AGREEMENT AND PLAN OF MERGER
among
USA WASTE SERVICES, INC.,
DOME MERGER SUBSIDIARY, INC.,
and
WASTE MANAGEMENT, INC.
Dated as of March 10, 1998
TABLE OF CONTENTS
Section Page
ARTICLE I
THE MERGER
1.01. The Merger.............................................................2
1.02. Closing................................................................2
1.03. Effective Time.........................................................2
1.04. Effect of the Merger...................................................3
1.05. Certificate of Incorporation; Bylaws; Directors and Officers of
Surviving Corporation...........................................3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities...............................................4
2.02. Exchange of Certificates...............................................5
2.03. Stock Transfer Books...................................................9
2.04. Options to Purchase Company Common Stock...............................9
2.05. Restricted Stock......................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01. Organization and Qualification; Subsidiaries..........................11
3.02. Certificate of Incorporation and Bylaws...............................11
3.03. Capitalization........................................................12
3.04. Authority Relative to this Agreement..................................13
3.05. No Conflict; Required Filings and Consents............................13
3.06. Permits; Compliance with Laws.........................................14
3.07. SEC Filings; Financial Statements.....................................15
3.08. Absence of Certain Changes or Events..................................16
3.09. Employee Benefit Plans; Labor Matters.................................17
3.10. Accounting and Tax Matters............................................19
3.11. Contracts; Company Debt Instruments...................................20
3.12. Litigation............................................................20
3.13. Environmental Matters.................................................21
3.14. Taxes ...............................................................22
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Section Page
3.15. Pooling Affiliates....................................................23
3.16. Non-Competition Agreements............................................23
3.17. Opinion of Financial Advisor..........................................24
3.18. Brokers...............................................................24
3.19. Insurance.............................................................24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
4.01. Organization and Qualification; Subsidiaries..........................24
4.02. Certificate of Incorporation and Bylaws...............................25
4.03. Capitalization........................................................25
4.04. Authority Relative to this Agreement..................................26
4.05. No Conflict; Required Filings and Consents............................27
4.06. Permits; Compliance with Laws.........................................28
4.07. SEC Filings; Financial Statements.....................................28
4.08. Absence of Certain Changes or Events..................................29
4.09. Employee Benefit Plans; Labor Matters.................................30
4.10. Accounting and Tax Matters............................................32
4.11. Contracts; Parent Debt Instruments....................................32
4.12. Litigation............................................................33
4.13. Environmental Matters.................................................33
4.14. Taxes ...............................................................34
4.15. Pooling Affiliates....................................................34
4.16. Non-Competition Agreements............................................34
4.17. Opinion of Financial Advisor..........................................35
4.18. Brokers...............................................................35
4.19. Insurance.............................................................35
4.20. Ownership of Merger Sub; No Prior Activities..........................35
ARTICLE V
COVENANTS
5.01. Conduct of Business by the Company Pending the Closing................36
5.02. Conduct of Business by Parent Pending the Closing.....................39
5.03. Cooperation...........................................................41
5.04. Notices of Certain Events.............................................41
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Section Page
5.05. Access to Information; Confidentiality................................41
5.06. No Solicitation of Transactions.......................................42
5.07. Pooling Matters.......................................................43
5.08. Letters of Accountants................................................44
5.09. Plan of Reorganization................................................45
5.10. Subsequent Financial Statements.......................................45
5.11. Control of Operations.................................................45
5.12. Further Action; Consents; Filings.....................................45
5.13. Stockholder Rights Plan...............................................47
5.14. Employee Benefit Plans................................................47
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Registration Statement; Joint Proxy Statement.........................49
6.02. Stockholders' Meetings................................................51
6.03. Post-Merger Directors and Chief Executive Officer of Parent...........52
6.04. Pooling Affiliates....................................................52
6.05. Assumption of Debt....................................................53
6.06. Indemnification of Directors and Officers.............................53
6.07. No Shelf Registration.................................................55
6.08. Public Announcements..................................................55
6.09. Parent Restated Certificate of Incorporation..........................55
6.10. Stock Exchange Listing................................................55
6.11. Blue Sky..............................................................55
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. Conditions to the Obligations of Each Party to Consummate the Merger..56
7.02. Conditions to the Obligations of the Company..........................57
7.03. Conditions to the Obligations of Parent...............................58
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination...........................................................59
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Section Page
8.02. Effect of Termination.................................................62
8.03. Amendment.............................................................62
8.04. Waiver ...............................................................63
8.05. Fees and Expenses.....................................................63
ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations and Warranties........................65
9.02. Notices...............................................................65
9.03. Certain Definitions...................................................66
9.04. Severability..........................................................68
9.05. Assignment; Binding Effect; Benefit...................................68
9.06. Incorporation of Exhibits.............................................68
9.07. Specific Performance..................................................68
9.08. Governing Law.........................................................68
9.09. Consent to Jurisdiction; Venue........................................69
9.10. Headings..............................................................69
9.11. Counterparts..........................................................69
9.12. Entire Agreement......................................................69
EXHIBITS
EXHIBIT 6.04(a) Form of Company Affiliate Letter
EXHIBIT 6.04(b) Form of Parent Affiliate Letter
Index of Defined Terms
Defined Term Section
- ------------ -------
Acquired Company Conversions Section 4.03
affiliate Section 9.03(a)
Agreement Preamble
Arthur Andersen Section 3.10(b)
beneficial owner Section 9.03(b)
Blue Sky Laws Section 3.05(b)
business day Section 9.03(c)
CERCLA Section 3.13(d)
Certificate Amendment Section 4.04
Certificate of Merger Section 1.03
Certificates Section 2.02(b)
Closing Section 1.02
Code Recitals
Company Preamble
Company 1996 10-K Section 3.11
Company Affiliate Letter Section 6.04(a)
Company Benefit Plans Section 3.09(a)
Company Common Stock Recitals
Company Designees Section 6.03
Company Disclosure Schedule Section 3.01
Company Foreign Benefit Plan Section 3.09(c)
Company Indentures Section 6.05
Company Material Adverse Effect Section 3.01
Company Material Contract Section 3.11
Company Permits Section 3.06
Company Preferred Stock Section 3.03
Company Reports Section 3.07(a)
Company Stock Options Section 2.04
Company Stock Plans Section 3.03
Company Stockholders' Meeting Section 6.01(a)
Company Subordinated Notes Section 3.03
Company Subsidiaries Section 3.01
Company Termination Fee Section 8.05(b)
Competing Transaction Section 5.06(b)
Confidentiality Agreement Section 5.05(b)
Coopers & Lybrand Section 4.10(b)
DGCL Recitals
DLJ Section 4.17
Index of Defined Terms (cont'd)
Defined Term Section
- ------------ -------
$ Section 9.03(d)
Effective Time Section 1.03
Environmental Laws Section 3.13(d)
Environmental Permits Section 3.13(d)
ERISA Section 3.09(a)
Excess Shares Section 2.02(e)(ii)
Exchange Act Section 3.05(b)
Exchange Agent Section 2.02(a)
Exchange Fund Section 2.02(a)
Exchange Ratio Section 2.01(a)
Expenses Section 8.05(a)
Government Antitrust Entity Section 5.12(b)
Governmental Entity Section 3.05(b)
Governmental Order Section 9.03(e)
Hazardous Materials Section 3.13(d)
HSR Act Section 3.05(b)
Indemnified Parties Section 6.06(b)
Insurance Amount Section 6.06(c)
IRS Section 3.09(a)
Joint Proxy Statement Section 6.01(a)
knowledge Section 9.03(f)
Law Section 3.06
Lehman Section 4.18
Merger Recitals
Merger Sub Preamble
Merger Sub Common Stock Section 2.01(c)
Merrill Lynch Section 3.17
NSC Section 3.01
NYSE Section 2.02(e)(ii)
Parent Preamble
Parent 1996 10-K Section 4.02
Parent Affiliate Letter Section 6.04(b)
Parent Benefit Plans Section 4.09(a)
Parent Common Stock Recitals
Parent Disclosure Schedule Section 4.01
Parent Foreign Benefit Plan Section 4.09(c)
Parent Material Adverse Effect Section 4.01
Index of Defined Terms (cont'd)
Defined Term Section
- ------------ -------
Parent Material Contract Section 4.11
Parent Permits Section 4.06
Parent Preferred Stock Section 4.03
Parent Reports Section 4.07(a)
Parent Stock Options Section 4.03
Parent Stock Plans Section 4.03
Parent Stockholders' Meeting Section 6.01(a)
Parent Subordinated Notes Section 4.03
Parent Subsidiaries Section 4.01
Parent Termination Fee Section 8.05(c)
person Section 9.03(g)
Pooling Affiliate Section 3.15
Registration Statement Section 6.01(a)
Regulations Recitals
Relational Section 4.18
Reporting Company Subsidiaries Section 3.07(a)
Reporting Parent Subsidiaries Section 4.07(a)
Representatives Section 5.05(a)
SEC Recitals
Securities Act Section 3.05(b)
SERP Section 5.14(c)
Share Issuance Section 4.04
S-3 Registration Statement Section 5.07(c)
Stockholders' Meetings Section 6.01(a)
subsidiary or subsidiaries Section 9.03(h)
Surviving Corporation Section 1.01
Taxes Section 3.14(a)
Terminating Company Breach Section 8.01(g)
Terminating Parent Breach Section 8.01(h)
U.S. GAAP Section 3.07(b)
WME Section 3.01
WMI Merger Sub Section 5.07(b)
WTI Section 5.07(b)
WTI Stock Plans Section 5.07(b)
AGREEMENT AND PLAN OF MERGER, dated as of March 10, 1998 (this
"Agreement"), among USA WASTE SERVICES, INC., a Delaware corporation ("Parent"),
DOME MERGER SUBSIDIARY, INC., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and WASTE MANAGEMENT, INC., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the boards of directors of Parent and the Company
have determined that it is consistent with and in furtherance of their
respective long-term business strategies and fair to and in the best interests
of their respective companies and stockholders to combine their respective
businesses pursuant to the transaction set forth in this Agreement;
WHEREAS, the board of directors of each of Parent, Merger Sub
and the Company have approved and declared advisable the merger of Merger Sub
with and into the Company (the "Merger"), upon the terms and subject to the
conditions of this Agreement and in accordance with the General Corporation Law
of the State of Delaware (the "DGCL");
WHEREAS, the board of directors of Parent has approved this
Agreement and the Merger and the issuance of common stock, par value $.01 per
share, of Parent ("Parent Common Stock"), and the amendments to the Restated
Certificate of Incorporation of Parent, all as contemplated by this Agreement,
and has recommended that the holders of Parent Common Stock vote to approve the
issuance of Parent Common Stock and the amendments to the Restated Certificate
of Incorporation of Parent as contemplated by this Agreement;
WHEREAS, the board of directors of the Company has approved
this Agreement and the Merger, as contemplated by this Agreement, and has
recommended that the holders of common stock, par value $1.00 per share, of the
Company ("Company Common Stock"), vote to adopt this Agreement and the terms of
the Merger as contemplated by this Agreement;
WHEREAS, the board of directors of Merger Sub has approved
this Agreement and the Merger, as contemplated by this Agreement, and has
recommended that its sole stockholder vote to adopt this Agreement and the terms
of the Merger, and Parent, as the sole stockholder of Merger Sub, has adopted
this Agreement and terms of the Merger, as contemplated by this Agreement;
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WHEREAS, the parties hereto intend that the Merger shall be
accounted for as a "pooling of interests" for financial reporting purposes under
applicable United States accounting rules and the accounting standards of the
United States Securities and Exchange Commission (the "SEC"); and
WHEREAS, for United States federal income tax purposes, it is
intended that the Merger shall qualify as a reorganization under the provisions
of Section 368(a) of the United States Internal Revenue Code of 1986, as amended
(the "Code"), and the Treasury regulations thereunder (the "Regulations");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, at the
Effective Time (as defined below), Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger as a wholly owned subsidiary of Parent (the "Surviving Corporation").
SECTION 1.02. Closing. Unless this Agreement shall have been
terminated and the Merger herein contemplated shall have been abandoned pursuant
to Section 8.01 and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the consummation of the Merger shall take place as
promptly as practicable (and in any event within three business days) after
satisfaction or waiver of the conditions set forth in Article VII, at a closing
(the "Closing") to be held at the offices of Shearman & Sterling, 599 Lexington
Avenue, New York, New York, unless another date, time or place is agreed to by
Parent and the Company.
SECTION 1.03. Effective Time. At the time of the Closing, the
parties shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL (the date and time of such filing, or such
later date or time as set forth therein, being the "Effective Time").
3
SECTION 1.04. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 1.05. Certificate of Incorporation; Bylaws; Directors
and Officers of Surviving Corporation. At the Effective Time:
(a) the Certificate of Incorporation and the Bylaws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation and the Bylaws of the Surviving
Corporation (except that Article I of the Certificate of Incorporation
shall be amended as of the Effective Time to read as follows: "The name
of the Corporation is Waste Management, Inc.");
(b) the officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation from and after the Effective Time, in each case until their
successors are elected or appointed and qualified or until their
resignation or removal. If, at the Effective Time, a vacancy shall
exist in any office of the Surviving Corporation, such vacancy may
thereafter be filled in the manner provided by Law and the Certificate
of Incorporation and Bylaws of the Surviving Corporation; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving
Corporation from and after the Effective Time, in each case until their
successors are elected or appointed and qualified or until their
resignation or removal. If, at the Effective Time, a vacancy shall
exist on the Board of Directors of the Surviving Corporation, such
vacancy may thereafter be filled in the manner provided by Law and the
Certificate of Incorporation and Bylaws of the Surviving Corporation.
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ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time,
by virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the capital stock of Merger Sub or the Company:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of
Company Common Stock to be canceled pursuant to Section 2.01(b)) shall
be converted, subject to Section 2.02(e), into the right to receive
0.725 shares of Parent Common Stock (the "Exchange Ratio"); provided,
however, that, in any event, if between the date of this Agreement and
the Effective Time the outstanding shares of Parent Common Stock or
Company Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Exchange Ratio shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares. All such
shares of Company Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each certificate previously representing any such shares shall
thereafter represent the right to receive a certificate representing
the shares of Parent Common Stock into which such Company Common Stock
was converted in the Merger. Certificates previously representing
shares of Company Common Stock shall be exchanged for certificates
representing whole shares of Parent Common Stock issued in
consideration therefor upon the surrender of such certificates in
accordance with the provisions of Section 2.02, without interest. No
fractional share of Parent Common Stock shall be issued, and, in lieu
thereof, a cash payment shall be made pursuant to Section 2.02(e)
hereof.
(b) Each share of Company Common Stock held in the treasury of
the Company and each share of Company Common Stock owned by Parent or
any direct or indirect wholly owned subsidiary of Parent or of the
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be
made with respect thereto.
(c) Each share of common stock, par value $0.01 per share, of
Merger Sub ("Merger Sub Common Stock") issued and outstanding
immediately prior to the
5
Effective Time shall be converted into and exchanged for one newly and
validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
(d) For all purposes of this Agreement, unless otherwise
specified, all shares held by employee benefit plans of the Company (i)
shall be deemed to be issued and outstanding, (ii) shall not be deemed
to be held in the treasury of the Company and (iii) shall be converted
into shares of Parent Common Stock in accordance with Section 2.01(a).
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. As
of the Effective Time, Parent shall deposit, or shall cause to be deposited,
with a bank or trust company designated by Parent and reasonably acceptable to
the Company (the "Exchange Agent"), for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article II, through
the Exchange Agent, certificates representing the shares of Parent Common Stock
(such certificates for shares of Parent Common Stock, together with cash in lieu
of fractional shares and any dividends or distributions with respect thereto,
being hereinafter referred to as the "Exchange Fund") issuable pursuant to
Section 2.01 in exchange for outstanding shares of Company Common Stock. The
Exchange Agent shall, pursuant to irrevocable instructions, deliver the Parent
Common Stock contemplated to be issued pursuant to Section 2.01 out of the
Exchange Fund. Except as contemplated by Section 2.02(e) hereof, the Exchange
Fund shall not be used for any other purpose.
(b) Exchange Procedures. Promptly after the Effective Time,
Parent shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates") (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent, and shall be in customary
form) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent Common
Stock. Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Parent Common Stock which such
holder has the right to receive in respect of the shares of Company Common Stock
formerly represented by such Certificate (after taking into account all shares
of Company Common Stock then held by such holder), cash in lieu of fractional
shares of Parent Common Stock to which such holder is entitled pursuant to
Section 2.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c), and the Certificate so surrendered shall
forthwith be canceled. No interest will be paid or accrued on any cash in lieu
of fractional shares or on any unpaid dividends and
6
distributions payable to holders of Certificates. Notwithstanding anything to
the contrary contained herein, no certificate representing Parent Common Stock
or cash in lieu of a fractional share interest shall be delivered to a person
who is a Pooling Affiliate of Parent or the Company unless such affiliate has
theretofore executed and delivered to Parent the agreement referred to in
Section 6.04(a). In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Parent Common Stock, cash in
lieu of any fractional shares of Parent Common Stock to which such holder is
entitled pursuant to Section 2.02(e) and any dividends or other distributions to
which such holder is entitled pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Shares of Parent
Common Stock. No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 2.02(e), until the holder of such Certificate shall surrender such
Certificate. Subject to the effect of escheat, tax or other applicable Laws,
following surrender of any such Certificate, there shall be paid to the holder
of the certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) promptly, the amount of any cash
payable with respect to a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.02(e) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock and (ii) at the
appropriate payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a payment date
occurring after surrender, payable with respect to such whole shares of Parent
Common Stock.
(d) No Further Rights in Company Common Stock. All shares of
Parent Common Stock issued upon conversion of the shares of Company Common Stock
in accordance with the terms hereof (including any cash paid pursuant to Section
2.02(c) or (e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Company Common Stock, subject, however, to
the Surviving Corporation's obligation to pay dividends or make any other
distribution with respect to shares of Company Common Stock with a record date
prior to the Effective Time which have been declared or made by the
7
Company on such shares of Company Common Stock in accordance with the terms of
this Agreement (to the extent permitted under Section 5.01) prior to the date
hereof and which remain unpaid at the Effective Time.
(e) No Fractional Shares. (i) No certificates or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution with respect
to Parent Common Stock shall be payable on or with respect to any fractional
share and such fractional share interests will not entitle the owner thereof to
any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time,
the Exchange Agent shall determine the excess of (x) the number of full shares
of Parent Common Stock delivered to the Exchange Agent by Parent pursuant to
Section 2.02(a) over (y) the aggregate number of full shares of Parent Common
Stock to be distributed to holders of Company Common Stock pursuant to Section
2.02(b) (such excess being herein called the "Excess Shares"). As soon after the
Effective Time as practicable, the Exchange Agent, as agent for such holders of
Parent Common Stock, shall sell the Excess Shares at then prevailing prices on
the New York Stock Exchange, Inc. (the "NYSE"), all in the manner provided in
paragraph (iii) of this Section 2.02(e).
(iii) The sale of the Excess Shares by the Exchange Agent
shall be executed on the NYSE through one or more member firms of the NYSE and
shall be executed in round lots to the extent practicable. The Exchange Agent
shall use all reasonable efforts to complete the sale of the Excess Shares as
promptly following the Effective Time as, in the Exchange Agent's reasonable
judgment, is practicable consistent with obtaining the best execution of such
sales in light of prevailing market conditions. Until the net proceeds of any
such sale or sales have been distributed to such holders of Company Common
Stock, the Exchange Agent will hold such proceeds in trust for such holders of
Company Common Stock as part of the Exchange Fund. Parent shall pay all
commissions, transfer taxes and other out-of-pocket transaction costs of the
Exchange Agent incurred in connection with such sale or sales of Excess Shares.
In addition, Parent shall pay the Exchange Agent's compensation and expenses in
connection with such sale or sales. The Exchange Agent shall determine the
portion of such net proceeds to which each holder of Company Common Stock shall
be entitled, if any, by multiplying the amount of the aggregate net proceeds by
a fraction the numerator of which is the amount of the fractional share interest
to which such holder of Company Common Stock is entitled (after taking into
account all shares of Company Common Stock then held by such holder) and the
denominator of which is the aggregate amount of fractional share interests to
which all holders of Certificates representing Company Common Stock are
entitled.
8
(iv) Notwithstanding the provisions of subsections (ii) and
(iii) of this Section 2.02(e), Parent may elect, at its option exercised prior
to the Effective Time and in lieu of the issuance and sale of Excess Shares and
the making of the payments contemplated in such subsections, to pay to the
Exchange Agent an amount in cash sufficient for the Exchange Agent to pay each
holder of Company Common Stock an amount in cash equal to the product obtained
by multiplying (x) the fractional share interest to which such holder would
otherwise be entitled (after taking into account all shares of Company Common
Stock held at the Effective Time by such holder) by (y) the closing price for a
share of Parent Common Stock on the NYSE Composite Transaction Tape on the first
business day immediately following the Effective Time and, in such case, all
references herein to the cash proceeds of the sale of the Excess Shares and
similar references shall be deemed to mean and refer to the payments calculated
as set forth in this Section 2.02(e)(iv).
(v) As soon as practicable after the determination of the
amount of cash, if any, to be paid to holders of Company Common Stock with
respect to any fractional share interests, the Exchange Agent shall promptly pay
such amounts to such holders of Company Common Stock subject to and in
accordance with the terms of Section 2.02(c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Company Common Stock for one
year after the Effective Time shall be delivered to Parent, upon demand, and any
holders of Company Common Stock who have not theretofore complied with this
Article II shall thereafter look only to Parent for the shares of Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock to which
they are entitled pursuant to Section 2.02(e) and any dividends or other
distributions with respect to Parent Common Stock to which they are entitled
pursuant to Section 2.02(c), in each case, without any interest thereon.
(g) No Liability. Neither Parent nor the Company shall be
liable to any holder of shares of Company Common Stock for any such shares of
Parent Common Stock (or dividends or distributions with respect thereto) or cash
from the Exchange Fund delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
(h) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond, in such reasonable
amount as Parent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant
9
to Section 2.02(e) and any dividends or other distributions to which the holders
thereof are entitled pursuant to Section 2.02(c), in each case, without any
interest thereon.
(i) Withholding. Parent or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock such amounts as
Parent or the Exchange Agent are required to deduct and withhold under the Code,
or any provision of state, local or foreign tax law, with respect to the making
of such payment. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of Company Common Stock in respect
of whom such deduction and withholding was made by Parent or the Exchange Agent.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of shares of Company Common Stock thereafter
on the records of the Company. From and after the Effective Time, the holders of
certificates representing shares of Company Common Stock outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
shares of Company Common Stock except as otherwise provided herein or by Law. On
or after the Effective Time, any Certificates presented to the Exchange Agent or
Parent for any reason shall be converted into the shares of Parent Common Stock,
any cash in lieu of fractional shares of Parent Common Stock to which the
holders thereof are entitled pursuant to Section 2.02(e) and any dividends or
other distributions to which the holders thereof are entitled pursuant to
Section 2.02(c).
SECTION 2.04. Options to Purchase Company Common Stock. (a) At
the Effective Time, each option or warrant granted by the Company to purchase
shares of Company Common Stock (the "Company Stock Options"), which is
outstanding and unexercised immediately prior to the Effective Time, shall be
assumed by Parent and converted into an option or warrant to purchase shares of
Parent Common Stock in such number and at such exercise price as provided below
and otherwise having the same terms and conditions as in effect immediately
prior to the Effective Time (except to the extent that such terms, conditions
and restrictions may be altered in accordance with their terms as a result of
the Merger contemplated hereby):
(i) the number of shares of Parent Common Stock to be subject
to the converted option or warrant shall be equal to the product of (x)
the number of shares of Company Common Stock subject to the original
option or warrant and (y) the Exchange Ratio;
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(ii) the exercise price per share of Parent Common Stock under
the converted option or warrant shall be equal to (x) the exercise
price per share of Company Common Stock under the original option or
warrant divided by (y) the Exchange Ratio; and
(iii) upon each exercise of options or warrants by a holder
thereof, the aggregate number of shares of Parent Common Stock
deliverable upon such exercise shall be rounded down, if necessary, to
the nearest whole share and the aggregate exercise price shall be
rounded up, if necessary, to the nearest cent.
The adjustments provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be effected in a
manner consistent with the requirements of Section 424(a) of the Code.
(b) Parent shall take all corporate action necessary to
reserve and make available for issuance a sufficient number of shares of Parent
Common Stock for delivery under Company Stock Options assumed by Parent. At or
prior to the Effective Time, Parent shall file a registration statement on Form
S-8 (or any successor or other appropriate forms) with respect to the shares of
Parent Common Stock subject to such options and shall use its best efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding.
SECTION 2.05. Restricted Stock. At the Effective Time, any
restricted shares of Company Common Stock awarded pursuant to any plan,
arrangement or transaction and outstanding immediately prior to the Effective
Time shall be assumed by Parent and converted into restricted shares of Parent
Common Stock in accordance with Section 2.01 hereof, subject to the same terms,
conditions and restrictions as in effect immediately prior to the Effective
Time, except to the extent that such terms, conditions and restrictions may be
altered in accordance with their terms as a result of the Merger contemplated
hereby.
11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent that:
SECTION 3.01. Organization and Qualification; Subsidiaries.
Each of the Company and each subsidiary of the Company (the "Company
Subsidiaries") has been duly organized and is validly existing and in good
standing (to the extent applicable) under the laws of the jurisdiction of its
incorporation or organization, as the case may be, and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would not,
individually or in the aggregate, have a Company Material Adverse Effect. Each
of the Company and each Company Subsidiary is duly qualified or licensed to do
business, and is in good standing (to the extent applicable), in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, have any change in or
effect on the business of the Company and the Company Subsidiaries that is, or
is reasonably likely to be, materially adverse to the business, assets
(including intangible assets), liabilities (contingent or otherwise), condition
(financial or otherwise) or results of operations of the Company and the Company
Subsidiaries taken as a whole (a "Company Material Adverse Effect"). Section
3.01(a) of the Disclosure Schedule delivered by the Company to Parent prior to
the execution of this Agreement (the "Company Disclosure Schedule") sets forth a
complete and correct list of all of the Company Subsidiaries other than the
subsidiaries of Waste Management International plc (together with its
subsidiaries, "WME"). Except as set forth in Section 3.01(b) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary (except for
WME and NSC Corporation and its subsidiaries (collectively, "NSC")) holds any
interest in any corporation, limited liability company, partnership, joint
venture or other legal entity of any kind.
SECTION 3.02. Certificate of Incorporation and Bylaws. The
copy of the Company's Restated Certificate of Incorporation that is incorporated
by reference as an exhibit to the Company's Form 10-Q for the period ending June
30, 1997 and the copy of the Company's Bylaws that is incorporated by reference
as an exhibit to the Company's Form 10-Q for the period ending September 30,
1997 are complete and correct copies thereof. Such Restated Certificate of
Incorporation and Bylaws are in full force and effect. The Company is not in
violation of any of the provisions of its Restated Certificate of Incorporation
or Bylaws.
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SECTION 3.03. Capitalization. The authorized capital stock of
the Company consists of 1,500,000,000 shares of Company Common Stock and
50,000,000 shares of preferred stock, par value $1.00 per share (the "Company
Preferred Stock"). As of December 31, 1997, (i) 507,101,774 shares of Company
Common Stock were issued (including treasury shares), all of which were validly
issued, fully paid and nonassessable, (ii) 2,500,000 shares of Series A
Preferred Stock were authorized, none of which were issued, (iii) 52,063,991
shares of Company Common Stock were held in the treasury of the Company or by
any direct or indirect wholly owned Company Subsidiary (including those in the
employee stock benefit trust), (iv) 14,650,015 shares of Company Common Stock
were reserved for future issuance pursuant to the terms of the Company's
Convertible Subordinated Notes due 2005 and the Company's Liquid Yield Option
Notes due 2001, 2010 and 2012 (together, the "Company Subordinated Notes") and
(v) 21,998,096 shares of Company Common Stock were reserved for issuance
pursuant to outstanding Company Stock Options issued under the benefits plans
set forth on Section 3.03(a) of the Company Disclosure Schedule (the "Company
Stock Plans"). Between December 31, 1997 and the date of this Agreement, an
aggregate of 10,000 Company Stock Options have been granted, excluding Company
Stock Options with respect to up to 5.3 million shares of Company Common Stock
granted on March 9, 1998 under the Company 1997 Equity Incentive Plan (the
"March 1998 Options"), and, since that date, no awards of restricted stock have
been made under the Company Stock Plans, and, since that date, no shares of
Company Common Stock (or securities convertible into Company Common Stock) have
been issued other than those shares of Company Common Stock reserved for
issuance as set forth in this Section 3.03. Except for the Company Stock Options
granted pursuant to the Company Stock Plans and shares of Company Common Stock
issuable pursuant to the Company Stock Plans and upon the conversion of the
Company Subordinated Notes or pursuant to agreements or arrangements described
in Section 3.03(a) of the Company Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character to which the Company is a party or by which the Company is bound
relating to the issued or unissued capital stock of the Company or any Company
Subsidiary (other than WME and NSC) or obligating the Company or any Company
Subsidiary (other than WME and NSC) to issue or sell any shares of capital stock
of, or other equity interests in, the Company or any Company Subsidiary (other
than WME and NSC). The terms of each grant of a March 1998 Option provide that,
as a condition to such grant, the optionee must waive any rights thereunder
arising as a result of any "change in control" of the Company that may be caused
by the Merger. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Section 3.03(a) of the Company Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any Company Subsidiary (other than WME
and NSC) to repurchase, redeem or otherwise acquire any shares of Company Common
Stock or any capital stock of any Company Subsidiary. Except as
13
disclosed in Section 3.03(a) of the Company Disclosure Schedule, each
outstanding share of capital stock of each Company Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and each such share
owned by the Company or another Company Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or such other Company Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever, except
where the failure to own such shares free and clear would not, individually or
in the aggregate, have a Company Material Adverse Effect. Except as set forth in
Section 3.03(b) of the Company Disclosure Schedule or as set forth in the
Company Reports (as hereinafter defined), there are no material outstanding
contractual obligations of the Company or any Company Subsidiary (other than WME
and NSC) to provide funds to, or make any material investment (in the form of a
loan, capital contribution or otherwise) in, any Company Subsidiary which is not
wholly owned by the Company or in any other person.
SECTION 3.04. Authority Relative to this Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Merger. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the Merger contemplated hereby have been duly and
validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the Merger (other than, with respect to the Merger, the
adoption of this Agreement by the affirmative vote of a majority of the
outstanding shares of Company Common Stock entitled to vote with respect thereto
at the Company Stockholders' Meeting and the filing and recordation of the
Certificate of Merger as required by the DGCL). This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by the other parties hereto and thereto, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company does not, and the
performance by the Company of its obligations hereunder and the consummation of
the Merger will not, (i) conflict with or violate any provision of the Restated
Certificate of Incorporation or Bylaws of the Company or any equivalent
organizational documents of any Company Subsidiary (other than WME and NSC),
(ii) assuming that all consents, approvals, authorizations and permits described
in Section 3.05(b) have been obtained and all filings and notifications
described in Section 3.05(b) have been made, conflict with or violate any Law
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected or (iii)
except as set forth in Section 3.05(a) of the Company Disclosure Schedule,
result in any breach of or constitute a default (or an event
14
which with the giving of notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company or any Company Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, Company
Permit, franchise or other instrument or obligation, except, with respect to
clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences which would neither, individually or in the aggregate, (A)
have a Company Material Adverse Effect nor (B) prevent or materially delay the
performance by the Company of its obligations pursuant to this Agreement or the
consummation of the Merger.
(b) The execution and delivery of this Agreement by the
Company does not, and the performance by the Company of its obligations
hereunder or the consummation of the Merger will not, require any consent,
approval, authorization or permit of, or filing by the Company with or
notification by the Company to, any United States federal, state or local or any
supranational or foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body (a "Governmental
Entity"), except (i) applicable requirements of the Securities Exchange Act of
1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"), the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the "Securities
Act"), state securities or "blue sky" laws ("Blue Sky Laws"), the rules and
regulations of the NYSE, state takeover laws, the premerger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), the filing
and recordation of the Certificate of Merger as required by the DGCL, and as set
forth in Section 3.05(b) of the Company Disclosure Schedule, and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not (A) prevent or materially delay
the performance by the Company of its obligations pursuant to this Agreement and
the consummation of the Merger or (B) individually or in the aggregate have a
Company Material Adverse Effect.
SECTION 3.06. Permits; Compliance with Laws. Each of the
Company and the Company Subsidiaries (other than WME) is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Entity necessary for the Company or any Company Subsidiary (other than WME) to
own, lease and operate its properties or to carry on its business as it is now
being conducted (the "Company Permits"), and all such Company Permits are valid
and in full force and effect, except where the failure to have, or the
suspension or cancellation of, any of the Company Permits, or the failure of any
of such Company Permits to be valid and in full force and effect, would not,
individually or in the aggregate, (i) have a Company Material Adverse Effect, or
(ii) except as described in Section 3.05(b) of the
15
Company Disclosure Schedule, prevent or materially delay the performance by the
Company of its obligations pursuant to this Agreement and the consummation of
the Merger, and, as of the date of this Agreement, no suspension or cancellation
of any of the Company Permits is pending or, to the knowledge of the Company,
threatened, except where the failure to have, or the suspension or cancellation
of, any of the Company Permits would not, individually or in the aggregate, (i)
have a Company Material Adverse Effect or (ii) prevent or materially delay the
performance by the Company of its obligations pursuant to this Agreement and the
consummation of the Merger. Except as disclosed in Section 3.06(a) of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary
(other than WME) is in conflict with, or in default or violation of, (i) any Law
applicable to the Company or any Company Subsidiary (other than WME) or by which
any property or asset of the Company or any Company Subsidiary (other than WME)
is bound or affected or (ii) any Company Permits, except in the case of clauses
(i) and (ii) for any such conflicts, defaults or violations that would neither
individually or in the aggregate, (A) have a Company Material Adverse Effect nor
(B) prevent or materially delay the performance by the Company of its
obligations pursuant to this Agreement and the consummation of the Merger. As
used in this Agreement, "Law" means any federal, state or local statute, law,
ordinance, regulation, rule, code, order, judgment, writ, stipulation, award,
injunction, decree or other requirement or rule of law of the United States or
any other jurisdiction.
SECTION 3.07. SEC Filings; Financial Statements. (a) Other
than those listed on Section 3.07(a)(i) of the Company Disclosure Schedule (the
"Reporting Company Subsidiaries") and other than NSC, no Company Subsidiary is
subject to the periodic reporting requirements of the Exchange Act or required
to file any form, report or other document with the SEC, NYSE, any other stock
exchange or any other comparable Governmental Entity. The Company and each
Reporting Company Subsidiary has timely filed all periodic reports and all other
documents required to be filed by it with the SEC under the Exchange Act since
December 31, 1996 through the date of this Agreement (collectively and as
amended, the "Company Reports"). Except as set forth in Section 3.07(a)(iii) of
the Company Disclosure Schedule or except as would not have a Company Material
Adverse Effect, each Company Report (i) was prepared in accordance with the
requirements of the Exchange Act and (ii) did not at the time it was filed
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Except as set forth on Section 3.07(b)(i) of the Company
Disclosure Schedule, each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Company Reports was prepared
in accordance with United States generally accepted accounting principles ("U.S.
GAAP") applied on a consistent basis throughout the periods indicated (except as
may be indicated in the notes thereto) and each
16
presented fairly, in all material respects, the consolidated financial position
of the Company and the consolidated Company Subsidiaries (with respect to
Company Reports filed by the Company) or the consolidated financial position of
the Reporting Company Subsidiary (with respect to Company Reports filed by a
Reporting Company Subsidiary) as at the respective dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Company Material Adverse Effect). The books and records of
the Company and the Company Subsidiaries (other than WME and NSC) are being
maintained in accordance with U.S. GAAP and any other applicable legal and
accounting requirements.
(c) Except as and to the extent set forth on Section 3.07(c)
of the Company Disclosure Schedule, none of the Company or any Company
Subsidiary (other than WME and NSC) has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would result in
the stockholders' equity of the Company as of December 31, 1997 as set forth in
the Company Reports not fairly reflecting the financial condition of the Company
and the Company Subsidiaries, taken as a whole, in accordance with U.S. GAAP,
except for liabilities or obligations incurred in the ordinary course of
business since January 1, 1998 that would not, individually or in the aggregate,
have a Company Material Adverse Effect, it being understood that for purposes of
determining whether a Company Material Adverse Effect shall have occurred on the
assets, liabilities, financial condition or results of operations of the Company
and the Company Subsidiaries taken as a whole, actual amounts as at any date of
determination or for any period of determination shall be compared, to the
extent practicable, to the corresponding amounts included in the Company's 1998
business plan included in Section 3.08 of the Company Disclosure Schedule.
SECTION 3.08. Absence of Certain Changes or Events. Since
January 1, 1998, except as contemplated by or as disclosed in this Agreement, as
set forth in Section 3.08 of the Company Disclosure Schedule or as disclosed in,
reflected in or contemplated by, any Company Reports filed since December 31,
1996, the Company and the Company Subsidiaries (other than WME and NSC) have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice and, since such date, there has not been (i) any
Company Material Adverse Effect or any event or development that would have a
Company Material Adverse Effect, excluding any changes and effects resulting
from changes in economic, regulatory or political conditions or changes in
conditions generally applicable to the industries in which the Company and the
Company Subsidiaries are involved, it being understood that for purposes of
determining whether a Company Material Adverse Effect shall have occurred on the
assets, liabilities, financial condition or results of operations of the Company
and the Company Subsidiaries taken as a whole, actual amounts as at any date of
17
determination or for any period of determination shall be compared, to the
extent practicable, to the corresponding amounts included in the Company's 1998
business plan included in Section 3.08 of the Company Disclosure Schedule, (ii)
any event that could reasonably be expected to prevent or materially delay the
performance of its obligations pursuant to this Agreement and the consummation
of the Merger by the Company, (iii) except as required by law after the date of
this Agreement, any material change by the Company in its accounting methods,
principles or practices, (iv) any declaration, setting aside or payment of any
dividend or distribution in respect of the shares of Company Common Stock (other
than regular quarterly dividends not to exceed $0.17 per share) or any
redemption, purchase or other acquisition of any of the Company's securities or
(v) except with respect to WME and NSC, any increase in the compensation or
benefits or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any executive officers of the Company or any Company Subsidiary
(other than WME and NSC) except in the ordinary course of business consistent
with past practice.
SECTION 3.09. Employee Benefit Plans; Labor Matters. (a) With
respect to each employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plan", as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) maintained or contributed to by the Company or any Company
Subsidiary, or with respect to which the Company or any Company Subsidiary (in
each case, other than WME and NSC) could incur liability under Section 4069,
4212(c) or 4204 of ERISA (the "Company Benefit Plans"), the Company has
delivered (or will, within 15 days of the date hereof, deliver) to Parent a true
and correct copy of (i) such Company Benefit Plan and the most recent summary
plan description related to each Company Benefit Plan for which a summary plan
description is required, (ii) each trust agreement or other funding arrangement
relating to such Company Benefit Plan, (iii) the most recent annual report (Form
5500) filed with the Internal Revenue Service (the "IRS"), (iv) the most recent
actuarial report or financial statement relating to a Company Benefit Plan and
(v) the most recent determination letter issued by the IRS with respect to any
Company Benefit Plan qualified under Section 401(a) of the Code.
(b) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all contributions required to
be made under the terms of any of the Company Benefit Plans as of the date of
this Agreement have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Company
Reports prior to the date of this Agreement. Except as set forth in Section
3.09(b) of the Company Disclosure Schedule, with respect to the Company Benefit
18
Plans, no event has occurred and, to the knowledge of the Company, there exists
no condition or set of circumstances in connection with which the Company or any
Company Subsidiary could be subject to any liability under the terms of such
Company Benefit Plans, ERISA, the Code or any other applicable Law which, in any
case, would individually or in the aggregate have a Company Material Adverse
Effect.
(c) Except as set forth in Section 3.09(c) of the Company
Disclosure Schedule or except as would not have a Company Material Adverse
Effect, with respect to each Company Benefit Plan that is not subject to United
States Law (a "Company Foreign Benefit Plan"):
(i) all employer and employee contributions to each Company
Foreign Benefit Plan required by Law or by the terms of such Company
Foreign Benefit Plan have been made or, if applicable, accrued in
accordance with normal accounting practices and a pro rata contribution
for the period from the date hereof to and including the Effective Time
has been made or accrued in accordance with normal accounting
principles;
(ii) the fair market value of the assets of each funded
Company Foreign Benefit Plan, the liability of each insurer for any
Company Foreign Benefit Plan funded through insurance or the book
reserve established for any Company Foreign Benefit Plan, together with
any accrued contributions, is sufficient to procure or provide for the
accrued benefit obligations, as of the Effective Time, with respect to
all current and former participants in such plan according to the
actuarial assumptions and valuations most recently used to determine
employer contributions to such Company Foreign Benefit Plan and no
transaction contemplated by this Agreement shall cause such assets or
insurance obligations to be less than such benefit obligations; and
(iii) each Company Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing
with the appropriate regulatory authorities.
(d) As of the date of this Agreement, there is no labor
dispute, strike or work stoppage against the Company or any Company Subsidiary
pending or, to the knowledge of the Company, threatened which may interfere with
the respective business activities of the Company or any Company Subsidiary,
except where such dispute, strike or work stoppage would not have a Company
Material Adverse Effect. Except as set forth on Section 3.09(d) of the Company
Disclosure Schedule, as of the date of this Agreement, to the knowledge of the
Company, none of the Company, any Company Subsidiary, or any of their respective
representatives or employees has committed any unfair labor practice in
connection with the
19
operation of the respective businesses of the Company or any Company Subsidiary,
and there is no charge or complaint against the Company or any Company
Subsidiary by the National Labor Relations Board or any comparable governmental
agency pending or threatened in writing, except where such unfair labor
practice, charge or complaint would not have a Company Material Adverse Effect.
(e) The Company has made available to Parent true and complete
copies of (i) all employment agreements with executive officers of the Company
and with each other officer of the Company and of each Company Subsidiary (other
than NSC and, except with respect to the chief executive officer thereof, WME)
providing for annual compensation in excess of $250,000, (ii) all severance
plans, agreements, programs and policies of the Company and each Company
Subsidiary (other than WME and NSC) with or relating to their respective
employees, and (iii) all plans, programs, agreements and other arrangements of
the Company and each Company Subsidiary (other than WME and NSC) with or
relating to their respective employees which contain "change of control"
provisions.
(f) Except as set forth in Section 3.09(f) of the Company
Disclosure Schedule, no amount paid or payable by the Company or any Company
Subsidiary in connection with the transactions contemplated hereby either solely
as a result thereof or as a result of such transactions in conjunction with any
other events will be an "excess parachute payment" within the meaning of Section
280G of the Code.
(g) Except as provided in Section 3.09(g) of the Company
Disclosure Schedule, except as otherwise required by Law, and except for the
Company Foreign Benefit Plans, no Company Benefit Plan provides retiree medical
or retiree life insurance benefits to any person.
(h) The Company has agreed to continue Mr. Robert S. Miller's
employment as chairman and chief executive officer of the Company until the
Effective Time and Mr. Robert S. Miller has agreed, as of the date of this
Agreement, to continue to serve as such until the Effective Time.
SECTION 3.10. Accounting and Tax Matters. (a) Except as
disclosed in the Company Reports or in Section 3.10 of the Company Disclosure
Schedule, neither the Company nor, to the knowledge of the Company, any of its
affiliates has taken or agreed to take any action (other than actions
contemplated by this Agreement) that would prevent the Merger from qualifying
for "pooling of interests" accounting treatment under applicable United States
accounting rules, including, without limitation, applicable SEC accounting
standards, or would prevent the Merger from constituting a transaction
qualifying under Section 368(a) of
20
the Code. The Company is not aware of any agreement, plan or other circumstance
that would prevent the Merger from so qualifying under Section 368(a) of the
Code.
(b) The representations and warranties made in the Company's
letter of compliance with pooling of interest criteria addressed to Arthur
Andersen LLP ("Arthur Andersen") are true as of the date hereof.
(c) The Company has duly authorized amendments to the Company
Stock Plans set forth on Section 3.10(c) of the Company Disclosure Schedule so
as to provide that the Company (or, following the Effective Time, Parent) shall
satisfy any obligations it may have to repurchase a participant's exercisable
but unexercised options under such Company Stock Plan by issuing to such
participant shares of Company Common Stock (or, following the Effective Time,
Parent Common Stock), with a fair market value equal to the cash that would
otherwise have been payable thereunder.
SECTION 3.11. Contracts; Company Debt Instruments. Except as
disclosed in the Company Reports or in Section 3.11 of the Company Disclosure
Schedule, there is no contract or agreement that is material to the business,
financial condition or results of operations of the Company and the Company
Subsidiaries taken as a whole (each, a "Company Material Contract"). Except as
disclosed in the Company Reports or in Section 3.11 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is in violation of or
in default under (nor does there exist any condition which with the passage of
time or the giving of notice would cause such a violation of or default under)
any loan or credit agreement, note, bond, mortgage, indenture or lease, or any
other contract, agreement, arrangement or understanding to which it is a party
or by which it or any of its properties or assets is bound, except for
violations or defaults that would not, individually or in the aggregate, result
in a Company Material Adverse Effect. Set forth in Section 3.11 of the Company
Disclosure Schedule is a description of indebtedness of the Company and the
Company Subsidiaries as of February 19, 1998.
SECTION 3.12. Litigation. Except as disclosed in the Company
Reports or in Section 3.12 of the Company Disclosure Schedule, there is no suit,
claim, action, proceeding or investigation pending or, to the knowledge of the
Company, threatened against the Company or any Company Subsidiary before any
Governmental Entity that, individually or in the aggregate, is reasonably likely
to have a Company Material Adverse Effect, and, except as disclosed to Parent,
to the knowledge of the Company, there are no existing facts or circumstances
that would be reasonably likely to result in such a suit, claim, action,
proceeding or investigation. Except as disclosed to Parent, the Company is not
aware of any facts or circumstances which would result in the denial of
insurance coverage under policies issued to the Company and the Company
Subsidiaries in respect of such suits, claims, actions,
21
proceedings and investigations, except in any case as would not, individually or
in the aggregate, have a Company Material Adverse Effect. Except as disclosed in
the Company Reports or in Section 3.12 of the Company Disclosure Schedule,
neither the Company nor any Company Subsidiary is subject to any outstanding
order, writ, injunction or decree which, insofar as can be reasonably foreseen,
individually or in the aggregate, would have a Company Material Adverse Effect.
SECTION 3.13. Environmental Matters. Except as disclosed in
the Company Reports or in Section 3.13 of the Company Disclosure Schedule or as
would not, individually or in the aggregate, have a Company Material Adverse
Effect:
(a) the Company and the Company Subsidiaries (other than WME)
(i) are in compliance with all, and are not subject to any asserted
liability or, to the Company's knowledge, any liability, in each case
with respect to any, applicable Environmental Laws (as defined below),
(ii) hold or have applied for all Environmental Permits (as defined
below) and (iii) are in compliance with their respective Environmental
Permits;
(b) neither the Company nor any Company Subsidiary (other than
WME) has received any written notice, demand, letter, claim or request
for information alleging that the Company or any of its Subsidiaries
(other than WME) may be in violation of, or liable under, any
Environmental Law;
(c) neither the Company nor any Company Subsidiary (other than
WME) (i) has entered into or agreed to any consent decree or order or
is subject to any judgment, decree or judicial order relating to
compliance with Environmental Laws, Environmental Permits or the
investigation, sampling, monitoring, treatment, remediation, removal or
cleanup of Hazardous Materials (as defined below) and, to the knowledge
of the Company, no investigation, litigation or other proceeding is
pending or threatened in writing with respect thereto, or (ii) is an
indemnitor in connection with any threatened or asserted claim by any
third-party indemnitee for any liability under any Environmental Law or
relating to any Hazardous Materials;
(d) none of the real property owned or leased by the Company
or any Company Subsidiary (other than WME) is listed or, to the
knowledge of the Company, proposed for listing on the "National
Priorities List" under CERCLA, as updated through the date hereof, or
any similar state or foreign list of sites requiring investigation or
cleanup; and
(e) the dollar amounts set forth in Section 3.13(e) of the
Company Disclosure Schedule represent the best estimates of the Company
of all reserves
22
expected to be established by the Company as of December 31, 1997 for
the Company's and the Company Subsidiaries' obligations and liabilities
pursuant to any Environmental Law (including, without limitation,
obligations and liabilities for the investigation and remediation of
Hazardous Materials and obligations and liabilities for the interim and
final closure and post closure of disposal facilities), and the
accounting policies and procedures used to determine such estimated
reserves are in compliance with U.S. GAAP.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date
hereof.
"Environmental Laws" means any federal, state, local or
foreign statute, law, ordinance, regulation, rule, code, treaty, writ
or order and any enforceable judicial or administrative interpretation
thereof, including any judicial or administrative order, consent
decree, judgment, stipulation, injunction, permit, authorization,
policy, opinion, or agency requirement, in each case having the force
and effect of law, relating to the pollution, protection, investigation
or restoration of the environment, health and safety or natural
resources, including, without limitation, those relating to the use,
handling, presence, transportation, treatment, storage, disposal,
release, threatened release or discharge of Hazardous Materials or
noise, odor, wetlands, pollution, contamination or any injury or threat
of injury to persons or property or to the siting, construction,
operation, closure and post-closure care of waste disposal, handling
and transfer facilities.
"Environmental Permits" means any permit, approval,
identification number, license and other authorization required under
any applicable Environmental Law.
"Hazardous Materials" means (a) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (b) any
chemical, material or other substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any
applicable Environmental Law.
SECTION 3.14. Taxes. (a) Except as set forth in Section 3.14
of the Company Disclosure Schedule and except for such matters that,
individually or in the aggregate, would not have a Company Material Adverse
Effect, (i) the Company and each of the Company Subsidiaries have timely filed
or shall timely file all returns and reports required to be filed by them with
any taxing authority with respect to Taxes for any period ending on or
23
before the Effective Time, taking into account any extension of time to file
granted to or obtained on behalf of the Company and the Company Subsidiaries,
(ii) all Taxes that are due prior to the Effective Time have been paid or shall
be paid on or before the applicable due date, (iii) as of the date hereof, no
deficiency for any amount of Tax has been asserted or assessed by a taxing
authority against the Company or any of the Company Subsidiaries and (iv) the
Company and each of the Company Subsidiaries have provided adequate reserves in
their financial statements for any Taxes that have not been paid, whether or not
shown as being due on any returns. As used in this Agreement, "Taxes" shall mean
any and all taxes, fees, levies, duties, tariffs, imposts and other charges of
any kind (together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any government or
taxing authority, including, without limitation, taxes or other charges on or
with respect to income, franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees; and
customers' duties, tariffs and similar charges.
(b) Except as set forth in Section 3.14 of the Company
Disclosure Schedule, to the best of the Company's knowledge, no Tax disputes or
audits are pending against, and no claims for Taxes have been received in
writing by the Company or any of the Company Subsidiaries, other than disputes,
audits and claims that are not reasonably likely to have a Company Material
Adverse Effect.
(c) There are no Tax liens upon any property or assets of the
Company or any of the Company Subsidiaries except liens for current Taxes not
yet due and liens which have not had and are not reasonably likely to have a
Company Material Adverse Effect.
SECTION 3.15. Pooling Affiliates. Section 3.15 of the Company
Disclosure Schedule sets forth the names and addresses of those persons who are,
in the Company's reasonable judgment, "affiliates" within the meaning of Rule
145 of the rules and regulations promulgated under the Securities Act or
applicable SEC accounting releases with respect to pooling of interests
accounting treatment (each such person, a "Pooling Affiliate") of the Company.
SECTION 3.16. Non-Competition Agreements. Except as set forth
on Section 3.16 of the Company Disclosure Schedule, neither the Company nor any
Company Subsidiary (other than WME and NSC) is a party to any agreement which
purports to restrict or prohibit in any material respect the Company and the
Company Subsidiaries collectively 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
24
wastes, chemical or hazardous wastes, liquid and any other wastes services
businesses currently engaged in by the Company, or any corporations affiliated
with the Company. 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 Company Subsidiary
or affiliate from, directly or indirectly, engaging in any of the businesses
described above.
SECTION 3.17. Opinion of Financial Advisor. Merrill Lynch &
Co., Inc. ("Merrill Lynch") has delivered to the board of directors of the
Company its written opinion to the effect that, as of the date of the opinion,
the Exchange Ratio was fair from a financial point of view to the holders of
Company Common Stock (other than Parent or its affiliates). Merrill Lynch has
authorized the inclusion of its opinion in the Joint Proxy Statement and the
Company shall promptly, after the date of this Agreement, deliver a signed copy
of such opinion to Parent.
SECTION 3.18. Brokers. No broker, finder or investment banker
(other than Merrill Lynch) is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger based upon arrangements made by or
on behalf of the Company. The Company has heretofore made available to Parent
complete and correct copies of all agreements between the Company and Merrill
Lynch pursuant to which such firm would be entitled to any payment relating to
the Merger.
SECTION 3.19. Insurance. Set forth on Schedule 3.19 of the
Company Disclosure Schedule is a description of material insurance policies
maintained by the Company with respect to the businesses of the Company and the
Company Subsidiaries (other than WME and NSC).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub hereby jointly and severally represent
and warrant to the Company that:
SECTION 4.01. Organization and Qualification; Subsidiaries.
Each of Parent, Merger Sub and each other subsidiary of Parent (together with
Merger Sub, the "Parent Subsidiaries") has been duly organized and is validly
existing and in good standing (to the
25
extent applicable) under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Parent Material Adverse Effect. Each of Parent and each
Parent Subsidiary is duly qualified or licensed to do business, and is in good
standing (to the extent applicable), in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have any change in or effect on the business of Parent and the
Parent Subsidiaries that is, or is reasonably likely to be, materially adverse
to the business, assets (including intangible assets), liabilities (contingent
or otherwise), condition (financial or otherwise) or results of operations of
Parent and the Parent Subsidiaries taken as a whole (a "Parent Material Adverse
Effect"). Section 4.01(a) of the Disclosure Schedule delivered by Parent to the
Company prior to the execution of this Agreement (the "Parent Disclosure
Schedule") sets forth a complete and correct list of all of Parent Subsidiaries.
Except as set forth in Section 4.01(b) of the Parent Disclosure Schedule,
neither Parent nor any Parent Subsidiary holds any interest in any corporation,
limited liability company, partnership, joint venture or other legal entity of
any kind.
SECTION 4.02. Certificate of Incorporation and Bylaws. The
copy of Parent's Restated Certificate of Incorporation that is incorporated by
reference as an exhibit to Parent's Form 10-Q for the period ending September
30, 1997 and the copy of Parent's Bylaws that is incorporated by reference as an
exhibit to Parent's Form 10-K for the period ending December 31, 1996 (the
"Parent 1996 10-K") are complete and correct copies thereof. Parent has
heretofore furnished to the Company a complete and correct copy of the
Certificate of Incorporation and Bylaws of Merger Sub. Such Restated Certificate
of Incorporation, Certificate of Incorporation and Bylaws of Parent and Merger
Sub are in full force and effect. Neither Parent nor Merger Sub is in violation
of any of the provisions of its Certificate of Incorporation or Bylaws.
SECTION 4.03. Capitalization. The authorized capital stock of
Parent consists of 500,000,000 shares of Parent Common Stock and 10,000,000
shares of preferred stock (the "Parent Preferred Stock"). As of February 27,
1998, (i) 218,866,174 shares of Parent Common Stock were issued and outstanding,
all of which were validly issued, fully paid and nonassessable, (ii) no shares
of Parent Preferred Stock were authorized and outstanding, (iii) 23,485 shares
of Parent Common Stock were held in the treasury of Parent or by Parent
Subsidiaries, (iv) 15,542,075 shares of Parent Common Stock were reserved for
future issuance pursuant to the terms of Parent's Convertible Subordinated Notes
due 2002, Parent's
26
4 1/2% Convertible Subordinated Notes due 2001 and Parent's 5% Convertible
Subordinated Notes due 2006 (together, the "Parent Subordinated Notes"), (v)
19,176,005 shares of Parent Common Stock were reserved for issuance pursuant to
outstanding options or warrants to purchase shares of Parent Common Stock
("Parent Stock Options") issued under the benefits plans set forth on Section
4.03(v) of the Parent Disclosure Schedule or otherwise (the "Parent Stock
Plans") and (vi) 4,035,572 shares of Parent Common Stock were reserved for
issuance upon conversion of shares of acquired companies ("Acquired Company
Conversions"). Between February 27, 1998 and the date of this Agreement, no
Parent Stock Options have been granted and no awards have been made under Parent
Stock Plans, and no shares of Parent Common Stock (or securities convertible
into Parent Common Stock) have been issued other than those shares of Parent
Common Stock reserved for issuance as set forth in this Section 4.03. Except for
Parent Stock Options granted pursuant to Parent Stock Plans and shares of Parent
Common Stock issuable pursuant to Parent Stock Plans, upon Acquired Company
Conversions, and upon the conversion of the Parent Subordinated Notes or
pursuant to agreements or arrangements described in Section 4.03 of the Parent
Disclosure Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which Parent is a party or by
which Parent is bound relating to the issued or unissued capital stock of Parent
or any Parent Subsidiary or obligating Parent or any Parent Subsidiary to issue
or sell any shares of capital stock of, or other equity interests in, Parent or
any Parent Subsidiary. All shares of Parent Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Section 4.03 of the Parent Disclosure Schedule, there are no outstanding
contractual obligations of Parent or any Parent Subsidiary to repurchase, redeem
or otherwise acquire any shares of Parent Common Stock or any capital stock of
any Parent Subsidiary. Except as disclosed in Section 4.03 of the Parent
Disclosure Schedule, each outstanding share of capital stock of each Parent
Subsidiary is duly authorized, validly issued, fully paid and nonassessable and
each such share owned by Parent or another Parent Subsidiary is free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on Parent's or such other Parent Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever, except
where the failure to own such shares free and clear would not, individually or
in the aggregate, have a Parent Material Adverse Effect. Except as set forth in
Section 4.03 of the Parent Disclosure Schedule or as set forth in the Parent
Reports (as hereinafter defined), there are no material outstanding contractual
obligations of Parent or any Parent Subsidiary to provide funds to, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in, any Parent Subsidiary which is not wholly owned by Parent or in any other
person.
SECTION 4.04. Authority Relative to this Agreement. Each of
Parent and Merger Sub has all necessary corporate power and authority to execute
and deliver this
27
Agreement, to perform its obligations hereunder and to consummate the Merger.
Each of (i) the execution and delivery of this Agreement by Parent and Merger
Sub and the consummation by Parent and Merger Sub of the transactions
contemplated hereby, (ii) the amendment to the Restated Certificate of
Incorporation of Parent to increase the number of authorized shares of Parent
Common Stock to a number sufficient to consummate the transactions contemplated
hereby and to change Parent's name, as of the Effective Time, to "Waste
Management, Inc." (the "Certificate Amendment") and (iii) the issuance (the
"Share Issuance") of shares of Parent Common Stock in the Merger, have been duly
and validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent or Merger Sub are necessary to authorize this
Agreement or to consummate such transactions (other than, with respect to (a)
the adoption of the Certificate Amendment, the affirmative vote of a majority of
the votes entitled to be cast and (b) the adoption of the Share Issuance, the
approval thereof by the affirmative vote of a majority of votes cast by the
holders of outstanding shares of Parent Common Stock at the Parent Stockholders'
Meeting). This Agreement has been duly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery by the
Company, this Agreement constitutes a legal, valid and binding obligation of
each of Parent and Merger Sub, enforceable against Parent and Merger Sub, as the
case may be, in accordance with its terms.
SECTION 4.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Parent and Merger Sub, do not,
and the performance by Parent and Merger Sub of their respective obligations
hereunder and the consummation of the Merger will not, (i) conflict with or
violate any provision of the Restated Certificate of Incorporation or Bylaws of
Parent or any equivalent organizational documents of any Parent Subsidiary
(assuming that the Certificate Amendment is approved as contemplated by this
Agreement), (ii) assuming that all consents, approvals, authorizations and
permits described in Section 4.05(b) have been obtained and all filings and
notifications described in Section 4.05(b) have been made, conflict with or
violate any Law applicable to Parent or any Parent Subsidiary or by which any
property or asset of Parent or any Parent Subsidiary is bound or affected or
(iii) except as set forth in Section 4.05(a) of the Parent Disclosure Schedule,
result in any breach of or constitute a default (or an event which with the
giving of notice or lapse of time or both would become a default) under, or give
to others any right of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance on any property or
asset of Parent or any Parent Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, Parent Permit, franchise or
other instrument or obligation, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
which would neither, individually or in the aggregate, (A) have a Parent
Material Adverse Effect nor (B) prevent or materially delay the performance by
Parent or Merger Sub of their respective obligations pursuant to this Agreement
or the consummation of the Merger.
28
(b) The execution and delivery of this Agreement by each of
Parent and Merger Sub does not, and the performance by Parent and Merger Sub of
their respective obligations hereunder or the consummation of the Merger will
not, require any consent, approval, authorization or permit of, or filing by
Parent or Merger Sub with or notification by Parent or Merger Sub to, any
Governmental Entity, except (i) applicable requirements of the Exchange Act, the
Securities Act, Blue Sky Laws, the rules and regulations of the NYSE, state
takeover laws, the premerger notification requirements of the HSR Act, the
filing and recordation of the Certificate of Merger as required by the DGCL, and
as set forth in Section 4.05(b) of the Parent Disclosure Schedule, and (ii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not (A) prevent or materially delay
the performance by Parent or Merger Sub of their respective obligations pursuant
to this Agreement and the consummation of the Merger or (B) individually or in
the aggregate have a Parent Material Adverse Effect.
SECTION 4.06. Permits; Compliance with Laws. Each of Parent
and the Parent Subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Parent or any Parent Subsidiary to own, lease and operate its properties or to
carry on its business as it is now being conducted (the "Parent Permits"), and
all such Parent Permits are valid and in full force and effect, except where the
failure to have, or the suspension or cancellation of, any of Parent Permits, or
the failure of any such Parent Permits to be valid and in full force and effect,
would not, individually or in the aggregate, (i) have a Parent Material Adverse
Effect, or (ii) prevent or materially delay the performance by Parent or Merger
Sub of their respective obligations pursuant to this Agreement and the
consummation of the Merger, and, as of the date of this Agreement, no suspension
or cancellation of any of Parent Permits is pending or, to the knowledge of
Parent, threatened, except where the failure to have, or the suspension or
cancellation of, any of Parent Permits would not, individually or in the
aggregate, (i) have a Parent Material Adverse Effect or (ii) prevent or
materially delay the performance by Parent or Merger Sub of their respective
obligations pursuant to this Agreement and the consummation of the Merger.
Except as disclosed in Section 4.06 of the Parent Disclosure Schedule, neither
Parent nor any Parent Subsidiary is in conflict with, or in default or violation
of, (i) any Law applicable to Parent or any Parent Subsidiary or by which any
property or asset of Parent or any Parent Subsidiary is bound or affected or
(ii) any Parent Permits, except in the case of clauses (i) and (ii) for any such
conflicts, defaults or violations that would neither individually or in the
aggregate, (A) have a Parent Material Adverse Effect nor (B) prevent or
materially delay the performance by Parent or Merger Sub of their respective
obligations pursuant to this Agreement and the consummation of the Merger.
29
SECTION 4.07. SEC Filings; Financial Statements. (a) Other
than those listed on Section 4.07(a)(i) of the Parent Disclosure Schedule (the
"Reporting Parent Subsidiaries"), no Parent Subsidiary is subject to the
periodic reporting requirements of the Exchange Act or required to file any
form, report or other document with the SEC, NYSE, any other stock exchange or
any other comparable Governmental Entity. Except as disclosed in Section
4.07(a)(ii) of the Parent Disclosure Schedule, Parent and each Reporting Parent
Subsidiary has timely filed all forms, reports and documents required to be
filed by it with the SEC, the NYSE, any other stock exchange or comparable
Governmental Entity since January 1, 1995 through the date of this Agreement
(collectively and as amended, the "Parent Reports"). Except as would not have a
Parent Material Adverse Effect, each Parent Report (i) was prepared in
accordance with the requirements of the Securities Act, the Exchange Act, the
NYSE, other stock exchange or comparable Governmental Entity, as the case may
be, and (ii) except as set forth in Section 4.07(a)(iii) of the Parent
Disclosure Schedule, did not at the time it was filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Parent Reports was prepared in
accordance with U.S. GAAP applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each presented
fairly, in all material respects, the consolidated financial position of Parent
and the consolidated Parent Subsidiaries as at the respective dates thereof and
the consolidated results of their operations and their consolidated cash flows
for the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring year-end
adjustments which were not and are not expected, individually or in the
aggregate, to have a Parent Material Adverse Effect). The books and records of
Parent and the Parent Subsidiaries have been, and are being, maintained in
accordance with U.S. GAAP and any other applicable legal and accounting
requirements.
(c) Except as and to the extent set forth on the consolidated
balance sheet of Parent and the Parent Subsidiaries as reported in the Parent
Reports, including the notes thereto, none of Parent or any Parent Subsidiary
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with U.S. GAAP, except for
liabilities or obligations incurred in the ordinary course of business since
January 1, 1997 that would not, individually or in the aggregate, have a Parent
Material Adverse Effect.
SECTION 4.08. Absence of Certain Changes or Events. Since
January 1, 1997, except as contemplated by or as disclosed in this Agreement, as
set forth in Section 4.08
30
of the Parent Disclosure Schedule or as disclosed in any Parent Report filed
since January 1, 1997, Parent and the Parent Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any Parent Material
Adverse Effect or any event or development that would have a Parent Material
Adverse Effect, excluding any changes and effects resulting from changes in
economic, regulatory or political conditions or changes in conditions generally
applicable to the industries in which Parent and the Parent Subsidiaries are
involved, (ii) any event that could reasonably be expected to prevent or
materially delay the performance of Parent's and Merger Sub's obligations
pursuant to this Agreement and the consummation of the Merger by Parent and
Merger Sub, (iii) any material change by Parent in its accounting methods,
principles or practices, (iv) any declaration, setting aside or payment of any
dividend or distribution in respect of the shares of Parent Common Stock or any
redemption, purchase or other acquisition of any of Parent's securities or (v)
any increase in the compensation or benefits or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any executive officers of
Parent or any Parent Subsidiary except in the ordinary course of business
consistent with past practice.
SECTION 4.09. Employee Benefit Plans; Labor Matters. (a) With
respect to each employee benefit plan, program, arrangement and contract
(including, without limitation, any "employee benefit plan", as defined in
Section 3(3) of ERISA maintained or contributed to by Parent or any Parent
Subsidiary, or with respect to which Parent or any Parent Subsidiary could incur
liability under Section 4069, 4212(c) or 4204 of ERISA (the "Parent Benefit
Plans"), Parent has delivered (or will, within 15 days of the date hereof,
deliver) to the Company a true and correct copy of (i) such Parent Benefit Plan
and the most recent summary plan description related to each Company Benefit
Plan for which a summary plan description is required, (ii) each trust agreement
or other funding arrangement relating to such Parent Benefit Plan, (iii) the
most recent annual report (Form 5500) filed with the IRS, (iv) the most recent
actuarial report or financial statement relating to a Parent Benefit Plan and
(v) the most recent determination letter issued by the IRS with respect to any
Parent Benefit Plan qualified under Section 401(a) of the Code.
(b) Each Parent Benefit Plan has been administered in all
material respects in accordance with its terms and all contributions required to
be made under the terms of any of the Parent Benefit Plans as of the date of
this Agreement have been timely made or have been reflected on the most recent
consolidated balance sheet filed or incorporated by reference in the Parent
Reports prior to the date of this Agreement. Except as set forth in Section
4.09(b) of the Parent Disclosure Schedule, with respect to the Parent Benefit
Plans, no event has occurred
31
and, to the knowledge of Parent, there exists no condition or set of
circumstances in connection with which Parent or any Parent Subsidiary could be
subject to any liability under the terms of such Parent Benefit Plans, ERISA,
the Code or any other applicable Law which, in any case, would individually or
in the aggregate have a Parent Material Adverse Effect.
(c) Except as set forth in Section 4.09(c) of the Parent
Disclosure Schedule or except as would not have a Parent Material Adverse
Effect, with respect to each Parent Benefit Plan that is not subject to United
States Law (a "Parent Foreign Benefit Plan"):
(i) all employer and employee contributions to each Parent
Foreign Benefit Plan required by Law or by the terms of such Parent
Foreign Benefit Plan have been made or, if applicable, accrued in
accordance with normal accounting practices and a pro rata contribution
for the period from the date hereof to and including the Effective Time
has been made or accrued in accordance with normal accounting
principles;
(ii) the fair market value of the assets of each funded Parent
Foreign Benefit Plan, the liability of each insurer for any Parent
Foreign Benefit Plan funded through insurance or the book reserve
established for any Parent Foreign Benefit Plan, together with any
accrued contributions, is sufficient to procure or provide for the
accrued benefit obligations, as of the Effective Time, with respect to
all current and former participants in such plan according to the
actuarial assumptions and valuations most recently used to determine
employer contributions to such Parent Foreign Benefit Plan and no
transaction contemplated by this Agreement shall cause such assets or
insurance obligations to be less than such benefit obligations; and
(iii) each Parent Foreign Benefit Plan required to be
registered has been registered and has been maintained in good standing
with the appropriate regulatory authorities.
(d) As of the date of this Agreement, there is no labor
dispute, strike or work stoppage against Parent or any Parent Subsidiary pending
or, to the knowledge of Parent, threatened which may interfere with the
respective business activities of Parent or any Parent Subsidiary, except where
such dispute, strike or work stoppage would not have a Parent Material Adverse
Effect. As of the date of this Agreement, to the knowledge of the Parent, none
of Parent, any Parent Subsidiary, or any of their respective representatives or
employees has committed any unfair labor practice in connection with the
operation of the respective businesses of Parent or any Parent Subsidiary, and
there is no charge or complaint against Parent or any Parent Subsidiary by the
National Labor Relations Board or any comparable governmental agency pending or
threatened in writing, except where such unfair labor practice, charge or
complaint would not have a Parent Material Adverse Effect.
32
(e) Parent has made available to the Company true and complete
copies of (i) all employment agreements with executive officers of Parent and
with each other officer of Parent and of each Parent Subsidiary providing for
annual compensation in excess of $250,000, (ii) all severance plans, agreements,
programs and policies of Parent and each Parent Subsidiary with or relating to
their respective employees, and (iii) all plans, programs, agreements and other
arrangements of Parent and each Parent Subsidiary with or relating to their
respective employees which contain "change of control" provisions.
(f) No amount paid or payable by Parent or any Parent
Subsidiary in connection with the transactions contemplated hereby either solely
as a result thereof or as a result of such transactions in conjunction with any
other events will be an "excess parachute payment" within the meaning of Section
280G of the Code.
(g) Except as provided in Section 4.09(g) of the Parent
Disclosure Schedule or as otherwise required by Law, no Parent Benefit Plan
provides retiree medical or retiree life insurance benefits to any person.
SECTION 4.10. Accounting and Tax Matters. (a) Except as
disclosed in the Parent Reports, neither Parent nor, to the knowledge of Parent,
any of its affiliates has taken or agreed to take any action (other than actions
contemplated by this Agreement) that would prevent the Merger from qualifying
for "pooling of interests" accounting treatment under applicable United States
accounting rules, including, without limitation, applicable SEC accounting
standards, or would prevent the Merger from constituting a transaction
qualifying under Section 368(a) of the Code. Parent is not aware of any
agreement, plan or other circumstance that would prevent the Merger from so
qualifying under Section 368(a) of the Code.
(b) The representations and warranties made in Parent's letter
of compliance with pooling of interest criteria addressed to Coopers & Lybrand
("Coopers & Lybrand") are true as of the date hereof.
SECTION 4.11. Contracts; Parent Debt Instruments. Except as
disclosed in the Parent Reports or in Section 4.11(a) of the Parent Disclosure
Schedule, there is no contract or agreement that is material to the business,
financial condition or results of operations of Parent and the Parent
Subsidiaries taken as a whole (each, a "Parent Material Contract"). Except as
disclosed in the Parent Reports or in Section 4.11(b) of the Parent Disclosure
Schedule, neither the Parent nor any Parent Subsidiary is in violation of or in
default under (nor does there exist any condition which with the passage of time
or the giving of notice would cause such a violation of or default under) any
loan or credit agreement, note, bond, mortgage, indenture or lease, or any other
contract, agreement, arrangement or understanding
33
to which it is a party or by which it or any of its properties or assets is
bound, except for violations or defaults that would not, individually or in the
aggregate, result in a Parent Material Adverse Effect. Set forth in Section
4.11(c) of the Parent Disclosure Schedule is a description of any material
changes to the amount and terms of the indebtedness of Parent and the Parent
Subsidiaries as described in the notes to the financial statements incorporated
in the Parent 1996 10-K.
SECTION 4.12. Litigation. Except as disclosed in the Parent
Reports or in Section 4.12 of the Parent Disclosure Schedule, there is no suit,
claim, action, proceeding or investigation pending or, to the knowledge of
Parent, threatened against Parent or any Parent Subsidiary before any
Governmental Entity that, individually or in the aggregate, is reasonably likely
to have a Parent Material Adverse Effect, and, except as disclosed to the
Company, to the knowledge of Parent, there are no existing facts or
circumstances that would be reasonably likely to result in such a suit, claim,
action, proceeding or investigation. Except as disclosed to the Company, Parent
is not aware of any facts or circumstances which would result in the denial of
insurance coverage under policies issued to Parent and the Parent Subsidiaries
in respect of such suits, claims, actions, proceedings and investigations,
except in any case as would not, individually or in the aggregate, have a Parent
Material Adverse Effect. Except as disclosed in the Parent Reports or in Section
4.12 of the Parent Disclosure Schedule, neither Parent nor any Parent Subsidiary
is subject to any outstanding order, writ, injunction or decree which, insofar
as can be reasonably foreseen, individually or in the aggregate, would have a
Parent Material Adverse Effect.
SECTION 4.13. Environmental Matters. Except as disclosed in
the Parent Reports or in Section 4.13 of the Parent Disclosure Schedule or as
would not, individually or in the aggregate, have a Parent Material Adverse
Effect:
(a) Parent and the Parent Subsidiaries (i) are in compliance
with all, and are not subject to any asserted liability or, to Parent's
knowledge, any liability, in each case with respect to any, applicable
Environmental Laws, (ii) hold or have applied for all Environmental
Permits and (iii) are in compliance with their respective Environmental
Permits;
(b) neither Parent nor any Parent Subsidiary has received any
written notice, demand, letter, claim or request for information
alleging that Parent or any of its Subsidiaries may be in violation of,
or liable under, any Environmental Law;
(c) neither Parent nor any Parent Subsidiary (i) has entered
into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with
Environmental Laws, Environmental Permits or the
34
investigation, sampling, monitoring, treatment, remediation, removal or
cleanup of Hazardous Materials and, to the knowledge of Parent, no
investigation, litigation or other proceeding is pending or threatened
in writing with respect thereto, or (ii) is an indemnitor in connection
with any threatened or asserted claim by any third-party indemnitee for
any liability under any Environmental Law or relating to any Hazardous
Materials; and
(d) none of the real property owned or leased by Parent or any
Parent Subsidiary is listed or, to the knowledge of the Company,
proposed for listing on the "National Priorities List" under CERCLA, as
updated through the date hereof, or any similar state or foreign list
of sites requiring investigation or cleanup.
SECTION 4.14. Taxes. (a) Except as set forth in Section 4.14
of the Parent Disclosure Schedule and except for such matters that, individually
or in the aggregate, would not have a Parent Material Adverse Effect, (i) Parent
and each of the Parent Subsidiaries have timely filed or shall timely file all
returns and reports required to be filed by them with any taxing authority with
respect to Taxes for any period ending on or before the Effective Time, taking
into account any extension of time to file granted to or obtained on behalf of
Parent and the Parent Subsidiaries, (ii) all Taxes that are due prior to the
Effective Time have been paid or shall be paid on or before the applicable due
date, (iii) as of the date hereof, no deficiency for any amount of Tax has been
asserted or assessed by a taxing authority against Parent or any of the Parent
Subsidiaries and (iv) Parent and each of the Parent Subsidiaries have provided
adequate reserves in their financial statements for any Taxes that have not been
paid, whether or not shown as being due on any returns.
(b) To the best of Parent's knowledge, no Tax disputes or
audits are pending against, and no claims for Taxes have been received in
writing by or any of Parent Subsidiar ies, other than disputes, audits and
claims that are not reasonably likely to have a Parent Material Adverse Effect.
(c) There are no Tax liens upon any property or assets of
Parent or any of the Parent Subsidiaries except liens for current Taxes not yet
due and liens which have not had and are not reasonably likely to have a Parent
Material Adverse Effect.
SECTION 4.15. Pooling Affiliates. Section 4.15 of the Parent
Disclosure Schedule sets forth the names and addresses of those persons who are,
in Parent's reasonable judgment, a Pooling Affiliate of Parent.
SECTION 4.16. Non-Competition Agreements. Except as set forth
on Section 4.16 of the Parent Disclosure Schedule, neither Parent nor any Parent
Subsidiary is a party to
35
any agreement which purports to restrict or prohibit in any material respect
Parent and the Parent Subsidiaries collectively 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 any other wastes
services businesses currently engaged in by Parent or any corporations
affiliated with Parent. None of Parent's officers, directors or key employees is
a party to any agreement which, by virtue of such person's relationship with
Parent, restricts in any material respect Parent or any Parent Subsidiary or
affiliate from, directly or indirectly, engaging in any of the businesses
described above.
SECTION 4.17. Opinion of Financial Advisor. Donaldson, Lufkin
& Jenrette ("DLJ") has delivered to the board of directors of Parent its written
opinion to the effect that, as of the date of the opinion, the Exchange Ratio
was fair to Parent from a financial point of view. DLJ has authorized the
inclusion of its opinion in the Joint Proxy Statement and Parent shall promptly,
after the date of this Agreement, deliver a signed copy of such opinion to the
Company.
SECTION 4.18. Brokers. No broker, finder or investment banker
(other than DLJ, Relational Investors, LLC ("Relational") and Lehman Brothers
Inc. ("Lehman")) is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made by or on
behalf of Parent. Parent has heretofore made available to the Company complete
and correct copies of all agreements between Parent, on the one hand, and each
of DLJ, Relational and Lehman, on the other hand, pursuant to which such firm
would be entitled to any payment relating to the Merger.
SECTION 4.19. Insurance. Parent maintains insurance coverage
with reputable insurers in such amounts and covering such risks as are in
accordance with normal industry practice for companies engaged in businesses
similar to that of Parent (taking into account the cost and availability of such
insurance).
SECTION 4.20. Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging in the transactions
contemplated by this Agreement.
(b) As of the Effective Time, all of the outstanding capital
stock of Merger Sub will be owned directly by Parent. As of the Effective Time,
there will be no options, warrants or other rights, agreements, arrangements or
commitments to which Merger Sub is a party of any character relating to the
issued or unissued capital stock of, or other equity interests in, Merger Sub or
obligating Merger Sub to grant, issue or sell any shares of the capital stock
of, or other equity interests in, Merger Sub, by sale, lease, license or
otherwise.
36
There are no obligations, contingent or otherwise, of Merger Sub to repurchase,
redeem or otherwise acquire any shares of the capital stock of Merger Sub.
(c) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, Merger Sub has
not and will not have incurred, directly or indirectly, through any subsidiary
or affiliate, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of Business by the Company Pending the
Closing. The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 5.01 of the Company Disclosure
Schedule or as expressly contemplated by any other provision of this Agreement
(including, without limitation, Section 5.12(b)), unless Parent shall otherwise
agree in writing, which agreement shall not be unreasonably withheld or delayed,
(x) the respective businesses of the Company and the Company Subsidiaries (other
than WME) shall be conducted only in, and the Company and the Company
Subsidiaries (other than WME) shall not take any action except in, the ordinary
course of business consistent with past practice, (y) the Company shall use all
reasonable efforts to keep available the services of such of the current
officers, significant employees and consultants of the Company and the Company
Subsidiaries (other than WME) and to preserve the current relationships of the
Company and the Company Subsidiaries (other than WME) with such of the
customers, suppliers and other persons with which the Company or any Company
Subsidiary (other than WME) has significant business relations in order to
preserve substantially intact its business organization and (z) with respect to
WME, the Company will use all reasonable efforts to cause WME to comply with the
covenants contained in this Section 5.01, including clauses (a) through (i)
below including, without limitation, by voting on any matter presented for a
vote of stockholders of WME all shares of WME capital stock owned by the Company
or any Company Subsidiary in a manner consistent with this clause (z), and by
directing those of its employees who are on the Board of Directors of WME to
vote on all matters presented for action by such Board in a manner consistent
with this clause (z). By way of amplification and not limitation, except as set
forth in Section 5.01 of the Company Disclosure Schedule or as expressly
contemplated by any other provision of this Agreement, neither the Company nor
any Company Subsidiary (other than WME) shall, between the date of this
Agreement and the Effective Time, directly or indirectly, do, or agree to do,
any of the
37
following without the prior written consent of Parent, which consent shall not
be unreasonably withheld or delayed:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or encumbrance of,
(i) any shares of capital stock of the Company or any Company
Subsidiary of any class, or securities convertible into or exchangeable
or exercisable for any shares of such capital stock, or any options,
warrants or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of the Company or any Company
Subsidiary (except for the issuance of (A) shares of Company Common
Stock issuable pursuant to the Company Stock Options outstanding on the
date of this Agreement and (B) a maximum of 14,650,015 shares of
Company Common Stock issuable pursuant to the Company Subordinated
Notes), or (ii) any property or assets of the Company or any Company
Subsidiary, except in the ordinary course of business and in a manner
consistent with past practice or in an aggregate amount not in excess
of $15,000,000;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or person or any
division thereof or any assets, other than acquisitions of assets
(excluding the acquisition of a business or substantially all of the
stock or assets thereof) in the ordinary course of business consistent
with past practice, and any acquisitions for consideration, calculated
as of the date of execution of the definitive agreement for any such
acquisition, that is not, in the aggregate for all such acquisitions,
in excess of $500 million; (ii) incur any indebtedness for borrowed
money or issue any debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the obligations
of any person for borrowed money, except for (A) indebtedness for
borrowed money incurred in the ordinary course of business and
consistent with past practice and incurred to refinance outstanding
indebtedness for borrowed money existing on the date of this Agreement,
or (B) indebtedness for borrowed money incurred to finance acquisitions
permitted by clause (i) of this paragraph (c); (iii) terminate, cancel
or request any material change in, or agree to any material change in,
any Company Material Contract or enter into any contract or agreement
material to the business, results of operations or financial condition
of the Company and the Company Subsidiaries taken as a whole, in either
case other than in the ordinary course of business, consistent with
past practice; (iv) make or authorize any capital expenditure, other
than capital expenditures in the
38
ordinary course of business consistent with past practice that are not,
in the aggregate, in excess of (A) $1.2 billion plus (B) 15% of the
aggregate consideration, calculated as of the date of execution of each
definitive acquisition agreement, paid for in acquisitions permitted by
clause (i) of this paragraph (c); or (v) enter into or amend any
contract, agreement, commitment or arrangement that, if fully
performed, would not be permitted under this Section 5.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except (i) for regular quarterly
dividends not in excess of $0.17 per share of Company Common Stock and
(ii) that any Company Subsidiary may pay dividends or make other
distributions to the Company or any other Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(f) increase the compensation payable or to become payable to
its officers or employees, except for increases in accordance with past
practices in salaries or wages of employees or officers of the Company
or any Company Subsidiary who are not executive officers of the
Company, or grant any rights to severance or termination pay to, or
enter into any employment or severance agreement with, any director,
officer or other employee of the Company or any Company Subsidiary, or
establish, adopt, enter into or amend any bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, officer or employee of the Company or any
Company Subsidiary, except to the extent required by applicable Law or
the terms of a collective bargaining agreement;
(g) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and
consistent with past practice, as required by U.S. GAAP or as may be
required by the SEC;
(h) make any tax election or settle or compromise any material
federal, state or local United States income tax liability, or any
income tax liability of any other jurisdiction, other than those made
in the ordinary course of business consistent with past practice and
those for which specific reserves have been recorded on the
consolidated balance sheet of the Company and the consolidated Company
Subsidiaries dated as of December 31, 1996 included in the Company's
Form 10-K for the period
39
ended December 31, 1996 (the "1996 Company 10-K") and only to the
extent of such reserves; or
(i) authorize or enter into any formal or informal agreement
or otherwise make any commitment to do any of the foregoing.
SECTION 5.02. Conduct of Business by Parent Pending the
Closing. Parent agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 5.02 of the Parent Disclosure
Schedule or as expressly contemplated by any other provision of this Agreement
(including, without limitation, Section 5.12(b)), unless the Company shall
otherwise agree in writing, which agreement shall not be unreasonably withheld
or delayed, (x) the respective businesses of Parent and the Parent Subsidiaries
shall be conducted only in, and Parent and the Parent Subsidiaries shall not
take any action except in, the ordinary course of business consistent with past
practice and (y) Parent shall use its reasonable efforts to keep available the
services of such of the current officers, significant employees and consultants
of Parent and the Parent Subsidiaries and to preserve the current relationships
of Parent and the Parent Subsidiaries with such of the customers, suppliers and
other persons with which Parent or any Parent Subsidiary has significant
business relations in order to preserve substantially intact its business
organization. By way of amplification and not limitation, except as set forth in
Section 5.02 of the Parent Disclosure Schedule or as expressly contemplated by
any other provision of this Agreement, neither Parent nor any Parent Subsidiary
shall, between the date of this Agreement and the Effective Time, directly or
indirectly, do, or agree to do, any of the following without the prior written
consent of the Company, which consent shall not be unreasonably withheld or
delayed:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or encumbrance of,
any shares of capital stock of Parent or any Parent Subsidiary of any
class, or securities convertible into or exchangeable or exercisable
for any shares of such capital stock, or any options, warrants or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of Parent or any Parent Subsidiary (except for the issuance
of (A) a maximum of 19,176,005 shares of Parent Common Stock issuable
pursuant to Parent Stock Options outstanding on the date of this
Agreement and the issuance, in the ordinary course of business,
consistent with past practices and on terms no more favorable than
customary prior grants, of Parent Stock Options to acquire shares of
Parent Common Stock and the shares of Parent Common Stock
40
issuable pursuant to such Parent Stock Options, in accordance with the
terms of the Parent Stock Plans, (B) a maximum of 15,542,075 shares of
Parent Common Stock issuable pursuant to the Parent Subordinated Notes,
(C) 4,035,572 shares of Parent Company Stock issuable upon Acquired
Company Conversions and (D) shares of Parent Common Stock issuable as
consideration for acquisitions as contemplated by Section 5.02(c));
(c) (i) acquire (including, without limitation, by merger,
consolidation or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or person or any
division thereof or any assets, other than acquisition of assets
(excluding the acquisition of a business or substantially all of the
stock or assets thereof) in the ordinary course of business consistent
with past practice, and any acquisitions for consideration, calculated
as of the date of execution of the definitive agreement for any such
acquisition that is not, in the aggregate for all such acquisitions, in
excess of $1.2 billion (which acquisitions may include, but need not be
limited to, those set forth on Section 5.02(c) of the Parent Disclosure
Schedule); (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person for
borrowed money, except for (A) indebtedness for borrowed money incurred
in the ordinary course of business and consistent with past practice
and incurred to refinance outstanding indebtedness for borrowed money
existing on the date of this Agreement, or (B) indebtedness for
borrowed money incurred to finance acquisitions permitted by clause (i)
of this paragraph (c); (iii) make or authorize any capital expenditure,
other than capital expenditures in the ordinary course of business
consistent with past practice that are not, in the aggregate, in excess
of (A) $500 million plus (B) 15% of the aggregate consideration,
calculated as of the date of execution of each definitive acquisition
agreement, paid for in acquisitions permitted by clause (i) of this
paragraph (c); or (iv) enter into or amend any contract, agreement,
commitment or arrangement that, if fully performed, would not be
permitted under this Section 5.02(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that any Parent Subsidiary
may pay dividends or make other distributions to Parent or any other
Parent Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
41
(f) take any action with respect to accounting policies or
procedures, other than actions in the ordinary course of business and
consistent with past practice, as required by U.S. GAAP or as may be
required by the SEC; or
(g) authorize or enter into any formal or informal agreement
or otherwise make any commitment to do any of the foregoing.
SECTION 5.03. Cooperation. The Company and Parent shall
coordinate and cooperate in connection with (i) the preparation of the
Registration Statement and the Joint Proxy Statement, (ii) determining whether
any action by or in respect of, or filing with, any Governmental Entity is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any Parent Material Contracts or any Company Material
Contracts, in connection with the consummation of the Merger and (iii) seeking
any such actions, consents, approvals or waivers or making any such filings,
furnishing information required in connection therewith or with the Registration
Statement and the Joint Proxy Statement and timely seeking to obtain any such
actions, consents, approvals or waivers.
SECTION 5.04. Notices of Certain Events. Each of Parent and
the Company shall give prompt notice to the other of (i) any notice or other
communication from any person alleging that the consent of such person is or may
be required in connection with the Merger; (ii) any notice or other
communication from any Governmental Entity in connection with the Merger; (iii)
any actions, suits, claims, investigations or proceedings commenced or, to its
knowledge, threatened against, relating to or involving or otherwise affecting
Parent, the Company, the Parent Subsidiaries or the Company Subsidiaries that
relate to the consummation of the Merger; (iv) the occurrence of a default or
event that, with the giving of notice or lapse of time or both, will become a
default under any Company Material Contract or Parent Material Contract; and (v)
any change that is reasonably likely to result in a Company Material Adverse
Effect or a Parent Material Adverse Effect or is reasonably likely to delay or
impede the ability of either the Company or Parent to perform its respective
obligations pursuant to this Agreement and to effect the consummation of the
Merger.
SECTION 5.05. Access to Information; Confidentiality. (a)
Except as prohibited by any confidentiality agreement or similar agreement or
arrangement to which Parent or the Company or any of the Parent Subsidiaries or
the Company Subsidiaries is a party or by applicable Law or the regulations or
requirements of any stock exchange or other regulatory organization with whose
rules a party hereto is required to comply, from the date of this Agreement to
the Effective Time, Parent and the Company shall (and shall cause the Parent
Subsidiaries and the Company Subsidiaries, respectively, to): (i) provide to the
other (and its officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives (collectively, "Representatives"))
access at reasonable times upon prior
42
notice to its and its subsidiaries' officers, employees, agents, properties,
offices and other facilities and to the books and records thereof, and (ii)
furnish promptly such information concerning its and its subsidiaries' business,
properties, contracts, assets, liabilities and personnel as the other party or
its Representatives may reasonably request. No investigation conducted pursuant
to this Section 5.05 shall affect or be deemed to modify any representation or
warranty made in this Agreement.
(b) The parties hereto shall comply with their respective
obligations under the Confidentiality Agreement dated January 26, 1998 (the
"Confidentiality Agreement") between Parent and the Company with respect to the
information disclosed pursuant to this Agreement.
SECTION 5.06. No Solicitation of Transactions. (a) Each party
to this Agreement shall not, directly or indirectly, and shall instruct its
officers, directors, employees, subsidiaries, agents or advisors or other
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it), not to, directly or indirectly, solicit, initiate
or knowingly encourage (including by way of furnishing nonpublic information),
or take any other action knowingly to facilitate, any inquiries or the making of
any proposal or offer (including, without limitation, any proposal or offer to
its stockholders) that constitutes, or may reasonably be expected to lead to,
any Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of the officers, directors or employees of such party or
any of its subsidiaries, or any investment banker, financial advisor, attorney,
accountant or other representative retained by such party or any of such party's
subsidiaries, to take any such action; provided, however, that nothing contained
in this Section 5.06 shall prohibit the Board of Directors of Parent or the
Company from furnishing information to, or entering into discussions or
negotiations with, any person in connection with an unsolicited (from the date
of this Agreement) proposal by such person to acquire such party pursuant to a
merger, consolidation, share exchange, tender offer, exchange offer, business
combination or other similar transaction or to acquire all or substantially all
of the assets of such party or any of its subsidiaries, if, and only to the
extent that, (i) such Board of Directors, after consultation with outside legal
counsel (which may include its regularly engaged outside legal counsel),
determines in good faith that such action is required for such Board of
Directors to comply with its duties to its stockholders imposed by applicable
Law and (ii) prior to furnishing such information to, or entering into
discussions or negotiations with, such person, such party obtains from such
person an executed confidentiality agreement on terms no less favorable to the
Company or Parent, as the case may be, than those contained in the
Confidentiality Agreement. Each party hereto shall notify the other parties
hereto promptly if any proposal or offer, or any inquiry or contact with any
person with respect thereto, regarding a Competing
43
Transaction is made. Each party hereto immediately shall cease and cause to be
terminated all existing discussions or negotiations with any parties conducted
heretofore with respect to a Competing Transaction. Each party hereto agrees not
to release any third party from, or waive any provision of, any confidentiality
or standstill agreement to which it is a party. Notwithstanding the foregoing,
either party may enter into a confidentiality agreement containing a standstill
provision which permits, or waive compliance with any existing standstill
agreement in order to permit, a third party to make a confidential takeover
proposal to the Board of Directors which could reasonably be expected to result
in a Competing Transaction; provided, however, that either party may then
further waive compliance with a standstill agreement in order to permit a third
party to make such takeover proposal to such party's stockholders so as to
enable the Company or Parent to terminate this Agreement pursuant to the
provisions of Section 8.01(i) or (j), as the case may be; provided further that
nothing in this Section 5.06(a) shall affect the obligation of the Company or
Parent to pay the Company Termination Fee or the Parent Termination Fee (each as
hereinafter defined) pursuant to the terms of Section 8.05.
(b) A "Competing Transaction" means any of the following
involving the Company or Parent, as the case may be (other than the Merger
contemplated by this Agreement): (i) a merger, consolidation, share exchange,
business combination or other similar transaction, (ii) any sale, lease,
exchange, transfer or other disposition of 25 percent or more of the assets of
such party and its subsidiaries, taken as a whole, or of assets of such party
and its subsidiaries generating 25 percent or more of such party's revenues or
operating income, or (iii) a tender offer or exchange offer for 25 percent or
more of the outstanding voting securities of such party.
SECTION 5.07. Pooling Matters. (a) From and after the date of
this Agreement, each of the parties hereto, and each of their respective
subsidiaries or other affiliates, shall take all reasonable actions necessary to
cause the Merger to be characterized as a pooling of interests for accounting
purposes.
(b) As soon as practicable following the effective time of the
merger of WMI Merger Sub, Inc. ("WMI Merger Sub"), a wholly owned subsidiary of
the Company, with and into Wheelabrator Technologies Inc. ("WTI") as
contemplated by the Agreement and Plan of Merger among the Company, WTI and WMI
Merger Sub, the Company shall take all actions necessary to cause the WTI
benefits plans set forth on Section 3.10 of the Company Disclosure Schedule (the
"WTI Stock Plans") to be amended so as to provide that the Company shall satisfy
any obligations it may have to repurchase a participant's exercisable but
unexercised options under such WTI Stock Plans by issuing to such participant
shares of the Company Common Stock, with a fair market value equal to the cash
that would otherwise have been payable thereunder.
44
(c) The Company agrees that, at Parent's request, it shall
cooperate with and assist Parent in conducting one or more registered exchange
offers to exchange outstanding Company Stock Options for shares of Parent Common
Stock as of the Effective Time. The Company shall furnish all information
concerning the Company as Parent may reasonably request in connection with such
exchange offer(s), including as may be necessary to comply with the applicable
requirements of the Exchange Act, the Securities Act, the NYSE and the DGCL.
(d) The Company will file with the SEC a registration
statement on Form S-3 or other applicable form (the "S-3 Registration
Statement") to dispose of any "tainted shares" required to be disposed of prior
to the Effective Time (including those described in Section 3.10 of the Company
Disclosure Schedule, as well as any other shares of Company Common Stock
required to be disposed of prior to the Effective Time in furtherance of the
provisions of Section 5.07(a)); provided, however, that the terms and conditions
of any such disposition shall be reasonably acceptable to Parent (it being
understood and agreed that any sale of "tainted shares" at a customary discount
to the then-market price, less customary underwriters' discounts and
commissions, shall be reasonably acceptable to Parent). Parent will cooperate
with the Company in fulfilling the requirements of the S-3 Registration
Statement.
SECTION 5.08. Letters of Accountants. (a) Parent shall use all
reasonable efforts to cause to be delivered to the Company a "comfort" letter of
Coopers & Lybrand dated and delivered as of the date the Registration Statement
shall have become effective and a "bring-down comfort" letter of Coopers &
Lybrand dated and delivered as of the Effective Time. The Company shall use all
reasonable efforts to cause to be delivered to Parent a "comfort" letter of
Arthur Andersen dated and delivered as of the date the Registration Statement
shall have become effective and a "bring-down comfort" letter of Arthur Andersen
dated and delivered as of the Effective Time. Each such letter shall be
addressed to Parent and the Company, and shall be in form and substance
reasonably satisfactory to the recipient thereof and reasonably customary in
scope and substance for letters delivered by independent public accountants in
connection with mergers such as the one contemplated by this Agreement.
(b) Each of Parent and the Company shall use all reasonable
efforts to cause to be delivered to the other an opinion from Coopers & Lybrand
and Arthur Andersen, respectively, addressed to each of Parent and the Company
and dated as of the Closing Date, that the Merger will qualify for "pooling of
interests" accounting treatment under applicable United States accounting rules,
including, without limitation, applicable SEC accounting standards.
45
SECTION 5.09. Plan of Reorganization. This Agreement is
intended to constitute a "plan of reorganization" within the meaning of Section
1.368-2(g) of the income tax regulations promulgated under the Code. From and
after the date of this Agreement, each party hereto shall use all reasonable
efforts to cause the Merger to qualify, and shall not, without the prior written
consent of the other parties hereto, knowingly take any actions or cause any
actions to be taken which could prevent the Merger from qualifying as a
reorganization under the provisions of Section 368(a) of the Code.
SECTION 5.10. Subsequent Financial Statements. Prior to the
Effective Time, each of the Company and Parent (a) shall consult with the other
prior to making publicly available its financial results for any period and (b)
shall consult with the other prior to the filing of, and shall timely file with
the SEC, each Annual Report on Form 10-K, Quarterly Report on Form 10-Q and
Current Report on Form 8-K required to be filed by such party under the Exchange
Act and the rules and regulations promulgated thereunder and shall promptly
deliver to the other copies of each such report filed with the SEC. As of their
respective dates, none of such reports shall 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 respective audited financial
statements and unaudited interim financial statements of each of the Company and
Parent, as the case may be, included in such reports shall fairly present the
financial position of such party and its Subsidiaries as at the dates thereof
and the results of their operations and cash flows for the periods then ended in
accordance with U.S. GAAP applied on a consistent basis and subject, in the case
of unaudited interim financial statements, to normal year-end adjustments.
SECTION 5.11. Control of Operations. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the operations of the Company and the Company Subsidiaries prior to the
Effective Time. Nothing contained in this Agreement shall give the Company,
directly or indirectly, the right to control or direct the operations of Parent
and the Parent Subsidiaries prior to the Effective Time. Prior to the Effective
Time, each of Parent and the Company shall exercise, consistent with the terms
and conditions of this Agreement, complete control and supervision over its
respective operations.
SECTION 5.12. Further Action; Consents; Filings. (a) Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
all reasonable efforts to (i) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or advisable
under applicable Law or otherwise to consummate and make effective the Merger,
(ii) obtain from Governmental Entities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by Parent,
the Company or the Surviving Corporation or any of their subsidiaries in
connection with the
46
authorization, execution and delivery of this Agreement and the consummation of
the Merger, including, but not limited to, actions with respect to Environmental
Permits, (iii) make all necessary filings, and thereafter make any other
required or appropriate submissions, with respect to this Agreement and the
Merger required under (A) the rules and regulations of the NYSE, (B) the
Securities Act, the Exchange Act and any other applicable federal or state
securities Laws, (C) the HSR Act and (D) any other applicable Law and (iv)
obtain any consents necessary such that the Merger will not constitute a change
of control, or any similar event, which constitutes a default (or an event which
with notice or lapse of time or both would become a default) under any material
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company, Parent or any of their subsidiaries is a party.
The parties hereto shall cooperate and consult with each other in connection
with the making of all such filings, including by providing copies of all such
documents to the nonfiling parties and their advisors prior to filing, and any
comments of the nonfiling parties and their advisors shall be considered prior
to the filing of such document. No party shall consent to any voluntary
extension of any statutory deadline or waiting period or to any voluntary delay
of the consummation of the Merger at the behest of any Governmental Entity
without the consent and agreement of the other parties hereto.
(b) Without limiting the generality of the foregoing, and
subject to the following sentence, each of the parties hereto agrees, and shall
cause each of its respective Subsidiaries to cooperate and to use their
commercially reasonable efforts to obtain any government clearances required for
completion of the Merger (including though compliance with the HSR Act), to
respond to any government requests for information, and to contest and resist
any action, including any legislative, administrative or judicial action, and to
have vacated, lifted, reversed or overturned any Governmental Order (whether
temporary, preliminary or permanent) that restricts, prevents or prohibits the
consummation of the Merger, including, without limitation, by vigorously
pursuing all available avenues of administrative and judicial appeal and all
available legislative action. Each of the parties hereto also agrees to take or
cause to be taken the following actions: (i) provide promptly to Governmental
Entities with regulatory jurisdiction over enforcement of any applicable
antitrust laws ("Government Antitrust Entity") information and documents
requested by any Government Antitrust Entity or necessary, proper or advisable
to permit consummation of the transactions contemplated by this Agreement; (ii)
file any Notification and Report Form and related material required under the
HSR Act as soon as practicable after the date hereof, and thereafter use its
reasonable efforts to certify as soon as practicable its substantial compliance
with any requests for additional information or documentary material that may be
made under the HSR Act; (iii) deliver the proffer of Parent and the Company of
their willingness to (A) sell or otherwise dispose of, or hold separate and
agree to sell or otherwise dispose of, such assets, categories of assets or
businesses of Parent or Parent Subsidiaries or Company or Company Subsidiaries
(other than WME), as applicable, and (B) terminate such existing
47
relationships and contractual rights and obligations (and, in each case, to
enter into agreements with the relevant Government Antitrust Entity giving
effect thereto) in each case with respect to the foregoing clause (A) or (B), if
such action is necessary or reasonably advisable for the purpose of avoiding or
preventing any action by any Government Antitrust Entity which would restrain,
enjoin or otherwise prevent or materially delay consummation of the transactions
contemplated by this Agreement; provided, however, that no party shall be
required to take any actions described in this clause (iii) if such actions
would be reasonably likely, individually or in the aggregate, to have a Parent
Material Adverse Effect after giving effect to the Merger; and (iv) Parent or
the Company, as applicable, shall take promptly, in the event that any permanent
or preliminary injunction or other order is entered or becomes reasonably
foreseeable to be entered in any proceeding that would make consummation of the
transactions contemplated hereby in accordance with the terms of this Agreement
unlawful or that would prevent or delay consummation of the transactions
contemplated hereby, any and all steps (including the appeal thereof, the
posting of a bond or the taking of the steps contemplated by clause (iii) of
this subsection (b)) necessary to vacate, modify or suspend such injunction or
order so as to permit such consummation prior to the deadline specified in
Section 8.01(b). The parties hereto will consult and cooperate with one another,
and consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or in behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other federal, state or
foreign antitrust or fair trade law. The parties hereto will provide to the
other copies of all correspondence between it (or its advisors) and any
Government Antitrust Entity relating to this Agreement or any of the matters
described in this Section 5.12(b). The parties hereto agree that all material
telephonic calls and meetings with a Government Antitrust Entity regarding the
transactions contemplated hereby or any of the matters described in this Section
5.12(b) shall include representatives of each of Parent and the Company. Parent
shall coordinate and be the principal spokesperson in connection with any
proceedings or negotiations with any Governmental Entity relating to any of the
foregoing, provided that it shall afford the Company a reasonable opportunity to
participate therein.
SECTION 5.13. Stockholder Rights Plan. Notwithstanding the
limitations set forth in this Agreement with respect to the conduct of the
Company's or Parent's respective businesses prior to the Effective Time,
including the limitations set forth in Sections 5.01 and 5.02, either the
Company or Parent may, at any time prior to the Effective Time, take all actions
necessary to adopt and implement a stockholder rights plan, provided that the
terms of such stockholder rights plan shall specifically exclude the
consummation of the Merger as contemplated by this Agreement.
SECTION 5.14. Employee Benefit Plans. (a) Following the
Effective Time, Parent shall arrange for each employee of the Company or any
Company Subsidiary to
48
participate in any counterpart Parent Benefit Plans in accordance with the
eligibility criteria thereof, provided that (i) such participants shall receive
full credit for years of service with the Company or any Company Subsidiary (and
service otherwise credited by the Company or any Company Subsidiary) prior to
the Effective Time for all purposes for which such service was recognized under
the Company Benefit Plans including, but not limited to, eligibility to
participate, vesting, and, to the extent not duplicative of benefits received
under such Company Benefit Plan, the amount of benefits, (ii) such participants
shall participate in the Parent Benefit Plans on terms no less favorable than
those offered by Parent to similarly situated employees of Parent, and (iii)
Parent shall cause any and all pre-existing condition limitations, eligibility
waiting periods and evidence of insurability requirements under any group plans
to be waived with respect to such participants and their eligible dependents and
shall provide each such participant with credit for any co-payments and
deductibles paid prior to the Effective Time for purposes of satisfying any
applicable deductible, out-of-pocket, or similar requirements under any health
plans in which such participants are eligible to participate after the Effective
Time. Notwithstanding any of the foregoing to the contrary, none of the
provisions contained herein shall operate to duplicate any benefit provided to
any employee of the Company or the funding of any such benefit.
(b) Following the Effective Time, Parent shall cause the
Surviving Corporation to honor and perform, pursuant to their terms, all
employee benefit obligations to current and former employees and directors of
the Company under any Company Benefit Plans; provided, however, that nothing
contained herein shall limit any reserved right in any Company Benefit Plan to
amend, modify, suspend, revoke or terminate any such plan.
(c) Notwithstanding any of the foregoing to the contrary,
prior to the Effective Time, the Company shall take all necessary action to
terminate the Company Supplemental Executive Retirement Plan, as amended and
restated as of November 11, 1997 (the "SERP"). No further benefits shall accrue
under the SERP after its termination (except that participants shall be credited
with the maximum number of additional years of benefit service to which the
participant would be entitled under his or her employment agreement if his or
her employment terminated upon the termination of the SERP under circumstances
which would entitle him or her to severance or similar benefits under such
employment agreement) and all benefits thereunder shall be fully vested and paid
out on a present value basis, using the actuarial assumptions applicable to lump
sum payments under the Company's qualified defined benefit plan, effective as of
the date of termination of the SERP.
(d) To the extent that Parent elects to terminate after the
Effective Time any employee pension benefit plan maintained by the Company or
any Company Subsidiary which is a defined benefit plan, then all accrued
benefits thereunder shall be fully vested and the
49
accrued benefits shall be paid as promptly as practicable to participants
thereunder who so elect in a lump sum payment.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, (i) Parent
and the Company shall jointly prepare and file with the SEC a joint proxy
statement with respect to the Merger relating to the special meeting of each of
the Company's stockholders (the "Company Stockholders' Meeting") and Parent's
stockholders (the "Parent Stockholders' Meeting" and, together with the Company
Stockholders' Meeting, the "Stockholders' Meetings") to be held in connection
with the Merger (together with any amendments thereto, the "Joint Proxy
Statement") and (ii) Parent shall prepare and file with the SEC a registration
statement on Form S-4 (together with all amendments thereto, the "Registration
Statement"), in connection with the registration under the Securities Act of the
issuance of Parent Common Stock to the Company's stockholders pursuant to the
Merger, in which the Joint Proxy Statement shall be included as a prospectus.
Copies of the Joint Proxy Statement shall be provided to the NYSE in accordance
with the rules of such exchange. Each of the parties hereto shall use all
reasonable efforts to cause the Registration Statement to become effective as
promptly as practicable, and, prior to the effective date of the Registration
Statement, the parties hereto shall take all action required under any
applicable Laws in connection with the issuance of shares of Parent Common Stock
pursuant to the Merger. Parent or the Company, as the case may be, shall furnish
all information concerning Parent or the Company as the other party may
reasonably request in connection with such actions and the preparation of the
Registration Statement and Joint Proxy Statement. As promptly as practicable
after the effective date of the Registration Statement, the Joint Proxy
Statement shall be mailed to the stockholders of Parent and the Company. Each of
the parties hereto shall cause the Joint Proxy Statement to comply as to form
and substance in all material respects with the applicable requirements of (i)
the Exchange Act, (ii) the NYSE, (iii) the Securities Act and (iv) the DGCL.
(b) (i) The Joint Proxy Statement shall include the approval
of this Agreement and the recommendation of the Board of Directors of the
Company to the Company's stockholders that they vote in favor of adoption of
this Agreement; provided, however, that the Board of Directors of the Company
may, at any time prior to the Effective Time, withdraw, modify or change any
such recommendation to the extent that the Board of Directors of the Company
determines in good faith, after consultation with outside legal counsel (who may
be the Company's regularly engaged outside legal counsel), that such
50
withdrawal, modification or change of its recommendation is required by its
fiduciary duties to the Company's stockholders under applicable Law. In
addition, the Joint Proxy Statement shall include the opinion of Merrill Lynch
referred to in Section 3.17.
(ii) The Joint Proxy Statement shall include the approval of
this Agreement and the recommendation of the Board of Directors of Parent to
Parent's stockholders that they vote in favor of the Share Issuance and the
Certificate Amendment contemplated hereby; provided, however, that the Board of
Directors of Parent may, at any time prior to the Effective Time, withdraw,
modify or change any such recommendation to the extent that the Board of
Directors of Parent determines in good faith, after consultation with outside
legal counsel (who may be Parent's regularly engaged outside legal counsel),
that such withdrawal, modification or change of its recommendation is required
by its fiduciary duties to Parent's stockholders under applicable Law. In
addition, the Joint Proxy Statement shall include the opinion of DLJ referred to
in Section 4.17.
(c) No amendment or supplement to the Joint Proxy Statement or
the Registration Statement shall be made without the prior review of Parent and
the Company, and any comments of Parent or the Company shall be considered prior
to filing such amendment or supplement, to the extent practicable. Each of the
parties hereto shall advise the other parties hereto, promptly after it receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop
order, of the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any jurisdiction,
or of any request by the SEC or the NYSE for amendment of the Joint Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
(d) The information supplied by the Company for inclusion in
the Registration Statement and the Joint Proxy Statement shall not, at (i) the
time the Registration Statement is filed with the SEC, (ii) if different, the
time the Registration Statement is declared effective, (iii) the time the Joint
Proxy Statement (or any amendment thereof or supplement thereto) is first mailed
to the stockholders of the Company and Parent, (iv) the time of the Company
Stockholders' Meeting, (v) the time of the Parent Stockholders' Meeting and (vi)
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any Company Subsidiary, or their
respective officers or directors, should be discovered by the Company that
should be set forth in an amendment or a supplement to the Registration
Statement or Joint Proxy Statement, the Company shall promptly inform Parent.
All documents that the Company is responsible for filing with the SEC in
connection with the Merger will comply as
51
to form in all material respects with the applicable requirements of the NYSE,
the DGCL, the Securities Act and the Exchange Act.
(e) The information supplied by Parent for inclusion in the
Registration Statement and the Joint Proxy Statement shall not, at (i) the time
the Registration Statement is filed with the SEC, (ii) if different, the time
the Registration Statement is declared effective, (iii) the time the Joint Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of Parent and the Company, (iv) the time of the Company
Stockholders' Meeting, (v) the time of the Parent Stockholders' Meeting and (vi)
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any Parent Subsidiary, or their respective
officers or directors, should be discovered by Parent that should be set forth
in an amendment or a supplement to the Registration Statement or Joint Proxy
Statement, Parent shall promptly inform the Company. All documents that Parent
is responsible for filing with the SEC in connection with the Merger will comply
as to form in all material respects with the applicable requirements of the
NYSE, the DGCL, the Securities Act and the Exchange Act.
SECTION 6.02. Stockholders' Meetings. The Company shall call
and hold the Company Stockholders' Meeting, and Parent shall call and hold the
Parent Stockholders' Meeting, in each case as promptly as practicable, for the
purpose, in the case of the Company Stockholders' Meeting, of voting upon the
adoption of this Agreement and the Merger contemplated hereby, and, in the case
of the Parent Stockholders' Meeting, of voting upon the adoption of the
Certificate Amendment and the Share Issuance pursuant to the Joint Proxy
Statement, and each of Parent and the Company shall use its reasonable efforts
to hold the Stockholders' Meetings on the same day and as soon as practicable
after the date on which the Registration Statement becomes effective. The
Company shall use its reasonable efforts to solicit from its stockholders
proxies in favor of the adoption of this Agreement pursuant to the Joint Proxy
Statement and shall take all other action necessary or advisable to secure the
vote or consent of stockholders required by the DGCL or applicable stock
exchange requirements to obtain such approval, except to the extent that the
Board of Directors of the Company determines in good faith after consultation
with outside legal counsel (who may be the Company's regularly engaged outside
legal counsel) that the withdrawal, modification or change of its recommendation
is required by its fiduciary duties to the Company stockholders under applicable
Law. Parent shall use its reasonable efforts to solicit from its stockholders
proxies in favor of the Certificate Amendment and the Share Issuance
contemplated hereby pursuant to the Joint Proxy Statement, and shall take all
other action necessary or advisable to secure the vote or consent of
stockholders required by the DGCL or applicable stock exchange requirements to
obtain such approval, except to the extent that the Board of Directors of Parent
52
determines in good faith after consultation with outside legal counsel (who may
be Parent's regularly engaged outside legal counsel) that the withdrawal,
modification or change of its recommendation is required by its fiduciary duties
to Parent's stockholders under applicable Law. Each of the parties hereto,
subject to the exercise of their fiduciary duties to their respective
stockholders, as described in this Section 6.02, shall take all other action
necessary or, in the opinion of the other parties hereto, advisable to promptly
and expeditiously secure any vote or consent of stockholders required by
applicable Law and such party's Restated Certificate of Incorporation and Bylaws
to effect the Merger.
SECTION 6.03. Post-Merger Directors and Chief Executive
Officer of Parent. (a) The Board of Directors of Parent shall take such action
as may be necessary to cause Parent's Board of Directors immediately following
the Effective Time to be composed of fourteen members, and to cause seven
persons designated by the Board of Directors of the Company prior to the Closing
(the "Company Designees") to be elected to Parent's Board of Directors. In
furtherance thereof, Parent shall increase the size of its Board of Directors
and secure the resignations of such number of its incumbent directors as is
necessary to effectuate the foregoing sentence. To the extent practicable, the
Company Designees and the members of the Parent board of Directors designated by
Parent shall be equally distributed among the Parent's three classes of
directors at the Effective Time. All of the Company Designees shall serve in
accordance with the Restated Certificate of Incorporation and Bylaws of Parent
until their respective successors are duly elected or appointed and qualified.
The Board of Directors of Parent shall take such action as may be necessary to
cause Mr. Robert S. Miller to be named as the Non-Executive Chairman of the
Board of Parent for a 12-month term to begin immediately following the Effective
Time. Following the expiration of such term, Mr. John E. Drury shall be named as
the Chairman of the Board of Parent.
(b) The current Chief Executive Officer of Parent shall remain
as Chief Executive Officer of Parent following the Effective Time.
SECTION 6.04. Pooling Affiliates. (a) Not less than 45 days
prior to the Effective Time, the Company shall deliver to Parent a list of names
and addresses of those persons, in the Company's reasonable judgment, at the
record date for the Company Stockholders' Meeting, who were Pooling Affiliates
of the Company. The Company shall provide Parent such information and documents
as Parent shall reasonably request for purposes of reviewing such list. The
Company shall use its reasonable efforts to deliver or cause to be delivered to
Parent, prior to the Effective Time, an affiliate letter in the form attached
hereto as Exhibit 6.04(a) (the "Company Affiliate Letter"), executed by each of
the Pooling Affiliates of the Company identified in the above-referenced list.
The foregoing notwithstanding, Parent shall be entitled to place legends as
specified in the Company Affiliate Letter on the certificates evidencing any of
the Parent Common Stock to be received by (i) any Pooling Affiliate of the
53
Company or (ii) any person Parent reasonably identifies (by written notice to
the Company) as being a person who may be deemed an "affiliate" within the
meaning of Rule 145 of the rules and regulations of the Securities Act or
applicable SEC accounting releases with respect to pooling-of-interests
accounting treatment, pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Parent
Common Stock, consistent with the terms of the Company Affiliate Letter,
regardless of whether such person has executed the Company Affiliate Letter and
regardless of whether such person's name and address appear on Section 3.15 of
the Company Disclosure Schedule.
(b) Not less than 45 days prior to the Effective Time, Parent
shall deliver to the Company a list of names and addresses of those persons who
were, in Parent's reasonable judgment, at the record date for the Parent
Stockholders' Meeting, Pooling Affiliates of Parent. Parent shall provide the
Company such information and documents as the Company shall reasonably request
for purposes of reviewing such list. Parent shall use its reasonable efforts to
deliver or cause to be delivered to the Company, prior to the Effective Time, an
affiliate letter in the form attached hereto as Exhibit 6.04(b) (the "Parent
Affiliate Letter"), executed by each of the Pooling Affiliates of Parent
identified in the above-referenced list.
SECTION 6.05. Assumption of Debt. With respect to the
Company's indebtedness identified on Section 6.05 of the Company Disclosure
Schedule issued by the Company under an indenture qualified under the Trust
Indenture Act of 1939 (the "Company Indentures"), if required by the Company
Indentures, the Surviving Corporation shall execute and deliver to the trustee
under each Company Indenture a supplemental indenture, in form satisfactory to
the trustee, expressly assuming the obligations of the Company with respect to
the due and punctual payment of the principal of (and premium, if any) and
interest on such indebtedness and the due and punctual performance of all the
terms, covenants and conditions of the Company Indentures to be kept or
performed by the Company, and shall deliver such supplemental indenture to the
trustee under each Company Indenture. Holders of the Company Subordinated Notes
who convert after the Effective Time shall be entitled to receive Parent Common
Stock based on a ratio determined in accordance with Section 2.01(a).
SECTION 6.06. Indemnification of Directors and Officers. (a)
Parent and Merger Sub agree that the indemnification obligations set forth in
the Company's Restated Certificate of Incorporation and Bylaws, in each case as
of the date of this Agreement, shall survive the Merger (and, prior to the
Effective Time, Parent shall cause the Certificate of Incorporation and Bylaws
of Merger Sub to reflect such provisions) and shall not be amended, repealed or
otherwise modified for a period of six years after the Effective Time in any
manner that would adversely affect the rights thereunder of the individuals who
on or prior to the Effective Time were directors, officers, employees or agents
of the Company or the Company Subsidiaries.
54
(b) The Company shall, to the fullest extent permitted under
applicable Law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable Law, indemnify and hold
harmless, each present and former director, officer, trustee, fiduciary,
employee or agent of the Company and each Company Subsidiary and each such
person who served at the request of the Company or any Company Subsidiary as a
director, officer, trustee, partner, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise (collectively, the "Indemnified Parties") against all
costs and expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and settlement amounts paid in connection
with any claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), whether civil, administrative or
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer or director, in each case occurring before the Effective
Time (including the transactions contemplated by this Agreement). Without
limiting the foregoing, in the event of any such claim, action, suit, proceeding
or investigation, the Company or the Surviving Corporation, as the case may be,
shall pay the fees and expenses of counsel selected by any Indemnified Party,
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, as the case may be, promptly after statements therefor are received
(unless the Surviving Corporation shall elect to defend such action).
(c) For six years from the Effective Time, the Surviving
Corporation shall provide (to the extent available in the market) to the
Company's current directors and officers liability insurance protection of the
same kind and scope as that provided by the Company's directors' and officers'
liability insurance policies (copies of which have been made available to
Parent); provided, however, that in no event shall the Surviving Corporation be
required to expend more than 200% of the current amount expended by the Company
(the "Insurance Amount") to maintain or procure insurance coverage pursuant
hereto and further provided that if the Surviving Corporation is unable to
maintain or obtain the insurance called for by this Section 6.06(c), it shall
use its best efforts to obtain as much comparable insurance as is available for
the Insurance Amount.
(d) Following the Effective Time, Parent will fully guaranty
the prompt payment and performance of all obligations of the Surviving
Corporation pursuant to this Section 6.06 and under any and all director and
officer indemnification agreements entered into by the Company and/or any
Company Subsidiary.
(e) The obligations of the Company, the Surviving Corporation,
and Parent under this Section 6.06 shall not be terminated or modified in such a
manner as to adversely
55
affect any Indemnified Party without the consent of such affected party (it
being expressly agreed that each such party shall be a third-party beneficiary
of this Section 6.06).
(f) The rights of an Indemnified Party to indemnification and
advancement of expenses under this Section 6.06 shall not be deemed exclusive of
any other rights which the Indemnified Party may at any time be entitled to
under applicable Law, any charter or bylaw provision, any agreement, vote of
stockholders, resolution of disinterested directors or otherwise.
SECTION 6.07. No Shelf Registration. Parent shall not be
required to amend or maintain the effectiveness of the Registration Statement
for the purpose of permitting resale of the shares of Parent Common Stock
received pursuant hereto by the persons who may be deemed to be "affiliates" of
the Company within the meaning of Rule 145 promulgated under the Securities Act.
SECTION 6.08. Public Announcements. The initial press release
concerning the Merger shall be a joint press release and, thereafter, Parent and
the Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
Merger and shall not issue any such press release or make any such public
statement without the prior written approval of the other, except to the extent
required by applicable Law or the requirements of the NYSE, in which case the
issuing party shall use its reasonable efforts to consult with the other party
before issuing any such release or making any such public statement.
SECTION 6.09. Parent Restated Certificate of Incorporation. As
of the Effective Time, Parent shall cause its Restated Certificate of
Incorporation to be amended to reflect the Certificate Amendment.
SECTION 6.10. Stock Exchange Listing. Each of the parties
hereto shall use its reasonable efforts to obtain, prior to the Effective Time,
the approval for listing on the NYSE, effective upon official notice of
issuance, of the shares of Parent Common Stock issuable to the Company's
stockholders in the Merger and upon the exercise of options pursuant to Section
2.04 hereof.
SECTION 6.11. Blue Sky. Each of the parties hereto shall use
all reasonable efforts to obtain prior to the Effective Time all necessary blue
sky permits and approvals required under Blue Sky Laws to permit the
distribution of the shares of Parent Common Stock to be issued in accordance
with the provisions of this Agreement.
56
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party to
Consummate the Merger. The obligations of the parties hereto to consummate the
Merger, or to permit the consummation of the Merger, are subject to the
satisfaction or, if permitted by applicable Law, waiver of the following
conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC and not concluded or withdrawn;
(b) this Agreement shall have been duly adopted by the
requisite vote of stockholders of the Company and the matters specified
in Section 4.04 shall have been approved by the requisite vote of
stockholders of Parent;
(c) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued any order, which is then in
effect and has the effect of making the Merger illegal or otherwise
prohibiting its consummation;
(d) any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act or any other
applicable competition, merger control or similar Law shall have
expired or been terminated;
(e) all consents, approvals and authorizations legally
required to be obtained to consummate the Merger shall have been
obtained from all Governmental Entities, except where the failure to
obtain any such consent, approval or authorization would not have a
Parent Material Adverse Effect after the Effective Time;
(f) each of Arthur Andersen and Coopers & Lybrand, as the
independent public accountants of the Company and Parent, respectively,
shall have issued the "comfort" letters referred to in Section 5.08(a)
and the "pooling of interests" opinions referred to in Section 5.08(b);
(g) the shares of Parent Common Stock issuable to the
Company's stockholders in the Merger and upon the exercise of options
pursuant to Section 2.04
57
hereof shall have been authorized for listing on the NYSE, subject to
official notice of issuance; and
(h) the S-3 Registration Statement shall have been declared
effective by the SEC and the "tainted shares" shall have been disposed
of thereunder as contemplated by Section 5.07.
SECTION 7.02. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger, or to permit the
consummation of the Merger, are subject to the satisfaction or, if permitted by
applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of Parent
contained in this Agreement that is qualified by materiality shall be
true and correct on and as of the Effective Time as if made at and as
of the Effective Time (other than representations and warranties which
address matters only as of a certain date which shall be true and
correct as of such certain date) and each of the representations and
warranties that is not so qualified shall be true and correct in all
material respects on and as of the Effective Time as if made at and as
of the Effective Time (other than representations and warranties which
address matters only as of a certain date which shall be true and
correct in all material respects as of such certain date), in each case
except as contemplated or permitted by this Agreement, and the Company
shall have received a certificate of the Chairman or President and
Chief Financial Officer of Parent to such effect;
(b) Parent shall have performed or complied in all material
respects with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time and the Company shall have received a certificate of the
Chairman or President and Chief Financial Officer of Parent to that
effect;
(c) no event or events shall have occurred or be reasonably
likely to occur which, individually or in the aggregate, shall have had
or could reasonably be expected to have, a Parent Material Adverse
Effect;
(d) the Company shall have received the opinion of Skadden,
Arps, Slate, Meagher & Flom (Illinois), in form and substance
reasonably satisfactory to the Company, based upon facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, to
the effect that (i) the Merger will be treated for federal income tax
purposes as a reorganization
58
qualifying under the provisions of section 368(a) of the Code, and
Parent, Merger Sub and the Company will each be a party to the
reorganization, (ii) no gain or loss will be recognized by Parent,
Merger Sub or the Company as a result of the Merger, and (iii) no gain
or loss will be recognized by the stockholders of the Company who
exchange their Company Common Stock solely for Parent Common Stock
pursuant to the Merger (except with respect to cash received in lieu of
a fractional share interest). In rendering such opinion, counsel may
require and rely upon representations contained in certificates of
officers of Parent and the Company; and
(e) Parent shall have taken all action necessary to cause the
Company Designees to become members of the Parent Board of Directors,
and Mr. Robert S. Miller to be elected Chairman of the Board of Parent,
in each case as of the Effective Time, as contemplated by Section 6.03.
SECTION 7.03. Conditions to the Obligations of Parent. The
obligations of Parent to consummate the Merger, or to permit the consummation of
the Merger, are subject to the satisfaction or, if permitted by applicable Law,
waiver of the following further conditions:
(a) each of the representations and warranties of the Company
contained in this Agreement that is qualified by materiality shall be
true and correct on and as of the Effective Time as if made at and as
of the Effective Time (other than representations and warranties which
address matters only as of a certain date which shall be true and
correct as of such certain date) and each of the representations and
warranties that is not so qualified shall be true and correct in all
material respects on and as of the Effective Time as if made on and as
of such date (other than representations and warranties which address
matters only as of a certain date which shall be true and correct in
all material respects as of such certain date), in each case except as
contemplated or permitted by this Agreement, and Parent shall have
received a certificate of the Chairman or President and Chief Financial
Officer of the Company to such effect;
(b) the Company shall have performed or complied in all
material respects with all material agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to
the Effective Time and Parent shall have received a certificate of the
Chairman or President and Chief Financial Officer of the Company to
that effect;
(c) except as set forth on Section 3.08 of the Company
Disclosure Schedule, no event or events shall have occurred or be
reasonably likely to occur which, individually or in the aggregate,
shall have had, or could reasonably be expected to have, a Company
Material Adverse Effect, it being understood that for purposes of
59
determining whether a Company Material Adverse Effect shall have
occurred on the assets, liabilities, financial condition or results of
operations of the Company and the Company Subsidiaries taken as a
whole, actual amounts as at any date of determination or for any period
of determination shall be compared, to the extent practicable, to the
corresponding amounts included in the Company's 1998 business plan
included in Section 3.08 of the Company Disclosure Schedule; and
(d) Parent shall have received the opinion of Shearman &
Sterling, in form and substance reasonably satisfactory to Parent,
based upon facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at the
Effective Time, to the effect that (i) the Merger will be treated for
federal income tax purposes as a reorganization qualifying under the
provisions of Section 368(a) of the Code, and Parent, Merger Sub and
the Company will each be a party to the reorganization, (ii) no gain or
loss will be recognized by Parent, Merger Sub or the Company as a
result of the Merger, and (iii) no gain or loss will be recognized by
the stockholders of the Company who exchange their Company Common Stock
solely for Parent Common Stock pursuant to the Merger (except with
respect to cash received in lieu of a fractional share interest). In
rendering such opinion, counsel may require and rely upon
representations contained in certificates of officers of Parent and the
Company.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite adoption of this Agreement, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Parent and the Company;
(b) by either Parent or the Company, if the Effective Time
shall not have occurred on or before October 31, 1998; provided,
however, that the right to terminate this Agreement under this Section
8.01(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement shall have caused, or resulted in,
the failure of the Effective Time to occur on or before such date;
provided further that this Agreement may be extended not more than 60
days by Parent or the Company by written notice to the other party if
the Merger shall not have been consummated as a direct result of (i)
the Company or Parent having failed to receive all regulatory
60
approvals or consents required to be obtained by the Company or Parent
with respect to the Merger in order to satisfy the condition set forth
in Section 7.01(e) or (ii) the existence of litigation or any
governmental proceeding seeking to prevent or prohibit consummation of
the Merger;
(c) by either Parent or the Company, if any Governmental
Order, writ, injunction or decree preventing the consummation of the
Merger shall have been entered by any court of competent jurisdiction
and shall have become final and nonappealable;
(d) by Parent, if (i) in accordance with the proviso to
Section 6.01(b)(i), the Board of Directors of the Company withdraws,
modifies or changes its recommendation of this Agreement and the Merger
in a manner adverse to Parent or its stockholders or shall have
resolved to do so, or if the Board of Directors of the Company shall
have refused to affirm its recommendation of this Agreement and the
Merger as promptly as practicable (but in any event within three
business days) after receipt of any request by Parent, (ii) the Board
of Directors of the Company shall have recommended to the stockholders
of the Company a Competing Transaction or shall have resolved to do so
or (iii) a tender offer or exchange offer for 25 percent or more of the
outstanding shares of capital stock of the Company is commenced and the
Board of Directors of the Company fails to recommend against acceptance
of such tender offer or exchange offer by its stockholders (including
by taking no position with respect to the acceptance of such tender
offer or exchange offer by its stockholders);
(e) by the Company, if (i) in accordance with the proviso to
Section 6.01(b)(ii), the Board of Directors of Parent withdraws,
modifies or changes its recommendation of this Agreement and the Merger
in a manner adverse to the Company or its stockholders or shall have
resolved to do so, or if the Board of Directors of Parent shall have
refused to affirm its recommendation of this Agreement and the Merger
as promptly as practicable (but in any event within three business
days) after receipt of any request by the Company, (ii) the Board of
Directors of Parent shall have recommended to the stockholders of
Parent a Competing Transaction or shall have resolved to do so or (iii)
a tender offer or exchange offer for 25 percent or more of the
outstanding shares of capital stock of Parent is commenced and the
Board of Directors of Parent fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders (including by
taking no position with respect to the acceptance of such tender offer
or exchange offer by its stockholders);
(f) by Parent or the Company, (i) if this Agreement shall fail
to receive the requisite votes for adoption at the Company
Stockholders' Meeting or any adjournment
61
or postponement thereof or (ii) if the Share Issuance or the
Certificate Amendment shall fail to receive the requisite votes for
approval at the Parent Stockholders' Meeting or any adjournment or
postponement thereof;
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall
have become untrue, in either case such that the conditions set forth
in Section 7.03 would not be satisfied (a "Terminating Company
Breach"); provided, however, that, if such Terminating Company Breach
is curable by the Company through the exercise of its reasonable
efforts and for so long as the Company continues to exercise such
reasonable efforts, Parent may not terminate this Agreement under this
Section 8.01(g); and provided further that the preceding proviso shall
not in any event be deemed to extend any date set forth in paragraph
(b) of this Section 8.01;
(h) by the Company, upon breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have
become untrue, in either case such that the conditions set forth in
Section 7.02 would not be satisfied (a "Terminating Parent Breach");
provided, however, that, if such Terminating Parent Breach is curable
by Parent through the exercise of its reasonable efforts and for so
long as Parent continues to exercise such reasonable efforts, the
Company may not terminate this Agreement under this Section 8.01(h);
and provided further that the preceding proviso shall not in any event
be deemed to extend any date set forth in paragraph (b) of this Section
8.01;
(i) by the Company, if the Board of Directors of the Company
shall, following receipt of advice of outside legal counsel (who may be
the Company's regularly engaged outside legal counsel) that failure to
so terminate would be inconsistent with its duties to its stockholders
under applicable Law, in good faith have withdrawn, modified or changed
its recommendation of the adoption of this Agreement and the Merger in
a manner adverse to Parent and, on or prior to such date, any person
(other than Parent) shall have made a public announcement or otherwise
communicated to the Company and its stockholders with respect to a
Competing Transaction that, as determined by the Board of Directors of
the Company after consultation with its outside legal counsel (who may
be its regularly engaged outside legal counsel) and financial advisors,
contains terms more favorable to the stockholders of the Company than
those provided for in the Merger; provided, however, that the Company
may not terminate this Agreement pursuant to this Section 8.01(i) until
three business days have elapsed following delivery to Parent of
written notice of such determination of the Company (which written
notice shall inform Parent of the material terms and conditions of the
62
Competing Transaction); provided further, that such termination under
this Section 8.01(i) shall not be effective until the Company has made
payment to Parent of the amounts required to be paid pursuant to
Section 8.05(b); or
(j) by Parent, if the Board of Directors of Parent shall,
following receipt of advice of outside legal counsel (who may be
Parent's regularly engaged outside legal counsel) that failure to so
terminate would be inconsistent with its duties to its stockholders
under applicable Law, in good faith have withdrawn, modified or changed
its recommendation of the approval of this Agreement and the Merger in
a manner adverse to the Company and, on or prior to such date, any
person (other than the Company) shall have made a public announcement
or otherwise communicated to Parent and its stockholders with respect
to a Competing Transaction that, as determined by the Board of
Directors of Parent after consultation with its outside legal counsel
(who may be its regularly engaged outside legal counsel) and financial
advisors, contains terms more favorable to the stockholders of Parent
than those provided for in the Merger; provided, however, that Parent
may not terminate this Agreement pursuant to this subsection (j) until
three business days have elapsed following delivery to the Company of
written notice of such determination of Parent (which written notice
shall inform the Company of the material terms and conditions of the
Competing Transaction); provided further, that such termination under
this Section 8.01(j) shall not be effective until Parent has made
payment to the Company of the amounts required to be paid pursuant to
Section 8.05(c).
SECTION 8.02. Effect of Termination. Except as provided in
Section 9.01, in the event of termination of this Agreement pursuant to Section
8.01, this Agreement shall forthwith become void, there shall be no liability
under this Agreement on the part of Parent or the Company or any of their
respective officers or directors, and all rights and obligations of each party
hereto shall cease, subject to the remedies of the parties hereto set forth in
Section 8.05(b) through and including (f); provided, however, that nothing
herein shall relieve any party hereto from liability for the willful or
intentional breach of any of its representations and warranties or the willful
or intentional breach of any of its covenants or agreements set forth in this
Agreement; provided further, that the Confidentiality Agreement shall survive
any termination of this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the adoption of this Agreement by the stockholders of the Company, no
amendment may be made, except such amendments that have received the requisite
stockholder approval and such amendments as are permitted to be made
63
without stockholder approval under the DGCL. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time,
any party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto or (b)
waive any inaccuracy in the representations and warranties contained herein or
in any document delivered pursuant hereto. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 8.05. Fees and Expenses. (a) Except as set forth in
this Section 8.05, all Expenses incurred in connection with this Agreement and
the Merger shall be paid by the party incurring such Expenses, whether or not
the Merger is consummated, except that Parent and the Company each shall pay
one-half of all Expenses incurred solely for printing, filing and mailing the
Registration Statement and the Joint Proxy Statement and all SEC and other
regulatory filing fees incurred in connection with the Registration Statement
and the Joint Proxy Statement, the fee required to be paid in connection with
the HSR Act and the printing, filing and mailing of the S-3 Registration
Statement. "Expenses", as used in this Agreement, shall include all reasonable
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of its obligations pursuant to this Agreement and the consummation
of the Merger, the preparation, printing, filing and mailing of the Registration
Statement and the Joint Proxy Statement, the solicitation of stockholder
approvals, the filing of HSR Act notice and all other matters related to the
closing of the Merger.
(b) The Company agrees that, if:
(i) the Company shall terminate this Agreement pursuant to
Section 8.01(i),
(ii) (A) Parent shall terminate this Agreement pursuant to
Section 8.01(d) and (B) at the time of such termination, there shall
exist or be proposed to the Company a Competing Transaction with
respect to the Company, or
(iii) (A) Parent shall terminate this Agreement pursuant to
Section 8.01(f)(i), (B) at the time of such failure to so approve this
Agreement, there shall exist or have been proposed a Competing
Transaction that has been publicly announced or otherwise communicated
to the Company and its stockholders with respect to the Company and (C)
within 12 months thereafter, the Company shall enter into a definitive
agreement
64
with respect to any Competing Transaction or any Competing Transaction
shall be consummated,
then, in the case of (i), prior to such termination, in the case of (ii),
promptly after such termination, or, in the case of (iii), promptly after the
consummation of the Competing Transaction referred to in clause (C), the Company
shall pay to Parent an amount equal to $275 million (the "Company Termination
Fee").
(c) Parent agrees that, if:
(i) Parent shall terminate this Agreement pursuant to Section
8.01(j),
(ii) (A) the Company shall terminate this Agreement pursuant
to Section 8.01(e) and (B) at the time of such termination, there shall
exist or be proposed to Parent a Competing Transaction with respect to
Parent, or
(iii) (A) the Company shall terminate this Agreement pursuant
to Section 8.01(f)(ii), (B) at the time of such failure to so approve
this Agreement, there shall exist or have been proposed a Competing
Transaction that has been publicly announced or otherwise communicated
to Parent and its stockholders with respect to Parent and (C) within 12
months thereafter, Parent shall enter into a definitive agreement with
respect to any Competing Transaction or any Competing Transaction shall
be consummated,
then, in the case of (i), prior to such termination, in the case of (ii),
promptly after such termination, or, in the case of (iii), promptly after the
consummation of the Competing Transaction referred to in clause (C), Parent
shall pay to the Company an amount equal to $183 million (the "Parent
Termination Fee").
(d) (i) The Company agrees that, if Parent terminates this
Agreement pursuant to Section 8.01(g), the Company shall reimburse Parent for
Parent's Expenses incurred in connection with pursuing the Merger and (ii)
Parent agrees that, if the Company terminates this Agreement pursuant to Section
8.01(h), Parent shall reimburse the Company for the Company's Expenses incurred
in connection with pursuing the Merger; provided, however, that no party shall
be obligated to reimburse the other party for Expenses in excess of $20 million
in the aggregate.
(e) Any payment required to be made pursuant to Section
8.05(a), (b), (c) or (d) shall be made to the party entitled to receive such
payment not later than two business days after delivery to the other party of
notice of demand for payment and shall be made by wire
65
transfer of immediately available funds to an account designated by the party
entitled to receive payment in the notice of demand for payment delivered
pursuant to this Section 8.05(e).
(f) In the event that Parent or the Company, as the case may
be, shall fail to pay the Parent Termination Fee or the Company Termination Fee,
as the case may be, the amount of any such Parent Termination Fee or Company
Termination Fee shall be increased to include the costs and expenses actually
incurred by the other (including, without limitation, fees and expenses of
counsel) in connection with the collection under and enforcement of this Section
8.05, together with interest on such unpaid Parent Termination Fee or Company
Termination Fee, commencing on the date that such Parent Termination Fee or
Company Termination Fee became due, at a rate equal to the rate of interest
publicly announced by Citibank, N.A., from time to time, in The City of New
York, from time to time, as such bank's base rate plus 5.00%.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations and Warranties.
The representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.01, as the case may be. Each party agrees that, except for the representations
and warranties contained in this Agreement, the Parent Disclosure Schedule and
the Company Disclosure Schedule, no party hereto has made any other
representations and warranties, and each party hereby disclaims any other
representations and warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement or the Merger
contemplated herein, notwithstanding the delivery or disclosure to any other
party or any party's representatives of any documentation or other information
with respect to any one or more of the foregoing.
SECTION 9.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or facsimile, by registered or certified mail (postage prepaid, return
receipt requested) or by a nationally recognized courier service to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
9.02):
66
(a) if to the Company:
Waste Management, Inc.
3003 Butterfield Road
Oak Brook, Illinois 60523-1100
Attention: Herbert A. Getz, Esq.
Telecopier: (630) 572-9130
with a copy to:
Skadden, Arps, Slate,
Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, IL 60606
Attention: Charles W. Mulaney, Jr., Esq.
Telecopier: (312) 407-0411
(b) if to Parent or Merger Sub:
USA Waste Services, Inc.
1001 Fannin Street, Suite 4000
Houston, Texas 77002
Attention: Gregory T. Sangalis, Esq.
Telecopier: (713) 209-9711
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: John A. Marzulli, Jr., Esq.
Telecopier: (212) 848-7179
SECTION 9.03. Certain Definitions. For purposes of this
Agreement, the following terms have the following meanings:
(a) "affiliate" has the meaning specified in Rule 144
promulgated by the SEC under the Securities Act;
67
(b) "beneficial owner" with respect to any shares of capital
stock means a person who shall be deemed to be the beneficial owner of
such shares (i) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 promulgated under the
Exchange Act) beneficially owns, directly or indirectly, (ii) which
such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding, or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such person or
any of its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock;
(c) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on
which banks are not required or authorized by law or executive order to
close in The City of New York, USA;
(d) "$" means United States Dollars;
(e) "Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or
with any Governmental Entity;
(f) "knowledge" means, with respect to any matter in question,
that the executive officers of Parent or the Company, as the case may
be, have actual knowledge of such matter;
(g) "person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including, without limitation, a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government;
and
(h) "subsidiary" or "subsidiaries" of any person means any
corporation, limited liability company, partnership, joint venture or
other legal entity of which such person (either alone or through or
together with any other subsidiary of such person)
68
owns, directly or indirectly, more than fifty percent of the stock or
other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity.
SECTION 9.04. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Merger is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner to
the fullest extent permitted by applicable Law in order that the Merger may be
consummated as originally contemplated to the fullest extent possible.
SECTION 9.05. Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of Law or
otherwise) without the prior written consent of the other parties hereto.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Notwithstanding anything contained in this Agreement to
the contrary, other than Section 6.06, which shall survive the Effective Time
and be enforceable by the beneficiaries thereof as contemplated by Section
6.06(e), nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
SECTION 9.06. Incorporation of Exhibits. The Parent Disclosure
Schedule, the Company Disclosure Schedule and all Exhibits attached hereto and
referred to herein are hereby incorporated herein and made a part of this
Agreement for all purposes as if fully set forth herein.
SECTION 9.07. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
SECTION 9.08. Governing Law. Except to the extent that the
Laws of the jurisdiction of organization of any party hereto, or any other
jurisdiction, are mandatorily applicable to the Merger or to matters arising
under or in connection with this Agreement, this Agreement shall be governed by
the Laws of the State of Delaware. All actions and
69
proceedings arising out of or relating to this Agreement shall be heard and
determined in any New York state or federal court sitting in the State of
Delaware.
SECTION 9.09. Consent to Jurisdiction; Venue. (a) Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of the state
courts of Delaware and to the jurisdiction of the United States District Court
for Delaware for the purpose of any action or proceeding arising out of or
relating to this Agreement, and each of the parties hereto irrevocably agrees
that all claims in respect to such action or proceeding may be heard and
determined exclusively in any Delaware state or federal court sitting in
Delaware. Each of the parties hereto agrees that a final judgment in any action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law.
(b) Each of the parties hereto irrevocably consents to the
service of any summons and complaint and any other process in any other action
or proceeding relating to the Merger, on behalf of itself or its property, by
the personal delivery of copies of such process to such party. Nothing in this
Section 9.09 shall affect the right of any party hereto to serve legal process
in any other manner permitted by Law.
SECTION 9.10. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.11. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.12. Entire Agreement. This Agreement (including the
Exhibits, the Parent Disclosure Schedule and the Company Disclosure Schedule)
and the Confidentiality Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
70
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
USA WASTE SERVICES, INC.
By: /s/ John E. Drury
--------------------------------------
Name: John E. Drury
Title: Chairman of the Board and
Chief Executive Officer
WASTE MANAGEMENT, INC.
By: /s/ R. S. Miller
--------------------------------------
Name: R. S. Miller
Title: Chairman of the Board and
Chief Executive Officer
DOME MERGER SUBSIDIARY, INC.
By: /s/ John E. Drury
--------------------------------------
Name: John E. Drury
Title: President
EXHIBIT 6.04(a)
FORM OF COMPANY AFFILIATE LETTER
USA Waste Services, Inc.
1001 Fannin Street, Suite 4000
Houston, TX 77002
Waste Management, Inc.
3003 Butterfield Road
Oak Brook, IL 60523
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Waste Management, Inc., a Delaware corporation
("Company"), as the term "affiliate" is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger, dated as
of March 10, 1998 (the "Agreement"), among USA Waste Services, Inc. ("Parent"),
the Company and Dome Merger Subsidiary, Inc., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), Merger Sub shall be merged
with and into the Company (the "Merger"), and the stockholders of the Company
shall receive shares of common stock, par value $.01 per share, of Parent
("Parent Common Stock"), in exchange for shares of common stock, par value $1.00
per share, of the Company (the "Company Common Stock").
As a result of the Merger, I may receive shares of Parent
Common Stock in exchange for shares (or upon exercise of options for shares or
upon the exercise by me of rights under certain option plans of the Company that
become exercisable upon the consummation of the Merger) owned by me of Company
Common Stock ("Parent Securities").
I represent, warrant and covenant to Parent that in the event
I receive any shares of Parent Securities as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of Parent Securities in violation of the Act or the Rules
and Regulations.
2
B. I have carefully read this letter and the
Agreement and discussed the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or otherwise
dispose of Parent Securities to the extent I felt necessary, with my
counsel or counsel for the Company.
C. I have been advised that the issuance of Parent
Securities to me pursuant to the Merger shall be registered with the
Securities and Exchange Commission (the "Commission") under the Act on
a Registration Statement on Form S- 4. However, I have also been
advised that, since (a) at the time the Merger shall be submitted for a
vote of the stockholders of the Company, I may be deemed to be an
affiliate of the Company and (b) the distribution by me of Parent
Securities has not been registered under the Act, I may not sell,
transfer or otherwise dispose of Parent Securities issued to me in the
Merger unless (i) such sale, transfer or other disposition is made in
conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, (ii) such sale, transfer
or other disposition has been registered under the Act or (iii) in the
opinion of counsel reasonably acceptable to Parent, such sale, transfer
or other disposition is otherwise exempt from registration under the
Act.
D. I understand that, except as provided in the
Agreement, Parent is under no obligation to register the sale, transfer
or other disposition of Parent Securities by me or on my behalf under
the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
E. I also understand that stop transfer instructions
will be given to Parent's transfer agents with respect to Parent
Securities issued to me and that there will be placed on the
certificates for Parent Securities issued to me, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN
AGREEMENT DATED ________ BETWEEN THE REGISTERED
HOLDER HEREOF AND USA WASTE SERVICES, INC., A COPY
OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF USA WASTE SERVICES, INC."
3
F. I also understand that, unless the sale or
transfer by me of Parent Securities has been registered under the Act
or is a sale made in conformity with the provisions of Rule 145, Parent
reserves the right to put the following legend on the certificates
issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE
BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR
FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION
THEREOF WITHIN THE MEANING OF THE SECURITIES ACT OF
1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933."
G. I further represent to, and covenant with, Parent
that to the extent the consummation of the Merger results in a "change
in control" pursuant to any option plan of the Company and, as a result
thereof, I exercise my right to require Parent to repurchase my
outstanding options thereunder, I will elect to receive Parent
Securities as consideration for such repurchase, notwithstanding any
ability I may have under such option plan to receive cash consideration
from Parent (whether as the result of Parent's sale, on my behalf, of
Parent Securities issued to me or otherwise).
H. I further represent to, and covenant with, Parent
that I will not sell, transfer or otherwise dispose of, or execute any
cashless exercise of stock options or warrants for, (i) any Company
Common Stock during the 30 days immediately preceding the effective
date of the Merger or (ii) any Parent Securities received by me in the
Merger or any other shares of the capital stock of Parent or enter into
any arrangement to reduce my risk relating to Company Common Stock or
such Parent Securities until after such time as results covering at
least 30 days of combined operations of Company and Parent have been
published by Parent, in the form of a quarterly earnings report, an
effective registration statement filed with the Commission, a report to
the Commission on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement which includes such combined results of operations. Parent
shall notify the "affiliates" of the publication of such results.
4
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
Name:
Accepted this ____ day of
_____________ , 1998, by
USA WASTE SERVICES, INC.
By:
Name:
Title:
WASTE MANAGEMENT, INC.
By:
Name:
Title:
EXHIBIT 6.04(b)
FORM OF PARENT AFFILIATE LETTER
USA Waste Services, Inc.
1001 Fannin Street, Suite 4000
Houston, TX 77002
Waste Management, Inc.
3003 Butterfield Road
Oak Brook, IL 60523
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of USA Waste Services, Inc., a Delaware
corporation ("Parent"), as the term "affiliate" is (i) defined for purposes of
paragraphs (c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"), and/or (ii) used in and for
purposes of Accounting Series Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger, dated as
of March 10, 1998 (the "Agreement"), among Parent, Waste Management, Inc., a
Delaware corporation (the "Company"), and Dome Merger Subsidiary, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"),
Merger Sub shall be merged with and into the Company (the "Merger") and the
stockholders of the Company shall receive shares of common stock, par value $.01
per share, of Parent ("Parent Common Stock"), in exchange for shares of common
stock, par value $1.00 per share, of the Company.
I represent to, and covenant with, Parent that I will not
sell, transfer or otherwise dispose of, or execute any cashless exercise of
stock options or warrants for, (i) any Parent Common Stock during the 30 days
immediately preceding the effective date of the Merger or (ii) any other shares
of the capital stock of Parent or enter into any arrangement to reduce my risk
relating to Parent Common Stock until after such time as results covering at
least 30 days of combined operations of the Company and Parent have been
published by Parent, in the form of a quarterly earnings report, an effective
registration statement filed with the Securities and Exchange Commission (the
"Commission"), a report to the Commission on Form 10-K, 10-Q or 8-K, or any
other public filing or announcement which includes such
2
combined results of operations. Parent shall notify the "affiliates" of the
publication of such results.
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of Parent as described in the first
paragraph of this letter, or as a waiver of any rights I may have to object to
any claim that I am such an affiliate on or after the date of this letter.
Very truly yours,
Name:
Accepted this ____ day of
______________, 1998, by
USA WASTE SERVICES, INC.
By:
Name:
Title:
WASTE MANAGEMENT, INC.
By:
Name:
Title: