on the
closing market price for USA Waste Common Stock on January 6, 1998. Based
on earnings estimates derived from securities industry sources, the
price/earnings ratio for USA Waste Common Stock based on 1997 estimated
earnings per share of $1.65 per share was 23.5x, and for estimated 1998
estimated earnings per share of $2.15 per share was 18.1x. Dain Rauscher
also considered price/earnings ratios of a selected group of "industry
consolidators" in various industries (which averaged 28.0x for 1997
estimated earnings per share and 21.7x for 1998 estimated earnings per
share).
Dain Rauscher also considered possible economies of scale and operating
efficiencies relating to the combination (including lower insurance and
bonding costs, potential acquisition prospects, and overhead elimination) and
the larger market capitalization and more active trading volumes relating to
the market for USA Waste Common Stock as compared to TransAmerican Common
Stock.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete view of the
processes underlying Dain Rauscher's opinion. In arriving at its fairness
determination, Dain Rauscher considered the results of all such analyses. No
company or transaction used in the above analyses as a comparison is identical
to TransAmerican or USA Waste or the contemplated transaction. The analyses
were prepared solely for the purpose of Dain Rauscher providing its opinion to
the Board of Directors of TransAmerican as to the fairness of the Merger
Agreement to the holders of TransAmerican Common Stock, and do not purport to
be appraisals or necessarily reflect the prices at which business or
securities actually may be sold. Analyses based upon forecasts of future
results are not necessarily indicative of actual future results, which may be
significantly more or less favorable than suggested by such analyses. Because
such analyses are inherently subject to uncertainty, being based upon numerous
factors or events beyond the control of the parties or their respective
advisors, none of TransAmerican, USA Waste, Dain Rauscher or any other person
assume responsibility if future results are materially different from those
forecast. As described above, Dain Rauscher's opinion to the Board of
Directors of TransAmerican was one of many factors taken into consideration by
the TransAmerican Board of Directors in making its determination to approve
the Merger Agreement.
Pursuant to a letter agreement dated January 6, 1998 (the "Dain Rauscher
Engagement Letter"), TransAmerican engaged Dain Rauscher to act as its
financial advisor to provide the fairness opinion described above in
connection with the Merger. Pursuant to the terms of the Dain Rauscher
Engagement Letter, TransAmerican has paid Dain Rauscher $150,000 and has
agreed to reimburse Dain Rauscher for certain out-of-pocket expenses,
including attorney's fees, and to indemnify Dain Rauscher against certain
liabilities, including certain liabilities under the federal securities laws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain officers and directors of TransAmerican have direct or indirect
interests in recommending the Merger apart from their interests as
stockholders of TransAmerican, which are separate from those of unaffiliated
stockholders of TransAmerican. Such interests include: (i) USA Waste will
offer to enter into a consulting and
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non-competition agreement with J. David Green, Senior Vice President, General
Counsel and Secretary of TransAmerican, such agreement to be effective at the
Effective Time and it is expected that Mr. Green will enter into such
agreement; (ii) USA Waste has offered to enter into an employment or
consulting agreement with Jerome Kruszka, President and Chief Operating
Officer of TransAmerican, and negotiations with respect to such agreement are
continuing; (iii) all officers and directors of TransAmerican hold vested and
unvested TransAmerican Options, all of which options vest at the Effective
Time and are expected to be automatically converted at the Effective Time into
an option to purchase a number of shares of USA Waste Common Stock equal to
the number of shares of TransAmerican's Common Stock that could have been
purchased under the TransAmerican Options multiplied by the Exchange Ratio, as
adjusted, at a price per share of USA Waste Common Stock equal to the option
exercise price determined pursuant to the TransAmerican Option divided by the
Exchange Ratio, as adjusted; (iv) pursuant to the terms of their respective
severance agreements with TransAmerican, certain officers of TransAmerican
including Tom J. Fatjo, Jr., Jerome Kruszka, J. David Green, Tom J. Fatjo, III
and Michael L. Paxton will have the right to receive severance payments upon
consummation of the Merger in an aggregate amount of approximately $1.1
million; (v) any vesting requirements set forth in that certain stock
participation plan pursuant to which officers and directors were to receive
shares of TransAmerican Common Stock over a five-year period shall lapse and
the shares issuable thereunder shall automatically vest; and (vi) pursuant to
the Merger Agreement, officers, directors and employees of TransAmerican will
be indemnified by USA Waste and TransAmerican against certain liabilities.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences generally applicable to holders of TransAmerican Common Stock
who, pursuant to the Merger, exchange their TransAmerican Common Stock solely
for USA Waste Common Stock. The summary does not purport to deal with all
aspects of federal income taxation that may affect particular stockholders in
light of their individual circumstances and is not intended for holders of
TransAmerican Common Stock subject to special treatment under federal income
tax law (including insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, foreign persons or entities, holders of
TransAmerican Common Stock who do not hold their stock as capital assets and
holders of TransAmerican Common Stock who have acquired their stock upon the
exercise of employee options or otherwise as compensation). The summary does
not address federal income tax consequences related to any TransAmerican
Option, TransAmerican Warrant or TransAmerican convertible debentures. In
addition, this discussion does not consider the effect of any applicable
state, local or foreign tax laws. Accordingly, each TransAmerican stockholder
is strongly urged to consult with his or her tax advisor to determine the tax
consequences of the Merger.
The following summary is based upon current provisions of the Code,
currently applicable Treasury regulations, and judicial and administrative
decisions and rulings. Future legislative, judicial or administrative changes
or interpretations could alter or modify the statements and conclusions set
forth herein, and any such changes or interpretations could be retroactive and
could affect the tax consequences to the stockholders of TransAmerican.
Tax Opinion
Consummation of the Merger is conditioned upon the receipt by TransAmerican
of an opinion of Mayor, Day, Caldwell & Keeton, L.L.P., dated the Closing
Date, addressed to TransAmerican and in form and substance satisfactory to
TransAmerican, which opinion will be based on certain representations of USA
Waste and TransAmerican, to the effect that the Merger will be treated as a
reorganization within the meaning of Section 368(a) of the Code. There can be
no assurance that the Internal Revenue Service ("IRS") will not take a
contrary view, and no ruling from the IRS has been or will be sought
concerning the federal income tax consequences of the Merger. An opinion of
counsel expresses what counsel believes a court should properly hold if
presented with the issue which is the subject of the opinion. An opinion is
not a guarantee of a certain tax treatment and is not binding on the IRS or
the courts. The following discussion assumes that the Merger will be treated
in the manner described in the opinion of Mayor, Day, Caldwell & Keeton,
L.L.P.
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Treatment of Holders of TransAmerican Common Stock
Except as discussed below under "--Cash in Lieu of Fractional Shares" and
"--Transfer Taxes," a holder of TransAmerican Common Stock who, pursuant to
the Merger, exchanges TransAmerican Common Stock for USA Waste Common Stock
generally will not recognize gain or loss upon such exchange. Such holder's
aggregate tax basis in the USA Waste Common Stock received pursuant to the
Merger will be equal to its aggregate tax basis in the TransAmerican Common
Stock surrendered in the exchange (reduced by any tax basis allocable to
fractional shares exchanged for cash) and its holding period for the USA Waste
Common Stock will include its holding period for the TransAmerican Common
Stock surrendered.
Cash in Lieu of Fractional Shares
No fractional shares of USA Waste Common Stock will be issued upon the
surrender for exchange of certificates representing shares of TransAmerican
Common Stock. A holder of TransAmerican Common Stock who receives cash in lieu
of fractional shares of USA Waste Common Stock will be treated as having
received such fractional shares pursuant to the Merger and then as having sold
such fractional shares for cash in a redemption by USA Waste. Any gain or loss
attributable to fractional shares generally will be capital gain or loss. The
amount of such gain or loss will be equal to the difference between the
portion of the tax basis of the TransAmerican Common Stock surrendered in the
Merger that is allocated to such fractional shares and the cash received in
lieu thereof. Capital gain on assets held for more than one year recognized by
certain non-corporate stockholders is subject to federal income tax at
preferential capital gains rates, and such gain recognized with respect to an
asset with a holding period of more than 18 months is generally subject to
federal income tax at further reduced capital gains rates.
Reporting Requirements
Unless an exemption applies under the applicable law and regulations, the
Exchange Agent may be required to withhold, and, if required, will withhold,
31% of any cash payments to a holder of TransAmerican Common Stock in the
Merger unless such holder provides the appropriate form. A holder should
complete and sign the Substitute Form W-9 enclosed with the letter of
transmittal sent by the Exchange Agent so as to provide the information
(including the holder's taxpayer identification number) and certification
necessary to avoid backup withholding, unless an applicable exemption exists
and is proved in a manner satisfactory to the Exchange Agent.
THE FOREGOING SUMMARY OF CERTAIN MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF
THE MERGER WITH RESPECT TO HOLDERS OF TRANSAMERICAN COMMON STOCK IS WITHOUT
REFERENCE TO THE PARTICULAR FACTS AND CIRCUMSTANCES OF ANY PARTICULAR HOLDER.
IN ADDITION, THE FOREGOING SUMMARY DOES NOT ADDRESS ANY NON-INCOME TAX OR ANY
FOREIGN, STATE OR LOCAL TAX CONSEQUENCES OF THE MERGER NOR DOES IT ADDRESS THE
TAX CONSEQUENCES OF ANY TRANSACTIONS OTHER THAN THE MERGER OR ANY ASPECT OF
THE MERGER NOT INVOLVING THE EXCHANGE OF TRANSAMERICAN COMMON STOCK.
ACCORDINGLY, EACH HOLDER OF TRANSAMERICAN COMMON STOCK IS STRONGLY URGED TO
CONSULT WITH SUCH HOLDER'S TAX ADVISOR TO DETERMINE THE PARTICULAR UNITED
STATES FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER TAX CONSEQUENCES OF
THE MERGER TO SUCH HOLDER.
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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It is a condition to each party's obligation to consummate the Merger that
USA Waste shall have received a letter from Coopers & Lybrand L.L.P., dated
the Closing Date, to the effect that the Merger will qualify for a pooling of
interests accounting treatment if consummated in accordance with the Merger
Agreement. Furthermore, it is a condition to each party's obligation to
consummate the Merger that TransAmerican shall have received a letter from
Arthur Andersen LLP, dated the Closing Date, regarding such firm's concurrence
with TransAmerican's management's conclusions that no conditions exist related
to TransAmerican that would preclude USA Waste's accounting for the Merger
with TransAmerican as a pooling of interests under Accounting Principles Board
Opinion No. 16 if closed and consummated in accordance with the Merger
Agreement.
If the number of TransAmerican stockholders entitled to vote on the Merger
who exercise their appraisal rights pursuant to Section 262 of the DGCL exceed
a certail level, the Merger will not qualify as a pooling of interests for
accounting purposes. Consequently, neither Arthur Andersen LLP nor Coopers &
Lybrand L.L.P. would be able to deliver their respective pooling of interest
letters as contemplated by the Merger Agreement, and the parties would then
not be obligated to consummate the Merger. See "The Merger--Appraisal Rights"
and "The Plan of Merger and Terms of the Merger--Conditions to the Merger."
GOVERNMENT AND REGULATORY APPROVALS
Transactions such as the Merger are reviewed by the Antitrust Division and
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. TransAmerican and USA Waste filed notification reports with the
Antitrust Division and FTC under the HSR Act on February 4, 1998 and February
5, 1998, respectively. On March 6, 1998, the Antitrust Division issued the
Second Request to USA Waste and TransAmerican. The Second Request extends the
waiting period under the HSR Act to 20 days from the date that the Antitrust
Division receives the requested information and documents, unless the waiting
period is terminated earlier. The waiting period may then be extended only by
court order or with the consent of the parties. USA Waste and TransAmerican
have held discussions with the Antitrust Division regarding its concerns with
respect to the Merger, and USA Waste and TransAmerican are in the process of
preparing a response to the Second Request. USA Waste and TransAmerican expect
to submit their responses to the Second Request no later than April 8, 1998,
and thus, the waiting period under the HSR Act should expire prior to the date
of the Meeting.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Merger. At any time before or
after the Merger, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the Merger or seeking divestiture of
substantial assets of USA Waste or TransAmerican or their subsidiaries.
Private parties and state attorneys general may also bring an action under the
antitrust laws under certain circumstances. TransAmerican previously acquired
landfill and collection assets in Houston, Texas from USA Waste pursuant to a
consent decree entered into by USA Waste which remains binding on USA Waste
and TransAmerican. There can be no assurance that these landfill and
collection assets will not have to be divested in connection with the Merger.
There can be no assurance that a challenge to the Merger on antitrust grounds
will not be made or, if such a challenge is made, of the result. See "The Plan
of Merger and Terms of the Merger--Cooperation."
Consummation of the Merger is conditioned upon all governmental waivers,
consents, orders and approvals legally required for the consummation of the
Merger and the transactions contemplated thereby, and all consents from
lenders required to consummate the Merger, having been obtained and being in
effect at the Effective Time.
APPRAISAL RIGHTS
Delaware law requires that holders of TransAmerican Common Stock who object
to the Merger and who vote against or abstain from voting in favor of the
Merger be afforded appraisal or dissenters' rights or the right to receive
cash for their shares in connection with the Merger pursuant to Section 262 of
the DGCL.
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The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL and is qualified in its entirety by the
full text of Section 262 which is attached to this Proxy Statement/Prospectus
as Appendix C. All references in Section 262 and in this summary to a
"stockholder" are to the record holder of the shares of TransAmerican Common
Stock as to which appraisal rights are asserted. A person having a beneficial
interest in shares of TransAmerican Common Stock held of record in the name of
another person, such as a broker or nominee, must act promptly to cause the
record holder to follow the steps summarized below properly and in a timely
manner to perfect appraisal rights.
Under the DGCL, holders of shares of TransAmerican Common Stock who follow
the procedures set forth in Section 262 will be entitled to have their shares
of TransAmerican Common Stock appraised by the Delaware Court of Chancery and
to receive payment of the "fair value" of such shares, exclusive of any
element of value arising from the accomplishment or expectation of the Merger,
together with a fair rate of interest, as determined by such court.
Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the case of the Meeting, the corporation, not
less than 20 days prior to the meeting, must notify each of its stockholders
entitled to appraisal rights that such appraisal rights are available and
include in such notice a copy of Section 262. This Proxy Statement/Prospectus
shall constitute such notice, and the applicable statutory provisions are
attached to this Proxy Statement/Prospectus as Appendix C. Any holder of
TransAmerican Common Stock who wishes to exercise such appraisal rights or who
wishes to preserve his, her or its right to do so, should review the following
discussion and Appendix C carefully because failure to timely and properly
comply with the procedures specified will result in the loss of appraisal
rights under the DGCL.
A holder of shares of TransAmerican Common Stock wishing to exercise his,
her or its appraisal rights must deliver to TransAmerican, before the vote on
the Merger at the Meeting, a written demand for appraisal of his, her or its
shares of TransAmerican Common Stock and must not vote in favor of the Merger.
Because a duly executed proxy which does not contain voting instructions will,
unless revoked, be voted for the Merger, a holder of shares of TransAmerican
Common Stock who votes by proxy and who wishes to exercise his, her or its
appraisal rights must (i) vote against the Merger, or (ii) abstain from voting
on the Merger. A vote against the Merger, in person or by proxy, will not in
and of itself constitute a written demand for appraisal satisfying the
requirements of Section 262. In addition, a holder of shares of TransAmerican
Common Stock wishing to exercise his, her or its appraisal rights must hold of
record such shares on the date the written demand for appraisal is made and
must continue to hold such shares of record until the Effective Time. If any
holder of shares of TransAmerican Common Stock fails to comply with any of
these conditions and the Merger becomes effective, the holder of shares of
TransAmerican Common Stock will be entitled to receive the consideration
receivable with respect to such shares in the absence of a valid assertion of
appraisal rights in accordance with the Merger Agreement.
Only a holder of record of shares of TransAmerican Common Stock is entitled
to assert appraisal rights for the shares of TransAmerican Common Stock
registered in that holder's name. A demand for appraisal should be executed by
or on behalf of the holder of record, fully and correctly, as his, her or its
name appears on his, her or its stock certificates, and must state that the
stockholder intends thereby to demand appraisal of his, her or its shares in
connection with the Merger. If the shares of TransAmerican Common Stock are
owned of record in a fiduciary capacity, such as by a trustee, guardian or
custodian, execution of the demand should be made in that capacity, and if the
shares of TransAmerican Common Stock are owned of record by more than one
person, as in a joint tenancy and tenancy in common, the demand should be
executed by or on behalf of all joint owners. An authorized agent, including
two or more joint owners, may execute a demand for appraisal on behalf of a
holder of record; however, the agent must identify the record owner or owners
and expressly disclose the fact that, in executing the demand, the agent is
agent for such owner or owners. A record holder such as a broker who holds
shares of TransAmerican Common Stock as nominee for several beneficial owners
may exercise appraisal rights with respect to the shares of TransAmerican
Common Stock held for one or more beneficial owners while not exercising such
rights with respect to the shares of TransAmerican Common Stock held for other
beneficial owners; in such case, however, the written demand should set forth
the number of shares of
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TransAmerican Common Stock as to which appraisal is sought and where no number
of shares of TransAmerican Common Stock is expressly mentioned the demand will
be presumed to cover all shares of TransAmerican Common Stock held in the name
of the record owner. Stockholders who hold their shares of TransAmerican
Common Stock in brokerage accounts or other nominee forms and who wish to
exercise appraisal rights are urged to consult with their brokers to determine
the appropriate procedures for the making of a demand for appraisal by such a
nominee.
All written demands for appraisal pursuant to Section 262 should be sent or
delivered to TransAmerican at 10554 Tanner Road, Houston, Texas 77041,
Attention: Corporate Secretary.
Within ten days after the Effective Time, TransAmerican, as the surviving
corporation of the Merger, must notify each holder of TransAmerican Common
Stock who has complied with Section 262 and has not voted in favor of or
consented to the Merger of the date that the Merger has become effective.
Within 120 days after the Effective Time, but not thereafter, TransAmerican or
any holder of TransAmerican Common Stock who has so complied with Section 262
and is entitled to appraisal rights under Section 262 may file a petition in
the Delaware Court of Chancery demanding a determination of the fair value of
his, her or its shares of TransAmerican Common Stock. TransAmerican is under
no obligation to and has no present intention to file such a petition.
Accordingly, it is the obligation of the holders of TransAmerican Common Stock
to initiate all necessary action to perfect their appraisal rights within the
time prescribed in Section 262.
Within 120 days after the Effective Time, any holder of TransAmerican Common
Stock who has complied with the requirements for exercise of appraisal rights
will be entitled, upon written request, to receive from TransAmerican a
statement setting forth the aggregate number of shares of TransAmerican Common
Stock entitled to demand appraisal rights not voted in favor of the Merger and
with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such statement must be mailed
within ten days after a written request therefor has been received by
TransAmerican or within ten days after expiration of the period for delivery
of demands for appraisal, whichever is later.
If a petition for an appraisal is timely filed by a holder of shares of
TransAmerican Common Stock entitled to demand appraisal rights and a copy
thereof is served upon TransAmerican, TransAmerican will then be obligated
within 20 days to file with the Delaware Register in Chancery a duly verified
list containing the names and addresses of all holders of TransAmerican Common
Stock who have demanded an appraisal of their shares and with whom agreements
as to the value of their shares have not been reached. After notice to such
stockholders as required by the Court, the Delaware Court of Chancery is
empowered to conduct a hearing on such petition to determine those holders of
TransAmerican Common Stock who have complied with Section 262 and who have
become entitled to appraisal rights thereunder. The Delaware Court of Chancery
may require the holders of shares of TransAmerican Common Stock who demanded
payment for their shares to submit their stock certificates to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court of
Chancery may dismiss the proceedings as to such stockholder.
After determining the holders of TransAmerican Common Stock entitled to
appraisal, the Delaware Court of Chancery will appraise the "fair value" of
their shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
Holders of TransAmerican Common Stock considering seeking appraisal should be
aware that the fair value of their shares of TransAmerican Common Stock as
determined in an appraisal proceeding under Section 262 could be more than,
the same as or less than the value of the shares they would receive or
continue to hold, as the case may be, pursuant to the Merger if they did not
seek appraisal of their shares of TransAmerican Common Stock and that
investment banking opinions as to fairness from a financial point of view are
not necessarily opinions as to fair value under Section 262. The Delaware
Supreme Court has stated that "proof of value by any techniques or methods
which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered in the appraisal
proceeding. In addition, Delaware courts have decided that the statutory
appraisal remedy, depending on factual
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circumstances, may or may not be a dissenter's exclusive remedy. The Court of
Chancery will also determine the amount of interest, if any, to be paid upon
the amounts to be received by persons whose shares of TransAmerican Common
Stock have been appraised. The costs of the action may be determined by the
Court and taxed upon the parties as the Court deems equitable. The Court may
also order that all or a portion of the expenses incurred by any stockholder
in connection with an appraisal, including, without limitation, reasonable
attorneys' fees and the fees and expenses of experts utilized in the appraisal
proceeding, be charged against the value of all the shares of TransAmerican
Common Stock entitled to be appraised.
Any holder of shares of TransAmerican Common Stock who has duly demanded an
appraisal in compliance with Section 262 will not, after the Effective Time,
be entitled to vote the shares of TransAmerican Common Stock subject to such
demand for any purpose or be entitled to the payment of dividends or other
distributions on those shares of TransAmerican Common Stock (except dividends
or other distributions payable to holders of record of TransAmerican Common
Stock as of a record date prior to the Effective Time).
If any stockholder who demands appraisal of his, her or its shares of
TransAmerican Common Stock under Section 262 fails to perfect, or effectively
withdraws or loses, his, her or its right to appraisal, as provided in the
DGCL, the shares of TransAmerican Common Stock of such stockholder will be
converted into the right to receive shares of USA Waste Common Stock pursuant
to the Merger Agreement as described herein (without interest). A stockholder
will fail to perfect, or effectively loses or withdraws, his, her or its right
to appraisal if no petition for appraisal is filed within 120 days after the
Effective Time, or if the stockholder delivers to TransAmerican a written
withdrawal of his, her or its demand for appraisal and an acceptance of the
Merger, except that any such attempt to withdraw made more than 60 days after
the Effective Time will require the written approval of TransAmerican and,
once a petition for appraisal is filed, the appraisal proceeding may not be
dismissed as to any holder absent court approval.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
If the number of TransAmerican stockholders entitled to vote on the Merger
who exercise their appraisal rights pursuant to Section 262 of the DGCL exceed
a certain level, the Merger will not qualify as a pooling of interests for
accounting purposes. Consequently, neither Arthur Andersen LLP nor Coopers &
Lybrand L.L.P. would be able to deliver their respective pooling of interests
letters as contemplated by the Merger Agreement, and the parties would then
not be obligated to consummate the Merger. See "The Merger--Accounting
Treatment" and "The Plan of Merger and Terms of the Merger--Conditions to the
Merger."
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of USA Waste Common Stock received by TransAmerican 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 TransAmerican 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 TransAmerican will cause
each of its principal executive officers, each director and each other person
who is an "affiliate" of TransAmerican to deliver to USA Waste 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 TransAmerican have been filed with the Commission, sent to
stockholders of USA Waste or otherwise publicly issued.
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Under Commission guidelines interpreting generally accepted accounting
principles ("GAAP"), with certain limited exceptions, the sale of USA Waste
Common Stock by an affiliate of either USA Waste or TransAmerican generally
within 30 days prior to the Effective Time or thereafter prior to the
publication of results that include a minimum of at least 30 days of combined
operations of USA Waste and TransAmerican after the Effective Time could
preclude pooling of interests accounting treatment for the Merger.
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THE PLAN OF MERGER AND TERMS OF THE MERGER
The following summary of the terms of the Merger Agreement is qualified in
its entirety by reference to the Merger Agreement, a copy of which is attached
hereto as Appendix A. Certain capitalized terms used herein without definition
have the respective meanings set forth in the Merger Agreement.
EFFECTIVE TIME OF THE MERGER
The Merger will become effective at such time as shall be stated in the
Certificate of Merger, which shall be in a form mutually acceptable to USA
Waste and TransAmerican, and shall 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 the Merger Agreement in
accordance with the Merger Agreement.
MANNER AND BASIS FOR CONVERTING SHARES
At the Effective Time, each outstanding share of TransAmerican Common Stock
(other than shares owned by USA Waste and its subsidiaries) will be converted
into the right to receive, without interest, 0.045232 shares of USA Waste
Common Stock (as adjusted, the "Exchange Ratio"). In addition, at the
Effective Time, each issued and outstanding share of Acquisition Common Stock
will be converted into one share of common stock, par value $.001 per share,
of the Surviving Corporation.
To the extent Net Debt (as defined below) calculated as of the last day of
the calendar month immediately preceding the Meeting exceeds $43.2 million
(the "Net Debt Threshold"), the Exchange Ratio shall be adjusted downward and
determined as follows: (i) subtract from 2,000,000 that number which is the
quotient of (A) the excess of Net Debt over the Net Debt Threshold and (B)
$38.00, and (ii) then divide the resulting number by 44,216,250. "Net Debt"
shall mean TransAmerican's (i) long-term debt, less current portion plus (ii)
net working capital deficiency resulting from total current assets less total
current liabilities (including all prepayment costs, penalties and fees
relating to binding agreements that have been entered into for the retirement
of debt pursuant to Section 8.3(e) of the Merger Agreement, but excluding any
expenses or accruals for the actual transaction costs incurred (not in excess
of $375,000 plus such other amounts as may be charged by Arthur Andersen for
preparation of the report required to be delivered pursuant to Section 8.3(g)
of the Merger Agreement) or for severance costs or stay bonuses (reasonably
estimated at $1.4 million)), less (iii) the cash restricted for developmental
projects which is classified as a non-current asset, in each case as
determined in accordance with GAAP as applied by TransAmerican in its
previously filed reports and financial statements.
After the Effective Time, the stock transfer books of TransAmerican will be
closed. SHARE CERTIFICATES SHOULD NOT BE SURRENDERED FOR EXCHANGE BY
STOCKHOLDERS OF TRANSAMERICAN PRIOR TO APPROVAL OF THE MERGER AND THE RECEIPT
OF A LETTER OF TRANSMITTAL.
No certificates or scrip for fractional shares of USA Waste Common Stock
will be issued in the Merger and no USA Waste Common Stock dividend, stock
split or interest shall relate to any fractional security, and such fractional
interests will 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 TransAmerican Common Stock who would otherwise have been entitled to
receive a fraction of a share of USA Waste Common Stock upon surrender of
TransAmerican certificates for exchange pursuant to the Merger Agreement will
be entitled to receive from the Exchange Agent a cash payment equal to such
fraction multiplied by $38.00.
From and after the Effective Time, each holder of an outstanding certificate
which immediately prior to the Effective Time represented shares of
TransAmerican Common Stock will be entitled to receive in exchange therefor,
upon surrender thereof to the Exchange Agent, a certificate or certificates
representing the number of whole shares of USA Waste Common Stock to which
such holder is entitled pursuant to the Merger Agreement. Until holders or
transferees of certificates theretofore representing shares of TransAmerican
Common Stock have
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surrendered them for exchange as provided herein, no dividends or other
distributions will be paid with respect to any shares represented by such
certificates and no payment for fractional shares will be made and, without
regard to when such certificates representing shares of TransAmerican Common
Stock are surrendered for exchange as provided herein, no interest will be
paid on any dividends or other distributions or any payment for fractional
shares. Upon surrender of a certificate which, immediately prior to the
Effective Time, represented shares of TransAmerican Common Stock, there will
be paid to the holder of such certificate the amount of any dividends or other
distributions which theretofore became payable, but which were not paid by
reason of the foregoing, with respect to the number of whole shares of USA
Waste Common Stock represented by the certificate or certificates issued upon
such surrender.
CONVERSION OF TRANSAMERICAN OPTIONS
The Merger Agreement provides that, prior to the Effective Time,
TransAmerican shall use reasonable efforts to cause each holder of a
TransAmerican Option to exercise such option into shares of TransAmerican
Common Stock effective as of the Closing Date. In the event that some holders
of TransAmerican Options fail to exercise such options, then, prior to the
Effective Time, TransAmerican and USA Waste shall take such action as may be
necessary to cause each unexpired and unexercised TransAmerican Option to be
automatically converted at the Effective Time into a USA Waste Option to
purchase the number of shares of USA Waste Common Stock equal to the number of
shares of TransAmerican Common Stock that could have been purchased under the
TransAmerican Option multiplied by the Exchange Ratio, as adjusted, at a price
per share of USA Waste Common Stock equal to the option exercise price
determined pursuant to the TransAmerican Option divided by the Exchange Ratio,
as adjusted, and subject to the same terms and conditions as the TransAmerican
Option.
CONVERSION OF TRANSAMERICAN WARRANTS
The Merger Agreement provides that, prior to the Effective Time,
TransAmerican shall use reasonable efforts to cause each holder of a
TransAmerican Warrant to exercise such warrant into shares of TransAmerican
Common Stock effective as of the Closing Date. In the event that some holders
of TransAmerican Warrants fail to exercise such warrants, each unexpired
TransAmerican Warrant that is outstanding at the Effective Time, whether or
not exercisable, will automatically be converted into a USA Waste Warrant to
purchase a number of shares of USA Waste Common Stock equal to the number of
shares of TransAmerican Common Stock that could be purchased under such
warrant multiplied by the Exchange Ratio, as adjusted, at a price per share of
USA Waste Common Stock equal to the per share exercise price of such warrant
divided by the Exchange Ratio, as adjusted, and subject to the same terms and
conditions as the TransAmerican Warrant.
CONVERSION OF TRANSAMERICAN CONVERTIBLE DEBENTURES
The Merger Agreement provides that, prior to the Effective Time,
TransAmerican shall use reasonable efforts to cause each holder of a
TransAmerican convertible debenture to convert such convertible debenture into
shares of TransAmerican Common Stock effective as of the Closing Date. In the
event that some holders of TransAmerican convertible debentures fail to
convert such convertible debentures, then each TransAmerican convertible
debenture that is outstanding at the Effective Time, whether or not
convertible, shall automatically and without any action on the part of the
holder thereof be convertible into a number of shares of USA Waste Common
Stock equal to the number of shares of TransAmerican Common Stock that could
be issued upon conversion of the convertible debenture multiplied by the
Exchange Ratio, as adjusted, at a price per share of USA Waste Common Stock
equal to the per share conversion price set forth in the debenture divided by
the Exchange Ratio, as adjusted.
EMPLOYEE PLANS AND BENEFITS AND EMPLOYMENT CONTRACTS
The Merger Agreement provides that from and after the Effective Time, the
Surviving Corporation and its subsidiaries will honor in accordance with their
terms all existing written employment, severance, consulting and salary
continuation agreements between TransAmerican or any of its subsidiaries and
any current or former
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officer, director, employee or consultant of TransAmerican or any of its
subsidiaries or group of such officers, directors, employees or consultants
described in the TransAmerican Disclosure Schedule attached to the Merger
Agreement.
To the extent permitted under applicable law, each employee of TransAmerican
or its subsidiaries shall be given credit for all service with TransAmerican
or its subsidiaries (or service credited by TransAmerican or its subsidiaries)
under all employee benefit plans, programs, policies and arrangements
maintained by USA Waste or the Surviving Corporation in which they participate
or in which they become participants for purposes of eligibility, vesting and
benefit accrual including, without limitation, for purposes of determining (i)
short-term and long-term disability benefits, (ii) severance benefits, (iii)
vacation benefits and (iv) benefits under any retirement plan.
The Merger Agreement specifically provides that these provisions shall
survive the consummation of the Merger at the Effective Time and shall
continue without limit, and are intended to benefit and bind TransAmerican,
the Surviving Corporation and any other person or entity referenced in the
Merger Agreement with respect to these provisions, each of whom may enforce
these provisions (whether or not parties to the Merger Agreement).
CONDITIONS TO THE MERGER
The respective obligations of USA Waste and TransAmerican to effect the
Merger are subject to the fulfillment at or prior to the Closing Date 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 TransAmerican under applicable law; (b) 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 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, 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
authority; (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 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 Merger illegal; (g) all material
consents from lenders required to consummate the Merger shall have been
obtained and be in effect at the Effective Time; (h) Coopers & Lybrand L.L.P.,
independent accountants for USA Waste, shall have delivered a letter, dated
the Closing Date, addressed to USA Waste, in form and substance reasonably
satisfactory to USA Waste, to the effect that the merger will qualify for
"pooling of interests" accounting treatment if consummated in accordance with
the Merger Agreement; and (i) each of the parties to the Merger Agreement
shall have received a letter dated the Closing Date from Arthur Andersen LLP
regarding such firm's concurrence with TransAmerican's management's
conclusions that no conditions exist related to TransAmerican that would
preclude USA Waste's accounting for the Merger as a "pooling of interests"
under Accounting Principles Board Opinion No. 16 if closed and consummated in
accordance with the Merger Agreement.
The obligation of TransAmerican to effect the Merger is further subject to
the fulfillment at or prior to the Closing Date of the following additional
conditions, unless waived by TransAmerican: (a) USA Waste and Acquisition
shall have performed in all material respects their agreements in the Merger
Agreement required to be performed on or prior to the Closing Date, and the
representations and warranties of USA Waste and Acquisition contained in the
Merger Agreement shall be true and correct 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 TransAmerican 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) TransAmerican shall have received
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an opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., in form and
substance reasonably satisfactory to TransAmerican; and (c) TransAmerican
shall have received an opinion from Mayor, Day, Caldwell & Keeton, L.L.P.,
reasonably acceptable to TransAmerican, substantially to the effect that on
the basis of facts, representations and assumptions set forth in such opinion
which are consistent with the state of facts existing at the Effective Time,
the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code.
The obligation of USA Waste and Acquisition to effect the Merger is further
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions, unless waived by USA Waste and Acquisition: (a)
TransAmerican shall have performed its agreements in the Merger Agreement
required to be performed on or prior to the Closing Date, and the
representations and warranties of TransAmerican contained in the Merger
Agreement shall be true and correct 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 USA
Waste shall have received a certificate of the President and Chief Executive
Officer or of a Vice President of TransAmerican to that effect; (b) since the
Closing Date, there shall have been no changes that constitute, and no event
or events shall have occurred which have resulted in or constitute, a Material
Adverse Effect in the business, operations, properties, assets, conditions
(financial or other) or results of operations of TransAmerican and its
subsidiaries, taken as a whole; (c) all governmental waivers, consents,
orders, permit transfers and approvals legally required for the consummation
of the Merger and the transactions contemplated by the Merger Agreement or to
permit USA Waste to carry on the business of TransAmerican after Closing in
accordance with past customs and practice shall have been obtained and be in
effect at the Closing Date, and no governmental authority shall have
promulgated any statute, rule or regulation which, when taken together with
all such promulgations, would materially impair the value of TransAmerican to
USA Waste; (d) all waivers, consents and approvals from third parties
necessary for the transfer of any material contracts, financial assurances and
any other rights and benefits in connection with the Merger, or necessary for
the consummation of the Merger and the transactions contemplated hereby shall
have been obtained and be in effect at the Closing Date; (e) TransAmerican
shall have entered into binding agreements to retire in its entirety all of
its tax exempt debt and any other debt which requires a prepayment penalty,
cost or fee and removed itself from all guarantees of debt in excess of an
aggregate of $300,000; (f) USA Waste shall have received a certificate of the
Chief Executive Officer and the Treasurer of TransAmerican to the effect that
no material change has occurred in the Net Debt since the last day of the
calendar month immediately preceding the Meeting; (g) Arthur Andersen LLP
shall have delivered at Closing an agreed upon procedures report with respect
to the calculation of Net Debt as of a date mutually satisfactory to USA Waste
and TransAmerican; and (h) USA Waste shall have received a legal opinion from
Mayor, Day, Caldwell & Keeton, L.L.P., in form reasonably satisfactory to USA
Waste.
COOPERATION
Pursuant to the Merger Agreement, each of the parties has agreed to take, or
to 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 the Merger
Agreement. In this regard, the Merger Agreement provides, among other things,
that USA Waste shall take all reasonable steps necessary to avoid or eliminate
impediments under any antitrust, competition or trade regulation law that may
be asserted by the FTC, the Antitrust Division, any state Attorney General or
any governmental entity with respect to the Merger so as to enable
consummation of the Merger to occur as soon as reasonably possible. The Merger
Agreement further provides that, notwithstanding the foregoing, USA Waste will
propose, negotiate, commit to and effect, by consent decree, hold separate
order, or otherwise, the sale, divestiture, or disposition of such assets or
businesses of USA Waste or, effective as of the Effective Time, the Surviving
Corporation, as may be required in order to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order or other order
in any suit or proceeding, which would otherwise have the effect of preventing
or delaying consummation of the Merger; provided, however, that USA Waste will
not be required to sell, divest, dispose of, or hold separate assets or
businesses with aggregate 1997 revenues in excess of $6.25 million, not
including any assets or businesses that are required to be sold, divested,
disposed of, or held separate as a result of acquisitions of assets or
businesses by USA Waste or any of its subsidiaries after the date of the
Merger Agreement.
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REPRESENTATIONS AND WARRANTIES OF USA WASTE AND TRANSAMERICAN
In the Merger Agreement, USA Waste and TransAmerican 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. The representations and warranties of each of the parties
to the Merger Agreement will expire upon consummation of the Merger.
CONDUCT OF THE BUSINESS OF USA WASTE AND TRANSAMERICAN PRIOR TO THE MERGER
Pursuant to the Merger Agreement, TransAmerican has agreed that, after the
date of the Merger Agreement and prior to the Closing Date or earlier
termination of the Merger Agreement, and except as otherwise agreed to in
writing by USA Waste or as otherwise contemplated by or disclosed in 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 practice; (b) not (i) amend or propose to
amend their respective charters 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 to TransAmerican by a wholly
owned subsidiary of TransAmerican; (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 TransAmerican may issue
shares upon conversion of convertible securities and exercise of options and
warrants; (d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings required for working
capital purposes in the ordinary course of business or (B) borrowings to
refinance existing indebtedness on terms which are reasonably acceptable to
USA Waste, (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) make any acquisition of any assets or businesses other
than expenditures for fixed or capital assets in the ordinary course of
business, (iv) sell, pledge, dispose of or encumber any material assets or
businesses other than sales of businesses or assets in the ordinary course of
business, or (v) enter into any binding contract, agreement, commitment or
arrangement with respect to any of the foregoing; (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
transaction contemplated by the Merger Agreement; (f) subject to restrictions
imposed by applicable law, confer 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 TransAmerican 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; (j) not make, change or revoke any material tax
election or make any material agreement or settlement regarding taxes with any
taxing authority; (k) give prompt written notice to USA Waste of the
commencement of any Environmental Claim, or non-routine inspection by any
Governmental Authority with responsibility for enforcing or implementing any
applicable Environmental Laws, and provide to USA Waste such information as
USA Waste may reasonably request regarding such Environmental Claim, any
developments in connection therewith, and, as applicable, TransAmerican's or
its subsidiary's anticipated or actual response
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thereto; (l) use its commercially reasonable efforts to cause the transfer of
Environmental Permits (on the same terms and conditions), and any financial
assurance required thereunder to USA Waste or Acquisition as may be necessary
under applicable Environmental Laws in connection with the consummation of the
transactions under this Agreement to allow USA Waste or Acquisition to conduct
the business of TransAmerican and its subsidiaries, as currently conducted;
and (m) in the event that TransAmerican incurs indebtedness or uses its
restricted cash after the date hereof, TransAmerican will notify USA Waste of
such action and related amounts.
NO SOLICITATION OF ACQUISITION TRANSACTIONS
The Merger Agreement provides that after the date of the Merger Agreement
and prior to the Effective Time or earlier termination of the Merger
Agreement, TransAmerican shall not, and shall not permit any of its
subsidiaries to, initiate, solicit, negotiate, encourage or provide
confidential information to facilitate, and TransAmerican shall, and shall
cause each of its subsidiaries to, cause any officer, director or employee of
TransAmerican, or any attorney, accountant, investment banker, financial
advisor or any other agent retained by it or any of its subsidiaries, not to
initiate, solicit, negotiate, encourage or provide non-public or confidential
information to facilitate, any Acquisition Transaction; provided, however,
that TransAmerican may, in response to an Acquisition Proposal, furnish
(subject to the execution of a confidentiality agreement substantially similar
to the confidentiality provisions in the Merger Agreement), confidential or
non-public information to a Potential Acquirer if (a) the Board of Directors
of TransAmerican, after consulting with its outside legal counsel, determines
in good faith that the failure to provide such confidential or non-public
information to such Potential Acquirer would be reasonably likely to
constitute a breach of its fiduciary duty to its stockholders and (b)
TransAmerican's Board of Directors in good faith concludes that such
Acquisition Proposal (if consummated pursuant to its terms) would result in a
transaction more favorable to TransAmerican's stockholders than the Merger
Agreement. The Merger Agreement requires that TransAmerican immediately notify
USA Waste after receipt of any Acquisition Proposal, indication of interest or
request for non-public information relating to TransAmerican or its
subsidiaries in connection with an Acquisition Proposal or for access to the
properties, books or records of TransAmerican or any subsidiary by any person
or entity that informs the Board of Directors of TransAmerican 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 offeror and the terms
and conditions of such proposal, inquiry or contact.
TERMINATION OR AMENDMENT
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval by the stockholders of TransAmerican,
by the mutual written consent of TransAmerican and USA Waste or as follows:
(a) by either USA Waste or TransAmerican (i) 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
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 thirty (30) days
after written notice of such failure is given to the Non-Terminating Party by
the Terminating Party; (ii) if the Merger is not completed by May 15, 1998
(unless due to a delay or default on the part of the Terminating Party); (iii)
if the Non-Terminating Party (A) fails to perform in any material respects any
of its covenants in the Merger Agreement and (B) does not cure such default in
all material respects within thirty (30) days after notice of such default is
given to the Non-Terminating Party by the Terminating Party; and (iv) if the
requisite vote of the stockholders of TransAmerican shall not have been
obtained by May 10, 1998, or if the stockholders of TransAmerican shall not
have approved the Merger and the Merger Agreement at the Meeting; (b) by
TransAmerican (i) if the Merger is enjoined by a final, unappealable court
order; (ii) if (A) TransAmerican receives an offer from any third party
(excluding any affiliate of TransAmerican or any group of which any affiliate
of TransAmerican is a member) with respect to a merger, sale of substantial
assets or other business combination involving TransAmerican, (B)
TransAmerican's Board of Directors determines in good faith that such offer
constitutes a Superior Proposal and resolves to accept such Superior Proposal
and (C) TransAmerican shall have given USA Waste two (2) days prior written
notice of its intention to terminate the Merger Agreement (provided that such
termination shall not be effective until such time as any termination fees
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required to be paid by TransAmerican pursuant to the Merger Agreement have
been received by USA Waste); or (iii) if (A) a tender or exchange offer is
commenced by a third party (excluding any affiliate of TransAmerican or any
group of which any affiliate of TransAmerican is a member) for all outstanding
shares of TransAmerican Common Stock, (B) TransAmerican's Board of Directors
determines in good faith that such offer constitutes a Superior Proposal and
resolves to accept such Superior Proposal and recommend to the stockholders of
TransAmerican that they tender their shares in such tender or exchange offer,
and (C) TransAmerican shall have given USA Waste two (2) days prior written
notice of its intent to terminate the Merger Agreement (provided that such
termination shall not be effective until such time as the payment of any
termination fees required to be paid by TransAmerican pursuant to the Merger
Agreement have been received by USA Waste); and (c) by USA Waste if the Board
of Directors of TransAmerican shall have resolved to accept a Superior
Proposal or shall have recommended to the stockholders of TransAmerican that
they tender their shares in a tender or 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). In the event of termination of the Merger
Agreement pursuant to its terms by either USA Waste or TransAmerican, the
Merger Agreement shall forthwith become void and there shall be no liability
or further obligation on the part of TransAmerican, USA Waste, Acquisition or
their respective officers and directors (except for certain obligations of the
parties regarding confidential information, return of non-public information
following termination, expenses and fees payable in connection with the Merger
Agreement and/or the termination thereof, assignment of the Merger Agreement
and governing law applicable to the Merger Agreement, all of which shall
survive the termination).
The Merger Agreement may not be amended except by action taken by the
parties' respective Boards of Directors 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, and,
subject to applicable law, whether before or after approval by the
stockholders of TransAmerican, but after any such stockholder approval, no
amendment shall be made which decreases the Exchange Ratio or which adversely
affects the rights of the TransAmerican stockholders under the Merger
Agreement without the approval of the stockholders of TransAmerican.
TERMINATION FEES
TransAmerican 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.
TransAmerican has agreed to pay USA Waste a fee equal to $3 million if (i)
TransAmerican terminates the Merger Agreement pursuant to clauses (b)(ii) or
(b)(iii) of "--Termination or Amendment" above or (ii) USA Waste terminates the
Merger Agreement as described in clause (c) of "--Termination or Amendment"
above. USA Waste has agreed to pay TransAmerican (i) its reasonable, actual,
verified expenses (not in excess of $375,000, plus certain other expenses)
related to the transaction contemplated by the Merger Agreement if USA Waste
terminates the Merger Agreement because it is required to sell, divest, dispose
of or hold separate assets or businesses with aggregate 1997 revenues in excess
of $6.25 million or (ii) a fee equal to $1 million if TransAmerican terminates
the Merger Agreement pursuant to clause (a)(iii) 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 (i) the filing
fee and expenses incurred in connection with the HSR filing shall be paid by
USA Waste, (ii) all filing fees incurred in connection with the filing of the
Proxy Statement and Registration Statement, including any filing required
under state blue sky or securities laws, shall be paid by USA Waste, and (iii)
those expenses incurred in connection with printing the Proxy
Statement/Prospectus shall be shared equally by USA Waste and TransAmerican.
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INDEMNIFICATION
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
materially and adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers, employees or agents of
TransAmerican.
The Merger Agreement also provides that, without limiting the foregoing,
after the Effective Time, each of USA Waste 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 TransAmerican 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 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 TransAmerican) or arising out of or pertaining to the transactions
contemplated by the Merger Agreement. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) TransAmerican or USA Waste 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 USA Waste 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) USA Waste and the
Surviving Corporation will cooperate in the 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 USA Waste's or the Surviving Corporation's respective
charters or bylaws, such determination shall be made by independent legal
counsel acceptable to USA Waste or the Surviving Corporation, as the case may
be, and the indemnified Party; provided, however, that neither USA Waste nor
the Surviving Corporation shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld).
In the event the Surviving Corporation or USA Waste 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 USA Waste shall assume the indemnification obligations of the
Surviving Corporation or USA Waste, as the case may be, set forth in the
Merger Agreement.
The rights of each indemnified Party under the Merger Agreement are in
addition to, and not in limitation of, any other rights such indemnified Party
may have under the charter or bylaws of TransAmerican, any indemnification
agreement, under the DGCL or otherwise. The indemnification provisions of the
Merger Agreement shall survive the consummation of the Merger and are
expressly intended to benefit each of the indemnified Parties.
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COMPARATIVE RIGHTS OF STOCKHOLDERS OF USA WASTE AND TRANSAMERICAN
GENERAL
As a result of the Merger, holders of TransAmerican Common Stock will become
stockholders of USA Waste, and the rights of such former TransAmerican
stockholders will thereafter be governed by the USA Waste Certificate, the USA
Waste By-laws and the DGCL. The rights of holders of TransAmerican Common
Stock are currently governed by the TransAmerican Certificate of Incorporation
(the "TransAmerican Certificate"), the TransAmerican 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 TransAmerican, sets forth certain differences between
the USA Waste Certificate and the USA Waste By-laws, on the one hand, and the
TransAmerican Certificate and the TransAmerican Bylaws, on the other. This
summary is qualified in its entirety by reference to the full text of each of
these documents and the DGCL. For more information on how such documents may
be obtained, see "Available Information."
CLASSIFIED BOARD OF DIRECTORS
The DGCL permits, but does not require, a classified board of directors. The
TransAmerican Board of Directors is not classified; all of its directors serve
one-year terms and are subject to election at each annual meeting of the
stockholders of TransAmerican. The USA Waste Board of Directors is classified;
it is divided into three classes, with each class elected for a term of three
years and consisting, as nearly as possible, of one-third of the total number
of directors on the Board. At each annual meeting of USA Waste stockholders,
one class of directors is elected for a three-year term.
The fact that the USA Waste Board of Directors is classified may have the
effect of making it more difficult to change the composition of the Board, and
thus may make effecting a change of control of USA Waste more difficult. At
least two annual meetings of stockholders, instead of one, will generally be
required to effect a change in the majority of a classified board. Such a
delay may help ensure that incumbent directors, if confronted by a holder
attempting to force a proxy contest, a tender offer or other extraordinary
corporate transaction, would have sufficient time to review the proposal as
well as any available alternatives to the proposal and to act in what they
believe to be the best interests of stockholders. On the other hand, the
classification of directors may delay, defer or prevent a takeover attempt
that stockholders might consider in their best interest.
NUMBER OF DIRECTORS; REMOVAL OF DIRECTORS
The USA Waste Certificate and the USA Waste By-laws 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 TransAmerican Bylaws provide that the number of directors will
be fixed by the TransAmerican Board of Directors. The Board of Directors of
USA Waste currently consists of twelve members, and the Board of Directors of
TransAmerican currently consists of eleven members.
The USA Waste Certificate and the USA Waste By-laws 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 TransAmerican Certificate provides that any director
may be removed at any time by the Board of Directors. The TransAmerican Bylaws
provide that any or all directors may be removed, with or without cause, at
any time by the vote of a majority of the shares entitled to vote in the
election of directors.
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SPECIAL MEETINGS OF STOCKHOLDERS
The TransAmerican Bylaws provide that special meetings of the stockholders
of TransAmerican, for any purpose or purposes, may be called by the
TransAmerican Board of Directors. The USA Waste By-laws provide that special
meetings of the stockholders of USA Waste, for any purpose or purposes, may be
called by the Chairman of the Board (if any), by the Chief Executive Officer,
or by written order of a majority of directors, but such special meetings may
not be called by any other person or persons.
STOCKHOLDER NOMINATIONS AND PROPOSALS
The USA Waste By-laws 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
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 information specified in the USA Waste By-laws. The USA
Waste By-laws 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 TransAmerican Bylaws do not provide for any special advance notice
provisions with regard to the nomination of candidates for election as
directors or with regard to matters to be brought before an annual or special
meeting of the stockholders of TransAmerican.
AMENDMENT OF CERTAIN CHARTER PROVISIONS
The USA Waste Certificate 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
providing for a classified 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.
The TransAmerican Certificate of Incorporation does not provide for any
special charter amendment procedures, other than as provided in the DGCL.
VOTING
The USA Waste By-laws provide that all voting by stockholders must be taken
by written ballot. The TransAmerican Certificate provides that, except as
otherwise provided by law, determined by the Chairman to
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be advisable or demanded by the holders of a majority of the shares entitled
to vote, the vote upon any matter before a meeting of stockholders need not be
by ballot.
AMENDMENT OF BYLAWS
The TransAmerican Bylaws may be amended or repealed, or new or additional
Bylaws adopted by the Board of Directors of TransAmerican or by the vote of
not less than a majority of the total voting power of the stockholders of
TransAmerican entitled to vote in the election of directors. The USA Waste
Certificate and the USA Waste By-laws provide that the Board of Directors is
expressly authorized to adopt, amend or repeal the USA Waste By-laws, or adopt
new bylaws, without any action on the part of the stockholders of USA Waste;
provided, however, that no such adoption, amendment or repeal shall be valid
with respect to bylaw provisions which have been adopted, amended or repealed
by the stockholders of USA Waste; and further provided, that bylaws adopted or
amended by the directors of USA Waste and any powers thereby conferred may be
amended, altered or repealed by the stockholders of USA Waste.
AUTHORIZED CAPITAL STOCK
The USA Waste Certificate provides that USA Waste has the authority to issue
500,000,000 shares of USA Waste Common Stock and 10,000,000 shares of its
Preferred Stock. No shares of USA Waste Preferred Stock are outstanding. The
TransAmerican Certificate provides that TransAmerican has the authority to
issue 100,000,000 shares of TransAmerican Common Stock, and 5,000,000 shares
of its preferred stock, par value $.001 per share (the "TransAmerican
Preferred Stock"). No shares of TransAmerican Preferred Stock are outstanding.
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MARKET PRICE DATA
MARKET INFORMATION
The USA Waste Common Stock is traded on the NYSE under the symbol "UW." The
TransAmerican Common Stock is traded on the Nasdaq SmallCap Market under the
symbol "WSTE." The following table sets forth the range of high and low per
share sale prices for the USA Waste Common Stock and the TransAmerican Common
Stock, as reported on the NYSE Composite Tape and the Nasdaq SmallCap Market,
respectively.
<TABLE>
<CAPTION>
USA WASTE TRANSAMERICAN
COMMON STOCK COMMON STOCK
------------- -------------
HIGH LOW HIGH LOW
------ ------ -------------
<S> <C> <C> <C> <C>
1996
First Quarter..................................... $25.63 $17.25 $2.31 $ 1.38
Second Quarter.................................... 32.63 24.00 2.84 1.31
Third Quarter..................................... 34.13 22.75 3.06 1.38
Fourth Quarter.................................... 34.25 28.63 1.75 0.88
1997
First Quarter..................................... $38.88 $28.63 $ 1.66 $ 1.00
Second Quarter.................................... 39.25 29.50 1.53 1.03
Third Quarter..................................... 44.13 38.00 1.56 1.06
Fourth Quarter.................................... 41.75 32.63 1.63 1.00
1998
First Quarter..................................... $46.88 $34.44 $ 1.78 $ 1.28
</TABLE>
On January 26, 1998, the last trading day prior to announcement by USA Waste
and TransAmerican that they had reached an agreement concerning the Merger,
the closing sale price of USA Waste Common Stock as reported on the NYSE
Composite Tape was $34.75 per share, and the closing sale price of
TransAmerican Common Stock as reported on the Nasdaq SmallCap Market was $1.38
per share. Assuming the Merger had occurred on such date, the equivalent
market value per share of TransAmerican Common Stock, calculated by
multiplying the closing sale price of USA Waste Common Stock by the Exchange
Ratio, would have been $1.57.
On March 31, 1998, the closing sale price of USA Waste Common Stock as
reported on the NYSE Composite Tape was $44.56 per share, and the closing sale
price of TransAmerican Common Stock as reported on the Nasdaq SmallCap Market
was $1.78 per share. The market prices of shares of USA Waste Common Stock and
TransAmerican Common Stock are subject to fluctuation.
Following the Merger, USA Waste Common Stock will continue to be traded on
the NYSE under the symbol "UW", and the listing of TransAmerican Common Stock
on the Nasdaq SmallCap Market will be terminated.
DIVIDEND INFORMATION
USA Waste has never paid cash dividends on its common stock. Although
payment of dividends on USA Waste Common Stock is currently restricted by the
terms of USA Waste's revolving credit facility, the Board of Directors of USA
Waste may review its dividend policy in the future.
TransAmerican has never paid cash dividends on its common stock. In
addition, payment of dividends on the TransAmerican Common Stock is restricted
by the terms of certain TransAmerican loan agreements.
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DESCRIPTION OF USA WASTE CAPITAL STOCK
USA Waste is currently authorized to issue 500,000,000 shares of its Common
Stock, par value $.01 per share, of which 216,610,031 shares were outstanding
on November 12, 1997, and 10,000,000 shares of preferred stock, par value $.01
(the "USA Waste Preferred Stock"), none of which are outstanding.
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 USA Waste 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 USA Waste 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 USA Waste 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 USA Waste 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 USA Waste Common Stock upon USA Waste's
dissolution.
AUTHORIZED BUT UNISSUED SHARES
Authorized but unissued shares of USA Waste Common Stock or USA Waste
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.
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LEGAL MATTERS
The validity of the USA Waste Common Stock to be issued in connection with
the Merger and certain tax consequences of the Merger will be passed upon by
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. Certain tax consequences of the
Merger will be passed upon for TransAmerican by Mayor, Day, Caldwell & Keaton,
L.L.P.
EXPERTS
The consolidated balance sheets of USA Waste as of December 31, 1997 and
1996 and the consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Proxy Statement/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 audited consolidated financial statements of TransAmerican incorporated
by reference in this Proxy Statement/Prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm as experts in
giving said reports.
STOCKHOLDER PROPOSALS
If the Merger is not consummated, and unless the annual meeting is postponed
for any reason, proposals by a TransAmerican stockholder to be presented at
TransAmerican's 1998 annual meeting were required to be received by
TransAmerican by February 8, 1998 in order to be included in TransAmerican's
proxy statement.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
USA WASTE SERVICES, INC.,
TRANSAMERICAN ACQUISITION CORP.,
AND
TRANSAMERICAN WASTE INDUSTRIES, INC.
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TABLE OF CONTENTS
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ARTICLE I THE MERGER............................................................................ 1
Section 1.1. The Merger................................................................... 1
Section 1.2. Effective Time of the Merger................................................. 1
ARTICLE II THE SURVIVING AND PARENT CORPORATIONS................................................ 2
Section 2.1. Certificate of Incorporation................................................. 2
Section 2.2. Bylaws....................................................................... 2
Section 2.3. Directors.................................................................... 2
Section 2.4. Officers..................................................................... 2
ARTICLE III CONVERSION OF SHARES................................................................ 2
Section 3.1. Conversion of Company Shares in the Merger................................... 2
Section 3.2. Conversion of Subsidiary Shares.............................................. 3
Section 3.3. Exchange of Certificates..................................................... 3
Section 3.4. No Fractional Securities..................................................... 5
Section 3.5. Closing...................................................................... 5
Section 3.6. Closing of the Company's Transfer Books...................................... 5
Section 3.7. Exchange Ratio Adjustment.................................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY.............................. 6
Section 4.1. Organization and Qualification............................................... 6
Section 4.2. Capitalization............................................................... 6
Section 4.3. Authority; Non-Contravention; Approvals...................................... 6
Section 4.4. Litigation................................................................... 8
Section 4.5. Registration Statement and Proxy Statement................................... 8
Section 4.6. Reports and Financial Statements............................................. 8
Section 4.7. Environmental Matters........................................................ 9
Section 4.8. Reorganization and Pooling of Interests...................................... 9
Section 4.9. Ownership of Company Common Stock............................................ 10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................................... 10
Section 5.1. Organization and Qualification............................................... 10
Section 5.2. Capitalization............................................................... 10
Section 5.3. Subsidiaries................................................................. 11
Section 5.4. Authority; Non-Contravention; Approvals...................................... 11
Section 5.5. Reports and Financial Statements............................................. 12
Section 5.6. Absence of Undisclosed Liabilities........................................... 13
Section 5.7. Absence of Certain Changes or Events......................................... 13
Section 5.8. Litigation................................................................... 13
Section 5.9. Proxy Statement.............................................................. 14
Section 5.10. No Violation of Law......................................................... 14
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Section 5.11. Compliance with Agreements................................................... 15
Section 5.12. Taxes........................................................................ 15
Section 5.13. Employee Benefit Plans; ERISA................................................ 16
Section 5.14. Labor Controversies.......................................................... 18
Section 5.15. Environmental Matters........................................................ 18
Section 5.16. Non-competition Agreements................................................... 19
Section 5.17. Title to Assets.............................................................. 19
Section 5.18. Material Contracts........................................................... 20
Section 5.19. Company Stockholders' Approval............................................... 20
Section 5.20. Brokers and Finders.......................................................... 20
Section 5.21. Opinion of Financial Advisor................................................. 20
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER............................................... 20
Section 6.1. Conduct of Business by the Company Pending the Merger........................ 20
Section 6.2. Control of the Company's Operations.......................................... 22
Section 6.3. Acquisition Transactions..................................................... 22
ARTICLE VII ADDITIONAL AGREEMENTS............................................................... 23
Section 7.1. Access to Information........................................................ 23
Section 7.2. Registration Statement and Proxy Statement................................... 24
Section 7.3. Stockholders' Approvals...................................................... 24
Section 7.4. Compliance with the Securities Act........................................... 24
Section 7.5. Exchange Listing............................................................. 25
Section 7.6. Expenses and Fees............................................................ 25
Section 7.7. Agreement to Cooperate....................................................... 25
Section 7.8. Public Statements............................................................ 26
Section 7.9. Option Plans and Warrants.................................................... 26
Section 7.10. Notification of Certain Matters.............................................. 27
Section 7.11. Directors' and Officers' Indemnification..................................... 27
Section 7.12. Corrections to the Proxy Statement/Prospectus and Registration
Statement.................................................................... 28
Section 7.13. Release of Sureties and Bonds................................................ 28
Section 7.14. Employee Plans and Benefits and Employment Contracts......................... 28
Section 7.15. Exercise or Conversion of Options, Warrants and Convertible
Debentures................................................................... 29
ARTICLE VIII CONDITIONS TO CLOSING.............................................................. 29
Section 8.1. Conditions to Each Party's Obligation to Effect the Merger................... 29
Section 8.2. Conditions to Obligation of the Company to Effect the Merger................. 30
Section 8.3. Conditions to Obligations of Parent and Subsidiary to Effect the Merger...... 31
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.................................................... 32
Section 9.1. Termination.................................................................. 32
Section 9.2. Effect of Termination........................................................ 33
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Section 9.3. Amendment................................................................... 34
Section 9.4. Extensions; Waiver.......................................................... 34
ARTICLE X GENERAL PROVISIONS.................................................................... 34
Section 10.1. Non-Survival of Representations and Warranties.............................. 34
Section 10.2. Notices..................................................................... 34
Section 10.3. Interpretation.............................................................. 35
Section 10.4. Miscellaneous............................................................... 35
Section 10.5. Counterparts................................................................ 36
Section 10.6. Parties in Interest......................................................... 36
Section 10.7. Enforcement of the Agreement................................................ 36
Section 10.8. Certain Definitions......................................................... 36
Section 10.9. Validity.................................................................... 37
Section 10.10. Disclosure Schedules........................................................ 37
Section 10.11. Obligation of the Parent.................................................... 37
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of January ___, 1998 (the
"Agreement"), by and among USA Waste Services, Inc., a Delaware corporation
("Parent"), TransAmerican Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Subsidiary"), and TransAmerican Waste Industries,
Inc., a Delaware corporation (the "Company").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the respective Boards of Directors of Parent, Subsidiary and
Company have approved the merger of Subsidiary with and into the Company (the
"Merger");
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;
and
WHEREAS, Parent, Subsidiary and the Company intend that the Merger be
accounted for as a pooling-of-interests for financial reporting purposes.
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 Delaware General Corporation Law ("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 certified
copy of the agreement, in a form mutually acceptable to Parent and the Company,
or in a certificate of merger in lieu thereof, to be filed with the Secretary of
State of the State of Delaware in accordance with 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, and in any event within five (5) days after the satisfaction, or waiver,
of all conditions to Closing set forth in Article VIII hereof, subject to the
terms and conditions hereof. Accordingly, subject to the provisions hereof and
to the fiduciary duties of their respective boards of directors, the parties
shall 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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ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
Section 2.1. CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time shall be the Certificate of Incorporation of the Surviving Corporation
after the Effective Time, and subject to Section 7.11 of this Agreement as may
thereafter be amended in accordance with its terms and as provided under DGCL.
Section 2.2. BYLAWS. The Bylaws of the Company as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
after the Effective Time, and subject to Section 7.11 of this Agreement as may
thereafter be amended in accordance with their terms and as provided by the
Certificate of Incorporation of the Surviving Corporation and DGCL.
Section 2.3. DIRECTORS. The directors of the Surviving Corporation shall
be as designated in Schedule 2.3, and such directors shall serve in accordance
with the Bylaws of the Surviving Corporation until their respective successors
are duly elected or appointed and qualified.
Section 2.4. OFFICERS. The officers of the Surviving Corporation shall be
as designated in Schedule 2.4, and such officers shall serve in accordance with
the Bylaws of the Surviving Corporation until their respective successors are
duly elected or appointed and qualified.
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 Company's common stock, $.001 par value per
share (the "Company Common Stock") issued and outstanding shall, subject to
Sections 3.3, 3.4 and 3.7, be converted into the right to receive validly
issued, fully paid and non-assessable shares of common stock, par value $.01 per
share, of Parent (the "Parent Common Stock") in the ratio of 0.045232 shares of
Parent Common Stock for each share of Company Common Stock (as adjusted
pursuant to this agreement, the "Exchange Ratio");
(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) each convertible debenture that is outstanding at the Effective
Time, whether or not convertible, shall automatically and without any action on
the part of the holder thereof be convertible into a number of shares of Parent
Common Stock equal to the number of shares of Company Common Stock that could be
issued upon conversion of the convertible debenture
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multiplied by the Exchange Ratio, at a price per share of Parent Common Stock
equal to the per share conversion price of the debenture divided by the Exchange
Ratio;
(d) all rights to receive shares of Company Common Stock in
connection with the earn-out arrangement set forth in Schedule 3.1(e) 3.1(d)
shall automatically be converted into a right to receive a number of shares of
Parent Company Stock equal to the number of shares of Company Common Stock that
could be acquired under such right multiplied 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 $.001 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). From and after the Effective Time the holders of
the outstanding certificates of Company Common Stock shall be treated as a
holder of record of Parent Common Stock for all purposes; provided, however,
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 or
other distributions 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 other distributions 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 or other distributions 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 surrender.
(b) If any certificate representing 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.
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(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 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 Time, 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 and cash in lieu of fractional
shares, 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
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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 $38.00.
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 (but in any event within
five business days) 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.
Section 3.7. EXCHANGE RATIO ADJUSTMENT. To the extent Net Debt (as
defined below) calculated as of the last day of the calendar month immediately
preceding the Company Stockholders' Meeting exceeds $43,200,000 (the "Net Debt
Threshold"), the Exchange Ratio shall be adjusted downward and determined as
follows: (i) subtract from 2,000,000 that number which is the quotient of (A)
the excess of Net Debt over the Net Debt Threshold and (B) $38.00, and (ii) then
divide the resulting number by 44,216,250. Arthur Andersen will deliver promptly
after such calendar month, a report based upon agreed upon procedures relating
to the calculation of Net Debt, which report will be in form and substance
satisfactory to Parent and the Company. "Net Debt" shall mean the Company's (i)
long-term debt, less current portion plus (ii) net working capital deficiency
resulting from total current assets less total current
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liabilities (including all prepayment costs, penalties and fees relating to
binding agreements that have been entered into for the retirement of debt
pursuant to Section 8.3(e), but excluding any expenses or accruals for
the actual transaction costs incurred (not in excess of $375,000) plus such
other amounts as may be charged by Arthur Andersen pursuant to the report
required to be delivered pursuant to this Section and Section 8.3(g)) or for
severance costs or stay bonuses (reasonably estimated at $1,400,000)), less
(iii) the cash restricted for developmental projects which is classified as a
non-current asset, in each case as determined in accordance with GAAP as applied
by the Company in its previously filed reports and financial statements pursuant
to Section 5.5.
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 "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.
Section 4.2. CAPITALIZATION.
(a) As of September 30, 1997, the authorized capital stock of Parent
consisted of 500,000,000 shares of Parent Common Stock and 10,000,000 shares of
preferred stock, par value $1.00 per share ("Parent Preferred Stock"). As of
September 30, 1997, (i) 216,048,062 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 and (iii) 23,485 shares of Parent Common Stock
and no shares of Parent Preferred Stock were held in the treasury of Parent.
(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.
Section 4.3. 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 Required Statutory
Approvals (as defined in Section 4.3(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 the consummation by Parent and Subsidiary of the
transactions contemplated hereby.
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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 Article VII is valid, legally binding and
enforceable, notwithstanding the absence of any approval, including approval by
Parent's stockholders. The consent or approval of the Parent's stockholders is
not required or necessary to authorize the execution and delivery of this
Agreement or the consummation by Parent or Subsidiary of the transactions
contemplated hereby
(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 bylaws 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 (including without limitation Environmental Laws as defined herein) 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 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. 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), results of
operations or prospects 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 Proxy Statement/Prospectus (as defined in Section 4.5) 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)
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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 4.4. LITIGATION. There are no claims, suits, actions or
proceedings pending or, to the knowledge of the 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 would reasonably be expected either alone or in the aggregate with all
such claims, actions or proceedings to materially 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 4.5. 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 meeting of its 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 "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 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, 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.
Section 4.6. 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.
As of their respective dates, the Parent SEC Reports (defined herein below) 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.
Parent has previously delivered to the Company copies (including all exhibits,
post-effect amendments and supplements
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thereto) of each of the Parent SEC Reports filed since December 31, 1996. 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. "Parent SEC Reports" shall mean the Parent's (a) Annual Reports on Form
10-K for the fiscal year ended December 31, 1996 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) (in each case as filed prior to the date hereof).
Section 4.7. ENVIRONMENTAL MATTERS. 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 10.8), 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 10.8) as a result of any activity of Parent or any of its subsidiaries
in amounts exceeding the levels permitted by applicable Environmental Laws,
(iii) since January 1, 1994, 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 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 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, and (vi) 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
(vi) 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.
Section 4.8. 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 within the
meaning of Section 368(a) of the Code or (b) being treated for financial
<PAGE>
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 4.9. 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 except for warrants to purchase Company Common Stock which will be
canceled as of the Effective Time.
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 Certificate of
Incorporation, as amended, and Bylaws, in each case as in effect on the date
hereof, including all amendments thereto, have heretofore been delivered to
Parent.
Section 5.2. CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock. As of September 30, 1997, 44,193,750 shares of Company Common Stock, and
no shares of preferred stock were issued and outstanding. All of such issued
and outstanding shares are validly issued and are fully paid, nonassessable and
free of preemptive rights. No subsidiary of the Company holds any shares of the
capital stock of the Company.
(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,
<PAGE>
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, except where the failure to be so
organized 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. 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.
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) and the Company Required Statutory Approvals (as defined in Section
5.4(c)), to consummate the transactions contemplated hereby. This Agreement has
been approved by the Board of Directors of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
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 and 6.3 and Article VII is valid, legally
binding and enforceable notwithstanding the absence of the Company Stockholders'
Approval.
<PAGE>
(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 bylaws 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 (including without limitation Environmental Laws as defined
herein), 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 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
Stockholder's Approval. 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 Parent and the Company required by
the HSR Act, (ii) the filing of the 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 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, 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 complied in all
<PAGE>
material respects with all applicable requirements of the appropriate act and
the rules and regulations thereunder. The Company has previously delivered to
Parent copies of its (a) Annual Reports on Form 10-K for the fiscal year ended
December 31, 1996, and for each of the two immediately preceding fiscal years,
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, 1997, until
the date hereof, and (c) all other reports, including quarterly reports, or
registration statements filed by the Company with the SEC since January 1, 1997
(other than Registration Statements filed on Form S-8) (the documents referred
to in clauses (a), (b) and (c) and collectively referred to as the "Company SEC
Reports"). 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
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, neither the Company nor any of its subsidiaries has
incurred 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 the Company Financial
Statements or reflected in the notes thereto or (ii) which were incurred after
September 30, 1997, and were incurred in the ordinary course of business and
consistent with past practices, and (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.
Section 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
most recent Company SEC Report, 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, Environmental Claims 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 proceedings, to materially and adversely affect
the business, operations, properties, assets, condition (financial or other) or
<PAGE>
results of operations of the Company and its subsidiaries, taken as a whole.
Except as referred to in the Company SEC Reports or in the Company Disclosure
Schedule, 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. PROXY STATEMENT. None of the information to be supplied by
the Company or its subsidiaries for inclusion in the Proxy Statement will, at
the time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the meeting of stockholders of the Company to be
held in connection with the transactions contemplated by this Agreement, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply, as of its mailing date, as to form
in all material respects with all applicable laws, including the provisions of
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 or Subsidiary for inclusion therein.
Section 5.10. NO VIOLATION OF LAW. Except as disclosed in the Company SEC
Reports or in the Company Disclosure Schedule, 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) 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 or prospects of the Company and its subsidiaries, taken as a whole.
<PAGE>
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 charters,
bylaws 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, which breaches,
violations and defaults, in the case of clause (b) of this Section 5.11, would
have, in the 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.
(a) The Company and its subsidiaries have (i) duly filed (or there has
been filed on their behalf) with the appropriate taxing authority all Tax
Returns (as hereinafter defined) required to be filed by them on or prior to the
date hereof, and such Tax Returns are true, correct and complete in all material
respects, and (ii) duly paid in full or made adequate provision on their
financial statements (or there has been paid or adequate provision has been made
on their behalf) for the payment of all Taxes (as hereinafter defined) for all
periods ending through the date hereof. There are no liens for Taxes upon any
property or assets of the Company or any subsidiary thereof, except for liens
for Taxes not yet due. Neither the Company or any of its subsidiaries has made
any change in accounting methods, received a ruling from any taxing authority or
signed an agreement with any taxing authority which is reasonably likely to have
a material adverse effect on the Company or any of its subsidiaries. The Company
and its subsidiaries have complied in all respects with all applicable laws,
rules and regulations relating to the payment and withholding of Taxes
(including, without limitation, withholding of Taxes pursuant to Sections 1441
and 1442 of the Internal Revenue Code of 1986, as amended (the "Code") or
similar provisions under any foreign laws) and have, within the time and the
manner prescribed by law, withheld from employee wages and paid over to the
appropriate taxing authority all amounts required to be so withheld and paid
over under all applicable laws. No federal, state, local or foreign audits or
other administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company or its subsidiaries, and
neither the Company nor its subsidiaries has received a written notice of any
pending audits or proceedings. The federal income Tax Returns of the Company
and its subsidiaries have been examined by the Internal Revenue Service (which
examination has been completed) or the statute of limitations for the assessment
of federal income Taxes of the Company and its subsidiaries has expired, for all
periods through and including December 31, 1993, and no deficiencies were
asserted as a result of such examinations which have not been resolved and fully
paid. There are no outstanding requests, agreements, consents or waivers to
extend the statute of limitations applicable to the assessment of any Taxes or
deficiencies against the Company or any of its subsidiaries, and no power of
attorney granted by either the Company or any of its subsidiaries with respect
to any Taxes is currently in force. 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 the Company. Neither the Company nor any of its
subsidiaries has, with regard to any assets or property held, acquired or to be
acquired
<PAGE>
by any of them, filed a consent to the application of Section 341(f) of the
Code, or agreed to have Section 341(f)(2) of the Code apply to any disposition
of a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by the Company or any of its subsidiaries. Except for any payments
made in connection with the transactions contemplated by this Agreement, the
deductibility of compensation paid by the Company and/or its subsidiaries will
not be limited by Section 162(m) of the Code. No adjustments or deficiencies
relating to Tax Returns of the Company and its subsidiaries have been proposed,
asserted or assessed by any taxing authority, except for such adjustments or
deficiencies which have been fully paid or finally settled. No payment to be
made in connection with the transactions contemplated by this Agreement will
fail to be deductible under Section 280G of the Code.
(b) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the Internal Revenue
Service or any taxing authority (whether domestic or foreign including, without
limitation, any state, county, local or foreign government or any subdivision or
taxing agency thereof (including a United States possession)), whether computed
on a separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest whether paid or received, fines, penalties or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments.
(c) "Tax Return" shall mean any report, return, document, declaration
or other information or filing required to be supplied to any taxing authority
or jurisdiction (foreign or domestic) with respect to Taxes, including, without
limitation, information returns, any documents with respect to or accompanying
payments of estimated Taxes, or with respect to or accompanying requests for the
extension of time in which to file any such report, return, document,
declaration or other information.
Section 5.13. EMPLOYEE BENEFIT PLANS; ERISA.
(a) Except as set forth in the Company SEC Reports, at the date
hereof, the Company and its subsidiaries do not maintain or contribute to any
material employee benefit plans, programs, arrangements and practices (such
plans, programs, arrangements and 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 and Multiple Employer Plans which any of
the Company or its subsidiaries maintains or to which any of them is obligated
to make contributions. Neither the Company nor its subsidiaries has any
obligation to create any additional such plan or to amend any such plan so as to
increase benefits thereunder, except as required under the terms of the Company
Plans, under existing collective bargaining agreements or to comply with
applicable law.
<PAGE>
(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 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 Disclosure Schedule, 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 all applicable laws, rules and regulations 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 IRS 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 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 ERISA, (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, or any fiduciary thereunder, other than
claims for benefits in the ordinary course, and (x) the Company and its
subsidiaries have no current material liability, whether measured alone or in
the aggregate, for plan termination or withdrawal (complete or partial) under
Title IV of ERISA based on any plan to which any entity that would be deemed one
employer with the Company and its subsidiaries under Section 4001 of ERISA or
Section 414 of the Code contributed during the period of time covered by the
applicable statute of limitations (the "Company Controlled Group Plans"), 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. None
of the Company Controlled Group Plans has an "accumulated funding deficiency"
(as defined in Section 302 of ERISA and 412 of the Code).
(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.
<PAGE>
(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
subsidiary would have withholding liability.
Section 5.14. LABOR CONTROVERSIES. Except as set forth 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 Substances as a result of any activity of
the Company or any of its subsidiaries in amounts exceeding the levels permitted
by applicable Environmental Laws or environmental permits, (iii) neither the
Company 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 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) there have
been no environmental investigations, studies, audits, tests, reviews or other
analyses regarding compliance or non-compliance with any applicable
Environmental Law conducted by or which are in the possession of the Company or
its subsidiaries relating to the activities of the Company or its subsidiaries
which have not been made available at their respective sites to Parent prior to
the date hereof, (viii) 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, (ix) there is no asbestos or
asbestos containing material present in any of the properties owned by the
Company and its subsidiaries above permitted levels, and no asbestos has been
removed from any such properties during the time such properties were owned,
leased or operated by the Company or any of its
<PAGE>
subsidiaries above permitted levels, and (x) 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 (x) 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 5.15
of the Company Disclosure Schedule lists all facilities of the Company for which
environmental permits are required.
Section 5.16. NON-COMPETITION AGREEMENTS. 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 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 business currently engaged in by the 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 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), (iii) as
disclosed in the Company SEC Reports, or (iv) any lien securing any debt or
obligation described on the Company Disclosure Schedule which is expressly
referenced as being secured, 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 leases any substantial amount of real property
have been delivered to Parent and 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 by or on behalf of the Company or its subsidiaries, or to
the knowledge of the Company, by or on behalf of any third party, other than
defaults under such leases which in the aggregate will not materially and
adversely affect the condition of the Company.
Section 5.18. MATERIAL CONTRACTS. All contracts required to be filed by
the Company pursuant to Item 601 of Regulation S-K are set forth as exhibits to
the Company SEC Reports. All
<PAGE>
such contracts are in good standing, valid and effective in accordance with
their respective terms, and there is not, under any of such material contracts,
any existing default or event which with notice or lapse of time or both would
become a default by or on behalf of the Company or its subsidiaries, or to the
knowledge of the Company, by or on behalf of any third party, other than
defaults under such contracts 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.
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.
Section 5.20. BROKERS AND FINDERS. Except for the fees and expenses
payable to Dain Rauscher, Inc. ("Dain Rauscher"), 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 Rauscher Pierce, 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, Dain Rauscher has rendered a written opinion to the Company to the
effect that the Merger is fair from a financial point of view to the
shareholders of the Company (other than Parent and its affiliates).
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 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 charters 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 the Company to the Company;
<PAGE>
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional share of, or any options, warrants or
rights of any kind to acquire any share of their capital stock of any class or
any debt or equity securities convertible into or exchangeable for such capital
stock, except that the Company may issue shares upon conversion of convertible
securities and exercise of options and warrants outstanding on the date hereof;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowing required for working
capital purposes in the ordinary course of business or (B) borrowing to
refinance existing indebtedness on terms which are reasonably acceptable to
Parent, (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) make any acquisition of any assets or businesses other than
expenditures for fixed or capital assets in the ordinary course of business,
(iv) sell, pledge, dispose of or encumber any assets or businesses other than
sales in the ordinary course of business or (v) enter into any contract,
agreement, commitment or arrangement with respect to any of the foregoing;
(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 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;
(j) not make, change or revoke any material Tax election or make any
material agreement or settlement regarding Taxes with any taxing authority;
<PAGE>
(k) give prompt written notice to Parent of the commencement of any
Environmental Claim, or non-routine inspection by any Governmental Authority
with responsibility for enforcing or implementing any applicable Environmental
Laws, and provide to Purchaser such information as Purchaser may reasonably
request regarding such Environmental Claim, any developments in connection
therewith, and, as applicable, the Company's or its subsidiary's anticipated or
actual response thereto;
(l) use its commercially reasonable efforts to cause the transfer of
Environmental Permits (on the same terms and conditions), and any financial
assurance required thereunder to Parent or Subsidiary as may be necessary under
applicable Environmental Laws in connection with the consummation of the
transactions under this Agreement to allow Parent or Subsidiary to conduct the
business of the Company and its subsidiaries, as currently conducted; and
(m) in the event that the Company incurs indebtedness or uses its
restricted cash after the date hereof, the Company will notify Parent of such
action and related amounts.
Section 6.2. 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 6.3. 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 it 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 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 (such transactions being referred to herein
as "Acquisition Transactions");
(b) Notwithstanding the provisions of paragraph (a) above, the Company
may, in response to an unsolicited written proposal with respect to an
Acquisition Transaction ("Acquisition Proposal"), furnish (subject to the
execution of a confidentiality agreement substantially similar to the
confidentiality provisions of the Confidentiality Agreement, executed by Parent
in connection herewith) confidential or non-public information concerning its
business, properties or assets to a financially capable corporation,
partnership, person or other entity or group (a "Potential Acquiror") and
negotiate with such Potential Acquiror if (i) the Board of Directors of the
Company in good faith concludes that such Acquisition Proposal (if consummated
pursuant to its terms) would result in a transaction more favorable to the
Company's stockholders than the Merger and (ii) based upon advice of its outside
legal counsel, its Board of Directors determines in good faith that the failure
to provide such confidential or non-public information to such Potential
<PAGE>
Acquiror would constitute a breach of its fiduciary duty to its stockholders
(any such Acquisition Proposal meeting the condition of clause (i) being
referred to as a "Superior Proposal"). Moreover, the Company's Board of
Directors may take and disclose to the Company's stockholders a position with
respect to a tender offer by a third party pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or may make such other disclosures to the
Company's stockholders which, as advised by outside counsel, is required under
applicable law.
(c) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal or any request for non-public 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") full access during normal
business hours throughout the period prior to the Effective Time to all of their
respective properties (including without limitation to conduct soil,
groundwater, ambient air or other environmental testing or analyses), books,
contracts, personnel, representatives of or contacts with governmental or
regulatory authorities, agencies or bodies, commitments, and records (including,
but not limited to, Tax Returns and any and all records or documents which are
within the possession of governmental or regulatory authorities, agencies or
bodies, and the disclosure of which the Company and its subsidiaries can
facilitate or control) 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 or which may have a material effect on their
respective businesses, properties or personnel and (ii) such other information
concerning their respective businesses, properties and personnel as Parent or
Subsidiary, as the case may be, shall reasonably request. Parent and its
subsidiaries shall hold and shall use their reasonable best efforts to cause the
Parent Representatives to hold in strict confidence all non-public documents and
information furnished to Parent and Subsidiary 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, 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.
<PAGE>
(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.
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 Proxy Statement/Prospectus and shall use all reasonable efforts
to have the Registration Statement declared effective by the SEC as promptly as
REASONABLY 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.
Section 7.3. STOCKHOLDERS' APPROVALS. Subject to the fiduciary duties of
the Board of Directors of the Company under applicable law, 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 (the "Company Stockholders' Approval"). Such meeting of
stockholders shall be held as soon as practicable, and shall be referred to
herein as the "Company Stockholders' Meeting." Parent shall 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. The Company shall 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 the Company, to deliver to Parent 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 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. To the
extent required under the Company's convertible debentures, options and
warrants, Parent shall, promptly following the Effective Time, use commercially
reasonable efforts to cause one or more registration statements under the
Securities Act to be declared effective to cover the exercise of such
convertible debentures, options and warrants for shares of Parent Common Stock.
<PAGE>
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 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 the
exercise of stock options or warrants or the conversion of convertible
debentures.
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 (i) the filing fee and expenses incurred in
connection with the HSR filing shall be paid by Parent, (ii) all filing fees
incurred in connection with the filing of the Proxy and Registration Statement,
including any filing required under state blue sky or securities laws, shall be
paid by Parent, and (iii) those expenses incurred in connection with printing
the Proxy Statement/Prospectus shall be shared equally by Parent and the
Company.
(b) The Company agrees to pay to Parent a fee equal to Three Million
Dollars ($3,000,000) if (i) the Company terminates this Agreement pursuant to
clause (v) or (vi) of Section 9.1(a), or (ii) Parent terminates this Agreement
pursuant to clause (iv) of Section 9.1(b).
(c) Parent agrees to pay to the Company (i) its reasonable, actual,
verified expenses (not in excess of $375,000 PLUS THE EXPENSES OF ARTHUR
ANDERSEN REFERENCED IN SECTION 3.7) related to the transaction contemplated
hereby if Parent terminates this Agreement because it is required to sell,
divest, dispose of, or hold separate assets or businesses with aggregate 1997
revenues in excess of $6,250,000 (which amount is estimated to be the revenues
from the front loader business in the Greater Houston area and the North County
Landfill) or (ii) a fee equal to One Million Dollars ($1,000,000) if the Company
terminates this Agreement pursuant to clause (iv) of Section 9.1(a).
Section 7.7. AGREEMENT TO COOPERATE.
(a) Subject to the terms and conditions herein provided, 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, 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), subject,
however, to the fiduciary duties of the Board of Directors of the Company and
Parent and the requisite vote of the stockholders of the Company.
<PAGE>
(b) Without limitation of the foregoing, each of Parent and the
Company undertakes and agrees to file as soon as practicable, and in any event
prior to 15 days 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) respond as promptly as practicable to any inquiries received
from the FTC or the Antitrust Division for additional information or
documentation and to all inquiries and requests received from any State Attorney
General or other governmental authority in connection with antitrust matters 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. Parent shall take all reasonable steps necessary to avoid
or eliminate impediments under any antitrust, competition, or trade regulation
law that may be asserted by the FTC, the Antitrust Division, any State Attorney
General or any other governmental entity with respect to the merger so as to
enable the Closing to occur as soon as reasonable possible. Without limiting
the foregoing, Parent shall propose, negotiate, commit to and effect, by consent
decree, hold separate order, or otherwise, the sale, divestiture or disposition
of such assets or businesses of Parent or, effective as of the Effective Time,
the Surviving Corporation as may be required in order to avoid the entry of, or
to effect the dissolution of, any injunction, temporary restraining order or
other order in any suit or proceeding, which would otherwise have the effect of
preventing or delaying the Closing; provided, however, that Parent shall not be
required to sell, divest, dispose of, or hold separate assets or businesses with
aggregate 1997 revenues in excess of $6,250,000 (which amount is estimated to be
the revenues from the front loader business in the Greater Houston area and the
North County Landfill). Each party shall promptly notify the other party of any
communication to that party from the FTC, the Antitrust Division, any State
Attorney General or any other governmental entity and permit the other party to
review in advance any proposed communication to any of the foregoing.
(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 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 AND WARRANTS.
(a) 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
<PAGE>
Exchange Ratio, as adjusted, 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 converted 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.
(b) Prior to the Effective Time, the Company and Parent shall take
such action as may be necessary to cause each unexpired and unexercised warrant
to purchase shares of Company Common Stock (each a "Company Warrant") to be
automatically converted at the Effective Time into a warrant (each a "Parent
Warrant") 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 Warrant multiplied by the Exchange Ratio, at a price per share of
Parent Common Stock equal to the warrant exercise price determined pursuant to
the Company Warrant divided by the Exchange Ratio, as adjusted, and subject to
the same terms and conditions as the Company Warrant. The date of grant of a
substituted Parent Warrant shall be the date on which the corresponding Company
Warrant was granted. At the Effective Time, all references in the warrant
agreements to the Company shall be deemed to refer to parent. Parent shall
assume all of the Company's obligations with respect to Company Warrants as so
amended and shall, from and after the Effective Time, make available for
issuance upon exercise of the Parent Warrants all shares of Parent Common Stock
converted thereby.
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 materially and 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.
<PAGE>
(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 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 at or 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
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, (ii) the Parent and the Surviving Corporation
will cooperate in the defense of any such matter, and (iii) any determination
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 bylaws 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).
(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) This Section 7.11, which shall survive the consummation of the
Merger at the Effective Time and shall continue for the periods specified
herein, is intended to benefit the Company, the Surviving Corporation and
Parent, and any person or entity referenced in this Section 7.11 or
indemnified hereunder, each of whom may enforce the provisions of this Section
7.11 (whether or not parties to this Agreement).
Section 7.12. CORRECTIONS TO THE PROXY STATEMENT/PROSPECTUS AND
REGISTRATION STATEMENT. Prior to the date of approval of the Merger by the
Company's stockholders, each of the Company, Parent and Subsidiary shall correct
promptly any information provided by it to be used specifically in the 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 Proxy Statement/Prospectus or the Registration Statement so as
to correct the same and to cause the Proxy
<PAGE>
Statement/Prospectus as so corrected to be disseminated to the stockholders of
the Company, in each case to the extent required by applicable law.
Section 7.13. RELEASE OF SURETIES AND BONDS. Parent shall cause the
Company and any affiliate or stockholder of the Company to be released of all
sureties and bonds set forth on Schedule 7.13 within one hundred eighty (180)
days of the Closing Date.
Section 7.14. EMPLOYEE PLANS AND BENEFITS AND EMPLOYMENT CONTRACTS.
(a) From and after the Effective Time, the Surviving Corporation and
its subsidiaries will honor in accordance with their terms all existing written
employment, severance, consulting and salary continuation agreements between the
Company or any of its subsidiaries and any current or former officer, director,
employee or consultant of the Company or any of its subsidiaries or group of
such officers, directors, employees or consultants described in Section 7.14(a)
of the Company Disclosure Schedule.
(b) To the extent permitted under applicable law, each employee of the
Company or its subsidiaries shall be given credit for all service with the
Company or its Subsidiaries (or service credited by the Company or its
subsidiaries) under all employee benefit plans, programs, policies and
arrangements maintained by the Parent or Surviving Corporation in which they
participate or in which they become participants for purposes of eligibility,
vesting and benefit accrual including, without limitation, for purposes of
determining (i) short-term and long-term disability benefits, (ii) severance
benefits, (iii) vacation benefits and (iv) benefits under any retirement plan.
(c) This Section 7.14, which shall survive the consummation of the
Merger at the Effective Time and shall continue without limit, is intended to
benefit and bind the Company, the Surviving Corporation and any person or entity
referenced in this Section 7.14, each of whom may enforce the provisions of this
Section 7.14 (whether or not parties to this Agreement). Notwithstanding
anything to the contrary contained herein, nothing contained in this Section
7.14 shall create any beneficiary rights in any employee or former employee
(including any dependent thereof) of the Company, any of its subsidiaries or the
Surviving Corporation in respect of continued employment for any specified
period of any nature or kind whatsoever.
Section 7.15. EXERCISE OR CONVERSION OF OPTIONS, WARRANTS and Convertible
Debentures. The Company shall use reasonable efforts to cause each of its
holders of stock options, warrants and convertible debentures to exercise or
convert such securities into shares of Company Common Stock effective as of the
Closing.
ARTICLE VIII
CONDITIONS TO CLOSING
<PAGE>
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 or waiver, if permissible, at or prior to the Effective Time
of the following conditions:
(a) the waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated;
(b) 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);
(c) 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;
(d) all consents from lenders required to consummate the Merger shall
have been obtained and be in effect at the Effective Time;
(e) 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 debentures shall have been authorized for listing on
the NYSE upon official notice of issuance;
(f) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, any material state blue
sky or securities law shall have been complied with, 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;
(g) 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;
(h) each of the parties to the Agreement shall have received a letter
dated the Closing Date, addressed to the Company, from Arthur Andersen LLP
regarding such firm's concurrence with the Company's management's conclusions
that no conditions exist related to the Company that would preclude the Parent's
accounting for the Merger with the Company as a pooling of interests under
Accounting Principles Board Opinion No. 16 if closed and consummated in
accordance with this Agreement; and
(i) this Agreement and the Merger, shall have been approved and
adopted by the affirmative vote of the stockholders of the Company as required
by and in accordance with applicable law.
<PAGE>
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 Effective Time 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 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) Company shall have received a legal opinion from Liddell, Sapp,
Zivley, Hill & LaBoon, L.L.P., in form reasonably satisfactory to Company;
(c) Parent shall have obtained the release of all guarantees of
officers and directors of the Company with respect to Company indebtedness; and
(d) the Company shall have received an opinion from the Company's
counsel, reasonably acceptable to the Company, to the effect that (i) the Merger
will qualify as a tax-free reorganization within the meaning of Section 368(a)
of the Code; and (ii) the Company, the Parent and the Subsidiary will each be a
"party to a reorganization" within the meaning of Section 368(b) of the Code
with respect to 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) since the date hereof, there shall have been no changes that
constitute, and no event or events shall have occurred which have resulted in or
constitute, a Material Adverse Effect in the business, operations, properties,
assets, conditions (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole;
(c) all governmental waivers, consents, orders, permit transfers and
approvals legally required for the consummation of the Merger and the
transactions contemplated hereby or to permit Parent to carry on the business of
the Company after Closing in accordance with past customs and practice shall
have been obtained and be in effect at the Closing Date, and no
<PAGE>
governmental authority shall have promulgated any statute, rule or regulation
which, when taken together with all such promulgations, would materially impair
the value of the Company to Parent;
(d) all waivers, consents and approvals from third parties necessary
for the transfer of any material contracts, financial assurances and any other
rights and benefits in connection with the Merger, or necessary for the
consummation of the Merger and the transactions contemplated hereby shall have
been obtained and be in effect at the Closing Date;
(e) the Company shall have entered into binding agreements to retire
in its entirety all of its tax exempt debt and any other debt which requires a
prepayment penalty, cost or fee and removed itself from all guarantees of debt
in excess of an aggregate $300,000;
(f) Parent shall have received a certificate of the Chief Executive
Officer and Treasurer of the Company to the effect that no material change has
occurred in the Net Debt since the last day of the calendar month immediately
preceding the Company Stockholders' Meeting;
(g) Arthur Andersen will deliver at Closing an agreed upon procedures
report with respect to the calculation of Net Debt as of a date mutually
satisfactory to Parent and the Company; and
(h) Parent shall have received a legal opinion from Mayor, Day,
Caldwell & Keeton, L.L.P., in form reasonably satisfactory to Parent.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company 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
subsequent date and such failure shall not 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 May 15, 1998 (provided that
the right to terminate this Agreement under this Section 9.1(a)(ii) shall not be
available to the Company if the failure of the Company to fulfill any obligation
to Parent under or in connection with this
<PAGE>
Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date);
(iii) if the Merger is enjoined by a final, unappealable court
order;
(iv) if Parent (A) fails to perform in any material respect any of
its 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;
(v) if (A) the Company receives an offer from any third party
(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 that such offer constitutes a Superior
Proposal and resolves to accept such Superior Proposal, and (C) the Company
shall have given Parent two (2) days' prior written notice of its intention to
terminate this Agreement pursuant to this provision, provided that 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 (A) a tender or exchange offer is commenced by a third
party (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 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 (2)
days' prior written notice of its intention to terminate this Agreement pursuant
to this provision, provided 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; or
(vii) if the requisite vote of the stockholders of the Company
shall not have been obtained by May 10, 1998, or if the stockholders of the
Company shall not have approved the Merger and this Agreement at the Company
Stockholders' Meeting.
(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 May 15, 1998 (provided that
the right to terminate this Agreement under this Section 9.1(b)(ii) shall not be
available to Parent if the failure of Parent to fulfill any obligation to the
Company under or in connection with this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date);
<PAGE>
(iii) 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;
(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 exchange offer
commenced by a third party (excluding any affiliate of Parent or any group of
which any affiliate of Parent is a member); or
(v) if the requisite vote of the stockholders of the Company shall
not have been obtained by May 10, 1998, or if the stockholders of the Company
shall not have approved the Merger and this Agreement at the Company
Stockholders' Meeting.
(c) The Board of Directors of the Company and Parent mutually agree.
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
obligations on the part of the Company, Parent, Subsidiary or their respective
officers or directors (except as set forth in this Section 9.2 and in Section
7.1, 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. The Confidentiality Agreement shall remain in full force and
effect following any termination of this Agreement.
Section 9.3. AMENDMENT. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Boards of
Directors of the Company, the Parent and the Subsidiary at any time before or
after adoption of this Agreement by the stockholders of the Company, but, after
any such stockholder approval, no amendment shall be made which decreases the
Exchange Ratio or which adversely affects the rights of the Company's
stockholders hereunder without the approval of the stockholders of the Company.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all of the parties.
Section 9.4. EXTENSIONS; 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 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.
ARTICLE X
GENERAL PROVISIONS
Section 10.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties in this Agreement shall not survive the Merger,
and after effectiveness of the Merger neither the Company, Parent, Subsidiary or
their respective officers or directors shall have any
<PAGE>
further obligation with respect thereto. This Section 10.1 shall not limit any
covenant or agreement of the parties hereto which by its terms contemplates
performance after the Effective Time.
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.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Chief Executive Officer
Telecopy: (713) 209-9711
with a copy to:
USA Waste Services, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Attention: Gregory T. Sangalis
Telecopy: (713) 209-9711
and:
Marcus A. Watts
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
3400 Chase Tower
600 Travis
Houston, Texas 77002
Telecopy: (713) 223-3717
(b) if to the Company, to:
TransAmerican Waste Industries, Inc.
10554 Tanner Road
Houston, Texas 77041
Attention: Chairman of the Board
Telecopy: (713) 956-1212
with copies to:
Mayor, Day, Caldwell & Keeton, L.L.P.
700 Louisiana, Suite 1900
<PAGE>
Houston, Texas 77002
Attention: Jeff Dodd
Telecopy: (713) 225-7726
Section 10.3. INTERPRETATION. The heading contained in this Agreement are
for reference purposes only and shall not affect in any way 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.
Section 10.4. MISCELLANEOUS. Except for the confidentiality agreement
referred to herein, 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 an of them, with respect to the subject matter hereof, (b) except as
provided in Section 7.11 and 7.14, is not intended to confer upon any other
person any rights or remedies hereunder, 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 incorporated in Delaware, but no
such assignment shall relieve the Parent or the Subsidiary, as the case may be,
of its obligations hereunder. 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. Except as provided in Section 7.11 and
7.14, this Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and except as set forth in Section 7.11 and 7.14, 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.
Section 10.7. ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof.
Section 10.8. CERTAIN DEFINITIONS.
(a) "Material Adverse Effect" shall mean, as to a person, any adverse
change in the business, prospects, financial condition or results of operations
of such person and its subsidiaries
<PAGE>
that is material to such person and its subsidiaries taken as a whole, excluding
any such adverse change that is due to events, occurrences, facts, conditions,
changes, developments or effects which affect the economy generally.
(b) "Environmental Law" shall mean 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) "Subsidiary" shall mean, when used with reference to an entity,
any other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions, or a majority of the outstanding voting
securities of which, are owned directly or indirectly by such entity.
(d) "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 10.9. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
<PAGE>
Section 10.10. DISCLOSURE SCHEDULES. Disclosure of any matter in the
Parent or Company Disclosure Schedules shall not constitute an expression of a
view that such matter is material or is required to be disclosed pursuant to
this Agreement.
Section 10.11. OBLIGATION OF THE PARENT. Whenever this Agreement
requires Subsidiary to take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to cause Subsidiary to take such
action.
<PAGE>
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.
USA WASTE SERVICES, INC.
Attest:
/s/ GREGORY T. SANGALIS /s/ RODNEY R. PROTO
By:________________________________
Secretary Name: Rodney R. Proto
Title: President and Chief
Operating Officer
TRANSAMERICAN ACQUISITION CORP.
Attest:
/s/ GREGORY T. SANGALIS /s/ RODNEY R. PROTO
By:________________________________
Secretary Name: Rodney R. Proto
Title: President and Chief
Operating Officer
TRANSAMERICAN WASTE INDUSTRIES, INC.
Attest:
/s/ J. DAVID GREEN /s/ TOM J. FATJO, JR.
By:________________________________
Secretary Name: Tom J. Fatjo, Jr.
Title: Chairman
39
<PAGE>
APPENDIX B
[LOGO OF
DAIN RAUSCHER
APPEARS HERE]
G. CLYDE BUCK
MANAGING DIRECTOR
April 1, 1998
PERSONAL AND CONFIDENTIAL
- -------------------------
TransAmerican Waste Industries, Inc.
314 N. Post Oak Lane
Houston, Texas 77024
Attention: Tom J. Fatjo, Jr.
Chairman & CEO
Gentlemen:
You have advised Dain Rauscher Incorporated ("Dain Rauscher") that USA
Waste Services, Inc. ("USA") has proposed to acquire 100% of the outstanding
common stock of TransAmerican Waste Industries, Inc. ("TransAmerican") in a
tax-free stock exchange of approximately 0.044 shares of USA common stock for
each share of TransAmerican common stock. The exchange ratio is subject to
adjustment if TransAmerican's Net Debt (as defined) exceeds $43,200,000. You
have requested that Dain Rauscher issue an opinion ("Opinion") as to the
fairness to the common stockholders of TransAmerican of the terms of the
proposed transaction from a financial point of view.
Dain Rauscher, as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements, and
valuations for estate, corporate and other purposes.
<PAGE>
TransAmerican Waste Industries, Inc.
April 1, 1998
Page 2
- --------------------------------------------------------------------------------
In arriving at our opinion, we have, among other things:
1. Reviewed the Merger Agreement dated 1/26/98 between TransAmerican
and USA;
2. Reviewed "term sheets" for January 1998 proposals to acquire
TransAmerican from USA and another potential acquiror;
3. Reviewed a memo entitled "Summary of the Revised Terms of the
Agreement and Plan of Merger and the Voting Agreements as proposed
by USA Waste" dated 1/26/98;
4. Reviewed letter dated 4/1/98 from TransAmerican regarding material
new information since 1/26/98;
5. Reviewed TransAmerican's Annual Report, Form 10-K and Amendment for
the year ended 12/31/96;
6. Reviewed TransAmerican's Form 10-Q for the quarterly periods ended
3/31/97, 6/30/97 and 9/30/97;
7. Reviewed TransAmerican's Proxy Statement dated 6/9/97;
8. Reviewed TransAmerican's Prospectus offering 21,411,534 shares of
common stock dated 6/20/97;
9. Reviewed USA's Annual Report, Form 10-K and Amendment for the year
ended 12/31/96;
10. Reviewed TransAmerican's Form 10-Q for the quarterly periods ended
3/31/97, 6/30/97 and 9/30/97;
11. Reviewed TransAmerican's Proxy Statement dated 7/24/97;
12. Reviewed USA's Prospectus Supplements dated 2/3/97, 9/10/97 and
12/12/97;
13. Reviewed a research report dated 2/10/98 by Raymond James, as well
as the following research reports on USA:
(a) report dated 9/23/97 by Credit Suisse First Boston;
(b) report dated 10/29/97 by Goldman Sachs;
(c) report dated 11/11/97 by Deutsche Morgan Grenfell;
(d) report dated 11/11/97 by BT Alex Brown;
(e) report dated 11/14/97 by Smith Barney;
<PAGE>
TransAmerican Waste Industries, Inc.
April 1, 1998
Page 3
- --------------------------------------------------------------------------------
(f) report dated 11/17/97 by Merrill Lynch;
(g) report dated 12/1/97 by Donaldson, Lufkin & Jenrette;
(h) report dated 12/4/97 by Credit Suisse First Boston; and
(i) report dated 12/9/97 by Morgan Stanley Dean Witter;
14. Discussed with management of TransAmerican and USA the outlook for
future operating results, the assets and liabilities of both companies,
materials in the foregoing documents, and other matters we considered relevant
to our inquiry; and
15. Considered such other information, financial studies, analyses and
investigations as we deemed relevant under the circumstances.
In our review and in arriving at our opinion, we have, with your
permission, (i) not independently verified any of the foregoing information and
have relied upon its being complete and accurate in all material respects and
(ii) not made an independent evaluation or appraisal of specific assets of
TransAmerican or USA. Our Opinion is provided to you pursuant to the terms of
our engagement letter dated January 6, 1998.
Based upon and subject to the foregoing, it is our Opinion that, as of
the date hereof, the consideration to be received pursuant to the proposed
transaction is fair to the common stockholders of TransAmerican from a financial
point of view.
DAIN RAUSCHER INCORPORATED
By: /s/ G. Clyde Buck
--------------------------------
G. Clyde Buck
Managing Director
<PAGE>
APPENDIX C
Section 262 of the Delaware General Corporation Law
DELAWARE GENERAL CORPORATION LAW
SECTION 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to (S)228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S)251 (other than a merger effected pursuant to (S)251(g)
of this title), (S)252, (S)254, (S)257, (S)258, (S)263 or (S)264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(i) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series of
stock of a constituent corporation if the holders thereof are required by the
terms of an agreement of merger or consolidation pursuant to (S)(S)251, 252,
254, 257, 258, 263 and 264 of this title to accept for such stock anything
except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of record
by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this paragraph;
or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
<PAGE>
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsections (b) and (c) hereof that appraisal rights are available for any or
all of the shares of the constituent corporations, and shall include in such
notice a copy of this section. Each stockholder electing to demand the appraisal
of his shares shall deliver to the corporation, before the taking of the vote on
the merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of his shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or
(S)253 of this title, each constituent corporation, either before the effective
date of the merger or consolidation or within ten days thereafter, shall notify
each of the holders of any class or series of stock of such constituent
corporation who are entitled to appraisal rights of the approval of the merger
or consolidation and that appraisal rights are available for any or all shares
of such class or series of stock of such constituent corporation, and shall
include in such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation, such notice
shall be given by the surviving or resulting corporation to all such holders of
any class or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective date
of the merger or consolidation, shall, also notify such stockholders of the
effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation the appraisal of
such holder's shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such notice
did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a second
notice before the effective date of the merger or consolidation notifying each
of the holders of any class or series of stock of such constituent corporation
that are entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such effective
date; provided, however, that if such second notice is sent more than 20 days
following the sending of the first notice, such second notice need only be sent
to each stockholder who is entitled to appraisal rights and who has demanded
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or assistant secretary or of the transfer agent of
the corporation that is required to give either notice that such notice has been
given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the notice is given,
provided, that if the notice is given on or after the effective date of the
merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the day on
which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or
<PAGE>
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair
rate of interest, the Court may consider all relevant factors, including the
rate of interest which the surviving or resulting corporation would have had to
pay to borrow money during the pendency of the proceeding. Upon application by
the surviving or resulting corporation or by any stockholder entitled to
participate in the appraisal proceeding, the Court may, in its discretion,
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the
surviving or resulting corporation pursuant to subsection (f) of this section
and who has submitted his certificates of stock to the Register in Chancery, if
such is required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
<PAGE>
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
120, L. '97, eff. 7-1-97.)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an improper payment
of a dividend or an improper purchase by the corporation of stock or any
transaction from which the director derived an improper personal benefit. USA
Waste's Restated Certificate of Incorporation provides that USA Waste's
directors are not liable to USA Waste or its stockholders for monetary damages
for breach of their fiduciary duty, subject to the described exceptions
specified by Delaware law.
Section 145 of the Delaware General Corporation Law grants to a corporation
the right to indemnify each of its officers and directors against liabilities
and expenses incurred by reason of the fact that he is or was an officer or
director of such corporation if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of such
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The By-laws of USA Waste
provide for indemnification of each officer and director of USA Waste to the
fullest extent permitted by Delaware law.
Section 145 of the Delaware General Corporation Law also empowers a
corporation to purchase and maintain insurance on behalf of any person who is
or was an officer or director of such corporation against liability asserted
against or incurred by him in any such capacity, whether or not such
corporation would have the power to indemnify such officer or director against
such liability under the provisions of Section 145. USA Waste has purchased
and maintains a directors' and officers' liability policy for such purposes.
USA Waste has entered into Indemnification Agreements with each of its
directors and executive officers. Such Indemnification Agreements provide that
such persons (the "Indemnitees") will be indemnified and held harmless from
all expenses, including (without limitation) reasonable fees and expenses of
counsel, and all liabilities, including (without limitation) the amount of any
judgments, fines, penalties, excise taxes and amounts paid in settlement,
actually incurred by an Indemnitee with respect to any threatened, pending or
completed claim, action (including any action by or in the right of USA
Waste), suit or proceeding (whether formal or informal, or civil, criminal,
administrative, legislative, arbitrative or investigative) in respect of which
such Indemnitee is, was or at any time becomes, or is threatened to be made, a
party, witness, subject or target, by reason of the fact that such Indemnitee
is or was a director, officer, agent or fiduciary of USA Waste or serving at
the request of USA Waste as a director, officer, employee, fiduciary or
representative of another enterprise. Such Indemnification Agreements also
provide that USA Waste, if requested to do so by an Indemnitee, will advance
to such Indemnitee, prior to final disposition of any proceeding, the expenses
actually incurred by the Indemnitee subject to the obligation of the
Indemnitee to refund such advances if it is ultimately determined that such
Indemnitee was not entitled to indemnification.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<C> <C> <S>
2.1 -- Agreement and Plan of Merger, dated as of January 26, 1998, by and
among USA Waste, Acquisition and TransAmerican attached as Appendix A
to the Prospectus/Proxy Statement.
5.1 -- Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. [filed
herewith].
8.1 -- Opinion of Mayor, Day, Caldwell & Keeton, L.L.P. regarding certain
tax matters [filed herewith].
8.2 -- Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. regarding
certain tax matters [filed herewith].
23.1 -- Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. [included in
Exhibit 5.1].
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <C> <S>
23.2 -- Consent of Mayor, Day, Caldwell & Keeton, L.L.P. [included in Exhibit
8.1].
23.3 -- Consent of Coopers & Lybrand L.L.P. [filed herewith].
23.4 -- Consent of Arthur Andersen LLP [filed herewith].
23.5 -- Consent of Dain Rauscher Incorporated [filed herewith].
24.1 -- Powers of Attorney [included on signature page].
99.1 -- Opinion of Dain Rauscher Incorporated attached as Appendix B to the
Proxy Statement/Prospectus.
99.2 -- Form of TransAmerican Proxy Card [filed herewith].
</TABLE>
(b) Financial Statement Schedules:
All schedules have been omitted either as inapplicable or because the
required information is included in the financial statements or notes thereto.
(c) Report, Opinion or appraisal:
The fairness opinion of Dain Rauscher is attached as Appendix B to the Proxy
Statement/Prospectus. The legal opinions of Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P. and Mayor, Day, Caldwell, Keeton, L.L.P., are included herewith
as Exhibits 5.1, 8.1 and 8.2.
ITEM 22. UNDERTAKINGS.
(a) USA Waste hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
(2) That, for the purpose 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; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) USA Waste hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of USA Waste's annual
report pursuant to Section 13(a) or Section 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.
(c) USA Waste hereby undertakes:
(1) 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
II-2
<PAGE>
within the meaning of Rule 145(c), USA Waste 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.
(2) USA Waste hereby undertakes that every prospectus (i) that is filed
pursuant to paragraph (c)(1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Securities Act of 1933
and is used in connection with an offering of securities subject to Rule
415, will be filed as a part of an amendment to this 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.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
USA Waste pursuant to the foregoing provisions, or otherwise, USA Waste has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by USA Waste for expenses
incurred or paid by a director, officer or controlling person of USA Waste 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, USA Waste 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 Securities Act of 1933 and will be
governed by the final adjudication of such issue.
(e) USA Waste 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.
(f) USA Waste 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>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, USA Waste
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4, and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas on April 2, 1998.
USA WASTE SERVICES, INC.
/s/ John E. Drury
By:__________________________________
John E. Drury
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John E. Drury, Earl E. DeFrates and Gregory T.
Sangalis and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (including his capacity as a
director and/or officer of USA Waste Services, Inc.) to sign any or all
amendments (including pre-effective and post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
behalf of USA Waste Services, Inc. in the capacities and on the dates
indicated.
<TABLE>
<S> <C>
</TABLE>
SIGNATURE TITLE DATE
/s/ John E. Drury Chairman of the April 2, 1998
- ----------------------------------- Board and Chief
John E. Drury Executive Officer
(Principal
Executive Officer)
/s/ Rodney R. Proto President, Chief April 2, 1998
- ----------------------------------- Operating Officer
Rodney R. Proto and Director
/s/ Earl E. Defrates Executive Vice April 2, 1998
- ----------------------------------- President and Chief
Earl E. Defrates Financial Officer
(Principal Financial
Officer)
/s/ Bruce E. Snyder Vice President and April 2, 1998
- ----------------------------------- Chief Accounting
Bruce E. Snyder Officer (Principal
Accounting Officer)
/s/ Ralph F. Cox Director April 2, 1998
- -----------------------------------
Ralph F. Cox
/s/ Richard J. Heckmann Director April 2, 1998
- -----------------------------------
Richard J. Heckmann
II-4
<PAGE>
<TABLE>
<S> <C>
</TABLE>
SIGNATURE TITLE DATE
/s/ Richard D. Kinder Director April 2, 1998
- -----------------------------------
Richard D. Kinder
/s/ Larry J. Martin Director April 2, 1998
- -----------------------------------
Larry J. Martin
/s/ William E. Moffett Director April 2, 1998
- -----------------------------------
William E. Moffett
/s/ Alexander W. Rangos Director April 2, 1998
- -----------------------------------
Alexander W. Rangos
/s/ John G. Rangos, Sr. Director April 2, 1998
- -----------------------------------
John G. Rangos, Sr.
/s/ Kosti Shirvanian Director April 2, 1998
- -----------------------------------
Kosti Shirvanian
/s/David Sutherland-Yoest Director April 2, 1998
- -----------------------------------
David Sutherland-Yoest
/s/ Jerome B. York Director April 2, 1998
- -----------------------------------
Jerome B. York
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<C> <C> <S>
2.1 -- Agreement and Plan of Merger [attached as Appendix A to the Proxy
Statement/Prospectus].
5.1 -- Opinion of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
8.1 -- Opinion of Mayor, Day, Caldwell & Keeton, L.L.P. regarding certain
tax matters.
8.2 -- Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. regarding
certain tax matters.
23.1 -- Consent of Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P. [included in
Exhibit 5.1].
23.2 -- Consent of Mayor, Day, Caldwell & Keeton, L.L.P. [included in Exhibit
8.1].
23.3 -- Consent of Coopers & Lybrand L.L.P.
23.4 -- Consent of Arthur Andersen LLP.
23.5 -- Consent of Dain Rauscher Incorporated.
24.1 -- Powers of Attorney [included on signature page].
99.1 -- Opinion of Dain Rauscher Incorporated [attached as Appendix B to the
Proxy Statement/Prospectus].
99.2 -- Form of TransAmerican Proxy Card.
</TABLE>
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF LIDDELL, SAPP, ZIVLEY, HILL & LABOON, L.L.P. APPEARS HERE]
April 2, 1998
USA Waste Services, Inc.
First City Tower
1001 Fannin, Suite 4000
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel for USA Waste Services, Inc., a Delaware
corporation ("USA Waste"), in connection with the registration, pursuant to a
Registration Statement on Form S-4 to be filed with the Securities and
Exchange Commission (the "Registration Statement") under the Securities Act of
1933, as amended, with respect to the shares of USA Waste's common stock, par
value $.01 per share ("USA Waste Common Stock"), to be issued to the holders
of common stock, par value $.001 per share (the "TransAmerican Common Stock")
of TransAmerican Waste Industries, Inc., a Delaware corporation
("TransAmerican"), in connection with the proposed merger of TransAmerican
Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of USA
Waste, with and into TransAmerican (the "Merger").
In rendering this opinion, we have examined the corporate records of USA
Waste including its restated certificate of incorporation, as amended, bylaws
and minutes of meetings of its directors and shareholders. We have also
examined (i) the Agreement and Plan of Merger dated as of January 26, 1998,
among USA Waste, TransAmerican Acquisition Corp. and TransAmerican (the
"Merger Agreement"), (ii) the Registration Statement, together with the
exhibits thereto, and (iii) such other documents as we have deemed necessary
for the purposes of expressing the opinions contained herein. With respect to
certain factual matters, we have relied on statements of officers of USA
Waste.
Based upon the foregoing, we are of the opinion that the shares of USA Waste
Common Stock to be issued to the holders of TransAmerican Common Stock in
consideration of the Merger are duly authorized and, when issued and delivered
as described in the Merger Agreement, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5.1 to the Registration Statement and to the
use of our name in the Proxy Statement/Prospectus forming a part of the
Registration Statement under the caption "Legal Matters."
Very truly yours,
/s/ Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P.
LIDDELL, SAPP, ZIVLEY, HILL &
LaBOON, L.L.P.
<PAGE>
EXHIBIT 8.1
[LETTERHEAD OF
MAYOR, DAY, CALDWELL & KEETON, L.L.P.]
April 2, 1998
TransAmerican Waste Industries, Inc.
10554 Tanner Road
Houston, Texas 77041
Gentlemen:
We have been requested by TransAmerican Waste Industries, Inc. ("Company")
to render this opinion in connection with the transactions described in the
letter from the Company which is attached to this letter as Exhibit A
("Company Tax Representation Letter"). Capitalized terms not otherwise defined
herein shall have the same meanings given to them in Exhibit A.
In connection with our opinion, we have examined and are familiar with the
Agreement and Plan of Merger among USA Waste Services, Inc. ("USA Waste"),
TransAmerican Acquisition Corp. ("Sub"), a wholly-owned subsidiary of USA
Waste, and the Company ("the Merger Agreement"), and such other documents as
we have deemed necessary or appropriate as a basis for the conclusions set
forth below. We have relied, as to matters of fact, upon representations by
the Company contained in the Company Tax Representation Letter and upon
representations by USA Waste contained in the USA Waste Tax Representation
Letter which is attached to this letter as Exhibit B and upon the assumptions
contained herein. Without such representations, we would not render this
opinion.
In rendering the opinions set forth below, we have assumed that (1) the
Merger will be consummated in the manner described in the Merger Agreement,
(2) the representations made in the Company Tax Representation Letter and USA
Waste Tax Representation Letter are true and correct, and (3) all signatures
on all documents we examined are genuine, all documents submitted to us as
originals are authentic and all documents submitted to us as photostatic
copies are in conformity to the original documents.
Based on the assumptions set forth above and upon our examination of the
Merger Agreement and the relevant legal authorities, it is our opinion that
the merger of Sub into the Company with the stockholders of the Company
receiving USA Waste common stock will qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code") and that USA Waste, Sub and TransAmerican are each a party to a
reorganization within the meaning of Section 368(b) of the Code. Accordingly,
for federal income tax purposes, the Company stockholders will not recognize
gain on the receipt of USA Waste common stock pursuant to the Merger
Agreement. However, any realized gain may be recognized by the Company's
stockholders to the extent of any cash received in the Merger or pursuant to
the exercise of dissenters' rights.
We do not express any opinion concerning the tax consequences of the Merger
other than those expressly set forth above. We express no opinion with respect
to the effect of any laws other than the federal income tax laws of the United
States of America.
This opinion is provided to you only and, without our prior consent, may not
be relied upon, used, circulated, quoted or otherwise referred to in any
manner by any person, firm, governmental authority or entity whatsoever other
than reliance thereon by you and the stockholders of the Company, to whom you
may provide a copy of this opinion letter. This opinion letter is limited to
the matters stated herein and no opinion is implied or may be inferred beyond
the matters expressly stated herein. This opinion letter shall not be
construed as or deemed to be a guaranty or insuring agreement.
The conclusions set forth above are based on our analysis of the law and
express what counsel believes a court should properly hold if presented with
such issue, but is not in any way binding on the Internal Revenue Service
("Service") or the courts. Our opinion is based on the Code and the
regulations promulgated thereunder
<PAGE>
TransAmerican Waste Industries, Inc.
April 2, 1998
Page 2
as currently existing and in effect, and court decisions and revenue rulings
and procedures of the Service all as of the date of this letter. Any of the
foregoing authorities is subject to change either prospectively or
retroactively, and any such change could affect our opinion. This opinion is
rendered as of the date hereof based on the facts in existence on the date
hereof, and we undertake no, and hereby disclaim any, obligation to advise you
of any changes or any new developments, which may be brought to our attention
at a later date.
Sincerely,
/s/ Mayor, Day Caldwell & Keeton,
L.L.P.
Mayor, Day, Caldwell & Keeton,
L.L.P.
<PAGE>
EXHIBIT 8.2
[LETTERHEAD OF LIDDELL, SAPP, ZIVLEY, HILL & LABOON, L.L.P. APPEARS HERE]
April 2, 1998
USA Waste Services, Inc.
First City Tower
1001 Fannin, Suite 4000
Houston, Texas 77002
Ladies and Gentlemen:
We have acted as counsel to USA Waste Services, Inc., a Delaware corporation
("USA Waste") in connection with (i) the planned merger (the "Merger") of
TransAmerican Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of USA Waste ("Merger Sub") with and into TransAmerican Waste
Industries, Inc., a Delaware corporation ("TransAmerican"), pursuant to an
Agreement and Plan of Merger dated as of January 26, 1998, by and among
TransAmerican, Merger Sub and USA Waste (the "Merger Agreement"), pursuant to
which the shareholders of TransAmerican will receive solely voting common
stock of USA Waste in exchange for their stock in TransAmerican, and (ii) the
Registration Statement on Form S-4 of USA Waste, to which this opinion letter
is filed as an exhibit (the "Registration Statement"). All capitalized terms
not otherwise defined herein shall have the meaning set forth in the Merger
Agreement.
For purposes of the opinion set forth below, we have reviewed and relied
upon (i) the Merger Agreement, (ii) the Proxy Statement/Prospectus included in
the Registration Statement (the "Proxy Statement/Prospectus") and (iii) such
other documents, records and instruments as we deemed necessary or appropriate
in order to enable us to render our opinion. Our opinion is based and
conditioned upon certain statements and representations made by USA Waste,
Merger Sub and TransAmerican in connection with the Merger, which we have
neither investigated nor verified. We have assumed that all such statements
and representations are true, correct, complete and not breached and that no
actions that are or would be inconsistent with such statements and
representations have been or will be taken. We have also assumed that all
representations made "to the best knowledge of" any person or entity will be
true, correct and complete as if made without such qualification.
In addition, we have assumed that (i) the Merger will be consummated in
accordance with the Merger Agreement (including satisfaction of all covenants
and conditions to the obligations of the parties without amendment or waiver
thereof), (ii) the Merger will qualify as a merger under the applicable laws
of the State of Delaware and (iii) the Merger Agreement and all of the
documents and instruments referred to therein are valid and binding in
accordance with their terms. Any inaccuracy in, or breach of, into the
aforementioned statements, representations and assumptions could adversely
affect our opinion. Our opinion is based upon existing provisions of the Code,
Treasury Regulations promulgated or proposed thereunder, and interpretations
thereof by the Internal Revenue Service ("IRS") and the courts, all of which
are subject to change with prospective or retroactive effect, and our opinion
could be adversely affected or rendered obsolete by any such change.
Based upon and subject to the foregoing as well as the limitations set forth
below, it is our opinion that the statements contained in the Proxy
Statement/Prospectus under the heading "THE MERGER--Material Federal Income
Tax Consequences", insofar as such statements constitute legal conclusions or
summaries of legal matters, are accurate.
Except as set forth above, we express no opinion as to the tax consequences
to any party, whether federal, state, local or foreign, of the Merger or any
transactions related to the Merger or contemplated by the Merger Agreement.
Furthermore, our opinion is based on current federal income tax law and
administrative practice, and we do not undertake to advise you as to any
changes after the Effective Time of the Merger in federal income tax law or
administrative practice that may affect our opinion.
This opinion is for use in connection with the Registration Statement. We
hereby consent to the filing of this opinion as an exhibit to Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Registration Statement and the Proxy Statement/Prospectus which is a part
thereof. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under the Securities Act of
1933 and the rules and regulations promulgated thereunder.
Very truly yours,
/s/ Liddell, Sapp, Zivley, Hill & LaBoon,
L.L.P.
LIDDELL, SAPP, ZIVLEY, HILL & LABOON,
L.L.P.
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
of USA Waste Services, Inc. on Form S-4, related to the merger with
TransAmerican Waste Industries, Inc., of our report dated March 16, 1998, on our
audits of the consolidated financial statements of USA Waste Services, Inc. as
of December 31, 1997 and 1996, and for the years ended December 31, 1997, 1996
and 1995, which report is included in the USA Waste Services, Inc. Annual Report
on Form 10-K. We also consent to the reference to our firm under the caption
"Experts."
Coopers & Lybrand L.L.P.
Houston, Texas
April 2, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement to be filed on
April 2, 1998, of our report dated February 11, 1998 included in TransAmerican's
Form 10-K for the year ended December 31, 1997 and to all references to our Firm
included in this registration statement.
/s/ Arthur Andersen LLP
Houston, Texas
April 2, 1998
<PAGE>
EXHIBIT 23.5
CONSENT OF DAIN RAUSCHER INCORPORATED
We hereby consent to the incorporation of our fairness opinion dated
April 1, 1998 in this registration statement to be filed on April 2, 1998.
/s/ G. CLYDE BUCK
-----------------------------
G. Clyde Buck
Managing Director
Dain Rauscher Incorporated
<PAGE>
PROXY TRANSAMERICAN WASTE INDUSTRIES, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) of TransAmerican Waste Industries, Inc.
(the "Company") hereby appoint TOM J. FATJO, III and J. DAVID GREEN, and each of
them, attorneys-in-fact and proxies of the undersigned, with full power of
substitution, to vote in respect of the undersigned's shares of the Company's
Common Stock at the Special Meeting of Stockholders of the Company to be held at
the Houstonian Hotel and Conference Center, 111 North Post Oak Lane, Houston,
Texas, on May 6, 1998 at 9:00 a.m. Central Time and at any adjournment(s)
thereof, the number of shares that the undersigned would be entitled to vote if
personally present.
The Board of Directors recommends a vote "FOR" Proposal 1 below.
PROPOSAL 1: TO APPROVE AND ADOPT THE AGREEMENT FOR AGAINST ABSTAIN
AND PLAN OF MERGER AMONG THE COMPANY, [ ] [ ] [ ]
TRANSAMERICAN ACQUISITION
CORP. AND USA WASTE SERVICES, INC.
2. In their discretion, on such other matters as may properly come before the
Special Meeting of Stockholders or any adjournment(s) thereof, all as more
particularly described in the Joint Proxy Statement/Prospectus, receipt of
which is hereby acknowledged.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder(s). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1. All prior proxies are hereby
revoked.
-----------------------------------------
-----------------------------------------
Signature(s)
Dated: , 1998
-----------------------------
(PLEASE SIGN EXACTLY AS YOUR NAME APPEARS
HEREON. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., GIVE
FULL TITLE AS SUCH. FOR JOINT ACCOUNTS, EACH
JOINT OWNER SHOULD SIGN.)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
