Republic Services, Inc.
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As filed with the Securities and Exchange Commission on October 10, 2008
Registration No. 333-152693
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Amendment No. 3 to
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
 
Republic Services, Inc.
(Exact name of registrant as specified in its charter)
         
Delaware   4953   65-0716904
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)
 
110 S.E. 6th Street, 28th Floor
Fort Lauderdale, Florida 33301
(954) 769-2400
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
David A. Barclay, Esq.
Senior Vice President, General Counsel
and Assistant Secretary
Republic Services, Inc.
110 S.E. 6th Street, 28th Floor
Fort Lauderdale, Florida 33301
(954) 769-2400
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
 
 
 
Copies to:
 
         
Jonathan L. Awner, Esq.
Stephen K. Roddenberry, Esq.
Michael T. Francis, Esq.
Akerman Senterfitt
One Southeast Third Avenue, 25th
Floor
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
 
Approximate date of commencement of proposed sale to the public:   As soon as practicable after the effective time of this registration statement and the effective time of the merger of RS Merger Wedge, Inc., a Delaware corporation and a wholly owned subsidiary of Republic Services, Inc., with and into Allied Waste Industries, Inc., a Delaware corporation, as described in the Agreement and Plan of Merger, dated as of June 22, 2008, as amended, attached as Annex A to the joint proxy statement/prospectus forming part of this registration statement.
 
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o
 
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
 
             
Large accelerated filer þ
    Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company)
  Smaller reporting company o
 
 
 
 
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 


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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.
 
SUBJECT TO COMPLETION, DATED OCTOBER 10, 2008
 
         
(REPUBLIC SERVICES, INC. LOGO)     (ALLIED WASTE LOGO)  
 
MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT
 
The boards of directors of Republic Services, Inc. and Allied Waste Industries, Inc. have each approved a merger agreement which provides for the combination of the two companies. The boards of directors of Republic and Allied believe that the combination of the two companies will be able to create substantially more long-term stockholder value than either company could individually achieve. Following the completion of the merger, Allied will be a wholly owned subsidiary of Republic with Allied stockholders receiving approximately 51.7% of the outstanding common stock of the combined company in respect of their Allied shares and Republic stockholders retaining approximately 48.3% of the outstanding common stock of the combined company, in each case, on a diluted basis. In this joint proxy statement/prospectus, Republic Services, Inc. is referred to as “Republic” and Allied Waste Industries, Inc. is referred to as “Allied.”
 
The combined company will be named Republic Services, Inc. and the shares of the combined company will be traded on the New York Stock Exchange, or the NYSE, under the symbol “RSG.”
 
If the merger is completed, Allied stockholders will be entitled to receive .45 shares of Republic common stock, par value $.01 per share, for each share of Allied common stock that they owned immediately before the effective time of the merger. Allied stockholders will be entitled to receive cash for any fractional shares that they would otherwise have received pursuant to the merger. Republic stockholders will continue to own their existing shares after the merger. Republic common stock is traded on the NYSE under the symbol “RSG.” On October 9, 2008, the closing price per share of Republic common stock as reported by the NYSE was $22.98. You are urged to obtain current market quotations for the shares of Republic and Allied.
 
Republic and Allied estimate that Republic will issue approximately 196.2 million shares of Republic common stock pursuant to the merger based on the number of shares of Allied common stock outstanding on June 30, 2008, and will reserve an additional 14.1 million shares of Republic common stock for issuance in connection with the exercise or conversion of Allied’s outstanding options, other equity-based awards and convertible debentures.
 
YOUR VOTE IS IMPORTANT. The merger cannot be completed unless holders of Republic common stock vote to approve the issuance 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 merger, and holders of Allied common stock vote to adopt the merger agreement, as amended on July 31, 2008, which is referred to as the merger agreement.
 
The Republic board of directors unanimously recommends that Republic stockholders vote “FOR” the Republic share issuance in connection with the merger. The Allied board of directors unanimously recommends that Allied stockholders vote “FOR” the adoption of the merger agreement.
 
Republic and Allied will each hold a special meeting of their respective stockholders to vote on these proposals. Whether or not you plan to attend your company’s special meeting, please take the time to cause your shares to be voted by completing and mailing the enclosed proxy card or submitting your proxy by telephone or through the Internet, using the procedures in the proxy voting instructions included with your proxy card. Even if you return the proxy, you may attend the special meeting and vote your shares in person at the meeting.
 
This document describes the proposed merger and related transactions in more detail. Republic and Allied encourage you to read this entire document carefully, including the merger agreement, as amended, which is included as Annex A, and the section discussing “Risk Factors” relating to the merger and the combined company beginning on page 29.
 
Republic and Allied look forward to the successful combination of the two companies.
 
     
     
     
     
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.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger described in this joint proxy statement/prospectus or the Republic common stock to be issued pursuant to the merger, or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.
 
This joint proxy statement/prospectus is dated October 10, 2008 and, together with the accompanying proxy card, is first being mailed or otherwise delivered to stockholders of Republic and Allied on or about October 14, 2008.


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THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES ADDITIONAL INFORMATION
 
This document incorporates by reference important business and financial information about Republic and Allied from other documents filed with the Securities and Exchange Commission, which is referred to as the SEC, that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. For a list of the documents incorporated by reference into this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 158. You can obtain electronic or hardcopy versions of the documents that are incorporated by reference into this joint proxy statement/prospectus, without charge, from the Investor Relations section of the appropriate company’s website or by requesting them in writing or by telephone, in each case as set forth below:
 
             
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
 
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY NOVEMBER 6, 2008 IN ORDER TO RECEIVE THEM BEFORE YOUR COMPANY’S SPECIAL MEETING.
 
SUBMITTING A PROXY ELECTRONICALLY, BY TELEPHONE OR BY MAIL
 
Republic stockholders of record on October 6, 2008 may submit their proxies as follows:
 
  •  Through the Internet, by visiting the website established for that purpose at www.proxyvote.com and following the instructions;
 
  •  By telephone, by calling the toll-free number (800) 690-6903 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.
 
Allied stockholders of record on October 6, 2008 may submit their proxies as follows:
 
  •  Through the Internet, by visiting the website established for that purpose at http://proxy.georgeson.com and following the instructions;
 
  •  By telephone, by calling the toll-free number (877) 412-6959 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.
 
If you are a beneficial owner, please refer to your proxy card or the information forwarded by your bank, broker or other holder of record to see which options are available to you.


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(REPUBLIC SERVICES, INC. LOGO)
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On November 14, 2008
 
Dear Republic Stockholder:
 
Republic Services, Inc. is pleased to invite you to attend a special meeting of the stockholders of Republic, which will be held on November 14, 2008 at 1:30 p.m., Eastern time, in the Atrium on the 7th Floor of the AutoNation Building, 110 S.E. 6th Street, Fort Lauderdale, Florida 33301.
 
The purpose of the Republic special meeting is to consider and to vote upon the following proposals:
 
  •  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.
 
The Republic board of directors has unanimously determined that the Republic share issuance in connection with the merger is advisable and in the best interests of Republic and its stockholders and recommends that Republic stockholders vote “FOR” the Republic share issuance in connection with the merger and “FOR” the adjournment of the Republic special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.
 
Republic and Allied cannot complete the merger unless the Republic share issuance in connection with the merger is approved:
 
(1) under the rules of the New York Stock Exchange, which 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, which 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.
 
Your vote is very important. Your failure to vote will make it more difficult to approve the Republic share issuance.
 
The close of business on October 6, 2008 has been fixed as the record date, which is referred to as the Republic record date. Only holders of record of Republic common stock on the Republic record date are entitled to notice of, and to vote at, the Republic special meeting or any adjournments or postponements of the Republic special meeting. A list of the holders of Republic common stock entitled to vote at the Republic special meeting will be available for examination by any Republic stockholder, for any purpose germane to the Republic special meeting, at Republic’s principal executive offices at 110 S.E. 6th Street, 28th Floor, Fort Lauderdale, Florida 33301, for ten days before the Republic special meeting, during normal business hours, and at the time and place of the Republic special meeting as required by law.
 
Republic directs your attention to the joint proxy statement/prospectus accompanying this notice for a more complete statement regarding the matters proposed to be acted upon at the Republic special meeting. You are encouraged to read the entire joint proxy statement/prospectus carefully, including the merger agreement, as amended, which is included as Annex A to the joint proxy statement/prospectus, and the section discussing “Risk Factors” beginning on page 29.
 
SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE REPUBLIC SPECIAL MEETING, PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE BY MAIL, BY TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS ON THESE DIFFERENT WAYS TO SUBMIT YOUR PROXY ARE FOUND ON THE ENCLOSED PROXY FORM. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE REPUBLIC SPECIAL MEETING. REMEMBER, YOUR VOTE IS IMPORTANT, SO PLEASE ACT TODAY!
 
By Order of the Board of Directors,
 
 
James E. O’Connor
Chairman of the Board of Directors and Chief
Executive Officer
 
October 10, 2008


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(ALLIED WASTE LOGO)
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
 
To Be Held On November 14, 2008
 
Dear Allied Stockholder:
 
Allied Waste Industries, Inc. is pleased to invite you to attend a special meeting of the stockholders of Allied which will be held on November 14, 2008 at 11:30 a.m., Mountain time, at the Marriott at McDowell Mountains, 16770 North Perimeter Drive, Scottsdale, Arizona 85260.
 
The purpose of the Allied special meeting is to consider and to vote upon the following proposals:
 
  •  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.
 
The Allied board of directors has unanimously determined that the merger agreement and the transactions contemplated by it, including the merger, are advisable and in the best interests of Allied and its stockholders and recommends that Allied stockholders vote “FOR” the adoption of the merger agreement and “FOR” the adjournment of the Allied special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.
 
Republic and Allied cannot complete the merger unless the proposal to adopt the merger agreement is approved by 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.
 
Your vote is very important. Your failure to vote will have the same effect as a vote against the adoption of the merger agreement.
 
The close of business on October 6, 2008 has been fixed as the record date, which is referred to as the Allied record date. Only holders of record of Allied common stock on the Allied record date are entitled to notice of, and to vote at, the Allied special meeting or any adjournments or postponements of the Allied special meeting. A list of holders of Allied common stock entitled to vote at the Allied special meeting will be available for examination by any Allied stockholder for any purpose germane to the Allied special meeting, at Allied’s principal executive offices at 18500 North Allied Way, Phoenix, Arizona 85054, for ten days before the Allied special meeting, during normal business hours, and at the time and place of the Allied special meeting as required by law.
 
Allied directs your attention to the joint proxy statement/prospectus accompanying this notice for more detailed information regarding the matters proposed to be acted upon at the Allied special meeting. You are encouraged to read the entire joint proxy statement/prospectus carefully, including the merger agreement, as amended, which is included as Annex A to the joint proxy statement/prospectus, and the section discussing “Risk Factors” beginning on page 29.
 
SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE ALLIED SPECIAL MEETING, PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE BY MAIL, BY TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS ON THESE DIFFERENT WAYS TO SUBMIT YOUR PROXY ARE FOUND ON THE ENCLOSED PROXY FORM. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE ALLIED SPECIAL MEETING. REMEMBER, YOUR VOTE IS IMPORTANT, SO PLEASE ACT TODAY!
 
By Order of the Board of Directors,
 
John J. Zillmer
Chairman of the Board of Directors and Chief
Executive Officer
 
October 10, 2008


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    A-1  
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 Ex-5.1 Opinion of Akerman Senterfitt
 Ex-8.1 Opinion of Mayer Brown LLP
 Ex-8.2 Opinion of Akerman Senterfitt
 EX-23.1 Consent of Ernst & Young LLP
 EX-23.2 Consent of PricewaterhouseCoopers LLP
 Republic Services Proxy Card
 Allied Waste Industries, Inc.


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SUMMARY
 
This summary highlights information contained elsewhere in this joint proxy statement/prospectus. It does not contain all of the information that may be important to you. You are urged to read carefully this entire document, including the attached annexes, and the other documents to which this joint proxy statement/prospectus refers you in order for you to understand fully the proposed merger. See “Where You Can Find More Information” beginning on page 158. Each item in this summary refers to the page of this joint proxy statement/prospectus on which that subject is discussed in more detail.
 
The Companies
 
Republic Services, Inc. (see page 105)
 
110 S.E. 6th Street, 28th Floor
Fort Lauderdale, Florida 33301
(954) 769-2400
www.republicservices.com (The information contained on Republic’s website is not deemed part of this joint proxy statement/prospectus.)
 
Republic is a leading provider of services in the domestic non-hazardous solid waste industry with reported revenues of approximately $3.2 billion and $3.1 billion for the years ended December 31, 2007 and 2006, respectively. Republic provides non-hazardous solid waste collection services for commercial, industrial, municipal and residential customers through 136 collection companies in 21 states. Republic also owns or operates 93 transfer stations, 58 solid waste landfills and 33 recycling facilities.
 
Allied Waste Industries, Inc. (see page 105)
 
18500 North Allied Way
Phoenix, Arizona 85054
(480) 627-2700
www.alliedwaste.com (The information contained on Allied’s website is not deemed part of this joint proxy statement/prospectus.)
 
Allied is the country’s second largest non-hazardous, solid waste management company with reported revenues of approximately $6.1 billion and $5.9 billion for the years ended December 31, 2007 and 2006, respectively. Allied provides collection, transfer, recycling and disposal services for more than 8 million residential, commercial and industrial customers. Allied serves its customers through a network of 291 collection companies, 161 transfer stations, 160 active landfills and 53 recycling facilities in 123 markets within 37 states and Puerto Rico.
 
The Merger
 
The Agreement and Plan of Merger, dated as of June 22, 2008, as amended on July 31, 2008, among Republic Services, Inc., RS Merger Wedge, Inc. and Allied Waste Industries, Inc., which is referred to as the merger agreement, is included as Annex A to this joint proxy statement/prospectus. Allied and Republic encourage you to carefully read the merger agreement in its entirety because it is the principal legal agreement that governs the merger.
 
Structure of the Merger (see page 106)
 
Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, RS Merger Wedge, Inc., 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


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Services, Inc.” and will be the parent company of Allied. Accordingly, after the effective time of the merger, shares of Allied common stock will no longer be publicly traded.
 
Merger Consideration (see page 106)
 
Allied Stockholders.  As a result of the merger, at the effective time, Allied stockholders will be entitled to receive .45 shares of Republic common stock for each share of Allied common stock that they own. The number of shares of Republic common stock delivered in respect of each share of Allied common stock pursuant to the merger is referred to as the exchange ratio. This exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the effective time of the merger. Republic will not issue any fractional shares of Republic common stock pursuant to the merger. Instead, Allied stockholders will be entitled to receive cash for any fractional shares of Republic common stock that they otherwise would have received pursuant to the merger (after aggregating all shares held). 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 in the merger 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. The Republic common stock received based on the exchange ratio, together with any cash received in lieu of fractional shares, is referred to as the merger consideration. For more information about fractional share treatment, please see “The Merger Agreement — Merger Consideration — Fractional Shares” beginning on page 106.
 
Republic Stockholders.  Republic stockholders will continue to own their existing shares of Republic common stock after the merger. Each share of Republic common stock will represent one share of common stock in the combined company.
 
Ownership of the Combined Company After the Merger (see page 46)
 
As of June 30, 2008, Republic has approximately 181.9 million outstanding shares of Republic common stock and has reserved approximately 10.5 million shares of Republic common stock in connection with the exercise of outstanding Republic options and other equity-based awards. Pursuant to the merger, at the effective time of the merger, Republic (1) will issue approximately 196.2 million shares of Republic common stock and (2) will reserve for issuance approximately 14.1 million shares of Republic common stock in connection with the exercise or settlement of Allied equity-based awards and conversion of the Allied convertible debentures. 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.
 
Comparative Per Share Market Price and Dividend Information (see page 22)
 
Republic common stock is listed on the NYSE under the symbol “RSG.” Allied common stock is listed on the NYSE under the symbol “AW.” The following table sets forth the closing sale prices of Republic common stock as reported on the NYSE and the closing sale prices of Allied common stock as reported on the NYSE, each 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 possible business combination, on June 20, 2008, the last trading day before the day on which Republic and Allied announced the execution of the merger agreement, and on October 3, 2008, the last trading day before the Republic and Allied record date. This table also


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shows the implied value of an Allied common share, which was calculated by multiplying the closing price of Republic common stock on those dates by the exchange ratio of .45.
 
                         
    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  
October 3, 2008
    28.35       11.08       12.76  
 
The market prices of Republic common stock and Allied common stock will fluctuate before the special meetings and before the merger is completed. Therefore, you should obtain current market quotations for Republic common stock and Allied common stock.
 
Comparison of Stockholder Rights
 
Republic and Allied are both Delaware corporations. The Republic Amended and Restated Certificate of Incorporation and amended and restated bylaws contain provisions that are different from the Allied Amended and Restated Certificate of Incorporation and amended and restated bylaws. In connection with the merger, Republic will amend and restate its bylaws to provide for certain corporate governance and other matters. For a discussion of certain differences among the rights of stockholders, see “Comparison of Stockholder Rights” beginning on page 135.
 
Recommendations to Stockholders
 
Recommendations to Republic Stockholders.  The Republic board of directors has unanimously determined that the Republic share issuance in connection with the merger is advisable and in the best interests of Republic and its stockholders. The Republic board of directors recommends that Republic stockholders vote:
 
  •  “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 additional information see “The Republic Special Meeting — Board Recommendations” beginning on page 123.
 
Recommendations to Allied Stockholders.  The Allied board of directors has unanimously determined that the merger agreement and the merger contemplated by the merger agreement are advisable and in the best interests of Allied and its stockholders. The Allied board of directors recommends that Allied stockholders vote:
 
  •  “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.
 
For additional information see “The Allied Special Meeting — Board Recommendations” beginning on page 127.
 
In making their respective recommendations, each of the Republic board of directors and the Allied board of directors considered, among other matters, the strategic benefits of combining the two companies, the strong financial foundation of the combined company, the synergies and cost savings expected to be achieved by the merger, the strengthened management team of the combined company and the net growth opportunities available to the combined company. For additional information see “The Merger — Rationale for the Merger” beginning on page 58. In addition, in making its respective recommendation, each board considered those further matters set forth under the headings “The Merger — Republic Reasons for the Merger” and “The Merger — Allied Reasons for the Merger” beginning on pages 59 and 73, respectively.


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Opinions of Financial Advisors (see pages 64 and 78)
 
Republic.  In connection with the merger, the Republic board of directors received an oral opinion, subsequently confirmed by delivery of a written opinion dated June 22, 2008, from Merrill Lynch, Pierce, Fenner & Smith Incorporated, which is referred to as Merrill Lynch, as to the fairness, from a financial point of view and as of the date of such opinion, to Republic of the exchange ratio provided for in the merger agreement. The full text of the written opinion of Merrill Lynch is attached to this joint proxy statement/prospectus as Annex C. Republic stockholders are encouraged to read this opinion carefully in its entirety for a description of the assumptions made, matters considered and qualifications and limitations on the review undertaken. Merrill Lynch’s opinion as to the fairness, from a financial point of view, of the exchange ratio to Republic was provided to the Republic board of directors in connection with its evaluation of the exchange ratio from a financial point of view, does not address any other aspect of the merger and does not constitute a recommendation to any stockholder as to how that stockholder should vote on the proposed merger or any related matter.
 
Allied.  In connection with the merger, the Allied board of directors received a written opinion, dated June 22, 2008, from Allied’s financial advisor, UBS Securities LLC, which is referred to as UBS, as to the fairness, from a financial point of view and as of the date of such opinion, of the exchange ratio provided for in the merger to the holders of Allied common stock. The full text of UBS’ written opinion, dated June 22, 2008, is attached to this joint proxy statement/prospectus as Annex D. UBS’ opinion was provided for the benefit of the Allied board of directors in connection with, and for the purpose of, its evaluation of the exchange ratio from a financial point of view and does not address any other aspect of the merger. The opinion does not address the relative merits of the merger as compared to other business strategies or transactions that might be available with respect to Allied or Allied’s underlying business decision to effect the merger. The opinion does not constitute a recommendation to any stockholder as to how to vote or act with respect to the merger. Holders of Allied common stock are encouraged to read UBS’ opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the review undertaken by UBS.
 
Allied Options, Other Equity-Based Awards and Convertible Debentures (see page 107)
 
At the effective time of the merger, each outstanding option issued by Allied to purchase shares of Allied common stock, which is referred to as an Allied option, will be converted into an option to purchase shares of Republic common stock on the same terms and conditions as were applicable before the merger (but taking into account any acceleration of Allied options in connection with the merger) except that the holder thereof will be allowed to purchase shares of Republic common stock equal to (1) the number of shares of Allied common stock subject to the Allied option before the completion of the merger multiplied by (2) .45, which is the exchange ratio, (3) with the result rounded to the nearest whole share. In addition, at the effective time of the merger, each option that has been converted into an option to purchase shares of Republic common stock will have an exercise price per share equal to (1) the exercise price per share of Allied common stock purchasable pursuant to the Allied option before the completion of the merger divided by (2) .45, which is the exchange ratio, (3) with the result rounded to the nearest whole cent.
 
At the effective time of the merger, each outstanding Allied restricted share, restricted stock unit and deferred stock unit, which are referred to as other Allied equity-based awards, will be converted into a restricted share, restricted stock unit or deferred stock unit of Republic, respectively, on the same terms and conditions (but taking into account any acceleration of Allied equity-based awards in connection with the merger) as were applicable before the merger except that the number of shares of Republic common stock subject to the converted other Allied equity-based award will equal (1) the number of shares of Allied common stock subject to the equity-based award before the completion of the merger multiplied by (2) .45, which is the exchange ratio, (3) with the result rounded to the nearest whole share. For more information regarding Allied equity-based awards, please see “The Merger Agreement — Allied Options, Other Equity-Based Awards and Convertible Debentures” beginning on page 107.
 
In April 2004, Allied issued $230 million of 4.25% senior subordinated convertible debentures due 2034. The debentures are convertible into 11.3 million shares of Allied common stock at a conversion price of


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$20.43 per share. Each convertible debenture outstanding immediately prior to the effective time will, following the merger, remain outstanding and cease to be convertible into Allied common stock and the holder of such convertible debenture will become entitled to receive, upon conversion thereof, Republic common stock that such holder would have received in the merger if such holder had converted the holder’s debenture to Allied common stock immediately prior to the merger.
 
Interests of Republic and Allied Executive Officers and Directors in the Merger (see pages 70, 85 and 92)
 
When you consider the Republic and Allied board of directors’ respective recommendations that stockholders vote in favor of the proposals described in this joint proxy statement/prospectus, you should be aware that (1) some Republic executive officers and directors may have interests that may be different from, or in addition to, Republic stockholders’ interests, including their receipt of severance benefits under existing Republic employment arrangements, accelerated vesting of Republic equity-based awards and participation in various benefits plans, and (2) some Allied executive officers and directors may have interests that may be different from, or in addition to, Allied stockholders’ interests, including their receipt of severance benefits under existing Allied employment arrangements, accelerated vesting of Allied equity-based awards and participation in various benefits plans.
 
No Appraisal Rights (see page 93)
 
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.
 
Material Federal Income Tax Consequences of the Merger (see page 93)
 
An Allied stockholder’s receipt of Republic common stock pursuant to the merger will generally be tax-free for U.S. federal income tax purposes, except for taxes that may result from any receipt of cash in lieu of a fractional share of Republic common stock. There will be no U.S. federal income tax consequences to a holder of Republic common stock as a result of the merger.
 
The U.S. federal income tax consequences described above may not apply to some holders of Allied common stock, including some types of holders specifically referred to on page 93. Accordingly, please consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.
 
Accounting Treatment (see page 91)
 
Republic will account for the merger as a purchase of Allied by Republic, using the acquisition method of accounting in accordance with United States generally accepted accounting principles, or “GAAP.” Republic and Allied expect that, upon completion of the merger, Allied stockholders will receive approximately 51.7% of the outstanding common stock of the combined company in respect of their Allied shares on a diluted basis and Republic stockholders will retain 48.3% of the outstanding common stock of the combined company on a diluted basis. In addition to considering these relative voting rights, Republic also considered the proposed composition of the combined company’s board of directors and the board committees, the proposed structure and members of the executive management team of the combined company and the premium to be paid by Republic to acquire Allied in determining the acquirer for accounting purposes. Based on the weighting of these factors, Republic has concluded that it is the accounting acquirer.
 
Under the acquisition method of accounting, as of the effective time of the merger, the assets, including identifiable intangible assets, and liabilities of Allied will be recorded at their respective fair values and added to those of Republic. Any excess of the purchase price for the merger over the net fair value of Allied’s assets and liabilities will be recorded as goodwill. The results of operations of Allied will be combined with the results of operations of Republic beginning on the effective time of the merger. The consolidated financial statements of Republic after the effective time of the merger will not be restated retroactively to reflect the historical financial position or results of operations of Allied. Following the merger, and subject to the finalization of the purchase price allocation, the earnings of Republic will reflect the effect of any purchase


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accounting adjustments, including any increased depreciation and amortization associated with fair value adjustments to the assets acquired and liabilities assumed.
 
The preliminary purchase price allocation assumes the merger is consummated in 2008, and that it will be accounted for under Statement of Financial Accounting Standards No. 141, “Business Combinations.” Republic’s and Allied’s management believe the merger will be consummated in the fourth quarter of 2008. If the merger is consummated subsequent to December 31, 2008, it will be accounted for under Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which is effective for Republic on January 1, 2009. SFAS 141(R) changes the methodologies for calculating purchase price and for determining fair values. It also requires that all transaction and restructuring costs related to business combinations be expensed as incurred, and it requires that changes in deferred tax asset valuation allowances and liabilities for tax uncertainties subsequent to the acquisition date that do not meet certain remeasurement criteria be recorded in the income statement. The consolidated balance sheet and results of operations of the combined company would be materially different if the merger of Republic and Allied were accounted for under SFAS 141(R).
 
Regulatory Matters (see page 96)
 
The merger is subject to review by federal and state antitrust authorities pursuant to applicable federal and state antitrust laws. Under the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), and the rules and regulations thereunder, the merger cannot be completed until the companies have made the required notifications and the occurrence of the first of the following: (1) the early termination of the waiting period; (2) the expiration of the required waiting period; or (3) the resolution of any applicable federal or state litigation. Republic and Allied filed the required notification and report forms with the United States Department of Justice, Antitrust Division and the Federal Trade Commission on June 23, 2008.
 
Financing (see page 97)
 
In connection with the merger, Republic intends to refinance Allied’s existing senior secured credit facility, which includes a revolving credit facility, a term loan facility, an institutional letter of credit facility and an incremental revolving letter of credit facility. Republic intends to accomplish the refinancing through a combination of funding under a new $1.75 billion senior revolving credit facility, which is referred to as the new credit facility, and Republic’s existing $1.0 billion senior revolving credit facility, which is referred to as the existing credit facility. The new credit facility and the existing credit facility are referred to together as the credit facilities. Allied’s other debt will remain outstanding immediately following the merger.
 
Republic entered into the new credit facility evidenced by a Credit Agreement dated as of September 18, 2008 among Republic, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, JPMorgan Chase Bank, N.A., as Syndication Agent, Barclays Bank, PLC, BNP Paribas, and The Royal Bank of Scotland PLC, as Co-Documentation Agents and the other lenders party thereto, and intends to close the initial funding under the new credit facility concurrent with the merger. A condition to the initial funding under the new credit facility will be the closing of the merger on or prior to May 15, 2009. Additional conditions to the initial funding under the new credit facility, as well as terms of the new credit facility, are described under “Financing.”
 
On September 18, 2008, Republic entered into an amendment to the existing credit facility that, subject to the initial funding under the new credit facility, will amend the terms of the existing credit facility to be substantially similar to the terms of the new credit facility, including pricing but excluding maturity, and otherwise permit the acquisition.
 
On September 19, 2008, Allied entered into an amendment of its $400 million accounts receivable facility consenting to the acquisition. Subsequent to the Allied stockholder vote but prior to the closing of the merger, Allied expects to enter into an amendment to its accounts receivable facility extending its maturity date by an additional 364 days. Allied has entered into a mandate letter with Calyon New York Branch to begin the process to obtain the extension. If the extension is obtained, Republic would not seek to refinance the Allied


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accounts receivable facility prior to the closing of the acquisition. If the extension is not obtained, Republic believes that it could obtain the financing necessary to refinance the Allied accounts receivable facility on terms that would be acceptable to the lenders under the new credit facility and the existing credit facility. Republic may elect to complete such refinancing concurrently with the closing of the merger, or at some time prior to May 29, 2009, when the accounts receivable facility is scheduled to expire.
 
For more information regarding the financing in connection with the merger, see “Financing.”
 
Listing of Republic Stock (see page 108)
 
Republic has agreed to use its best efforts to cause the shares of Republic common stock to be issued pursuant to the merger and the shares of Republic common stock to be reserved for issuance upon exercise or settlement of Allied equity-based awards or conversion of Allied convertible debentures to be approved for listing on the NYSE. It is also a condition to the merger that the shares of Republic common stock issuable in connection with the merger be approved for listing on the NYSE on or prior to the effective time of the merger.
 
New Republic Governance Structure After the Merger (see page 108)
 
Republic and Allied have agreed on a governance structure for Republic following the completion of the merger, referred to as the New Republic Governance Structure, as further described below.
 
Republic Board of Directors
 
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 Republic Directors, and (3) five Continuing Allied 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.
 
Committees of the Republic Board of Directors
 
Other than with respect to the Continuing Republic Committee or 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.
 
Amendments to the Republic Bylaws
 
In connection with the merger, the Republic bylaws will be amended and restated as of the effective time in the form attached to this joint proxy statement/prospectus as Annex B in order to facilitate the implementation of the New Republic Governance Structure, as well as to revise certain other provisions of the Republic bylaws as agreed to by Republic and Allied.
 
Future Amendments to New Republic Governance Structure
 
During the Continuation Period, the Republic board of directors may amend, alter or repeal any provisions included in the Republic bylaws relating to the New Republic Governance Structure only upon the affirmative vote of directors constituting at least seven members of the Republic board of directors, referred to as the required number. In the event that the size of the Republic board of directors is increased after the Initial Continuation Period as described above, the required number will be increased by one for each additional director position created.
 
Conditions to Completion of the Merger (see page 119)
 
Each party’s obligations to effect the merger is subject to the satisfaction or waiver of mutual conditions, including the following:
 
  •  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 on Form S-4 of which this joint proxy statement/prospectus forms a part.
 
Each of Republic’s and RS Merger Wedge Inc.’s, on the one hand, and Allied’s, on the other hand, obligation to effect the merger is subject to the satisfaction or waiver of the following additional conditions:
 
  •  (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.
 
In addition, Republic’s obligation to complete the merger is subject to the satisfaction or waiver of the following additional condition:
 
  •  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.
 
Termination of the Merger Agreement (see page 120)
 
The merger agreement may be terminated at any time before the effective time of the merger by mutual written consent of Republic and Allied.


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The merger agreement may also be terminated prior to the effective time of the merger by either Republic or Allied if:
 
  •  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 Republic stockholders or Allied stockholders fail to give the necessary approvals at their special meetings or any adjournments or postponements thereof.
 
The merger agreement may also be terminated prior to the effective time of the merger by Republic if:
 
  •  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 warranties and/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.
 
The merger agreement may also be terminated prior to the effective time of the merger by Allied if:
 
  •  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 warranties and/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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Termination Fees (see page 121)
 
Termination Fee Payable by Republic.  Republic has agreed to pay Allied a termination fee of $200 million, and up to $50 million of Allied’s reasonable documented fees and expenses incurred in connection with the merger and the merger agreement, under any of the following circumstances:
 
  •  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 the 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.
 
Termination Fee Payable by Allied.  Allied has agreed to pay Republic a termination fee of $200 million, and up to $50 million of Republic’s reasonable documented fees and expenses incurred in connection with the merger and the merger agreement, under any of the following circumstances:
 
  •  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 the 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.
 
Executive Officers (see page 92)
 
Republic and Allied have agreed that upon consummation of the merger the following persons will be executive officers of the combined company and hold the offices set forth next to their names:
 
     
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
 
Headquarters (see page 92)
 
The combined company’s corporate headquarters will be located in Phoenix, Arizona.


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Special Meetings of Republic and Allied Stockholders
 
The Republic Special Meeting (see page 123)
 
Meeting.  The Republic special meeting will be held on November 14, 2008 at 1:30 p.m., Eastern time, in the Atrium on the 7th Floor of the AutoNation Building, 110 S.E. 6th Street, Fort Lauderdale, Florida 33301. At the Republic special meeting, Republic stockholders will be asked to:
 
  •  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.
 
Record Date; Votes.  Republic has fixed the close of business on October 6, 2008 as the record date, which is referred to as the Republic record date, for determining the Republic stockholders entitled to receive notice of and to vote at the Republic special meeting. Only holders of record of Republic common stock on the Republic record date are entitled to receive notice of and vote at the Republic special meeting, and any adjournment or postponement thereof.
 
Each share of Republic common stock is entitled to one vote on each matter brought before the meeting. On the Republic record date, there were 182,163,533 shares of Republic common stock issued and outstanding.
 
Required Vote.  The Republic proposals require different percentages of votes for approval as set forth below:
 
Republic stockholders must approve the Republic share issuance under each of (1) the rules of the NYSE and (2) the Republic bylaws, as follows:
 
  •  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.
 
Approval of the Republic share issuance by Republic stockholders is a condition to completion of the merger.
 
Approval of an adjournment of the Republic special meeting, if necessary, to solicit additional proxies in favor of the Republic share issuance requires the affirmative vote of holders 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 Republic special meeting, and entitled to vote on the proposal.
 
Failure to Vote; Abstentions.  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. Any of your shares as to which you abstain or which are present and entitled to vote but not voted will have the same effect as a vote “AGAINST” approving an adjournment of the Republic special meeting. For more information regarding the effect of abstentions, a failure to vote or broker non-vote, see “The Republic Special Meeting — Votes Required to Approve Republic Proposals” on page 124.


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Revocation of Proxies.  You have the power to revoke your proxy at any time before the proxy is voted at the Republic special meeting. You can revoke your proxy 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 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.
 
If you choose either of the first two methods to revoke your proxy, you must submit your notice of revocation or your new proxy to Republic’s Corporate Secretary at the Republic address under “The Companies” beginning on page 105 so that it is received no later than the beginning of the Republic special meeting.
 
Stock Ownership of Republic Directors and Executive Officers.  On October 6, 2008, the Republic record date, directors and executive officers of Republic and their respective affiliates owned and were entitled to vote approximately 1,000,052 shares of Republic common stock, or approximately 0.55% of the shares of Republic common stock outstanding on that date. To Republic’s knowledge, the directors and executive officers of Republic and their respective affiliates intend to vote their shares of Republic common stock in favor of all Republic proposals at the Republic special meeting, and any adjournment or postponement thereof.
 
The Allied Special Meeting (see page 127)
 
Meeting.  The Allied special meeting will be held on November 14, 2008, at 11:30 a.m., Mountain time, at the Marriott at McDowell Mountains, 16770 North Perimeter Drive, Scottsdale, Arizona 85260. At the Allied special meeting, Allied stockholders will be asked to:
 
  •  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.
 
Record Date; Votes.  Allied has fixed the close of business on October 6, 2008 as the record date, which is referred to as the Allied record date, for determining the Allied stockholders entitled to receive notice of and to vote at the Allied special meeting. Only holders of record of Allied common stock on the Allied record date are entitled to receive notice of and vote at the Allied special meeting, and any adjournment or postponement thereof.
 
Each share of Allied common stock is entitled to one vote on each matter brought before the meeting. On the Allied record date, there were 433,493,501 shares of Allied common stock issued and outstanding.
 
Required Vote.  The Allied proposals require different percentages of votes in order to approve them:
 
  •  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.
 
Adoption of the merger agreement by Allied stockholders is a condition to completion of the merger.
 
Failure to Vote; Abstentions.  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” adopting the merger


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agreement and any of your shares as to which you abstain or which are present and entitled to vote but not voted will have the same effect as a vote against approving an adjournment of the Allied special meeting. For more information regarding the effect of abstentions, a failure to vote or broker non-votes, see “The Allied Special Meeting — Votes Required to Approve Allied Proposals” beginning on page 128.
 
Revocation of Proxies.  You have the power to revoke your proxy at any time before the proxy is voted at the Allied special meeting. You can revoke your proxy 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 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.
 
If you choose either of the first two methods to revoke your proxy, you must submit your notice of revocation or your new proxy to Allied’s Corporate Secretary at the Allied address under “The Companies” beginning on page 105 so that it is received no later than the beginning of the Allied special meeting.
 
Stock Ownership of Directors and Executive Officers.  On October 6, 2008, the Allied record date, directors and executive officers of Allied and their respective affiliates owned and were entitled to vote approximately 48,876,385 shares of Allied common stock, or approximately 11.3% of the shares of Allied common stock outstanding on that date. To Allied’s knowledge, the directors and executive officers of Allied and their respective affiliates intend to vote their shares of Allied common stock in favor of all Allied proposals at the Allied special meeting, and any adjournment or postponement thereof. Included in the foregoing are Allied shares owned by entities affiliated with Blackstone Capital Partners II Merchant Bank Fund L.P. (collectively, “Blackstone”), who currently have the right to nominate three of Allied’s directors and who together owned approximately 11.1% of Allied’s outstanding shares of common stock as of the Allied record date. Blackstone has agreed, in connection with any proposed business combination involving Allied, to vote their shares in the manner recommended by a majority of the Allied board of directors. Accordingly, Allied expects that all shares of Allied common stock owned by Blackstone will be voted in favor of the merger. Blackstone’s right to nominate any directors will terminate at the effective time of the merger.
 
Recent Developments
 
Waste Management Proposal
 
On July 14, 2008, Republic received from Waste Management, Inc. an unsolicited proposal to acquire all of Republic’s outstanding common stock for $34.00 per share in cash, subject to Waste’s conducting a due diligence review of Republic, obtaining financing, clearing all antitrust reviews without divestitures that would have a material adverse effect, maintaining its investment grade credit ratings and other conditions. On July 17, 2008, the Republic board of directors conducted a telephonic meeting to review the Waste proposal. After careful consultation with its legal and financial advisors and further deliberations, the Republic board of directors determined unanimously that the Waste proposal did not constitute, and could not reasonably be expected to lead to, a proposal for a transaction that is or would be more favorable to Republic stockholders than the merger transaction between Republic and Allied. On July 18, 2008, Republic issued a press release, emphasizing that Republic is not for sale and that as a result of the Republic board of directors’ determination, and in accordance with Republic’s obligations under the terms of the merger agreement with Allied, Republic may not furnish information to, or have discussions and negotiations with, Waste. At the meeting, the Republic board of directors also reaffirmed its recommendation to Republic stockholders regarding the existing transaction with Allied. On August 11, 2008, the Republic board of directors received a revised unsolicited proposal from Waste to acquire all of the Republic outstanding common stock for $37.00 per share in cash, which proposal remained subject to substantial conditions. On August 14, 2008, the Republic board of directors determined unanimously that the revised Waste proposal did not meet the standard in the merger


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agreement to allow Republic to furnish information to, or have discussions and negotiations with, Waste. See “The Merger — Background of the Merger.”
 
Certain Litigation
 
On July 25, 2008, a putative class action was filed, and on August 15, 2008 was amended, in the Court of Chancery of the State of Delaware by the New Jersey Carpenters Pension and the New Jersey Carpenters Annuity Funds against Republic and the members of the Republic board of directors, individually.
 
On August 21, 2008, a second putative class action was filed in the Court of Chancery of the State of Delaware by David Shade against Republic, the members of the Republic board of directors, individually, and Allied. On September 22, 2008, the New Jersey Carpenters and the Shade cases were consolidated by the Court of Chancery, and on September 24, 2008, the plaintiffs in the Delaware case, now known as In Re: Republic Services Inc. Shareholders Litigation, filed a verified consolidated amended class action complaint in the Court of Chancery of the State of Delaware. Discovery in the Delaware case is ongoing.
 
On September 5, 2008, a putative class action was filed in the Circuit Court in and for Broward County, Florida, by the Teamsters Local 456 Annuity Fund against Republic and the members of the Republic board of directors, individually. On September 24, 2008, the defendants in the Florida litigation filed a Motion to Stay or to Dismiss the lawsuit in light of the consolidated Delaware class action. On October 6, 2008, the Circuit Court ordered full briefing on the Motion to Stay or Dismiss and a hearing on the Motion is set for October 31, 2008. No further activity in the Florida litigation was allowed by the Circuit Court pending the hearing. However, the Circuit Court ordered, in the interim, defendants to provide the Florida plaintiff with copies of any discovery produced to plaintiffs in the Delaware action.
 
Each of these suits primarily seeks to enjoin the proposed transaction between Republic and Allied and compel Republic to accept the unsolicited proposals made by Waste, or at least compel the Republic board of directors to further consider and evaluate the Waste proposals, as well as damages and attorneys’ fees.
 
Rights Plan and Amended and Restated Bylaws
 
On July 28, 2008, the Republic board of directors declared a dividend of one preferred share purchase right, each of which is referred to as a right and collectively as the rights, for each outstanding share of Republic common stock. The dividend was paid to holders of record of Republic’s common stock as of the close of business on August 7, 2008. The specific terms of the rights are contained in the Rights Agreement, dated as of July 28, 2008, by and between Republic and The Bank of New York Mellon, as Rights Agent.
 
The Republic board of directors adopted the Rights Agreement to protect Republic stockholders from coercive or otherwise unfair takeover tactics. In general terms, the rights impose a significant penalty upon any person or group which acquires beneficial ownership of 10% (20% in the case of existing 10% holders) or more of Republic’s outstanding common stock, including derivatives, unless such acquisition was approved by the Republic board of directors or such acquisition was in connection with an offer for all of the outstanding shares of Republic common stock for the same consideration. The rights will terminate concurrently with the acquisition of more than 50% of Republic’s outstanding shares of common stock not owned by the acquiring person in such an offer, provided that the acquiring person irrevocably commits to acquire all remaining untendered shares for the same consideration as in the tender offer as promptly as practicable following completion of the offer. See “Description of Republic Capital Stock” and “Amendment to the Republic Amended and Restated Bylaws.”
 
Also on July 28, 2008, Republic adopted bylaw amendments intended to provide orderly procedures to regulate the written consent process and to require notice and information about stockholder proposals. Stockholders seeking to act by written consent must request the Republic board of directors set a record date for stockholders entitled to consent. The record date must be set within ten days of a request and must be no later than ten days after the Republic board of directors acts. Absent this bylaw, action could be taken by consent without prior notice to Republic and all of its stockholders.


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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF REPUBLIC
(in millions, except per share data)
 
The following tables set forth the selected historical consolidated financial data for Republic. The selected consolidated financial data as of and for the fiscal years ended December 31, 2007, 2006, 2005, 2004 and 2003 have been derived from Republic’s consolidated financial statements. You should not take historical results as necessarily indicative of the results that may be expected for any future period. The selected consolidated financial data as of and for the six months ended June 30, 2008 and June 30, 2007 have been derived from Republic’s unaudited consolidated condensed financial statements, which include all adjustments, consisting only of normal, recurring adjustments, that Republic considers necessary for the fair presentation of the financial position and results of operations for these periods. The results for the six months ended June 30, 2008 are not necessarily indicative of results that may be expected for the entire fiscal year. Republic’s shares, per share data and weighted average common and common equivalent shares outstanding have been retroactively adjusted for all periods prior to 2007 to reflect a 3-for-2 stock split in the form of a stock dividend that was effective on March 16, 2007.
 
You should read this selected consolidated financial data in conjunction with Republic’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and Republic’s Quarterly Report on Form 10-Q for the period ended June 30, 2008.
 
                                                         
    Six Months
       
    Ended June 30,     Years Ended December 31,  
    2008(1)     2007(2)     2007(2)     2006     2005     2004     2003  
 
Statement of Income Data:
                                                       
Revenue
  $ 1,606.7     $ 1,574.0     $ 3,176.2     $ 3,070.6     $ 2,863.9     $ 2,708.1     $ 2,517.8  
Expenses:
                                                       
Cost of operations
    1,054.0       986.3       1,997.3       1,924.4       1,803.9       1,714.4       1,605.4  
Depreciation, amortization and depletion
    149.6       155.9       305.5       296.0       278.8       259.4       239.1  
Accretion
    8.9       8.3       17.1       15.7       14.5       13.7       12.7  
Selling, general and administrative
    166.4       155.7       320.3       315.0       289.5       268.3       247.9  
                                                         
Operating income
    227.8       267.8       536.0       519.5       477.2       452.3       412.7  
Interest expense
    (42.5 )     (47.2 )     (94.8 )     (95.8 )     (81.0 )     (76.7 )     (78.0 )
Interest income
    5.3       6.4       12.8       15.8       11.4       6.9       9.5  
Other income (expenses), net
    .9       1.1       14.1       4.2       1.6       1.2       3.2  
                                                         
Income before income taxes
    191.5       228.1       468.1       443.7       409.2       383.7       347.4  
Provision for income taxes
    74.7       87.0       177.9       164.1       155.5       145.8       132.0  
                                                         
Income before cumulative effect of
changes in accounting principles
    116.8       141.1       290.2       279.6       253.7       237.9       215.4  
Cumulative effect of changes in accounting principles
                                        (37.8 )
                                                         
Net income
  $ 116.8     $ 141.1     $ 290.2     $ 279.6     $ 253.7     $ 237.9     $ 177.6  
                                                         
Basic earnings per share:
                                                       
Before cumulative effect of changes in accounting principles
  $ .64     $ .73     $ 1.53     $ 1.41     $ 1.23     $ 1.10     $ .96  
Cumulative effect of changes in accounting principles
                                        (.17 )
                                                         
Basic earnings per share
  $ .64     $ .73     $ 1.53     $ 1.41     $ 1.23     $ 1.10     $ 0.79  
                                                         
Weighted average common shares outstanding
    182.7       193.2       190.1       198.2       207.0       217.3       224.8  
                                                         
Diluted earnings per share:
                                                       
Before cumulative effect of changes in accounting principles
  $ .63     $ .72     $ 1.51     $ 1.39     $ 1.20     $ 1.08     $ .95  
Cumulative effect of changes in accounting principles
                                        (.17 )
                                                         


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    Six Months
       
    Ended June 30,     Years Ended December 31,  
    2008(1)     2007(2)     2007(2)     2006     2005     2004     2003  
 
Diluted earnings per share
  $ .63     $ .72     $ 1.51     $ 1.39     $ 1.20     $ 1.08     $ .78  
                                                         
Weighted average common and common
equivalent shares outstanding
    184.5       195.1       192.0       200.6       210.8       221.1       227.6  
                                                         
Cash dividends per common share
  $ .3400     $ .2134     $ .5534     $ .4000     $ .3466     $ .2400     $ .0800  
                                                         
Balance Sheet Data:
                                                       
Cash and cash equivalents
  $ 13.1     $ 25.9     $ 21.8     $ 29.1     $ 131.8     $ 141.5     $ 119.2  
Restricted cash and marketable securities
    177.8       129.4       165.0       153.3       255.3       275.7       397.4  
Total assets
    4,547.5       4,416.2       4,467.8       4,429.4       4,550.5       4,464.6       4,554.1  
Total debt
    1,617.0       1,498.3       1,567.8       1,547.2       1,475.1       1,354.3       1,520.3  
Total stockholders’ equity
    1,261.8       1,388.4       1,303.8       1,422.1       1,605.8       1,872.5       1,904.5  
 
 
(1) During the six months ended June 30, 2008, Republic recorded a pre-tax charge of $34.0 million ($21.8 million, or $.12 per diluted share, net of tax) related to additional orders received from the Ohio Environmental Protection Agency regarding environmental conditions at its Countywide Recycling and Disposal Facility in Ohio. Also during the six months ended June 30, 2008, Republic recorded a pre-tax charge of $35.0 million ($22.0 million, or $.12 per diluted share, net of tax) related to estimated costs believed required to comply with a Consent Decree and Settlement Agreement that Republic signed with the U.S. EPA, the Bureau of Land Management and Clark County, Nevada related to the Sunrise Landfill in Nevada.
 
(2) During the six months ended June 30, 2007, Republic recorded a pre-tax charge of $22.0 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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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ALLIED
(in millions, except per share data)
 
The following tables set forth the selected historical consolidated financial data for Allied. The selected consolidated financial data as of and for the fiscal years ended December 31, 2007, 2006, 2005, 2004 and 2003 have been derived from Allied’s consolidated financial statements. You should not take historical results as necessarily indicative of the results that may be expected for any future period. The selected consolidated financial data as of and for the six months ended June 30, 2008 and June 30, 2007 have been derived from Allied’s unaudited consolidated condensed financial statements, which include all adjustments, consisting only of normal, recurring adjustments, that Allied considers necessary for the fair presentation of the financial position and results of operations for these periods. The results for the six months ended June 30, 2008 are not necessarily indicative of results that may be expected for the entire fiscal year.
 
You should read this selected consolidated financial data in conjunction with Allied’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, Allied’s Current Report on Form 8-K dated May 5, 2008, in which certain previously reported financial information was reclassified to reflect the realignment of their organizational structure during the first quarter of 2008, and Allied’s Quarterly Report on Form 10-Q for the period ended June 30, 2008.
 
                                                         
    Six Months Ended June 30,     Years Ended December 31,  
    2008     2007     2007     2006     2005     2004     2003(5)  
 
Statement of Operations Data(1):
                                                       
Revenues
  $ 3,066.5     $ 2,992.1     $ 6,068.7     $ 5,908.5     $ 5,612.2     $ 5,396.5     $ 5,264.1  
Cost of operations
    1,920.3       1,886.8       3,787.1       3,786.4       3,654.6       3,428.8       3,235.8  
Selling, general and administrative expenses
    292.1       324.2       631.9       587.3       510.2       544.7       471.7  
Merger-related costs
    9.0                                      
Depreciation and amortization
    277.5       269.9       553.5       557.7       543.6       547.1       534.1  
Loss (gain) from divestitures and asset impairments(2)
    23.8       1.5       40.5       22.5                    
                                                         
Operating income
    543.8       509.7       1,055.7       954.6       903.8       875.9       1,022.5  
Interest expense and other(3)
    216.1       294.1       538.4       563.4       583.1       752.5       826.1  
                                                         
Income from continuing
operations before income taxes
    327.7       215.6       517.3       391.2       320.7       123.4       196.4  
Income tax expense
    142.8       90.3       207.1       235.3       131.1       70.6       86.6  
Minority interests
    0.9             0.4       0.1       (0.2 )     (2.7 )     1.9  
                                                         
Income from continuing operations
  $ 184.0     $ 125.3     $ 309.8     $ 155.8     $ 189.8     $ 55.5     $ 107.9  
                                                         
Basic earnings per share:
                                                       
Continuing operations
  $ .43     $ .29     $ .74     $ .32     $ .42     $ .11     $ (2.37 )
                                                         
Weighted average common shares
    411.1       368.2       368.8       356.7       326.9       315.0       203.8  
                                                         
Diluted earnings per share:
                                                       
Continuing operations
  $ .42     $ .29     $ .71     $ .32     $ .42     $ .11     $ (2.37 )
                                                         
Weighted average common and common equivalent shares
    444.8       381.5       443.0       359.3       330.1       319.7       203.8  
                                                         
Balance Sheet Data(1):
                                                       
Cash and cash equivalents
  $ 69.4     $ 107.6     $ 230.9     $ 94.1     $ 56.1     $ 68.0     $ 444.7  
Total assets
    13,936.3       13,863.6       13,948.7       13,811.0       13,661.3       13,539.2       13,860.9  
Total debt
    6,578.1       6,861.3       6,642.9       6,910.6       7,091.7       7,757.0       8,234.1  
Stockholders’ equity(4)
    4,107.2       3,732.4       3,904.2       3,598.9       3,439.4       2,604.9       2,517.7  


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(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.
 
(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 $23.8 million for the six months ended June 30, 2008 includes asset impairment charges of $22.9 million related to two landfill closures in Allied’s Midwest region. 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 one of the Midwest region landfills 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 certain 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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SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL DATA
 
The following Selected Unaudited Pro Forma Condensed Consolidated Financial Data is based on the historical financial data of Republic and Allied, and has been prepared to illustrate the effects of the merger. The Selected Unaudited Pro Forma Condensed Consolidated Statements of Income from Continuing Operations Data below is presented as if the merger were completed on January 1, 2007, and the Selected Unaudited Pro Forma Condensed Consolidated Balance Sheet Data below is presented as if the merger were completed on June 30, 2008. This data should be read in conjunction with Republic’s and Allied’s historical consolidated financial statements and accompanying notes in their Annual Reports on Form 10-K as of and for the year ended December 31, 2007, their Quarterly Reports on Form 10-Q as of and for the six months ended June 30, 2008, and Allied’s Current Report on Form 8-K dated May 5, 2008, in which certain previously reported financial information was reclassified to reflect the realignment of their organizational structure during the first quarter of 2008. See also the Unaudited Pro Forma Condensed Consolidated Financial Statements and notes thereto beginning on page 143.
 
                 
    For the Six Months
    For the Year Ended
 
    Ended June 30, 2008
    December 31, 2007
 
    (in millions,
    (in millions,
 
    except per
    except per
 
    share data)     share data)  
 
STATEMENT OF INCOME FROM CONTINUING OPERATIONS DATA:
               
Revenue
  $ 4,673.2     $ 9,244.9  
Operating income
    743.4       1,527.6  
Income from continuing operations
    285.4       571.5  
Income from continuing operations available to common shareholders
    279.2       534.0  
Basic income from continuing operations available to common shareholders per share
    .76       1.49  
Diluted income from continuing operations available to common shareholders per share
    .74       1.47  
Cash dividends per common share
    .34       .55  
 
         
    As of June 30, 2008
 
    (in millions)  
 
BALANCE SHEET DATA:
       
Cash and cash equivalents
  $ 19.0  
Restricted cash (current and non-current)
    262.9  
Total assets
    20,441.6  
Total debt
    8,197.4  
Total stockholders’ equity
    7,457.3  


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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
 
The following table sets forth selected per share data for Republic and Allied separately on a historical basis. It also includes unaudited pro forma consolidated per share data for Republic, which combines the data of Republic and Allied on a pro forma basis giving effect to the merger, and it includes equivalent per share data for Allied. This data should be read in conjunction with Republic’s and Allied’s historical consolidated financial statements and accompanying notes in their Annual Reports on Form 10-K as of and for the year ended December 31, 2007, their Quarterly Reports on Form 10-Q as of and for the six months ended June 30, 2008, and Allied’s Current Report on Form 8-K dated May 5, 2008, in which certain previously reported financial information was reclassified to reflect the realignment of their organizational structure during the first quarter of 2008. See also the Unaudited Pro Forma Condensed Consolidated Financial Statements and notes thereto beginning on page 143.
 
                 
    As of and for the
    For the
 
    Six Months Ended
    Year Ended
 
    June 30, 2008     December 31, 2007  
 
Republic Historical Per Share Data:
               
Income from continuing operations available to common shareholders — 
               
Basic
  $ .64     $ 1.53  
Diluted
    .63       1.51  
Cash dividends per common share
    .34       .55  
Book value per common share
    6.94       N/A  
Republic Unaudited Pro Forma Consolidated Per Share Data:
               
Income from continuing operations available to common shareholders — 
               
Basic
  $ .76     $ 1.49  
Diluted
    .74       1.47  
Cash dividends per common share
    .34       .55  
Book value per common share
    19.72       N/A  
Allied Historical Per Share Data:
               
Income from continuing operations available to common shareholders — 
               
Basic
  $ .43     $ .74  
Diluted
    .42       .71  
Cash dividends per common share
           
Book value per common share
    9.48       N/A  
Allied Unaudited Equivalent Pro Forma Per Share Data:(1)
               
Income from continuing operations available to common shareholders — 
               
Basic
  $ .34     $ .67  
Diluted
    .33       .66  
Cash dividends per common share
    .15       .25  
Book value per common share
    8.87       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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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION
 
Shares of Republic common stock and Allied common stock are each listed and principally traded on the NYSE. Republic common stock is listed for trading under the symbol “RSG” and Allied common stock is listed for trading under the symbol “AW.” The following table sets forth, for the periods indicated, the high and low sales prices per share of Republic common stock and Allied common stock, in each case as reported on the consolidated tape of the NYSE, and the cash dividends per share of common stock, as reported, respectively, in Republic’s and Allied’s Annual Reports on Form 10-K for the year ended December 31, 2007 with respect to years 2006 and 2007, and thereafter as reported in published financial sources. Republic’s per share data have been retroactively adjusted for all periods prior to March 16, 2007 to reflect a 3-for-2 stock split in the form of a stock dividend that was effective on that date.
 
                                                 
    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
    36.52       27.29       .1900       13.72       10.73        
Fourth Quarter (through October 9, 2008)
    29.96       22.58             11.28       8.60        
 
The table below sets forth the closing sale prices of Republic common stock and Allied common stock as reported on the NYSE 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 possible business combination, on June 20, 2008, the last trading day prior to the public announcement of the execution of the merger agreement, and on October 3, 2008, the last trading day before the Republic and Allied record date. The table also shows the implied value of one Allied common share, which was calculated by multiplying the closing sale price of Republic common stock on those dates and the exchange ratio of .45. The market prices of Republic and Allied common stock will fluctuate prior to the time of the special meetings and the completion of the merger. No assurance can be given concerning the market prices of Republic common stock or Allied common stock before the completion of the merger or the market price of Republic common stock after the completion of the merger. The exchange ratio is fixed in the merger agreement. Therefore, the market value of the Republic common stock that Allied stockholders will be entitled to receive pursuant to the merger may vary significantly from the prices shown in the table below.
 


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                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  
October 3, 2008
    28.35       11.08       12.76  
 
Republic stockholders should obtain current market quotations for shares of Republic and Allied common stock in deciding whether to vote for approval of the issuance of Republic common stock in accordance with the terms of the merger agreement. Allied stockholders should obtain current market quotations for shares of Republic common stock and Allied common stock in deciding whether to vote for adoption of the merger agreement.
 
Pursuant to the merger agreement, Republic is permitted to pay to holders of its common stock, before the effective time of the merger, regular quarterly cash dividends. After the effective time of the merger, Republic and Allied expect that the combined company will continue to pay quarterly dividends to stockholders of the combined company at a quarterly dividend rate per share of $.19. The combined company’s payment of dividends in the future, however, will depend on business conditions, its financial condition and earnings and other factors, and there can be no guarantee that dividends will continue to be paid at the same rate by the combined company. Allied does not currently pay a dividend on its outstanding shares of common stock.

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QUESTIONS AND ANSWERS ABOUT THE MERGER
 
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, nominating and corporate governance, and compensation 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 108.


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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 November 14, 2008 at 1:30 p.m., Eastern time, in the Atrium on the 7th Floor of the AutoNation Building, 110 S.E. 6th Street, Fort Lauderdale, Florida 33301, to consider and vote on the proposals related to the merger.
 
Allied Special Meeting.  A special meeting of Allied stockholders, which is referred to as the Allied special meeting, will be held on November 14, 2008 at 11:30 a.m., Mountain time, at the Marriott at McDowell Mountains, 16770 North Perimeter Drive, Scottsdale, Arizona 85260 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 company’s 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?


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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?
 
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 105 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 125. 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 129.
 
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 123 and “The Allied Special Meeting” beginning on page 127.
 
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.


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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 124 if you are a Republic stockholder, and “The Allied Special Meeting — Votes Required to Approve Allied Proposals” beginning on page 128 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.
 
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 29 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 119.
 
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


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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 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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RISK FACTORS
 
In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” below, you should carefully consider the following risk factors before deciding whether to vote for the Republic share issuance, in the case of Republic stockholders, or for adoption of the merger agreement, in the case of Allied stockholders. In addition to the risk factors set forth below, you should read and consider other risk factors specific to each of the Republic and Allied businesses that will also affect the combined company after the merger, which are described in Part I, Item 1A of each company’s Annual Report on Form 10-K for the year ended December 31, 2007, each of which has been filed by Republic or Allied, as applicable, with the SEC and all of which are incorporated by reference into this joint proxy statement/prospectus. If any of the risks described below or in the periodic reports incorporated by reference into this joint proxy statement/prospectus actually occurs, the businesses, financial condition, results of operations, prospects or stock prices of Republic, Allied or the combined company could be materially adversely affected. See “Where You Can Find More Information,” beginning on page 158.
 
Risks Related to the Merger
 
The exchange ratio is fixed and will not be adjusted. The market price of shares of Republic common stock may fluctuate, and Allied stockholders cannot be sure of the market value of the shares of Republic common stock that will be issued pursuant to the merger.
 
Upon completion of the merger, each share of Allied common stock outstanding immediately prior to the merger will be converted into the right to receive .45 shares of Republic common stock, with cash being paid in lieu of any fractional shares. The exchange ratio is fixed at .45 shares of Republic common stock for each share of Allied common stock, and will not be adjusted to reflect any increases or decreases in the price of Republic common stock or Allied common stock. The value a stockholder receives pursuant to the merger in respect of the stockholder’s Allied common stock will depend upon the market price of a share of Republic common stock upon the completion of the merger. If the price of Republic common stock declines, Allied stockholders will receive less value for their shares upon completion of the merger than the value calculated pursuant to the exchange ratio on the date immediately prior to the date on which the parties confirmed that they were engaged in merger discussions, the date immediately prior to the date the merger agreement was signed or the date of the Allied special meeting.
 
Due to the regulatory approval process, the merger may not be completed until a significant period of time has passed after the Republic and Allied special meetings, during which time the market value of Republic common stock and Allied common stock may fluctuate. Therefore, at the time of their respective special meetings, Republic and Allied stockholders will not know the exact market value of Republic common stock that will be issued in connection with the merger. The market price of a share of Republic common stock at the time the merger is completed is likely to be different, and may be lower or higher, than it was at the time the parties confirmed that they were engaged in merger discussions, the time the merger agreement was executed or the time of the special meetings. The closing sale price of Republic common stock on the NYSE 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 possible business combination, was $33.66 per share. From June 13, 2008 through the date of this joint proxy statement/prospectus, the trading price of Republic common stock ranged from a high of $36.52 per share to a low of $22.58 per share. For Republic and Allied historical market prices, see “Comparative Per Share Market Price and Dividend Information” beginning on page 22.
 
Stock price changes may result from a variety of factors, including:
 
  •  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.”
 
Republic and Allied stockholders are urged to obtain current market quotations for Republic and Allied common stock when they consider whether to approve the proposals required to complete the merger at the respective special meetings.
 
The fairness opinions obtained by Republic and Allied from their respective financial advisors will not reflect changes in circumstances between the signing of the merger agreement and the completion of the merger.
 
Neither Republic nor Allied has obtained an updated fairness opinion as of the date of this joint proxy statement/prospectus from Merrill Lynch, Republic’s financial advisor, or UBS, Allied’s financial advisor. Changes in the operations and prospects of Republic or Allied, general market and economic conditions, and other factors that may be beyond the control of Republic and Allied, and on which the fairness opinions were based, may alter the value of Republic or Allied or the prices of shares of Allied common stock or Republic common stock by the time the merger is completed. The opinions do not speak as of the time the merger will be completed or as of any date other than the dates of such written opinions. Because neither Republic nor Allied anticipates asking its respective financial advisor to update its opinion, the written opinions dated June 22, 2008 do not address the fairness of the exchange ratio, from a financial point of view, at the time the merger is completed. The opinions are included as Annex C and D to this joint proxy statement/prospectus. For a description of the opinion that Republic received from its financial advisor and a summary of the material financial analyses provided to the Republic board of directors in connection with rendering such opinion, see “Opinion of Financial Advisor to the Republic Board of Directors” beginning on page 64. For a description of the opinion that Allied received from its financial advisor and a summary of the material financial analyses provided to the Allied board of directors in connection with rendering such opinion, see “Opinion of Financial Advisor to the Allied Board of Directors” beginning on page 78. For a description of the other factors considered by the Republic board of directors in determining to approve the merger, see “Republic Reasons for the Merger” beginning on page 59. For a description of the other factors considered by the Allied board of directors in determining to approve the merger, see “Allied Reasons for the Merger” beginning on page 73.
 
The merger is subject to the receipt of consents, approvals and non-objections from anti-trust regulators, which may impose conditions on, jeopardize or delay completion of the merger, result in additional expenditures of money and resources, reduce the anticipated benefits of the merger or cause the failure of the completion of the merger.
 
Completion of the merger is conditioned upon filings with, and the receipt of required consents, orders, approvals, non-objections or clearances from, the Antitrust Division of the U.S. Department of Justice under the HSR Act. Republic and Allied intend to pursue these consents, orders, approvals, non-objections and clearances in accordance with the merger agreement. There can be no assurance, however, that these consents,


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orders, approvals, non-objections and clearances will be obtained or, if they are obtained, that they will not impose conditions on, or require divestitures relating to, the divisions, operations or assets of Republic or Allied. These conditions or divestitures may jeopardize or delay completion of the merger, result in additional expenditures of money and resources, or reduce the anticipated benefits of the merger. The merger agreement requires Republic and Allied to satisfy any conditions or divestiture requirements imposed upon them unless the conditions or divestitures individually or in the aggregate would reasonably be expected to have a material adverse effect after the effective time of the merger on the assets and liabilities, financial condition or business of Republic and its subsidiaries (including the combined company and its subsidiaries), taken as a whole, or the benefits expected to be derived by the parties on the date of the merger agreement from the combination of Republic and Allied via the merger (such combined business to be taken as a whole) in such a manner that such party would not have entered into the merger agreement in the face of such materially and adversely affected benefits. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 119 for a discussion of the conditions to the completion of the merger and “Regulatory Matters” beginning on page 96 for a description of the regulatory approvals necessary in connection with the merger.
 
There can be no assurance that the merger will be consummated. The announcement and pendency of the merger, or the failure of the merger to be consummated, could have an adverse effect on Republic’s or Allied’s stock price, business, financial condition, results of operations or prospects.
 
The merger is subject to a number of conditions to closing, including (i) the approval of the issuance of shares of Republic common stock in accordance with the terms of the merger agreement, (ii) the adoption of the merger agreement by the Allied stockholders, (iii) the expiration or termination of the waiting period (and any extension thereof) or the resolution of any litigation instituted applicable to the merger under the HSR Act or any other applicable federal or state statue or regulation, (iv) no temporary restraining order, preliminary or permanent injunction or other order shall have been issued (and remain in effect) by a court or other governmental entity having the effect of making the merger illegal or otherwise prohibiting the consummation of the merger, (v) the approval for listing on the NYSE of the shares of Republic common stock issuable in connection with the merger, and (vi) receipt by Republic of written confirmation from the applicable credit ratings agencies of the senior unsecured debt rating of Republic (including certain subsidiaries of Allied who are issuers of debt and will become subsidiaries of Republic at the effective time) upon the consummation of the merger. See “The Merger Agreement — Conditions to Completion of the Merger,” beginning on page 119.
 
If the stockholders of Republic fail to approve the Republic share issuance or if Allied stockholders fail to adopt the merger agreement, Republic and Allied will not be able to complete the merger. Additionally, if the other closing conditions are not met or waived, the companies will not be able to complete the merger. In addition, on July 14, 2008 and August 11, 2008, Waste Management, Inc. made unsolicited proposals to acquire Republic. While Republic refused to enter into discussions with Waste because neither proposal constituted a superior proposal, and could not reasonably be expected to lead to a superior proposal, there can be no assurance that Waste will not make a further proposal or that any such proposal will not result in the termination of the merger agreement. As a result, there can be no assurance that the merger will be completed in a timely manner or at all.
 
Further, the announcement and pendency of the merger could disrupt Republic’s and Allied’s businesses, in any of the following ways, among others:
 
  •  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
 
  •  customers, suppliers or others may seek to modify or terminate their business relationships with Republic or Allied.


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Republic and Allied may face additional challenges in competing for new business and retaining or renewing business. These disruptions could be exacerbated by a delay in the completion of the merger or termination of the merger agreement.
 
For the foregoing reasons, there can be no assurance that the announcement and pendency of the merger, or the failure of the merger to be consummated, will not have an adverse effect on Republic’s or Allied’s stock price, business, financial condition, results of operations or prospectus.
 
There can be no assurance that the combined company will obtain investment grade credit ratings at the closing of the merger, which could impact the results of operations of the combined company after the merger.
 
Under the merger agreement, Republic is not required to consummate the merger unless, upon consummation of the merger, the senior unsecured debt rating of Republic (including certain subsidiaries of Allied who are issuers of debt and will become subsidiaries of Republic at the effective time) is at least investment grade from one of Standard & Poor’s and Moody’s (and no lower than one level below investment grade from the other rating agency). See “The Merger Agreement — Conditions to Completion of the Merger,” beginning on page 119. There can be no assurance that this condition to the closing of the merger will be satisfied. The parties anticipate that Republic’s senior unsecured debt rating upon consummation of the merger will be investment grade (although lower than Republic’s senior unsecured debt rating prior to announcement of the merger). Republic could, however, waive the condition to closing of the merger that Republic’s rating be at least investment grade from one of Standard & Poor’s and Moody’s (and no lower than one level below investment grade from the other rating agency). If Republic closes the merger without an investment grade credit rating, then the combined company could have increased interest expenses and more burdensome covenants in its financing agreements. That could adversely impact the growth prospects and the results of operations of the combined company.
 
There can be no assurance that Republic will be able to satisfy all conditions necessary in order to borrow under the debt financing contemplated in connection with the merger.
 
Completion of the merger is not conditioned on receipt of any financing. Republic has agreed to use its best efforts to arrange financing sufficient to refinance or amend the terms of Allied’s existing senior secured credit facility, which includes a revolving credit facility, a term loan facility, an institutional letter of credit facility and an incremental revolving letter of credit facility. Republic intends to accomplish the refinancing through a combination of a new $1.75 billion senior revolving credit facility and Republic’s existing $1.0 billion senior revolving credit facility. Republic has entered into the new facility and has also entered into an amendment to its existing facility that is necessary to permit the merger, but there can be no assurance that Republic will be able to satisfy all the conditions necessary to borrow funds under the new facility and the existing facility in order to complete the merger. If such conditions are not satisfied, then alternative financing obtained in lieu of the financings contemplated by the existing commitments may have higher interest rates than Republic or Allied currently anticipate, which could increase the combined company’s interest expense, and may contain more burdensome covenants than Republic’s current debt instruments.
 
The merger agreement limits Republic’s and Allied’s ability to pursue an alternative acquisition proposal and requires Republic or Allied to pay a termination fee of $200 million, plus expenses, if it does.
 
The merger agreement prohibits Republic and Allied from soliciting, initiating or encouraging alternative merger or acquisition proposals with any third party. The merger agreement also provides for the payment by either of Republic or Allied to the other of a termination fee of $200 million, plus up to $50 million in expenses, if the merger agreement is terminated in certain circumstances in connection with a competing acquisition proposal for that company or the withdrawal by the board of directors of that company of its recommendation that the stockholders of that company vote in favor of the proposals required to consummate the merger, as the case may be. See “The Merger Agreement — Termination Fees,” beginning on page 121.


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There may be a long delay between Republic and Allied each receiving the necessary stockholder approvals for the merger and the closing of the transaction, during which time both companies will lose the ability to consider and pursue alternative acquisition proposals, which might otherwise be superior to the merger.
 
Following their respective stockholder approvals, the merger agreement prohibits both Republic and Allied from taking any actions to review, consider or recommend any alternative acquisition proposals, including those that could be superior to Republic’s or Allied’s stockholders, respectively, when compared to the merger. Given the potentially long delay between stockholder approval and antitrust clearance, the time during which both companies could be prevented from reviewing, considering or recommending such proposals could be significant.
 
Certain directors and executive officers of Republic and Allied may have interests that may be different from, or in addition to, interests of Republic and Allied stockholders generally.
 
Some of the directors of Republic and Allied who recommend that Republic and Allied stockholders vote in favor of adopting the merger agreement, and the executive officers of Republic and Allied who provided information to the Republic and Allied board of directors relating to the merger, have employment, indemnification and severance benefit arrangements, rights to acceleration of equity-based awards and other benefits on a change in control of Republic and Allied, and rights to ongoing indemnification and insurance that may provide them with interests in the merger. The receipt of compensation or other benefits, including the rights to acceleration of equity-based awards by Republic’s or Allied’s executive officers in connection with the merger, may make it more difficult for the combined company to retain their services after the merger, or require the combined company to expend additional sums to continue to retain their services. Stockholders of both companies should be aware of these interests when considering the Republic and Allied board of directors’ recommendations that they vote in favor of the adoption of the merger agreement, or the Republic share issuance, as the case may be. See “The Merger — Interests of Republic Executive Officers and Directors in the Merger” beginning on page 70. See “The Merger — Interests of Allied Executive Officers and Directors in the Merger” beginning on page 85.
 
Estimates as to the future value of the combined company are inherently uncertain. You should not rely on such estimates without considering all of the information contained in this joint proxy statement/prospectus.
 
Any estimates as to the future value of the combined company, including estimates regarding the price at which the common stock of the combined company will trade following the merger, are inherently uncertain. The future value of the combined company will depend upon, among other factors, the combined company’s ability to achieve projected revenue and earnings expectations and to realize the anticipated synergies described in this joint proxy statement/prospectus, all of which are subject to the risks and uncertainties described in this joint proxy statement/prospectus, including these risk factors. Accordingly, you should not rely upon any estimates as to the future value of the combined company, or the price at which the common stock of the combined company will trade following the merger, whether made before or after the date of this joint proxy statement/prospectus by Republic’s or Allied’s respective management or affliliates or others, without considering all of the information contained in this joint proxy statement/prospectus.
 
Risks Related to the Combined Company if the Merger is Completed
 
Republic and Allied may experience difficulties integrating their businesses.
 
Currently, each company operates as an independent public company. Achieving the anticipated benefits of the merger will depend in significant part upon whether the two companies integrate their businesses in an efficient and effective manner. Due to legal restrictions, Republic and Allied have been able to conduct only limited planning regarding the integration of the two companies following the merger and have not yet determined the exact nature of how the businesses and operations of the two companies will be combined after the merger. The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. The companies may not be able to accomplish the integration process smoothly, successfully or on a timely basis. The necessity of coordinating geographically


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separated organizations, systems of controls, and facilities and addressing possible differences in business backgrounds, corporate cultures and management philosophies may increase the difficulties of integration. The companies operate numerous systems and controls, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll and regulatory compliance. The integration of operations following the merger will require the dedication of significant management and external resources, which may temporarily distract management’s attention from the day-to-day business of the combined company and be costly. Employee uncertainty and lack of focus during the integration process may also disrupt the business of the combined company. Any inability of management to successfully and timely integrate the operations of the two companies could have a material adverse effect on the business and results of operations of the combined company.
 
The combined company may not fully realize the anticipated synergies and related benefits of the merger or within the timing anticipated.
 
Republic and Allied entered into the merger agreement because each company believes that the merger will be beneficial to each of Republic, Allied and their respective stockholders primarily as a result of the anticipated synergies resulting from the combined company’s operations. The companies may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of the merger within the timing anticipated. For example, elimination of duplicative costs may not be fully achieved or may take longer than anticipated. For at least the first year after the merger, and possibly longer, the benefits from the merger will be offset by the costs incurred in integrating the businesses and operations, or adverse conditions imposed by regulatory authorities on the combined business in connection with granting approval for the merger. An inability to realize the full extent of, or any of, the anticipated synergies or other benefits of the merger, as well as any delays that may be encountered in the integration process, which may delay the timing of such synergies or other benefits, could have an adverse effect on the business and results of operations of the combined company, and may affect the value of the shares of Republic common stock after the completion of the merger.
 
The merger may not be accretive in the anticipated time, or at all, and may cause dilution to the combined company’s earnings per share, which may harm the market price of Republic common stock after the merger.
 
The parties currently anticipate that the merger will be accretive to earnings per share within the first full calendar year after the merger is complete. However, Republic and Allied have been able to conduct only limited planning regarding the integration of the two companies. Accordingly, this expectation is based on preliminary estimates which may materially change after the completion of the merger. The combined company could also encounter additional transaction and integration-related costs or other factors such as the failure to realize all of the benefits anticipated in the merger or a downturn in its business. All of these factors could cause dilution to the combined company’s earnings per share or decrease the expected accretive effect of the merger and cause a decrease in the price of Republic common stock after the merger.
 
The price of the common stock of the combined company may be affected by factors different from those affecting the price of Republic common stock or Allied common stock independently.
 
After completion of the merger, as the combined company integrates the businesses of Republic and Allied, the results of operations as well as the stock price of the combined company may be affected by factors different than those factors affecting Republic and Allied as independent stand-alone entities. The combined company may face additional risks and uncertainties not otherwise facing each independent company prior to the merger. For a discussion of Republic’s and Allied’s businesses and certain factors to consider in connection with their respective businesses, see the respective sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each of Republic’s and Allied’s annual reports on Form 10-K for the year ended December 31, 2007 and quarterly reports on Form 10-Q for


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the period ended June 30, 2008 and other documents incorporated by reference into this joint proxy statement/prospectus.
 
Charges to earnings resulting from the application of the acquisition method of accounting may adversely affect the market value of Republic common stock following the merger.
 
In accordance with GAAP, Republic will be considered the acquiror of Allied for accounting purposes. Republic will account for the merger using the acquisition method of accounting. There may be charges related to the acquisition that are required to be recorded to Republic’s earnings that could adversely affect the market value of Republic common stock following the completion of the merger. Under the acquisition method of accounting, Republic will allocate the total purchase price to the assets acquired, including identifiable intangible assets, and liabilities assumed from Allied based on their fair values as of the date of the completion of the merger, and record any excess of the purchase price over those fair values as goodwill. For certain tangible and intangible assets, revaluating them to their fair values as of the completion date of the merger may result in Republic’s incurring additional depreciation and amortization expense that may exceed the combined amounts recorded by Republic and Allied prior to the merger. This increased expense will be recorded by Republic over the useful lives of the underlying assets. In addition, to the extent the value of goodwill or intangible assets were to become impaired after the merger, Republic may be required to incur charges relating to the impairment of those assets.
 
If the merger is consummated subsequent to December 31, 2008, all transaction and restructuring costs will need to be expensed.
 
The preliminary purchase price allocation made in connection with the preparation of the pro forma financial statements included in this joint proxy statement/prospectus assumes the merger is consummated in 2008, and that it will be accounted for under Statement of Financial Accounting Standards No. 141, “Business Combinations.” Management believes the merger will be consummated in the fourth quarter of 2008. If the merger is consummated subsequent to December 31, 2008, it will be accounted for under Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which is effective for Republic on January 1, 2009. SFAS 141(R) changes the methodologies for calculating purchase price and for determining fair values. It also requires that all transaction and restructuring costs related to business combinations be expensed as incurred, which will reduce earnings, and it requires that changes in deferred tax asset valuation allowances and liabilities for tax uncertainties subsequent to the acquisition date that do not meet certain remeasurement criteria be recorded in the income statement as well. The consolidated balance sheet and results of operations of the combined company would be materially different if the merger of Republic and Allied were accounted for under SFAS 141(R).
 
The combined company will incur significant transaction- and integration-related costs in connection with the merger.
 
Republic and Allied expect to incur non-recurring costs associated with combining the operations of the two companies, including charges and payments to be made to some of their employees pursuant to “change in control” contractual obligations. Republic expects that the amount of these costs will be determined as of the effective time of the merger and may be material to the financial position and results of operations of the combined company. The substantial majority of non-recurring expenses resulting from the merger will be comprised of transaction costs related to the merger, facilities and systems consolidation costs, and employee-related costs. Republic and Allied will also incur fees and costs related to formulating integration plans and performing these activities. Additional unanticipated costs may be incurred in the integration of the two companies’ businesses. The elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may not offset incremental transaction- and other integration-related costs in the near term.


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The combined company will have substantial indebtedness following the merger, which may limit its financial flexibility.
 
Following the completion of the merger, the combined company is expected to have approximately $8.4 billion in total debt outstanding and a higher debt to capital ratio than that of Republic on a stand-alone basis. This amount of indebtedness may limit the combined company’s flexibility as a result of its debt service requirements, and may limit the combined company’s ability to access additional capital and make capital expenditures and other investments in its business, to withstand economic downturns and interest rate increases, to plan for or react to changes in its business and its industry, and to comply with financial and other restrictive covenants in its indebtedness.
 
Further, the combined company’s ability to comply with the financial and other covenants contained in its debt instruments may be affected by changes in economic or business conditions or other events beyond its control. If the combined company does not comply with these covenants and restrictions, it may be required to take actions such as reducing or delaying capital expenditures, reducing dividends, selling assets, restructuring or refinancing all or part of its existing debt, or seeking additional equity capital.
 
The waste industry is highly competitive and includes competitors that may have greater financial and operational resources, flexibility to reduce prices and other competitive advantages that could make it difficult for the combined company to compete effectively.
 
The combined company will compete with large national waste management companies, municipalities and numerous regional and local companies for collection and disposal accounts. The competition will primarily be on the basis of price and the quality of services. Some of these competitors may have greater financial and operational resources than the combined company. Many counties and municipalities that operate their own waste collection and disposal facilities may have the benefits of tax revenues or tax-exempt financing. The combined company’s ability to obtain solid waste volume for its landfills may also be limited by the fact that some major collection companies also own or operate landfills to which they send their waste. In markets in which the combined company does not own or operate a landfill, its collection operations may operate at a disadvantage to fully integrated competitors. As a result of these factors, the combined company may have difficulty competing effectively from time to time or in certain markets. If the combined company were to lower prices to address these competitive issues, it could negatively impact its revenue growth and profitability.
 
Price increases may not be adequate to offset the impact of increased costs or may cause the combined company to lose volume.
 
The combined company will compete for collection accounts primarily on the basis of price and the quality of services. In addition, the combined company will seek to secure price increases necessary to offset increased costs (including fuel costs), to improve operating margins and to obtain adequate returns on its substantial investments in assets such as its landfills. From time to time, the combined company’s competitors may reduce the prices for their services in an effort to expand their market share. Contractual, general economic or market-specific conditions may also limit the combined company’s ability to raise prices. As a result of these factors, the combined company may be unable to offset increases in costs, improve operating margins and obtain adequate investment returns through price increases. The combined company may also lose volume to lower-cost competitors.
 
Increases in the cost of fuel or oil will increase operating expenses of the combined company and there can be no assurance that the combined company will be able to recover fuel or oil cost increases from its customers.
 
Republic’s and Allied’s operations are dependent on fuel to run their respective collection and transfer trucks and equipment. The combined company will buy fuel in the open market. Fuel prices are unpredictable and can fluctuate significantly based on events beyond the combined company’s control, including geopolitical


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developments, actions by the Organization of the Petroleum Exporting Countries and other oil and gas producers, supply and demand for oil and gas, war, terrorism and unrest in oil-producing countries, and regional production patterns. The combined company may not be able to offset such volatility through fuel surcharges. For example, Republic’s and Allied’s fuel costs were $192.0 million and $308.7 million in 2007, respectively, representing 9.6% and 8.2% of costs of Republic’s and Allied’s operations compared to $178.1 million and $291.6 million in 2006, respectively, representing 9.3% and 7.7% of costs of Republic’s and Allied’s operations. The increases primarily reflect an increase in the price of fuel.
 
In addition, regulations affecting the type of fuel used by Republic’s and Allied’s trucks are changing and could materially increase the cost and consumption of the combined company’s fuel. Each of Republic’s and Allied’s operations also require the use of certain petroleum-based products (such as liners at each company’s landfills) whose costs may vary with the price of oil. An increase in the price of oil could increase the cost of those products, which would increase the combined company’s operating and capital costs. Republic and Allied are also susceptible to increases in indirect fuel surcharges from vendors.
 
Downturns in the U.S. economy may have an adverse impact on the combined company’s operating results.
 
A weak economy generally results in decreases in the volumes of waste generated. In the past, weakness in the U.S. economy has had a negative effect on Republic’s and Allied’s operating results, including decreases in revenues, increases in costs and decreases in operating cash flows. Previous economic slowdowns have negatively impacted the portion of each company’s collection business servicing the manufacturing and construction industries. In the future, in an economic slowdown, the combined company may experience the negative effects of increased competitive pricing pressure and customer turnover as well. There can be no assurance that worsening economic conditions or a prolonged or recurring recession will not have a significant adverse impact on the combined company’s operating results or liquidity. Further, there can be no assurance that an improvement in economic conditions will result in an immediate, if at all positive, improvement in the combined company’s operating results or cash flows.
 
Adverse weather conditions may limit the combined company’s operations and increase the costs of collection and disposal.
 
The combined company’s collection and landfill operations could be adversely impacted by extended periods of inclement weather, which could increase the volume of waste collected under our existing contracts (without corresponding compensation), may interfere with collection and landfill operations, delay the development of landfill capacity or reduce the volume of waste generated by the combined company’s customers. In addition, weather conditions may result in the temporary suspension of the combined company’s operations, which could significantly affect the combined company’s operating results in the affected regions during those periods.
 
The combined company may be unable to execute its financial strategy.
 
The combined company’s ability to execute its financial strategy is dependent in part on its ability to maintain an investment grade rating on its senior debt. The credit rating process is contingent upon a number of factors, many of which are beyond the combined company’s control. Even if the combined company has investment grade credit ratings upon closing of the merger, it may not be able to maintain investment grade ratings. The combined company’s interest expense would increase and its ability to obtain financing on favorable terms may be adversely affected should it fail to maintain investment grade ratings.
 
The combined company’s financial strategy is also dependent in part on its ability to generate sufficient cash flow to reinvest in its existing businesses, fund internal growth, acquire other solid waste businesses, pay dividends, reduce indebtedness and minimize borrowings and take other actions to enhance stockholder value. There can be no assurance that the combined company will be successful in executing its broad-based pricing


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program, that it will generate sufficient cash flow to execute its financial strategy, that it will be able to pay cash dividends at the same rate or that it will be able to increase the amount of such dividends.
 
The combined company may be unable to manage its growth effectively.
 
The combined company’s growth strategy will place significant demands on its financial, operational and management resources. In order to continue its growth, the combined company may need to add administrative and other personnel, and will need to make additional investments in operations and systems. There can be no assurance that the combined company will be able to find and train qualified personnel, or do so on a timely basis, or expand its operations and systems to the extent, and in the time, required.
 
The combined company may be unable to execute its acquisition growth strategy.
 
The combined company’s ability to execute its growth strategy depends in part on its ability to identify and acquire desirable acquisition candidates as well as its ability to successfully consolidate acquired operations into its business. The consolidation of the combined company’s operations with the operations of acquired companies, including the consolidation of systems, procedures, personnel and facilities, the relocation of staff, and the achievement of anticipated cost savings, economies of scale and other business efficiencies, will present significant challenges to its management, particularly during the initial phases of integrating the operations of Allied and Republic. There can be no assurance that:
 
  •  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.
 
Additional factors may negatively impact the combined company’s acquisition growth strategy. The combined company’s acquisition strategy may require spending significant amounts of capital. If the combined company is unable to obtain additional needed financing on acceptable terms, it may need to reduce the scope of its acquisition growth strategy, which could have a material adverse effect on its growth prospects. The intense competition among companies pursuing the same acquisition candidates may increase purchase prices for solid waste businesses and increase the combined company’s capital requirements or prevent the combined company from acquiring certain acquisition candidates. If any of the aforementioned factors force management to alter the combined company’s growth strategy, the combined company’s growth prospects could be adversely affected.
 
Businesses the combined company acquires may have undisclosed liabilities.
 
In pursuing the combined company’s acquisition strategy, the combined company’s investigations of the acquisition candidates may fail to discover certain undisclosed liabilities of the acquisition candidates. If the combined company acquires a company having undisclosed liabilities, as a successor owner it may be responsible for such undisclosed liabilities. The combined company expects to try to minimize exposure to such liabilities by obtaining indemnification from each seller of the acquired companies, by deferring payment of a portion of the purchase price as security for the indemnification and by acquiring only specified assets. However, there can be no assurance that the combined company will be able to obtain indemnifications or that they will be enforceable, collectible or sufficient in amount, scope or duration to fully offset any undisclosed liabilities arising from acquisitions.


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Allied currently has matters pending with the Internal Revenue Service (IRS), which could result in large cash expenditures and could have an adverse impact on the combined company’s operating results and cash flows.
 
Allied’s federal income tax returns for years 1998 through 2006 are currently under examination by the IRS. The federal income tax audit for Allied’s subsidiary, Browning Ferris Industries LLC’s (f/k/a Browning Ferris Industries, Inc.) tax years ended September 30, 1996 through July 30, 1999 is complete except for one matter related to a capital loss deduction. If the capital loss deduction is fully disallowed, Allied estimates that it would have a total cash impact of approximately $431 million ($360 million net of tax benefit) related to federal taxes, state taxes and interest. Because of the interest rate assessed on this matter, Allied has previously paid the IRS $224 million ($191 million net of tax benefit) for tax and interest related to the capital loss deductions taken on the 1999 income tax returns. Later in 2008, Allied expects to pay the IRS and state tax authorities approximately $160 million ($124 million net of tax benefit) for tax and interest related to capital loss deductions taken on its 2000 through 2003 income tax returns. These payments do not represent a settlement with respect to the potential tax, interest or penalty related to this matter, nor do they prevent Allied from contesting the IRS tax adjustment applicable to its 1999 through 2003 taxable years in a federal refund action. The remaining impact of the capital loss disallowance, $47 million ($45 million net of tax benefit), will likely be paid in the normal course of future audit cycles for the tax years 2004 and beyond. Additionally, the IRS and state authorities could ultimately impose penalties and penalty interest for any amount up to approximately $124 million, net of tax benefit, as of June 30, 2008.
 
Also, if an outstanding matter from 2002 relating to an exchange of partnership interests is decided against Allied, it estimates it could have a potential total cash impact of approximately $160 million for federal and state taxes, plus accrued interest through June 30, 2008 of approximately $43 million ($27 million, net of tax benefit). In addition, for both matters, the IRS could impose a penalty of up to 40% of the additional income tax due.
 
The potential tax and interest (but not penalties or penalty-related interest) impact of the above matters has been fully reserved on Allied’s consolidated balance sheet. With regard to tax and accrued interest through June 30, 2008, a disallowance would not materially affect Allied’s consolidated results of operations; however, a deficiency payment would adversely impact Allied’s cash flow in the period the payment was made. The accrual of additional interest charges through the time these matters are resolved will affect Allied or the combined company’s consolidated results of operations. In addition, the successful assertion by the IRS of penalties could have a material adverse impact on Allied or the combined company’s consolidated cash flows and results of operations.
 
Also, the IRS has proposed that certain landfill costs be allocated to the collection and control of methane gas that is naturally produced within the landfill. The IRS’ position is that the methane gas produced by a landfill is a joint product resulting from the operations of the landfill and, therefore, these costs should not be expensed until the methane gas is sold or otherwise disposed. Allied believes it has several meritorious defenses, including the fact that methane gas is not actively produced for sale by Allied but rather arises naturally in the context of providing disposal services. Therefore, Allied believes that the resolution of this issue will not have a material adverse impact on the combined company’s consolidated liquidity, financial position or results of operations.
 
For additional information on these matters, see Note 9, Income Taxes, to Allied’s consolidated financial statements in Item 8 of Allied’s Annual Report on Form 10-K for the year ended December 31, 2007, Note 7, Income Taxes to Allied’s Quarterly Report on Form 10-Q for the six months ended June 30, 2008 and Allied’s Current Report on Form 8-K dated May 5, 2008, in which certain previously reported financial information was reclassified to reflect the realignment of their organizational structure during the first quarter of 2008. Other matters may also arise in the course of tax audits that could adversely impact the combined company’s consolidated liquidity, financial condition, and results of operations.


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Fluctuations in prices for recycled commodities that the combined company sells to customers may adversely affect its revenues, operating income and cash flows.
 
Republic and Allied process recyclable materials such as paper, cardboard, plastics, aluminum and other metals for sale to third parties. The results of operations of the combined company may be affected by changing prices or market requirements for recyclable materials. The resale and purchase prices of, and market demand for, recyclable materials can be volatile due to numerous factors beyond the combined company’s control. These fluctuations may affect the combined company’s future revenues, operating income and cash flows.
 
The combined company may be subject to influences of the workforce, including work stoppages, which could increase its operating costs and disrupt its operations.
 
As of June 30, 2008, approximately 29.25% of Republic’s and Allied’s combined workforces were represented by various local labor unions. If, in the future, the combined company’s unionized workers were to engage in a strike, work stoppage or other slowdown, it could experience a significant disruption of its operations and an increase in its operating costs, which could have an adverse impact on its results of operations and cash flows. In addition, if a greater percentage of the combined company’s workforce becomes unionized, the combined company’s business and financial results could be materially and adversely impacted due to the potential for increased operating costs.
 
The combined company will be subject to costly environmental regulations that may affect the combined company’s operating margins, restrict its operations and subject the combined company to additional liabilities.
 
The combined company’s compliance with laws and regulations governing the use, treatment, storage, transfer and disposal of solid and hazardous wastes and materials, air quality, water quality and the remediation of contamination associated with the release of hazardous substances will be costly. Laws and regulations often require Republic and Allied to enhance or replace their equipment and to modify landfill operations or initiate final closure of a landfill. There can be no assurance that the combined company will be able to implement price increases sufficient to offset the cost of complying with these laws and regulations. In addition, environmental regulatory changes could accelerate or increase expenditures for capping, closure, post-closure and environmental remediation activities at solid waste facilities and obligate the combined company to spend sums in addition to those presently accrued for such purposes.
 
In the future, the combined company’s collection, transfer and landfill operations may also be affected by proposed federal and state legislation that may allow individual states to prohibit the disposal of out-of-state waste or to limit the amount of out-of-state waste that can be imported for disposal and may require states, under some circumstances, to reduce the amount of waste exported to other states. If this or similar legislation is enacted in states in which the combined company operates landfills that receive a significant portion of waste from out-of-state, the combined company’s operations could be negatively affected due to a decline in landfill volumes and the increased costs of alternate disposal. The United States Congress could also propose “flow control” legislation, which may allow states and local governments to direct waste generated within their jurisdiction to a specific facility for disposal or processing. If this or similar legislation is enacted, state or local governments with jurisdiction over any of the combined company’s landfills could act to limit or prohibit disposal or processing of waste in any of the combined company’s landfills.
 
In addition to the costs of complying with environmental regulations, Republic and Allied incur costs to defend against litigation brought by government agencies and private parties who may allege Republic or Allied is in violation of its permits and applicable environmental laws and regulations, or who assert claims alleging environmental damage, personal injury or property damage. As a result, the combined company may be required to pay fines or implement corrective measures, or may have its permits and licenses modified or revoked. A significant judgment against the combined company, the loss of a significant permit or license or


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the imposition of a significant fine could have a material adverse impact on the combined company’s consolidated liquidity, financial condition or results of operations.
 
The combined company may be unable to obtain or maintain required permits or to expand existing permitted capacity of its landfills, which could decrease its revenues and increase its costs.
 
There can be no assurance that the combined company will successfully obtain or maintain the permits it will require to operate its business because permits to operate non-hazardous solid waste landfills and to expand the permitted capacity of existing landfills have become more difficult and expensive to obtain. Permits often take years to obtain as a result of numerous hearings and compliance with zoning, environmental and other regulatory requirements. These permits are also often subject to resistance from citizen or other groups and other political pressures. Local communities and citizen groups, adjacent landowners or governmental agencies may oppose the issuance of a permit or approval the combined company may need, allege violations of the permits under which Republic or Allied currently operates or laws or regulations to which Republic or Allied is subject, or seek to impose liability on the combined company for environmental damage. Responding to these challenges has, at times, increased Republic’s and Allied’s costs and extended the time associated with establishing new facilities and expanding existing facilities. In addition, failure to receive regulatory and zoning approval may prohibit the combined company from establishing new facilities, maintaining permits for its facilities or expanding existing facilities. The combined company’s failure to obtain the required permits to operate its non-hazardous solid waste landfills could hinder its ability to implement its vertical integration strategy and could have a material adverse impact on its future results of operations as 12.6% and 13.7% of Republic’s and Allied’s third-party revenues in 2007, respectively, were generated from their landfills. Additionally, landfills typically operate at a higher margin than Republic’s and Allied’s other operations. The combined company also could incur higher costs due to the fact that it would be required to dispose of its waste in landfills owned by other waste companies or municipalities.
 
The combined company may have potential environmental liabilities that are not covered by its insurance; changes in insurance markets may impact the combined company’s financial results.
 
The combined company may incur liabilities for the deterioration of the environment as a result of its operations. The combined company will maintain high deductibles for its environmental liability insurance coverage. If the combined company were to incur substantial liability for environmental damage, its insurance coverage may be inadequate to cover such liability. This could have a material adverse impact on the combined company’s liquidity, financial condition and results of operations.
 
Also, due to the variable condition of the insurance market, the combined company may experience in the future increased self-insurance retention levels and increased premiums. As the combined company assumes more risk for self-insurance through higher retention levels, it may experience more variability in its self-insurance reserves and expense.
 
Despite the combined company’s efforts, it may incur additional hazardous substances liabilities in excess of amounts presently known and accrued.
 
Each of Republic and Allied is a potentially responsible party at various sites under CERCLA, which provides for the remediation of contaminated facilities and imposes strict, joint and several liability for the cost of remediation on current owners and operators of a facility at which there has been a release or a threatened release of a “hazardous substance”, on former site owners and operators at the time of disposal of the hazardous substance(s), and on persons who arrange for the disposal of such substances at the facility (e.g., generators of the waste and transporters who selected the disposal site). Hundreds of substances are defined as “hazardous” under CERCLA and their presence, even in minute amounts, can result in substantial liability. Notwithstanding the combined company’s efforts to comply with applicable regulations and to avoid transporting and receiving hazardous substances, the combined company may have future additional liability under CERCLA or similar laws in excess of current liabilities accrued because such substances may be present in waste collected by the combined company or disposed of in the combined company’s landfills, or in waste collected, transported or disposed of in the past by acquired companies. In addition, actual costs for these liabilities could be significantly greater than amounts presently accrued for these purposes.


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The combined company cannot assure you that it will continue to operate its landfills at currently estimated volumes due to the use of alternatives to landfill disposal caused by state requirements or voluntary initiatives.
 
Most of the states in which Republic and Allied operate landfills require counties and municipalities to formulate comprehensive plans to reduce the volume of solid waste deposited in landfills through waste planning, composting and recycling or other programs. Some state and local governments mandate waste reduction at the source and prohibit the disposal of certain types of wastes, such as yard wastes, at landfills. Although such actions are useful to protect the environment, these actions, as well as voluntary private initiatives by customers to reduce waste or seek disposal alternatives, may reduce the volume of waste going to landfills in certain areas. If this occurs, there can be no assurance that the combined company will be able to operate its landfills at the current estimated volumes or charge current prices for landfill disposal services due to the decrease in demand for such services.
 
If the combined company is unable to execute its business strategy, its waste disposal expenses could increase significantly.
 
Implementation of the combined company’s vertical integration strategy will depend on its ability to maintain appropriate collection operations, transfer stations and landfill capacity. The combined company cannot assure you that it will be able to replace such assets either timely or cost effectively. The combined company cannot assure you that it will be successful in expanding the permitted capacity of its current landfills once its landfill capacity is full. In such event, the combined company may have to dispose of collected waste at landfills operated by its competitors or haul the waste long distances at a higher cost to another of its landfills, either of which could significantly increase its waste disposal expenses. Any such failure could seriously harm the combined company’s business, financial condition, results of operations and cash flows.
 
The solid waste industry is a capital-intensive industry and the amount the combined company will spend on capital expenditures may exceed its current expectations, which could require it to issue additional equity or debt to fund its operations or impair its ability to grow its business.
 
The combined company’s ability to be competitive and expand operations largely depends on its cash flow from operations and access to capital. Republic and Allied spent $293 million and $670 million, respectively, on capital expenditures during 2007 and expect to spend approximately $335 million and $650 million, respectively, in 2008. If the combined company’s capital efficiency programs are unable to offset the impact of inflation and business growth, it may be necessary to increase the amount it spends.
 
In addition, Republic and Allied spent approximately $44 million and $75 million, respectively, on landfill capping, closure and post-closure and environmental remediation during 2007, and expect to spend approximately $64 million and $96 million, respectively, in 2008. If the combined company makes acquisitions or further expands its operations, the amount it expends on capital, capping, closure, post-closure and environmental remediation expenditures will increase. The combined company’s cash needs will also increase if the expenditures for capping, closure and post-closure activities increase above current estimates, which may occur over a long period due to changes in federal, state, or local government requirements. Increases in expenditures will result in lower levels of cash flows.
 
Further, federal regulations have tightened the emission standards on class A vehicles, which includes the collection vehicles the combined company will purchase. As a result, it could experience a reduction in operating efficiency. This could cause an increase in vehicle operating costs. Also, the combined company may reduce the number of vehicles it purchases until manufacturers adapt to the new standards to increase efficiency.
 
The combined company’s goodwill or other intangible assets may become impaired, which could result in material non-cash charges to its results of operations.
 
The combined company will have a substantial amount of goodwill and other intangible assets resulting from the merger. At least annually, or whenever events or changes in circumstances indicate a potential impairment in the carrying value as defined by GAAP, the combined company will evaluate this goodwill for


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impairment based on the fair value of each reporting unit. Estimated fair values could change if there are changes in the combined company’s capital structure, cost of debt, interest rates, capital expenditure levels, operating cash flows, or market capitalization. Impairments of goodwill or other intangible assets could require material non-cash charges to the combined company’s results of operations.
 
The possibility of impairments to disposal site developments, expansion projects or certain other projects could result in a material charge against the combined company’s earnings.
 
The combined company will capitalize certain expenditures relating to disposal site development, expansion projects, and other projects. If a facility or operation is permanently shut down or determined to be impaired, or a development or expansion project is not completed or is determined to be impaired, the combined company will charge against earnings any unamortized capitalized expenditures relating to such facility or project that the combined company is unable to recover through sale or otherwise. In future periods, the combined company may incur charges against earnings in accordance with this policy, or due to other events that cause impairments. Depending on the magnitude, any such charges could have a material adverse impact on the combined company’s financial condition and results of operations.
 
Currently pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements.
 
Republic and Allied are and from time to time become involved in lawsuits, regulatory inquiries and governmental and other legal proceedings arising out of the ordinary course of their businesses. In addition, Republic has been sued by certain of its stockholders seeking to enjoin the merger. Many of these matters raise difficult and complicated factual and legal issues and are subject to uncertainties and complexities. The timing of the final resolutions to these types of matters is often uncertain. Additionally, the possible outcomes or resolutions to these matters could include adverse judgments or settlements, either of which could require substantial payments, adversely affecting the combined company’s results of operations and liquidity.
 
If the combined company inadequately accrues for landfill capping, closure and post-closure costs, its results of operations and financial condition may be adversely affected.
 
A landfill must be capped and closed, and post-closure maintenance must be commenced once the permitted capacity of the landfill is reached and additional capacity is not authorized. The combined company will have significant financial obligations relating to such capping, closure and post-closure costs of Republic’s and Allied’s existing owned or operated landfills and will have material financial obligations with respect to any future owned or operated landfills. The combined company will establish accrued liabilities for the estimated costs associated with such capping, closure and post-closure financial obligations. The combined company could underestimate such accruals and its financial obligations for capping, closure or post-closure costs could exceed the amount accrued and reserved or amounts otherwise receivable pursuant to trust funds established for this purpose. Such a shortfall could result in significant unanticipated charges to income. Additionally, if a landfill is required to be closed earlier than expected or its remaining air-space is reduced for any other reason, the accruals for capping, closure and post-closure could be required to be accelerated which could result in a material charge to income.
 
The combined company’s financial statements will be based on estimates and assumptions that may differ from actual results.
 
The combined company’s financial statements will be prepared in accordance with GAAP and necessarily will include amounts based on estimates and assumptions made by management. Actual results could differ from these amounts. Significant items subject to such estimates and assumptions include the carrying value of long-lived assets, the depletion and amortization of landfill development costs, accruals for final capping, closure and post-closure costs, valuation allowances for accounts receivable and deferred tax assets, liabilities for potential litigation, claims and assessments, and liabilities for environmental remediation, employee benefit plans, deferred taxes, uncertain tax positions and self-insurance.
 
There can be no assurance that the liabilities to be recorded for landfill and environmental costs will be adequate to cover the requirements of existing environmental regulations, future changes to or interpretations


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of existing regulations, or the identification of adverse environmental conditions previously unknown to management.
 
The introduction of new accounting rules, laws or regulations could adversely impact the combined company’s results of operations.
 
Complying with new accounting rules, laws or regulations could adversely impact the combined company’s financial condition, results of operations or funding requirements, or cause unanticipated fluctuations in its results of operations in future periods.
 
The combined company’s obligation to fund multi-employer pension plans to which it will contribute may have an adverse impact on it.
 
Republic and Allied contribute to at least 28 multi-employer pension plans covering at least 22% of the expected employees of the combined company. Republic and Allied do not administer these plans and generally are not represented on the boards of trustees of these plans. The Pension Protection Act enacted in August 2006 requires under-funded pension plans to improve their funding ratios, perhaps beginning as soon as 2008. Republic and Allied do not have current plan financial information for the multi-employer plans to which each company contributes but, based on the information available, some of them may be under-funded. It cannot be determined at this time the amount of additional funding, if any, the combined company would be required to make to these plans and, therefore, no liability has been recorded, but under-funded plans could have an adverse impact on the combined company’s cash flows or results of operations for a given period. Furthermore, under current law, upon the termination of a multi-employer pension plan, or in the event of a mass withdrawal of contributing employers, the combined company would be required to make payments to the plan for its proportionate share of the plan’s unfunded vested liabilities. The bankruptcy of a participant in a multi-employer pension plan could increase the liabilities of the remaining participants. There can be no assurance that there will not be a termination of, or the bankruptcy or mass withdrawal of employers contributing to, any of the multi-employer pension plans to which Republic or Allied contributes or that, in the event of such a termination, bankruptcy or mass withdrawal, the amounts the combined company would be required to contribute would not have an adverse impact on the combined company’s cash flows or results of operations.
 
The loss of key personnel could have a material adverse effect on the combined company’s financial condition, results of operations and growth prospects.
 
The success of the combined company will depend on the continued contributions of key employees and officers. The loss of the services of key employees and officers, whether such loss is through resignation or other causes, or the inability to attract additional qualified personnel, could have a material adverse effect on the combined company’s financial condition, results of operations and growth prospects.


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CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
 
This document contains certain forward-looking information about Republic, Allied and the combined company that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this joint proxy statement/prospectus or may be incorporated into this joint proxy statement/prospectus by reference to other documents and may include statements for the period following the completion of the merger. Representatives of Republic and Allied may also make forward-looking statements. Forward-looking statements are statements that are not historical facts. Words such as “expect,” “believe,” “will,” “may,” “anticipate,” “plan,” “estimate,” “intend,” “should,” “can,” “likely,” “could” and similar expressions are intended to identify forward-looking statements. These statements include statements about the expected benefits of the merger, information about the combined company, including expected synergies, combined operating and financial data and the combined company’s objectives, plans and expectations, the likelihood of satisfaction of certain conditions to the completion of the merger and whether and when the merger will be consummated. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of the management of each of Republic and Allied and are subject to risks and uncertainties, including the risks described in this joint proxy statement/prospectus under the section “Risk Factors” and those that are incorporated by reference into this joint proxy statement/prospectus that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
 
In light of these risks, uncertainties, assumptions and factors, the results anticipated by the forward-looking statements discussed in this joint proxy statement/prospectus or made by representatives of Republic or Allied may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof or, in the case of statements incorporated by reference, on the date of the document incorporated by reference, or, in the case of statements made by representatives of Republic or Allied, on the date those statements are made. All subsequent written and oral forward-looking statements concerning the merger or the combined company or other matters addressed in this joint proxy statement/prospectus and attributable to Republic or Allied or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, neither Republic nor Allied undertakes any obligation to update or publish revised forward-looking statements to reflect events or circumstances after the date hereof or the date of the forward-looking statements or to reflect the occurrence of unanticipated events.


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THE MERGER
 
The following discussion contains important information relating to the merger. You are urged to read this discussion together with the merger agreement and related documents attached as annexes to this joint proxy statement/prospectus before voting.
 
Structure of the Merger
 
Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, RS Merger Wedge, Inc., 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. Accordingly, after the effective time of the merger, shares of Allied common stock will no longer be publicly traded.
 
Merger Consideration
 
Allied Stockholders.  As a result of the merger, at the effective time, Allied stockholders will be entitled to receive .45 shares of Republic common stock for each share of Allied common stock that they own. The number of shares of Republic common stock delivered in respect of each share of Allied common stock pursuant to the merger is referred to as the exchange ratio. The exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the effective time of the merger. Republic will not issue any fractional shares of Republic common stock in the merger. Instead, Allied stockholders will be entitled to receive cash for any fractional shares of Republic common stock that they otherwise would receive pursuant to the merger (after aggregating all shares held). 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 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. The Republic common stock received based on the exchange ratio, together with any cash received in lieu of fractional shares, is referred to as the merger consideration. For more information about fractional share treatment, please see “The Merger Agreement — Merger Consideration — Fractional Shares” beginning on page 106.
 
Republic Stockholders.  Republic stockholders will continue to own their existing shares of Republic common stock after the merger. Each share of Republic common stock will represent one share of common stock in the combined company.
 
Ownership of the Combined Company After the Merger
 
As of June 30, 2008, approximately 181.9 million shares of Republic common stock are outstanding and approximately 10.5 million shares of Republic common stock are reserved for the exercise of outstanding Republic options and settlement of other outstanding Republic equity-based awards. In accordance with terms of the merger, at the effective time of the merger, Republic (1) will issue approximately 196.2 million shares of Republic common stock to Allied stockholders pursuant to the merger and (2) will reserve for issuance approximately 14.1 million shares of Republic common stock in connection with the exercise or settlement of Allied equity-based awards and conversion of the Allied convertible debentures. Republic and Allied expect that the shares of Republic common stock issued in connection with the merger in respect of 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.
 
Background of the Merger
 
Before 2006, the management of Republic and Allied engaged in several informal discussions regarding potential combination scenarios dating back to 2003. However, all of these discussions were terminated early in the discussion process due to a variety of issues.


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2006 Discussions between Allied and Republic
 
In late April 2006, the Allied board of directors had a discussion with its financial advisor, UBS, regarding a possible no premium stock-for-stock merger between Allied and Republic. During May and June 2006, Jim O’Connor, Chairman and Chief Executive Officer of Republic, and John Zillmer, Chairman and Chief Executive Officer of Allied, engaged in informal discussions regarding the merger of Republic and Allied. Mr. Zillmer proposed a transaction that at the time was believed by Mr. O’Connor to be below market for the Republic shares and Mr. O’Connor advised him that he did not believe it would be of interest to the Republic board of directors. On July 18, 2006, the Republic board of directors met and Mr. O’Connor reported his conversations with Mr. Zillmer. Although Allied’s proposal was not of interest to the Republic board of directors, analyses performed in July 2006 by Republic and its financial advisor, Merrill Lynch, indicated that a combination of Republic and Allied would result in appreciable cash flow accretion to Republic stockholders. As a result, for the next several months, management and the Republic board of directors engaged in discussions and reviewed presentations prepared by Merrill Lynch regarding a potential transaction with Allied. This review culminated in Republic board of directors meetings on October 26 and 27, 2006 during which Merrill Lynch presented additional pro forma impact analyses in which Republic would acquire Allied in a no-premium stock-for-stock merger.
 
On November 14, 2006, the Republic board of directors authorized Mr. O’Connor to commence discussions with Allied regarding a potential transaction between Republic and Allied.
 
In November 2006, Mr. O’Connor spoke with Mr. Zillmer to summarize Republic’s position regarding a potential no-premium stock-for-stock merger between Republic and Allied which included Republic having a majority of the board of directors and management control of the combined company. Mr. Zillmer indicated that he would discuss Republic’s position with the Allied board of directors at its next scheduled board meeting.
 
At a regularly scheduled board of directors meeting on December 7, 2006, Mr. Zillmer discussed his conversations with Mr. O’Connor with the Allied board of directors. On December 8, 2006, Mr. Zillmer contacted Mr. O’Connor to discuss Allied’s response to Republic’s position. Mr. Zillmer indicated that Allied preferred a merger in which Republic would not have a majority of the board of directors nor management control of the combined company.
 
On December 14, 2006, the Republic board of directors met and Mr. O’Connor reported his conversations with Mr. Zillmer. Upon receipt of this information, the Republic board of directors determined that Mr. O’Connor should contact Mr. Zillmer to communicate that there was no need for any further discussions because the proposed transaction did not appear to be likely at that time.
 
Allied’s Strategic Review
 
For several months in mid-2007, UBS assisted Allied in exploring strategic opportunities. Several parties expressed interest in evaluating a transaction involving Allied and, during this time, such parties met with Allied’s management and conducted due diligence on Allied. The Allied board of directors met several times during this period to discuss the transaction process and their fiduciary duties, and, ultimately, to review the initial, non-binding proposals received from such parties. In August 2007, the Allied board of directors determined to suspend the process with respect to a potential transaction involving Allied and determined to revisit Allied’s strategic alternatives at a future date.
 
2007 and 2008 Discussions between Allied and Republic
 
During November 2007 through January 2008, through the course of regular discussions with Republic regarding strategic opportunities, Merrill Lynch presented to Republic management several analyses of a potential Republic merger with Allied. These presentations culminated in Mr. O’Connor calling Mr. Zillmer to engage in new discussions regarding a potential transaction.
 
During early 2008, Mr. O’Connor and Mr. Zillmer engaged in informal discussions by telephone regarding the potential merger of Republic and Allied. During this time, representatives of UBS reviewed with


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Allied’s management several analyses of a potential transaction with Republic. On March 25, 2008, Republic and Allied entered into a confidentiality agreement.
 
From April 1, 2008 through April 3, 2008, Mr. O’Connor visited Allied in Arizona with members of the Republic management team to discuss in person with Allied’s management team a possible transaction between Allied and Republic. On April 7, 2008, Mr. Zillmer updated the Allied board of directors regarding the status of discussions with Republic and indicated that he would provide a detailed presentation at the next regularly scheduled board of directors meeting.
 
On April 15, 2008, the Republic board of directors met and Mr. O’Connor reported on his discussions with Mr. Zillmer and on the management meetings in Arizona regarding possible reasons for a potential merger between Republic and Allied. Republic’s management provided the Republic board of directors a review of the potential synergies associated with the potential merger. Merrill Lynch discussed the changes in the potential transaction since Republic’s discussions with Allied in 2006, including changes to each company’s market valuation, and the pro forma impact to Republic. Merrill Lynch also discussed preliminary pro forma consequences and relative valuation analyses it had performed, based on potential synergies and divestiture exposures.
 
On April 16, 2008, the Republic board of directors meeting reconvened. The Republic board of directors considered the advice of legal counsel, Akerman Senterfitt, regarding the board of directors’ fiduciary duties. The Republic board of directors advised Merrill Lynch and Akerman Senterfitt to work together to prepare a proposal letter to Allied.
 
On April 22, 2008, the Republic board of directors met and discussed updates regarding the status of the potential merger with Allied. Republic’s management provided the Republic board of directors with a memorandum of its recommendations on the possible merger and a draft proposal letter. Merrill Lynch updated the analyses that were presented on April 15, 2008, including updated pro forma consequences analyses. Following discussions regarding the exchange ratio, the Republic board of directors authorized including an exchange ratio of .43 in the proposal letter to Allied. The Republic board of directors authorized Mr. O’Connor to finalize the proposal letter, as discussed during the meeting, and present such proposal letter to Mr. Zillmer.
 
On April 22, 2008, Republic sent a preliminary proposal letter addressed to Mr. Zillmer for a stock-for-stock merger combination between Republic and Allied. The proposed exchange ratio was .43. The key assumptions for the proposed transaction were the following:
 
  •  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.
 
The preliminary proposal provided that the merger would be conditioned upon standard merger agreement protections, relevant government and antitrust approvals and necessary stockholder approvals of both companies. The preliminary proposal letter also provided that Mr. O’Connor would become the Chairman and Chief Executive Officer of the combined company, and that the remaining board of directors would consist of an equal number of directors from both Republic and Allied. The preliminary proposal letter also provided that the management team of the combined company would include Mr. Donald W. Slager of Allied as Chief Operating Officer.
 
On April 24, 2008, the Allied board of directors held a regular meeting at which the Republic proposal was discussed. Representatives of UBS discussed UBS’ analyses regarding the potential transaction and the


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pro forma impact on earnings and free cash flow, credit statistics and value creation, as well as the solid waste sector benchmarking and a review of strategic alternatives. The Allied board of directors authorized Allied’s representatives to make a counteroffer to Republic. Accordingly, on April 24, 2008, Allied’s financial advisor, UBS, provided Republic with a counteroffer to Republic’s preliminary proposal letter. The counteroffer proposed the following:
 
  •  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
 
  •  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.
 
On April 29, 2008, the Republic board of directors held a telephonic special meeting to discuss the status of the potential merger with Allied. Merrill Lynch outlined the terms of Allied’s counteroffer of April 24, 2008. The Republic board of directors discussed the impact of the change in the exchange ratio and the corporate governance issues. Merrill Lynch provided updated pro forma consequences analyses. The Republic board of directors authorized Mr. O’Connor to call Mr. Zillmer to summarize the Republic board of directors’ position on the counteroffer, which was the following:
 
  •  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.
 
On May 1, 2008, Mr. Zillmer called Mr. O’Connor to discuss the potential transaction, Allied’s counteroffer and Republic’s response. Mr. Zillmer confirmed that Mr. O’Connor could meet with Mr. Slager to discuss the proposed organization of the combined company.
 
On May 1, 2008, the Republic board of directors held a telephonic special meeting to discuss updates regarding the potential merger with Allied. Mr. O’Connor reported his discussion with Mr. Zillmer regarding Republic’s response to Allied’s counteroffer. The Republic board of directors determined that Mr. O’Connor should contact Mr. Slager to discuss the proposed organization of the combined company.
 
Mr. O’Connor, Mr. Michael J. Cordesman, President and Chief Operating Officer of Republic, Mr. Tod C. Holmes, Senior Vice President and Chief Financial Officer of Republic, and Mr. Slager met on May 5 and 6, 2008 in Chicago to discuss the potential merger and the proposed organization of the combined company.
 
On May 8, 2008, the Republic board of directors held a telephonic special meeting to discuss updates regarding the potential merger with Allied. Mr. O’Connor reported that he met with Mr. Slager, Mr. Cordesman and Mr. Holmes earlier that week to discuss the proposed organization of the combined company. After those discussions, Mr. O’Connor advised the Republic board of directors that he believed that the Republic management could work with Mr. Slager to create an effective organization for the combined company and that integration of the management teams would not present an issue in consummating the potential merger or in operating the combined company.
 
On May 9, 2008, the Allied board of directors held a telephonic special meeting to discuss the status of the potential merger with Republic. Mr Slager reported on his meetings with Mr. O’Connor. Mr. Zillmer then discussed various governance issues with the Allied board of directors. The Allied board of directors determined that Allied should arrange a meeting between the Allied board of directors and Mr. O’Connor.


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On May 9, 2008, Allied provided Republic with a revised counteroffer consisting of the following terms:
 
  •  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;
 
  •  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.
 
On May 12, 2008, the Republic board of directors held a telephonic special meeting to discuss updates regarding the potential merger with Allied and review Allied’s revised counteroffer. The Republic board of directors granted Mr. O’Connor the authority to call Mr. Zillmer and relay the Republic board of directors’ concerns with the revised counteroffer.
 
On May 12, 2008, Republic delivered a revised proposal letter to Mr. Zillmer. In the revised proposal letter Republic recited the terms of Allied’s revised counteroffer with the exception of the selection of the remainder of the management team on a mutually agreed upon basis. Republic’s revised proposal instead stated that Mr. O’Connor would assemble the remainder of the management team.
 
On May 16, 2008, the Republic board of directors met and discussed updates regarding the potential merger with Allied. Mr. O’Connor informed the Republic board of directors that he was scheduled to meet with Mr. Slager and the Allied board of directors in New York on June 5, 2008 to discuss the organization of the combined company, and immediately thereafter, he would also meet with the Republic board of directors along with Mr. Slager to discuss the same matter.
 
On May 16, 2008, Allied circulated a draft merger agreement.
 
On May 19, 2008, representatives of each of Republic and Allied met by teleconference to commence the mutual due diligence process. Mutual due diligence proceeded over several weeks on financial, operational, accounting, information systems, legal, tax, environmental, labor and other matters.
 
On June 4, 2008, representatives of the management teams of both Republic and Allied jointly met on a confidential basis with Moody’s and Standard & Poor’s to brief each credit ratings agency on the proposed transaction and financial impact to the credit of both companies and inquire whether both agencies would likely assign the combined company investment grade ratings. Republic and Allied management subsequently responded to various follow-up questions asked by each agency. Based on the meetings and the preliminary indications of the rating agencies, Republic and Allied believe that the combined company will receive investment grade ratings.
 
Also on June 4, 2008, representatives of Republic and its legal counsel, Akerman Senterfitt, met with representatives of Allied and its legal counsel, Mayer Brown LLP, to discuss in person the draft merger agreement.
 
On June 5, 2008, the Allied board of directors met in New York regarding the proposed merger. Mayer Brown LLP updated the directors on the status of negotiations and the antitrust analysis. Allied management discussed with the board of directors synergy analyses, due diligence and various financial considerations. Representatives of UBS discussed UBS’ updated analyses of the proposed transaction which it provided in an oral presentation to the Allied board of directors. Mr. O’Connor joined for a portion of the meeting and made a joint presentation with Mr. Slager regarding the strategy and vision for the combined company and responded to questions from the Allied board of directors.


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On June 5, 2008, immediately following the Allied board of directors meeting, Mr. O’Connor and Mr. Slager met in New York with the Republic board of directors. They made a joint presentation regarding the strategy and vision for the combined company. Mr. Slager also discussed his background in the solid waste industry and answered questions posed by the Republic board of directors about integrating the combined company and potential synergies.
 
Following the board of directors meetings on June 5, 2008, representatives of the boards of directors, the management teams, the financial advisors and legal counsel of Republic and Allied met informally.
 
Over the following weeks, mutual due diligence and the negotiation of the definitive merger agreement continued.
 
On June 13, 2008, The Wall Street Journal reported that Republic and Allied were engaged in discussions regarding a potential merger of Allied and Republic. Both companies issued a joint press release that day confirming that they were in discussions and that, under the terms being discussed, Republic would offer Allied stockholders .45 shares of Republic common stock for each share of Allied common stock.
 
On June 19, 2008, the Republic board of directors met to discuss updates regarding the potential merger with Allied. Republic’s management provided the Republic board of directors a review of the due diligence process and Merrill Lynch updated its presentation that was presented on April 22, 2008, including updated pro forma consequences and relative valuation analyses. At this meeting, the Republic board of directors reviewed certain corporate governance matters and other terms and conditions to be set forth in the merger agreement. The Republic board of directors granted Mr. O’Connor the authority to call Mr. Zillmer and discuss certain corporate governance matters to be set forth in the merger agreement.
 
On June 20, 2008, the Republic board of directors held a telephonic special meeting to discuss updates regarding the potential merger with Allied. At this meeting, the Republic board of directors reviewed certain of the closing conditions to be set forth in the merger agreement. The Republic board of directors granted Mr. O’Connor the authority to call Mr. Zillmer and discuss certain closing conditions to be set forth in the merger agreement.
 
On June 22, 2008, the Republic board of directors held a telephonic special meeting to consider resolutions approving the merger. Also, at this meeting, Merrill Lynch reviewed with the Republic board of directors its financial analyses of the exchange ratio and rendered to the Republic board of directors an opinion, dated June 22, 2008, to the effect that, as of that date and based on and subject to the matters stated in the opinion, the exchange ratio was fair from a financial point of view to Republic. The Republic board of directors primarily evaluated the exchange ratio based upon relative valuation analyses of Republic and Allied, among other things, because Republic was considering issuing shares in connection with the Allied merger and was not for sale. The meeting concluded with the passing of resolutions of the Republic board of directors approving and adopting the merger and the merger agreement and related matters and authorizing management to finalize the negotiations.
 
Also on June 22, 2008, the Allied board of directors met in New York to consider the merger. Mayer Brown LLP updated its presentation regarding the terms of the merger agreement, the board of directors’ fiduciary duties and the antitrust analysis of the transaction. The Allied board of directors also received updated presentations regarding synergy analyses, due diligence and financial considerations. Next, representatives of UBS presented to the board of directors UBS’ financial analyses of the transaction and delivered an oral opinion, which opinion was confirmed by delivery of a written opinion dated June 22, 2008, to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations described in its opinion, the exchange ratio provided for in the merger was fair, from a financial point of view, to the holders of Allied common stock. The meeting concluded with the passing of resolutions of the Allied board of directors approving the merger, adopting the merger agreement and approving certain related matters.
 
Following the meetings, on the evening of June 22, 2008, Republic and Allied signed the merger agreement. On the following morning of June 23, 2008, the parties issued a joint press release announcing the execution of the merger agreement and held a conference call to discuss the transaction.


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On the morning of July 14, 2008, Mr. O’Connor received an unsolicited call from David Steiner, the Chief Executive Officer of Waste Management, Inc., which we refer to as Waste, advising him that by letter to be sent that morning prior to the opening of trading on the stock markets, Waste would make a proposal to the Republic board of directors to acquire all of Republic’s outstanding common stock for $34.00 per share in cash. Mr. O’Connor shortly thereafter received the proposal, which expressly was subject to Waste conducting a due diligence review of Republic, obtaining financing, clearing all antitrust reviews without divestitures that would have a material adverse effect, maintaining its investment grade credit ratings and other conditions. Mr. O’Connor reviewed the proposal with Republic’s legal counsel and financial advisors. That morning, Waste also issued a press release, which included a copy of Mr. Steiner’s letter to Mr. O’Connor.
 
That afternoon, the Republic board of directors conducted a telephonic meeting at which Republic’s legal counsel, Akerman Senterfitt, and financial advisors, Merrill Lynch, provided an overview of the Waste proposal and a discussion of the Republic board of directors’ duties and obligations under the merger agreement with Allied and in accordance with Delaware law. The Republic board of directors also authorized the engagement of Wachtell, Lipton, Rosen & Katz as special counsel to represent Republic in connection with the Waste proposal and related matters. The Republic board of directors asked Merrill Lynch to provide it with financial analyses of the Waste proposal and asked its legal advisors to review and advise it with respect to the other conditions included in the proposal.
 
On July 14, 2008 and July 17, 2008, Allied delivered letters to Republic stating that it did not believe that the Waste proposal represented a “Superior Proposal” nor a proposal that could be reasonably expected to lead to a “Superior Proposal” (as defined in the merger agreement) and, therefore, asserting that Republic could not engage in discussions with, or provide information to, Waste in connection with its unsolicited proposal.
 
On July 16, 2008, Mr. O’Connor received a call from Michael Larson of BGI, the investment office that manages the assets of Cascade Investment, L.L.C. and the Bill & Melinda Gates Foundation Trust. At the time, Cascade and the Gates Foundation Trust beneficially owned approximately 15% of Republic, which made them the largest stockholders of Republic. Mr. Larson said he called Mr. O’Connor to advise Republic that BGI did not support the Waste proposal. Mr. Larson also told Mr. O’Connor that BGI was contemplating issuing a press release to publicly disclose its disapproval of the Waste proposal and its support of Republic’s merger with Allied. Mr. Larson also reiterated a request that BGI first made to Republic in January 2008, when Cascade’s holdings, due to Republic’s stock repurchase programs, first approached the 15% level, that Republic waive Section 203 of the Delaware General Corporation Law, Delaware’s antitakeover statute. The waiver of Section 203 was requested to allow Cascade and the Gates Foundation Trust to be able to acquire more shares of Republic common stock in the open market, without being subject to the restrictions on certain transactions set forth in Section 203. Cascade’s original request was going to be reviewed at the board of directors’ regular meeting in April 2008, but consideration of the request at that time was deferred as the discussions with Allied were progressing. As the Allied merger had since been announced and was proceeding, Mr. O’Connor advised Mr. Larson that the Republic board of directors would review the renewed request. Mr. O’Connor stated that the Republic board of directors would be meeting soon to review the Waste proposal.
 
On July 17, 2008, the Republic board of directors conducted a telephonic meeting to review the Waste proposal. Merrill Lynch provided a review of the conditions to which the Waste proposal was subject, including (1) the requirement for Waste to clear federal and state antitrust regulatory reviews, without divestitures that would reasonably be expected to have a material adverse effect, (2) the need for Waste to obtain financing commitments for more than $6 billion in cash in order to fund the proposal, (3) the requirement that Waste maintain an investment grade rating following the closing of an acquisition of Republic, and (4) Waste’s request to conduct due diligence on Republic. Merrill Lynch noted that two of the ratings agencies placed Waste on review for possible downgrade subsequent to Waste’s announcement of its proposal to purchase Republic, and that Waste only had a “highly confident” indication from its financial advisor, Credit Suisse, that it could obtain commitments for the financing. Legal counsel advised the Republic board of directors that the antitrust regulatory review for an acquisition of Republic by Waste likely would be more complex and involve greater delay than the regulatory review necessary for the Allied transaction due to


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the greater number of market overlaps and Waste’s need to comply with consent decrees previously entered into by Waste. The Republic board of directors discussed the issues presented by the conditions in the Waste proposal, and concluded that Waste had not sufficiently and clearly articulated how or when such significant conditions were going to be satisfied by Waste.
 
At the meeting, Merrill Lynch then provided the Republic board of directors with an analysis of the financial terms of the proposed transaction and reviewed the analyses previously provided regarding the transaction with Allied. Merrill Lynch estimated that, based on discount rates ranging from 8.0% to 10.0% and a projected period required to close the proposed transaction ranging from six to twelve months, the discounted present value range of the $34.00 per share price proposed by Waste was approximately $31.00 to $33.00 per share. Because discounted stock prices are typically calculated using a discount rate based solely on the cost of equity, Merrill Lynch selected these discount rates based on Republic’s cost of equity. Merrill Lynch compared the nominal and discounted value of Waste’s proposal to the historical trading performance of Republic common stock, including the closing price per share of Republic 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 possible business combination, and on July 11, 2008, the last trading day before the Waste proposal was announced, as well as the maximum and minimum price per share of Republic common stock over the previous 12-month period and various averages of prices for shares of Republic common stock over periods ranging from 30 days to 3 years. Merrill Lynch advised the Republic board of directors that, in its view, neither the discounted proposal price nor the nominal price of $34.00 per share represented a meaningful premium to the closing price per share of Republic 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 possible business combination, or the average closing prices for shares of Republic common stock over the 90-day and 52-week periods ending on July 11, 2008, the last trading day before the Waste proposal was announced. Merrill Lynch also reviewed with the Republic board of directors its valuation analyses of Allied and Republic as a combined company, including an analysis based on the discounted estimated cash flow of the combined company that reflected synergies expected by Republic management. For purposes of these valuation analyses, Merrill Lynch used the same base case financial forecasts that were reviewed by the Republic board of directors at its meeting on June 22, 2008, which are described below under “Certain Financial Forecasts Reviewed by the Republic Board of Directors.” The discounted estimated cash flow analysis yielded a per share value range for Allied and Republic as a combined company of $36.00 to $42.00. This discounted cash flow analysis utilized assumptions for terminal multiples based on trading characteristics of Republic and its comparable companies and did not include value associated with a control premium. In evaluating Waste’s proposal, which would be mutually exclusive of completing the merger with Allied the Republic board of directors primarily considered the value of Republic based on the discounted estimated cash flow for Republic and Allied as a combined company, and the discounted estimated value range of the Waste proposal, among other things.
 
Also at the July 17 meeting, Republic’s legal advisors reviewed with the Republic board of directors its fiduciary duties in connection with the Waste proposal. Republic’s legal advisors also provided the Republic board of directors with a legal overview of the Waste proposal, and reiterated to the board the obligations and restrictions with respect to unsolicited proposals under the merger agreement with Allied.
 
After careful consultation with its legal and financial advisors and further deliberations among the directors, the Republic board of directors determined unanimously that the Waste proposal did not constitute, and could not reasonably be expected to lead to, a proposal for a transaction that is or would be more favorable to Republic stockholders than the merger currently contemplated between Republic and Allied. At the meeting, the Republic board of directors also reaffirmed its recommendation to Republic stockholders regarding the existing transaction with Allied.
 
On July 18, 2008, Mr. O’Connor sent a letter to Mr. Steiner relaying the Republic board of directors’ determination regarding the Waste proposal. Republic also issued a press release, including Mr. O’Connor’s letter, emphasizing that Republic is not for sale and that as a result of the Republic board of directors’ determination, and in accordance with Republic’s obligations under the terms of the merger agreement with Allied, Republic may not furnish information to, or have discussions and negotiations with, Waste. The letter


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and press release also addressed the Republic board of directors’ views of key points of the Waste proposal, noting that the Waste proposal seriously undervalues Republic and appeared on its face to be opportunistic only for Waste. In addition, the letter and press release noted the significant conditions of the proposal that call into question the ability of Waste to complete its proposed transaction.
 
On July 18, 2008, Waste issued a press release expressing its disappointment with the determination by the Republic board of directors and advising that it was reviewing its options.
 
On July 18, 2008, Allied issued a press release, indicating that it was pleased with the Republic board of directors’ determination regarding the Waste proposal and its reaffirmation of the transaction with Allied.
 
On July 18, 2008, BGI, the investment office that manages the assets of Cascade and the Gates Foundation Trust, which at the time owned in the aggregate approximately 15.6% of Republic and 2.3% of Waste, issued a press release indicating its support of the merger between Republic and Allied, and announcing that it would not support the proposal made by Waste to acquire Republic. On July 21, 2008, Cascade filed a statement on Schedule 13D which included the BGI press release.
 
On July 24, 2008, Waste notified Republic by a faxed letter that it would be filing the requisite forms to commence the federal and state antitrust reviews of its July 14, 2008 proposal to acquire all of Republic’s common stock. Waste stated in the letter that it intended to acquire Republic shares in open market purchases or other transactions. Waste also issued a press release regarding its commencement of the governmental antitrust review process.
 
On July 24, 2008, Republic issued a press release reiterating that Waste’s July 14 proposal was rejected by the Republic board of directors. Republic noted that it continues to believe the merger with Allied is in the best interests of the Republic stockholders. Republic stated that it will respond to Waste’s antitrust notices as appropriate, and guard against opportunistic attempts to disrupt its strategic plans through open market activity or otherwise.
 
On July 25, 2008, a class action was filed in the Court of Chancery of the State of Delaware by the New Jersey Carpenters Pension and the New Jersey Carpenters Annuity Funds against Republic and the members of the Republic board, each individually. The suit sought to enjoin the proposed transaction between Republic and Allied and compel Republic to accept the unsolicited proposal made by Waste on July 14, 2008, or at least compel the Republic board to further consider and evaluate the Waste proposal.
 
On July 28, 2008, the Republic board of directors declared a dividend of one preferred share purchase right, which is referred to as a right and collectively as the rights, for each outstanding share of Republic common stock. The dividend was paid to holders of record of Republic’s common stock as of the close of business on August 7, 2008. The specific terms of the rights are contained in the Rights Agreement, dated as of July 28, 2008, by and between Republic and The Bank of New York Mellon, as Rights Agent.
 
The Republic board of directors adopted the Rights Agreement to protect Republic stockholders from coercive or otherwise unfair takeover tactics. In general terms, the rights impose a significant penalty upon any person or group which acquires beneficial ownership of 10% (20% in the case of existing 10% holders) or more of Republic’s outstanding common stock, including derivatives, unless such acquisition was approved by the Republic board of directors or such acquisition was in connection with an offer for all of the outstanding shares of Republic common stock for the same consideration. The rights will terminate concurrently with the acquisition of more than 50% of Republic’s outstanding shares of common stock not owned by the acquiring person in such an offer, provided that the acquiring person irrevocably commits to acquire all remaining untendered shares for the same consideration as in the tender offer as promptly as practicable following completion of the offer.
 
In adopting the carve-out to the Rights Agreement permitting existing beneficial owners of 10% or more of Republic to acquire up to 20% without triggering the exercise of the rights, the Republic board of directors accommodated the request of BGI, on behalf of Cascade and the Gates Foundation Trust, to be able to acquire up to 20% in the aggregate of the outstanding shares of Republic common stock. The Republic board of directors also waived Section 203 of the Delaware General Corporation Law to a limited extent to allow


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Cascade and the Gates Foundation Trust to be able to acquire up to 20% of the outstanding shares of Republic common stock without being subject to Section 203. The Republic board of directors took these actions because Cascade and the Gates Foundation Trust were long-term stockholders of Republic, were Republic’s largest stockholders and had never sold any of their holdings in Republic. In addition, the Republic board of directors considered that Cascade’s expressed interest in purchasing more shares of Republic pre-dated the announcement of the merger discussions with Allied and was not tied to either the Allied merger or the Waste proposal proceeding or not proceeding. There is no agreement, understanding or arrangement with Cascade, the Gates Foundation Trust, BGI or their affiliates, on the one hand, and Republic, on the other hand, as to the acquisition, disposition or voting of shares of Republic common stock. None of Cascade, the Gates Foundation Trust, BGI or any of their affiliates has been in contact with Allied.
 
On July 28, 2008, Republic adopted bylaw amendments intended to provide orderly procedures to regulate the written consent process and to require notice and information about stockholder proposals. Stockholders seeking to act by written consent must request the Republic board of directors set a record date for stockholders entitled to consent. The record date must be set within ten days of a request and must be no later than ten days after the Republic board acts. Absent this bylaw, action could be taken by consent without prior notice to Republic and all of its stockholders.
 
On July 28, 2008, Republic issued a press release announcing that its board of directors had taken steps to prevent disruptive and coercive acquisition tactics by adopting the bylaw amendments and the shareholder rights plan pursuant to the Rights Agreement. Republic also announced that its board of directors had waived Section 203 of the Delaware General Corporation Law with respect to the acquisition by Cascade and the Gates Foundation Trust of up to 20% in the aggregate of the outstanding shares of Republic common stock. On July 28, 2008, Cascade and the Gates Foundation Trust filed a Schedule 13D/A acknowledging the waiver of Section 203 by the Republic board of directors, and stating that they may utilize this waiver to acquire additional shares of Republic common stock without becoming subject to Section 203.
 
On July 28, 2008, Waste issued a press release stating that Republic’s adoption of the Rights Agreement and bylaws amendments did not change its focus on acquiring Republic. Waste also stated that it was working diligently to prepare a response that addressed all of the issues raised by the Republic board of directors in their letter dated July 18, 2008.
 
On July 30, 2008, the Republic board of directors held a telephonic special meeting to review an amendment to the merger agreement. The Republic board of directors discussed that the only substantive change contemplated by the amendment to the merger agreement would eliminate the requirement in the merger agreement that the Republic charter be amended to include a corporate governance provision relating to the combined company’s board composition structure. Instead, pursuant to the amendment to the merger agreement, such corporate governance provision would be included in the Republic bylaws. The Republic board of directors was advised that any charter amendment would require approval by a majority vote of the outstanding stock of Republic, and that the implementation of the corporate governance provision through the bylaw amendment was sufficient and there was no need for a separate charter amendment proposal and vote of Republic stockholders at the special meeting. Following discussion, the Republic board of directors concluded that the amendment to the merger agreement was advisable and in the best interest of Republic and its stockholders. Republic’s legal counsel also reviewed with the board of directors a draft joint proxy statement/prospectus previously delivered to all members of the board of directors.
 
On July 30, 2008, the amendment to the merger agreement, which Allied management presented, at a regularly scheduled board of directors meeting on July 24, 2008, was approved pursuant to written consent.
 
On July 30, 2008, the Compensation Committee of the Republic board of directors held a telephonic special meeting to review various Republic employee benefit plans and severance agreements. Following discussion with Republic’s legal advisors, the Compensation Committee determined unanimously that the closing of the merger with Allied would constitute a change of control under various Republic employee benefit plans and severance agreements. As a result of this determination, the closing of the merger will trigger accelerated vesting of certain benefits under various Republic employee benefit plans, and may trigger


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increased benefits payable under certain severance agreements in connection with employment terminations upon or after the merger.
 
On August 1, 2008, Republic filed a preliminary joint proxy statement/prospectus with the Securities and Exchange Commission with respect to the merger with Allied and the Republic share issuance in connection with the merger.
 
On Sunday, August 10, 2008, Mr. O’Connor received an unsolicited call from Mr. Steiner advising him that by letter to be sent the following morning, Waste would make a revised proposal to the Republic board of directors to acquire all of Republic’s outstanding common stock for $37.00 per share in cash. Mr. O’Connor received the revised proposal on Monday, August 11, 2008, and reviewed the revised proposal with Republic’s legal and financial advisors. In addition to increasing the proposed price, the revised proposal attempted to address the concerns of the Republic board of directors with the other terms and conditions of Waste’s original proposal by stating that Waste would pay Republic a fee of $250 million if the parties are unable to close a transaction due to opposition from the Department of Justice; that Waste would include a “ticking fee” by increasing the $37.00 per share price by an interest component if antitrust clearance delayed a closing beyond a date (the date and the terms of the “ticking fee” to be on terms mutually acceptable to the parties); that Waste believed financing was available to it; and that Waste believed it would retain its investment grade rating. That morning, Waste also issued a press release, which included a copy of Mr. Steiner’s letter to Mr. O’Connor.
 
On August 11, 2008, Allied issued a press release commenting on Waste’s revised proposal stating that the revised proposal of $37.00 per share remained inferior to the range of values supporting the merger of Republic and Allied, and that Waste failed to address fully the antitrust, financing and timing risks of the revised proposal.
 
On August 14, 2008, the Republic board of directors held a telephonic special meeting at which Republic’s legal and financial advisors provided an overview of Waste’s revised proposal. Republic’s legal counsel reminded the Republic board of directors of its duties and obligations under the merger agreement with Allied and under Delaware law. At the August 14, 2008 meeting, Merrill Lynch provided the Republic board of directors with an analysis of the financial terms of Waste’s revised transaction proposal. Although Waste’s revised transaction proposal lacked specificity regarding the terms of its proposed “ticking fee,” Merrill Lynch assumed that any interest component included in the revised proposal would address the financial impact of any delay in closing. Merrill Lynch estimated that, based on discount rates ranging from 8.0% to 10.0% and a projected period ranging from three to six months (the estimated time before the ticking fee would be expected to take effect), the discounted present value range of the $37.00 per share price proposed by Waste was approximately $35.00 to $36.00 per share. Because discounted stock prices are typically calculated using a discount rate based solely on the cost of equity, Merrill Lynch selected these discount rates based on Republic’s cost of equity. Merrill Lynch compared the nominal and discounted value of Waste’s proposal to the historical trading performance of Republic common stock, including the closing price per share of Republic 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 possible business combination, on June 20, 2008, the last trading day before the day on which Republic and Allied announced the execution of the merger agreement, and on July 11, 2008, the last trading day before the initial Waste proposal was announced, as well as the maximum and minimum price per share of Republic common stock over the previous 12-month period and various averages of prices for shares of Republic common stock over periods ranging from 30 days to 1 year. Merrill Lynch advised the Republic board of directors that, in its view, neither the discounted proposal price nor the nominal price of $37.00 per share represented a meaningful premium to the closing price per share of Republic 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 possible business combination. Based upon public reports published by Moody’s and Standard and Poor’s and pro forma credit statistics analysis, Merrill Lynch also indicated that it may be difficult for Waste to obtain financing. Republic’s legal counsel and financial advisors discussed with the Republic board of directors certain aspects of Waste’s revised proposal that failed to satisfactorily address issues raised by the Republic board of directors in its response to the first Waste proposal, including its assessment that the Waste proposal will involve


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significant additional regulatory complexities and delays compared to the merger with Allied, the fact that Waste has not obtained customary financing commitments for the cash needed to complete its proposed transaction, Waste’s condition that Waste maintains an investment grade rating as a result of the proposed transaction, and operational issues and additional contingencies that would result from a protracted delay. After careful consultation with its legal counsel and financial advisors and further deliberations among the directors, the Republic board of directors determined unanimously that the revised Waste proposal did not constitute, and could not reasonably be expected to lead to, a proposal for a transaction that is more favorable to Republic stockholders than the merger currently contemplated between Republic and Allied. Accordingly, the Republic board of directors did not change its recommendation to Republic stockholders regarding the existing transaction with Allied.
 
On August 14, 2008, Mr. O’Connor sent a letter to Mr. Steiner relaying the Republic board of directors’ determination regarding the revised Waste proposal. Republic also issued a press release, including Mr. O’Connor’s letter, reiterating that Republic was not for sale. The press release noted that the revised Waste proposal substantially undervalued Republic and failed to satisfactorily address the issues identified by the Republic board of directors in its response to the first Waste proposal. The letter stated that the Republic board of directors believed that the revised Waste proposal remained substantially more conditional than the merger with Allied. The letter stressed that as a result of the determination by the Republic board of directors and in accordance with Republic’s obligations under the terms of the merger agreement with Allied, Republic may not furnish information to, or have discussions and negotiations with, Waste.
 
On August 15, 2008, Waste issued a press release expressing its disappointment with the determination by the Republic board of directors and stating that it was evaluating its options.
 
On August 15, 2008, the class action filed by the New Jersey Carpenters was amended, primarily to include claims about deficient disclosures in the preliminary joint proxy statement/prospectus filed on August 1, 2008 by Republic, and to claim breach of fiduciary duties by the individual members of the Republic board for failure to accept Waste’s revised proposal or to enter into discussions with Waste.
 
On August 18, 2008, Republic issued a press release announcing that Bank of America Securities LLC and J.P. Morgan Securities Inc. had arranged a syndicate of lenders committed in writing to the entire amount of Republic’s proposed new $1.75 billion senior unsecured revolving credit facility. Republic noted that the new credit facility, together with Republic’s existing $1 billion senior unsecured revolving credit facility, will provide Republic with all of the financing expected to be needed to consummate its proposed merger with Allied, as well as with additional working capital.
 
On August 18, 2008, Cascade and the Gates Foundation Trust filed a Schedule 13D/A to report that between August 5, 2008 and August 12, 2008, Cascade purchased for cash, in open market transactions, additional shares of Republic common stock which increased their aggregate holdings to approximately 18% of the outstanding common stock of Republic.
 
On August 21, 2008, a second putative class action was filed in the Court of Chancery of the State of Delaware by David Shade against Republic, the members of the Republic board of directors, individually, and Allied. On September 22, 2008, the New Jersey Carpenters and the Shade cases were consolidated by the Court of Chancery, and on September 24, 2008, the plaintiffs in the Delaware case, now known as In Re: Republic Services Inc. Shareholders Litigation, filed a verified consolidated amended class action complaint in the Court of Chancery of the State of Delaware. Discovery in the Delaware case is ongoing.
 
On September 5, 2008, a putative class action was filed in the Circuit Court in and for Broward County, Florida, by the Teamsters Local 456 Annuity Fund against Republic and the members of the Republic board of directors, individually. On September 24, 2008, the defendants in the Florida litigation filed a Motion to Stay or to Dismiss the lawsuit in light of the consolidated Delaware class action.
 
These suits primarily seek to enjoin the proposed transaction between Republic and Allied and compel Republic to accept the unsolicited proposals made by Waste, or at least compel the Republic board of directors to further consider and evaluate the Waste proposals, as well as damages and attorneys’ fees.


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On September 16, 2008, Mr. Steiner made an unsolicited call to Mr. O’Connor in which he indicated that Waste was still interested in acquiring Republic, that the Waste board of directors would meet the following week and that Mr. Steiner would be contacting Republic again in about a week. On September 25, 2008, Mr. Steiner again called Mr. O’Connor. In that call, Mr. Steiner said that Waste continued to be interested in acquiring Republic, and while he thought financing was available he acknowledged that the current credit market environment made acquisition debt more expensive and a transaction less attractive to Waste. Mr. Steiner indicated that Waste would continue to monitor the credit market and other conditions impacting a possible acquisition of Republic, and may further communicate with Republic as Waste continues to evaluate its options in advance of Republic’s expected mid-November stockholder meeting. Mr. Steiner stated that Waste would continue to pursue clearance of its antitrust filing with the Department of Justice. Mr. Steiner also expressed an interest in buying any assets that would be divested as a result of a Republic-Allied combination, if the Republic-Allied merger went forward.
 
On September 22, 2008, Cascade and the Gates Foundation Trust filed a Schedule 13D/A to report that between August 13, 2008 and September 18, 2008, Cascade purchased for cash, in open market transactions, additional shares of Republic common stock which increased their aggregate holdings to approximately 19% of the outstanding common stock of Republic.
 
On October 6, 2008, the Circuit Court in the Florida litigation ordered full briefing on the Motion to Stay or Dismiss and a hearing on the Motion is set for October 31, 2008. No further activity in the Florida litigation was allowed by the Circuit Court pending the hearing. However, the Circuit Court ordered, in the interim, defendants to provide the Florida plaintiff with copies of any discovery produced to plaintiffs in the Delaware action.
 
Rationale for the Merger
 
The solid waste service industry has been consolidating over time and both Republic and Allied believe that the proposed merger will provide their respective stockholders with an interest in a combined company that will be one of the strongest in the industry. The combined company will have greater financial strength, operational efficiencies, earning power and growth potential than either Republic or Allied would have on its own. The parties have identified a number of potential benefits of the merger which they believe will contribute to the success of the combined company and thus inure to the benefit of the combined company’s stockholders, including the following:
 
Strategic Benefits.  Both Republic and Allied are engaged in the non-hazardous solid waste and environmental service business and provide solid waste management services, consisting of collection, transfer, recycling and disposal (landfill) services to municipal, commercial, industrial and residential customers. Republic, after the merger, expects to generate annual revenues of approximately $9 billion and expects to operate approximately 218 landfills, 254 transfer stations, 427 collection companies and 86 recycling facilities serving over 13 million customers in 40 states and Puerto Rico. The parties believe that there is a substantial strategic fit between the markets served by Republic, which are located predominantly in high-growth Sunbelt markets, and those served by Allied, which has a national footprint. Since Republic and Allied’s collection operations are highly complementary, the combined company will be diversified across geographic markets, customer segments and service offerings. This balance will enable the combined company to capitalize on attractive business opportunities, mitigate geographic risk and result in greater stability and predictability of revenue and free cash flow.
 
Strong Financial Foundation.  Key components of the combined company’s financial strategy will include its ability to generate free cash flow and sustain or improve its return on invested capital. The parties expect that the combined company will generate significant free cash flow, which it intends to use to reduce debt, invest in internal growth and fund its quarterly dividend, which it expects to at least maintain at $.19 per share. In addition, it is anticipated that the strong capital structure of the combined company will enable it to maintain its investment grade rating, resulting in better access to capital and lower debt financing costs. Republic and Allied believe that this strong foundation for future financial performance will create significant benefits for stockholders of the combined company.


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Synergies and Cost Savings of the Combined Company.  Republic and Allied believe that the merger should result in a number of important synergies, primarily from achieving greater operating efficiencies, capturing inherent economies of scale and leveraging corporate resources. The management of Republic estimated that the combined company would achieve approximately $150 million in net annual synergies by the third year following the completion of the merger, and has the potential to achieve additional synergies thereafter from other initiatives, including national accounts programs and centralized procurement. The management of Allied estimated additional potential synergies of up to $39 million could be achieved if the combined company were to adopt certain Allied initiatives. Any synergies achieved will further enhance the free cash flow and return on invested capital of the combined company.
 
Strengthened Management.  The parties believe the combined company will have a favorable personnel mix. In particular, the parties believe that certain of the members of Allied’s management would complement Republic’s existing management team and that the combined company’s management would enjoy a combination of skills and capabilities that are needed by a company in a consolidating industry. In addition, each of Republic and Allied believes that by combining best practices and creating standardized policies, procedures and measurement tools, the combined company will be better able to meet and exceed its customers’ needs.
 
New Growth Opportunities.  Republic’s long-term growth strategy has been to increase revenue, gain market share and enhance stockholder value through internal growth and acquisitions. The combined company will be able to better execute these strategic priorities by investing in the growth and development of the business. The combined company will be better positioned to grow organically and pursue acquisition opportunities by being able to draw upon the resources, experience and development efforts of both Republic and Allied.
 
Republic Reasons for the Merger
 
In approving the transaction and making these recommendations, the Republic board of directors consulted with Republic’s management, as well as its outside legal and financial advisors, and it carefully considered the following factors:
 
  •  all the reasons described above under “— Rationale for the Merger” beginning on page 58, 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 opportunities for 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;


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  •  the terms and conditions of the merger agreement;
 
  •  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 64;
 
  •  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.
 
In addition to the factors described above, the Republic board of directors identified and considered a variety of risks and potentially negative factors concerning the merger, including:
 
  •  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 “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 119);
 
  •  that while the termination payment provisions of the merger agreement were reasonable in light of the potential size and benefits of the transaction and were not preclusive of a superior transaction, they could have the effect of discouraging bona fide alternative proposals for a business combination with Republic (See “The Merger Agreement — Termination of the Merger Agreement” beginning on page 120);
 
  •  the risk that Allied has liabilities which were not identified during Republic’s due diligence; and
 
  •  various other risks associated with the merger and Republic’s business set forth under the section entitled “Risk Factors.”
 
In view of the number and wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Republic board of directors did not find it practicable to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered. In addition, the Republic board of directors did not undertake to make any specific determination as to whether any particular factor was favorable or unfavorable to the Republic board of directors’ ultimate determination or assign any particular weight to any factor, but conducted an overall analysis of the factors described above, including thorough discussions with and questioning of Republic’s management and management’s analysis of the proposed merger based on information received from Republic’s legal, financial and accounting advisors. In considering the factors described above, individual members of the Republic board of directors may have given different weight to different factors.
 
In considering the recommendation of the Republic board of directors with respect to the proposal to issue shares of Republic common stock pursuant to the merger, you should be aware that certain Republic


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directors and officers have arrangements that may cause them to have interests in the transaction that are different from, or are in addition to, the interests of Republic stockholders generally. See “Interests of Republic Executive Officers and Directors in the Merger” beginning on page 70.
 
The Republic board of directors considered all these factors together and considered them in their totality to be favorable to, and to support, its determination to recommend approval by Republic stockholders of the proposals necessary to complete the merger.
 
Recommendations of the Republic Board of Directors
 
The Republic board of directors has unanimously determined that the Republic share issuance is advisable and in the best interests of Republic and its stockholders. The Republic board of directors recommends that Republic stockholders vote:
 
  •  “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.
 
Certain Financial Forecasts Reviewed by the Republic Board of Directors
 
Republic does not, as a matter of course, publicly disclose forecasts or internal projections as to future performance, earnings or other results. In connection with discussions concerning the proposed transaction, the management of Republic, with its financial advisor, prepared and furnished to the management of Allied and UBS two financial forecasts for Republic. The Republic base case forecast is presented below and was used by Merrill Lynch for purposes of its opinion regarding the exchange ratio. The other Republic forecast was used by Allied’s financial advisor as described under “ — Certain Financial Forecasts Reviewed by the Allied Board of Directors.” The inclusion of such financial forecasts in this joint proxy statement/prospectus should not be regarded as an indication that Republic or its board of directors considered, or now considers, these forecasts to be material to a stockholder or a reliable predictor of future results. You should not place undue reliance on the financial forecasts contained in this joint proxy statement/prospectus. Please read carefully “ — Important Information about the Financial Forecasts” below.
 
Republic Financial Forecast
 
Republic’s management prepared and provided the following information to the Republic board of directors and Merrill Lynch regarding Republic’s base case forecasted operating results for 2008 through 2012. Early each calendar year, Republic management finalizes a three year financial forecast, which is the only long-term financial forecast regularly prepared by Republic. These forecasts are used primarily to establish financial targets for Republic’s long-term incentive plan. The forecast is based upon management’s evaluation of macroeconomic trends at the time it is prepared. The economic factors that management believes are most relevant for purposes of this forecast include population growth, household formation and related business growth. After analyzing this economic data in late 2007 and early 2008, Republic’s management determined that long-term annual revenue growth of approximately 4% would be an appropriate assumption for the forecast that was being prepared at that time. In April, solely for the purpose of Republic’s analysis of a potential transaction with Allied, this forecast was extrapolated to add two additional years, and that five year


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forecast is Republic’s base case financial forecast presented to the Republic board of directors and used by Merrill Lynch for purposes of its opinion.
 
                                         
    Fiscal Year Ended December 31,  
(Dollars in millions)
  2008E     2009E     2010E     2011E     2012E  
 
Revenue
  $ 3,284     $ 3,393     $ 3,529     $ 3,670     $ 3,817  
% Growth
          3.3       4.0       4.0       4.0  
EBITDA(1)
    937       984       1,031       1,079       1,122  
% Margin
    28.5       29.0       29.2       29.4       29.4  
% Growth
          5.0       4.7       4.7       4.0  
Depletion, Depreciation and Amortization
    328       333       346       360       374  
% of Revenue
    10.0       9.8       9.8       9.8       9.8  
Capital Expenditures
    (327 )     (350 )     (339 )     (374 )     (361 )
 
 
(1) EBITDA is net income before interest expense, income taxes, and depletion, depreciation and amortization.
 
Allied Financial Forecast
 
Republic’s management provided the following information to the Republic board of directors and Merrill Lynch regarding Allied’s forecasted operating results for 2008 through 2012. This financial forecast was based on a projection prepared by Allied and submitted to Republic, which was adjusted by Republic to reflect annual revenue growth rates and EBITDA margins consistent with Republic management projections reflected in its base case forecast above. Allied’s projections assumed an annual revenue growth approximating 5%. The Allied projection provided to Republic is set forth in “Certain Financial Forecasts Reviewed by the Allied Board of Directors” on page 75. Republic’s management and the Republic board of directors believed that assumptions about market conditions and economic factors that were used in determining both Republic’s and Allied’s long-term annual revenue growth and EBITDA margins should be similar for purposes of comparing and analyzing financial forecasts, particularly as the companies operate in the same industry and face the same economic conditions. Therefore, Republic adjusted Allied’s projections to reflect the lower growth rates and EBITDA margins assumed for Republic’s base case forecast. The Republic board of directors was advised that the growth rates and EBITDA margins used for the five year financial forecasts presented to the Republic board of directors were consistent with the growth rates and EBITDA margins used for Republic’s most recent regularly prepared three year financial forecast, and was also advised that the financial forecast prepared by Allied had a higher long-term growth rate and higher EBITDA margins and that Republic management adjusted that financial forecast to conform it to the lower long-term growth rate and lower EBITDA margins used by Republic for its financial forecast. At its June 22, 2008 meeting, the Republic board of directors did not consider what impact the second set of forecasts used by Allied would be likely to have on financial analyses which may have been performed in reliance on such other forecasts. The financial forecasts using the lower growth assumptions were also used for the joint presentations by Republic and Allied to the credit ratings agencies on June 4, 2008.
 
                                         
    Fiscal Year Ended December 31,  
(Dollars in millions)
  2008E     2009E     2010E     2011E     2012E  
 
Revenue
  $ 6,268     $ 6,477     $ 6,736     $ 7,005     $ 7,285  
% Growth
          3.3       4.0       4.0       4.0  
EBITDA(1)
    1,760       1,878       1,967       2,059       2,142  
% Margin
    28.1       29.0       29.2       29.4       29.4  
% Growth
    6.7       6.7       4.7       4.7       4.0  
Depletion, Depreciation and Amortization
    576       584       599       632       667  
% of Revenue
    9.2       9.0       8.9       9.0       9.2  
Capital Expenditures
    (650 )     (701 )     (736 )     (773 )     (812 )


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(1) EBITDA is net income before interest expense, income taxes, and depletion, depreciation and amortization.
 
Use of Financial Forecasts
 
Republic used the foregoing financial forecasts in evaluating the exchange ratio. As noted above, two financial forecasts were prepared by the management of Republic and provided to UBS. The Republic base case forecast used by Merrill Lynch for purposes of its opinion differs from the Republic forecast used by UBS for purposes of its opinion. The Republic base case forecast used by Merrill Lynch, at the direction of the Republic board of directors, reflects lower growth assumptions that are consistent with the macroeconomic trends projected by the management of Republic in connection with the Republic long-term incentive plan. In addition, the Allied financial analyses and forecasts prepared by management of Allied were adjusted by management of Republic to reflect the same macroeconomic trends and growth assumptions incorporated into the base case forecast of Republic. At the direction of the Republic board of directors, such Allied forecasts, as adjusted, were used by Merrill Lynch for purposes of its analyses and opinion.
 
Important Information about the Financial Forecasts
 
While the financial forecasts summarized above were prepared in good faith, no assurance can be made regarding future events. The estimates and assumptions underlying the financial forecasts involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described in “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are beyond the control of Republic and will be beyond the control of the combined company. There can be no assurance that the underlying assumptions will prove to be accurate or that the projected results will be realized, and actual results likely will differ, and may differ materially, from those presented in the financial forecasts, even if the merger is not completed. Such financial forecasts cannot, therefore, be considered a reliable predictor of future operating results, and this information should not be relied on as such.
 
The financial forecasts summarized in this section were prepared solely for internal use and not with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements, or U.S. generally accepted accounting principles. In the view of Republic’s management, the financial forecasts prepared by Republic were prepared on a reasonable basis. However, the financial forecasts are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on this information. None of the financial forecasts reflect any impact of the proposed merger.
 
The Republic financial forecasts included in this joint proxy statement/prospectus were prepared by and are the responsibility of the management of Republic, as indicated. Neither Ernst & Young LLP nor PricewaterhouseCoopers LLP has examined, compiled or otherwise performed any procedures with respect to the prospective financial information contained in these financial forecasts and, accordingly, neither Ernst & Young LLP nor PricewaterhouseCoopers LLP has expressed any opinion or given any other form of assurance with respect thereto and they assume no responsibility for the prospective financial information. The Ernst & Young LLP report incorporated by reference in this joint proxy statement/prospectus relates to Republic’s historical financial information. It does not extend to the financial forecasts and should not be read to do so. The PricewaterhouseCoopers LLP reports incorporated by reference in this joint proxy statement/prospectus relate to Allied’s historical financial information. They do not extend to the financial forecasts and should not be read to do so.
 
By including in this joint proxy statement/prospectus a summary of certain Republic financial forecasts, neither Republic nor any of its representatives has made or makes any representation to any person regarding


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the ultimate performance of Republic compared to the information contained in the financial forecasts. The financial forecasts were prepared in June of 2008 and have not been updated to reflect any changes since that date. Neither Republic nor, following the merger, the combined company undertakes any obligation, except as required by law, to update or otherwise revise the financial forecasts or financial information to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.
 
The summary of the financial forecasts is not included in this joint proxy statement/prospectus in order to induce any stockholder to vote in favor of any of the proposals to be voted on at the Republic special meeting, as described in this joint proxy statement/prospectus.
 
Opinion of Financial Advisor to the Republic Board of Directors
 
On May 14, 2008, the Republic board of directors engaged Merrill Lynch to act as its financial advisor in connection with the proposed merger. On June 22, 2008, Merrill Lynch rendered to the Republic board of directors its oral opinion, subsequently confirmed by delivery of a written opinion dated June 22, 2008, that, as of that date and based upon and subject to the assumptions made, matters considered and qualifications and limitations set forth in the written opinion, the exchange ratio in the proposed merger of .45 shares of Republic common stock for each share of Allied common stock provided for in the merger agreement was fair from a financial point of view to Republic.
 
The full text of Merrill Lynch’s written opinion, which sets forth the assumptions made, matters considered and qualifications and limitations on the review undertaken by Merrill Lynch, is attached as Annex C to this joint proxy statement/prospectus and is incorporated herein by reference. The following summary of Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. The holders of Republic common stock are encouraged to read the opinion carefully in its entirety. Merrill Lynch’s opinion was provided for the use and benefit of the Republic board of directors, is directed only to the fairness, from a financial point of view, of the exchange ratio to Republic, and does not address the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of Republic. Merrill Lynch’s opinion does not constitute a recommendation to any holder of Republic common stock as to how that stockholder should vote on the proposed merger or any related matter. In rendering its opinion, Merrill Lynch expressed no view or opinion with respect to the fairness (financial or otherwise) of the amount or nature or any other aspect of any compensation payable to or to be received by an officers, directors, or employees of any party to the merger, or any class of such persons, relative to the exchange ratio. Merrill Lynch has consented to the inclusion in this joint proxy statement/prospectus of its written opinion and of the summary of that opinion set forth below.
 
In arriving at its opinion, Merrill Lynch, among other things:
 
  •  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;


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  •  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;
 
  •  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.
 
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to it, discussed with or reviewed by or for it, or publicly available, and Merrill Lynch did not assume any responsibility for independently verifying such information or undertake an independent evaluation or appraisal of any of the assets or liabilities of Allied or Republic, nor did it evaluate the solvency or fair value of Allied or Republic under any state or federal laws relating to bankruptcy, insolvency or similar matters. In addition, Merrill Lynch did not assume any obligation to conduct any physical inspection of the properties or facilities of Allied or Republic.
 
With respect to the financial forecast information, the expected synergies and any other estimates or pro forma effects furnished to or discussed with Merrill Lynch by Allied or Republic, Merrill Lynch assumed that they had been reasonably prepared and reflected the best currently available estimates and judgment of Allied’s or Republic’s management, as the case may be, as to the matters covered thereby. With respect to the expected synergies, Merrill Lynch assumed, with the consent of the Republic board of directors, that the expected synergies would be realized in the amounts and time periods forecasted by Republic. In addition, based on Merrill Lynch’s discussions with Republic’s management and at its direction, Merrill Lynch assumed that the financial forecasts of Allied prepared by its management and adjusted by management of Republic were a reasonable basis upon which to evaluate the future performance of Allied, and that Republic financial forecasts provided to Merrill Lynch by management of Republic were a reasonable basis upon which to evaluate the future performance of Republic, and therefore Merrill Lynch used those financial forecasts for purposes of Merrill Lynch’s analyses and opinion. Merrill Lynch further assumed that the merger would qualify as a tax-free reorganization for U.S. federal income tax purposes and that the final form of the merger agreement would be substantially similar to the last draft reviewed by it.
 
Merrill Lynch’s opinion is necessarily based upon market, economic and other conditions as they existed and could be evaluated on, and on the information made available to Merrill Lynch as of the date of the opinion. Merrill Lynch assumed that in the course of obtaining the necessary regulatory or other consents or approvals (contractual or otherwise) for the merger, no restrictions, including any divestiture requirements or amendments or modifications, would be imposed that would have a material adverse effect on the contemplated benefits of the merger. Merrill Lynch also assumed, in all respects material to its analyses, that each party to the merger agreement would comply with all material terms of the merger agreement and that the merger will be consummated in accordance with its terms, without the waiver, modification or amendment of any material term, condition or agreement.
 
The following is a summary of the material financial analyses presented by Merrill Lynch to the Republic board of directors in connection with the rendering of its opinion. The financial analyses summarized below include information presented in tabular format. In order to understand fully the financial analyses performed by Merrill Lynch, the tables must be read together with the accompanying text of each


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summary. The tables alone do not constitute a complete description of the financial analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by Merrill Lynch. To the extent the following quantitative information reflects market data, except as otherwise indicated, Merrill Lynch based this information on market data as it existed prior to June 22, 2008. This information, therefore, does not necessarily reflect current or future market conditions.
 
In preparing its opinion to the Republic board of directors, Merrill Lynch performed various valuation, financial and comparative analyses, including those described below. The summary set forth below does not purport to be a complete description of the analyses underlying Merrill Lynch’s opinion or the presentations made by Merrill Lynch to the Republic board of directors. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a fairness opinion is not readily susceptible to partial analysis or summary description. In arriving at its opinion, Merrill Lynch did not attribute any particular weight to any analysis or factor considered by it, but rather made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. Accordingly, Merrill Lynch believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors, or focusing on information presented in tabular format, without considering all of the analyses and factors or the narrative description of the analyses, would create a misleading or incomplete view of the process underlying its opinion.
 
Calculation of Transaction Value
 
Merrill Lynch reviewed the financial terms of the merger. Merrill Lynch noted that Allied stockholders will be entitled to receive .45 shares of Republic common stock for each share of Allied common stock. The merger consideration therefore had an implied offer price of $15.15 per share of Allied common stock based upon the closing price of Republic common stock of $33.66 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 possible business combination. Accounting for the assumption of projected net debt as of December 31, 2008, Merrill Lynch noted that the merger would have a transaction value of just over $13 billion.
 
Summary Table
 
Merrill Lynch performed a number of financial analyses, including a historical trading performance analysis, a research analysts’ price target analysis, a comparable companies analysis, and a discounted cash flow analysis, which are described below. The following summary table sets out the maximum range of exchange ratios implied from each of these financial analyses, which were compared to the transaction exchange ratio of .45 pursuant to the merger agreement and the unaffected exchange ratio of .414 that existed based on the two companies’ closing stock prices 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 possible business combination. The minimum exchange ratio was calculated for each analysis by dividing the lowest implied value per share of Allied common stock by the highest implied value per share of Republic common stock derived from each analysis. The maximum exchange ratio was calculated for each analysis by dividing the highest implied value per share of Allied common stock by the lowest implied value per share of Republic common stock derived from each analysis.
 
In applying the various valuation methodologies, Merrill Lynch made qualitative judgments as to the significance and relevance of each analysis. Accordingly, the methodologies and implied exchange ratio ranges derived from these analyses and presented in this table should be considered as a whole and in the context of the narrative description of the financial analyses below, including the methodologies and assumptions underlying these analyses. Considering the implied exchange ratio ranges presented in the table without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying these analyses, could create a misleading or incomplete view of the financial analyses performed by Merrill Lynch.
 


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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  
 
Historical Trading Performance
 
Merrill Lynch reviewed historical trading prices of Allied common stock. This review indicated that for the 52-week period ending June 12, 2008, Allied common stock traded as low as $8.88 and as high as $14.13 per share. These trading prices were compared to the closing price of Allied common stock of $13.92 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 possible business combination, and the implied offer price of $15.15 per share of Allied common stock derived from the exchange ratio of .45 provided for in the merger agreement and the closing price of Republic common stock on June 12, 2008.
 
Merrill Lynch reviewed historical trading prices of Republic common stock. This review indicated that for the 52-week period ending June 12, 2008, Republic common stock traded as low as $27.30 and as high as $35.00 per share. These trading prices were compared to the closing price of Republic common stock of $33.66 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 possible business combination.
 
Merrill Lynch then reviewed the range of historical trading prices of Allied and Republic common stock and calculated the maximum range of exchange ratios implied from such historical trading performance. This analysis yielded a range for the implied exchange ratio of .254 to .518, which Merrill Lynch compared to the transaction exchange ratio of .45 pursuant to the merger agreement and the unaffected exchange ratio of .414 that existed based on the two companies’ closing stock prices 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 possible business combination.
 
Research Analysts’ Price Targets
 
Merrill Lynch reviewed the most recent research analysts’ per share target prices for Allied and Republic common stock according to Bloomberg as of June 12, 2008, the last trading day before the day on which Republic and Allied confirmed that they were involved in discussions regarding a possible business combination. For Allied common stock, the research analysts’ per share target prices ranged from $15.00 to $18.00, as compared to the closing price of Allied common stock of $13.92 on June 12, 2008, and the implied offer price of $15.15 per share of Allied common stock. For Republic common stock, the research analysts’ per share target prices ranged from $32.00 to $40.00, as compared to the closing price of Republic common stock of $33.66 on June 12, 2008.
 
Merrill Lynch then reviewed the range of research analysts’ target prices for Allied and Republic common stock and calculated the maximum range of exchange ratios implied from such target prices. This analysis yielded a range for the implied exchange ratio of .375 to .563, which Merrill Lynch compared to the transaction exchange ratio of .45 pursuant to the merger agreement and the unaffected exchange ratio of .414 that existed based on the two companies’ closing stock prices 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 possible business combination.

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Comparable Companies Analysis
 
Merrill Lynch reviewed and compared selected financial information and trading statistics for Allied and Republic with the publicly available corresponding data for certain publicly traded waste management companies that Merrill Lynch, in its professional judgment, deemed reasonably comparable to Allied and Republic, namely, Waste Connections, Inc. and Waste Management, Inc. Although the foregoing companies were compared to Allied and Republic for purposes of this analysis, no company utilized in this analysis is identical to Allied or Republic and the limited number of companies included in the analysis may limit its usefulness as a comparative measure. In evaluating the comparable companies, Merrill Lynch made judgments and assumptions concerning differences in financial and operating characteristics of the comparable companies and other factors that could affect the public trading value of the selected companies. Estimated financial data for the selected comparable companies were based on publicly available information and estimates of future financial results published by Wall Street research analysts. Estimated financial data for Allied were based on financial forecasts prepared by Allied’s management, as adjusted by Republic’s management, and estimated financial data for Republic were based on financial forecasts prepared by Republic’s management.
 
For Republic, Allied and each comparable company, Merrill Lynch calculated the following financial ratios: (1) enterprise value as a multiple of estimated 2008 earnings before interest, taxes, depreciation and amortization, which is referred to as EBITDA, (2) enterprise value as a multiple of estimated 2009 EBITDA, (3) stock price as a multiple of estimated 2008 earnings per share and (4) stock price as a multiple of estimated 2009 earnings per share.
 
Based upon the analysis of the publicly traded comparable companies, Merrill Lynch estimated an EBITDA multiple range of 7.0x to 8.0x and a price-to-earnings multiple range of 14.0x to 17.0x for Allied. Based upon the publicly traded comparable companies analysis, Merrill Lynch estimated an EBITDA multiple range of 7.5x to 8.5x for Republic and a price-to-earnings multiple range of 17.0x to 19.0x for Republic.
 
Merrill Lynch then used the results of the foregoing comparable companies analysis to calculate the maximum range of implied exchange ratios derived from the relative ranges of implied share value for Allied and Republic, by dividing the lowest implied share value of Allied common stock by the highest implied share value of Republic common stock and the highest implied share value of Allied common stock by the lowest implied share value of Republic common stock. This analysis based upon the EBITDA multiple ranges yielded a range of implied exchange ratios from .371 to .573. This analysis based upon the price-to-earnings multiple ranges yielded a range of implied exchange ratios from .402 to .546. Merrill Lynch compared these implied exchange ratio ranges to the transaction exchange ratio of .45 pursuant to the merger agreement and the unaffected exchange ratio of .414 that existed based on the two companies’ closing stock prices 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 possible business combination.
 
Discounted Cash Flow Analysis
 
Merrill Lynch performed discounted cash flow analyses of both Allied and Republic as stand-alone entities to derive a range of implied equity values for each company’s common stock. Using financial forecasts prepared by Allied’s management, as adjusted by Republic’s management, Merrill Lynch calculated a range of implied equity values per share by adding the present value of Allied’s projected free cash flows through December 31, 2012 and the present value of Allied’s “terminal value” based on a range of multiples of Allied’s estimated 2012 EBITDA. Using financial forecasts prepared by Republic’s management, Merrill Lynch calculated a range of implied equity values per share of Republic common stock using the same methodology. As part of this analysis, Merrill Lynch also analyzed the weighted average cost of capital of Allied and Republic, which included a sensitivity analysis of each company’s weighted average cost of capital.
 
In calculating the terminal value, Merrill Lynch applied terminal value multiples of estimated 2012 EBITDA ranging from 7.5x to 8.5x. Merrill Lynch selected these terminal value EBITDA multiples based upon the trading characteristics of the common stock of the publicly traded comparable companies referred to above. The free cash flow stream and terminal values were then discounted back to June 30, 2008, using


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discount rates ranging from 7.0% to 9.0%. Merrill Lynch selected these discount rates based on an analysis of the weighted average cost of capital of the publicly traded companies referred to above.
 
Merrill Lynch then used the implied equity value ranges for Allied and Republic common stock derived from the discounted cash flow analysis to calculate the maximum range of exchange ratios implied from those implied equity value ranges. This analysis yielded a range of implied exchange ratios from .395 to .693, which Merrill Lynch compared to the transaction exchange ratio of .45 pursuant to the merger agreement and the unaffected exchange ratio of .414 that existed based on the two companies’ closing stock prices 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 possible business combination.
 
Historical Stock Price and Exchange Ratio Analysis
 
Merrill Lynch calculated the implied premium that the implied offer price of $15.15 per share represents over the closing price of Allied 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 possible business combination, and the historical average stock price of Allied common stock for the 10-day, 30-day, 60-day, 90-day, one-year, two-year and three-year periods ending June 12, 2008. Merrill Lynch also calculated the historical range of exchange ratios for the same periods ending June 12, 2008, in comparison to the unaffected exchange ratio that existed between Allied common stock and Republic common stock on June 12, 2008. Merrill Lynch then calculated the implied premium that the .45 exchange ratio represents over the historical exchange ratios on June 12, 2008, and for the specified periods ending June 12, 2008. The results of Merrill Lynch’s analysis are set forth in the following table:
 
                                 
    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 %
 
Miscellaneous
 
In conducting its analyses and arriving at its opinion, Merrill Lynch utilized a variety of generally accepted valuation methods. The analyses were prepared for the purpose of enabling Merrill Lynch to provide its opinion to the Republic board of directors as to the fairness, from a financial point view, to Republic of the exchange ratio pursuant to the merger agreement and do not purport to be appraisals or necessarily to reflect the prices at which businesses or securities actually may be sold, which are inherently subject to uncertainty. In connection with its analyses, Merrill Lynch made, and was provided by the management of each of Allied and Republic with, numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Merrill Lynch, Republic or Allied. Analyses based on estimates or forecasts of future results are not necessarily indicative of actual past or future values or results, which may be significantly more or less favorable than suggested by such analyses. Because such analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of Allied, Republic or their respective advisors, neither Republic nor Merrill Lynch nor any other person assumes responsibility if future results or actual values are materially different from these forecasts or assumptions.
 
The terms of the merger were determined through negotiations between Allied and Republic and were approved by the Republic board of directors. Although Merrill Lynch provided advice to Republic during the


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course of these negotiations, the decision to enter into the merger was solely that of the Republic board of directors. The opinion and presentation of Merrill Lynch to the Republic board of directors was only one of a number of factors taken into consideration by the Republic board of directors in making its determination to approve and adopt the merger agreement and the transactions contemplated by the merger agreement, including the merger. Merrill Lynch’s opinion should not be viewed as determinative of the views of the Republic board of directors or management with respect to the merger or the transaction exchange ratio. Merrill Lynch’s opinion was provided to the Republic board of directors to assist it in connection with its consideration of the merger and does not constitute a recommendation to any stockholder as to how to vote on the proposed merger or any related matter. Merrill Lynch’s opinion does not in any manner address the prices at which the shares of common stock of either Republic or Allied will trade following the announcement of the merger or the price at which the shares of common stock of Republic will trade following the consummation of the merger.
 
Republic retained Merrill Lynch based upon Merrill Lynch’s experience and expertise. Merrill Lynch is an internationally recognized investment banking and advisory firm with substantial experience in transactions similar to the proposed transaction. Merrill Lynch, as part of its investment banking business, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes.
 
Under the terms of its engagement, Republic has agreed to pay Merrill Lynch a fee of $26.5 million, $2.5 million of which was payable in connection with the public announcement of the execution of the merger agreement and $24.0 million of which is contingent upon the consummation of the merger. Republic has also agreed to reimburse Merrill Lynch for its reasonable expenses incurred in connection with this engagement, including reasonable fees of outside legal counsel, and to indemnify Merrill Lynch and its affiliates for certain liabilities arising out of this engagement, including liabilities under U.S. federal securities laws.
 
Merrill Lynch has, in the past, provided financial advisory and financing services to Republic and/or its affiliates and may continue to do so. Merrill Lynch has received, and may receive, fees for the rendering of such services. In addition, in the ordinary course of its business, Merrill Lynch or its affiliates may actively trade the common stock and other securities of Allied, as well as the common stock of Republic and other securities of Republic, for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.
 
Interests of Republic Executive Officers and Directors in the Merger
 
In considering the recommendation of the Republic board of directors with respect to the merger, Republic stockholders should be aware that executive officers of Republic and members of the Republic board of directors may have interests in the transactions contemplated by the merger agreement that may be different from, or in addition to, the interests of the Republic stockholders generally. The Republic board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and making its recommendation. These interests are summarized below.
 
Board of Directors and Board Committees
 
At the effective time of the merger, all non-employee members of the Republic board of directors, other than Mr. Harris Hudson, will continue as directors of the combined company. The board of directors of the combined company initially will be comprised of the chairman of the board, five (5) individuals designated by the Republic board and five (5) individuals designated by the Allied board. Mr. O’Connor, currently the chairman of the board and chief executive officer of Republic, will continue in those roles with the combined company. The continuing Republic directors will hold a majority on each of the audit, nominating and corporate governance, and compensation committees of the combined company and the current Republic chairman on each of those committees will continue in that role in the combined company. See “— Board of Directors and Executive Officers of Republic Following the Merger; Headquarters” beginning on page 92.


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Republic’s non-employee directors hold stock units issued pursuant to Republic’s 1998 Stock Incentive Plan. All such stock units are fully vested. Pursuant to the terms of the stock unit award agreements, and upon consummation of the merger, each stock unit will be converted into the right to receive a cash payment equal to the closing price of Republic common stock on the date of the merger. Stock unit holdings are as follows: John W. Croghan - 29,693, Harris W. Hudson - 29,693; W. Lee Nutter - 32,909; Ramon A. Rodriguez - 29,693; Allan C. Sorensen - 29,693; Michael W. Wickham - 32,844.
 
Executive Officers
 
Executive Officer Appointments
 
As of the effective time of the merger, Mr. O’Connor will be the Chief Executive Officer, Mr. Holmes will be the Chief Financial Officer, and Mr. Cordesman will be the Executive Vice President of Republic.
 
Equity Awards
 
In accordance with the terms of the Republic Services, Inc. 1998 Stock Incentive Plan, upon consummation of the merger, all outstanding unvested equity awards of Republic will vest, including those held by the executive officers.
 
Incentive Compensation
 
In accordance with the terms of the Republic Services, Inc. Executive Incentive Plan, upon consummation of the merger, the performance goals and other conditions to the payments of the outstanding awards held by all executive officers of Republic shall be deemed achieved and satisfied for performance periods in effect at the time of the merger. Such awards are to be paid at target levels within 10 days following the merger.
 
Deferred Compensation
 
In accordance with the terms of the Republic Services, Inc. Deferred Compensation Plan, upon consummation of the merger, the account balances of the executive officers become fully vested. However, with the exception of $390,809 payable to David A. Barclay, Senior Vice President, General Counsel and Assistant Secretary of Republic, such amounts are already vested. In addition, Messrs. O’Connor, Cordesman and Holmes will receive a distribution of their account balances upon the consummation of the merger, in accordance with their elections made at the time the deferred compensation plan was adopted.
 
Severance For David A. Barclay
 
It is currently anticipated that Mr. Barclay will terminate his employment with Republic for good reason upon the relocation of Republic’s offices to Arizona. Pursuant to his employment agreement, upon such termination for good reason within two years of the merger, in addition to the benefits discussed above, he will be entitled to the following severance:
 
  •  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 a gross-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).


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Executive Officers
 
The following table sets forth the value of benefits each current Republic executive officer will receive upon consummation of the merger, and, in the case of Mr. Barclay, the termination of his employment for good reason.
 
                                                 
    Cash
    Incentive
    Benefits
    Restricted
    Deferred
       
Executive Officers
  Severance     Compensation     Continuation(1)     Stock Vesting(2)     Compensation(3)     Total  
 
James E. O’Connor(4)(5)
  $     $ 3,108,000     $     $ 4,222,346     $     $ 7,330,346  
Michael J. Cordesman(4)(5)
          1,770,000             1,555,601             3,325,601  
Tod C. Holmes(4)(5)
          1,660,000             1,532,209             3,192,209  
David A. Barclay(5)
    3,985,211       1,122,000       30,983       1,532,209       390,809       7,061,212  
 
 
(1) The lump sum present value of Republic’s obligation for benefits continuation 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.
 
(3) The following deferred compensation amounts will be distributed to the executives upon 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 $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) Messrs. O’Connor, Cordesman and Holmes also have severance provisions in their existing employment agreements. Their severance provisions are substantially the same as those in Mr. Barclay’s employment agreement, which is described above under “Interests of Republic Executive Officers and Directors in the Merger — Executive Officers — Severance for David A. Barclay” on page 71. Pursuant to their existing agreements, each of Messrs. O’Connor, Cordesman and Holmes has the right to terminate his employment with Republic for good reason, including the relocation of Republic’s offices to Arizona. In addition to the amounts set forth above, Messrs. O’Connor, Cordesman and Holmes would be entitled to cash severance and income tax gross-ups on their deferred compensation accounts balances as follows: James E. O’Connor— $12,919,849 severance and $5,174,376 tax gross-up, Michael J. Cordesman — $6,800,659 severance and $1,843,799 tax gross-up, Tod C. Holmes— $5,561,711 severance and $3,129,091 tax gross-up. The income tax gross-up would be calculated based on the deferred compensation account balances as of December 31, 2006.
 
(5) 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. In the event that Messrs. O’Connor, Cordesman or Holmes terminates his employment for good reason following the merger, which is not anticipated, the excise tax gross-up payment should not exceed $9,400,000, $4,700,000 or $4,600,000, respectively. Excise tax gross-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.
 
Republic expects that each of Messrs. O’Connor, Cordesman and Holmes will relocate to Arizona and continue to be employed by Republic for at least two years following the closing of the merger. Republic also expects that Messrs. O’Connor, Cordesman and Holmes will be eligible to receive an integration bonus following the combined company’s achievement of a targeted level of synergies at the beginning of the third


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year following the merger. In connection with the implementation of the integration bonus plan, Republic intends to require each of Messrs. O’Connor, Cordesman and Holmes to enter into a waiver of his existing rights to terminate employment for good reason as a result of the relocation to Arizona or the combined company’s new reporting structure (and corresponding roles, responsibilities and authority) as has been contemplated in connection with the integration planning process. For more information regarding the integration bonus plan, see “The Merger — Integration Bonus” on page 92.
 
Allied Reasons for the Merger
 
In reaching its decision to approve the merger agreement and recommend that its stockholders adopt the merger agreement, the Allied board of directors considered a number of factors, including the ones discussed in the following paragraphs.
 
In arriving at its determination, the Allied board of directors consulted with Allied’s management and its financial and legal advisors and considered a number of factors, including the following material factors, which the Allied board of directors viewed as generally supporting its determination:
 
  •  all the reasons described above under “— Rationale for the Merger” beginning on page 58, 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 possible business combination, and a premium of approximately 31% to the 90-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”);


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  •  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 (the foregoing is based on the implied present values per share of Allied common stock, pro forma for the merger and including estimated net synergies, based upon the .45 shares of common stock of Republic to be issued in exchange for each share of Allied common stock in the merger, ranging from approximately $18.25 to $22.25, divided by the exchange ratio of .45);
 
  •  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.
 
In addition to the factors described above, the Allied board of directors identified and considered a variety of risks and potentially negative factors concerning the merger, including:
 
  •  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;
 
  •  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


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  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.”
 
The foregoing discussion of the material factors considered by the Allied board of directors is not intended to be exhaustive, but does set forth the principal factors considered by the Allied board of directors.
 
In light of the number and wide variety of factors considered in connection with its evaluation of the transaction, the Allied board of directors did not consider it practicable to, and did not attempt to, quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its determination. Rather, the Allied board of directors made its recommendation based on the totality of information presented to, and the investigations conducted by or at the direction of, the Allied board of directors. In addition, individual directors may have given different weight to different factors. This explanation of Allied’s reasons for the merger with Republic and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Regarding Forward-Looking Statements.”
 
Recommendations of the Allied Board of Directors
 
The Allied board of directors has unanimously determined that the merger agreement and the merger contemplated by the merger agreement are advisable and in the best interests of Allied and its stockholders. The Allied board of directors recommends that Allied stockholders vote:
 
  •  “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.
 
Certain Financial Forecasts Reviewed by the Allied Board of Directors
 
Allied does not, as a matter of course, publicly disclose forecasts or internal projections as to future performance, earnings or other results. In connection with discussions concerning the proposed transaction, the management of Allied prepared and furnished to the management of Republic certain financial forecasts for Allied. The inclusion of certain of the financial forecasts in this proxy statement/prospectus should not be regarded as an indication that Allied, or its board of directors, considered, or now considers, these forecasts to be material to a stockholder or a reliable predictor of future results. You should not place undue reliance on the financial forecasts contained in this proxy statement/prospectus. Please read carefully “ — Important Information about the Financial Forecasts” below.
 
Allied Financial Forecast
 
Allied’s management prepared and provided the following information to the Allied board of directors and UBS regarding Allied’s forecasted operating results for 2008 through 2012. The following forecast was


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based on the long-term plan Allied developed in early 2007 as part of its strategic planning, which plan (including underlying assumptions regarding revenue and EBITDA margin growth) was reviewed and discussed in detail by the Allied board of directors over several board meetings from May to July 2007. In early 2008, when the following forecast was prepared, management believed the fundamental assumptions underlying the 2007 plan, subject to minor adjustments, continued to be appropriate for purposes of evaluating long-term performance.
 
                                                 
    Fiscal Year Ended December 31,(1)     2008E-2012E  
(Dollars 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% to 5.0%;
 
  •  Annual EBITDA margins ranging from 28.1% to 30.9% of revenue; and
 
  •  Annual capital expenditures ranging from 10.4% to 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.
 
Republic Financial Forecast
 
Allied’s management provided the following information to the Allied board of directors and UBS regarding projections of Republic’s operating results for 2008 through 2012. The projections were prepared by Republic and submitted to Allied.
 
                                                 
    Fiscal Year Ended December 31,     2008E-2012E  
(Dollars in millions)
  2008E     2009E     2010E     2011E     2012E     CAGR (%)  
 
Revenue
  $ 3,284     $ 3,410     $ 3,582     $ 3,761     $ 3,950       4.7 %
EBITDA
    937       1,010       1,086       1,155       1,233       7.1  
Depreciation and Amortization
    328       333       346       360       378          
Capital Expenditures(1)
    (345 )     (368 )     (339 )     (374 )     (361 )        
 
 
(1) The capital expenditures presented include expected annual cash expenditures for environmental remediation associated with Republic’s Countywide landfill of $17 million and $17 million in 2008 and 2009, respectively.
 
Use of Financial Forecasts
 
Allied used the foregoing financial forecasts, plus Allied’s estimate of net synergies to be realized from the merger, to arrive at an implied present value of Republic pro forma for the merger. See “— Allied Reasons for the Merger.”
 
Two financial forecasts were prepared by the management of Republic and provided to UBS. The first Republic financial forecast was provided to Allied on April 18, 2008 in response to Allied’s request for a forecast to use in its valuation analysis. This forecast is reflected above and is the forecast used by UBS (at the direction of Allied management). The second financial forecast was provided to Allied on or about June 4, 2008. The Republic financial forecast used by UBS for purposes of its opinion differs from the second Republic financial forecast provided to Allied as the second Republic financial forecast assumed lower long-term annual revenue growth and EBITDA margins.


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Allied management selected the first financial forecast provided by Republic because it is consistent with Allied’s internal views regarding long-term expected industry and company performance based on factors such as inflation, waste volumes and pricing, and because the second financial forecast provided by Republic was extrapolated from the three-year forecast used by Republic primarily for purposes of its long-term incentive compensation plan. Allied’s due diligence investigation of Republic did not give Allied reason to select or use the second financial forecast provided by Republic. Allied’s management presented to the Allied board of directors only the first financial forecast provided by Republic, which was consistent, in terms of revenue and EBITDA margin growth, with Allied’s own forecast and Allied’s long-term plan developed and reviewed by the Allied board of directors in early 2007.
 
Important Information about the Financial Forecasts
 
While the financial forecasts summarized above were prepared in good faith, no assurance can be made regarding future events. The estimates and assumptions underlying the financial forecasts involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described in “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are beyond the control of Allied and will be beyond the control of the combined company. There can be no assurance that the underlying assumptions will prove to be accurate or that the projected results will be realized, and actual results likely will differ, and may differ materially, from those presented in the financial forecasts, even if the merger is not completed. Such financial forecasts cannot, therefore, be considered a reliable predictor of future operating results and this information should not be relied on as such.
 
The financial forecasts summarized in this section were prepared solely for internal use and not with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements or GAAP. In the view of Allied’s management, the financial forecasts prepared by Allied were prepared on a reasonable basis. However, the financial forecasts are not fact and should not be relied upon as being necessarily indicative of future results, and readers of this joint proxy statement/prospectus are cautioned not to place undue reliance on this information. None of the financial forecasts reflect any impact of the proposed merger.
 
The Allied financial forecasts included in this joint proxy statement/prospectus were prepared by and are the responsibility of the management of Allied. Neither PricewaterhouseCoopers LLP nor Ernst & Young LLP has examined, compiled or otherwise performed any procedures with respect to the prospective financial information contained in these financial forecasts and, accordingly, neither PricewaterhouseCoopers LLP nor Ernst & Young LLP has expressed any opinion or given any other form of assurance with respect thereto and they assume no responsibility for the prospective financial information. The PricewaterhouseCoopers LLP reports incorporated by reference in this joint proxy statement/prospectus relate to Allied’s historical financial information. They do not extend to the financial forecasts and should not be read to do so. The Ernst & Young LLP report incorporated by reference in this joint proxy statement/prospectus relates to Republic’s historical financial information. It does not extend to financial forecasts and should not be read to do so.
 
By including in this joint proxy statement/prospectus a summary of certain Allied financial forecasts, neither Allied nor any of its respective representatives has made or makes any representation to any person regarding the ultimate performance of Allied compared to the information contained in the financial forecasts. The financial forecasts were prepared in June of 2008 and have not been updated to reflect any changes since that date. Neither Allied nor, following the merger, the combined company undertakes any obligation, except as required by law, to update or otherwise revise the financial forecasts or financial information to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.


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The summary of the financial forecasts is not included in this joint proxy statement/prospectus in order to induce any stockholder to vote in favor of any of the proposals to be voted on at the Allied special meeting, as described in this joint proxy statement/prospectus.
 
Opinion of Financial Advisor to the Allied Board of Directors
 
On June 19, 2007, the Allied board of directors engaged UBS to act as its financial advisor in connection with the evaluation of strategic opportunities. On June 22, 2008, at a meeting of the Allied board of directors held to evaluate the proposed merger, UBS delivered to the Allied board of directors an oral opinion, which opinion was confirmed by delivery of a written opinion dated June 22, 2008, to the effect that, as of that date and based on and subject to various assumptions, matters considered and limitations described in its opinion, the exchange ratio provided for in the merger was fair, from a financial point of view, to the holders of Allied common stock.
 
The full text of the opinion of UBS describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken by UBS. This opinion is attached as Annex D and is incorporated into this joint proxy statement/prospectus by reference. UBS’ opinion was provided for the benefit of the Allied board of directors in connection with, and for the purpose of, its evaluation of the exchange ratio and did not address any other aspect of the merger. The opinion did not address the relative merits of the merger as compared to other business strategies or transactions that might be available with respect to Allied or Allied’s underlying business decision to effect the merger. The opinion does not constitute a recommendation to any shareholder as to how such shareholder should vote or act with respect to the merger. Holders of Allied common stock are encouraged to read the opinion carefully in its entirety. The following summary of UBS’ opinion is qualified in its entirety by reference to the full text of UBS’ opinion.
 
In arriving at its opinion, UBS, among other things:
 
  •  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 the Allied 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 the Allied 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 the Republic 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 the Republic 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 the Allied 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;


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  •  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.
 
In connection with its review, with the consent of the Allied board of directors, UBS assumed and relied upon, without independent verification, the accuracy and completeness in all material respects of the information provided to or reviewed by UBS for the purpose of its opinion. In addition, with the consent of the Allied board of directors, UBS did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of Allied or Republic, nor was UBS furnished with any such evaluation or appraisal. With respect to the financial forecasts, estimates, synergies and pro forma effects referred to above, UBS assumed, at the direction of the Allied board of directors, that such forecasts, estimates, synergies and pro forma effects had been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of each of Allied and Republic as to the future financial performance of their respective companies and such synergies and pro forma effects. In addition, UBS assumed, with the approval of the Allied board of directors, that the financial forecasts and estimates, including synergies, referred to above would be achieved at the times and in the amounts projected. UBS also assumed, with the consent of the Allied board of directors, that the merger would qualify for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended. UBS’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to UBS as of, the date of its opinion.
 
At the direction of the Allied board of directors, UBS was not asked to, and it did not, offer any opinion as to the terms, other than the exchange ratio to the extent expressly specified in UBS’ opinion, of the merger agreement or the form of the merger. In addition, UBS expressed no opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the merger, or any class of such persons, relative to the exchange ratio. UBS expressed no opinion as to what the value of Republic common stock would be when issued pursuant to the merger or the prices at which Republic common stock or Allied common stock would trade at any time. In rendering its opinion, UBS assumed, with the consent of the Allied board of directors, that (i) Republic and Allied would comply with all material terms of the merger agreement and (ii) the merger would be consummated in accordance with the terms of the merger agreement without any adverse waiver or amendment of any material term or condition of the merger agreement. UBS also assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger would be obtained without any material adverse effect on Allied, Republic, or the merger. Except as described above, Allied imposed no other instructions or limitations on UBS with respect to the investigations made or the procedures followed by UBS in rendering its opinion. The issuance of UBS’ opinion was approved by an authorized committee of UBS.
 
In connection with rendering its opinion to the Allied board of directors, UBS performed a variety of financial and comparative analyses which are summarized below. The following is not a complete description of all analyses performed and factors considered by UBS in connection with its opinion. The preparation of a fairness opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. With respect to the selected companies analysis summarized below, no company used as a comparison was identical to Allied, Republic or Republic pro forma for the merger. These analyses necessarily involved complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading values of the companies concerned.
 
UBS believes that its analyses and the summary below must be considered as a whole and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete


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view of the processes underlying UBS’ analyses and opinion. UBS did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole.
 
The estimates of the future performance of Allied, Republic, and Republic pro forma for the merger in or underlying UBS’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than those estimates. In performing its analysis, UBS considered industry performance, general business and economic conditions and other matters, many of which are beyond Allied’s or Republic’s control. Estimates of the financial value of companies do not purport to be appraisals or necessarily reflect the prices at which companies may actually be sold.
 
The exchange ratio was determined through negotiations between Allied and Republic and the decision of the Allied board of directors to enter into and approve the merger agreement was solely that of the Allied board of directors. UBS’ opinion and financial analyses were only one of many factors considered by the Allied board of directors in its evaluation of the merger and should not be viewed as determinative of the views of the Allied board of directors or management with respect to the merger or the exchange ratio.
 
The following is a brief summary of the material financial analyses performed by UBS and reviewed with the Allied board of directors on June 22, 2008, in connection with UBS’ opinion relating to the proposed merger. Portions of the summaries of the financial analyses include information presented in tabular format. In order to fully understand UBS’ financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of UBS’ financial analyses.
 
Historical Trading Ratio Analysis.  For perspective on the relative prices at which Allied’s common stock and Republic’s common stock have historically traded, UBS reviewed the ratio of the average daily closing prices per share of Allied common stock to the average daily closing prices per share of Republic common stock for the twelve month period ended June 12, 2008, the last trading day before the day on which Republic and Allied confirmed that they were involved in discussions regarding a possible business combination, as well as the ratio of the average daily closing prices per share of Allied common stock to the average daily closing prices per share of Republic common stock for each of the other periods set forth in the table below, each such period ended June 12, 2008. UBS noted that, as of June 12, 2008, the ratio of the closing price per share of Allied common stock to the closing price per share of Republic common stock was .4135. UBS calculated illustrative implied trading ratios by dividing the average daily closing prices per share of Allied common stock by the average daily closing prices per share of Republic common stock for each such period. UBS compared the results of this analysis to the exchange ratio of .45 shares of Republic common stock per share of Allied common stock provided for in the merger.
 
The following table presents the results of this analysis as of June 12, 2008.
 
         
    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  
 
Summary Contribution Analysis.  To compare the relative contribution of Allied to Republic pro forma for the merger, based on the various financial metrics described below, to the percentage of the common stock


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of Republic pro forma for the merger to be received by holders of Allied common stock as a result of the merger, UBS performed the levered and unlevered contribution analyses described below.
 
Levered Analysis.  UBS performed an analysis of the relative contributions from each of Allied and Republic to the pro forma combined company, both including and excluding the synergies estimated by the management of Allied to result from the merger, with respect to selected levered financial metrics that can be assessed relative to implied equity value. For this analysis, UBS reviewed the relative contributions of Allied and Republic to the pro forma combined company, both including and excluding estimated synergies, with respect to net income for the twelve month period ended March 31, 2008, and with respect to estimated net income for 2008. UBS used the internal estimates referred to above for the net income of each of Allied and Republic and for the synergies expected to result from the merger. UBS compared the results of this analysis to the expected 51.7% ownership by Allied stockholders of the common stock of Republic pro forma for the merger.
 
Unlevered Analysis.  In addition, UBS performed an analysis of the relative contributions from each of Allied and Republic to the pro forma combined company, both including and excluding the synergies estimated by the management of Allied to result from the merger, with respect to selected unlevered financial metrics that can be assessed relative to implied enterprise value. For this analysis, UBS calculated the implied enterprise value of Allied as the sum of (i) the implied equity value of Allied pro forma for the merger (calculated as (a) the number of diluted shares outstanding of Allied as of March 31, 2008, based on the treasury stock method for stock options and including restricted stock units as though fully vested, multiplied by (b) the implied closing price of Allied common stock on June 12, 2008, of $15.15 per share, which is referred to in this summary as the “Offer Value” and equals the closing price per share of Republic common stock on June 12, 2008 of $33.66 multiplied by the exchange ratio of .45 shares of Republic common stock per share of Allied common stock provided for in the merger), (ii) the book value of the debt (net of cash) and minority interests of Allied as of March 31, 2008, and (iii) the estimated book value of a one-time special tax payment, net of benefits, expected by the management of Allied to be incurred in the last quarter of 2008, as estimated by the management of Allied and that the Allied board of directors directed UBS to utilize for the purposes of its analyses. UBS calculated the implied enterprise value of Republic as the sum of (i) the implied equity value of Republic (calculated as (a) the number of diluted shares outstanding of Republic as of March 31, 2008, based on the treasury stock method for stock options, multiplied by (b) the closing price per share of Republic common stock on June 12, 2008) and (ii) the book value of the debt (net of cash) and minority interests of Republic as of March 31, 2008. UBS then reviewed the relative contributions of Allied and Republic to the pro forma combined company, both including and excluding estimated synergies, with respect to earnings before interest, taxes, depreciation and amortization, commonly referred to as EBITDA, for the twelve month period ended March 31, 2008, and with respect to estimated EBITDA for 2008. UBS used the internal estimates referred to above for the EBITDA of each of Allied and Republic and for the synergies expected to result from the merger. UBS compared the results of this analysis to the expected 63.0% of the implied enterprise value of Republic pro forma for the merger ascribable to Allied.


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The table below presents the results of the contribution analyses:
 
                         
    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  
 
Selected Public Companies Analysis.  UBS compared selected financial and stock market data of Allied and Republic with corresponding data of the selected publicly traded waste management companies identified in the table below. UBS reviewed, among other things, the enterprise values of the selected companies (calculated as the market value of equity, plus the book value of debt and minority interests, plus preferred stock, if any, at liquidation value, less cash) as multiples of EBITDA for the twelve month period ended March 31, 2008, and of estimated EBITDA for each of 2008 and 2009. UBS also reviewed the closing stock prices, as of June 12, 2008, of the selected companies as a multiple of earnings per share, commonly referred to as EPS, as estimated for each of 2008 and 2009. UBS then compared these multiples for the selected companies with corresponding multiples for each of Republic, Allied, and Allied assuming an implied stock price at Offer Value, using both (i) publicly available research analysts’ estimates and (ii) the internal estimates for each of Allied and Republic referred to above. Financial data for the selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information. Equity market value and multiples for Allied, Republic and the selected companies were based on the closing price of the common stock of each company on June 12, 2008 (or the Offer Value of Allied, as applicable), and on the number of diluted shares of common stock outstanding for each company using the treasury stock method for stock options and, in the case of Allied only, including restricted stock units as though fully vested.


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This analysis indicated the following implied multiples for the selected companies, as compared to corresponding multiples implied for Republic, Allied, and Allied at Offer Value:
 
                                         
          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  
 
Discounted Cash Flow Analysis.  UBS analyzed the potential difference between the range of implied present values per share of Allied common stock without giving effect to the merger and the range of implied present values per .45 shares of the common stock of Republic pro forma for the merger to be issued in exchange for each share of Allied common stock in the merger, in each instance based on a discounted cash flow analysis. In connection with this analysis, UBS first performed a discounted cash flow analysis of Allied without giving effect to the merger, using the financial forecasts for Allied referred to above for the last two quarters of 2008 and for 2009 through 2012. UBS then performed a discounted cash flow analysis of Republic pro forma for the merger and including estimated net synergies (equivalent to estimated synergies, net of severance, transition and integration costs and other costs associated with the merger) expected to result from the merger, using the estimates of net synergies expected to result from the merger and the financial forecasts for each of Allied and Republic, as applicable, for the last two quarters of 2008 and for 2009 through 2012, each as referred to above.
 
Allied Without Giving Effect to the Merger.  UBS performed a discounted cash flow analysis of Allied using the financial forecasts for Allied described above for the last two quarters of 2008 and for 2009 through 2012. UBS calculated a range of implied present values as of June 30, 2008, of the standalone unlevered after-tax free cash flows that Allied was forecasted to generate for the last two quarters of 2008 and for 2009 through 2012 using discount rates ranging from 8.0% to 9.0%. UBS derived the discount rate range of 8.0% to 9.0% for such discounted cash flow analysis by calculating a weighted average cost of capital (“WACC”) range for Allied. The WACC analysis relied on weightings of the cost of equity and the after-tax cost of debt derived from UBS’ internal analysis and publicly available information. UBS calculated a range of implied terminal values for Allied as of December 31, 2012 by applying a range of EBITDA multiples ranging from 7.0x to 8.0x to Allied’s 2012 estimated EBITDA. The implied terminal values were then discounted to present values as of June 30, 2008, using discount rates ranging from 8.0% to 9.0%. This discounted cash flow analysis resulted in a range of implied present values of approximately $16.50 to $21.25 per share of Allied common stock.
 
Pro Forma for the Merger and Including Estimated Net Synergies.  UBS performed a discounted cash flow analysis of Republic pro forma for the merger and including estimated net synergies expected to result from the merger. For this analysis, UBS aggregated the financial forecasts described above for each of Allied and Republic for the last two quarters of 2008 and for 2009 through 2012, and included estimated net


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synergies described above through 2012. UBS calculated a range of implied present values, as of June 30, 2008, of the standalone unlevered after-tax free cash flows that Republic, pro forma for the merger and including estimated net synergies, was forecasted to generate for the last two quarters of 2008 and for 2009 through 2012 using discount rates ranging from 8.0% to 9.0%. UBS derived the discount rate of 8.0% to 9.0% for such discounted cash flow analysis by calculating a WACC range for Republic, proforma for the merger and including estimated net synergies. The WACC analysis relied on weightings of the cost of equity and the after-tax cost of debt derived from UBS’ internal analysis and publicly available information. UBS calculated a range of implied terminal values for Republic, pro forma for the merger and including estimated net synergies, as of December 31, 2012 by applying a range of EBITDA multiples ranging from 7.5x to 8.5x to estimated EBITDA for 2012 of Republic, pro forma for the merger and including estimated net synergies. The implied terminal values were then discounted to present values as of June 30, 2008, using discount rates ranging from 8.0% to 9.0%. This discounted cash flow analysis resulted in a range of implied present values, per share of Allied common stock, pro forma for the merger and including estimated net synergies, based upon the .45 shares of common stock of Republic to be issued in exchange for each share of Allied common stock in the merger, ranging from approximately $18.25 to $22.25.
 
Based on the foregoing analyses, UBS then calculated the percentage increase between (i) the implied present value per share of Allied common stock without giving effect to the merger and (ii) the implied present value per share of Allied common stock, pro forma for the merger and including estimated net synergies, based upon the .45 shares of common stock of Republic to be issued in the merger in exchange for each share of Allied common stock. UBS observed that such percentage increase ranged from approximately 5% (when comparing the implied present value per share of Allied common stock based on a discount rate of 8.0% and a terminal value multiple of 8.0x to the implied present value per share of Allied common stock, pro forma for the merger and including estimated net synergies, based on a discount rate of 8.0% and a terminal value multiple of 8.5x) to 10% (when comparing the implied present value per share of Allied common stock based on a discount rate of 9.0% and a terminal value multiple of 7.0x to the implied present value per share of Allied common stock, pro forma for the merger and including estimated net synergies, based on a discount rate of 9.0% and a terminal value multiple of 7.5x).
 
Miscellaneous.  Under the terms of UBS’ engagement, Allied has agreed to pay UBS for its financial advisory services in connection with the merger an aggregate fee currently estimated to be approximately $27.5 million, a portion of which is payable to Moelis & Company. In addition, a portion of the aggregate fee ($2.5 million) was payable in connection with UBS’ opinion, a portion of the aggregate fee ($2.0 million) was payable in connection with the announcement of the merger and the remainder of the fee ($23.0 million) is contingent upon consummation of the merger. In addition, Allied has agreed to reimburse UBS for its reasonable expenses, including fees, disbursements and other charges of its counsel, and to indemnify UBS and related parties against liabilities, including liabilities under the federal securities laws, relating to, or arising out of, its engagement. In the past, UBS and its affiliates have provided investment banking services to Allied unrelated to the merger, for which UBS and its affiliates received compensation of approximately $8.0 million in the aggregate, including having acted as (i) joint book runner in connection with Allied’s May 2006 notes offering; (ii) sole underwriter in connection with Allied’s November 2006 equity offering; (iii) joint book runner in connection with Allied’s February 2007 notes offering; and (iv) co-documentation agent in connection with Allied’s March 2007 $3.175 billion amended and restated credit facility. As of the date of UBS’ opinion, an affiliate of UBS was a participant in a credit facility of Allied for which such affiliate received fees and interest payments. In the ordinary course of business, UBS and its affiliates may hold or trade, for their own accounts and the accounts of their customers, securities of Allied and Republic and, accordingly, may at any time hold a long or short position in such securities. Allied selected UBS as its financial advisor in connection with the merger because UBS is an internationally recognized investment banking firm with substantial experience in similar transactions and because of UBS’ familiarity with Allied and its business. UBS is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities and private placements.


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Interests of Allied Executive Officers and Directors in the Merger
 
In considering the recommendation of the Allied board of directors with respect to the merger, Allied stockholders should be aware that executive officers of Allied and members of the Allied board of directors may have interests in the transactions contemplated by the merger agreement that may be different from, or in addition to, the interests of Allied stockholders generally. The Allied board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and making its recommendation. These interests are summarized below.
 
Appointment of Directors and Executive Officers
 
When the merger is completed, certain current members of the Allied board of directors will be appointed to the Republic board of directors and to certain committees of the Republic board of directors. In addition, certain executive officers of Allied have been selected to serve as management of Republic. More information regarding the directors and executive officers who have been selected is set forth in “— Board of Directors and Executive Officers of Republic Following the Merger; Headquarters” on page 92.
 
Treatment of Stock Options and Other Equity-Based Awards
 
Allied’s executive officers hold options to purchase Allied common stock, shares of restricted Allied common stock and Allied restricted and deferred stock units issued under Allied’s Amended and Restated 2006 Incentive Stock Plan (which is the successor to the Amended and Restated 1991 Incentive Stock Plan). Under that plan all outstanding unvested options to purchase shares of Allied common stock, unvested shares of restricted stock and unvested deferred or restricted stock units, including those held by executive officers of Allied, will vest automatically at the effective time of the merger.
 
The following table sets forth, for each executive officer of Allied, as of June 22, 2008, the aggregate number of shares subject to unvested options to purchase shares of Allied common stock (and their weighted average exercise price), the number of unvested shares of restricted Allied common stock and the number of unvested Allied deferred or restricted stock units.
 
                                 
                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.
 
Allied’s non-employee directors hold options to purchase Allied common stock and shares of restricted Allied common stock issued pursuant to the 2005 Non-Employee Director Equity Compensation Plan (which is the successor to the 1994 Amended and Restated Non-Employee Director Stock Option Plan). All of the outstanding options to purchase Allied stock are fully vested and, if unexercised as of the effective time of the merger, will be converted into options to purchase Republic common stock as described below. Pursuant to this plan, restricted stock held by a non-employee director that is unvested immediately prior to the effective time of the merger will be treated as follows: (i) for directors who will become directors of Republic, the restricted stock will be converted into shares of Republic restricted stock subject to the original vesting schedule of the award; and (ii) for directors who will not become directors of Republic, the restricted stock


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will vest and be cancelled immediately prior to the effective time of the merger and the directors will receive in cash the fair market value of their award at the effective time of the merger.
 
The following table sets forth, as of June 22, 2008, the number of unvested restricted shares of Allied common stock held by Allied’s non-employee directors:
 
         
    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.
 
Under the terms of the merger agreement:
 
  •  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.
 
For a more complete description of the treatment of Allied options, shares of restricted stock and deferred and restricted stock units, see “The Merger Agreement — Allied Stock Options, Other Equity-Based Awards and Convertible Debentures.”
 
Employment Agreements
 
Allied previously entered into employment agreements with each of its executive officers, which provide for certain payments and other benefits if an executive officer’s employment with Allied is terminated by Allied without “cause” or by the executive for “good reason” under circumstances specified in his respective agreement, including a “change in control” of Allied (as defined in the agreement). The merger will constitute a “change in control” for purposes of these agreements. On June 22, 2008, Allied’s Management Development / Compensation Committee approved revisions to these agreements. As a result, the executive officers


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(other than Mr. Slager, who has yet to execute his agreement) have entered into new amended and restated agreements which:
 
  •  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 the conviction of (or plea of guilty or nolo contendere to) 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 tax gross-up provisions therein to (a) eliminate a requirement that Allied’s share price attain a threshold for the tax gross-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 the gross-up payment; and (c) provide for an excise tax gross-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.
 
The new agreements also revise the Supplemental Retirement Benefit provisions contained in the prior agreements to provide for the following:
 
  •  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


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  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 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.
 
Under the amended and restated employment agreements, each of Allied’s executive officers (other than Mr. Slager, who has yet to execute his agreement) will be entitled to the following payments if the executive’s employment agreement is terminated by the executive for “good reason” or by Allied “without cause” within the six months preceding or the twelve months following the effective time of the merger, unless otherwise noted:
 
  •  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.
 
In addition to the amounts described above, the executive is also entitled to:
 
  •  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;


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  •  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 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.