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Table of Contents
TABLE OF CONTENTS
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Advanced Disposal Services, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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Common stock, par value $0.01 per share, of Advanced Disposal Services, Inc.
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(2)
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Aggregate number of securities to which transaction applies:
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94,365,579 shares of common stock, which consist of: (A) 88,792,415 shares of common stock (excluding 2,274 shares held by Advanced Disposal Services, Inc. in treasury) issued and outstanding as of May 7, 2019; (B) 4,673,450
shares of common stock issuable upon exercise of outstanding Advanced Disposal Services, Inc. stock options with exercise prices below the per share merger consideration of $33.15 as of May 7, 2019; (C) 489,948 shares of common stock
underlying outstanding restricted share unit awards as of May 7, 2019; (D) 335,591 shares of common stock underlying outstanding performance share unit awards as of May 7, 2019; and (E) 74,175 shares of common stock underlying
outstanding restricted share awards granted under the stock plans or otherwise as of May 7, 2019.
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Solely for the purpose of calculating the filing fee, the underlying value of the transaction was calculated based on the sum of: (A) 88,792,415 shares of common stock (excluding 2,274 shares held by Advanced Disposal Services, Inc. in
treasury) multiplied by the per share merger consideration of $33.15; (B) 4,673,450 shares of common stock issuable upon exercise of outstanding Advanced Disposal Services, Inc. stock options with exercise prices below the per share merger
consideration of $33.15, multiplied by $11.78, which is the excess of the per share merger consideration over the weighted average exercise price of $21.37 per share; (C) 489,948 shares of common stock underlying outstanding restricted share
unit awards multiplied by the per share merger consideration of $33.15; (D) 335,591 shares of common stock underlying outstanding performance share unit awards multiplied by the per share merger consideration of $33.15; and (E) 74,175
shares of common stock underlying outstanding restricted share awards granted under the stock plans or otherwise multiplied by the per share merger consideration of $33.15. The filing fee was determined by multiplying 0.0001212 by the proposed
maximum aggregate value of the transaction of $3,028,347,317.35.
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(4)
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Proposed maximum aggregate value of transaction:
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$3,028,347,317.35
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(5)
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Total fee paid:
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$367,035.69
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Table of Contents
PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION
DATED MAY 10, 2019
[
·
], 2019
Dear
Stockholders of Advanced Disposal:
You
are cordially invited to attend a Special Meeting (which we refer to as the
Special Meeting
) of the stockholders of Advanced Disposal
Services, Inc. (which we refer to as
Advanced Disposal
,
we
,
us
,
our
, and the
Company
). The
Special Meeting will be held on [
·
], 2019 at
[
·
] located at [
·
],
beginning at [
·
], Eastern Time.
At
the Special Meeting, you will be asked to consider and vote upon (1) a proposal to adopt the Agreement and Plan of Merger, dated as of April 14, 2019, as may be amended from time to
time (which we refer to as the
merger agreement
), by and among Advanced Disposal, Waste Management, Inc. (which we refer to as
Waste Management
) and Everglades Merger Sub Inc. (which we refer to as
Merger Sub
),
which is an indirect, wholly-owned subsidiary of Waste Management, pursuant to which Merger Sub will merge with and into Advanced Disposal (which we refer to as the
merger
), and Advanced Disposal will continue as the surviving company and an indirect, wholly-owned subsidiary of Waste Management, (2) a
non-binding advisory proposal to approve specified compensation that may be paid or become payable to Advanced Disposal’s named executive officers in connection with the merger and
contemplated by the merger agreement (which we refer to as the
compensation advisory proposal
) and (3) a proposal to approve one or more
adjournments of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the proposal to adopt the
merger agreement (which we refer to as the
adjournment proposal
).
If
the merger is completed, you will be entitled to receive $33.15 in cash, without interest and less applicable withholding taxes, for each share of Advanced Disposal common stock, par value $0.01
per share (which we refer to as
Advanced Disposal common stock
) you own (unless you have properly exercised your appraisal rights with respect to
such shares).
The Advanced Disposal Board of Directors (which we refer to as the
Board
) unanimously determined that the merger
agreement and the transactions contemplated by the merger agreement are fair to, and in the best interests of, Advanced Disposal and its stockholders, approved and declared advisable the merger
agreement and the transactions contemplated by the merger agreement, including the merger, and approved the execution, delivery and performance by Advanced Disposal of the merger agreement and the
consummation of the transactions contemplated by the merger agreement, including the merger. The Board unanimously recommends that you vote (1) FOR the proposal to
adopt the merger agreement, (2) FOR the compensation advisory proposal and (3) FOR the adjournment proposal.
All
Advanced Disposal stockholders of record at the close of business on [
·
], 2019 are welcome to attend the
Special Meeting. Every stockholder’s vote is important to us, so it is important that your shares are represented at the Special Meeting whether or not you plan to attend. To ensure
that you will be represented, please promptly vote by submitting the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by
telephone. If you plan to attend the Special Meeting in person, you must provide appropriate proof of share ownership and a form of photo identification in order to be admitted to the Special Meeting.
If you attend the Special Meeting and vote in
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person
by ballot, your vote will revoke any proxy that you have previously submitted. If you hold your shares in street name, you should instruct your broker, bank or other nominee how to vote in
accordance with the voting instruction form you will receive from your broker, bank or other nominee.
The
enclosed proxy statement provides detailed information about the Special Meeting, the merger agreement and the merger. A copy of the merger agreement is attached as
Annex A
to the proxy statement. The proxy statement also describes the actions and determinations of the Board in connection with its evaluation of the merger
agreement and the merger. We encourage you to read the proxy statement and its annexes, including the merger agreement, carefully and in their entirety. You may also obtain more information about
Advanced Disposal from documents we file with the Securities and Exchange Commission (which we refer to as the
SEC
) from time to time.
Your vote is very important, regardless of the number of shares that you own. We cannot consummate the merger unless the proposal to adopt the merger agreement is approved by
the affirmative vote of the holders of a majority of the shares of Advanced Disposal common stock issued and outstanding and entitled to vote thereon. The failure of any stockholder to vote in person
by ballot at the Special Meeting, to submit a signed proxy card or to grant a proxy electronically over the Internet or by telephone or an abstention from voting will have the same effect as a vote
AGAINST the proposal to adopt the merger agreement. If you hold your shares in street name, the failure to instruct your broker, bank or other nominee on how to vote your
shares will have the same effect as a vote AGAINST the proposal to adopt the merger agreement.
If
you have any questions or need assistance voting your shares of Advanced Disposal common stock, please contact Innisfree M&A Incorporated, our proxy solicitor, by calling the toll-free number
at +1 (888) 750-5834.
On
behalf of the Board, management and employees of Advanced Disposal, thank you for your continued support of Advanced Disposal and we appreciate your consideration of this matter.
Sincerely,
Richard
Burke
Chairman and Chief Executive Officer
Neither the SEC nor any state securities regulatory agency has approved or disapproved of the transactions described in this document, including the merger, or determined if
the information contained in this document is accurate or adequate. Any representation to the contrary is a criminal offense.
The
accompanying proxy statement is dated [
·
], 2019 and, together with the enclosed form of proxy card, is
first being mailed to stockholders of record of Advanced Disposal on or about [
·
], 2019.
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Advanced Disposal Services, Inc.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that a Special Meeting (which we refer to as the
Special Meeting
) of the stockholders of Advanced
Disposal Services, Inc. (which we refer to as
Advanced Disposal
,
we
,
us
,
our
, and the
Company
), is to be
held on [
·
], 2019 at
[
·
] located at [
·
]
beginning at [
·
], Eastern Time, to consider and vote upon the following proposals:
-
1.
-
to
adopt the Agreement and Plan of Merger, dated as of April 14, 2019, as may be amended from time to time (which we refer to as the
merger agreement
), by and among Advanced Disposal, Waste Management, Inc. (which we refer to as
Waste
Management
) and Everglades Merger Sub Inc. (which we refer to as
Merger Sub
), pursuant to which Merger Sub
will merge with and into Advanced Disposal (which we refer to as the
merger
), and Advanced Disposal will continue as the surviving company and an
indirect, wholly-owned subsidiary of Waste Management;
-
2.
-
to
approve, on a non-binding advisory basis, specified compensation that may be paid or become payable to Advanced Disposal’s named executive
officers in connection with the merger and contemplated by the merger agreement (which we refer to as the
compensation advisory proposal
); and
-
3.
-
to
approve one or more adjournments of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of
the Special Meeting to approve the proposal to adopt the merger agreement (which we refer to as the
adjournment proposal
).
Your vote is very important, regardless of the number of shares that you own.
We cannot consummate the merger unless the proposal to adopt the merger
agreement is approved by the affirmative vote of the holders of a majority of the shares of Advanced Disposal common stock, par value $0.01 per share (which we refer to as the
Advanced Disposal common stock
) issued and outstanding at the close of business on the record date and entitled to vote thereon.
Even
if you plan to attend the Special Meeting in person, we request that you complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply
envelope or submit your proxy or voting instructions by telephone or the Internet prior to the Special Meeting to ensure that your shares of Advanced Disposal common stock will be represented and
voted at the Special Meeting if you are unable to attend.
For
Advanced Disposal to consummate the merger, stockholders holding a majority of the shares of Advanced Disposal common stock issued and outstanding at the close of business on the record date and
entitled to vote thereon must vote
FOR
the proposal to adopt the merger agreement. Failure to submit a signed proxy card,
grant a proxy by phone or the Internet or to vote in person by ballot at the Special Meeting or an abstention from voting will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement. If your shares are held in street name by your broker, bank or other
nominee and you do not instruct the nominee how to vote your shares, a broker non-vote will arise and will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement.
The
approval of the compensation advisory proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Advanced Disposal common stock that are present in
person or represented by proxy at the Special Meeting and entitled to vote thereon, so long as a quorum is
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present,
to vote
FOR
the compensation advisory proposal. An abstention from voting will have the same effect as a vote
AGAINST
the compensation advisory proposal. If your shares are held in street name by your broker, bank or other nominee and
you do not instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the compensation advisory proposal, so long as a quorum is
otherwise present.
The
affirmative vote of the holders of a majority of the issued and outstanding shares of Advanced Disposal common stock that are present in person or represented by proxy at the Special Meeting and
entitled to vote thereon, whether or not a quorum is present, is required to approve the adjournment proposal. An abstention from voting will have the same effect as a vote
AGAINST
the adjournment proposal. If your shares are held in street name by your broker, bank or other nominee and you do not
instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the adjournment proposal.
Only
stockholders of record as of the close of business on [
·
], 2019 are entitled to notice of the Special
Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof. As required by our amended and restated bylaws, a list of stockholders entitled to vote at the Special Meeting
will be available in our corporate offices located at 90 Fort Wade Road, Ponte Vedra, FL 32081 during regular business hours for a period of at least ten (10) days before the Special Meeting
and at the place of the Special Meeting during the meeting.
The
enclosed proxy statement provides detailed information about the Special Meeting, the merger agreement and the merger. A copy of the merger agreement is attached as
Annex A
to the proxy statement. The proxy statement also describes the actions and determinations of the Board in connection with its evaluation of the merger
agreement and the merger. We encourage you to read the proxy statement and its annexes, including the merger agreement, carefully and in their entirety. You may also obtain more information about
Advanced Disposal from documents we file with the U.S. Securities and Exchange Commission from time to time. If you have any questions concerning the merger, the Special Meeting or this proxy
statement, would like additional copies of this proxy statement or need help voting your shares of Advanced Disposal common stock, please contact our proxy solicitor:
Innisfree
M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders may call toll-free: +1 (888) 750-5834
Banks and brokers may call collect: +1 (212) 750-5833
Stockholders
who do not vote
FOR
the proposal to adopt the merger agreement will have the right to seek appraisal for the fair
value of their shares of Advanced Disposal common stock if they deliver a demand for appraisal before the vote is taken on the merger agreement and comply with all applicable requirements under
Delaware law, which are summarized herein and reproduced in their entirety in
Annex D
to the proxy statement.
The Advanced Disposal Board of Directors unanimously recommends that you vote (1) FOR the proposal to adopt the merger agreement,
(2) FOR the compensation advisory proposal and (3) FOR the adjournment proposal.
By
Order of the Board of Directors,
Michael
K. Slattery
Corporate Secretary
Ponte
Vedra, Florida
[
·
], 2019
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YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING IN PERSON, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (1) BY TELEPHONE,
(2) THROUGH THE INTERNET OR (3) BY MARKING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your
vote at any time before the Special Meeting. If your shares are held in the name of a broker, bank or other nominee, please follow the instructions on the voting instruction card furnished to you by
such broker, bank or other nominee, which is considered the stockholder of record, in order to vote. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to
vote the shares in your account. Your broker, bank or other nominee cannot vote on any of the proposals, including the proposal to adopt the merger agreement, without your instructions.
If
you fail to return your proxy card, to grant your proxy electronically over the Internet or by telephone, or to vote by ballot in person at the Special Meeting, your shares will not be counted for
purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record, voting in person by ballot at the Special Meeting will revoke any proxy that you
previously submitted. If you hold your shares through a broker, bank or other nominee, you must obtain from the record holder a valid proxy issued in your name in order to vote in person at the
Special Meeting.
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Table of Contents
i
Table of Contents
Annexes
ii
Table of Contents
SUMMARY
This Summary, together with the following section entitled Questions and Answers, highlights selected
information from this proxy statement and does not contain all of the information that may be important to you. You should read the entire proxy statement and the additional documents referred to in
this proxy statement carefully for a more complete understanding of the matters being considered at the Special Meeting. This summary includes references to other parts of this proxy statement to
direct you to a more complete description of the topics presented in this summary. This proxy statement is dated
[
·
], 2019 and is first being mailed to stockholders of record on or about
[
·
], 2019.
In this proxy statement, the terms
Advanced Disposal
, the
Company
,
we
,
us
, and
our
refer to Advanced
Disposal Services, Inc. and, where appropriate, its subsidiaries. We refer to Waste Management, Inc. as
Waste Management
and
Everglades Merger Sub Inc. as
Merger Sub
. The shares of Advanced Disposal common stock, par value $0.01 per share are referred to as
Advanced Disposal common stock
or
our common stock
. All references to the
merger agreement
refer to the Agreement and Plan of Merger, dated as of April 14, 2019, as it may be amended from time to time, by and
among Advanced Disposal, Waste Management and Merger Sub, a copy of which is included as
Annex A
to this proxy statement. All references to the
merger
refer to the merger of Merger Sub with and into Advanced Disposal pursuant to the merger agreement, with Advanced Disposal continuing as
the surviving company and becoming an indirect, wholly-owned subsidiary of Waste Management. We refer to the
transactions
as the merger,
collectively with all of the other transactions contemplated by the merger agreement. Advanced Disposal, following the consummation of the merger, is sometimes referred to as the
surviving company
. All references to the
Special Meeting
refer to the Special Meeting of
the stockholders of Advanced Disposal to be held on [
·
], 2019 at
[
·
] located at [
·
]
beginning at [
·
], Eastern Time, or any adjournment or postponement thereof.
Parties Involved in the Merger (page 28)
Advanced Disposal Services, Inc.
Advanced Disposal, a Delaware corporation based in Ponte Vedra, Florida, is a leading integrated provider of nonhazardous solid waste collection, transfer,
recycling and disposal services operating primarily in secondary markets or under exclusive arrangements. The Company has a presence in 16 states across the Midwest, South and East regions of the
United States as well as in the Commonwealth of the Bahamas, serving approximately 2.8 million residential customers and over 200,000 commercial and industrial customers through our extensive
network of 95 collection operations, 73 transfer stations, 22 owned or operated recycling facilities and 41 owned or operated active landfills.
Waste Management, Inc.
Waste Management, a Delaware corporation based in Houston, Texas, is the leading provider of comprehensive waste management environmental services in North
America. Through its subsidiaries, Waste Management provides collection, transfer, disposal services, and recycling and resource recovery. It is also a leading developer, operator and owner of
landfill gas-to-energy facilities in the United States. Waste Management’s customers include residential, commercial, industrial, and municipal customers throughout North America.
Everglades Merger Sub Inc.
Merger Sub is a Delaware corporation formed for the sole purpose of completing the merger with Advanced Disposal. Merger Sub is an indirect, wholly-owned
subsidiary of Waste Management. Merger Sub has not engaged in any business to date except for activities incidental to its incorporation and activities undertaken in furtherance of the transactions.
1
Table of Contents
The Merger and Merger Consideration (page 35)
At the Special Meeting, you will be asked to consider and vote upon a proposal to adopt the merger agreement. Pursuant to the merger agreement, upon
consummation of the merger, Merger Sub will merge with and into Advanced Disposal, the separate corporate existence of Merger Sub will cease and Advanced Disposal will continue as the surviving
company and become an indirect, wholly-owned subsidiary of Waste Management. If the merger is completed, you will be entitled to receive $33.15 in cash, without interest and less applicable
withholding taxes, for each share of Advanced Disposal common stock you own (unless you have properly exercised your appraisal rights with respect to such shares) (which we refer to as the
merger consideration
).
If
the merger agreement is not adopted by Advanced Disposal stockholders, or if the merger is not completed for any other reason, the Advanced Disposal stockholders will not receive any payment for
their shares of Advanced Disposal common stock in connection with the merger. Except in certain circumstances where Advanced Disposal has entered into an alternative transaction to the merger,
Advanced Disposal will remain a public company, and shares of Advanced Disposal common stock will continue to be registered under the Securities Act of 1934, as amended (which we refer to as the
Exchange Act
), as well as listed and traded on the New York Stock Exchange (which we refer to as
NYSE
). In the event that the merger agreement is terminated, in certain specified circumstances, a termination fee of $100,000,000 (or
potentially an amount of up to $15,000,000 in expenses) will be due and payable by Advanced Disposal to Waste Management, and in certain other specified circumstances, a termination fee of
$150,000,000 will be due and payable by Waste Management to Advanced Disposal. See the sections entitled
The Merger AgreementTermination; Effect of
Termination
beginning on page 87 of this proxy statement and
The Merger AgreementCompany Termination Fee; Waste
Management Termination Fee
beginning on page 88 of this proxy statement.
The Special Meeting (page 29)
The Special Meeting will be held on [
·
], 2019 at
[
·
] located at [
·
]
beginning at [
·
], Eastern Time.
Record Date and Quorum (page 30)
Only individuals who were Advanced Disposal stockholders of record as of the close of business on
[
·
], 2019 (which we refer to as the
record date
) are
entitled to notice of and to vote at the Special Meeting or at any adjournment or postponement thereof.
The
presence at the Special Meeting of the holders of record of a majority of the shares entitled to vote, present in person or represented by proxy, at the close of business on the record date will
constitute a quorum. Abstentions will be counted as present for the purpose of determining whether a quorum is present at the Special Meeting, however broker non-votes
(described in more detail in the section entitled
Questions and Answers
beginning on page 13 of this proxy statement) will not
be counted as present for the purpose of determining whether a quorum is present at the Special Meeting.
Required Vote (page 30)
Holders of Advanced Disposal common stock are entitled to one vote for each share of Advanced Disposal common stock they owned at the close of business on the
record date on each proposal submitted to a vote at the Special Meeting.
For
Advanced Disposal to complete the merger, stockholders holding a majority of the shares of Advanced Disposal common stock issued and outstanding at the close of business on the record date and
entitled to vote thereon must vote
FOR
the proposal to adopt the merger agreement (which we refer to as the
Advanced Disposal stockholder approval
). A failure to vote your shares of Advanced Disposal common
2
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stock
or an abstention from voting for the proposal to adopt the merger agreement will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement. If your shares are held in street name by your broker, bank or other nominee, and you do not instruct the nominee how to vote your shares, a
broker non-vote will arise and will have the same effect as a vote
AGAINST
the proposal to adopt the
merger agreement.
For
stockholders to approve, on a non-binding advisory basis, the proposal regarding specified compensation that may be paid or become payable to Advanced Disposal’s named executive
officers in connection with the merger and contemplated by the merger agreement (which we refer to as the
compensation advisory proposal
),
stockholders holding a majority of the issued and outstanding shares of Advanced Disposal common stock, present in person or represented by proxy at the Special Meeting and entitled to vote thereon,
at which a quorum is present, must vote
FOR
the compensation advisory proposal. An abstention from voting for the compensation
advisory proposal will have the same effect as a vote
AGAINST
the compensation advisory proposal. If your shares are held
in street name by your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the
compensation advisory proposal, so long as a quorum is otherwise present.
Stockholders
holding a majority of the issued and outstanding shares of Advanced Disposal common stock, present in person or represented by proxy at the Special Meeting and entitled to vote thereon,
whether or not a quorum is present, must vote
FOR
the proposal to approve one or more adjournments of the Special Meeting, if
necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to approve the proposal to adopt the merger agreement (which we refer to as
the
adjournment proposal
). An abstention from voting on the adjournment proposal will have the same effect as a vote
AGAINST
the adjournment proposal. If your shares are held in street name by your broker, bank or other nominee and you do not
instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the adjournment proposal.
As
of the close of business on the record date, there were [
·
] shares of Advanced Disposal common stock issued
and outstanding.
In
connection with the transactions, Waste Management and Canada Pension Plan Investment Board (
CPPIB
) entered into a Voting and Support
Agreement, dated as of April 14, 2019 (which we refer to as the
voting agreement
). Subject to certain terms and conditions contained in
the voting agreement, CPPIB agreed, among other things, not to transfer the shares it held on the date of the voting agreement and vote its shares of Advanced Disposal common stock for the adoption of
the merger agreement and the transactions and against any alternative acquisition proposal (unless the Advanced Disposal Board of Directors (which we refer to as the
Board
) withdraws or changes the Board recommendation (as defined in the section entitled
Summary
No Solicitation; Acquisition Proposals
beginning on page 8
of this proxy statement) or until the voting agreement has terminated in accordance with its terms). The voting agreement is described in more detail in the section entitled
The Voting Agreement
beginning on page 90 of this proxy statement.
Furthermore,
we currently expect that Advanced Disposal directors and executive officers will vote their shares of Advanced Disposal common stock, representing, as of the close of business on the
record date, approximately [
·
]% of the issued and outstanding shares of Advanced Disposal common stock,
FOR
the proposal to adopt the merger agreement, the compensation advisory proposal and the adjournment proposal, although they
have no obligation to do so.
The
directors and executive officers of Advanced Disposal have interests in the merger that may be different from, or in addition to, the interests of Advanced Disposal stockholders generally. These
interests are described in more detail in the section entitled
The Merger (Proposal 1)Interests of Advanced Disposal Directors and Executive Officers
in the Merger
beginning on page 55 of this proxy statement.
3
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How to Vote Your Shares
If you are a stockholder of record, you may vote your shares using one of the four (4) methods described
below:
-
-
in person at the Special Meeting;
-
-
via the Internet, at the Internet address provided on the proxy card;
-
-
by telephone, by using the toll-free number listed on the proxy card; or
-
-
by mail, by completing, signing and dating the proxy card and returning it in the enclosed postage-paid envelope.
If
you are a beneficial owner of shares held in street name, you will receive instructions from your broker, bank or other nominee as to how to vote your shares. You must follow the instructions of
your broker, bank or other nominee in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain brokers, banks and other
nominees. If your shares are not registered in your own name but are held through your broker, bank or other nominee and you plan to vote your shares in person at the Special Meeting, you should
contact your broker, bank or other nominee to obtain a legal proxy or broker’s proxy card executed in your favor and bring the original signed
legal proxy to the Special Meeting in order to vote. A legal proxy is a written document that will authorize you to vote your shares held in street
name at the Special Meeting. The legal proxy is not the form of proxy enclosed with this proxy statement. If you hold your shares through a broker, bank or other nominee,
such nominee cannot vote your shares unless you have given your nominee specific instructions as to how to vote.
Closing of the Merger (page 69)
The closing of the merger (which we refer to as the
closing
) will take place at the offices of Simpson
Thacher & Bartlett, 600 Travis Street, Suite 5400, Houston, Texas, at 8:00 a.m., Central Time, on the third (3
rd
) business day after the satisfaction of, or,
to the extent permissible by law, waiver of the conditions to closing set forth in the merger agreement (other than those conditions that by their nature are to be satisfied at the closing, but
subject to the satisfaction or, to the extent permitted by applicable law, waiver of those conditions at the closing) or at such other time, date and place as Advanced Disposal and Waste Management
may agree in writing.
The
merger will become effective at the time of filing of the certificate of merger with the Secretary of State of the State of Delaware or on such later date and time as may be agreed to in writing
by Advanced Disposal, Waste Management and Merger Sub and set forth in the certificate of merger (which date and time, in either case, we refer to as the
effective
time
). The date on which the closing occurs is sometimes referred to as the
closing date
.
Conditions to the Merger (page 85)
The following are certain of the conditions that must be satisfied or, if permissible by law, waived before each party is required to consummate the merger,
in each case as more fully described in the section entitled
The Merger AgreementConditions to the Merger
beginning on page 85 of this proxy statement:
-
-
the Advanced Disposal stockholder approval will have been obtained;
-
-
no governmental authority of competent jurisdiction will have enacted, entered, promulgated or enforced a law or injunction which prevents,
makes illegal, prohibits, restrains or enjoins the consummation of the merger;
4
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-
-
any applicable waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which we
refer to as the
HSR Act
), will have expired or been terminated;
-
-
the accuracy of the representations and warranties of Advanced Disposal, on the one hand, and Waste Management and Merger Sub, on the other
hand, in the merger agreement, subject in some instances to
de minimis
, materiality, material adverse effect (as defined in
the section entitled
The Merger AgreementRepresentations and Warranties; Material Adverse Effect
beginning on
page 72 of this proxy statement) or other qualifiers, as of April 14, 2019 and as of the closing date;
-
-
the performance of or compliance with, in all material respects by, Advanced Disposal, on the one hand, and Waste Management and Merger Sub, on
the other hand, of their respective covenants, agreements and obligations required to be performed by them or complied with under the merger agreement on or prior to the closing date; and
-
-
since the date of the merger agreement, no material adverse effect with respect to Advanced Disposal having occurred.
Recommendation of the Advanced Disposal Board of Directors and Reasons for
the Merger (page 41)
The Board unanimously recommends that Advanced Disposal stockholders vote
FOR
the
proposal to adopt the merger agreement and
FOR
the other proposals to be considered at the Special Meeting. For a description
of the reasons considered by the Board in deciding to recommend the adoption of the merger agreement, see the section entitled
The Merger (Proposal
1)Recommendation of the Board and Reasons for Recommendation
beginning on page 41 of this proxy statement.
Voting Agreement with CPPIB (page 90)
Concurrently with the execution of the merger agreement, on April 14, 2019, CPPIB entered into the voting agreement with Waste Management, pursuant to
which, among other things, and subject to the terms and conditions set forth therein, CPPIB agreed to vote its shares of Advanced Disposal common stock at the Special Meeting for the adoption of the
merger agreement and against any alternative proposal (unless the Board withdraws or changes the Board recommendation or until the voting agreement has terminated in accordance with its terms). The
voting agreement automatically terminates upon the earliest to occur of: (i) the merger contemplated by the merger agreement becoming effective, (ii) the merger agreement being validly
terminated in accordance with the terms thereof, or (iii) CPPIB’s election to terminate in its sole discretion promptly following any amendment to the merger agreement that
reduces or changes the form of consideration payable. See the section entitled
The Voting Agreement
beginning on page 90 of
this proxy statement for a more detailed summary of the voting agreement.
CPPIB
owned, as of the close of business on the record date, approximately [
·
]% of the outstanding Advanced
Disposal common stock.
Opinion of Financial Advisor (page 46)
Opinion of UBS
On April 14, 2019, at a meeting of the Board held to evaluate the proposed merger, UBS Securities LLC (which we refer to as
UBS
), delivered to the Board an oral opinion, which oral opinion was subsequently confirmed by delivery of a written opinion, dated
April 14, 2019, to the effect that, as of that date and based on and subject to various procedures, assumptions and matters considered and the qualifications and limitations described in its
opinion, the merger consideration to be received by the Advanced Disposal stockholders (other than the holders of excluded shares (as defined in the section entitled
The Merger
5
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(Proposal 1)Certain Effects of the Merger; Merger Consideration
beginning on page 35 of this proxy statement) in the merger was fair, from a financial
point of view, to such stockholders.
The
full text of UBS’s opinion describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken by UBS. UBS’s opinion
is attached as
Annex C
to this proxy statement and is incorporated herein by reference. Advanced Disposal stockholders are encouraged to read
UBS’s opinion carefully in its entirety. UBS’s opinion was provided for the benefit of the Board (in its capacity as such) in connection with and for the purpose of
its evaluation of the fairness, from a financial point of view, of the merger consideration to be received by the Advanced Disposal stockholders (other than the holders of excluded shares as defined
in the section entitled
The Merger (Proposal 1)Certain Effects of the Merger; Merger Consideration
beginning on
page 35 of this proxy statement) in the merger, and does not address any other aspect of the merger or any related transaction. UBS’s opinion does not address the relative merits of
the merger or any related transaction as compared to other business strategies or transactions that might be available to Advanced Disposal or Advanced Disposal’s underlying business
decision to effect the merger or any related transaction. UBS’s opinion does not constitute a recommendation to any Advanced Disposal stockholder as to how such stockholder should
vote or act with respect to the merger or any related transaction.
Treatment of Advanced Disposal Equity Awards (page 70)
The merger agreement provides that at the effective time, each option to purchase shares of Advanced Disposal common stock granted under the Advanced Disposal
Waste Holdings Corp. Amended and Restated 2012 Stock Incentive Plan, the Advanced Disposal Services, Inc. 2016 Omnibus Equity Plan (which we refer to as the
stock
plans
) or
otherwise (which we refer to as an
Advanced Disposal stock option
) that is outstanding immediately prior to the effective time and that has an
exercise price per share that is less than $33.15, whether or not vested, will become fully vested and will be cancelled and thereafter entitle the holder to receive, promptly after the effective
time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the excess of $33.15 over the per-share exercise price of such
Advanced Disposal stock option and (ii) the number of shares issuable upon exercise of such Advanced Disposal stock option. Each Advanced Disposal stock option with an exercise price equal to
or greater than $33.15 will be cancelled as of the effective time without payment of any consideration and will have no further force or effect.
The
merger agreement provides that at the effective time, each performance share unit award granted under the stock plans or otherwise (which we refer to as a
performance
share unit award
) that is outstanding immediately prior to the effective time will become fully vested and will be cancelled and thereafter entitle the holder to receive,
promptly after the effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the number of shares equal to the
greater of (x) the target number of shares with respect to such performance share unit award and (y) the number of shares that would be considered earned under the terms of such
performance share unit award based on the most recent fiscal year-end results multiplied by (ii) $33.15.
The
merger agreement provides that at the effective time, each restricted share unit award granted under the stock plans or otherwise (which we refer to as a
restricted
share unit award
) that is outstanding immediately prior to the effective time will become fully vested and will be cancelled and thereafter entitle the holder to receive,
promptly after the effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the number of shares subject to such
restricted share unit award and (ii) $33.15.
The
merger agreement provides that at the effective time, each restricted share award granted under the stock plans or otherwise (which we refer to as a
restricted share
award
) that is outstanding immediately prior to the effective time will become fully vested and will be cancelled and thereafter entitle the holder to receive, promptly
after the effective time, a cash payment (without interest and subject to all applicable tax
6
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withholding
requirements) equal to the product of (i) the number of shares subject to such restricted share award and (ii) $33.15.
Together,
the Advanced Disposal stock options, performance share unit awards, restricted share unit awards and restricted share awards are referred to herein as the
Advanced
Disposal equity awards
.
Interests of Advanced Disposal Directors and Executive Officers in the
Merger (page 55)
The directors and executive officers of Advanced Disposal have interests in the merger that may be different from, or in addition to, the interests of
Advanced Disposal stockholders generally. These interests are described in more detail in the section entitled
The Merger (Proposal 1)Interests of
Advanced Disposal Directors and Executive Officers in the Merger
beginning on page 55 of this proxy statement. The Board was aware of these interests in approving
the merger agreement and in determining to recommend that the Advanced Disposal stockholders adopt the merger agreement. These interests may include the following, among
others:
-
-
the accelerated vesting, cancellation and cash-out of all outstanding Advanced Disposal equity awards;
-
-
guaranteed annual bonus amounts for the 2019 and 2020 fiscal years at no less than an employee’s 2019 target annual bonus to
employees in good standing;
-
-
the entitlement to benefits under existing employment agreements; and
-
-
continuation of indemnification, directors’ and officers’ liability insurance and other compensation and
employee benefits to be provided by the surviving company or one of its affiliates.
Financing (page 63)
Waste Management has committed to have, at the closing, access to sufficient cash, available lines of credit or other sources of immediately available funds
to enable Waste Management to consummate the transactions contemplated by the merger agreement, including payment of the aggregate merger consideration to the stockholders of Advanced Disposal and all
other required payments payable in connection with the transactions contemplated by the merger agreement. Waste Management expects to finance the merger using a combination of bank debt and senior
notes. The consummation of the merger is not conditioned upon Waste Management’s or Merger Sub’s receipt of financing.
Material U.S. Federal Income Tax Consequences of the Merger (page 63)
The exchange of shares of Advanced Disposal common stock for the merger consideration pursuant to the merger will be a taxable transaction for U.S. federal
income tax purposes. Accordingly, an Advanced Disposal stockholder that is a U.S. holder (as defined in the section entitled
The Merger
(Proposal 1)
Material U.S. Federal Income Tax Consequences of the Merger
beginning on page 63 of this
proxy statement) will recognize taxable gain or loss in an amount equal to the difference, if any, between (i) the amount of cash received by such U.S. holder in the merger plus the amount used
to satisfy any applicable withholding taxes and (ii) such U.S. holder’s adjusted tax basis in the shares of Advanced Disposal common stock exchanged therefor. With respect to
an Advanced Disposal stockholder that is a non-U.S. holder (as defined in the section entitled
The Merger (Proposal
1)
Material U.S. Federal Income Tax Consequences of the Merger
beginning on page 63 of this proxy
statement), the exchange of shares of Advanced Disposal common stock for the merger consideration pursuant to the merger generally will not result in tax to such non-U.S. holder under U.S. federal
income tax laws unless such non-U.S. holder has certain connections with the United States. Backup withholding may apply to the cash payment made pursuant to the merger unless the Advanced Disposal
stockholder or other payee provides a valid taxpayer
7
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identification
number and complies with certain certification procedures (generally, by providing a properly completed and executed U.S. Internal Revenue Service (which we refer to as
IRS
) Form W-9 or IRS Form W-8 or applicable successor form).
Each
Advanced Disposal stockholder is urged to read the discussion in the section entitled
The Merger (Proposal 1)Material U.S. Federal Income Tax
Consequences of the Merger
beginning on page 63 of this proxy statement and to consult its tax advisor to determine the particular U.S. federal, state or local or
non-U.S. income or other tax consequences to it of the merger.
Regulatory Clearances (page 66)
Under the merger agreement, the merger cannot be completed until any applicable waiting period under the HSR Act has expired or been terminated following the
filing of premerger notification and report forms with the Federal Trade Commission (which we refer to as the
FTC
) and the Antitrust Division of
the U.S. Department of Justice (which we refer to as the
DOJ
). Advanced Disposal and Waste Management made the necessary filings with the FTC and
the Antitrust Division of the DOJ on May 9, 2019. See the section entitled
The Merger (Proposal 1)Regulatory
Clearances
beginning on page 66 of this proxy statement for additional details.
Appraisal Rights (page 99)
Under the General Corporation Law of the State of Delaware (which we refer to as the
DGCL
), Advanced
Disposal stockholders who do not vote for the adoption of the merger agreement will have the right to seek appraisal of the fair value of their shares as determined by the Delaware Court of Chancery,
but only if they fully comply with all of the applicable requirements of the DGCL, which are summarized in this proxy statement. Any appraisal amount determined by the court could be more than, the
same as, or less than the value of the merger consideration. Any stockholder intending to exercise appraisal rights must, among other things, submit a written demand for appraisal to Advanced Disposal
before the vote on the adoption of the merger agreement and must not vote or otherwise submit a proxy in favor of the adoption of the merger agreement. Failure to follow the procedures specified under
the DGCL exactly will result in the loss of appraisal rights. Because of the complexity of the DGCL relating to appraisal rights, if you are considering exercising your appraisal rights, we encourage
you to seek the advice of your own legal counsel. The discussion of appraisal rights contained in this proxy statement is not a full summary of the law pertaining to appraisal rights under the DGCL
and is qualified in its entirety by the full text of Section 262 of the DGCL that is attached as
Annex D
to this proxy statement. For additional information,
see the section entitled
Appraisal Rights
beginning on page 99 of this proxy statement.
De-listing and De-registration of Advanced Disposal Common Stock (page
67)
If the merger is completed, Advanced Disposal common stock will be de-listed from the NYSE and de-registered under the Exchange Act. As such, following
completion of the merger and such de-registration, Advanced Disposal will no longer file periodic reports with the SEC on account of Advanced Disposal common stock.
No Solicitation; Acquisition Proposals (page 78)
Under the merger agreement, Advanced Disposal is subject to customary restrictions on its ability to solicit acquisition proposals (as defined in the section
entitled
The Merger AgreementOther Covenants and AgreementsNo Solicitation; Acquisition Proposals
beginning on page 78 of this proxy statement) from third parties, to provide information to, and enter into discussions or
negotiations with, third parties regarding acquisition proposals, and to withdraw or change its recommendation that Advanced Disposal
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stockholders
vote
FOR
the proposal to approve the merger agreement and the transactions, including the merger (which we refer
to as the
Board recommendation
). However, prior to the Special Meeting, these restrictions are subject to customary fiduciary
out provisions that allow, under certain circumstances, (i) Advanced Disposal to provide information to, and enter into discussions or negotiations with, third parties with respect
to an acquisition proposal if the Board determines in good faith, after consultation with and taking into account the advice of, Advanced Disposal’s financial advisor and outside
legal counsel, that such acquisition proposal could reasonably be expected to constitute or result in a superior proposal and that failure to take such actions would be inconsistent with its fiduciary
duties and (ii) the Board to withdraw or change the Board recommendation if it determines that its failure to take such action would be inconsistent with its fiduciary duties, including in
connection with an intervening event that was not known by or reasonably foreseeable by the Board as of the date of the merger agreement that is unrelated to any acquisition proposal (as more fully
described in the section entitled
The Merger AgreementOther Covenants and AgreementsThe Advanced Disposal Board Recommendation; Change of
Recommendation; Fiduciary Exception
beginning on page 78 of this proxy statement).
Termination (page 87)
The merger agreement may be terminated and the transactions may be abandoned at any time prior to the effective time of the
merger:
-
-
by mutual written consent of Waste Management and Advanced Disposal; or
-
-
by either Waste Management or Advanced Disposal if:
-
-
a governmental entity of competent jurisdiction sitting in the United States has adopted a law or issued a governmental order (which has become
final and nonappealable) prohibiting the merger, except this termination right will not be available to a party whose breach of the merger agreement was the primary cause of, or primarily resulted in,
the issuance of such legal restraint;
-
-
the effective time has not occurred on or before April 14, 2020, as may be extended by the mutual written consent of Waste Management
and Advanced Disposal and as will be extended by ninety (90) days if all of the conditions set forth in the merger agreement have been satisfied (or, with respect to the conditions that by
their terms must be satisfied at the closing, would have been so satisfied if the closing had occurred) or remain capable of being satisfied other than (i) the absence of legal restraints
imposed by a governmental entity and (ii) approval under the HSR Act not having been obtained (which date we refer to as the
end date
),
except that this termination right will not be available to a party whose breach of the merger agreement was the primary cause of, or primarily resulted in, the failure of the effective time of the
merger to occur before April 14, 2020;
-
-
the Advanced Disposal stockholder approval is not obtained at the Special Meeting (or any adjournment or postponement thereof); or
-
-
by Advanced Disposal if:
-
-
there is an uncured breach by Waste Management or Merger Sub of any of their respective representations, warranties or covenants in the merger
agreement; or
-
-
the Board determines to enter into an acquisition agreement with respect to a superior proposal prior to (but not after) obtaining the Advanced
Disposal stockholder approval at the Special Meeting (or any adjournment or postponement thereof);
9
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-
-
by Waste Management if:
-
-
there is an uncured breach by Advanced Disposal of any of its representations, warranties or covenants in the merger agreement; or
-
-
the Board has changed the Board recommendation prior to obtaining the Advanced Disposal stockholder approval at the Special Meeting (or any
adjournment or postponement thereof) or has taken similar actions as specified in the merger agreement (see
The Merger AgreementTermination; Effect of
Termination
beginning on page 87 of this proxy statement for additional details).
If
the merger agreement is validly terminated pursuant to the termination rights described in the bullet points above, the merger agreement will become void and of no further force or effect and there
will be no liability or obligation on the part of any party, except for the confidentiality provisions, provisions relating to the effect of termination (including the termination fees described in
the section entitled
The Merger AgreementCompany Termination Fee; Waste Management Termination Fee
beginning on
page 88 of this proxy statement) and certain other specified general provisions of the merger agreement, each of which will survive the termination of the merger agreement, and liabilities or damages
resulting from a party’s fraud or willful breach of the merger agreement prior to such termination.
Termination Fees (page 88)
Under the merger agreement, Advanced Disposal is required to pay Waste Management a termination fee of $100,000,000 (which we refer to as the
Company termination fee
) if the merger agreement is terminated by the applicable party under the following
circumstances:
-
-
if Advanced Disposal enters into an acquisition agreement with respect to a superior proposal prior to obtaining Advanced Disposal stockholder
approval;
-
-
if the Board changes the Board recommendation or takes similar actions prior to the Special Meeting;
-
-
if Advanced Disposal stockholders do not approve the transaction at a time when Waste Management is entitled to terminate the merger agreement
due to the Board’s change of the Board recommendation; or
-
-
if (i) the Advanced Disposal stockholder approval is not obtained at the Special Meeting (or any adjournment or postponement thereof),
(ii) there is an uncured breach by Advanced Disposal of its representations, warranties or covenants in the merger agreement or (iii) the merger is not consummated by the end date, and,
in each case, prior to the applicable termination event, (A) a third party announces its intention to make an acquisition proposal, which acquisition proposal is not withdrawn, and
(B) within 12 months after the termination date, Advanced Disposal has entered into an agreement with a third party with respect to an acquisition proposal or an acquisition proposal has
been consummated involving Advanced Disposal or any of its subsidiaries.
Under
the merger agreement, Waste Management is required to pay Advanced Disposal a termination fee of $150,000,000 (which we refer to as the
Waste Management termination
fee
) if the merger agreement is terminated by Advanced Disposal because:
-
-
a nonappealable court order or legal restraint has been issued prohibiting the merger due to antitrust reasons; or
-
-
the transactions contemplated by the merger agreement have not been completed by the end date, and at such time, antitrust approval under the
HSR Act has not been obtained;
10
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provided
that, in either case, at the time of termination, (i) a breach by Advanced Disposal of a covenant in the merger agreement is not the cause of such order, legal restraint or lack of
approval, (ii) Advanced Disposal must have satisfied its closing conditions and (iii) the Advanced Disposal stockholder approval must have been obtained.
Advanced
Disposal will be required to reimburse Waste Management’s expenses of up to $15,000,000 if the merger agreement is terminated by either Advanced Disposal or Waste Management
as a result of a failure to obtain the Advanced Disposal stockholder approval or by Waste Management for Advanced Disposal’s uncured breach of any of its representations, warranties
or covenants; however, such reimbursement amount can be credited against the Company termination fee.
Expenses (page 89)
Except as otherwise provided in the merger agreement, whether or not the merger is consummated, all expenses incurred in connection with the merger, the
merger agreement and the other transactions will be paid by the party incurring or required to incur such expenses. However, Waste Management has agreed to pay all filing fees required under the HSR
Act with respect to the transactions contemplated by the merger agreement.
Limitations on Remedies; Specific Performance (page 89)
Advanced Disposal and Waste Management have agreed that the parties will be entitled to an injunction, specific performance and other equitable relief to
prevent actual or threatened breaches of the merger agreement and to specifically enforce the terms of the merger agreement, in addition to any other remedy to which they are entitled at law or in
equity.
The
parties have also agreed that, if the Company termination fee is payable as a result of an acceptance by the Board of a superior proposal (as defined in the section entitled
The Merger AgreementOther Covenants and Agreements; The Advanced Disposal Board Recommendation; Change of Recommendation; Fiduciary
Exception
), Waste Management’s and Merger Sub’s right to terminate the merger agreement and receive payment of the Company
termination fee will be the sole and exclusive remedy of Waste Management and Merger Sub for any loss suffered by Waste Management or Merger Sub as a result of a breach by Advanced Disposal of its
obligations with respect to the non-solicitation provisions under the merger agreement. In addition, the parties have agreed that Advanced Disposal’s right to terminate the merger
agreement and receive payment of the Waste Management termination fee will be the sole and exclusive remedy of Advanced Disposal against Waste Management and Merger Sub for any loss suffered by
Advanced Disposal as a result of a breach by Waste Management or Merger Sub of certain of its obligations with respect to regulatory matters under the merger agreement.
Litigation Relating to the Merger (page 67)
No litigation relating to the merger was pending as of the time of filing this proxy statement.
Market Price of Advanced Disposal Common Stock and Dividend Data (page
96)
Advanced Disposal common stock is listed on NYSE under the symbol ADSW. The closing sale price of Advanced Disposal common stock on
April 12, 2019, the last trading day prior to the execution of the merger agreement, was $27.14 per share. On May 9, 2019 the most recent practicable date before the filing of this proxy
statement, the closing sale price of Advanced Disposal common stock was $32.33 per share. You are encouraged to obtain current market quotations for our common stock in connection with voting your
shares of our common stock.
11
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Following
completion of the merger, there will be no further market for Advanced Disposal common stock, and our common stock will be de-listed from NYSE and de-registered under the Exchange Act. As a
result, following completion of the merger and such de-registration, we will no longer file periodic reports with the SEC.
For
a more complete description, please see the section entitled
Market Prices and Dividend Data
beginning on page 96 of this
proxy statement.
*
* *
Neither the SEC nor any state securities regulatory agency has approved or disapproved of the transactions described in this document, including the merger, or determined if
the information contained in this document is accurate or adequate. Any representation to the contrary is a criminal offense.
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QUESTIONS AND ANSWERS
The following questions and answers are intended to address briefly some commonly asked questions regarding the Special Meeting, the
merger agreement and the transactions. These questions and answers may not address all questions that may be important to you as an Advanced Disposal stockholder. Please refer to the section entitled
Summary preceding this section and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents referred
to in this proxy statement, all of which you should read carefully.
-
Q:
-
Why am I receiving this proxy statement?
A:
On April 14, 2019, Advanced Disposal entered into the merger agreement providing for the merger of Merger Sub with and into
Advanced Disposal, with Advanced Disposal surviving the merger as an indirect, wholly-owned subsidiary of Waste Management. You are receiving this proxy statement in connection with the solicitation
of proxies by the Board
FOR
the proposal to adopt the merger agreement and to approve the other proposals to be voted on at
the Special Meeting.
-
Q:
-
What is a proxy?
A:
A proxy is your legal designation of another person, referred to as a proxy, to vote your shares of Advanced
Disposal common stock. The written document describing the matters to be considered and voted on at the Special Meeting is called a proxy statement. The document used to
designate a proxy to vote your shares of Advanced Disposal common stock is called a form of proxy or proxy card. The Board has designated each of
Richard Burke, Chairman and Chief Executive Officer, and Michael K. Slattery, Corporate Secretary, with full power of substitution, as proxy for the Special Meeting.
-
Q:
-
What is the proposed transaction?
A:
The proposed transaction is the acquisition of Advanced Disposal by Waste Management through the merger of Merger Sub with and into
Advanced Disposal pursuant to the merger agreement. Following the effective time, Advanced Disposal will be privately held as an indirect, wholly-owned subsidiary of Waste Management, and you will no
longer own shares of Advanced Disposal common stock and instead will have only the right to receive the merger consideration. Following the consummation of the merger, Advanced Disposal common stock
will be de-listed from NYSE and de-registered under the Exchange Act; thus, Advanced Disposal will no longer be a public company.
-
Q:
-
What will I receive in the merger?
A:
If the merger is consummated, you will be entitled to receive $33.15 in cash for each share of Advanced Disposal common stock you own,
without interest and less applicable withholding taxes. For example, if you own 100 shares of Advanced Disposal common stock, you will be entitled to receive $3,315.00 in cash, without interest and
less applicable withholding taxes. After the effective time, you will no longer have any rights as an Advanced Disposal stockholder, other than the right to receive the merger consideration.
-
Q:
-
What is included in these materials?
A:
These materials include:
-
-
this proxy statement for the Special Meeting;
-
-
a proxy card or voting instruction form (enclosed with this proxy statement);
13
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-
-
a copy of the merger agreement (attached as
Annex A
to this proxy statement);
-
-
a copy of the voting agreement (attached as
Annex B
to this proxy statement);
-
-
the written opinion of UBS (attached as
Annex C
to this proxy statement); and
-
-
the full text of Section 262 of the DGCL (attached as
Annex D
to this proxy statement).
-
Q:
-
Where and when is the Special Meeting?
A:
The Special Meeting will take place on [
·
],
2019 at [
·
] located at
[
·
], beginning at
[
·
], Eastern Time. To ensure that you will be represented, we encourage you to promptly vote by submitting the
enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone. In certain circumstances, the Special Meeting could be adjourned to
another time or place. All references in our proxy materials to Special Meeting include any adjournment or postponement of the Special Meeting.
-
Q:
-
How do I attend the Special Meeting?
A:
To attend the meeting, you will need to present valid photo identification, such as a driver’s license or passport, and
proof of ownership of our common stock. If you are a beneficial owner of shares held in street name and wish to vote in person at the Special Meeting, you must obtain a legal
proxy or broker’s proxy card from your broker, bank or other nominee. A legal proxy is a written document that will authorize you to vote your
shares held in street name at the Special Meeting. If you are not a holder of record as of the close of business on the record date, you will be permitted to vote at the meeting only if you have a
valid legal proxy from a holder of record as of the close of business on the record date.
-
Q:
-
What proposals will be voted on at the Special Meeting?
A:
There are three (3) proposals scheduled to be voted on at the Special Meeting:
-
-
to adopt the merger agreement;
-
-
to approve, on a non-binding advisory basis, specified compensation that may be paid or become payable to Advanced Disposal’s
named executive officers in connection with the merger and contemplated by the merger agreement (which we refer to as the compensation advisory proposal); and
-
-
to approve one or more adjournments of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are
insufficient votes at the time of the Special Meeting to approve the proposal to adopt the merger agreement (which we refer to as the adjournment proposal).
-
Q:
-
What is the Board’s voting recommendation?
A:
Upon consideration, the Board unanimously recommends that you vote your shares:
-
-
FOR
the proposal to adopt the merger agreement;
-
-
FOR
the compensation advisory proposal; and
-
-
FOR
the adjournment proposal.
For
a discussion of the factors that the Board considered in determining to approve the execution and delivery of the merger agreement by Advanced Disposal and to recommend the adoption of the merger
agreement, please see the section entitled
The Merger (Proposal 1)Recommendation of the Board and Reasons for
Recommendation
beginning on page 41 of this proxy statement. In addition, in considering the
14
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recommendation
of the Board with respect to the merger agreement, you should be aware that some of our directors and executive officers have interests that may be different from, or in addition to,
the interests of Advanced Disposal stockholders generally. For a discussion of these interests, please see the section entitled
The Merger (Proposal
1)Interests of Advanced Disposal Directors and Executive Officers in the Merger
beginning on page 55 of this proxy statement.
-
Q:
-
Who is entitled to vote at the Special Meeting?
A:
All shares of Advanced Disposal common stock owned by you as of the record date, which is the close of business on
[
·
], 2019, may be voted by you. You may cast one vote per share of Advanced Disposal common stock that you
held on the record date. These shares include shares that are:
-
-
held directly in your name as the stockholder of record; and
-
-
held through a broker, bank or other nominee for you as the beneficial owner, including those shares over which a broker, bank or other
nominees has granted you a legal proxy allowing you to vote those shares in person at the Special Meeting.
As
of the close of business on the record date, there were [
·
] shares of Advanced Disposal common stock issued
and outstanding, and entitled to vote at the Special Meeting. Each share of Advanced Disposal common stock issued and outstanding as of the close of business on the record date will be entitled to one
vote on each matter submitted to a vote at the Special Meeting.
-
Q:
-
What is the difference between holding shares as a stockholder of record and as a beneficial
owner?
A:
Our stockholders may hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized
below, there are some differences between shares held of record and those owned beneficially.
-
-
Stockholder of Record
.
If your shares of Advanced
Disposal common stock are registered directly in your name with Advanced Disposal’s transfer agent, EQ Shareowner Services, you are considered, with respect to those shares, the
stockholder of record, and this proxy statement was sent directly to you by Advanced Disposal. As the stockholder of record, you have the right to vote in person at the Special Meeting, grant your
voting proxy directly to certain officers of Advanced Disposal or to appoint a representative of your choosing to attend the Special Meeting and vote on your behalf by granting such person a
legal proxy.
-
-
Beneficial Owner
.
If your shares of Advanced Disposal
common stock are held in an account at a broker, bank or other nominee, you are considered the beneficial owner of shares held in street name, and this proxy statement was forwarded to you by your
broker, bank or other nominee, who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your
broker, bank or other nominee how to vote your shares on your behalf at the Special Meeting, or you may contact your broker, bank or other nominee to obtain a legal proxy or
broker’s proxy card to authorize you to vote your shares in person at the Special Meeting. However, because you are not the stockholder of record, you may
not vote your shares in person at the Special Meeting, unless you request and obtain a valid proxy from your broker, bank or other nominee.
-
Q:
-
What must I do if I want to attend the Special Meeting in person?
A:
Only individuals who were Advanced Disposal stockholders as of the close of business on the record date and their authorized
representatives may attend the Special Meeting. Proof of ownership of Advanced
15
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Disposal
common stock (which may be the appearance of such stockholder’s name on Advanced Disposal stockholder list as of the record date), along with valid photo identification (such
as a driver’s license or passport), must be presented to be admitted to the Special Meeting. If you are a beneficial owner of shares held in street name and wish to vote in person at
the Special Meeting, you must obtain a legal proxy or broker’s proxy card from your broker, bank or other nominee. A legal proxy is
a written document that will authorize you to vote your shares held in street name at the Special Meeting. To ensure that you will be represented, even if you plan to attend the Special Meeting in
person, we encourage you to promptly vote by submitting the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone. If you
attend the Special Meeting and vote in person by ballot, your vote will revoke any proxy that you have previously submitted. Please contact your broker, bank or other nominee for instructions
regarding obtaining a legal proxy. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Special Meeting.
-
Q:
-
If I am a stockholder of record of shares of Advanced Disposal common stock, how do I vote?
A:
You do not need to physically attend the Special Meeting in person in order to vote your shares of Advanced Disposal common stock. If
you are a stockholder of record, there are four (4) ways you can vote:
-
-
in person at the Special Meeting;
-
-
via the Internet, at the Internet address provided on the proxy card;
-
-
by telephone, by using the toll-free number listed on the proxy card; or
-
-
by mail, by completing, signing and dating the proxy card and returning it in the enclosed postage-paid envelope.
-
Q:
-
If I am a beneficial owner of shares of Advanced Disposal common stock held in street name, how do I vote?
A:
If you are a beneficial owner of shares of Advanced Disposal common stock held in street name, you will receive instructions from your
broker, bank or other nominee as to how to vote your shares. You must follow the instructions of your broker, bank or other nominee in order for your shares to be voted. Telephone and Internet voting
also will be offered to stockholders owning shares through certain brokers, banks and other nominees. If your shares are not registered in your own name but are held through your broker, bank or other
nominee and you plan to vote your shares in person at the Special Meeting, you should contact your broker, bank or other nominee to obtain a legal proxy or
broker’s proxy card and bring it to the Special Meeting in order to vote. Please note that if you hold your shares through a broker, bank or other nominee, such nominee cannot vote
your shares unless you have given your nominee specific instructions as to how to vote. In order for your vote to be counted, please make sure that you submit your vote to your broker, bank or other
nominee.
-
Q:
-
Will my shares of Advanced Disposal common stock held in street name or another form of record ownership be combined for voting purposes with
shares I hold of record?
A:
No. Because any shares of Advanced Disposal common stock you may hold in street name will be deemed to be held by a different
stockholder of record than any shares of Advanced Disposal common stock you hold of record, any shares of Advanced Disposal common stock held in street name will not be combined for voting purposes
with shares of Advanced Disposal common stock you hold of record. Similarly, if you own shares of Advanced Disposal common stock in various registered forms, such as jointly with your spouse, as
trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card or vote separately by telephone or Internet with respect to those shares of
Advanced Disposal common stock because they are held in a different form of record ownership.
16
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Shares
of Advanced Disposal common stock held by a corporation or business entity must be voted by an authorized officer of the entity. Shares of Advanced Disposal common stock held in an individual
retirement account must be voted under the rules governing such account.
-
Q:
-
What is the quorum requirement for the Special Meeting?
A:
A quorum is necessary to hold a valid meeting of the Advanced Disposal stockholders. The holders of record of a majority of the shares
entitled to vote, present in person or represented by proxy, at the close of business on the record date will constitute a quorum at the Special Meeting. If a quorum is not present at the Special
Meeting, the Special Meeting may be adjourned or postponed from time to time until a quorum is obtained. Pursuant to the voting agreement, CPPIB has agreed to cause its shares of Advanced Disposal
common stock to be counted at the Special Meeting for purposes of determining whether a quorum has been obtained.
If
you submit a proxy but fail to provide voting instructions or abstain on any of the proposals listed on the proxy card, your shares will be counted for the purpose of determining whether a quorum
is present at the Special Meeting.
If
your shares are held in street name by your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, these shares will not be counted for purposes of determining
whether a quorum is present for the transaction of business at the Special Meeting.
In
the event that a quorum is not present at the Special Meeting, we expect to adjourn or postpone the Special Meeting until we solicit enough proxies to obtain a quorum.
-
Q:
-
What happens if I do not give specific voting instructions?
A:
Stockholder of Record
.
If you are a
stockholder of record and you submit a signed proxy card or submit your proxy by telephone or the Internet, but do not specify how you want to vote your shares on a particular proposal, then the proxy
holders will vote your shares in accordance with the recommendations of the Board on all matters presented in this proxy statement. Thus, your shares of Advanced Disposal common stock will be voted:
-
-
FOR
the proposal to adopt the merger agreement;
-
-
FOR
the compensation advisory proposal; and
-
-
FOR
the adjournment proposal.
Beneficial Owner
.
If you are a beneficial owner of shares held in street name, under applicable stock exchange
rules the broker, bank or other nominee that holds your shares may generally vote on routine proposals but cannot vote without instructions on non-routine matters unless they have discretionary
authority. None of the proposals to be voted on at the Special Meeting are considered routine proposals. As a result, if the broker, bank or other nominee that holds your shares does not receive
instructions from you on how to vote your shares, a broker non-vote will occur. Therefore, we urge you to give voting instructions to your broker. Shares represented by
such broker non-votes will not be counted as present in person or represented by proxy in determining whether there is a quorum. A broker non-vote
will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement. Your abstention will have no effect on
the compensation advisory proposal or the adjournment proposal.
-
Q:
-
What is the voting requirement to approve the proposal to adopt the merger agreement?
A:
Adoption of the merger agreement requires stockholders holding a majority of the shares of Advanced Disposal common stock issued and
outstanding at the close of business on the record date and entitled to
17
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vote
thereon to vote
FOR
the proposal to adopt the merger agreement. A failure to vote your shares of Advanced Disposal common
stock or an abstention from voting on this proposal will have the same effect as a vote
AGAINST
the proposal to adopt the
merger agreement. If your shares are held in street name by your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, a broker non-vote
will arise and will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement.
-
Q:
-
What is the voting requirement to approve the compensation advisory proposal?
A:
The approval of the compensation advisory proposal requires stockholders holding a majority of the issued and outstanding shares of
Advanced Disposal common stock which are present in person or represented by proxy at the Special Meeting and entitled to vote thereon, so long as a quorum is present, to vote
FOR
the compensation advisory proposal. An abstention from voting on the compensation advisory proposal will have the same
effect as a vote
AGAINST
the compensation advisory proposal. If your shares are held in street name by your broker, bank or
other nominee and you do not instruct the nominee how to vote your shares, a broker non-vote will arise but, so long as a quorum is otherwise present at the Special Meeting,
will have no effect on the compensation advisory proposal.
Because the vote to approve the compensation advisory proposal is only advisory in nature, it will not be binding on Advanced Disposal, Waste Management or the surviving company. Accordingly, if the
merger agreement is adopted by Advanced Disposal stockholders and the merger is completed, the merger-related compensation may be paid to Advanced Disposal’s named executive officers
even if stockholders fail to approve the compensation advisory proposal, so long as quorum is otherwise present.
-
Q:
-
What is the voting requirement to approve the adjournment proposal?
A:
The approval of the adjournment proposal requires stockholders holding a majority of the issued and outstanding shares of Advanced
Disposal common stock, present in person or represented by proxy at the Special Meeting and entitled to vote thereon, whether or not a quorum is present, to vote
FOR
the adjournment proposal. An abstention from voting on the adjournment proposal will have the same effect as a vote
AGAINST
the adjournment proposal. If your shares are held in street name by your broker, bank or other nominee and you do not
instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the adjournment proposal.
-
Q:
-
How do Advanced Disposal directors and executive officers intend to vote?
A:
We currently expect that Advanced Disposal directors and executive officers will vote their shares of Advanced Disposal common stock
FOR
the proposal to adopt the merger agreement and the other proposals to be considered at the Special Meeting, although they
have no obligation to do so.
The
directors and executive officers of Advanced Disposal have interests in the merger that may be different from, or in addition to, the interests of Advanced Disposal stockholders generally. These
interests are described in more detail in the section entitled
The Merger (Proposal 1)Interests of Advanced Disposal Directors and Executive Officers
in the Merger
beginning on page 55 of this proxy statement.
-
Q:
-
Have any stockholders already agreed to vote FOR the adoption of the merger agreement?
A:
Yes. CPPIB, which beneficially owned approximately
[
·
]% of the issued and outstanding shares of Advanced Disposal common stock as of the close of business on the
record date, entered into the voting agreement with Waste Management to vote the Advanced Disposal common stock beneficially owned by it as of the close of business on the record date for the adoption
of the merger agreement, subject to the
18
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terms
and conditions of the voting agreement. The voting agreement is described in more detail in the section entitled
The Voting
Agreement
beginning on page 90 of this proxy statement.
-
Q:
-
What effects will the merger have on Advanced Disposal and the Advanced Disposal common stock?
A:
Advanced Disposal common stock is currently registered under the Exchange Act, and is listed on NYSE under the symbol
ADSW. At the effective time, Merger Sub will merge with and into Advanced Disposal, with Advanced Disposal continuing as the surviving company and as an indirect,
wholly-owned subsidiary of Waste Management. As a result of the merger, Advanced Disposal will cease to be a publicly traded company. Following the consummation of the merger, Advanced Disposal common
stock will be de-listed from NYSE and de-registered under the Exchange Act.
-
Q:
-
What effects will the merger have on Advanced Disposal equity awards?
A:
At the effective time, each Advanced Disposal stock option that is outstanding immediately prior to the effective time and that has an
exercise price per share that is less than $33.15, whether or not vested, will become fully vested and will be cancelled and thereafter entitle the holder to receive, promptly after the effective
time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the excess of $33.15 over the per-share exercise price of such
Advanced Disposal stock option and (ii) the number of shares issuable upon exercise of such Advanced Disposal stock option. Each Advanced Disposal stock option with an exercise price equal to
or greater than $33.15 will be cancelled as of the effective time without payment of any consideration and will have no further force or effect.
At
the effective time, each performance share unit award that is outstanding immediately prior to the effective time will become fully vested and will be cancelled and thereafter entitle the holder to
receive, promptly after the effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the number of shares equal
to the greater of (x) the target number of shares with respect to such performance share unit award and (y) the number of shares that would be considered earned under the terms of such
performance share unit award based on the most recent fiscal year-end results multiplied by (ii) $33.15.
At
the effective time, each restricted share unit award that is outstanding immediately prior to the effective time will become fully vested and will be cancelled and thereafter entitle the holder to
receive, promptly after the effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the number of shares subject
to such restricted share unit award and (ii) $33.15.
Further,
at the effective time, each restricted share award that is outstanding immediately prior to the effective time will become fully vested and will be cancelled and thereafter entitle the holder
to receive, promptly after the effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the number of shares
subject to such restricted share award and (ii) $33.15.
-
Q:
-
When is the merger expected to be completed?
A:
Together with Waste Management, we are working toward completing the merger as quickly as possible after the date of the Special
Meeting, and currently expect to consummate the merger by the first quarter of 2020. We cannot be certain when or if the conditions to the merger will be satisfied (or, to the extent permitted,
waived). The merger cannot be completed until the conditions to closing are satisfied (or, to the extent permitted, waived), including the adoption of the merger agreement by Advanced Disposal
stockholders.
19
Table of Contents
-
Q:
-
What happens if the merger is not completed?
A:
If the merger agreement is not adopted by Advanced Disposal stockholders, or if the merger is not completed for any other reason, the
Advanced Disposal stockholders will not receive any payment for their shares of Advanced Disposal common stock in connection with the merger. Except in certain circumstances where Advanced Disposal
has entered into an alternative transaction to the merger, Advanced Disposal would remain a public company, and shares of Advanced Disposal common stock would continue to be registered under the
Exchange Act, as well as listed and traded on NYSE. In the event that the merger agreement is terminated, in certain specified circumstances, the Company termination fee (or potentially an amount of
up to $15,000,000 in expenses) will be due and payable by Advanced Disposal to Waste Management, and in certain other specified circumstances, the Waste Management termination fee will be due and
payable by Waste Management to Advanced Disposal. See the sections entitled
The Merger AgreementTermination; Effect of
Termination
beginning on page 87 of this proxy statement and
The Merger AgreementCompany Termination Fee;
Waste Management Termination Fee
beginning on page 88 of this proxy statement.
-
Q:
-
What will happen if stockholders do not approve the compensation advisory proposal?
A:
The inclusion of this proposal is required by the SEC rules. However, the approval of the compensation advisory proposal is not a
condition to the completion of the merger and the vote on the compensation advisory proposal is an advisory vote and will not be binding on Advanced Disposal, Waste Management or the surviving
company. If the merger agreement is adopted by Advanced Disposal stockholders and the merger is completed, the merger-related compensation may be paid to Advanced Disposal’s named
executive officers even if stockholders fail to approve the compensation advisory proposal.
-
Q:
-
Can I revoke my proxy or change my vote?
A:
Yes. If you are a stockholder of record, you may revoke your proxy at any time before the vote is taken at the Special Meeting
by:
-
-
voting over the Internet or by telephone as instructed on the proxy card. Only your latest Internet or telephone vote will be counted. You may
not change your vote over the Internet or by telephone after 11:59 p.m. Eastern Time, on [
·
];
-
-
providing a written notice of revocation that is received before the Special Meeting by the Corporate Secretary at Advanced Disposal
Services, Inc., 90 Fort Wade Road, Ponte Vedra, Florida 32081, Attention: Michael K. Slattery, Corporate Secretary;
-
-
completing, signing, dating and returning a new proxy card by mail to Advanced Disposal before the Special Meeting (received by or with our
last mail delivery before the Special Meeting); or
-
-
attending the Special Meeting and requesting that your proxy be revoked and/or voting in person as instructed above.
Please
note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that
if you want to revoke your proxy by mailing a new proxy card or by sending a written notice of revocation to Advanced Disposal, you should ensure that you send your new proxy card or written notice of
revocation in sufficient time for it to be received by Advanced Disposal before the Special Meeting (such new proxy cards or written notices of revocation received by or with our last mail delivery
before the Special Meeting begins will be counted).
20
Table of Contents
If
you hold your shares in street name through a broker, bank or other nominee, you will need to follow the instructions provided to you by your broker, bank or other nominee in order to revoke your
proxy or submit new voting instructions. You may also revoke your proxy by obtaining a legal proxy or broker’s proxy card from your broker, bank or other
nominee that holds the shares of record and voting your shares in person at the Special Meeting.
-
Q:
-
What happens if I do not vote or if I abstain from voting on the proposals?
A:
The requisite number of shares to approve the proposal to adopt the merger agreement is based on the total number of shares of Advanced
Disposal common stock issued and outstanding, not just the shares that are voted. Failure to submit a signed proxy card, grant a proxy by phone or the Internet or to vote in person by ballot at the
Special Meeting will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement. If your shares are
held in street name by your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, a broker non-vote will arise and will have the same
effect as a vote
AGAINST
the proposal to adopt the merger agreement. For more information concerning the Special Meeting, the
merger agreement and the merger, please review this proxy statement and the copy of the merger agreement attached as
Annex A
thereto.
The
requisite number of shares to approve the compensation advisory proposal is a majority of the shares of Advanced Disposal common stock issued and outstanding and that are present in person or
represented by proxy at the Special Meeting and entitled to vote thereon. A quorum is a majority of the shares of Advanced Disposal common stock issued and outstanding. An abstention from voting will
have the same effect as a vote
AGAINST
the compensation advisory proposal. If your shares are held in street name by your
broker, bank or other nominee and you do not instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the compensation advisory
proposal, so long as a quorum is otherwise present.
The
requisite number of shares to approve the adjournment proposal is a majority of shares of Advanced Disposal common stock issued and outstanding and that are present in person or represented by
proxy at the Special Meeting and entitled to vote thereon, whether or not a quorum is present. An abstention from voting will have the same effect as a vote
AGAINST
the adjournment proposal. If your shares are held in street name by your broker, bank or other nominee and you do not
instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the adjournment proposal.
Only
shares of Advanced Disposal common stock that are issued and outstanding as of the close of business on the record date are eligible to be voted on each of the three (3) proposals and will
be counted for purposes of determining whether a quorum is present at the Special Meeting.
-
Q:
-
If the merger is consummated, how will I receive the cash for my shares of Advanced Disposal common stock?
A:
If the merger is consummated and your shares of Advanced Disposal common stock are held in book-entry or in the name of a broker, bank
or other custodian, the cash proceeds will be deposited into your bank or brokerage account without any further action on your part. If you hold your shares of Advanced Disposal common stock in
certificate form, you will receive a letter of transmittal with instructions on how to send your shares of Advanced Disposal common stock to the paying agent in connection with the merger. The paying
agent will issue and deliver to you a check for your shares of Advanced Disposal common stock after you comply with such instructions.
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-
Q:
-
What happens if the market price of shares of Advanced Disposal common stock significantly changes before the closing?
A:
Waste Management is not obligated to change the merger consideration of $33.15 per share of Advanced Disposal common stock as a result
of a change in the market price of Advanced Disposal common stock.
-
Q:
-
What happens if I sell my shares of Advanced Disposal common stock before completion of the merger?
A:
In order to receive the merger consideration, you must hold your shares of Advanced Disposal common stock through completion of the
merger. Consequently, if you transfer your shares of Advanced Disposal common stock before completion of the merger, you will have transferred your right to receive the merger consideration in the
merger.
The
record date for stockholders entitled to vote at the Special Meeting is [
·
]. If you transfer your shares
of Advanced Disposal common stock after the record date but before the closing, unless you have granted a legal proxy to the purchaser as part of the transfer, you will have
the right to vote at the Special Meeting, although you will have transferred your right to receive the merger consideration in the merger.
-
Q:
-
Should I send in my evidence of ownership now?
A:
No. After the merger is completed, you will receive a letter of transmittal, if applicable, and related materials from the paying agent
for the merger with detailed written instructions for exchanging your shares of Advanced Disposal common stock evidenced by stock certificates for the merger consideration. If your shares of Advanced
Disposal common stock are held in street name by your broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee as to what action, if any, you need to take
in order to effect the surrender of your street name shares in exchange for the merger consideration. Please do not send in any documentation of evidence of ownership now.
-
Q:
-
Am I entitled to exercise dissenters’ or appraisal rights instead of receiving the merger consideration for my shares of
Advanced Disposal common stock?
A:
Yes. Under Section 262 of the DGCL, stockholders who do not vote for the adoption of the merger agreement have the right to seek
appraisal of the fair value of their shares as determined by the Delaware Court of Chancery, but only if they fully comply with all applicable requirements of the DGCL, which are summarized in this
proxy statement. Any appraisal amount determined by the court could be more than, the same as, or less than the merger consideration. Any stockholder intending to exercise appraisal rights must, among
other things, submit a written demand for appraisal to Advanced Disposal before the vote on the proposal to adopt the merger agreement and such stockholder must not vote or otherwise submit a proxy in
favor of the adoption of the merger agreement. Failure to comply exactly with the procedures and requirements specified under the DGCL will result in the loss of appraisal rights. The discussion of
appraisal rights contained in this proxy statement is not a full summary of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of
Section 262 of the DGCL that is attached as
Annex D
to this proxy statement. For additional information, see the section entitled
Appraisal Rights
beginning on page 99 of this proxy statement. Because of the complexity of the DGCL relating to
appraisal rights, if you are considering exercising your appraisal rights, we encourage you to seek the advice of your own legal counsel.
22
Table of Contents
-
Q:
-
Will I be subject to U.S. federal income tax upon the exchange of Advanced Disposal common stock for the merger consideration pursuant to the
merger?
A:
Generally, yes, if you are a U.S. stockholder. The exchange of shares of Advanced Disposal common stock for the merger consideration
pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, an Advanced Disposal stockholder that is a U.S. holder (as defined in
the section entitled
The Merger (Proposal 1)
Material U.S. Federal Income Tax Consequences of
the Merger
beginning on page 63 of this proxy statement) will recognize taxable gain or loss in an amount equal to the difference, if any, between
(i) the amount of cash received by such U.S. holder in the merger plus the amount used to satisfy any applicable withholding taxes and (ii) such U.S. holder’s adjusted
tax basis in the shares of Advanced Disposal common stock exchanged therefor. With respect to an Advanced Disposal stockholder that is a non-U.S. holder (as defined in the
section entitled
The Merger (Proposal 1)
Material U.S. Federal Income Tax Consequences of the
Merger
beginning on page 63 of this proxy statement), the exchange of shares of Advanced Disposal common stock for the merger consideration pursuant to the
merger generally will not result in tax to such non-U.S. holder under U.S. federal income tax laws unless such non-U.S. holder has certain connections with the United States. Backup withholding may
apply to the cash payment made pursuant to the merger unless the Advanced Disposal stockholder or other payee provides a valid taxpayer identification number and complies with certain certification
procedures (generally, by providing a properly completed and executed IRS Form W-9 or IRS Form W-8 or applicable successor form).
Each
Advanced Disposal stockholder is urged to read the discussion in the section entitled
The Merger (Proposal
1)
Material U.S. Federal Income Tax Consequences of the Merger
beginning on page 63 of this
proxy statement and to consult its tax advisor to determine the particular U.S. federal, state or local or non-U.S. income or other tax consequences to it of the merger.
Because
particular circumstances may differ, we recommend that you consult your own tax advisor to determine the U.S. federal income tax consequences relating to the merger in light of your own
particular circumstances and any consequences arising under any state, local or non-U.S. tax laws or tax treaties.
-
Q:
-
What does it mean if I get more than one proxy card?
A:
If your shares of Advanced Disposal common stock are registered differently or are held in more than one account, you will receive more
than one proxy or voting instruction form. Please complete and return all of the proxy cards or voting instructions forms you receive (or submit each of your
proxies or voting instructions forms by telephone or the Internet, if available to you) to ensure that all of your shares of Advanced Disposal common stock are voted.
-
Q:
-
How many copies should I receive if I share an address with another stockholder?
A:
Some banks, brokers and other nominees may participate in the practice of householding proxy statements,
annual reports and notices of Internet availability of proxy materials. This means that a single set of our proxy materials, containing a single copy of this proxy statement but multiple proxy cards
or voting instruction forms, may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of our proxy materials to you if you write or call our proxy
solicitor, Innisfree M&A Incorporated (which we refer to as
Innisfree
) by phone, toll-free at +1 (888) 750-5834, or in writing at
Innisfree M&A Incorporated, 501 Madison Avenue, 20
th
Floor, New York, NY 10022. Banks and brokers may call collect at +1 (212) 750-5833. In addition, stockholders who share
a single address, but receive multiple copies of the proxy statement, may request that in the future they receive a single copy by contacting (i) Advanced Disposal at Advanced Disposal
Services, Inc., 90 Fort Wade Road, Ponte Vedra, FL 32081, Attention: Michael K. Slattery, Corporate Secretary or by calling +1 (904) 737-7900 (if your
23
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shares
are registered in your own name) or (ii) your broker, bank or other nominee (if your shares are registered in their name).
-
Q:
-
Who will count the votes?
A:
The votes will be counted by one or more inspectors of election appointed for the Special Meeting.
-
Q:
-
Who will solicit and bear the cost of soliciting votes for the Special Meeting?
A:
Advanced Disposal will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. In
addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic and facsimile transmission by our directors, officers and
employees, who will not receive any additional compensation for such solicitation activities. Advanced Disposal has engaged Innisfree as proxy advisor to assist in the solicitation of proxies for the
Advanced Disposal Special Meeting. Advanced Disposal estimates that it will pay the proxy advisor a fee of approximately $20,000, plus reimbursement of certain expenses. In addition, Advanced Disposal
may reimburse its transfer agent, brokerage firms and other persons representing beneficial owners of shares of Advanced Disposal common stock for their expenses in forwarding solicitation material to
such beneficial owners.
-
Q:
-
Are there any other risks to me from the merger that I should consider?
A:
Yes. There are risks associated with all business combinations, including the merger. See the section entitled
Forward-Looking Statements
beginning on page 26 of this proxy statement.
-
Q:
-
Where can I find the voting results of the Special Meeting?
A:
Advanced Disposal will announce preliminary voting results at the Special Meeting and publish preliminary, or final results if
available, in a current report on Form 8-K filed with the SEC within four (4) business days after the Special Meeting.
-
Q:
-
What do I need to do now?
A:
We urge you to read this entire document carefully, including its appendices and the documents incorporated by reference, and to
consider how the merger affects you. Your vote is important, regardless of the number of shares of Advanced Disposal common stock you own. Please see the above questions If I am a
stockholder of record of Advanced Disposal shares, how do I vote? and If I am a beneficial owner of shares held in street name, how do I vote? for a summary of
instructions on how to vote.
-
Q:
-
Where can I find more information about Advanced Disposal?
A:
You can find more information about us from various sources described in the section entitled
Where
You Can Find Additional Information
beginning on page 105 of this proxy statement.
-
Q:
-
Who can help answer my other questions?
A:
If you have more questions about the merger, or require assistance in submitting your proxy or voting your shares or need additional
copies of the proxy statement or the enclosed proxy card, please contact
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Table of Contents
Innisfree,
which is acting as the proxy solicitor and information agent for Advanced Disposal in connection with the merger:
Innisfree
M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders may call toll-free: +1 (888) 750-5834
Banks and brokers may call collect: +1 (212) 750-5833
If your broker, bank or other nominee holds your shares, you should also call your broker, bank or other nominee for additional information.
25
Table of Contents
FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements within the meaning of the U.S. federal securities laws. Such statements
include statements concerning anticipated future events and expectations that are not historical facts. All statements other than statements of historical fact are statements that could be deemed
forward-looking statements. Forward-looking statements are typically identified by words such as believe, expect,
anticipate, intend, target, estimate, continue,
positions,
plan, predict, project, forecast, guidance,
goal, objective, prospects, possible or potential, by future
conditional verbs such as assume, will, would, should, could or
may, or by variations of such words or by similar expressions or the negative thereof. All forward-looking statements included in this proxy statement are based upon
information available to us as of the filing date of this proxy statement, and, except to the extent required by applicable law, we undertake no obligation to update any of these forward-looking
statements for any reason. You should not place undue reliance on forward-looking statements. The forward-looking statements involve known and unknown risks, uncertainties and other factors that may
cause our actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these statements. Important factors that could cause actual results
to differ materially from those contained in any forward-looking statement include the factors identified in Advanced Disposal annual report on Form 10-K for the year ended December 31,
2018, under the heading Risk Factors, as updated from time to time by Advanced Disposal quarterly reports on Form 10-Q, including Advanced Disposal Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2019, and other documents of Advanced Disposal on file with the SEC or in this proxy statement filed with the SEC by Advanced Disposal,
and the following factors:
-
-
risks related to the consummation of the merger, including the risks that (i) the merger may not be consummated within the anticipated
time period, or at all, (ii) the parties may fail to obtain stockholder approval of the merger agreement, (iii) the parties may fail to secure the termination or expiration of any
waiting period applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (iv) other conditions to the consummation of the merger under the merger agreement may
not be satisfied;
-
-
the effects that any termination of the merger agreement may have on Advanced Disposal or its business, including the risks that
(i) Advanced Disposal’s stock price may decline significantly if the merger is not completed, (ii) the merger agreement may be terminated in circumstances requiring
Advanced Disposal to pay to Waste Management the Company termination fee or reimburse certain of Waste Management’s expenses, or (iii) the circumstances of the termination,
including the possible imposition of a 12-month tail period during which the termination fee could be payable upon the occurrence of, or entry into a definitive agreement for, certain subsequent
transactions, which may have a chilling effect on alternatives to the merger;
-
-
the effects that the announcement or pendency of the merger may have on Advanced Disposal and its business, including the risks that as a
result (i) Advanced Disposal’s business, operating results or stock price may suffer, (ii) Advanced Disposal’s current plans and operations may be
disrupted, (iii) Advanced Disposal’s ability to retain or recruit key employees may be adversely affected, (iv) Advanced Disposal’s business
relationships (including customers and suppliers) may be adversely affected, or (v) Advanced Disposal’s management’s or employees’ attention
may be diverted from other important matters;
-
-
the effect of limitations that the merger agreement places on Advanced Disposal’s ability to operate its business, return
capital to stockholders or engage in alternative transactions;
-
-
the nature, cost and outcome of pending and future litigation and other legal proceedings, including any such proceedings related to the merger
and instituted against Advanced Disposal and others;
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-
-
the risk that the merger and related transactions may involve unexpected costs, liabilities or delays; and
-
-
other economic, business, competitive, legal, regulatory, and/or tax factors.
Consequently,
all of the forward-looking statements we make in this proxy statement are qualified by the information contained or incorporated by reference herein, including, but not limited to,
(i) the information contained under this heading and (ii) the information contained under the heading
Risk Factors and information in our consolidated financial statements and notes thereto included in our most recent filing on Form 10-K and subsequent periodic and
interim report filings (see
Where You Can Find Additional Information
beginning on page 105 of this proxy statement).
No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.
27
Table of Contents
PARTIES INVOLVED IN THE MERGER
Advanced Disposal Services, Inc.
90 Fort Wade Road
Ponte Vedra, FL 32081
Telephone: (904) 737-7900
Advanced
Disposal is a leading integrated provider of nonhazardous solid waste collection, transfer, recycling and disposal services operating primarily in secondary markets or under exclusive
arrangements. We have a presence in 16 states across the Midwest, South and East regions of the United States as well as in the Commonwealth of the Bahamas, serving approximately 2.8 million
residential customers and over 200,000 commercial and industrial customers through our extensive network of 95 collection operations, 73 transfer stations, 22 owned or operated
recycling facilities and 41 owned or operated active landfills. Our principal executive offices are located at 90 Fort Wade Road, Ponte Vedra, FL 32081 and our telephone number is
(904) 737-7900.
Advanced
Disposal is a Delaware corporation and Advanced Disposal common stock trades on NYSE under the symbol ADSW.
Additional
information about Advanced Disposal is contained in our public filings, which are incorporated by reference herein. See
Where You Can Find Additional
Information
beginning on page 105 of this proxy statement.
Waste Management, Inc.
1001 Fannin Street
Houston, Texas 77002
Telephone: (713) 512-6200
Waste
Management, a Delaware corporation, is North America’s leading provider of comprehensive waste management environmental services that partners with residential, commercial,
industrial and municipal customers and the communities it serves to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable
energy. Waste Management’s Solid Waste business is operated and managed locally by its subsidiaries that focus on distinct geographic areas and provides
collection, transfer, disposal, and recycling and resource recovery services. Through its subsidiaries, Waste Management is also a leading developer, operator and owner of landfill gas-to-energy
facilities in the United States. Waste Management’s stock is traded on NYSE under the symbol WM. Its principal executive offices are located at
1001 Fannin Street, Houston, Texas 77002 and its telephone number is (713) 512-6200.
Everglades Merger Sub Inc.
1001 Fannin Street
Houston, Texas 77002
Telephone: (713) 512-6200
Merger
Sub is a Delaware corporation formed for the purpose of entering into the merger agreement and completing the merger with Advanced Disposal. Merger Sub is an indirect, wholly-owned subsidiary
of Waste Management. Merger Sub has not engaged in any business to date except for activities incidental to its incorporation and activities undertaken in furtherance of the transactions. Upon
completion of the merger, Merger Sub will merge with and into Advanced Disposal and will cease to exist. Merger Sub’s principal executive offices are located at 1001 Fannin
Street, Houston, Texas 77002 and its telephone number is (713) 512-6200.
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Table of Contents
THE SPECIAL MEETING
We are furnishing this proxy statement to Advanced Disposal stockholders as part of the solicitation of proxies by the Board for use
at the Special Meeting or any adjournment or postponement thereof. This proxy statement provides Advanced Disposal stockholders with the information they need to know to be able to vote or instruct
their vote to be cast at the Special Meeting or any adjournment or postponement thereof.
Date, Time and Place of the Special Meeting
This proxy statement is being furnished to our stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held on
[
·
], 2019 at [
·
],
located at [
·
] beginning at
[
·
], Eastern Time or at any adjournment or postponement thereof.
Only
individuals who were Advanced Disposal stockholders as of the close of business on the record date and their authorized representatives may attend the Special Meeting. Proof of ownership of
Advanced Disposal common stock (which may be the appearance of such stockholder’s name on Advanced Disposal stockholder list as of the record date), along with valid photo
identification (such as a driver’s license or passport), must be presented to be admitted to the Special Meeting. If you are a beneficial owner of shares held in street name and wish
to vote in person at the Special Meeting, you must obtain a legal proxy or broker’s proxy card from your broker, bank or other nominee. A legal
proxy is a written document that will authorize you to vote your shares held in street name at the Special Meeting. To ensure that you will be represented, even if you plan to attend the
Special Meeting in person, we encourage you to promptly vote by
submitting the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone. If you attend the Special Meeting and vote in person
by ballot, your vote will revoke any proxy that you have previously submitted. Please contact your broker, bank or other nominee for instructions regarding obtaining a legal
proxy. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Special Meeting.
This
proxy statement and the enclosed form of proxy are first being mailed to our stockholders of record on or about
[
·
].
Purposes of the Special Meeting
The primary purpose of the Special Meeting is for our stockholders to consider and vote upon the proposal to adopt the merger agreement. Our stockholders
holding a majority of the shares of Advanced Disposal common stock issued and outstanding at the close of business on the record date and entitled to vote thereon must adopt the merger agreement in
order for the merger to occur. If our stockholders fail to adopt the merger agreement, the merger will not occur. A copy of the merger agreement is attached as
Annex A
to this proxy statement, and the material provisions of the merger agreement are summarized in the section of this proxy statement entitled
The Merger Agreement
beginning on page 68 of this proxy statement.
In
addition, our stockholders are being asked to approve the compensation advisory proposal, which is the approval, on a non-binding advisory basis, of specified compensation that may be paid or
become payable to Advanced Disposal’s named executive officers in connection with the merger and contemplated by the merger agreement, the value of which is disclosed in the table
entitled Golden Parachute Compensation and the notes accompanying that table in the section entitled
Advisory Vote on Specified
Compensation (Proposal 2)
beginning on page 91 of this proxy statement.
Our
stockholders are also being asked to approve the adjournment proposal, which is one or more adjournments of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there
are insufficient votes at the time of the Special Meeting to approve the proposal to adopt the merger agreement.
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Record Date and Quorum
The holders of record of Advanced Disposal common stock as of the close of business on
[
·
], the record date for the Special Meeting, are entitled to receive notice of and to vote at the Special
Meeting. As of the close of business on the record date, [
·
] shares of Advanced Disposal common stock were
issued and outstanding.
The
presence at the Special Meeting of the holders of record of a majority of the shares of Advanced Disposal common stock entitled to vote, present in person or represented by proxy, at the close of
business on the record date will constitute a quorum. Once a share is represented at the Special Meeting, it will be counted for the purpose of determining a quorum at the Special Meeting. However, if
a new record date is set for an adjourned Special Meeting, then a new quorum will have to be established. Proxies received but marked as abstentions will be included in the calculation of the number
of shares considered to be present for the purpose of determining a quorum at the Special Meeting. Broker non-votes, described below under the section entitled
The Special MeetingAttendance; Voting; Proxies; RevocationProviding Voting Instructions by ProxyShares of Advanced Disposal
Common Stock Held in Street Name
beginning on page 32 of this proxy statement, will not be included in the calculation of the number of shares considered to
be present for the purpose of determining a quorum at the Special Meeting.
Pursuant
to the voting agreement, CPPIB has agreed to cause its shares of Advanced Disposal common stock to be counted at the Special Meeting for quorum purposes pursuant to this proxy statement.
Required Vote
Holders of Advanced Disposal common stock are entitled to one vote on each proposal submitted to a vote at the Special Meeting for each share of Advanced
Disposal common stock they own at the close of business on the record date. As of the close of business on the record date, there were
[
·
] shares of Advanced Disposal common stock issued and outstanding.
For
Advanced Disposal to complete the merger, stockholders holding a majority of the shares of Advanced Disposal common stock issued and outstanding at the close of business on the record date and
entitled to vote thereon must vote
FOR
the proposal to adopt the merger agreement. A failure to vote your shares of Advanced
Disposal common stock or an abstention from voting will have the same effect as a vote
AGAINST
the proposal to adopt the
merger agreement. If your shares are held in street name by your broker, bank or other nominee and you do not instruct the nominee how to vote your shares, a broker non-vote
will arise and will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement.
The
approval, on a non-binding advisory basis, of the compensation advisory proposal requires the affirmative vote of stockholders holding a majority of the issued and outstanding shares of Advanced
Disposal common stock which are present in person or represented by proxy at the Special Meeting and entitled to vote thereon, so long as a quorum is present, to vote
FOR
the proposal. An abstention from voting will have the same effect as a vote
AGAINST
the compensation advisory proposal. If your shares are held in street name by your broker, bank or other nominee and
you do not instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the compensation advisory proposal, so long as a quorum is
otherwise present.
The
affirmative vote of stockholders holding a majority of the issued and outstanding shares of Advanced Disposal common stock which are present in person or represented by proxy at the Special
Meeting and entitled to vote thereon, whether or not a quorum is present, is required to approve the adjournment proposal. An abstention from voting will have the same effect as a vote
AGAINST
the adjournment proposal. If your shares are held in street name by your broker, bank or other nominee and you do not
instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the adjournment proposal.
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Voting by CPPIB
Concurrently with the execution of the merger agreement, on April 14, 2019, CPPIB entered into the voting agreement with Waste Management, pursuant to
which, among other things, and subject to the terms and conditions set forth therein, CPPIB agreed to vote its shares of Advanced Disposal common stock at the Special Meeting for the adoption of the
merger agreement and against any alternative proposal (unless the Board withdraws or changes the Board recommendation or until the voting agreement has terminated in accordance with its terms). The
voting agreement terminates upon the earliest to occur of: (i) the merger becoming effective, (ii) the merger agreement being validly terminated in accordance with the terms thereof, or
(iii) CPPIB’s election to terminate in its sole discretion promptly following any amendment to the merger agreement that reduces or changes the form of consideration payable.
In addition, CPPIB waived its appraisal rights. The voting agreement is described in more detail in the section entitled
The Voting
Agreement
beginning on page 90 of this proxy statement. CPPIB owned, as of the close of business on the record date, approximately
[
·
]% of the outstanding Advanced Disposal common stock.
Voting by Advanced Disposal Directors and Executive Officers
At the close of business on the record date, directors and executive officers of Advanced Disposal were entitled to vote
[
·
] shares of Advanced Disposal common stock, or approximately
[
·
]% of the shares of Advanced Disposal common stock issued and outstanding on that date. We currently expect
that Advanced Disposal directors and executive officers will vote their shares
FOR
the proposal to adopt the merger agreement
and
FOR
the other proposals to be considered at the Special Meeting, although they have no obligation to do so.
The
directors and executive officers of Advanced Disposal have interests in the merger that may be different from, or in addition to, the interests of Advanced Disposal stockholders generally. These
interests are described in more detail in the section entitled
The Merger (Proposal 1)Interests of Advanced Disposal Directors and Executive
Officers in the Merger
beginning on page 55 of this proxy statement.
Attendance; Voting; Proxies; Revocation
Attendance
All holders of shares of Advanced Disposal common stock as of the close of business on the record date, including stockholders of record and beneficial owners
of Advanced Disposal common stock registered in the street name of a broker, bank or other nominee, are invited to attend the Special Meeting. Proof of ownership of Advanced Disposal common stock
(which may be the appearance of such stockholder’s name on Advanced Disposal stockholder list as of the record date), along with valid photo identification (such as a
driver’s license or passport), must be presented to be admitted to the Special Meeting. If you are a beneficial owner of shares held in street name and wish to vote in person at the
Special Meeting, you must obtain a legal proxy or broker’s proxy card from your broker, bank or other nominee. A legal proxy is a
written document that will authorize you to vote your shares held in street name at the Special Meeting.
Voting in Person
Stockholders of record will be able to vote in person at the Special Meeting. If you are a beneficial owner of shares held in street name and wish to vote in
person at the Special Meeting, you must obtain a legal proxy or broker’s proxy card from your broker, bank or other nominee. A legal
proxy is a written document that will authorize you to vote your shares held in street name at the Special Meeting. Please contact your broker, bank or other nominee for instructions
regarding obtaining a legal proxy.
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Providing Voting Instructions by Proxy
To ensure that your shares of Advanced Disposal common stock are voted at the Special Meeting, we recommend that you provide voting instructions promptly by
proxy, even if you plan to attend the Special Meeting in person.
Shares of Advanced Disposal Common Stock Held by Record Holder
If you are a stockholder of record, you may provide voting instructions by proxy using one of the following
methods:
-
-
via the Internet, at the Internet address provided on the proxy card;
-
-
by telephone, by using the toll-free number listed on the proxy card; or
-
-
by mail, by completing, signing and dating the proxy card and returning it in the enclosed postage-paid envelope.
If
you submit a signed proxy card or submit your proxy by telephone or the Internet, but do not specify how you want to vote your shares on a particular proposal, then the proxy holders will vote your
shares in accordance with the recommendations of the Board on all matters presented in this proxy statement. If you fail to return your proxy card and you are a holder of record as of the close of
business on the record date, unless you attend the Special Meeting and vote in person, the effect will be that your shares of Advanced Disposal common stock will not be considered present at the
Special Meeting for purposes of determining whether a quorum is present at the Special Meeting, will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement, will have no effect on the vote regarding the compensation advisory
proposal, so long as a quorum is otherwise present, and will have no effect on the vote regarding the adjournment proposal.
Shares of Advanced Disposal Common Stock Held in Street Name
If your shares of Advanced Disposal common stock are held in the name of a bank, broker or other nominee, you will receive instructions from your bank, broker
or other nominee as to how to vote your shares. You must follow the instructions of your bank, broker or other nominee in order for your shares of Advanced Disposal common stock to be voted. Telephone
and Internet voting also will be offered to stockholders owning shares through certain banks, brokers and other nominees. If your shares of Advanced Disposal common stock are not registered in your
own name but are held through your bank, broker or other nominee and you plan to vote your shares in person at the Special Meeting, you should contact your bank, broker or other nominee to obtain a
legal proxy or broker’s proxy card and bring it to the Special Meeting in order to vote.
In
accordance with the rules of NYSE, brokers, banks and other nominees that hold shares of Advanced Disposal common stock in street name for their customers do not have discretionary authority to
vote the shares with respect to the proposal to adopt the merger agreement, the compensation advisory proposal or the adjournment proposal. Accordingly, if brokers, banks or other nominees do not
receive specific voting instructions from the beneficial owner of such shares, they may not vote such shares with respect to these proposals. Under such circumstance, a broker
non-vote would arise. Broker non-votes, if any, will not be considered present at the Special Meeting for purposes of determining whether a quorum is present at
the Special Meeting, will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement and will have no
effect (x) so long as a quorum is otherwise present, on the compensation advisory proposal or (y) on the adjournment proposal. Thus, for shares of Advanced Disposal common stock held in
street name, only shares of Advanced Disposal common stock affirmatively voted
FOR
the proposal to adopt the merger agreement
will be counted as a vote
FOR
such proposal.
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Table of Contents
Revocation of Proxies
Any person giving a proxy pursuant to this solicitation has the power to revoke and change it at any time before it is voted. If you are a stockholder of
record, you may revoke your proxy at any time before the vote is taken at the Special Meeting by:
-
-
voting over the Internet or by telephone as instructed on the proxy card. Only your latest Internet or telephone vote will be counted. You may
not change your vote over the Internet or by telephone after 11:59 p.m. Eastern Time, on [
·
];
-
-
providing a written notice of revocation that is received before the Special Meeting by the Corporate Secretary at Advanced Disposal
Services, Inc., 90 Fort Wade Road, Ponte Vedra, FL 32081, Attention: Michael K. Slattery, Corporate Secretary;
-
-
completing, signing, dating and returning a new proxy card by mail to Advanced Disposal before the Special Meeting (received by or with our
last mail delivery before the Special Meeting); or
-
-
attending the Special Meeting and request that your proxy be revoked and/or voting in person as instructed above.
Please
note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. If you want to
revoke your proxy by mailing a new proxy card or by sending a written notice of revocation to Advanced Disposal, you should ensure that you send your new proxy card or written notice of revocation in
sufficient time for it to be received by Advanced Disposal before the Special Meeting (such new proxy cards or written notices of revocation received by or with our last mail delivery before the
Special Meeting will be counted).
If
you hold your shares in street name through a broker, bank or other nominee, you will need to follow the instructions provided to you by your broker, bank or other nominee in order to revoke your
proxy or submit new voting instructions. You may also revoke your proxy by obtaining a legal proxy from your broker, bank or other nominee and voting your shares in person at the Special Meeting.
Abstentions
An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. Abstentions will be included as shares of
Advanced Disposal common stock present or represented at the Special Meeting for purposes of determining whether a quorum has been achieved. Abstaining from voting will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement, the compensation advisory proposal and the adjournment proposal.
Adjournments or Postponements
Although it is not currently expected, the Special Meeting may be adjourned or postponed if necessary or appropriate, including for the purpose of soliciting
a sufficient number of proxies
FOR
the proposal to adopt the merger agreement. In the event that a sufficient number of shares
of Advanced Disposal common stock is present or represented, in person or by proxy, and voted
FOR
the proposal to adopt the
merger agreement at the Special Meeting such that the Advanced Disposal stockholder approval will have been obtained, Advanced Disposal does not anticipate that it will adjourn or postpone the Special
Meeting.
The
Special Meeting may be adjourned by the affirmative vote of the holders of a majority of the shares of Advanced Disposal common stock that are present in person or represented by proxy at the
Special Meeting and entitled to vote at the Special Meeting or as otherwise permitted by law, whether or not a quorum is present. Any adjournment or postponement of the Special Meeting will allow
Advanced
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Disposal
stockholders who have already sent in their proxies to revoke them at any time before their use at the Special Meeting that was adjourned or postponed.
Solicitation of Proxies
We are paying the cost for the preparation, printing and distribution of the proxy materials. We may use the services of our directors, officers and
employees, without additional compensation, to solicit proxies. We will reimburse any holder of record for its reasonable expenses incurred in completing the mailing of stockholder requested proxy
materials to the beneficial owners of our common stock. Advanced Disposal has engaged Innisfree to assist in the solicitation of proxies for the Special Meeting. Advanced Disposal estimates that it
will pay Innisfree a fee of approximately $20,000, plus reimbursement of certain expenses. In addition, Advanced Disposal may reimburse its transfer agent, brokerage firms and other persons
representing beneficial owners of shares of Advanced Disposal common stock for their expenses in forwarding solicitation material to such beneficial owners.
Householding
We are permitted to send a single set of proxy materials to stockholders who share the same last name and address. This procedure is called
householding and is designed to reduce our printing and postage costs. This means that we may send a single set of our proxy materials, containing a single copy of this proxy
statement but separate proxy cards or voting instruction forms for each stockholder in your household. We will promptly deliver a separate copy of our proxy materials to you if you write or call
Innisfree by phone, toll-free at +1 (888) 750-5834, or in writing to Innisfree M&A Incorporated, 501 Madison Avenue, 20
th
Floor, New York,
NY 10022. Such requests by street name holders should be made through their broker, bank or other nominee.
In
addition, stockholders who share a single address, but receive multiple copies of the proxy statement, may request that in the future they receive a single copy by contacting (i) Advanced
Disposal at Advanced Disposal Services, Inc., 90 Fort Wade Road, Ponte Vedra, FL 32081, Attention: Corporate Secretary or by
calling +1 (904) 737-7900 (if your shares are registered in your own name) or (ii) your broker, bank or other nominee (if your shares are registered in their name).
Other Information
You should not return any evidence of your shares of Advanced Disposal common stock or send documents representing Advanced Disposal
common stock with the proxy card. If the merger is completed, the paying agent for the merger will send to you a letter of transmittal, if applicable, and related materials and instructions for
exchanging your shares of Advanced Disposal common stock.
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THE MERGER (PROPOSAL 1)
The description of the merger in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the
complete text of the merger agreement, a copy of which is attached as
Annex A
to this proxy statement and is incorporated by reference herein. This summary does not
purport to be complete and may not contain all of the information about the merger that is important to you. You are encouraged to read the merger agreement carefully and in its
entirety.
Certain Effects of the Merger; Merger Consideration
If the merger agreement is adopted by Advanced Disposal stockholders and the other conditions to the closing are either satisfied or waived, Merger Sub will
merge with and into Advanced Disposal, the separate corporate existence of Merger Sub will cease, and Advanced Disposal will continue as the surviving company in the merger as an indirect,
wholly-owned subsidiary of Waste Management.
Upon
the consummation of the merger, each share of Advanced Disposal common stock issued and outstanding immediately prior to the effective time, other than shares of Advanced Disposal common stock
(i) owned by Waste Management, Merger Sub or Advanced Disposal, including shares held in treasury by Advanced Disposal, (ii) held by stockholders who will have neither voted for the
merger nor consented thereto in writing and who will have demanded properly in writing appraisal for such shares in accordance with Section 262 of the DGCL, and (iii) owned by any direct
or indirect, wholly-owned subsidiary of Advanced Disposal or Waste Management (which we refer to as the
excluded shares
), will be cancelled and
converted into the right to receive $33.15 in cash, without interest and less applicable withholding taxes. At the effective time of the merger, Advanced Disposal stockholders will cease to have
ownership interests in Advanced Disposal or rights as stockholders of Advanced Disposal, except as provided in the merger agreement or by law.
Advanced
Disposal common stock is currently registered under the Exchange Act and is listed on NYSE under the symbol ADSW. As a result of the merger, Advanced Disposal will
cease to be a publicly traded company and will be an indirect, wholly-owned subsidiary of Waste Management. Following the consummation of the merger, Advanced Disposal common stock will be de-listed
from NYSE and de-registered under the Exchange Act, in each case in accordance with applicable law, rules and regulations.
If
the merger agreement is not adopted by Advanced Disposal stockholders, or if the merger is not completed for any other reason, the Advanced Disposal stockholders will not receive any payment for
their shares of Advanced Disposal common stock in connection with the merger. Except in certain circumstances where Advanced Disposal has entered into an alternative transaction to the merger,
Advanced Disposal will remain a public company, and shares of Advanced Disposal common stock will continue to be registered under the Exchange Act, as well as listed and traded on NYSE.
Background of the Merger
The Board and Advanced Disposal’s senior management regularly review and assess Advanced Disposal’s business strategies and
objectives, and the Board regularly discusses Advanced Disposal’s performance, risks and opportunities, all with the goal of enhancing stockholder value. As part of these ongoing
efforts, the Board and Advanced Disposal’s senior management evaluate from time to time various strategic alternatives, taking into account current and expected economic and other
market conditions and developments and trends in the solid waste industry. These strategic alternatives include the continued operation of Advanced Disposal as an independent, standalone company,
acquiring new businesses to complement or expand existing businesses, divesting one or more of its businesses, and entering into strategic partnerships or other investments with respect to one or more
of Advanced Disposal’s businesses. In addition, Advanced Disposal and its representatives have been approached periodically by other companies and their representatives regarding
potential interest in a material transaction involving Advanced Disposal.
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During
the second quarter of 2018, an industry participant (which we refer to as
Company A
) approached Mr. Richard Burke, Chairman and
Chief Executive Officer of Advanced Disposal, regarding its potential interest in a material transaction involving Advanced Disposal. Separately, a financial sponsor (which we refer to as
Company B
) also contacted Mr. Burke with respect to its potential interest in a material transaction involving Advanced Disposal. In June
2018, Advanced Disposal entered into confidentiality agreements with each of Company A and Company B to facilitate ongoing discussions.
On
July 9, 2018, senior management of Advanced Disposal, including Mr. Burke, participated in a meeting with Company A to discuss an overview of Advanced Disposal’s
business.
On
July 31, 2018, the Board convened a regular meeting, during which the Board discussed the status of preliminary discussions with each of Company A and Company B. A representative of
Shearman & Sterling LLP (which we refer to as
Shearman & Sterling
), Advanced Disposal’s legal advisor,
presented on the fiduciary duties and confidentiality
obligations of the directors under Delaware law, as well as considerations in the context of discussions with potential counterparties. The Board authorized Advanced Disposal’s senior
management to continue preliminary discussions with Company A and Company B and requested updates as such discussions progressed.
Following
the July 9, 2018 meeting with Company A, representatives of Advanced Disposal held calls and meetings with representatives of Company A pursuant to which Company A conducted
preliminary diligence on Advanced Disposal. By early September 2018, representatives of Company A informed Mr. Burke that Company A could not offer a price that, in Company A's opinion, would
be considered an attractive premium to the trading price of Advanced Disposal common stock around such time. Company A did not engage in further discussions with Advanced Disposal with respect to a
potential transaction following early September 2018.
Also
in the summer of 2018, representatives of Advanced Disposal had preliminary discussions with Company B, including an in-person meeting in June 2018 among representatives of Company B and senior
management of Advanced Disposal, including Mr. Burke, to discuss an overview of Advanced Disposal’s business, and provided Company B with preliminary diligence materials. By
the end of August 2018, representatives of Company B informed Advanced Disposal that Company B was not prepared to proceed with a material transaction involving Advanced Disposal at a price that, in
Company B’s opinion, would be acceptable to the Board.
On
October 11, 2018, Mr. Burke received a call from Mr. James C. Fish, Jr., President and Chief Executive Officer of Waste Management, to request a meeting. At a meeting in
Dallas, Texas on November 9, 2018, Mr. Fish expressed to Mr. Burke Waste Management’s potential interest in pursuing an acquisition of Advanced Disposal.
On
November 23, 2018, Waste Management and Advanced Disposal executed a mutual confidentiality agreement, which was followed by the execution of a joint defense agreement on December 7,
2018 for the purpose of sharing confidential information in connection with regulatory matters without waiving legal privileges or protections.
On
December 10, 2018, the Board held a meeting with Advanced Disposal’s senior management and representatives of UBS in attendance. The representatives of UBS provided an
update on recent developments in the solid waste industry and activities being undertaken by other industry participants, discussed its preliminary financial analyses of Advanced Disposal and certain
valuation considerations, and reviewed with the Board various strategic alternatives potentially available to Advanced Disposal. The Board discussed various options, including (i) continuing as
an independent, standalone company, (ii) engaging in a material acquisition, (iii) merging with or engaging in a strategic transaction with another strategic company, (iv) a sale
to an industry participant (including a discussion of potential counterparties), and (v) a sale to a financial sponsor (including a discussion of potential counterparties).
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On
December 21, 2018, senior management of Advanced Disposal, including Mr. Burke, participated in a meeting in Charleston, South Carolina with senior management of Waste Management,
including Mr. John J. Morris Jr., Executive Vice President and Chief Operating Officer of Waste Management, to discuss, among other things, an overview of Advanced Disposal’s
business, as well as the possible synergies that could result from an acquisition of Advanced Disposal by Waste Management.
On
January 23, 2019, Mr. Morris telephoned Mr. Burke and submitted a verbal expression of interest on behalf of Waste Management to purchase all of the outstanding shares of
Advanced Disposal for a price of $32.00 per share in cash. The closing price of Advanced Disposal common stock was $24.35 per share on January 23, 2019.
On
January 25, 2019, the Board convened a special telephonic meeting to discuss Waste Management’s verbal expression of interest. During such meeting, a representative of
Shearman & Sterling discussed with the Board certain corporate governance matters and reviewed the fiduciary duties and confidentiality obligations of the directors under Delaware law generally
and in the context of inquiries of this type. In light of the earlier discussions with Company A and Company B, the Board noted the low probability that another industry participant or financial
sponsor would be in a position to propose a transaction more favorable to the stockholders of Advanced Disposal than the transaction proposed by Waste Management. The Board, Advanced
Disposal’s senior management and Shearman & Sterling also discussed the considerations of conducting a broader market check, including the risk of a leak. Following such
discussion, the Board concluded that it would not be in the best interests of stockholders to solicit any other alternatives to Waste Management’s proposal at that time. After
deliberations, the Board authorized Mr. Burke to inform Mr. Morris that prior to further engagement by Advanced Disposal, Waste Management should submit its indication of interest in
writing. Mr. Burke conveyed the Board’s message to Mr. Morris on the same date.
On
February 5, 2019, Waste Management submitted a written, non-binding indication of interest that stated Waste Management would be prepared to acquire all of the Advanced Disposal common stock
for a price of $32.00 per share in cash. In addition, Waste Management requested a 45-day exclusivity period during which Advanced Disposal would not be permitted to discuss a potential material
transaction with another counterparty.
On
February 6, 2019, the Board convened a special telephonic meeting, attended by representatives of UBS and Shearman & Sterling, to discuss Waste Management’s written,
non-binding indication of interest. A representative of Shearman & Sterling reminded the Board of its fiduciary duties and confidentiality obligations under Delaware law. The Board discussed
the terms of
Waste Management’s written, non-binding indication of interest, including the price, approach on regulatory matters, and the request for a 45-day exclusivity period. At the conclusion
of such discussion, the Board authorized Advanced Disposal’s senior management to continue to have preliminary discussions with Waste Management but to convey that Advanced Disposal
would not agree to Waste Management’s request for exclusivity and that Advanced Disposal would not respond to Waste Management’s proposed price without first getting
a clearer understanding of Waste Management’s regulatory analysis of the potential transaction. Following the February 6, 2019 Board meeting, Mr. Burke contacted
Mr. Morris to communicate the Board’s position and schedule an in-person meeting.
On
February 12, 2019, UBS provided the Board with certain disclosures relating to its relationships with Advanced Disposal and Waste Management. The Company and UBS entered into an engagement
letter, dated February 14, 2019, pursuant to which UBS would provide certain services, including, if requested, rendering an opinion as to the fairness, from a financial point of view, to the
holders of the Company’s common stock (other than the excluded shares), of the consideration to be received in a proposed transaction.
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On
February 15, 2019, senior management of Advanced Disposal, including Mr. Burke, met with senior management of Waste Management, including Mr. Morris, in Roanoke, Virginia, and
the participants further discussed operational and regulatory matters.
On
February 20, 2019, the Board convened a regular meeting, attended by representatives of UBS and Shearman & Sterling, during which Mr. Burke updated the Board on discussions
with Waste Management since the previous Board meeting. A representative of Shearman & Sterling then reviewed certain legal considerations in the context of these discussions. Following such
discussion, at the direction of the Board, representatives of UBS reviewed with the Board the strategic alternatives potentially available to Advanced Disposal and financial analyses of Advanced
Disposal, including some of those that were previously discussed with the Board at the December 10, 2018 meeting. The Board discussed the prospects of Advanced Disposal continuing on a
standalone basis and other alternatives. The Board also noted the low probability that another industry participant or financial sponsor would be in a position to propose a transaction more favorable
to the stockholders of Advanced Disposal than the transaction proposed by Waste Management.
The
Board held a special telephonic meeting on February 25, 2019 to discuss the current status of discussions with Waste Management. After discussion, the Board instructed representatives of
UBS to make a counterproposal to representatives of Centerview Partners LLC (which we refer to as "
Centerview
"), the financial advisor of Waste Management, that
included a price of $34.50 per share in cash, no exclusivity, 30 days to complete any remaining due diligence and a requirement that a meeting
be scheduled between the legal advisors of Advanced Disposal and Waste Management to discuss regulatory matters (which we refer to as the
February 25
proposal
).
On
February 26, 2019, at the direction of the Board, representatives of UBS met with representatives of Centerview to discuss the February 25 proposal, valuation and feasibility of a
transaction between Advanced Disposal and Waste Management. After representatives of UBS raised the February 25 proposal, representatives of Centerview reiterated that the board of directors
and senior management of Waste Management considered the $32.00 per share in cash pursuant to Waste Management’s original proposal as an appropriate valuation based on the diligence
information provided by Advanced Disposal as of such date, which information representatives of UBS relayed to senior management of Advanced Disposal.
On
March 1, 2019, representatives of Centerview contacted representatives of UBS to indicate that Waste Management had discussed the February 25 proposal and that Waste Management needed
access to additional information in order to properly evaluate the February 25 proposal. Representatives of Centerview indicated that thereafter, Waste Management would be in a position to
respond to the February 25 proposal. Representatives of Centerview stated that Waste Management agreed that, while other diligence was occurring, a meeting should be scheduled between the legal
advisors of Advanced Disposal and Waste Management to discuss regulatory matters. Representatives of UBS relayed the response from representatives of Centerview to senior management of Advanced
Disposal.
On
March 7, 2019, at the direction of the Board, senior management of Advanced Disposal, including Mr. Burke, met with senior management of Waste Management, including Mr. Morris
and Ms. Devina A. Rankin, Senior Vice President and Chief Financial Officer of Waste Management, along with representatives of UBS and Centerview, in New York City, New York, during which
meeting the senior management of Advanced Disposal presented a business overview of Advanced Disposal, including the projections (as described in the section entitled
The Merger (Proposal 1)Projected Financial Information
beginning on page 52 of this proxy statement). On the same
day, Advanced Disposal made available an online data room with due diligence materials regarding Advanced Disposal to representatives of Waste Management. Over the course of the following several
weeks, Advanced Disposal and its representatives facilitated Waste Management’s and its representatives’ due diligence investigations of Advanced Disposal and its
business, including participation in a March 20, 2019 meeting among representatives of Advanced
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Disposal,
Waste Management, Mayer Brown LLP (which we refer to as
Mayer Brown
), regulatory counsel for Advanced Disposal, Vedder Price
P.C., regulatory counsel for Waste Management, and Simpson Thacher & Bartlett LLP (which we refer to as
Simpson Thacher
), legal
counsel to Waste Management, in Washington, DC to discuss regulatory matters.
On
March 26, 2019, the Board convened a special telephonic meeting to discuss the status of discussions between representatives of Advanced Disposal and Waste Management.
Later
on March 26, 2019, Waste Management submitted an updated non-binding indication of interest, which outlined Waste Management’s proposal to acquire all of the Advanced
Disposal common stock for a price of $32.75 per share in cash. The letter also contemplated other material terms, including the level of potential divestitures that might be required in the potential
transaction, as well as the amount of any termination fees payable by and to Advanced Disposal in certain circumstances. Representatives of Waste Management also circulated an initial draft of the
merger agreement on the same date. The draft merger agreement contemplated a voting agreement to be executed by CPPIB, which was a condition of Waste Management’s proposal. The
closing price of Advanced Disposal common stock was $28.00 per share on March 26, 2019.
The
Board convened a special telephonic meeting on March 28, 2019, attended by representatives of UBS and Shearman & Sterling, to discuss Waste Management’s updated
non-binding indication of interest. Representatives of UBS reviewed with the Board its preliminary financial analyses of the proposed transaction and discussed with the Board the prior written
indication of interest submitted by Waste Management. The Board, with the assistance of its legal and financial advisors, then discussed potential responses to the indication of interest. A
representative of Shearman & Sterling then discussed certain corporate governance matters with the Board and reviewed the fiduciary duties and confidentiality obligations of the directors under
Delaware law. The Board then discussed Advanced Disposal’s strategic plan as an independent, standalone company, including the timing and achievability of such plan, as compared to
the transaction contemplated by Waste Management’s updated indication of interest. The Board determined to continue to explore a potential transaction with Waste Management and
authorized Advanced Disposal’s senior management and representatives of Advanced Disposal to counter Waste Management’s proposal with a counterproposal of $33.50 per
share in cash (which we refer to as the
March 28 proposal
). The Board also authorized Mr. Burke to negotiate other material terms
within certain specified parameters.
On
March 29, 2019, Mr. Burke sent a letter to Mr. Morris indicating that the Board authorized Advanced Disposal’s senior management to proceed with negotiations
with Waste Management, subject to Waste Management’s acceptance of the March 28 proposal.
On
April 1, 2019, Mr. Morris telephoned Mr. Burke and informed him that Waste Management would be willing to acquire Advanced Disposal at a price of $33.15 per share in cash in
what was described as the best and final price. Mr. Morris also stated that the reverse termination fee payable by Waste Management should be equal to the termination
fee payable by Advanced Disposal. As directed by the Board, representatives of UBS contacted representatives of Centerview and proposed a price of $33.25 per share in cash. Later on April 1,
2019, representatives of Centerview reiterated to representatives of UBS that $33.15 was Waste Management’s best and final price, but, after discussing with
Waste Management, Waste Management would be willing to consider a lower termination fee payable by Advanced Disposal and a higher reverse termination fee payable by Waste
Management than had been previously discussed (which we refer to as the
April 1 proposal
).
On
April 2, 2019, the Board convened a special telephonic meeting, attended by representatives of UBS and Shearman & Sterling, and Mr. Burke relayed the conversation he had the
previous day with Mr. Morris and the subsequent conversations between UBS and Centerview, held at the direction of the Board. A representative of Shearman & Sterling then discussed with
the Board the legal obligations of the directors in the context of a sale of Advanced Disposal. During this meeting, the Board, Advanced
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Disposal's
senior management and representatives of UBS and Shearman & Sterling discussed and considered the risks and benefits of performing a further market check to
assess whether a transaction that offered greater immediate value to Advanced Disposal stockholders was reasonably available as compared to the transaction proposed by Waste Management, in terms of
price, timing, likelihood of consummation, regulatory and other considerations, and the effect such market check would have on Waste Management’s engagement
and interest. The participants also noted that any market check could result in public leaks of a potential sale process, which could also have an adverse impact on
employees, customers and external partners. The participants further discussed parties that could potentially be interested in acquiring Advanced Disposal, including whether Company A or Company B
might re-engage in discussions regarding a potential transaction, and whether any such parties could have the financial capacity and interest to make such acquisition. Mr. Burke reminded the
Board of the history of prior discussions with Company A and Company B. Following this discussion, the Board concluded that it was unlikely that any other party would be able to match or exceed the
terms of the transaction proposed by Waste Management. The Board also unanimously authorized Advanced Disposal’s senior management to proceed with negotiations on the merger agreement
based on the price and material terms of the April 1 proposal, as described by Mr. Burke.
On
April 5, 2019, Simpson Thacher circulated an initial draft of the voting agreement to Shearman & Sterling, which Shearman & Sterling shared with CPPIB’s legal
counsel, Debevoise & Plimpton LLP on April 7, 2019.
Between
April 6, 2019 and April 8, 2019, Advanced Disposal, Waste Management and their respective legal counsel (Shearman & Sterling and Mayer Brown, on behalf of Advanced
Disposal, and Simpson Thacher, on behalf of Waste Management), engaged in various negotiations regarding the terms of the merger agreement and exchanged drafts. During this time, Waste Management,
CPPIB and their respective legal counsel engaged in various negotiations regarding the terms of the voting agreement and exchanged drafts.
On
April 10, 2019, the Board convened a special telephonic meeting, during which the Board discussed the status of negotiations between Advanced Disposal and Waste Management, including with
respect to employment matters. The Board also discussed the materials provided to the Board, including Advanced Disposal's strategic plan as an independent, standalone company and the projections (as
defined in the section entitled
The Merger (Proposal 1)Projected Financial Information
beginning on page 52 of
this proxy statement). Senior management of Advanced Disposal explained how the materials differed from materials previously distributed to the Board, including to update the strategic plan to take
into account fiscal year 2018 actual results and among other things, changes to the fuel and commodities prices and volume growth used in developing Advanced Disposal’s projected
results. Later on April 10, 2019, Shearman & Sterling provided Simpson Thacher with a revised draft of the merger agreement.
From
April 11, 2019 through April 13, 2019, Advanced Disposal, Waste Management and their respective legal counsel continued to engage in negotiations regarding, and exchange drafts of,
the merger agreement. Waste Management and CPPIB and their respective legal counsel also continued to negotiate, and exchange drafts of, the voting agreement.
On
April 14, 2019, Mr. Burke reported to the Board that negotiations with Waste Management on the transaction documents had substantially concluded and that the language of the merger
agreement was being finalized and would reflect the April 1 proposal. In the late afternoon of April 14, 2019, the Board convened a special telephonic meeting, attended by
representatives of UBS, Mayer Brown and Shearman & Sterling.
During
the meeting, a representative of Mayer Brown discussed the process of obtaining regulatory approvals with respect to the merger agreement, and a representative of Shearman & Sterling
summarized the regulatory covenants and commitments in the merger agreement, including each party’s obligations in connection with obtaining the applicable regulatory approvals, the
risks that approval would not be
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obtained
and the circumstances under which the reverse termination fee would be payable by Waste Management in the event regulatory approvals are not obtained, as well as the amount payable under such
circumstances.
Representatives
of UBS reviewed with the Board UBS’s financial analysis of the proposed transaction with Waste Management. Representatives of UBS also provided certain disclosures
relating to UBS’s relationships with Advanced Disposal, CPPIB, and Waste Management, including the fee UBS would receive from Advanced Disposal in connection with
the proposed transaction with Waste Management, which disclosures were updated relative to those that UBS provided to the Board on February 12, 2019, as described above. At the conclusion of
such discussions, a representative of UBS delivered to the Board an oral opinion (which oral opinion was subsequently confirmed by delivery of a written opinion, dated April 14, 2019), to the
effect that, as of that date and based on and subject to various procedures, assumptions and matters considered and the qualifications and limitations described in its opinion, the merger
consideration to be received by the holders of Advanced Disposal common stock (other than the holders of excluded shares) in the merger was fair, from a financial point of view, to such holders. A
copy of the written opinion of UBS is attached to this proxy statement as
Annex C
. Following this discussion, representatives of UBS left the meeting.
A
representative of Shearman & Sterling then presented certain corporate governance matters and the fiduciary duties of the directors under Delaware law. Such representative of
Shearman & Sterling then provided the Board with an overview of the proposed transaction, including the principal terms of the transaction documents that would be executed in connection with
the proposed transaction. The Board and the remaining participants again discussed the merits and considerations of a market check process, both prior to and after entering
into a merger agreement (taking into account the terms and conditions of the merger agreement and the voting agreement), and the Board concluded not to pursue a further market
check.
After
deliberation and consideration of the factors described in the section entitled
The Merger (Proposal 1)Recommendation of the Board and
Reasons for RecommendationReasons for Recommendation
beginning on page 41 of this proxy statement, the Board unanimously (i) determined that
the merger agreement and the transactions were fair to, and in the best interests of, Advanced Disposal and its stockholders, (ii) approved and declared advisable the merger agreement and the
transactions, including the merger, (iii) approved the execution, delivery and performance by Advanced Disposal of the merger agreement and the consummation of the transactions, including the
merger, upon the terms and subject to the conditions of the merger agreement, (iv) recommended the approval of the adoption of the merger agreement by the stockholders of Advanced Disposal, and
(v) directed that the adoption of the merger agreement be submitted to a vote of the holders of Advanced Disposal common stock.
Following
the conclusion of the Board meeting, Advanced Disposal, Waste Management, and their respective legal counsel finalized negotiations of the merger agreement on terms consistent with the terms
approved by the Board and the April 1 proposal, and all relevant parties executed and exchanged the definitive documentation on April 14, 2019.
Prior
to the opening of U.S. stock markets on April 15, 2019, Advanced Disposal and Waste Management issued a joint press release publicly announcing their entry into the merger agreement.
Recommendation of the Board and Reasons for Recommendation
Recommendation of the Board
After considering the various factors described below, the Board unanimously (i) determined that the merger agreement and the transactions were fair
to, and in the best interests of, Advanced Disposal and its stockholders, (ii) approved and declared advisable to enter into the merger agreement and the
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transactions,
(iii) approved the execution, delivery and performance by Advanced Disposal of the merger agreement and the consummation of the transactions upon the terms and subject to the
conditions set forth in the merger agreement, (iv) recommended the adoption of the merger agreement by Advanced Disposal stockholders, and (v) directed that the merger agreement be
submitted to a vote of Advanced Disposal stockholders.
The Board unanimously recommends that you vote (1) FOR the proposal to adopt the merger agreement (2) FOR the
compensation advisory proposal and (3) FOR the adjournment proposal.
Reasons for Recommendation
In evaluating the merger agreement and the merger, the Board consulted with Advanced Disposal’s senior management and its outside legal and
financial advisors and, in reaching its determination to recommend that the Advanced Disposal stockholders adopt the merger agreement, the Board relied upon and considered numerous factors, including
the material factors set forth below (the order in which the following factors appear does not reflect any relative significance):
Financial Terms; Certainty of Value
-
-
The belief of the Board that the merger consideration of $33.15 per share in cash of Advanced Disposal common stock represents full and fair
value for shares of Advanced Disposal common stock, taking into account Advanced Disposal’s current and historical financial condition, results of operations, business, competitive
position and prospects, as well as Advanced Disposal’s near-term and long-term standalone plan in the event Advanced Disposal were to remain an independent public company, and the
future prospects and risks associated with remaining an independent public company and the risks and uncertainties associated with the execution of the standalone plan.
-
-
The opportunity for Advanced Disposal’s stockholders to realize substantial value based on the receipt of the merger
consideration representing a significant premium of 22.1% to the closing share price of April 12, 2019, the last trading day prior to the announcement of the merger, a premium of approximately
20.9% to the 30-day volume weighted average price of April 12, 2019, and a premium of approximately 18.3% to the all-time highest closing share price prior to April 12, 2019.
-
-
The fact that the merger consideration consists solely of cash, which provides certainty of value and liquidity to the stockholders of Advanced
Disposal and does not expose them to any future risks related to the business or the financial markets generally, as compared to a transaction in which stockholders receive equity or other securities,
or as compared to remaining an independent, standalone company.
-
-
The oral opinion of UBS (which oral opinion was subsequently confirmed by delivery of a written opinion, dated as of April 14, 2019),
provided to the Board, to the effect that, as of that date and based on and subject to various procedures, assumptions and matters considered and the qualifications and limitations described in its
opinion, the merger consideration to be received by the holders of Advanced Disposal common stock (other than the holders of excluded shares) in the merger was fair, from a financial point of view, to
such holders. A copy of the written opinion of UBS is attached to this proxy statement as
Annex C
.
-
-
The fact that appraisal rights will be available to the holders of Advanced Disposal common stock who properly exercise their rights under the
DGCL, which would give these stockholders the ability to seek and be paid a judicially determined appraisal of the fair value of their shares of Advanced Disposal common
stock if they do not wish to accept the merger consideration.
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-
-
The fact that the merger consideration Waste Management agreed pay to the holders of Advanced Disposal common stock was increased from $32.00
to $33.15 per share of Advanced Disposal common stock as a result of extensive negotiations, as described in the section above entitled
The Merger (Proposal
1)
Background of the Merger
beginning on page 35 of this proxy statement.
-
-
The fact that the parties have agreed that all vested and unvested equity awards of Advanced Disposal will automatically accelerate and settle
in cash based on the value of the merger consideration, rather than be assumed by, and converted into equity awards of, Waste Management, which provides certainty of value and liquidity to holders of
Advanced Disposal equity awards and does not expose them to the risk of lost value based on Waste Management’s performance or future risks related to the financial markets generally.
Prospects of Advanced Disposal
-
-
Advanced Disposal’s current and historical business, financial condition, results of operations, competitive position,
strategic options and prospects, as well as Advanced Disposal’s near-term and long-term standalone plan in the event Advanced Disposal were to remain an independent public company,
the risks and challenges associated with remaining an independent public company and the risks and uncertainties associated with the execution of the standalone plan, and the potential impact of those
factors on the future trading price of Advanced Disposal common stock, including risks related to:
-
-
the general business environment for the solid waste industry, including industry trends, increased labor, transportation and fuel costs, high
level of capital expenditures, and substantial governmental regulation and involvement;
-
-
the costs, risks and uncertainties relating to the execution by Advanced Disposal of its near-term and long-term standalone plan in the event
Advanced Disposal were to remain an independent public company;
-
-
the additional costs and burdens involved with being a public company;
-
-
the U.S. and global economy and general stock market conditions and volatility;
-
-
the other risks and uncertainties identified in Advanced Disposal’s filings with the SEC, including in its Annual Report on
Form 10-K for the year ended December 31, 2018 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019; and
-
-
the Board’s belief, after consideration of the factors described in this section, that the consummation of the transactions
represent Advanced Disposal’s best reasonably available alternative for maximizing stockholder value.
Process and Consideration of Alternatives
-
-
The Board’s belief, based on a review of the possible alternatives to a sale of Advanced Disposal, including the prospects of
continuing to operate in accordance with the near-term and long-term strategic plan, the potential value to Advanced Disposal stockholders of such alternatives and the timing and likelihood of
actually achieving additional value for such stockholders from these alternatives, that none of these options, on a risk- and time-adjusted basis, was reasonably likely to create value for Advanced
Disposal stockholders greater than the merger consideration.
-
-
The fact that Advanced Disposal had preliminary discussions with respect to a potential material transaction involving Advanced Disposal with
at least two other potential strategic or financial counterparties in 2018, none of which provided any indication that it was interested in proceeding with a transaction on terms competitive with the
proposal made by Waste Management, as described in
The Merger (Proposal 1)Background of the Merger
, beginning on
page 35 of this proxy statement.
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-
-
The determination by the Board, after discussion with Advanced Disposal’s senior management, that Waste Management was one of
the most logical acquirers of Advanced Disposal and, in light of Waste Management’s complementary businesses, as well as the projected synergies that would result from the
combination, together with Waste Management’s strong balance sheet and financial position, that Waste Management would be the potential transaction partner most likely to offer the
best combination of value and closing certainty to Advanced Disposal’s stockholders.
-
-
The Board’s belief that there were no other credible potential parties that might have an interest in engaging in a strategic
transaction with Advanced Disposal at a value higher than Waste Management’s proposal; the potential regulatory, commercial and financing issues that might arise in connection with
pursuing such an alternative transaction; and the belief that Waste Management would withdraw from consideration of a potential transaction if Advanced Disposal were to pursue discussions with other
potential counterparties.
Likelihood of Consummation
-
-
The business reputation and capabilities of Waste Management and its management.
-
-
The fact that Waste Management’s obligation to complete the transactions is not conditioned on Waste Management or Merger Sub
obtaining financing.
-
-
The fact that concurrently with the execution of the merger agreement, Advanced Disposal’s largest stockholder, CPPIB, entered
into the voting agreement with Waste Management, pursuant to which, among other things, and subject to the terms and conditions set forth therein, CPPIB agreed to vote its shares of Advanced Disposal
common stock for the adoption of the merger agreement and against any alternative proposal.
-
-
The fact that the merger is not subject to approval by Waste Management’s stockholders.
-
-
The fact that the merger agreement requires Waste Management to use its reasonable best efforts to take actions necessary to satisfy the
regulatory conditions set forth in the merger agreement, and includes a commitment by Waste Management to obtain applicable consents and approvals under antitrust laws and assume the risks related to
certain conditions and requirements that may be imposed by regulators in connection with securing such consents and approvals up to specified thresholds and limitations, as more fully described in the
section entitled
The Merger AgreementEfforts to Complete the Merger; Regulatory Approvals
beginning on page 80 of
this proxy statement.
Terms of the Merger Agreement
-
-
The Board considered all of the terms and conditions of the merger agreement, including the representations, warranties, covenants and
agreements of the parties, the conditions to closing, the form of the merger consideration and the termination rights, including:
-
-
that the terms of the merger agreement were the products of arms’-length negotiations among sophisticated parties and their
respective legal and financial advisors, as more fully described in
The Merger (Proposal 1)Background of the
Merger
beginning on page 35 of this proxy statement;
-
-
that the fiduciary out provisions, subject to Advanced Disposal’s compliance with the terms and
conditions of the merger agreement, give the Board the ability to furnish information to, and engage in negotiations with, third parties that have made a
bona
fide
unsolicited proposal that is a superior proposal or could reasonably be expected to lead to a superior proposal, and, upon payment of the Company termination fee and
compliance with the other terms and conditions of the merger agreement, terminate the merger agreement in order to enter into an agreement with respect to a superior proposal (as more fully described
in the section entitled
The Merger AgreementOther Covenants and AgreementsNo Solicitation; Acquisition
Proposals
beginning on page 78 of this proxy statement);
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-
-
that the Board has the ability in certain circumstances, and subject to certain conditions, to change, qualify, withdraw or modify its
recommendation that the Advanced Disposal stockholders vote to adopt the merger agreement (as more fully described in the section entitled
The Merger
AgreementOther Covenants and AgreementsThe Advanced Disposal Board Recommendation; Change of Recommendation; Fiduciary Exception
beginning on page 78 of this proxy statement;
-
-
the availability of appraisal rights for the holders of Advanced Disposal common stock who do not vote in favor of the merger and otherwise
properly exercise their appraisal rights under the DGCL;
-
-
the fact that, if the merger agreement is terminated by Advanced Disposal due to a nonappealable court order or legal restraint has been issued
prohibiting the merger due to antitrust reasons or the failure of the merger to be consummated by the end date, and at such time, antitrust approval under the HSR Act has not been obtained, Waste
Management will be required to pay Advanced Disposal the Waste Management termination fee if certain specified conditions are met;
-
-
the fact that, subject to certain customary limitations, Advanced Disposal will have sufficient operating flexibility for it to conduct its
business in the ordinary course consistent with past practice during the pre-closing period;
-
-
the fact that the conditions to the closing are specific and limited in scope;
-
-
the fact that a vote of Advanced Disposal stockholders is required under the DGCL to adopt the merger agreement; and
-
-
that the remedies of specific performance and monetary damages are available to Advanced Disposal under the merger agreement as more fully
described in the section entitled
The Merger AgreementLimitations on Remedies; Specific Performance
beginning on
page 89 of this proxy statement.
In
addition to the factors above, the Board identified and considered a variety of risks and potentially negative factors concerning the merger, including:
-
-
the possibility that the merger might not be consummated, and the risks and costs to Advanced Disposal in such event, including the diversion
of management and employee attention and the potential disruptive effect on business and customer relationships, vendor relationships, stock price and ability to attract and retain key management
personnel and employees;
-
-
the possibility that completion of the merger might be delayed or subject to adverse conditions that may be imposed by governmental authorities
that are not within Advanced Disposal’s control, that the required governmental approvals may not be obtained at all, and the period of time Advanced Disposal may be subject to the
merger agreement without assurance that the merger will be completed;
-
-
the fact that upon termination of the merger agreement under specified circumstances, Advanced Disposal may be required to pay Waste Management
the Company termination fee or reimburse Waste Management’s expenses of up to $15,000,000 and that this termination fee may discourage other parties that may otherwise have an
interest in a business combination with, or an acquisition of Advanced Disposal;
-
-
the significant costs involved in connection with completing the merger, the substantial management time and effort required to complete the
merger, and the related disruption to Advanced Disposal’s operations;
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-
-
the limitations imposed on the solicitation or consideration by Advanced Disposal of alternative transactions prior to the completion of the
Special Meeting and the other terms and conditions of the merger agreement;
-
-
that the Board is required to submit the merger to the vote of the Advanced Disposal stockholders at the Special Meeting even if the Board has
made a change of recommendation, unless the merger agreement is terminated;
-
-
the interests that certain Advanced Disposal executive officers and directors may have with respect to the merger in addition to their
interests as Advanced Disposal stockholders as described in
The Merger (Proposal 1)Interests of Advanced Disposal Directors and Executive Officers in
the Merger
beginning on page 55 of this proxy statement; and
-
-
that the gain likely to be realized by Advanced Disposal stockholders as a result of the merger generally will be taxable to such stockholders
for U.S. federal income tax purposes if they are not otherwise exempt from the payment of such taxes (as more fully described in
The Merger (Proposal
1)Material U.S. Federal Income Tax Consequences of the Merger
beginning on page 63 of this proxy statement.
The
foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive, but rather includes the principal material information, factors and analyses
considered by the Board in reaching its conclusions and recommendation in relation to the merger agreement and the transactions. The Board evaluated the various factors listed above in light of its
knowledge of the business, financial condition and prospects of Advanced Disposal, in consultation with Advanced Disposal’s senior management and outside legal and financial advisors.
The Board did not provide a specific assessment of, quantify or otherwise assign any relative weights to, the factors considered in determining its recommendation. Instead, the Board conducted an
overall analysis of the factors and reasons described above and determined in its business judgment that, in the aggregate, the potential benefits of the merger to the stockholders of Advanced
Disposal outweighed the risks or potential negative consequences. Individual members of the Board may have given different weight to different factors. In addition, in arriving at its recommendation,
the directors of Advanced Disposal were aware of the interests of certain officers and directors of Advanced Disposal as described in
The Merger (Proposal
1)Interests of Advanced Disposal Directors and Executive Officers in the Merger
beginning on page 55 of this proxy statement.
Opinion of Financial Advisor
UBS was retained as financial advisor to the Board in connection with the merger. As part of that engagement, the Board requested that UBS render an opinion,
as to the fairness, from a financial point of view, to the Advanced Disposal stockholders (other than holders of excluded shares) of the merger consideration to be received by such stockholders in the
merger. On April 14, 2019, at a meeting of the Board held to evaluate the proposed merger, UBS delivered to the Board an oral opinion, confirmed by delivery of a written opinion, dated
April 14, 2019, to the effect that, as of that date and based on and subject to various procedures, assumptions and matters considered and the qualifications and limitations described in its
opinion, the merger consideration to be received by the Advanced Disposal stockholders (other than the holders of excluded shares) in the merger was fair, from a financial point of view, to such
stockholders.
The full text of UBS’s opinion describes the procedures followed, assumptions made, matters considered and qualifications and limitations on the review
undertaken by UBS. UBS’s opinion is attached as
Annex C
to this proxy statement and is incorporated by reference herein. UBS’s
opinion was provided for the benefit of the Board (in its capacity as such) in connection with, and for the purpose of, its evaluation of the fairness, from a financial point of view, of the merger
consideration to be received by the Advanced Disposal
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stockholders (other than the holders of excluded shares) in the merger, and does not address any other aspect of the merger or any related transaction. UBS’s opinion does not address
the relative merits of the merger or any related transaction as compared to other business strategies or transactions that might be available to Advanced Disposal or Advanced
Disposal’s underlying business decision to effect the merger or any related transaction. UBS’s opinion does not constitute a recommendation to any Advanced Disposal
stockholder as to how such stockholder should vote or act with respect to the merger or any related transaction. The following summary of UBS’s opinion is qualified in its entirety by
reference to the full text of UBS’s opinion.
In
arriving at its opinion, UBS, among other things:
-
-
reviewed certain publicly available business and financial information relating to Advanced Disposal and Waste Management;
-
-
reviewed certain internal financial information and other data relating to the business and financial prospects of Advanced Disposal that were
not publicly available, including the projections (as defined in the section entitled
The Merger (Proposal 1)Projected Financial
Information
beginning on page 52 of this proxy statement) that the Board directed UBS to utilize for purposes of its analysis;
-
-
conducted discussions with members of the senior management of Advanced Disposal concerning the businesses and financial prospects of Advanced
Disposal;
-
-
performed a discounted cash flow analysis of Advanced Disposal in which UBS analyzed the future cash flows of Advanced Disposal using the
projections;
-
-
reviewed publicly available financial and stock market data with respect to certain other companies UBS believed to be generally relevant;
-
-
compared the financial terms of the merger with the publicly available financial terms of certain other transactions that UBS believed to be
generally relevant;
-
-
reviewed current and historical market prices of Advanced Disposal common stock;
-
-
reviewed a draft, dated April 14, 2019, of the merger agreement; and
-
-
conducted such other financial studies, analyses and investigations, and considered such other information, as UBS deemed necessary or
appropriate.
In
connection with its review, with the consent of the Board, UBS assumed and relied upon, without independent verification, the accuracy and completeness in all material respects of the information
provided to or reviewed by UBS for the purpose of its opinion. In addition, with the consent of the Board, UBS did not make any independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of Advanced Disposal, nor was UBS furnished with any such evaluation or appraisal. With respect to the projections that UBS utilized for its analysis, UBS assumed at the
direction of the Board, that they were reasonably prepared on a basis reflecting the best currently available estimates and judgements of the management of Advanced Disposal as to the future financial
performance of Advanced Disposal. In addition, UBS assumed with the approval of the Board that the financial forecasts and estimates referred to above would be achieved at the times and in the amounts
projected. UBS’s opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information available to UBS as of, the date of its opinion.
UBS’s
opinion does not address the relative merits of the merger or any related transaction as compared to other business strategies or transactions that might be available to
Advanced Disposal or Advanced Disposal’s underlying business decision to effect the merger or any related transaction. UBS’s opinion does not constitute a
recommendation to any Advanced Disposal stockholder as to how such stockholder should vote or act with respect to the merger or any related transaction. At the direction of the Board, UBS was
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not
asked to, nor did it, offer any opinion as to the terms, other than the merger consideration to the extent expressly specified in its opinion, of the merger agreement or any related documents or
the form of the merger or any related transaction. In addition, UBS expressed no opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or
employees of any parties to the merger, or any class of such persons, relative to the merger consideration. UBS expressed no opinion as to the price at which Advanced Disposal common stock will trade
at any time. In rendering its opinion, UBS assumed, with the consent of the Board, that (i) the final executed form of the merger agreement would not differ in any material respect from the
draft UBS reviewed dated April 14, 2019, (ii) the parties to the merger agreement would comply with all material terms of the merger agreement and (iii) the merger would be
consummated in accordance with the terms of the merger agreement and in accordance with all applicable laws and other relevant documents or
requirements without any adverse waiver or amendment of any material term or condition thereof. UBS also assumed that all governmental, regulatory or other consents and approvals necessary for the
consummation of the merger would be obtained without any adverse effect on Advanced Disposal, Waste Management or the merger. The issuance of UBS’s opinion was approved by an
authorized committee of UBS.
In
connection with rendering its opinion to the Board, UBS performed a variety of financial and comparative analyses, which are summarized below. The following summary is not a complete description of
all analyses performed and factors considered by UBS in connection with its opinion. The preparation of a fairness opinion is a complex process involving subjective judgments and is not necessarily
susceptible to partial analysis or summary description. With respect to the selected public companies analysis and the selected transactions analysis summarized below, no company or transaction used
as a comparison was identical to Advanced Disposal, Waste Management or the merger. These analyses necessarily involve complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the public trading or acquisition values of the companies concerned.
UBS
believes that its analyses and the summary below must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format,
without considering all analyses and factors or the narrative description of the analyses, creates a misleading or incomplete view of the processes underlying UBS’s analyses and
opinion. UBS did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the
results of analyses undertaken by it and assessed as a whole.
The
projections in or underlying UBS’s analyses are not necessarily indicative of actual future results or values, which may be significantly more or less favorable than those
estimates. In performing these analyses, UBS considered industry performance, general business and economic conditions and other matters, many of which were beyond Advanced
Disposal’s control. Estimates of the financial value of companies do not purport to be appraisals or necessarily reflect the prices at which businesses or securities actually may be
sold or acquired.
The
merger consideration was determined through negotiations between Advanced Disposal and Waste Management and their respective representatives and the decision by the Board to recommend that
Advanced Disposal enter into the merger was solely that of the Board, and the decision by Advanced Disposal to enter into the merger was solely that of the Board. UBS’s opinion and
financial analyses were only one of many factors considered by the Board in its evaluation of the merger and should not be viewed as determinative of the views of the Board or the management of
Advanced Disposal with respect to the merger or the merger consideration to be received by the Advanced Disposal stockholders (other than the holders of excluded shares) in the merger.
The
following is a brief summary of the material financial analyses performed by UBS and reviewed with the Board on April 14, 2019 in connection with its opinion.
The
financial analyses summarized
below include information presented in tabular format. In order for UBS’s financial analyses to be fully
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understood, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without
considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of
UBS’s financial analyses.
Trading Statistics for Selected Public Companies Analysis
UBS compared selected financial and stock market data of Advanced Disposal with corresponding data of certain publicly traded companies whose primary business
is municipal solid waste collection and disposal in the United States and Canada (collectively referred to as the selected companies):
-
-
Waste Management;
-
-
Republic Services, Inc. (which we refer to as
Republic
);
-
-
Waste Connections, Inc. (which we refer to as
Waste Connections
); and
-
-
Casella Waste Systems, Inc. (which we refer to as
Casella
).
Although
none of the selected companies is directly comparable to Advanced Disposal, the companies included were chosen because they are publicly traded companies with operations that, for purposes of
analysis, may be considered generally relevant to certain operations of Advanced Disposal.
UBS
reviewed, among other things:
-
-
the enterprise values of each of the selected companies, calculated as equity market value based on closing stock prices on April 12,
2019, the last trading date prior to the delivery of UBS’s oral opinion, plus debt at book value, less cash and cash equivalents, plus minority interest at book value of each of the
selected companies, as a multiple of earnings before taxes, interest and depreciation (after stock-based compensation and before landfill retirement accretion and certain non-recurring items based on
prevalent treatment by selected public companies, where available) (which we refer to as
Market Adjusted EBITDA
) as projected and estimated with
respect to calendar year 2019 (which we refer to as
2019E Market Adjusted EBITDA
) for such selected company (which we refer to as
EV/2019E Market Adjusted EBITDA
); and
-
-
the equity market value calculated based on closing stock prices on April 12, 2019, the last trading price date prior to the delivery of
UBS’s oral opinion, of each of the selected companies as a multiple of projected, estimated calendar year 2019 free cash flow (which we refer to as
2019E FCF
), defined as cash flow from operations minus capital expenditures, of such selected company (which we refer to as
P/2019E FCF
)
Financial
data for the selected companies were based on FactSet data, public filings and other publicly available information, as well as analyst research. Financial data for Advanced Disposal was
based on public filings and the financial forecasts and estimates prepared by the management of Advanced Disposal that the Board directed UBS to utilize for purposes of its analyses. This analysis
indicated the following implied multiples for the selected companies, as compared to corresponding multiples implied for Advanced Disposal.
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The
following table presents the results of this analysis of the selected companies:
|
|
|
|
|
|
|
EV/2019E
Market Adjusted
EBITDA
|
|
P/2019E FCF
|
|
|
|
|
|
Waste Management
|
|
11.9x
|
|
21.4x
|
Republic
|
|
11.4x
|
|
22.1x
|
Waste Connections
|
|
15.9x
|
|
24.3x
|
Casella
|
|
13.0x
|
|
34.9x
|
|
|
|
|
|
Mean
|
|
13.0x
|
|
25.7x
|
Median
|
|
12.4x
|
|
23.2x
|
|
|
|
|
|
Implied for Advanced Disposal at closing share price on April 12, 2019
|
|
10.0x
|
|
16.6x
|
Implied for Advanced Disposal at $33.15 offer price
|
|
11.3x
|
|
20.5x
|
Using
its experience and professional judgment, UBS made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of Advanced Disposal
and the selected companies and selected a reference range for EV/2019E Market Adjusted EBITDA of 10.0x 11.5x and for P/2019E FCF of 17.5x 22.0x and applied
such ranges to Advanced Disposal’s 2019E Market Adjusted EBITDA of $437 million and Advanced Disposal’s 2019E FCF of $148 million, as provided by the
management of Advanced Disposal, to derive a range of implied consideration per share for Advanced Disposal of approximately $27 to $34 and $29 to $36 respectively, as compared to the $33.15 offer
price.
Precedent Transactions Analysis
UBS also analyzed certain publicly available information related to United States and Canadian publicly disclosed transactions with enterprise values over
$250 million since 2008 with municipal solid waste collection and disposal being the target’s primary line of business.
With
respect to this group of transactions, which is listed below, UBS calculated and compared the target company’s enterprise value (which we refer to as
EV/LTM Market Adjusted EBITDA
), based on public disclosure related to the transaction, as a multiple of last twelve months Market Adjusted EBITDA
(which we refer to as
LTM Market Adjusted EBITDA
).
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The
following table presents the results of this analysis of the precedent transactions:
Precedent Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Announcement Date
|
|
Buyer
|
|
Target
|
|
EV/LTM Market
Adjusted EBITDA
|
|
|
|
|
|
|
|
October 2018
|
|
GFL Environmental, Inc.
|
|
Waste Industries, Inc.
|
|
13.1x
|
April 2018
|
|
BC Partners & Ontario Teachers
|
|
GFL Environmental, Inc.
|
|
12.9x
|
January 2016
|
|
Waste Connections
|
|
Progressive Waste
|
|
10.1x
|
October 2015
|
|
GFL Environmental, Inc.
|
|
Transforce’s Waste Management System (segment)
|
|
10.8x
|
October 2014
|
|
Waste Management
|
|
Deffenbaugh Disposal, Inc.
|
|
8.0x
|
July 2012
|
|
Star Atlantic Waste Holdings LP
|
|
Veolia ES Solid Waste, Inc.
|
|
8.0x
|
December 2011
|
|
Macquarie Infrastructure Partners II
|
|
WCA Waste Corporation
|
|
9.1x
|
November 2009
|
|
IESI-BFC Ltd.
|
|
Waste Services, Inc.
|
|
7.6x
|
June 2008
|
|
Republic
|
|
Allied Waste Industries, Inc.
|
|
7.8x
|
|
|
|
|
|
|
|
Mean
|
|
|
|
|
|
9.7x
|
Median
|
|
|
|
|
|
9.1x
|
Implied for Advanced Disposal based on $33.15 offer price
|
|
11.8x
|
None
of the precedent transactions or companies that participated in the precedent transactions are directly comparable to the merger, Advanced Disposal or Waste Management. Each of the target
companies in the precedent transactions was involved in the municipal solid waste collection and disposal industry and the selected transactions are all of the transactions since 2008 that, in
UBS’s professional judgment, involved target companies with operations that, for
the purposes of UBS’s analyses, may be considered generally relevant to certain operating characteristics of Advanced Disposal.
With
respect to the precedent transactions and based on the results of the foregoing calculations and UBS’s analyses of the various transactions and its professional judgment, UBS
applied a reference range of enterprise value to Market Adjusted EBITDA multiples of 9.5x 12.0x to Advanced Disposal’s actual 2018 Market Adjusted EBITDA of
$416 million, as provided by Advanced Disposal’s public filings and management, to derive a range of implied per share consideration for the Company of approximately $23 to
$34, as compared to the $33.15 offer price.
Discounted Cash Flow Analysis
UBS performed discounted cash flow analyses utilizing financial forecasts and estimates prepared by the management of Advanced Disposal (as more fully
described in the section entitled
The Merger (Proposal 1)Projected Financial Information
beginning on page
52 of this proxy statement). UBS calculated ranges of implied present values (as of January 1, 2019) of the standalone, unlevered, free cash flows that Advanced Disposal was forecasted to
generate from January 1, 2019 through December 31, 2023 and of terminal values for Advanced Disposal. Implied terminal values were derived by applying to the projection of Advanced
Disposal’s 2023 estimated Market Adjusted EBITDA a range of estimated terminal last twelve months Market Adjusted EBITDA multiples of 9.5x to 11.5x, which range was selected based on
current and historical trading Market Adjusted EBITDA multiples of Advanced Disposal and
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certain
of the selected companies. Implied present values of cash flows and terminal values were calculated using discount rates ranging from 8% to 9%, reflecting estimates of Advanced
Disposal’s weighted average cost of capital. The discounted cash flow analyses resulted in a range of implied equity values of approximately $25 to $35 per share for Advanced
Disposal, as compared to the $33.15 offer price.
Public Research Analyst Targets and Trading History Analysis
UBS also reviewed publicly available research analyst price targets for Advanced Disposal and the 52-week trading range of Advanced Disposal common stock and
determined that (i) over the 52 weeks ended April 12, 2019, Advanced Disposal common stock has traded within a range of approximately $22 to $28 per share and (ii) that, as
of April 12, 2019, publicly available research analysts covering Advanced Disposal had a set of price targets ranging from $26 to $33 per share, as compared to the $33.15 offer price.
Miscellaneous
Under the terms of UBS’s engagement, Advanced Disposal agreed to pay UBS an aggregate fee of $24.85 million for its financial advisory
services in connection with the merger, of which $2.5 million was payable upon the delivery of the opinion (which amount is required to be deducted from any fee paid in connection with the
consummation of the merger), and the remaining $22.35 million is payable contingent upon consummation of the merger. If the merger is terminated and Advanced Disposal receives from Waste
Management a termination fee, UBS is entitled to a fee of up to 10% of such termination fee, not to exceed $3.5 million. In addition, Advanced Disposal agreed to reimburse UBS for its
reasonable expenses, including fees, disbursements and other charges of counsel, and indemnify UBS and related parties against liabilities, including liabilities under federal securities laws,
relating to, or arising out of, its engagement. In the past, UBS and its affiliates have provided investment banking, commercial banking and other financial services to Advanced Disposal, and CPPIB
unrelated to the merger, for which UBS and its affiliates have received or will receive compensation, including in the past four years having acted as (a) co-underwriter to Advanced Disposal in
connection with an underwritten secondary offering of Advanced Disposal common stock in May 2018 and (b) co-lead joint book-running manager to Advanced Disposal in connection with a secondary
public offering of Advanced Disposal common stock in May 2017. In the past four years, UBS received (i) less than $8 million in fees from Advanced Disposal and (ii) no fees from
Waste Management. In the ordinary course of business, UBS, its affiliates and its and their respective employees may hold or trade, for their own accounts and the accounts of their customers loans,
debt and/or equity securities of Advanced Disposal and Waste Management, and accordingly, may at any time hold a long or short position in such securities.
The
Board selected UBS as its financial advisor in connection with the merger because UBS is an internationally recognized investment-banking firm with substantial experience in similar transactions.
UBS is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities and private placements.
Projected Financial Information
Advanced Disposal does not, on a routine basis, publicly disclose long-term projections as to future financial performance due to, among other reasons, the
unpredictability of the underlying assumptions and estimates, though Advanced Disposal has in the past provided investors with full-fiscal year financial guidance on certain financial metrics,
including total revenue, adjusted EBITDA and adjusted free cash flow, which are updated when necessary during the relevant fiscal year. However, in connection with the evaluation of the proposed
merger, Advanced Disposal’s senior management shared certain non-public, unaudited prospective financial information prepared by it for strategic planning purposes with the Board,
Waste Management and UBS, for the fiscal year ending December 31, 2019 and the four (4) following fiscal years ending December 31, 2023 (which we refer to as the
projections
).
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The projections were not prepared with a view to public disclosure and are included in this proxy statement only because such information was made available to the Board, Waste
Management and UBS as described above. The projections were not prepared with a view to compliance with generally accepted accounting principles as applied in the United States (which we refer to as
GAAP
), the published guidelines of the SEC regarding projections and forward-looking statements or the guidelines established by the American
Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The prospective financial information included in this proxy statement has been
prepared by, and is the responsibility of, Advanced Disposal’s senior management, and is subjective in many respects. The projections were, in the view of Advanced
Disposal’s senior management, prepared on a reasonable basis, reflected the best available estimates and judgments at the time of preparation, and presented as of the time of
preparation, to the best of senior management’s knowledge and belief, the expected course of action and the expected future financial performance of Advanced Disposal on a standalone
basis, subject to the assumptions and limitations described in this section. Furthermore, neither Advanced
Disposal’s independent auditors nor any other independent accountants have audited, reviewed, examined, compiled or applied agreed-upon procedures with respect to the accompanying
prospective financial information and, accordingly, assume no responsibility for, and express no opinion or other form of assurance on, such information or its achievability.
The
projections are forward-looking statements. Although summaries of the projections are presented with numerical specificity, the projections reflect numerous assumptions and estimates as to future
events made by Advanced Disposal’s senior management, which it believes were reasonable at the time the projections were prepared, taking into account the relevant information
available to management at such time. However, this information is not fact and should not be relied upon as being necessarily predictive of actual future results. Important factors may affect actual
results and cause the forecasts not to be achieved. These factors include general economic conditions, accuracy of certain accounting assumptions, timing of business investments by Advanced Disposal,
changes in actual or projected cash flows, competitive pressures, changes in tax or other laws or regulations, and the other factors described in the section entitled
Forward-Looking Statements
beginning on page 26 of this proxy statement, the Risk Factors section in
our 2018 Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q, and the information referenced in the section entitled
Where
You Can Find Additional Information
beginning on page 105 of this proxy statement. Generally, the further out the period to which the projections relate, the less
predictable and more unreliable the information becomes. In addition, the projections do not take into account any circumstances or events occurring after the date that the projections were prepared.
Furthermore, the projections were prepared on a standalone basis without giving effect to the merger, including the impact of negotiating or executing the merger agreement, the expenses that may be
incurred in connection with consummating the merger, including the expenses payable pursuant to the merger agreement, the potential synergies that may be achieved as a result of the merger, or the
effect of any business or strategic decision or action that has been or will be taken as a result of the merger agreement. As a result, there can be no assurance that the projections will be realized,
and actual results may be materially better or worse than those contained in the projections. The inclusion of this information in the proxy statement should not be regarded as an indication that
Advanced Disposal’s senior management, the Board, UBS, Waste Management or any other recipient of this information considered, or now considers, the projections to be material
information of Advanced Disposal, or necessarily predictive of actual future results, nor should it be construed as financial guidance, and it should not be relied upon as such. The summary of the
projections is not included in this proxy statement in order to induce any stockholder to vote for the proposal to adopt the merger agreement or any of the other proposals to be voted on at the
Special Meeting or to influence any stockholder to make any investment decision with respect to the merger, including whether or not to seek appraisal rights with respect to the shares of Advanced
Disposal common stock.
The
projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Advanced Disposal contained in Advanced
Disposal’s public filings with the
53
Table of Contents
SEC.
The projections were reviewed by Advanced Disposal’s senior management with, and considered by, the Board in connection with its evaluation and approval of the merger and were
relied upon by UBS for purposes of its financial analyses and opinion, as described more fully in the sections entitled
The Merger (Proposal
1)Recommendation of the Board and Reasons for Recommendation
beginning on page 41 of this proxy statement and
The
Merger (Proposal 1)Opinion of Financial Advisor
beginning on page 46 of this proxy statement.
Except
to the extent required by applicable federal securities laws, we do not intend, and expressly disclaim any responsibility to update or otherwise revise the forecasts to reflect circumstances
existing after the date when we prepared the projections or to reflect the occurrence of future events or changes in general economic or industry conditions, even in the event that any of the
assumptions underlying the projections are shown to be in error. We can give no assurance that, had our projections been prepared either as of the date of the merger agreement or as of the date of
this proxy statement, similar estimates and assumptions would be used. Neither Advanced Disposal nor any of its affiliates, directors, officers, advisors or other representatives has made or makes any
representation to any of our stockholders or any other person regarding the ultimate performance of Advanced Disposal compared to the information contained in our projections or that our projections
will be achieved.
In
light of the foregoing factors and the uncertainties inherent in the projections and considering that the Special Meeting will be held several months after the projections were prepared,
stockholders are cautioned not to rely on the projections included in this proxy statement.
Certain
of the measures included in the projections may be considered non-GAAP financial measures, as noted below. These non-GAAP financial measures are useful to investors and management in
understanding current profitability levels and liquidity that may serve as a basis for evaluating future performance and facilitating comparability of results. Non-GAAP financial measures should not
be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Advanced Disposal may not be comparable to
similarly titled amounts used by other companies. The non-GAAP financial measures used in the forecasts were relied upon by UBS for purposes of its respective financial analyses and opinion and by the
Board in connection with its consideration of the merger. Financial measures provided to a financial advisor are excluded from the definition of non-GAAP financial measures and, therefore, are not
subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure.
Summary of the Projections
The following is a summary of the projections prepared by senior management of Advanced Disposal and provided to its Board, UBS and Waste Management prior to
the execution of the merger agreement:
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
1,615.1
|
|
1,673.7
|
|
1,734.0
|
|
1,796.8
|
|
1,860.4
|
Adjusted EBITDA
(1)
|
|
446.7
|
|
475.7
|
|
499.5
|
|
524.3
|
|
546.7
|
Cash Flow from Operations less Adjusted Capital Expenditures
(2)
|
|
148.0
|
|
157.6
|
|
172.9
|
|
189.5
|
|
198.5
|
-
(1)
-
EBITDA
is net (loss) income from continuing operations adjusted for interest, taxes, depreciation and amortization. Adjusted EBITDA is EBITDA adjusted to exclude
non-cash and non-recurring items, as well as other adjustments permitted in calculating covenant compliance under the agreements governing Advanced Disposal’s outstanding debt
securities and credit facilities. Advanced Disposal excludes acquisition and development costs and stock-based compensation in its calculation of adjusted EBITDA. Advanced Disposal believes adjusted
EBITDA is useful to
54
Table of Contents
evaluate
performance because it eliminates the effect of financing, income taxes and the accounting effects of capital spending, as well as certain items that are not indicative of Advanced
Disposal’s performance on an ongoing basis.
-
(2)
-
Reflects
net cash provided by operating activities less adjusted capital expenditures (purchases of property and equipment, excluding expenditures for significant
new municipal contracts and significant purchases of land for future landfill airspace and landfill construction and development), net of proceeds from the sale of property and equipment. Advanced
Disposal believes such metric is useful because it provides a meaningful measure of Advanced Disposal’s operational strength and performance of our businesses by eliminating the
significant level of non-cash depreciation and amortization expense that results from the capital intensive nature of our businesses.
Interests of Advanced Disposal Directors and Executive Officers in the Merger
In considering the recommendation by the Board that Advanced Disposal stockholders vote to adopt the merger agreement, stockholders should be aware that the
directors and executive officers of Advanced Disposal have certain interests in the transactions that may be different from, or in addition to, the interests of Advanced Disposal stockholders
generally. The members of the Board were aware of these interests in evaluating the merger agreement and the transactions and in recommending that Advanced Disposal stockholders adopt the merger
agreement. These interests may present such directors and executive officers with actual or potential conflicts of interest and these interests are described in this section and the section entitled
Advisory Vote on Specified Compensation (Proposal 2)Golden Parachute Compensation
beginning on page 91 of this
proxy statement.
Bret
Budenbender and Jared Parker resigned from their positions as directors of Advanced Disposal, effective May 1, 2018, in connection with Star Atlantic Waste
Holdings, L.P.’s sale of its shares of Advanced Disposal common stock in March 2018. Michael Koen is a current nonemployee director nominated by CPPIB. To Advanced
Disposal’s knowledge, none of Messrs. Budenbender, Parker or Koen hold shares of Advanced Disposal common stock or Advanced Disposal equity awards or are entitled to payments
in connection with the transactions contemplated by the merger agreement. The interests of the other persons who are or have been since January 1, 2018, directors or executive officers of
Advanced Disposal are discussed below.
For
the numerical disclosure in this section of the proxy statement, we have assumed a closing date of December 31, 2019. December 31, 2019 is an illustrative date used solely for
purposes of this specified disclosure and is not intended to indicate that the closing will or will not occur on such date. This description and the tables below assume that Advanced Disposal grants
no new Advanced Disposal equity awards prior to the closing to Advanced Disposal’s directors or executive officers.
Treatment of Advanced Disposal Equity Awards
Treatment of Advanced Disposal Stock Options
The merger agreement provides that at the effective time, each Advanced Disposal stock option that is outstanding immediately prior to the effective time and
that has an exercise price per share that is less than $33.15, whether or not vested, will become fully vested and will be cancelled and thereafter entitle the holder to receive, promptly after the
effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the excess of $33.15 over the per-share exercise price
of such Advanced Disposal stock option and (ii) the number of shares issuable upon exercise of such Advanced Disposal stock option. Each Advanced Disposal stock option with an exercise price
equal to or greater than $33.15 will be cancelled as of the effective time without payment of any consideration and will have no further force or effect.
55
Table of Contents
The
following table shows, with respect to each individual who served as a director or an executive officer of Advanced Disposal at any point in time on or following January 1, 2018 and who, as
of the close of business on April 14, 2019, held Advanced Disposal stock options with a per-share exercise price less than $33.15, (i) the number of shares of Advanced Disposal common
stock underlying each Advanced Disposal stock option that is held as of April 14, 2019 and is scheduled to be vested as of December 31, 2019, (ii) the expected value of such
Advanced Disposal stock options as of the effective time, (iii) the number of shares of Advanced Disposal common stock underlying each Advanced
Disposal stock option that is held as of April 14, 2019 and is scheduled to be unvested as of December 31, 2019, (iv) the expected value of such Advanced Disposal stock options as
of the effective time and (v) the total expected value of outstanding Advanced Disposal stock options as of the effective time.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Shares
Underlying
Vested
In-the-Money
Advanced
Disposal
Stock
Options
(#)
|
|
Expected Value
of Vested
In-the-Money
Advanced
Disposal Stock
Options
($)
(1)
|
|
Shares
Underlying
Unvested
In-the-Money
Advanced
Disposal Stock
Options
(#)
(2)
|
|
Expected Value
of Unvested
In-the-Money
Advanced
Disposal Stock
Options
($)
(1)(2)
|
|
Total
Expected
Value of
In-the-Money
Advanced
Disposal Stock
Options
($)
(1)
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
Richard Burke
|
|
645,366
|
|
9,617,421
|
|
389,500
|
|
3,761,794
|
|
13,379,214
|
Steven Carn
|
|
161,237
|
|
2,661,189
|
|
98,665
|
|
964,984
|
|
3,626,173
|
John Spegal
|
|
217,046
|
|
3,155,929
|
|
92,993
|
|
905,798
|
|
4,061,728
|
Michael Slattery
|
|
181,264
|
|
2,635,962
|
|
67,899
|
|
656,118
|
|
3,292,081
|
Melissa Westerman
|
|
|
|
|
|
6,919
|
|
44,677
|
|
44,677
|
Matthew Gunnelson
|
|
89,203
|
|
1,253,218
|
|
29,400
|
|
351,004
|
|
1,604,223
|
-
(1)
-
The
value of the Advanced Disposal stock options shown in the table above is based on an illustrative closing date for the transactions of December 31, 2019
(solely for purposes of this specified disclosure) and the excess of the merger consideration of $33.15 over the applicable exercise price.
-
(2)
-
Amounts
include shares underlying Advanced Disposal stock options that are scheduled to vest on June 24, 2019 and October 12, 2019.
Treatment of Performance Share Unit Awards
At the effective time, each performance share unit award that is outstanding immediately prior to the effective time will become fully vested and will be
cancelled and will thereafter entitle the holder to receive, promptly after the effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to
the product of (i) the number of shares equal to the greater of (x) the target number of shares with respect to such performance share unit award and (y) the number of shares that
would be considered earned under the terms of such performance share unit award based on Advanced Disposal’s most recent fiscal year-end results preceding the year in which the
effective time occurs multiplied by (ii) $33.15.
The
following table shows, with respect to each individual who served as a director or an executive officer of Advanced Disposal at any point in time on or following January 1, 2018 and who, as
of the close of business on April 14, 2019, held performance share unit awards: (i) the number of shares of Advanced Disposal common stock underlying performance share unit awards that
are scheduled to be unvested as of December 31, 2019 (based on the theoretical achievement of performance metrics at the target value) and
56
Table of Contents
(ii) the
total expected value of such performance share unit awards as of the effective time, based on a stock price of $33.15 per share.
|
|
|
|
|
Name
|
|
Shares
Underlying
Unvested
Performance
Share
Unit Awards
(#)
(1)
|
|
Total Expected
Value of
Performance
Share
Unit Awards
($)
(1)
|
Executive Officers
|
|
|
|
|
Richard Burke
|
|
138,351
|
|
4,586,336
|
Steven Carn
|
|
50,109
|
|
1,661,113
|
John Spegal
|
|
47,368
|
|
1,570,249
|
Michael Slattery
|
|
34,585
|
|
1,146,493
|
Melissa Westerman
|
|
3,747
|
|
124,213
|
Matthew Gunnelson
|
|
4,512
|
|
149,573
|
-
(1)
-
The
value of the Advanced Disposal performance share unit awards shown in the table above is based on an illustrative closing date for the transactions of
December 31, 2019 and achievement of performance metrics at the target value on the date of grant. The value reported does not include the value of performance share unit awards that are
scheduled to vest and settle on June 24, 2019. Had those performance share unit awards been included in this table, they would have increased the total expected value of performance share unit
awards by the following amounts: Mr. Burke, $955,018; Mr. Carn, $289,333; Mr. Spegal, $325,699; and Mr. Slattery, $252,968.
Treatment of Restricted Share Unit Awards
At the effective time, each restricted share unit award that is outstanding as of immediately prior to the effective time will become fully vested as of the
effective time and will be cancelled as of the effective time and converted into a right to receive, promptly after the effective time, a cash payment (without interest and subject to all applicable
tax withholding requirements) equal to the product of (i) $33.15 and (ii) the aggregate number of shares subject to such restricted share unit award.
The
following table shows, with respect to each individual who served as a director or an executive officer of Advanced Disposal at any point in time on or following January 1, 2018 and who, as
of the close of business on April 14, 2019, held restricted share unit awards: (i) the number of shares of Advanced Disposal common stock underlying unvested restricted share unit awards
and (ii) the total expected value of such restricted share unit awards as of the effective time, based on a stock price of $33.15 per share.
|
|
|
|
|
Name
|
|
Shares
Underlying
Unvested
Restricted Share
Unit Awards
(#)
(1)
|
|
Total Expected
Value of
Restricted Share Unit
Awards
($)
(1)
|
Executive Officers
|
|
|
|
|
Richard Burke
|
|
69,175
|
|
2,293,151
|
Steven Carn
|
|
70,180
|
|
2,326,467
|
John Spegal
|
|
23,683
|
|
785,091
|
Michael Slattery
|
|
17,292
|
|
573,230
|
Melissa Westerman
|
|
1,873
|
|
62,090
|
Matthew Gunnelson
|
|
2,256
|
|
74,786
|
-
(1)
-
The
value of the Advanced Disposal restricted share unit awards shown in the table above is based on an illustrative closing date for the transactions of
December 31, 2019. The value reported does not include the value of restricted share unit awards that are scheduled to vest on October 12, 2019.
57
Table of Contents
Treatment of Restricted Share Awards
At the effective time, each restricted share award that is outstanding immediately prior to the effective time will become fully vested and will be cancelled
and thereafter entitle the holder to receive, promptly after the effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of
(i) the number of shares subject to such restricted share award and (ii) $33.15. The following table shows, with respect to each individual who served as a director or an executive
officer of Advanced Disposal at any point in time on or following January 1, 2018 and who, as of the close of business on April 14, 2019, held restricted share awards: (i) the
number of restricted share awards that are scheduled to be unvested as of December 31,
2019 and (ii) the total expected value of such restricted share awards as of the effective time, based on a stock price of $33.15 per share. Based on an assumed closing date of
December 31, 2019, none of the executive officers will hold outstanding restricted share awards, as all unvested restricted share awards held by named executive officers are scheduled to vest
on June 24, 2019.
|
|
|
|
|
Name
|
|
Shares
Underlying
Unvested
Restricted
Share Awards
(#)
(1)
|
|
Total Expected Value of
Restricted Share Awards
($)
(1)
|
Non-Employee Directors
(1)
|
|
|
|
|
E. Renae Conley
|
|
12,366
|
|
409,933
|
Tanuja Dehne
|
|
12,366
|
|
409,933
|
Michael Hoffman
|
|
12,696
|
|
420,872
|
Ernest Mrozek
|
|
8,260
|
|
273,819
|
B. Clyde Preslar
|
|
12,805
|
|
424,486
|
-
(1)
-
The
restricted share awards shown in this table are unvested. The number of unvested restricted share awards and the expected value of the restricted share awards
shown in the table above is based on an illustrative closing date for the transactions of December 31, 2019. The value reported does not include the value of restricted share awards that are
scheduled to vest on October 12, 2019.
Quantification of Holdings and Equity Compensation Awards
The following table shows, with respect to each individual who served as a director or an executive officer of Advanced Disposal at any point in time on or
following January 1, 2018 and who, as of the close of business on April 14, 2019, held shares of Advanced Disposal common stock: (i) the number of shares of Advanced Disposal
common stock and (ii) the total expected value of such Advanced Disposal common
58
Table of Contents
stock
as of the effective time, based on a stock price of $33.15 per share. Based on an assumed closing date of December 31, 2019, the following table includes all shares held as of the assumed
closing date.
|
|
|
|
|
Name
|
|
Shares
Directly Held
(#)
(1)
|
|
Total Expected Value of
Shares Directly Held
($)
(1)
|
Directors
|
|
|
|
|
Tanuja Dehne
|
|
1,000
|
|
33,150
|
Ernest Mrozek
|
|
4,500
|
|
149,175
|
B. Clyde Preslar
|
|
5,556
|
|
184,181
|
Executive Officers
|
|
|
|
|
Richard Burke
|
|
218,443
|
|
7,241,385
|
Steven Carn
|
|
66,301
|
|
2,197,878
|
John Spegal
|
|
67,363
|
|
2,233,083
|
Michael Slattery
|
|
56,334
|
|
1,867,472
|
-
(1)
-
Amounts
reflected in this table include direct holdings, restricted shares that are scheduled to vest on June 24, 2019 and the number of shares underlying
performance share unit awards and restricted share unit awards that are scheduled to vest on June 24, 2019 and October 12, 2019.
See
the section entitled
Advisory Vote on Specified Compensation (Proposal 2)
beginning on page 91 of this proxy statement for
information regarding unvested equity compensation awards for the named executive officers in accordance with Item 402(t) of the SEC’s Regulation S-K based on the
assumptions described in such section, including the assumption that the effective time occurs on December 31, 2019, and that the price per share of Advanced Disposal common stock is equal to
$33.15.
Guaranteed Bonuses
In accordance with the merger agreement, Advanced Disposal may establish bonus plans and grant and pay annual bonus awards for 2019 and 2020 in the ordinary
course and consistent with past practice. In order to reward and incentivize employees to remain employed by Advanced Disposal through the closing, bonus-eligible employees may be guaranteed a cash
bonus amount for each of 2019 and 2020 that is at least equal to such employee’s 2019 target annual bonus, meaning that bonus-eligible employees will receive their ordinary course
bonus, if it is in excess of the bonus guarantee amount, but in any event will receive at least the bonus guarantee amount for both 2019 and 2020 if they remain employed through the closing.
Advanced
Disposal may pay bonuses, including guaranteed bonuses, with respect to 2019 on or after December 1, 2019, or earlier if the closing occurs in 2019. Advanced Disposal may pay bonuses,
including guaranteed bonuses, with respect to 2020 on or after December 1, 2020, provided that in certain circumstances, Advanced Disposal may pay bonuses with respect to 2020 prior to the
closing. If the closing occurs prior to the payment of 2019 bonuses, Waste Management will cause bonus-eligible employees who are employed by Advanced Disposal prior to the closing to receive a bonus
in an amount no less than the greater of the employee’s 2019 target annual bonus or as accrued by the Advanced Disposal on the closing date. 2019 bonuses will be paid prior to
March 15, 2020. If the closing occurs prior to the payment of 2020 bonuses, Waste Management will cause bonus-eligible employees who are employed by Advanced Disposal prior to the
closing to receive a bonus in an amount no less than the employee’s 2019 target annual bonus. 2020 bonuses will be paid on the earliest of (i) the date on which annual bonuses
would be paid by Advanced Disposal in the ordinary course of business consistent with past practice, (ii) the one-year anniversary of the closing date, and (iii) an involuntary
separation from service of the employee without cause or by the employee with good reason, as defined in the employee’s employment agreement. Employees
without employment agreements who resign because they refuse to relocate more than 50 miles to a new principal place of business will also be entitled to a bonus. The following table
59
Table of Contents
shows
for individuals who served as an executive officer of Advanced Disposal at any point in time on or following January 1, 2018, the value of the 2019 and 2020 cash incentive bonuses that
would be payable, assuming each executive officer remains employed in good standing on the day immediately prior to the closing date. The below table assumes that all bonuses will be paid out at the
2019 target amount.
|
|
|
|
|
|
|
Name
|
|
2019
Guaranteed
Annual Bonus ($)
|
|
2020 Guaranteed
Annual Bonus ($)
|
|
Total Guaranteed
Annual Bonuses ($)
|
Richard Burke
|
|
1,080,000
|
|
1,080,000
|
|
2,160,000
|
Steven Carn
|
|
462,000
|
|
462,000
|
|
924,000
|
John Spegal
|
|
450,000
|
|
450,000
|
|
900,000
|
Michael Slattery
|
|
308,000
|
|
308,000
|
|
616,000
|
Melissa Westerman
|
|
144,000
|
|
144,000
|
|
288,000
|
Matthew Gunnelson
|
|
96,900
|
|
96,900
|
|
193,800
|
Employment Agreements
Executive Officer Employment Agreements
Advanced Disposal is party to an employment agreement with each of its executive officers. Each of these employment agreements provides for an initial
three-year term that will automatically be extended for successive one-year periods thereafter unless either Advanced Disposal or the employee gives a contrary written notice to the other at least
60 days prior to the end of the applicable term.
Pursuant
to each employment agreement, the executive officers have agreed to certain non-competition, non-solicitation and employee non-interference covenants during employment and for two years
following termination of employment for any reason, as well as perpetual confidentiality covenants. All severance benefits are subject to the execution and non-revocation of a general release.
Each
employment agreement provides for severance benefits payable to the executive officer in connection with a termination without cause or resignation for good
reason or termination by Advanced Disposal in connection with or within two years following a change in control. Under each employment agreement (except for
Mr. Gunnelson’s, which is described separately below), severance will be payable in an amount equal to: (1) two times annual base salary then in effect, payable in 24
equal monthly installments; (2) a prorata portion of bonus for the year in which termination occurs as earned through the termination date; (3) two times bonus (calculated pursuant to
the employment agreements), payable in 24 equal monthly installments; and (4) 24 months of the named executive officer’s monthly cost of COBRA coverage. In addition,
Mr. Burke’s employment agreement provides that, with respect to a termination by Advanced Disposal in connection with or within two years following a change in control,
severance will be payable in an amount equal to: (1) three times annual base salary then in effect, payable in 36 equal monthly installments; (2) a prorata portion of his bonus for the
year in which termination occurs as earned through his termination date; (3) three times his bonus (calculated pursuant to his employment agreement), payable in 36 equal monthly installments;
and (4) 36 months of his monthly cost of COBRA coverage. Mr. Burke is also entitled to an additional amount of $36,000, payable in 24 equal monthly installments. Mr. Spegal
is entitled to an additional amount of $50,000 for relocation services, payable in a lump sum.
Under
each employment agreement, cause means generally (i) the employee’s failure to comply with the published policies, standards, and regulations of
Advanced Disposal, (ii) the employee’s commission of an act of fraud, dishonesty, or gross misconduct, including but not limited to intentional violations or intentional
breaches of the restrictive covenants provided in the employment agreement, in the rendering of services to Advanced Disposal, (iii) the employee’s willful failure to
diligently comply with the reasonable requests of the person(s) to whom the employee reports, (iv) a conviction or plea of nolo contendere to any felony substantively related to the
employee’s duties, or commission of any act that
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Table of Contents
damages
the reputation or causes public embarrassment to Advanced Disposal, or (v) the employee’s willful failure to adequately perform the usual and customary duties of
employment and/or those duties typically associated with the employee’s position.
Under
each employment agreement, good reason means generally (i) a relocation of the principal place of business to a location that represents a material change (50
miles) in geographic location, or (ii) a material diminution in authority, duties, responsibilities, reporting position or compensation. Mr. Burke’s employment agreement
also provides that a breach of his employment agreement constitutes good reason.
Mr. Gunnelson’s
employment agreement provides for severance benefits payable in connection with a termination without cause or resignation for
good reason (as each term is defined in his employment agreement, which, with respect to good reason, includes certain material changes to location, duties, authority,
compensation and benefits) or termination by Advanced Disposal in connection with or within two years following a change in control. Under Mr. Gunnelson’s employment agreement,
severance will be payable in an amount equal to: (1) two times annual base salary then in effect, payable in 24 equal monthly installments; (2) a prorata portion of bonus for the year in
which termination occurs as earned through the termination date; and (3) two times bonus (calculated pursuant to the employment agreement), payable in 24 equal monthly installments.
Pursuant
to the terms of each employment agreement, no employee is entitled to receive any tax gross-up for any excise tax imposed upon him or her under Sections 280G and 4999 of the Internal
Revenue Code of 1986, as amended (which we refer to as the
Code
). The Section 280G excise tax gross-up payment provision in
Mr. Burke’s prior employment agreement expired in October 2018 and was not extended; as such, he is no longer entitled to this benefit. In the event that any payments or
benefits paid or payable to an employee pursuant to an employment agreement or any other plan, program or arrangement maintained by Advanced Disposal would constitute a parachute
payment within the meaning of
Section 280G of the Code, such payments and benefits will be reduced to the extent reducing the payments and benefits would result in the employee retaining a greater net after tax amount.
In
connection with guaranteed bonuses for 2019 and 2020 described above in the section entitled
Guaranteed Bonuses
, each
executive officer who is employed on the day prior to the closing date will be entitled to receive a bonus for 2019 and 2020 that is no less than the executive officer’s 2019 target
annual bonus. For employees, including the named executive officers, with employment agreements that provide severance benefits upon a termination for cause or resignation
for good reason or termination by Advanced Disposal in connection with or within two years following a change in control, any such employee who would be entitled to receive a
prorata annual bonus for the year of termination and otherwise would be entitled to receive a guaranteed annual bonus for 2019 and 2020 will receive such full annual bonus for the year of termination
(instead of a pro-rated bonus), which will be no less than the 2019 target annual bonus.
The
following table shows, as of the effective time, with respect to Advanced Disposal’s named executive officers (as identified in Advanced Disposal’s proxy
statement on Schedule 14A filed with the SEC on April 3, 2019), the value of the severance that would be payable pursuant to the employment agreements, assuming a covered termination in
connection with or within two years of the closing of a merger that
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occurs
on December 31, 2019, including the full annual bonus payout for the year of termination in lieu of a pro rata annual bonus payment for the year of termination.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Severance Base
Salary ($)
|
|
Severance
Annual Bonus
($)
(1)
|
|
Guaranteed 2019
Bonus (in Lieu of
Pro-Rated
Annual Bonus)
($)
(1)
|
|
Additional
Severance ($)
|
|
Perquisites/
Benefits ($)
(3)
|
|
Total Expected
Severance ($)
|
Richard Burke
|
|
2,700,000
|
|
3,240,000
|
|
1,080,000
|
|
36,000
(2)
|
|
58,503
|
|
7,114,503
|
Steven Carn
|
|
924,000
|
|
924,000
|
|
462,000
|
|
-
|
|
39,002
|
|
2,349,002
|
John Spegal
|
|
900,000
|
|
900,000
|
|
450,000
|
|
-
|
|
69,780
(4)
|
|
2,319,780
|
Michael Slattery
|
|
770,000
|
|
616,000
|
|
308,000
|
|
-
|
|
39,002
|
|
1,733,002
|
Melissa Westerman
|
|
480,000
|
|
288,000
|
|
144,000
|
|
-
|
|
26,085
|
|
938,085
|
Matthew Gunnelson
|
|
387,600
|
|
193,800
|
|
96,900
|
|
-
|
|
11,003
|
|
689,303
|
-
(1)
-
Assumes
annual bonuses for 2019 will all be paid at the 2019 target level. Amounts do not include the value of the 2020 guaranteed bonuses payable pursuant to the
merger agreement upon termination in the following amounts: Mr. Burke, $1,080,000; Mr. Carn, $462,000; Mr. Spegal, $450,000; Mr. Slattery, $308,000; Ms. Westerman,
$144,000; and Mr. Gunnelson, $96,900.
-
(2)
-
Paid
in 24 equal monthly installments, pursuant to the terms of Mr. Burke’s employment agreement.
-
(3)
-
Represents
amounts to be paid in respect of post-employment COBRA benefits following a covered termination pursuant to each executive officer’s
employment agreement
-
(4)
-
Amount
includes $50,000 relocation benefit for relocation services, payable in a single lump sum pursuant to Mr. Spegal’s employment
agreement, which is to be paid net of taxes. As such, Mr. Spegal is entitled to a gross amount equal to $81,354.
280G Mitigation Actions
As described above, the employment agreements and the severance plan provide a limitation in the event the executive officer would be subject to excise taxes
due to Sections 4999 and 280G of the Code (which we refer to as the
280G excise tax
). Based on information available to date, certain
executives may, absent any mitigating actions, be subject to the 280G excise tax.
Advanced
Disposal will be permitted to implement reasonable measures in consultation with Waste Management to mitigate the adverse tax consequences of Sections 4999 and 280G of the Code for
Advanced Disposal and disqualified individuals (as that term is defined in Section 280G of the Code). In addition, Advanced Disposal and Waste Management will in good
faith consult with each other (and allow their respective outside accounting experts to consult with each other) and agree as promptly as practicable, and in any event prior to the effective time on
methodologies, calculations and assumptions to be used for valuing noncompete arrangements for disqualified individuals in connection with assessing and mitigating the
adverse tax consequences of Sections 4999 and 280G of the Code. Following the closing, Waste Management and the surviving company and its subsidiaries and affiliates will implement those
methodologies, calculations and assumptions. Notwithstanding this paragraph, the Compensation Committee of the Board of Directors of Advanced Disposal has not yet approved any specific actions to
mitigate the possible impact of Section 280G of the Code on Advanced Disposal and certain of the executives.
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Insurance and Indemnification of Directors and Executive Officers
See the section entitled
The Merger AgreementOther Covenants and
AgreementsDirectors’ and Officers’ Indemnification and Insurance
beginning on page 80 of this proxy statement, for a
summary of the obligations of the surviving company with respect to insurance indemnification of directors and executive officers after the effective time.
Compensation and Benefits-Related Arrangements with the Surviving Company
See the section entitled
The Merger AgreementOther Covenants and AgreementsEmployee
Matters
beginning on page 83 of this proxy statement, for a summary of certain post-closing covenants related to compensation and employee benefit arrangements.
Financing
Waste Management has committed to have, at the closing, access to sufficient cash, available lines of credit or other sources of immediately available funds
to enable Waste Management to consummate the transactions contemplated by the merger agreement, including payment of the aggregate merger consideration to the stockholders of Advanced Disposal and all
other required payments payable in connection with the transactions contemplated by the merger agreement. Waste Management expects to finance the merger using a combination of bank debt and senior
notes. The consummation of the merger is not conditioned upon Waste Management’s or Merger Sub’s receipt of financing.
Material U.S. Federal Income Tax Consequences of the Merger
General
The following summary discusses the material U.S. federal income tax consequences of the merger to holders of shares of Advanced Disposal common stock. This
discussion is based on the Code, applicable Treasury regulations promulgated under the Code, administrative interpretations, judicial decisions and administrative rulings as in effect as of the date
of this proxy statement, all of which may change, possibly with retroactive effect. This summary is for the general information of the holders of shares of Advanced Disposal common stock only and does
not purport to be a complete analysis of all potential tax effects of the merger.
This
discussion addresses only the consequences of the exchange of shares of Advanced Disposal common stock held as capital assets within the meaning of Section 1221 of the Code (generally,
property held for investment). It does not address all aspects of U.S. federal income taxation that may be important to an Advanced Disposal stockholder in light of the Advanced Disposal
stockholder’s particular circumstances, or to an Advanced Disposal stockholder that is subject to special rules, such as:
-
-
a bank, insurance company, or other financial institution;
-
-
a tax-exempt organization;
-
-
a dealer or broker in securities or non-U.S. currencies;
-
-
a trader in securities who elects the mark-to-market method of accounting;
-
-
an individual subject to the alternative minimum tax provisions of the Code;
-
-
a mutual fund;
-
-
a U.S. expatriate or former citizen or long-term resident of the United States;
-
-
a foreign pension fund and its affiliates;
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-
-
a person whose functional currency is not the U.S. dollar;
-
-
a former citizen or former long-term resident of the United States;
-
-
a real estate investment trust or regulated investment company;
-
-
an Advanced Disposal stockholder that holds its shares of Advanced Disposal common stock through individual retirement or other tax-deferred
accounts;
-
-
an Advanced Disposal stockholder that exercises appraisal rights;
-
-
an Advanced Disposal stockholder that holds shares of Advanced Disposal common stock as part of a hedge, appreciated financial position,
straddle, or conversion or integrated transaction;
-
-
an Advanced Disposal stockholder that acquired shares of Advanced Disposal common stock through the exercise of compensatory options or stock
purchase plans or otherwise as compensation; or
-
-
an Advanced Disposal stockholder that is required to accelerate the recognition of any item of gross income with respect to the merger as a
result of such income being recognized on an applicable financial statement.
For
purposes of this discussion, a U.S. holder is a beneficial owner of shares of Advanced Disposal common stock that is for U.S. federal income tax
purposes:
-
-
an individual who is a citizen or resident of the United States;
-
-
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any state therein or
the District of Columbia;
-
-
an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
-
-
a trust (i) that is subject to the primary supervision of a court within the United States and all the substantial decisions of which
are controlled by one or more U.S. persons or (ii) that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.
A
non-U.S. holder is a beneficial owner of shares of Advanced Disposal common stock that is neither a U.S. holder nor a partnership (nor an entity treated as a partnership)
for U.S. federal income tax purposes.
If
a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of Advanced Disposal common stock, the U.S. federal income tax
treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A partner in a partnership holding shares of Advanced Disposal
common stock should consult its tax advisors.
This
discussion of the material U.S. federal income tax consequences of the merger is not a complete description of all potential U.S. federal income tax consequences of the merger. This discussion
does not address tax consequences that may vary with, or are contingent on, individual circumstances. In addition, it does not address any U.S. state or local or any non-U.S. tax consequences of the
merger or the potential application of the Medicare contribution tax on net investment income. Accordingly, each Advanced Disposal stockholder should consult its tax advisor to determine the
particular U.S. federal, state or local or non-U.S. income or other tax consequences to it of the merger.
U.S. Federal Income Tax Consequences to U.S. Holders
The receipt of the merger consideration by U.S. holders pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general,
for U.S. federal income tax purposes, a U.S. holder will recognize taxable capital gain or loss in an amount equal to the difference, if any, between (i) the amount of cash received in the
merger plus the amount used to satisfy any applicable withholding
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taxes
and (ii) such U.S. holder’s adjusted tax basis in its shares of Advanced Disposal common stock exchanged therefor. A U.S. holder’s adjusted tax
basis in a particular share of Advanced Disposal common stock generally will equal the price the U.S. holder paid for such share of Advanced Disposal common stock.
If
a U.S. holder’s holding period in the shares of Advanced Disposal common stock surrendered in the merger is greater than one year as of the date of the merger, the capital gain or
loss will be long-term capital gain or loss. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates.
The deductibility of a capital loss recognized in connection with the merger is subject to limitations under the Code. If a U.S. holder acquired different blocks of shares of Advanced Disposal common
stock at different times or different prices, such U.S. holder must determine its adjusted tax basis and holding period separately with respect to each block of shares of Advanced Disposal common
stock that it holds.
U.S. Federal Income Tax Consequences to non-U.S. Holders
The receipt of the merger consideration by a non-U.S. holder pursuant to the merger will not be subject to U.S. federal income tax
unless:
-
-
the gain, if any, recognized by the non-U.S. holder is effectively connected with a trade or business of the non-U.S. holder in the United
States (and, if required by an applicable income tax treaty, is attributable to the non-U.S. holder’s permanent establishment in the United States);
-
-
the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the merger and
certain other conditions are met; or
-
-
the non-U.S. holder owned, directly or under certain constructive ownership rules of the Code, more than 5% of Advanced Disposal common stock
at any time during the five (5)-year period preceding the merger, and Advanced Disposal is or has been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code for U.S. federal income tax purposes at any time during the shorter of the five (5)-year period preceding the merger or the period that the non-U.S. holder held
the shares of Advanced Disposal common stock.
Gain
described in the first bullet point above will be subject to tax on a net income basis in the same manner as if the non-U.S. holder were a U.S. holder (unless an applicable income tax treaty
provides otherwise). Additionally, any gain described in the first bullet point above of a non-U.S. holder that is a corporation also may be subject to an additional branch profits
tax at a 30% rate (or lower rate provided by an applicable income tax treaty). A non-U.S. holder described in the second bullet point above will be subject to tax at a rate of 30% (or a
lower rate provided by an applicable income tax treaty) on any capital gain realized, which may be offset by U.S.-source capital losses recognized in the same taxable year. If the third bullet point
above applies to a non-U.S. holder, capital gain recognized by such holder will be subject to tax at generally applicable U.S. federal income tax rates. We believe that we are not, and we do not
anticipate becoming, a United States real property holding corporation. However, because the determination of whether we are a United States real property
holding corporation depends on the fair market value of our United States real property interests relative to the fair market value of our global real property interests and other
business assets, there can be no assurance that we do not currently constitute or will not become a United States real property holding corporation. Non-U.S. holders owning
(actually or constructively) more than 5% of Advanced Disposal common stock should consult their own tax advisors regarding the U.S. federal income tax consequences of the merger.
Backup Withholding and Information Reporting
Payments of cash made in exchange for shares of Advanced Disposal common stock pursuant to the merger may be subject, under certain circumstances, to
information reporting and backup withholding
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(currently
at a rate of 24%). To avoid backup withholding, a U.S. holder that does not otherwise establish an exemption should complete and return an IRS Form W-9, certifying under penalties of
perjury that such U.S. holder is a United States person (within the meaning of the Code), that the taxpayer identification number provided is correct and that such U.S.
holder is not subject to backup withholding. To avoid backup withholding, a non-U.S. holder is required to establish an exemption, for example, by completing and providing to the applicable
withholding agent the appropriate IRS Form W-8 for the non-U.S. holder, in accordance with the instructions thereto.
Any
amount withheld under the backup withholding rules will be allowed as a refund or credit against the U.S. federal income tax liability of an Advanced Disposal stockholder, provided the required
information is timely furnished to the IRS. The IRS may impose a penalty upon an Advanced Disposal stockholder that fails to provide the correct taxpayer identification number.
Regulatory Clearances
Required Approvals
Under the merger agreement, the merger cannot be completed until any applicable waiting period under the HSR Act has expired or been terminated. Advanced
Disposal and Waste Management made the necessary filings with the FTC and the Antitrust Division of the DOJ on May 9, 2019.
Even
after the applicable waiting period under the HSR Act expires or is terminated, the FTC and the Antitrust Division of the DOJ retain the authority to challenge the merger on antitrust grounds
before or after the merger is completed. Likewise, at any time before or after the consummation of the merger, a U.S. state or a foreign governmental authority with jurisdiction over the parties could
take such action under antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the merger, to rescind the merger or to seek
divestiture of particular assets. Private parties also may seek to take legal action under the antitrust laws under certain circumstances. Neither Advanced Disposal nor Waste Management can provide
assurance that any action under antitrust laws will not result in the delay or abandonment of the merger.
Commitments to Obtain Regulatory Approvals
Waste Management must use its reasonable best efforts to take all actions reasonably necessary to make effective the merger. Each party will cooperate with
the other party and use its reasonable best efforts to, as promptly as practicable, prepare and submit all filings required for any regulatory approval or consent from any governmental entity and to
assist and cooperate with the other party in connection with the foregoing. Advanced Disposal and Waste Management have agreed to:
-
-
cooperate with each other in connection with any filing and any investigation, including any proceeding initiated by a private party;
-
-
keep the other party reasonably informed of any communication received from the FTC, the Antitrust Division of the DOJ or any other U.S. or
foreign governmental entity, or from a private party; and
-
-
permit the other party to review any communication given by it to the DOJ, the FTC or any such other governmental entity or in connection with
any proceeding by a private party.
Waste
Management is also specifically required to sell or divest assets (belonging to Waste Management or Advanced Disposal or any of their respective subsidiaries) if required in order to obtain
antitrust approval. However, Waste Management is not required to sell assets that would, individually or in the aggregate, result in a reduction of revenue (without duplication and net of any
intercompany revenues) in excess of $200,000,000 (for any rolling 12-month period ending the last full month prior to any date between the date of the merger agreement and the closing date) to Waste
Management, Advanced Disposal and their
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respective
subsidiaries (taken as a whole after giving effect to the merger) if such actions had been taken at the beginning of any such rolling 12-month period (as more fully described in the section
entitled
The Merger AgreementOther Covenants and AgreementsEfforts to Complete the Merger; Regulatory
Approvals
beginning on page 80 of this proxy statement).
De-listing and De-registration of Advanced Disposal Common Stock
If the merger is completed, Advanced Disposal common stock will be de-listed from NYSE and de-registered under the Exchange Act. As such, following the
completion of the merger, Advanced Disposal will no longer file periodic reports with the SEC on account of Advanced Disposal common stock.
Litigation Relating to the Merger
No litigation relating to the merger was pending as of the time of filing this proxy statement.
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THE MERGER AGREEMENT
Below is a summary of the material provisions of the merger agreement, a copy of which is attached to this proxy statement as
Annex A
and which is incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information
about the merger agreement that is important to you. We encourage you to read the merger agreement in its entirety carefully, as the rights and obligations of the parties thereto are governed by the
express terms of the merger agreement and not by this summary or any other information contained in this proxy statement.
Explanatory Note Regarding the Merger Agreement
The following summary of the Agreement and Plan of Merger, dated as of April 14, 2019, by and among Advanced Disposal, Waste Management and Merger Sub
and the copy of the merger agreement attached to this proxy statement as
Annex A
are intended only to provide information regarding the terms of the merger
agreement. The merger agreement and the related summary are not intended to be a source of factual, business or operational information about Advanced Disposal, Waste Management or Merger Sub, and the
following summary of the merger agreement and the copy thereof included as
Annex A
are not intended to modify or supplement any factual disclosure about Advanced
Disposal in any documents Advanced Disposal has or will publicly file with the SEC. The merger agreement contains representations and warranties by, and covenants of, Advanced Disposal, Waste
Management and Merger Sub that were made only for purposes of the merger agreement and as of specified dates. The representations, warranties and covenants in the merger agreement were made solely for
the benefit of the parties to the merger agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of
allocating contractual risk between the parties to the merger agreement instead of establishing these matters as facts, and may be subject to contractual standards of materiality or material adverse
effect applicable to the contracting parties that generally differ from those applicable to investors. In addition, information concerning the subject matter of the representations, warranties and
covenants contained in the merger agreement may change after the date of the merger agreement, which subsequent information may or may not be fully reflected in Advanced Disposal’s
public disclosures. Until the effective time, stockholders are not third-party beneficiaries under the merger agreement (and after the effective time, stockholders will be third-party beneficiaries
under the merger agreement solely to the extent necessary to receive the merger consideration due to such persons under the merger agreement).
Additional
information about Advanced Disposal may be found elsewhere in this proxy statement and in Advanced Disposal’s other public filings. See the section entitled
Where You Can Find Additional Information
beginning on page 105 of this proxy statement.
Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers
The merger agreement provides that at the effective time, the separate corporate existence of Merger Sub will cease, and Advanced Disposal will continue as
the surviving company and as an indirect, wholly-owned subsidiary of Waste Management. At the effective time, all of the property, rights, privileges, immunities, powers and franchises of Advanced
Disposal and Merger Sub
will vest in Advanced Disposal as the surviving company and, pursuant to the DGCL, all debts, liabilities and duties of Advanced Disposal and Merger Sub will become the debts, liabilities and duties
of Advanced Disposal as the surviving company. At the effective time, the certificate of incorporation of Advanced Disposal will be amended and restated in its entirety to be in the form of an exhibit
to the merger agreement and, as so amended and restated, such certificate of incorporation will be the certificate of incorporation of the surviving company and the bylaws of Merger Sub as in effect
immediately prior to the effective time will be the bylaws of the surviving company, in each case, until subsequently amended.
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The
directors of Merger Sub immediately prior to the effective time will be the initial directors of the surviving company and the officers of Advanced Disposal immediately prior to the effective time
will be the initial officers of the surviving company. The initial directors and officers will hold office until their respective successors are duly elected or appointed and qualified or until the
earlier of their death, resignation or removal in accordance with the certificate of incorporation and bylaws of the surviving company.
Closing of the Merger
The closing will take place on the third (3
rd
) business day following the day on which the conditions to the merger (other than those conditions
that by their nature are to be satisfied at the closing, but subject to the satisfaction or, to the extent permitted by applicable law, waiver of those conditions at the closing) have been satisfied
or waived in accordance with the merger agreement or at such other time, date and place as Advanced Disposal and Waste Management may agree in writing.
On
the closing date (or on a later date agreed to by the parties), Waste Management and Advanced Disposal will cause a certificate of merger to be executed and filed with the Secretary of State of the
State of Delaware in accordance with the relevant provisions of the DGCL and will make all other filings or recordings required under the DGCL. The merger will become effective at the time the
certificate of merger is duly filed with the Secretary of State of the State of Delaware or on such later date and time as may be agreed upon by the parties and specified in the certificate of merger.
Effect of the Merger on Advanced Disposal Common Stock
At the effective time, each share of Advanced Disposal common stock issued and outstanding immediately prior to the effective time (other than shares
(i) owned by Waste Management or Merger Sub and shares owned by Advanced Disposal or held in treasury, (ii) owned by any direct or indirect, wholly-owned subsidiary of Advanced Disposal
or Waste Management, or (iii) held by stockholders who will have neither voted for the merger nor consented thereto in writing and who will have demanded properly in writing appraisal for such
shares in accordance with Section 262 of the DGCL) will be converted automatically into the right to receive the merger consideration, and upon conversion, will automatically be cancelled and
will cease to exist. Shares referred to in clause (i) above will cease to exist at the effective time and will be cancelled without payment of any consideration. Shares referred to in
clause (ii) will be converted into shares of common stock, par value $0.01 per share, of the surviving company. Shares of Advanced Disposal common stock described in clause (iii) will
also be cancelled at the effective time, and the holders of such shares will be entitled to the rights granted to them under Section 262 of the DGCL (as further described in the section
entitled
Appraisal Rights
beginning on page 99 of this proxy statement).
At
the effective time, each share of Merger Sub common stock issued and outstanding immediately prior to the effective time of the merger will be converted into and become one validly issued, fully
paid and nonassessable share of common stock, par value $0.01 per share, of the surviving company and such shares will constitute the only outstanding shares of capital stock of the surviving company
immediately following the effective time.
Payment Procedures
Prior to the effective time, Waste Management or Merger Sub will enter into a paying agent agreement with a paying agent selected by Waste Management, and
approved in advance by Advanced Disposal, to act as the paying agent for the Advanced Disposal stockholders in connection with the merger. At or prior to the effective time, Waste Management will
deposit with the paying agent cash in an amount sufficient to pay the merger consideration (which cash we refer to as the
exchange fund
). Waste
Management will not be required to deposit or cause to be deposited with the paying agent funds sufficient to pay the merger
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consideration
payable in respect of the dissenting shares (as defined in the section entitled
The Merger AgreementAppraisal
Rights
beginning on page 71 of this proxy statement). Subject to certain conditions in the merger agreement, the paying agent is required to invest the exchange
fund as directed by Waste Management.
Promptly
after the effective time (and in no event later than three (3) business days after the closing date), Waste Management will mail to each person who was, at the effective time, a holder
of record of Advanced Disposal common stock entitled to receive the merger consideration: (i) transmittal materials, including a customary letter of transmittal, specifying that delivery will
be effected, and risk of loss and title to the shares of Advanced Disposal common stock will pass, only upon proper delivery of such shares to the paying agent and (ii) instructions for
effecting the surrender of the stock certificates or the non-certificated shares of Advanced Disposal common stock represented by book-entry (which we refer to as
book-entry
shares
) in exchange for the merger consideration. Upon surrender of the certificates to the paying agent for cancellation, together with the letter of transmittal, the
holder of the shares will be entitled to receive the merger consideration and the surrendered certificates will be cancelled.
Any
holder of book-entry shares will not be required to deliver a certificate or an executed letter of transmittal to the paying agent to receive the merger consideration. Each registered holder of
one or more book-entry shares will be entitled at the effective time to receive the merger consideration for each book-entry share upon receipt by the paying agent of an
agent’s message in customary form.
No
interest will be paid on any cash payable to holders of stock certificates or book-entry shares under the merger agreement. From and after the effective time, holders of shares of Advanced Disposal
common stock will cease to have any rights as stockholders of Advanced Disposal, except as provided in the merger agreement or by law.
Any
portion of the exchange fund that remains undistributed to the former holders of shares of Advanced Disposal common stock twelve (12) months after the effective time will be delivered to
the surviving company, and any former holders of shares of Advanced Disposal common stock who are entitled to do so and have not previously complied with the exchange procedures in the merger
agreement may thereafter look only to the surviving company for payment of their claim for the merger consideration.
Under
the merger agreement, each of the paying agent, the surviving company and any applicable withholding agent are entitled to deduct and withhold from the merger consideration otherwise payable to
any holder of Advanced Disposal common stock, Advanced Disposal stock option, performance share unit awards, restricted share unit awards or restricted share awards, such amounts as are required
to be deducted and withheld with respect to such payment under all applicable federal, state or local tax laws and pay such withholding amount over to the appropriate governmental authority.
Treatment of Advanced Disposal Equity Awards
Treatment of Advanced Disposal Stock Options
The merger agreement provides that at the effective time, each Advanced Disposal stock option that is outstanding immediately prior to the effective time and
that has an exercise price per share that is less than $33.15, whether or not vested, will become fully vested and will be cancelled and thereafter entitle the holder to receive, promptly after the
effective time, a cash payment (without interest and subject to all applicable tax withholding requirements) equal to the product of (i) the excess of $33.15 over the per-share exercise price
of such Advanced Disposal stock option and (ii) the number of shares issuable upon exercise of such Advanced Disposal stock option. Each Advanced Disposal stock option with an exercise price
equal to or greater than $33.15 will be cancelled as of the effective time without payment of any consideration and will have no further force or effect.
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Treatment of Performance Share Unit Awards
The merger agreement provides that at the effective time, each performance share unit award that is outstanding immediately prior to the effective time will
become fully vested and will be cancelled and thereafter entitle the holder to receive, promptly after the effective time, a cash payment (without interest and subject to all applicable tax
withholding requirements) equal to the
product of (i) the number of shares equal to the greater of (x) the target number of shares with respect to such performance share unit award and (y) the number of shares that
would be considered earned under the terms of such performance share unit award based on the most recent fiscal year-end results multiplied by (ii) $33.15.
Treatment of Restricted Share Unit Awards
The merger agreement provides that at the effective time, each restricted share unit award that is outstanding immediately prior to the effective time will
become fully vested and will be cancelled and thereafter entitle the holder to receive, promptly after the effective time, a cash payment (without interest and subject to all applicable tax
withholding requirements) equal to the product of (i) the number of shares subject to such restricted share unit award and (ii) $33.15.
Treatment of Restricted Share Awards
The merger agreement also provides that at the effective time, each restricted share award that is outstanding immediately prior to the effective time will
become fully vested and will be cancelled and thereafter entitle the holder to receive, promptly after the effective time, a cash payment (without interest and subject to all applicable tax
withholding requirements) equal to the product of (i) the number of shares subject to such restricted share award and (ii) $33.15.
Appraisal Rights
Notwithstanding anything to the contrary in the merger agreement, shares of Advanced Disposal common stock that are outstanding immediately prior to the
effective time and that are held by Advanced Disposal stockholders who have neither voted for the merger nor consented to the merger in writing and who have demanded properly in writing appraisal for
such shares in accordance with Section 262 of the DGCL and have not effectively withdrawn such demand (collectively, we refer to such shares as the
dissenting
shares
) will not be converted into, or represent the right to receive, the merger consideration, unless and until such holder fails to perfect, effectively withdraws or
otherwise loses the right to appraisal under the DGCL. At the effective time, all dissenting shares will no longer be outstanding and automatically will be
cancelled and will cease to exist, and, except as otherwise provided by applicable laws, each holder of dissenting shares will cease to have any rights with respect to the dissenting shares, other
than such rights as are granted under Section 262 of the DGCL. Such stockholders will be entitled to receive payment of the appraised value of such shares held by them in accordance with the
provisions of Section 262 of the DGCL, except that all dissenting shares held by stockholders who have failed to perfect or who effectively have withdrawn or lost their rights to appraisal of
such shares under such Section 262 of the DGCL will thereupon be deemed to have been converted into, and to have become exchangeable for, as of the effective time, the right to receive the
merger consideration, without interest, upon surrender, in the manner provided in the merger agreement, of the certificate or certificates that formerly evidenced such shares.
Advanced
Disposal is required to give Waste Management (i) prompt notice of any demands for appraisal received by Advanced Disposal or any of its representatives, withdrawals of such demands
and any other related instruments served pursuant to the DGCL and received by Advanced Disposal or any of its representatives and (ii) the opportunity to direct all negotiations and proceedings
with respect to such notices and demands for appraisal under the DGCL. Advanced Disposal will not, except with the prior
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written
consent of Waste Management or as required by law, make any payment with respect to any demands for appraisal, settle, compromise, or offer to settle or compromise any such demands.
Representations and Warranties; Material Adverse Effect
The merger agreement contains representations and warranties of Advanced Disposal and of Waste Management and Merger Sub.
Subject
to certain exceptions (i) in the merger agreement, (ii) in the disclosure schedule delivered by Advanced Disposal to Waste Management and Merger Sub in connection with the merger
agreement (which we refer to as the
disclosure schedule
) and (iii) as disclosed in Advanced Disposal public filings with the SEC (subject
to certain specified exceptions), the merger agreement contains representations and warranties of Advanced Disposal as to, among other things:
-
-
organization and valid existence, good standing and qualification to do business of Advanced Disposal and each of its subsidiaries;
-
-
effectiveness of organizational documents and absence of violation of such organizational documents;
-
-
Advanced Disposal ownership of its subsidiaries;
-
-
authorized share capital of Advanced Disposal, issued and outstanding equity of Advanced Disposal and other matters regarding capitalization;
-
-
indebtedness of Advanced Disposal and its subsidiaries;
-
-
corporate authority relative to the merger agreement, consents and approvals relating to the execution, delivery and performance of the merger
agreement, and the enforceability of the merger agreement against Advanced Disposal;
-
-
unanimous approval and recommendation by the Board of the merger agreement and the transactions;
-
-
absence of (i) any conflict with or violation of the organizational documents of Advanced Disposal or any of its subsidiaries,
(ii) any conflict with or violation of applicable laws, (iii) any breach or default under, or any right of termination, amendment, acceleration or cancellation of, any contract of
Advanced Disposal or its subsidiaries, and (iv) requirement for any other governmental filing, except for those specified in the merger agreement, in each case, as a result of the execution and
delivery by Advanced Disposal of the merger agreement, the performance of Advanced Disposal obligations under the merger agreement and the consummation by Advanced Disposal of the transactions;
-
-
compliance with applicable laws and regulations (including anticorruption laws and regulations imposing economic sanctions);
-
-
possession of and compliance with required licenses, registrations, permits, approvals, accreditations, certificates and other authorizations
of any governmental authority necessary for the conduct of Advanced Disposal and its subsidiaries’ business;
-
-
compliance with SEC filing requirements for Advanced Disposal SEC filings since January 1, 2017, fair presentation of Advanced
Disposal’s and its subsidiaries financial position in the audited consolidated financial statement and establishment and maintenance of certain disclosure controls and procedures, and
the absence of significant deficiencies or material weaknesses in internal controls over financial reporting;
-
-
Advanced Disposal’s material contracts, their enforceability and the absence of breach or default under such material
contracts;
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-
-
the fact that Advanced Disposal has conducted its business in the ordinary course of business in all material respects and that there has not
been a material adverse effect (as defined below);
-
-
the fact that there is no material litigation, suit, claim, action or proceeding against or involving Advanced Disposal;
-
-
employee benefit plans;
-
-
labor and employment matters;
-
-
insurance policies;
-
-
title to or valid leasehold interests in real property;
-
-
Advanced Disposal tax returns, filings and other tax matters;
-
-
intellectual property, privacy and data protection matters;
-
-
environmental matters, including compliance with applicable environmental laws;
-
-
opinion of UBS, Advanced Disposal’s financial advisor;
-
-
brokers’ fees and expenses;
-
-
accuracy of the information to be provided in this proxy statement;
-
-
absence of certain transactions with related parties;
-
-
applicable state anti-takeover statutes or regulations;
-
-
sufficiency of Advanced Disposal stockholder vote to adopt the merger agreement and approve the merger and other transaction contemplated by
the merger agreement; and
-
-
absence of stockholder rights plan or so-called poison pill.
Subject
to certain exceptions in the merger agreement, the merger agreement also contains representations and warranties of Waste Management and Merger Sub as to, among other
things:
-
-
organization, valid existence and good standing;
-
-
effectiveness of organizational documents and absence of violation of such organizational documents;
-
-
corporate authority relative to the merger agreement, consents and approvals relating to the execution, delivery and performance of the merger
agreement, and the enforceability of the merger agreement against Waste Management and Merger Sub;
-
-
absence of (i) any conflict with or violation of the organizational documents of Waste Management or Merger Sub, (ii) any
conflict with or violation of applicable laws, and (iii) any breach or default under, or any right of termination, amendment, acceleration or cancellation of, any contract of Waste Management
or Merger Sub, in each case, as a result of the execution and delivery by Waste Management and Merger Sub of the merger agreement, the performance of Waste Management and Merger Sub of obligations
under the merger agreement and the consummation by Waste Management and Merger Sub of the transactions;
-
-
the fact that there is no litigation, suit, claim, action or proceeding against or involving Waste Management that would prevent or materially
delay the consummation of any of the transactions or otherwise prevent or materially delay Waste Management or Merger Sub from performing their obligations under the merger agreement;
-
-
operations of Merger Sub and ownership of Merger Sub by Waste Management;
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-
-
broker’s fees and expenses;
-
-
the fact that Waste Management will have at the closing access to sufficient cash, available lines of credit or other sources of immediately
available funds to enable it consummate the merger, including payment of the merger consideration and other payments under the merger agreement (though the consummation of the merger is not
conditioned upon Waste Management’s or Merger Sub’s receipt of financing);
-
-
absence of ownership of any shares of Advanced Disposal common stock that would qualify Waste Management or its subsidiaries as interested
stockholders for purposes of Section 203 of the DGCL;
-
-
accuracy of the information to be provided for in this proxy statement; and
-
-
absence of voting agreement or an agreement regarding consideration of a different amount or nature than the merger consideration with Advanced
Disposal stockholder, directors, officers or employees, other than the voting agreement.
Some
of the representations and warranties in the merger agreement are qualified by knowledge or materiality qualifications including, in certain instances, a material adverse
effect qualification with respect to Advanced Disposal.
For
purposes of this summary of the merger agreement, a
material adverse effect
with respect to Advanced Disposal means any event, development,
circumstance, change, effect or occurrence that, individually or in the aggregate, with all other events, developments, circumstances, changes, effects or occurrences, has, or would reasonably be
expected to have, a material adverse effect on or with respect to the business, assets, liabilities, results of operations or financial condition of Advanced Disposal and its subsidiaries taken as a
whole. However, under certain circumstances set forth in the merger agreement, no events, developments, circumstances, changes, effects or occurrences, to the extent arising out of or resulting from
or relating to any of the following will be deemed to constitute a material adverse effect:
-
-
general changes or developments in the economy or the financial, debt, capital, credit or securities markets in the United States or elsewhere
in the world;
-
-
the execution and delivery of the merger agreement or the public announcement or pendency of the merger or other transactions contemplated in
the merger agreement;
-
-
any change in any applicable laws or applicable accounting regulations or principles after the date of the merger agreement;
-
-
any hurricane, tornado, earthquake, flood, tsunami or other natural disaster or outbreak or escalation of hostilities or war, military actions
or any act of sabotage, terrorism or other international or national emergency, or other force majeure event or natural disaster or act of God or other comparable events;
-
-
any change in the price or trading volume of Advanced Disposal common stock or the credit rating of Advanced Disposal, in and of itself;
-
-
any failure by Advanced Disposal to meet (i) any published analyst estimates, expectations, projections or forecasts of Advanced
Disposal’s revenue, earnings, cash flow, cash positions or other financial performance or results of operations for any period or (ii) its internal or published projections,
budgets, plans, forecasts, guidance, estimates, milestones of its revenues, earnings or other financial performance or results of operations, in and of itself;
-
-
any change or development in the industries, or in the business conditions in the geographic regions, in which Advanced Disposal and its
subsidiaries operate, and any ordinary course seasonal fluctuations in the business of Advanced Disposal and its subsidiaries;
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-
-
the identity of Waste Management or its subsidiaries or any communication by Waste Management or its subsidiaries regarding the plans or
intentions of Waste Management with respect to the conduct of the business of the surviving company or its subsidiaries;
-
-
the taking of any action at the written request of or with the written consent of Waste Management; or
-
-
the failure to obtain any approvals or consents from any governmental entity in connection with the merger agreement or any delay in obtaining
any such approvals or consents.
However,
with respect to the exceptions described in the first, third and fourth bullet points above, such exceptions will only apply to the extent that such event, development, circumstance, change,
effect or occurrence does not have a materially disproportionate impact on Advanced Disposal and its subsidiaries, taken as a whole, as compared to other participants in the industries in which
Advanced Disposal and its subsidiaries operate, and with respect to the exceptions described in the fifth and sixth bullet points above, such exceptions will not prevent or otherwise affect a
determination that any events, developments, circumstances, changes, effects or occurrences underlying such changes or failures constitute or contribute to a material adverse effect.
Conduct of Business Pending the Merger
The merger agreement provides that, subject to certain exceptions, during the period commencing on April 14, 2019 and ending on the earlier of the
effective time of the merger and the termination of the merger agreement in accordance with its terms (which we refer to as the
pre-closing
period
), Advanced Disposal must conduct its business and the business of its subsidiaries in the ordinary course of business, and use commercially reasonable efforts to
preserve substantially intact the business organization of Advanced Disposal and its subsidiaries and to preserve its material assets, rights and properties in good repair and condition, to keep
available the services of its directors, officers and employees, and to maintain its existing relationships and goodwill with customers, suppliers or others having business dealings with Advanced
Disposal and its subsidiaries. Further, the merger agreement also provides that during the pre-closing period, subject to certain exceptions, Advanced Disposal must not, and must cause each of its
subsidiaries not to, do any of the following:
-
-
acquire, or invest in any business or assets in excess of $15,000,000 in the aggregate; however, Advanced Disposal may purchase inventory or
other assets in the ordinary course consistent with past practice, and Advanced Disposal may, after consulting with Waste Management, acquire or invest in third parties of up to $15,000,000 in the
aggregate, so long as the transaction does not require a regulatory filing;
-
-
sell or dispose of any material assets or business or dispose of material intellectual property; however, Advanced Disposal may continue to
make ordinary course dispositions or dispositions pursuant to contracts in effect as of the date of the merger agreement that were made available to Waste Management;
-
-
acquire or license any material intellectual property, except in the ordinary course of business consistent with past practice;
-
-
issue, sell or dispose of any shares of, options, warrants, or rights of any kind to acquire any shares of its capital stock, or pledge any of
Advanced Disposal’s or its subsidiaries shares, except for:
-
-
issuances of shares of Advanced Disposal common stock upon the exercise of options;
-
-
dispositions in connection with the vesting of restricted share awards, performance share unit awards or restricted share unit awards; or
-
-
any issuance or sale to Advanced Disposal or a wholly-owned subsidiary by any Advanced Disposal subsidiary;
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-
-
declare dividends, except that subsidiary of Advanced Disposal may issue dividends to Advanced Disposal or to another of its wholly-owned
subsidiaries;
-
-
adopt a plan with respect to liquidation, dissolution, merger, consolidation or restructuring;
-
-
subject to certain exceptions in the merger agreement, acquire any shares of Advanced Disposal common stock;
-
-
subdivide the ownership interests in any of Advanced Disposal’ subsidiaries;
-
-
implement any stockholder rights plan or poison-pill;
-
-
amend any governing documents of Advanced Disposal or its subsidiaries;
-
-
subject to certain exceptions in the merger agreement, incur or guarantee indebtedness exceeding $10 million in the aggregate;
-
-
subject to certain exceptions in the merger agreement, modify in any material respect the terms of indebtedness or guarantee the obligations of
a third party;
-
-
make any loan or advances to any person other than Advanced Disposal or any of its wholly-owned subsidiaries in excess of $100,000 in the
aggregate, other than customary relocation or business expenses to Advanced Disposal employees in the ordinary course;
-
-
subject to certain exceptions in the merger agreement, create any material liens;
-
-
except as otherwise contemplated by the merger agreement, issue a notice of redemption causing the repayment of Advanced
Disposal’s senior notes;
-
-
other than in the ordinary course of business or as required by law:
-
-
extend, modify or fail to perform under a material contract; or
-
-
terminate or fail to renew a material contract (subject to certain limitations on the renewal of leases for real property);
-
-
enter into a material contract other than in the ordinary course of business;
-
-
enter into a contract related to the sale, transfer, grant or license of any rights in landfill gas and related assets;
-
-
fail to renew or maintain any existing insurance policy other than in the ordinary course of business consistent with past practice;
-
-
other than as required by law or GAAP: (i) file an amended U.S. federal income or material tax return; (ii) make a material
change to any method of financial or tax accounting; (iii) change any material tax election; (iv) surrender a material tax refund claim; (v) waive a limitation period applicable
to a material tax claim; or (vi) enter into a tax sharing agreement, tax allocation agreement or tax indemnity agreement;
-
-
pay, discharge, settle or satisfy any litigation, arbitration, claim or other obligation other than:
-
-
litigation arising in connection with the merger; or
-
-
settlements involving:
-
-
payments not in excess of $10,000,000 in the aggregate (net of insurance proceeds), which do not materially limit the future business
operations of Advanced Disposal and its subsidiaries; or
-
-
third-party indemnification recoveries payable to Advanced Disposal;
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-
-
settle material class-action litigation in excess of $10,000,000 in the aggregate without consulting Waste Management;
-
-
make capital expenditures; however, Advanced Disposal may make capital expenditures:
-
-
-
as set forth in a budget in the disclosure schedule;
-
-
-
in connection with the acquisition of new equipment, trucks, containers or landfill compactors in the ordinary course of business and
consistent with past practice;
-
-
-
in connection with bids previously awarded to Advanced Disposal that have not yet been serviced or are awarded to Advanced Disposal between the
date of the merger agreement and the closing; or
-
-
-
involving less than $15,000,000 in the aggregate;
-
-
subject to certain exceptions in the merger agreement:
-
-
amend, renew, terminate (or communicate any intention to amend, renew or terminate) an existing material compensation
or benefit plan, or establish, adopt or enter into a new material compensation or benefit plan or arrangement, except in the ordinary course of business, consistent with past
practice, and in a manner that does not result in a material increase in benefits or administrative costs;
-
-
increase benefits, compensation or incentive compensation opportunity to any employee or independent contractor;
-
-
pay any bonus or MIP/LIP award in excess of the amount earned based on actual performance in accordance with the terms of the bonus or MIP/LIP
plan;
-
-
grant equity awards, amend the terms of outstanding equity awards, or discretionarily accelerate the vesting or payment of equity awards;
-
-
grant or pay any severance or termination pay or benefits in a manner inconsistent with the terms of an existing employment agreement or
severance policy;
-
-
hire or engage the services of, or terminate any individual with the title of Vice President or above (other than for cause) other than to
replace a former employee;
-
-
loan or advance money or other property to any current or former employees or independent contractors, except to employees with a title below
Vice President made in the ordinary course and consistent with past practice;
-
-
recognize any new unions or enter into any new collective bargaining agreement, except as required by applicable law;
-
-
conduct any mass layoff, reduction in force, or other program resulting in employee termination that would trigger the WARN Act;
-
-
take any action to fund or secure the payment of any amounts under any compensation or benefit plan;
-
-
change any assumptions used to calculate funding or contribution obligations under any compensation or benefit plan, or increase or accelerate
its funding rate (unless required by GAAP); or
-
-
take any action that would be reasonably likely to result in a complete or partial withdrawal under any multiemployer plan; or
-
-
agree, authorize or commit to do any of the foregoing actions.
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Other Covenants and Agreements
No Solicitation; Acquisition Proposals
Pursuant to the merger agreement, Advanced Disposal has agreed to immediately cease and cause to be terminated, and to cause its subsidiaries, and its and its
subsidiaries’ respective directors, officers, employees and the attorneys, investment bankers and other advisors or representatives (such individuals, we collectively refer to as
representatives
), to immediately cease and cause to be terminated any solicitation, discussions or negotiations that may be ongoing as of the
date of the merger agreement with a potential acquirer with respect to an acquisition proposal (as defined below), or any proposal that could reasonably be expected to lead
to an acquisition proposal. In addition, except as provided in the merger agreement, Advanced Disposal has agreed that it will not modify, amend, terminate, waive, release, or fail to enforce any
provisions of, any standstill provisions (including provisions that restrict or prohibit the purchase of shares of Advanced Disposal common stock or the making or soliciting
of any offer or proposal) of any contract to which Advanced Disposal or any of its subsidiaries is a party relating to an acquisition proposal.
Except
as expressly permitted by the merger agreement, during the pre-closing period, Advanced Disposal has agreed that neither it nor any of its subsidiaries will (i) solicit, initiate, or
knowingly induce or encourage or otherwise knowingly facilitate (including by providing information) any inquiries of any acquisition proposal or (ii) engage in, continue or otherwise
participate in negotiations or discussions concerning, or provide access to its properties, books and records or any confidential or non-public information or data in connection with any acquisition
proposal except to (A) notify such person of the existence of the no-solicitation provision of the merger agreement or (B) in the case of a
bona
fide
acquisition proposal received by Advanced Disposal without otherwise violating the merger agreement, contact such person for purposes of clarifying the terms of and
likelihood of consummating such acquisition proposal. Under the merger agreement, Advanced Disposal must notify Waste Management within forty-eight (48) hours following receipt of an
acquisition proposal.
Under
the merger agreement,
acquisition proposal
means any proposal or offer (including a tender offer or exchange offer) from any person (other
than Waste Management or Merger Sub) relating to (i) any merger, consolidation, dissolution, liquidation, recapitalization, reorganization, spin off, share exchange, business combination,
purchase, or similar transaction with
respect to Advanced Disposal or any of its subsidiaries or (ii) (A) any direct or indirect acquisition or purchase of assets or businesses that constitute 15% or more of the revenues,
net income or assets of Advanced Disposal, or 15% or more of the total voting power of the equity securities of Advanced Disposal, or (B) any tender offer or exchange offer that if consummated
would result in any person beneficially owning 15% or more of the total voting power of the equity securities of Advanced Disposal, or any merger, reorganization, consolidation, share exchange,
business combination or similar transaction involving Advanced Disposal.
The Advanced Disposal Board Recommendation; Change of Recommendation; Fiduciary Exception
Under the merger agreement, generally, the Board may not (i) withdraw or modify in a manner adverse to Waste Management or Merger Sub, the Board
recommendation, (ii) approve, adopt or recommend, or declare the advisability of, any acquisition proposal, (iii) enter into any acquisition agreement, merger agreement, or similar
agreement (other than an acceptable confidentiality agreement with respect to any acquisition proposal), (iv) fail to include the Board recommendation in this proxy statement, (v) fail
to recommend against any acquisition proposal that is a tender offer or exchange offer within ten (10) business days after the commencement of such tender offer or exchange offer, or
(vi) if an acquisition proposal (including a material amendment to the terms of an existing acquisition proposal, other than as described in the previous clause (v)) has been publicly
announced or disclosed, fail to reaffirm the Board recommendation upon the written request of Waste Management.
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However,
prior to the receipt of the Advanced Disposal stockholder approval, the Board, in certain circumstances and subject to certain limitations set forth in the merger agreement, may
(A) take any of the actions described in clauses (i) through (vi) of the immediately preceding paragraph or terminate the merger agreement in connection with a superior proposal
(as defined below) and (B) take any of the actions described in clauses (i) through (vi) of the immediately preceding paragraph in connection with an intervening event (as defined
below), unrelated to any acquisition proposal, in each case, subject to specified notice obligations to Waste Management and specified obligations to negotiate and consider in good faith any
modifications proposed by Waste Management to the merger agreement. The Board is permitted to make a change of the Board recommendation or enter into an agreement with respect to a superior proposal
after providing Waste Management with a four (4) business day period of good faith negotiation.
Under
the merger agreement,
superior proposal
means a
bona fide
acquisition proposal (with all
references to 15% or more in the
definition of acquisition proposal being deemed to reference more than 50%) that the Board in good faith, after consultation with, and taking into account the advice of its
financial advisor and outside legal counsel, determines (i) would result in a transaction more favorable from a financial point of view to the Advanced Disposal stockholders than the merger,
taking into account all financial, legal, financing, regulatory and other aspects and risks and timing of consummation, and any changes to the terms of the merger agreement committed to by Waste
Management in response to such superior proposal and (ii) is reasonably capable of being completed on the terms proposed.
Under
the merger agreement, and subject to certain exceptions in the merger agreement, an
intervening event
means any material event, change,
effect, condition, development, fact or circumstance with respect to Advanced Disposal and its subsidiaries or business of Advanced Disposal that (i) is neither known by, nor reasonably
foreseeable by the Board as of or prior to the date of the merger agreement and (ii) first occurs, arises or becomes known to the Board after the date of the merger agreement and on or prior to
the date of the Special Meeting, subject to certain exceptions.
Access to Information
Prior to the effective time, and subject to certain exceptions, Advanced Disposal has agreed to use its reasonable efforts to afford Waste Management
reasonable access, consistent with applicable law and as specified in more detail in the merger agreement, at all reasonable business hours to its officers, employees, properties, offices, and other
facilities and books and records, and has agreed to furnish Waste Management with financial, operating and other data and information as Waste Management may from time to time reasonably request in
writing, and to use commercially reasonable efforts to cooperate and make its officers, employees or authorized representatives reasonably available to provide additional information and access as may
be reasonably requested by Waste Management. Waste Management will indemnify Advanced Disposal against any losses that may be incurred by it related to the use, storage or handling of any personally
identifiable information relating to employees, providers or customers of Advanced Disposal, and any other information that is protected by applicable law (including privacy laws). Waste Management is
also entitled to access for the preparation of non-invasive environmental assessments, and it has information and consultation rights regarding Advanced Disposal’s corrective actions
relating to elevated temperature, slope ability and related odor concerns at any of Advanced Disposal’s landfill sites (and Advanced Disposal must consider in good faith any
reasonable corrective actions recommended by Waste Management). In addition, Advanced Disposal must provide regular updates to Waste Management regarding material class action litigations, provide
Waste Management with the opportunity to consult with Advanced Disposal on the defense of such litigations and may not settle material class-action litigation in excess of $10,000,000 in the aggregate
without consulting Waste Management (except that Waste Management does not have the right to consult with Advanced Disposal to the extent any settlement terms include any pricing mechanism or other
restriction on pricing).
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Directors’ and Officers’ Indemnification and Insurance
For six (6) years from and after the effective time, the surviving company must indemnify each director and officer of Advanced Disposal against any
costs incurred in connection with any claim arising out of matters existing at or prior to the effective time, to the fullest extent that Advanced Disposal would have been required under applicable
law, its organizational documents or the organizational documents of its subsidiaries, and any indemnification agreements with any directors and officers of Advanced Disposal to indemnify such person,
as described in the merger agreement.
From
and after the effective time, the provisions in the surviving company’s certificate of incorporation and bylaws with respect to indemnification, advancement of expenses and
exculpation of former or present directors and officers will be no less favorable than such provisions contained in Advanced Disposal’s certificate of incorporation and bylaws in
effect as of the date of the merger agreement, which provisions may not be amended or otherwise modified for six (6) years from the effective time in any manner that would affect adversely the
rights of directors and officers of Advanced Disposal or any of its subsidiaries.
Prior
to the effective time, Advanced Disposal will be permitted to obtain and pay for tail insurance policies for the extension of the directors’ and
officers’ liability coverage of Advanced Disposal’s existing insurance policies for a claims period of at least six (6) years following the effective time,
that will be from an insurance carrier with the same or better credit rating as Advanced Disposal’s insurance carrier as of the date of the merger agreement with benefits and levels
of coverage that are at least as favorable as Advanced Disposal’s existing policies. However, Advanced Disposal may not expend a premium amount in excess of 300% of the annual
premiums currently paid by Advanced Disposal. If Advanced Disposal and the surviving company fail to obtain such tail insurance policies as of the effective time, the
surviving company will continue to maintain in effect the insurance in place as of the date of the merger agreement for at least six (6) years from and after the effective time, with benefits
and levels of coverage that are at least as favorable as provided in Advanced Disposal’s existing policies as of the date of the merger agreement. However, in no event will Waste
Management or the surviving company be required to expend more than 300% of the annual premiums currently paid by Advanced Disposal for such insurance. If the annual premiums of such insurance
coverage exceed such amount, the surviving company will obtain a policy with the greatest coverage available for a cost not exceeding such amount.
Efforts to Complete the Merger; Regulatory Approvals
Waste Management must use its reasonable best efforts to take all actions reasonably necessary to effectuate the merger. Each party will cooperate with the
other party and use its reasonable best efforts to, as promptly as practicable, prepare and submit all filings required for any regulatory approval or consent from any governmental entity and to
assist and cooperate with the other party in connection with the foregoing.
Advanced
Disposal and Waste Management have agreed, as described in the merger agreement, to:
-
-
cooperate with each other in connection with any regulatory filing and any investigation, including any proceeding initiated by a private
party;
-
-
keep the other party reasonably informed of any communication received by such party from the FTC, the DOJ or any other U.S. or foreign
governmental entity, or from a private party, in each case regarding any of the transactions contemplated by the merger agreement; and
-
-
permit the other party to review any substantive communication given by it to, and consult with each other in advance of any meeting or
conference with, the DOJ, the FTC or any such other governmental entity or in connection with any proceeding by a private party.
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Each
of Advanced Disposal and Waste Management must notify the other reasonably promptly upon the receipt of:
-
-
any material communication from any governmental entity in connection with any regulatory filing made pursuant to the merger agreement;
-
-
knowledge of the commencement of any suits, claims, actions or investigations by or before any governmental entity with respect to the merger;
and
-
-
any request by any governmental entity for any amendment to any filing made pursuant to the merger agreement.
Any
materials provided in connection with the foregoing may be redacted to (i) remove references concerning the valuation of Advanced Disposal, (ii) to comply with contractual
arrangements and (iii) to address reasonable privilege and confidentiality concerns.
In
the event that any action is commenced by a governmental entity challenging the merger under any antitrust laws, (i) each of Advanced Disposal and Waste Management must reasonably cooperate
with each other and (ii) Waste Management must use its reasonable best efforts to contest such action and to have overturned any decree other order that is in effect and that prohibits the
completion of the merger so as to permit completion of the merger no later than the end date.
In
furtherance of the foregoing, Waste Management has agreed to (i) commit to the sale, divesture, disposition, or license of any assets, operations, businesses of Waste Management or its
subsidiaries or Advanced Disposal or its subsidiaries, if required to obtain the necessary regulatory approvals and (ii) otherwise take any actions that would limit Waste
Management’s or its subsidiaries’ or Advanced Disposal’s or its subsidiaries’ freedom of action with respect to any assets,
operations, properties, products, or businesses, of Waste Management or its subsidiaries or Advanced Disposal’s or its subsidiaries. However, Waste Management will not be required to
take any of the foregoing actions if such actions would, individually or in the aggregate, result in a reduction of revenue (without duplication and net of any intercompany revenues) in excess of
$200,000,000 (for any rolling 12-month period ending the last full month prior to any date between the date of the merger agreement and the closing date) to Waste Management, Advanced Disposal and
their respective subsidiaries (taken as a whole after giving effect to the merger) if such actions had been taken at the beginning of any such rolling 12-month period. Any such actions will be
conditioned upon the consummation of the merger.
Waste
Management is entitled to control the strategy for obtaining all consents that may be sought from any governmental entity, including by directing the timing, nature, and substance of any filings
and communications contemplated by the merger agreement. However, Waste Management will give Advanced Disposal the opportunity to participate in such discussions or other proceedings to the extent not
prohibited by applicable law.
Advanced
Disposal has agreed to:
-
-
take all reasonable actions Waste Management requests and to cooperate with Waste Management in connection with obtaining any actions,
consents, undertakings, approvals or waivers by or from any governmental entity, including reasonable cooperation with Waste Management in litigating or otherwise contesting any objections to or
proceedings or other actions challenging the merger and the other transactions contemplated by the merger agreement;
-
-
reasonably assist Waste Management in any sales process with potential purchasers of any of Advanced Disposal’s or its
subsidiaries’ businesses or other assets proposed by Waste Management to be subject to such divestitures required by a governmental entity; and
-
-
enter into one or more agreements as requested by Waste Management prior to the closing with respect to any transaction to divest, hold
separate or otherwise take any action that would limit
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Advanced
Disposal’s or its subsidiaries’ freedom of action or their ability to retain or hold any of the businesses or assets of Advanced Disposal or any of its
subsidiaries.
However,
the consummation of the transactions provided for in any such agreement with respect to a divestiture will be conditioned upon the closing or satisfaction or waiver of all of the conditions
to closing in a case where the closing will occur immediately following consummation of such divestiture.
Financing Cooperation
Subject to certain exceptions in the merger agreement, Advanced Disposal has agreed to use its reasonable efforts to provide customary cooperation as may be
reasonably requested by Waste Management or Merger Sub in connection with any financing made, or to be made, by Waste Management or any of its subsidiaries, including
by:
-
-
providing customary historical financial and other customary pertinent information with respect to Advanced Disposal and its subsidiaries as
may be reasonably requested or required by Waste Management (for use in connection with any such financing);
-
-
providing information regarding Advanced Disposal and its subsidiaries reasonably necessary or customarily required to assist Waste Management
in preparing pro forma financial statements;
-
-
using commercially reasonable efforts to cause Ernst & Young LLP to provide reasonable and customary assistance to Waste
Management, including by participating in accounting due diligence sessions, facilitating the delivery of customary comfort letters from Ernst & Young LLP if necessary, desirable or
customary for Waste Management’s use of the financial statements of Advanced Disposal in any marketing or offering materials to be used in connection with the financing;
-
-
executing and delivering any definitive financing agreements, customary certificates or other instruments relating to guarantees;
-
-
furnishing reasonably promptly (and at least three (3) business days prior to the effective time) all documentation and other
information reasonably requested in writing at least ten (10) business days prior to the closing date that is required by any governmental entity in connection with the financing under
applicable know your customer and anti-money laundering rules;
-
-
obtaining customary payoff letters, lien releases and instruments of discharge in respect of Advanced Disposal’s existing
credit agreement;
-
-
providing reasonable assistance with due diligence, including providing reasonable contact with senior management of Advanced Disposal and its
subsidiaries;
-
-
reasonably cooperating with legal counsel to Waste Management in connection with any legal opinions; and
-
-
delivering conditional notices of prepayment within the time period required by Advanced Disposal under its credit agreement and issuing
conditional notices of redemption with respect to the outstanding senior notes of Advanced Disposal.
Debt Offers
Subject to certain conditions in the merger agreement, if Waste Management so requests, Advanced Disposal will use commercially reasonable efforts, as
described in the merger agreement, to commence an offer to purchase for cash any or all of the outstanding aggregate principal amount of its senior notes and/or to conduct consent solicitations with
respect to such notes as reasonably requested by Waste Management, or conduct consent solicitations with respect to such senior notes. Such offers to purchase or consent solicitations will be
contingent upon the consummation of the merger.
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Employee Matters
In connection with the transaction, in order to reward and retain employees, Advanced Disposal may implement a transaction bonus program with a bonus pool in
the aggregate amount of no more than $5 million to be allocated by Advanced Disposal’s chief executive officer to employees (other than named executive officers), in the
amounts determined by Advanced Disposal’s chief executive officer, subject to approval by Waste Management’s chief operating officer. Awards granted pursuant to the
transaction bonus program are conditioned on the occurrence of the closing and the transaction bonus recipient being an employee in good standing six months following the effective time. Employees who
receive a transaction bonus award and who experience an involuntary separation from service within six months following the effective time will be entitled to receive a transaction bonus. An
involuntary separation from service includes (i) termination without cause, (ii) resignation by the employee with good reason, as defined in the
employee’s employment agreement, or (iii) resignation by an employee who does not have an employment agreement and who refuses to relocate more than 50 miles to a new principal
place of business.
In
accordance with the merger agreement, Advanced Disposal may establish bonus plans and grant and pay annual bonus awards for 2019 and 2020 in the ordinary course and consistent with past practice.
In order to reward and incentivize employees to remain employed by Advanced Disposal through the
closing, bonus-eligible employees may be guaranteed a cash bonus amount for each of 2019 and 2020 that is at least equal to such employee’s 2019 target annual bonus, meaning that
bonus-eligible employees will receive their ordinary course bonus, if it is in excess of the bonus guarantee amount, but in any event will receive at least the bonus guarantee amount for both 2019 and
2020 if they remain employed through the closing. For more information about bonus guarantees of Advanced Disposal’s executive officers, see
The
Merger (Proposal 1)Interests of Advanced Disposal Directors and Executive Officers in the MergerGuaranteed Bonuses
beginning on page 59
of this proxy statement.
Advanced
Disposal may also implement a severance plan, or enter into severance contracts with, Advanced Disposal employees who do not have employment agreements. The new severance program may provide
that upon a qualifying termination, an employee may receive severance amounts equal to the greater of (i) two weeks’ severance for every year of service at Advanced Disposal,
including its predecessors or successors and (ii) twelve weeks’ severance, in each case, at the base salary rate for the applicable employee in effect immediately prior to the
effective time or the date of termination, whichever is greater. All of the executive officers of Advanced Disposal have employment agreements with Advanced Disposal and are not entitled to
participate in the new severance program. For more information about the employment agreements and severance entitlements of Advanced Disposal’s executive officers, see the section
entitled
The Merger (Proposal 1)Interests of Advanced Disposal Directors and Executive Officers in the MergerEmployment
Agreements
beginning on page 60 of this proxy statement.
For
a period commencing on the closing date and ending on the twelve-month anniversary of the closing date, Waste Management will, or will cause the surviving company and its subsidiaries to provide,
to each employee of Advanced Disposal or its subsidiaries who is not represented by a labor organization and who continues to be employed by Advanced Disposal or the surviving company or any
subsidiary or affiliate thereof: (i) a base salary or wage rate that is no less than that provided to such employee by Advanced Disposal or its subsidiaries immediately prior to the effective
time; (ii) severance benefits that are no less favorable than those provided to such employee by Advanced Disposal or its subsidiaries immediately prior to the effective time; and
(iii) all other compensation and benefits that are no less favorable in the aggregate than those provided to such employee by Advanced Disposal or its subsidiaries immediately prior to the
effective time. In addition, as of the effective time, Waste Management will honor in accordance with their terms, all contracts, policies, plans and commitments of Advanced Disposal and its
subsidiaries as in effect immediately prior to the effective time that are applicable to any of their current or former employees and directors.
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In
addition, commencing as of the effective time, the surviving company and its subsidiaries will: (i) observe the terms of each of their existing collective bargaining agreements that govern
the wages, hours and other terms and conditions of employment of employees of Advanced Disposal or its
subsidiaries who are covered by such collective bargaining agreements and who continue to be employed by Advanced Disposal or the surviving company or any subsidiary or affiliate thereof; and
(ii) honor their collective bargaining agreements until their respective expiration, modification or amendment.
With
respect to each benefit plan, program, practice, policy or arrangement maintained by Waste Management or its subsidiaries (including the surviving company) following the effective time and in
which any employee of Advanced Disposal or its subsidiaries who continues to be employed by Advanced Disposal or the surviving company or any subsidiary or affiliate thereof participates (which we
refer to as the
purchaser plans
), for purposes of determining eligibility to participate, vesting accrual of and entitlement to benefits (but not
for benefit accruals under defined benefit pension plans or participation in frozen (whether as to new participants or benefit accruals) post-employment or retiree welfare benefits), service with
Advanced Disposal and its subsidiaries will be treated as service with Waste Management and its subsidiaries, except to the extent such credit will result in the duplication of benefits.
With
respect to the purchaser plans, Waste Management and the surviving company and its subsidiaries and affiliates will waive, or cause the insurance carrier to waive, all eligibility waiting periods
and pre-existing condition limitations to the extent waived, met or not included under a corresponding Advanced Disposal plan, credit each employee and any covered dependent for any co-payments and
deductibles, and use commercially reasonable efforts to credit out-of-pocket expenses paid by each employee or any covered dependent under Advanced Disposal plans during the relevant plan year, up to
and including the effective time.
At
the request of Waste Management, Advanced Disposal will terminate its 401(k) retirement plan. If the Advanced Disposal 401(k) retirement plan is terminated pursuant to Waste
Management’s request, continuing employees will be eligible to participate in a purchaser plan that is a 401(k) retirement plan as soon as practicable following the effective time.
Special Meeting
Advanced Disposal has agreed to give notice of, convene and hold a special meeting of its stockholders, as soon as reasonably practicable, and in no event
more than fifty (50) days, after the date on which it learns that this proxy statement will not be reviewed or that the SEC has no further comments on this proxy statement. Advanced Disposal
has agreed not to postpone or adjourn the special meeting unless Advanced Disposal does not have the requisite votes or has not established a proper quorum on such date (in which case the meeting
shall not be postponed for more than thirty (30) days after the date on which such meeting was originally scheduled, except with Waste Management’s prior written consent).
Waste
Management and Merger Sub have agreed to furnish to Advanced Disposal the information relating to it and its subsidiaries that is required to be included in this proxy statement and provide
other assistance as may be reasonably requested by Advanced Disposal. Advanced Disposal has agreed to use its reasonable best efforts to resolve all SEC comments, if any, to this proxy statement as
promptly as practicable upon receipt of any such comments. Advanced Disposal and Waste Management have agreed that none of the information supplied by it for inclusion or incorporation in this proxy
statement will, at the date it is filed with the SEC or first mailed to Advanced Disposal’s stockholders or at the time of the Special Meeting or at the time of any amendment or
supplement of this proxy statement, contain any untrue statement of a material fact or omit to state any material fact required to be stated herein or necessary in order to make the statements herein,
in light of the circumstances in which they are made, not misleading. Advanced Disposal will promptly notify Waste Management of the receipt of any comments from the SEC with respect to the proxy
statement and any request by the SEC for any amendment to the proxy statement or any request for additional information. Prior to filing or mailing this proxy statement,
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Advanced
Disposal will provide Waste Management a reasonable opportunity to review and to propose amendments on such document or response and consider in good faith any comments proposed by Waste
Management for inclusion.
Stock Exchange De-listing
Advanced Disposal will cooperate with Waste Management and use its reasonable best efforts to cause Advanced Disposal securities to be de-listed from NYSE and
de-registered under the Exchange Act as promptly as practicable after the effective time.
Transaction Litigation
In the event that any litigation related to the merger agreement, the merger or the transactions contemplated by the merger agreement is brought against
Advanced Disposal or any member of the Board between during the pre-closing period, Advanced Disposal must promptly notify Waste Management and will keep Waste Management reasonably informed of its
status. Advanced
Disposal will also give Waste Management the opportunity to consult with Advanced Disposal with respect to the litigation defense. Further, Advanced Disposal will not settle any transaction litigation
without Waste Management’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed by Waste Management.
Takeover Laws
If any fair price, moratorium, control share acquisition, business
combination or other similar anti-takeover statute becomes or is deemed to be applicable to the merger agreement, the merger, the voting agreement, or the transactions, then the Board
will grant such approvals and take such actions as are necessary so that such transactions may be consummated as promptly as practicable on the terms contemplated under the merger agreement and the
voting agreement, and otherwise act to eliminate or minimize the effect of such statute or regulation.
Conditions to the Merger
The obligations of the parties to effect the merger are subject to the satisfaction (or written waiver by the parties not seeking the waiver, if permissible
by applicable law), at or prior to the effective time, of the following conditions:
-
-
the Advanced Disposal stockholder approval having been obtained;
-
-
no law or injunction having been enacted by any governmental entity which enjoins the merger; and
-
-
any waiting period applicable to the merger under the HSR Act having been expired or terminated.
The
obligations of Waste Management and Merger Sub to consummate the merger are subject to the satisfaction or written waiver of the following additional
conditions:
-
-
the representations and warranties of Advanced Disposal:
-
-
regarding (i) the authorized capitalization of Advanced Disposal, (ii) the authority of Advanced Disposal, (iii) the
absence of a material adverse effect, (iv) brokers’ and financial advisors’ fees, (v) the receipt of Advanced Disposal stockholder approval and
(vi) the absence of a rights plan, in each case, being true and correct as of the date of the merger agreement and the closing date as though made on and as of such date and time (except to the
extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty will be true and correct as of such earlier date);
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-
-
regarding (i) due organization, qualification and subsidiaries, (ii) certain capitalization information of Advanced Disposal, and
(iii) certain securities information of Advanced Disposal, in each case, being true and correct in all but
de minimis
respects as of the date of
the merger agreement and as of the closing date with the same force and effect as of made on such date (except if any such representation and warranty expressly speaks as of an earlier date, in which
case such representation and warranty must be true and correct in all but
de minimis
respects as of such earlier date);
-
-
regarding certain indebtedness of Advanced Disposal being true and correct in all material respects as of the date of the merger agreement and
as of the closing date with the same force and effect as if made on and as of such date (except if any such representation and warranty expressly relates to an earlier date, in which case, such
representation and warranty must be true and correct in all material respects as of the earlier date); and
-
-
regarding each of the other matters with respect to Advanced Disposal set forth in the merger agreement, in each case, being true and correct
in all respects as of as of the closing date, as if made at such time (except to the extent any such representation or warranty expressly relates to a specific date, in which case on and as of such
earlier date); provided that the condition described in this bullet point will be deemed to have been satisfied unless the failure of such representations and warranties to be so true and correct
(without giving effect to any material adverse effect, materiality or similar qualifications contained therein) individually or in the aggregate,
has had or would reasonably be expected to have a material adverse effect.
-
-
Advanced Disposal having performed in all material respects each of the obligations under the merger agreement at or prior to the closing date.
-
-
Waste Management having received a certificate from Advanced Disposal certifying that the conditions specified above regarding the
representations and warranties of Advanced Disposal and the covenants, agreements and obligations of Advanced Disposal have been satisfied.
-
-
Since the date of the merger agreement, there has not occurred a material adverse effect on Advanced Disposal.
The
obligations of Advanced Disposal to consummate the merger are subject to the satisfaction or waiver by Advanced Disposal, (if permissible by applicable law) of the following additional
conditions:
-
-
The representations and warranties of Waste Management and Merger Sub:
-
-
regarding Waste Management’s authority relative to the merger agreement being true and correct as of the date of the merger
agreement and as of the closing date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which
case such representation and warranty must be true and correct as of such earlier date); and
-
-
regarding each of the other matters with respect to Waste Management and Merger Sub set forth in the merger agreement, in each case, being true
and correct as of the date of the merger agreement and as of closing date, as though made on and as of such date and time (except to the extent that any such representation and warranty expressly
speaks as of an earlier date, in which case such representation and warranty must be true and correct as of such earlier date); provided that the condition described in this bullet point will be
deemed to have been satisfied unless the failure of any such representations and warranties to be so true and correct, individually or in the aggregate, would not reasonably be expected to prevent,
materially impair or have a material adverse effect on the ability of Waste Management or Merger Sub to consummate the transactions.
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-
-
Each of Waste Management and Merger Sub having performed in all material respects each of its obligations, and complied in all material
respects with each of its agreements and covenants under the merger agreement at or prior to the closing date.
-
-
Advanced Disposal having received a certificate from Waste Management certifying that the conditions specified above regarding the
representations and warranties of Waste Management and Merger Sub and the covenants, agreements and obligations of Waste Management and Merger Sub have been satisfied.
Termination; Effect of Termination
The merger agreement may be terminated and the transactions may be abandoned at any time prior to the effective time of the
merger:
-
-
by mutual written consent of Waste Management and Advanced Disposal;
-
-
by either Waste Management or Advanced Disposal if:
-
-
a governmental entity of competent jurisdiction sitting in the United States has adopted a law or issued a governmental order (which has become
final and nonappealable) prohibiting the merger, except this termination right will not be available to a party whose breach of the merger agreement was the primary cause of, or primarily resulted in,
the issuance of such legal restraint;
-
-
the effective time has not occurred on or before April 14, 2020, as may be extended by the mutual written consent of Waste Management
and Advanced Disposal and as will be extended by ninety (90) days if all of the conditions set forth in the merger agreement have been satisfied (or, with respect to the conditions that by
their terms must be satisfied at the closing, would have been so satisfied if the closing had occurred) or remain capable of being satisfied other than (i) the absence of legal restraints
imposed by a governmental entity and (ii) approval under the HSR Act not having been obtained, except that this termination right will not be available to a party whose breach of the merger
agreement was the primary cause of, or primarily resulted in, the failure of the effective time of the merger to occur before April 14, 2020;
-
-
the Advanced Disposal stockholder approval is not obtained at the Special Meeting (or any adjournment or postponement thereof); or
-
-
by Advanced Disposal if:
-
-
there is an uncured breach by Waste Management or Merger Sub or any of their respective representations, warranties or covenants in the merger
agreement;
-
-
the Board determines to enter into an acquisition agreement with respect to a superior proposal prior to (but not after) obtaining the Advanced
Disposal stockholder approval at the Special Meeting (or any adjournment or postponement thereof); or
-
-
by Waste Management if:
-
-
if there is an uncured breach by Advanced Disposal of any of its representations, warranties or covenants in the merger agreement; or
-
-
the Board has changed the Board recommendation prior to obtaining the Advanced Disposal stockholder approval at the Special Meeting (or any
adjournment or postponement thereof), or has taken other similar actions as specified in the merger agreement.
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If
the merger agreement is validly terminated pursuant to the termination rights described in the bullet points above in this section, the merger agreement will become void and of no further force or
effect and there will be no liability or obligation on the part of any party, except for the confidentiality provisions, provisions relating to the effect of termination (including the termination
fees described in the section entitled
The Merger AgreementCompany Termination Fee; Waste Management Termination
Fee
beginning on page 88 of this proxy statement) and certain other specified general provisions of the merger agreement, each of which will survive the
termination of the merger agreement.
Company Termination Fee; Waste Management Termination Fee
Under the merger agreement, Advanced Disposal is required to pay Waste Management the Company termination fee if the merger agreement is terminated by the
applicable party under the following specified circumstances:
-
-
if Advanced Disposal enters into an acquisition agreement with respect to a superior proposal prior to obtaining the Advanced Disposal
stockholder approval;
-
-
if the Board changes the Board recommendation or takes similar actions prior to the Special Meeting;
-
-
if Advanced Disposal stockholders do not approve the merger at a time when Waste Management is entitled to terminate the merger agreement due
to the Board’s change of the Board recommendation; or
-
-
if (i) the Advanced Disposal stockholder approval is not obtained at the Special Meeting, (ii) Advanced Disposal breached its
representations, warranties or covenants and such breach is not cured, or (iii) the merger is not consummated by the end date, and, in each case, prior to the applicable termination event,
(A) a third party announces its intention to make an acquisition proposal, which acquisition proposal is not withdrawn, and (B) within 12 months after the termination date,
Advanced Disposal has entered into an agreement with a third party with respect to an acquisition proposal or an acquisition proposal has been consummated involving Advanced Disposal or any of its
subsidiaries.
Under
the merger agreement, Waste Management is required to pay Advanced Disposal the Waste Management termination fee if the merger agreement is terminated by Advanced Disposal
because:
-
-
a nonappealable court order or legal restraint has been issued prohibiting the merger due to antitrust reasons; or
-
-
the transactions contemplated by the merger agreement have not been completed by the end date, and at such time, antitrust approval under the
HSR Act has not been obtained;
provided
that, in either case, at the time of termination, (i) a breach by Advanced Disposal of a covenant in the merger agreement is not the cause of such order, legal restraint or lack of
approval, (ii) Advanced Disposal must have satisfied its closing conditions and (iii) the Advanced Disposal stockholder approval must have been obtained.
Advanced
Disposal will be required to reimburse Waste Management’s expenses of up to $15,000,000 if the merger agreement is terminated by either Advanced Disposal or Waste Management
as a result of a failure to obtain the Advanced Disposal stockholder approval or by Waste Management for Advanced Disposal’s uncured breach of any of its representations, warranties
or covenants; however, such reimbursement amount can be credited against the Company termination fee.
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Limitations on Remedies; Specific Performance
Advanced Disposal and Waste Management have agreed that the parties will be entitled to an injunction, specific performance and other equitable relief to
prevent actual or threatened breaches of the merger agreement and to specifically enforce the terms of the merger agreement, in addition to any other remedy to which they are entitled at law or in
equity.
The
parties have also agreed that, if the Company termination fee is payable as a result of an acceptance by the Board of a superior proposal, Waste Management’s and Merger
Sub’s right to terminate the merger agreement and receive payment of the Company termination fee will be the sole and exclusive remedy of Waste Management and Merger Sub for any loss
suffered by Waste Management or Merger Sub as a result of a breach by Advanced Disposal of its obligations with respect to the non-solicitation provisions under the merger agreement. In addition, the
parties have also agreed that Advanced Disposal’s right to terminate the merger agreement and receive payment of the Waste Management termination fee will be the sole and exclusive
remedy of Advanced Disposal against Waste Management and Merger Sub for any loss suffered by Advanced Disposal as a result of a breach by Waste Management or Merger Sub of certain of its obligations
with respect to regulatory matters under the merger agreement.
Amendment; Extension; Waivers
At any time prior to the effective time, the merger agreement may be amended by written agreement among the parties. However, following receipt of Advanced
Disposal stockholder approval at the Special Meeting, no amendment may be made that would require the approval of Advanced Disposal stockholders, unless such approval is obtained prior to any such
amendment.
At
any time prior to the effective time of the merger, the parties may:
-
-
extend the time for the performance of any obligation of the other party to the merger agreement;
-
-
waive any inaccuracies in the representations and warranties of the other party contained in the merger agreement; and
-
-
subject to the requirements of applicable law, waive compliance with any agreement of the other party or any condition to its own obligations
contained in the merger agreement.
Such
extension or waiver will be valid if in writing signed by the other party to be bound. The failure of any party to assert any of its rights under the merger agreement will not constitute a waiver
of those rights.
Expenses
Except as otherwise provided in the merger agreement, each of the parties has agreed to bear its own expenses in connection with the merger agreement.
However, Waste Management must pay all filing fees required under the HSR Act with respect to the transactions contemplated by the merger agreement.
Governing Law; Jurisdiction
The merger agreement is governed by Delaware law.
The
parties have agreed to submit to the personal jurisdiction of the Delaware Court of Chancery and any state appellate court within the State of Delaware in connection with any matter arising out of
the merger agreement. The parties have also agreed to waive all rights to a jury trial arising out of the merger agreement.
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THE VOTING AGREEMENT
Below is a summary of the material provisions of the voting agreement, a copy of which is attached to this proxy statement as
Annex B
and which is incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information
about the voting agreement that is important to you. We encourage you to read the voting agreement in its entirety carefully, as the rights and obligations of the parties thereto are governed by the
express terms of the voting agreement and not by this summary or any other information contained in this proxy statement.
On
April 14, 2019, CPPIB and Waste Management entered into the voting agreement. CPPIB owned, as of the date of the voting agreement, 16,572,106 shares of Advanced Disposal common stock (which
we refer to as the
covered shares
), which represented approximately 18.7% of the outstanding Advanced Disposal common stock on such date.
Subject
to the terms and conditions of the voting agreement, including the absence of any change of Board recommendation under circumstances defined in the merger agreement, CPPIB has agreed, among
other things, to vote (unless the Board withdraws or changes the Board recommendation or until the voting agreement has terminated in accordance with its terms) (i) its covered shares for the
approval and adoption of the merger agreement and (ii) against certain other matters, including: (a) any action or agreement that would reasonably be expected to result in a breach of
the merger agreement or a failure of timely satisfaction of closing conditions under the merger agreement, (b) any acquisition proposal or other proposal made in opposition to, in competition
with, or inconsistent with, the merger or the merger agreement and (c) any other action, agreement or proposal that could reasonably be expected to delay, postpone or adversely affect the
consummation of the merger and the other transactions contemplated by the merger agreement.
The
voting agreement terminates upon the earliest to occur of (i) the merger contemplated by the merger agreement becoming effective, (ii) the merger agreement being validly terminated
in accordance with the terms thereof or (iii) CPPIB’s election to terminate in its sole discretion promptly following any amendment to the merger agreement that reduces or
changes the form of consideration payable.
The
voting agreement also restricts CPPIB, among other things, from transferring the covered shares without the consent of Waste Management. Exceptions include transfers to affiliated transferees who
agree to be bound by the terms of the voting agreement and transfers incident to ordinary course financing transactions following the receipt of the required stockholder approval of the merger by
Advanced Disposal’s stockholders. In addition, CPPIB waived its appraisal rights under Section 262 DGCL with respect to all covered shares owned.
The
foregoing description of the voting agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the voting agreement, which is filed as
Annex B
hereto and incorporated by reference into this proxy statement.
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ADVISORY VOTE ON SPECIFIED COMPENSATION (PROPOSAL 2)
Golden Parachute Compensation
This section sets forth the information required by Item 402(t) of the SEC’s Regulation S-K regarding certain compensation that
may be paid to Advanced Disposal’s named executive officers in connection with the transaction under existing arrangements between Advanced Disposal and the named executive officers.
This compensation is referred to as the golden parachute compensation by the applicable SEC disclosure rules, and in this section entitled
Advisory Vote on Specified Compensation (Proposal 2)
we use such term or the term
specified
compensation
to describe these payments. These potential payments consist of:
-
-
severance payments that each named executive officer would be entitled to receive in connection with a qualifying termination pursuant to the
terms of his or her employment agreement (each described in more detail in the section entitled
The Merger (Proposal 1)Interests of Advanced
Disposal’s Directors and Executive Officers in the MergerEmployment Agreements
beginning on page 60 of this proxy statement);
-
-
the guaranteed bonus payments (as described in more detail in the section entitled
The Merger (Proposal
1)Interests of Advanced Disposal’s Directors and Executive Officers in the MergerGuaranteed Bonuses
beginning on
page 59 of this proxy statement); and
-
-
payments in connection with Advanced Disposal’s equity-based compensation awards, the treatment of which is described in more
detail in the section entitled
The Merger (Proposal 1)Treatment of Advanced Disposal’s Equity
Awards
beginning on page 55 of this proxy statement.
Further
details on these potential payments and benefits, including applicable vesting terms and conditions, are provided in the footnotes to the table below and in the section entitled
The Merger (Proposal 1)Interests of Advanced Disposal’s Directors and Executive Officers in the
Merger
beginning on page 55 of this proxy statement. Specified compensation does not include amounts that are already vested at the effective time of the
merger.
For
purposes of quantifying these potential payments and benefits for the tables below, the following assumptions were used:
-
-
the closing date is December 31, 2019, which, solely for purposes of this specified compensation disclosure, is the assumed date of the
closing and to be used only for illustrative purposes;
-
-
immediately following the effective time, the employment of each of Advanced Disposal’s named executive officers is terminated
by Advanced Disposal without cause or by the named executive officer with good reason under his or her employment agreement (we refer to such a termination or resignation as a
covered termination
);
-
-
all annual bonus payments will pay out based on the named executive officer’s 2019 target annual bonus; and
-
-
the value of a share of Advanced Disposal common stock is $33.15, which is the merger consideration.
The
amounts shown are estimates based on multiple assumptions and do not reflect compensation actions that could occur after the date of this proxy statement and before the effective time. As a
result, the actual amounts received by a named executive officer may differ materially from the amounts shown in the following table, including in the event the effective time occurs on a different
date. December 31, 2019 is an illustrative date used solely for purposes of this specified compensation disclosure and is not intended to indicate that the closing will or will not occur on
such date. In addition, the amounts shown below do not attempt to quantify any reduction that may be required as a result of a Section 280G cutback; therefore, actual payments to the named
executive officers may be less than the amounts indicated below. For
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Table of Contents
purposes
of this discussion, single-trigger refers to benefits that are payable solely as a result of the closing and double-trigger refers to
benefits that require the closing, as well as a covered termination following the effective time, to become payable.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Cash ($)
(1)
|
|
Equity ($)
(2)
|
|
Perquisites/
Benefits ($)
(3)
|
|
Tax
Reimbursement ($)
(4)
|
|
Total ($)
|
Richard Burke
|
|
8,136,000
|
|
10,641,281
|
|
58,503
|
|
|
|
18,835,784
|
Steven Carn
|
|
2,772,000
|
|
4,952,564
|
|
39,002
|
|
|
|
7,763,566
|
John Spegal
|
|
2,700,000
|
|
3,261,138
|
|
69,780
|
|
31,354
|
|
6,062,272
|
Michael Slattery
|
|
2,002,000
|
|
2,375,841
|
|
39,002
|
|
|
|
4,416,843
|
Melissa Westerman
|
|
1,056,000
|
|
230,980
|
|
26,085
|
|
|
|
1,313,065
|
Matthew Gunnelson
|
|
775,000
|
|
575,363
|
|
11,003
|
|
|
|
1,361,566
|
-
(1)
-
The
cash severance payments are considered double-trigger payments because they will be paid only in connection with a covered termination,
pursuant to the terms of the applicable named executive officer’s employment agreement. The 2019 and 2020 bonus guarantees are also double-trigger payments
and will be paid only upon a termination or if a named executive officer remains employed through the payment date. The amounts reflected in this column represent, for each of Messrs. Carn,
Spegal, Slattery, Ms. Westerman and Mr. Gunnelson, an amount equal to: (1) two times annual base salary, payable in 24 equal monthly installments ($924,000 for Mr. Carn,
$900,000 for Mr. Spegal, $770,000 for Mr. Slattery, $480,000 for Ms. Westerman and $387,600 for Mr. Gunnelson); (2) two times annual bonus, payable in 24 equal
monthly installments ($924,000 for Mr. Carn, $900,000 for Mr. Spegal, $616,000 for Mr. Slattery, $288,000 for Ms. Westerman and $193,800 for Mr. Gunnelson); and
(3) the 2019 and 2020 guaranteed annual bonuses ($924,000 for Mr. Carn, $900,000 for Mr. Spegal, $616,000 for Mr. Slattery, $288,000 for Ms. Westerman and $193,800
for Mr. Gunnelson). The amounts reflected in this column represent, for Mr. Burke, an amount equal to: (1) three times annual base salary, payable in 36 equal monthly installments
($2,700,000); (2) three times his annual bonus, payable in 36 equal monthly installments ($3,240,000); (3) the 2019 and 2020 guaranteed annual bonuses ($2,160,000); and (4) an
additional amount of $36,000, payable in 24 equal monthly installments.
-
(2)
-
The
amounts reflected in the table below represent the single-trigger value of accelerated vesting of Advanced Disposal stock options,
performance share unit awards and restricted share unit awards held by each named executive officer upon the occurrence of the effective time pursuant to the merger agreement, the aggregate of which
is reflected in this column. The assumed per-share value of Advanced Disposal common stock for purposes of determining the values in this table is $33.15, which is the merger consideration. The value
reported does not include the value of currently unvested restricted share awards and the number of shares underlying currently unvested stock options,
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Table of Contents
performance
share unit awards and restricted share unit awards, in each case, that are scheduled to vest prior to December 31, 2019.
|
|
|
|
|
|
|
|
|
Name
|
|
Expected Value
of Accelerated
Stock
Options ($)
|
|
Expected Value
of Accelerated
Performance
Share Unit
Awards ($)
(a)
|
|
Expected Value
of Accelerated
Restricted Share
Unit Awards ($)
|
|
Total Expected
Value of
Accelerated
Equity ($)
|
Richard Burke
|
|
3,761,794
|
|
4,586,336
|
|
2,293,151
|
|
10,641,281
|
Steven Carn
|
|
964,984
|
|
1,661,113
|
|
2,326,467
|
|
4,952,564
|
John Spegal
|
|
905,798
|
|
1,570,249
|
|
785,091
|
|
3,261,138
|
Michael Slattery
|
|
656,118
|
|
1,146,493
|
|
573,230
|
|
2,375,841
|
Melissa Westerman
|
|
44,677
|
|
124,213
|
|
62,090
|
|
230,980
|
Matthew Gunnelson
|
|
351,004
|
|
149,573
|
|
74,786
|
|
575,363
|
-
(a)
-
The
value of the Advanced Disposal performance share units shown in the table above is based on an illustrative closing date for the transactions of
December 31, 2019 and achievement of performance metrics at target. The number of performance share unit awards held by Advanced Disposal named executive officers will be equal to the greater
of (i) the target number of shares of Advanced Disposal common stock with respect to each applicable performance share unit award and (ii) the number of shares of Advanced Disposal
common stock that would be considered earned under the terms of the applicable performance share unit award based on the most recent fiscal year-end results of Advanced Disposal preceding the fiscal
year during which the effective time occurs.
-
(3)
-
Represents
amounts to be paid in respect of post-employment COBRA benefits following a covered termination pursuant to each executive officer’s
employment agreement. The COBRA payments are considered double-trigger payments because they will be paid only in connection with a covered termination, pursuant to the terms
of the applicable named executive officer’s employment agreement. For Mr. Spegal, this amount also reflects an additional double-trigger amount of
$50,000 for relocation services, payable in a lump sum.
-
(4)
-
Represents
amounts to be paid to Mr. Spegal pursuant to his employment agreement as a tax gross-up for his $50,000 relocation benefit, payable in a single
lump sum. The relocation benefit tax gross-up is considered a double-trigger payment because it will be paid only in connection with a covered termination.
The Non-Binding Advisory Proposal
Section 14A of the Exchange Act, which was enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, requires that we
provide our stockholders with the opportunity to vote to approve, on a non-binding advisory basis, specified compensation that may be paid or become payable to Advanced Disposal’s
named executive officers in connection with the merger and contemplated by the merger agreement, as disclosed in the sections of this proxy statement above entitled
Advisory Vote on Specified Compensation (Proposal 2)Golden Parachute Compensation
beginning on page 91 of
this proxy statement and
The Merger (Proposal 1)Interests of Advanced Disposal’s Directors and Executive Officers in the
Merger
beginning on page 55 of this proxy statement. In general, the various plans and arrangements pursuant to which these compensation payments may be
made formed part of Advanced Disposal’s overall compensation program for its named executive officers, and have previously been disclosed to our stockholders as part of the
Compensation Discussion and Analysis and related sections of our annual proxy statements.
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Table of Contents
The
Advanced Disposal Board encourages you to review carefully the named executive officer specified compensation information disclosed in this proxy statement. The Advanced Disposal Board unanimously
recommends that you vote
FOR
the following resolution:
RESOLVED,
that the stockholders of Advanced Disposal Inc. approve, on a non-binding advisory basis, specified compensation that may be paid or become payable to Advanced
Disposal’s named executive officers in connection with the merger and contemplated by the merger agreement as disclosed pursuant to Item 402(t) of Regulation S-K in the
section entitled
Advisory Vote on Specified Compensation (Proposal 2)Golden Parachute Compensation
in
Advanced Disposal Corp.’s proxy statement for the Special Meeting.
Advanced
Disposal stockholders should note that this proposal is not a condition to completion of the merger and, as it is an advisory vote, the result will not be binding on Advanced Disposal, the
Advanced Disposal Board, the surviving company or Waste Management. Further, the underlying plans and arrangements are contractual in nature and not, by their terms, subject to stockholder approval.
Accordingly, regardless of the outcome of the advisory vote, if the merger is consummated, our named executive officers will be entitled to receive the compensation that is based on or otherwise
relates to the merger in accordance with the terms and conditions applicable to those payments.
The
approval of the compensation advisory proposal requires the affirmative vote of the holders of a majority of the issued and outstanding shares of Advanced Disposal common stock that are present in
person or represented by proxy at the Special Meeting and entitled to vote thereon, so long as a quorum is present, to vote
FOR
the compensation advisory proposal. An abstention from voting will have the same effect as a vote
AGAINST
the compensation advisory proposal. If your shares are held in street name by your broker, bank or other nominee and
you do not instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the compensation advisory proposal, so long as a quorum is
otherwise present.
The
Advanced Disposal Board unanimously recommends that you vote
FOR
the compensation advisory proposal.
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Table of Contents
ADJOURNMENT OF THE SPECIAL MEETING (PROPOSAL 3)
Advanced Disposal stockholders may be asked to adjourn the Special Meeting to a later date or time if necessary or appropriate, to solicit additional proxies
if there are insufficient votes at the time of the Special Meeting to approve the proposal to adopt the merger agreement.
Advanced
Disposal does not intend to call a vote on the adjournment proposal if Proposal No. 1 is approved by the requisite number of shares of Advanced Disposal common stock at the Special
Meeting.
The
affirmative vote of the holders of a majority of the issued and outstanding shares of Advanced Disposal common stock that are present in person or represented by proxy at the Special Meeting and
entitled to vote thereon, whether or not a quorum is present, is required to approve the adjournment proposal. An abstention from voting will have the same effect as a vote
AGAINST
the adjournment proposal. If your shares are held in street name by your broker, bank or other nominee and you do not
instruct the nominee how to vote your shares, a broker non-vote will arise but will have no effect on the adjournment proposal.
The
Board unanimously recommends that stockholders vote
FOR
the adjournment proposal.
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Table of Contents
MARKET PRICES AND DIVIDEND DATA
Advanced Disposal common stock is listed on NYSE under the symbol ADSW. The closing sale price of Advanced Disposal common stock on
April 12, 2019, the last trading day prior to the execution of the merger agreement, was $27.14 per share. On May 9, 2019, the most recent practicable date before the filing of this
proxy statement, the closing price of Advanced Disposal common stock was $32.33 per share. You are encouraged to obtain current market quotations for our common stock in connection with voting your
shares of our common stock.
The
following table sets forth during the periods indicated the intraday high and low sale prices of Advanced Disposal common stock as reported on NYSE, and the cash dividends declared per share for
the periods indicated:
|
|
|
|
|
|
|
|
|
Market Price
|
|
|
|
|
Dividend
Declared
(2)
|
Quarter
|
|
High
|
|
Low
|
Second Fiscal Quarter 2017
|
|
$24.07
|
|
$20.94
|
|
|
Third Fiscal Quarter 2017
|
|
$25.38
|
|
$22.35
|
|
|
Fourth Fiscal Quarter 2017
|
|
$25.71
|
|
$22.06
|
|
|
First Fiscal Quarter 2018
|
|
$24.81
|
|
$21.50
|
|
|
Second Fiscal Quarter 2018
|
|
$25.38
|
|
$21.80
|
|
|
Third Fiscal Quarter 2018
|
|
$27.93
|
|
$23.67
|
|
|
Fourth Fiscal Quarter 2018
|
|
$27.47
|
|
$22.05
|
|
|
First Fiscal Quarter 2019
|
|
$28.35
|
|
$23.02
|
|
|
Second Fiscal Quarter 2019
(1)
|
|
$33.01
|
|
$25.88
|
|
|
-
(1)
-
Provided
through May 9, 2019.
-
(2)
-
Under
the terms of the merger agreement, during the pre-closing period, Advanced Disposal is not permitted to declare, authorize, establish a record date for, set
aside or pay any dividends on, or make any other distributions in respect of, any of its capital stock except as specified in the merger agreement (as further described in the section entitled
The Merger Agreement
Conduct of Business Pending the Merger
beginning on page 75 of this proxy statement).
Following
completion of the merger, there will be no further market for Advanced Disposal common stock, and our common stock will be de-listed from NYSE and de-registered under the Exchange Act. As a
result, following completion of the merger and such de-registration, we will no longer file periodic reports with the SEC.
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Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information as of the close of business on May 7, 2019 (except as otherwise indicated by footnote), regarding the
beneficial ownership of shares of Advanced Disposal common stock by each director, named executive officer, by all directors and executive officers as a group, and by each person known by Advanced
Disposal to own 5% or more of Advanced Disposal common stock.
Unless
otherwise noted below, the address for each beneficial owner listed on the table is: c/o Advanced Disposal Services, Inc., 90 Fort Wade Road, Ponte Vedra, FL 32081. We have determined
beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in
the tables below have sole voting and investment power with respect to all shares of Advanced Disposal common stock that they beneficially own, subject to applicable community property laws.
For
purposes of the table below, the beneficial ownership amounts and percentages are based on a total of 88,792,415 shares of Advanced Disposal common stock outstanding as of the close of business on
May 7, 2019. In computing the number of shares of Advanced Disposal common stock beneficially owned by a person and the percentage ownership of that person, we deemed as outstanding the shares
of Advanced Disposal common stock subject to Advanced Disposal stock options, performance share unit awards and restricted share unit awards held by that person that are vested or will vest (and, in
the case of Advanced Disposal stock options, are exercisable or will become exercisable) as of May 7, 2019 or within 60 days thereafter. We did not deem these shares outstanding,
however, for the purpose of computing the percentage ownership of any other person.
|
|
|
|
|
|
|
Name
|
|
Total Beneficial
Ownership (1)
|
|
Number of
Exercisable
Advanced
Disposal Stock
Options (2)
|
|
Percent of
Issued and
Outstanding
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
Non-Employee Directors
|
|
|
|
|
|
|
E. Renae Conley
|
|
12,366
|
|
|
|
*
|
Tanuja Dehne
|
|
13,366
|
|
|
|
*
|
Michael Hoffman
|
|
12,696
|
|
|
|
*
|
Michael Koen
|
|
|
|
|
|
|
Ernest Mrozek
|
|
12,760
|
|
|
|
*
|
B. Clyde Preslar
|
|
18,361
|
|
|
|
*
|
Executive Officers
|
|
|
|
|
|
*
|
Richard Burke
|
|
107,332
|
|
476,161
|
|
*
|
Steven Carn
|
|
10,745
|
|
76,632
|
|
*
|
Matthew Gunnelson (3)
|
|
|
|
77,583
|
|
*
|
Michael Slattery
|
|
14,667
|
|
54,359
|
|
*
|
John Spegal
|
|
17,363
|
|
64,761
|
|
*
|
Melissa Westerman
|
|
|
|
|
|
|
Directors and executive officers as a group (11 persons)
|
|
219,656
|
|
671,913
|
|
1%
|
-
*
-
Represents
less than one (1) percent.
-
(1)
-
The
table reports beneficial ownership in accordance with Rule 13d-3 under the Exchange Act.
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Table of Contents
-
(2)
-
Includes
the number of options currently exercisable and options that will become exercisable within 60 days of our record date.
-
(3)
-
Mr. Gunnelson
ceased to be an executive officer on March 23, 2018.
Security Ownership of Certain Beneficial Owners
The table below shows information for persons known to us to beneficially own more than 5% of our common stock based on their filings with the SEC through
May 7, 2019.
|
|
|
|
|
|
|
|
Name
|
|
Total Beneficial
Ownership
|
|
Percentage of
Issued and
Outstanding
(1)
|
|
|
|
|
|
|
|
|
|
Canada Pension Plan Investment Board (
CPPIB
)
|
|
|
16,572,106
|
|
|
18.7%
|
|
One Queen Street East, Suite 2500
|
|
|
|
|
|
|
|
Toronto, ON M5C 2W5 (2)
|
|
|
|
|
|
|
|
FMR, LLC
|
|
|
6,462,516
|
|
|
7.3%
|
|
245 Summer Street
|
|
|
|
|
|
|
|
Boston, MA 02210 (3)
|
|
|
|
|
|
|
|
The Vanguard Group
|
|
|
6,301,372
|
|
|
7.1%
|
|
100 Vanguard Blvd
|
|
|
|
|
|
|
|
Malvern, PA 19355 (4)
|
|
|
|
|
|
|
|
JPMorgan Chase & Co.
|
|
|
5,763,047
|
|
|
6.5%
|
|
270 Park Avenue
|
|
|
|
|
|
|
|
New York, NY 10017 (5)
|
|
|
|
|
|
|
|
Blackrock, Inc.
|
|
|
4,978,355
|
|
|
5.6%
|
|
55 East 52
nd
Street
|
|
|
|
|
|
|
|
New York, NY 10017
|
|
|
|
|
|
|
|
SMALLCAP World Fund, Inc.
|
|
|
4,785,502
|
|
|
5.4%
|
|
6455 Irvine Center Drive
|
|
|
|
|
|
|
|
Irvine, CA 92618
|
|
|
|
|
|
|
|
-
(1)
-
Percentage
is calculated using the number of shares of Advanced Disposal common stock outstanding as of May 7, 2019.
-
(2)
-
Pursuant
to Schedule 13D/A filed on April 16, 2019, the amount reported consists of shares beneficially owned as of April 16, 2019 by CPPIB.
CPPIB is overseen by a board of directors. None of the directors of that board of directors has sole voting or dispositive power with respect to the shares of Advanced Disposal common stock owned by
CPPIB.
-
(3)
-
Pursuant
to Schedule 13G/A filed on February 13, 2019, the amount reported consists of shares beneficially owned as of December 31, 2018, by
FMR, with sole voting power to vote 1,825,140 shares and sole power to dispose or to direct the disposition of 6,462,516 shares held by Abigail P. Johnson.
-
(4)
-
Pursuant
to Schedule 13G/A filed on February 11, 2019, the amount reported consists of shares beneficially owned as of December 31, 2018, by
Vanguard, with sole voting power of 143,249 shares, shared voting of 5,000 shares, sole dispositive power of 6,158,618 shares and shared dispositive power of 142,754 shares.
-
(5)
-
Pursuant
to Schedule 13G/A filed on January 9, 2019, the amount reported consists of shares beneficially owned as of December 31, 2018 by
JPMorgan.
-
(6)
-
Pursuant
to Schedule 13G/A filed on February 8, 2019, the amount reported consists of shares beneficially owned as of December 31, 2018 by
BlackRock.
-
(7)
-
Pursuant
to Schedule 13G/A filed on February 14, 2019, the amount reported consists of shares that SMALLCAP may vote, under certain circumstances, as
of December 31, 2018. SMALLCAP is an investment company registered under the Investment Company Act of 1940, which is advised by Capital Research and Management Company.
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Table of Contents
APPRAISAL RIGHTS
If the merger agreement is adopted by Advanced Disposal stockholders, stockholders who do not vote in favor of the proposal to adopt the merger agreement and
who properly exercise and perfect their demand for appraisal of their shares in accordance with Section 262 of the DGCL (which we refer to as
Section 262
) will be entitled to appraisal rights in connection with the merger.
The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of
Section 262, which is attached as
Annex D
to this proxy statement. The following summary does not constitute any legal or other
advice nor does it constitute a recommendation that stockholders exercise their appraisal rights under Section 262. Only a holder of record of shares of Advanced Disposal common stock is
entitled to demand appraisal for the shares registered in that holder’s name. A person having a beneficial interest in shares of Advanced Disposal common stock held of record in the
name of another person, such as a broker, bank or other nominee, must act promptly to cause the record holder to follow the steps summarized below properly and in a timely manner to perfect appraisal
rights. If you hold your shares of Advanced Disposal common stock through a broker, bank or other nominee and you wish to exercise appraisal rights, you should consult with your broker, bank or other
nominee.
Under
Section 262, holders of shares of Advanced Disposal common stock who do not vote in favor of the proposal to adopt the merger agreement, who continuously are the record holders of such
shares through the effective time, and who otherwise follow the procedures set forth in Section 262 will be entitled to the appraisal by the Delaware Court of Chancery of the fair value of
their shares of Advanced Disposal common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the
amount determined to be the fair value of the shares from the effective date of the merger, as determined by the Delaware Court of Chancery. At any time before the entry of judgment in the
proceedings, the surviving company may pay to each stockholder entitled to appraisal an amount in cash, in which case interest will accrue thereafter as provided herein only upon the sum of
(1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid
at that time.
Under
Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than twenty (20) days prior to the meeting, must
notify each of its stockholders entitled to appraisal rights that appraisal rights are available and include in the notice a copy of Section 262. This proxy statement constitutes Advanced
Disposal notice to its stockholders that appraisal rights are available in connection with the merger, and the full text of Section 262 is attached as
Annex D
to this proxy statement. In connection with the merger, any holder of Advanced Disposal common stock who wishes to exercise appraisal rights, or who wishes
to preserve such holder’s right to do so, should review
Annex D
carefully.
Failure to strictly comply with the requirements
of Section 262 in a timely and proper manner may result in the loss of appraisal rights under the DGCL.
A stockholder who loses his, her or its appraisal rights will be
entitled to receive the merger consideration described in the merger agreement. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of Advanced
Disposal common stock, if a stockholder considers exercising such rights, Advanced Disposal urges such stockholder to seek the advice of legal counsel.
Stockholders
wishing to exercise the right to seek an appraisal of their shares of Advanced Disposal common stock must do
ALL
of the following:
-
-
the stockholder must
NOT
vote in favor of the proposal to adopt the merger agreement. Because a
proxy that is signed and submitted but does not otherwise contain voting instructions will, unless revoked, be voted in favor of the merger agreement, a stockholder who votes by proxy and who
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Table of Contents
wishes
to exercise appraisal rights must vote against the proposal to adopt the merger agreement, abstain or not vote its shares;
-
-
the stockholder must deliver to Advanced Disposal a written demand for appraisal before the vote on the proposal to adopt the merger agreement
at the Special Meeting;
-
-
the stockholder must continuously hold the shares of Advanced Disposal common stock from the date of making the demand through the effective
time. A stockholder will lose appraisal rights if the stockholder transfers the shares before the effective time; and
-
-
the stockholder or the surviving company must file a petition in the Delaware Court of Chancery requesting a determination of the fair
value of the shares within one hundred twenty (120) days after the effective time. The surviving company is under no obligation to file any such petition in the Delaware Court of Chancery and
has no intention of doing so. Accordingly, it is the obligation of Advanced Disposal stockholders to take all necessary action to perfect their appraisal rights in respect of shares of Advanced
Disposal common stock within the time prescribed in Section 262.
Filing Written Demand
Any holder of shares of Advanced Disposal common stock wishing to exercise appraisal rights must deliver to Advanced Disposal, before the vote on the adoption
of the merger agreement at the Special Meeting at which the proposal to adopt the merger agreement will be submitted to the stockholders, a written demand for the appraisal of the
stockholder’s shares, and that stockholder must not submit a blank proxy or vote in favor of the proposal to adopt the merger agreement. A holder of shares of Advanced Disposal common
stock wishing to exercise appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective
time. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the proposal to adopt the merger agreement, and it will constitute a waiver of the
stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise
appraisal rights must submit a proxy containing instructions to vote against the proposal to adopt the merger agreement, abstain from voting on the proposal to adopt the merger agreement or not vote
its shares. Neither voting against the proposal to adopt the merger agreement nor abstaining from voting or failing to vote on the proposal to adopt the merger agreement will, in and of itself,
constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the proposal
to adopt the merger agreement. A proxy or vote against the proposal to adopt the merger agreement will not constitute a demand. A stockholder’s failure to make the written demand
prior to the taking of the vote on the proposal to adopt the merger agreement at the Special Meeting of Advanced Disposal stockholders will constitute a waiver of appraisal rights.
Only
a holder of record of shares of Advanced Disposal common stock is entitled to demand appraisal for the shares registered in that holder’s name. A demand for appraisal in respect
of shares of Advanced Disposal common stock should be executed by or on behalf of the holder of record, and must reasonably inform Advanced Disposal of the identity of the holder and state that the
person intends thereby to demand appraisal of the holder’s shares in connection with the merger. If the shares are owned of record in a fiduciary capacity, such as by a trustee,
guardian or custodian, such demand must be executed by or on behalf of the record owner, and if the shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the
demand must be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two (2) or more joint owners, may execute a demand for appraisal on behalf of
a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners.
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Table of Contents
STOCKHOLDERS
WHO HOLD THEIR SHARES IN BROKERAGE OR BANK ACCOUNTS OR OTHER NOMINEE FORMS, AND WHO WISH TO EXERCISE APPRAISAL RIGHTS, SHOULD CONSULT WITH THEIR BROKERS, BANKS AND NOMINEES, AS
APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BROKER, BANK OR OTHER NOMINEE HOLDER TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF
RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER, BANK OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT
APPRAISAL RIGHTS.
All
written demands for appraisal pursuant to Section 262 should be mailed or delivered to Advanced Disposal Services, Inc., 90 Fort Wade Road, Ponte Vedra, Florida, 32081, Attention:
Michael K. Slattery, Corporate Secretary, and must be delivered before the vote on the merger agreement is taken at the Special Meeting and should be executed by, or on behalf of, the record holder of
the shares of Advanced Disposal common stock.
Any
holder of Advanced Disposal common stock may withdraw his, her or its demand for appraisal and accept the consideration offered pursuant to the merger agreement by delivering to Advanced Disposal
a written withdrawal of the demand for appraisal within sixty (60) days after the effective date of the merger. However, any such attempt to withdraw the demand made more than sixty
(60) days after the effective time will require written approval of the surviving company. No appraisal proceeding in the Delaware Court of Chancery will be dismissed without the approval of
the Delaware Court of Chancery, and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just.
Notice by the Surviving Company
If the merger is completed, within ten (10) days after the effective time, the surviving company will notify each holder of Advanced Disposal common
stock who has complied with Section 262, and who has not voted in favor of the proposal to adopt the merger agreement, that the merger has become effective and the effective date thereof.
Filing a Petition for Appraisal
Within one hundred twenty (120) days after the effective time, but not thereafter, the surviving company or any holder of Advanced Disposal common
stock who has complied with Section 262 and is entitled to appraisal rights under Section 262 may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery,
with a copy served on the surviving company in the case of a petition filed by a stockholder, demanding a determination of the fair value of the shares held by all stockholders entitled to appraisal.
The surviving company is under no obligation to and has no present intention to file a petition, and holders should not assume that the surviving company will file a petition or initiate
any negotiations with respect to the fair value of shares of Advanced Disposal common stock. Accordingly, any holders of Advanced Disposal common stock who desire to have their shares appraised should
initiate all necessary action to perfect their appraisal rights in respect of shares of Advanced Disposal common stock within the time and in the manner prescribed in Section 262. The failure
of a holder of Advanced Disposal common stock to file such a petition within the period specified in Section 262 could nullify the stockholder’s previous written demand for
appraisal.
Within
one hundred twenty (120) days after the effective time, any holder of Advanced Disposal common stock who has complied with the requirements for exercise of appraisal rights will be
entitled, upon written request, to receive from the surviving company a statement setting forth the aggregate number of shares not voted in favor of the proposal to adopt the merger agreement and with
respect to which Advanced Disposal has received demands for appraisal and the aggregate number of holders of such shares. The
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surviving
company must mail this statement to the requesting stockholder within ten (10) days after receipt of the written request for such a statement or within ten (10) days after the
expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares held either in a voting trust or by a nominee on behalf of such person may, in such
person’s own name, file a petition seeking appraisal or request from the surviving company the foregoing statements. As noted above, however, the demand for appraisal can only
be made by a stockholder of record.
If
a petition for an appraisal is duly filed by a holder of shares of Advanced Disposal common stock and a copy thereof is served upon the surviving company, the surviving company will then be
obligated within twenty (20) days to file with the Delaware Register in Chancery a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached. After notice to the stockholders as
required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those stockholders who have complied with Section 262 and who have become
entitled to appraisal thereunder. The Delaware Court of Chancery may require the stockholders who demanded payment for their shares to submit their stock certificates to the Delaware Register in
Chancery for notation thereon of the pendency of the appraisal proceedings, and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to
such stockholder.
Determination of Fair Value
After determining the holders of Advanced Disposal common stock entitled to appraisal, the Delaware Court of Chancery will appraise the fair value of the
shares of Advanced Disposal common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount
determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. Unless the court in its discretion determines otherwise for good
cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate
(including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment
in the proceedings, the surviving company may pay to each stockholder entitled to appraisal an amount in cash, in which case interest will accrue thereafter as provided herein only upon the sum of
(1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid
at that time. In
Weinberger v. UOP, Inc.
(which we refer to as
Weinberger
) the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an
appraisal proceeding, stating that proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in
court should be considered, and that
[
f
]
air price
obviously requires consideration of all relevant factors involving the value of a company. The Delaware Supreme Court stated that, in making this determination of fair value, the court
must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on
future prospects of the merged corporation. Section 262 provides that fair value is to be exclusive of any element of value arising from the accomplishment or expectation of the
merger. In
Cede & Co. v. Technicolor, Inc.
, the Delaware Supreme Court stated that such exclusion is a
narrow exclusion
[
that
]
does not encompass known elements of
value, but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In
Weinberger
,
the Supreme Court of Delaware also stated that elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and
not the product of speculation, may be considered.
Stockholders
considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the
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consideration
they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of
view of the consideration payable in a merger is not an opinion as to, and does not in any manner address, fair value under Section 262.
Although Advanced Disposal
believes that the merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should
recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the merger consideration
. Neither Advanced Disposal nor Waste
Management anticipates offering more than the merger consideration to any stockholder of Advanced Disposal exercising appraisal rights, and each of Advanced Disposal and Waste Management reserves the
right to assert, in any appraisal proceeding, that, for purposes of Section 262, the fair value of a share of Advanced Disposal common stock is less than the merger consideration. If a petition
for appraisal is not timely filed, then the right to an appraisal will cease. The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of
experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a stockholder,
the Delaware Court of Chancery may also order that all or a portion of the expenses incurred by a stockholder in connection with an appraisal, including, without limitation, reasonable
attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to be appraised.
If
any stockholder who demands appraisal of shares of Advanced Disposal common stock under Section 262 fails to perfect, or loses his or her appraisal rights, or successfully withdraws such
demand for appraisal, the stockholder’s shares of Advanced Disposal common stock will be deemed to have been converted at the effective time into the right to receive the merger
consideration applicable to the shares, less applicable withholding taxes. A stockholder will fail to perfect, or lose, his or her appraisal rights, or effectively withdraw a demand for appraisal, if
no petition for appraisal is filed within one hundred twenty (120) days after the effective time or if the stockholder delivers to the surviving company a written withdrawal of the
holder’s demand for appraisal and an acceptance of the merger consideration in accordance with Section 262.
From
and after the effective time, no stockholder who has demanded appraisal rights will be entitled to vote Advanced Disposal common stock for any purpose, or to receive payment of dividends or other
distributions on the stock, except dividends or other distributions on the holder’s shares of Advanced Disposal common stock, if any, payable to stockholders of Advanced Disposal of
record as of a time prior to the effective time; provided, however, that, if no petition for an appraisal is filed, or if the stockholder delivers to the surviving company a written withdrawal of the
demand for an appraisal and an acceptance of the merger, either within sixty (60) days after the effective time or thereafter with the written approval of the surviving company, then the right
of such stockholder to an appraisal will cease. Once a petition for appraisal is filed with the Delaware Court of Chancery,
however, the appraisal proceeding may not be dismissed as to any stockholder of Advanced Disposal without the approval of the Delaware Court of Chancery.
Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of a stockholder’s statutory appraisal rights.
Consequently, any stockholder of Advanced Disposal wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.
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FUTURE STOCKHOLDER PROPOSALS
If the merger is completed, Advanced Disposal will have no public stockholders, and there will be no public participation in any of our future stockholder
meetings. However, if the merger is not completed, stockholders will continue to be entitled to attend and participate in meetings of stockholders. On May 7, 2019, Advanced Disposal announced that the
Board has postponed the 2019 Annual Meeting of Stockholders given the merger. If the merger is completed by December 2019, Advanced Disposal does not expect to hold the 2019 Annual Meeting of
Stockholders, and there will be no public participation in any future meetings of Advanced Disposal's stockholders because, following completion of the merger, Advanced Disposal common stock will be
de-listed from NYSE and de-registered under the Exchange Act, and Advanced Disposal will no longer be a publicly-traded company. However, if the merger is not completed by December 2019 or if Advanced
Disposal is otherwise required to do so under applicable law, Advanced Disposal will take such further action as it deems necessary or appropriate to call and convene future meetings of Advanced
Disposal stockholders, and stockholder proposals will be eligible for consideration for inclusion in the proxy statement and form of proxy for such future annual meetings of Advanced Disposal
stockholders in accordance with Rule 14a-8 of the Exchange Act and the amended and restated bylaws of Advanced Disposal, as described below.
Our
amended and restated bylaws provide that stockholders seeking to bring business before an annual meeting of stockholders or to nominate candidates for election as directors at an annual meeting of
stockholders must provide timely notice of such proposed business in writing in order to be considered by the stockholders of the Company at the annual meeting. To be timely, a
stockholder’s notice must be delivered to, or mailed and received at, our principal executive office at Advanced Disposal Services, Inc., 90 Fort Wade Road, Ponte Vedra,
Florida 32081, Attention: Corporate Secretary, not less than ninety (90) days nor more than hundred-twenty (120) days prior to the first anniversary of the date on which Advanced
Disposal held the preceding
year’s annual meeting. In the event that the date of the annual meeting is delayed by more than seventy (70) days from the anniversary date of the previous
year’s meeting, notice by the stockholder to be timely must be so delivered not earlier than one hundred and twenty (120) days prior to such annual meeting and not later than
the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first
made. Public announcement of an adjournment or postponement of an annual meeting shall not commence a new time period (or extend any time period) for the giving of a stockholder’s
notice. The notice must also describe the stockholder proposal in reasonable detail and provide certain other information required by Advanced Disposal amended and restated bylaws. A copy of Advanced
Disposal’s amended and restated bylaws is available upon request without charge from the Corporate Secretary of Advanced Disposal at the address set forth above.
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Table of Contents
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC under the Exchange Act. The SEC maintains a website that
contains reports, proxy statements and other information that we file electronically with the SEC. The address of that website is
www.sec.gov
.
Advanced
Disposal filings referred to above are also available on our Internet website,
https://www.advanceddisposal.com
, under
Investors, without charge. Information contained on our Internet website does not constitute a part of this proxy statement. In addition, you may obtain a copy of the
reports, without charge, upon written request to: Advanced Disposal Services, Inc., 90 Fort Wade Road, Ponte Vedra, FL 32081, Attention: Corporate Secretary. Each such request must set forth a
good faith representation that, as of the close of business on the record date, the person making the request was a beneficial owner of Advanced Disposal common stock entitled to vote at the Special
Meeting. In order to ensure timely delivery of such documents before the Special Meeting, any such request should be made promptly to Advanced Disposal. A copy of any exhibit to a filing may be
obtained upon request by a stockholder (for a fee limited to Advanced Disposal’s reasonable expenses in furnishing the exhibit) to Advanced Disposal Services, Inc., 90 Fort
Wade Road, Ponte Vedra, FL 32081, Attention: Corporate Secretary.
The
SEC allows us to incorporate by reference into this proxy statement documents we file with the SEC. This means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference in this proxy statement is considered to be a part of this proxy statement, and later information that we file with the SEC
will update and supersede that information. Information in documents that is deemed, in accordance with SEC rules, to be furnished and not filed will not be deemed to be incorporated by reference into
this proxy statement. We incorporate by reference the documents listed below and any documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this proxy statement, and before the date of the Special Meeting (including any adjournment or postponement thereof):
-
-
Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed on February 26, 2019;
-
-
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2019, filed on April 30, 2019;
-
-
Definitive Proxy Statement for Advanced Disposal 2019 annual meeting of stockholders, filed on April 3, 2019; and
-
-
Current Reports on Form 8-K, filed on April 15, 2019, April 30, 2019 and May 8, 2019.
Notwithstanding
the foregoing, information furnished under Items 2.02 and 7.01 of any Current Report on Form 8-K, including the related exhibits, is not incorporated by reference into
this proxy statement.
No
persons have been authorized to give any information or to make any representations other than those contained in this proxy statement, and, if given or made, such information or representations
must not be relied upon as having been authorized by us or any other person. This proxy statement is dated
[
·
], 2019. You should not assume that the information contained in this proxy statement is accurate as of any
date other than that date, and the mailing of this proxy statement to Advanced Disposal stockholders does not and will not create any implication to the contrary.
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ANNEX A
AGREEMENT
AND PLAN OF MERGER
Among
ADVANCED
DISPOSAL SERVICES, INC.,
WASTE
MANAGEMENT, INC.
and
EVERGLADES
MERGER SUB INC.
Dated
as of April 14, 2019
Table of Contents
TABLE OF CONTENTS
A-i
Table of Contents
A-ii
Table of Contents
A-iii
Table of Contents
INDEX OF DEFINED TERMS
|
|
|
Acceptable Confidentiality Agreement
|
|
A-56
|
Acquisition Proposal
|
|
A-32
|
Actions
|
|
A-37
|
Affiliate
|
|
A-56
|
Agreement
|
|
A-1
|
Anticorruption Laws
|
|
A-11
|
Antitrust Law
|
|
A-57
|
Applicable Date
|
|
A-13
|
Award
|
|
A-57
|
Bankruptcy and Equity Exception
|
|
A-10
|
Beneficial Ownership Regulation
|
|
A-57
|
Book-Entry Share
|
|
A-3
|
Business Day
|
|
A-57
|
Bylaws
|
|
A-8
|
Cancelled Shares
|
|
A-2
|
Capitalization Date
|
|
A-8
|
Cash-Out Option
|
|
A-3
|
Certificate
|
|
A-3
|
Certificate of Incorporation
|
|
A-8
|
Certificate of Merger
|
|
A-2
|
Change of Recommendation
|
|
A-36
|
Charter
|
|
A-2
|
Closing
|
|
A-1
|
Closing Date
|
|
A-2
|
Code
|
|
A-6
|
Collective Bargaining Agreements
|
|
A-19
|
Common Stock
|
|
A-2
|
Company
|
|
A-1
|
Company 401(k) Plans
|
|
A-42
|
Company Board
|
|
A-1
|
Company Credit Agreement
|
|
A-57
|
Company Disclosure Schedule
|
|
A-8
|
Company Divestiture Action
|
|
A-39
|
Company Notice
|
|
A-34
|
Company Plan
|
|
A-57
|
Company Requisite Vote
|
|
A-10
|
Company Securities
|
|
A-9
|
Company Stock Plans
|
|
A-57
|
Company Termination Fee
|
|
A-53
|
Confidentiality Agreement
|
|
A-40
|
Consent Solicitation
|
|
A-47
|
Continuing Employee
|
|
A-57
|
Continuing Non-Union Employee
|
|
A-41
|
Continuing Union-Represented Employees
|
|
A-41
|
Contract
|
|
A-15
|
control
|
|
A-57
|
Costs
|
|
A-43
|
D&O Insurance
|
|
A-44
|
Data Room
|
|
A-58
|
A-iv
Table of Contents
|
|
|
Debt Financing
|
|
A-58
|
Debt Offer
|
|
A-47
|
DGCL
|
|
A-1
|
Dissenting Shares
|
|
A-7
|
DOJ
|
|
A-37
|
Effective Time
|
|
A-2
|
End Date
|
|
A-51
|
Environmental Laws
|
|
A-24
|
Environmental Permits
|
|
A-23
|
Equity Financing
|
|
A-58
|
ERISA
|
|
A-58
|
ERISA Affiliate
|
|
A-58
|
Exchange Act
|
|
A-11
|
Exchange Fund
|
|
A-4
|
Existing Facilities
|
|
A-30
|
Existing Indemnification Rights
|
|
A-43
|
FCPA
|
|
A-11
|
Financial Advisor
|
|
A-24
|
Financing
|
|
A-58
|
Financing Sources
|
|
A-58
|
FTC
|
|
A-37
|
GAAP
|
|
A-58
|
Government Official
|
|
A-58
|
Governmental Entity
|
|
A-58
|
Governmental Filings
|
|
A-58
|
Hazardous Materials
|
|
A-24
|
HSR Act
|
|
A-11
|
Indemnified Parties
|
|
A-43
|
Indenture
|
|
A-58
|
Indenture Amendments
|
|
A-47
|
Intellectual Property
|
|
A-58
|
Intervening Event
|
|
A-59
|
IRS
|
|
A-18
|
JV Plan
|
|
A-59
|
knowledge
|
|
A-59
|
Law
|
|
A-59
|
Leased Real Property
|
|
A-20
|
Legal Restraints
|
|
A-49
|
Liens
|
|
A-59
|
Material Adverse Effect
|
|
A-59
|
Material Contract
|
|
A-16
|
Material Disposal Contracts
|
|
A-17
|
Material Municipal Contracts
|
|
A-17
|
Merger
|
|
A-1
|
Merger Sub
|
|
A-1
|
Multiemployer Plan
|
|
A-18
|
Notice Period
|
|
A-34
|
OFAC
|
|
A-12
|
Offer to Purchase
|
|
A-47
|
Option
|
|
A-60
|
Outstanding Equity Awards
|
|
A-4
|
A-v
Table of Contents
|
|
|
Owned Real Property
|
|
A-20
|
Parent
|
|
A-1
|
Parent Disclosure Schedule
|
|
A-25
|
Parent Plans
|
|
A-42
|
Parent Termination Fee
|
|
A-54
|
Parties
|
|
A-1
|
Party
|
|
A-1
|
Paying Agent
|
|
A-4
|
Per Share Merger Consideration
|
|
A-3
|
Permits
|
|
A-12
|
Permitted Liens
|
|
A-60
|
Person
|
|
A-61
|
Pre-Closing Period
|
|
A-61
|
Preferred Stock
|
|
A-8
|
Proceeding
|
|
A-43
|
Proxy Statement
|
|
A-35
|
PSU
|
|
A-61
|
Real Property
|
|
A-20
|
Real Property Leases
|
|
A-20
|
Recommendation
|
|
A-10
|
Representatives
|
|
A-32
|
Required Financial Information
|
|
A-61
|
Restricted Share
|
|
A-61
|
RSU
|
|
A-61
|
Sanctions
|
|
A-12
|
Sarbanes Oxley Act
|
|
A-13
|
SEC
|
|
A-7
|
SEC Documents
|
|
A-7
|
SEC Reports
|
|
A-13
|
Securities Act
|
|
A-13
|
Senior Employee
|
|
A-62
|
Service Provider
|
|
A-62
|
Share
|
|
A-2
|
Software
|
|
A-62
|
Stockholders Meeting
|
|
A-36
|
subsidiaries
|
|
A-62
|
subsidiary
|
|
A-62
|
Subsidiary Shares
|
|
A-3
|
Superior Proposal
|
|
A-35
|
Surviving Corporation
|
|
A-1
|
Tax Return
|
|
A-22
|
Taxes
|
|
A-22
|
Termination Date
|
|
A-51
|
Top Customers
|
|
A-62
|
Top Vendors
|
|
A-62
|
Transaction Litigation
|
|
A-44
|
USL JV
|
|
A-62
|
Voting and Support Agreement
|
|
A-1
|
WARN Act
|
|
A-20
|
Willful Breach
|
|
A-62
|
A-vi
Table of Contents
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of April 14, 2019 (this
Agreement
), is
entered into by and among Advanced Disposal Services, Inc., a Delaware corporation (the
Company
), Waste Management, Inc., a
Delaware corporation (
Parent
), and Everglades Merger Sub Inc., a Delaware corporation and a wholly owned indirect subsidiary of Parent
(
Merger Sub
and, together with the Company and Parent, the
Parties
and each, a
Party
).
RECITALS
WHEREAS, the boards of directors of Parent and Merger Sub have approved and declared advisable this Agreement and the merger of Merger Sub with
and into the Company (the
Merger
), with the Company surviving the Merger on the terms and subject to the conditions set forth in this Agreement
and have authorized the execution and delivery hereof;
WHEREAS,
the board of directors of the Company (the
Company Board
) has unanimously (a) determined that it is fair to, and in
the best interests of the Company and the stockholders of the Company, and declared it advisable, to enter into this Agreement with Parent and Merger Sub providing for the Merger in accordance with
the General Corporation Law of the State of Delaware (the
DGCL
), (b) approved this Agreement and the transactions contemplated hereby in
accordance with the DGCL and (c) adopted a resolution recommending this Agreement be adopted by the stockholders of the Company; and
WHEREAS,
Parent, Merger Sub and a certain stockholder of the Company have entered into Voting and Support Agreement, dated as of the date hereof (the
Voting
and Support Agreement
), providing that, among other things, subject to the terms and conditions set forth therein, such stockholder will support the Merger and the other
transactions contemplated hereby, including by voting to adopt this Agreement; and
WHEREAS,
the Company, Parent and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement.
NOW,
THEREFORE, in consideration of the premises, and of the mutual representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1
The Merger
.
Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Sub shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the
Surviving
Corporation
) and a wholly owned indirect subsidiary of Parent, and the separate corporate existence of the Company, with all of its properties, rights, privileges,
immunities, powers and franchises, shall continue unaffected by the Merger, except as set forth in
Article II
. Without limiting the generality of the foregoing and
subject thereto, at the Effective Time, all the properties, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Company as the Surviving Corporation
and all claims, obligations, debts, liabilities and duties of the Company and Merger Sub shall become the claims, obligations, debts, liabilities and duties of the Company as the Surviving
Corporation. The Merger shall have the effects set forth in this Agreement and specified in the DGCL.
SECTION 1.2
Closing
.
The closing for the Merger (the
Closing
) shall take place (a) at the offices of Simpson Thacher &
Bartlett LLP, 600 Travis Street, Suite 5400, Houston, Texas, at 8:00 a.m., Central time, on the third (3rd) Business Day following the day on which the conditions set forth in
Article VII
(other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted by
applicable Law, waiver of those conditions at the Closing)
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have
been satisfied or waived in accordance with this Agreement or (b) at such other time, date and place as the Company and Parent may agree in writing. The date on which the Closing occurs is
referred to herein as the
Closing Date
.
SECTION 1.3
Effective Time
.
As soon as practicable following the Closing, the Company and Parent will cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware a certificate
of merger (the
Certificate of Merger
), to be executed, acknowledged and filed with the Secretary of State of the State of Delaware as provided in
Section 251 of the DGCL. The Merger shall become effective at the time when the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware or at such later
time as may be agreed by the Parties in writing and specified in the Certificate of Merger (the
Effective Time
).
SECTION 1.4
Certificate of Incorporation; Bylaws
.
(a) At
the Effective Time, the certificate of incorporation of the Surviving Corporation (the
Charter
) shall be the
certificate of incorporation of the Company, as amended and restated to read in its entirety as set forth in
Exhibit A
, until thereafter amended as provided therein
or by applicable Law.
(b) At
the Effective Time, subject to
Section 6.10
, and without any further action on the part of the Company and Merger Sub, the bylaws
of Merger Sub in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation, until thereafter amended as provided therein or by applicable Law.
SECTION 1.5
Directors and Officers
.
(a) The
Parties shall take all actions necessary so that the directors of Merger Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the
initial directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the
Charter and the bylaws of the Surviving Corporation.
(b) The
officers of the Company immediately prior to the Effective Time shall, from and after the Effective Time, be the initial officers of the Surviving Corporation until
their successors shall have been
duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Charter and bylaws of the Surviving Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.1
Effect on Capital Stock
.
At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub or the holders of any of the following securities:
(a)
Conversion of Common Stock; Merger Consideration
. Each share of common stock,
par value $0.01 per share, of the Company (the
Common Stock
) issued and outstanding immediately prior to the Effective Time (each, a
Share
) (other than (i) Shares owned by Parent or Merger Sub and Shares owned by the Company, including Shares held in treasury by the
Company, and in each case not held on behalf of third parties (collectively, the
Cancelled Shares
), (ii) subject to
Section 2.4
, the Dissenting Shares and (iii) Shares owned by any direct or indirect wholly-owned subsidiary of the Company or Parent (which shares shall be
converted into shares of common stock, par value $0.01 per share, of the Surviving Corporation, except that the number of such Shares owned by such subsidiaries may be adjusted following the Merger to
maintain the value of such Shares held by such subsidiaries (the
Subsidiary Shares
)) shall be converted into the right to receive $33.15 per
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Share
in cash, without interest (the
Per Share Merger Consideration
). From and after the Effective Time, each of the Shares that has been
converted into the right to receive the Per Share Merger Consideration shall automatically cease to be outstanding, shall be cancelled and
shall cease to exist, and each (x) certificate (a
Certificate
) formerly representing, immediately prior to the Effective Time, any of the
Shares (other than Cancelled Shares, Subsidiary Shares and Dissenting Shares) and (y) non-certificated Share held in book-entry form representing any such Share (other than Cancelled Shares,
Subsidiary Shares and Dissenting Shares) (a
Book-Entry Share
) shall thereafter represent only the right to receive the Per Share Merger
Consideration.
(b)
Cancellation of Cancelled Shares
. Each Cancelled Share shall cease to be
outstanding, shall be cancelled without payment of any consideration in exchange therefor and shall cease to exist.
(c)
Merger Sub
. Each share of common stock, par value $0.01 per share, of Merger
Sub, issued and outstanding immediately prior to the Effective Time, shall be converted into one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation, except for those shares which shall remain outstanding pursuant to
clause (iii) of
Section 2.1(a)
, if any.
SECTION 2.2
Treatment of Options, PSUs, RSUs and Restricted Shares
.
(a)
Treatment of Options
.
(i) At
the Effective Time, each Option with a per share exercise price less than the Per Share Merger Consideration that is outstanding immediately prior to the Effective
Time, whether vested or unvested (each, a
Cash-Out Option
), shall, automatically and without any required action on the part of the holder
thereof, become fully vested and shall be cancelled and thereafter entitle the holder of such Cash-Out Option to receive an amount in cash equal to the product of (x) the number of shares of
Common Stock subject to the Cash-Out Option
multiplied
by (y) the excess of the Per Share Merger Consideration over
the per-share exercise price of such Cash-Out Option.
(ii) At
the Effective Time, each Option with a per share exercise price equal to or greater than the Per Share Merger Consideration that is outstanding immediately prior to
the Effective Time, whether vested or unvested, shall, automatically and without any required action on the part of the holder thereof, be cancelled without any consideration paid to the holder
thereof.
(b)
Treatment of PSUs
. At the Effective Time, each PSU Award outstanding
immediately prior to the Effective Time shall, automatically and without any required action on the part of the holder thereof, become fully vested and shall be cancelled and thereafter entitle the
holder of such PSU Award to receive an amount in cash equal to the product of (x) the number of shares of Common Stock equal to the greater of (i) the target number of shares of Common
Stock with respect to such PSU Award as
defined and set forth in such PSU Award and (ii) the number of shares of Common Stock that would be considered earned under the terms of such PSU Award based on the most recent fiscal year-end
results of the Company preceding the fiscal year during which the Effective Time occurs
multiplied
by (y) the Per
Share Merger Consideration.
(c)
Treatment of RSUs
. At the Effective Time, each RSU Award outstanding
immediately prior to the Effective Time shall, automatically and without any required action on the part of the holder thereof, become fully vested and shall be cancelled and thereafter entitle the
holder of such RSU Award to receive an amount in cash equal to the product of (x) the number of shares of Common Stock subject to such RSU Award
multiplied
by (y) the Per Share Merger
Consideration.
(d)
Treatment of Restricted Shares
. At the Effective Time, each Restricted Share
Award outstanding immediately prior to the Effective Time shall, automatically and without any required
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action
on the part of the holder thereof, become fully vested and shall be cancelled and thereafter entitle the holder of such Restricted Share Award to receive an amount in cash equal to the product
of (x) the number of shares of Common Stock subject to such Restricted Share Award
multiplied
by (y) the Per
Share Merger Consideration.
(e)
Payment; Taxes
. The Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, pay to the holders of Cash-Out Options, PSU Awards, RSU Awards and Restricted Share Awards the cash payments described in this
Section 2.2
on or as soon as reasonably practicable after the Effective Time, but in any event within five Business Days following the Closing Date;
provided
,
however
, that no payment shall be accelerated to the extent it would result in the incurrence of a penalty tax under Section 409A of the Code, and instead, any such
payment shall be made on the earliest date possible without incurring any such penalty tax. All payments described in this
Section 2.2
shall be made after giving
effect to applicable withholding requirements as provided in
Section 2.3(e)
.
(f)
Corporate Actions
. At or prior to the Effective Time, the Company, the Company
Board and the compensation committee of the Company Board, as applicable, shall adopt all resolutions and take any actions which are necessary to effectuate the provisions of this
Section 2.2
. As of the Effective Time, each holder of an Option, PSU Award or RSU Award or Restricted Share Award (collectively the
Outstanding Equity Awards
) shall cease to have any rights with respect to shares of Common Stock. The Company shall take all actions necessary to
ensure that from and
after the Effective Time, neither Parent nor the Surviving Corporation will be required to deliver shares of Common Stock or other capital stock of the Company to any Person pursuant to or in
settlement of any Outstanding Equity Awards.
SECTION 2.3
Surrender of Shares; Payment
.
(a)
Paying Agent
. Prior to the Effective Time, Parent or Merger Sub shall enter
into an agreement with a paying agent selected by Parent, and approved (such approval not to be unreasonably withheld, conditioned or delayed) in advance by the Company, to act as agent for the
stockholders of the Company in connection with the Merger (the
Paying Agent
) to receive payment of the aggregate Per Share Merger Consideration
to which the stockholders of the Company shall become entitled pursuant to this
Article II
. At or prior to the Effective Time, Parent shall deposit or cause to be
deposited with the Paying Agent a cash amount in immediately available funds sufficient in the aggregate to provide all funds necessary for the Paying Agent to make all payments in respect of Shares
(other than Cancelled Shares, Dissenting Shares or Subsidiary Shares) under
Section 2.1(a)
(such cash being hereinafter referred to as the
Exchange Fund
) in trust for the benefit of the holders of the Shares. With respect to any Dissenting Shares, Parent shall not be required to
deposit or cause to be deposited with the Paying Agent funds sufficient to pay the Per Share Merger Consideration payable in respect of such Dissenting Shares. The Paying Agent shall invest the
Exchange Fund as directed by Parent;
provided
that such investments (i) shall not relieve Parent from making any payments required by this Agreement,
(ii) shall not have a maturity that could prevent or delay any payments to be made pursuant to this Agreement, and (iii) shall be in short-term obligations of or guaranteed by the United
States of America, in commercial paper obligations rated P-1 or A-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Financial
Services LLC, respectively, in certificates of deposit, bank repurchase agreements or banker’s acceptances of commercial banks with capital exceeding $5 billion, or in
money market funds having a rating in the highest investment category granted by a recognized credit rating agency at the time of acquisition or a combination of the foregoing. Subject to
Section 2.3(c)
, to the extent that there are losses with respect to such investments, or the Exchange Fund diminishes for other reasons below the level required to
make prompt cash payment of the aggregate Per Share Merger Consideration as contemplated hereby, Parent shall, or shall cause the Surviving Corporation to, promptly replace or restore the cash in the
Exchange Fund lost through such investments or other events so as to ensure that the Exchange Fund is at all applicable times maintained at a level sufficient to make such cash payments, and Parent
(and,
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following
the Effective Time, the Surviving Corporation) shall in any event be liable for payment thereof. Any interest and other income resulting from such investment shall become a part of the
Exchange Fund, and any amounts in excess of the amounts payable in respect of Shares under
Section 2.1(a)
shall be promptly returned to Parent or the Surviving
Corporation, as requested by Parent. The funds deposited with the Paying Agent pursuant to this
Section 2.3(a)
shall not be used for any purpose other than as
contemplated by this
Section 2.3(a)
. Parent shall, or shall cause the Surviving Corporation to, pay all charges and expenses (other than Taxes and charges and
expenses resulting from lost Certificates), including those of the Paying Agent, in connection with the exchange of Shares for the Per Share Merger Consideration.
(b)
Exchange Procedures
.
(i)
Transmittal
Materials
. Promptly after the Effective Time (and in no event later than three (3) Business Days after the
Closing Date), Parent shall cause the Paying Agent to mail or otherwise provide to each holder of record of Shares (other than holders of Cancelled Shares, Dissenting Shares or Subsidiary Shares)
(A) transmittal materials, including a letter of transmittal in customary form as agreed by the Parties, specifying that delivery shall be effected, and risk of loss and title shall pass, with
respect to Book-Entry Shares, only upon delivery of an agent’s message regarding the book-entry transfer of Book-Entry Shares (or such other evidence, if
any, of the transfer as the Paying Agent may reasonably request), and with respect to Certificates, only upon delivery of the Certificates (or affidavits of loss in lieu of the Certificates as
provided in
Section 2.3(f)
) to the Paying Agent, such transmittal materials to be in such form and have such other provisions as Parent and the Company may
reasonably agree, and (B) instructions for effecting the surrender of the Book-Entry Shares or Certificates (or affidavits of loss in lieu of the Certificates as provided in
Section 2.3(f)
) to the Paying Agent.
(ii)
Certificates
. Upon
surrender of a Certificate (or affidavit of loss in lieu of the Certificate as provided in
Section 2.3(f)
) to the Paying Agent in accordance with the terms of such transmittal materials and instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor, and Parent shall instruct the Paying Agent to pay and deliver in exchange therefor as promptly as reasonably practicable, a cash amount in immediately available funds
(after giving effect to any required Tax withholdings as provided in
Section 2.3(e)
) equal to the product obtained by
multiplying
(A) the number of Shares previously represented
by such Certificate (or affidavit of loss in lieu of the
Certificate as provided in
Section 2.3(f)
) by (B) the Per Share Merger Consideration, and the Certificate of such holder so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on any amount payable upon due surrender of the Certificates.
(iii)
Book-Entry
Shares
. Notwithstanding anything to the contrary contained in this Agreement, any holder of Book-Entry Shares
shall not be required to deliver a Certificate or an executed letter of transmittal to the Paying Agent to receive the aggregate Per Share Merger Consideration that such holder is entitled to receive
as a result of the Merger pursuant to
Section 2.1(a)
. In lieu thereof, each holder of record of one or more Book-Entry Shares (other than Cancelled Shares,
Dissenting Shares and Subsidiary Shares) shall upon receipt by the Paying Agent of an agent’s message in customary form (it being understood that the holders
of Book-Entry Shares shall be deemed to have surrendered such Shares upon receipt by the Paying Agent of such agent’s message or such other evidence, if any,
as the Paying Agent may reasonably request) be entitled to receive, and Parent shall cause the Paying Agent to pay and deliver as promptly as
reasonably practicable after the Effective Time (and in no event more than three (3) Business Days thereafter), a cash amount in immediately available funds (after giving effect to any required
Tax withholdings as provided in
Section 2.3(e)
) equal to the product obtained by
multiplying
(A) the number of Shares previously represented by such Book-Entry Shares by
(B) the Per Share
Merger Consideration, and the Book-Entry Shares of such holder so
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surrendered
shall forthwith be cancelled. No interest will be paid or accrued on any amount payable upon due surrender of the Book-Entry Shares.
(iv)
Unrecorded
Transfers; Other Payments
. In the event of a transfer of ownership of Shares that is not registered in the transfer
records of the Company or if payment of the applicable Per Share Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate or Book-Entry Share is
registered, a check for any cash to be exchanged upon due surrender of the Certificate or Book-Entry Share may be issued to such transferee or other Person if the Certificate or Book-Entry Share
formerly representing such Shares is presented to the Paying Agent accompanied by all documents reasonably required to evidence and effect such transfer and to evidence that any applicable transfer or
other similar Taxes have been paid or are not applicable.
(v) Until
surrendered as contemplated by this
Section 2.3(b)
, each Certificate and each Book-Entry Share shall be deemed at any time
after the Effective Time to represent only the right to receive upon such surrender (together with a letter of transmittal, duly completed and validly executed in accordance with the instructions
thereto, and such other documents as may reasonably be required pursuant to such instructions (as applicable)) the applicable Per Share Merger Consideration as contemplated by this
Article II
.
(c)
Termination of Exchange Fund
. Any portion of the Exchange Fund (including any
interest received with respect thereto and the proceeds of any investments thereof) that remains unclaimed by the stockholders of the Company for twelve (12) months after the Effective Time
shall be delivered to the Surviving Corporation or its designee(s). Any holder of Shares (other than Cancelled Shares, Dissenting Shares or Subsidiary Shares) who has not theretofore exchanged Shares
for the Per Share Merger Consideration in accordance with this
Article II
shall thereafter be entitled to look to the Surviving Corporation for payment of the Per
Share Merger Consideration (after giving effect to any required Tax withholdings as provided in
Section 2.3(e)
) upon due surrender of its Certificates (or
affidavits of loss in lieu of the Certificates) or acceptable evidence of Book-Entry Shares, without any interest thereon in accordance with the provisions set forth in
Section 2.3(b)
, and Parent shall remain liable for (subject to applicable abandoned property, escheat or other similar Laws) payment of their claim for
the Per Share Merger Consideration payable upon due surrender of their Certificates or Book-Entry Share. Notwithstanding the foregoing, none of the Surviving Corporation, Parent, the Company, the
Paying Agent or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar
Laws.
(d)
Transfers
. From and after the close of business on the day on which the
Effective Time occurs, there shall be no transfers on the stock transfer books of the Company of the Shares that were outstanding immediately prior to the Effective Time. If, after the Effective Time,
any Certificate or acceptable evidence of a Book-Entry Share is presented to the Surviving Corporation, Parent or the Paying Agent for transfer, it shall be cancelled and exchanged for the cash amount
in immediately available funds to which the holder thereof is entitled pursuant to this
Article II
. The Per Share Merger Consideration paid upon the surrender of
Certificates (or upon receipt by the Paying Agent of an agent’s message, in the case of Book-Entry Shares) in accordance with the terms of this
Article II
shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares formerly represented by such Certificates or such
Book-Entry Shares.
(e)
Withholding Rights
. Each of Parent, the Surviving Corporation and any
applicable withholding agent shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Agreement such Taxes as it is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended (the
Code
), or under any other applicable provision of Law. To the
extent that amounts are so deducted and withheld
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and
timely paid over to the appropriate Governmental Entity, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of
which such deduction and withholding was made.
(f)
Lost Certificates
. In the event 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
customary amount and upon such terms as may be reasonably required by Parent as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate,
the Paying Agent will issue a check in the amount (after giving effect to any required Tax withholdings as provided in
Section 2.3(e)
) equal to the product obtained
by
multiplying
(i) the number of Shares represented by such lost, stolen or destroyed Certificate by (ii) the
Per Share Merger Consideration.
SECTION 2.4
Appraisal Rights
.
Notwithstanding anything in this Agreement to the contrary, any Shares of Common Stock that are issued and outstanding immediately prior to the Effective Time and as to which the holders
thereof have neither voted in favor of the Merger nor consented thereto in writing and who shall have properly demanded appraisal in writing in accordance with Section 262 of the DGCL and have
not effectively withdrawn such demand (collectively,
Dissenting Shares
) shall not be converted into the right to receive the Per Share Merger
Consideration as provided in
Section 2.1(a)
, unless and until such Person shall have effectively withdrawn or lost such Person’s right to appraisal
under the DGCL, at which time such Shares shall be treated as if they had been converted into and become exchangeable for the right to receive, as of the Effective Time, the Per Share Merger
Consideration as provided in
Section 2.1(a)
, without interest and after giving effect to any required Tax withholdings pursuant to
Section 2.3(e)
and such Shares shall not be deemed Dissenting Shares, and such holder thereof shall cease to have any other rights with respect to such Shares. From
and after the Effective Time, each holder of Dissenting Shares shall only be entitled to such consideration as may be due with respect to such Dissenting Shares pursuant to Section 262 of the
DGCL. The Company shall give Parent prompt notice of any demands for appraisal, withdrawals of such demands, and any other instruments served pursuant to applicable Law that are received by the
Company or any of its Representatives relating to stockholders’ rights of appraisal, and Parent shall be entitled to direct all negotiations and proceedings with respect to any demand
for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal, offer to settle or settle any such
demands or approve any withdrawal of any such demands, except as required by applicable Law.
SECTION 2.5
Adjustments
.
In the event that the number of Shares or securities convertible or exchangeable into or exercisable for Shares issued and outstanding after the date hereof and prior to the Effective
Time shall have been changed into a different number of Shares or securities or a different class as a result of a reclassification, stock split (including a reverse stock split), stock dividend or
distribution, recapitalization, merger, or other similar transaction, the Per Share Merger Consideration shall be appropriately adjusted to provide the holders of Shares the same economic effect as
contemplated by this Agreement prior to such action;
provided
,
however
, that nothing in this
Section 2.5
shall be construed to permit the Company, any subsidiary of the Company or any other Person to take any action that is otherwise prohibited by the terms of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except (a) as disclosed in all forms, reports, statements, certifications and other documents (including all exhibits and other
information incorporated therein, amendments and
supplements thereto) in each case required to be filed or furnished by it with the U.S. Securities and Exchange Commission (the
SEC
)
(collectively, the
SEC Documents
) and publicly available no less than one (1) Business Day prior to the date of this Agreement (excluding
any risk factor disclosures contained under the heading Risk Factors
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(other
than factual information contained therein) or in any other section to the extent risk disclosures are explicitly included in forward-looking statements or similarly predictive or
forward-looking in nature (other than factual information contained therein)) (it being understood that this sub-clause (a) shall not be applicable to the representations and warranties set
forth in
Section 3.3(a)
,
Section 3.3(b)
, the first two sentences of
Section 3.4
and
Section 3.23
) or (b) as set forth in the corresponding sections or subsections of the disclosure schedules delivered to Parent by the Company concurrently
with entering into this Agreement (the
Company Disclosure Schedule
) (it being agreed that disclosure of any item in any section or subsection of
the Company Disclosure Schedule shall also be deemed disclosure with respect to any other section or subsection of this Agreement to which the relevance of such item is reasonably apparent on its
face), the Company hereby represents and warrants to Parent and Merger Sub as follows:
SECTION 3.1
Organization and Qualification; Subsidiaries
.
Each of the Company and its subsidiaries is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of its
respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership,
leasing or operation of its assets or properties or present conduct of its business requires such qualification, except in each case where the failure to be so qualified or, to the extent such concept
is applicable, in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.1
of the Company Disclosure Schedule sets forth, as of the date of this Agreement, (a) each of the Company’s subsidiaries and the
ownership interest of the Company in each such subsidiary, as well as the ownership interest of any other Person or Persons in each such subsidiary and the jurisdiction of organization thereof of each
such subsidiary and (b) the Company’s or its subsidiaries’ direct or indirect ownership interest in any other Person other than securities in a publicly traded
company held for investment by the Company or any of its subsidiaries and consisting of less than one percent of the outstanding capital stock of such Person.
SECTION 3.2
Certificate of Incorporation and Bylaws
.
The Company has heretofore made available to Parent in the Data Room a correct and complete copy of the amended and restated certificate of incorporation, as amended to date (the
Certificate of Incorporation
), and the amended and restated bylaws, as amended to date (the
Bylaws
), of the Company as currently in effect as of the date hereof. The Certificate of Incorporation and the Bylaws are in full force and
effect. The Company has made available to Parent in the Data Room prior to the date of this Agreement complete and correct copies of the certificates of incorporation and bylaws or comparable
governing documents, each as amended to the date of this Agreement of each of its subsidiaries, and each as so delivered is in full force and effect. The Company is not in violation of any provision
of its Certificate of Incorporation or Bylaws in any material respect, and none of the subsidiaries of the Company are in violation of any provision of their certificates of incorporation and bylaws
or comparable governing documents in any material respect.
SECTION 3.3
Capitalization
.
(a) The
authorized capital stock of the Company consists of (i) 1,000,000,000 shares of Common Stock, and (ii) 100,000,000 shares of preferred stock, par value
$0.01 per share (the
Preferred Stock
). As of the close of business on April 10, 2019 (the
Capitalization
Date
):
(i) 88,728,473
shares of Common Stock were issued and outstanding, other than Restricted Shares;
(ii) no
shares of Preferred Stock were issued or outstanding;
(iii) 2,274
shares of Common Stock were held by the Company in its treasury;
(iv) there
were (A) 4,787,699 shares of Common Stock underlying outstanding Options with a weighted average exercise price of $21.39, (B) 74,192 Restricted
Shares outstanding, (C) 337,744 shares of Common Stock underlying PSU Awards (assuming the target number of PSUs under outstanding PSU Awards) and (D) 489,948 shares of Common Stock
underlying RSU Awards, in each such case granted under the Company Stock Plans.
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(b) From
the close of business on the Capitalization Date through the date of this Agreement, no Shares, Options, Restricted Shares, PSUs, RSUs or other rights to purchase
or receive Shares have been granted or issued, except for Shares issued pursuant to the exercise of Options, the vesting of Restricted Shares, PSUs and RSUs, in each case that were outstanding on the
Capitalization Date and in accordance with their terms. Except as set forth in
Section 3.3(a)
, as of the date of this Agreement, (i) there are not
outstanding, authorized or reserved for issuance any (A) shares of capital stock or other voting securities of the Company, (B) securities of the Company convertible into or exchangeable
for shares of capital stock or voting securities of the Company, (C) options, warrants, calls, phantom stock or other rights to acquire from the Company, or obligations of the Company to issue
or sell, any capital stock, voting securities or securities convertible into, exercisable for, or exchangeable for, or giving any Person a right to subscribe for or acquire, any capital stock or
voting securities of the Company or (D) rights issued by the Company or any of its subsidiaries that are linked to, or based upon, the value of shares of capital stock or voting securities of
the Company (collectively,
Company Securities
), and (ii) there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any Company Securities. All outstanding Shares, and all Shares reserved for issuance as noted in
Section 3.3(a)
, when issued
in accordance with the respective terms thereof, are or will be duly authorized, validly issued, fully paid and non-assessable and free of pre-emptive or similar rights. Each of the outstanding shares
of capital stock or other voting securities of each of the Company’s subsidiaries is (i) duly authorized, validly issued, fully paid and nonassessable, (ii) owned by the
Company or another subsidiary of the Company or by the other Person or Persons set forth in
Section 3.1
of the Company Disclosure Schedule and (iii) owned
free and clear of all Liens and limitations in voting rights (other than (x) Permitted Liens described in clause (vi) of the definition thereof and (y) transfer restrictions under
applicable federal and state securities Laws). Except as set forth in this
Section 3.3(b)
, there are not outstanding or authorized any (A) shares of capital
stock or other voting securities of the Company’s subsidiaries, (B) securities of any of the Company’s subsidiaries convertible into or exchangeable for shares
of capital stock or voting securities of any such subsidiary, (C) preemptive rights, options, warrants, calls, phantom stock, conversion rights, redemption rights, repurchase rights or other
rights to acquire from the Company or any of the Company’s subsidiaries, or obligations of the Company or any of the Company’s subsidiaries to issue or sell, any
capital stock, voting securities or securities convertible into, exercisable for, or exchangeable for, or giving any Person a right to subscribe for or acquire, any capital stock or voting securities
of the Company or any such subsidiary or (D) rights that are linked to, or based upon, the value of shares of capital stock or other voting securities of the Company’s
subsidiaries. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any matter pursuant to the terms thereof. No subsidiary of the Company owns any Shares.
(c)
Section 3.3(c)
of the Company Disclosure Schedule contains a correct and complete list of Options, Restricted Shares, PSU Awards and
RSUs outstanding as of April 10, 2019, including the holder, date of grant, vesting schedule, number of Shares covered by or subject to the award (including, with respect to PSU Awards, target
number of shares of Common Stock subject to the award), the Company Stock Plan under which the award was granted and, where applicable, exercise price and term. All grants of Options, Restricted
Shares, PSUs and RSUs were validly issued and properly approved by the Company Board (or a committee thereof) in accordance with the applicable Company Stock Plan and applicable Law, including the
applicable requirements of the New York Stock Exchange.
(d) As
of the date of this Agreement, (i) there is no outstanding indebtedness for borrowed money (or guarantees thereof) of the Company or its subsidiaries
(excluding intercompany indebtedness among the Company and/or wholly-owned subsidiaries) other than indebtedness reflected on the consolidated balance sheet of the Company and its subsidiaries as of
December 31,
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2018
(or the notes thereto) set forth in the Company’s Form 10-K filed February 26, 2019 and as set forth in
Section 3.3(d)
of the
Company Disclosure Schedule and (ii) neither the Company nor any of its subsidiaries is a party to, or has any commitment to become a party to, any off balance sheet
arrangement (as defined in Item 303(a) of Regulation S-K promulgated by the SEC). The Company does not have outstanding any bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which stockholders may vote pursuant to the terms thereof.
SECTION 3.4
Authority
.
The Company has all requisite corporate power and authority, and has taken all corporate action necessary, to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the Merger, subject only to the affirmative vote (in person or by proxy) of the holders of a majority of all of the outstanding shares of Common Stock entitled to vote thereon at the
Stockholders Meeting, or any adjournment or postponement thereof, to adopt this Agreement (the
Company Requisite Vote
) and the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware. This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the
effects of applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws, now or hereafter in effect, relating to or affecting
creditors’ rights generally and general equitable principles (whether considered in a proceeding in equity or at law) (the
Bankruptcy and Equity
Exception
). The Company Board, at a duly called and held meeting, has unanimously (a) determined that this Agreement and the transactions contemplated hereby,
including the Merger, are advisable, fair to and in the best interests of the Company’s stockholders, approved this Agreement and resolved to recommend that the stockholders of the
Company vote in favor of the adoption of this Agreement and the Merger (the
Recommendation
) and (b) directed that this Agreement be
submitted to the stockholders of the Company for their adoption.
SECTION 3.5
No Conflict; Required Filings and Consents
.
(a) Except
as set forth in
Section 3.5(a)
of the Company Disclosure Schedule, the execution, delivery and performance of this Agreement
by the Company do not, and the consummation of the Merger and the other transactions contemplated hereby will not (i) conflict with or violate the Certificate of Incorporation or Bylaws or the
comparable governing documents of any subsidiary of the Company, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (v) of
subsection (b) below have been obtained, and all filings, notifications and other actions described in such clauses have been made or taken (and any waiting periods thereunder have terminated
or expired), and the Company Requisite Vote has been obtained, conflict with or violate any Law applicable to the Company or any of its subsidiaries or by which its or any of their respective assets,
rights or properties are bound or (iii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in
the loss of a benefit to which the Company or its subsidiaries are entitled under, give rise to any right of termination, cancellation, amendment or acceleration of, require notice or consent under,
or result in the creation of a Lien (except a Permitted Lien) on any of the material assets, rights or properties of the Company or any of its subsidiaries pursuant to, any Contract to which the
Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or their respective assets, rights or properties are bound, except, in the case of
clauses (ii) and (iii), for any such conflict, violation, Lien, breach, default, loss, right or other occurrence which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the Merger and the other transactions contemplated by this Agreement.
(b) The
execution, delivery and performance of this Agreement by the Company and the consummation of the Merger and the other transactions contemplated hereby by the Company
do not and will not require any Governmental Filings, except for (i) applicable filings under, or compliance
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with
other applicable requirements of, the Securities Exchange Act of 1934, as amended (the
Exchange Act
) and the rules and regulations
promulgated thereunder (including the filing of the Proxy Statement), and state securities, takeover and blue sky Laws, (ii) the filing of a premerger
Notification and Report Form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
HSR
Act
) and compliance with all other requirements thereunder, (iii) applicable filings under, or compliance with other applicable requirements of the New York Stock
Exchange, (iv) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL, (v) any non-material municipal or other waste permits
required to be obtained in connection with the transactions contemplated hereby (the failure of which to obtain would not, in the aggregate, reasonably be expected to have a Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to consummate the Merger and the other transactions contemplated by this Agreement) and that the Parties will cooperate to
obtain prior to the Effective Time and (vi) any such consent, approval, authorization, Permit, action, filing or notification the failure of which to make or obtain would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the Merger and the other
transactions contemplated by this Agreement.
SECTION 3.6
Compliance; Permits
.
(a) Since
the Applicable Date, (i) the business of the Company and its subsidiaries has been, and is being, conducted in compliance with all Laws applicable to the
Company or any of its subsidiaries, except for such failures in compliance that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and
(ii) the Company and its subsidiaries have not received any written notice or, to the knowledge of the Company, any other communication of any material noncompliance with any such Laws, except
for any such non-compliance that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Since
the Applicable Date, neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any other Person acting for or on behalf of the Company
or any of its subsidiaries, including any director, officer, agent, employee, Representative or Affiliate of the Company or any of its subsidiaries, has paid, promised to pay or authorized the payment
of any money, or offered, given, promised to give or authorized the giving of anything of value, to any Government Official or any other person under circumstances where it was known, or reasonably
should have been known (after reasonable due inquiry) that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to a Government Official or any
other person for the purpose of (i) influencing any act or decision of a Government Official in their official capacity, (ii) inducing a Government Official to do or omit to do any act
in violation of such person’s lawful duties, (iii) securing any illegal business advantage or (iv) inducing a Government Official to influence or affect any act or
decision of any Governmental Entity, any company, business enterprise or other entity owned, in whole or in part, or controlled by any Governmental Entity or any political party or any other person
(whether public or private), in a manner that has the effect of public or commercial bribery, acceptance of or acquiescence to extortion, kickbacks or other unlawful means of obtaining business or any
improper advantage.
(c) Since
the Applicable Date, the Company and its subsidiaries (i) have conducted and continue to conduct business in compliance in all material respects with all
applicable provisions of, and neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any other Person acting for or on behalf of the Company or any of its subsidiaries,
including any director, officer, agent, employee, Representative or Affiliate of the Company or any of its subsidiaries, has, since the Applicable Date, taken any act that would violate,
(A) the U.S. Foreign Corrupt Practices Act of 1977 (the
FCPA
), and (B) any other applicable similar anticorruption Law of all
jurisdictions in which the Company or any of its subsidiaries conduct business (collectively,
Anticorruption
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Laws
),
and (ii) have not conducted or initiated any internal investigation or made a voluntary, directed or involuntary disclosure to any Governmental
Entity or similar agency in response to any alleged act or omission arising under or relating to any noncompliance with any Anticorruption Law.
(d) Since
the Applicable Date, (i) there is no, and has been no, written request for information from, enforcement proceeding against or, to the knowledge of the
Company, investigation of, the Company or any of its subsidiaries by any Governmental Entity regarding a violation of the Anticorruption Laws, and (ii) there is no, and has been no, written
allegation or, to the knowledge of the Company, other allegation or inquiry, by any Governmental Entity regarding the Company or any of its subsidiaries’ actual or possible violation
of the Anticorruption Laws.
(e) The
Company has established and implemented reasonable internal controls and procedures applicable to the Company and its subsidiaries intended to prevent any activity,
practice, or conduct which would constitute an offense under any Anticorruption Laws and ensure compliance with the Anticorruption Laws, including a Code of Business Conduct, policies and guidelines
that generally (i) require compliance with the Anticorruption Laws and otherwise prohibit bribes to Government Officials; (ii) restrict gifts, entertainment and travel expenses for
Government Officials; (iii) require diligence on certain third parties that may have relations with Government Officials on the Company’s behalf; (iv) restrict political
and charitable contributions; (v) mandate possible discipline for violations of policy or the Code of Business Conduct; and (vi) include procedures for reporting and investigating
possible violations of the program.
(f) Since
the Applicable Date, neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any other Person acting for or on behalf of the Company
or any of its subsidiaries, including any director, officer, agent, employee, Representative or Affiliate of the Company or any of its subsidiaries, has taken any action, directly or indirectly, that
would result in a violation of Laws and regulations imposing U.S. or E.U. or U.K. economic sanctions measures, including any sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (
OFAC
) and the Bureau of Industry Security of the U.S. Department of Commerce, and any sanctions measures under the
International Emergency Economic Powers Act, the Trading with the Enemy Act, or the Iran Sanctions Act, all as amended, and any executive order, directive, or regulation pursuant to the authority of
any of the foregoing, or any orders or licenses issued thereunder (collectively,
Sanctions
). Neither the Company nor any of its subsidiaries nor,
to the knowledge of the Company, any other Person acting for or on behalf of the Company or any of its subsidiaries, including any director, officer, agent, employee,
Representative or Affiliate of the Company or any of its subsidiaries, is a Person that is the subject or target of Sanctions or designated as a Specially Designated National
or Blocked Person by OFAC.
(g) To
the knowledge of the Company, the books and records utilized and relied upon by each of the Company and its subsidiaries in connection with the operation of its
business since the Applicable Date have been maintained in material compliance with its corporate governance policies and, in all material respects, with applicable Law.
(h) Each
of the Company and its subsidiaries has all required governmental licenses, permits, certificates, approvals and authorizations
(
Permits
) necessary to conduct its business and to own, operate and use its properties and assets, as conducted, owned, operated and used as of
the date hereof, except where the failure to have such Permit would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The operation of the business of
the Company and its subsidiaries as currently conducted is not, and has not been since the Applicable Date, in violation of, nor are the Company or its subsidiaries in default or violation under, any
Permit, except where such default or violation of such Permit would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect and, to the knowledge of the
Company, no event has occurred which, with notice or the lapse of time or both, would constitute a default or
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violation
of any material terms, condition or provision of any Permit, except where such default or violation of such Permit would not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. All such Permits are in full force and effect, except where the failure to be in full force and effect would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. There are no actions pending or, to the knowledge of the Company, threatened, that seek the revocation, cancellation or adverse modification of any Permit, except where
such revocation, cancellation or adverse modification would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(i) Except
with respect to regulatory matters covered by
Section 6.4
and except for such investigations or reviews the outcome of which
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, as of the date hereof, no investigation or review by any Governmental Entity with respect to the
Company or any of its subsidiaries is pending or, to the knowledge of the Company, threatened. Neither the Company nor any of its subsidiaries has, since the Applicable Date, been charged by any
Governmental Entity with, or to the knowledge of the Company, investigated for,
a violation of any Antitrust Law applicable to the Company or any of its subsidiaries or entered any settlement, memorandum of understanding or similar agreement with a Governmental Entity in respect
of a violation or alleged violation of any such Antitrust Law, except, in each case, for any such violation that would not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or prevent, materially delay or materially impair the ability of the Company to consummate the Merger and the other transactions contemplated by this Agreement. To the knowledge of the
Company, other than with respect to this Agreement or the transactions contemplated hereby, no investigation or review by any Governmental Entity under any Antitrust Law or any settlement agreement in
respect of a violation or alleged violation thereof with respect to the Company or any of its subsidiaries is pending or threatened, nor has any Governmental Entity indicated to the Company or any of
its subsidiaries an intention to conduct any such investigation or review.
SECTION 3.7
SEC Filings; Financial Statements; Undisclosed Liabilities
.
(a) The
Company has timely filed or otherwise furnished all forms, reports, statements, certifications and other documents (including all exhibits and other information
incorporated therein, amendments and supplements thereto) in each case required to be filed or furnished by it with the SEC since January 1, 2017 (the
Applicable
Date
) (all such forms, reports, statements, certificates and other documents filed since the Applicable Date, and those filed or furnished subsequent to the date hereof,
including all exhibits and other information incorporated therein, amendments and supplements thereto, collectively, the
SEC Reports
). As of
their respective filing dates, or, if amended or superseded by a subsequent filing made prior to the date of this Agreement, as of the date of the last such amendment or superseding filing prior to
the date of this Agreement, the SEC Reports complied or will comply in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the
Securities Act
), the Exchange Act and the Sarbanes Oxley Act of 2002 (the
Sarbanes Oxley
Act
), as the case may be, and the applicable rules and regulations promulgated thereunder, each as in effect on the date of any such filing. As of the time of filing with
the SEC (or, if amended prior to the date of this Agreement, as of the date of such amendment), none of the SEC Reports so filed contained, when filed, any untrue statement of a material fact or
omitted to state any material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they
were made, not misleading, except to the extent that the information in such SEC Reports has been amended or superseded by a later SEC Report filed at least one (1) Business Day prior to the
date of this Agreement. Since the Applicable Date, the Company has been in compliance in all material respects with the applicable listing and corporate governance rules and regulations of the New
York Stock
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Exchange.
None of the Company’s subsidiaries is, as of the date hereof, or has been since the Applicable Date, subject to the reporting requirements of Section 13 or 15(b) of
the Exchange Act.
(b) The
audited consolidated financial statements of the Company (including all notes thereto) and its subsidiaries included in the SEC Reports filed prior to the date of
this Agreement have been prepared or, in the case of SEC Reports filed after the date of this Agreement, will be prepared, in accordance with GAAP in all material respects applied on a consistent
basis throughout the periods involved (except as may be indicated therein or in the notes thereto) and fairly present or, in the case of SEC Reports filed after the date of this Agreement, will fairly
present, in all material respects the consolidated financial position of the Company and its subsidiaries at the respective dates thereof (taking into account the notes thereto) and the consolidated
statements of operations, comprehensive earnings, cash flows and stockholders’ equity for the periods indicated. The unaudited consolidated financial statements of the Company
(including any related notes thereto) for all interim periods included in the SEC Reports filed prior to the date of this Agreement have been prepared or, in the case of SEC Reports filed after the
date of this Agreement, will be prepared, in accordance with GAAP in all material respects applied on a consistent basis throughout the periods involved (except as may be indicated in the notes
thereto) and fairly present or, in the case of SEC Reports filed after the date of this Agreement, will fairly present, in all material respects the consolidated financial position of the Company and
its subsidiaries as of the respective dates thereof (taking into account the notes thereto) and the consolidated statements of operations, comprehensive earnings, cash flows and
stockholders’ equity for the periods indicated (subject to normal and recurring period-end adjustments and to any other adjustments described therein or in the notes thereto).
(c) The
Company maintains disclosure controls and procedures required by Rules 13a-15 and 15d-15 of the Exchange Act. Such disclosure controls and procedures are
reasonably designed to ensure that material information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded and reported on a timely basis to
the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents. Such internal control over financial reporting is
sufficient to provide reasonable assurance in all material respects regarding the reliability of the Company’s financial reporting and the preparation of the
Company’s financial statements for external purposes, in each case, in accordance with GAAP. Since the Applicable Date, the Company’s chief executive officer and
chief financial and accounting officer have disclosed to the Company’s auditors and the audit committee of the Company Board (A) any significant
deficiencies and material weaknesses in the design or operation of its internal controls over financial reporting that are reasonably likely to adversely affect
the Company’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who
have a significant role in the
Company’s internal control over financial reporting, and in each case the Company has made available to Parent (or its Representatives), or otherwise provided as an SEC Document,
prior to the date of this Agreement all such disclosures from the Applicable Date to the date of this Agreement. The terms significant deficiencies and material
weaknesses have the meanings assigned to such terms in Rule 12b-2 of the Exchange Act.
(d) Except
(i) as reflected, accrued or reserved against in the audited balance sheet of the Company and its subsidiaries (or the notes thereto) dated as of
December 31, 2018, included in the SEC Reports, (ii) for liabilities or obligations incurred in the ordinary course of business since December 31, 2018, and (iii) for
liabilities or obligations incurred pursuant to the transactions contemplated by this Agreement, neither the Company nor any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that would be required by GAAP to be reflected on a consolidated balance sheet of the Company and its subsidiaries (or in the notes thereto), other
than those which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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SECTION 3.8
Contracts
.
(a) Except
(w) for this Agreement, (x) for the Contracts filed as an exhibit to the SEC Documents at least one (1) Business Day prior to the date of
this Agreement, (y) for each Company Plan, JV Plan or Collective Bargaining Agreement, and (z) as set forth in
Section 3.8
of the Company Disclosure
Schedule, as of the date of this Agreement, neither the Company nor any of its subsidiaries is party to or bound by any note, bond, mortgage, indenture, contract, agreement, lease, license, Permit or
other instrument, obligation or arrangement (whether written or oral) (each, a
Contract
) that is:
(i) a
Contract that is or would be required to be filed by the Company as a material contract pursuant to Item 601(b)(10) of
Regulation S-K under the Securities Act or disclosed by the Company on a Current Report on Form 8-K;
(ii) a
Contract that contains covenants binding upon the Company or any of its subsidiaries in each case that are material to the Company and its subsidiaries taken as a
whole, that (A) restricts the ability of the Company (or, following the Effective Time, the Surviving Corporation) or any of its subsidiaries or Affiliates to compete in any business or with
any Person or in any geographic area or acquire any Person or that would require the disposition of any material assets or line of business of the Company
and its subsidiaries or, in each case, after the Effective Time, Parent or its subsidiaries, (B) grant most favored nation status or (C) include
take or pay requirements, volume requirements or commitments, exclusive or preferred purchasing arrangements or similar provisions obligating a Person to obtain a minimum
quantity of goods or services from another Person, except, in each case, any such Contract that may be canceled without penalty or other liability to the Company or any of its subsidiaries upon
60 days’ notice or less;
(iii) other
than with respect to any partnership or limited liability company that is wholly owned by the Company or any of its wholly owned subsidiaries, a Contract that is
a joint venture, partnership, limited liability, strategic alliance or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any joint
venture, partnership, limited liability company, strategic alliance or other similar Person, in each case, that is material to the Company’s and its wholly owned
subsidiaries’ respective businesses, taken as a whole;
(iv) a
Contract involving amounts of $2,000,000 or more in fiscal year 2018 that is a mortgage, pledge, indenture, credit agreement, loan agreement, security agreement, deed
of trust, guarantee, or bond relating to indebtedness for borrowed money or the deferred purchase price of property, in each case whether incurred, assumed, guaranteed or secured by any asset, other
than (A) accounts receivable and accounts payable in the ordinary course of business, and (B) any such Contract between or among any of the Company and any of its subsidiaries;
(v) a
Contract that is a mortgage, pledge, security agreement, deed of trust or other Contract granting a Lien on any material property or assets of the Company or any of
its subsidiaries;
(vi) a
Contract that (A) prohibits or restricts the payment of dividends or distributions in respect of the capital stock of the Company or any of its subsidiaries,
(B) prohibits or restricts the pledging of the capital stock of the Company or any subsidiary of the Company, (C) prohibits or restricts the issuance of guarantees by the Company or any
subsidiary of the Company, (D) grants any right of first refusal or right of first offer or similar right or (E) that limits the ability of the Company or any of its subsidiaries or
Affiliates to sell, transfer, pledge or otherwise dispose of any assets or businesses;
(vii) a
Contract under which the Company or any of its subsidiaries has, directly or indirectly, any obligations or potential obligations to make a capital contribution to,
or other investment in,
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any
Person (other than the Company or any of its wholly owned subsidiaries and other than (A) extensions of credit in the ordinary course of business consistent with past practice and
(B) investments in marketable securities in the ordinary course of business);
(viii) a
Contract with respect to any acquisition, sale or lease of material properties or assets, including equipment (by merger, purchase or sale of stock or assets or
otherwise), with a value at the time of such acquisition, sale or lease in excess of $7,500,000 per individual property or asset entered into since the Applicable Date;
(ix) a
Contract with respect to any acquisition and divestiture in the past five (5) years pursuant to which the Company or any of its subsidiaries has material
indemnification, holdback, earn-out or other contingent payment obligations that, in each case, remain outstanding or otherwise survive as of the date hereof;
(x) a
Contract between the Company or any of its subsidiaries, on the one hand, and any director or officer of the Company or its subsidiaries or any Person beneficially
owning five percent (5%) or more of the outstanding Shares or any of their respective Affiliates, on the other hand;
(xi) a
Contract that contains a standstill or similar agreement that will be in effect as of the Closing pursuant to which the Company or any of its subsidiaries has agreed
not to acquire assets or securities of another Person;
(xii) a
Contract that contains a put, call or similar right pursuant to which the Company or any of its subsidiaries could be required to purchase or sell, as applicable,
any equity interests of any Person or assets, in each case with a value in excess of $2,000,000;
(xiii) a
Contract that is a voting agreement or registration rights agreement with respect to securities of the Company or its subsidiaries;
(xiv) a
Contract with respect to the Top Customers;
(xv) a
Contract (other than a customer, broker, client or supply Contract) that involved aggregate payments to the Company and its subsidiaries in fiscal year 2018 in excess
of $5,000,000;
(xvi) a
Contract with respect to the Top Vendors;
(xvii) a
Contract that, to the extent material to the business or financial condition of the Company and its subsidiaries (taken as a whole) and that is a
(A) consulting Contract, (B) license or royalty Contract (other than any Contract relating to Intellectual Property), or (C) merchandising, sales representative or distribution
Contract;
(xviii) a
Contract with any Governmental Entity (other than a customer or host Contract) that involves consideration of greater than $2,000,000 annually;
(xix) a
Real Property Lease that is material to the Company and its subsidiaries taken as a whole; or
(xx) is
a Contract (excluding licenses for (x) Software used by the Company or any of its subsidiaries in the ordinary course of business, or (y) non-exclusive
rights granted in the ordinary course of business) under which the Company or any of its subsidiaries grants to a third party, or is granted by a third party, any right to use any material
Intellectual Property rights, which Contract is material to the Company and its subsidiaries, taken as a whole.
Each
Contract set forth or required to be set forth in
Section 3.8
of the Company Disclosure Schedule or that would be required to be filed by the
Company as a material contract pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act is referred to herein as a
Material Contract
.
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(b) A
copy of each Material Contract (other than those set forth in
Section 3.8(a)(xiv)
or
(xvi)
) has been
made available to Parent prior to the date of this Agreement, subject to applicable Law. Each of the Material Contracts is valid and binding on the Company and each of its subsidiaries party thereto,
as applicable, and, to the knowledge of the Company, each other party thereto, and is in full force and effect, subject to the Bankruptcy and Equity Exception, except (i) to the extent that any
Material Contract expires in accordance with its terms, and (ii) for such failures to be valid and binding or to be in full force and effect that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (x) neither the
Company nor any of its subsidiaries is in breach or violation of, or default under, any Material Contract (and, to the knowledge of the Company, no event has occurred which, with notice or the lapse
of time or both, would constitute such a breach, violation or default), (y) neither the Company nor any of its subsidiaries have received written notice from any other party to a Material
Contract that such other party intends to terminate, not renew, or renegotiate in any material respects the terms of any such Material Contract, and (z) to the knowledge of the
Company, no other party is in breach or violation of, or default under, any Material Contract (and, to the knowledge of the Company, no event has occurred which, with notice or the lapse of time or
both, would constitute such a breach, violation or default).
(c) Except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (x) neither the Company nor any of its
subsidiaries or, to the knowledge of the Company, any customer party to a municipal franchise collection and service contract, or a waste disposal contract at the Company or its
subsidiaries’ respective landfills and transfer stations, in each case, with annual revenue of $2,000,000 or more (as applicable,
Material Municipal
Contracts
and
Material Disposal Contracts
) is in material breach or violation of, or default under, any such Material
Municipal Contract or Material Disposal Contract (and, to the knowledge of the Company, no event has occurred which, with notice or the lapse of time or both, would constitute such a breach, violation
or default), and (y) as of the date of this Agreement, neither the Company nor any of its subsidiaries have received written notice from any other party to a Material Municipal Contract or
Material Disposal Contract that such other party intends to terminate, not renew, or renegotiate in any material respects the terms of any such Contract, except for any notices of terminations,
renewals, non-renewals or renegotiations of Material Municipal Contracts or Material Disposal Contracts in the ordinary course of business consistent with the Company’s general
historical experience.
SECTION 3.9
Absence of Certain Changes and Events
.
Since December 31, 2018 through the date of this Agreement, (a) the Company and its subsidiaries have conducted their businesses in all material respects in the ordinary
course consistent with past practice and have not taken any action that if occurred after the date hereof would require the consent of Parent pursuant to the terms of
Section 5.1
hereof and (b) there have not occurred any events, developments, changes, effects or occurrences that, individually or in the aggregate, have had
or would reasonably be expected to have a Material Adverse Effect.
SECTION 3.10
Absence of Litigation
.
There are no Proceedings pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries, other than any such Proceeding that would not reasonably
be expected to be material, individually or in the aggregate, to the Company and its subsidiaries, taken as a whole, and would not reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement by the Company. Neither the Company nor any of its subsidiaries nor any of their respective assets, rights or properties is or are
subject to any order, writ, judgment, injunction, decree or award except for those that would not reasonably be expected to be material, individually or in the aggregate, to the Company and its
subsidiaries, taken as a whole, and would not reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by this Agreement by the Company. To the knowledge
of the Company, there are no SEC
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inquiries
or investigations or other inquiries or investigations by a Governmental Entity or internal investigations pending or threatened, in each case regarding any accounting practices of the
Company or any of its subsidiaries or any malfeasance by any executive officer of the Company.
SECTION 3.11
Employee Benefit Plans
.
(a)
Section 3.11(a)
of the Company Disclosure Schedule contains a true and complete list, as of the date of this Agreement, of each
material Company Plan. With respect to each material Company Plan, prior to the date hereof, the Company has made available to Parent a current, accurate and complete copy thereof (or, if a Company
Plan is an individual agreement, a form materially consistent therewith) and, to the extent applicable, (i) any related trust agreement or other funding instrument, (ii) the most recent
determination letter, if any, received from the Internal Revenue Service (the
IRS
), (iii) the most recent summary plan description, and
(iv) for the last two years (A) the Form 5500 and attached schedules, (B) audited financial statements and (C) actuarial valuation reports, if any, (v) all
pending applications for rulings, determination letters, opinions, no action letters and similar documents filed with any Governmental Entity (including the United States Department of Labor and the
IRS) and (vi) for each Company Plan that is a multiemployer plan, as defined in Section 3(37) or 4001(a)(3) of ERISA (a
Multiemployer
Plan
), (A) any estimates of withdrawal liability from any Multiemployer Plan, (B) any assessments or demands for payment of withdrawal liability from any
Multiemployer Plan, and (C) any audits or third party analyses with respect to the status of or withdrawal liability for any Multiemployer Plan, in each case, received by the Company since the
Applicable Date.
(b) Except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) each Company Plan and, to the knowledge of
the Company, each JV Plan is established, maintained, operated and administered in accordance with its terms and in compliance with applicable Law, (ii) with respect to each Company Plan
and, to the knowledge of the Company, each JV Plan, as of the date of this Agreement, there are no Proceedings (other than routine claims for benefits in the ordinary course) pending or, to the
knowledge of the Company, threatened in writing and (iii) neither the Company nor any of its subsidiaries is engaged in a transaction in connection with which the Company or any of its
subsidiaries would reasonably be expected to be subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section 4975 or 4976 of
the Code. Each Company Plan and, to the knowledge of the Company, each JV Plan which is intended to be qualified under Section 401(a) of the Code has been determined to be so qualified
by the IRS and, to the knowledge of the Company, no circumstances exist which would reasonably be expected to cause the loss of such qualification.
(c) Except
as set forth in
Section 3.11(c)
of the Company Disclosure Schedule, no Company Plan or, to the knowledge of the Company,
JV Plan is and neither the Company nor any of its subsidiaries or ERISA Affiliates sponsors, maintains or contributes to, or has in the past six years sponsored,
maintained or contributed to (or been obligated to sponsor, maintain or contribute to), (i) a Multiemployer Plan, (ii) a multiple employer plan within the meaning of Section 4063
or 4064 of ERISA or Section 413 of the Code, (iii) an employee benefit plan that is subject to Section 302 of ERISA, Title IV of ERISA or Section 412 of the Code or
(iv) a multiple employer welfare arrangement (as defined in Section 3(40) of ERISA). With respect to each Multiemployer Plan listed on
Section 3.11(c)
of the Company Disclosure Schedule, (A) neither the Company nor any of its subsidiaries or ERISA Affiliates has incurred any liability under
ERISA on account of a partial withdrawal or complete withdrawal (within the meaning of Sections 4205 and 4203, respectively, of ERISA) from any such plan and no such liability has been asserted
in writing to the Company or any of its subsidiaries, and (B) to the knowledge of the Company, (x) no such plan has been terminated, and no proceeding has been initiated to terminate
such plan and (y) no such plan is insolvent (as described in Section 4245 of ERISA).
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(d) There
are no Company Plans maintained primarily for the benefit of employees outside of the United States.
(e) Neither
the Company nor any of its subsidiaries sponsors, maintains or contributes to any plan, program or arrangement that provides for post-retirement or other
post-employment welfare benefits, including life insurance and health coverage (other than health care continuation coverage as required by applicable Law).
(f) Neither
the Company nor any of its subsidiaries has any obligation to gross-up, indemnify or otherwise reimburse any Service Provider for any Taxes incurred by such
Service Provider, including under Section 409A or 4999 of the Code, or any interest or penalty related thereto.
(g) Except
as set forth in
Section 3.11(g)
of the Company Disclosure Schedule, or specifically provided by this Agreement, the execution
and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement will not (either alone or in combination with another event) (i) result in any payment
from the Company or any of its subsidiaries becoming due, or increase the amount of any compensation due, to any Service Provider, (ii) increase any benefits otherwise payable under any Company
Plan or, to the knowledge of the Company, JV Plan, (iii) result in the acceleration of the time of payment (including the funding of a trust or transfer of any assets to fund any
benefits under any Company Plan or, to the knowledge of the Company, JV Plan) or vesting of any compensation or benefits payable to or in respect of any Service Provider or (iv) limit or
restrict the right of the Company to merge, amend or terminate any Company Plan or, to the knowledge of the Company, JV Plan.
(h) Except
as set forth in
Section 3.11(h)
of the Company Disclosure Schedule, no amount payable to any Service Provider (whether in cash
or property or as a result of any accelerated vesting) as a result of the execution of this Agreement or the consummation of the transactions contemplated by this Agreement (either alone or together
with any other event) under any Company Plan or, to the knowledge of the Company, JV Plan or other compensation arrangement would be nondeductible under Section 280G of the Code.
SECTION 3.12
Labor and Employment Matters
.
(a) Except
as set forth in
Section 3.12(a)
of the Company Disclosure Schedule, no union or other labor organization is recognized or
certified as the representative of any employees of the Company or any of its subsidiaries for purposes of collective bargaining, and neither the Company nor any of its subsidiaries is a party to or
bound by any collective bargaining agreement or any other agreement with any labor organization or other representative of any employee (the
Collective Bargaining
Agreements
), nor is any such agreement being negotiated by the Company or any of its subsidiaries. Since the Applicable Date, (i) other than with respect to the
Company’s existing union relationships listed in
Section 3.12(a)
of the Company Disclosure Schedule, there have been no demands for labor
recognition or, to the knowledge of the Company, union organizing activities among or directed at the employees of the Company or any of its subsidiaries, and (ii) there are and have been no
strikes, work stoppages, material slowdowns, lockouts or similar material labor disputes pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries.
(b) Except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) there are no Proceedings pending or, to the
knowledge of the Company, threatened against the Company or any of its subsidiaries by or before any Governmental Entity arising out of or relating to labor or employment practices, (ii) the
Company and each of its subsidiaries is in compliance with all applicable Laws relating to employment, employment practices and the termination of employment, including (but not limited to) the
payment of wages for all time worked, the payment of overtime, the engagement and classification of individuals as non-employee
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contractors,
the classification of employees as exempt or non-exempt from overtime, labor relations and collective bargaining, equal employment opportunities and the prevention of discrimination,
harassment, and retaliation, plant closing and mass layoff notice requirements under the Worker Adjustment and Retraining Notification Act and the regulations promulgated thereunder or any similar
state or local Law (collectively, the
WARN Act
), and the provision of meal, rest and other breaks, and (iii) since the Applicable Date,
there have been no material investigations of the Company or any of its subsidiaries arising out of or relating to labor or employment practices.
SECTION 3.13
Insurance
.
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, all insurance policies of the Company and its subsidiaries (a) are
in full force and effect and provide insurance in such amounts and against such risks as are reasonably adequate to protect them and their businesses and customary in all material respects for
businesses engaged in the waste collection and disposal business in the United States, and as are sufficient to comply with applicable Law, (b) neither the Company nor any of its subsidiaries
is in breach or default, and neither the Company nor any of its subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination or modification of, any such insurance policies, (c) to the knowledge of the Company, as of the date hereof, no insurer of any such policy has been declared
insolvent or placed in receivership, conservatorship or liquidation, and (d) no notice of cancellation or termination has been received with respect to any such policy and no notice that any
material coverage will be specially rated, or that substantial capital improvements or other expenditures will have to be made in order to continue such insurance has been received with respect to any
such policy.
SECTION 3.14
Properties
.
(a)
Section 3.14
of the Company Disclosure Schedule contains a list of all (i) material real properties (by location) owned by the
Company or any of its subsidiaries as of the date hereof (the
Owned Real Property
) and (ii) material leases, subleases, licenses or other
agreements for interests in real properties leased, subleased, licensed, occupied or operated by the Company or of its subsidiaries as of the date hereof with total base rental obligations greater
than $200,000 for the fiscal year 2018 (the
Real Property Leases
, and the interests granted to the Company or its subsidiaries thereby, the
Leased Real Property
, and the Leased Real Property and the Owned Real Property collectively, the
Real
Property
). True and correct copies of all the material Real Property Leases have been made available to Parent, except for the failure to make available the terms of any
Real Property Leases as would not reasonably be expected to be material, individually or in the aggregate, to the Company and its subsidiaries taken as a whole. The Company or a subsidiary of the
Company owns and has good and marketable title to all material Owned Real Property and holds a valid leasehold estate in all material Leased Real Property pursuant to legally binding, enforceable
rights, which are in full force and effect, in each case, free and clear of all Liens, except Permitted Liens.
(b) Except
as would not reasonably be expected to be material, individually or in the aggregate, to the Company and its subsidiaries taken as a whole, (i) no
condemnation, requisition or taking by any public authority has been threatened in writing or contemplated, and neither the Company nor any subsidiary has received any written notice of any such
condemnation, requisition or taking by a Governmental
Entity with respect to the Owned Real Property; (ii) none of the Company nor any of its subsidiaries nor, to the knowledge of the Company, each other party thereto, is in default or breach of
any Real Property Lease beyond any applicable notice and cure period, and no event has occurred and is continuing which, with notice, lapse of time or both, would constitute a default or breach of any
Real Property Lease by any of the Company or its subsidiaries; (iii) with respect to the Owned Real Property, to the knowledge of the Company, there are no outstanding options or rights of
first refusal granted by the Company or any of its subsidiaries to purchase any such Owned Real Property, any portion thereof or interest therein; and (iv) the buildings, improvements and
fixtures on the Real Property are in good operating condition and repair and structurally sound (ordinary wear and tear
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excepted),
and sufficient for the operation of the businesses of the Company and its subsidiaries consistent with past practices. Except as would not reasonably be expected to be material,
individually or in the aggregate, to the Company and its subsidiaries taken as a whole, each parcel of Real Property is suitable for its current uses and can be used by Parent and the Surviving
Corporation after Closing in the manner currently operated by the Company and its subsidiaries without violating any Real Property Lease, any Law or private restriction.
(c) Except
as would not reasonably be expected to be material, individually or in the aggregate, to the Company and its subsidiaries taken as a whole, the Company or a
subsidiary of the Company owns and has good and marketable title to, or holds a valid leasehold estate in all items of personal property owned, leased, subleased or otherwise lawfully used by the
Company and its subsidiaries pursuant to legally binding, enforceable rights, which are in full force and effect, in each case, free and clear of all Liens, except Permitted Liens. Except as would not
reasonably be expected to be material, individually or in the aggregate, to the Company and its subsidiaries taken as a whole, the personal property owned or leased by the Company and its subsidiaries
is, taking into account in each case the design, age, prior use and locale of such personal property, in good operating condition and repair adequate for purposes for which the Company and its
subsidiaries currently use such personal property, subject to continued repair and replacement generally in accordance with past practice and normal wear and tear.
SECTION 3.15
Tax Matters
.
(a) The
Company and each of its subsidiaries (A) have prepared in good faith and duly and timely filed (taking into account any extension of time within which to
file) all income and other material Tax Returns (as defined below) required to be filed by any of them and all such Tax Returns are true, complete and accurate in all material respects;
(B) have duly and timely paid all material Taxes (as
defined below) that are required to be paid (whether or not shown as due on any Tax Return), except with respect to matters contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP in the financial statements contained in the SEC Reports; and (C) have not waived any statute of limitations with respect to material Taxes
or agreed to any extension of time with respect to a material Tax assessment or deficiency (other than as a result of obtaining an extension of time within which to file a Tax Return).
(b) The
financial statements contained in the SEC Reports reflect an adequate reserve (excluding any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) for all material Taxes payable by the Company and its subsidiaries for all taxable periods and portions thereof through the date of such financial statements. To the
knowledge of the Company, the Taxes payable by the Company and the subsidiaries of the Company since the date of the financial statements contained in the last SEC Reports through the Closing Date
with respect to all taxable periods and portions thereof through the Closing Date will not materially exceed such reserve as adjusted through the Closing Date for the passage of time and ordinary
course business operations of the Company and its subsidiaries.
(c) There
are no pending material Tax audits, examinations, investigations or other proceedings with respect to the Company or any of its subsidiaries, and no such material
audits, investigations or proceedings have been threatened in writing.
(d) There
are no material Liens on any of the assets of the Company or any subsidiary that arose in connection with any failure (or alleged failure) to pay any Tax, other
than for Taxes that are not yet due and payable or for Taxes that are being contested in good faith by appropriate proceeding and for which adequate reserves have been provided in accordance with
GAAP.
(e) Neither
the Company nor any of its subsidiaries has participated in any listed transaction within the meaning of Treasury Regulations
Section 1.6011-4.
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(f) Neither
the Company nor any of its subsidiaries (A) has any liability for the Taxes of any Person (other than the Company or its subsidiaries) under Treasury
Regulations Section 1.1502-6 or any similar provision of state, local or foreign Law, (B) is a party to or bound by any Tax sharing agreement, Tax allocation agreement or Tax indemnity
agreement (other than those contained in commercial agreements or contracts not primarily related to Tax and entered into in the ordinary course of business or any agreement among or between only the
Company and/or any of its subsidiaries) or (C) has been either a distributing corporation or a controlled
corporation in a transaction intended to be governed by Section 355 of the Code in the two-year period ending on the date of this Agreement.
(g) Within
the past six (6) years, no claim has been made by a Governmental Entity in a jurisdiction where the Company or any of its subsidiaries does not
file a type of Tax Return that the Company or any subsidiary is or may be subject to material amounts of taxation by, or is required to file any material Tax Return in, that jurisdiction.
(h) No
closing agreements, private letter rulings, technical advance memoranda or similar agreements or rulings have been entered into or issued by any Tax authority with
respect to the Company or any subsidiary.
(i) All
material Taxes required to be withheld, collected or deposited by or with respect to the Company and each subsidiary of the Company have been timely withheld,
collected or deposited as the case may be, and to the extent required, have been paid to the relevant Tax authority.
(j) Neither
the Company nor any subsidiary of the Company will be required to include material amounts in income, or exclude material items of deduction, in a taxable period
ending after the Closing Date as a result of (i) a change in method of accounting occurring prior to the Closing Date, (ii) an installment sale or open transaction arising in a taxable
period (or portion thereof) ending on or before the Closing Date, (iii) a prepaid amount received outside the ordinary course of business, prior to the Closing Date, (iv) any
intercompany transactions occurring prior to the Closing Date or any excess loss account described in Treasury Regulations under Section 1502 of the Code that exists as of the Closing Date,
(v) a closing agreement as described in Section 7121 of the Code (or any similar provision of state, local or foreign Law) executed prior to the Closing Date,
(vi) an election under Section 108(i) of the Code or (vii) an election under Section 965(h) of the Code.
(k) Neither
the Company nor any subsidiary of the Company has a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise has an office or fixed
place of business in a country other than the country in which it is organized.
(l) For
purposes of this Agreement:
(i)
Taxes
means all federal, state, local and foreign income, profits, franchise, gross receipts, customs duty,
capital stock, severance, stamp, payroll, sales, ad valorem, employment, unemployment, disability, use, property, withholding, transfer, excise, license, production, value added, alternative or add on
minimum, occupancy and other taxes, customs, duties, governmental fees, escheats, or assessments or charges of any nature whatsoever imposed by any Governmental Entity, including as a result of being
or having been a member of an affiliated, consolidated, combined
or unitary group, together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions; and
(ii)
Tax
Return
means all returns and reports or similar statements (including elections, declarations, disclosures,
schedules, claim for refund, amended returns, estimates and information returns and any attached schedules) filed or required to be filed with respect to any Tax.
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SECTION 3.16
Intellectual Property
.
(a) Except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or as set forth in
Section 3.16(a)
of the Company Disclosure Schedule, (i) the Company and its subsidiaries exclusively own all of their Intellectual Property registrations and
applications and all of their material unregistered proprietary Intellectual Property, free and clear of all Liens except Permitted Liens, (ii) (x) the Company’s use and
exploitation of such Intellectual Property in connection with the operation of the business of the Company and its subsidiaries has not and does not, infringe, dilute or misappropriate the
Intellectual Property (other than patents) and, to the knowledge of the Company, patents of any third party, and (y) and to the knowledge of the Company, the Company’s and its
subsidiaries’ material Intellectual Property is not being infringed, diluted or misappropriated by any third party, (iii) the Company and its subsidiaries take reasonable
actions to protect and maintain their trade secrets and confidential information, (iv) all Intellectual Property registrations and applications owned by the Company and its subsidiaries are
subsisting and unexpired and, and to the knowledge of the Company, are valid and enforceable, (v) neither the Company nor any of its subsidiaries is a party to any Proceeding and no Proceeding
is pending or, to the knowledge of the Company, threatened in writing (including cease and desist letters and invitations to take a patent license) against the Company or any
of its subsidiaries, in each case, that challenges the validity, enforceability or ownership of, their Intellectual Property (other than the review of pending patent and trademark applications by
applicable Governmental Entities) or alleges that the Company or its subsidiaries have infringed, diluted or misappropriated the Intellectual Property of any third party, and (vi) the Company
and its subsidiaries have not provided any Person other than authorized employees any material proprietary source code of the Company or its subsidiaries or the current or contingent right to access
or possess same, other than in the ordinary course of business and pursuant to binding obligations of confidentiality.
(b)
Section 3.16(b)
of the Company Disclosure Schedule identifies as of the date of this Agreement, a complete list of all material
Intellectual Property registrations and applications owned by the Company
or its subsidiaries, indicating for each applicable item the registration or application number, the record owner, the date filed or issued and the applicable filing jurisdiction.
(c) Except
as would not have, individually or in the aggregate, a Material Adverse Effect, the Company and its subsidiaries have taken reasonable steps to maintain
(i) the confidentiality of or otherwise protect and enforce their rights in all Intellectual Property owned by them, and to protect and preserve through the use of customary nondisclosure
agreements the confidentiality of all confidential information that is owned or held by the Company and its subsidiaries and used in the conduct of the business and (ii) the security,
continuous operation, and integrity of the websites, networks, Software and any other information technology systems (and any data stored or contained therein or transmitted thereby) used or held for
use in the Company’s business, and there have been no security breaches or unauthorized access to or use of any of same.
(d) To
the knowledge of the Company, (i) each of the Company and its subsidiaries is in material compliance with all applicable Laws relating to privacy, data
protection, and the collection and use of personal information (if any) collected, used, or held for use by, each of the Company and its subsidiaries and (ii) no claims have been asserted or
threatened in writing against the Company or its subsidiaries alleging a violation of any Person’s privacy or personal information or data rights.
SECTION 3.17
Environmental Matters
.
(a) Except
as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) the Company and each of its subsidiaries is,
and has been for the past three (3) years, in compliance with all applicable Environmental Laws, (ii) the Company and its subsidiaries have, and are and for the past three
(3) years have been in compliance with, all Permits, authorizations and approvals required under any applicable Environmental Laws (
Environmental
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Permits
),
and there is no pending, or to the knowledge of the Company, threatened, legal or administrative challenge to, or proposed termination or adverse
modification of, any such Environmental Permit, or unresolved claim which alleges that the Company or any of its subsidiaries lacks an Environmental Permit required for the lawful operation of their
facilities, (iii) there are no
pending or, to the knowledge of the Company, threatened, administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, or
proceedings relating to any Environmental Law against the Company or any of its subsidiaries, (iv) there is no contamination relating to any property or facility currently owned or operated by
any of the Company and its subsidiaries, or to the knowledge of the Company, relating to any other location, that would reasonably be expected to result in liability under any Environmental Law, and
(v) none of the disposal sites utilized by, or properties owned or operated by, the Company or its subsidiaries, currently or, to the knowledge of the Company historically, is on the National
Priorities List under the U.S. Comprehensive Environmental Response Compensation and Liability Act, which would reasonably be expected to create environmental liability for the Company and its
subsidiaries.
(b) For
purposes of this Agreement, the following terms shall have the meanings assigned below:
Environmental
Laws
means Laws relating to the protection of the environment or natural resources or human exposure to Hazardous
Materials or noxious odors, the transport or release or threatened release of Hazardous Materials, greenhouse gas emissions, or the handling of solid waste.
Hazardous
Materials
means any substance, material or waste that is regulated under applicable Environmental Law, including those
defined as hazardous or toxic, or as a contaminant, pollutant or solid waste, or other term of similar import, and including asbestos, polychlorinated biphenyls, petroleum or petroleum products.
SECTION 3.18
Opinion of Financial Advisor
.
UBS Securities LLC (the
Financial Advisor
) has delivered to the Company Board its written opinion (or oral opinion to be
confirmed in writing), dated as of the date of this Agreement, that, as of such date, and subject to the assumptions, qualifications and limitations set forth therein, the Per Share Merger
Consideration is fair, from a financial point of view, to the holders of Common Stock (other than the holders of the Cancelled Shares, Subsidiary Shares or the Dissenting Shares), a copy of which
opinion will be delivered Parent solely for informational purposes promptly following receipt thereof by the Company.
SECTION 3.19
Brokers
.
No broker, finder or investment banker (other than the Financial Advisor) is entitled to any brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and on behalf of the Company, any of its subsidiaries or any of their respective officers, directors or employees. Prior to
the execution of this Agreement, the Company has made available to Parent a copy of all Contracts pursuant to which the Financial Advisor is entitled to any fees and expenses from the Company or any
of its Affiliates in connection with the transactions contemplated by this Agreement (which Contracts may be redacted with respect to terms that do not relate to the transactions contemplated by this
Agreement and do not relate to any fees or expenses that are or may become payable by the Company).
SECTION 3.20
Information in the Proxy Statement
.
The Proxy Statement (and any amendment thereof or supplement thereto), at the date disseminated to the Company’s stockholders and at the time of the Stockholders
Meeting, will not 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 made therein, in light
of the circumstances under which they were made, not misleading, except that no representation or warranty is made by the Company with respect to statements made therein based on information supplied
by Parent or Merger Sub in writing expressly for inclusion in the Proxy Statement. The Proxy Statement will comply in all material respects with the provisions of the Exchange Act and any other
applicable federal securities Laws.
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SECTION 3.21
Related Party Transactions
.
As of the date of this Agreement, except as set forth in the SEC Reports filed prior to the date of this Agreement, there are no outstanding amounts payable to or receivable from, or
advances by the Company or any of its subsidiaries to, and neither the Company nor any of its subsidiaries is otherwise a creditor or debtor to, or party to any Contract or transaction with, any
holder of 5% or more of the Shares or any director, officer, or Affiliate of the Company or any of its subsidiaries, or to any relative of any of the foregoing, except for Company Plans and Collective
Bargaining Agreements.
SECTION 3.22
Takeover Statutes
.
Assuming the accuracy of the representations and warranties by Parent and Merger Sub in
Section 4.8
, as of the date of this Agreement, the Company
Board has taken all appropriate action so that the restrictions contained in Section 203 of the DGCL will not apply with respect to, or as a result of, the execution of this Agreement or the
consummation of the transactions contemplated hereby. No other fair price, moratorium, control share acquisition or other
similar antitakeover statute or regulation enacted under any Laws applicable to the Company or any of its subsidiaries is applicable to this Agreement, the Merger, the Voting and Support Agreement or
the transactions contemplated hereby and the Voting and Support Agreement.
SECTION 3.23
Company Requisite Vote
.
The Company Requisite Vote is the only vote of holders of securities of the Company that are required to adopt this Agreement and approve the Merger and the other transactions
contemplated hereby under the DGCL, the Certificate of Incorporation, the Bylaws and the rules and regulations of the New York Stock Exchange. All issued and outstanding shares of Common Stock are
entitled to vote.
SECTION 3.24
Rights Plan
.
Neither the Company nor any of its subsidiaries has adopted a stockholder rights plan or poison pill.
SECTION 3.25
No Other Representations or Warranties
.
Except for the representations and warranties contained in this Agreement or any certificate delivered pursuant to this Agreement, each of Parent and Merger Sub acknowledges that neither
the Company nor any other Person on behalf of the Company makes any other express or implied representation or warranty with respect to the Company or with respect to any other information provided to
Parent or Merger Sub, including any information, documents, projections, forecasts or other material made available to Parent or Merger Sub or their Representatives in the Data Room or management
presentations in expectation of the transactions contemplated by this Agreement, including with respect to the completeness, accuracy or currency of any such information.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub each hereby represents and warrants to the Company that, except as set forth in the corresponding sections or subsections
of the disclosure schedules delivered to the Company by Parent and Merger Sub concurrently with entering into this Agreement (the
Parent Disclosure
Schedule
), it being agreed that disclosure of any item in any section or subsection of the Parent Disclosure Schedule shall also be deemed disclosure with respect to any
other section or subsection of this Agreement to which the relevance of such item is reasonably apparent on its face:
SECTION 4.1
Organization
.
Each of Parent and Merger Sub is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the Laws of its respective
jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and
is qualified to do business and, to the extent such concept is applicable, is in good standing as a foreign corporation or other legal entity in each jurisdiction where the ownership, leasing or
operation of its assets
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or
properties or present conduct of its business requires such qualification, except in each case where the failure to be so qualified or, to the extent such concept is applicable, in good standing,
or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the ability of Parent and Merger Sub to consummate the Merger and
the other transactions contemplated by this Agreement. Parent has made available to the Company prior to the date of this Agreement a complete and correct copy of the certificate of incorporation and
bylaws of Parent and Merger Sub, each as amended to the date of this Agreement, and each as so delivered is in full force and effect.
SECTION 4.2
Authority
.
Each of Parent and Merger Sub has all requisite corporate power and authority and has taken all corporate or other action necessary, to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Merger and the other transactions contemplated hereby. The execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the
consummation by each of Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate or similar action by the boards of directors of
Parent and Merger Sub and immediately following execution and delivery of this Agreement, Parent will approve and adopt this Agreement and the transactions contemplated hereby in its capacity as sole
stockholder of Merger Sub in accordance with applicable Law and the certificate of incorporation and bylaws of Merger Sub, and no other corporate proceedings or stockholder or similar action on the
part of Parent or Merger Sub or any of their Affiliates are necessary to authorize this Agreement, to perform their respective obligations hereunder, or to consummate the transactions contemplated
hereby (other than the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL). This Agreement has been duly and validly executed and
delivered by each of Parent and Merger Sub and assuming the due authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of each of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy and Equity Exception.
SECTION 4.3
No Conflict; Required Filings and Consents
.
(a) The
execution, delivery and performance of this Agreement by each of Parent and Merger Sub do not, and the consummation of the Merger and the other transactions
contemplated hereby, will not (i) conflict with or violate the certificate of incorporation or bylaws of Parent or Merger Sub, (ii) assuming that all consents, approvals and
authorizations contemplated by clauses (i) through (iv) of subsection (b) below have been obtained, and all filings, notifications and other actions described in such clauses have
been made or taken (and any waiting periods thereunder have terminated or expired), conflict with or violate any Law applicable to Parent, Merger Sub or any of their respective subsidiaries or by
which any of Parent’s or Merger Sub’s or their respective subsidiaries’ assets, rights or properties are bound or (iii) result in any breach
or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of a benefit to which Parent, Merger Sub or any of their
subsidiaries are entitled under, give rise to any right of termination, cancellation, amendment or acceleration of, require notice of consent under, or result in the creation of a Lien (except a
Permitted Lien) on any of the material assets, rights or properties of Parent, Merger Sub or any of their respective subsidiaries pursuant to, any Contract to which Parent, Merger Sub, or any of their
respective subsidiaries is a party or by which Parent, Merger Sub or any of their subsidiaries or its or their respective assets, rights or properties are bound, except in the case of
clauses (ii) and (iii), for any such conflict, violation, Lien, breach, default, loss, right or other occurrence which would not reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement by Parent or Merger Sub.
(b) The
execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation of the Merger and the other transactions contemplated
hereby by each of Parent
and Merger Sub do not and will not require any Governmental Filings, except for (i) applicable filings under, or compliance with other applicable requirements, of, the Exchange Act and the
rules
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and
regulations promulgated thereunder, and state securities, takeover and blue sky Laws, (ii) the filing of a premerger Notification and Report
Form by Parent and Merger Sub under the HSR Act and compliance with all other requirements thereunder, (iii) applicable filings under, or compliance with other applicable
requirements of the New York Stock Exchange, (iv) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL, and (v) any such
consent, approval, authorization, Permit, action, filing or notification the failure of which to make or obtain would not reasonably be expected to prevent or materially delay the consummation of the
transactions contemplated hereby.
SECTION 4.4
Absence of Litigation
.
As of the date of this Agreement, there are no Proceedings pending or, to the knowledge of Parent, threatened against Parent or Merger Sub or any of their respective subsidiaries, other
than any such Proceeding that would not, or would not reasonably be expected to, individually or in the aggregate, prevent or materially delay the consummation of the transactions contemplated hereby
by Parent or Merger Sub. As of the date of this Agreement, neither Parent nor any of its subsidiaries nor any of their respective assets, rights or properties is or are subject to any order, writ,
judgment, injunction, decree or award that would, or would reasonably be expected to, individually or in the aggregate, prevent or materially delay the consummation of the transactions contemplated
hereby by Parent or Merger Sub.
SECTION 4.5
Operations and Ownership of Merger Sub
.
All of the issued and outstanding capital stock of Merger Sub is, and at and immediately prior to the Effective Time will be, owned by Parent or a direct or indirect subsidiary of
Parent. Merger Sub has been formed solely for the purpose of engaging in the transactions contemplated hereby and prior to the Effective Time will have engaged in no other business activities and will
have no assets, liabilities or obligations of any nature other than those incidental to its formation and those in furtherance of the Merger and the other transactions contemplated by this Agreement.
SECTION 4.6
Brokers
.
No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent or Merger Sub for which the Company could have any liability in a circumstance where the Merger is not consummated.
SECTION 4.7
Funding
.
Parent will have, at the Closing, access to sufficient cash, available lines of credit or other sources of immediately available funds to enable Parent to consummate the transactions
contemplated by this Agreement, including payment of the aggregate Per Share Merger Consideration and all other required payments payable in connection with the transactions contemplated hereby. Each
of Parent and Merger Sub affirms that it is not a condition to the Closing or any of its other obligations under this Agreement that Parent or Merger Sub obtain the Financing for or related to any of
the transactions contemplated hereby.
SECTION 4.8
Ownership of Shares
.
Neither Parent nor Merger Sub is, nor at any time during the last three years has it been, an interested stockholder of the Company as defined in
Section 203 of the DGCL (other than as contemplated by this Agreement).
SECTION 4.9
Information in the Proxy Statement
.
The information supplied by Parent and Merger Sub in writing expressly for inclusion in the Proxy Statement (and any amendment thereof or supplement thereto), if any, at the date
disseminated to the Company’s stockholders and at the time of the Stockholders Meeting, will not 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 made therein, in light of the circumstances under which they were made, not misleading, except that no representation or
warranty is made by Parent or Merger Sub with respect to statements made therein based on information supplied by the Company for inclusion in the Proxy Statement.
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SECTION 4.10
Agreements with Company Stockholders, Directors, Officers and Employees
.
As of the date of this Agreement, neither Parent, Merger Sub nor any of their respective subsidiaries is a party to any Contract, or has made or entered into any formal or informal
arrangements or other understandings (whether or not binding), with any beneficial owner of more than five percent (5%) of the outstanding Common Stock, pursuant to which such holder would be entitled
to receive consideration of a different amount or nature than the Per Share Merger Consideration or pursuant to which any such holder agrees to vote to adopt this Agreement or approve the Merger or
with any director or officer of the Company or any of its subsidiaries that in any way relates to this Agreement, the transactions contemplated by this Agreement or the post-Closing operation of the
Surviving Corporation, other than the Voting and Support Agreement.
SECTION 4.11
No Other Representations or Warranties
.
Except for the representations and warranties expressly set forth in this
Article IV
, the Company acknowledges that neither Parent nor Merger Sub, nor any
other Person on behalf of Parent or Merger Sub, makes any other express or implied representation or warranty with respect to Parent or Merger Sub or with respect to any other information provided to
the Company. Parent and Merger Sub entered into this Agreement based upon their own investigation, examination and determination with respect thereto as to all matters and without reliance upon any
express or implied representations or warranties of any nature made by or on behalf of the Company, except as expressly set forth in this Agreement.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1
Conduct of Business of the Company Pending the Merger
.
During the Pre-Closing Period, except as otherwise expressly contemplated by this Agreement, as set forth in
Section 5.1
of the Company Disclosure
Schedule, as required by applicable Laws, or unless otherwise consented to in writing by Parent (such consent not to be unreasonably withheld, conditioned or delayed, except with respect to
clauses (i), (iii), (iv), (viii), (xviii), (xix), and (xx) and, solely to the extent relating to any of the foregoing clauses, (xxi), in each case, for which consent may be withheld in
Parent’s sole discretion), (a) the Company shall, and shall cause each of its subsidiaries to, conduct the business of the Company and its subsidiaries in the ordinary course
of business, (b) the Company shall, and shall cause each of its subsidiaries to, use commercially reasonable efforts to preserve substantially intact the business organization of the Company
and its subsidiaries and to preserve its material assets, rights and properties in good repair and condition, to keep available the services of its directors, officers and employees, and to maintain
its existing relationships and goodwill with customers, suppliers, lenders, licensors, licensees, distributors or others having business dealing with the Company and its subsidiaries and
(c) without limiting the foregoing, the Company shall not, and shall cause each of its subsidiaries not to:
(i) amend
or otherwise change its Certificate of Incorporation or Bylaws or other applicable governing instruments;
(ii) (A)
make any acquisition of (whether by merger, consolidation, acquisition of stock or assets or otherwise), or make any investment in any interest in, any assets or
any Person (other than wholly owned subsidiaries of the Company), in each case, except for (x) purchases of inventory or other assets in the ordinary course of business consistent with past
practice or (y) acquisitions of or investments in a third party Person that do not exceed $15,000,000 in the aggregate in purchase price and assumed liabilities, but, the case of
clause (y), only after reasonable consultation with Parent and in a transaction that will not require a competition or other regulatory filing with any Governmental Entity or (B) acquire
or license any material Intellectual Property from any third party, except in the ordinary course of business consistent with past practice;
(iii) issue,
deliver, sell, pledge, dispose of, grant, award or encumber (or authorize the issuance, delivery, sale, pledge, disposition of, grant, award or encumbrance),
any shares of capital stock,
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ownership
interests or voting securities, or any options, warrants, convertible securities or other rights of any kind to acquire or receive any shares of capital stock, any other ownership interests
or any
voting securities (including restricted stock, stock appreciation rights, phantom stock or similar instruments), of the Company or any of its subsidiaries (except (A) for the issuance of shares
of Common Stock upon the exercise of Options outstanding as of the date hereof, (B) in connection with the vesting or settlement of Restricted Shares, PSUs or RSUs, as applicable, outstanding
as of the date hereof, in each case, in accordance with the terms of the applicable Company Stock Plan and award agreement or (C) for any issuance, sale or disposition to the Company or a
wholly owned subsidiary of the Company by any subsidiary of the Company), or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation or
dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(iv) reclassify,
combine, split, subdivide, redeem, purchase or otherwise acquire any shares of capital stock of the Company (except (A) for the acquisition of shares
of Common Stock tendered by directors or employees in connection with a cashless exercise of Options outstanding as of the date hereof or in order to pay Taxes in connection with the exercise of
Options outstanding as of the date hereof or (B) shares of Common Stock withheld in order to pay Taxes in connection with the vesting or settlement of any Restricted Shares, PSUs or RSUs
outstanding as of the date hereof), or reclassify, combine, split or subdivide any capital stock or other ownership interests of any of the Company’s subsidiaries;
(v) create
or incur any Lien that would be material in scope and amount to the Company and its subsidiaries taken as a whole, other than Permitted Liens or Liens securing
indebtedness permitted pursuant to clause (xii) below;
(vi) make
any loans or advances to any Person in excess of $100,000 in the aggregate (other than (A) to the Company or any of its wholly owned subsidiaries or
(B) customary relocation or business expenses to employees of the Company and its subsidiaries in the ordinary course);
(vii) (A)
sell or otherwise dispose of (whether by merger, consolidation or disposition of stock or assets or otherwise) any material assets (including any Real Property) or
any corporation, partnership or other business organization or division thereof that is material to the business or financial condition of the Company or any of its subsidiaries (taken as a whole) or
(B) sublicense, transfer, allow to lapse or expire, pledge, abandon, discontinue, fail to maintain or otherwise dispose of any right, title or interest of the Company or any of its subsidiaries
in any material Intellectual Property, in each case of (A) and (B), other than (x) in the ordinary course of business consistent with past practice or pursuant to Contracts in effect as
of the date hereof (which Contracts have been made available to Parent), or (y) to the Company or any of its wholly owned subsidiaries;
(viii) declare,
authorize, 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 for any dividend or distribution by a subsidiary of the Company to the Company or a wholly owned subsidiary of the Company);
(ix) commit,
make or authorize any capital expenditures (including any capital leases and any landfill construction, development or remediation), except any capital
expenditures (A) as set forth in the budget set forth in
Section 5.1
of the Company Disclosure Schedule, (B) for the acquisition of new equipment,
trucks, containers or landfill compactors in the ordinary course of business and consistent with past practice or (C) with respect to bids awarded to or acquired by the Company or any of its
subsidiaries that have not been serviced as of the date hereof or are awarded or acquired by the Company or any of its subsidiaries after the date hereof or (D) less than $15,000,000 in the
aggregate;
(x) other
than in the ordinary course of business or as required by Law, extend, modify or fail to perform the terms of any Material Contract in any material respect or
terminate or fail to renew any
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Material
Contract (
provided
, that the Company shall not renew any Real Property Lease for a duration of more than the current term as of the date of such renewal (or for
more than three (3) years in the case of any Real Property Lease that has a current term of more than three (3) years);
(xi) enter
into any Contract that (A) would have been a Material Contract had it been entered into prior to the date of this Agreement, other than any Contract
entered into in the ordinary course of business which would constitute a Material Contract under
Section 3.8(a)(xiv)
, or (B) is related to the sale,
transfer, grant or license of any rights in landfill gas and related assets;
(xii) except
for (A) borrowings under the Company’s and its subsidiaries’ credit facilities listed on
Section 5.1(xii)
of the Company Disclosure Schedule (the
Existing Facilities
), (B) intercompany loans
between the Company and any of its wholly owned subsidiaries or between any wholly owned subsidiaries and (C) subject to
Section 5.1(c)(ix)
, capitalized
leases entered into in the ordinary course of business, incur indebtedness for borrowed money in excess of $10,000,000 in the aggregate, or modify in any material respect in a manner adverse to the
Company the terms of any such indebtedness for borrowed money, or assume or guarantee the obligations of any Person, other than (x) guarantees by the Company of indebtedness of subsidiaries of
the Company incurred in compliance with this
Section 5.1
by the Company, or (y) any commodity, currency, sale or hedging agreements which can be terminated
on or sold with 90 days’ or less notice, without penalty (which, for the avoidance of doubt, shall not include customary settlement costs), entered into in the ordinary course
of business for
bona fide
risk mitigation purposes and not for speculative purposes;
(xiii) other
than as required by applicable Law, as required pursuant to the terms of any Company Plan, JV Plan, or Collective Bargaining Agreement in effect on the date
hereof: (A) (x) amend, renew, or terminate (or communicate any intention to take such action) any material Company Plan or (y) establish, adopt, or enter into any compensation or
benefit agreement, plan or arrangement that would be a material Company Plan if it were in existence as of the date of this Agreement, in either case, other than amending, renewing, terminating,
establishing, adopting, or entering into arrangements that are not otherwise prohibited under sub-clauses (B), (C), (D), or (E) of this
Section 5.1(c)(xiii)
and that are in the ordinary course of business consistent with past practice and do not result in a material increase in benefits or
administrative costs, (B) increase the benefits or compensation (or incentive compensation opportunity) provided to any Service Provider, other than increases to salary and wages (by not more
than three percent (3%) in the aggregate) or broad-based benefits for employees who are not Senior Employees in the ordinary course of business consistent with past practice that do not result in a
material increase in benefits or administrative costs, (C) pay any annual bonus or annual incentive compensation in excess of the amount earned based on actual performance in accordance with
the applicable Company Plan, (D) grant any new equity or long-term incentive award, amend the terms of outstanding equity or long-term incentive awards or discretionarily accelerate the vesting
or payment of any equity or long-term incentive award, (E) grant or pay any severance or termination pay or benefits, (F) take any action to fund or secure the payment of any amounts
under any Company Plan, (G) change any assumptions used to calculate funding or contribution obligations under any Company Plan, or increase or accelerate the funding rate in respect of any
Company Plan, other than as required by GAAP, (H) hire or engage the services of any individual who would be, or terminate the services (other than for cause) of, a Senior Employee other than
to replace a former employee, (I) loan or advance any money or other property to any Service Provider, other than any such loans or advance made to a Service Provider who is not a Senior
Employee in the ordinary course of business and consistent with past practice, or (J) take any action that would be reasonably likely to result in a complete or partial withdrawal under any
Multiemployer Plan;
(xiv) other
than as required by applicable Law or GAAP (or as required to conform to any changes in statutory or regulatory accounting rules (including GAAP or regulatory
requirements with
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respect
thereto)), (A) file any amended U.S. federal income or other material Tax Return, (B) make any material change to any method of financial or Tax accounting (or accounting
principles in connection therewith), (C) make or change any material Tax election, (D) surrender any material claim for a refund of Taxes, (E) consent to any extension or waiver
of the limitation period applicable to any material Tax claim or assessment relating to the Company or any of its subsidiaries (other than pursuant to an extension of time to file a Tax Return)
or (F) enter into any Tax sharing agreement, Tax allocation agreement or Tax indemnity agreement (other than commercial agreements or contracts not primarily related to Tax and entered into in
the ordinary course of business or any agreement among or between only the Company and/or any of its subsidiaries) which would be considered material to the Company and its subsidiaries taken as a
whole;
(xv) other
than as required by applicable Law, recognize any new union or other labor organization as the representative of any of the employees of the Company or its
subsidiaries, or enter into any new or amended Collective Bargaining Agreement;
(xvi) announce,
implement or effect any reduction in force, layoff or other program resulting in the termination of employees, in each case, that would trigger the WARN Act;
(xvii) other
than with respect to Transaction Litigation, which is addressed in
Section 6.11
, and subject to
Section 6.6(a)
, pay, discharge, settle or satisfy any material litigation, arbitration, Proceeding, investigation, order, claim, liability or obligation, other than
(A) settlements involving (x) payments by the Company or any of its subsidiaries of not more than $10,000,000 in the aggregate (net of insurance proceeds) and which do not involve any
material limitations on the future business or operations of the Company and its subsidiaries taken as a whole that are reasonably expected to continue following the Closing and (y) third party
indemnification recoveries payable to the Company or any of its subsidiaries in connection with such settlement, or (B) with respect to Transaction Litigation, which is addressed in
Section 6.11
;
(xviii) fail
to renew or maintain existing insurance policies as of the date hereof or comparable replacement policies covering the Company and its subsidiaries and their
respective properties, assets and businesses, other than in the ordinary course of business consistent with past practice;
(xix) adopt
or otherwise implement any stockholder rights plan, poison-pill or other comparable agreement designed to have the effect of delaying,
deferring or discouraging Parent or Merger Sub from acquiring control of the Company pursuant to this Agreement;
(xx) except
as requested by Parent pursuant to
Section 6.15
, issue any notice of redemption or take any other action which would cause
the redemption or other repayment of the Company Notes; or
(xxi) agree,
authorize or commit to do any of the foregoing actions described in
Section 5.1(i)
through
Section 5.1(xx)
.
SECTION 5.2
No Control of Company’s Business
. Nothing
contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s or its subsidiaries’ operations
prior to the Effective
Time. Prior to the Effective Time, the Company shall have the right to exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its
subsidiaries’ businesses and operations.
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1
Acquisition Proposals
.
(a) Except
as permitted by this
Section 6.1
or
Section 6.3
, during the Pre-Closing Period, the
Company shall not, and shall cause its subsidiaries and its and its subsidiaries’ directors, officers, and employees and the attorneys, investment bankers and other advisors or
representatives (collectively,
Representatives
) of the Company and its subsidiaries not to, directly or indirectly, (i) initiate, solicit
or knowingly induce or encourage or otherwise knowingly facilitate (including by providing information) any inquiries with respect to, or the making of, any Acquisition Proposal or any inquiry, offer
or proposal that could reasonably be expected to lead to an Acquisition Proposal, (ii) engage in, continue or otherwise participate in any negotiations or discussions concerning, or provide
access to its properties, books and records or any confidential or non-public information or data to, any Person for the purpose of encouraging or facilitating an Acquisition Proposal or any inquiry,
offer or proposal that could reasonably be expected to lead to an Acquisition Proposal (
provided
that, notwithstanding the foregoing, the Company may (x) notify
such Person of the existence of this
Section 6.1
, and (y) in response to a
bona fide
Acquisition Proposal
after the date hereof that was not initiated, solicited, knowingly encouraged or facilitated in, and did not otherwise result from a, violation of this
Section 6.1
,
contact such Person and its Representatives for the purpose of clarifying the material terms of any such Acquisition Proposal and the likelihood and timing of consummation thereof),
(iii) approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any Acquisition Proposal, or (iv) execute or enter into, any letter of intent, agreement in
principle, merger agreement, acquisition agreement or other similar definitive agreement relating to any Acquisition Proposal (which, for the avoidance of doubt, shall not include an Acceptable
Confidentiality Agreement), and the Company shall not resolve or agree to do any of the foregoing. Without limiting the foregoing, it is agreed that any violation of any of the restrictions set forth
in the preceding sentence by any Representatives of the Company or any of its subsidiaries shall be deemed to be a breach of this
Section 6.1(a)
by the Company. The
Company shall, shall cause each of its subsidiaries to, and shall instruct (and use its reasonable efforts to cause) its Representatives to, immediately cease and cause to be terminated any
solicitations, discussions or negotiations with any Person (other than the Parties and their respective Representatives) in connection with an Acquisition Proposal. The Company also agrees that it
will promptly request each Person (other than the Parties and their respective Representatives) that has, prior to the date hereof, executed a confidentiality agreement in connection with its
consideration of an Acquisition Proposal to promptly return or destroy all confidential information furnished to such Person by or on behalf of it or any of its subsidiaries prior to the date hereof
and shall terminate access to data rooms furnished in connection therewith. The Company shall promptly (and in any event within 48 hours) notify Parent orally and in writing of the receipt of
any Acquisition Proposal and any inquiries, proposals or offers, any requests for information, or any requests for discussions or negotiations with the Company or any of its Representatives, in each
case in writing and relating to an Acquisition Proposal, which notice shall include a summary of the material terms and conditions of, and the identity of the Person making, such Acquisition Proposal,
inquiry, proposal or offer, and copies of any such written requests, proposals or offers, including proposed agreements, and thereafter shall (i) keep Parent reasonably informed, on a
reasonably current basis (and in any event within 48 hours of the occurrence of any changes, developments, discussions or negotiations), of any material developments regarding any Acquisition
Proposals or any material change to the terms and status of any such Acquisition Proposal and (ii) provide to Parent as soon as practicable (and in any event within 48 hours) after
receipt or delivery thereof copies of all correspondence and other written material sent or provided to the Company or any of its subsidiaries from any person that describes any of the terms or
conditions of any Acquisition Proposal. The Company agrees that neither it nor any of its subsidiaries shall
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terminate,
waive, amend, release or modify any provision of any existing standstill or similar agreement to which it or one of its subsidiaries is a party, except that prior to, but not after,
obtaining the Company Requisite Vote, if after consultation with, and taking into account the advice of, outside legal counsel, the Company Board determines that the failure to take such action would
be reasonably likely to result in a violation of its fiduciary duties under applicable Law, the Company may waive any such standstill provision solely to the extent necessary to permit a third party
to make, on a confidential basis, to the Company Board, an Acquisition Proposal.
(b) Notwithstanding
anything to the contrary in this Agreement, nothing contained herein shall prevent the Company or the Company Board from:
(i) taking
and disclosing to its stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated under the Exchange Act (or any similar
communication to stockholders in connection with the making or amendment of a tender offer or exchange offer, in each case, to the extent legally required) or from making any other disclosure to
stockholders with regard to the transactions contemplated by this Agreement or an Acquisition Proposal if the Company Board determines in good faith that the failure to make such disclosure would be
inconsistent with its fiduciary duties under applicable Law (
provided
, that neither the Company nor the Company Board may recommend any Acquisition Proposal unless
expressly permitted by
Section 6.1(c)
or
Section 6.3
, and
provided
,
further
, that any such disclosure that has the substantive effect of withdrawing or adversely modifying the Recommendation shall be deemed to be a Change of Recommendation
and any such disclosure that relates to an Acquisition Proposal, shall be deemed to be a Change of Recommendation unless the Company in connection with such disclosure publicly and expressly reaffirms
the Recommendation);
provided
,
further
, that the issuance by the Company or the Company Board of a stop, look and
listen communication as contemplated by Rule 14d-9(f) promulgated under the Exchange Act (or any similar communication to its stockholders) in which the Company provides only a
factually accurate public statement that the Company has received an Acquisition Proposal and states that the Company Board has not changed the Recommendation shall not constitute a Change of
Recommendation;
(ii) prior
to, but not after, obtaining the Company Requisite Vote, providing access to its properties, books and records and providing any information or data in response
to a request therefor by a Person or group who has made a
bona fide
Acquisition Proposal that was made after the date hereof and was not initiated,
solicited, or knowingly encouraged or facilitated in violation of
Section 6.1
, if the Company Board (A) shall have determined in good faith, after
consultation with, and taking into account the advice of, its outside legal counsel and Financial Advisor, that such Acquisition Proposal could reasonably be expected to constitute or result in a
Superior Proposal, (B) shall have determined in good faith, after consultation with, and taking into account the advice of, its outside legal counsel, that the failure to take such actions
would be inconsistent with its fiduciary duties under applicable Law and
(C) has received from the Person so requesting such information an executed Acceptable Confidentiality Agreement;
provided
, that any such access, information or
data has previously been provided to Parent or is provided to Parent prior to or substantially concurrently with the time such access, information or data is provided to such Person or group;
(iii) prior
to, but not after, obtaining the Company Requisite Vote, engaging in any negotiations or discussions with any Person and its Representatives who has made a
bona fide
Acquisition Proposal that was made
after the date hereof and was not initiated, solicited, or knowingly encouraged or facilitated in violation
of
Section 6.1
or any other violation of this Agreement, if the Company Board shall have determined in good faith, after consultation with, and taking into account
the advice of, its outside legal counsel and Financial Advisor, that (A) such Acquisition Proposal could reasonably be expected to constitute or result in a Superior
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Proposal
and (B) the failure to engage in any such negotiations or discussions would be inconsistent with its fiduciary duties under applicable Law; or
(iv) prior
to, but not after, obtaining the Company Requisite Vote, making a Change of Recommendation (but only if permitted by
Section 6.1(c)
or
Section 6.3
).
(c) Notwithstanding
anything in this Agreement to the contrary, if, at any time prior to, but not after, obtaining the Company Requisite Vote, the Company Board determines
in good faith, after consultation with, and taking into account the advice of, its Financial Advisor and outside legal counsel, in response to a
bona
fide
Acquisition Proposal that was made after the date hereof and was not initiated, solicited, or knowingly encouraged or facilitated in violation of
Section 6.1
and such Acquisition Proposal constitutes a Superior Proposal (taking into account any adjustment to the terms and conditions of this Agreement
committed to by Parent and Merger Sub in response to such Acquisition Proposal) and the failure to take the action in sub-clause (i) or (ii) below would be inconsistent with its
fiduciary duties under applicable Law, the Company or the Company Board may (and may resolve or agree to) (i) terminate this Agreement pursuant to
Section 8.1(d)(ii)
and enter into a definitive agreement with respect to such Superior Proposal or (ii) effect a Change of Recommendation in accordance with
clause (x)(A) of
Section 6.3
;
provided
,
however
, that, if the Company terminates the Agreement
pursuant to
Section 8.1(d)(ii)
, the Company pays to Parent the Company Termination Fee required to be paid pursuant to
Section 8.2(b)(i)
concurrently with or prior to such termination;
provided
,
further
, that the Company will
not be entitled to enter into such definitive agreement and to terminate this Agreement in accordance with
Section 8.1(d)(ii)
or effect a Change of Recommendation
pursuant to clause (x) of
Section 6.3
unless (x) the Company delivers to
Parent a written notice (a
Company Notice
), advising Parent that the Company Board proposes to take such action and containing a summary of the
material terms and conditions of the Superior Proposal that is the basis of the proposed action by the Company Board (including the identity of the party making such Superior Proposal and copies of
any written proposals or offers, including proposed agreements) and (y) at or after 11:59 p.m., Eastern time, on the fourth (4
th
) Business Day immediately following the day
on which the Company delivered the Company Notice (such period from the time the Company Notice is provided until 11:59 p.m., Eastern time, on the fourth (4
th
) Business Day
immediately following the day on which the Company delivered the Company Notice, the
Notice Period
), the Company Board reaffirms in good faith
(after consultation with, and taking into account the advice of, its outside legal counsel and Financial Advisor and taking into account any adjustment to the terms and conditions of this Agreement
committed to by Parent during the Notice Period) that such Acquisition Proposal continues to constitute a Superior Proposal and that the failure to take such action would be inconsistent with Company
Board’s fiduciary duties under applicable Law. If requested by Parent, the Company will, and will cause its Representatives to, during the Notice Period, engage in good faith
negotiations with Parent and its Representatives regarding any
bona fide
adjustments in the terms and conditions of this Agreement so that such
Acquisition Proposal would cease to constitute a Superior Proposal. The Company agrees to notify Parent promptly if it determines during such Notice Period not to terminate this Agreement and enter
into the definitive agreement referred to in the Company Notice. Any amendment to the financial terms or any other material amendment to the terms and conditions of a proposed agreement relating to a
Superior Proposal will be deemed to be a new proposal or proposed agreement relating to a Superior Proposal for purposes of this
Section 6.1(c)
requiring a new
Company Notice and an additional Notice Period;
provided
,
however
, that each such additional Notice Period after the initial four
(4) Business Day Notice Period shall expire at 11:59 p.m., Eastern time, on the second (2
nd
) Business Day immediately following the day on which the Company delivers such
new Company Notice (it being understood that no such new Company Notice shall reduce the initial Notice Period to less than four (4) Business Days).
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(d) For
purposes of this Agreement, the following terms shall have the meanings assigned below:
(i)
Acquisition
Proposal
means any proposal or offer (including a tender offer or exchange offer) from any Person or
group of Persons (other than Parent or Merger Sub) relating to (A) any merger, consolidation, dissolution, liquidation, recapitalization, reorganization, spin off, share exchange, business
combination, purchase, or similar transaction with respect to the Company or any of its subsidiaries or (B) (x) any direct or indirect acquisition or purchase, in one transaction or a series of
related transactions, of assets (including equity securities of any subsidiary of the Company) or businesses that constitute 15% or more of the revenues, net income or assets of the Company and its
subsidiaries, taken as a whole, or 15% or more of the total voting power of the equity securities of the Company, or (y) any tender offer or exchange offer that if consummated would result in
any Person or group of Persons beneficially owning 15% or more of the total voting power of the equity securities of the Company, or any merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation, joint venture, partnership, dissolution or similar transaction involving the
Company (or any subsidiary or subsidiaries of the Company whose business constitutes 15% or more of the revenues, net income or assets of the Company and its subsidiaries, taken as a whole).
(ii)
Superior
Proposal
means a
bona fide
written Acquisition Proposal
(with all references to 15% or more in the definition of Acquisition Proposal being deemed to reference more than 50%) that the Company Board in
good faith, after consultation with, and taking into account the advice of, the Company’s Financial Advisor and outside legal counsel, determines (i) would, if consummated,
result in a transaction more favorable from a financial point of view to the stockholders of the Company than the Merger taking into account all financial, legal, financing (including availability
thereof), regulatory and other aspects and risks and timing of consummation, and any changes to the terms of this Agreement committed to by Parent in response to such Superior Proposal pursuant to,
and in accordance with,
Section 6.1(c)
and (ii) is reasonably capable of being completed on the terms proposed.
SECTION 6.2
Proxy Statement
.
The Company shall prepare and file with the SEC, as promptly as practicable after the date of this Agreement, and in any event within 20 Business Days after the date of this Agreement, a
preliminary proxy statement to be sent to the stockholders of the Company in connection with the Stockholders Meeting (such proxy statement, as amended or supplemented, the
Proxy Statement
). Parent, Merger Sub and the Company will cooperate and consult with each other in the preparation of the Proxy Statement and any
amendments or supplements thereto. Without limiting the generality of the foregoing, each of Parent and Merger Sub will furnish to the Company the information relating to it and its subsidiaries as
required by the Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Proxy Statement (or that is customarily included in proxy statements prepared in connection
with transactions of the type contemplated by this Agreement) and provide such other assistance as may be reasonably requested by the Company. The Company shall use its reasonable best efforts to
resolve all SEC comments, if any, with respect to the Proxy Statement as promptly as practicable after receipt thereof. Each Party covenants that none of the information supplied or to be supplied by
it for inclusion or incorporation in the Proxy Statement will, at the date it is filed with the SEC or first mailed to the Company’s stockholders or at the time of the Stockholders
Meeting or at the time of any amendment or supplement thereof, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are made, not misleading. The Company shall promptly notify Parent and Merger Sub of the receipt of any comments from the
SEC with respect to the Proxy Statement and any request by the SEC for any amendment to the Proxy Statement or for additional information. If at any time prior to the Stockholders Meeting any
information relating to Parent, Merger Sub or the Company, or any of their respective Affiliates, officers or directors, should be discovered by Parent, Merger Sub or the Company, which should be set
forth in an amendment or supplement to the
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Proxy
Statement so that the Proxy Statement would not include any misstatement of a material fact necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading, the Party which discovers such information shall promptly notify the other Party and, to the extent required by applicable Law, the Company shall promptly file with the SEC and
disseminate to the stockholders of the Company an appropriate amendment or supplement describing such information. Prior to filing or mailing the Proxy Statement (or any amendment or supplement
thereto) or responding to any comments of the SEC or its staff with respect thereto, the Company shall provide Parent a reasonable opportunity to review and to propose comments on such document or
response and consider in good faith such comments proposed by Parent for inclusion therein. Unless the Company Board has made a Change of Recommendation in accordance with
Section 6.3
, the Recommendation shall be included in the Proxy Statement.
SECTION 6.3
Stockholders Meeting
.
The Company, acting through the Company Board (or a committee thereof), shall as soon as reasonably practicable following the date on which the Company learns that the Proxy Statement
will not be reviewed or that the SEC has no further comments thereon, duly call, give notice of, convene and hold a meeting of its stockholders to be held no more than 50 days thereafter for
the purpose of approving and adopting this Agreement (including any adjournment or postponement thereof, the
Stockholders Meeting
) and shall not
postpone, recess or adjourn such meeting;
provided
, that the Company may postpone, recess or adjourn such meeting (i) if on the date on which the Stockholders
Meeting is originally scheduled (as set forth in the Proxy Statement), the Company has not received proxies representing a sufficient number of Shares to obtain the Company Requisite Vote or there are
insufficient Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of the Stockholders Meeting; or (ii) if the failure to postpone, recess
or adjourn the Stockholders Meeting would reasonably be expected to be a violation of applicable Law for the distribution of any required amendment or supplement to the Proxy Statement to be timely
provided to the holders of Shares;
provided
,
further
, that the Stockholders Meeting shall not be postponed, recessed or adjourned pursuant to
this proviso to a date that is more than 30 days after the date on which the Stockholders Meeting was originally scheduled without the prior written consent of Parent. The Company, acting
through the Company Board (or a committee thereof), shall (a) subject to
Section 6.1(c)
, include in the Proxy Statement the Recommendation,
(b) include the written opinion of the Financial Advisor, dated as of the date of this Agreement, that, as of such date, the Per Share Merger Consideration is fair, from a financial point of
view, to the holders of the Common Stock (other than the holders of Cancelled Shares, Subsidiary Shares and Dissenting Shares), and (c) subject to
Section 6.1(c)
, use its reasonable best efforts to obtain the Company Requisite Vote, including to solicit proxies necessary to obtain the Company Requisite Vote;
provided
that, notwithstanding anything to the contrary contained in this Agreement, the Company Board may fail to include the Recommendation in the Proxy Statement or
withdraw, modify, qualify in any manner adverse to Parent, or change the Recommendation, or formally resolve to effect or publicly announce an intention to effect any of the foregoing (a
Change of Recommendation
), if (x) (A) a
bona fide
Acquisition Proposal that was made after
the date hereof and was not initiated, solicited, knowingly encouraged or facilitated in violation of
Section 6.1
is made to the Company and is not withdrawn and
the Company Board determines in good faith, after consultation with, and taking into account the advice of, its Financial Advisor and outside legal counsel that such Acquisition Proposal constitutes a
Superior Proposal or (B) there exists any Intervening Event, (y) the Company Board shall have determined in good faith, after consultation with, and taking into account the advice of,
outside legal counsel to the Company, that the failure of the Company Board to effect a Change of Recommendation would be inconsistent with its fiduciary duties under applicable Law and (z) (A)
if such Change of Recommendation is made in response to an Acquisition Proposal, the Company complies with the provisions of
Section 6.1(c)
or (B) if such
Change of Recommendation is made in response to an Intervening Event, the Company (x) delivers to Parent a written notice informing Parent that the Company Board proposes to take such action
and the basis of the proposed action (including a reasonably detailed description of the underlying facts giving rise to, and the reasons for taking, such action) no less than four
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(4) Business
Days before taking such action and (y) during such four (4) Business Day period, if requested by Parent, engages in good faith negotiations with Parent and its
Representatives regarding any adjustments in the terms and conditions of this Agreement proposed by Parent so that such event, development, circumstance, change, effect, condition or occurrence would
cease to warrant a Change of Recommendation. The Company shall keep Parent updated with respect to proxy solicitation results as reasonably requested by Parent. Notwithstanding anything to the
contrary contained in this Agreement, if subsequent to the date of this Agreement the Company Board makes a Change of Recommendation, the Company nevertheless shall submit this Agreement to the
holders of Shares for approval and adoption at the Stockholders Meeting unless and until this Agreement is terminated in accordance with its terms.
SECTION 6.4
Further Action; Efforts
.
(a) Subject
to the terms and conditions of this Agreement, including
Section 6.4(d)
, Parent shall use its reasonable best efforts to
take, or cause to be taken, all actions and to use its reasonable best efforts to do, or cause to be done, all things reasonably necessary, proper or advisable under this Agreement and applicable Law
to consummate and make effective the Merger and the other transactions contemplated by this Agreement. Each Party agrees to, as promptly as reasonably practicable and advisable, and in any event no
later than fifteen (15) Business Days after the date of this Agreement, make appropriate filings of Notification and Report Forms pursuant to the HSR Act. Each Party will cooperate with the
other Party and use its respective reasonable best efforts to, as promptly as practicable and advisable, prepare and submit all other filings, information updates and other presentations required for
any other regulatory approval, exemption, change of ownership approval, or other authorization or consent from, any Governmental Entity or third party in each case that are set forth on
Schedule 6.4(a)
or are otherwise required in connection with the Merger or any of the transactions contemplated by this Agreement, and to assist and cooperate with
the other Party in connection with the foregoing.
(b) Subject
to
Sections 6.4(d)
and
6.4(e)
, each of Parent, on the one hand, and the Company, on the other
hand, shall (i) cooperate in all respects with each other in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding
initiated by a private party, (ii) keep the other Party and/or its counsel reasonably informed of any communication received by such Party from, or given by such Party to, the Federal Trade
Commission (the
FTC
), the Antitrust Division of the Department of Justice (the
DOJ
) or any
other U.S. or foreign Governmental Entity, and of any communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated
hereby, and (iii) permit the other Party and/or its counsel to review any substantive communication given by it to, and consult with each other in advance of any meeting or conference with, the
DOJ, the FTC or any such other Governmental Entity or, in connection with any proceeding by a private party, with any other person, and to the extent not prohibited by the DOJ, the FTC or such other
Governmental Entity or other person, give the other Party and/or its counsel the opportunity to attend and participate in any substantive meeting, discussion or teleconference. Parent and the Company
may, as each deems advisable and necessary, reasonably
designate any competitively sensitive material provided to the other under this
Section 6.4(b)
as Antitrust Counsel Only Material. Such
materials and the information contained therein shall be given only to the outside antitrust counsel of the recipient and will not be disclosed by such outside counsel to employees, officers or
directors of the recipient unless express permission is obtained in advance from the source of the materials (Parent or the Company, as the case may be) or its legal counsel. Each of Parent and the
Company shall notify the other reasonably promptly upon the receipt of (i) any material communication from any official of any Governmental Entity in connection with any filing made pursuant to
this Agreement, (ii) knowledge of the commencement or threat of commencement of any suits, claims, actions, proceedings, arbitrations, mediations, consent decrees, audits or investigations
(whether governmental, internal or otherwise) (
Actions
) by or before any Governmental Entity with respect
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to
the Merger (and shall keep the other Party informed as to the status of any such Action or threat) and (iii) any request by any official of any Governmental Entity for any amendment or
supplement to any filing made pursuant to this Agreement or any information required to comply with applicable Law applicable to the Merger. Notwithstanding anything to the contrary contained in this
Section 6.4
, materials provided pursuant to this
Section 6.4(b)
may be redacted to (x) remove references concerning the
valuation of the Company and the transactions contemplated by this Agreement, (y) to the extent necessary to comply with contractual arrangements and (z) to the extent necessary to
address reasonable privilege and confidentiality concerns.
(c) Subject
to
Sections 6.4(d)
, in the event that any Action is commenced or threatened by a Governmental Entity or other persons
challenging the Merger or the other transactions contemplated by this Agreement under Antitrust Law, (i) each of Parent and the Company shall reasonably cooperate with each other and
(ii) Parent shall use its reasonable best efforts to contest, resist or resolve any such Action and to have vacated, lifted, reversed or overturned any decree, judgment, injunction or other
Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the Merger or the other transactions contemplated by this Agreement so
as to permit such consummation no later than the End Date (as such End Date may be extended in accordance with
Section 8.1(c)
hereof), and oppose any such Actions,
whether judicial or administrative, against it in connection with the Merger or the other transactions contemplated by this Agreement.
(d) In
furtherance of the foregoing, Parent shall, and shall cause its subsidiaries to, (i) propose, negotiate, commit to and effect, by consent decree, hold separate
orders or otherwise, the sale, divesture, disposition, or license of any assets, operations, properties, products, rights, licenses, services or businesses of Parent or its subsidiaries or the Company
or its subsidiaries, or any interest therein, and (ii) otherwise take or commit to take any actions that would limit Parent’s or its subsidiaries’ or the
Company’s or its
subsidiaries’ freedom of action with respect to, or its or their ability to retain any assets, operations, properties, products, rights, licenses, services, businesses, of Parent or
its subsidiaries or the Company or its subsidiaries, or any interest therein;
provided
, that Parent shall not be required or obligated to take or agree to take any of the
foregoing actions if such actions would result in or account for, either individually or in the aggregate, a reduction of revenue (without duplication and net of intercompany revenues) in excess of
$200,000,000 (for any rolling 12-month period ending the last full month prior to any date between the date hereof and the Closing Date) to Parent, the Company and their respective subsidiaries (taken
as a whole, after giving effect to the Merger) if such actions had been taken at the beginning of any such rolling 12-month period;
provided
,
further
, that any such actions are conditioned upon the consummation of the Merger and the transactions contemplated by this Agreement and that the Company shall not be
obligated to take any action with respect to the Company and its subsidiaries the effectiveness of which is not conditioned on the Closing occurring.
(e) Notwithstanding
anything in this Agreement to the contrary, Parent shall control the strategy for obtaining all consents, approvals, or waivers that may be sought from
any Governmental Entity pursuant to this
Section 6.4
, including by directing the timing, nature, and substance of any filings, forms, statements, commitments,
submissions and communications contemplated by or made in accordance with this
Section 6.4
, as well as the manner in which to contest or otherwise respond, by
litigation or otherwise, to objections to, or proceedings or other actions challenging, the consummation of the Merger and the other transactions contemplated by this Agreement;
provided
, that Parent shall give the Company the opportunity to participate in such discussions, negotiations or other proceedings to the extent not prohibited by
applicable Law.
(f) At
Parent’s request, the Company agrees to take all reasonable actions Parent requests and to cooperate with Parent in connection with obtaining any
actions, consents, undertakings, approvals or waivers by or from any Governmental Entity for or in connection with, and reasonably cooperate
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with
Parent in litigating or otherwise contesting any objections to or proceedings or other actions challenging, the consummation of the Merger and the other transactions contemplated by this
Agreement. Without limiting the foregoing, the Company will, and will cause its subsidiaries to, (i) reasonably assist Parent in any sales process (including through facilitation of reasonable
due diligence and granting any approvals that may be required under the Confidentiality Agreement) with potential purchasers of any of the Company’s or its
subsidiaries’ businesses or other assets proposed by Parent to be subject to any such divestitures and (ii) enter into one or more agreements as requested by Parent to be
entered into by any of them prior to the Closing with respect to any transaction to divest, hold separate or otherwise take any action that would limit the Company’s or its
subsidiaries’ freedom of action, ownership or control with respect to, or their ability to retain or hold, directly or indirectly, any of the businesses or assets of the Company or
any of its subsidiaries (each, a
Company Divestiture Action
);
provided
,
however
, that
the consummation of the transactions provided for in any such agreement for a Company Divestiture Action will be conditioned upon the Closing or satisfaction or (to the extent permitted by applicable
Law) waiver of all of the conditions to Closing in a case where the Closing will occur immediately following consummation of such Company Divestiture Action. The Company shall not, and shall not
permit any of its Representatives to, make any offer, acceptance or counter-offer to or otherwise engage in negotiations or discussions with any Governmental Entity with respect to any proposed
settlement, consent, decree, commitment or remedy or, in the event of litigation, discovery, admissibility of evidence, timing or scheduling, except as specifically requested by or agreed with Parent.
SECTION 6.5
Notification of Certain Matters
.
The Company and Parent shall each give prompt notice to the other Party of (a) any written notice or other written communication received from any Governmental Entity in
connection with the Merger or the other transactions contemplated hereby or from any other Person alleging that the consent of such Person is or may be required in connection with the Merger, if the
subject matter of such communication or the failure to obtain such consent would reasonably be expected to be material to the Company, the Surviving Corporation or Parent and (b) any Proceeding
commenced or, to the knowledge of the Company or Parent, respectively, is threatened which relates to the Merger or the other transactions contemplated hereby (in each case of sub-clauses (a)
and (b) other than with respect to Antitrust Laws, which are the subject of
Section 6.4
) and (c) upon becoming aware of the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which such Party has determined would or would reasonably be expected to cause or result in any of the conditions to the Merger set
forth in
Article VII
not being satisfied or satisfaction of those conditions being materially delayed in violation of any provision of this Agreement;
provided
,
however
, that the delivery of any notice pursuant to this
Section 6.5
shall not
(i) affect the representations, warranties, covenants or agreements of the Parties or the conditions to the obligations of the Parties under this Agreement or (ii) limit the remedies
available to the Party receiving such notification.
SECTION 6.6
Access to Information and Cooperation; Confidentiality
.
(a) From
the date hereof to the Effective Time or the earlier termination of this Agreement, upon reasonable prior written notice from Parent, the Company shall, and shall
use its reasonable efforts to cause its subsidiaries, officers, directors and employees to, afford the officers, employees, auditors and other authorized representatives of Parent reasonable access,
consistent with applicable Law, at all reasonable business hours to its officers, employees, properties, offices, and other facilities and books and records (including personnel records), and shall
furnish Parent with financial, operating and other data and information as Parent, through its officers, employees or authorized representatives, may from time to time reasonably request in writing
and use commercially reasonable efforts to cooperate and make its officers, employees or authorized representatives reasonably available to provide additional information and access as may be
reasonably requested by Parent. Such access shall include (x) access after the date of the Stockholders Meeting as reasonably required for the preparation of non-invasive environmental
assessments, (y) updates on a regular basis to Parent’s
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internal
and external counsel regarding the Company’s material class-action litigations, including the status thereof, and any discharge or settlement proceedings, and the Company
shall give Parent the opportunity to consult with the Company with respect to the defense of such litigations, and the Company shall not settle or agree to settle any such litigations in an aggregate
amount for all such litigations in excess of $10,000,000 without prior consultation with Parent;
provided
, that Parent shall not have the right to consult with the Company
to the extent any settlement terms include any pricing mechanism or other restriction on pricing, and (z) updates on a regular basis regarding the Company’s anticipated
corrective actions relating to elevated temperature, slope stability and related odor concerns at any landfill sites owned or operated by the Company or any of its subsidiaries, and the Company shall
give Parent the opportunity to consult with the Company with respect to such corrective actions and consider in good faith any reasonable corrective actions recommended by Parent. Any such access
shall be at reasonable times during normal business hours and under supervision of a designee of the Company, at the Company’s discretion. Notwithstanding the foregoing,
(i) any such access shall be in such a manner as not to interfere unreasonably with the business or operations of the Company or its subsidiaries; (ii) neither the Company nor any of its
subsidiaries shall be required to provide access where the Company determines in its reasonable judgment that such access would be reasonably likely to (A) result in the loss of the protection
of any attorney-client or other privilege held by the Company or any of its subsidiaries, or contravene any Law, rule, regulation, order, judgment or (B) breach any binding agreement entered
into prior to the date of this Agreement of the Company or any of its subsidiaries with any third party,
provided
that the Company shall have used commercially reasonable
efforts to make appropriate substitute arrangements under circumstances in which the restrictions of this clause (ii) would apply. Parent shall indemnify and hold harmless the Company and its
subsidiaries from and against any losses that may be incurred by any of them arising out of or related to the use, storage or handling of (x) any personally identifiable information relating to
employees, providers or customers of the Company or any of its subsidiaries, and (y) any other information that is protected by applicable Law (including privacy Laws) and to which Parent or
its Representatives are afforded access pursuant to the terms of this Agreement.
(b) Each
of Parent and Merger Sub will comply with the terms and conditions of the letter agreement, dated November 23, 2018, between the Company and Parent (the
Confidentiality Agreement
), and will hold and treat, and will cause their respective Representatives to hold and treat, in confidence all
documents and information concerning the Company and its subsidiaries furnished to Parent or Merger Sub in connection with the transactions contemplated by this Agreement in accordance with the
Confidentiality Agreement, which Confidentiality Agreement shall remain in full force and effect in accordance with its terms;
provided
, that the execution of this
Agreement by the Company shall constitute written consent by the Company and the Company Board pursuant to the Confidentiality Agreement to all actions by Parent, Merger Sub and their Representatives
permitted or contemplated by this Agreement;
provided
,
further
, that the Company agrees that without any further action on its part any
potential debt or equity financing source of Parent or Merger Sub (including the Financing Sources), in each case shall constitute
Representatives of Parent for purposes of the Confidentiality Agreement (it being understood that notwithstanding anything in the Confidentiality Agreement to the contrary,
Parent, Merger Sub and their respective Representatives may disclose any information to such prospective debt and equity financing sources, subject to receipt of customary confidentiality undertakings
from such prospective debt and equity financing sources).
SECTION 6.7
Stock Exchange Delisting
.
Prior to the Closing Date, the Company shall cooperate with Parent and use reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things,
reasonably necessary, proper or advisable on its part under applicable Laws and rules and policies of the New York Stock Exchange to enable the delisting of the Shares from the New York
Stock
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Exchange
and the deregistration of the Shares under the Exchange Act as promptly as practicable after the Effective Time.
SECTION 6.8
Publicity
.
Following the execution of this Agreement, Parent and the Company shall issue an initial joint press release agreed upon by Parent and the Company regarding the Merger, and thereafter,
during the Pre-Closing Period, neither the Company nor Parent shall issue any press releases or otherwise make public announcements with respect to the Merger and the other transactions contemplated
by this Agreement without the other Party’s prior consent (such consent not to be unreasonably withheld, conditioned or delayed) in each case, except as such release or announcement
may be required by Law or by the rules or regulations of any United States securities exchange to which the relevant Party is subject, in which case such Party shall use reasonable efforts to consult
with the other Party in advance of such release or announcement. Notwithstanding anything to the contrary contained in this Agreement, the restrictions in this
Section 6.8
shall not apply to any communication made by any Party regarding an Acquisition Proposal or a Change of Recommendation or in connection with any
Proceeding in which the Parties are adverse to each other. Notwithstanding the foregoing, (a) each Party may, without such consultation, make internal announcements to employees and make
disclosures in documents (including exhibits and all other information incorporated therein) required to be filed or furnished by the Company with the SEC, so long as such statements are consistent in
all respects with previous press releases, public disclosures or public statements made jointly by the Parties (or individually in accordance with this
Section 6.8
)
and (b) each Party may, without such consultation, make any public statement in response to questions from the press, analysts, investors or those attending industry conferences so long as such
statements are not inconsistent with previous press releases, public disclosures or public statements made jointly by the Parties hereto (or individually in accordance with this
Section 6.8
).
SECTION 6.9
Employees and Employee Benefits
.
(a) For
a period beginning on the Closing Date and ending on the twelve-month anniversary of the Closing Date (or, if shorter, during an employee’s period
of employment following the Closing Date), Parent shall provide, or shall cause the Surviving Corporation to provide, to each employee of the Company or its subsidiaries who is not represented by a
labor organization and who continue to be employed by the Company or the Surviving Corporation or any subsidiary or Affiliate thereof (each a
Continuing Non-Union
Employee
), (i) a base salary or wage rate that is no less than that provided to such Continuing Non-Union Employee by the Company or its subsidiaries immediately
prior to the Effective Time, (ii) severance benefits that are no less favorable than those provided to such Continuing Non-Union Employee by the Company or its subsidiaries immediately prior to
the Effective Time, and (iii) all other compensation and benefits that are no less favorable in the aggregate than those provided to such Continuing Non-Union Employee by the Company or its
subsidiaries immediately prior to the Effective Time. Commencing as of the Effective Time, Parent shall, and shall cause the Surviving Corporation and its subsidiaries and Affiliates to, honor in
accordance with their terms, all Contracts, policies, plans and commitments of the Company and its subsidiaries as in effect immediately prior to the Effective Time that are applicable to any of their
current or former employees and directors, including those annual incentive award terms set forth in
Section 6.9(a)
of the Company Disclosure Schedule.
(b) Commencing
as of the Effective Time, the Surviving Corporation and its subsidiaries shall, as required by
Section 6.9(b)
of the
Company Disclosure Schedule, (i) observe the terms of each of their existing Collective Bargaining Agreements that govern the wages, hours and other terms and conditions of employment of
employees of the Company or its subsidiaries who are covered by such Collective Bargaining Agreements and who continue to be employed by the Company or the Surviving Corporation or any subsidiary or
Affiliate thereof (the
Continuing Union-Represented Employees
) and (ii) honor their Collective Bargaining Agreements until their
respective expiration, modification or amendment.
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(c) Parent
and the Company hereby agree that the occurrence of the Closing shall constitute a Change in Control for purposes of all Company Plans
and related trusts.
(d) With
respect to each benefit plan, program, practice, policy or arrangement maintained by Parent or its subsidiaries (including the Surviving Corporation) following the
Effective Time and in which any of the Continuing Employees participate (the
Parent Plans
), for purposes of determining eligibility to
participate, vesting, accrual of and entitlement to benefits (but not for benefit accruals under defined benefit pension plans or participation in frozen (whether as to new participants or benefit
accruals) post-employment or retiree welfare benefits), service with the Company and its subsidiaries (or predecessor employers to the extent the Company provides past service credit) shall be treated
as service with Parent and its subsidiaries, except to the extent such treatment will result in duplication of benefits. With respect to each applicable Parent Plan, Parent shall, and shall cause the
Surviving Corporation and its subsidiaries and Affiliates to, waive, or cause the insurance carrier to waive, all eligibility waiting periods and pre-existing condition limitations to the extent
waived, met or not included under a corresponding Company Plan, and credit each Continuing Employee and any covered dependent for any co-payments and deductibles and use commercially reasonable
efforts to credit out-of-pocket expenses paid by such Continuing Employee or any covered dependent under the Company Plans during the relevant plan year, up to and including the Effective Time.
(e) From
and after the date hereof, prior to disseminating or otherwise disclosing any material communication with the officers or employees of the Company or any of its
subsidiaries regarding commitments to compensation, benefits or other employment-related treatment they will receive following the Effective Time, the Company shall provide Parent with such
communications and a reasonable opportunity to comment, and the Company shall consider Parent’s comments, if any, in good faith.
(f) If
requested by Parent, as of at least ten days prior to the Closing Date (but conditioned upon the occurrence of the Closing), the Company shall seek approval from the
Company Board to terminate or cause to be terminated any or all of the Company Plans sponsored or maintained by the Company or any of its subsidiaries that are intended to be qualified within the
meaning of Section 401(a) of the Code (the
Company 401(k) Plans
). The Company and Parent shall cooperate in good faith prior to the
Closing with respect to the preparation and execution of all documentation necessary to effect the foregoing termination, and the Company shall provide Parent a reasonable opportunity to review and
comment on all such documentation. To the extent any Company 401(k) Plan is terminated pursuant to Parent’s request, the Continuing Employees shall be eligible to participate in a
Parent Plan that is intended to be qualified within the meaning of Section 401(a) of the Code (and meets the qualifications thereof) as soon as practicable following the Effective Time.
(g) Nothing
in this Agreement shall confer upon any Person any right to continue in the employ or service of Parent, the Surviving Corporation or any Affiliate of Parent, or
shall interfere with or restrict in any way the rights of Parent, the Surviving Corporation or any Affiliate of Parent, which rights are hereby expressly reserved, to discharge or terminate the
services of any Person at any time for any reason whatsoever, with or without cause. Notwithstanding any provision in this Agreement to the contrary, nothing in this
Section 6.9
shall (i) be deemed or construed to be an amendment or other modification of any Company Plan, Parent Plan or any other compensation or benefit
plan, (ii) prevent Parent, the Surviving Corporation or any Affiliate of Parent from amending or terminating any Company Plans in accordance with their terms or (iii) create any
third-party rights in any Person (including any employee or other service provider or any beneficiaries or dependents thereof).
SECTION 6.10
Directors’ and Officers’
Indemnification and Insurance
.
(a) For
six years from and after the Effective Time, the Surviving Corporation shall indemnify and hold harmless each present and former director and officer of the Company
or any of its subsidiaries (in each case, when acting or having acted in such capacity), determined as of the
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Effective
Time (the
Indemnified Parties
), against any costs and expenses (including reasonable attorneys’ fees), judgments,
fines, losses, claims, damages or liabilities (collectively,
Costs
) incurred in connection with any claim, action, suit, arbitration, proceeding,
investigation, mediation, consent decree, audit or inquiry, whether civil, criminal, administrative or investigative and whether formal or informal (each, a
Proceeding
), arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent that the Company would have been required under applicable Law, the Certificate of Incorporation, the Bylaws, the certificate of incorporation and bylaws (or
equivalent governing documents) of any of the Company’s subsidiaries, and any indemnification agreements with any directors and officers of the Company or any of its subsidiaries in
effect on the date of this Agreement (the
Existing Indemnification Rights
) to indemnify such Person (and the Surviving Corporation shall also
advance expenses (including reasonable and documented attorneys’ fees to the fullest extent that the Company would have been required to advance expenses under the Existing
Indemnification Rights) as incurred to the fullest extent permitted under applicable Law;
provided
, that the Person to whom expenses are advanced provides an undertaking
to repay such advances if it is ultimately determined that such Person is not entitled to indemnification). In the event any Proceeding is brought against any Indemnified Party and in which
indemnification could be sought by such Indemnified Party under this
Section 6.10
, (i) the Surviving Corporation shall have the right to control the defense
thereof after the Effective Time and the Indemnified Parties shall cooperate with Parent and the Surviving Corporation in such defense;
provided
that the Surviving
Corporation shall pay all reasonable fees and expenses of counsel selected by the Indemnified Parties, which counsel shall be reasonably satisfactory to the Surviving Corporation, promptly as
statements therefor are received to the fullest extent that the Company would have been required to pay such fees and expenses under the Existing Indemnification Rights; (ii) Parent and the
Surviving Corporation shall cooperate in the defense of any such matter if the Parent or Surviving Corporation elects not to assume the defense thereof; (iii) neither Parent nor the Surviving
Corporation shall be liable for any settlement effected without their prior written consent and (iv) neither Parent nor the Surviving Corporation shall settle, compromise or consent to the
entry of any judgment in any pending or threatened Proceeding to which an Indemnified Party is a party (and in respect of which indemnification could be sought by such Indemnified Party hereunder),
unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising out of such Proceeding or such Indemnified Party otherwise
consents. In the event the Surviving Corporation or any of its successors or assigns consolidates or amalgamates or merges into with any other Person and shall not be the continuing or surviving
company or entity of such consolidation, amalgamation or merger, then proper provision shall be made so that the successors and assigns of the Surviving Corporation shall succeed to the obligations
set forth in this
Section 6.10
.
(b) Any
Indemnified Party wishing to claim indemnification under paragraph (a) of this
Section 6.10
, upon learning of any such
Proceeding, shall reasonably promptly notify Parent thereof, but the failure to so notify shall not relieve Parent or the Surviving Corporation of any liability it may have to such Indemnified Party
except to the extent such failure materially prejudices the indemnifying Party.
(c) From
and after the Effective Time, the provisions in the Surviving Corporation’s Charter and bylaws with respect to indemnification, advancement of
expenses and exculpation of former or present directors and officers shall be no less favorable to such directors and officers than such provisions contained in the Company’s
Certificate of Incorporation and Bylaws in effect as of the date hereof, which provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Effective
Time in any manner that would affect adversely the rights thereunder of individuals who, at or prior to the Effective Time, were directors and officers of the Company or any of its subsidiaries,
except to the extent required by applicable Law.
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(d) Prior
to the Effective Time, the Company shall be permitted and, if the Company fails to do so, Parent shall cause the Surviving Corporation as of the Effective Time to,
obtain and fully pay for tail insurance policies for the extension of the directors’ and officers’ liability coverage of the
Company’s existing directors’ and officers’ insurance policies for a claims period of at least six (6) years from and after the Effective
Time, that shall be from an insurance carrier with the same or better credit rating as the Company’s insurance carrier as of the date hereof with respect to
directors’ and officers’ liability insurance (collectively,
D&O Insurance
) with benefits and levels of coverage
(including terms relating thereto) that are at least as favorable as the Company’s existing policies with respect to matters existing or occurring prior to the Effective Time
(including in connection with this Agreement, the Merger or the transactions contemplated thereby);
provided
,
however
, that in no event shall
the Company expend, or shall Parent or the Surviving Corporation be required to expend, for such policies an aggregate premium amount in excess of 300% of the annual premiums currently paid by the
Company for such insurance (which current annual premium amount is set forth in
Section 6.10(d)
of the Company Disclosure Schedule). If the Company and the
Surviving Corporation for any reason fail to obtain such tail insurance policies as of the Effective Time, the Surviving Corporation shall, and Parent shall cause the
Surviving Corporation to, continue to maintain in effect for a period of at least six (6) years from and after the Effective Time, the D&O Insurance in place as of the date of this Agreement
with benefits and levels of coverage (including terms relating thereto) that are at least as favorable as provided in the Company’s existing policies as of the date of this Agreement,
or the Surviving Corporation shall, and Parent shall cause the Surviving Corporation to, use reasonable best efforts to purchase comparable D&O Insurance for such six-year period with benefits and
levels of coverage at least as favorable as provided in the Company’s existing policies as of the date of this Agreement;
provided
,
however
, that in no event shall Parent or the Surviving Corporation be required to expend for such policies an annual premium amount in excess of 300% of the annual
premiums currently paid by the Company for such insurance;
provided
,
further
, that if the annual premiums of such insurance coverage exceed
such amount, the Surviving Corporation shall obtain a policy with the greatest coverage available for a cost not exceeding such amount.
(e) The
provisions of this
Section 6.10
are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified
Parties and their respective heirs, successors and representatives.
(f) The
rights of the Indemnified Parties under this
Section 6.10
shall be in addition to any rights such Indemnified Parties may have
under the Certificate of Incorporation, Bylaws, the certificate of incorporation or bylaws (or equivalent governing documents) of any subsidiaries of the Company or the Surviving Corporation or any of
its subsidiaries, or under any Law or indemnification agreement to which any Indemnified Party is a party in effect as of the date of this Agreement.
(g) With
respect to any indemnification obligations of the Surviving Corporation pursuant to this
Section 6.10
, Parent hereby
acknowledges and agrees that the Surviving Corporation shall be the indemnitor of first resort with respect to all indemnification obligations of the Surviving Corporation pursuant to this
Section 6.10
(i.e., its obligations to an applicable Indemnified Party are primary and any obligation of any other person to advance expenses or to provide
indemnification and/or insurance for the same expenses or losses incurred by such Indemnified Parties are secondary).
SECTION 6.11
Transaction Litigation
.
In the event that any litigation related to this Agreement, the Merger or the other transactions contemplated by this Agreement is brought against the Company or any member of the
Company Board during the Pre-Closing Period (the
Transaction Litigation
), the Company shall promptly notify Parent of any such Transaction
Litigation and shall keep Parent reasonably informed with respect to the status thereof. The Company shall give Parent the opportunity to consult with the Company with respect to the defense of any
Transaction Litigation, and the Company shall not settle or agree to settle any Transaction Litigation without Parent’s prior written consent (such consent not to be unreasonably
withheld, conditioned or delayed).
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SECTION 6.12
Obligations of Merger Sub
.
Parent shall take all action necessary to cause Merger Sub to perform its obligations under this Agreement. During the Pre-Closing Period, Merger Sub shall not, and Parent shall not
permit Merger Sub to, engage in any activity of any nature except as provided in, expressly contemplated by or in furtherance of the transactions contemplated by this Agreement.
SECTION 6.13
Rule 16b-3
.
Prior to the Effective Time, the Company shall take such steps as may be reasonably necessary or advisable hereto to cause any dispositions of Company equity securities (including
derivative securities) pursuant to the transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with
respect to the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.
SECTION 6.14
Financing Cooperation
.
(a) The
Company shall, and shall cause its subsidiaries, and shall use its reasonable efforts to cause its and their respective Representatives to, use its and their
respective reasonable efforts to provide such customary cooperation as may be reasonably requested by Parent or Merger Sub or their respective Affiliates in connection with any Financing made, or to
be made, by Parent or any of its subsidiaries and any SEC filing related to the Financing to be made by Parent, including by: (i) using reasonable efforts to, upon reasonable advance written
notice, provide reasonable contact, including with respect to customary due diligence, among the Company’s and its subsidiaries’ senior management and appropriate
senior management, representatives, advisors and the Financing Sources; (ii) providing such customary historical financial and other customary pertinent information with respect to the Company
and its subsidiaries (including, in any event, the Required Financial Information) as may be reasonably requested or reasonably required by Parent for use in connection with the Financing and
designating, upon request, whether any such information is suitable to be made available to lenders and other investors who do not wish to receive material non-public information with respect to the
Company and its subsidiaries or their respective securities; (iii) providing information regarding the Company and its subsidiaries reasonably necessary or customarily required to assist Parent
in preparing pro forma financial statements if Parent reasonably determines such pro forma financial statements are necessary, required or customary in connection with the Financing or any other SEC
filing related to the Financing to be made by Parent (it being understood that the Company need only reasonably assist in the preparation thereof, but shall not be required to independently prepare
any separate pro forma financial statements and shall not be required to change its fiscal year); (iv) using commercially reasonable efforts to cause Ernst & Young LLP to provide
reasonable and customary assistance to Parent, including by participating in accounting due diligence sessions, obtaining the consent of, and facilitating the delivery of, customary comfort letters
(including as to negative assurance) from, Ernst & Young LLP (including by providing customary management letters and requesting legal letters to obtain such consent) if necessary,
desirable or customary for Parent’s use of the financial statements of the Company
and its subsidiaries in any marketing or offering materials to be used in connection with the Financing; (v) taking all organizational actions and executing and delivering any definitive
financing agreements, any customary certificates or other customary documents or instruments relating to guarantees or other matters related to the Financing, subject to the occurrence of the
Effective Time, reasonably requested by Parent to permit the Financing and repayment or refinancing of indebtedness in connection with the Merger; (vi) furnishing reasonably promptly (and in
any event at least three (3) Business Days prior to the Closing Date) all documentation and other information reasonably requested in writing at least ten (10) Business Days prior to the
Closing Date required by any Governmental Entity in connection with the Financing under applicable know your customer and anti-money laundering rules and regulations,
including the U.S. Patriot Act and the Beneficial Ownership Regulation (to the extent applicable); (vii) obtaining customary payoff letters, lien releases and instruments of discharge in
respect of the Company Credit Agreement; (viii) reasonably cooperating with legal counsel to Parent and Merger Sub in connection with any legal opinions that
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such
counsel may be required to deliver in connection with any Financing; and (x) delivering conditional notices of prepayment within the time period required by the Company Credit Agreement
(or such shorter period as may be acceptable to the agent or the lenders thereunder) and issuing conditional notices of redemption with respect to the Company Notes, as reasonably requested by Parent.
The Company hereby consents to the use of the trademarks, service marks and logos of the Company and its subsidiaries in connection with the arrangement of the Financing so long as such trademarks,
service marks and logos are used in a manner that is not intended to harm or reasonably likely to harm or disparage the Company or any of its subsidiaries or the reputation or goodwill of the Company
or any its subsidiaries. Notwithstanding the foregoing, nothing herein shall require such cooperation to the extent it would (i) unreasonably disrupt the ordinary conduct of the business or
operations of the Company or its subsidiaries, (ii) require the Company or its subsidiaries to agree to pay any fees, reimburse any expenses or otherwise incur any actual liability or give any
indemnities in each case prior to the Effective Time unless Parent reimburses or is required to reimburse or indemnify the Company or its subsidiaries pursuant to this Agreement;
provided
,
however
, that, with respect to any series of Company Notes or the Company Credit Agreement, neither the Company nor any of its
subsidiaries shall be required to make any payments of outstanding principal, accrued and unpaid interest and/or applicable premiums or consent payments (other than with respect to scheduled payments
of principal and interest) unless Parent has irrevocably deposited funds sufficient to cover such amounts with the applicable trustee or agent, (iii) require the Company or its subsidiaries to
take any action that would reasonably be expected, in the reasonable judgment of the Company, to conflict with, or result in any violation or breach of, any applicable Laws or obligations of
confidentiality (not created in contemplation hereof) binding on the Company or its subsidiaries, (iv) require the Company or its subsidiaries to (A) subject to the requirements of
Section 6.15
, pass resolutions or consents, approve or authorize the execution of, or execute any document, agreement, certificate or instrument or take any other
corporate action with respect to the Financing that is not contingent on the Closing or that would be effective prior to the Effective Time or (B) provide or cause its legal counsel to provide
any legal opinions that are not required in connection with the transactions contemplated by
Section 6.15
, (v) require the Company to prepare separate
financial statements or any new compensation
information or (vi) require the Company or any subsidiary thereof to incur additional indebtedness prior to the Closing. Notwithstanding anything to the contrary contained in this Agreement
(including this
Section 6.14
), nothing in this Agreement shall require the Company to cause the delivery of (A) any reliance letter, any certificate as to
solvency or any other certificate necessary for the Financing other than as contemplated by clause (iii) of the first sentence in this
Section 6.14(a)
,
(B) any financial information in a form not customarily prepared by the Company with respect to any period or (C) any financial information with respect to a month of fiscal period that
has not yet ended or has ended less than forty-five (45) days prior to the date of such request. Parent acknowledges and agrees that any access or information contemplated to be provided by the
Company or any of its subsidiaries pursuant to this
Section 6.14
shall, to the extent such information constitutes material non-public information of the Company,
only be provided to other Persons, including any Financing Sources, if such other Person affirmatively agrees to maintain the confidentiality of such information pursuant to a customary
confidentiality agreement and to comply with all federal and state securities laws and regulations applicable to such information, except with respect to such information that would be required to be
disclosed in respect of an offering of securities in connection with the Financing to ensure that the offering materials in respect of such securities would not contain any untrue statement of a
material fact or omit a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(b) Parent
shall, promptly upon written request by the Company, reimburse the Company for all reasonable and documented out-of-pocket costs, fees and expenses (including
attorneys’ fees and expenses) to the extent such costs, fees and expenses are incurred by the Company, its subsidiaries or
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their
respective Representatives in connection with any such party complying with the obligations under this
Section 6.14
, and Parent shall indemnify and hold
harmless the Company, its subsidiaries and their respective Representatives from and against any and all losses, damages, claims, interest, awards, judgments, penalties, costs or expenses suffered or
incurred by them to the extent such losses, damages, claims, interest, awards, judgments, penalties, costs or expenses arose out of the actions taken by the Company, its subsidiaries or their
respective Representatives pursuant to this
Section 6.14
(other than information provided by the Company, its subsidiaries or Representatives in writing for express
use therein), except in the event such losses, damages, claims, interest, awards, judgments, penalties, costs or expenses are determined by a final non-appealable judgment of a court of competent
jurisdiction to have arisen out of or resulted from the gross negligence, bad faith or willful misconduct of the Company, any of its subsidiaries or any of their respective Representatives.
(c) Notwithstanding
anything to the contrary herein, it is understood and agreed that the Company shall be deemed to have satisfied its obligations under this
Section 6.14
unless the
Company’s failure to reasonably satisfy its obligations under this
Section 6.14
was the primary cause of, or primarily resulted in, any Financing
not being obtained.
SECTION 6.15
Debt Offers
.
(a) As
soon as reasonably practicable after the receipt of any written request by Parent to do so and at the expense of Parent, the Company shall use its commercially
reasonable efforts to (i) commence an offer to purchase for cash, with respect to any or all of the outstanding aggregate principal amount of the senior notes of the Company set forth in
Section 6.15
of the Company Disclosure Schedule (the
Company Notes
) (each an
Offer
to Purchase
and collectively, the
Offers to Purchase
) and/or to conduct consent solicitations with respect to the
Company Notes regarding certain proposed amendments to the Indenture (the
Indenture Amendments
) as reasonably requested by Parent (the
Consent Solicitation
and, together with the Offer to Purchase, the
Debt Offer
), in each
case, on such terms and conditions, including pricing terms and amendments to the terms and provisions of the Indenture, that are specified, from time to time, by Parent;
provided
that, in any event, Parent and the Company hereby agree that (i) the terms and conditions of the Offer to Purchase shall provide that the closing thereof
shall be contingent upon the consummation of the Merger at the Effective Time and in no event shall the Company be required to purchase any Notes prior to the Effective Time, (ii) the Company
shall not be required to commence any Debt Offer until Parent shall have provided the Company with draft documentation and final documents shall be in form and substance reasonably satisfactory to the
Company (and any legal opinions required by the Debt Offers shall be provided by Parent’s counsel,
provided
, that if requested by Parent, the
Company’s counsel shall provide all customary legal opinions required in connection with the transactions contemplated by this
Section 6.15
to the
extent such legal opinion is required to be delivered prior to the Closing Date (notwithstanding the foregoing, in no event shall the Company or its legal counsel be required to give an opinion with
respect to a Debt Offer that in the opinion of the Company or its legal counsel does not comply with applicable Laws or the applicable indenture, or an opinion with respect to financing by Parent)),
(iii) the terms and conditions specified by Parent for the Debt Offer shall be in compliance with the Indenture, the Company Credit Agreement and any applicable Law (including the requirements
of Rule 14e-1 promulgated under the Exchange Act and the Trust Indenture Act of 1939, as amended), (iv) the Company shall use its commercially reasonable efforts to cause the trustee to
agree to proceed with the redemption of the Company Notes at least 35 days (or such shorter period as the trustee may agree to) before the expected redemption date (which shall not be prior to
the Effective Time), which notices to holders, to the extent applicable, may be subject to one or more conditions precedent, and use commercially reasonable efforts to cause the trustee to provide
such notice to holders of such Company Notes substantially concurrently with the completion of the Closing, (v) the Company shall provide Parent the opportunity to review and comment on each of
the notices and other documents contemplated by the foregoing sub-clause (iv)
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reasonably
in advance of their delivery, and (vi) the Company shall use commercially reasonable best efforts to take all other actions and prepare and deliver all other documents (including any
officers certificates) as may be required under the Indenture to (A) issue an irrevocable notice of redemption providing for the redemption on or after the Closing Date (but in no event shall
such redemption occur prior to the Effective Time) of the outstanding aggregate principal amount of the Company Notes (together with all accrued and unpaid interest and applicable premiums related to
the Company Notes) pursuant to the applicable provisions of the Indenture and (B) cause the satisfaction and discharge of the Indenture and the Company Notes substantially concurrently with the
Closing (but in no event prior to the Effective Time) (subject to the irrevocable deposit with the trustee on the Closing Date of funds sufficient to pay in full the outstanding aggregate principal
amount of, accrued and unpaid interest through the redemption date on, and applicable premiums related to, the Company Notes, as arranged by, and at the expense of, Parent). Parent shall assist the
Company in connection with the foregoing as reasonably requested by the Company. Subject to the preceding sentence, the Company shall, and shall cause its subsidiaries to, and shall use its
commercially reasonable efforts to cause their respective Representatives to, provide all cooperation reasonably requested by Parent in connection with the Debt Offers. The Company shall waive any of
the conditions to the Debt Offers as may be reasonably requested by Parent in writing that after consultation with its legal counsel the Company determines can be legally waived (other than that the
Merger shall have been consummated) and shall not, without the written consent of Parent, waive any condition to the Debt Offers or make any changes to the Debt Offers.
(b) The
Company covenants and agrees that, promptly following the consent solicitation expiration date, if any, and assuming the requisite consents are received in the
consent solicitation constituting part of the Debt Offer, each of the Company and its applicable subsidiaries as is necessary shall (and shall use their commercially reasonable efforts to cause the
trustee to) execute supplemental indentures to the Indenture, which supplemental indentures shall implement the amendments described in the offer to purchase, consent solicitation statement, related
letter of transmittal, and other related documents;
provided
,
however
, that notwithstanding the fact that a supplemental indenture may become
effective earlier, the proposed amendments set forth therein shall not become operative unless and until the Effective Time has occurred.
(c) The
dealer manager, solicitation agent, information agent, depositary or other agent retained in connection with the Debt Offers shall be selected by Parent. The Company
shall enter into customary agreements (including indemnities, which shall be subject to
Section 6.15(d)
) with such parties so selected and on terms and conditions
acceptable to Parent.
(d) Parent
shall, promptly upon written request by the Company, reimburse the Company for all reasonable and documented out-of-pocket costs, fees and expenses (including
attorneys’ fees and expenses) to the extent such costs, fees and expenses are
incurred by the Company, its subsidiaries or their respective Representatives in connection with it complying with its obligations under this
Section 6.15
, and
Parent shall indemnify and hold harmless the Company and its subsidiaries and Representatives from and against any and all losses, damages, claims, costs or expenses suffered or incurred by them to
the extent such losses, damages, claims, interest, awards, judgments, penalties, costs or expenses arose out of the actions taken by the Company, its subsidiaries or its Representatives pursuant to
this
Section 6.15
(other than information provided in writing by the Company or its subsidiaries or Representatives), except in the event such losses, damages,
claims, interest, awards, judgments, penalties, costs or expenses are determined by a final, non-appealable judgment of a court of competent jurisdiction to have arisen out of or resulted from the
gross negligence or willful misconduct by the Company, any of its subsidiaries or any of their respective Representatives.
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(e) Notwithstanding
the foregoing, nothing in this
Section 6.15
shall require the Company’s cooperation to the extent it
would (i) unreasonably disrupt the ordinary conduct of the business or operations of the Company or its subsidiaries, (ii) require the Company or its subsidiaries to agree to pay any
fees, reimburse any expenses or otherwise incur any liability or give any indemnities prior to the Effective Time unless Parent reimburses or is required to reimburse or indemnify the Company or its
subsidiaries pursuant to this Agreement, (iii) require the Company or its subsidiaries to take any action that would reasonably be expected, in the reasonable judgment of the Company, to
conflict with, or result in any violation or breach of, any applicable Laws, order or any Contract of the Company, (iv) cause any representation or warranty in this Agreement to be breached or
become inaccurate, cause any condition to the Closing to fail to be satisfied or otherwise cause any breach of this Agreement or (v) cause the Company to be obligated with respect to the
purchase, redemption or satisfaction and discharge of any Company Notes in the event the Merger is not consummated.
SECTION 6.16
Anti-Takeover Statute
. If any
fair price, moratorium, control share acquisition, business combination or other similar
antitakeover statute or regulation enacted under any federal, state, local or foreign Laws applicable to the Company is, or will be, applicable to this Agreement, the Merger, the Voting and Support
Agreement or the other transactions contemplated hereby is or may become applicable to this Agreement (including the Merger and the other transactions contemplated hereby) and the Voting and Support
Agreement, the Company and the Company Board shall grant all such approvals and take all such actions within their control as are necessary so that such transactions may be consummated as promptly as
practicable hereafter on the terms contemplated by this Agreement and the Voting and Support Agreement and shall otherwise act to eliminate or minimize the effects of such statute or regulation on
such transactions.
SECTION 6.17
Resignation of Directors
. At the Closing, the Company shall use
reasonable best efforts to cause all directors of the Company and, the directors (or equivalent positions) specified by Parent reasonably in advance of the Closing of each subsidiary of the Company,
in each case, to execute and deliver a letter reasonably satisfactory to Parent effecting his or her resignation as a director (or equivalent position) (but not as an employee and without prejudice to
such person’s rights as an employee) of such entity effective at the Effective Time.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1
Conditions to Obligation of Each Party to Effect the Merger
.
The respective obligations of each Party to effect the Merger shall be subject to the satisfaction (or written waiver by the Company, Parent, and Merger Sub, if permissible by Law) at or
prior to the Closing of the following conditions:
(a)
Stockholder Approval
. This Agreement shall have been duly adopted by holders of
Shares constituting the Company Requisite Vote;
(b)
No Legal Restraints
. No Law or injunction (whether temporary, preliminary or
permanent) shall have been enacted, entered, promulgated or enforced by any Governmental Entity of competent jurisdiction (collectively, the
Legal
Restraints
) which prevents, makes illegal, prohibits, restrains or enjoins the consummation of the Merger; and
(c)
Antitrust Consents
. The waiting period (and any extension thereof, including
any agreement by Parent not to consummate the Merger) applicable to the consummation of the Merger under the HSR Act shall have expired or been earlier terminated.
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SECTION 7.2
Conditions to Obligations of Parent and Merger Sub
.
The obligations of Parent and Merger Sub to effect the Merger shall be further subject to the satisfaction (or written waiver, where permissible, by Parent) at or prior to the Closing of
the following conditions:
(a)
Representations and Warranties
. (i) The representations and warranties of the
Company set forth in the first sentence of
Section 3.3(a)
(
Capitalization
),
Section 3.4
(
Authority
),
Section 3.9(b)
(
Absence of
Certain Changes and Events
),
Section 3.19
(
Brokers
),
Section 3.23
(
Company Requisite Vote
) and
Section 3.24
(
Rights Plan
) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of such date and time
(except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier
date); (ii) the representations and warranties of the Company set forth in
Section 3.1
(
Organization and Qualification;
Subsidiaries
), the second sentence of
Section 3.3(a)
(
Capitalization
), and
Section 3.3(b)
(
Capitalization
) shall be true and correct in all but
de
minimis
respects as of the date of this Agreement and as of the Closing Date with the same force and effect as if made on and as of such date (except to the extent that any
such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all but
de
minimis
respects as of such earlier date), (iii) the representations and warranties of the Company set forth in
Section 3.3(d)
(
Capitalization
) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date with the same force and
effect as if made on and as of such date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be
true and correct in all material respects as of such earlier date), and (iv) the representations and warranties of the Company set forth in this Agreement (other than those identified in
clauses (i), (ii) and (iii)) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent
that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date);
provided
,
however
, that notwithstanding anything herein to the contrary, the condition set forth in this
Section 7.2(a)(iii)
shall be deemed to have been satisfied unless the failure of such representations and warranties of the Company to be so true and correct
(without giving effect to any Material Adverse Effect,
materiality or similar qualifications contained therein), individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect;
(b)
Performance of Obligations of the Company
. The Company shall have performed in
all material respects each of the obligations, and complied in all material respects with each of the agreements and covenants, required to be performed by, or complied with by, it under this
Agreement at or prior to the Closing;
(c)
Certificate
. Parent shall have received a certificate of the Chief Executive
Officer or the Chief Financial Officer of the Company, on behalf of the Company, solely in such Person’s capacity as such executive officer and not in such Person’s
personal capacity, certifying that the conditions set forth in
Section 7.2(a)
and
Section 7.2(b)
have been satisfied; and
(d)
No Material Adverse Effect
. Since the date of this Agreement, there shall not
have occurred a Material Adverse Effect.
SECTION 7.3
Conditions to Obligations of the Company
.
The obligation of the Company to effect the Merger shall be further subject to the satisfaction (or written waiver, where permissible, by the Company) at or prior to the Closing of the
following conditions:
(a)
Representations and Warranties
. (i) The representations and warranties of
Parent and Merger Sub set forth in
Section 4.2
(
Authority
) shall be true and correct as of the date of this
Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which
case
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such
representation and warranty shall be true and correct as of such earlier date); and (ii) the representations and warranties of Parent and Merger Sub set forth in this Agreement (other than
those identified in clause (i)) shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent that
any such
representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date);
provided
,
however
, that notwithstanding anything herein to the contrary, the condition set forth in this
Section 7.3(a)(ii)
shall be deemed to have been satisfied unless the failure of any such representations and warranties to be true and correct, individually or in
the aggregate, would not reasonably be expected to prevent, materially impair or have a material adverse effect on the ability of Parent or Merger Sub to consummate the transactions contemplated by
the Agreement;
(b)
Performance of Obligations of Parent and Merger Sub
. Each of Parent and Merger
Sub shall have performed in all material respects each of the obligations, and complied in all material respects with each of the agreements and covenants, required to be performed by or complied with
by it under this Agreement at or prior to the Closing Date; and
(c)
Certificate
. The Company shall have received a certificate of the Chief
Executive Officer or the Chief Financial Officer of Parent, on behalf of Parent, solely in such Person’s capacity as such executive officer and not in such Person’s
personal capacity, certifying that the conditions set forth in
Section 7.3(a)
and
Section 7.3(b)
have been satisfied.
ARTICLE VIII
TERMINATION; AMENDMENT AND WAIVER
SECTION 8.1
Termination
.
This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, notwithstanding the adoption of this Agreement by the stockholders of the
Company (except in the case of a termination pursuant to
Section 8.1(d)(ii)
which may only be invoked prior to the receipt of the Company Requisite Vote) (the date
of any such termination, the
Termination Date
):
(a) by
mutual written consent of Parent and the Company;
(b) by
Parent or the Company if any Governmental Entity of competent jurisdiction sitting in the United States shall have issued a Legal Restraint which permanently
prevents, makes illegal, prohibits, restrains or enjoins the consummation of the Merger and such Legal Restraint is or shall have become final and nonappealable;
provided
,
that the Party seeking to terminate this Agreement pursuant to this
Section 8.1(b)
did not breach in any material respect any provision of this Agreement which
breach was
the primary cause of, or primarily resulted in, the issuance of such order, decree or ruling or the taking of any such other final action;
(c) by
either Parent or the Company if the Effective Time shall not have occurred on or before April 14, 2020 (as such date may be extended pursuant to the terms of
this Agreement or by the mutual written consent of Parent and the Company, the
End Date
);
provided
, if on the End
Date all of the conditions set forth in
Section 7.1
,
Section 7.2
and
Section 7.3
have been
satisfied (or, with respect to the conditions that by their terms must be satisfied at the Closing, would have been so satisfied if the Closing would have occurred) or remain capable of being
satisfied but any of the conditions set forth in
Section 7.1(b)
and/or
Section 7.1(c)
has not been satisfied, then the End Date
shall automatically be extended for an additional 90 days, in which case the End Date shall be deemed for all purposes to be such later date;
provided
,
further
, that the Party seeking to terminate this Agreement pursuant to this
Section 8.1(c)
shall not be in breach or have breached in
any material respect any provision of this Agreement in any manner that shall have primarily contributed to the failure of the Effective Time to occur on or before the End Date;
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(d) by
written notice of the Company:
(i) if
there shall have been a breach of any representation, warranty, covenant or agreement on the part of Parent or Merger Sub contained in this Agreement, or any such
representation or warranty shall be or shall have become inaccurate, such that if continuing as of the Closing Date the conditions set forth in
Section 7.3(a)
or
Section 7.3(b)
would not be satisfied, and, in either such case, such breach is not curable prior to the End Date;
provided
, that the
Company shall not have the right to terminate this Agreement pursuant to this
Section 8.1(d)(i)
if the Company is then in material breach of any of its covenants or
agreements contained in this Agreement; or
(ii) if
the Company Board determines to enter into an acquisition agreement, merger agreement or similar agreement with respect to a Superior Proposal prior to, but not
after, obtaining the Company Requisite Vote, in accordance with, and subject to compliance with the terms and conditions of,
Section 6.1(c)
;
(e) by
written notice of Parent:
(i) if
there shall have been a breach of any representation, warranty, covenant or agreement on the part of the Company contained in this Agreement, or any such
representation or warranty shall be or shall
have become inaccurate, such that the conditions set forth in
Section 7.2(a)
or
Section 7.2(b)
would not be satisfied, and, in
either such case, such breach is not curable prior to the End Date;
provided
, that Parent shall not have the right to terminate this Agreement pursuant to this
Section 8.1(e)(i)
if Parent or Merger Sub is then in material breach of any of its covenants or agreements contained in this Agreement; or
(ii) if
the Company Board (A) shall have made a Change of Recommendation, (B) shall have failed to include the Recommendation in the Proxy Statement
distributed to stockholders, (C) shall have recommended, approved or otherwise declared advisable to the stockholders of the Company an Acquisition Proposal, (D) following the
commencement of a tender offer or exchange offer that constitutes an Acquisition Proposal by a person unaffiliated with Parent or Merger Sub, shall not have published, sent or given to its
stockholders, pursuant to Rule 14e-2 under the Exchange Act, within the 10 Business Day period (as specified in Rule 14e-2 under the Exchange Act) after such tender offer or exchange
offer is first published, sent or given, or subsequently amended in any material respect, a statement recommending that stockholders reject such tender offer or exchange offer and affirming the
Recommendation, or (E) shall have formally resolved to effect or publicly announced an intention to effect any of the foregoing, prior to obtaining the Company Requisite Vote; or
(f) by
either Parent or the Company if the Company Requisite Vote shall not have been obtained at the Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof, in each case, at which a vote on the adoption of this Agreement was taken.
SECTION 8.2
Effect of Termination
.
(a) In
the event of the termination of this Agreement pursuant to
Section 8.1
, this Agreement shall forthwith become void and there shall
be no liability or obligation on the part of any Party hereto, except as provided in
Section 6.6(b)
, this
Section 8.2
,
Section 8.3
and
Article IX
, which shall survive such termination;
provided
,
however
, that nothing herein shall relieve any Party hereto of any liability for damages resulting from fraud or Willful Breach prior to such termination by any Party
hereto (which the Parties acknowledge and agree shall be determined by a court of competent jurisdiction in accordance with
Section 9.13
applying the governing Law
in accordance with
Section 9.9
), in which case the aggrieved Party shall be entitled to all rights and remedies available at law or equity. The Parties acknowledge
and agree that (i) nothing in this
Section 8.2
shall be deemed
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to
affect their right to specific performance under
Section 9.12
and (ii) no termination of this Agreement shall affect the obligations of the Parties
contained in the Confidentiality Agreement.
(b) In
the event that:
(i) this
Agreement is terminated (x) by the Company pursuant to
Section 8.1(d)(ii)
(
Superior
Proposal
), (y) by Parent pursuant to
Section 8.1(e)(ii)
(
Change of Recommendation
),
or (z) by either Parent or the Company pursuant to
Section 8.1(f)
(
Company Requisite Vote
) at a time when
this Agreement was terminable by Parent pursuant to
Section 8.1(e)(ii)
(
Change of Recommendation
), then the Company
shall pay $100,000,000 (the
Company Termination Fee
) to Parent (or its designee), at or prior to the time of termination and as a condition to
such termination in the case of a termination by the Company or as promptly as reasonably practicable in the case of a termination by Parent (and, in any event, within two Business Days following such
termination), payable by wire transfer of immediately available funds;
(ii) this
Agreement is terminated by either Parent or the Company pursuant to
Section 8.1(f)
(
Company Requisite
Vote
) or by Parent pursuant to
Section 8.1(e)(i)
(
Breach
), or by either Parent or the
Company pursuant to
Section 8.1(c)
(
End Date
) (other than in circumstances in which Parent is required to pay the
Parent Termination Fee pursuant to
Section 8.2(b)(iv)
) and (A) at any time after the date of this Agreement but prior to the date of the Stockholders Meeting
(in the case of
Section 8.1(f)
), prior to the breach giving rise to such right of termination (in the case of
Section 8.1(e)(i)
)
and prior to such termination (in the case of
Section 8.1(c)
), any Person shall have announced (which announcement in the case of
Section 8.1(f)
) must have been publicly made) an intention to make an Acquisition Proposal (whether or not conditional), which, in the case of
Section 8.1(f)
, was not withdrawn at least three (3) Business Days prior to the Stockholders Meeting) and (B) within twelve (12) months after
the Termination Date, (x) the Company or any of its subsidiaries shall have entered into a definitive agreement with respect to an Acquisition Proposal, or (y) an Acquisition Proposal
shall have been consummated involving the Company or any of its subsidiaries (in each case of clause (x) or (y) whether or not involving the same Acquisition Proposal as that which was
publicly announced), then in each case of clause (x) or (y) the Company shall pay or cause to be paid to Parent (or its designee) the Company Termination Fee, such payment to be made
within two (2) Business Days from the earliest to occur of the foregoing events, payable by wire transfer of immediately available funds to an account designated by Parent;
provided
,
however
, that, for purposes of this
Section 8.2(b)(ii)
, references to
15% in the definition of Acquisition Proposal shall be deemed to be references to 50%;
(iii) this
Agreement is terminated by either the Company or Parent pursuant to
Section 8.1(f)
(
Company Requisite
Vote
) or by Parent pursuant to
Section 8.1(e)(i)
(
Breach
), then the Company shall promptly,
but in no event later than two (2) days after being notified of such by Parent, pay to Parent (or its designee) all of the documented out-of-pocket expenses incurred by Parent or Merger Sub in
connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and the transactions contemplated by this Agreement up to a maximum amount of
$15,000,000, payable by wire transfer of immediately available funds;
provided
, that any amounts paid under this
Section 8.2(b)(iii)
shall be credited (without interest) against any Company Termination Fee if paid to Parent (or its designee) pursuant to the terms of this Agreement; or
(iv) this
Agreement is terminated by Parent or the Company pursuant to (x)
Section 8.1(b)
(
Legal
Restraint
) and the applicable Legal Restraint giving rise to such termination right is issued under or pursuant to any Antitrust Law or
(y)
Section 8.1(c)
(
End Date
) and, in either case of clause (x) or (y), on the Termination Date the
only conditions to closing set forth in
Section 7.1
or
Section 7.2
that have not been satisfied (other than those conditions
that by their nature are to be
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satisfied
at the Closing which conditions would be capable of being satisfied at the Closing if the Closing Date were on the Termination Date) are the conditions set forth in
Section 7.1(b)
(but only if the applicable Legal Restraint causing such condition not to be satisfied is issued under or pursuant to any Antitrust Law) or
Section 7.1(c)
, then Parent shall pay $150,000,000 (the
Parent Termination Fee
) to the Company (or its
designee) by wire transfer of immediately available funds, at or prior to the time of termination in the case of a termination by Parent, or as promptly as reasonably practicable (and, in any event,
within two Business Days following such termination) in the case of a termination by the Company;
provided
,
however
, that Parent shall not be
required to pay the Parent Termination Fee to the Company if (x) the applicable Legal Restraint giving rise to such termination pursuant to
Section 8.1(b)
or
(y) the failure of the conditions in
Section 7.1(b)
or
Section 7.1(c)
, as applicable, to have been satisfied resulted
from any breach by the Company of a covenant set forth in this Agreement.
(c) The
Parties acknowledge and hereby agree that in no event shall the Company be required to pay the Company Termination Fee or Parent be required to pay the Parent
Termination Fee on more than one occasion.
(d) Each
of the Company, Parent and Merger Sub acknowledges that the agreements contained in this
Section 8.2
are an integral part of the
transactions contemplated by this Agreement and that, without these agreements, the Parties would not enter into this Agreement. Accordingly, if a Party fails to
promptly pay any amount due pursuant to this
Section 8.2
, and the other Party commences a Proceeding that results in a judgment against the failing Party for the
amount set forth in this
Section 8.2
or a portion thereof, the failing Party shall pay to the other Party all fees, costs and expenses of enforcement (including
attorney’s fees as well as expenses incurred in connection with any such action), together with interest on such amount or such portion thereof at the prime lending rate as published
in the
Wall Street Journal
, in effect on the date such payment is required to be made.
(e) Notwithstanding
anything to the contrary set forth in this Agreement, but subject to each Party’s rights expressly set forth in
Section 9.12
, each Party expressly acknowledges and agrees that, (i) if this Agreement is terminated by the Company pursuant to
Section 8.1(d)(ii)
(
Superior Proposal
) and the Company Termination Fee is paid to Parent or its designees, then the
payment to Parent or its designees of the Company Termination Fee shall be the sole and exclusive remedy of Parent and Merger Sub for any loss suffered by Parent or Merger Sub as a result of a breach
by the Company of its obligations under
Section 6.1
; and (ii) if the Parent Termination Fee is paid to the Company pursuant to this Agreement, then the
payment to the Company or its designees of the Parent Termination Fee shall be the sole and exclusive remedy of the Company for any loss suffered by the Company as a result of a breach by Parent or
Merger Sub of its obligations under
Section 6.4
.
SECTION 8.3
Expenses
.
Except as otherwise specifically provided herein, each Party shall bear its own expenses in connection with this Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing, Parent shall pay all filing fees required under the HSR Act with respect to the transactions contemplated by this Agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1
Non-Survival of Representations, Warranties, Covenants and Agreements
.
None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any
breach of such representations, warranties, covenants and agreements, shall survive the Effective Time, except for (a) those covenants and agreements contained herein that by their terms apply
or are to be performed in whole or in part after the Effective Time and (b) those contained in this
Article IX
.
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SECTION 9.2
Modification or Amendment
.
Subject to the provisions of applicable Law, at any time prior to the Effective Time, the Parties (by action of their respective boards of directors) may modify, amend or supplement this
Agreement only by written agreement, executed and delivered by duly authorized officers of the respective Parties;
provided
,
however
, that
after the Company Requisite Vote has been obtained, there shall not be made any modification or amendment to this Agreement that by Law requires the further approval of the stockholders of the Company
without such approval having first been obtained.
SECTION 9.3
Waiver
.
At any time prior to the Effective Time, any Party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other Parties,
(b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) subject to the requirements of applicable Law,
waive compliance with any of the agreements or conditions contained herein. 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 and specifically referencing this Agreement. The failure of any Party to assert any rights or remedies shall not constitute a waiver of such rights or remedies.
SECTION 9.4
Notices
.
All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given by delivery in person, by facsimile or by email, by registered or
certified mail (with postage prepaid, return receipt requested) or by a nationally recognized courier service (with signed confirmation of receipt) to the respective Parties at the following addresses
(or at such other address for a Party as shall be specified by like notice):
|
|
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(a) if to the Company:
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Advanced Disposal Services, Inc.
90 Fort Wade Rd., Suite 200
Ponte Vedra Beach, FL 32081
Attention: Richard Burke and Michael K. Slattery
Email: Richard.Burke@AdvancedDisposal.com;
Michael.Slattery@AdvancedDisposal.com
|
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with an additional copy (which shall not constitute notice) to:
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Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022
|
|
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Attention: Scott Petepiece and Daniel Litowitz
|
|
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Facsimile: (212) 848-7179
|
|
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Email: SPetepiece@Shearman.com;
Daniel.Litowitz@Shearman.com
|
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and
|
|
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Mayer Brown LLP
1999 K Street, N.W.
Washington, D.C. 20006-1101
|
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Attention: Mark W. Ryan and William H. Stallings
|
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Facsimile: (202) 830-0328
|
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Email: mryan@mayerbrown.com;
wstallings@mayerbrown.com
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(b) if to Parent or Merger Sub:
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Waste Management, Inc.
1001 Fannin St.
Houston, Texas 77002
|
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Attention: John J. Morris, Executive Vice President and Chief
Operating Officer
|
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Email: JMorris@wm.com
|
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with a copy to:
|
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Waste Management, Inc.
1001 Fannin St.
Houston, TX 77002
|
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Attention: General Counsel
|
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Email: gclegal@wm.com
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with an additional copy (which shall not constitute notice) to:
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Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
|
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Attention: Alan M. Klein
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Facsimile: (212) 455-2502
|
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Email: aklein@stblaw.com
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and
|
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Simpson Thacher & Bartlett LLP
600 Travis Street, Suite 5400
Houston, TX 77002
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Attention: Christopher R. May
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Facsimile: (713) 821-5602
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Email: cmay@stblaw.com
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Any
such notification shall be deemed delivered (i) upon receipt, if delivered personally, (ii) on the next Business Day, if sent by nationally recognized courier service for next
Business Day delivery or (iii) the Business Day received, if sent by facsimile, email or any other permitted method (
provided
that any notice received by facsimile
transmission, email or otherwise at the addressee’s location on any non-Business Day or any Business Day after 5:00 p.m. (addressee’s local time) shall be
deemed to have been received at 9:00 a.m. (addressee’s local time) on the next Business Day).
SECTION 9.5
Certain Definitions
.
For purposes of this Agreement, the term:
(a)
Acceptable
Confidentiality Agreement
means a confidentiality agreement on terms (including standstill
restrictions,
provided
that such standstill restrictions need not restrict a Person from making an offer or proposal to the Company (including the Company Board) in
respect of an Acquisition Proposal) substantially no less restrictive to the Company’s counterparty thereto than those contained in the Confidentiality Agreement as in effect
immediately prior to the execution of this Agreement (except for such changes necessary in order for the Company to be able to comply with its obligations under this Agreement) and which does not
restrict the Company from providing the access, information or data required to be provided to Parent pursuant to
Section 6.1
.
(b)
Affiliate
means, with respect to any Person, any other Person directly or indirectly, controlling, controlled by,
or under common control with, such Person. For the avoidance of doubt,
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for
purposes of this Agreement, the USL JV or any of its subsidiaries will be considered an Affiliate of the Company and its subsidiaries.
(c)
Antitrust
Law
means the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, the HSR Act, the Federal
Trade Commission Act of 1914, and all other Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
(d)
Award
means an award of Options, PSUs, RSUs or Restricted Shares granted pursuant to a Company Stock Plan.
(e)
Beneficial
Ownership Regulation
means 31 C.F.R. § 1010.230.
(f)
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 (other than a Saturday or Sunday or a day) on which commercial banks are not required or authorized by Law to close in
the United States in the City of New York, New York.
(g)
Company
Credit Agreement
means the Amended and Restated Credit Agreement, dated as of October 9, 2012, by
and among the Company, the guarantors party thereto, the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent, as amended and restated by the
Amendment and Restatement Agreement, dated as of November 10, 2016, and as further amended by Amendment No. 1, dated as of November 21, 2017, as amended, restated, amended and
restated, supplemented or otherwise modified from time to time.
(h)
Company
Plan
means (i) each employee benefit plan as defined in
Section 3(3) of ERISA (whether or not subject to ERISA), (ii) each employment, consulting, severance, change in control, retention or similar plan, agreement, arrangement or policy and
(iii) each other plan, agreement, arrangement or policy (written or oral) providing for compensation, bonuses, perquisites, profit-sharing, equity or equity-related rights (including the
Company Stock Plans and any award agreements thereunder), incentive or deferred compensation, vacation, sick leave or other paid time off, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance program, disability or sick leave benefits, fringe benefits, workers’ compensation, supplemental unemployment benefits,
post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) or any other employee benefits, in each case maintained, sponsored or contributed
to (or required to be contributed to) by the Company or any of its subsidiaries for the benefit of any Service Provider or with respect to which the Company or any of its subsidiaries has any direct
or indirect liability, excluding any JV Plan.
(i)
Company
Stock Plans
means the Company’s 2012 Stock Incentive Plan, Amended and Restated 2012
Stock Incentive Plan (as amended by the Amendment to the Company’s 2012 Stock Incentive Plan, adopted on April 25, 2013 and the Second Amendment to the
Company’s 2012 Stock Incentive Plan, adopted on May 8, 2014), and 2016 Omnibus Equity Plan (and applicable award agreements issued under such plans), as applicable, as well as
any other plans or agreements pursuant to which the Company or any of its subsidiaries has granted equity awards (including equity awards granted or assumed by the Company or its subsidiaries in
connection with any acquisitions prior to the Effective Time).
(j)
Continuing
Employee
means any Continuing Non-Union Employee and any Continuing Union-Represented Employee.
(k)
control
(including the terms
controlling
,
controlled
,
controlled by
and
under common control
with
) means the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
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(l)
Data
Room
means the virtual data room supported by Merrill Corporation, and any clean
room, with respect to Everglades VDR.
(m)
Debt
Financing
means, collectively, any incurrence of, or other commitment to obtain or arrange, any loans
(whether bridge, term or revolving in nature), or the issuance of, or other commitment to obtain, arrange, underwrite or place, any bonds, note, debentures or similar instruments (whether in any
underwritten offering or private placement), in each case evidencing indebtedness, the proceeds of which are used or intended to be used to fund, in whole or in part, the transactions contemplated by
this Agreement.
(n)
Equity
Financing
means the issuance and sale of capital stock of Parent in an underwritten offering or a private
placement, excluding the issuance of equity interests upon the exercise of employee and director stock options, the proceeds of which are used or intended to be used, in whole or in part, to fund the
transactions contemplated by this Agreement.
(o)
ERISA
means the Employee Retirement Income Security Act of 1974, as amended.
(p)
ERISA
Affiliate
means any trade or business, whether or not incorporated, that together with the Company would be
deemed to be a single employer for purposes of Section 4001 of ERISA or Sections 414(b), (c), (m), (n) or (o) of the Code.
(q)
Financing
means, collectively, the Debt Financing and the Equity Financing.
(r)
Financing
Sources
means any entities that have committed to provide, arrange, underwrite, obtain, or otherwise
entered into agreements to provide, arrange, underwrite, obtain or place the Financing.
(s)
GAAP
means the U.S. generally accepted accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, in each case, as of the time of the
relevant financial statements referred to herein.
(t)
Government
Official
means any officer or employee of any Governmental Entity acting in an official capacity for or
on behalf of such Governmental Entity.
(u)
Governmental
Entity
means any governmental, quasi-governmental, administrative, judicial or regulatory (including
any stock exchange or other self-regulatory organization) authority, agency, court, commission or other governmental body, entity or authority, whether supranational, foreign or domestic, of one or
more countries, nations, republics, federations or similar entities or any states, counties, parishes or municipalities, jurisdictions or other political subdivisions thereof.
(v)
Governmental
Filings
mean any consents, approvals, authorizations or Permits of, actions by, filings with or
notifications to, any Governmental Entity.
(w)
Indenture
means the Indenture dated as of November 10, 2016, between the Company, each of the Guarantors
(as defined therein) from time to time party thereto and Wells Fargo Bank, National Association, as trustee, as supplemented by the First Supplemental Indenture dated as of December 13, 2017.
(x)
Intellectual
Property
means (i) patents, (ii) copyrights and copyrighted works (including Software),
(iii) trademarks, service marks, corporate, business and d/b/a names, logos, trade dress, domain names, social media identifiers and other indicators of source or origin and all associated
goodwill, and (iv) registrations, applications, renewals, provisionals, continuations, continuations-in-part, divisionals, re-issues, re-examinations and foreign counterparts of any of the
foregoing.
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(y)
Intervening
Event
means any material event, change, effect, condition, development, fact or circumstance with
respect to the Company and its subsidiaries or business of the Company, in each case taken as a whole, that (i) is neither known by, nor reasonably foreseeable (with respect to magnitude or
material consequences), by the Company Board as of or prior to the date of this Agreement and (ii) first occurs, arises or becomes known to the Company Board after the date of this Agreement
and on or prior to the date of the Company Requisite Vote;
provided
that none of the foregoing shall constitute an Intervening Event: (A) any event, change, effect,
condition, development, fact or circumstance (1) relating to any Acquisition Proposal or (2) resulting from (I) the announcement, pendency and consummation of this Agreement and
the transactions contemplated by this Agreement, including the Merger, (II) any actions required to be taken or to be refrained from being taken pursuant to this Agreement, or (III) a
material breach of this Agreement by the Company, (B) the fact that the Company meets or exceeds any internal or analysts’ expectations or projections or (C) any changes
after the date hereof in the market price or trading volume of the Company (it being understood, however, in each case of sub-clause (B) and (C), that any underlying cause thereof may be taken
into account for purposes of determining whether an Intervening Event has occurred).
(z)
JV
Plan
means (i) each employee benefit plan as defined in Section 3(3) of
ERISA (whether or not subject to ERISA), (ii) each employment, consulting, severance, change in control, retention or similar plan, agreement, arrangement or policy and (iii) each other
plan, agreement, arrangement or policy (written or oral) providing for compensation, bonuses, perquisites, profit-sharing, equity or equity-related rights, incentive or deferred compensation,
vacation, sick leave or other paid time off, insurance (including any self-insured arrangements), health or medical benefits, employee assistance program, disability or sick leave benefits, fringe
benefits, workers’ compensation, supplemental unemployment benefits, post-employment or retirement benefits (including compensation, pension, health, medical or life insurance
benefits) or any other employee benefits, in each case maintained, sponsored or contributed to (or required to be contributed to) by the USL JV or any of its subsidiaries for the benefit of any of
their Service Providers or with respect to which the USL JV or any of its subsidiaries has any direct or indirect liability.
(aa)
knowledge
or any similar phrase (i) with respect to the Company means the actual knowledge of any of the
individuals listed in
Section 9.5(aa)
of the Company Disclosure Schedule and (ii) with respect to Parent or Merger Sub means the actual knowledge of any of
the individuals listed in
Section 9.5(aa)
of the Parent Disclosure Schedule.
(bb)
Law
means any federal, state, local, municipal, foreign, multi-national or other law, statute, constitution,
principle of common law, ordinance, code, decree, order, executive order, directive, judgment, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity and any order or decision of an applicable arbitrator or arbitration panel, including any Antitrust Law.
(cc)
Liens
means any liens, encumbrances, pledges, security interests, claims and defects, imperfections, mortgages,
deeds of trust, hypothecations, encroachments, easements, use restrictions, rights-of-way, charges, adverse ownership interests, attachments, options or other rights to acquire an interest, rights of
first refusal or conditional sale or similar restriction on transfer of title or voting and other restrictions of title.
(dd)
Material
Adverse Effect
means any event, development, circumstance, change, effect or occurrence that,
individually or in the aggregate, with all other events, developments, circumstances, changes, effects or occurrences, has, or would reasonably be expected to have, a material adverse effect on or
with respect to the business, assets, liabilities, results of operations or financial condition of the Company and its subsidiaries taken as a whole;
provided
,
however
, that no events, developments, circumstances, changes, effects or occurrences to the extent arising out of or resulting
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from
or relating to any of the following, alone or in combination, shall be deemed to constitute, nor be taken into account in determining whether there has been, a Material Adverse Effect:
(i) general changes or developments in the economy or the financial, debt, capital, credit or securities markets in the United States or elsewhere in the world, including as a result of changes
in geopolitical conditions or developments in prevailing interest or exchange rates or the disruption of any securities markets, (ii) the
execution and delivery of this Agreement or the public announcement or pendency of the Merger or other transactions contemplated hereby, including the impact thereof on relationships, contractual or
otherwise, with customers or employees of the Company or its subsidiaries, (iii) any change in any applicable Laws or applicable accounting regulations or principles, including GAAP, or
interpretations thereof after the date of this Agreement, (iv) any hurricane, tornado, earthquake, flood, tsunami or other natural disaster or outbreak or escalation of hostilities or war
(whether or not declared), military actions or any act of sabotage, terrorism or other international or national emergency, or other force majeure event or natural disaster or act of God or other
comparable events, (v) any change in the price or trading volume of the Shares or the credit rating of the Company, in and of itself, (vi) any failure by the Company to meet
(x) any published analyst estimates, expectations, projections or forecasts of the Company’s revenue, earnings, cash flow, cash positions or other financial performance or
results of operations for any period or (y) its internal or published projections, budgets, plans, forecasts, guidance, estimates, milestones of its revenues, earnings or other financial
performance or results of operations, in and of itself, (vii) any change or development in the industries, or in the business conditions in the geographic regions, in which the Company and its
subsidiaries operate, and any ordinary course seasonal fluctuations in the business of the Company and its subsidiaries, (viii) the identity of Parent or its subsidiaries or any communication
by Parent or its subsidiaries regarding the plans or intentions of Parent with respect to the conduct of the business of the Surviving Corporation or its subsidiaries, (ix) any taking of any
action at the written request of or with the written consent of Parent (it being understood and agreed that, with respect to any action taken with such consent, the foregoing shall not preclude Parent
from asserting that any facts or occurrences resulting from such action that are not otherwise excluded from the definition of Material Adverse Effect should be deemed to constitute, or be taken into
account in determining whether there has been, or would reasonably be expected to be, a Material Adverse Effect) or (x) the failure to obtain any approvals or consents from any Governmental
Entity in connection with the transactions contemplated hereby or any delay in obtaining any such approvals or consents; except (A) in the cases of clauses (i), (iii), or (iv), to the
extent that the Company and its subsidiaries, taken as a whole, are disproportionately affected thereby as compared with other participants in the industries in which the Company and its subsidiaries
operate and (B) that clauses (v) and (vi) shall not prevent or otherwise affect a determination that any events, developments, circumstances, changes, effects or occurrences
underlying such changes or failures constitute or contribute to a Material Adverse Effect;
provided
,
further
, that the exceptions in
clauses (ii) and (x) above shall not apply with respect to references to Material Adverse Effect in those portions of the representations and warranties contained in
Section 3.5(a)
(and in
Section 7.2(a)
and
Section 8.1(e)(i)
to the extent related to such
portions of such representation) the purposes of which are to address the consequences resulting from the execution, delivery and performance of this Agreement by the Company or the consummation of
the Merger and the other transactions contemplated by this Agreement.
(ee)
Option
means an option to purchase a number of shares of Common Stock for a fixed exercise price granted pursuant
to a Company Stock Plan.
(ff)
Permitted
Liens
means (i) statutory liens securing payments not yet due or delinquent (or which may be
paid without interest or penalties), (ii) such imperfections or irregularities of title, non-monetary Liens, charges, easements, rights of way, covenants and other restrictions or encumbrances
that do not, in each case, materially affect the use, occupancy or marketability of the properties or assets subject thereto or affected thereby or otherwise materially impair business operations at
such properties, (iii) encumbrances for current Taxes or other governmental charges not
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yet
due and payable or for Taxes that are being contested in good faith by appropriate proceeding and for which adequate reserves have been provided in accordance with GAAP, (iv) pledges or
deposits made in the ordinary course of business to secure obligations under workers’ compensation, unemployment insurance, social security, retirement and similar Laws or similar
legislation or to secure public or statutory obligations, (v) mechanics’, carriers’, workmen’s, repairmen’s or other like
encumbrances arising or incurred in the ordinary course of business for amounts not yet past due or delinquent, (vi) Liens, mortgages, or deeds of trust, security interests or other
encumbrances on title related to indebtedness reflected on the consolidated financial statements of the Company, (vii) Liens that will be released or discharged at or prior to the Closing,
(viii) Liens permitted under the Company Credit Agreement and Indenture, and (ix) any Liens that are not material to the Company and its subsidiaries or Parent and its subsidiaries, as
applicable, taken as a whole.
(gg)
Person
means an individual, corporation (including not-for-profit), Governmental Entity, general or limited
partnership, limited liability company, joint venture, estate, trust, association, organization, unincorporated organization or other entity of any kind or nature including any
group (as such term is defined in Section 13(d)(3) of the Exchange Act).
(hh)
Pre-Closing
Period
means the period between the date of this Agreement and the earlier of the Effective Time and
the termination of this Agreement in accordance with its terms.
(ii)
PSU
means a performance share unit or performance stock unit, representing the right to receive one share of
Common Stock (or cash equivalent), subject to certain vesting terms, conditions and restrictions and the achievement of certain performance targets, granted pursuant to a Company Stock Plan.
(jj)
Required
Financial Information
means (i) the audited consolidated balance sheets of the Company and its
consolidated subsidiaries as at the end of, and related audited consolidated statements of operations, consolidated statements of comprehensive income (loss), consolidated statements of
stockholders’ equity and consolidated statements of cash flows of the Company and its consolidated subsidiaries for, (A) the fiscal years ended December 31, 2016,
December 31, 2017 and December 31, 2018 and (B) and if the Closing Date has not occurred on or prior to the date that is 75 days after December 31, 2019, the fiscal
year ended December 31, 2019, and (ii) an unaudited consolidated balance sheet of the Company and its consolidated subsidiaries as at the end of the most recent fiscal quarter (other
than the fourth fiscal quarter of any fiscal year) that has been
completed prior to the Closing Date and that has ended at least 45 days prior the Closing Date, and the related unaudited consolidated statements of operations, consolidated statements of
comprehensive income (loss), consolidated statements of stockholders’ equity and consolidated statements of cash flows of the Company and its consolidated subsidiaries for the most
recent three, six or nine month, as applicable, period (other than the fourth fiscal quarter period of any fiscal year) that has been completed prior to the Closing Date and that has ended at least
45 days before the Closing Date;
provided
that, as to an applicable financial period, the filing by the Company of the required financial statements specified above
in its Annual Report on Form 10-K or its Quarterly Report on Form 10-Q, as applicable, will be deemed to satisfy the foregoing requirements relating to such financial reporting period
with respect to the Company and its consolidated subsidiaries for all purposes of this Agreement.
(kk)
Restricted
Share
means a share of Common Stock subject to certain vesting terms, conditions and restrictions
granted pursuant to any Company Stock Plan.
(ll)
RSU
means a restricted share unit, representing the right to receive one share of Common Stock (or cash
equivalent) subject to certain vesting terms, conditions and restrictions granted pursuant to a Company Stock Plan.
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(mm)
Senior
Employee
means an employee of the Company with a title of Vice President or above.
(nn)
Service
Provider
means any current or former director, officer, employee or individual contractor who provides,
or has provided, services to the Company or any of its subsidiaries;
provided
,
however
, that an individual contractor other than a director
shall not be considered a Service Provider unless such individual contractor earns remuneration in excess of $100,000 per year. For purposes of this Agreement, the Company
may amend the disclosure in Section 3.11 and Section 3.12 of the Company Disclosure Schedule at any time during the thirty (30)-day period immediately following the date hereof with
respect to information about individual contractors.
(oo)
Software
means any computer program, operating system, applications system, firmware or code, including all
object code, source code, data files, rules, data collections, diagrams, protocols, specifications, interfaces, definitions or methodology related to same in any form or media.
(pp)
subsidiary
or
subsidiaries
means with respect to any
Person (i) any Person (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of stock or other equity interests of
such Person entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries of that Person or a combination thereof and (ii) any partnership, joint venture or limited liability company of
which (A) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership
interests or otherwise or (B) such Person or any subsidiary of such Person is the controlling general partner or otherwise controls such entity. For the avoidance of doubt, for purposes of this
Agreement, the USL JV or any of its subsidiaries will be considered a subsidiary of the Company and its subsidiaries;
provided
that any
representation and warranty in
Article III
(other than
Section 3.1
,
Section 3.3
,
Section 3.5
,
Section 3.19
,
Section 3.22
and
Section 3.24
) relating to a subsidiary of the Company shall, with respect to the USL JV, be to the knowledge of the Company.
(qq)
Top
Customers
means the top customers of the Company and its subsidiaries generating $8,000,000 or more in
revenue during fiscal year 2018, in each case, as listed in
Section 9.5(qq)
of the Company Disclosure Schedule.
(rr)
Top
Vendor
means the top vendors of the Company and its subsidiaries to which the Company and its subsidiaries
paid $10,000,000 or more during fiscal year 2018, in each case, as listed in
Section 9.5(rr)
of the Company Disclosure Schedule.
(ss)
USL
JV
means Urban Sanitation Limited, a company limited by shares incorporated under the laws of the Bahamas, in
which a wholly owned subsidiary of the Company owns a fifty percent (50%) ownership interest.
(tt)
Willful
Breach
means a material breach of, or failure to perform any of the covenants or other agreements
contained in this Agreement, that is a consequence of an act or failure to act by the breaching or non-performing Party with actual knowledge, or knowledge that a Person acting reasonably under the
circumstances should have, that such Party’s act or failure to act (including acts or failures to act by a Party’s Representative at the direction of the Party)
would, or would be reasonably expected to, result in or constitute a breach of or failure of performance under this Agreement.
SECTION 9.6
Severability
.
If any term or other provision of this Agreement is found by a court of competent jurisdiction to be 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
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effect
so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties 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 end that the transactions contemplated hereby are consummated as originally contemplated as of the date hereof to the fullest extent possible.
SECTION 9.7
Entire Agreement; Assignment
.
This Agreement (including the Exhibits hereto and the Company Disclosure Schedule and the Parent Disclosure Schedule), the Voting and Support Agreement and the Confidentiality Agreement
constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements and undertakings, both written and oral, among the
Parties, or any of them, with respect to the subject matter hereof and thereof. This Agreement shall not be assigned by operation of law or otherwise without the prior written consent of each of the
other Parties, and any assignment without such consent shall be null and void. Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the Parties and their respective successors and assigns.
SECTION 9.8
Parties in Interest
.
This Agreement shall be binding upon and inure solely to the benefit of each Party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any
other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement, other than with respect to (i) after the Effective Time, the provisions of
Article II
(which shall inure to the benefit of, and be enforceable by, holders of Common Stock, Options, PSUs, RSUs and Restricted Shares to the extent necessary
to receive the consideration due to such persons thereunder), and (ii) after the Effective Time, the provisions of
Section 6.10
(which shall inure to the
benefit of and be enforceable by, the Indemnified Parties). The representations and warranties in this Agreement are the product of negotiations among the Parties and are for the sole benefit of the
Parties. Any inaccuracies in such representations and warranties are subject to waiver by the Parties in accordance with
Section 9.3
without notice or liability to
any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the Parties of risks associated with particular matters regardless of the
knowledge of any of the Parties. Consequently, Persons other than the Parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or
circumstances as of the date of this Agreement or as of any other date.
SECTION 9.9
Governing Law
.
This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware (without giving effect to choice of Law principles thereof).
SECTION 9.10
Headings
.
The descriptive headings contained in this Agreement and the table of contents hereof 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, .pdf, or other electronic transmission) in one or more counterparts, and by
the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
SECTION 9.12
Specific Performance
.
The Parties agree that irreparable damage for which monetary damages, even if available, may not be an adequate remedy, would occur in the event that the Parties do not perform the
provisions of this Agreement (including failing to take such actions as are required of it hereunder in order to consummate this Agreement) in accordance with its specified terms or otherwise breach
such provisions. The Parties acknowledge and agree that the Parties shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches or threatened breaches of
this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they are entitled at law or in equity (except as may be limited by
Section 8.2
). Each of the Parties agrees that, prior to the valid termination of this Agreement in accordance with
Article VIII
,
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it
will not oppose the granting of an injunction, specific performance and other equitable relief as provided herein on the basis that (x) either Party has an adequate remedy at law or
(y) an award of specific performance is not an appropriate remedy for any reason at law or equity. Any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement shall not be required to provide any bond or other security in connection with any such order or injunction.
SECTION 9.13
Jurisdiction
.
Each of the Parties irrevocably (a) consents to submit itself to the personal jurisdiction of the Delaware Court of Chancery and any state appellate court therefrom within the
State of Delaware (unless the Delaware Court of Chancery shall decline to accept jurisdiction over a particular matter, in which case, in any Delaware state or federal court within the State of
Delaware), in connection with any matter based upon or arising out of this Agreement or any of the transactions contemplated by this Agreement or the actions of Parent, Merger Sub or the Company in
the negotiation, administration, performance and enforcement hereof and thereof, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court, (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than the courts
of the State of Delaware, as described above, and (d) consents to service being made through the notice procedures set forth in
Section 9.4
. Each of the
Company, Parent and Merger Sub hereby agrees that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in
Section 9.4
shall be effective service of process for any Proceeding in connection with this Agreement or the transactions contemplated hereby. Each Party hereto
hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any Proceeding with respect to this Agreement, any claim that it is not personally
subject to the jurisdiction of the above-named courts for any reason other than the failure to serve process in accordance with this
Section 9.13
, that it or its
property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid
of execution of judgment, execution of judgment or otherwise), and to the fullest extent permitted by applicable Law, that the suit, Proceeding in any such court is brought in an inconvenient forum,
that the venue of such Proceeding is improper, or that this Agreement, or the subject matter hereof or thereof, may not be enforced in or by such courts and further irrevocably waives, to the fullest
extent permitted by applicable Law, the benefit of any defense that would hinder, fetter or delay the levy, execution or collection of any amount to which the Party is entitled pursuant to the final
judgment of any court having jurisdiction. Each Party expressly acknowledges that the foregoing waiver is intended to be irrevocable under the Laws of the State of Delaware;
provided
, that each such Party’s consent to jurisdiction and service contained in this
Section 9.13
is solely for the
purpose referred to in this
Section 9.13
and shall not be deemed to be a general submission to said courts or in the State of Delaware other than for such purpose.
SECTION 9.14
WAIVER OF JURY TRIAL
.
EACH OF PARENT, MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF PARENT OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF OR THEREOF.
SECTION 9.15
Interpretation
.
When reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words
include, includes or including are used in this Agreement, they shall be deemed to be followed by the words
without limitation. The words hereof, herein, hereto, hereby and
hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word
or shall not be exclusive. References to dollars
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or
$ are to United States of America dollars. The word extent in the phrase to the extent shall mean the degree to which a
subject or other thing extends, and such phrase shall not mean simply if. The definitions contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter genders of such term. Any agreement, instrument or Law defined or referred to herein means such agreement, instrument or
Law as from time to time amended, modified or supplemented, unless otherwise specifically indicated. All accounting terms used and not defined herein have the respective meanings given to them under
GAAP, except to the extent otherwise specifically indicated or that the context otherwise requires. References to a person are also to its successors and permitted assigns. When calculating the period
of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded,
and if the last day of such period is not a Business Day, the period shall end on the immediately following Business Day. References to days shall mean calendar
days unless expressly stated otherwise. Unless otherwise indicated, documents, materials and information are deemed to have been made available to Parent and
Merger Sub, if such documents, materials or information were (a) included in the Data Room on or prior to 6:00 p.m. prevailing Eastern Time on the day immediately prior to the date of
this Agreement and continuously available for review by such person and its Representatives in the Data Room during such period (it being understood and agreed that as soon as practicable after the
date of this Agreement, the Company shall deliver to Parent on optical media format a complete and accurate copy of the contents of the Data Room as of the date of this Agreement),
(b) disclosed in a SEC Document filed and publicly available, or (c) otherwise provided in written or electronic form by or on behalf of the Company to Parent, Merger Sub or their
Representatives. Each of the parties has participated in the drafting and negotiation of this Agreement, and this Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the Party drafting or causing any instrument to be drafted.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective officers
thereunto duly authorized.
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COMPANY:
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ADVANCED DISPOSAL SERVICES, INC.
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By:
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/s/ RICHARD BURKE
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Richard Burke
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Chief Executive Officer
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PARENT:
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WASTE MANAGEMENT, INC.
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By:
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/s/ JOHN J. MORRIS JR.
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Name:
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John J. Morris Jr.
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Title:
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Executive Vice President and
Chief Operating Officer
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MERGER SUB:
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EVERGLADES MERGER SUB INC.
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By:
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/s/ MARK A. LOCKETT
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Name:
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Mark A. Lockett
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Title:
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President
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[Signature PageAgreement and Plan of Merger]
Table of Contents
ANNEX B
VOTING AND SUPPORT AGREEMENT
This Voting and Support Agreement (this
Agreement
) is made and entered into as of
April 14, 2019, by and between Waste Management, Inc., a Delaware corporation (
Parent
), and
the person whose name appears on the signature pages hereto (the
Stockholder
).
RECITALS
A. Concurrently
with the execution and delivery of this Agreement, Parent, Everglades Merger Sub Inc., a Delaware corporation and indirect subsidiary of Parent
(
Merger Sub
), and Advanced Disposal Services, Inc., a Delaware corporation (the
Company
), are entering into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time, the
Merger Agreement
) that, among other things and subject to the terms and conditions set forth therein, provides for the merger of Merger Sub with
and into the Company, with the Company being the surviving entity in such merger (the
Merger
).
B. As
an inducement and condition for Parent and Merger Sub to enter into the Merger Agreement, the Stockholder agrees to enter into this Agreement with respect to all
shares of common stock, par value $0.01 per share, of the Company (the
Common Stock
) that the Stockholder owns, beneficially (as defined in
Rule 13d-3 under the Exchange Act) or of record as of the date hereof, and any additional shares of Common Stock that such Stockholder may acquire beneficial (as defined in Rule 13d-3
under the Exchange Act) or record ownership of after the date hereof (collectively, the
Covered Shares
).
C. As
of the date hereof, the Stockholder is the beneficial or legal owner of record, and has sole voting power over, 16,572,106 of shares of Common Stock.
D. The
Stockholder is party to (i) that certain Stockholders Agreement, dated as of October 12, 2016, by and among the Company, the Stockholder and the other
parties thereto (the
Stockholders Agreement
), (ii) that certain Registration Rights Agreement, dated as of October 12, 2016, by and
among the Company and certain shareholders of the Company (the
Registration Rights Agreement
) and (iii) that certain Subscription
Agreement by and between Star Atlantic Waste Holdings II, L.P. and the Stockholder dated as of August 3, 2016 (the
Subscription
Agreement
).
NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth below and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
1.
Definitions
. Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed to such terms in the Merger Agreement. When used in this Agreement, the following terms shall have the meanings assigned to them in this
Section 1
.
Expiration
Time
shall mean the earlier to occur of (a) the Effective Time and (b) such date and time as the Merger
Agreement shall be validly terminated pursuant to Article VIII thereof.
Transfer
shall mean (a) any direct or indirect offer, sale, assignment, encumbrance, pledge, hypothecation, disposition,
loan or other transfer (by operation of Law or otherwise), either voluntary or involuntary, or entry into any option or other Contract, arrangement or understanding with respect to any offer, sale,
assignment, encumbrance, pledge, hypothecation, disposition, loan or other transfer (by operation of Law or otherwise), of any Covered Shares or any interest in any Covered Shares (in each case other
than this Agreement), (b) the deposit of such Covered Shares into a voting trust, the entry into a voting agreement or arrangement (other than this Agreement) with respect to such Covered
Shares or the grant of any proxy or power of attorney (other than this Agreement) with respect to such Covered Shares, (c) entry into any hedge, swap or other transaction or Contract which is
designed to (or is reasonably expected to lead to or result in) a transfer of the economic consequences of ownership of any Covered Shares, whether any such transaction is to be settled by delivery of
Covered Shares, in cash or otherwise or
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(d) any
Contract or commitment (whether or not in writing) to take any of the actions referred to in the foregoing clauses (a), (b) or (c) above.
2.
Agreement to Not Transfer the Covered Shares
.
2.1
No Transfer of Covered Shares
. Until the Expiration Time, the Stockholder
agrees not to Transfer or cause or permit the Transfer of any Covered Shares, other than with the prior written consent of Parent (to be granted or withheld in Parent’s sole
discretion);
provided
,
however
, that nothing herein shall prohibit (i) a Transfer to an Affiliate of the Stockholder, but only if, as a
precondition to such Transfer, the transferee agrees in a writing, reasonably satisfactory in form and substance to Parent, to assume all of the obligations of the Stockholder under, and be bound by
all of
the terms of, this Agreement, and (ii) from and after the date of the Stockholders Meeting at which the Company Requisite Vote is obtained, the Stockholder and its Affiliates shall be permitted
to engage in Transfers to the extent incident to or resulting from the pledging of the Covered Shares as collateral as part of the ordinary course financing activity of the Stockholder and its
Affiliates. Any Transfer or attempted Transfer of any Covered Shares in violation of this
Section 2.1
shall be null and void and of no effect whatsoever.
2.2
Update of Beneficial Ownership Information
. Promptly following the written
request of Parent, or upon the Stockholder’s or any of its Affiliates’ acquisition of beneficial (as defined in Rule 13d-3 under the Exchange Act) or record
ownership of additional shares of Common Stock after the date hereof, the Stockholder will send to Parent a written notice setting forth the number of Covered Shares beneficially owned by such
Stockholder or any of its Affiliates and indicating the capacity in which such Covered Shares are owned. The Stockholder agrees to cause any of its Affiliates that acquires beneficial ownership of any
shares of Common Stock on or after the date hereof to execute an agreement in a form reasonably acceptable to Parent to be bound with respect to this Agreement with respect to such shares to the same
extent such shares would be subject to this Agreement had they been beneficially acquired by the Stockholder.
3.
Agreement to Vote the Covered Shares
.
3.1 Until
the Expiration Time, at every meeting of the Company’s stockholders at which any of the following matters are to be voted on (and at every
adjournment or postponement thereof), and on any action or approval of Company’s stockholders by written consent with respect to any of the following matters, the Stockholder shall
vote (including via proxy) the Covered Shares (or cause the holder of record on any applicable record date to vote (including via proxy) the Covered Shares):
(a) unless
the Company Board has made a Change of Recommendation that has not been rescinded or otherwise withdrawn, in favor of the adoption of the Merger Agreement; and
(b) unless
the Company Board has made a Change of Recommendation that has not been rescinded or otherwise withdrawn, against (A) any action or agreement that would
reasonably be expected to result in a breach of the Merger Agreement or result in any condition set forth in Article VII of the Merger Agreement not being satisfied on a timely basis,
(B) any Acquisition Proposal, or any other proposal made in opposition to, in competition with, or inconsistent with the Merger Agreement, the Merger or the transactions contemplated by the
Merger Agreement and (C) any other action, agreement or proposal which could reasonably be expected to delay, postpone or adversely affect consummation of the Merger and the other transactions
contemplated by the Merger Agreement.
3.2 Until
the Expiration Time, at every meeting of the Company’s stockholders (and at every adjournment or postponement thereof), the Stockholder shall be
represented in person or by proxy at such meeting (or cause the holders of record on any applicable record date to be represented
in person or by proxy at such meeting) in order for the Covered Shares to be counted as present for purposes of establishing a quorum.
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3.3 Except
as explicitly set forth in this Section 3, nothing in this Agreement shall limit the right of the Stockholder to vote (or cause to be voted), including by
proxy, if applicable, in favor of, or against or to abstain with respect to, any other matters presented to the stockholders of the Company. Without limiting the foregoing, nothing herein shall limit
the Stockholder’s ability to vote for directors of the Company.
4.
Waiver of Appraisal Rights
. The Stockholder hereby waives all appraisal rights
under Section 262 of the DGCL with respect to all Covered Shares owned (beneficially or of record) by such Stockholder.
5.
No Solicitation
.
5.1 Until
the Expiration Time, the Stockholder shall not, and shall cause its Representatives not to, directly or indirectly, take any of the actions set forth in
clauses (i) through (iv) of Section 6.1(a) of the Merger Agreement. The Stockholder shall, and shall cause its Representatives to, immediately cease and cause to be terminated any
activities, discussions or negotiations conducted before the date of this Agreement with any persons other than Parent with respect to any Acquisition Proposal. Notwithstanding anything in this
Agreement to the contrary, (i) the Stockholder shall not be responsible for the actions of the Company or its Board of Directors (or any committee thereof), any Subsidiary of the Company or any
officers, directors (in their capacity as such), employees and professional advisors of any of the foregoing, including with respect to any matters referred to in Section 6.1 of the Merger
Agreement.
5.2 Notwithstanding
the foregoing, solely to the extent the Company is permitted, pursuant to Section 6.1(b) of the Merger Agreement, to have discussions or
negotiations with a person making a
bona fide
Acquisition Proposal, the Stockholder and its Representatives shall be permitted to participate in such
discussions or negotiations with such person making such Acquisition Proposal.
6.
No Legal Action
. The Stockholder shall not, and shall cause its Representatives
not to, bring, commence, institute, maintain, prosecute or voluntarily aid any claim, appeal, or proceeding which (a) challenges the validity of or seeks to enjoin the operation of any
provision of this Agreement or (b) alleges that the execution and delivery of this Agreement by the Stockholder (or its performance hereunder) breaches any fiduciary duty of the Company Board
(or any member thereof) or any duty
that the Stockholder has (or may be alleged to have) to the Company or to the other holders of the Common Stock.
7.
Capacity
. No Person who is a representative of the Stockholder, who is or
becomes during the term hereof a director of the Company, shall be deemed to make any agreement or understanding in this Agreement in such Person’s capacity as a director of the
Company. The Stockholder is entering into this Agreement solely in its capacity as the record holder or beneficial owner of the Covered Shares and nothing herein shall limit or affect any actions
taken (or any failures to act) by a representative of the Stockholder in such representative’s capacity as a director of the Company. The taking of any actions (or any failures to
act) by any representative of the Stockholder in his or her capacity as a director of the Company shall not be deemed to constitute a breach of this Agreement, regardless of the circumstances related
thereto.
8.
Notice of Certain Events
. The Stockholder shall notify Parent in writing
promptly of (a) any fact, event or circumstance that would cause, or reasonably be expected to cause or constitute, a breach of the representations and warranties of the Stockholder under this
Agreement or (b) the receipt by the Stockholder of any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with this
Agreement.
9.
Stockholders, Registration Rights and Subscription Agreements
. The Stockholder,
on behalf of itself and its Affiliates, hereby agrees that upon the Effective Time, (i) the Stockholder and its Affiliates shall cease to have any rights under the Stockholders Agreement, the
Registration Rights Agreement or
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the
Subscription Agreement, (ii) the Stockholders Agreement, Registration Rights Agreement and Subscription Agreement shall be terminated without any further action of the Stockholder or its
Affiliates and (iii) the Stockholder and its Affiliates release the Surviving Corporation and its Affiliates, and the Parent on behalf of itself and its Affiliates (including the Surviving
Corporation) release the Stockholder and its Affiliates, from all liabilities or obligations arising under the Stockholders Agreement the Registration Rights Agreement or the Subscription Agreement,
it being agreed, for the avoidance of doubt, that the foregoing shall not limit the rights under Section 6.10 of the Merger Agreement of any director nominee appointed pursuant to the
Stockholders Agreement.
10.
Representations and Warranties of the Stockholder
. The Stockholder hereby
represents and warrants to Parent that:
10.1
Due Authority
. The Stockholder has the full power and capacity to make, enter
into and carry out the terms of this Agreement. The Stockholder is duly organized, validly existing and in good standing in accordance with the laws of its jurisdiction of formation. The execution and
delivery of this Agreement, the performance of the Stockholder’s obligations hereunder, and the consummation of the transactions contemplated hereby have been validly authorized, and
no other consents or authorizations are required to give effect to this Agreement or the transactions contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by
the Stockholder and constitutes a valid and binding obligation of the Stockholder enforceable against it in accordance with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar Laws affecting creditors’ rights and remedies generally.
10.2
Ownership of the Covered Shares
. (a) The Stockholder is, as of the date
hereof, the beneficial or record owner of the Covered Shares, free and clear of any and all Liens, other than those created by this Agreement or the agreements referred to in Section 9 hereof
and (b) the Stockholder has sole voting power over all of the Covered Shares beneficially owned by the Stockholder. The Stockholder has not entered into any agreement to Transfer any Covered
Shares. As of the date hereof, the Stockholder does not own, beneficially or of record, any shares of Common Stock or other voting shares of the Company (or any securities convertible, exercisable or
exchangeable for, or rights to purchase or acquire, any shares of Common Stock or other voting shares of the Company) other than the Covered Shares.
10.3
No Conflict; Consents
.
(a) The
execution and delivery of this Agreement by the Stockholder does not, and the performance by the Stockholder of its obligations under this Agreement and the
compliance by the Stockholder with any provisions hereof does not and will not: (a) conflict with or violate any Laws applicable to the Stockholder, or (b) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of a Lien on any of the Covered Shares beneficially owned by the Stockholder pursuant to any Contract or obligation to which the Stockholder is a party or by which the
Stockholder is subject.
(b) No
consent, approval, order or authorization of, or registration, declaration or, except as required by the rules and regulations promulgated under the Exchange Act,
filing with, any Governmental Entity or any other Person, is required by or with respect to the Stockholder in connection with the execution and delivery of this Agreement or the consummation by them
of the transactions contemplated hereby.
10.4
Absence of Litigation
. As of the date of this Agreement, there is no legal
action pending against, or, to the knowledge of the Stockholder, threatened against or affecting the Stockholder that could reasonably be expected to materially impair or materially adversely affect
the ability of the
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Stockholder
to perform its obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.
11.
Representations and Warranties of Parent
. Parent hereby represents and warrants
to the Stockholder that:
11.1
Due Authority
. Parent has the full power and capacity to make, enter into and
carry out the terms of this Agreement. Parent is duly organized, validly existing and in good standing in accordance with the laws of its jurisdiction of formation. The execution and delivery of this
Agreement, the performance of Parent’s obligations hereunder, and the consummation of the transactions contemplated hereby has been validly authorized, and no other consents or
authorizations are required to give effect to this Agreement or the transactions contemplated by this Agreement. This Agreement has been duly and validly executed and delivered by Parent and
constitutes a valid and binding obligation of Parent enforceable against it in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar Laws affecting creditors’ rights and remedies generally.
11.2
No Conflict; Consents
.
(a) The
execution and delivery of this Agreement by Parent does not, and the performance by Parent of its obligations under this Agreement and the compliance by Parent with
the provisions hereof do not and will not: (a) conflict with or violate any Laws applicable to Parent, or (b) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a material default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, pursuant to any Contract or obligation
to which Parent is a party or by which Parent is subject.
(b) No
consent, approval, order or authorization of, or registration, declaration or, except as required by the rules and regulations promulgated under the Exchange Act,
filing with, any Governmental Entity or any other Person, is required by or with respect to Parent in connection with the execution and delivery of this Agreement or the consummation by Parent of the
transactions contemplated hereby.
11.3
Absence of Litigation
. As of the date of this Agreement, there is no legal
action pending against, or, to the knowledge of Parent, threatened against or affecting Parent that could reasonably be expected to materially impair or materially adversely affect the ability of
Parent to perform its obligations hereunder or to consummate the transactions contemplated hereby on a timely basis.
12.
Miscellaneous
.
12.1
No Ownership Interest
. Nothing contained in this Agreement shall be deemed to
vest in Parent any direct or indirect ownership or incidence of ownership of or with respect to the Covered Shares. All rights, ownership and economic benefits of and relating to the Covered Shares
shall remain vested in and belong to the Stockholder, and Parent shall have no authority to direct the Stockholder in the voting or disposition of any of the Covered Shares, except as otherwise
provided herein.
12.2
Certain Adjustments
. In the event of a stock split, stock dividend or
distribution, or any change in the Common Stock by reason of any split-up, reverse stock split, recapitalization, combination, reclassification, exchange of shares or the like, the terms
Common Stock and Covered Shares shall be deemed to refer to and include such shares as well as all such stock dividends and distributions and any
securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction.
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12.3
Amendments and Modifications
. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written agreement executed by all of the parties hereto.
12.4
Expenses
. All costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
12.5
Notices
. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or by facsimile (upon confirmation of receipt) on the first (1st) Business Day following the date of dispatch if delivered by a recognized next day
courier service, or on the third (3rd) Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall
be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
(i)
if
to the Stockholder, to
:
Canada
Pension Plan Investment Board
One Queen Street East
Suite 2500
Toronto, ON
M5C 2W5
Canada
Attn: Ryan Barry, Managing Director, Legal
Email: rbarry@cppib.com
Canada
Pension Plan Investment Board
One Queen Street East
Suite 2500
Toronto, ON
M5C 2W5
Canada
Attn: Sean Cheah, Principal, Relationship Investments, Active Equities
Email: scheah@cppib.com
with
a copy to (which shall not be considered notice)
:
Debevoise &
Plimpton LLP
919 Third Avenue
New York, NY 10022
Attention: Kevin M. Schmidt
Email: kmschmidt@debevoise.com
(ii)
if
to Parent, to
:
Waste
Management, Inc.
1001 Fannin
Houston, Texas 77002
Attn: John Morris, Executive Vice President and Chief Operating Officer
E-mail: JMorris@wm.com
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with
a copy to:
General
Counsel
E-mail: gclegal@wm.com
with
a copy to (which shall not be considered notice)
:
Simpson
Thacher & Bartlett LLP
425 Lexington Avenue
New York, New York 10017
Fax: (212) 455-2502
Attn: Alan M. Klein
E-mail: aklein@stblaw.com
and
Simpson
Thacher & Bartlett LLP
600 Travis Street, Suite 5400
Houston, Texas 77002
Fax: (713) 821-5602
Attn: Christopher R. May
E-mail: cmay@stblaw.com
(iii)
if
to Company, to
:
Advanced
Disposal Services, Inc.
90 Fort Wade Road, Suite 200
Ponte Vedra Beach, FL 32081
Attn: Richard Burke and Michael K. Slattery
E-mail: Richard.Burke@AdvancedDisposal.com
E-mail: Michael.Slattery@AdvancedDisposal.com
with
a copy to (which shall not constitute notice)
:
Shearman &
Sterling LLP
599 Lexington Avenue
New York, NY 10022
Fax: (212) 848-7179
Attn: Scott Petepiece and Daniel Litowitz
E-mail: spetepiece@shearman.com; Daniel.Litowitz@shearman.com
12.6
Jurisdiction; Waiver of Jury
.
(a) Each
of the parties irrevocably submits to the exclusive jurisdiction of the Delaware Court of Chancery and any state appellate court therefrom within the State of
Delaware (unless the Delaware Court of Chancery shall decline to accept jurisdiction over a particular matter, in which case, of any Delaware state or federal court within the State of Delaware) for
the purpose of any claim directly or indirectly based upon, arising out of or relating to this Agreement, any of the transactions contemplated by this Agreement or the actions of Parent or the
Stockholder in the negotiation,
administration, performance and enforcement hereof and thereof. Each of the parties (i) consents to submit itself to the personal jurisdiction of the Delaware Court of Chancery and any state
appellate court therefrom within the State of Delaware (unless the Delaware Court of Chancery shall decline to accept jurisdiction over a particular matter, in which case, of any Delaware state or
federal court within the State of Delaware) with respect to any matter relating to or arising under this Agreement, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iii) agrees that it will not bring any such proceeding in any
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court
other than the Delaware state or federal courts within the State of Delaware, as described above. Each of Parent and the Stockholder irrevocably consents to the service of process out of any of
the aforementioned courts in any such action, suit or proceeding by the mailing of copies thereof by registered mail, postage prepaid, to such party at its address specified pursuant to
Section 12.5
, such service of process to be effective upon acknowledgment of receipt of such registered mail.
(b) EACH
OF PARENT AND THE STOCKHOLDER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE ACTIONS OF PARENT OR THE STOCKHOLDER IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT HEREOF AND THEREOF.
12.7
Documentation and Information
. The Stockholder consents to and authorizes the
publication and disclosure by Parent and the Company of the Stockholder’s identity and holding of the Covered Shares, and the terms of this Agreement (including, for the avoidance of
doubt, the disclosure of this Agreement), in any press release, the Proxy Statement and any other disclosure document required in connection with the Merger Agreement, the Merger and the transactions
contemplated by the Merger Agreement;
provided
, that prior to any such publication or disclosure Parent and the Company have provided the Stockholder with an opportunity
to review and comment upon such announcement or disclosure, which comments Parent and the Company will consider in good faith.
12.8
Further Assurances
. The Stockholder agrees, from time to time, at the
reasonable request of Parent and without further consideration, to execute and deliver such additional documents and take all such further action as may be reasonable required to consummate and make
effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement.
12.9
Stop Transfer Instructions
. At all times commencing with the execution and
delivery of this Agreement and continuing until the Expiration Time, in furtherance of this Agreement, the Stockholder hereby authorizes the Company or its counsel to notify the
Company’s transfer agent that there is a stop transfer order with respect to all of the Covered Shares (and that this Agreement places limits on the voting and transfer of the Covered
Shares), subject to the provisions hereof and provided that any such stop transfer order and notice will immediately be withdrawn and terminated by the Company following the Expiration Time.
12.10
Specific Performance
. Each of Parent and the Stockholder agrees that
irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms on a timely basis or were otherwise breached. It is accordingly
agreed that Parent and the Stockholder shall be entitled to injunctive or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this
Agreement in any court identified in
Section 12.6(a)
above, this being in addition to any other remedy to which they are entitled at law or in equity.
12.11
Entire Agreement
. This Agreement contains the entire understanding of the
parties in respect of the subject matter hereof, and supersedes all prior negotiations and understandings, both written and oral, between the parties with respect to such subject matter. For the
avoidance of doubt, nothing in this Agreement shall be deemed to amend, alter or modify, in any respect, any of the provisions of the Merger Agreement.
12.12
Reliance
. The Stockholder understands and acknowledges that Parent and Merger
Sub are entering into the Merger Agreement in reliance upon the Stockholder’s execution and delivery of this Agreement.
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12.13
Interpretation
. This Agreement and any documents or instruments delivered
pursuant hereto or in connection herewith shall be construed without regard to the identity of the person who drafted the various provisions of the same. Each and every provision of this Agreement and
such other documents and instruments shall be construed as though all of the parties participated equally in the drafting of the same. Consequently, the parties acknowledge and agree that any rule of
construction that a document is to be construed against the drafting party shall not be applicable either to this Agreement or such other documents and instruments. The words
hereof, herein and hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section references are to this Agreement unless otherwise specified. Whenever the words include,
includes or including are used in this Agreement, they shall be deemed to be followed by the words without limitation. The
headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. In this Agreement, all references to
dollars or $ are to United States dollars. References to a party or to the parties to this Agreement refers to the Parent and the Stockholder,
individually or collectively, as the case may be.
12.14
Assignment
. Neither this Agreement nor any of the rights, interests or
obligations of any party 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 party.
12.15
Severability
. Any term or provision of this Agreement which is determined by
a court of competent jurisdiction to be invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability
without rendering invalid, illegal or unenforceable the remaining terms and provisions of this Agreement or affecting the validity, legality or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction, and if any provision of this Agreement is determined to be so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is
enforceable, in all cases so long as neither the economic nor legal substance of the transactions contemplated hereby is affected in any manner materially adverse to any party or its stockholders.
Upon any such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.
12.16
Counterparts
. This Agreement may be executed by facsimile and in
counterparts, all of which shall be considered an original and one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same counterpart.
12.17
Governing Law
. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without giving effect to choice of law principles thereof).
12.18
Termination
. This Agreement shall automatically terminate without further
action by any of the parties hereto and shall have no further force or effect as of the earliest to occur of (i) the Expiration Time, or (ii) the election of the Stockholder in its sole
discretion to terminate this Agreement promptly following any amendment of any term or provision of the original unamended Merger Agreement dated as of the date hereof that reduces or changes the form
of consideration payable pursuant to and in accordance with such Merger Agreement;
provided
that the provisions of this
Article XII
shall survive any such termination. Notwithstanding the foregoing, termination of this Agreement shall not prevent any party from seeking any remedies (at law or in equity) against any other party for
that party’s breach of any of the terms of this Agreement prior to the date of termination.
[
Signature page follows
]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered on the date and year first above written.
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WASTE MANAGEMENT, INC.
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By:
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/s/ JOHN J. MORRIS JR.
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Name:
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John J. Morris Jr.
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Title:
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Executive Vice President and
Chief Operating Officer
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CANADA PENSION PLAN INVESTMENT BOARD
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By:
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/s/ DEBORAH K. ORIDA
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Name:
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Deborah K. Orida
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Title:
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Senior Managing Director & Global Head of Active Equities
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By:
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/s/ KEVIN GODWIN
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Name:
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Kevin Godwin
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Title:
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Senior Principal, Relationship Investments, Active Equities
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[Signature
Page to Voting and Support Agreement]
Table of Contents
ANNEX C
OPINION OF UBS
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UBS Securities LLC
1285 Avenue of the Americas
New York, NY 10019
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April 14,
2019
The
Board of Directors
Advanced Disposal Services, Inc.
90 Fort Wade Road
Ponte Vedra, Florida 32081
Dear
Members of the Board:
We
understand that Advanced Disposal Services, Inc., a Delaware corporation (the Company), is considering a transaction whereby Waste Management Inc., a
Delaware corporation (Parent), will effect a merger involving the Company. Pursuant to the terms of an Agreement and Plan of Merger, draft dated as of April 14, 2019
(the Agreement), among Parent, the Company and Everglades Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Parent
(Sub), Parent will undertake a series of transactions whereby the
Company will become a wholly owned subsidiary of Parent (the Transaction). Pursuant to the terms of the Agreement all of the issued and outstanding shares of the common
stock, par value of $0.01 per share, of the Company (Company Common Stock), other than the Dissenting Shares (as defined in the Agreement) and the Company Common Stock owned
by (a) the Company as treasury stock, (b) Whitney and Merger Sub or (c) any direct or indirect wholly owned subsidiaries of Parent, Merger Sub and the Company (together with the
Dissenting Shares, the Excluded Shares), will be converted into the right to receive, for each outstanding share of Company Common Stock, $33.15 in cash (the
Consideration).
The
terms and conditions of the Transaction are more fully set forth in the Agreement.
You
have requested our opinion as to the fairness, from a financial point of view, to the holders of the Company Common Stock (other than the holders of the Excluded Shares) of the Consideration to be
received by such holders in the Transaction.
UBS
Securities LLC (UBS) has acted as financial advisor to the Company in connection with the Transaction and will receive a fee for its services, a portion of which
is payable in connection with this opinion and a significant portion of which is contingent upon consummation of the Transaction. In addition, the Company has agreed to reimburse certain of our
expenses arising, and indemnify us against certain liabilities that may arise, out of our engagement. In the past, UBS and its affiliates have provided investment banking, commercial banking and other
financial services to the Company, Parent and Canada Pension Plan Investment Board (CPP) unrelated to the proposed Transaction, for which UBS and its affiliates received
compensation, including in the past four years having acted as (a) co-underwriter to the Company in connection with an underwritten secondary offering of the Company Common Stock in May 2018,
(b) co-lead joint book-running manager to the Company in connection with a secondary public offering of the Company Common Stock in May 2017 and (c) advisor to a consortium of four
parties (including CPP) in connection with the consortium’s acquisition of a majority stake in a corporation. In
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addition,
UBS or an affiliate is a participant in a credit facility of the Company for which it received and continues to receive fees and interest payments. In the ordinary course of business, UBS
and its affiliates may hold or trade, for their own accounts and the accounts of their customers, securities of the Company and Parent and, accordingly, may at any time hold a long or short position
in such securities. The issuance of this opinion was approved by an authorized committee of UBS.
Our
opinion does not address the relative merits of the Transaction as compared to other business strategies or transactions that might be available with respect to the Company or the
Company’s underlying business decision to effect the Transaction. Our opinion does not constitute a recommendation to any shareholder as to how such shareholder should vote or act
with respect to the Transaction. At your direction, we have not been asked to, nor do we, offer any opinion as to the terms, other than the Consideration to the extent expressly specified herein, of
the Agreement or any related documents or the form of the Transaction. In addition, we express no opinion as to the fairness of the amount or nature of any compensation to be received by any officers,
directors or employees of any parties to the Transaction, or any class of such persons, relative to the Consideration. We express no opinion as to what the value of the price at which the Company
Common Stock will trade at any time. In rendering this opinion, we have assumed, with your consent, that (i) the final executed form of the Agreement will not differ in any material respect
from the draft that we have reviewed, (ii) the parties to the Agreement will comply with all material terms of the Agreement, and (iii) the Transaction will be consummated in accordance
with the terms of the Agreement without any adverse waiver or amendment of any material term or condition thereof. We also have assumed that all governmental, regulatory or other consents and
approvals necessary for the consummation of the Transaction will be obtained without any adverse effect on the Company, Parent or the Transaction. We have not been authorized to solicit and have not
solicited indications of interest in a transaction with the Company from any party.
In
arriving at our opinion, we have, among other things: (i) reviewed certain publicly available business and financial information relating to the Company and Parent; (ii) reviewed
certain internal financial information and other data relating to the business and financial prospects of the Company that were not publicly available, including financial forecasts and estimates
prepared by the management of the Company that you have directed us to utilize for purposes of our analysis; (iii) conducted discussions with members of the senior management of the Company
concerning the business and financial prospects of the Company; (iv) performed a discounted cash flow analysis of the Company in which we analyzed the future cash flows of the Company using
financial forecasts and estimates prepared by the management of the Company; (v) reviewed publicly available financial and stock market data with respect to certain other companies we believe
to be generally relevant; (vi) compared the financial terms of the Transaction with the publicly available financial terms of certain other transactions we believe to be generally relevant;
(vii) reviewed current and historical market prices of Company Common Stock; (viii) reviewed the Agreement; and (ix) conducted such other financial studies, analyses and
investigations, and considered such other information, as we deemed necessary or appropriate.
In
connection with our review, with your consent, we have assumed and relied upon, without independent verification, the accuracy and completeness in all material respects of the information provided
to or reviewed by us for the purpose of this opinion. In addition, with your consent, we have not made any independent evaluation or appraisal of any of the assets or liabilities (contingent or
otherwise) of the Company, nor have we been furnished with any such evaluation or appraisal. With respect to the financial forecasts and estimates referred to above, we have assumed, at your
direction, that they have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of
the Company. In addition, we have assumed with your approval that the financial forecasts and estimates referred to above will be achieved at the times and in the amounts projected. Our opinion is
necessarily based on economic, monetary, market and other conditions as in effect on, and the information available to us as of, the date hereof.
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Based
upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Consideration to be received by holders of Company Common Stock (other than the holders of Excluded Shares)
in the Transaction is fair, from a financial point of view, to such holders.
This
opinion is provided for the benefit of the Board of Directors (in its capacity as such) in connection with, and for the purpose of, its evaluation of the Consideration in the Transaction.
Very
truly yours,
/s/
UBS SECURITIES LLC
UBS
SECURITIES LLC
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ANNEX D
SECTION 262 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
§ 262. Appraisal rights.
(a) Any
stockholder of a corporation of this State who holds shares of stock on the date of the making of a demand pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares through the effective date of the merger or consolidation, who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be entitled to an appraisal by the Court of Chancery of
the fair value of the stockholder’s shares of stock under the circumstances described in subsections (b) and (c) of this section. As used in this section, the word
stockholder means a holder of record of stock in a corporation; the words stock and share mean and include what is
ordinarily meant by those words; and the words depository receipt mean a receipt or other instrument issued by a depository representing an interest in 1 or more shares, or
fractions thereof, solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal
rights shall be available for the shares of any class or series of stock of a constituent corporation in a merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to § 251(g) of this title), § 252, § 254, § 255,
§ 256, § 257, § 258, § 263 or § 264 of this title:
(1)
Provided
,
however
, that, except as expressly provided in § 363(b) of this title, no
appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the
stockholders entitled to receive notice of the meeting of stockholders to act upon the agreement of merger or consolidation (or, in the case of a merger pursuant to § 251(h), as of
immediately prior to the execution of the agreement of merger), were either: (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving corporation as provided in § 251(f) of this title.
(2) Notwithstanding
paragraph (b)(1) of this section, appraisal rights under this section shall be available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 255, 256, 257, 258, 263
and 264 of this title to accept for such stock anything except:
a. Shares
of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
b. Shares
of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or held of record by more than 2,000 holders;
c. Cash
in lieu of fractional shares or fractional depository receipts described in the foregoing paragraphs (b)(2)a. and b. of this section; or
d. Any
combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing
paragraphs (b)(2)a., b. and c. of this section.
(3) In
the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 or § 267 of this title is
not owned by the parent immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.
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(4) In
the event of an amendment to a corporation’s certificate of incorporation contemplated by § 363(a) of this title, appraisal rights
shall be available as contemplated by § 363(b) of this title, and the procedures of this section, including those set forth in subsections (d) and (e) of this section,
shall apply as nearly as practicable, with the word amendment substituted for the words merger or consolidation, and the word
corporation substituted for
the words constituent corporation and/or surviving or resulting corporation.
(c) Any
corporation may provide in its certificate of incorporation that appraisal rights under this section shall be available for the shares of any class or series of its
stock as a result of an amendment to its certificate of incorporation, any merger or consolidation in which the corporation is a constituent corporation or the sale of all or substantially all of the
assets of the corporation. If the certificate of incorporation contains such a provision, the provisions of this section, including those set forth in subsections (d), (e), and (g) of
this section, shall apply as nearly as is practicable.
(d) Appraisal
rights shall be perfected as follows:
(1) If
a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for notice of such meeting (or such members who received notice in
accordance with § 255(c) of this title) with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) of this section that
appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a
nonstock corporation, a copy of § 114 of this title. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
(2) If
the merger or consolidation was approved pursuant to § 228, § 251(h), § 253, or § 267 of
this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each
of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section and, if 1 of the constituent corporations is a
nonstock corporation, a copy of § 114 of this title. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice or, in the case of a
merger approved pursuant to § 251(h) of this title, within the later of the consummation of the offer contemplated by § 251(h) of this title and 20 days
after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or
series of stock of such constituent
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corporation
that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such
holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice or, in the case
of a merger approved pursuant to § 251(h) of this title, later than the later of the consummation of the offer contemplated by § 251(h) of this title and
20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such
holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either
notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given; provided, that, if the notice is given on or
after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which the notice is given.
(e) Within
120 days after the effective date of the merger or consolidation, the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) of this section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal proceeding by filing a petition in the Court of Chancery
demanding a determination of the value of the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after the effective date of the merger or consolidation,
any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw such stockholder’s demand for appraisal and
to accept the terms offered upon the merger or consolidation.
Within
120 days after the effective date of the merger or consolidation, any stockholder who has complied with the requirements of subsections (a) and (d) of this
section hereof, upon written request, shall be entitled to receive from the corporation surviving the merger or resulting from the consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation (or, in the case of a merger approved pursuant to § 251(h) of this title, the aggregate number of shares (other than any
excluded stock (as
defined in § 251(h)(6)d. of this title)) that were the subject of, and were not tendered into, and accepted for purchase or exchange in, the offer referred to in
§ 251(h)(2)), and, in either case, with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. Such written statement shall be
mailed to the stockholder within 10 days after such stockholder’s written request for such a statement is received by the surviving or resulting corporation or within
10 days after expiration of the period for delivery of demands for appraisal under subsection (d) of this section hereof, whichever is later. Notwithstanding subsection (a) of
this section, a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name,
file a petition or request from the corporation the statement described in this subsection.
(f) Upon
the filing of any such petition by a stockholder, service of a copy thereof shall be made upon the surviving or resulting corporation, which shall within
20 days after such service file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all stockholders who have
demanded payment for their shares and with whom agreements as to the value of their shares have not been reached by the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so ordered by the Court, shall give notice of the time and place fixed
for the hearing of such petition by registered or certified mail to the surviving or resulting corporation and to the stockholders shown on the list at the addresses therein stated. Such notice shall
also be given by 1 or more publications at least 1 week before the day of the hearing, in a newspaper of general
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circulation
published in the City of Wilmington, Delaware or such publication as the Court deems advisable. The forms of the notices by mail and by publication shall be approved by the Court, and the
costs thereof shall be borne by the surviving or resulting corporation.
(g) At
the hearing on such petition, the Court shall determine the stockholders who have complied with this section and who have become entitled to appraisal rights. The
Court may require the stockholders who have demanded an appraisal for their shares and who hold stock represented by certificates to submit their certificates of stock to the Register in Chancery for
notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such direction, the Court may dismiss the proceedings as to such stockholder. If immediately
before the merger or consolidation the shares of the class or series of stock of the constituent corporation as to which appraisal rights are available were listed on a national securities exchange,
the Court shall dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares entitled to appraisal exceeds 1% of
the outstanding shares of the class or series eligible for appraisal, (2) the value of the consideration provided in the merger or consolidation for such total number of shares exceeds
$1 million, or (3) the merger was approved pursuant to § 253 or § 267 of this title.
(h) After
the Court determines the stockholders entitled to an appraisal, the appraisal proceeding shall be conducted in accordance with the rules of the Court of Chancery,
including any rules specifically governing appraisal proceedings. Through such proceeding the Court shall determine the fair value of the shares exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court
shall take into account all relevant factors. Unless the Court in its discretion determines otherwise for good cause shown, and except as provided in this subsection, interest from the effective date
of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time
to time during the period between the effective date of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving corporation may
pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the
amount so paid and the fair value of the shares as determined by the Court, and (2) interest theretofore accrued, unless paid at that time. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the
stockholders entitled to an appraisal. Any stockholder whose name appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of this section and who has
submitted such stockholder’s certificates of stock to the Register in Chancery, if such is required, may participate fully in all proceedings until it is finally determined that such
stockholder is not entitled to appraisal rights under this section.
(i) The
Court shall direct the payment of the fair value of the shares, together with interest, if any, by the surviving or resulting corporation to the stockholders
entitled thereto. Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock forthwith, and the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock. The Court’s decree may be enforced as other decrees in the Court of Chancery may be enforced, whether such
surviving or resulting corporation be a corporation of this State or of any state.
(j) The
costs of the proceeding may be determined by the Court and taxed upon the parties as the Court deems equitable in the circumstances. Upon application of a
stockholder, the Court may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable
attorney’s fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
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(k) From
and after the effective date of the merger or consolidation, no stockholder who has demanded appraisal rights as provided in subsection (d) of this section
shall be entitled to vote such stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record
at a date which is prior to the effective date of the merger or consolidation); provided, however, that if no petition for an appraisal shall be filed within the time provided in subsection (e)
of this section, or if such stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of
the merger or consolidation, either within 60 days after the effective date of the merger or consolidation as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed as to
any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however, that this provision shall not affect the right of
any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms
offered upon the merger or consolidation within 60 days after the effective date of the merger or consolidation, as set forth in subsection (e) of this section.
(l) The
shares of the surviving or resulting corporation to which the shares of such objecting stockholders would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued shares of the surviving or resulting corporation.
D-5
PRELIMINARY PROXY CARD DATED MAY 10, 2019 SUBJECT TO COMPLETION the special meeting date. Have your proxy card in hand when you access If you would like to reduce the costs incurred by our company in mailing using the Internet and, when prompted, indicate that you agree to receive VOTE BY PHONE - 1-800-690-6903 your proxy card in hand when you call and then follow the instructions. 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLANK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR proposals 1, 2 and 3. For Against Abstain For AgainstAbstain 1To adopt the Agreement and Plan of Merger (the merger agreement), dated as of April 14, 2019, by and among Advanced Disposal Services, Inc. (Advanced Disposal), Waste Management, Inc. and Everglades Merger Sub Inc. (Merger Sub) pursuant to which Merger Sub will merge with and into Advanced Disposal. 3 To approve one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the proposal to adopt the merger agreement. 2 To approve, on a non-binding advisory basis, specified compensation that may be paid or become payable to Advanced Disposal's named executive officers in connection with the merger and contemplated by the merger agreement. NOTE: Such other business as may properly come before the special meeting or any adjournment thereof. Investor Address Line 2 Investor Address Line 4 1234 ANYWHERE STREET 02 0000000000 For address change/comments, mark here.YesNo (see reverse for instructions) Please indicate if you plan to attend this meeting Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. Investor Address Line 1 Investor Address Line 3 Investor Address Line 5 John Sample ANY CITY, ON A1A 1A1 SHARES CUSIP # SEQUENCE # Signature [PLEASE SIGN WITHIN BOX]Date JOB # Signature (Joint Owners)Date ___ ___ ___ ___ ___ ___ VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the website and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote or access proxy materials electronically in future years. Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the special meeting date. Have VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPANY NAME INC. - 401 K CONTROL # SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 PAGE1 OF2 0000000000000000 ADVANCED DISPOSAL SERVICES, INC. 90 FORT WADE ROAD PONTE VEDRA, FL 32081 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 1OF2 1 1
Important Notice Regarding the Availability of Proxy Materials for the Special Meeting: The Notice & Proxy Statement is/are available at www.proxyvote.com ADVANCED DISPOSAL SERVICES, INC. Special Meeting of Stockholders [ ] Eastern Time This proxy is solicited by the Board of Directors The undersigned stockholder(s) of Advanced Disposal Services, Inc., a Delaware corporation, hereby acknowledge(s) receipt of the Proxy Statement dated [ ], and hereby appoint(s) Richard Burke and Michael K. Slattery, and each of them, proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the Special Meeting of Stockholders of Advanced Disposal Services, Inc., which will be held at [ ] Eastern Time on [ ] at and at any adjournment(s) thereof, and to vote all shares of Advanced Disposal common stock which the undersigned would be entitled to vote if then and there personally present, on all matters set forth on the reverse side. The undersigned hereby acknowledges receipt of the Notice of Special Meeting of Stockholders and of the accompanying proxy statement which is hereby incorporated by reference, and revokes any proxy heretofore given with respect to such meeting. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. The proxies are also authorized to vote upon all matters as may properly come before the meeting, or any postponement or adjournment thereof, utilizing their own discretion. Address change / comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side
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