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Delaware | 4953 | 65-0716904 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Jonathan L. Awner, Esq. Stephen K. Roddenberry, Esq. Michael T. Francis, Esq. Akerman Senterfitt One Southeast Third Avenue, 25thFloor Miami, Florida 33131 (305) 374-5600 | Timothy R. Donovan, Esq. Allied Waste Industries, Inc. Executive Vice President, General Counsel and Corporate Secretary 18500 North Allied Way Phoenix, Arizona 85054 (480) 627-2700 | Jodi A. Simala, Esq. David A. Schuette, Esq. Mayer Brown LLP 71 S. Wacker Drive Chicago, Illinois 60606 (312) 782-0600 |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
Title of Each Class | Amount to be | Proposed Maximum | Proposed Maximum | Amount of | ||||||||
of Securities to be Registered | Registered(1) | Offering Price per Unit | Aggregate Offering Price(2) | Registration Fee(2) | ||||||||
Common Stock, par value $.01 per share | 208,983,554 | $33.21 | $6,940,343,832 | $272,756 | ||||||||
(1) | Represents the number of shares of common stock, with par value $.01 per share, of Republic Services, Inc. estimated to be issued in connection with the merger, based on the exchange ratio of .45 shares of Republic common stock for each share of common stock, par value $.01 per share, of Allied Waste Industries, Inc. (based on 433,284,868 shares of Allied common stock outstanding on July 29, 2008, 19,865,082 shares of Allied common stock issuable pursuant to Allied options and other equity-based awards and 11,257,948 shares of Allied common stock issuable upon the conversion of convertible debentures of Allied outstanding on July 29, 2008). | |
(2) | Estimated solely for the purpose of calculating the amount of the registration fee required by Section 6(b) of the Securities Act of 1933, as amended, and calculated pursuant to Rules 457(f)(1) and 457(c) under the Securities Act, the proposed maximum aggregate offering price of the registrant’s common stock was calculated based upon the market value of shares of Allied common stock (the securities to be cancelled in the merger) in accordance with Rule 457(c) under the Securities Act as follows: the product of (a) $11.54, the average of the high and low prices per share of Allied common stock on July 29, 2008 as quoted on the New York Stock Exchange, multiplied by (b) 464,407,898, the sum of the aggregate number of shares of Allied common stock outstanding as of July 29, 2008 and the aggregate number of shares of Allied common stock issuable pursuant to Allied options, other equity-based awards and convertible debentures. |
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The information in this preliminary joint proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary joint proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
James E. O’Connor | John J. Zillmer | |
Chairman of the Board of Directors and Chief Executive Officer, | Chairman of the Board of Directors and Chief Executive Officer, | |
Republic Services, Inc. | Allied Waste Industries, Inc. |
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if you are a Republic stockholder: | if you are an Allied stockholder: | |||||
Electronic: | www.republicservices.com | Electronic: | www.alliedwaste.com | |||
(please see “Contact Us” page in the Investor Relations portion of the site) | (please see “Information Request” page in the Investor Relations portion of the site) | |||||
By Mail: | Republic Services, Inc. | By Mail: | Allied Waste Industries, Inc. | |||
110 S.E. 6th Street, 28th Floor | 18500 North Allied Way | |||||
Fort Lauderdale, FL 33301 | Phoenix, AZ 85054 | |||||
Attention: Investor Relations | Attention: Investor Relations | |||||
E-mail Address: investorrelations@repsrv.com | E-mail Address: investor.relations@awin.com | |||||
By Telephone: | (954) 769-2400 | By Telephone: | (480) 627-2700 |
• | Through the Internet, by visiting the website established for that purpose at[ ]and following the instructions; | |
• | By telephone, by calling the toll-free number [( )] in the United States, Canada or Puerto Rico on a touch-tone phone and following the recorded instructions; or | |
• | By mail, by marking, signing, and dating the enclosed proxy card and returning it in the postage-paid envelope provided or returning it pursuant to the instructions set out in the proxy card. |
• | Through the Internet, by visiting the website established for that purpose at[ ]and following the instructions; | |
• | By telephone, by calling the toll-free number [( )] in the United States, Canada or Puerto Rico on a touch-tone phone and following the recorded instructions; or | |
• | By mail, by marking, signing, and dating the enclosed proxy card and returning it in the postage-paid envelope provided or returning it pursuant to the instructions provided in the proxy card. |
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To Be Held On [ ], 2008
• | a proposal to approve the issuance of shares of Republic common stock and other securities convertible into or exercisable for shares of Republic common stock, which we refer to as the Republic share issuance, in connection with the transactions contemplated by the Agreement and Plan of Merger, dated as of June 22, 2008, as amended July 31, 2008, among Republic, RS Merger Wedge, Inc., a wholly owned subsidiary of Republic formed for the purpose of the merger, and Allied Waste Industries, Inc.; and | |
• | a proposal to approve an adjournment of the Republic special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
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• | a proposal to adopt the Agreement and Plan of Merger, dated as of June 22, 2008, as amended July 31, 2008, among Republic Services, Inc., RS Merger Wedge, Inc., a wholly owned subsidiary of Republic formed for the purpose of the merger, and Allied Waste Industries, Inc., a copy of which is attached as Annex A to the joint proxy statement/prospectus, pursuant to which Allied will become a wholly owned subsidiary of Republic; and | |
• | a proposal to approve an adjournment of the Allied special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
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EX-23.1 Consent of Ernst & Young LLP | ||||||||
EX-23.2 Consent of PricewaterhouseCoopers LLP |
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Q: | What will happen in the transaction? | |
A: | Republic and Allied are proposing to combine the two companies in a merger transaction. In the merger, a wholly owned subsidiary of Republic that was formed for the purpose of the merger will be merged with and into Allied, with Allied surviving the merger and becoming a wholly owned subsidiary of Republic. Immediately following the merger, Republic will continue to be named “Republic Services, Inc.” and will be the parent company of Allied. Allied stockholders will have their shares of Allied common stock converted into the right to receive newly issued shares of common stock of Republic, and Republic stockholders will retain their existing shares of Republic common stock. Republic and Allied expect that the shares of Republic common stock issued in connection with the merger in respect of outstanding Allied common stock will represent approximately 51.7% of the outstanding common stock of the combined company immediately after the merger on a diluted basis. Shares of Republic common stock held by Republic stockholders immediately prior to the merger will represent approximately 48.3% of the outstanding common stock of the combined company immediately after the merger on a diluted basis. | |
Q: | What will I receive in the merger? | |
A: | Republic Stockholders. Each share of Republic common stock held by Republic stockholders immediately before the merger will continue to represent one share of common stock of the combined company after the effective time of the merger. Republic stockholders will receive no consideration in the merger. | |
Allied Stockholders. For each share of Allied common stock held, Allied stockholders will have the right to receive .45 shares of Republic common stock. At the effective time of the merger, each share of Allied common stock will be cancelled and converted automatically into the right to receive .45 shares of Republic common stock. Allied stockholders will be entitled to receive cash for any fractional shares of Republic common stock that they would otherwise have received pursuant to the merger. The amount of cash for each fractional share will be calculated by multiplying the fraction of a share of Republic common stock to which the Allied stockholder would have been entitled to receive pursuant to the merger (after aggregating all shares held) by the closing sale price of a share of Republic common stock on the first trading day immediately following the effective time of the merger. | ||
Q: | What will be the corporate governance structure of the combined company? | |
A: | Commencing on the effective time of the merger and continuing until the close of business on the day immediately prior to the third annual meeting of Republic stockholders held after the effective time, the Republic board of directors will consist of eleven members, including (1) Republic’s Chief Executive Officer and Chairman of the Board, who at the effective time will continue to be Mr. James E. O’Connor, (2) five directors who are either current independent members of the Republic board of directors or individuals nominated by such independent members, and (3) five directors who are either current independent members of the Allied board of directors or individuals nominated by such independent members. The continuing Republic directors will hold a majority on each of the audit, compensation and nomination and corporate governance committees of the combined company and the current Republic chairman on each of the committees will initially continue in that role in the combined company. | |
The corporate governance structure will be accomplished through amendments to the Republic bylaws. Those amendments are further discussed in “The Merger Agreement — New Republic Governance Structure After the Merger” beginning on page 100. | ||
Q: | When and where are the Republic and Allied special meetings? | |
A: | Republic Special Meeting. A special meeting of Republic stockholders, which is referred to as the Republic special meeting, will be held on[ ], 2008 at[ ] a.m., Eastern time, at[ ], to consider and vote on the proposals related to the merger. |
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Allied Special Meeting. A special meeting of Allied stockholders, which is referred to as the Allied special meeting, will be held on[ ], 2008 at[ ] a.m., Mountain time, at[ ]to consider and vote on the proposals related to the merger. | ||
Q: | What are the quorum requirements for the Republic and Allied special meetings? | |
A: | Under Delaware law and the Republic and Allied bylaws, a quorum of each companies’ stockholders at their respective special meeting is necessary to transact business. The presence of holders representing a majority of the votes of all outstanding common stock entitled to vote at each special meeting will constitute a quorum for the transaction of business at each special meeting. | |
Q: | Why is my vote important? | |
A: | In order to complete the merger, Republic stockholders must approve of the Republic share issuance and Allied stockholders must vote to adopt the merger agreement. | |
Q: | What votes of Republic stockholders are required to complete the merger? | |
A: | In order to complete the merger, Republic stockholders must approve the issuance of Republic common stock and other securities convertible into or exercisable for shares of Republic common stock in connection with the merger, which is referred to as the Republic share issuance, under each of (1) the rules of the NYSE and (2) the Republic bylaws, as follows: | |
(1) under the NYSE rules, the Republic share issuance requires the affirmative vote of holders of shares of Republic common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal represents a majority of the total number of shares of Republic common stock issued and outstanding on the record date for the Republic special meeting; and | ||
(2) under the Republic bylaws, the Republic share issuance requires the affirmative vote of holders of shares of Republic common stock representing a majority of the total number of shares of Republic common stock present, in person or by proxy at the special meeting, and entitled to vote on the proposal. | ||
These approvals, together, are referred to as the Republic stockholder approval. | ||
If you are a Republic stockholder, any of your shares as to which you abstain will have the same effect as a vote “AGAINST” the Republic share issuance. Under the NYSE rules, any of your shares that are not voted on the Republic share issuance will not be counted to determine if holders representing a majority of the issued and outstanding shares of Republic common stock have cast a vote on that proposal, making the requirement that votes cast represent a majority of the total issued and outstanding shares of Republic common stock more difficult to meet. | ||
The Republic board of directors recommends that Republic stockholders vote “FOR” the Republic share issuance in connection with the merger. | ||
Q: | What votes of Allied stockholders are required to complete the merger? | |
A: | Allied stockholders are being asked to adopt the merger agreement, which requires the approval of holders of a majority of the total number of shares of Allied common stock issued and outstanding on the record date for the Allied special meeting, which is referred to as the Allied stockholder approval. | |
If you are an Allied stockholder, any of your shares as to which you abstain or which are not voted will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement. | ||
The Allied board of directors recommends that Allied stockholders vote “FOR” the adoption of the merger agreement. | ||
Q: | What do I do if I want to change my vote? |
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A: | You can change your vote at any time before your proxy is voted at your company’s special meeting. You can do this in one of four ways: | |
• you can send a signed notice of revocation of proxy; | ||
• you can grant a new, valid proxy bearing a later date; | ||
• you can submit a proxy again by telephone or through the Internet; or | ||
• if you are a holder of record, you can attend the applicable special meeting and vote in person, but your attendance alone will not revoke any proxy that you have previously given. | ||
If you choose either of the first two methods, you must send your notice of revocation or your new proxy to your company’s Corporate Secretary at the address under “The Companies” beginning on page 97 so that it is received no later than the beginning of the applicable special meeting. If you are a Republic stockholder, you can find further details on how to revoke your proxy in “The Republic Special Meeting — Revocation of Proxies” beginning on page 117. If you are an Allied stockholder, you can find further details on how to revoke your proxy in “The Allied Special Meeting — Revocation of Proxies” beginning on page 121. | ||
Q: | If my shares are held in “street name” by my broker, will my broker vote my shares for me? | |
A: | No. Your broker is not permitted to decide how your shares should be voted on either the Republic proposal or the Allied proposal necessary to approve the merger. Your broker will only vote your shares on a proposal if you provide your broker with voting instructions on that proposal. You should instruct your broker to vote your shares by following the directions that your broker provides you. Please review the voting information form used by your broker to see if you can submit your voting instructions by telephone or Internet. | |
A broker non-vote occurs when a beneficial owner fails to provide voting instructions to his or her broker as to how to vote the shares held by the broker in street name and the broker does not have discretionary authority to vote without instructions. See “The Republic Special Meeting” beginning on page 115 and “The Allied Special Meeting” beginning on page 119. | ||
Q: | What if I fail to instruct my broker with respect to those items that are necessary to consummate the merger? | |
A: | If you are a Republic stockholder, | |
• under the NYSE rules, a broker non-vote will not be considered a vote cast on the Republic share issuance and will not be counted to determine if holders of a majority of the issued and outstanding shares of Republic common stock have cast a vote on the Republic share issuance, making it more difficult to achieve the necessary number of votes cast on that proposal; and | ||
• under the Republic bylaws, a broker non-vote will have no effect on the proposal to approve the Republic share issuance. | ||
If you are an Allied stockholder, | ||
• a broker non-vote will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement, but will be counted towards a quorum at the Allied special meeting. | ||
For additional information, see “The Republic Special Meeting — Votes Required to Approve Republic Proposals” beginning on page 116 if you are a Republic stockholder, and “The Allied Special Meeting — Votes Required to Approve Allied Proposals” beginning on page 120 if you are an Allied stockholder. | ||
Q: | What do I do now? | |
A: | Carefully read and consider the information contained in and incorporated by reference into this joint proxy statement/prospectus, including its annexes. |
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In order for your shares to be represented at your company’s special meeting: | ||
• you can submit a proxy by telephone or through the Internet by following the instructions included on your proxy card; | ||
• you can indicate on the enclosed proxy card how you would like to vote and sign and return the proxy card in the accompanying pre-addressed postage paid envelope; or | ||
• you can attend your company’s special meeting in person and vote at the meeting. | ||
Q: | Should I send in my stock certificates now? | |
A: | No. Allied stockholders should not send in their stock certificates at this time. Promptly after the effective time, Republic or Republic’s exchange agent will send former Allied stockholders a letter of transmittal and instructions explaining what they must do to exchange their Allied stock certificates or transfer uncertificated shares for the merger consideration payable to them. | |
Republic stockholders will retain their current stock certificates after the merger and should not send in their stock certificates. | ||
Q: | Can I require an appraisal of my shares? | |
A: | No. Under Delaware law, Republic and Allied stockholders have no right to an appraisal of the fair value of their shares in connection with the merger. | |
Q: | Are there risks involved in undertaking the merger? | |
A: | Yes. In evaluating the merger, Republic and Allied stockholders should carefully consider the factors discussed in “Risk Factors” beginning on page 30 and other information about Republic and Allied included in the documents incorporated by reference into this joint proxy statement/prospectus. | |
Q: | When do you expect to complete the merger? | |
A: | Republic and Allied are working to complete the merger as quickly as practicable. However, Republic and Allied cannot assure you when or if the merger will be completed. Completion of the merger is subject to satisfaction or waiver of the conditions specified in the merger agreement, including receipt of the necessary approvals of Republic’s and Allied’s stockholders at their respective special meetings and any necessary regulatory approvals. It is possible that factors outside the control of both companies could result in the merger being completed later than expected. Although the exact timing of the completion of the merger cannot be predicted with certainty, Republic and Allied anticipate completing the merger by the end of the fourth quarter of 2008. If the merger is not completed on or before May 15, 2009, the merger agreement may be terminated by Republic or Allied, unless Republic and Allied mutually agree to extend the term. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 111. | |
Q: | What happens if the Allied board of directors has changed its recommendation regarding the merger with Republic prior to the Allied special meeting? | |
A: | If the Allied board of directors changes its recommendation regarding the merger, Republic has the right to (i) terminate the merger agreement, in which case the special meeting will not be held, or (ii) exercise its option to require the Allied special meeting to be held, in which case the Allied stockholders will be asked to vote on the merger with Republic notwithstanding the change in recommendation by the Allied board of directors. | |
Q: | What happens if the Republic board of directors has changed its recommendation regarding the proposal to approve the share issuance in connection with the merger prior to the Republic special meeting? | |
A: | If the Republic board of directors changes its recommendation on the proposal, Allied has the right to (i) terminate the merger agreement, in which case the special meeting will not be held, or (ii) exercise its option to require the Republic special meeting to be held, in which case the Republic stockholders |
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will be asked to vote on the Republic share issuance notwithstanding the change in recommendation by the Republic board of directors. | ||
Q: | Whom should I call with questions? | |
A: | Republic Stockholders. If you have additional questions about the merger, you should contact: | |
Republic Services, Inc. 110 S.E. 6th Street, 28th Floor Fort Lauderdale, Florida 33301 Attention: Investor Relations Phone Number:(954) 769-2400 E-mail Address: investorrelations@repsrv.com | ||
If you would like additional copies of this joint proxy statement/prospectus, or if you have questions about the merger or need assistance voting your shares, you should contact: | ||
Mackenzie Partners, Inc. 105 Madison Avenue, 14th Floor New York, New York 10016 Phone Number: 800-322-2885 | ||
Allied Stockholders. If you have additional questions about the merger, you should contact: | ||
Allied Waste Industries, Inc. 18500 North Allied Way Phoenix, Arizona 85054 Attention: Investor Relations Phone Number:480-627-2700 E-mail Address: investor.relations@awin.com | ||
If you would like additional copies of this joint proxy statement/prospectus, have questions about the merger or need assistance voting your shares, you should contact: | ||
Georgeson 199 Water Street, 26th Floor New York, New York 10038 Phone Number: (888) 549-6627 |
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Republic | Allied | Implied | ||||||||||
Common | Common | Value of Allied | ||||||||||
Stock | Stock | Common Stock | ||||||||||
June 12, 2008 | $ | 33.66 | $ | 13.92 | $ | 15.15 | ||||||
June 20, 2008 | $ | 31.19 | $ | 13.56 | $ | 14.04 | ||||||
[ ], 2008 | $ | $ | $ |
• | “FOR”the Republic share issuance in connection with the merger; and | |
• | “FOR”the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
• | “FOR”the adoption of the merger agreement; and | |
• | “FOR”the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
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• | the Republic board of directors must have a “Continuing Republic Committee,” consisting solely of five Continuing Republic Directors, defined as directors who are either (1) members of the Republic board of directors prior to the effective time of the merger, determined by the Republic board of directors to be “independent” of Republic under the rules of the NYSE and designated by Republic to be members of the Republic board of directors as of the effective time of the merger, or (2) subsequently nominated or appointed to be a member of the Republic board of directors by the Continuing Republic Committee; | |
• | the Republic board of directors must have a “Continuing Allied Committee,” consisting solely of five Continuing Allied Directors, defined as directors who are either (1) members of the Allied board of directors prior to the effective time of the merger, determined by the Allied board of directors to be “independent” of Allied and Republic under the rules of NYSE and designated by Allied to be members of the Republic board of directors as of the effective time of the merger, or (2) subsequently nominated or appointed to be a member of the Republic board of directors by the Continuing Allied Committee; | |
• | the Republic board of directors must be comprised of eleven members, consisting of (1) the Chief Executive Officer of Republic, (2) five Continuing Allied Directors, and (3) five Continuing Republic Directors, provided that, notwithstanding the foregoing, after the Initial Continuation Period, the size of the Republic board of directors may be increased by the affirmative vote of a majority of the board of directors; | |
• | at each meeting of the Republic stockholders during the Continuation Period at which directors are to be elected, (1) the Continuing Republic Committee shall have the exclusive authority on behalf of Republic to nominate as directors of the Republic board of directors, a number of persons for election equal to the number of Continuing Republic Directors to be elected at such meeting, and (2) the Continuing Allied Committee shall have the exclusive authority on behalf of Republic to nominate as directors of the Republic board of directors, a number of persons for election equal to the number of Continuing Allied Directors to be elected at such meeting; and |
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• | all directors nominated or appointed by the Continuing Republic Committee or the Continuing Allied Committee, as the case may be, must be “independent” of Republic for purposes of the rules of the NYSE, as determined by a majority of the persons making the nomination or appointment. |
• | In addition, during the period commencing on the effective time of the merger and continuing until the close of business on the day immediately prior to the second annual meeting of Republic stockholders held after the effective time, referred to as the Initial Continuation Period, (1) if any Continuing Republic Director is removed from the Republic board of directors, becomes disqualified, resigns, retires, dies or otherwise cannot or will not continue to serve as a member of the Republic board of directors, such vacancy may only be filled by the Continuing Republic Committee, and (2) if any Continuing Allied Director is removed from the Republic board of directors, becomes disqualified, resigns, retires, dies or otherwise cannot or will not continue to serve as a member of the Republic board of directors, such vacancy may only be filled by the Continuing Allied Committee. |
• | during the Continuation Period, each committee of the Republic board of directors must be comprised of five members, consisting of three Continuing Republic Directors and two Continuing Allied Directors; | |
• | the initial chairman of the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee of the Republic board of directors as of the effective time of the merger will be, in each case, the Continuing Republic Director who was the chairman of such committee immediately prior to the effective time of the merger; and | |
• | each Continuing Republic Director and Continuing Allied Director serving on the Audit Committee, the Nominating and Corporate Governance Committee or the Compensation Committee of the Republic board of directors must qualify as “independent” under the rules of the NYSE and, as applicable, the rules of the SEC. |
• | receipt of the Republic stockholder approval and Allied stockholder approval, in each case in accordance with Delaware law; |
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• | the expiration or termination of the waiting period (and any extension thereof) applicable to the merger under the HSR Act; | |
• | the absence of any law, temporary restraining order or preliminary or permanent injunction or other order making the merger illegal or otherwise prohibiting the consummation of the merger (collectively, “restraints”); | |
• | the approval for listing on the NYSE, subject to official notice of issuance, of the shares of Republic common stock issuable in connection with the merger; and | |
• | the effectiveness of, and the absence of any stop order with respect to, the registration statement onForm S-4 of which this joint proxy statement/prospectus forms a part. |
• | (x) certain representations and warranties made by the other party or parties in the merger agreement regarding capitalization, authority, broker fees, the opinion of the financial advisor, takeover laws, rights plans, ownership of stock, interests in competitors, insurance and RS Merger Wedge Inc.’s operations, being true and correct in all material respects on the date of the merger agreement and as of the closing date (or, if applicable, an earlier specified date) and (y) the other representations and warranties made by the other party or parties in the merger agreement being true and correct (without giving effect to any materiality or material adverse effect qualifications and words of similar import) on the date of the merger agreement and as of the closing date (or, if applicable, an earlier specified date), except in each case where the failure of any such representations and warranties to be true and correct would not, individually or in the aggregate, have or reasonably be expected to have a material adverse effect on the party making the representation or warranty (and provided that two representations and warranties made by Allied in respect of its indebtedness must be true and correct on the closing date without any materiality qualification); | |
• | the performance by the other party or parties in all material respects of the covenants required to be performed by it or them at or before the effective time of the merger; | |
• | receipt by each of Republic and Allied of an officer’s certificate of the other party on the closing date stating that the closing conditions with respect to such other party’s representations and warranties and covenants have been satisfied; and | |
• | receipt by each party of an opinion of its own counsel that the merger will qualify as a tax-free reorganization. |
• | receipt by Republic of written confirmation from the applicable credit ratings agency that, upon the consummation of the merger, the consolidated senior unsecured debt of Republic (including Allied or any Allied subsidiary to the extent an issuer under certain indentures, and after giving effect to any parent or other guarantees required by such agency) will be rated either (i) BBB- or better by Standard & Poor’s and Ba1 or better by Moody’s, or (ii) Baa3 or better by Moody’s and BB+ or better by Standard & Poor’s. Each of Republic and Allied has committed to use its best efforts to ensure that this closing condition is satisfied. |
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• | the merger has not been completed on or before May 15, 2009 (the “outside date”), except that the right to terminate the merger agreement under this provision will not be available to any party whose breach or failure to fulfill any obligation of the merger agreement has been a principal cause of or resulted in the failure of the merger to occur on or before the outside date; | |
• | any restraint having the effect of making the merger illegal or otherwise prohibiting the completion of the merger becomes final and nonappealable; provided, however that the party electing to terminate pursuant to this provision will have used its reasonable best efforts to oppose any such restraint or to have such restraint vacated or made inapplicable to the merger; or | |
• | the Allied stockholders or Republic stockholders fail to give the necessary approvals at their special meetings or any adjournments or postponements thereof. |
• | prior to the Allied stockholder approval, the Allied board of directors changes its recommendation to the Allied stockholders that they adopt the merger agreement unless, within ten business days, Republic requires the Allied board of directors to nevertheless submit such adoption to the Allied stockholders for approval despite such change in recommendation; | |
• | Allied has breached any of its representations or warranties or failed to perform in any material respect any of its covenants or agreements set forth in the merger agreement, and such breach or failure to perform (i) would prevent Allied from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warrantiesand/or compliance with covenants, and (ii) cannot be cured by the outside date or, if capable of being cured by that date, is not cured within 30 calendar days’ written notice to Allied; or | |
• | prior to the Republic stockholder approval, the Republic board of directors changes its recommendation to the Republic stockholders that they approve the Republic share issuance and, within ten business days, Allied does not require the Republic board of directors to nevertheless submit the Republic share issuance to the Republic stockholders for approval despite such change in recommendation. |
• | prior to the Republic stockholder approval, the Republic board of directors changes its recommendation to the Republic stockholders that they approve the Republic share issuance unless, within ten business days, Allied requires the Republic board of directors to nevertheless submit the Republic share issuance to the Republic stockholders for approval despite such change in recommendation; | |
• | Republic has breached any of its representations or warranties or failed to perform in any material respect any of its covenants or agreements set forth in the merger agreement, and such breach or failure to perform (i) would prevent Republic from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warrantiesand/or compliance with covenants, and (ii) cannot be cured by the outside date or, if capable of being cured by that date, is not cured within 30 calendar days’ written notice to Republic; or | |
• | prior to the Allied stockholder approval, the Allied board of directors changes its recommendation to the Allied stockholders that they adopt the merger agreement and, within ten business days, Republic does not require the Allied board of directors to nevertheless submit such adoption to the Allied stockholders for approval despite such change in recommendation. |
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• | if the merger agreement is terminated by Republic or Allied following the failure by Republic to obtain the Republic stockholder approval, and (1) prior to such termination, an acquisition proposal with respect to Republic has been publicly announced or made known to the Republic board of directors and (2) within 12 months of such termination, Republic enters into a binding agreement to effect an acquisition proposal or consummates an acquisition proposal; or | |
• | if the merger agreement is terminated by Republic or Allied following a change in the Republic recommendation, but only if (1) Allied does not require the Republic board of directors to nevertheless submit the Republic share issuance to the Republic stockholders for approval despite such change in Republic recommendation or (2) Allied is otherwise entitled to the payment of a termination fee and expenses under the circumstances described in the immediately preceding clause. |
• | if the merger agreement is terminated by Republic or Allied following the failure by Allied to obtain the Allied stockholder approval, and (1) prior to such termination, an acquisition proposal with respect to Allied has been publicly announced or made known to the Allied board of directors and (2) within 12 months of such termination, Allied enters into a binding agreement to effect an acquisition proposal or consummates an acquisition proposal; or | |
• | if the merger agreement is terminated by Republic or Allied following a change in the Allied recommendation, but only if (1) Republic does not require the Allied board of directors to nevertheless submit such adoption to the Allied stockholders for approval despite such change in Allied recommendation or (2) Republic is otherwise entitled to the payment of a termination fee and expenses under the circumstances described in the immediately preceding clause. |
Name | Title | |
James E. O’Connor | Chief Executive Officer and Chairman of the Board | |
Donald W. Slager | Chief Operating Officer and President | |
Tod C. Holmes | Executive Vice President and Chief Financial Officer | |
Michael J. Cordesman | Executive Vice President | |
Timothy R. Donovan | Executive Vice President, General Counsel and Secretary |
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• | approve the issuance of shares of Republic common stock and other securities in connection with the merger; and | |
• | approve an adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
• | under the NYSE rules, the Republic share issuance requires the affirmative vote of holders of shares of Republic common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal represents a majority of the total number of shares of Republic common stock issued and outstanding on the record date for the Republic special meeting; and | |
• | under the Republic bylaws, the Republic share issuance requires the affirmative vote of holders of shares of Republic common stock representing a majority of the total number of shares of Republic common stock present, in person or by proxy at the special meeting, and entitled to vote on the proposal. |
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• | you can send a signed notice of revocation of proxy; | |
• | you can grant a new, valid proxy bearing a later date; | |
• | you can revoke the proxy in accordance with the telephone or Internet proxy submission procedures described in the proxy voting instructions attached to the proxy card; or | |
• | if you are a holder of record, you can attend the Republic special meeting and vote in person, which will automatically cancel any proxy previously given, but your attendance alone will not revoke any proxy that you have previously given. |
• | adopt the merger agreement, pursuant to which Allied will become a wholly owned subsidiary of Republic; and | |
• | approve an adjournment of the Allied special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
• | the adoption of the merger agreement requires the affirmative vote of holders of shares of Allied common stock representing a majority of the total number of shares of Allied common stock issued and outstanding on the Allied record date; and | |
• | the approval of an adjournment of the Allied special meeting, if necessary, to solicit additional proxies in favor of the adoption of the merger agreement, requires the affirmative vote of holders of shares of Allied common stock representing a majority of the total number of shares of Allied common stock present, in person or by proxy at the Allied special meeting, and entitled to vote on the proposal. |
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• | you can send a signed notice of revocation of proxy; | |
• | you can grant a new, valid proxy bearing a later date; | |
• | you can revoke the proxy in accordance with the telephone or Internet proxy submission procedures described in the proxy voting instructions attached to the proxy card; or | |
• | if you are a holder of record, you can attend the Allied special meeting and vote in person, which will automatically cancel any proxy previously given, but your attendance alone will not revoke any proxy that you have previously given. |
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(in millions, except per share data)
Three Months | ||||||||||||||||||||||||||||
Ended March 31, | Years Ended December 31, | |||||||||||||||||||||||||||
2008 | 2007(1) | 2007(1) | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||||||||
Statement of Income Data: | ||||||||||||||||||||||||||||
Revenue | $ | 779.2 | $ | 765.6 | $ | 3,176.2 | $ | 3,070.6 | $ | 2,863.9 | $ | 2,708.1 | $ | 2,517.8 | ||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Cost of operations | 476.5 | 488.4 | 1,997.3 | 1,924.4 | 1,803.9 | 1,714.4 | 1,605.4 | |||||||||||||||||||||
Depreciation, amortization and depletion | 73.4 | 79.0 | 305.5 | 296.0 | 278.8 | 259.4 | 239.1 | |||||||||||||||||||||
Accretion | 4.4 | 4.1 | 17.1 | 15.7 | 14.5 | 13.7 | 12.7 | |||||||||||||||||||||
Selling, general and administrative | 82.7 | 79.4 | 320.3 | 315.0 | 289.5 | 268.3 | 247.9 | |||||||||||||||||||||
Operating income | 142.2 | 114.7 | 536.0 | 519.5 | 477.2 | 452.3 | 412.7 | |||||||||||||||||||||
Interest expense | (21.4 | ) | (24.0 | ) | (94.8 | ) | (95.8 | ) | (81.0 | ) | (76.7 | ) | (78.0 | ) | ||||||||||||||
Interest income | 2.8 | 3.3 | 12.8 | 15.8 | 11.4 | 6.9 | 9.5 | |||||||||||||||||||||
Other income (expenses), net | .2 | .4 | 14.1 | 4.2 | 1.6 | 1.2 | 3.2 | |||||||||||||||||||||
Income before income taxes | 123.8 | 94.4 | 468.1 | 443.7 | 409.2 | 383.7 | 347.4 | |||||||||||||||||||||
Provision for income taxes | 47.7 | 40.5 | 177.9 | 164.1 | 155.5 | 145.8 | 132.0 | |||||||||||||||||||||
Income before cumulative effect of changes in accounting principles | 76.1 | 53.9 | 290.2 | 279.6 | 253.7 | 237.9 | 215.4 | |||||||||||||||||||||
Cumulative effect of changes in accounting principles | — | — | — | — | — | — | (37.8 | ) | ||||||||||||||||||||
Net income | $ | 76.1 | $ | 53.9 | $ | 290.2 | $ | 279.6 | $ | 253.7 | $ | 237.9 | $ | 177.6 | ||||||||||||||
Basic earnings per share: | ||||||||||||||||||||||||||||
Before cumulative effect of changes in accounting principles | $ | .41 | $ | .28 | $ | 1.53 | $ | 1.41 | $ | 1.23 | $ | 1.10 | $ | .96 | ||||||||||||||
Cumulative effect of changes in accounting principles | — | — | — | — | — | — | (.17 | ) | ||||||||||||||||||||
Basic earnings per share | $ | .41 | $ | .28 | $ | 1.53 | $ | 1.41 | $ | 1.23 | $ | 1.10 | $ | 0.79 | ||||||||||||||
Weighted average common shares outstanding | 183.4 | 193.7 | 190.1 | 198.2 | 207.0 | 217.3 | 224.8 | |||||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||||||
Before cumulative effect of changes in accounting principles | $ | .41 | $ | .28 | $ | 1.51 | $ | 1.39 | $ | 1.20 | $ | 1.08 | $ | .95 | ||||||||||||||
Cumulative effect of changes in accounting principles | — | — | — | — | — | — | (.17 | ) | ||||||||||||||||||||
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Three Months | ||||||||||||||||||||||||||||
Ended March 31, | Years Ended December 31, | |||||||||||||||||||||||||||
2008 | 2007(1) | 2007(1) | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||||||||
Diluted earnings per share | $ | .41 | $ | .28 | $ | 1.51 | $ | 1.39 | $ | 1.20 | $ | 1.08 | $ | .78 | ||||||||||||||
Weighted average common and common equivalent shares outstanding | 185.1 | 195.6 | 192.0 | 200.6 | 210.8 | 221.1 | 227.6 | |||||||||||||||||||||
Cash dividends per common share | $ | .1700 | $ | .1067 | $ | .5534 | $ | .4000 | $ | .3466 | $ | .2400 | $ | .0800 | ||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 50.4 | $ | 20.3 | $ | 21.8 | $ | 29.1 | $ | 131.8 | $ | 141.5 | $ | 119.2 | ||||||||||||||
Restricted cash and marketable securities | 190.0 | 142.0 | 165.0 | 153.3 | 255.3 | 275.7 | 397.4 | |||||||||||||||||||||
Total assets | 4,534.4 | 4,410.6 | 4,467.8 | 4,429.4 | 4,550.5 | 4,464.6 | 4,554.1 | |||||||||||||||||||||
Total debt | 1,695.3 | 1,552.2 | 1,567.8 | 1,547.2 | 1,475.1 | 1,354.3 | 1,520.3 | |||||||||||||||||||||
Total stockholders’ equity | 1,264.0 | 1,400.6 | 1,303.8 | 1,422.1 | 1,605.8 | 1,872.5 | 1,904.5 |
(1) | During the three months ended March 31, 2007, Republic recorded a pre-tax charge of $22 million ($13.5 million, or $.07 per diluted share, net of tax) related to estimated costs believed required to comply with final findings and orders issued by the Ohio Environmental Protection Agency in response to environmental conditions at its Countywide Recycling and Disposal Facility in Ohio. During the three months ended September 30, 2007, Republic agreed to take certain additional remedial actions at Countywide and recorded an additional pre-tax charge of $23.3 million ($14.4 million, or $.08 per diluted share, net of tax). |
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(in millions, except per share data)
Three Months Ended March 31, | Years Ended December 31, | |||||||||||||||||||||||||||
2008 | 2007 | 2007 | 2006 | 2005 | 2004 | 2003(5) | ||||||||||||||||||||||
Statement of Operations Data(1): | ||||||||||||||||||||||||||||
Revenues | $ | 1,484.2 | $ | 1,444.6 | $ | 6,068.7 | $ | 5,908.5 | $ | 5,612.2 | $ | 5,396.5 | $ | 5,264.1 | ||||||||||||||
Cost of operations | 948.1 | 922.8 | 3,787.1 | 3,786.4 | 3,654.6 | 3,428.8 | 3,235.8 | |||||||||||||||||||||
Selling, general and administrative expenses | 144.4 | 160.8 | 631.9 | 587.3 | 510.2 | 544.7 | 471.7 | |||||||||||||||||||||
Depreciation and amortization | 132.8 | 128.4 | 553.5 | 557.7 | 543.6 | 547.1 | 534.1 | |||||||||||||||||||||
Loss (gain) from divestitures and asset impairments(2) | 18.5 | (0.9 | ) | 40.5 | 22.5 | — | — | — | ||||||||||||||||||||
Operating income | 240.4 | 233.5 | 1,055.7 | 954.6 | 903.8 | 875.9 | 1,022.5 | |||||||||||||||||||||
Interest expense and other(3) | 109.7 | 171.1 | 538.4 | 563.4 | 583.1 | 752.5 | 826.1 | |||||||||||||||||||||
Income from continuing operations before income taxes | 130.7 | 62.4 | 517.3 | 391.2 | 320.7 | 123.4 | 196.4 | |||||||||||||||||||||
Income tax expense | 57.6 | 28.2 | 207.1 | 235.3 | 131.1 | 70.6 | 86.6 | |||||||||||||||||||||
Minority interests | 0.5 | (0.1 | ) | 0.4 | 0.1 | (0.2 | ) | (2.7 | ) | 1.9 | ||||||||||||||||||
Income from continuing operations | $ | 72.6 | $ | 34.3 | $ | 309.8 | $ | 155.8 | $ | 189.8 | $ | 55.5 | $ | 107.9 | ||||||||||||||
Basic earnings per share: | ||||||||||||||||||||||||||||
Continuing operations | $ | 0.17 | $ | 0.07 | $ | 0.74 | $ | 0.32 | $ | 0.42 | $ | 0.11 | $ | (2.37 | ) | |||||||||||||
Weighted average common shares | 390.6 | 367.7 | 368.8 | 356.7 | 326.9 | 315.0 | 203.8 | |||||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||||||||||
Continuing operations | $ | 0.17 | $ | 0.07 | $ | 0.71 | $ | 0.32 | $ | 0.42 | $ | 0.11 | $ | (2.37 | ) | |||||||||||||
Weighted average common and common equivalent shares | 444.2 | 370.4 | 443.0 | 359.3 | 330.1 | 319.7 | 203.8 | |||||||||||||||||||||
Balance Sheet Data(1): | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 44.5 | $ | 49.8 | $ | 230.9 | $ | 94.1 | $ | 56.1 | $ | 68.0 | $ | 444.7 | ||||||||||||||
Total assets | 13,799.9 | 13,776.4 | 13,948.7 | 13,811.0 | 13,661.3 | 13,539.2 | 13,860.9 | |||||||||||||||||||||
Total debt | 6,674.5 | 7,006.1 | 6,642.9 | 6,910.6 | 7,091.7 | 7,757.0 | 8,234.1 | |||||||||||||||||||||
Stockholders’ equity(4) | 3,973.7 | 3,641.2 | 3,904.2 | 3,598.9 | 3,439.4 | 2,604.9 | 2,517.7 |
(1) | During 2007, 2004 and 2003, Allied sold or held for sale certain operations that met the criteria for reporting as discontinued operations. The selected financial data for all prior periods has been reclassified to exclude these operations from continuing operations. |
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(2) | Loss (gain) from divestitures and asset impairments includes asset sales completed as a result of Allied’s market rationalization focus and are not included in discontinued operations. The amount of $18.5 million for the three months ended March 31, 2008 includes an asset impairment charge of $17.8 million associated with a landfill in Allied’s Midwest region that until February 2007 was managed by a third party under a partnership agreement. The amount of $40.5 million for the year ended December 31, 2007 includes asset impairments of $27.1 million, of which $24.5 million related to the asset impairment charge for the Midwest region landfill mentioned previously. The amount of $22.5 million for the year ended December 31, 2006 includes $9.7 million of landfill asset impairments resulting from management’s decision to discontinue development and operations of the sites and a $5.2 million charge related to the relocation of Allied’s operations support center. | |
(3) | Includes costs incurred to extinguish debt for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 of $59.6 million, $41.3 million, $62.6 million, $156.2 million and $108.1 million, respectively. | |
(4) | In 2006, Allied recorded an after-tax charge of $57.4 million to stockholders’ equity relating to the adoption of SFAS No. 158,Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R)(SFAS 158). | |
(5) | During December 2003, all of Allied’s Series A Preferred Stock was exchanged for 110.5 million shares of common stock. In connection with the exchange, Allied recorded a reduction to net income available to common shareholders of $496.6 million for the fair value of the incremental shares of common stock issued to the holders of the preferred stock over the amount the holders would have received under the original conversion provisions. |
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FINANCIAL DATA
For the Three Months | For the Year Ended | |||||||
Ended March 31, 2008 | December 31, 2007 | |||||||
(in millions, | (in millions, | |||||||
except per | except per | |||||||
share data) | share data) | |||||||
STATEMENT OF INCOME FROM CONTINUING OPERATIONS DATA: | ||||||||
Revenue | $ | 2,263.4 | $ | 9,244.9 | ||||
Operating income | 365.0 | 1,527.6 | ||||||
Income from continuing operations | 138.8 | 571.0 | ||||||
Income from continuing operations available to common shareholders | 132.6 | 533.5 | ||||||
Basic income from continuing operations available to common shareholders per share | .37 | 1.49 | ||||||
Diluted income from continuing operations available to common shareholders per share | .36 | 1.47 | ||||||
Cash dividends per common share | .17 | .55 |
As of March 31, 2008 | ||||
(in millions) | ||||
BALANCE SHEET DATA: | ||||
Cash and cash equivalents | $ | 26.9 | ||
Restricted cash (current and non-current) | 253.0 | |||
Total assets | 20,882.1 | |||
Total debt | 8,372.9 | |||
Total stockholders’ equity | 7,444.1 |
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As of and for the | For the | |||||||
Three Months Ended | Year Ended | |||||||
March 31, 2008 | December 31, 2007 | |||||||
Republic Historical Per Share Data: | ||||||||
Income from continuing operations available to common shareholders — | ||||||||
Basic | $ | .41 | $ | 1.53 | ||||
Diluted | .41 | 1.51 | ||||||
Cash dividends per common share | .17 | .55 | ||||||
Book value per common share | 6.92 | N/A | ||||||
Republic Unaudited Pro Forma Consolidated Per Share Data: | ||||||||
Income from continuing operations available to common shareholders — | ||||||||
Basic | $ | .37 | $ | 1.49 | ||||
Diluted | .36 | 1.47 | ||||||
Cash dividends per common share | .17 | .55 | ||||||
Book value per common share | 19.68 | N/A | ||||||
Allied Historical Per Share Data: | ||||||||
Income from continuing operations available to common shareholders — | ||||||||
Basic | $ | .17 | $ | .74 | ||||
Diluted | .17 | .71 | ||||||
Cash dividends per common share | — | — | ||||||
Book value per common share | 9.21 | N/A | ||||||
Allied Unaudited Equivalent Pro Forma Per Share Data:(1) | ||||||||
Income from continuing operations available to common shareholders — | ||||||||
Basic | $ | .17 | $ | .67 | ||||
Diluted | .16 | .66 | ||||||
Cash dividends per common share | .08 | .25 | ||||||
Book value per common share | 8.86 | N/A |
(1) | The equivalent pro forma per share data for Allied was calculated by multiplying the Republic pro forma consolidated per share data above by the exchange ratio of .45. Under the terms of the Merger Agreement, Allied stockholders will receive .45 shares of Republic stock for each share of Allied common stock held at the effective time of the merger. |
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Republic Common Stock | Allied Common Stock | |||||||||||||||||||||||
Market Price | Market Price | |||||||||||||||||||||||
High | Low | Dividends | High | Low | Dividends | |||||||||||||||||||
2006 | ||||||||||||||||||||||||
First Quarter | $ | 28.49 | $ | 24.47 | $ | .0933 | $ | 12.24 | $ | 8.53 | $ | — | ||||||||||||
Second Quarter | 29.47 | 25.75 | .0933 | 14.26 | 10.66 | — | ||||||||||||||||||
Third Quarter | 27.53 | 25.04 | .1067 | 11.27 | 9.78 | — | ||||||||||||||||||
Fourth Quarter | 28.83 | 26.57 | .1067 | 13.50 | 11.19 | — | ||||||||||||||||||
2007 | ||||||||||||||||||||||||
First Quarter | 29.67 | 26.22 | .1067 | 13.22 | 12.23 | — | ||||||||||||||||||
Second Quarter | 31.09 | 27.05 | .1067 | 14.00 | 12.41 | — | ||||||||||||||||||
Third Quarter | 33.26 | 27.93 | .1700 | 13.97 | 11.90 | — | ||||||||||||||||||
Fourth Quarter | 35.00 | 30.90 | .1700 | 13.15 | 10.75 | — | ||||||||||||||||||
2008 | ||||||||||||||||||||||||
First Quarter | 32.00 | 27.30 | .1700 | 10.90 | 9.30 | — | ||||||||||||||||||
Second Quarter | 34.44 | 29.09 | .1700 | 15.00 | 11.12 | — | ||||||||||||||||||
Third Quarter (through July 28, 2008) | 33.21 | 27.29 | .1900 | 12.48 | 11.47 | — |
Implied Value | ||||||||||||
Republic | Allied | of Allied | ||||||||||
Common Stock | Common Stock | Common Stock | ||||||||||
June 12, 2008 | $ | 33.66 | $ | 13.92 | $ | 15.15 | ||||||
June 20, 2008 | 31.19 | 13.56 | 14.04 | |||||||||
[ ], 2008 |
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• | changes in the business, operations or prospects of Republic or Allied; | |
• | catastrophic events, both natural and man-made; | |
• | government, litigation or regulatory developments or considerations; |
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• | general market and economic conditions; | |
• | market assessments as to whether and when the merger will be consummated and market assessments of the condition, results or prospects of either company’s business or the combined company’s business; | |
• | announcements or rumors involving third parties, including Waste Management, Inc., related to any alternative proposal to acquire Republic or Allied; | |
• | arbitrage, short selling and derivative transactions in the common stock of Republic and Allied by hedge funds and other market participants; | |
• | governmental actions or legislative developments affecting the non-hazardous, solid waste industry generally; and | |
• | other factors set forth under the headings “Risk Factors Related to the Combined Company if the Merger is Completed.” |
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• | Republic and Allied employees may experience uncertainty about their future roles with the combined company, which might adversely affect Allied’s and Republic’s ability to retain and hire key managers and other employees; | |
• | the attention of management of each of Republic and Allied may be directed toward the completion of the merger and transaction-related considerations and may be diverted from the day-to-day business operations of their respective companies; and |
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• | customers, suppliers or others may seek to modify or terminate their business relationships with Republic or Allied. |
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• | desirable acquisition candidates exist or will be identified, | |
• | the combined company will be able to acquire any of the candidates identified, | |
• | the combined company will effectively consolidate companies which it acquires and fully or timely realize expected cost savings, economies of scale or business efficiencies, or | |
• | any acquisitions will be profitable or accretive to the combined company’s earnings. |
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FORWARD-LOOKING STATEMENTS
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• | Republic would continue to pay the same cash dividend to stockholders, subject to regular review and adjustment by the Republic board of directors; | |
• | the pro forma company would receive an investment grade rating; | |
• | the existing credit facilities of Republic and Allied could be amended or modified to accommodate the proposed transaction; | |
• | there would not be any material changes in either company’s capital structure, results of operations, financial condition or business since the April 3, 2008 meeting; and | |
• | the stock-for-stock exchange would qualify as a tax-free reorganization and therefore be tax-free to stockholders of both companies. |
• | a higher exchange ratio of .45; | |
• | the need for a super-majority vote of the combined company board of directors to remove either the Chairman and Chief Executive Officer or President and Chief Operating Officer; and |
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• | the need for Mr. Slager, Chief Operating Officer and President of Allied, to be designated President and Chief Operating Officer of the combined company, reporting directly to Mr. O’Connor. |
• | to agree with the exchange ratio being set at .45; | |
• | to agree on the designation of Mr. Slager as President and Chief Operating Officer of the combined company, reporting directly to Mr. O’Connor; | |
• | to reject the requirement of a super-majority vote of the combined company board of directors to remove either the Chairman and Chief Executive Officer or President and Chief Operating Officer; | |
• | to request a majority of Republic independent directors, in addition to Mr. O’Connor, to constitute the board of directors of the combined company; and | |
• | to request that Mr. O’Connor meet with Mr. Slager to discuss the proposed organization of the combined company. |
• | the new headquarters of the combined company would be located at Allied’s current headquarters in Phoenix, Arizona; | |
• | an exchange ratio of .45; | |
• | there would be no collar or walkaway rights; |
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• | the board of directors of the combined company would consist of Mr. O’Connor as the Chairman, five independent directors nominated by Republic and five independent directors nominated by Allied for a total of eleven directors; | |
• | Mr. Slager would be the President and Chief Operating Officer of the combined company, reporting directly to Mr. O’Connor; and | |
• | the remainder of the management team would be mutually agreed upon based on contributions from each company. |
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• | all the reasons described above under “— Rationale for the Merger” beginning on page 55, including the strategic benefits, the near- and longer-term synergies and growth opportunities expected to be available to the combined company and the ability to create a leading environmental services firm; | |
• | information concerning the business, assets, capital structure, financial performance and condition and prospects of each of Republic and Allied, focusing in particular on the quality of Allied’s assets, the compatibility of the two companies’ operations and opportunities to capture substantial synergies, which are expected by management of Republic to be approximately $150 million by the third year following the completion of the merger; | |
• | the likelihood of the enhancement of the strategic position of the combined company, which combines Republic’s and Allied’s complementary businesses and creates a broader company with enhanced operational and financial flexibility and increased opportunity earnings per share and cash flow growth; | |
• | current and historical prices and trading information with respect to each of Republic’s and Allied’s common stock, which assisted the Republic board of directors in its conclusion that the merger was fairly priced; | |
• | the possibility, as alternatives to the merger, of continuing to pursue the company’s current growth strategy, and the Republic board of directors’ conclusion that a merger with Allied is expected to yield greater benefits for Republic and its stockholders. The Republic board of directors reached this conclusion for reasons including Allied’s interest in pursuing a transaction with Republic, Republic’s view that the transaction could be acceptably completed from a timing and regulatory standpoint, and Republic management’s assessment of the expected benefits of the merger and compatibility of the two companies; | |
• | current industry, economic and market conditions, including the pace of change and opportunities for growth in the non-hazardous solid waste industry; | |
• | the terms and conditions of the merger agreement; | |
• | the potential effect of the terms of the merger agreement with respect to possible third party proposals to acquire Republic after execution of the merger agreement, as described under “The Merger Agreement — Termination of the Merger Agreement” beginning on page 112; | |
• | that while the termination payment provisions of the merger agreement could have the effect of discouraging alternative proposals for a business combination with Republic, these provisions would not preclude bona fide alternative proposals, and that the size of the termination fee was reasonable in light |
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of the size and benefits of the transaction and not preclusive of a superior transaction, if one were to emerge; |
• | the fact that Republic stockholders would hold approximately 48% of the outstanding shares of the combined company after the merger on a diluted basis; | |
• | the analyses and presentation prepared by Merrill Lynch and its opinion, dated as of June 22, 2008, that, as of that date, based upon the assumptions made, procedures followed, matters considered and qualifications and limitations on the review, set forth in its opinion, the exchange ratio provided for in the merger was fair from a financial point of view to Republic. Merrill Lynch’s opinion dated June 22, 2008 is described in detail below under the heading “— Opinion of Financial Advisor to the Republic Board of Directors” beginning on page 60; | |
• | the challenges of combining the businesses of two corporations of this size and the attendant risks of not achieving the expected strategic benefits, cost savings, other financial and operating benefits or improvement in earnings, and of diverting management focus and resources from other strategic opportunities and from operational matters for an extended period of time; | |
• | that, while the merger is likely to be completed, there are risks associated with obtaining necessary approvals on terms that satisfy closing conditions to the respective parties’ obligations to complete the merger, and, as a result of certain conditions to the completion of the merger, it is possible that the merger may not be completed even if approved by stockholders (see “Conditions to Completion of the Merger” beginning on page 111); | |
• | that, upon completion of the merger, Mr. O’Connor will be the Chief Executive Officer of the combined company and Mr. Holmes will be the Chief Financial Officer of the combined company, and that, upon completion of the merger, Mr. O’Connor will be the Chairman of the Board of the combined company; and | |
• | that current Republic directors, including Mr. O’Connor, will represent a majority of the combined company’s board of directors and current Republic directors will represent a majority of each of the key board committees of the combined company and chair each of these committees. |
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• | “FOR”the Republic share issuance; and | |
• | “FOR”the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
Fiscal Year Ended December 31, | ||||||||||||||||||||
($ in millions) | 2008E | 2009E | 2010E | 2011E | 2012E | |||||||||||||||
Revenue($) | 3,284 | 3,393 | 3,529 | �� | 3,670 | 3,817 | ||||||||||||||
EBITDA($)(1) | 937 | 984 | 1,031 | 1,079 | 1,122 | |||||||||||||||
Depletion, Depreciation and Amortization($) | 328 | 333 | 346 | 360 | 374 | |||||||||||||||
Capital Expenditures($) | (189 | )(2) | (350 | ) | (339 | ) | (374 | ) | (361 | ) | ||||||||||
Change in Deferred Income Taxes($) | 16 | (2) | 22 | 23 | 24 | 24 | ||||||||||||||
Change in Cash From Other Operating Activities ($) | 111 | (2) | (53 | ) | (44 | ) | (45 | ) | (46 | ) |
(1) | EBITDA is net income before interest expense, income taxes, and depletion, depreciation and amortization. | |
(2) | These figures solely reflect the six-month period ended December 31, 2008. |
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• | reviewed certain publicly available business and financial information relating to Allied and Republic that Merrill Lynch deemed to be relevant; | |
• | reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of Allied and Republic, including financial analyses and forecasts relating to Republic prepared by management of Republic, and financial analyses and forecasts relating to Allied prepared by management of Allied and adjusted by management of Republic to reflect the macroeconomic trends incorporated into the forecasts of Republic, as well as the amount and timing of the cost savings and related expenses and synergies expected to result from the merger, which are referred to as the expected synergies, furnished to Merrill Lynch by Republic; | |
• | conducted discussions with members of senior management and representatives of Allied and Republic concerning the matters described in the preceding two bullet points, as well as their respective businesses and prospects before and after giving effect to the merger and the expected synergies; | |
• | reviewed the market prices and valuation multiples for Allied’s common stock and Republic’s common stock and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant; | |
• | reviewed the results of operations of Allied and Republic and compared them with those of certain publicly traded companies that Merrill Lynch deemed to be relevant; | |
• | compared the proposed financial terms of the merger with the financial terms of certain other transactions that Merrill Lynch deemed to be relevant; | |
• | participated in certain discussions and negotiations among representatives of Allied and Republic and their financial and legal advisors; |
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• | reviewed the potential pro forma impact of the merger; | |
• | reviewed a draft dated June 21, 2008, of the merger agreement; and | |
• | reviewed such other financial studies and analyses and took into account such other matters as Merrill Lynch deemed necessary, including its assessment of general economic, market and monetary conditions. |
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Implied | Unaffected | |||||||||||
Exchange | Transaction | Exchange | ||||||||||
Implied Exchange Ratio Analysis | Ratio | Exchange Ratio | Ratio | |||||||||
Historical trading performance | .254 — .518 | .450 | .414 | |||||||||
Research analysts’ price targets | .375 — .563 | .450 | .414 | |||||||||
Comparable companies — enterprise value to EBITDA multiple | .371 — .573 | .450 | .414 | |||||||||
Comparable companies — price to earnings multiple | .402 — .546 | .450 | .414 | |||||||||
Discounted cash flows | .395 — .693 | .450 | .414 |
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Allied Stock Price | Exchange Ratio | |||||||||||||||
Implied Premium | Implied Premium | |||||||||||||||
Time Period | Average | ($15.15) | Average | (.450) | ||||||||||||
As of June 12, 2008 | $ | 13.92 | 8.8 | % | .414 | 8.8 | % | |||||||||
10-day average | 13.50 | 12.2 | % | .404 | 11.4 | % | ||||||||||
30-day average | 12.97 | 16.8 | % | .395 | 13.8 | % | ||||||||||
60-day average | 12.20 | 24.2 | % | .386 | 16.6 | % | ||||||||||
90-day average | 11.53 | 31.4 | % | .368 | 22.2 | % | ||||||||||
1-year average | 11.95 | 26.7 | % | .379 | 18.6 | % | ||||||||||
2-year average | 12.00 | 26.2 | % | .408 | 10.4 | % | ||||||||||
3-year average | 11.22 | 35.1 | % | .398 | 13.0 | % |
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• | Three times the sum of (a) adjusted salary plus (b) maximum annual incentive award. | |
• | Maximum long-term incentive awards for all open periods, all paid in lump sum. | |
• | Continued coverage under benefit plans for two years. | |
• | Gross-up payment for any excise taxes imposed with respect to payments contingent on a change in control of Republic. | |
• | Payment of Mr. Barclay’s deferred compensation account plus agross-up payment for federal taxes due, at the effective tax rate then in effect, on the balance that existed in such account as of December 31, 2006 (including any deferrals made after such date but attributable to periods prior to such date). |
Cash | Incentive | Benefits | Restricted | Deferred | ||||||||||||||||||||
Executive Officers | Severance | Compensation | Continuation(1) | Stock Vesting(2) | Compensation(3) | Total | ||||||||||||||||||
James E. O’Connor | $ | — | $ | 3,108,000 | $ | — | $ | 4,222,346 | $ | — | $ | 7,330,346 | ||||||||||||
Michael J. Cordesman | — | 1,770,000 | — | 1,555,601 | — | 3,325,601 | ||||||||||||||||||
Tod C. Holmes | — | 1,660,000 | — | 1,532,209 | — | 3,192,209 | ||||||||||||||||||
David A. Barclay(4) | 3,985,211 | 1,122,000 | 30,983 | 1,532,209 | 390,809 | 7,061,212 |
(1) | The lump sum present value of payment obligations of Republic to Mr. Barclay is calculated based on the current cost of such coverage assuming a 20% percent annual increase in the cost of such coverage and a discount rate of 6.5%. | |
(2) | This amount represents the value of the previously unvested restricted stock that vests upon consummation of the merger. For the purposes of this calculation the value of the stock of Republic at the time of the merger is assumed to be $31.19 per share, which is the closing price of the stock on June 20, 2008. That value is an approximation and is subject to change. |
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(3) | The following deferred compensation amounts will be distributed to the executives upon following the consummation of the merger: James E. O’Connor — $12,099,118, Michael J. Cordesman — $4,552,568, Tod C. Holmes — $7,994,526 and David Barclay — $5,560,580; however, with the exception of approximately $390,809 with respect to David Barclay, such amounts were earned and are already vested. These figures are based on information available as of July 28, 2008 and are subject to change. Additionally, Republic will make a $2,199,107 payment to David Barclay (assuming tax rates currently in effect) so that he receives the distribution of his deferred compensation account balance that existed on December 31, 2006 (including any deferrals made after such date but attributable to periods prior to such date) free of income and any other taxes. | |
(4) | Additionally, Republic will make an excise tax gross-up payment that should not exceed $3,400,000 to Mr. Barclay so that he retains the same amount of the payments as he would if no excise tax had been imposed under Section 4999 of the Code. Excise taxgross-up calculations depend on variables that will become known only at the time of the merger; thus these figures are approximations only and are subject to change as more information becomes available. |
• | all the reasons described above under “— Rationale for the Merger” beginning on page 55, including the strategic benefits, the synergy and growth opportunities expected to be available to the combined company and the ability to create a leading environmental services firm; | |
• | the merger would provide significant opportunities for cost savings by eliminating duplicate activities and realizing synergies between the businesses of Allied and Republic, including the Allied board of directors’ belief in the achievability of Allied management’s expected annual expense savings of at least $150 million beginning in the third year following the merger, primarily from route consolidations, transportation and disposal savings, headcount rationalization, facility closures and reduced financial assurance costs, plus additional annual operating income of up to $39 million beginning in the third year following the merger relating to Allied initiatives such as national accounts and centralized purchasing that management believes could be extended to the combined company; | |
• | the fact that the combined company is expected to have an investment grade credit rating for its unsecured senior debt, as compared to Allied’s current sub-investment grade credit ratings, and the Allied board of directors’ belief that the combined company will have an efficient capital structure with substantial financial flexibility to fund dividends, invest in the business and pay down debt; | |
• | the fact that the Republic common stock issued pursuant to the merger in respect of Allied common stock will represent approximately 51.7% of Republic immediately following the merger and that Allied stockholders will therefore participate meaningfully in the significant opportunities for long-term growth of Republic; | |
• | Republic’s strong returns to stockholders, including a 60% increase in Republic’s annual dividend to $.68 per share in October 2007, the expectation that the transaction will produce accretion to Republic’s earnings per share in the first year after the merger, and the fact that Allied stockholders will have the opportunity to participate in that dividend and anticipated earnings growth; | |
• | the fact that the Allied common stock price implied by the exchange ratio represented a premium of 8.8% to the closing price of Allied’s common stock on June 12, 2008, the last trading day before the day on which Republic and Allied confirmed that they were involved in discussions regarding a |
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possible business combination, and a premium of approximately 31% to the90-day average closing price of Allied’s common stock for the period ended June 12, 2008; |
• | the fact that Republic’s common stock has historically traded at a higher multiple of Republic’s last twelve months of EBITDA as compared to the level at which Allied’s common stock trades to Allied’s last twelve months of EBITDA; | |
• | the opinion of UBS dated as of June 22, 2008 to the Allied board of directors as to the fairness, from a financial point of view and as of the date of the opinion, of the exchange ratio, to the holders of Allied common stock (see “— Opinion of Financial Advisor to the Allied Board of Directors”); | |
• | based upon the discounted cash flow analysis performed by UBS (see “— Opinion of Financial Advisor to the Allied Board of Directors”), the implied present values of Republic pro forma for the merger and including estimated net synergies ranges from approximately $40.50 to $49.50 per share of Republic common stock; | |
• | information concerning Republic’s and Allied’s respective businesses, prospects, financial condition and results of operations, management and competitive position, including the results of business, legal, environmental and financial due diligence investigations of Republic conducted by Allied’s management; | |
• | the proposed governance and management of the combined company, including that the Chairman of the Board and Chief Executive Officer would be Mr. O’Connor, the President and Chief Operating Officer would be Mr. Slager and the combined company’s board of directors initially would include five members who were directors of Allied immediately prior to the merger; | |
• | the fact that the executive and operational headquarters of the combined company will be located in Phoenix, Arizona; | |
• | the expected qualification of the merger as a reorganization within the meaning of Section 368(a) of the Code resulting in the stock consideration to be received by holders of Allied common stock in the merger not being subject to federal income tax, as described under “Material Federal Income Tax Consequences of the Merger;” and | |
• | the belief that the terms of the merger agreement, including the parties’ respective representations, warranties and covenants, are reasonable and would not prevent third parties from making competing bids. |
• | the possibility that the merger might not be completed as a result of the failure to satisfy one or more conditions to the merger, including the condition that the combined company achieve specified senior unsecured credit ratings as described under “The Merger Agreement — Conditions to Completion of the Merger;” | |
• | the possibility that completion of the merger might be delayed or subject to adverse conditions that may be imposed by governmental authorities, including the Department of Justice, that the required governmental approvals may not be obtained at all and the period of time Allied may be subject to the merger agreement without assurance that the merger will be completed; | |
• | the effect of the public announcement of the merger on Allied’s revenues, operating results, stock price, customers, suppliers, management, employees and other constituencies; | |
• | the risk that the operations of the two companies might not be successfully integrated or integrated in a timely manner, and the possibility of not achieving the anticipated synergies and other benefits sought to be obtained in the merger; |
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• | the substantial costs to be incurred in connection with the merger, including costs of integrating the businesses and transaction expenses arising from the merger, which may exceed management’s estimates; | |
• | because the exchange ratio is a fixed number of shares of Republic common stock, the possibility that holders of Allied common stock could be adversely affected by a decrease in the trading price of Republic common stock between the date of announcement of execution of the merger agreement or the date of the Allied stockholder meeting and the closing of the merger, and the fact that the merger agreement does not provide Allied stockholders with a minimum price or Allied with a price-based termination right or other similar protection; | |
• | the limitations imposed in the merger agreement on the solicitation or consideration by Allied of alternative business combinations prior to the completion of the merger and the other terms and conditions of the merger agreement; | |
• | the risk that Republic has liabilities which were not identified during Allied’s due diligence; | |
• | the fact that upon termination of the merger agreement under specified circumstances, Allied may be required to pay Republic a termination fee of $200 million plus expenses of up to $50 million and this termination fee may discourage other parties that may otherwise have an interest in a business combination with, or an acquisition of, Allied; | |
• | the interests that certain Allied executive officers and directors may have with respect to the combination in addition to their interests as Allied stockholders; and | |
• | various other risks associated with the merger and Republic’s business and Republic set forth under the section entitled “Risk Factors.” |
• | “FOR”the adoption of the merger agreement; and | |
• | “FOR”the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
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Fiscal Year Ended December 31,(1) | 2008E-2012E | |||||||||||||||||||||||
($ in millions) | 2008E | 2009E | 2010E | 2011E | 2012E | CAGR (%) | ||||||||||||||||||
Revenue($) | 6,267 | 6,551 | 6,879 | 7,225 | 7,587 | 4.9 | % | |||||||||||||||||
EBITDA($)(2) | 1,760 | 1,883 | 2,043 | 2,192 | 2,347 | 7.5 | % | |||||||||||||||||
Depreciation and Amortization($) | 576 | 584 | 599 | 632 | 667 | |||||||||||||||||||
Capital Expenditures($) | (650 | ) | (701 | ) | (736 | ) | (773 | ) | (812 | ) | ||||||||||||||
Change in Net Working Capital($)(3) | (179 | ) | (82 | ) | (120 | ) | (65 | ) | (40 | ) | ||||||||||||||
(1) | Significant assumptions made in connection with the forecasted financial information include: |
• | Annual revenue growth ranging from 3.3-5.0%; | |
• | Annual EBITDA margins ranging from 28.1-30.9% of revenue; and | |
• | Annual capital expenditures ranging from 10.4-10.7% of revenue. |
(2) | EBITDA is net income before interest expense, income taxes, depreciation and amortization. | |
(3) | The estimated 2008 change in net working capital is adjusted to exclude $393 million of payments related to an IRS tax matter partially offset by the expected cash tax benefit of $71 million for the deductibility of interest. |
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• | reviewed certain publicly available business and financial information relating to Allied and Republic; | |
• | reviewed certain internal financial information and other data relating to the business and financial prospects of Allied that were provided to UBS by the management of Allied and not publicly available, including financial forecasts and estimates prepared by the management of Allied that Allied’s board of directors directed UBS to utilize for purposes of its analysis; | |
• | reviewed certain internal financial information and other data relating to the business and financial prospects of Republic that were provided to UBS by the management of Allied and not publicly available, including financial forecasts and estimates prepared by the management of Republic that Allied’s board of directors directed UBS to utilize for purposes of its analysis (Two financial forecasts were prepared by the management of Republic and provided to UBS. The Republic financial forecast Allied management directed UBS to use for purposes of its opinion differs from the Republic base case financial forecast included in this joint proxy statement/prospectus under “ — Certain Financial Forecasts Reviewed by Republic’s Board of Directors” and reflects higher growth assumptions that Allied believes are consistent with growth assumptions incorporated into the Allied financial forecast prepared by the management of Allied. See “ — Certain Financial Forecasts Reviewed by Republic’s Board of Directors.”); | |
• | reviewed certain estimates of synergies prepared by the management of Allied that were provided to UBS by Allied and not publicly available that Allied’s board of directors directed UBS to utilize for purposes of its analysis; | |
• | conducted discussions with members of the senior managements of Allied and Republic concerning the businesses and financial prospects of Allied and Republic; | |
• | reviewed publicly available financial and stock market data with respect to certain other companies UBS believed to be generally relevant; | |
• | reviewed the publicly available financial terms of certain transactions involving certain companies that are generally in the industry in which Allied operates; | |
• | reviewed current and historical market prices of Allied common stock and Republic common stock; | |
• | considered certain pro forma effects of the merger on Republic’s financial statements; | |
• | reviewed the merger agreement; and | |
• | conducted such other financial studies, analyses and investigations, and considered such other information, as UBS deemed necessary or appropriate. |
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Illustrative Implied | ||||
Trading Ratio | ||||
(average daily closing prices | ||||
per share of Allied common | ||||
stock divided by average | ||||
daily closing prices per share of | ||||
Republic common stock) | ||||
30 Trading Day Average | .3949 | |||
60 Trading Day Average | .3865 | |||
90 Trading Day Average | .3697 | |||
Last Twelve Months Average | .3787 | |||
Exchange Ratio, as Provided For in the Merger | .4500 |
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Percentage Contribution | ||||||||||||
Estimated | ||||||||||||
Allied | Republic | Synergies | ||||||||||
Levered Analysis | ||||||||||||
Implied Equity Ownership at Offer Value | 51.7 | % | 48.3 | % | — | % | ||||||
Net Income Contribution for the Twelve Months Ended March 31, 2008, Excluding Synergies | 50.1 | 49.9 | — | |||||||||
Net Income Contribution for the Twelve Months Ended March 31, 2008, Including Synergies | 42.4 | 42.2 | 15.4 | |||||||||
2008E Net Income Contribution, Excluding Synergies | 56.4 | 43.6 | — | |||||||||
2008E Net Income Contribution, Including Synergies | 49.0 | 37.9 | 13.2 | |||||||||
Unlevered Analysis | ||||||||||||
Implied Relative Enterprise Value at Offer Value | 63.0 | 37.0 | — | |||||||||
EBITDA Contribution for the Twelve Months Ended March 31, 2008, Excluding Synergies | 66.1 | 33.9 | — | |||||||||
EBITDA Contribution for the Twelve Months Ended March 31, 2008, Including Synergies | 61.5 | 31.6 | 6.9 | |||||||||
2008E EBITDA Contribution, Excluding Synergies | 65.2 | 34.8 | — | |||||||||
2008E EBITDA Contribution, Including Synergies | 61.0 | 32.5 | 6.6 |
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Stock Price on | ||||||||||||||||||||
Implied Enterprise Value | June 12, | |||||||||||||||||||
12 Mos. Ended | 2008 | |||||||||||||||||||
3/31/08 | 2008E | 2009E | 2008E | 2009E | ||||||||||||||||
Company | EBITDA | EBITDA | EBITDA | EPS | EPS | |||||||||||||||
Waste Management, Inc. | 7.9 | 7.6 | 7.2 | 17.0 | 15.1 | |||||||||||||||
Waste Services, Inc. | 6.6 | 6.6 | 6.2 | 26.5 | 19.4 | |||||||||||||||
Casella Waste Systems, Inc. | 6.8 | 6.9 | 6.6 | nm | nm | |||||||||||||||
Waste Connections, Inc. | 9.7 | 9.4 | 8.8 | 20.6 | 17.9 | |||||||||||||||
Calculated Using Institutional Brokers Estimate System (IBES) Consensus Estimates: | ||||||||||||||||||||
Republic | 9.1 | 8.4 | 7.9 | 18.5 | 16.8 | |||||||||||||||
Allied | 7.7 | 7.4 | 7.0 | 14.8 | 13.3 | |||||||||||||||
Allied at Offer Value | 8.0 | 7.7 | 7.3 | 16.1 | 14.5 | |||||||||||||||
Calculated Using Management Estimates: | ||||||||||||||||||||
Republic | 9.1 | 8.4 | 7.8 | 18.8 | 16.5 | |||||||||||||||
Allied | 7.7 | 7.3 | 6.8 | 14.2 | 12.0 | |||||||||||||||
Allied at Offer Value | 8.0 | 7.6 | 7.1 | 15.5 | 13.0 |
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Number of | Number of | |||||||||||||||
Shares Subject to | Unvested Shares of | Unvested Deferred or | ||||||||||||||
Unvested | Restricted Stock | Restricted Stock | ||||||||||||||
Options That Will | Weighted | That Will Vest in | Units That Will | |||||||||||||
Vest in Connection | Average Exercise | Connection with the | Vest in Connection | |||||||||||||
Executive Officer | with the Merger | Price per Share | Merger | with the Merger(1) | ||||||||||||
John J. Zillmer | 1,365,742 | $ | 9.99 | 36,676 | 176,439 | |||||||||||
Donald A. Slager | 454,750 | 11.39 | — | 178,341 | ||||||||||||
Peter S. Hathaway | 200,275 | 11.41 | — | 146,683 | ||||||||||||
Timothy R. Donovan | 212,500 | 11.97 | — | 7,500 | ||||||||||||
Edward A. Evans | 304,075 | 10.36 | — | 49,209 |
(1) | Includes certain restricted stock units which are vested but subject to deferred delivery of the underlying stock. The delivery of the stock will be accelerated as a result of the merger. The amounts of these restricted stock units are: John J. Zilmer - 53,626; Donald A. Slager - 33,851; Peter S. Hathaway - 13,333; and Edward A. Evans - 19,339. |
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Number of | ||||
Unvested Shares of | ||||
Non-Employee Directors | Restricted Stock | |||
David Abney(a) | 18,656 | |||
Charles H. Cotros | 5,533 | |||
James W. Crownover | 5,533 | |||
William J. Flynn(b) | 13,208 | |||
David I. Foley(c) | 5,533 | |||
Nolan Lehmann | 5,533 | |||
Leon J. Level(d) | 12,919 | |||
James A. Quella(c) | 5,533 | |||
John M. Trani(b) | 13,208 |
(a) | Mr. Abney was appointed as a director on April 7, 2008. | |
(b) | Messrs. Flynn and Trani were appointed as directors on February 19, 2007. | |
(c) | Awards reflected were issued in respect of the service of Messrs. Foley and Quella who are principals of Blackstone. Pursuant to Blackstone policies, such awards were issued directly to Blackstone rather than to Messrs. Foley or Quella individually. | |
(d) | Mr. Level was appointed as a director on May 30, 2007. |
• | each outstanding option to purchase shares of Allied common stock outstanding at the effective time of the merger, including any option held by a director or executive officer of Allied, will be assumed by Republic and will become an option to purchase shares of Republic common stock with appropriate adjustments to be made to the number of shares and the exercise price under the option based on the exchange ratio; and | |
• | each outstanding Allied restricted common share, Allied restricted stock unit and Allied deferred stock unit outstanding at the effective time of the merger, including any held by a director or executive officer of Allied, will become a restricted share, restricted stock unit or deferred stock unit, respectively, of Republic with appropriate adjustments made to the number of shares subject to the award based on the exchange ratio. |
• | narrow the definition of “cause” for any determination of “cause” on or after a “change in control”, as that term is defined in the agreements. As amended, Allied has “cause” to terminate the executive on or after a “change in control” if the executive has engaged in any of a list of specified activities, including |
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the conviction of (or plea of guilty ornolo contendereto) a felony or any other crime involving Allied, the breach of any material term of his employment agreement, the violation of Allied’s Code of Ethics or its policies regarding trading of its stock or reimbursement of expenses, willful or deliberate conduct that exposes Allied to potential financial or other injury, fraud, misappropriation of assets, embezzlement, or the willful and deliberate failure or refusal to perform his assigned duties; |
• | revise the definition of “good reason” to delete that portion that would exempt the relocation of the executive permanently to any office or location to which the majority of Allied executive officers are located from being considered a “good reason” under such agreements. As amended, the executive officer is said to have “good reason” to terminate his employment with Allied (and thereby receive the benefits described below) if Allied assigns the executive duties that are materially inconsistent with his position, materially diminishes the executive’s position, materially breaches any of the provisions of his employment agreement, materially reduces the executive officer’s compensation or benefits, requires that the executive officer relocate permanently to any location except in the Phoenix-Scottsdale metropolitan area or fails to comply with, or prevent or impede the executive from complying with, any legal obligation in a manner that would subject the executive to liability; | |
• | provide that in the event of a termination of employment by Allied without cause or by the executive for good reason within one year following the date of a change in control, the executive will receive a pro rata portion of the target annual incentive compensation bonus for the fiscal year in which the termination occurs; | |
• | revise the parachute payment excise taxgross-up provisions therein to (a) eliminate a requirement that Allied’s share price attain a threshold for the taxgross-up provisions to be applicable; (b) eliminate a cap on an executive’s base annual compensation that would be used to calculate the amount of thegross-up payment; and (c) provide for an excise taxgross-up with respect to the benefits payable under the Supplemental Retirement Benefit Plan, and any other amounts that may be subject to the parachute payment excise tax, as determined for purposes of Section 280G and Section 4999 of the Code (the merger will not result in any excise tax gross-up payments); | |
• | in the case of Mr. Hathaway, reverses a change that was made on account of Section 409A of the Code but which was not necessary so that his stock options remain exercisable after a termination of employment on a basis consistent with the other executive officers’ agreements; and | |
• | eliminate the requirement that the executive repay to Allied any and all proceeds realized by the executive (after termination of employment) as a result of vesting, exercise or sale of shares of Allied common stock granted or issued to the executive if (i) the executive violates Allied’s policies regarding trading of common stock or violates any of the restrictive covenant provisions set forth in the agreements, or (ii) cause is determined following the executive’s termination of employment. The agreements were amended to permit Allied to terminate and recapture payments on account of cause only if cause is determined within one year after termination of employment. |
• | If the executive has a termination of employment for any reason other than cause prior to a change in control, the executive will receive (within thirty days after the sixth month anniversary of the date of termination) a cash lump sum payment equal to the present value of the SERP Benefit, as that term is defined in the agreement, multiplied by a fraction (not to exceed one), the numerator of which is the executive’s years of service and the denominator of which is 10 (the “Pro Rata SERP”). The present value of the SERP Benefit will be calculated based upon a 6% interest rate and assuming payments would have commenced on the 10th anniversary of the executive’s initial date of employment (or in the case of Mr. Hathaway, age 55) or, if later, the date of termination. | |
• | If, on or after a change in control, the executive’s employment is terminated either by Allied without cause or by the executive for good reason within one year of the date of the change in control, the |
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executive will receive (within thirty days after the six month anniversary of the termination) a lump sum payment equal to the present value of the full SERP Benefit. |
• | If, on or after a change in control, the executive’s employment is terminated for any reason other than by Allied for cause (and the immediately preceding clause is not applicable), the executive will receive (within thirty days after the sixth month anniversary of the date of termination) a cash lump sum payment equal to the Pro Rata SERP he would have been entitled to receive if his employment was terminated immediately prior to the change in control, increased by an annual interest rate of six percent (6%) for the period from the date of the change in control until the date of termination. | |
• | Elimination of the provision that provides for proportionate reduction of the SERP Benefit if the executive becomes employed by a non-competitor employer. |
• | any unpaid base salary through the date of termination; | |
• | if the agreement is terminated by executive for good reason or by Allied without cause within the twelve months following the effective time of the merger, three times such executive’s (a) base salary in effect at termination plus (b) such executive’s target annual incentive compensation for the year in which his termination occurs, payable in a lump sum within 30 days after the six month anniversary of the date of termination; | |
• | if the agreement is terminated by executive for good reason or by Allied without cause within the six months preceding the effective time of the merger, three times such executive’s (a) base salary in effect at termination plus (b) such executive’s target annual incentive compensation for the year in which his termination occurs, payable in substantially equal bi-weekly installments beginning as of the first payroll date immediately following the six-month anniversary of the date of termination and continuing until the first payroll date immediately following the three year anniversary of termination (provided that the first payment will include the amount that would have been paid prior to the actual first payment date had the first payment date been the first payroll date immediately following termination); | |
• | if the agreement is terminated by executive for good reason or by Allied without cause within the twelve months following the effective time of the merger, a pro rata portion of the target annual incentive compensation bonus for the fiscal year in which the termination occurs; | |
• | the SERP Benefit as described above; | |
• | any accrued but unpaid vacation or paid leave; | |
• | any earned but unpaid annual incentive compensation; and | |
• | any unpaid deferred compensation. |
• | any reimbursements; | |
• | full and immediate vesting of all outstanding equity-based awards under Allied’s incentive stock plans and two years to exercise such awards but not beyond the remaining term; | |
• | a“gross-up” payment for excise taxes incurred by the executive under the Code (a) due to cash payments made by Allied as a result of termination of employment in connection with a “change in control”, (b) due with respect to the SERP Benefits (as defined in the agreements), or (c) due with respect to any other amounts that may be subject to the parachute payment excise tax, as determined for purposes of Section 280G and Section 4999 of the Code (Allied will be obligated to make a |
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gross-up payment only if the “parachute payments” to the executive (as defined in Code Section 280G) equal or exceed 110% of the executive’s untaxed safe harbor amount); The merger will not result in any excise tax gross-up payments. |
• | medical, dental,and/or vision coverage for the executiveand/or the executive’s spouse and dependents at levels equal to that which would have been provided if the executive’s employment had not terminated until the earlier of (a) the date the executive becomes eligible for any comparable medical, dental, or vision coverage provided by any other employer, or (b) the date the executive becomes eligible for Medicare or any similar government sponsored or provided health care program; | |
• | outplacement services through an agency of Allied’s choosing for one year after the date of termination, provided that the cost of such services cannot exceed $50,000 for each executive unless the board or a board committee approves a higher amount; and | |
• | continued coverage under Allied’s directors’ and officers’ liability insurance and under the executive’s separate indemnity agreement for a period of 10 years or for such longer term as may be provided in the indemnity agreement. |
Value of | ||||||||||||||||||||||||||||||||
Stock | ||||||||||||||||||||||||||||||||
Option, | Lump | |||||||||||||||||||||||||||||||
Restricted | Sum | |||||||||||||||||||||||||||||||
Pro Rata | Stock and | Supplemental | ||||||||||||||||||||||||||||||
Cash | Bonus | Benefits | RSU | Retirement | Deferred | |||||||||||||||||||||||||||
Executive Officer | Severance | (at Target) | Continuation(1) | Outplacement | Vesting(2) | Benefit | Compensation(3) | Total | ||||||||||||||||||||||||
John J. Zillmer | $ | 5,966,250 | $ | 886,458 | $ | 115,683 | $ | 50,000 | $ | 8,399,561 | $ | 2,735,481 | $ | — | $ | 18,153,433 | ||||||||||||||||
Donald W. Slager | 4,800,000 | 666,667 | 89,676 | 50,000 | 3,656,890 | —(4 | ) | — | 9,263,233 | |||||||||||||||||||||||
Peter S. Hathaway | 3,690,000 | 512,500 | 105,923 | 50,000 | 2,558,340 | 2,413,245 | 786,398 | 10,116,406 | ||||||||||||||||||||||||
Timothy R. Donovan | 3,000,000 | 416,667 | 101,805 | 50,000 | 526,793 | 1,349,544 | — | 5,444,809 | ||||||||||||||||||||||||
Edward A. Evans | 2,676,000 | 371,667 | 120,132 | 50,000 | 1,780,046 | 1,305,267 | 562,494 | 6,865,606 |
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(1) | The estimated lump sum present value of the payment obligations of Allied with respect to continued medical, dental, and/or vision coverage for each of the executives is calculated in accordance with generally accepted accounting principles for financial reporting purposes assuming (a) a 6.25% discount rate, (b) increases in the cost of coverage trending from 10% to 5% over the coverage term and (c) five years of coverage. | |
(2) | The value of accelerated vesting of stock options, restricted stock and restricted stock units is based upon the number of shares of Republic stock that the executive will be entitled to receive at the exchange ratio and the closing market price of Republic common stock on June 22, 2008, less, if applicable, the exercise price of options). These amounts are in addition to the value of vested equity-based awards held by each executive. Includes certain restricted stock units which are vested but subject to deferred delivery of the underlying stock. The delivery of the stock will be accelerated as a result of the merger. | |
(3) | The deferred compensation amounts are the account balances as of March 31, 2008. Mr. Hathaway’s deferred compensation is paid after termination of employment in annual installments over 10 years. Mr. Evans’ deferred compensation is paid after termination of employment in quarterly installments over three years. | |
(4) | If Mr. Slager executes the amended employment agreement approved on June 22, 2008, his lump sum supplemental retirement benefit payment upon termination by him for good reason or by Allied without cause would be $2,155,416. |
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Director | Age | Previous Board of Director Membership | Director Since | |||||||
James E. O’Connor | 58 | Chairman and Chief Executive Officer of Republic | 1998 | |||||||
John W. Croghan | 77 | Director of Republic | 1998 | |||||||
W. Lee Nutter | 64 | Director of Republic | 2004 | |||||||
Ramon A. Rodriguez | 62 | Director of Republic | 1999 | |||||||
Allan C. Sorensen | 69 | Director of Republic | 1998 | |||||||
Michael W. Wickham | 61 | Director of Republic | 2004 | |||||||
Director of Allied | ||||||||||
Director of Allied | ||||||||||
Director of Allied | ||||||||||
Director of Allied | ||||||||||
Director of Allied |
Name | Title | |
James E. O’Connor | Chief Executive Officer and Chairman of the Board | |
Donald W. Slager | Chief Operating Officer and President | |
Tod C. Holmes | Executive Vice President and Chief Financial Officer | |
Michael J. Cordesman | Executive Vice President | |
Timothy R. Donovan | Executive Vice President, General Counsel and Secretary |
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• | a stockholder that is not a U.S. holder; | |
• | a financial institution or insurance company; | |
• | a mutual fund; | |
• | a tax-exempt organization; | |
• | a dealer or broker in securities or foreign currencies; | |
• | a trader in securities that elects to apply a mark-to-market method of accounting; | |
• | a stockholder that holds Allied common stock as part of a hedge, appreciated financial position, straddle, conversion, or other risk reduction transaction; or | |
• | a stockholder that acquired Allied common stock pursuant to the exercise of options or similar derivative securities or otherwise as compensation. |
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• | a citizen or resident of the United States; | |
• | a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any State or the District of Columbia; | |
• | an estate, the income of which is subject to U.S. federal income tax regardless of its source; or | |
• | a trust, the substantial decisions of which are controlled by one or more U.S. persons and which is subject to the primary supervision of a U.S. court, or a trust that validly has elected under applicable Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes. |
• | A holder of Allied common stock will not recognize gain or loss upon the exchange of that stockholder’s Allied common stock for Republic common stock pursuant to the merger, except that gain or loss will be recognized on the receipt of cash instead of a fractional share of Republic common stock (as described below). |
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• | If a holder of Allied common stock receives cash instead of a fractional share of Republic common stock, the holder will be required to recognize gain or loss, measured by the difference between the amount of cash received and the portion of the tax basis of that holder’s Allied common stock allocable to that fractional share of Republic common stock. This gain or loss will be a capital gain or loss and will be a long-term capital gain or loss if the holding period for the Allied common stock exchanged is more than one year at the completion of the merger. Under current law as of the date of this joint proxy statement/prospectus, long-term capital gain of an individual generally is subject to a maximum U.S. federal income tax rate of 15%, and short-term capital gains of an individual generally are subject to a maximum U.S. federal income tax rate of 35%. The deductibility of capital losses is subject to limitations. | |
• | A holder of Allied common stock will have a tax basis in the Republic common stock received in the merger equal to (1) the tax basis of the Allied common stock surrendered by that holder in the merger, reduced by (2) any tax basis of the Allied common stock surrendered that is allocable to a fractional share of Republic common stock for which cash is received. | |
• | The holding period for the Republic common stock received in exchange for shares of Allied common stock in the merger will include the holding period for the shares of Allied common stock surrendered in the merger. |
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• | to enter into any settlement, undertaking, consent decree, stipulation or agreement with any governmental authority in connection with the merger and the other transactions contemplated by the merger agreement, or | |
• | to divest or otherwise hold separate (including by establishing a trust or otherwise), or take any other action (or otherwise agree to do any of the foregoing) with respect to any of its subsidiaries or any of their respective affiliates’ businesses, assets or properties, |
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Applicable | Applicable | |||||||||||||||
Senior | Margin for | Margin | ||||||||||||||
Unsecured | Facility | LIBOR | for Base | |||||||||||||
Level | Debt Rating | Fee | Loans | Rate Loans | ||||||||||||
I | BBB+/Baa1 | 0.15 | % | 1.10 | % | 0.00 | % | |||||||||
II | BBB/Baa2 | 0.20 | 1.30 | 0.00 | ||||||||||||
III | BBB-/Baa3 | 0.30 | 1.45 | 0.00 | ||||||||||||
IV | £ BB+/Ba1 | 0.50 | 2.00 | 0.50 |
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• | Republic shall not permit the ratio of total debt minus restricted cash to consolidated EBITDA as of the end of any fiscal quarter to be greater than (i) 4.00 to 1.00 for any trailing four-quarter period ending on or before March 31, 2010, or (ii) 3.25 to 1.00 for any trailing four-quarter period thereafter. | |
• | Republic shall not permit the ratio of consolidated EBITDA to consolidated interest expense for any trailing four quarter period to be less than 3.00 to 1.00. |
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• | The closing of the merger having occurred on or before May 15, 2009. | |
• | The merger agreement and all other agreements, instruments and documents relating to the merger shall not have been altered, amended or otherwise changed or supplemented or any condition therein waived in a manner that is materially adverse to the lenders (as determined by the arrangers in their sole discretion), in each case without the prior written consent of the arrangers. The merger shall have been or will be on the funding date consummated in accordance with the terms thereof, including, to the extent required by the merger agreement, in compliance with applicable law and regulatory approvals. | |
• | Receipt by the arrangers within a reasonable time prior to the funding date of (x) interim financial statements of each of Republic and Allied and their respective subsidiaries dated as of the end of the most recent fiscal quarter preceding the funding date for which financial statements are available or are required to be filed with the Securities and Exchange Commission, which interim financial statements shall be substantially consistent with, and not materially worse than, the unaudited financial statements for each of Republic and Allied dated as of March 31, 2008, and (y) pro formaconsolidated financial statements of Republic and its subsidiaries giving effect to the acquisition as of the date of such interim statements which are consistent in all material respects with the pro forma consolidated financial statements provided on or before the funding date and reflect synergies reasonably satisfactory to the arrangers and administrative agent of at least $150 million. | |
• | On apro formabasis after giving effect to the merger, the ratio of (a) the total debt, minus restricted cash supporting industrial revenue bonds and tax exempt financings of Republic and its subsidiaries; to (b) the consolidated EBITDA for the trailing four quarters ending as of a date no less than 30 days immediately prior to the closing of the merger does not exceed 3.50 to 1.00. | |
• | (x) The capital structure of the Republic and each of the subsidiary guarantors (after giving effect to the merger and related transactions) shall be as described in the pro forma financial statements described above, and (y) the amount, tenor, ranking and other terms and conditions of any other equity and debt financings comprising part of the acquisition not previously disclosed to the administrative agent will be reasonably satisfactory to it, it being agreed that the indebtedness of Republic under its existing indentures, the indebtedness of Allied Waste North America, Inc. and Browning-Ferris Industries, Inc. (each, a wholly-owned subsidiary of Allied) under their respective indentures may rank pari passu with such parties’ obligations under the new credit facility. | |
• | Since December 31, 2007, there shall not have been any change, occurrence or development (including as a result of the continuation of any existing condition) that shall have occurred or become known to the arrangers or any lender that could reasonably be expected to have a material adverse effect (defined below) with respect to Republic or Allied. For purposes of the new credit facility, the term “material adverse effect” means, with respect to Republic or Allied, any change, event or occurrence that has a material adverse effect on the assets and liabilities (taken as a whole), financial condition or business of that party and of its subsidiaries, taken as a whole; provided, however, that none of the following, or any change, event or occurrence resulting or arising from the following, shall constitute, or shall be considered in determining whether there has occurred, a material adverse effect: (i) changes in conditions in the U.S. or global economy or capital or financial markets generally, including changes in interest or exchange rates (provided that such conditions do not affect that party or any of its subsidiaries, taken as a whole, in a materially disproportionate manner as compared to other companies operating in the same industry); (ii) changes in general legal, tax, regulatory, political or business conditions in the jurisdictions in which that party or any of its subsidiaries operates (provided that such conditions do not affect that party or any of its subsidiaries, taken as a whole, in a materially disproportionate manner as compared to other companies operating in the same industry); (iii) general |
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market or economic conditions in the industry in which that party or any of its subsidiaries operates (provided that such conditions do not affect that party or any of its subsidiaries, taken as a whole, in a materially disproportionate manner as compared to other companies operating in the same industry); (iv) actions contemplated by the merger agreement (but, excluding from the definition of the merger agreement for the purposes of this definition, any amendments or waivers of any terms or conditions thereof); (v) the negotiation, execution, announcement, pendency or performance of the merger agreement or the transactions contemplated thereby, the consummation of the transactions contemplated by the merger agreement or any public communications by the other party regarding the merger agreement or the transactions contemplated by the merger agreement, including, in any such case, the impact thereof on relationships, contractual or otherwise, with lenders, investors, venture partners or employees (provided that a negative impact on relationships with customers or vendors, taken as a whole, may be taken into account in determining whether a material adverse effect has occurred); (vi) changes after the date of the merger agreement in applicable United States or foreign, federal, state or local law or interpretations thereof (provided that such changes do not affect that party or any of its subsidiaries, taken as a whole, in a materially disproportionate manner as compared to other companies operating in the same industry); (vii) changes in generally accepted accounting principles or the interpretation thereof; (viii) any action taken pursuant to or in accordance with the merger agreement or at the request or with the consent of the other party; (ix) any failure by that party to meet any projections, guidance, estimates, forecasts or milestones or financial or operating predictions for or during any period ending (or for which results are released) on or after the date hereof (it being agreed that the facts and circumstances giving rise to such failure may be taken into account in determining whether a material adverse effect has occurred); (x) any action, arbitration, proceeding, litigation or suit arising from or relating to the merger or the transactions contemplated by the merger agreement; (xi) a decline in the price of that party’s common stock (it being agreed that the facts and circumstances giving rise to such decline may be taken into account in determining whether a material adverse effect has occurred); (xii) labor conditions in the industry in which that party or any of its subsidiaries operates (provided that such conditions do not affect that party or any of its subsidiaries, taken as a whole, in a materially disproportionate manner as compared to other companies operating in the same industry); and (xiii) any natural disaster or other acts of God, acts of war, armed hostilities, sabotage or terrorism, or any escalation or worsening of any such acts of war, armed hostilities, sabotage or terrorism threatened or underway as of the date of the merger agreement (provided that such conditions do not affect that party or any of its subsidiaries, taken as a whole, in a materially disproportionate manner as compared to other companies operating in the same industry); and provided, in the event any such change, event or occurrence identified in clause (i), (ii), (iii), (vi), (xii) or (xiii) does adversely affect a party or its subsidiaries in a materially disproportionate manner (after giving effect to the impact of such change, event or occurrence at the level of impact generally experienced by other companies operating in the same industry), such change, event or occurrence shall be considered in determining whether a material adverse effect has occurred only to the extent of the disproportionate impact on the party and its subsidiaries, taken as a whole. This is substantially the same meaning that has been given to the term “material adverse effect” in the merger agreement. |
• | Receipt of all governmental and third party consents and approvals necessary in connection with the merger and the related financings and other transactions contemplated by the new credit facility, except to the extent the failure to receive such approval could not reasonably be expected to have a material adverse effect with respect to Republic and its subsidiaries (including Allied and its subsidiaries), taken as a whole. Expiration of all applicable waiting periods under theHart-Scott-Rodino Act and other anti-trust laws without any action being taken by any authority that (i) would require a regulatory divestiture (as defined in the merger agreement) that could be reasonably be expected to cause a failure of Republic to meet its financial covenants under the new credit facility, or (ii) could restrain, prevent or impose any other material adverse conditions that reasonably could be expected to have a material adverse effect on Republic and its subsidiaries (including Allied and its subsidiaries), taken as a whole, or the merger. No law or regulation shall be applicable to Republic and its subsidiaries or Allied and its |
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subsidiaries which in the reasonable judgment of the administrative agent could have a material adverse effect on Republic and its subsidiaries (including Allied and its subsidiaries), taken as a whole. |
• | The absence of any action, suit, investigation or proceeding, pending or threatened in writing, in any court or before any governmental authority (a) that could reasonably be expected to restrain or prevent the merger or any of the transactions contemplated by new credit facility or the performance by Republic and its subsidiaries (including Allied and its subsidiaries) of their respective obligations under the documentation for the new credit facility or (b) involving any of Republic and its subsidiaries (including Allied and its subsidiaries) that could reasonably be expected to result in a material adverse effect on Republic and its subsidiaries (including Allied and its subsidiaries), taken as a whole. | |
• | The administrative agent shall have received evidence reasonably satisfactory to it that concurrently with the closing of the merger, indebtedness of Allied that is to be repaid on the funding date is paid in full, the related credit facilities are terminated and any liens securing such indebtedness and facilities (including any liens securing the Allied indentures) have been terminated and released. | |
• | The arrangers shall have received satisfactory confirmation not more than 30 days prior to the funding date that the senior unsecured debt of Republic (after giving effect to the merger), will be rated either (i) BBB- or better by Standard & Poor’s and Ba1 or better by Moody’s, or (ii) Baa3 or better by Moody’s and BB+ or better by S&P. | |
• | The administrative agent shall have received reasonably satisfactory opinions of counsel to Republic and the subsidiary guarantors (which shall cover, among other things, authority, legality, validity, binding effect and enforceability of the documents for the new credit facility) and such corporate resolutions, certificates and other documents as the administrative agent shall reasonably require. | |
• | The administrative agent shall have received evidence satisfactory to it that, as of the funding date, there shall be an effective amendment to existing credit facility that (w) adds pari passu guaranties of the obligations thereunder from the guarantors (with the guarantees from Allied guarantors to become effective the day after the funding date), (x) amends the pricing under the existing credit facility to match the pricing of the new credit facility, (y) amends the leverage ratio maintenance covenant therein to conform to the levels applicable to the revolving credit facility, and (z) amends such other matters as the administrative agent may reasonably determine for the purpose of making the terms of Republic’s existing credit facility consistent with the terms of the new credit facility (other than the maturity date thereof). | |
• | All accrued fees and expenses of the administrative agent, the arrangers and the lenders (including the fees and expenses of counsel for the administrative agent) shall have been paid. |
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• | During the period commencing on the effective time of the merger and continuing until the close of business on the day immediately prior to the third annual meeting of Republic stockholders held after the effective time, referred to as the Continuation Period: |
• | the Republic board of directors must have a “Continuing Republic Committee,” consisting solely of five Continuing Republic Directors, defined as directors who are either (1) members of the Republic board of directors prior to the effective time of the merger, determined by the Republic board of directors to be “independent” of Republic under the rules of the NYSE and designated by Republic to be members of the Republic board of directors as of the effective time of the merger, or (2) subsequently nominated or appointed to be a member of the Republic board of directors by the Continuing Republic Committee; | |
• | the Republic board of directors must have a “Continuing Allied Committee,” consisting solely of five Continuing Allied Directors, defined as directors who are either (1) members of the Allied board of directors prior to the effective time of the merger, determined by the Allied board of directors to be “independent” of Allied and Republic under the rules of the NYSE and designated by Allied to be members of the Republic board of directors as of the effective time of the merger, or (2) subsequently nominated or appointed to be a member of the Republic board of directors by the Continuing Allied Committee; | |
• | the Republic board of directors must be comprised of eleven members, consisting of (1) the Chief Executive Officer of Republic, (2) five Continuing Allied Directors, and (3) five Continuing Republic Directors; provided that, notwithstanding the foregoing, after the Initial Continuation Period, the size of the Republic board of directors may be increased by the affirmative vote of a majority of the board of directors; | |
• | at each meeting of the Republic stockholders during the Continuation Period at which directors are to be elected, (1) the Continuing Republic Committee shall have the exclusive authority on behalf of Republic to nominate as directors of the Republic board of directors, a number of persons for election equal to the number of Continuing Republic Directors to be elected at such meeting, and (2) the Continuing Allied Committee shall have the exclusive authority on behalf of Republic to nominate as directors of Republic board of directors, a number of persons for election equal to the number of Continuing Allied Directors to be elected at such meeting; and | |
• | all directors nominated or appointed by the Continuing Republic Committee or the Continuing Allied Committee, as the case may be, must be “independent” of Republic for purposes of the rules of the NYSE, as determined by a majority of the persons making the nomination or appointment. |
• | In addition, during the period commencing on the effective time of the merger and continuing until the close of business on the day immediately prior to the second annual meeting of Republic stockholders held after the effective time, referred to as the Initial Continuation Period: (1) if any Continuing Republic Director is removed from the Republic board of directors, becomes disqualified, resigns, |
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retires, dies or otherwise cannot or will not continue to serve as a member of the Republic board of directors, such vacancy may only be filled by the Continuing Republic Committee; and (2) if any Continuing Allied Director is removed from the Republic board of directors, becomes disqualified, resigns, retires, dies or otherwise cannot or will not continue to serve as a member of the Republic board of directors, such vacancy may only be filled by the Continuing Allied Committee. |
• | Other than the Continuing Republic Committee and the Continuing Allied Committee: |
• | during the Continuation Period, each committee of the Republic board of directors must be comprised of five members, consisting of three Continuing Republic Directors and two Continuing Allied Directors; | |
• | the initial chairman of the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee of the Republic board of directors as of the effective time of the merger will be, in each case, the Continuing Republic Director who was the chairman of such committee immediately prior to the effective time of the merger; and | |
• | each Continuing Republic Director and Continuing Allied Director serving on the Audit Committee, the Nominating and Corporate Governance Committee or the Compensation Committee of the Republic board of directors must qualify as “independent” under the rules of the NYSE and, as applicable, the rules of the SEC. |
• | due incorporation, good standing and qualification; | |
• | ownership of subsidiaries; |
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• | capitalization; | |
• | corporate authority to enter into the merger agreement and complete the merger; | |
• | approval and adoption of the merger agreement and related matters by each party’s board of directors; | |
• | required stockholder vote to (1) adopt the merger agreement, in the case of Allied, and (2) approve the issuance of shares of Republic common stock in connection with the merger, in the case of Republic; | |
• | required consents and filings with government entities; | |
• | absence of any breach of organizational documents, laws and agreements as a result of the merger; | |
• | accuracy and sufficiency of documents filed with the SEC; | |
• | conformity of the financial statements with applicable accounting requirements and that the financial statements fairly present, in all material respects, the consolidated financial positions of Republic and Allied, respectively; | |
• | absence of undisclosed liabilities; | |
• | sufficiency of internal controls; | |
• | information supplied for use in this joint proxy statement/prospectus; | |
• | since December 31, 2007, conduct of business in ordinary and usual course and absence of any material adverse event, change, effect or development; | |
• | tax matters and tax treatments; | |
• | employee benefits plans and labor matters; | |
• | absence of material pending or threatened legal proceedings; | |
• | compliance with laws, regulations and court orders; | |
• | material contracts; | |
• | intellectual property matters; | |
• | real estate matters; | |
• | absence of any obligation to pay brokers’ or other similar fees; | |
• | receipt of opinions from financial advisors; | |
• | environmental matters; and | |
• | inapplicability of Delaware takeover statutes to the merger. |
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• | declare, set aside or pay any dividends, except for regular quarterly cash dividends not in excess of $.19 per share, in the case of Republic common stock, or redeem, purchase or otherwise acquire any shares of its capital stock or options or any other rights to acquire shares of its capital stock; | |
• | make any loans, advances or capital contributions to, or investments in, any other person; | |
• | split, combine or reclassify its shares of capital stock; | |
• | authorize for issuance, issue, deliver, sell or grant (1) any shares of its capital stock, (2) any voting securities, (3) any securities convertible into or exchangeable for, or any options, warrants or rights to acquire, any such shares, voting securities or convertible or exchangeable securities or (4) any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock-based performance units, other than (x) (1) the issuance of common stock upon the exercise of stock options outstanding on the date of the merger agreement or granted after the date of the merger agreement in accordance with clause (y) below, in either case in accordance with their terms on the date of the merger agreement (or on the date of grant, if later), or (2) the issuance of common stock upon the vesting of restricted stock units or deferred stock units outstanding on the date of the merger agreement or granted after the date of the merger agreement in accordance with clause (y) below, in either case in accordance with their terms on the date of the merger agreement (or on the date of grant, if later) and (y) the grant of other equity awards to non-employee directors or employees of either party or its respective subsidiaries as required pursuant to plans or agreements existing as of the date hereof or as set forth below (provided that no such award may vest as a result of the consummation of the merger): |
• | issuances in the ordinary and usual course of business in connection with hires and promotions not to exceed 80,000 in the case of Republic, and 150,000 in the case of Allied; | |
• | following February 15, 2009, annual equity compensation grants to employees and officers not to exceed 1,100,000 stock options and 260,000 shares of restricted stock or deferred stock units in the case of Republic, and 2,600,000 stock options and 400,000 shares of restricted stock or deferred stock units in the case of Allied; |
• | amend its organizational documents; | |
• | merge or consolidate with any Person (other than with respect to either company, a subsidiary merging or consolidating with another subsidiary); | |
• | acquire any assets of any third party, in excess of certain dollar thresholds, other than acquisitions (1) in the ordinary and usual course of business that would not materially hinder or delay the consummation of transactions contemplated by the merger agreement and (2) pursuant to existing contractual commitments; |
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• | dispose of or otherwise encumber any of its assets, in excess of certain dollar thresholds, other than dispositions (1) in the ordinary and usual course of business and (2) pursuant to existing contractual commitments; | |
• | other than in the ordinary and usual course of business or as required pursuant to existing agreements or plans or any existing collective bargaining agreement, (1) grant to any officer or director of the party or any of its subsidiaries any material increase in compensation or fringe benefits, (2) grant to any present or former employee, officer or director of the party or any of its subsidiaries any increase in severance or termination pay or (3) enter into or amend any employment, consulting, indemnification, severance or termination agreement with any such present or former employee, officer or director; | |
• | except as contemplated by the merger agreement, required by law or any collective bargaining agreement, adopt any new employee benefit plan or amend any existing employee benefit plan in any material respect, or cause the acceleration of rights, benefits or payments under any benefit plan; | |
• | incur or guarantee any indebtedness for borrowed money, or issue any debt or make any loans or contributions to any entity, in each case except in the ordinary and usual course of business or as required by existing contractual commitments (it being understood that the refinancing of any indebtedness outstanding on the date of the merger agreement other than at its stated maturity shall not be considered in the ordinary and usual course of business); | |
• | enter into, renew or extend any agreement that limits or otherwise restricts Allied, Republic or any of their respective subsidiaries or affiliates from engaging or competing in any line of business or in any geographical area, or could restrict the combined company in a materially adverse manner after the effective time of the merger; | |
• | enter into certain collective bargaining and similar agreements; | |
• | change its financial accounting or tax accounting policies; and | |
• | make or agree to make any new capital expenditure or expenditures that, in the aggregate, are in excess of 110% of its existing fiscal year capital expenditures budget. |
• | use all commercially reasonable efforts to cause the Republic stockholder meeting to be duly called and held as soon as reasonably practicable to secure the Republic stockholder approval (as defined below); | |
• | cause the joint proxy statement/prospectus to contain the recommendation of the Republic board that the Republic stockholders approve the Republic share issuance (the “Republic stockholder approval”); and | |
• | not withhold, withdraw, modify or qualify (or publicly propose to or publicly state that it intends to withhold, withdraw, modify or qualify) in any manner adverse to Allied such recommendation or take any other action or make any other public statement in connection with the Republic stockholders meeting inconsistent with such recommendation (any such action is a “change in Republic recommendation”). |
• | use all commercially reasonable efforts to cause the Allied stockholder meeting to be duly called and held as soon as reasonably practicable to secure the Allied stockholder approval (as defined below); |
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• | cause the joint proxy statement/prospectus to contain the recommendation of the Allied board that the Allied stockholders approve the adoption of the merger agreement (the “Allied stockholder approval”); and | |
• | not withhold, withdraw, modify or qualify (or publicly propose to or publicly state that it intends to withhold, withdraw, modify or qualify) in any manner adverse to Republic such recommendation or take any other action or make any other public statement in connection with the Allied stockholders meeting inconsistent with such recommendation (such action is a “change in Allied recommendation”). |
• | engage in any negotiations or discussions with, or provide any confidential information or data to, any third party relating to an acquisition proposal, or otherwise knowingly encourage or facilitate any effort or attempt to make or implement an acquisition proposal; | |
• | approve or recommend, or propose publicly to approve or recommend, any acquisition proposal; or | |
• | execute or enter into, or publicly propose to accept or enter into, or publicly propose to accept or enter into an agreement with respect to an acquisition proposal, including a letter of intent, agreement in principle, option agreement, merger agreement, acquisition agreement or other agreement (whether binding or not) in furtherance of an acquisition proposal (other than a confidentiality agreement to the extent permitted as described below). |
• | complying withRule 14d-9 orRule 14e-2 under the Securities Exchange Act of 1934; | |
• | engaging in negotiations or discussions with or, subject to certain restrictions, providing confidential information to, a third party who has made an unsolicited bona fide written acquisition proposal, but in each case only if: |
• | the Republic stockholder approval or the Allied stockholder approval, as applicable, has not yet been obtained; | |
• | such party is in compliance with the provisions described under this section; | |
• | the board of directors of such party determines in good faith (after consultation with its financial advisor of national reputation and outside legal counsel) that the relevant acquisition proposal constitutes, or could be reasonably expected to lead to, a superior proposal, as defined below; |
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• | effecting a change in recommendation in respect of an acquisition proposal, but only if, prior to taking such action: |
• | the Republic stockholder approval or the Allied stockholder approval, as applicable, has not yet been obtained; | |
• | such party is in compliance with the provisions described under this section; | |
• | the board of directors of such party has determined in good faith (after consultation with its financial advisor and outside legal counsel), that such acquisition proposal constitutes a superior proposal after giving effect to all of the adjustments which may be offered by the other party as described below; | |
• | such party has notified the other party in writing, at least four business days in advance of such change in recommendation (which period will be extended by an additional two business days following any change in financial terms or other material terms of the relevant acquisition proposal) that it is considering taking such action, specifying the material terms and conditions of such superior proposal and the identity of the person making such superior proposal and delivering certain required information to the other party; and | |
• | during such four business day period (as extended, if applicable), such party has negotiated, and made its financial and legal advisors available to negotiate, with the other party should the other party elect to propose adjustments in the terms and conditions of the merger agreement such that, after giving effect to such amendments, such acquisition proposal no longer constitutes a superior proposal. |
• | effecting a change in recommendation other than in respect of an acquisition proposal, but only if, prior to taking such action: |
• | the Republic stockholder approval or the Allied stockholder approval, as applicable, has not yet been obtained; | |
• | the board of directors of such party determines in good faith (after consultation with outside legal counsel) that failure to make a change of recommendation would be inconsistent with its fiduciary duties under applicable law; | |
• | such party has notified the other party in writing, at least four business days in advance of such change in recommendation that it is considering taking such action, specifying in reasonable detail the reasons therefor; and | |
• | during such four business day period, such party has negotiated, and made its financial and legal advisors available to negotiate, with the other party should the other party elect to propose adjustments in the terms and conditions of the merger agreement such that, after giving effect to such amendments, such party shall have determined in good faith after consultation with outside counsel not to effect a change in recommendation. |
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• | prepare theForm S-4 and joint proxy statement/prospectus; | |
• | provide reasonable access to information subject to a confidentiality agreement; | |
• | use reasonable best efforts to consummate the merger and the other transactions; | |
• | consult with the other party regarding any public announcements; | |
• | have Republic pay any stock transfer taxes, if any, and any penalties or interest except as provided in the merger agreement; | |
• | take all actions reasonably necessary to cause any acquisitions or dispositions of equity securities in connection with the transactions contemplated by the merger agreement by each individual who is a director or officer of Allied to be exempt underRule 16b-3 promulgated under the Exchange Act; | |
• | have Allied, Allied Waste North America, Inc. and Browning-Ferris Industries, LLC provide to the trustees under the indentures all notifications, certificates and other information required by the indentures and other documents and to release the collateral; | |
• | agree to notify the other party of certain events; | |
• | complete certain corporate governance matters as described above, under “New Republic Governance Structure After the Merger”; | |
• | grant approvals and take such other actions as is necessary so that the transactions may be consummated as promptly as practicable on the terms contemplated and to eliminate or minimize the effects of state takeover statutes; and | |
• | use reasonable best efforts to obtain the opinions referred to in the merger agreement including customary tax representation letters. |
• | receipt of the Republic stockholder approval and the Allied stockholder approval, in each case in accordance with Delaware law; | |
• | the expiration or termination of the waiting period (and any extension thereof) applicable to the merger under the HSR Act; | |
• | the absence of any law, temporary restraining order or preliminary or permanent injunction or other order making the merger illegal or otherwise prohibiting the consummation of the merger (collectively, “restraints”); | |
• | the approval for listing on the NYSE, subject to official notice of issuance, of the shares of Republic common stock issuable in connection with the merger; and | |
• | the effectiveness of, and the absence of any stop order with respect to, the registration statement onForm S-4 of which this joint proxy statement/prospectus forms a part. |
• | (x) certain representations and warranties made by the other party or parties in the merger agreement regarding capitalization, authority, broker fees, the opinion of the financial advisor, takeover laws, rights plans, ownership of stock, interests in competitors, insurance and RS Merger Wedge Inc.’s operations, |
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being true and correct in all material respects on the date of the merger agreement and as of the closing date (or, if applicable, an earlier specified date) and (y) the other representations and warranties made by the other party or parties in the merger agreement being true and correct (without giving effect to any materiality or material adverse effect qualifications and words of similar import) on the date of the merger agreement and as of the closing date (or, if applicable, an earlier specified date), except in each case where the failure of any such representations and warranties to be true and correct would not, individually or in the aggregate, have or reasonably be expected to have a material adverse effect on the party making the representation or warranty (and provided that two representations and warranties made by Allied in respect of its indebtedness must be true and correct on the closing date without any materiality qualification); |
• | the performance by the other party or parties in all material respects of the covenants required to be performed by it or them at or before the effective time of the merger; | |
• | receipt by each of Republic and Allied of an officer’s certificate of the other party on the closing date stating that the closing conditions with respect to such other party’s representations and warranties and covenants have been satisfied; and | |
• | receipt by each party of an opinion of its own counsel that the merger will qualify as a tax-free reorganization. |
• | receipt by Republic of written confirmation from the applicable credit ratings agency that, upon the consummation of the merger, the consolidated senior unsecured debt of Republic (including Allied or any Allied Subsidiary to the extent an issuer under certain indentures, and after giving effect to any parent or other guarantees required by such agency) will be rated either (i) BBB- or better by Standard & Poor’s and Ba1 or better by Moody’s, or (ii) Baa3 or better by Moody’s and BB+ or better by Standard & Poor’s. As described above in “Financing and Ratings”, each of Republic and Allied has committed to use its best efforts to ensure that this closing condition is satisfied. |
• | the merger has not been completed on or before May 15, 2009 (the “outside date”), except that the right to terminate the merger agreement under this provision will not be available to any party whose breach or failure to fulfill any obligation of the merger agreement has been a principal cause of or resulted in the failure of the merger to occur on or before the outside date; | |
• | any restraint having the effect of making the merger illegal or otherwise prohibiting the completion of the merger becomes final and nonappealable; provided, however that the party electing to terminate pursuant to this provision will have used its reasonable best efforts to oppose any such restraint or to have such restraint vacated or made inapplicable to the merger; or | |
• | the Allied stockholders or Republic stockholders fail to give the necessary approvals at their special meetings or any adjournments or postponements thereof. |
• | prior to the Allied stockholder approval, the Allied board of directors changes its recommendation to the Allied stockholders that they adopt the merger agreement unless, within ten business days, Republic requires the Allied board of directors to nevertheless submit such adoption to the Allied stockholders for approval despite such change in recommendation; |
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• | Allied has breached any of its representations or warranties or failed to perform in any material respect any of its covenants or agreements set forth in the merger agreement, and such breach or failure to perform (i) would prevent Allied from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warrantiesand/or compliance with covenants, and (ii) cannot be cured by the outside date or, if capable of being cured by that date, is not cured within 30 calendar days’ written notice to Allied; or | |
• | prior to the Republic stockholder approval, the Republic board of directors changes its recommendation to the Republic stockholders that they approve the Republic share issuance and, within ten business days, Allied does not require the Republic board of directors to nevertheless submit the Republic share issuance to the Republic stockholders for approval despite such change in recommendation. |
• | prior to the Republic stockholder approval, the Republic board of directors changes its recommendation to the Republic stockholders that they approve the Republic share issuance unless, within ten business days, Allied requires the Republic board of directors to nevertheless submit the Republic share issuance to the Republic stockholders for approval despite such change in recommendation; | |
• | Republic has breached any of its representations or warranties or failed to perform in any material respect any of its covenants or agreements set forth in the merger agreement, and such breach or failure to perform (i) would prevent Republic from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warrantiesand/or compliance with covenants, and (ii) cannot be cured by the outside date or, if capable of being cured by that date, is not cured within 30 calendar days’ written notice to Republic; or | |
• | prior to the Allied stockholder approval, the Allied board of directors changes its recommendation to the Allied stockholders that they adopt the merger agreement and, within ten business days, Republic does not require the Allied board of directors to nevertheless submit such adoption to the Allied stockholders for approval despite such change in recommendation. |
• | if the merger agreement is terminated by Republic or Allied following the failure by Republic to obtain the Republic stockholder approval, and (1) prior to such termination, an acquisition proposal with respect to Republic has been publicly announced or made known to the Republic board of directors and (2) within 12 months of such termination, Republic enters into a binding agreement to effect an acquisition proposal or consummates an acquisition proposal; or | |
• | if the merger agreement is terminated by Republic or Allied following a change in the Republic recommendation, but only if (1) Allied does not require the Republic board of directors to nevertheless submit the Republic share issuance to the stockholders of Republic for approval despite such change in |
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Republic recommendation or (2) Allied is otherwise entitled to the payment of a termination fee and expenses under the circumstances described in the immediately preceding clause. |
• | if the merger agreement is terminated by Republic or Allied following the failure by Allied to obtain Allied stockholder approval and (1) prior to such termination, an acquisition proposal with respect to Allied has been publicly announced or made known to the Allied board of directors and (2) within 12 months of such termination, Allied enters into a binding agreement to effect an acquisition proposal or consummates an acquisition proposal; or | |
• | if the merger agreement is terminated by Republic or Allied following a change in the Allied recommendation, but only if (1) Republic does not require the Allied board of directors to nevertheless submit such adoption to Allied stockholders for approval despite such change in Allied recommendation or (2) Republic is otherwise entitled to the payment of a termination fee and expenses under the circumstances described in the immediately preceding clause. |
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• | to approve the Republic share issuance; and | |
• | to approve an adjournment of the Republic special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
• | “FOR”the Republic share issuance; and | |
• | “FOR”the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
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• | under the NYSE rules, the Republic share issuance requires the affirmative vote of holders of shares of Republic common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal represents a majority of the total number of shares of Republic common stock issued and outstanding on the record date for the Republic special meeting; and | |
• | under the Republic bylaws, the Republic share issuance requires the affirmative vote of holders of shares of Republic common stock representing a majority of the total number of shares of Republic common stock present, in person or by proxy at the special meeting, and entitled to vote on the proposal. |
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• | you can send a signed notice of revocation of proxy; | |
• | you can grant a new, valid proxy bearing a later date (including, if applicable, a proxy by telephone or through the Internet); | |
• | you can revoke the proxy in accordance with the telephone or Internet proxy submission procedures described in the proxy voting instructions attached to the proxy card; or | |
• | if you are a holder of record, you can attend the Republic special meeting (or, if the special meeting is adjourned or postponed, attend the adjourned or postponed meeting) and vote in person, which will automatically cancel any proxy previously given, but your attendance alone will not revoke any proxy that you have previously given. |
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• | to adopt the merger agreement; and | |
• | to approve an adjournment of the Allied special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
• | “FOR”the adoption of the merger agreement; and | |
• | “FOR”the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal. |
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• | you can send a signed notice of revocation of proxy; | |
• | you can grant a new, valid proxy bearing a later date (including, if applicable, a proxy by telephone or through the Internet); | |
• | you can revoke the proxy in accordance with the telephone or Internet proxy submission procedures described in the proxy voting instructions attached to the proxy card; or | |
• | if you are a holder of record, you can attend the Allied special meeting (or, if the special meeting is adjourned or postponed attend the adjourned or postponed meeting) and vote in person, which will |
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automatically cancel any proxy previously given, but your attendance alone will not revoke any proxy that you have previously given. |
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• | the Republic board of directors must have a “Continuing Republic Committee,” consisting solely of five Continuing Republic Directors, defined as directors who are either (1) members of the Republic board of directors prior to the effective time of the merger, determined by the Republic board of directors to be “independent” of Republic under the rules of the NYSE and designated by Republic to be members of the Republic board of directors as of the effective time of the merger, or (2) subsequently nominated or appointed to be a member of the Republic board of directors by the Continuing Republic Committee; | |
• | the Republic board of directors must have a “Continuing Allied Committee,” consisting solely of five Continuing Allied Directors, defined as directors who are either (1) members of the Allied board of directors prior to the effective time of the merger, determined by the Allied board of directors to be “independent” of Allied and Republic under the rules of NYSE and designated by Allied to be members of the Republic board of directors as of the effective time of the merger, or (2) subsequently nominated or appointed to be a member of the Republic board of directors by the Continuing Allied Committee; | |
• | the Republic board of directors must be comprised of eleven members, consisting of (1) the Chief Executive Officer of Republic, (2) five Continuing Allied Directors, and (3) five Continuing Republic Directors, provided that, notwithstanding the foregoing, after the Initial Continuation Period, the size of the Republic board of directors may be increased by the affirmative vote of a majority of the board of directors; | |
• | at each meeting of the Republic stockholders during the Continuation Period at which directors are to be elected, (1) the Continuing Republic Committee shall have the exclusive authority on behalf of Republic to nominate as directors of the Republic board of directors, a number of persons for election equal to the number of Continuing Republic Directors to be elected at such meeting, and (2) the Continuing Allied Committee shall have the exclusive authority on behalf of Republic to nominate as directors of the Republic board of directors, a number of persons for election equal to the number of Continuing Allied Directors to be elected at such meeting; and | |
• | all directors nominated or appointed by the Continuing Republic Committee or the Continuing Allied Committee, as the case may be, must be “independent” of Republic for purposes of the rules of the NYSE, as determined by a majority of the persons making the nomination or appointment. |
• | In addition, during the period commencing on the effective time of the merger and continuing until the close of business on the day immediately prior to the second annual meeting of Republic stockholders held after the effective time, referred to as the Initial Continuation Period, (1) if any Continuing |
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Republic Director is removed from the Republic board of directors, becomes disqualified, resigns, retires, dies or otherwise cannot or will not continue to serve as a member of the Republic board of directors, such vacancy may only be filled by the Continuing Republic Committee, and (2) if any Continuing Allied Director is removed from the Republic board of directors, becomes disqualified, resigns, retires, dies or otherwise cannot or will not continue to serve as a member of the Republic board of directors, such vacancy may only be filled by the Continuing Allied Committee. |
• | during the Continuation Period, each committee of the Republic board of directors must be comprised of five members, consisting of three Continuing Republic Directors and two Continuing Allied Directors; | |
• | the initial chairman of the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee of the Republic board of directors as of the effective time of the merger will be, in each case, the Continuing Republic Director who was the chairman of such committee immediately prior to the effective time of the merger; and | |
• | each Continuing Republic Director and Continuing Allied Director serving on the Audit Committee, the Nominating and Corporate Governance Committee or the Compensation Committee of the Republic board of directors must qualify as “independent” under the rules of the NYSE and, as applicable, the rules of the SEC. |
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• | approximately[ ] shares of Republic common stock (not counting shares held in Republic’s treasury); and | |
• | employee stock options to purchase an aggregate of approximately[ ] shares of Republic common stock. |
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Allied Stockholder Rights | Republic Stockholder Rights | |||
Authorized Capital | The authorized capital stock of Allied is 525,000,000 shares of common stock, $.01 par value per share, and 10 million shares of preferred stock, par value $.10 per share. | The authorized capital stock of Republic is set forth under “Description of Republic Capital Stock — Authorized Capital Stock” beginning on page 125. | ||
Number of Directors | The Allied bylaws provide that the number of directors will not be more than thirteen until certain provisions of the Amended Shareholder’s Agreement are satisfied. The Allied board of directors currently consists of ten directors. | The Republic bylaws provide that the number of directors shall be fixed by resolution of the stockholders or the board of directors, and will consist of not more than twelve directors. | ||
Removal of Directors | Where a corporation does not have a classified board of directors, Delaware law provides that any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote on the election of directors. | Where a corporation does not have a classified board of directors, Delaware law provides that any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote on the election of directors. The Republic bylaws provide that a Republic director may be removed from office, with or without cause, by the holders of a majority of the votes then entitled to vote on the election of directors. | ||
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director may be removed without cause before the expiration of his or her term of office except by the vote of the stockholders at a meeting called for such purpose. | ||||
Vacancies on the Board of Directors | The Allied bylaws provide that in the case of a vacancy occurring on the board of directors, including any vacancy created by an increase in the number of directors, the board of directors (i) may appoint a member of management to fill a vacancy of the Management Director ceasing to serve as a director, (ii) shall appoint a person designated by the Apollo/Blackstone Shareholders to fill a vacancy created by a Shareholder Designees ceasing to serve as a director (except as a result of the reduction in the number of Shareholder Designees pursuant to the Amended Shareholder’s Agreement) and (iii) may appoint a person who qualifies as an Unaffiliated Director and is recommended by the nominating committee to fill a vacancy created by Unaffiliated Director ceasing to serve as director. | The Republic bylaws provide that in general a vacancy occurring on the board of directors, including any vacancy created by an increase in the number of directors, may be filled by the board of directors or by the stockholders. | ||
Committees of the Board of Directors | The Allied bylaws provide that the board of directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. As long as the Apollo/Blackstone Shareholders are entitled to at least two Shareholder Designees under the shareholders’ agreement, the Apollo/Blackstone Shareholders will be entitled to have one Shareholder Designee serve on each committee of the board of directors other than on any committee formed for the purpose of considering matters relating to the Apollo/Blackstone Shareholders. | The Republic bylaws provide that the board of directors may, by resolution passed by a majority of the whole board of directors, designate one or more committees, each such committee to consist of one or more directors of Republic. The current committees of the Republic board of directors are the audit committee, the compensation committee and the nominating and corporate governance committee. |
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Allied Stockholder Rights | Republic Stockholder Rights | |||
as of the effective time of the merger will be, in each case, the Continuing Republic Director who was the chairman of such committee immediately prior to such effective time. | ||||
Stockholder Quorum | The Allied bylaws provide that the presence in person or by proxy of the holders of a majority of the votes entitled to be cast at the stockholder meeting shall constitute a quorum, but if at any stockholder meeting there is less than a quorum present, the majority of those stockholders present may adjourn the meeting from time to time until such time as a quorum is present. | The Republic bylaws provide that the presence in person or by proxy of the holders of a majority of the voting power of the outstanding shares of stock entitled to vote on every matter that is to be voted on, without regard to class or series, shall constitute a quorum at all stockholder meetings, but if at any stockholder meeting there is less than a quorum present, the holders of a majority of the voting power of such shares of stock present in person or represented by proxy may adjourn the meeting from time to time until such time as a quorum is present. | ||
Stockholder Action by Written Consent | The Allied bylaws provide that an action may be taken by written consent if a valid written consent or valid consents signed by a sufficient number of holders to take such action are delivered to the corporation and the appropriate record date is adopted by the board of directors. | The Republic bylaws provide that any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if a consent is signed by the holders having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. | ||
Special Meetings of Stockholders | Under Delaware law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the corporation’s certificate of incorporation or bylaws. The Allied bylaws provide that special meetings of stockholders | Under Delaware law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the corporation’s certificate of incorporation or bylaws. The Republic bylaws provide that special meetings of |
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may be called by the board of directors or a committee of the board of directors that has been expressly empowered to do so. Under Delaware law, the written notice of the special meeting must set forth the purpose or purposes for which the meeting is called. | stockholders may be called by the board of directors or by the president. Under Delaware law and the Republic bylaws, the written notice of the special meeting must set forth the purpose or purposes for which the meeting is called. | |||
Stockholder Proposals | The Allied bylaws provide that the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (i) pursuant to the corporation’s notice of meeting, (ii) by or at the direction of the board of directors or (iii) by any stockholder of the corporation who was a stockholder of record at the time notice was delivered to the secretary of Allied, who is entitled to vote at the meeting and who complies with the procedures set forth in the bylaws. | The Republic bylaws provide that the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders only (i) pursuant to the corporation’s notice of meeting, (ii) by or at the direction of the board of directors or (iii) by any stockholder of the corporation who was a stockholder of record at the time notice was delivered to the secretary of Republic and at the time of the meeting, who is entitled to vote at the meeting and who complies with the procedures set forth in the bylaws. Clause (iii) is the exclusive means for a stockholder to make a proposal, other than proposals governed byRule 14a-8 under the rules of the Exchange Act of 1934, as amended. | ||
Stockholder Nominations | The Allied bylaws provide that the nomination of persons for election to the board of directors may be made at an annual meeting of stockholders only (i) pursuant to the corporation’s notice of meeting, (ii) by or at the direction of the board of directors or (iii) by any stockholder of the corporation who was a stockholder of record at the time notice was delivered to the secretary of Allied, who is entitled to vote at the meeting | The Republic bylaws provide that the nomination of persons for election to the board of directors may be made at an annual meeting of stockholders only (i) pursuant to the corporation’s notice of meeting, (ii) by or at the direction of the board of directors or (iii) by any stockholder of the corporation who was a stockholder of record at the time notice was delivered to the secretary of Republic and at the time of the annual |
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Allied Stockholder Rights | Republic Stockholder Rights | |||
and who complies with the procedures set forth in the bylaws. | meeting, who is entitled to vote at the annual meeting and who complies with the procedures set forth in the bylaws. Clause (iii) is the exclusive means for a stockholder to nominate persons for election to the board of directors. | |||
Voting Stock | Allied common stock is the only outstanding class of Allied voting securities. Each share of common stock is entitled to one vote on all matters submitted to stockholders. | Republic common stock is the only outstanding class of Republic voting securities and will be the only outstanding class of Republic voting securities upon completion of the merger. Under the Republic charter, each share of common stock |
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Allied Stockholder Rights | Republic Stockholder Rights | |||
is entitled to one vote on all matters submitted to stockholders. | ||||
Vote Required for Certain Stockholder Actions; Effect of Abstentions | Under Delaware law, except as otherwise required by Delaware law and unless the certificate of incorporation or bylaws of the corporation provide otherwise, in all matters other than the election of directors, the affirmative vote of the majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter is an act of the stockholders. The Allied charter and Allied bylaws do not contain any provision altering this default rule. | The Republic bylaws provide that each matter properly presented to any meeting of stockholders shall be decided by the affirmative vote of the holders of a majority of the voting power of the shares of stock present in person or by proxy and entitled to vote on the matter. | ||
Amendment of Certificate of Incorporation | Under Delaware law, the Allied charter may be amended by the adoption of a resolution of the board of directors, setting forth the proposed amendment and either calling a special meeting or directing that the amendment be considered at the next annual meeting followed by the vote of a majority of the outstanding voting stock entitled to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon as a class. | Under Delaware law, the Republic charter may be amended by the adoption of a resolution of the board of directors, setting forth the proposed amendment and either calling a special meeting or directing that the amendment be considered at the next annual meeting followed by the vote of a majority of the outstanding voting power entitled to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon as a separate class. | ||
Amendment of Bylaws | Under Delaware law the Allied bylaws may be amended by the stockholders holding at least a majority of the voting power present in person or represented by proxy at a meeting of stockholders and entitled to vote on the matter. Pursuant to the Allied charter, the board of directors may amend the Allied | Before the merger.Any amendment of the Republic bylaws requires the approval of a majority of the Republic board of directors or the approval of stockholders holding at least a majority of the voting power present in person or represented by proxy at a meeting of stockholders and entitled to vote thereon. | ||
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Allied Stockholder Rights | Republic Stockholder Rights | |||
bylaws. Under the Allied bylaws, any amendment of the Allied bylaws by the board of directors requires the approval of a majority of the Allied board of directors; provided, however, that (i) any amendments to the number and qualifications of Allied’s board of directors and (ii) certain amendments to the procedures by which the bylaws may be amended require the affirmative vote of seven members of the Allied board of directors. | After the merger.The amended and restated bylaws of Republic will provide that, during the “Continuation Period”, any amendment by the Republic board of directors to the newly added provisions of the amended and restated Republic bylaws described under “Amendment to the Republic Amended and Restated Bylaws” beginning on page 123 relating to the composition of the Republic board of directors and committees will require the affirmative vote of directors constituting at least seven members of the Republic board of directors (the “Required Number”). In the event that the size of Republic’s board of directors is increased after the Initial Continuation Period, the Required Number will be increased by one for each additional director position created. The definition of Continuation Period is set forth under “Amendment to the Republic Amended and Restated Bylaws” beginning on page 123. | |||
Dividends | Under Delaware law, except as set forth in the certificate of incorporation, directors of a corporation are generally permitted to declare and pay dividends out of surplus (defined as the excess, if any, of net assets over capital) or, if no surplus exists, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. However, the directors of a corporation may not pay any dividends out of net profits if the capital of the corporation has been reduced to an amount less than the aggregate amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets. | Under Delaware law, except as set forth in the certificate of incorporation, the directors of a corporation are generally permitted to declare and pay dividends out of surplus (defined as the excess, if any, of net assets over capital) or, if no surplus exists, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. However, the directors of a corporation may not pay any dividends out of net profits if the capital of the corporation has been reduced to an amount less than the aggregate amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets. | ||
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2008
(in millions)
Historical | ||||||||||||||||||||
Allied | Allied | |||||||||||||||||||
Republic | Waste | Waste | Pro | |||||||||||||||||
Services, | Industries, | Reclassi- | Forma | |||||||||||||||||
Inc. | Inc. | fications | Adjustments | Pro Forma | ||||||||||||||||
ASSETS | ||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||
Cash and cash equivalents | $ | 50.4 | $ | 44.5 | $ | — | $ | (68.0 | )(a) | $ | 26.9 | |||||||||
Restricted cash | — | 15.2 | — | — | 15.2 | |||||||||||||||
Accounts receivable, net of allowances for doubtful accounts | 306.7 | 714.9 | — | — | 1,021.6 | |||||||||||||||
Prepaid expenses and other current assets | 72.9 | 87.4 | — | — | 160.3 | |||||||||||||||
Deferred tax assets | 26.0 | 114.9 | — | 31.0 | (h) | 171.9 | ||||||||||||||
Total Current Assets | 456.0 | 976.9 | — | (37.0 | ) | 1,395.9 | ||||||||||||||
RESTRICTED CASH | 190.0 | — | 47.8 | (1) | — | 237.8 | ||||||||||||||
PROPERTY AND EQUIPMENT, NET | 2,149.2 | 4,464.1 | — | 338.6 | (b) | 6,951.9 | ||||||||||||||
GOODWILL, NET | 1,555.4 | 8,019.9 | — | 1,867.6 | (c) | 11,442.9 | ||||||||||||||
OTHER INTANGIBLE ASSETS | 32.1 | — | 10.0 | (2) | 481.0 | (d) | 523.1 | |||||||||||||
OTHER ASSETS | 151.7 | 339.0 | (57.8 | )(1)(2) | (102.4 | )(e) | 330.5 | |||||||||||||
$ | 4,534.4 | $ | 13,799.9 | $ | — | $ | 2,547.8 | $ | 20,882.1 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||
Accounts payable | $ | 120.9 | $ | 424.2 | $ | — | $ | — | $ | 545.1 | ||||||||||
Deferred revenue | 124.2 | 248.5 | — | — | 372.7 | |||||||||||||||
Current portion of accrued landfill and environmental costs | 43.0 | 94.4 | — | — | (g) | 137.4 | ||||||||||||||
Notes payable and current maturities of long-term debt | 2.3 | 380.6 | — | — | (f) | 382.9 | ||||||||||||||
Accrued interest | — | 106.6 | (106.6 | )(3) | — | — | ||||||||||||||
Other accrued liabilities | 281.7 | 542.7 | 106.6 | (3) | — | 931.0 | ||||||||||||||
Total Current Liabilities | 572.1 | 1,797.0 | — | — | 2,369.1 | |||||||||||||||
LONG-TERM DEBT, NET OF CURRENT MATURITIES | 1,693.0 | 6,293.9 | — | 3.1 | (f) | 7,990.0 | ||||||||||||||
ACCRUED LANDFILL AND ENVIRONMENTAL COSTS | 300.3 | 804.3 | — | 70.1 | (g) | 1,174.7 | ||||||||||||||
DEFERRED INCOME TAXES AND OTHER LONG-TERM TAX LIABILITIES | 500.8 | 401.1 | 277.9 | (4) | 268.2 | (h) | 1,448.0 | |||||||||||||
OTHER LIABILITIES | 204.2 | 527.9 | (277.9 | )(4) | — | 454.2 | ||||||||||||||
MINORITY INTERESTS | — | 2.0 | — | — | 2.0 | |||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||
STOCKHOLDERS’ EQUITY: | ||||||||||||||||||||
Republic preferred stock, par value $.01 per share; 50,000,000 shares authorized; none issued | — | — | — | — | — | |||||||||||||||
Common stock, par value $.01 per share | 2.0 | 4.3 | — | (2.3 | ) (i) | 4.0 | ||||||||||||||
Additional paid-in capital | 49.8 | 3,427.5 | — | 2,750.6 | (i) | 6,227.9 | ||||||||||||||
Retained earnings | 1,617.3 | 571.4 | — | (571.4 | ) (i) | 1,617.3 | ||||||||||||||
Treasury stock, at cost | (416.1 | ) | — | — | — | (416.1 | ) | |||||||||||||
Accumulated other comprehensive | ||||||||||||||||||||
income (loss), net of tax | 11.0 | (29.5 | ) | — | 29.5 | (e) | 11.0 | |||||||||||||
Total Stockholders’ Equity | 1,264.0 | 3,973.7 | — | 2,206.4 | 7,444.1 | |||||||||||||||
$ | 4,534.4 | $ | 13,799.9 | $ | — | $ | 2,547.8 | $ | 20,882.1 | |||||||||||
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FROM CONTINUING OPERATIONS
For the year ended December 31, 2007
(in millions, except per share data)
Historical | ||||||||||||||||
Allied | ||||||||||||||||
Republic | Waste | |||||||||||||||
Services, | Industries, | Pro Forma | ||||||||||||||
Inc. | Inc. | Adjustments | Pro Forma | |||||||||||||
Revenue | $ | 3,176.2 | $ | 6,068.7 | $ | — | $ | 9,244.9 | ||||||||
Expenses: | ||||||||||||||||
Cost of operations | 1,997.3 | 3,733.9 | — | 5,731.2 | ||||||||||||
Depreciation, amortization and depletion | 305.5 | 553.5 | 68.5 | (j) | 927.5 | |||||||||||
Accretion | 17.1 | 53.2 | 1.3 | (k) | 71.6 | |||||||||||
Selling, general and administrative | 320.3 | 631.9 | (5.7 | )(l) | 946.5 | |||||||||||
Loss from divestitures and asset impairments | — | 40.5 | — | (m) | 40.5 | |||||||||||
Operating income | 536.0 | 1,055.7 | (64.1 | ) | 1,527.6 | |||||||||||
Interest expense and other | (67.9 | ) | (538.4 | ) | 17.3 | (n) | (589.0 | ) | ||||||||
Income from continuing operations before provision for income taxes | 468.1 | 517.3 | (46.8 | ) | 938.6 | |||||||||||
Provision for income taxes | 177.9 | 207.1 | (17.8 | )(o) | 367.2 | |||||||||||
Minority interests | — | .4 | — | .4 | ||||||||||||
Income from continuing operations | 290.2 | 309.8 | (29.0 | ) | 571.0 | |||||||||||
Dividends on preferred stock | — | (37.5 | ) | — | (37.5 | ) | ||||||||||
Income from continuing operations available to common shareholders | $ | 290.2 | $ | 272.3 | $ | (29.0 | ) | $ | 533.5 | |||||||
Basic earnings per share: | ||||||||||||||||
Basic income from continuing operations available to common shareholders per share | $ | 1.53 | $ | .74 | $ | 1.49 | ||||||||||
Weighted average common shares outstanding | 190.1 | 368.8 | (201.5 | )(p) | 357.4 | |||||||||||
Diluted earnings per share: | ||||||||||||||||
Diluted income from continuing operations available to common shareholders per share | $ | 1.51 | $ | .71 | $ | 1.47 | ||||||||||
Weighted average common and common equivalent shares outstanding | 192.0 | 443.0 | (241.3 | )(p) | 393.7 | |||||||||||
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FROM CONTINUING OPERATIONS
For the three months ended March 31, 2008
(in millions, except per share data)
Historical | ||||||||||||||||
Allied | ||||||||||||||||
Republic | Waste | |||||||||||||||
Services, | Industries, | Pro Forma | ||||||||||||||
Inc. | Inc. | Adjustments | Pro Forma | |||||||||||||
Revenue | $ | 779.2 | $ | 1,484.2 | $ | — | $ | 2,263.4 | ||||||||
Expenses: | ||||||||||||||||
Cost of operations | 476.5 | 934.2 | — | 1,410.7 | ||||||||||||
Depreciation, amortization and depletion | 73.4 | 144.4 | 17.9 | (j) | 235.7 | |||||||||||
Accretion | 4.4 | 13.9 | — | (k) | 18.3 | |||||||||||
Selling, general and administrative | 82.7 | 132.8 | (.3 | )(l) | 215.2 | |||||||||||
Loss from divestitures and asset impairments | — | 18.5 | — | (m) | 18.5 | |||||||||||
Operating income | 142.2 | 240.4 | (17.6 | ) | 365.0 | |||||||||||
Interest expense and other | (18.4 | ) | (109.7 | ) | 1.6 | (n) | (126.5 | ) | ||||||||
Income from continuing operations before provision for income taxes | 123.8 | 130.7 | (16.0 | ) | 238.5 | |||||||||||
Provision for income taxes | 47.7 | 57.6 | (6.1 | )(o) | 99.2 | |||||||||||
Minority interests | — | .5 | — | .5 | ||||||||||||
Income from continuing operations | 76.1 | 72.6 | (9.9 | ) | 138.8 | |||||||||||
Dividends on preferred stock | — | (6.2 | ) | — | (6.2 | ) | ||||||||||
Income from continuing operations available to common shareholders | $ | 76.1 | $ | 66.4 | $ | (9.9 | ) | $ | 132.6 | |||||||
Basic earnings per share: | ||||||||||||||||
Basic income from continuing operations available to common shareholders per share | $ | .41 | $ | .17 | $ | .37 | ||||||||||
Weighted average common shares outstanding | 183.4 | 390.6 | (213.2 | )(p) | 360.8 | |||||||||||
Diluted earnings per share: | ||||||||||||||||
Diluted income from continuing operations available to common shareholders per share | $ | .41 | $ | .17 | $ | .36 | ||||||||||
Weighted average common and common equivalent shares outstanding | 185.1 | 444.2 | (241.7 | )(p) | 387.6 | |||||||||||
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(1) | Restricted Cash |
(2) | Other Intangible Assets |
(3) | Accrued Interest |
(4) | Deferred Income Taxes and Other Long-Term Tax Liabilities |
Transaction costs | $ | 48.8 | ||
Debt issuance costs | 17.4 | |||
Equity issuance costs | 1.8 | |||
Total pro forma cash expenditures | $ | 68.0 | ||
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(b) | Property and Equipment, Net |
(c) | Goodwill |
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Value of Republic common stock issued as consideration: | ||||||||
Shares of Allied’s common stock outstanding on March 31, 2008 | 431.3 | |||||||
Assumed vesting of outstanding equity-based awards and issuance of shares of Allied common stock in settlement thereof (excluding stock options) | 3.1 | |||||||
434.4 | ||||||||
Exchange Ratio | .45 | |||||||
Shares of Republic common stock issued in exchange for Allied common stock outstanding | 195.5 | |||||||
Average per share closing price of Republic’s common stock for the five-day period around the announcement date of June 23, 2008 | $ | 31.23 | ||||||
Value of Republic common stock issued in exchange for Allied common stock outstanding | $ | 6,105.5 | ||||||
Value of Republic stock options issued as consideration: | ||||||||
Units of Allied stock options outstanding as of March 31, 2008 (assumed fully vested) | 19.3 | |||||||
Exchange Ratio | .45 | |||||||
Units of Republic stock options issued in exchange for Allied stock options outstanding | 8.7 | |||||||
Average fair value per unit of Republic stock options issued | $ | 8.70 | ||||||
Value of Republic stock options issued in exchange for Allied stock options outstanding | $ | 75.7 | ||||||
Value of Republic unvested other equity-based awards issued to retained directors | $ | .7 | ||||||
Value of Republic stock options and unvested other equity-based awards issued to replace Allied stock options and unvested restricted stock outstanding | 76.4 | |||||||
Debt, fair value | 6,677.6 | |||||||
Less: Cash acquired | (44.5 | ) | ||||||
Transaction costs | 48.8 | |||||||
Total preliminary purchase price | $ | 12,863.8 | ||||||
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Historical book value of Allied’s net assets | $ | 3,973.7 | ||
Less: | ||||
Goodwill, book value | (8,019.9 | ) | ||
Other intangible assets, book value | (10.0 | ) | ||
Cash acquired | (44.5 | ) | ||
Debt, book value | 6,674.5 | |||
Purchase price allocation adjustments: | ||||
Landfill development costs, adjustment to fair value | 338.6 | |||
Goodwill | 9,887.5 | |||
Other intangible assets | 491.0 | |||
Other assets, adjustments to fair value | (119.8 | ) | ||
Accrued landfill and environmental costs, fair value adjustment | (70.1 | ) | ||
Deferred taxes on adjustments to fair value | (237.2 | ) | ||
Purchase price | $ | 12,863.8 | ||
(d) | Other Intangible Assets |
Preliminary | ||||||||||||
Fair Value | Pro Forma | |||||||||||
of Other | Estimated | Adjustment | ||||||||||
Intangible | Useful | to Annual | ||||||||||
Assets | Life | Amortization | ||||||||||
Other Intangible Assets | (in millions) | (in years) | (in millions) | |||||||||
Customer relationships | $ | 400.0 | 10 | $ | 40.0 | |||||||
Franchise agreements | 70.0 | 9 | 7.8 | |||||||||
Other municipal agreements | 20.0 | 3 | 6.7 | |||||||||
Non-compete agreements | 1.0 | 2 | .5 | |||||||||
Total | $ | 491.0 | $ | 55.0 | ||||||||
(e) | Other Assets |
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Pro Forma Adjustments | ||||||||||||
Addition | ||||||||||||
Reversal | of Amounts | |||||||||||
of Allied’s | For Combined | |||||||||||
Amounts | Company | Total | ||||||||||
Deferred financing costs, net | $ | (73.0 | ) | $ | 17.4 | $ | (55.6 | ) | ||||
Defined benefit pension plan asset | (46.8 | ) | — | (46.8 | ) | |||||||
$ | (119.8 | ) | $ | 17.4 | $ | (102.4 | ) | |||||
(f) | Debt |
(g) | Accrued Landfill and Environmental Costs |
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(h) | Deferred Tax Assets and Liabilities |
(i) | Equity |
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(j) | Depreciation, Amortization and Depletion |
Pro Forma Adjustments | ||||||||||||||||
Addition | ||||||||||||||||
Reversal | of Amounts | |||||||||||||||
of Allied’s | for Combined | |||||||||||||||
Amounts | Company | Total | ||||||||||||||
For the Fiscal Year Ended December 31, 2007: | ||||||||||||||||
Landfill asset amortization expense | $ | (229.5 | ) | $ | 243.7 | $ | 14.2 | |||||||||
Other intangible asset amortization expense | (.7 | ) | 55.0 | 54.3 | ||||||||||||
$ | (230.2 | ) | $ | 298.7 | $ | 68.5 | ||||||||||
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Pro Forma Adjustments | ||||||||||||||||
Addition | ||||||||||||||||
Reversal | of Amounts | |||||||||||||||
of Allied’s | for Combined | |||||||||||||||
Amounts | Company | Total | ||||||||||||||
For the Three Months Ended March 31, 2008: | ||||||||||||||||
Landfill asset amortization expense | $ | (50.5 | ) | $ | 54.9 | $ | 4.4 | |||||||||
Other intangible asset amortization expense | (.3 | ) | 13.8 | 13.5 | ||||||||||||
$ | (50.8 | ) | $ | 68.7 | $ | 17.9 | ||||||||||
(k) | Accretion |
(l) | Sales, General and Administrative Expenses |
(m) | Loss from Divestitures and Asset Impairments |
(n) | Interest Expense and Other |
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(o) | Provision for Income Taxes |
(p) | Earnings per Share |
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100 F Street, N.E.
Room 1024
Washington, DC 20549
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Republic SEC Filings | ||
(File No. 1-14267) | Period | |
Annual Report onForm 10-K | For the fiscal year ended December 31, 2007, as amended on Form 10-K/A, filed with the Commission on May 5, 2008 | |
Quarterly Reports onForm 10-Q | Quarter ended: March 31, 2008 | |
Current Reports onForm 8-K | Filed on: February 5, 2008, June 16, 2008, June 23, 2008, June 23, 2008 and July 28, 2008 | |
Proxy Statement on Schedule 14A | Filed on: April 2, 2008 | |
The description of Republic common stock set forth in its Registration Statements onForm 8-A | Filed on: June 30, 1998 and July 28, 2008 |
Allied SEC Filings | ||
(File No. 1-14705) | Period | |
Annual Report onForm 10-K | For the fiscal year ended December 31, 2007 | |
Quarterly Reports onForm 10-Q | Quarter ended: March 31, 2008 | |
Current Reports onForm 8-K | Filed on: April 10, 2008, May 6, 2008, June 16, 2008 and June 23, 2008 | |
Proxy Statement on Schedule 14A | Filed on: April 10, 2008 |
Republic Services, Inc. | Allied Waste Industries, Inc. | |
110 S.E. 6th Street, 28th Floor | 18500 North Allied Way | |
Fort Lauderdale, FL 33301 | Phoenix, AZ 85054 | |
Attention: Investor Relations | Attention: Investor Relations | |
Telephone:(954) 769-2400 | Telephone: (480) 627-2700 | |
website: www.republicservices.com | website: www.alliedwaste.com |
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Annex A-1
Table of Contents
Page | ||||||
ARTICLE I DEFINITIONS | Annex A-6 | |||||
ARTICLE II THE MERGER | Annex A-15 | |||||
Section 2.01 | The Merger | Annex A-15 | ||||
Section 2.02 | Effective Time | Annex A-16 | ||||
Section 2.03 | Closing | Annex A-16 | ||||
Section 2.04 | Conversion of Shares | Annex A-16 | ||||
Section 2.05 | Surrender and Payment | Annex A-16 | ||||
Section 2.06 | Equity Awards | Annex A-18 | ||||
Section 2.07 | Fractional Shares | Annex A-19 | ||||
Section 2.08 | Withholding Rights | Annex A-19 | ||||
Section 2.09 | Lost, Stolen or Destroyed Certificates | Annex A-19 | ||||
Section 2.10 | Adjustments | Annex A-19 | ||||
ARTICLE III THE SURVIVING CORPORATION; REPUBLIC BY-LAWS | Annex A-19 | |||||
Section 3.01 | Certificate of Incorporation of the Surviving Corporation | Annex A-19 | ||||
Section 3.02 | By-laws of the Surviving Corporation | Annex A-19 | ||||
Section 3.03 | Directors and Officers of the Surviving Corporation | Annex A-19 | ||||
Section 3.04 | Republic Charter Amendment | Annex A-20 | ||||
Section 3.05 | By-laws of Republic | Annex A-20 | ||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ALLIED | Annex A-20 | |||||
Section 4.01 | Organization, Standing and Power | Annex A-20 | ||||
Section 4.02 | Allied Subsidiaries | Annex A-20 | ||||
Section 4.03 | Capital Structure | Annex A-20 | ||||
Section 4.04 | Authorization; Validity of Agreement; Necessary Action | Annex A-21 | ||||
Section 4.05 | No Conflicts; Consents | Annex A-21 | ||||
Section 4.06 | SEC Documents; Financial Statements; Undisclosed Liabilities | Annex A-22 | ||||
Section 4.07 | Information Supplied | Annex A-23 | ||||
Section 4.08 | Absence of Certain Changes or Events | Annex A-23 | ||||
Section 4.09 | Taxes | Annex A-23 | ||||
Section 4.10 | Benefit Plans | Annex A-24 | ||||
Section 4.11 | Employment and Labor Matters | Annex A-25 | ||||
Section 4.12 | Litigation | Annex A-25 | ||||
Section 4.13 | Compliance with Applicable Laws | Annex A-26 |
Annex A-2
Table of Contents
Page | ||||||
Section 4.14 | Contracts | Annex A-26 | ||||
Section 4.15 | Intellectual Property | Annex A-27 | ||||
Section 4.16 | Real Estate | Annex A-27 | ||||
Section 4.17 | Environmental Matters | Annex A-28 | ||||
Section 4.18 | Brokers | Annex A-29 | ||||
Section 4.19 | Opinion of Financial Advisor | Annex A-29 | ||||
Section 4.20 | State Takeover Statutes | Annex A-29 | ||||
Section 4.21 | Rights Plan | Annex A-29 | ||||
Section 4.22 | Ownership of Republic Common Stock; Section 203 of the DGCL | Annex A-29 | ||||
Section 4.23 | Interests in Competitors | Annex A-29 | ||||
Section 4.24 | Insurance | Annex A-29 | ||||
ARTICLE V REPRESENTATIONS AND WARRANTIES OF REPUBLIC AND MERGER SUB | Annex A-29 | |||||
Section 5.01 | Organization, Standing and Power | Annex A-30 | ||||
Section 5.02 | Republic Subsidiaries | Annex A-30 | ||||
Section 5.03 | Capital Structure | Annex A-30 | ||||
Section 5.04 | Authorization; Validity of Agreement; Necessary Action | Annex A-31 | ||||
Section 5.05 | No Conflicts; Consents | Annex A-31 | ||||
Section 5.06 | SEC Documents; Financial Statements; Undisclosed Liabilities | Annex A-32 | ||||
Section 5.07 | Information Supplied | Annex A-33 | ||||
Section 5.08 | Absence of Certain Changes or Events | Annex A-33 | ||||
Section 5.09 | Taxes | Annex A-33 | ||||
Section 5.10 | Benefit Plans | Annex A-34 | ||||
Section 5.11 | Employment and Labor Matters | Annex A-35 | ||||
Section 5.12 | Litigation | Annex A-35 | ||||
Section 5.13 | Compliance with Applicable Laws | Annex A-36 | ||||
Section 5.14 | Contracts | Annex A-37 | ||||
Section 5.15 | Intellectual Property | Annex A-37 | ||||
Section 5.16 | Real Estate | Annex A-37 | ||||
Section 5.17 | Environmental Matters | Annex A-38 | ||||
Section 5.18 | Brokers | Annex A-39 | ||||
Section 5.19 | Opinion of Financial Advisor | Annex A-39 | ||||
Section 5.20 | State Takeover Statutes | Annex A-39 |
Annex A-3
Table of Contents
Page | ||||||
Section 5.21 | Rights Plan | Annex A-39 | ||||
Section 5.22 | Ownership of Allied Common Stock; Section 203 of the DGCL | Annex A-39 | ||||
Section 5.23 | Interests in Competitors | Annex A-39 | ||||
Section 5.24 | Insurance | Annex A-39 | ||||
Section 5.25 | Operations of Merger Sub | Annex A-39 | ||||
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS | Annex A-40 | |||||
Section 6.01 | Conduct of Business | Annex A-40 | ||||
Section 6.02 | No Solicitation | Annex A-44 | ||||
ARTICLE VII ADDITIONAL AGREEMENTS | Annex A-47 | |||||
Section 7.01 | Preparation of the Form S-4 and Joint Proxy Statement/Prospectus | Annex A-47 | ||||
Section 7.02 | Stockholders Meeting; Recommendations | Annex A-47 | ||||
Section 7.03 | Access to Information; Confidentiality | Annex A-48 | ||||
Section 7.04 | Efforts to Consummate, Notification. | Annex A-48 | ||||
Section 7.05 | Tax Treatment | Annex A-50 | ||||
Section 7.06 | Indemnification; D&O Insurance | Annex A-50 | ||||
Section 7.07 | Public Announcements | Annex A-51 | ||||
Section 7.08 | Stock Transfer Taxes | Annex A-51 | ||||
Section 7.09 | Employee Matters | Annex A-51 | ||||
Section 7.10 | Section 16 Matters | Annex A-52 | ||||
Section 7.11 | Financing | Annex A-53 | ||||
Section 7.12 | Stock Exchange Listing | Annex A-54 | ||||
Section 7.13 | Notice of Certain Events | Annex A-54 | ||||
Section 7.14 | Certain Corporate Governance and Other Matters | Annex A-54 | ||||
Section 7.15 | Control of Operations | Annex A-54 | ||||
Section 7.16 | State Takeover Statutes | Annex A-54 | ||||
ARTICLE VIII CONDITIONS PRECEDENT | Annex A-55 | |||||
Section 8.01 | Conditions to Each Party’s Obligation to Effect the Merger | Annex A-55 | ||||
Section 8.02 | Conditions to Obligation of Allied to Effect the Merger | Annex A-55 | ||||
Section 8.03 | Conditions to Obligation of Republic and Merger Sub to Effect the Merger | Annex A-56 | ||||
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER | Annex A-57 | |||||
Section 9.01 | Termination | Annex A-57 | ||||
Section 9.02 | Effect of Termination; Remedies | Annex A-58 | ||||
Section 9.03 | Amendment | Annex A-58 |
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Section 9.04 | Extension; Waiver | Annex A-58 | ||||
ARTICLE X GENERAL PROVISIONS | Annex A-58 | |||||
Section 10.01 | Nonsurvival of Representations and Warranties; Disclosure Schedule | Annex A-58 | ||||
Section 10.02 | Notices | Annex A-58 | ||||
Section 10.03 | Fees and Expenses | Annex A-59 | ||||
Section 10.04 | Interpretation | Annex A-60 | ||||
Section 10.05 | Severability | Annex A-61 | ||||
Section 10.06 | Counterparts | Annex A-61 | ||||
Section 10.07 | Entire Agreement; No Third-Party Beneficiaries | Annex A-61 | ||||
Section 10.08 | Governing Law | Annex A-61 | ||||
Section 10.09 | Assignment | Annex A-61 | ||||
Section 10.10 | Enforcement | Annex A-61 | ||||
Section 10.11 | Submission to Jurisdiction | Annex A-61 | ||||
Section 10.12 | Acknowledgement | Annex A-62 | ||||
Section 10.13 | Waiver of Jury Trial | Annex A-63 | ||||
EXHIBIT A REPUBLIC CHARTER AMENDMENT | A-1 | |||||
EXHIBIT B NEW REPUBLIC BY-LAWS | B-1 |
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Annex A-7
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Annex A-8
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Annex A-9
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Annex A-10
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Annex A-11
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Annex A-12
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Annex A-13
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Annex A-14
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Annex A-15
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Annex A-16
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Annex A-17
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Annex A-18
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Annex A-19
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Annex A-20
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Annex A-21
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Annex A-22
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Annex A-23
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Annex A-24
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Annex A-25
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Annex A-26
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Annex A-27
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Annex A-28
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Annex A-29
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Annex A-30
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Annex A-31
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Annex A-32
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Annex A-33
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Annex A-34
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Annex A-35
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Annex A-36
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Annex A-37
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Annex A-38
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Annex A-39
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Annex A-40
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Annex A-41
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Annex A-42
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Annex A-43
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Annex A-44
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Annex A-45
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Annex A-46
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Annex A-47
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Annex A-48
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Annex A-49
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Annex A-50
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Annex A-51
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Annex A-52
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Annex A-53
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Annex A-54
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Annex A-55
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Annex A-56
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Annex A-57
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RS Merger Wedge, Inc.
110 S.E. 6th Street, 28th Floor
Fort Lauderdale, Florida 33301
Tel: (954)-769-2400
Annex A-58
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Attention: David A. Barclay
One S.E. Third Avenue, Suite 2500
Miami, Florida 33131
Tel:(305) 374-5600
Fax:(305) 374-5095
Attention: Jonathan L. Awner,
Stephen K. Roddenberry, and Jose Gordo
18500 N. Allied Way
Phoenix, Arizona 85054
Tel:(480) 627-2700
Fax:(480) 627-2703
Attention: Timothy R. Donovan
71 South Wacker Drive
Chicago, Illinois 60606
Tel:(312) 782-0600
Fax:(312) 701-7711
Attention: Jodi A. Simala, Scott J. Davis and
Jennifer L. Keating
Annex A-59
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Annex A-60
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Annex A-61
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Annex A-62
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Annex A-63
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By: | /s/ James E. O’Connor |
Title: | Chairman of the Board and |
By: | /s/ James E. O’Connor |
Title: | President |
By: | /s/ John J. Zillmer |
Title: | Chairman of the Board and |
Annex A-64
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Annex A-65
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Annex A-66
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Annex A-67
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By: | /s/ James E. O’Connor |
Title: | Chairman of the Board and |
By: | /s/ James E. O’Connor |
Title: | President |
By: | /s/ John J. Zillmer |
Title: | Chairman of the Board and |
Annex A-68
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Annex B-1
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Annex B-2
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Annex B-3
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Annex B-4
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Annex B-5
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Annex B-6
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Annex B-7
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Annex B-8
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Annex B-9
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Annex B-10
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Annex B-11
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Annex B-12
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Annex B-13
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Annex C-1
Table of Contents
Annex C-2
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Annex C-3
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Annex D-1
Table of Contents
Annex D-2
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Item 20. | Indemnification of Directors and Officers. |
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Item 21. | Exhibits and Financial Statement Schedules. |
Exhibit | ||||
Number | Exhibit Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of June 22, 2008, among Republic Services, Inc., RS Merger Wedge, Inc. and Allied Waste Industries, Inc. (incorporated by reference to Exhibit 2.1 of Republic’s Current Report onForm 8-K dated June 22, 2008). | ||
2 | .2 | Amendment No. 1, dated July 31, 2008, to the Agreement and Plan of Merger, dated as of June 22, 2008, among Republic Services, Inc., RS Merger Wedge, Inc. and Allied Waste Industries, Inc. (incorporated by reference to Exhibit 2.1 of Republic’s Current Report on Form 8-K dated July 31, 2008). | ||
5 | .1 | Opinion of Akerman Senterfitt.* | ||
8 | .1 | Opinion of Mayer Brown LLP.* | ||
8 | .2 | Opinion of Akerman Senterfitt.* | ||
23 | .1 | Consent of Ernst & Young LLP. | ||
23 | .2 | Consent of PricewaterhouseCoopers LLP. | ||
23 | .3 | Consent of Akerman Senterfitt (contained in Exhibit 5.1).* | ||
23 | .4 | Consent of Mayer Brown LLP (contained in Exhibit 8.1).* | ||
23 | .5 | Consent of Akerman Senterfitt (contained in Exhibit 8.2).* | ||
24 | .1 | Power of Attorney for Republic Services, Inc. (included in signature page). | ||
99 | .1 | Form of Proxy Card of Republic Services, Inc.* | ||
99 | .2 | Form of Proxy Card of Allied Waste Industries, Inc.* | ||
99 | .3 | Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.* | ||
99 | .4 | Consent of UBS Securities LLC.* |
* | To be filed by amendment. |
Item 22. | Undertakings. |
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REPUBLIC SERVICES, INC. |
Signature | Title | Date | ||||||
/s/ James E. O’Connor | Chairman of the Board and Chief Executive Officer (principal executive officer) | July 31, 2008 | ||||||
/s/ Harris W. Hudson | Vice Chairman and Director | July 31, 2008 | ||||||
/s/ Tod C. Holmes | Senior Vice President and Chief Financial Officer (principal financial officer) | July 31, 2008 | ||||||
/s/ Charles F. Serianni | Vice President and Chief Accounting Officer (principal accounting officer) | July 31, 2008 | ||||||
/s/ John W. Croghan | Director | July 31, 2008 | ||||||
/s/ W. Lee Nutter | Director | July 31, 2008 | ||||||
/s/ Ramon A. Rodriguez | Director | July 31, 2008 | ||||||
/s/ Allan C. Sorensen | Director | July 31, 2008 | ||||||
/s/ Michael W. Wickham | Director | July 31, 2008 |
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Exhibit Number | Exhibit Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of June 22, 2008, among Republic Services, Inc., RS Merger Wedge, Inc. and Allied Waste Industries, Inc. (incorporated by reference to Exhibit 2.1 of Republic’s Current Report onForm 8-K dated June 22, 2008). | ||
2 | .2 | Amendment No. 1, dated July 31, 2008, to the Agreement and Plan of Merger, dated as of June 22, 2008, among Republic Services, Inc., RS Merger Wedge, Inc. and Allied Waste Industries, Inc. (incorporated by reference to Exhibit 2.1 of Republic’s Current Report on Form 8-K dated July 31, 2008). | ||
5 | .1 | Opinion of Akerman Senterfitt.* | ||
8 | .1 | Opinion of Mayer Brown LLP.* | ||
8 | .2 | Opinion of Akerman Senterfitt.* | ||
23 | .1 | Consent of Ernst & Young LLP. | ||
23 | .2 | Consent of PricewaterhouseCoopers LLP. | ||
23 | .3 | Consent of Akerman Senterfitt (contained in Exhibit 5.1).* | ||
23 | .4 | Consent of Mayer Brown LLP (contained in Exhibit 8.1).* | ||
23 | .5 | Consent of Akerman Senterfitt (contained in Exhibit 8.2).* | ||
24 | .1 | Power of Attorney for Republic Services, Inc. (included in signature page) | ||
99 | .1 | Form of Proxy Card of Republic Services, Inc.* | ||
99 | .2 | Form of Proxy Card of Allied Waste Industries, Inc.* | ||
99 | .3 | Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.* | ||
99 | .4 | Consent of UBS Securities LLC.* |
* | To be filed by amendment. |
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