Exhibit 10
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SAFETY-KLEEN CORPORATION, )
)
Plaintiff, )
)
v. ) NO.
)
LAIDLAW ENVIRONMENTAL SERVICES, )
INC., )
)
Defendant. )
COMPLAINT
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Plaintiff Safety-Kleen Corporation ("Safety-Kleen") for its complaint
against Laidlaw Environmental Services, Inc. ("Laidlaw"), states:
SUMMARY
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On November 13, 1997, Laidlaw demanded the right to inspect and copy
Safety-Kleen's record of shareholders to solicit proxies and communicate with
shareholders regarding Laidlaw's exchange offer for Safety-Kleen stock, made
that same day. The securities that comprise a substantial portion of the
consideration in the exchange offer have not yet been registered with the
Securities and Exchange Commission. Accordingly, Laidlaw is barred by Section
5(b)(1) of the Securities Act of 1933, 15 U.S.C. (S) 77e(b)(1), from
communicating with Safety-Kleen's shareholders about those securities through
written means other than through a prospectus complying with Sections 5(b)(1)
and 10 of the Securities Act of 1933, 15 U.S.C. (S)(S) 77e(b)(1) and 77j. To
require Safety-Kleen to provide its shareholder list under these
circumstances would be to require Safety-Kleen to facilitate a violation of the
federal securities laws. Safety-Kleen therefore seeks a declaration from this
Court that it need not provide Laidlaw with access to its shareholder lists.
This is a problem of Laidlaw's own creation since Laidlaw did not have to
initiate the calling of a special meeting before its securities were subject to
an effective registration statement.
Safety-Kleen further seeks a declaration from this Court that Laidlaw's
request for a shareholder meeting regarding its voting rights under Wis. Stat.
(S) 180.1150 fails to satisfy the notice requirements of Wis Stat. (S)
180.1150(4)(e), which requires detailed disclosure of the financing arrangements
for its exchange offer.
Jurisdiction and Venue
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1. This action arises under Section 5(b)(1) of the Securities Act of
1933, 15 U.S.C. (S) 77e(b)(1), and Wis. Stat. (S) 180.1150.
2. This Court has jurisdiction over this action pursuant to 28 U.S.C. (S)
1331, under the supplemental jurisdiction provisions of 28 U.S.C. (S) 1367, and
under the declaratory judgment provisions of 28 U.S.C. (S)(S) 2201 and 2202.
3. Venue lies in the Northern District of Illinois pursuant to 28 U.S.C.
(S) 1391(b) and (c), in that the defendant is subject to the personal
jurisdiction of the United States District Court for the Northern District of
Illinois, and initiated its demand for a meeting in this District.
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The Parties
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4. Plaintiff Safety-Kleen is a Wisconsin corporation with its principal
place of business in Elgin, Illinois.
5. Defendant Laidlaw is a Delaware corporation with its principal place
of business in Columbia, South Carolina.
The Laidlaw Exchange Offer
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6. On November 13, 1997, Laidlaw filed a Form S-4 with the Securities and
Exchange Commission for the purpose of registering Laidlaw shares. (See Exhibit
A.) By that filing, Laidlaw announced its offer to acquire each outstanding
share of Safety-Kleen in exchange for $14 and 2.4 shares of the stock subject to
the S-4.
7. Pursuant to Section 8(a) of the Securities Act of 1933, 15 U.S.C. (S)
77h(a), "the effective date of a registration statement shall be the 20th day
after the filing thereof." However, Laidlaw has requested a delay in the
effectiveness of its registration. (See Exhibit A, at 2.) Accordingly, Laidlaw's
registration is not yet effective, and it is not presently determinable when
that registration will become effective.
The Wisconsin Control Share Voting Restriction Statute
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8. Section 180.1150(2) of the Wisconsin Statutes provides that "the
voting power of shares of an issuing public corporation held by any person . . .
in excess of 20% of the voting power in the election of directors shall be
limited to 10% of the full voting power of those shares." As a Wisconsin
corporation, Safety-Kleen is subject to the provisions of (S) 180.1150(2).
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9. Pursuant to Wis. Stat. (S) 180.1150(5)(c), regular voting power may be
restored if, at a shareholder meeting at which a quorum is present, "a majority
of the voting power of shares represented at the meeting and entitled to vote on
the subject matter approve[s] [a] resolution" calling for a restoration of
regular voting power. Under Wis. Stat. (S) 180.1150(5)(a), such a shareholder
meeting must be scheduled within certain time limits once proper notice and a
proposed resolution are presented to a corporation. The required notice must
comply with certain disclosure requirements set forth in Wis. Stat. (S)
180.1150(4).
10. On November 13, 1997, Laidlaw delivered to Safety-Kleen a document
captioned "Notice Pursuant to Section 180.1150 of the Wisconsin Statutes." (See
Exhibit B.) Laidlaw attached to this document a proposed shareholder resolution
providing that "regular voting power shall be restored for all Shares now held
or hereafter acquired by any of the Laidlaw Parties in accordance with Section
180.1150(5)(c) of the Wisconsin Statutes." (See Exhibit C.)
11. Wis. Stat. (S) 180.1602(2)(c) permits a shareholder who has validly
requested a shareholder meeting pursuant to (S) 180.1150 to obtain the "record
of shareholders" of a corporation.
12. On November 13, 1997, Laidlaw also delivered to Safety-Kleen a letter
demanding the right to inspect and copy Safety-Kleen's records of its
shareholders purportedly pursuant to Wis. Stat. (S) 180.1602(2)(c). (See Exhibit
D.) According to the
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letter, "The purposes of this demand are to enable Laidlaw to communicate with
its fellow Company shareholders on matters relating to their mutual interests as
shareholders, including, but not limited to, (a) communicating with the
shareholders of the Company regarding the Notice dated November 13, 1997, and
served on the Company, pursuant to Section 180.1150(4) of the Wisconsin Statutes
and (b) soliciting proxies in connection with the special shareholders' meeting
to be called as a consequence of the foregoing Notice."
13. Laidlaw publicly announced its request for a shareholder meeting "to
consider permitting [Laidlaw] to vote all shares acquired under its offer." (See
Exhibit E.) This public announcement was a continuation of Laidlaw's prior
unlawful efforts to condition the market as to its exchange offer with public
statements and press releases dating to at least November 4, 1997, more than a
week before Laidlaw even filed its registration statement.
14. Laidlaw's exchange offer will be conditioned upon full restoration of
voting rights as to all shares of Safety-Kleen which Laidlaw holds. Laidlaw
seeks to achieve restoration of the voting rights by soliciting proxies of
Safety-Kleen shareholders in connection with the requested special meeting, and
so has demanded Safety-Kleen's shareholder list.
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COUNT I - DECLARATORY RELIEF
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15. Safety-Kleen restates the allegations set forth in paragraphs 1
through 14, inclusive, as though fully set forth herein.
16. An actual, immediate, and justiciable controversy exists between
Safety-Kleen and Laidlaw concerning the rights and obligations of the parties as
to Laidlaw's demand for access to Safety-Kleen's shareholder records.
17. Pursuant to (S) 5(b) of the Securities Act of 1933, 15 U.S.C. (S)
77e(b), "It shall be unlawful for any person, directly or indirectly: (1) To
make use of any means or instruments of transportation or communication in
interstate commerce or of the mails to carry or transmit any prospectus relating
to any security with respect to which a registration statement has been filed
under this title, unless such prospectus meet the requirements of Section 10" of
the Securities Act of 1933.
18. A "prospectus" is broadly defined under Section 2(10) of the
Securities Act of 1933, 15 U.S.C. (S) 77b(10), for purposes of securities whose
registration is not yet effective, as "any prospectus, notice, circular,
advertisement, letter, or communication, written or by radio or television,
which offers any security for sale or confirms the sale of any security . . .."
19. An "offer" is broadly defined under Section 2(3) of the Securities Act
of 1933, 15 U.S.C. (S) 77b(3), as "every attempt or offer to dispose of, or
solicitation of an offer to buy, a
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security or interest in a security, for value." This definition is designed to
preclude "attractive descriptions" of new securities and their issuer. See
Chris-Craft Industries, Inc. v. Bangor Punta Corp., 426 F.2d 569, 574 (2d Cir.
1970).
20. Laidlaw's proxy solicitation, which has already commenced through
Laidlaw's public pronouncements and press releases, and which is designed to
facilitate and promote Laidlaw's exchange offer, constitutes an "offer to sell"
within the meaning of Section 2(3) of the Securities Act of 1933, 15 U.S.C. (S)
77b(3), and a "prospectus" within the meaning of Section 2(10) of the Securities
Act of 1933, 15 U.S.C. (S) 77b(10).
21. Laidlaw's proxy solicitation and the individual press releases fail to
comply with the requirements of Sections 5(b)(1) and 10 of the Securities Act of
1933, 15 U.S.C. (S)(S) 77e(b)(1) and 77j, and thus constitute "premature
offer[s]" within the meaning of Chris-Craft Industries, 426 F.2d at 574. See
also Eckstein v. Balcor Film Investors, 8 F.3d 1121, 1131 (7th Cir. 1993) ("The
'33 Act permits issuers . . . to engage in `free writing' once the registration
statement becomes effective." (emphasis added)).
22. Safety-Kleen should not be obligated to turn over to Laidlaw its
shareholder records since Laidlaw desires such access to continue its premature
offers in violation of Section 5(b)(1) of the Securities Act of 1933, 15 U.S.C.
(S) 77e(b)(1). Safety-Kleen should not be required to facilitate acts in
violation of federal law.
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WHEREFORE, Safety-Kleen respectfully requests that this Court enter an
order declaring that Laidlaw's actions to date and its intended proxy
solicitation are in violation of Section 5(b)(1) of the Securities Act of 1933,
15 U.S.C. (S) 77e(b)(1), and that Safety-Kleen need not comply with Laidlaw's
demand for shareholder records.
COUNT II - DECLARATORY RELIEF
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23. Safety-Kleen restates the allegations set forth in paragraphs 1
through 22, inclusive, as though fully set forth herein.
24. An actual, immediate, and justiciable controversy exists between
Safety-Kleen and Laidlaw concerning the rights and obligations of the parties as
to Laidlaw's demand for a shareholder meeting to alter Laidlaw's voting rights
under Wis. Stat. (S) 180.1150.
25. Pursuant to Wis. Stat. (S) 180.1150(4), a person desiring a
shareholder meeting for purposes of restoring regular voting power must provide
notice containing, inter alia, "the circumstances, terms and conditions under
which shares representing in excess of 20% of the voting power were acquired or
are proposed to be acquired, set forth in reasonable detail, including the
source of funds or other consideration and other details of the financial
arrangements of the transactions."
26. Laidlaw's purported "Notice Pursuant to Section 180.1150" attempts to
provide the required notice of financial
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arrangements by reference to an attached prospectus. (See Exhibit B.)
27. Laidlaw's prospectus fails to detail the actual financial arrangements
relating to its exchange offer, despite Laidlaw's repeated public statements
that its financing was in place. For instance, on November 3, 1997, Laidlaw
wrote to Safety-Kleen and released a letter stating, "We have fully committed
financing to complete the combination." (Exhibit A, at 26.)
28. According to the prospectus, "the terms of the definitive agreement"
relating to the financing "have not yet been finalized." (See Exhibit A, at 44.)
Without knowledge of these terms, Safety-Kleen's shareholders cannot fairly
evaluate Laidlaw's proxy solicitation and exchange offer.
29. The prospectus further states that the commitment of Laidlaw's lender
to provide the necessary credit for the exchange offer "is conditioned on, among
other things, the negotiation, execution and delivery of the Loan Agreement;
receipt of all necessary or desirable governmental, shareholder, and third party
consents; the absence of a material adverse change in the business assets,
operations, condition (financial or otherwise), or prospects of LES Acquisition,
Safety-Kleen and their respective subsidiaries on a consolidated basis; the
execution of definitive agreements relating to the Merger and the Offer;
satisfactory completion of due diligence examinations; prior or contemporaneous
repayment in full of all existing indebtedness of
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each of LES Acquisition and Safety-Kleen; and the successful syndication of $400
million of the $1.8 billion commitment; and after consummation of the
transaction at closing, either (i) Laidlaw Environmental shall hold a sufficient
number of shares to effect the Merger or (ii) the Merger shall have been or,
concurrently with the closing, shall be, consummated, and the surviving
corporation shall be a wholly-owned subsidiary of LES Acquisition." (Id. at 44-
45 (emphasis added).)
30. As of today, there is no financing of the exchange offer, as
acknowledged in the prospectus, and Laidlaw fails to satisfy the requirements of
Wis. Stat. 180.1150(4)(e). Laidlaw is premature in its request for a meeting. As
a result of the long, and expressly nonexclusive, list of conditions necessary
to secure the financing Laidlaw requires, Safety-Kleen's shareholders cannot
reasonably anticipate whether the financing described in the prospectus will be
available under the terms set forth therein. Until they can, there is no right
to a special shareholder meeting.
31. As a result of the foregoing, Safety-Kleen will not provide a
shareholder list until the Court determines that a valid demand for a meeting
has been served.
WHEREFORE, Safety-Kleen respectfully requests that this Court enter an
order declaring that Laidlaw's purported "Notice Pursuant to Section 180.1150 of
the Wisconsin Statutes" fails to comply with the requirements of Wis. Stat. (S)
180.1150(4)(e), and that accordingly Safety-Kleen is not obligated to schedule a
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shareholder meeting pursuant to Wis. Stat. (S) 180.1150(5)(a) or to provide
access to a shareholder list.
Respectfully submitted,
SAFETY-KLEEN CORPORATION
By:
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One of its Attorneys
Dated: November 17, 1997
OF COUNSEL
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HAROLD C. HIRSHMAN, ESQ.
Attorney No. 1226290
CHRISTOPHER Q. KING, ESQ.
Attorney No. 6189835
GERALD E. FRADIN, ESQ.
Attorney No. 6204247
SONNENSCHEIN NATH & ROSENTHAL
8000 Sears Tower
233 S. Wacker Drive
Chicago, Illinois 60606-6404
(312) 876-8000
Attorneys for Plaintiff
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