EXHIBIT 8.2
[LETTERHEAD OF DRINKER XXXXXX & XXXXX LLP]
September 25, 1998
Eastern Environmental Services, Inc.
0000 Xxxxxxxx Xxxxx
Xx. Xxxxxx, XX 00000
Re: Agreement and Plan of Merger, dated as of
August 16, 1998, by and among Waste
Management, Inc., Ocho Acquisition Corporation
and Eastern Environmental Services, Inc.
----------------------------------------------
Ladies and Gentlemen:
You have requested our opinion, as counsel to Eastern Environmental
Services, Inc. (the "Company"), as to certain Federal income tax consequences of
the proposed merger of Ocho Acquisition Corporation ("Subsidiary"), a wholly
owned, directly held subsidiary of Waste Management, Inc. ("Parent"), with and
into the Company on the terms and conditions set forth in the Agreement and Plan
of Merger, dated as of August 16, 1998, by and among Parent, Subsidiary and the
Company (the "Plan of Merger"). Terms not otherwise defined in this letter shall
have the meanings ascribed to them in the Plan of Merger.
Each of the Company, Parent and Subsidiary is a Delaware corporation.
Subject to the approval of the Company Stockholders (defined below), pursuant to
the Plan of Merger, Subsidiary will merge with and into the Company, with the
Company continuing as the surviving corporation and as a wholly owned, directly
held subsidiary of Parent (the "Merger"). In the Merger, each holder of shares
of Company Common Stock (each, a "Company Stockholder" and, collectively, the
"Company Stockholders") shall receive shares of Parent Common Stock in the
manner provided in the Plan of Merger. Consummation of the Merger is subject to
the satisfaction of certain conditions set forth in the Plan of Merger.
The Company has filed with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act"), a
preliminary Proxy Statement/Prospectus (the "Company Proxy Statement") to obtain
the approval of the Merger of the Company Stockholders. Parent is filing today
with the SEC under the Securities Act, a
Eastern Environmental Services, Inc.
September 25, 1998
Page 2
Registration Statement on Form S-4 (together with all amendments, including the
definitive Proxy Statement/Prospectus, schedules and exhibits thereto, the
"Parent Registration Statement") with respect to the Parent Common Stock
issuable pursuant to the Plan of Merger.
You have directed us to assume in preparing this opinion that (i) the Merger
will be consummated in accordance with the terms, conditions and other
provisions of the Plan of Merger, and that no term or condition therein has been
or will be waived or modified and (ii) all factual information, descriptions,
representations and assumptions set forth in this letter, in the Plan of Merger,
in the Parent Registration Statement, and in the Company Proxy Statement as
filed with the SEC are accurate and complete and will be accurate and complete
at the time the Merger becomes effective. In addition, we have assumed that
representations will be made by the Company and Parent in letters to us
substantially in the form attached hereto (the "Certification Letters") and have
assumed that such representations will be accurate and complete at the time the
Merger becomes effective.
We have not independently verified any factual matters relating to the
factual recitations in this opinion letter or the averments in the Plan of
Merger and the Certification Letters in connection with our preparation of this
opinion and, accordingly, our opinion does not take into account any matters not
set forth herein that might have been disclosed by such independent
verification.
Assuming that the Merger is consummated in accordance with the terms and
conditions set forth in the Plan of Merger and based on the facts set forth
therein, in the Certification Letters and this letter, including all assumptions
and representations, and subject to the qualifications and other matters set
forth therein and herein, it is our opinion that for Federal income tax purposes
the Merger will constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), that the Company,
Subsidiary and Parent each will be a "party to the reorganization" within the
meaning of Section 368(b) of the Code, and therefore, the Merger will have the
following material Federal income tax consequences:
(i) No gain or loss will be recognized by any of the Company, Parent or
Subsidiary as a result of the Merger;
(ii) No gain or loss will be recognized by any Company Stockholder upon
receipt of shares of Parent Common Stock in exchange for shares of
Eastern Environmental Services, Inc.
September 25, 1998
Page 3
Company Common Stock in the Merger, except as discussed below with respect to
cash received by a Company Stockholder in lieu of a fractional share interest in
Parent Common Stock;
(iii) Each Company Stockholder who receives cash in lieu of a fractional
share of Parent Common Stock generally will recognize capital gain or loss in an
amount equal to the difference between the amount of cash received and the
portion of such Company Stockholder's basis in shares of Company Common Stock
that is allocable to the fractional share interest, provided that such Company
Stockholder holds his Company Common Stock as a capital asset (and provided that
the receipt of cash is not "substantially equivalent to a dividend" by reason of
such Company Stockholder's pre-existing direct or constructive ownership of
Parent Common Stock, if any);
(iv) The aggregate adjusted tax basis of the shares of Parent Common Stock
received by a Company Stockholder in the Merger will be the same as such
stockholder's aggregate adjusted tax basis in the shares of Company Common Stock
surrendered in exchange therefor; and
(v) The holding period of the shares of Parent Common Stock received by a
Company Stockholder in the Merger will include the holding period of the shares
of Company Common Stock surrendered in the Merger in exchange therefor, provided
that such shares of Company Common Stock are held as a capital asset on the date
of the Merger.
Our opinion is limited to the foregoing Federal income tax consequences of
the Merger, which are the only matters as to which you have requested our
opinion. We have not addressed any other Federal income tax consequences of the
Merger other than those specifically set forth herein and we have not considered
any matters (including state or local tax consequences of the Merger) arising
under the laws of any jurisdiction other than matters of Federal law arising
under the laws of the United States as expressly set forth herein.
Our opinion is based on the understanding that the relevant facts are, and
will continue to be as of the date of the consummation of the Merger, as set
forth or referred to in this letter. If this understanding is incorrect or
incomplete in any respect, our opinion could be affected. Our opinion is based
solely on the facts, representations and assumptions as expressed herein.
Further, our opinion represents our best legal judgment, but has no binding
effect or official status of any kind, and no assurance can be given that
contrary positions may not be taken by the Internal Revenue Service or a court
concerning certain issues. In issuing our opinion, we have relied solely upon
existing provisions of the Code, existing Treasury regulations
Eastern Environmental Services, Inc.
September 25, 1998
Page 4
promulgated thereunder, and current administrative positions and judicial law.
Such laws, regulations, administrative positions and judicial decisions are
subject to change at any time, and any such change may be made with retroactive
effect. No assurances can be provided as to future judicial interpretations of
these laws or their effect on this opinion. We are not hereby undertaking to
advise you as to any changes in the laws, facts, or circumstances which may
hereafter occur or come to our attention. No assurance can be provided that
after any such change our opinion would not be different. Further, we undertake
no responsibility and are under no obligation to update or supplement our
opinion at any future time nor render any further opinion to you.
We hereby consent to the filing with the SEC of this opinion as an exhibit
to the Parent Registration Statement on Form S-4 relating to the shares of
Parent Common Stock that may be issued in connection with the Merger and to the
references to our firm under the captions "Conditions to the Merger," "Certain
Federal Income Tax Consequences" and "Legal Matters" in the Parent Registration
Statement and the Company Proxy Statement. This consent does not, however,
constitute consent under Section 7 of the Securities Act, and in consenting to
such references to our firm we have not certified any part of the Registration
Statement and we do not admit that we come within the categories of persons
whose consent is required under Section 7 or under the rules and regulations of
the SEC issued thereunder.
Very truly yours,
/s/ Drinker Xxxxxx & Xxxxx LLP
DRINKER XXXXXX & XXXXX LLP
WASTE MANAGEMENT, INC.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
September __, 1998
Drinker Xxxxxx & Xxxxx LLP
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Re: Agreement and Plan of Merger, dated as of August 16, 1998,
by and among Waste Management, Inc., Ocho Acquisition
Corporation and Eastern Environmental Services, Inc.
-----------------------------------------------------------
Ladies and Gentlemen:
Eastern Environmental Services, Inc., (the "Company") has requested your
opinion as to certain Federal income tax matters in connection with a proposed
merger pursuant to which the Company would merge with Ocho Acquisition
Corporation ("Subsidiary"), a wholly owned subsidiary of Waste Management, Inc.
("Parent"), with the Company continuing as the surviving corporation and a
wholly owned subsidiary of Parent (the "Merger"). The Merger is to be effected
pursuant to and in accordance with the Agreement and Plan of Merger, dated as of
August 16, 1998, by and among Parent, Subsidiary and the Company (the "Plan of
Merger"). Capitalized terms used but not otherwise defined in this letter shall
have the meanings ascribed to them in the Plan of Merger.
In order to assist you in rendering your opinion, Parent hereby makes the
following representations, which representations are true, accurate and complete
as of the date hereof:
1. The Merger will be consummated in compliance with the terms of the
Plan of Merger, and none of the material terms therein have been or will be
waived or modified.
2. The Merger will be effected for bona fide business reasons.
3. Subsidiary was organized by Parent under the laws of the State of
Delaware solely in order to effect the Merger, and Subsidiary does not and will
not have any assets (other than the minimum assets required for state law
capitalization purposes) or liabilities or engage in any activities other than
those incident to its formation and capitalization and the Merger.
4. The Exchange Ratio was negotiated through arm's length bargaining.
Accordingly, the fair market value of Parent Common Stock to be received by the
holders of the Company Common Stock in the Merger will be approximately equal
to the fair market value of the Company Common Stock surrendered in the Merger
in exchange therefor.
5. Prior to the Merger, Parent will own all of the outstanding
capital stock of Subsidiary.
6. Immediately following the Merger, Parent will own directly all of
the issued and outstanding capital stock of the Company.
7. Following the Merger, Parent has no plan or intention of causing
or permitting the Company to issue additional shares of its stock that would
result in Parent losing control of the Company. For purposes of this letter,
"control" means the direct ownership of stock possessing at least 80% of the
total combined voting power for the election of directors of all classes
entitled to vote and at least 80% of the total number of each nonvoting class of
stock of the corporation.
8. Parent has no plan or intention to reacquire any of the Parent
Common Stock issued in the Merger.
9. At least 50 percent of the value of the shareholders' proprietary
interests in the Company will be preserved as a proprietary interest in Parent
received in exchange for Company Common Stock. For purposes of this
representation, proprietary interests will not be preserved to the extent that,
in connection with the Merger: (i) an extraordinary distribution is made with
respect to the stock of the Company; (ii) a redemption or acquisition of stock
of the Company is made by the Company or a person related to the Company; (iii)
Parent or a person related to Parent acquires stock of the Company for
consideration other than Parent stock; or (iv) Parent redeems its stock issued
in the Merger. Any reference to Parent or the Company includes a reference to
any successor or predecessor of such corporation, except that the Company is not
treated as a predecessor of Parent. A corporation will be treated as related to
another corporation if they are both members of the same affiliated group within
the meaning of Section 1504 of the Code (without regard to the exceptions in
Section 1504(b)) or they are related as described in Section 304(a)(2) of the
Code (disregarding Treas. Reg. Section 1502-80(b)), in either case, whether such
relationship exists immediately before or immediately after the acquisition.
Each partner of a partnership will be treated as owning or acquiring any stock
owned or acquired, as the case may be, by the partnership (and as having paid
any consideration paid by the partnership to acquire such stock) in accordance
with that partner's interest in the partnership. As used in this representation
letter, the term "partnership" shall have the same meaning given to it in
Section 7701(a)(2) of the Code.
10. Parent has no plan or intention to liquidate the Company; to merge
the Company with or into another corporation; to sell or otherwise dispose of
the stock of the Company; or to cause the Company to sell or otherwise dispose
of any of its assets, except for dispositions made in the ordinary course of
business or transfers of assets to corporations controlled by the Company.
11. Subsidiary will have no liabilities assumed by the Company in the
Merger, nor will Subsidiary transfer to the Company any assets subject to
liabilities pursuant to the Merger.
12. Following the Merger, the Company will continue its historic
business or use a significant portion of its historic business assets in a
business.
13. Parent, Subsidiary, the Company and the Company Shareholders will
pay their respective expenses, if any, incurred in connection with the Merger.
14. There is no intercorporate indebtedness existing between Parent
and the Company or between Subsidiary and the Company that was issued, acquired
or will be settled at a discount.
15. In the Merger, Parent will acquire shares of Company Common Stock
representing control of the Company solely in exchange for voting stock of
Parent. For purposes of this representation, Company Common Stock redeemed for
cash or other property furnished by Parent will be considered as acquired by
Parent.
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16. Parent does not own, nor has it owned during the past five years,
stock of Company in excess of 2% of the total outstanding shares of Company
Common Stock.
17. Parent is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
18. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately bargained
for consideration. In addition, this cash payment will not be made pro rata to
all Company stockholders. The total consideration that will be paid in the
Merger to the Company stockholders will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the Company stockholders in
exchange for their shares of Company Common Stock.
19. None of the consideration received by any Company Shareholder who
also is an employee of the Company (a "Company Shareholder-Employee") will be
separate consideration for, or allocable to, any of their shares of Company
Common Stock. None of the Parent Common Stock received in the Merger by any
such Company Shareholder-Employee in exchange for his Company Common Stock will
be in exchange for, or in consideration of, services rendered to the Company or
Parent. The compensation paid to any Company Shareholder-Employee will be for
services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's-length for similar services.
We understand that you will, and we expressly authorize you to, rely upon
each of the foregoing representations in rendering your opinion in connection
with the Merger. We shall undertake to advise you promptly if we become aware of
any facts or circumstances that would cause any representation set forth herein
to be incorrect.
Very truly yours,
Waste Management, Inc.
By: _________________
Title:_________________
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EASTERN ENVIRONMENTAL SERVICES, INC.
0000 Xxxxxxxx Xxxxx
Xx. Xxxxxx, XX 00000
_________ __, 1998
Drinker Xxxxxx & Xxxxx LLP
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Re: Agreement and Plan of Merger, dated as of August 16, 1998,
by and among Waste Management, Inc., Ocho Acquisition
Corporation and Eastern Environmental Services, Inc.
-----------------------------------------------------------
Ladies and Gentlemen:
We have requested your opinion as to certain Federal income tax matters in
connection with a proposed merger pursuant to which Eastern Environmental
Services, Inc. (the "Company") would merge with Ocho Acquisition Corporation
("Subsidiary"), a wholly owned subsidiary of Waste Management, Inc. ("Parent"),
with the Company continuing as the surviving corporation and a wholly owned
subsidiary of Parent (the "Merger"). The Merger is to be effected pursuant to
and in accordance with the Agreement and Plan of Merger, dated as of August 16,
1998, by and among Parent, Subsidiary and the Company (the "Plan of Merger").
Capitalized terms used but not otherwise defined in this letter shall have the
meanings ascribed to them in the Plan of Merger.
In order to assist you in rendering your opinion, the Company hereby makes
the following representations, which representations are true, accurate and
complete as of the date hereof:
1. The Merger will be consummated in compliance with the terms of the
Plan of Merger, and none of the material terms therein have been or will be
waived or modified.
2. The Merger will be effected for bona fide business reasons.
3. The Exchange Ratio was negotiated through arm's length bargaining.
Accordingly, the fair market value of Parent Common Stock received by the
holders of the Company Common Stock in the Merger will be approximately equal to
the fair market value of the Company Common Stock surrendered in the Merger in
exchange therefor.
4. Immediately following the Merger, Parent will own directly all of
the issued and outstanding capital stock of the Company and therefore, Parent
will be in
control of the Company. For purposes of this letter, "control" means the direct
ownership of stock possessing at least 80% of the total combined voting power
for the election of directors of all classes entitled to vote and at least 80%
of the total number of each nonvoting class of stock of the corporation.
5. Following the Merger, the Company will hold at least 90% of the
fair market value of the net assets and at least 70% of the fair market value of
the gross assets held by the Company immediately prior to the Merger, treating
any assets used by the Company to make distributions or redemptions other than
regular and normal distributions or redemptions as unacquired assets.
6. Parent, Subsidiary, the Company and the stockholders of the
Company will pay their respective expenses, if any, incurred in connection with
the Merger.
7. There is no intercorporate indebtedness existing between Parent
and the Company or between Subsidiary and the Company that was issued, acquired
or will be settled at a discount.
8. In the Merger, Parent will acquire shares of Company Common Stock
representing control of the Company solely in exchange for Parent voting stock.
For purposes of this representation, Company Common Stock redeemed for cash or
other property furnished by Parent will be considered as acquired by Parent.
9. At least 50 percent of the value of the shareholders' proprietary
interests in the Company will be preserved as a proprietary interest in Parent
received in exchange for Company Common Stock. For purposes of this
representation, proprietary interests will not be preserved to the extent that,
in connection with the Merger: (i) an extraordinary distribution is made with
respect to the stock of the Company; (ii) a redemption or acquisition of stock
of the Company is made by the Company or a person related to the Company; (iii)
Parent or a person related to Parent acquires stock of the Company for
consideration other than Parent stock; or (iv) Parent redeems its stock issued
in the Merger. Any reference to Parent or the Company includes a reference to
any successor or predecessor of such corporation, except that the Company is not
treated as a predecessor of Parent. A corporation will be treated as related to
another corporation if they are both members of the same affiliated group within
the meaning of Section 1504 of the Code (without regard to the exceptions in
Section 1504(b)) or they are related as described in Section 304(a)(2) of the
Code (disregarding Treas. Reg. Section 1502-80(b)), in either case, whether such
relationship exists immediately before or immediately after the acquisition.
Each partner of a partnership will be treated as owning or acquiring any stock
owned or acquired, as the case may be, by the partnership (and as having paid
any consideration paid by the partnership to acquire such stock) in accordance
with that partner's interest in the partnership. As used in this representation
letter, the term "partnership" shall have the same meaning given to it in
Section 7701(a)(2) of the Code.
10. At the time of the Merger, the Company will not have outstanding
any warrants, options, convertible securities or any other type right pursuant
to which any person could acquire stock in the Company that, if exercised or
converted, would affect Parent's acquisition or retention of control of the
Company.
11. The Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
12. On the date of the Merger, the fair market value of the assets of
the Company will exceed the sum of its liabilities (including, without
limitation, any liabilities to which its assets are subject).
13. The Company is not under the jurisdiction of a court in a Title
11 of the United States Code or a receivership, foreclosure or similar
proceeding in any Federal or State court.
14. Shares of Company Common Stock are regularly traded on an
established securities market. No foreign persons hold five percent (5%) or
more of the shares of Company Common Stock.
15. No dividends or distributions will be made with respect to any
Company Common Stock prior to the Merger. After the Merger, no dividends or
2
distributions will be made to the former stockholders of the Company, other than
dividend distributions made with regard to all shares of Parent Common Stock.
16. The payment of cash in lieu of fractional shares of Parent Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Parent of issuing fractional shares and does not represent separately bargained
for consideration. In addition, this cash payment will not be made pro rata to
all Company stockholders. The total consideration that will be paid in the
Merger to the Company stockholders will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the Company stockholders in
exchange for their shares of Company Common Stock.
17. None of the consideration received by any Company Shareholder who
also is an employee of the Company (a "Company Shareholder-Employee") will be
separate consideration for, or allocable to, any of their shares of Company
Common Stock. None of the Parent Common Stock received in the Merger by any
such Company Shareholder-Employee in exchange for his Company Common Stock will
be in exchange for, or in consideration of, services rendered to the Company or
Parent. The compensation paid to any Company Shareholder-Employee will be for
services actually rendered and will be commensurate with amounts paid to third
parties bargaining at arm's-length for similar services.
We understand that you will, and we expressly authorize you to, rely upon
each of the foregoing representations in rendering your opinion in connection
with the Merger. We shall undertake to advise you promptly if we become aware of
any facts or circumstances that would cause any representation set forth herein
to be incorrect.
Very truly yours,
Eastern Environmental Services, Inc.
By:
-------------------------------
Title:
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