Item 1.01
Entry into a Material Definitive Agreement.
Agreement and Plan of Merger
On February 8, 2022, US Ecology,
Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with Republic Services, Inc., a Delaware corporation (“Parent”), and Bronco Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent (“Merger Sub”).
The Merger Agreement provides
that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company
(the “Merger”), with the Company continuing as the surviving corporation and as a wholly-owned subsidiary of Parent.
At the effective
time of the Merger (“Effective Time”), each share of common stock, par value $0.01 per share, of the Company (the “Company
Common Stock”), issued and outstanding immediately prior to the Effective Time (other than shares of Company Common Stock owned
by Parent or the Company (as treasury stock or otherwise) or any of their respective direct or indirect wholly-owned subsidiaries as of
immediately prior to the Effective Time or for which appraisal rights have been demanded properly in accordance with Section 262 of the
General Corporation Law of the State of Delaware), will be converted into the right to receive $48.00 per share in cash, without interest
(the “Merger Consideration”).
At
the Effective Time:
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each outstanding stock option of the Company with an exercise price per share
of Company Common Stock less than the Merger Consideration that is outstanding immediately prior to the Effective Time, whether vested
or unvested (each, a “Cash-Out Option”), will automatically become fully vested and will be cancelled and entitle the
holder of such Cash-Out Option to receive in exchange therefor an amount in cash (subject to any applicable withholding or other taxes
or other amounts required by applicable law to be withheld) equal to (a) the number of shares of Company Common Stock subject to the Cash-Out
Option multiplied by (b) the excess of the Merger Consideration over the per-share exercise price of such Cash-Out Option,
and any such stock option of the Company that is not a Cash-Out Option outstanding immediately prior to the Effective Time, whether vested or unvested, will automatically be cancelled
without any consideration paid to the holder thereof.
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each performance stock unit (“PSU”) outstanding immediately
prior to the Effective Time will automatically become fully vested and will be cancelled and thereafter entitle the holder of such PSU
to receive in exchange therefor an amount in cash (subject to any applicable withholding or other taxes or other amounts required by applicable
law to be withheld) equal to (a) the number of shares of Company Common Stock equal to the greater of (i) the target number of shares
of Company Common Stock with respect to such PSU as defined and set forth in the applicable award agreement and (ii) the number of shares
of Company Common Stock determined based upon the actual level of achievement through the latest practicable date prior to the Effective
Time, as determined by the compensation committee of the board of directors of the Company (the “Company Board”) prior
to the Effective Time multiplied by (b) the Merger Consideration.
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each restricted stock unit (“RSU”) outstanding immediately
prior to the Effective Time will automatically become fully vested and will be cancelled and thereafter entitle the holder of such RSU
to receive in exchange therefor an amount in cash (subject to any applicable withholding or other taxes or other amounts required by applicable
law to be withheld) equal to (a) the number of shares of Company Common Stock subject to such RSU multiplied by (b) the
Merger Consideration.
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each restricted share award outstanding immediately prior to the Effective Time
will automatically become fully vested and will be cancelled and thereafter entitle the holder of such restricted share award to receive
in exchange therefor an amount in cash (subject to any applicable withholding or other taxes or other amounts required by applicable law
to be withheld) equal to (a) the number of shares of Company Common Stock subject to such restricted share multiplied by
(b) the Merger Consideration.
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At the Effective
Time, and in accordance with the terms of each warrant to purchase shares of Company Common Stock governed by that certain Assignment,
Assumption and Amendment to the Warrant Agreement between the Company and Contingent Stock Transfer & Trust Company, dated as of November
1, 2019 (the “Warrant Agreement” and such warrants, the “Warrants”) and that is issued and outstanding
immediately prior to the Effective Time, unless otherwise elected by the holder of any such Warrant, Parent will cause the surviving
corporation to issue a replacement warrant to each holder thereof that complies with and satisfies the applicable terms and conditions
of the Warrant Agreement, providing that such replacement warrant will be exercisable for an amount in cash, without interest, determined
in accordance with the Warrant Agreement.
The consummation of the
Merger (the “Closing”) is subject to certain conditions, including (i)
the affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock (the “Company
Stockholder Approval”), (ii) (a) the expiration or termination of any waiting period (or any extension thereof) under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the
“HSR Act”), (b) receipt of other required regulatory approvals, and
(iii) the absence of any law or order restraining, enjoining or otherwise prohibiting the Merger. Each of Parent’s, Merger
Sub’s, and the Company’s obligation to consummate the Merger is also subject to additional customary conditions,
including (x) subject to specific standards, the accuracy of the representations and warranties of the other party, and (y)
performance in all material respects by the other party of its obligations under the Merger Agreement.
The Company has
made customary representations and warranties in the Merger Agreement and has agreed to customary covenants regarding the operation of
the business of the Company and its subsidiaries prior to the earlier of the Closing or the date that the Merger Agreement is terminated
in accordance with its terms. Parent has agreed to customary covenants related to treatment of employees and their compensation and benefits
after Closing.
Notwithstanding the above, in the event the Merger does not close by
March 31, 2023, the Company may make in-cycle grants of stock options, PSUs, RSUs or restricted shares to eligible recipients in
the ordinary course of business, and at the Effective Time, any such new awards shall roll over into awards of Parent that maintain, to
the extent reasonably practicable, the terms and conditions applicable to such awards upon grant, including with respect to the remaining
vesting conditions.
Under
the Merger Agreement, the Company will be subject to “no-shop” restrictions and will not, subject to certain exceptions
set forth in the Merger Agreement, (i) solicit or knowingly encourage inquiries or proposals relating to alternative acquisition
transactions or (ii) engage in discussions or negotiations regarding, or provide any non-public information to third parties
in connection with, alternative acquisition proposals. In addition, the Company has agreed that, subject to certain exceptions, the Company
Board will not withdraw its recommendation to the Company’s stockholders in favor of the adoption of the Merger Agreement.
The Merger Agreement also includes
customary termination provisions for both the Company and Parent and provides that, in connection with the termination of the Merger
Agreement, under specified circumstances, the Company will be required to pay Parent a Termination Fee of $46,253,000, including if (i)
Parent terminates the Merger Agreement because the Company Board changes its recommendation regarding the Merger Agreement, (ii) the
Company terminates the Merger Agreement prior to the receipt of the Company Stockholder Approval to enter into an acquisition agreement
with a third-party with respect to a superior proposal or (iii) Parent or the Company terminates the Merger Agreement in certain circumstances
and, in any such case, prior to such termination, a takeover proposal by a third-party shall have been publicly disclosed and not publicly
withdrawn and within 12 months following the date of termination, the Company shall have entered into an alternative transaction agreement
(whether or not relating to a takeover proposal made, communication or publicly disclosed prior to the termination of the Merger Agreement).
The Merger Agreement also provides
that if the Merger Agreement is terminated because (i) of the issuance of a nonappealable court order or legal restraint prohibiting
the transaction for antitrust reasons or (ii) the transactions have not been consummated by August 8, 2023, and at such time, antitrust
approval for the transaction has not been obtained but the other conditions to Closing have been satisfied, then Parent will be required
to reimburse the Company for 50% of its reasonable and documented out-of-pocket expenses incurred in connection with the Merger up to
$5,000,000 (i.e., Parent's reimbursement shall not exceed $2,500,000).
The
Merger Agreement requires Parent and the Company to use its reasonable best efforts to take all actions to consummate the Merger,
including using its reasonable best efforts to obtain antitrust approval. In using their reasonable best efforts to obtain antitrust approval, the
parties are required to take any and all steps necessary, proper or advisable to avoid or eliminate each
and every impediment and any proceeding instituted or threatened by a governmental entity or private party under the HSR Act or any
other antitrust law that is asserted with respect to the Merger or any other transaction contemplated by this Agreement so as to
enable the consummation of such transactions to occur, including, among other things, to (i) oppose any
such challenge, promptly appeal any adverse decision or order by a governmental entity with respect thereto and litigate any such
challenge to a final non-appealable order and (ii) subject to certain exceptions and limitations, propose, negotiate, commit to and
effect, by consent decree, hold separate order or otherwise, the sale, divestiture or disposition of any such assets, businesses,
services, products, product lines, relationships or contractual rights of Parent or Merger Sub or the Company (or any of their
respective subsidiaries or affiliates).
The Merger
Agreement has been filed as Exhibit 2.1 to this report to provide investors and securities holders with certain information
regarding its terms. It is not intended to provide any other factual information about the parties to the Merger Agreement. The
Merger Agreement contains representations and warranties that the parties to the Merger Agreement made solely for the benefit of
each other. The assertions embodied in such representations and warranties are qualified by information contained in a confidential
disclosure letter that the parties exchanged in connection with signing the Merger Agreement. In addition, these representations and
warranties (i) were made as a way of allocating risk to one of the parties if those statements prove to be inaccurate, (ii) may
apply materiality standards different from what may be viewed as material to investors and securities holders, and (iii) were made
only as of the date of the Merger Agreement or as of such other date or dates as may be specified in the Merger Agreement. Moreover,
information concerning the subject matter of such representations and warranties may change after the date of the Merger Agreement,
which subsequent information may or may not be fully reflected in the Company’s public disclosures (and the Company undertakes
no obligation to update with respect thereto). Investors and securities holders should not to rely on such representations and
warranties as characterizations of the actual state of facts or circumstances at this time or any other time.
If the Merger
is consummated, the Company Common Stock and Warrants will be delisted from NASDAQ and deregistered under the Securities Exchange Act
of 1934.
