SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): AUGUST 29, 1996
COACH USA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-28056 76-0496471
(State of Incorporation) (Commission File (I.R.S. Employer
Number) Identification No.)
ONE RIVERWAY, SUITE 600
HOUSTON, TEXAS 77056-1903
TELEPHONE NUMBER: (713) 888-0104
(Address and phone number of principal executive office)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 29, 1996, Coach USA, Inc. (the "Registrant") acquired in six
separate transactions all of the issued and outstanding capital stock of each of
(i) American Bus Lines, Inc. and affiliates, LND, Inc. and Transportation
Contractors, Inc. (collectively, "ABL"), (ii) Gulf Coast Transportation Company
and affiliates ("Gulf Coast"), (iii) Yellow Cab Service Corporation and
affiliates ("Yellow Cab"); (iv) California Charter, Inc. ("CCI"), (v) Texas Bus
Lines, Inc. ("TBL") and (vi) K-T Contract Services, Inc. ("K-T"), all of which
are herein collectively referred to as the "Acquired Businesses." Total
consideration for the acquisitions consisted of 2,555,820 shares of the
Registrant's common stock, cash of $14.5 million and $22.5 million of 5.0%
subordinated notes convertible into the Registrant's common stock. The
consideration was determined through negotiations between the Registrant and
representatives of the Acquired Businesses. For financial accounting purposes,
the acquisitions of ABL, Gulf Coast and Yellow Cab will be accounted for under
the "pooling-of-interests" method, and the acquisitions of CCI, TBL and K-T will
be accounted for under the purchase method.
ABL, Gulf Coast, CCI, TBL and K-T provide motorcoach charter and tour as
well as sightseeing and airport-related ground passenger transportation
services. ABL operates out of Miami, Florida. Gulf Coast and TBL operate in and
around Houston, Texas. CCI is based in Long Beach, California and K-T is based
in Las Vegas, Nevada. Yellow Cab provides taxicab services to independent
contractors that operate vehicles under Yellow Cab's various trade names. Yellow
Cab has operations in and around Austin and Houston, Texas and Colorado Springs,
Colorado.
Immediately prior to the acquisitions, all of the issued and outstanding
shares of capital stock of the Acquired Businesses was owned by the individual
stockholders of the Acquired Businesses. The Registrant is unaware of any
pre-existing material relationships between such stockholders and the Registrant
or any of the Registrant's affiliates, directors or officers or any associate of
such directors or officers.
ITEM 5. OTHER EVENTS
On August 14, 1996, the Registrant entered into a three-year revolving
credit facility with eight banks. The credit agreement provides that the
Registrant may borrow up to $115 million from time to time under the facility,
subject to certain customary borrowing capacity requirements. The interest rate
applicable to borrowings under the facility is presently the London Interbank
Offering Rate ("LIBOR") plus 1.75%, with the rate varying as the Registrant's
level of funded debt varies relative to its cash flow. A commitment fee is
payable on the unused portion of the facility.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
The Registrant believes that it is impractical to provide
financial statements of the Acquired Businesses on the date of this
filing, and will, if required, file such financial statements when
available but not later than 60 days after the date on which this
Current Report on Form 8-K must be filed.
(B) PRO FORMA FINANCIAL INFORMATION
The Registrant believes that it is impractical to provide pro
forma financial information reflecting the Registrant's
acquisitions, and the Registrant will, if required, file such
financial information when available but not later than 60 days
after the date on which this Current Report on Form 8-K must be
filed.
(C) EXHIBITS.
2.1 Agreement and Plan of Reorganization dated as of August 29,
1996 by and among Coach USA, Inc., Coach I Acquisition, Inc.,
Coach II Acquisition, Inc., Coach III Acquisition, Inc.,
American Bus Lines, Inc., LND, Inc., Transportation
Contractors, Inc., Louis R. Cicerone, Norton M. Segal and
David Leblang.
2.2 Agreement and Plan of Reorganization dated as of August 29,
1996 by and among Coach USA, Inc., Coach IV Acquisition, Inc.,
Gulf Coast Transportation Company, Rogers Investments, Ltd.
and Lanny Rogers.
2.3 Agreement and Plan of Reorganization dated as of August 29,
1996 by and among Coach USA, Inc., Coach V Acquisition, Inc.,
Yellow Cab Service Corporation, George D. Kamins, Joseph M.
Chernow and Equus II Incorporated.
2.4 Stock Purchase Agreement dated as of August 29, 1996 by and
among Coach USA, Inc., California Charter, Inc., Scott Keller
and Fred Kaiser.
2.5 Stock Purchase Agreement dated as of August 29, 1996 by and
among Coach USA, Inc., Texas Bus Lines, Inc. and Scott Keller.
2.6 Stock Purchase Agreement dated as of August 29, 1996 by and
among Coach USA, Inc., K-T Contract Services, Inc., Kerrville
Bus Company, Inc. and Fred Kaiser.
99.1 Credit Agreement dated as of August 14, 1996 among Coach USA,
Inc. as Borrower, The Financial Institutions Named Therein as
Banks and NationsBank of Texas, N.A., as Agent for the Banks,
providing for a $115,000,000 revolving credit facility.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COACH USA, INC.
Dated: September 13, 1996 By: LAWRENCE K. KING
Lawrence K. King
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
4
EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF THE 29TH DAY OF AUGUST, 1996
BY AND AMONG
COACH USA, INC.,
COACH I ACQUISITION, INC.,
COACH II ACQUISITION, INC.,
COACH III ACQUISITION, INC.,
AMERICAN BUS LINES, INC.,
LND, INC,
TRANSPORTATION CONTRACTORS, INC.,
LOUIS R. CICERONE,
NORTON M. SEGAL, TRUSTEE AND
DAVID LEBLANG
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER
SECTION 1.2 EFFECTIVE TIME OF THE MERGER
SECTION 1.3 ARTICLES OF INCORPORATION, BY-LAWS AND BOARD OF
DIRECTORS OF SURVIVING CORPORATION
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 CONVERSION OF COMPANY SHARES
SECTION 2.2 CONVERSION OF NEWCO SHARES
SECTION 2.3 EXCHANGE OF CERTIFICATES
SECTION 2.4 CLOSING
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
SECTION 3.1 DUE ORGANIZATION
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 3.3 CAPITALIZATION
SECTION 3.4 POOLING-OF-INTERESTS ACCOUNTING
SECTION 3.5 SUBSIDIARIES
SECTION 3.6 FINANCIAL STATEMENTS
SECTION 3.7 LIABILITIES AND OBLIGATIONS
SECTION 3.8 ACCOUNTS AND NOTES RECEIVABLE
SECTION 3.9 ASSETS
SECTION 3.10 MATERIAL CUSTOMERS AND CONTRACTS
SECTION 3.11 PERMITS
SECTION 3.12 ENVIRONMENTAL MATTERS
SECTION 3.13 LABOR AND EMPLOYEE RELATIONS
SECTION 3.14 INSURANCE
SECTION 3.15 COMPENSATION; EMPLOYMENT AGREEMENTS
SECTION 3.16 EMPLOYEE BENEFIT PLANS
SECTION 3.17 LITIGATION AND COMPLIANCE WITH LAW
SECTION 3.18 TAXES
SECTION 3.19 ABSENCE OF CHANGES
SECTION 3.20 ACCOUNTS WITH BANKS AND BROKERAGES;
POWERS OF ATTORNEY
SECTION 3.21 ABSENCE OF CERTAIN BUSINESS PRACTICES
SECTION 3.22 COMPETING LINES OF BUSINESS;
RELATED-PARTY TRANSACTIONS
SECTION 3.23 INTANGIBLE PROPERTY
SECTION 3.24 DISCLOSURE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
SECTION 4.1 ORGANIZATION
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 4.3 COACH COMMON STOCK
SECTION 4.4 SEC FILINGS; DISCLOSURE
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 RELEASE FROM GUARANTEES
SECTION 5.2 FUTURE COOPERATION; TAX MATTERS
SECTION 5.3 EXPENSES
SECTION 5.4 EMPLOYMENT AGREEMENT(S)
SECTION 5.5 REPAYMENT OF RELATED PARTY INDEBTEDNESS
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS
SECTION 6.2 INDEMNIFICATION BY COACH
SECTION 6.3 THIRD PERSON CLAIMS
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES
SECTION 7.2 EQUITABLE RELIEF
SECTION 7.3 REASONABLE RESTRAINT
SECTION 7.4 SEVERABILITY; REFORMATION
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL
SECTION 8.2 EQUITABLE RELIEF
SECTION 8.3 SURVIVAL
ARTICLE IX
TRANSFER RESTRICTIONS RELATED TO POOLING-OF-INTERESTS
ACCOUNTING AND INTENDED TAX TREATMENT
SECTION 9.1 RESTRICTIONS ON RESALE
SECTION 9.2 TAX-FREE REORGANIZATION
ARTICLE X
REGISTRATION OF COACH STOCK; FEDERAL SECURITIES ACT
SECTION 10.1 REGISTRATION OBLIGATION
SECTION 10.2 FURNISH INFORMATION
SECTION 10.3 EXPENSES OF REGISTRATION
SECTION 10.4 FURTHER ASSURANCES
SECTION 10.5 RULE 144
SECTION 10.6 ECONOMIC RISK; SOPHISTICATION
SECTION 10.7 SALES OF STOCK
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUCCESSORS AND ASSIGNS
SECTION 11.2 ENTIRE AGREEMENT
SECTION 11.3 COUNTERPARTS
SECTION 11.4 BROKERS AND AGENTS
SECTION 11.5 NOTICES
SECTION 11.6 GOVERNING LAW
SECTION 11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 11.8 EXERCISE OF RIGHTS AND REMEDIES
SECTION 11.9 TIME
SECTION 11.10 REFORMATION AND SEVERABILITY
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the 29th day of August, 1996, by and among Coach USA, Inc., a Delaware
corporation ("Coach"), Coach I Acquisition, Inc., a Delaware corporation that is
a wholly-owned subsidiary of Coach ("Newco I"), Coach II Acquisition, Inc., a
Delaware corporation that is a wholly-owned subsidiary of Coach ("Newco II"),
Coach III Acquisition, Inc., a Delaware corporation that is a wholly-owned
subsidiary of Coach ("Newco III") (collectively "Newco" or "the Newcos,"
individually, in the generic, "each Newco," and otherwise as defined above),
American Bus Lines, Inc., a Florida corporation ("ABL"), LND, Inc., a Florida
corporation ("LND") and Transportation Contractors, Inc., a Florida corporation
("TCI") (collectively the "Company" or "the Companies," individually, in the
generic, "each Company," and otherwise as defined above), and Louis R. Cicerone,
Norton M. Segal, as acting Trustee of the Norton M. Segal Trust dated May 13,
1994, and David Leblang (the "Stockholders"), who are the only stockholders of
the Company.
WHEREAS, the respective Boards of Directors of the Newcos and the
Companies (collectively referred to as "Constituent Corporations") deem it
advisable and in the best interests of the Constituent Corporations and their
respective stockholders that Newcos merge with and into the Companies; and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER AND THE SURVIVING CORPORATION
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined below) in accordance with the
Florida Business Corporation Act ("FBCA") and the General Corporation Law of the
State of Delaware ("GCL"), the Newcos shall be merged with and into the
respective Companies and the separate existence of the Newcos shall thereupon
cease. The Companies shall be the surviving corporations in the mergers
(hereinafter sometimes referred to collectively as the "Surviving Corporation").
SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The merger of Newco I into ABL,
the merger of Newco II into LND and the merger of Newco III into TCI
(collectively the "Merger" or "the Mergers") shall become effective at such time
(the "Effective Time") as certificates of merger, in a form mutually acceptable
to Coach and the Company, are filed with the Secretaries of State of the States
of Florida and Delaware (the "Merger Filings"). The Merger Filings shall be made
simultaneously with or as soon as practicable after the execution of this
Agreement and the closing of the transactions contemplated by this Agreement,
and in no event more than twenty-four hours (24) following the Closing, in
accordance with Section 2.4.
SECTION 1.3 ARTICLES OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. As a result of the Merger and at the Effective Time, (i)
the Articles of Incorporation of the Companies in effect immediately prior to
the Effective Time shall become the Articles of Incorporation of the Surviving
Corporation, and thereafter may be amended in accordance with their terms and as
provided in the FBCA; (ii)the By-laws of the Companies in effect immediately
prior to the Effective Time shall become the By-laws of the Surviving
Corporation, and thereafter may be amended in accordance with their terms and as
provided by the Articles of Incorporation of the Surviving Corporation and the
FBCA; and (iii) the Board of Directors of the Companies as constituted
immediately prior to the Effective Time shall be the Board of Directors of the
Surviving Corporation.
ARTICLE II
CONVERSION OF SHARES
SECTION 2.1 CONVERSION OF COMPANY SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of any
capital stock of the Companies, each share of common stock of the Companies
issued and outstanding as of the Effective Time (the "Company Stock") shall be
converted into the right to receive, and become exchangeable for, its pro rata
interest in the aggregate consideration payable to all holders of each Company's
Stock, which shall consist of Five Hundred Sixty-Eight Thousand (568,000) shares
of common stock, par value $.01 per share, of Coach ("Coach Common Stock").
SECTION 2.2 CONVERSION OF NEWCO SHARES. At the Effective Time, by virtue
of the Merger and without any action on the part of Coach, as the sole holder of
any capital stock of each Newco, each issued and outstanding share of common
stock, par value $1.00 per share, of each Newco shall be converted into one
share of common stock of each Surviving Corporation.
SECTION 2.3 EXCHANGE OF CERTIFICATES. At the Closing, (i) the
Stockholders shall deliver to Coach the certificates representing the Company
Stock, duly endorsed in blank by the Stockholders or accompanied by signed stock
powers; and (ii) Coach shall deliver to the Stockholders certificates
representing the Coach Common Stock. The Stockholders agree promptly to cure any
deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to the Company Stock or with respect to the
stock powers accompanying the Company Stock.
SECTION 2.4 CLOSING. The consummation of the Mergers and exchange of
shares described in Section 2.3 hereof and the other transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Coach, One
Riverway, Suite 600, Houston, Texas 77056, concurrently with the execution of
this Agreement or at such other time and date as Coach, the Company and the
Stockholders may mutually agree, which date shall be referred to as the "Closing
Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
The Stockholders jointly and severally represent and warrant (other than
with respect to the representations beginning with the fourth sentence of
Section 3.4) to Coach as follows:
SECTION 3.1 DUE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and is duly authorized and qualified to do business under all applicable
laws, regulations, ordinances and orders of public authorities to carry on its
businesses in the places and in the manner as now conducted except where the
failure to be so authorized or qualified would not have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other), results of operations or prospects of the Company. Schedule 3.1 contains
a list of all jurisdictions in which the Company is authorized or qualified to
do business. True, complete and correct copies of the Articles of Incorporation
and By-laws, each as amended, of the Company are attached hereto as Schedule
3.1. The stock records and minute books of the Company that have been made
available to Coach are correct and complete.
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. The Company has
the full legal right, power and authority to enter into this Agreement and to
effect the Merger. Each Stockholder has the full legal right, power and
authority to enter into this Agreement. The execution, delivery and performance
of this Agreement have been approved by the board of directors of the Company
and by the Stockholders. No additional corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of this Agreement
and the consummation by the Company of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the Company,
and, assuming the due authorization, execution and delivery hereof by Coach and
Newco, constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.
The execution and delivery of this Agreement by the Company do not, and
the consummation by the Company of the transactions contemplated hereby will
not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
of its subsidiaries under any of the terms, conditions or provisions of (i) the
Articles of Incorporation or By-laws of the Company, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any court or governmental authority applicable to the Company or
any of its properties or assets, or (iii) any agreement, note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, lease or other
instrument, obligation or agreement of any kind to which the Company is now a
party or by which the Company or any of its properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. Except for the Merger Filings and any required filings
with or approvals from the Surface Transportation Board ("STB") and state and
Metropolitan Dade County and Broward County transportation authorities, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. Except as set forth on Schedule 3.2, none of the
customer contracts or other material agreements to which the Company is a party
requires notice to, or the consent or approval of, any governmental agency or
other third party to any of the transactions contemplated hereby to remain in
full force and effect following such transactions.
SECTION 3.3 CAPITALIZATION. The authorized capital stock of ABL consists
solely of 1,000 shares of common stock, par value $1.00 per share, of which 600
shares are issued and outstanding. The authorized capital stock of LND consists
solely of 100 shares of common stock, par value $1.00 per share, of which 100
shares are issued and outstanding. The authorized capital stock of TCI consists
solely of 100 shares of common stock, par value $1.00 per share, of which 100
shares are issued and outstanding. All of the issued and outstanding shares of
the Company Stock are owned beneficially and of record by the Stockholders as
set forth on Schedule 3.3. All of the issued and outstanding shares of the
Company Stock have been duly authorized and validly issued, are fully paid and
nonassessable, and were offered, issued, sold and delivered by the Company in
compliance with all applicable state and federal laws concerning the issuance of
securities. None of such shares were issued in violation of the preemptive
rights of any past or present stockholder. The exchange of the Company Stock for
Coach Common Stock pursuant to the mergers will transfer to Coach valid title in
the shares of the Company Stock owned by the Stockholders, free and clear of all
liens, encumbrances and claims of every kind except for those created by Coach.
Except as set forth in Schedule 3.3, no subscription, option, warrant, call,
convertible or exchangeable security, other conversion right or commitment of
any kind exists which obligates the Company to issue any of its capital stock or
the Stockholders to transfer any of the Company Stock.
SECTION 3.4 POOLING-OF-INTERESTS ACCOUNTING. The Company has never been
a subsidiary or division of another corporation or a part of an acquisition
which was later rescinded and, within the past two years, there has not been any
sale or spin-off of a significant amount of assets of the Company or any
affiliate of the Company other than in the ordinary course of business. Except
as set forth on Schedule 3.4, the Company owns no capital stock of Coach. The
Company has not acquired any of its capital stock during the past two years.
Except as set forth on Schedule 3.4, the Company has no obligation (contingent
or otherwise) to purchase, redeem or otherwise acquire any of the Company Stock
or any interest therein or to pay any dividend or make any distribution in
respect thereof. Neither the voting stock structure of the Company nor the
relative ownership of shares among any of the Company's stockholders has been
altered or changed within the last two years in contemplation of the Merger.
Except as set forth in Schedule 3.4, none of the shares of Company Stock was
issued pursuant to awards, grants or bonuses. To the knowledge of the
Stockholders, there has been no transaction or action taken with respect to the
equity ownership of the Company in contemplation of the Merger which would
prevent Coach from accounting for the Merger under the pooling-of-interests
method of accounting in accordance with Opinion No. 16 of the Accounting
Principles Board ("Opinion No. 16"). If required, the Stockholders and the
President or Chief Financial Officer of the Company will execute any
documentation reasonably required by Coach's independent public accountants to
enable Coach to account for the Merger as a pooling-of-interests.
SECTION 3.5 SUBSIDIARIES. Except as set forth in Schedule 3.5, the
Company does not presently own, of record or beneficially, or control, directly
or indirectly, any capital stock, securities convertible into or exchangeable
for capital stock or any other equity interest in any corporation, association
or business entity. Except as set forth in Schedule 3.5, the Company is not,
directly or indirectly, a participant in any joint venture, partnership or other
noncorporate entity.
SECTION 3.6 FINANCIAL STATEMENTS. The Stockholders have delivered to
Coach complete and correct copies of the following financial statements:
(i) the balance sheets of the Company as of October 31, 1995,
1994 and 1993 and the related statements of operations, of stockholder's
equity and of cash flows for the three-year period ended October 31,
1995, together with the related notes and schedules (such balance
sheets, the related statements of operations, of stockholder's equity
and of cash flows and the related notes and schedules are referred to
herein as the "Year-end Financial Statements"); and
(ii) the balance sheet of the Company as of June 30, 1996 (the
"Balance Sheet Date") and the related statements of operations, of
stockholder's equity and of cash flows for the six-month periods ended
June 30, 1996 and 1995 as to LND and TCI and for the eight- months
periods ended June 30, 1996 and 1995 as to ABL, , together with the
related notes and schedules (such balance sheets, the related statements
of operations, of stockholder's equity and of cash flows and the related
notes and schedules are referred to herein as the "Interim Financial
Statements"). The Year-end Financial Statements and the Interim
Financial Statements (collectively, the "Financial Statements") are
attached as Schedule 3.6 to this Agreement.
The Financial Statements have been prepared from the books and records
of the Company on a basis consistent with preceding years and throughout the
periods involved and present fairly the financial position and results of
operations of the Company as of the dates of such statements and for the periods
covered thereby. The books of account of the Company have been kept accurately
in all material respects in the ordinary course of business, the transactions
entered therein represent bona fide transactions, and the revenues, expenses,
assets and liabilities of the Company have been properly recorded therein in all
material respects.
SECTION 3.7 LIABILITIES AND OBLIGATIONS. Schedule 3.7 sets forth an
accurate list as of the Balance Sheet Date of (i) all liabilities of the
Company, which are known or as a result of the nature of such liability, should
have been known, are reflected in the Interim Balance Sheet and (ii) any
liabilities of any kind of the Company which are not reflected in the Interim
Balance Sheet. Except as set forth on Schedule 3.7, since the Balance Sheet
Date, the Company has not incurred any liabilities of any kind, character or
description, whether accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in the ordinary course of business
which are not materially greater than the corresponding liabilities reflected in
the Interim Balance Sheet. Schedule 3.7 contains a reasonable estimate by the
Stockholders of the maximum amount which may be payable with respect to
liabilities which are not fixed. For each such liability for which the amount is
not fixed or is contested, the Stockholders have provided a summary description
of the liability together with copies of all relevant documentation relating
thereto. As of August 29, 1996, the Company's total liabilities do not exceed
$4,408,000.
SECTION 3.8 ACCOUNTS AND NOTES RECEIVABLE. Schedule 3.8 sets forth an
accurate list of the accounts and notes receivable of the Company as of the
Balance Sheet Date and generated subsequent to the Balance Sheet Date, including
any such amounts which are not reflected in the Interim Balance Sheet.
Receivables from and advances to employees, the Stockholders and any entities or
persons related to or affiliated with the Stockholders are separately identified
on Schedule 3.8. Schedule 3.8 also sets forth an accurate aging of all accounts
and notes receivable as of the Balance Sheet Date, showing amounts due in 30-day
aging categories. The trade and other accounts receivable of the Company which
are classified as current assets on the Interim Balance Sheet are bona fide
receivables, were acquired in the ordinary course of business, are stated in
accordance with GAAP and, subject to the reserve for doubtful accounts, need not
be written-off as uncollectible. Such accounts and notes are collectible in the
amount shown on Schedule 3.8, net of reserves for doubtful accounts reflected in
the Interim Balance Sheet.
SECTION 3.9 ASSETS. Schedule 3.9 sets forth an accurate list of each
item of real and personal property included in "property and equipment" on the
balance sheet of the Company and all other tangible assets of the Company each
with a value in excess of $25,000, as well as all vehicles regardless of current
value, (i) owned by the Company as of the Balance Sheet Date and (ii) acquired
since the Balance Sheet Date, including in each case true, complete and correct
copies of leases for significant equipment and for all real property leased by
the Company and descriptions of all real property on which buildings,
warehouses, workshops, garages and other structures used in the operation of the
business of the Company are situated. Schedule 3.9 indicates which assets are
currently owned, or were formerly owned, by the Stockholders or affiliates of
the Company or Stockholders. Except as specifically identified on Schedule 3.9,
all of the tangible assets, vehicles and other significant machinery and
equipment of the Company listed on Schedule 3.9 are in good working order and
condition, ordinary wear and tear excepted, and have been maintained in
accordance with standard industry practices. All fixed assets used by the
Company that are material to the operation of the Company's business are either
owned by the Company or leased under an agreement identified on Schedule 3.9.
All leases set forth on Schedule 3.9 are in full force and effect and, to the
knowledge of the Company and the Stockholders, constitute valid and binding
agreements of the parties thereto in accordance with their respective terms.
Schedule 3.9 contains true, complete and correct copies of all title reports and
title insurance policies received or owned by the Company. Schedule 3.9 also
includes a summary description of all plans or projects involving the opening of
new operations, expansion of existing operations or the acquisition of any real
property or existing business, to which management of the Company has devoted
any significant effort or expenditure in the two-year period prior to the date
of the Agreement, which if pursued by the Company would require additional
expenditures of capital.
The Company has good title to the tangible and intangible personal
property and the real property owned and used in its business, including the
properties identified on Schedule 3.9, subject to no mortgage, pledge, lien,
claim, conditional sales agreement, encumbrance or charge, except for liens
reflected on Schedule 3.9, liens for current taxes not yet payable and
assessments not in default, easements for utilities serving only the property,
and easements, covenants and restrictions and other exceptions to title shown of
record in the office of the County Clerks in which the properties, assets and
leasehold estates are located, which do not adversely affect the Company's use
of the property.
SECTION 3.10 MATERIAL CUSTOMERS AND CONTRACTS. Schedule 3.10 sets forth
an accurate list of (i) all customers representing 5% or more of the Company's
revenues in any of the periods covered by the Financial Statements, and (ii) all
material contracts, commitments and similar agreements to which the Company is
currently a party or by which it or any of its properties is bound, including,
but not limited to, contracts with customers, leases, loan agreements, pledge
and security agreements, indemnity or guaranty agreements, bonds, notes,
mortgages, joint venture or partnership agreements, options to purchase real or
personal property, and agreements relating to the purchase or sale by the
Company of assets or securities. Schedule 3.10 contains true, complete and
correct copies of all such agreements. Except to the extent set forth on
Schedule 3.10, (i) none of the Company's material customers has canceled or
substantially reduced or is currently attempting or threatening to cancel or
substantially reduce its use of the Company's services and (ii) the Company has
complied with all material commitments and obligations pertaining to it under
such agreements and is not in default under any such agreements, no notice of
default has been received by the Company and the Stockholders are aware of no
basis therefor. Except as set forth on Schedule 3.10, the Company is not now and
has never been a party to any governmental contracts which by their terms are
subject to price redetermination or renegotiation.
SECTION 3.11 PERMITS. Schedule 3.11 contains an accurate list, summary
description and copies of all licenses, franchises, permits, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business including, without
limitation, permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel permits, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company. The licenses, operating authorizations,
franchises, permits and other governmental authorizations listed on Schedule
3.11 are valid, and the Company has not received any notice that any
governmental authority intends to cancel, terminate or not renew any such
license, operating authorization, franchise, permit or other governmental
authorization. The Company holds all licenses, operating authorizations,
franchises, permits and other governmental authorizations the absence of any of
which could have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. The Company has conducted and is conducting its
business in substantial compliance with the requirements, standards, criteria
and conditions set forth in its licenses, operating authorizations, franchises,
permits and other governmental authorizations as well as the applicable orders,
approvals and variances related thereto, and is not in violation of any of the
foregoing except for any violations that would not have a material and adverse
effect on the business, operations, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company. Except as
specifically provided in Schedule 3.11, the transactions contemplated by this
Agreement will not result in a default under or a breach or violation of, or
adversely affect the rights and benefits afforded to the Company by, any such
material licenses, operating authorizations, franchises, permits and other
government authorizations.
SECTION 3.12 ENVIRONMENTAL MATTERS. The Company has complied with and is
in compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to it or any of its properties, assets, operations
and businesses relating to the protection of the environment (collectively,
"Environmental Laws") including, without limitation, Environmental Laws relating
to air, water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (as such terms are defined in any applicable Environmental Law)
except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, does not and would not (i) have a material adverse
effect on the Company or any of its businesses or (ii) necessitate a material
expenditure by or on behalf of the Company in excess of amounts already reserved
for such purpose in the Company's financial statements. The Company has obtained
and complied with all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances and has reported, to the extent required by
all Environmental Laws, all past and present sites owned and operated by the
Company where Hazardous Wastes, Hazardous Materials or Hazardous Substances have
been treated, stored, disposed of or otherwise handled. Except as set forth on
Schedule 3.12 hereto, there have been no "releases" or threats of "releases" (as
defined in any Environmental Laws) at, from, in or on any property owned or
operated by the Company except as permitted by Environmental Laws. There is no
on-site or off-site location to which the Company has transported or disposed of
Hazardous Wastes, Hazardous Materials and Hazardous Substances or arranged for
the transportation or disposal of Hazardous Wastes, Hazardous Materials and
Hazardous Substances which is the subject of any federal, state, local or
foreign enforcement action or any other investigation which could lead to any
claim against the Company, Coach or Newco for any clean-up cost, remedial work,
damage to natural resources or personal injury, including, but not limited to,
any claim under (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (ii) the Resource Conservation and Recovery
Act, (iii) the Hazardous Materials Transportation Act or (iv) comparable state
and local statutes and regulations. The Company has no contingent liability in
connection with any release of any Hazardous Waste, Hazardous Material or
Hazardous Substance into the environment.
SECTION 3.13 LABOR AND EMPLOYEE RELATIONS. Except as set forth in
Schedule 3.13, the Company is not bound by or subject to any arrangement with
any labor union. No employees of the Company are represented by any labor union
or covered by any collective bargaining agreement nor, to the best of the
Stockholders' knowledge, is any campaign to establish such representation in
progress. There is no pending or threatened labor dispute involving the Company
and any group of its employees nor has the Company experienced any labor
interruptions over the past five years. The Company considers its relationship
with its employees to be good.
SECTION 3.14 INSURANCE. Schedule 3.14 sets forth an accurate list as of
the Balance Sheet Date of all insurance policies carried by the Company and of
all insurance loss runs or workers compensation claims received for the past two
(2) policy years. Also attached to Schedule 3.14 are true, complete and correct
copies of all of the Company's insurance policies currently in effect. None of
such policies is a "claims made" policy. The insurance policies set forth on
Schedule 3.14 provide adequate coverage against the risks involved in the
Company's business. Such policies are currently in full force and effect.
SECTION 3.15 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 3.15 sets
forth an accurate schedule of all officers, directors and key employees of the
Company, listing all employment agreements with such officers, directors and
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus, benefits and other compensation, respectively) of each of such
persons as of (i) the Balance Sheet Date and (ii) the date hereof. Attached to
Schedule 3.15 are true, complete and correct copies of all such employment
agreements and all other employment agreements and other similar agreements or
arrangements containing "golden parachute" or other similar provisions.
SECTION 3.16 EMPLOYEE BENEFIT PLANS. Schedule 3.16 sets forth an
accurate schedule of all employee benefit plans of the Company and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans described on Schedule 3.16, the Company does not sponsor, maintain
or contribute to any plan, program, fund or arrangement that constitutes an
"employee pension benefit plan," nor does the Company have any obligation to
contribute to or accrue or pay any benefits under any deferred compensation or
retirement funding arrangement on behalf of any employee or employees (such as,
for example, and without limitation, any individual retirement account or
annuity, any "excess benefit plan" (within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or any
non-qualified deferred compensation arrangement). For the purposes of this
Agreement, the term "employee pension benefit plan" shall have the same meaning
given that term in Section 3(2) of ERISA. The Company has not sponsored,
maintained or contributed to any employee pension benefit plan other than the
plans set forth on Schedule 3.16, nor is the Company required to contribute to
any retirement plan pursuant to the provisions of any collective bargaining
agreement.
The Company is not now, nor will it become as a result of its past
activities, liable to the Pension Benefit Guaranty Corporation or to any
multi-employer employee pension benefit plan under the provisions of Title IV of
ERISA. All employee benefit plans listed on Schedule 3.16 are in substantial
compliance with all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal, state and local
statutes, ordinances and regulations. All accrued contribution obligations of
the Company with respect to any plan listed on Schedule 3.16 have either been
fulfilled in their entirety or are fully reflected on the balance sheet of the
Company as of the Balance Sheet Date.
All plans listed on Schedule 3.16 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Code have been determined by the
Internal Revenue Service to be so qualified, and copies of such determination
letters are included as part of Schedule 3.16 hereof. Except as disclosed on
Schedule 3.16, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of
Schedule 3.16 hereof. Neither the Stockholders, any such plan listed in Schedule
3.16, nor the Company has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No such plan
listed in Schedule 3.16 has incurred an "accumulated funding deficiency," as
defined in Section 412(a) of the Code and Section 302(1) of ERISA, and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service nor any liability to the Pension Benefit Guaranty
Corporation. There have been no terminations, partial terminations or
discontinuances of contri butions to any such Qualified Plan without notice to
and approval by the Internal Revenue Service; no plan listed in Schedule 3.16
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan; and the Company has not incurred liability under
Section 4062 of ERISA.
SECTION 3.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in
Schedule 3.17, there are no claims, actions, suits or proceedings, pending or
threatened against or affecting the Company, at law or in equity, or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over the Company.
No notice of any claim, action, suit or proceeding, whether pending or
threatened, has been received by the Company and there is no basis therefor.
Except to the extent set forth on Schedule 3.17, the Company has conducted for
the past five years and does conduct its business in compliance with all laws,
regulations, writs, injunctions, decrees and orders applicable to the Company or
its assets.
SECTION 3.18 TAXES. For purposes of this Agreement, the term "Taxes"
shall mean all taxes, charges, fees, levies or other assessments including,
without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments. The Company has
timely filed all requisite federal, state, local and other tax returns for all
fiscal periods ended on or before the Effective Time, and has duly paid in full
or made adequate provision in the Financial Statements for the payment of all
Taxes for all periods ending at or prior to the Closing Date. Except as set
forth on Schedule 3.18, there are no examinations in progress or claims against
the Company for any period or periods prior to and including the Balance Sheet
Date and no notice of any claim for Taxes, whether pending or threatened, has
been received. The amounts shown as accruals for Taxes on the financial
statements of the Company as of the Balance Sheet Date are sufficient for the
payment of all Taxes for all fiscal periods ended on or before that date. Copies
of (i) any tax examinations, (ii) extensions of statutory limitations and (iii)
the federal, state and local Tax returns of the Company for the last three
fiscal years are attached hereto as Schedule 3.18. ABL and LND currently utilize
the accrual method of accounting for income tax purposes.
Such method of accounting has not changed in the past five years.
During all tax periods ended prior to the Closing Date for which the
statute of limitations has not expired, the Company has conducted its business
in a manner which entitles it to protection under the safe harbor provisions of
Section 530(a) of the Revenue Act of 1978, which was extended indefinitely by
Section 269(c) of the Tax Equity and Fiscal Responsibility Act of 1982.
SECTION 3.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the
Company has conducted its operations in the ordinary course and, except as set
forth on Schedule 3.19, there has not been:
(i) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities
(contingent or otherwise) or income of the Company;
(ii)any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the Company;
(iii) any change in the authorized capital stock of the Company
or in its securities outstanding or any change in the Stockholders'
ownership interests or any grant of any options, warrants, calls,
conversion rights or commitments or the declaration or payment of any
dividend or other distribution;
(iv) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
Company;
(v) any increase in the compensation payable or to become
payable by the Company to any of its officers, directors, Stockholders,
employees, consultants or agents, except for ordinary and customary
bonuses and salary increases for employees in accordance with past
practice;
(vi) any work interruptions, labor grievances or claims filed,
or any proposed law, regulation or event or condition of any character
materially adversely affecting the business or future prospects of the
Company;
(vii) any sale or transfer, or any agreement to sell or
transfer, any material assets, properties or rights of the Company to
any person, including, without limitation, the Stockholders and their
affiliates;
(viii) any cancellation, or agreement to cancel, any
indebtedness or other obligation owing to the Company;
(ix) any increase in the Company's indebtedness, other than
accounts payable incurred in the ordinary course of business;
(x) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to
the transfer and assignment of any such assets, property or rights;
(xi) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xii) any waiver of any material rights or claims of the
Company;
(xiii) any material breach, amendment or termination of any
material contract, agreement, license, permit or other right to which
the Company is a party; or
(xiv) any transaction by the Company outside the ordinary course
of business.
SECTION 3.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.
Schedule 3.20 sets forth an accurate schedule as of the (i) Balance Sheet Date
and (ii) date of the Agreement, of (A) the name of each financial institution or
brokerage firm in which the Company has accounts or safe deposit boxes; (B) the
names in which the accounts or boxes are held; (C) the type of account and the
cash, cash equivalents and securities held in such account; and (D) the name of
each person authorized to draw thereon or have access thereto. Schedule 3.20
also sets forth the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the Company and a
description of the terms thereof.
SECTION 3.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company
nor any of its affiliates has taken any action which would constitute a
violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
similar law.
SECTION 3.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.
Except as set forth in Schedule 3.22, neither the Stockholders nor any other
affiliate of the Company owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of or otherwise receives remuneration
from, any business which is a competitor, lessor, lessee, customer or supplier
of the Company. Except as set forth in Schedule 3.22, no officer, director or
Stockholder of the Company has, nor during the period beginning January 1, 1990
through the date hereof, had any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
SECTION 3.23 INTANGIBLE PROPERTY. Schedule 3.23 sets forth an accurate
list of all patents, patent applications, trademarks, service marks, trade
names, copyrights, and other intellectual property or proprietary property
rights owned or used by the Company. The Company owns or possesses sufficient
legal rights to use all of such items without conflict with or infringement of
the rights of others.
SECTION 3.24 DISCLOSURE. The Stockholders have fully provided Coach or
its representatives with all the information that Coach has requested in
analyzing whether to consummate the Merger. None of the information so provided
nor any representation or warranty of the Stockholders contained in this
Agreement contains any untrue statement or omits to state a material fact
necessary in order to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. There is no fact known
to the Stockholders which has specific application to the Company (other than
general economic or industry conditions) and which materially adversely affects
or, so far as the Stockholders can reasonably foresee, materially threatens, the
assets, business, condition (financial or otherwise), results of operations or
prospects of the Company which has not been described in this Agreement or the
Schedules hereto or otherwise disclosed in writing to Coach. The disclosures in
the Schedules, and those in any supplement thereto, shall relate only to the
representations and warranties in the Section of this Agreement to which each
Schedule expressly relates and to no other representation or warranty in this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
Coach and Newco represent and warrant to the Stockholders as follows:
SECTION 4.1 ORGANIZATION. Each of Coach and Newco is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and is duly authorized and qualified under all applicable laws,
regulations, and ordinances of public authorities to carry on its business in
the places and in the manner now conducted except where the failure to be so
authorized or qualified would not have a material adverse effect on its
business.
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. Each of Coach
and Newco has the full legal right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement have been approved by the boards of
directors of Coach and Newco and by the sole stockholder of Newco. No additional
corporate proceedings on the part of Coach or Newco are necessary to authorize
the execution and delivery of this Agreement and the consummation by Coach and
Newco of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Coach and Newco, and, assuming the due
authorization, execution and delivery by the Company and the Stockholders,
constitutes a valid and binding agreement of Coach and Newco, enforceable
against Coach and Newco in accordance with its terms. The execution and delivery
of this Agreement by Coach do not, and the consummation by Coach of the
transactions contemplated hereby will not, violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of Coach or any of its subsidiaries under any of the terms, conditions or
provisions of (i) the Restated Certificate of Incorporation or By-Laws of Coach,
(ii) any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to Coach or any of its properties or assets or (iii) any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which Coach is now a party or by which Coach or any of its properties or assets
may be bound or affected, excluding from the foregoing clauses (ii) and (iii)
such violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would not,
in the aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Coach.
Except for the Merger Filings, any required filings with or approvals
from the STB and state transportation authorities and such filings as may be
required under federal or state securities laws, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by Coach or the consummation by Coach of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of Coach.
SECTION 4.3 COACH COMMON STOCK. The shares of Coach Common Stock to be
issued to the Stockholders pursuant to the Merger, when issued in accordance
with the terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable. The issuance of Coach Common Stock pursuant to the
Merger will transfer to the Stockholders valid title to such shares of Coach
Common Stock, free and clear of all liens, encumbrances and claims of every kind
except for any created by the Stockholders.
SECTION 4.4 SEC FILINGS; DISCLOSURE. Coach has filed with the Securities
and Exchange Commission ("SEC") all material forms, statements, reports and
documents required to be filed by it under each of the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the respective rules and regulations thereunder, all of
which, as amended, if applicable, complied when filed in all material respects
with all applicable requirements of the appropriate Act and the rules and
regulations thereunder. Coach has previously delivered to the Stockholders
copies of the Prospectus, dated July 16, 1996 (the "Prospectus"), contained in
the Company's Registration Statement on Form S-1 filed under Rule 415 of the
1933 Act, and certain additional information concerning Coach. As of its date,
the Prospectus did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Coach is not subject to any stop orders concerning the offering
described in the Prospectus and is not on notice of or under threat of any SEC
or state securities commission or administrative agency investigation or
proceeding, whether formal or informal. Coach is not currently aware of any
material, adverse information which has not been disclosed in the Prospectus or
any subsequent public filings which would, if disclosed, materially impact on a
reasonable investor's decision to enter into the plan of reorganization
described in this Agreement.
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 RELEASE FROM GUARANTEES. Coach shall use its best efforts to
have the Stockholders released from the personal guarantees of the Company's
indebtedness identified on Schedule 5.1. In the event that Coach cannot obtain
releases of any such guarantees on or prior to one hundred and twenty (120) days
subsequent to the date hereof, Coach shall pay off or otherwise refinance or
retire such indebtedness.
SECTION 5.2 FUTURE COOPERATION; TAX MATTERS. The Stockholders and Coach
shall each deliver or cause to be delivered to the other following the Effective
Time such additional instruments as the other may reasonably request for the
purpose of fully carrying out this Agreement. The Stockholders will cooperate
and use their reasonable best efforts to have the present officers, directors
and employees of the Company cooperate with Coach and/or Newco at and after the
Effective Time in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to all periods prior to the
Effective Time. Coach will cooperate with the Stockholders in the preparation of
all tax returns covering the period from the beginning of the Company's current
tax year through the Closing. In addition, Coach will provide the Stockholders
with access to such of its books and records as may be reasonably requested by
the Stockholders in connection with federal, state and local tax matters
relating to periods prior to the Closing.
SECTION 5.3 EXPENSES. Coach will pay the fees, expenses and
disbursements of Coach and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments thereto. The Company will pay from funds otherwise
available for distribution to the Stockholders on account of accrued but unpaid
compensation, or accrued but undistributed earnings, the fees, expenses and
disbursements of the Company and its agents, representatives, financial
advisors, accountants and counsel incurred in connection with the execution,
delivery and performance of this Agreement and any amendments hereto.
SECTION 5.4 EMPLOYMENT AGREEMENT(S). Concurrently with the execution of
this Agreement, the Company shall enter into the Employment Agreements attached
as Exhibit 5.4(A) and 5.4(B) with Louis R. Cicerone and David Leblang,
respectively.
SECTION 5.5 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with
the execution of this Agreement, (i) the Stockholders shall repay to the Company
all amounts outstanding as advances to or receivables from the Stockholders, and
(ii) Coach shall repay or shall fund and cause the Company to repay all amounts
outstanding under loans to the Company from the Stockholders in accordance with
Schedule 5.5 attached hereto.
ARTICLE VI
INDEMNIFICATION
The Stockholders, Coach and Newco each make the following covenants:
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. Other than the
special indemnification obligations outlined in Schedule 6.1 attached hereto,
which supersede the provisions herein, the Stockholders covenant and agree that
they, jointly and severally, will indemnify, defend, protect and hold harmless
Coach, Newco and the Company, and their respective officers, directors,
employees, stockholders, agents, representatives and affiliates, at all times
from and after the date of this Agreement until the Expiration Date (as defined
in Section 11.7) from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) which in the aggregate exceed one percent (1%) of the value of
the consideration delivered pursuant to Section 2.1 as determined on the Closing
Date incurred by any of such indemnified persons as a result of or arising from
(i) any breach of the representations and warranties of the Stockholders set
forth herein or in the Schedules or certificates delivered in connection
herewith, and (ii) any breach or nonfulfillment of any covenant or agreement on
the part of the Stockholders or the Company under this Agreement.
SECTION 6.2 INDEMNIFICATION BY COACH. Coach covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholders at all times
from and after the date of this Agreement until the Expiration Date from and
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by the
Stockholders as a result of or arising from (i) any breach of the
representations and warranties set forth herein or in the Schedules or
certificates attached hereto, and (ii) any breach or nonfulfillment of any
covenant or agreement on the part of Coach under this Agreement.
SECTION 6.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall give to the party obligated to provide indemnification pursuant to
Section 6.1 or 6.2 hereof (hereinafter the "Indemnifying Party") written notice
of such claim or the commencement of such action or proceeding. Such notice
shall state the nature and the basis of such claim and a reasonable estimate of
the amount thereof. The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel, any such matter so long as
the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not
be limited to, furnishing the Indemnifying Party with any books, records and
other information reasonably requested by the Indemnifying Party and in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
provided that if counsel to the Indemnifying Party shall have a conflict of
interest that prevents such counsel from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the expenses of its counsel. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person and the Indemnified Party shall reimburse the Indemnifying Party
for any additional costs of defense which it subsequently incurs with respect to
such claim and all additional costs of settlement or judgment. If the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, HOWEVER, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES. The Stockholders will not, for a
period of five (5) years following the Closing Date, directly or indirectly, for
themselves or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial or advisory capacity,
whether as an employee, independent contractor, consultant or advisor,
or as a sales representative, in any business offering any services or
products in direct competition with Coach or any of its subsidiaries
within 100 miles of where Coach or any of its subsidiaries conducts
business, including any territory serviced by Coach or any of such
subsidiaries (the "Territory");
(ii)call upon any person who is, at that time, within the
Territory, an employee of Coach or any of its subsidiaries for the
purpose or with the intent of enticing such employee away from or out of
the employ of Coach or any of its subsidiaries; or
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of
Coach or any of its subsidiaries within the Territory for the purpose of
soliciting or selling services or products in direct competition with
Coach or any of its subsidiaries within the Territory. Notwithstanding
the above, the foregoing covenant shall not be deemed to prohibit any
Stockholder from acquiring, as a passive investor with no involvement in
the operations of the business, not more than one percent (1%) of the
capital stock of a business providing motorcoach or other passenger
ground transportation services whose stock is publicly traded on a
national securities exchange or over-the-counter.
SECTION 7.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to Coach as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to Coach
for which it would have no other adequate remedy, each Stockholder agrees that
the foregoing covenant may be enforced by Coach by injunctions, restraining
orders and other equitable actions.
SECTION 7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto
that the foregoing covenants in this Article VII impose a reasonable restraint
on the Stockholders in light of the activities and business of Coach on the date
of the execution of this Agreement and the current plans of Coach; but it is
also the intent of Coach and the Stockholders that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of Coach and its subsidiaries throughout the term of this covenant. During the
term of this covenant, if Coach or one of its subsidiaries engages in new and
different activities, enters a new business or establishes new locations for its
current activities or business in addition to or other than the activities or
business it is currently conducting in the locations currently established
therefor, then the Stockholders will be precluded from soliciting the customers
or employees of such new activities or business or from such new location and
from directly competing with such new activities or business within 100 miles of
its then-established operating location(s) through the term of this covenant.
SECTION 7.4 SEVERABILITY; REFORMATION. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in this Article VII are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable and this
Agreement shall thereby be reformed.
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT. The Stockholders
acknowledge that their agreements with the covenants set forth in this Article
VII are material conditions to Coach's agreement to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All of the
covenants in this Article VII shall be construed as an agreement independent of
any other provision in this Agreement, so long as Coach is in compliance with
all material obligations of Coach under this Agreement and is in compliance with
all material obligations of Coach under the Employment Agreements with each of
Messrs. Cicerone and Leblang, and the existence of any claim or cause of action
of any Stockholder against Coach or one of its subsidiaries, whether predicated
on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Coach of such covenants. It is specifically agreed that the
five-year period during which the agreements and covenants of each Stockholder
made in this Article VII shall survive shall be computed by excluding from such
computation any time during which such Stockholder is in violation of any
provision of this Article VII. The covenants contained in this Article VII shall
not be affected by any breach of any other provision hereof by any party hereto.
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL. The Stockholders recognize and acknowledge that
they had in the past, currently have, and in the future will have, access to
certain confidential information of the Company and/or Coach, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company and/or Coach. The
Stockholders agree that they will not disclose such confidential information to
any person, firm, corporation, association or other entity for any purpose
whatsoever, except as is required in the course of performing their duties to
the Company and/or Coach, unless (i) such information becomes known to the
public generally through no fault of the Stockholders, or (ii) disclosure is
required by law or the order of any governmental authority, provided, that prior
to disclosing any information pursuant to this clause (ii) the Stockholders
shall, if possible, give prior written notice thereof to Coach and provide Coach
with the opportunity to contest such disclosure. In the event of a breach or
threatened breach by the Stockholders of the provisions of this Section, Coach
shall be entitled to an injunction restraining the Stockholders from disclosing,
in whole or in part, such confidential information. Nothing herein shall be
construed as prohibiting Coach from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
SECTION 8.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
the Company and/or Coach would have no other adequate remedy, the Stockholders
agree that the foregoing covenants may be enforced against them by injunctions,
restraining orders and other equitable actions.
SECTION 8.3 SURVIVAL. The obligations of the parties under this Article
VIII shall survive the termination of this Agreement.
ARTICLE IX
TRANSFER RESTRICTIONS RELATED TO POOLING-OF-INTERESTS
ACCOUNTING AND INTENDED TAX TREATMENT
SECTION 9.1 RESTRICTIONS ON RESALE. Coach has informed the Stockholders
that Coach intends to account for the Merger as a pooling-of-interests under
Opinion No. 16. Coach has also informed the Stockholders that its ability to
account for the Merger as a pooling-of-interests was a material factor
considered by Coach in Coach's decision to enter into this Agreement. Therefore,
pursuant to Opinion No. 16, prior to the publication and dissemination by Coach
of consolidated financial results which include results of the combined
operations of the Company and Coach for at least thirty days on a consolidated
basis following the Effective Time, the Stockholders shall not sell, offer to
sell, or otherwise transfer or dispose of, any shares of the Coach Common Stock
received by Stockholders. The certificates evidencing the Coach Common Stock to
be received by the Stockholders will bear a legend substantially in the form set
forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, PRIOR TO THE PUBLICATION AND
DISSEMINATION OF FINANCIAL STATEMENTS BY THE ISSUER WHICH INCLUDE THE
RESULTS OF AT LEAST THIRTY (30) DAYS OF COMBINED OPERATIONS OF THE
ISSUER AND THE COMPANY ACQUIRED BY THE ISSUER FOR WHICH THESE SHARES ARE
ISSUED. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE
ISSUER WILL REMOVE THIS RESTRICTIVE LEGEND WHEN THIS REQUIREMENT HAS
BEEN MET.
SECTION 9.2 TAX-FREE REORGANIZATION. Coach and the Stockholders are
entering into this Agreement with the intention that the Merger qualify as a
tax-free reorganization for federal income tax purposes, except to the extent of
any "boot" received, and the Stockholders will not take any actions that
disqualify the Merger for such treatment.
ARTICLE X
REGISTRATION OF COACH STOCK; FEDERAL SECURITIES ACT
SECTION 10.1 REGISTRATION OBLIGATION. As soon as practicable after the
date hereof, but in no event later than October 1, 1996, Coach shall file a
registration statement under the 1933 Act, covering the registration of
forty-nine percent (49%) of the Coach Common Stock (such shares of Coach Common
Stock are referred to herein as "Shelf Shares") to be received by the
Stockholders pursuant to this Agreement for resale by the Stockholders. In
connection with such registration statement, Coach shall, as expeditiously as
reasonably possible:
(a) use its best efforts to cause such registration statement to
become effective and keep such registration statement effective for two
years (or such shorter period after which Coach Common Stock may be sold
by the Stockholders in accordance with the requirements of Rule 144
under the 1933 Act); provided, however, that Coach shall not be deemed
to have used its best efforts to keep the registration statement
effective during the applicable period if Coach voluntarily takes any
action that results in the Stockholders not being able to sell the Shelf
Shares during such period, unless such action is required by law;
(b) use its best efforts to prepare and file with the SEC such
amendments and supplements to such registration statement as may be
necessary to comply with the provisions of the 1933 Act;
(c) no less than twenty-four (24) hours prior to filing such
registration statement or prospectus contained therein or any amendment
or supplement thereto, furnish to each Stockholder copies of all
documents proposed to be filed to permit the reasonable and timely
review of statements contained in such documents pertaining to such
parties and thereafter furnish to the Stockholders such number of copies
of such registration statement, each amendment and supplement thereto,
such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the 1933 Act, and
such other documents as they may reasonably request in order to
facilitate the disposition of the Shelf Shares to be received by them
pursuant to this Agreement;
(d) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Stockholders, and to keep such registration or qualification
effective during the period such registration statement is to be kept
effective, provided that Coach shall not be required to become subject
to taxation, to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(e) use its best efforts to maintain the authorization for
quotation of the securities covered by such registration statement on
the NASDAQ National Market of the Nasdaq Stock Market, Inc.;
(f) notify each Stockholder, at any time when the Stockholders
must suspend offers or sales of Shelf Shares under the registration
statement, either because the prospectus included in such registration
statement is required to be amended for any reason, such as an amendment
under the 1933 Act to provide current information, or because the
prospectus includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing. Coach shall use its best efforts to enable the
Stockholders to promptly recommence offers and sales under the
registration statement. Notwithstanding the foregoing and anything to
the contrary set forth in this Section 10.1, each Stockholder
acknowledges that there may occasionally be times when Coach must
suspend the use of the prospectus included in such registration
statement until such time as an amendment to the registration statement
has been filed by Coach and declared effective by the SEC, or until such
time as Coach has filed an appropriate report with the SEC pursuant to
the 1934 Act. Each Stockholder hereby covenants that he will not offer
or sell any shares of Coach stock pursuant to such prospectus during the
period commencing when Coach notifies the Stockholder of the suspension
of the use of such prospectus and the reason therefor, and ending when
Coach notifies the Stockholder in writing that he may thereafter effect
offers and sales pursuant to such prospectus; and
(g) use its best efforts to cause all Shelf Shares to be listed,
by the date of the first sale of Shelf Shares pursuant to such
registration statement, on each securities exchange on which the shares
of Common Stock of Coach are then listed or proposed to be listed.
SECTION 10.2 FURNISH INFORMATION. It is a condition precedent to the
obligations of Coach to take any action pursuant to Section 10.1 hereof with
respect to the Shelf Shares of any Stockholder that such Stockholder shall
furnish to Coach such information regarding himself, the Coach Common Stock held
by him and the intended method of disposition of such securities as shall be
required to effect the registration of such Stockholder's Shelf Shares and as
may be required from time to time to keep such registration current.
SECTION 10.3 EXPENSES OF REGISTRATION. Except as otherwise provided, all
expenses incurred by or on behalf of Coach in connection with registrations,
filings or qualifications pursuant to Section 10.1 hereof, including without
limitation all registration, filing and qualification fees, the fees and
expenses incurred in connection with the listing of the Shelf Shares to be
registered on each security exchange on which shares of Common Stock of Coach
are then listed, printers' and accounting fees, and fees and disbursements of
counsel for Coach, shall be borne by Coach. In no event shall Coach be obligated
to bear underwriting, brokerage or related fees, discounts or commissions or the
fees or expenses of counsel to the Stockholders.
SECTION 10.4 FURTHER ASSURANCES. Each of Coach and the Stockholders
shall agree to such other reasonable and customary arrangements, undertakings
and indemnifications with respect to the registration of the Shelf Shares to be
received by the Stockholders pursuant to the Agreement as may be requested by
any of them, but shall not be obligated to enter into any underwriting
arrangements. Such indemnifications shall include Coach's indemnity of Stock
holders and their brokers or dealers which may be deemed to be underwriters as
reasonably requested by the Stockholders and their brokers or dealers against
liability, including liability arising under the 1933 Act.
SECTION 10.5 RULE 144. Coach covenants that it will at all times use its
best efforts to timely file any reports required to be filed by it under the
1933 Act and the 1934 Act and that it will take such other actions as may be
necessary or any Stockholder may reasonably request to enable the Stockholders
to sell the Coach Common Stock without registration under applicable exemptions
provided for under the 1933 Act including, without limitation, Rule 144.
SECTION 10.6 ECONOMIC RISK; SOPHISTICATION.
(a) Each Stockholder represents and warrants that such Stockholder has
not relied on any purchaser representative, or on the Company or any other
Stockholder, in connection with the acquisition of shares of Coach Common Stock
hereunder. The Stockholders (A) have such knowledge, sophistication and
experience in business and financial matters that they are capable of evaluating
the merits and risks of an investment in the shares of Coach Common Stock, (B)
fully understand the nature, scope and duration of the limitations on transfer
described in this Agreement and (C) can bear the economic risk of an investment
in the shares of Coach Common Stock and can afford a complete loss of such
investment. The Stockholders have had an adequate opportunity to ask questions
and receive answers from the officers of Coach concerning any and all matters
relating to the transactions described herein including without limitation the
background and experience of the officers and directors of Coach, the plans for
the operations of the business of Coach, the business, operations and financial
condition of Coach, and any plans for additional acquisitions and the like. The
Stockholders have asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to their satisfaction.
(b) Each Stockholder further represents, warrants, acknowledges and
agrees that (x) he is acquiring the shares of Coach Common Stock under this
Agreement for his own account, as principal and not on behalf of other persons,
and for investment and not with a view to the resale or distribution of all or
any part of such shares, (y) he will not sell or otherwise transfer such shares
unless, in the opinion of counsel who is satisfactory to the Company, the
transfer can be made without violating the registration provisions of the 1933
Act, as amended, and the rules and regulations thereunder, unless such sale or
transfer is under an effective registration statement, and (z) the certificate
representing such shares will also bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SHARES
REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
PLEDGED OR HYPOTHECATED, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH
SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE
OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
SECTION 10.7 SALES OF STOCK. Except with respect to the Stockholders'
collective responsibilities to act as agent for ABL Properties, Inc. with
respect to 30,000 shares, by its execution and delivery of this Agreement, each
Stockholder represents and warrants to the Company and each of the other
Stockholders that the representing Stockholder does not have any contract,
undertaking, agreement or arrangement, written or oral, with any other person to
sell, transfer or grant participation in any shares of Coach Common Stock to be
acquired by such Stockholder.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of
the parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors of Coach, Newco and the Company, and the heirs and legal
representatives of the Stockholders.
SECTION 11.2 ENTIRE AGREEMENT. This Agreement (including the Schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholders,
the Company, Newco and Coach and supersede any prior agreement and understanding
relating to the subject matter of this Agreement. This Agreement may be modified
or amended only by a written instrument executed by the Stockholders and the
Company, Newco and Coach, acting through their respective officers, duly
authorized by their respective Boards of Directors.
SECTION 11.3 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
SECTION 11.4 BROKERS AND AGENTS. Other than Coach's obligation to make a
payment to Exel Motorcoach Partners, LLC in connection with the consummation of
this Agreement, each party represents and warrants that it employed no broker or
agent in connection with this transaction and agrees to indemnify the other
against all loss, cost, damages or expense arising out of claims for fees or
commissions of brokers employed or alleged to have been employed by such
indemnifying party.
SECTION 11.5 NOTICES. All notices and communications required or
permitted hereunder shall be in writing and may be given by depositing the same
in the United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, or by
delivering the same in person to an officer or agent of such party, as follows:
(A) If to Coach or Newco, addressed to them at:
One Riverway, Suite 600
Houston, Texas 77056-1903
Attn: Law Department
(B) If to the Stockholders, addressed to them at:
Mr. Louis R. Cicerone
6801 S.W. 144th Street
Miami, Florida 33158
Mr. Norton M. Segal, Acting Trustee
For The Norton M. Segal Trust
6026 S.W. 152nd Street
Miami, Florida 33157
Mr. David Leblang
1150 Madruga Avenue
Coral Gables, Florida 33146
With copies to each of:
Barry J. Haft, Esq.
Haft & Associates, P.A.
1101 Brickell Avenue
South Tower, Suite 800
Miami, Florida 33131
Kenneth Bloom, Esq.
Rubenstein, Kornik, Bloom & Minsker
800 Brickell Avenue, Suite 1100
Miami, Florida 33131
or to such other address as any party hereto shall specify pursuant to
this Section 11.5 from time to time.
SECTION 11.6 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas (except for its principles
governing conflicts of laws).
SECTION 11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Articles III and IV shall survive
the Closing for a period of twelve (12) months from the Closing Date (which date
is hereinafter called the "Expiration Date"), except that the warranties and
representations set forth in Section 3.18 hereof shall survive until such time
as the limitations period has run for all tax periods ended prior to the Closing
Date, which shall be deemed to be the Expiration Date for Section 3.18.
SECTION 11.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default occurring before or after that waiver.
SECTION 11.9 TIME. Time is of the essence with respect to this
Agreement.
SECTION 11.10 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby. IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written. COACH USA, INC. AMERICAN
BUS LINES, INC.
By: By:
Name: Richard H. Kristinik Name: Louis R. Cicerone
Title: Chief Executive Officer Title: President
COACH I ACQUISITION, INC. LND, Inc.
By: By:
Name: Douglas M. Cerny Name: Louis R. Cicerone
Title: President Title: President
COACH II ACQUISITION, INC. TRANSPORTATION CONTRACTORS, INC.
By: By:
Name: Douglas M. Cerny Name: Louis R. Cicerone
Title: President Title: President
COACH III ACQUISITION, INC. THE STOCKHOLDERS:
By:
Name: Douglas M. Cerny Louis R. Cicerone, individually
Title: President
Norton M. Segal, Acting Trustee for The
Norton M. Segal Trust dated May 13, 1994
David Leblang, individually
EXHIBIT 2.2
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF THE 29TH DAY OF AUGUST, 1996
BY AND AMONG
COACH USA, INC.,
COACH IV ACQUISITION, INC.,
GULF COAST TRANSPORTATION, COMPANY
ROGERS INVESTMENTS, LTD.
AND
LANNY ROGERS
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER
SECTION 1.2 EFFECTIVE TIME OF THE MERGER
SECTION 1.3 ARTICLES OF INCORPORATION, BY-LAWS AND BOARD
OF DIRECTORS OF SURVIVING CORPORATION
ARTICLE II
CONVERSION OF SHARES; ACQUISITION OF THE PROPERTY
SECTION 2.1 CONVERSION OF COMPANY SHARES
SECTION 2.2 CONVERSION OF NEWCO SHARES
SECTION 2.3 EXCHANGE OF CERTIFICATES
SECTION 2.4 REPRESENTATIONS REGARDING REAL PROPERTY
SECTION 2.5 CLOSING
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
SECTION 3.1 DUE ORGANIZATION
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 3.3 CAPITALIZATION
SECTION 3.4 POOLING-OF-INTERESTS ACCOUNTING
SECTION 3.5 SUBSIDIARIES
SECTION 3.6 FINANCIAL STATEMENTS
SECTION 3.7 LIABILITIES AND OBLIGATIONS
SECTION 3.8 ACCOUNTS AND NOTES RECEIVABLE
SECTION 3.9 ASSETS
SECTION 3.10 MATERIAL CUSTOMERS AND CONTRACTS
SECTION 3.11 PERMITS
SECTION 3.12 ENVIRONMENTAL MATTERS
SECTION 3.13 LABOR AND EMPLOYEE RELATIONS
SECTION 3.14 INSURANCE
SECTION 3.15 COMPENSATION; EMPLOYMENT AGREEMENTS
SECTION 3.16 EMPLOYEE BENEFIT PLANS
SECTION 3.17 LITIGATION AND COMPLIANCE WITH LAW
SECTION 3.18 TAXES
SECTION 3.19 ABSENCE OF CHANGES
SECTION 3.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS
OF ATTORNEY
SECTION 3.21 ABSENCE OF CERTAIN BUSINESS PRACTICES
SECTION 3.22 COMPETING LINES OF BUSINESS; RELATED-PARTY
TRANSACTIONS
SECTION 3.23 INTANGIBLE PROPERTY
SECTION 3.24 DISCLOSURE
i
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
SECTION 4.1 ORGANIZATION
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 4.3 COACH COMMON STOCK
SECTION 4.4 SEC FILINGS; DISCLOSURE
SECTION 4.5 INVESTMENT INTENT QUALIFICATION
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 RELEASE FROM GUARANTEES
SECTION 5.2 FUTURE COOPERATION; TAX MATTERS
SECTION 5.3 EXPENSES
SECTION 5.4 EMPLOYMENT AGREEMENT(S)
SECTION 5.5 REPAYMENT OF RELATED PARTY INDEBTEDNESS
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDER
SECTION 6.2 INDEMNIFICATION BY COACH
SECTION 6.3 THIRD PERSON CLAIMS
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES
SECTION 7.2 EQUITABLE RELIEF
SECTION 7.3 REASONABLE RESTRAINT
SECTION 7.4 SEVERABILITY; REFORMATION
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL
SECTION 8.2 EQUITABLE RELIEF
SECTION 8.3 SURVIVAL
ARTICLE IX
TRANSFER RESTRICTIONS RELATED TO POOLING-OF-INTERESTS
ACCOUNTING AND INTENDED TAX TREATMENT
SECTION 9.1 RESTRICTIONS ON RESALE
SECTION 9.2 TAX-FREE REORGANIZATION
ARTICLE X
REGISTRATION OF COACH STOCK; FEDERAL SECURITIES ACT
SECTION 10.1 REGISTRATION OBLIGATION
SECTION 10.2 FURNISH INFORMATION
ii
SECTION 10.3 EXPENSES OF REGISTRATION
SECTION 10.4 FURTHER ASSURANCES
SECTION 10.5 RULE 144
SECTION 10.6 ECONOMIC RISK; SOPHISTICATION
SECTION 10.7 SALES OF STOCK
SECTION 10.8 PLAN OF DISTRIBUTION
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUCCESSORS AND ASSIGNS
SECTION 11.2 ENTIRE AGREEMENT
SECTION 11.3 COUNTERPARTS
SECTION 11.4 BROKERS AND AGENTS
SECTION 11.5 NOTICES
SECTION 11.6 GOVERNING LAW
SECTION 11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 11.8 EXERCISE OF RIGHTS AND REMEDIES
SECTION 11.9 TIME
SECTION 11.10 REFORMATION AND SEVERABILITY
iii
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the 29th day of August, 1996, by and among Coach USA, Inc., a Delaware
corporation ("Coach"), Coach IV Acquisition, Inc., a Delaware corporation that
is a wholly-owned subsidiary of Coach ("Newco"), Gulf Coast Transportation
Company, a Texas corporation (the "Company"), Rogers Investments, Ltd., a Texas
limited partnership with Lanny Rogers ("Rogers") as its managing general partner
(Rogers Investments, Ltd. and Lanny Rogers are collectively referred to herein
as the "Stockholder," and any reference to Rogers individually is made to
"Rogers").
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively referred to as "Constituent Corporations") deem it advisable and
in the best interests of the Constituent Corporations and their respective
stockholders that Newco merge with and into the Company; and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER AND THE SURVIVING CORPORATION
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined below) in accordance with the
Texas Business Corporation Act ("TBCA") and the General Corporation Law of the
State of Delaware ("GCL"), Newco shall be merged with and into the Company and
the separate existence of Newco shall thereupon cease. The Company shall be the
surviving corporation in the merger (hereinafter sometimes referred to as the
"Surviving Corporation").
SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The merger of Newco into the
Company (the "Merger") shall become effective at such time (the "Effective
Time") as certificates of merger, in a form mutually acceptable to Coach and the
Company, are filed with the Secretaries of State of the States of Texas and
Delaware (the "Merger Filings"). The Merger Filings shall be made simultaneously
with or as soon as practicable after the execution of this Agreement and the
closing of the transactions contemplated by this Agreement in accordance with
Section 2.4.
SECTION 1.3 ARTICLES OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS OF
SURVIVING CORPORATION. As a result of the Merger and at the Effective Time,
(i) the Articles of Incorporation of the Company in effect
immediately prior to the Effective Time shall become the Articles of
Incorporation of the Surviving Corporation, and thereafter may be
amended in accordance with their terms and as provided in the TBCA;
(ii)the By-laws of the Company in effect immediately prior to the
Effective Time shall become the By-laws of the Surviving Corporation,
and thereafter may be amended in accordance with their terms and as
provided by the Articles of Incorporation of the Surviving Corporation
and the TBCA; and
(iii) the Board of Directors of the Company as constituted
immediately prior to the Effective Time shall be the Board of Directors
of the Surviving Corporation.
ARTICLE II
CONVERSION OF SHARES; ACQUISITION OF THE PROPERTY
SECTION 2.1 CONVERSION OF COMPANY SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of any
capital stock of the Company, each share of common stock of the Company issued
and outstanding as of the Effective Time (the "Company Stock") shall be
converted into the right to receive, and become exchangeable for, its pro rata
interest in the aggregate consideration payable to the sole holder of the
Company's Stock, which shall consist of Four Hundred Ninety Thousand Five
Hundred and Eighty (490,580) shares of common stock, par value $.01 per share,
of Coach ("Coach Common Stock").
SECTION 2.2 CONVERSION OF NEWCO SHARES. At the Effective Time, by virtue
of the Merger and without any action on the part of Coach, as the sole holder of
any capital stock of Newco, each issued and outstanding share of common stock,
par value $1.00 per share, of Newco shall be converted into one share of common
stock of the Surviving Corporation.
SECTION 2.3 EXCHANGE OF CERTIFICATES. At the Closing, (i) the
Stockholder shall deliver to Coach the certificates representing the Company
Stock, duly endorsed in blank by the Stockholder or accompanied by signed stock
powers; and (ii) Coach shall deliver to the Stockholder certificates
representing the Coach Common Stock. The Stockholder agrees to promptly cure any
deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to the Company Stock or with respect to the
stock powers accompanying the Company Stock.
SECTION 2.4 REPRESENTATIONS REGARDING REAL PROPERTY. Except as listed in
Schedule 2.4, the real property set out on Schedule 3.9 (the "Property") is
subject to no mortgage, pledge, lien, conditional sales agreement, encumbrance
or charge, except for: (i) liens for current taxes and assessments not in
default; (ii) mortgage or deed of trust liabilities relating to the indebtedness
and (iii) easements, covenants and restrictions of record as to the Property
assets reflected on a title commitment (to be delivered as soon as reasonably
practical after Closing. Attached to Schedule 2.4 shall be copies of all
mortgage documents, title reports, title insurance policies and appraisals
relating to the Property and a commitment for title insurance in the amount of
the purchase price, covering title to the Property, showing title in the name of
the Company.
Stockholder shall deliver to the Company at or prior to Closing and such
assignments, bills of sale, deeds and such other good and sufficient instruments
of conveyance and transfer as shall be effective to vest in the Company all
title of Stockholder to the Property and any affixed assets to be transferred
hereunder.
From time to time after the Closing without further consideration,
Stockholder will execute and deliver such other instruments of conveyance and
transfer and take such other action as the Company may reasonably request to
more effectively convey and transfer to and vest in the Company and to put the
Company in possession of the Property to be transferred hereunder. Stockholder
will also furnish the Company with such information and documents in
Stockholder's possession, control or which Stockholder can execute or cause to
be executed as will enable the Company to prosecute any and all pending claims,
applications and the like which may be assigned hereunder.
SECTION 2.5 CLOSING. The consummation of the Merger and exchange and
delivery of shares described in Sections 2.3 and 2.4 hereof and the other
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Coach, One Riverway, Suite 600, Houston, Texas 77056,
concurrently with the execution of this Agreement or at such other time and date
as Coach, the Company, the Stockholder may mutually agree, which date shall be
referred to as the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDER
The Stockholder represents and warrants to Coach as follows:
SECTION 3.1 DUE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and is duly authorized and qualified to do business under all applicable
laws, regulations, ordinances and orders of public authorities to carry on its
business in the places and in the manner as now conducted except where the
failure to be so authorized or qualified would not have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other), results of operations or prospects of the Company. Schedule 3.1 contains
a list of all jurisdictions in which the Company is authorized or qualified to
do business. True, complete and correct copies of the Articles of Incorporation
and By-laws, each as amended, of the Company are attached hereto as Schedule
3.1. The original stock records and minute books of the Company have been lost.
The amended and restated stock records and minute books that have been made
available to Coach are correct in all material respects.
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. The Company has
the full legal right, power and authority to enter into this Agreement and to
effect the Merger. The Stockholder has the full legal right, power and authority
to enter into this Agreement. The execution, delivery and performance of this
Agreement have been approved by the board of directors of the Company and by the
Stockholder. No additional corporate proceedings on the part of the Company are
necessary to authorize the execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by the Company, and,
assuming the due authorization, execution and delivery hereof by Coach and
Newco, constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, subject to the Merger Filings
and any required filings with or approvals from the Surface Transportation Board
("STB").
The execution and delivery of this Agreement by the Company do not, and
the consummation by the Company of the transactions contemplated hereby will
not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or any
of its subsidiaries under any of the terms, conditions or provisions of (i) the
Articles of Incorporation or By-laws of the Company, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any court or governmental authority applicable to the Company or
any of its properties or assets, (subject to the required filings or approvals
with the STB) or (iii) any agreement, note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, lease or other instrument,
obligation or agreement of any kind to which the Company is now a party or by
which the Company or any of its properties or assets may be bound or affected,
except as provided in Schedule 3.2(ii) and (iii), excluding from the foregoing
clauses such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens, security interests, charges or encumbrances
that would not, in the aggregate, have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of the Company.
Except for the Merger Filings and any required filings with or approvals
from the Surface Transportation Board ("STB") and state transportation and
federal tax authorities, to the best of Stockholder's knowledge, no declaration,
filing or registration with, or notice to, or authorization, consent or approval
of, any governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. Except as set forth on Schedule 3.2, to the best of
Stockholder's knowledge, none of the customer contracts or other material
agreements to which the Company is a party requires notice to, or the consent or
approval of, any governmental agency or other third party to any of the
transactions contemplated hereby to remain in full force and effect following
such transactions.
SECTION 3.3 CAPITALIZATION. The authorized capital stock of the Company
consists solely of 10,000 shares of common stock, par value $1.00 per share, of
which 10,000 shares are issued and outstanding ("Company Stock"). All of the
issued and outstanding shares of Company Stock are owned beneficially and of
record by the Stockholder as set forth on Schedule 3.3. All of the issued and
outstanding shares of Company Stock have been duly authorized and validly
issued, are fully paid and nonassessable, and were offered, issued, sold and
delivered by the Company in compliance with all applicable state and federal
laws concerning the issuance of securities. None of such shares were issued in
violation of the preemptive rights of any past or present stockholder. The
exchange of Company Stock for Coach Common Stock pursuant to the merger will
transfer to Coach valid title in the shares of the Company Stock owned by the
Stockholder, free and clear of all liens, encumbrances and claims of every kind
except for those created by Coach, subject to the required filings or approvals
with the STB. Except as set forth in Schedule 3.3, no subscription, option,
warrant, call, convertible or exchangeable security, other conversion right or
commitment of any kind exists which obligates the Company to issue any of its
capital stock or the Stockholder to transfer any of the Company Stock.
SECTION 3.4 POOLING-OF-INTERESTS ACCOUNTING. The Company has never been
a subsidiary or division of another corporation or a part of an acquisition
which was later rescinded and, within the past two years, there has not been any
sale or spin-off of a significant amount of assets of the Company or any
affiliate of the Company other than in the ordinary course of business. All
issued and outstanding shares of Company Stock were transferred by Rogers to the
Stockholder prior to the execution of this Agreement. Except as set forth on
Schedule 3.4, the Company owns no capital stock of Coach. The Company has not
acquired any of its capital stock during the past two years. Except as set forth
on Schedule 3.4, the Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of the Company Stock or any interest
therein or to pay any dividend or make any distribution in respect thereof.
Except as provided above, neither the voting stock structure of the Company nor
the relative ownership of shares among any of the Company's stockholders has
been altered or changed within the last two years in contemplation of the
Merger. Except as set forth in Schedule 3.4, none of the shares of Company Stock
was issued pursuant to awards, grants or bonuses. Except as set forth above, to
the best of Stockholder's knowledge, there has been no transaction or action
taken with respect to the equity ownership of the Company in contemplation of
the Merger which would prevent Coach from accounting for the Merger under the
pooling-of-interests method of accounting in accordance with Opinion No. 16 of
the Accounting Principles Board ("Opinion No. 16"). If required, the Stockholder
and the President or Chief Financial Officer of the Company will execute any
documentation reasonably required by Coach's independent public accountants to
enable Coach to account for the Merger as a pooling-of-interests.
SECTION 3.5 SUBSIDIARIES. Except as set forth in Schedule 3.5, as of the
Closing Date, the Company does not presently own, of record or beneficially, or
control, directly or indirectly, any capital stock, securities convertible into
or exchangeable for capital stock or any other equity interest in any
corporation, association or business entity. Except as set forth in Schedule
3.5, the Company is not, directly or indirectly, a participant in any joint
venture, partnership or other noncorporate entity.
SECTION 3.6 FINANCIAL STATEMENTS. The Stockholder has delivered to Coach
materially complete and correct copies of the following financial statements:
(i) the balance sheets of the Company as of December 31, 1995, 1994
and 1993 and the related statements of operations, of stockholder's
equity and of cash flows for the three-year period ended December 31,
1995, together with the related notes and schedules (such balance
sheets, the related statements of operations, of stockholder's equity
and of cash flows and the related notes and schedules are referred to
herein as the "Year-end Financial Statements"); and
(ii) the interim balance sheet (the "Interim Balance Sheet") of the
Company as of June 30, 1996, the balance sheet of the Company as of July
31, 1996 (the "Balance Sheet Date") and the related statements of
operations, of stockholder's equity and of cash flows for the six-month
periods ended June 30, 1996 and 1995, together with the related notes
and schedules (such balance sheets, the related statements of
operations, of stockholder's equity and of cash flows and the related
notes and schedules are referred to herein as the "Interim Financial
Statements"). The Year-end Financial Statements and the Interim
Financial Statements (collectively, the "Financial Statements") are
attached as Schedule 3.6 to this Agreement. The Financial Statements
have been prepared from the books and records of the Company
in conformity with generally accepted accounting principles applied on a basis
consistent with preceding years and throughout the periods involved ("GAAP") and
present fairly the financial position and results of operations of the Company
as of the dates of such statements and for the periods covered thereby. The
books of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered therein
represent bona fide transactions, and the revenues, expenses, assets and
liabilities of the Company have been properly recorded therein in all material
respects.
SECTION 3.7 LIABILITIES AND OBLIGATIONS. Schedule 3.7 sets forth an
accurate list as of the Balance Sheet Date of (i) all liabilities of the Company
which are reflected in the Interim Balance Sheet and (ii) any material
liabilities of any kind of the Company which are not reflected in the Interim
Balance Sheet. Except as set forth on Schedule 3.7, since the Balance Sheet
Date, the Company has not incurred any liabilities of any kind, character or
description, whether accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in the ordinary course of business
which are not materially greater than the corresponding liabilities reflected in
the Interim Balance Sheet. For each such liability for which the amount is not
fixed or is contested, the Stockholder has provided a summary description of the
liability together with copies of all relevant documentation relating thereto.
SECTION 3.8 ACCOUNTS AND NOTES RECEIVABLE. Schedule 3.8 sets forth an
accurate list of the accounts and notes receivable of the Company as of the
Balance Sheet Date and generated subsequent to the Balance Sheet Date, including
any such amounts which are not reflected in the Interim Balance Sheet.
Receivables from and advances to employees, the Stockholder and any entities or
persons related to or affiliated with the Stockholder are separately identified
on Schedule 3.8. Schedule 3.8 also sets forth an accurate aging of all accounts
and notes receivable as of the Balance Sheet Date, showing amounts due in 30-day
aging categories. The trade and other accounts receivable of the Company which
are classified as current assets on the Interim Balance Sheet are bona fide
receivables, were acquired in the ordinary course of business, are stated in
accordance with GAAP and, subject to the reserve for doubtful accounts, need not
be written-off as uncollectible. Such accounts and notes are collectible in the
aggregate amount shown on Schedule 3.8, net of reserves for doubtful accounts
reflected in the Interim Balance Sheet.
SECTION 3.9 ASSETS. Schedule 3.9 sets forth an accurate list of all real
and personal property included in "property and equipment" on the balance sheet
of the Company and all other tangible assets of the Company with a value in
excess of $5,000 (i) owned by the Company as of the Balance Sheet Date and (ii)
acquired since the Balance Sheet Date, including in each case true, complete and
correct copies of leases for significant equipment and for all real property
leased by the Company and descriptions of all real property on which buildings,
warehouses, workshops, garages and other structures used in the operation of the
business of the Company are situated. Schedule 3.9 indicates which assets are
currently owned, or were formerly owned, by the Stockholder or affiliates of the
Company or the Stockholder. Except as specifically identified on Schedule 3.9,
all of the tangible assets, vehicles and other significant machinery and
equipment of the Company listed on Schedule 3.9 are in working order and
condition, ordinary wear and tear excepted, and have been maintained in
accordance with standard industry practices. All fixed assets used by the
Company that are material to the operation of the Company's business are either
owned by the Company or leased under an agreement identified on Schedule 3.9. To
the Stockholder's knowledge, all leases set forth on Schedule 3.9 are in full
force and effect and constitute valid and binding agreements of the parties
thereto in accordance with their respective terms. Schedule 3.9 contains true,
complete and correct copies of all title reports and title insurance policies
received or owned by the Company. Schedule 3.9 also includes a summary
description of all plans or projects involving the opening of new operations,
expansion of existing operations or the acquisition of any real property or
existing business, to which management of the Company has devoted any
significant effort or expenditure in the two-year period prior to the date of
the Agreement, which if pursued by the Company would require additional
expenditures of capital.
The Company has good and indefeasible title to the tangible and
intangible personal property and the real property owned and used in its
business, including the properties identified on Schedule 3.9, subject to no
mortgage, pledge, lien, claim, conditional sales agreement, encumbrance or
charge, except for liens reflected on Schedule 3.9, liens for current taxes not
yet payable and assessments not in default, easements for utilities serving only
the property, and easements, covenants and restrictions and other exceptions to
title shown of record in the office of the County Clerks in which the
properties, assets and leasehold estates are located, which do not adversely
affect the Company's use of the property.
SECTION 3.10 MATERIAL CUSTOMERS AND CONTRACTS. Schedule 3.10 sets forth
an accurate list of (i) all customers representing 5% or more of the Company's
revenues in any of the periods covered by the Financial Statements, and (ii) all
material contracts, commitments and similar agreements to which the Company is
currently a party or by which it or any of its properties is bound, including,
but not limited to, contracts with customers, contracts with any labor
organizations, leases, loan agreements, pledge and security agreements,
indemnity or guaranty agreements, bonds, notes, mortgages, joint venture or
partnership agreements, options to purchase real or personal property, and
agreements relating to the purchase or sale by the Company of assets or
securities. Schedule 3.10 contains true, complete and correct copies of all such
agreements. Except to the extent set forth on Schedule 3.10, (i) none of the
Company's material customers has canceled or substantially reduced or is, to the
Stockholder's knowledge, currently attempting or threatening to cancel or
substantially reduce its use of the Company's services and (ii) to the
Stockholder's knowledge, the Company has complied with all material commitments
and obligations pertaining to it under such agreements and is not in default
under any such agreements, no notice of default has been received by the Company
and the Stockholder is aware of no basis therefor. Except as set forth on
Schedule 3.10, the Company is not now and has never been a party to any
governmental contracts subject to price redetermination or renegotiation.
SECTION 3.11 PERMITS. Schedule 3.11 contains an accurate list, summary
description and copies of all licenses, franchises, permits, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business including, without
limitation, permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel permits, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company. To the Stockholder's knowledge, the
licenses, operating authorizations, franchises, permits and other governmental
authorizations listed on Schedule 3.11 are valid, and the Company has not
received any notice that any governmental authority intends to cancel, terminate
or not renew any such license, operating authorization, franchise, permit or
other governmental authorization. To the Stockholder's knowledge, the Company
holds all licenses, operating authorizations, franchises, permits and other
governmental authorizations the absence of any of which could have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the Company. To the
Stockholder's knowledge, the Company has conducted and is conducting its
business in substantial compliance with the requirements, standards, criteria
and conditions set forth in its licenses, operating authorizations, franchises,
permits and other governmental authorizations as well as the applicable orders,
approvals and variances related thereto, and is not in violation of any of the
foregoing except for any violations that would not have a material and adverse
effect on the business, operations, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company. Except as
specifically provided in Schedule 3.11, to the Stockholder's knowledge, the
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Company by, any such material licenses, operating
authorizations, franchises, permits and other government authorizations.
SECTION 3.12 ENVIRONMENTAL MATTERS. The Company has complied with and is
in compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to it or any of its properties, assets, operations
and businesses relating to the protection of the environment (collectively,
"Environmental Laws") including, without limitation, Environmental Laws relating
to air, water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (as such terms are defined in any applicable Environmental Law)
except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, does not and would not (i) have a material adverse
effect on the Company or any of its businesses or (ii) necessitate a material
expenditure by or on behalf of the Company. The Company has obtained and
complied with all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances and has reported, to the extent required by
all Environmental Laws, all past and present sites owned and operated by the
Company where Hazardous Wastes, Hazardous Materials or Hazardous Substances have
been treated, stored, disposed of or otherwise handled. To the Stockholder's
knowledge, there have been no "releases" or threats of "releases" (as defined in
any Environmental Laws) at, from, in or on any property owned or operated by the
Company except as permitted by Environmental Laws. There is no on-site or
off-site location to which the Company has transported or disposed of Hazardous
Wastes, Hazardous Materials and Hazardous Substances or arranged for the
transportation or disposal of Hazardous Wastes, Hazardous Materials and
Hazardous Substances which is the subject of any federal, state, local or
foreign enforcement action or any other investigation which could lead to any
claim against the Company, Coach or Newco for any clean-up cost, remedial work,
damage to natural resources or personal injury, including, but not limited to,
any claim under (i) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, (ii) the Resource Conservation and Recovery
Act, (iii) the Hazardous Materials Transportation Act or (iv) comparable state
and local statutes and regulations. The Company has no contingent liability in
connection with any release of any Hazardous Waste, Hazardous Material or
Hazardous Substance into the environment.
SECTION 3.13 LABOR AND EMPLOYEE RELATIONS. Except as set forth in
Schedule 3.13, the Company is not bound by or subject to any arrangement with
any labor union. No employees of the Company are represented by any labor union
or covered by any collective bargaining agreement nor, to the best of the
Stockholder's knowledge, is any campaign to establish such representation in
progress. There is no pending or threatened labor dispute involving the Company
and any group of its employees nor has the Company experienced any labor
interruptions over the past five years. The Company considers its relationship
with its employees to be good.
SECTION 3.14 INSURANCE. Schedule 3.14 sets forth an accurate list as of
the Balance Sheet Date of all insurance policies carried by the Company and of
all insurance loss runs or worker's compensation claims received for the past
five (5) policy years. Also attached to Schedule 3.14 are true, complete and
correct copies of all of the Company's insurance policies, covering at least the
past three years. None of such policies is a "claims made" policy. The insurance
policies set forth on Schedule 3.14 provide adequate coverage against the risks
involved historically in the Company's business. Such policies are currently in
full force and effect.
SECTION 3.15 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 3.15 sets
forth an accurate schedule of all officers, directors and key employees of the
Company, listing all employment agreements with such officers, directors and
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus, benefits and other compensation, respectively) of each of such
persons as of (i) the Balance Sheet Date and (ii) the date hereof. Attached to
Schedule 3.15 are true, complete and correct copies of all such employment
agreements and all other employment agreements and other similar agreements or
arrangements containing "golden parachute" or other similar provisions.
SECTION 3.16 EMPLOYEE BENEFIT PLANS. The Company does not currently
have, nor has it ever had, any employee benefit plans.
SECTION 3.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in
Schedule 3.17, there are no claims, actions, suits or proceedings, pending or
threatened against or, to the Stockholder's knowledge, affecting the Company, at
law or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
having jurisdiction over the Company. No notice of any claim, action, suit or
pro ceeding, whether pending or threatened, has been received by the Company and
there is no basis therefor. Except to the extent set forth on Schedule 3.17, to
the Stockholder's knowledge, the Company has conducted for the past five years
and does conduct its business in material compliance with all laws, regulations,
writs, injunctions, decrees and orders applicable to the Company or its assets.
SECTION 3.18 TAXES. For purposes of this Agreement, the term "Taxes"
shall mean all taxes, charges, fees, levies or other assessments including,
without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments. Except as
disclosed on Schedule 3.18, the Company has timely filed all requisite federal,
state, local and other tax returns for all fiscal periods ended on or before the
Effective Time, and has duly paid in full or made adequate provision in the
Financial Statements for the payment of all Taxes for all periods ending at or
prior to the Closing Date. Except as set forth on Schedule 3.18, there are no
examinations in progress or claims against the Company for any period or periods
prior to and including the Balance Sheet Date and no notice of any claim for
Taxes, whether pending or threatened, has been received. The amounts shown as
accruals for Taxes on the financial statements of the Company as of the Balance
Sheet Date are sufficient for the payment of all Taxes for all fiscal periods
ended on or before that date. Copies of (i) any tax examinations, (ii)
extensions of statutory limitations and (iii) the federal, state and local Tax
returns of the Company for the last three fiscal years are attached hereto as
Schedule 3.18. The Company currently utilizes the accrual method of accounting
for income tax purposes. Such method of accounting has not changed in the past
five years.
During all tax periods ended prior to the Closing Date for which the
statute of limitations has not expired, the Company has conducted its business
in a manner which entitles it to protection under the safe harbor provisions of
Section 530(a) of the Revenue Act of 1978, which was extended indefinitely by
Section 269(c) of the Tax Equity and Fiscal Responsibility Act of 1982, both as
amended by the Internal Revenue Code of 1986, as amended.
SECTION 3.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the
Company has conducted its operations in the ordinary course and, except as set
forth on Schedule 3.19, there has not been:
(i) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities
(contingent or otherwise) or income of the Company;
(ii)any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the Company;
(iii) any change in the authorized capital stock of the Company or in
its securities outstanding or any change in the Stockholder's ownership
interest or any grant of any options, warrants, calls, conversion rights
or commitments or the declaration or payment of any dividend or other
distribution;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
Company;
(v) any increase in the compensation payable or to become payable by
the Company to any of its officers, directors, Stockholder, employees,
consultants or agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice;
(vi) any work interruptions, labor grievances or claims filed, or any
proposed law, regulation or event or condition of any character
materially adversely affecting the business or future prospects of the
Company, except as affecting the industry as a whole or the local
economy in general;
(vii) any sale or transfer, or any agreement to sell or transfer, any
material assets, properties or rights of the Company to any person,
including, without limitation, the Stockholder and his affiliates;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any increase in the Company's indebtedness, other than
accounts payable incurred in the ordinary course of business;
(x) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to
the transfer and assignment of any such assets, property or rights;
(xi) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xii) any waiver of any material rights or claims of the Company;
(xiii) to the knowledge of the Stockholder, any material breach,
amendment or
termination of any material contract, agreement, license, permit or
other right to which the Company is a party; or
(xiv) any transaction by the Company outside the ordinary course of
business.
SECTION 3.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.
Schedule 3.20 sets forth an accurate schedule as of the (i) Balance Sheet Date
and (ii) date of the Agreement, of (A) the name of each financial institution or
brokerage firm in which the Company has accounts or safe deposit boxes; (B) the
names in which the accounts or boxes are held; (C) the type of account and the
cash, cash equivalents and securities held in such account; and (D) the name of
each person authorized to draw thereon or have access thereto. Schedule 3.20
also sets forth the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the Company and a
description of the terms thereof.
SECTION 3.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company
nor any of its affiliates has given or offered to give anything of value to any
governmental official, political party or candidate for government office nor
has it otherwise taken any action which would constitute a violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any similar law.
SECTION 3.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.
Except as set forth in Schedule 3.22, neither the Stockholder nor any other
affiliate of the Company owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of or otherwise receives remuneration
from, any business which is a competitor, lessor, lessee, customer or supplier
of the Company. Except as set forth in Schedule 3.22, no officer, director or
Stockholder of the Company has, nor during the period beginning January 1, 1990
through the date hereof, had any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
SECTION 3.23 INTANGIBLE PROPERTY. Schedule 3.23 sets forth an accurate
list of all patents, patent applications, trademarks, service marks, trade
names, copyrights, and other intellectual property or proprietary property
rights owned or used by the Company. To the knowledge of the Stockholder, the
Company owns or possesses sufficient legal rights to use all of such items
without conflict with or infringement of the rights of others.
SECTION 3.24 DISCLOSURE. None of the information provided to Coach nor
any representation or warranty of the Stockholder contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to the
Stockholder which has specific application to the Company (other than general
economic, local conditions or industry conditions) and which materially
adversely affects or, so far as the Stockholder can reasonably foresee,
materially threatens, the assets, business, condition (financial or otherwise),
results of operations or prospects of the Company which has not been described
in this Agreement or the Schedules hereto or otherwise disclosed in writing to
Coach. The disclosures in the Schedules, and those in any supplement thereto,
shall relate only to the representations and warranties in the Section of this
Agreement to which each Schedule expressly relates and to no other
representation or warranty in this Agreement or reasonably inferred therefrom.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
Coach and Newco represent and warrant to the Stockholder as follows:
SECTION 4.1 ORGANIZATION. Each of Coach and Newco is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and is duly authorized and qualified under all applicable laws,
regulations, and ordinances of public authorities to carry on its business in
the places and in the manner now conducted except where the failure to be so
authorized or qualified would not have a material adverse effect on its
business.
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. Each of Coach
and Newco has the full legal right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement have been approved by the boards of
directors of Coach and Newco and by the sole stockholder of Newco. No additional
corporate proceedings on the part of Coach or Newco are necessary to authorize
the execution and delivery of this Agreement and the consummation by Coach and
Newco of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Coach and Newco, and, assuming the due
authorization, execution and delivery by the Company and the Stockholder
constitutes a valid and binding agreement of Coach and Newco, enforceable
against Coach and Newco in accordance with its terms.
The execution and delivery of this Agreement by Coach do not, and the
consummation by Coach of the transactions contemplated hereby will not, violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Coach or any of its subsidiaries under
any of the terms, conditions or provisions of (i) the Restated Certificate of
Incorporation or By-Laws of Coach, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Coach or any of its properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Coach is now a party or by which Coach or any
of its properties or assets may be bound or affected, excluding from the
foregoing clauses (ii) and (iii) such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances that would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Coach.
Except for the Merger Filings, any required filings with or approvals
from the STB and state transportation authorities and such filings as may be
required under federal or state securities or tax laws, no declaration, filing
or registration with, or notice to, or authorization, consent or approval of,
any governmental or regulatory body or authority is necessary for the execution
and delivery of this Agreement by Coach or the consummation by Coach of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of Coach.
SECTION 4.3 COACH COMMON STOCK. The shares of Coach Common Stock to be
issued hereunder pursuant to the Merger, when issued in accordance with the
terms of this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable. The issuance of Coach Common Stock pursuant to this Agreement
will transfer to the Stockholder valid title to such shares of Coach Common
Stock, free and clear of all liens, encumbrances and claims of every kind except
for any created by the Stockholder or Owner.
SECTION 4.4 SEC FILINGS; DISCLOSURE. Coach has filed with the Securities
and Exchange Commission ("SEC") all material forms, statements, reports and
documents required to be filed by it under each of the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the respective rules and regulations thereunder, all of
which, as amended, if applicable, complied when filed in all material respects
with all applicable requirements of the appropriate Act and the rules and
regulations thereunder. Coach has previously delivered to the Stockholder copies
of the Prospectus, dated July 16, 1996 (the "Prospectus"), contained in the
Company's Registration Statement on Form S-1 filed under Rule 415 of the 1933
Act, and certain additional information concerning Coach. As of its date, the
Prospectus did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 4.5 INVESTMENT INTENT QUALIFICATION. Coach has had an adequate
opportunity to ask questions and receive answers from the officers of the
Company concerning any and all matters relating to the transactions described
herein including without limitation the background and experience of the
officers and directors of the Company, the plans for the operations of the
business of the Company, the business, operations and financial condition of the
Company, and any plans for additional acquisitions and the like. Coach has asked
any and all questions in the nature described in the preceding sentence and all
questions have been answered to its satisfaction.
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 RELEASE FROM GUARANTEES. Coach shall use its best efforts to
have the Stockholder and/or Rogers released from the personal guarantees of the
Company's indebtedness and any other of Company's indebtedness attached hereto
for which Stockholder and/or Rogers are personally liable identified on Schedule
5.1. In the event that Coach cannot obtain releases of any such guarantees on or
prior to one hundred and twenty (120) days subsequent to the date hereof, Coach
shall pay off or otherwise refinance or retire such indebtedness. Coach will
indemnify and hold the Stockholder and Rogers harmless from any and all
liability associated with such guarantees and indebtedness.
SECTION 5.2 FUTURE COOPERATION; TAX MATTERS. The Stockholder and Coach
shall each deliver or cause to be delivered to the other following the Effective
Time such additional instruments as the other may reasonably request for the
purpose of fully carrying out this Agreement. The Stockholder will cooperate and
use his reasonable best efforts to have the present officers, directors and
employees of the Company cooperate with Coach and/or Newco at and after the
Effective Time in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to all periods prior to the
Effective Time. Coach will cooperate with the Stockholder in the preparation of
all tax returns covering the period from the beginning of the Company's current
tax year through the Closing. In addition, Coach will provide the Stockholder
with access to such of its books and records as may be reasonably requested by
the Stockholder in connection with federal, state and local tax matters relating
to periods prior to the Closing. The Stockholder shall have control over the
preparation and audits, if any, of the tax returns for any period prior to
Closing.
SECTION 5.3 EXPENSES. Coach will pay the fees, expenses and
disbursements of Coach and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments thereto. The Stockholder will pay the fees,
expenses and disbursements of the Stockholder and Stockholder's agents,
representatives, financial advisors, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto.
SECTION 5.4 EMPLOYMENT AGREEMENT(S). Concurrently with the execution of
this Agreement, the Company shall enter into the Employment Agreements attached
as Exhibit 5.4(A) and 5.4(B) with Lanny Rogers and Gregory Rogers, respectively.
SECTION 5.5 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with
the execution of this Agreement, (i) the Stockholder shall represent and warrant
that as of the Closing Date there are no amounts outstanding as advances to or
receivables from the Stockholder, and (ii) the Company shall repay all amounts
outstanding under loans to the Company from the Stockholder.
ARTICLE VI
INDEMNIFICATION
The Stockholder, Rogers, Coach and Newco each make the following
covenants:
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDER AND ROGERS. The
Stockholder and Rogers jointly and severally covenant and agree that they will
indemnify, defend, protect and hold harmless Coach, Newco and the Company, and
their respective officers, directors, employees, stockholders, agents,
representatives and affiliates, at all times from and after the date of this
Agreement until the Expiration Date (as defined in Section 11.7) from and
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by any of
such indemnified persons as a result of or arising from (i) any breach of the
representations and warranties of the Stockholder or Rogers set forth herein or
in the Schedules or certificates delivered in connection herewith, and (ii) any
breach or nonfulfillment of any covenant or agreement on the part of the
Stockholder, Rogers or the Company under this Agreement. Notwithstanding the
above, the Stockholder and Rogers shall not have to indemnify Coach, Newco and
the Company (i) with respect to any amount which is fully covered by insurance,
and (ii) until such time as the aggregate amount of all indemnity claims exceeds
One Hundred Thousand Dollars ($100,000). Notwithstanding anything else contained
herein to the contrary, in no event will the aggregate liability of the
Stockholder and Rogers under this Agreement ever exceed Five Million Dollars
($5,000,000).
SECTION 6.2 INDEMNIFICATION BY COACH. Coach covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder and Rogers at
all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by the Stockholder or Rogers as a result of or arising from (i) any
breach of the representations and warranties set forth herein or in the
Schedules or certificates attached hereto, and (ii) any breach or nonfulfillment
of any covenant or agreement on the part of Coach or Newco under this Agreement.
SECTION 6.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall give to the party obligated to provide indemnification pursuant to
Section 6.1 or 6.2 hereof (hereinafter the "Indemnifying Party") written notice
of such claim or the commencement of such action or proceeding. Such notice
shall state the nature and the basis of such claim and a reasonable estimate of
the amount thereof. The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel, any such matter so long as
the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records and other
information reasonably requested by the Indemnifying Party and in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
PROVIDED that if counsel to the Indemnifying Party shall have a conflict of
interest that prevents such counsel from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the reasonable expenses of its counsel. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability. If the Indemnifying Party desires to accept a final and complete
settlement of any such Third Person claim and the Indemnified Party refuses to
consent to such settlement, then the Indemnifying Party's liability under this
Section with respect to such Third Person claim shall be limited to the amount
so offered in settlement by said Third Person and the Indemnified Party shall
reimburse the Indemnifying Party for any additional costs of defense which it
subsequently incurs with respect to such claim and all additional costs of
settlement or judgment. If the Indemnifying Party does not undertake to defend
such matter to which the Indemnified Party is entitled to indemnification
hereunder, or fails diligently to pursue such defense, the Indemnified Party may
undertake such defense through counsel of its choice, at the reasonable cost and
expense of the Indemnifying Party, and the Indemnified Party may settle such
matter, and the Indemnifying Party shall reimburse the Indemnified Party for the
amount paid in such settlement and any other liabilities or expenses incurred by
the Indemnified Party in connection therewith, provided, HOWEVER, that under no
circumstances shall the Indemnified Party settle any Third Person claim without
the written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES. Rogers will not, for a period of five
(5) years following the Closing Date, directly or indirectly, for himself or on
behalf of or in conjunction with any other person, company, partnership,
corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial or advisory capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering any services or products in
direct competition with Coach or any of its subsidiaries within 100
miles of where Coach or any of its subsidiaries conducts business,
including any territory serviced by Coach or any of such subsidiaries
(the "Territory");
(ii)call upon any person who is, at that time, within the Territory,
an employee of Coach or any of its subsidiaries for the purpose or with
the intent of enticing such employee away from or out of the employ of
Coach or any of its subsidiaries; or
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of Coach or
any of its subsidiaries within the Territory for the purpose of
soliciting or selling services or products in direct competition with
Coach or any of its subsidiaries within the Territory. Notwithstanding
the above, the foregoing covenant shall not be deemed to prohibit Rogers
from (i) acquiring, as a passive investor with no involvement in the operations
of the business, not more than one percent (1%) of the capital stock of any
company whose stock is publicly traded on a national securities exchange or
over-the-counter or (ii) from participating in as an owner, director, officer or
in any other capacity, a business engaged in the operation of a high-end
motorcoach service within or without the territory.
SECTION 7.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to Coach as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to Coach
for which it would have no other adequate remedy, Rogers agrees that the
foregoing covenant may be enforced by Coach by injunctions, restraining orders
and other equitable actions.
SECTION 7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto
that the foregoing covenants in this Article VII impose a reasonable restraint
on Rogers in light of the activities and business of Coach on the date of the
execution of this Agreement and the current plans of Coach; but it is also the
intent of Coach and Rogers that such covenants be construed and enforced in
accordance with the changing locations of Coach and its subsidiaries throughout
the term of this covenant. During the term of this covenant, if Coach or one of
its subsidiaries establishes new locations for its current activities or
business in addition to or other than the activities or business it is currently
conducting in the locations currently established therefor, then Rogers will be
precluded from soliciting the customers or employees of such new activities or
business or from such new location and from directly competing within 100 miles
of its then- established operating location(s) through the term of this
covenant.
SECTION 7.4 SEVERABILITY; REFORMATION. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in this Article VII are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable and this
Agreement shall thereby be reformed.
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT. Rogers acknowledges that
his agreement with the covenants set forth in this Article VII is a material
condition to Coach's agreement to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All of the covenants in this
Article VII shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or cause of action
of Rogers against Coach or one of its subsidiaries, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
Coach of such covenants. It is specifically agreed that the five-year period
during which the agreements and covenants of Rogers made in this Article VII
shall survive shall be computed by excluding from such computation any time
during which Rogers is in violation of any provision of this Article VII. The
covenants contained in this Article VII shall not be affected by any breach of
any other provision hereof by any party hereto.
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL. The Stockholder recognizes and acknowledges that he
had in the past, currently has, and in the future will have, access to certain
confidential information of the Company and/or Coach, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company and/or Coach. The Stockholder
agrees that he will not disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose whatsoever,
except as is required in the course of performing his duties to the Company
and/or Coach, unless (i) such information becomes known to the public generally
through no fault of the Stockholder, or (ii) disclosure is required by law or
the order of any governmental authority, provided, that prior to disclosing any
information pursuant to this clause (ii) the Stockholder shall, if possible,
give prior written notice thereof to Coach and provide Coach with the
opportunity to contest such disclosure. In the event of a breach or threatened
breach by the Stockholder of the provisions of this Section, Coach shall be
entitled to an injunction restraining the Stockholder from disclosing, in whole
or in part, such confidential information. Nothing herein shall be construed as
prohibiting Coach from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
SECTION 8.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
the Company and/or Coach would have no other adequate remedy, the Stockholder
agrees that the foregoing covenants may be enforced against him by injunctions,
restraining orders and other equitable actions.
SECTION 8.3 SURVIVAL. The obligations of the parties under this Article
VIII shall survive the termination of this Agreement.
ARTICLE IX
TRANSFER RESTRICTIONS RELATED TO POOLING-OF-INTERESTS
ACCOUNTING AND INTENDED TAX TREATMENT
SECTION 9.1 RESTRICTIONS ON RESALE. Coach has informed the Stockholder
that Coach intends to account for the Merger as a pooling-of-interests under
Opinion No. 16. Coach has also informed the Stockholder that its ability to
account for the Merger as a pooling-of-interests was a material factor
considered by Coach in Coach's decision to enter into this Agreement. Therefore,
pursuant to Opinion No. 16, prior to the publication and dissemination by Coach
of consolidated financial results which include results of the combined
operations of the Company and Coach for at least thirty days on a consolidated
basis following the Effective Time, the Stockholder shall not sell, offer to
sell, or otherwise transfer or dispose of, any shares of the Coach Common Stock
received by them, engage in put, call, short-sale, straddle or similar
transactions, or in any other way reduce their risk of owning shares of Coach.
The certificates evidencing the Coach Common Stock to be received by the
Stockholder will bear a legend substantially in the form set forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, PRIOR TO THE PUBLICATION AND
DISSEMINATION OF FINANCIAL STATEMENTS BY THE ISSUER WHICH INCLUDE THE
RESULTS OF AT LEAST THIRTY (30) DAYS OF COMBINED OPERATIONS OF THE
ISSUER AND THE COMPANY ACQUIRED BY THE ISSUER FOR WHICH THESE SHARES ARE
ISSUED. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE
ISSUER WILL REMOVE THIS RESTRICTIVE LEGEND WHEN THIS REQUIREMENT HAS
BEEN MET.
SECTION 9.2 TAX-FREE REORGANIZATION. Coach and the Stockholder are
entering into this Agreement with the intention that the Merger qualify as a
tax-free reorganization for federal income tax purposes, except to the extent of
any "boot" received, and the Stockholder will not take any actions that
disqualify the Merger for such treatment.
ARTICLE X
REGISTRATION OF COACH STOCK; FEDERAL SECURITIES ACT
SECTION 10.1 REGISTRATION OBLIGATION. As soon as practicable after the
date hereof, but in no event later than October 1, 1996, Coach shall file a
registration statement under the 1933 Act, covering the registration of
forty-nine percent (49%) of the Coach Common Stock (such shares of Coach Common
Stock are referred to herein as "Shelf Shares") to be received by the
Stockholder pursuant to this Agreement for resale by the Stockholder. In
connection with such registration statement, Coach shall, as expeditiously as
reasonably possible:
(a) use its best efforts to cause such registration statement to
become effective and keep such registration statement effective for two
years (or such shorter period after which Coach Common Stock may be sold
by the Stockholder in accordance with the requirements of Rule 144 under
the 1933 Act); provided, however, that Coach shall not be deemed to have
used its best efforts to keep the registration statement effective
during the applicable period if Coach voluntarily takes any action
(except for a public offering as provided in (f) below) that results in
the Stockholder not being able to sell the Shelf Shares during such
period, unless such action is required by law;
(b) use its best efforts to prepare and file with the SEC such
amendments and supplements to such registration statement as may be
necessary to comply with the provisions of the 1933 Act;
(c) no less than twenty-four (24) hours prior to filing a
registration statement or prospectus or any amendment or supplement
thereto, furnish to the Stockholder copies of all documents proposed to
be filed to permit the reasonable and timely review of statements
contained in such documents pertaining to such parties and thereafter
furnish to the Stockholder such number of copies of such registration
statement, each amendment and supplement thereto, such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the 1933 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Shelf
Shares to be received by them pursuant to this Agreement;
(d) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Stockholder, and to keep such registration or qualification
effective during the period such registration statement is to be kept
effective, provided that Coach shall not be required to become subject
to taxation, to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(e) use its best efforts to maintain the authorization for
quotation of the securities covered by such registration statement on
the NASDAQ National Market of the Nasdaq Stock Market, Inc.;
(f) notify the Stockholder at any time when the Stockholder must
suspend offers or sales of Shelf Shares under the registration
statement, either because the prospectus included in such registration
statement is required to be amended for any reason, such as an amendment
under the 1933 Act to provide current information, or because the
prospectus includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
then existing. Coach shall use its best efforts to enable the
Stockholder to recommence offers and sales under the registration
statement. Notwithstanding the foregoing and anything to the contrary
set forth in this Section 10.1, the Stockholder acknowledges that there
may occasionally be times when Coach must suspend the use of the
prospectus included in such registration statement until such time as an
amendment to the registration statement has been filed by Coach and
declared effective by the SEC, or until such time as Coach has filed an
appropriate report with the SEC pursuant to the 1934 Act. The
Stockholder hereby covenants that he will not offer or sell any shares
of Coach stock pursuant to such prospectus during the period commencing
when Coach notifies the Stockholder of the suspension of the use of such
prospectus and ending when Coach notifies the Stockholder that he may
thereafter effect offers and sales pursuant to such prospectus; and
(g) use its best efforts to cause all Shelf Shares to be listed,
by the date of the first sale of Shelf Shares pursuant to such
registration statement, on each securities exchange on which the shares
of Common Stock of Coach are then listed or proposed to be listed.
SECTION 10.2 FURNISH INFORMATION. It is a condition precedent to the
obligations of Coach to take any action pursuant to Section 10.1 hereof with
respect to the Shelf Shares of Stockholder that the Stockholder shall furnish to
Coach such information regarding themselves, the Coach Common Stock held by them
and the intended method of disposition of such securities as shall be required
to effect the registration of the Stockholder's Shelf Shares and as may be
required from time to time to keep such registration current.
SECTION 10.3 EXPENSES OF REGISTRATION. Except as otherwise provided, all
expenses incurred by or on behalf of Coach in connection with registrations,
filings or qualifications pursuant to Section 10.1 hereof, including without
limitation all registration, filing and qualification fees, any fees in
connection with state securities laws, the fees and expenses incurred in
connection with the listing of the Shelf Shares to be registered on each
security exchange on which shares of Common Stock of Coach are then listed,
printers' and accounting fees, and fees and disbursements of counsel for Coach,
shall be borne by Coach. In no event shall Coach be obligated to bear
underwriting, brokerage or related fees, discounts or commissions or the fees or
expenses of counsel to the Stockholder.
SECTION 10.4 FURTHER ASSURANCES. Each of Coach, the Stockholder shall
agree to such other reasonable and customary arrangements, undertakings and
indemnifications with respect to the registration of the Shelf Shares to be
received by the Stockholder pursuant to the Agreement as may be requested by any
of them, but shall not be obligated to enter into any underwriting arrangements.
Such indemnifications shall include Coach's indemnity of the Stockholder and his
brokers or dealers which may be deemed to be underwriters as reasonably
requested by the Stockholder and his brokers or dealers against liability,
including liability arising under the 1933 Act.
SECTION 10.5 RULE 144. Coach covenants that it will at all times use its
best efforts to timely file any reports required to be filed by it under the
1933 Act and the 1934 Act and that it will take such other actions as may be
necessary or the Stockholder may reasonably request to enable the Stockholder to
sell the Coach Common Stock without registration under applicable exemptions
provided for under the 1933 Act including, without limitation, Rule 144.
SECTION 10.6 ECONOMIC RISK; SOPHISTICATION.
(a) Each Stockholder and Owner represents and warrants that the
Stockholder or Owner has not relied on any purchaser representative, or on the
Company in connection with the acquisition of shares of Coach Common Stock
hereunder. The Stockholder (A) has such knowledge, sophistication and experience
in business and financial matters that he is capable of evaluating the merits
and risks of an investment in the shares of Coach Common Stock, (B) fully
understands the nature, scope and duration of the limitations on transfer
described in this Agreement and (C) can bear the economic risk of an investment
in the shares of Coach Common Stock and can afford a complete loss of such
investment. The Stockholder has had an adequate opportunity to ask questions and
receive answers from the officers of Coach concerning any and all matters
relating to the transactions described herein including without limitation the
background and experience of the officers and directors of Coach, the plans for
the operations of the business of Coach, the business, operations and financial
condition of Coach, and any plans for additional acquisitions and the like. The
Stockholder has asked any and all questions in the nature described in the
preceding sentence and all questions have been answered to his satisfaction.
(b) Each Stockholder and Owner further represents, warrants,
acknowledges and agrees that (x) he is acquiring the shares of Coach Common
Stock under this Agreement for his own account, as principal and not on behalf
of other persons, and for investment and not with a view to the resale or
distribution of all or any part of such shares, (y) he will not sell or
otherwise transfer such shares unless, in the opinion of counsel who is
satisfactory to the Company, the transfer can be made without violating the
registration provisions of the 1933 Act, as amended, and the rules and
regulations thereunder, unless such sale or transfer is under an effective
registration statement, and (z) the certificate representing such shares will
also bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SHARES
REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
PLEDGED OR HYPOTHECATED, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH
SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE
OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
SECTION 10.7 SALES OF STOCK. By its execution and delivery of this
Agreement, the Stockholder represents and warrants to the Company that he does
not have any contract, undertaking, agreement or arrangement, written or oral,
with any other person to sell, transfer or grant participation in any shares of
Coach Common Stock to be acquired by the Stockholder.
SECTION 10.8 PLAN OF DISTRIBUTION. The Shelf Shares may be sold by the
Stockholder or by pledgees, donees, transferees or other successors in interest.
Such sales may be made at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. The Shelf Shares may be sold by one or more of
the following: (a) one or more stock trades in which a broker or dealer so
engaged will attempt to sell all or a portion of the Shelf Shares held by
Stockholder as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to a
prospectus; and (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. The Stockholder may effect such transactions by
selling shares to or through broker-dealers, and such broker-dealers will
receive compensation in negotiated amounts in the form of discounts,
concessions, commissions or fees from the Stockholder and/or the purchasers of
the shares for whom such broker-dealers may act as agent or to whom they sell as
principal or both (which compensation to a particular broker-dealer might be in
excess of customary commissions). Such brokers or dealers or other participating
brokers or dealers and the Stockholder may be deemed to be "underwriters" within
the meaning of the 1933 Act, in connection with such sales.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of
the parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors of Coach, Newco, the Company and the Stockholder and the heirs and
legal representatives of Rogers.
SECTION 11.2 ENTIRE AGREEMENT. This Agreement (including the Schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholder,
Rogers, the Company, Newco and Coach and supersede any prior agreement and
understanding relating to the subject matter of this Agreement. This Agreement
may be modified or amended only by a written instrument executed by the
Stockholder, Rogers, the Company, Newco and Coach, acting through their
respective officers, duly authorized by their respective Boards of Directors.
SECTION 11.3 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
SECTION 11.4 BROKERS AND AGENTS. Each party agrees to indemnify the
other against all loss, cost, damages or expense arising out of claims for fees
or commissions of brokers employed or alleged to have been employed by such
indemnifying party.
SECTION 11.5 NOTICES. All notices and communications required or
permitted hereunder shall be in writing and may be given by depositing the same
in the United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, or by
delivering the same in person to an officer or agent of such party, as follows:
(A) If to Coach or Newco, addressed to them at:
One Riverway, Suite 600
Houston, Texas 77056-1903
Attn: Law Department
(B) If to the Stockholder, addressed to it at:
Rogers Investments, Ltd.
2310 Trail River Drive
Kingwood, Texas 77345
Attn: Mr. Lanny Rogers
If to Rogers, addressed to him at:
Mr. Lanny Rogers
2310 Trail River Drive
Kingwood, Texas 77345
With a copy to:
Jay R. Houren, Esq.
Crady, Jewett & McCulley, L.L.P.
909 Fannin, Suite 1400
Houston, Texas 77010-1006
or to such other address as any party hereto shall specify pursuant to
this Section 11.5 from time to time.
SECTION 11.6 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas (except for its principles
governing conflicts of laws), and venue for any dispute shall lie exclusively in
the courts of Harris County, Texas.
SECTION 11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Articles III and IV shall survive
the Closing for a period of twelve (12) months from the Closing Date (which date
is hereinafter called the "Expiration Date"), and such time limitation shall
supersede any applicable statute of limitations, and the warranties and
representations set forth in Section 3.18 hereof shall survive until such time
as the limitations period has run for all tax periods ended prior to the Closing
Date, which shall be deemed to be the Expiration Date for Section 3.18.
SECTION 11.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default occurring before or after that waiver.
SECTION 11.9 TIME. Time is of the essence with respect to this
Agreement.
SECTION 11.10 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COACH USA, INC. GULF COAST TRANSPORTATION
COMPANY
By: By:
Name: Richard H. Kristinik Name: Lanny Rogers
Title: Chief Executive Officer Title: President
COACH IV ACQUISITION, INC. ROGERS INVESTMENTS, LTD.
By: By:
Name: Douglas M. Cerny Name: Lanny Rogers
Title: President Title: Managing General Partner
Lanny Rogers, individually
EXHIBIT 2.3
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF THE 29TH DAY OF AUGUST, 1996
BY AND AMONG
COACH USA, INC.,
COACH V ACQUISITION, INC.,
YELLOW CAB SERVICE CORPORATION,
GEORGE D. KAMINS,
JOSEPH M. CHERNOW AND
EQUUS II INCORPORATED
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER
SECTION 1.2 EFFECTIVE TIME OF THE MERGER
SECTION 1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD
OF DIRECTORS OF SURVIVING CORPORATION
ARTICLE II
CONVERSION OF SHARES; ACQUISITION OF PROPERTY FOR SHARES
SECTION 2.1 CONVERSION OF COMPANY SHARES
SECTION 2.2 CONVERSION OF NEWCO SHARES
SECTION 2.3 EXCHANGE OF CERTIFICATES
SECTION 2.4 CONVEYANCE OF THE PROPERTY
SECTION 2.5 CLOSING
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND
THE EQUUS STOCKHOLDER
SECTION 3.1 DUE ORGANIZATION
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 3.3 CAPITALIZATION
SECTION 3.4 POOLING-OF-INTERESTS ACCOUNTING
SECTION 3.5 SUBSIDIARIES
SECTION 3.6 FINANCIAL STATEMENTS
SECTION 3.7 LIABILITIES AND OBLIGATIONS
SECTION 3.8 ACCOUNTS AND NOTES RECEIVABLE
SECTION 3.9 ASSETS
SECTION 3.10 MATERIAL CUSTOMERS AND CONTRACTS
SECTION 3.11 PERMITS
SECTION 3.12 ENVIRONMENTAL MATTERS
SECTION 3.13 LABOR AND EMPLOYEE RELATIONS
SECTION 3.14 INSURANCE
SECTION 3.15 COMPENSATION; EMPLOYMENT AGREEMENTS
SECTION 3.16 EMPLOYEE BENEFIT PLANS
SECTION 3.17 LITIGATION AND COMPLIANCE WITH LAW
SECTION 3.18 TAXES
SECTION 3.19 ABSENCE OF CHANGES
SECTION 3.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF
ATTORNEY
SECTION 3.21 ABSENCE OF CERTAIN BUSINESS PRACTICES
SECTION 3.22 COMPETING LINES OF BUSINESS; RELATED-PARTY
TRANSACTIONS
SECTION 3.23 INTANGIBLE PROPERTY
SECTION 3.24 DISCLOSURE
i
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
SECTION 4.1 ORGANIZATION
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 4.3 COACH COMMON STOCK
SECTION 4.4 SEC FILINGS; DISCLOSURE
SECTION 4.5 ABSENCE OF CHANGES
SECTION 4.6 NO RELIANCE ON FORECASTS
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 RELEASE FROM GUARANTEES
SECTION 5.2 FUTURE COOPERATION; TAX MATTERS
SECTION 5.3 EXPENSES
SECTION 5.4 EMPLOYMENT AGREEMENT(S)
SECTION 5.5 REPAYMENT OF RELATED PARTY INDEBTEDNESS
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS
SECTION 6.2 GENERAL INDEMNIFICATION BY THE EQUUS STOCKHOLDER
SECTION 6.3 INDEMNIFICATION BY COACH
SECTION 6.4 THIRD PERSON CLAIMS
SECTION 6.5 LIMITATION UPON INDEMNITY
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES
SECTION 7.2 EQUITABLE RELIEF
SECTION 7.3 REASONABLE RESTRAINT
SECTION 7.4 SEVERABILITY; REFORMATION
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL
SECTION 8.2 EQUITABLE RELIEF
SECTION 8.3 SURVIVAL
ARTICLE IX
TRANSFER RESTRICTIONS RELATED TO POOLING-OF-INTERESTS
ACCOUNTING AND INTENDED TAX TREATMENT
SECTION 9.1 RESTRICTIONS ON RESALE
SECTION 9.2 TAX-FREE REORGANIZATION
ii
ARTICLE X
REGISTRATION OF COACH STOCK; FEDERAL SECURITIES ACT
SECTION 10.1 REGISTRATION OBLIGATION
SECTION 10.2 FURNISH INFORMATION
SECTION 10.3 EXPENSES OF REGISTRATION
SECTION 10.4 FURTHER ASSURANCES
SECTION 10.5 RULE 144
SECTION 10.6 ECONOMIC RISK; SOPHISTICATION
SECTION 10.7 SALES OF STOCK
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUCCESSORS AND ASSIGNS
SECTION 11.2 ENTIRE AGREEMENT
SECTION 11.3 COUNTERPARTS
SECTION 11.4 BROKERS AND AGENTS
SECTION 11.5 NOTICES
SECTION 11.6 GOVERNING LAW
SECTION 11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 11.8 EXERCISE OF RIGHTS AND REMEDIES
SECTION 11.9 TIME
SECTION 11.10 REFORMATION AND SEVERABILITY
iii
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of the 29th day of August, 1996, by and among Coach USA, Inc., a Delaware
corporation ("Coach"), Coach V Acquisition, Inc., a Delaware corporation that is
a wholly-owned subsidiary of Coach ("Newco"), Yellow Cab Service Corporation, a
Delaware corporation (the "Company"), and George D. Kamins, Joseph M. Chernow
(the "Stockholders") and Equus II Incorporated (the "Equus Stockholder"), who in
the aggregate own more than ninety-seven percent (97%) of the issued and
outstanding stock of the Company, and George D. Kamins ("Kamins"), who is the
owner of the land, buildings and improvements utilized by the Company located in
Houston, Texas (the "Property"). The term "Stockholders" as used herein shall
refer only to Stockholders Kamins and Chernow; Equus II Incorporated shall be
herein referred to specifically as the "Equus Stockholder."
WHEREAS, the respective Boards of Directors of Newco and the Company
(collectively referred to as "Constituent Corporations") deem it advisable and
in the best interests of the Constituent Corporations and their respective
stockholders that Newco merge with and into the Company; and
WHEREAS, the Boards of Directors of the Constituent Corporations have
approved and adopted this Agreement as a plan of reorganization within the
provisions of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code");
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER AND THE SURVIVING CORPORATION
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined below) in accordance with the
General Corporation Law of the State of Delaware ("GCL"), Newco shall be merged
with and into the Company and the separate existence of Newco shall thereupon
cease. The Company shall be the surviving corporation in the merger (hereinafter
sometimes referred to collectively as the "Surviving Corporation").
SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The merger of Newco into the
Company (the "Merger") shall become effective at such time (the "Effective
Time") as a certificate of merger, in form mutually acceptable to Coach and the
Company, is filed with the Secretary of State of the State of Delaware (the
"Merger Filing"). The Merger Filing shall be made simultaneously with or as soon
as practicable after the execution of this Agreement and the closing of the
transactions contemplated by this Agreement in accordance with Section 2.5.
SECTION 1.3 CERTIFICATE OF INCORPORATION, BY-LAWS AND BOARD OF DIRECTORS
OF SURVIVING CORPORATION. As a result of the Merger and at the Effective Time,
(i) the Certificate of Incorporation of the Company in effect
immediately prior to the Effective Time shall become the Certificate of
Incorporation of the Surviving Corporation, and thereafter may be
amended in accordance with its terms and as provided in the GCL;
(ii) the By-laws of the Company in effect immediately prior to the
Effective Time shall become the By-laws of the Surviving Corporation,
and thereafter may be amended in accordance with their terms and as
provided by the Certificate of Incorporation of the Surviving
Corporation and the GCL; and
(iii) the Board of Directors of the Company as constituted
immediately prior to the Effective Time shall be the Board of Directors
of the Surviving Corporation.
ARTICLE II
CONVERSION OF SHARES; ACQUISITION OF PROPERTY FOR SHARES
SECTION 2.1 CONVERSION OF COMPANY SHARES. At the Effective Time, the
Stockholders, the Equus Stockholder, Kamins (as owner of the Property as defined
below) and the additional stockholders of the Company who are not parties to
this Agreement shall be entitled to receive, in the aggregate, One Million Five
Hundred Thousand (1,500,000) shares of the common stock, par value $.01 per
share, of Coach ("Coach Common Stock"). The Coach Common Stock shall be issued
as follows:
(i) At the Effective Time, by virtue of the Merger and without any
action on the part of any holder of any capital stock of the Company, each share
of common stock of the Company issued and outstanding as of the Effective Time
(the "Company Stock") shall be converted into the right to receive, and become
exchangeable for, its pro rata interest in the aggregate consideration payable
to all holders of Company Stock, which shall consist of shares of common stock,
par value $.01 per share, of Coach ("Coach Common Stock") as more particularly
set forth on Schedule 2.1(i) attached hereto.
(ii) At the Effective Time, and in consideration for the Stockholders'
transfer and assignment of that certain Promissory Note dated April 2, 1990 in
the original principal amount of $7,700,000.00 (the "Installment Note"), the
Stockholders shall receive their respective shares of the Coach Common Stock as
more particularly set forth on Schedule 2.1(ii) attached hereto.
(iii) At the Effective Time, and in consideration for Kamins' transfer
and assignment of that certain Promissory Note dated June 30,1993 in the
original principal amount of $998,201.00 (the "Kamins A Note"), Kamins shall
receive that number of shares of the Coach Common Stock as more particularly set
forth on Schedule 2.1 (iii) attached hereto.
(iv) At the Effective Time, and in consideration for Kamins' transfer
and assignment of that certain Promissory Note dated June 30, 1993 in the
original principal amount of $1,006,000.00 (the "Kamins B Note"), Kamins shall
receive that number of shares of the Coach Common Stock as more particularly set
forth on Schedule 2.11(iv) attached hereto.
(v) At the Effective Time, and in consideration for the transfer and
assignment of that certain Promissory Note dated June 30, 1993 in the original
principal amount of $3,517,082.52 by Equus Stockholder (the "Equus A Note"), on
behalf of itself and the other parties holding an interest in such indebtedness,
such parties shall receive their respective shares of the Coach Common Stock as
more particularly set forth on Schedule 2.1 (v) attached hereto.
(vi) At the Effective Time, and in consideration for the transfer and
assignment of that certain Promissory Note dated June 30, 1993 in the original
principal amount of $1,822,000.00 by the Equus Stockholder (the "Equus B Note"),
on behalf of itself and the other parties holding an interest in such
indebtedness, such parties shall receive their respective shares of the Coach
Common Stock as more particularly set forth on Schedule 2.1 (vi) attached
hereto.
SECTION 2.2 CONVERSION OF NEWCO SHARES. At the Effective Time, by virtue
of the Merger and without any action on the part of Coach, as the sole holder of
any capital stock of Newco, each issued and outstanding share of common stock,
par value $1.00 per share, of Newco shall be converted into one share of common
stock of each Surviving Corporation.
SECTION 2.3 EXCHANGE OF CERTIFICATES. At the Closing, (i) the
Stockholders and the Equus Stockholder shall deliver to the Company the
certificates representing the Company Stock, duly endorsed in blank by the
Stockholders and the Equus Stockholder or accompanied by signed stock powers,
with signatures guaranteed by a national bank and the Company shall mark such
certificates "canceled in exchange for common stock of Coach USA, Inc."; (ii)
Kamins and Chernow shall deliver the original Installment Note marked "canceled
in exchange for common stock of Coach USA, Inc."; (iii) Kamins shall deliver the
original Kamins A Note and the Kamins B Note, each marked "canceled in exchange
for common stock of Coach USA, Inc."; (iv) Equus shall deliver the original
Equus A note and Equus B Note, each marked "canceled in exchange for common
stock of Coach USA, Inc."; Coach shall deliver copies of its directives to its
transfer agent authorizing and instructing it to issue certificates evidencing
the Coach Common Stock to the Stockholders and Equus Stockholder in accordance
with Schedules 2.1(i), (ii), (iii), (iv), (v) and (vi) and Schedule 2.4(b). The
Stockholders and the Equus Stockholder agree promptly to cure any deficiencies
with respect to the endorsement of the certificates or other documents of
conveyance with respect to the Company Stock or with respect to the stock powers
accompanying the Company Stock.
SECTION 2.4 CONVEYANCE OF THE PROPERTY. Kamins is the sole owner of
the real property (the "Property") described in the Special Warranty Deed (the
"Deed") attached hereto as Schedule 2.4(a). At the Closing, Kamins shall convey
to the Company, by the Deed, the Property, subject only to the exceptions
contained in the Deed. In consideration for the Property, Coach shall deliver to
Kamins that number of shares of Coach Common Stock provided for in Schedule
2.4(b), and the Company shall assume the approximately $1,577,000 principle
balance, together with interest accrued and outstanding thereon, currently
outstanding on that certain promissory note (the "Real Property Note) dated
October 3, 1985, in the original principal amount of $2,600,000, executed by
Kamins and payable to the order of RepublicBank Houston, National Association,
and subsequently assigned to Southwest Bank of Texas, N.A. ("Southwest Bank"),
and all obligations on the Deed of Trust and the Assignments of Leases, and all
security interests, securing the Real Property Note, as described on Exhibit B
to the Deed. Coach shall use its best efforts to have Kamins released from all
personal liability with respect to the Real Property Note and the documents
securing the same, and to have Southwest Bank release its security interest in
all shares of common stock of Walgreen Co., and related collateral, owned by
Barbara D. Kamins and pledged to secure the Real Property Note. In the event
that Coach cannot otherwise obtain such releases on or prior to 120 days
subsequent to the date hereof, Coach shall pay off or otherwise refinance the
entire indebtedness evidenced by the Real Property Note, and thereby affect such
releases. Prior to such time, Coach will indemnify and hold Kamins harmless from
any loss or liability whatsoever with respect to his obligation on the Real
Property Note and the documents securing the same, and shall further indemnify
and hold Barbara D. Kamins harmless from any loss or liability that she may
incur with respect to the documents creating liens on, or by virtue of Southwest
Bank exercising remedies with respect to, the Walgreen Co. stock and related
collateral. Kamins acknowledges that the limitations of warranties with respect
to the Property, other than the warranty of title contained in the Deed, will
not limit Kamins' liability with respect to any representations or warranties
contained in this Agreement.
SECTION 2.5 CLOSING. The consummation of the Mergers, exchange of shares
described in Section 2.3 and the acquisition of Property for shares described in
Section 2.4 and the other transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Coach, One Riverway, Suite 600,
Houston, Texas 77056, concurrently with the execution of this Agreement or at
such other time and date as Coach, the Company and the Stockholders may mutually
agree, which date shall be referred to as the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS AND
THE EQUUS STOCKHOLDER
The Stockholders, jointly and severally, and, when specifically
indicated, the Equus Stockholder, represent and warrant to Coach as follows:
SECTION 3.1 DUE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly authorized and qualified to do business under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its businesses in the places and in the manner as now conducted except
where the failure to be so authorized or qualified would not have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the Company.
Schedule 3.1 contains a list of all jurisdictions in which the Company is
authorized or qualified to do business. True, complete and correct copies of the
Certificate of Incorporation and By-laws, each as amended, of the Company are
attached hereto as Schedule 3.1. The stock records and minute books of the
Company that have been made available to Coach are in all material respects
correct and complete.
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. The Company has
the full legal right, power and authority to enter into this Agreement and to
effect the Merger. Each Stockholder and the Equus Stockholder has the full legal
right, power and authority to enter into this Agreement. The execution, delivery
and performance of this Agreement have been approved by the board of directors
of the Company and by the Stockholders and by Equus II Incorporated. No
additional corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement and the consummation by
the Company of the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company, and, assuming the due
authorization, execution and delivery hereof by Coach and Newco, constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject to limitations on enforcement due to
bankruptcy, insolvency, other matters affecting the rights of creditors
generally and the discretion of courts as to application of equitable remedies.
Unless otherwise disclosed on Schedule 3.2, the execution and delivery
of this Agreement by the Company do not, and the consummation by the Company of
the transactions contemplated hereby will not, violate, conflict with or result
in a breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its subsidiaries under any of the
terms, conditions or provisions of (i) the Certificate of Incorporation or
By-laws of the Company, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to the Company or any of its properties or
assets, or (iii) any agreement, note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, lease or other instrument, obligation or
agreement of any kind to which the Company is now a party or by which the
Company or any of its properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security interests,
charges or encumbrances that would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the Company.
Unless otherwise disclosed on Schedule 3.2, except for the Merger Filing
and any required filings with or approvals from the U.S. Department of Justice
or Federal Trade Commission and state and local transportation authorities, no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. Except as set forth on Schedule 3.2, none of the
material customer contracts or other material agreements to which the Company is
a party requires notice to, or the consent or approval of, any governmental
agency or other third party to any of the transactions contemplated hereby to
remain in full force and effect following such transactions.
SECTION 3.3 CAPITALIZATION. The authorized capital stock of the Company
consists solely of 20,000,000 shares of common stock, par value $.01 per share,
of which 18,892,543 shares are outstanding and 25,750 shares are held in
treasury, and 4,475,000 shares of preferred stock, par value $.01 per share,
none of which shares are issued and outstanding. All of the issued and
outstanding shares of the Company Stock are owned beneficially and of record by
the Stockholders and the Equus Stockholder as set forth on Schedule 3.3. All of
the issued and outstanding shares of the Company Stock have been duly authorized
and validly issued, are fully paid and nonassessable, and were offered, issued,
sold and delivered by the Company in compliance with all applicable state and
federal laws concerning the issuance of securities. None of such shares were
issued in violation of the preemptive rights of any past or present stockholder.
The exchange of the Company Stock for Coach Common Stock pursuant to the mergers
will transfer to Coach valid title in the shares of the Company Stock owned by
the Stockholders and the Equus Stockholder, free and clear of all liens,
encumbrances and claims of every kind except for those created by Coach. Except
as set forth in Schedule 3.3, no subscription, option, warrant, call,
convertible or exchangeable security, other conversion right or commitment of
any kind exists which obligates the Company to issue any of its capital stock or
the Stockholders or the Equus Stockholder to transfer any of the Company Stock.
SECTION 3.4 POOLING-OF-INTERESTS ACCOUNTING. Within the past two years,
the Company has never been a subsidiary or division of another corporation or a
part of an acquisition which was later rescinded and there has not been any sale
or spin-off of a significant amount of assets of the Company or any affiliate of
the Company other than in the ordinary course of business. The Company owns no
capital stock of Coach. Except as set forth on Schedule 3.4, the Company has not
acquired any of its capital stock during the past two years. Except as set forth
on Schedule 3.4, the Company has no obligation (contingent or otherwise) to
purchase, redeem or otherwise acquire any of the Company Stock or any interest
therein or to pay any dividend or make any distribution in respect thereof.
Neither the voting stock structure of the Company nor the relative ownership of
shares among any of the Company's stockholders has been altered or
changed within the last two years in contemplation of the Merger other than
possible ownership changes between the Equus Stockholder and other stockholders
of the Company consistent with pre-existing arrangements. Except as set forth in
Schedule 3.4, none of the shares of Company Stock was issued pursuant to awards,
grants or bonuses. If required, the Stockholders and the President or Chief
Financial Officer of the Company will execute any documentation reasonably
required by Coach's independent public accountants to enable Coach to account
for the Merger as a pooling-of-interests; provided, however, that neither the
Company nor the Stockholders will be required to execute any such documentation
to the extent it may adversely affect the qualification of the Merger as a
tax-free reorganization for federal income tax purposes.
SECTION 3.5 SUBSIDIARIES. Except as set forth in Schedule 3.5, the
Company does not presently own, of record or beneficially, or control, directly
or indirectly, any capital stock, securities convertible into or exchangeable
for capital stock or any other equity interest in any corporation, association
or business entity. Except as set forth in Schedule 3.5, the Company is not,
directly or indirectly, a participant in any joint venture, partnership or other
noncorporate entity.
SECTION 3.6 FINANCIAL STATEMENTS. The Stockholders have delivered to
Coach complete and correct copies of the following financial statements:
(i) the balance sheets of the Company as of October 28, 1995, October
29, 1994 and October 30, 1993 and the related statements of operations,
of stockholder's equity and of cash flows for the three-year period
ended October 28, 1995, together with the related notes and schedules
(such balance sheets, the related statements of operations, of
stockholder's equity and of cash flows and the related notes and
schedules are referred to herein as the "Year-end Financial
Statements"); and
(ii) the interim balance sheet (the "Interim Balance Sheet") of the
Company as of June 29, 1996, the balance sheet of the Company as of July
27, 1996 (the "Balance Sheet Date") and the related statements of
operations, of stockholder's equity and of cash flows for the nine-month
periods ended July 27, 1996 and July 28, 1995, together with the related
notes and schedules (such balance sheets, the related statements of
operations, of stockholder's equity and of cash flows and the related
notes and schedules are referred to herein as the "Interim Financial
Statements"). The Year-end Financial Statements and the Interim
Financial Statements (collectively, the "Financial Statements") are
attached as Schedule 3.6 to this Agreement. The Financial Statements
have been prepared from the books and records of the Company
in conformity with generally accepted accounting principles applied on a basis
consistent with preceding years and throughout the periods involved ("GAAP") and
present fairly the financial position and results of operations of the Company
as of the dates of such statements and for the periods covered thereby, subject,
in the case of unaudited interim financial statements, to normal, recurring
year-end adjustments and further subject in the case of all financial statements
to retrospective adjustment relating to uninsured accident claims with the
intent of increasing the accrued liabilities for injuries and damages consistent
with the report of claims reserve based on the date of accident prepared by the
Company on August 21, 1996 and other adjustments contemplated herein or on
Schedules hereto. The books of account of the Company have been kept accurately
in all material respects in the ordinary course of business, the transactions
entered therein represent bona fide transactions, and the revenues, expenses,
assets and liabilities of the Company have been properly recorded therein in all
material respects.
SECTION 3.7 LIABILITIES AND OBLIGATIONS. Schedule 3.7 sets forth an
accurate list as of the Balance Sheet Date of (i) all liabilities of the Company
which are reflected in the Interim Balance Sheet and (ii) any liabilities of any
kind of the Company which are not reflected in the Interim Balance Sheet. The
provisions of Section 3.24 hereof notwithstanding, references are made on
Schedule 3.7 to other Schedules to this Agreement which provide more detailed
information concerning such liabilities, however, each individual liability is
individually described and specifically identified as a liability on Schedule
3.7. Except as set forth on Schedule 3.7, since the Balance Sheet Date, the
Company has not incurred any liabilities of any kind, character or description,
whether accrued, absolute, secured or unsecured, contingent or otherwise, other
than liabilities incurred in the ordinary course of business which are not
materially greater than the corresponding liabilities reflected in the Interim
Balance Sheet. Except for liabilities related to reserves established by
retrospective adjustments to the Company's financial statements, pursuant to
discussions between Coach and the Company, Schedule 3.7 contains a reasonable
estimate by the Stockholders of the maximum amount which may be payable with
respect to liabilities which are not fixed. For each such liability for which
the amount is not fixed or is contested, the Stockholders have provided a
summary description of the liability together with copies of all relevant
documentation relating thereto.
SECTION 3.8 ACCOUNTS AND NOTES RECEIVABLE. Schedule 3.8 sets forth an
accurate list of the accounts and notes receivable of the Company as of the
Balance Sheet Date and generated subsequent to the Balance Sheet Date, including
any such amounts which are not reflected in the Interim Balance Sheet.
Receivables from and advances to employees, the Stockholders, the Equus
Stockholder and any entities or persons related to or affiliated with the
Stockholders or the Equus Stockholder are separately identified on Schedule 3.8.
Schedule 3.8 also sets forth an accurate aging of all accounts and notes
receivable as of the Balance Sheet Date, showing amounts due for trade
receivables and in amounts due and past due for other receivables. The trade and
other accounts receivable of the Company which are classified as current assets
on the Interim Balance Sheet are bona fide receivables, were acquired in the
ordinary course of business, are stated in accordance with GAAP and, subject to
the reserve for doubtful accounts, including the increase adjustment pursuant to
prior discussions between the Company and Coach, need not be written-off as
uncollectible. Such accounts and notes are collectible in the aggregate amount
shown on Schedule 3.8, net of reserves for doubtful accounts reflected in the
Interim Balance Sheet adjusted as contemplated above.
SECTION 3.9 ASSETS. Schedule 3.9 sets forth an accurate list of all real
and personal property included in "property and equipment" and "inventory" on
the July 27, 1996 balance sheet of the Company and all other tangible assets of
the Company with a value in excess of $5,000 (i) owned by the Company as of the
Balance Sheet Date and (ii) acquired since the Balance Sheet Date, including in
each case true, complete and correct copies of leases for significant equipment
and for all real property leased by the Company and descriptions of all real
property on which buildings, warehouses, workshops, garages and other structures
used in the operation of the business of the Company are situated. Schedule 3.9
indicates which assets are currently owned, or were formerly owned, by the
Stockholders, the Equus Stockholder or affiliates of the Company, the
Stockholders or the Equus Stockholder. Except as specifically identified on
Schedule 3.9, all of the tangible assets, vehicles and other significant
machinery and equipment of the Company listed on Schedule 3.9 are in good
working order and condition, ordinary wear and tear excepted, and have been
maintained in accordance with standard industry practices. All
fixed assets used by the Company that are material to the operation of the
Company's business are either owned by the Company or leased under an agreement
identified on Schedule 3.9. All leases set forth on Schedule 3.9 are in full
force and effect and constitute valid and binding agreements of the parties
thereto in accordance with their respective terms. Schedule 3.9 contains true,
complete and correct copies of all title reports and title insurance policies
received or owned by the Company. Schedule 3.9 also includes a summary
description of all plans or projects involving the opening of new operations,
expansion of existing operations or the acquisition of any real property or
existing business, to which management of the Company has devoted any
significant effort or expenditure in the two-year period prior to the date of
the Agreement, which if pursued by the Company would require additional
expenditures of capital.
The Company has good and indefeasible title to the tangible and
intangible personal property and the real property owned and used in its
business, including the properties identified on Schedule 3.9, subject to no
mortgage, pledge, lien, claim, conditional sales agreement, encumbrance or
charge, except for liens reflected on Schedule 3.9, liens for current taxes not
yet payable and assessments not in default, easements for utilities serving only
the property, and easements, covenants and restrictions and other exceptions to
title shown of record in the office of the County Clerks in which the
properties, assets and leasehold estates are located, which do not adversely
affect the Company's use of the property.
SECTION 3.10 MATERIAL CUSTOMERS AND CONTRACTS. Schedule 3.10 sets forth
an accurate list of (i) all customers representing 5% or more of the Company's
revenues in any of the periods covered by the Financial Statements, and (ii) all
material contracts, commitments and similar agreements to which the Company is
currently a party or by which it or any of its properties is bound, including,
but not limited to, contracts with customers, contracts with any labor
organizations, leases, loan agreements, pledge and security agreements,
indemnity or guaranty agreements, bonds, notes, mortgages, joint venture or
partnership agreements, options to purchase real or personal property, and
agreements relating to the purchase or sale by the Company of assets or
securities. Schedule 3.10 contains true, complete and correct copies of all such
agreements. Except to the extent set forth on Schedule 3.10, (i) none of the
Company's material customers has canceled or substantially reduced or to the
knowledge of the Stockholders or the Equus Stockholder is currently attempting
or threatening to cancel or substantially reduce its use of the Company's
services and (ii) the Company has complied with all material commitments and
obligations pertaining to it under such agreements and is not in default under
any such agreements, no notice of default has been received by the Company and
the Stockholders and the Equus Stockholder are aware of no basis therefor.
Except as set forth on Schedule 3.10, the Company is not now a party to any
governmental contracts subject to price redetermination or renegotiation.
SECTION 3.11 PERMITS. Schedule 3.11 contains an accurate list, summary
description and copies of all licenses, franchises, permits, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business including, without
limitation, permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel permits, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company. The licenses, operating authorizations,
franchises, permits and other governmental authorizations listed on Schedule
3.11 are valid, and the Company has not received any notice that any
governmental authority intends to cancel, terminate or not renew any such
license, operating authorization, franchise, permit or other governmental
authorization. Except as set forth in Schedule 3.11, the Company holds all
licenses, operating authorizations, franchises, permits and other governmental
authorizations necessary to conduct its business as presently conducted. The
Company has conducted and is conducting its business in substantial compliance
with the requirements, standards, criteria and conditions set forth in its
licenses, operating authorizations, franchises, permits and other governmental
authorizations as well as the applicable orders, approvals and variances related
thereto, and is not in violation of any of the foregoing except for any
violations that would not have a material and adverse effect on the business,
operations, properties, assets, condition (financial or otherwise), results of
operations or prospects of the Company. Except as specifically provided in
Schedule 3.11, the transactions contemplated by this Agreement will not result
in a default under or a breach or violation of, or adversely affect the rights
and benefits afforded to the Company by, any such material licenses, operating
authorizations, franchises, permits and other government authorizations.
SECTION 3.12 ENVIRONMENTAL MATTERS. Liability with respect to this
Section 3.12 is subject first to application of the reserve contemplated to be
established on the Company's balance sheet with respect to environmental
matters. The Company has complied with and is in compliance with all federal,
state, local and foreign statutes (civil and criminal), laws, ordinances,
regulations, rules, notices, permits, judgments, orders and decrees applicable
to it or any of its properties, assets, operations and businesses relating to
the protection of the environment (collectively, "Environmental Laws")
including, without limitation, Environmental Laws relating to air, water, land
and the generation, storage, use, handling, transportation, treatment or
disposal of Hazardous Wastes, Hazardous Materials and Hazardous Substances (as
such terms are defined in any applicable Environmental Law) except to the extent
that noncompliance with any Environmental Laws, either singly or in the
aggregate, does not and would not (i) have a material adverse effect on the
Company or any of its businesses or (ii) necessitate a material expenditure by
or on behalf of the Company. The Company has obtained and complied with all
necessary permits and other approvals necessary to treat, transport, store,
dispose of and otherwise handle Hazardous Wastes, Hazardous Materials and
Hazardous Substances and has reported, to the extent required by all
Environmental Laws, required information with respect to all past and present
sites owned and operated by the Company where Hazardous Wastes, Hazardous
Materials or Hazardous Substances have been treated, stored, disposed of or
otherwise handled. There have been no "releases" (as defined in any
Environmental Laws) by the Company at, from, in or on any property owned or
operated by the Company except as permitted by Environmental Laws. There is no
on-site or off-site location to which the Company has transported or disposed of
Hazardous Wastes, Hazardous Materials and Hazardous Substances or arranged for
the transportation or disposal of Hazardous Wastes, Hazardous Materials and
Hazardous Substances which is the subject of any federal, state, local or
foreign enforcement action or any other investigation which could lead to any
claim against the Company for any clean-up cost, remedial work, damage to
natural resources or personal injury, including, but not limited to, any claim
under (i) the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, (ii) the Resource Conservation and Recovery Act, (iii)
the Hazardous Materials Transportation Act or (iv) comparable state and local
statutes and regulations. The Company has no contingent liability in connection
with any release of any Hazardous Waste, Hazardous Material or Hazardous
Substance into the environment.
SECTION 3.13 LABOR AND EMPLOYEE RELATIONS. Except as set forth in
Schedule 3.13, the Company is not bound by or subject to any arrangement with
any labor union. No employees of the Company are represented by any labor union
or covered by any collective bargaining agreement nor, to the best of the
Stockholders' knowledge, is any campaign to establish such representation in
progress. There is no pending or threatened labor dispute involving the Company
and any group of its employees nor has the Company experienced any labor
interruptions over the past five years. The Company considers its relationship
with its employees to be good.
SECTION 3.14 INSURANCE. Schedule 3.14 sets forth an accurate list as of
the Balance Sheet Date of all insurance policies carried by the Company and of
all insurance loss runs or workers compensation claims received for the past
five (5) policy years. Also attached to Schedule 3.14 are true, complete and
correct copies of all of the declaration pages of the Company's insurance
policies together with an accurate description of the form of policy as revised,
attached to each such declaration, covering at least the past three years. None
of such policies is a "claims made" policy. The insurance policies set forth on
Schedule 3.14 provide adequate coverage consistent with industry standards
against the risks involved in the Company's business prior to Closing. Such
policies are currently in full force and effect.
SECTION 3.15 COMPENSATION; EMPLOYMENT AGREEMENTS. Schedule 3.15 sets
forth an accurate schedule of all officers, directors and key employees of the
Company, listing all employment agreements with such officers, directors and
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus, benefits and other compensation, respectively) of each of such
persons as of (i) the Balance Sheet Date and (ii) the date hereof. Attached to
Schedule 3.15 are true, complete and correct copies of all such employment
agreements and all other employment agreements and other similar agreements or
arrangements containing "golden parachute" or other similar provisions.
SECTION 3.16 EMPLOYEE BENEFIT PLANS. Schedule 3.16 sets forth an
accurate schedule of all employee benefit plans of the Company and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Balance Sheet Date. Except for the employee
benefit plans described on Schedule 3.16, the Company does not sponsor, maintain
or contribute to any plan, program, fund or arrangement that constitutes an
"employee pension benefit plan," nor does the Company have any obligation to
contribute to or accrue or pay any benefits under any deferred compensation or
retirement funding arrangement on behalf of any employee or employees (such as,
for example, and without limitation, any individual retirement account or
annuity, any "excess benefit plan" (within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") or any
non-qualified deferred compensation arrangement). For the purposes of this
Agreement, the term "employee pension benefit plan" shall have the same meaning
given that term in Section 3(2) of ERISA. The Company has not sponsored,
maintained or contributed to any employee pension benefit plan other than the
plans set forth on Schedule 3.16, nor is the Company required to contribute to
any retirement plan pursuant to the provisions of any collective bargaining
agreement.
The Company is not now, nor will it become as a result of its past
activities, liable to the Pension Benefit Guaranty Corporation or to any
multi-employer employee pension benefit plan under the provisions of Title IV of
ERISA. All employee benefit plans listed on Schedule 3.16 are in substantial
compliance with all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal, state and local
statutes, ordinances and regulations. All accrued contribution obligations of
the Company with respect to any plan listed on Schedule 3.16 have either been
fulfilled in their entirety or are fully reflected on the balance sheet of the
Company as of the Balance Sheet Date.
All plans listed on Schedule 3.16 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Code have been determined by the
Internal Revenue Service to be so qualified, and copies of such determination
letters are included as part of Schedule 3.16 hereof. Except as disclosed on
Schedule 3.16, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of
Schedule 3.16 hereof. Neither the Stockholders, any such plan listed in Schedule
3.16, nor the Company has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No such plan
listed in Schedule 3.16 has incurred an "accumulated funding deficiency," as
defined in Section 412(a) of the Code and Section 302(1) of ERISA, and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service nor any liability to the Pension Benefit Guaranty
Corporation. There have been no terminations, partial terminations or
discontinuances of contri butions to any such Qualified Plan without notice to
and approval by the Internal Revenue Service; no plan listed in Schedule 3.16
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan; and the Company has not incurred liability under
Section 4062 of ERISA.
SECTION 3.17 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in
Schedule 3.17, there are no claims, actions, suits or proceedings, pending or,
to the knowledge of the Stockholders, threatened against or affecting the
Company, at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over the Company. No notice of any claim,
action, suit or proceeding, whether pending or threatened, has been received by
the Company and to the knowledge of the Stockholders there is no basis therefor.
Except to the extent set forth on Schedule 3.17, the Company has conducted for
the past five years and does conduct its business in compliance with all laws,
regulations, writs, injunctions, decrees and orders applicable to the Company or
its assets with which the failure to comply would have a material adverse effect
on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of the Company.
SECTION 3.18 TAXES. For purposes of this Agreement, the term "Taxes"
shall mean all taxes, charges, fees, levies or other assessments including,
without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments. Except as set
forth on Schedule 3.18, the Company has timely filed all requisite federal,
state, local and other tax returns for all fiscal periods ended on or before the
Effective Time, and has duly paid in full or made adequate provision in the
Financial Statements for the payment of all Taxes for all periods ending at or
prior to the Closing Date. Except as set forth on Schedule 3.18, there are no
examinations in progress or claims against the Company for any period or periods
prior to and including the Balance Sheet Date and no notice of any claim for
Taxes, whether pending or threatened, has been received. The amounts shown as
accruals for Taxes on the financial statements of the Company as of the Balance
Sheet Date are sufficient for the payment of all Taxes for all fiscal periods
ended on or before that date. Copies of (i) any tax examinations, (ii)
extensions of statutory limitations and (iii) the federal, state and local Tax
returns of the Company for the last three fiscal years are attached hereto as
Schedule 3.18. The Company currently utilizes the accrual method of accounting
for income tax purposes. Such method of accounting has not changed in the past
five years.
During all tax periods ended prior to the Closing Date for which the
statute of limitations has not expired, the Company has conducted its business
in a manner which entitles it to protection under the safe harbor provisions of
Section 530(a) of the Revenue Act of 1978, which was extended indefinitely by
Section 269(c) of the Tax Equity and Fiscal Responsibility Act of 1982.
SECTION 3.19 ABSENCE OF CHANGES. Since the Balance Sheet Date, the
Company has conducted its operations in the ordinary course and, except as set
forth on Schedule 3.19, there has not been:
(i) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities
(contingent or otherwise) or income of the Company;
(ii)any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the Company;
(iii) any change in the authorized capital stock of the Company or in
its securities outstanding or any change in the Stockholders' or the
Equus Stockholder' ownership interests or any grant of any options,
warrants, calls, conversion rights or commitments or the declaration or
payment of any dividend or other distribution;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
Company;
(v) any increase in the compensation payable or to become payable by
the Company to any of its officers, directors, stockholders, employees,
consultants or agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice;
(vi) any work interruptions, labor grievances or claims filed, or any
proposed law, regulation or event or condition of any character
materially adversely affecting the business or future prospects of the
Company;
(vii) any sale or transfer, or any agreement to sell or transfer, any
material assets, properties or rights of the Company to any person,
including, without limitation, the Stockholders and the Equus
Stockholder and their respective affiliates;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any increase in the Company's indebtedness, other than accounts
payable incurred in the ordinary course of business;
(x) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to
the transfer and assignment of any such assets, property or rights;
(xi) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xii) any waiver of any material rights or claims of the Company;
(xiii) any material breach, amendment or termination of any material
contract, agreement, license, permit or other right to which the Company
is a party; or
(xiv) any transaction by the Company outside the ordinary course of
business.
SECTION 3.20 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.
Schedule 3.20 sets forth an accurate schedule as of the (i) Balance Sheet Date
and (ii) date of the Agreement, of (A) the name of each financial institution or
brokerage firm in which the Company has accounts or safe deposit boxes; (B) the
names in which the accounts or boxes are held; (C) the type of account and the
cash, cash equivalents and securities held in such account; and (D) the name of
each person authorized to draw thereon or have access thereto. Other than
routine financial and leasing arrangements, Schedule 3.20 also sets forth the
name of each person, corporation, firm or other entity holding a general or
special power of attorney from the Company and a description of the terms
thereof.
SECTION 3.21 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except as set forth
on Schedule 3.21, neither the Company nor any of its affiliates has given or
offered to give anything of value to any governmental official, political party
or candidate for government office nor has it otherwise taken any action which
would constitute a violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any similar law.
SECTION 3.22 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.
Except as set forth in Schedule 3.22, neither the Stockholders nor any other
affiliate of the Company owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of or otherwise receives remuneration
from, any business which is a competitor, lessor, lessee, customer or supplier
of the Company. Except as set forth in Schedule 3.22, no officer, director, or
Stockholder of the Company has, nor during the period beginning January 1, 1991
through the date hereof, had any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business.
SECTION 3.23 INTANGIBLE PROPERTY. Schedule 3.23 sets forth an accurate
list of all patents, patent applications, trademarks, service marks, trade
names, copyrights, and other intellectual property or proprietary property
rights owned or used by the Company. The Company owns or possesses sufficient
legal rights to use all of such items without conflict with or infringement of
the rights of others.
SECTION 3.24 DISCLOSURE. The Stockholders have fully provided Coach or
its representatives, or have caused the Company to do so, with all the
information that Coach has requested in analyzing whether to consummate the
Merger. None of the information so provided nor any representation or warranty
of the Stockholders or the Equus Stockholder contained in this Agreement
contains any untrue statement or omits to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading. There is no fact known to the
Stockholders or the Equus Stockholder which has specific application to the
Company (other than general economic or industry conditions) and which
materially adversely affects or, so far as the Stockholders or Equus Stockholder
can reasonably foresee, materially threatens, the assets, business, condition
(financial or otherwise), results of operations or prospects of the Company
which has not been described in this Agreement or the Schedules hereto or
otherwise disclosed in writing to Coach. Except as provided in Schedule 3.7, the
disclosures in the Schedules, and those in any supplement thereto, shall relate
to the representations and warranties in the Section of this Agreement to which
each Schedule expressly relates and to each other representation or warranty in
this Agreement as may be required. The Stockholders represent that they have
made a reasonable good faith effort to cross-reference the same. The above
representations and warranties are accurate with respect to the Company and its
subsidiaries, taken as a whole, and each such representation and warranty is not
applicable to the Company and each subsidiary individually.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
Coach and Newco represent and warrant to the Stockholders and the Equus
Stockholder as follows:
SECTION 4.1 ORGANIZATION. Each of Coach and Newco is duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and is duly authorized and qualified under all applicable laws,
regulations, and ordinances of public authorities to carry on its business in
the places and in the manner now conducted except where the failure to be so
authorized or qualified would not have a material adverse effect on its
business. True, complete and correct copies of the Certificate of Incorporation
and By-laws, each as amended, of Coach are attached hereto as Schedule 4.1.
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. Each of Coach
and Newco has the full legal right, power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement have been approved by the boards of
directors of Coach and Newco and by the sole stockholder of Newco. No additional
corporate proceedings on the part of Coach or Newco are necessary to authorize
the execution and delivery of this Agreement and the consummation by Coach and
Newco of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Coach and Newco, and, assuming the due
authorization, execution and delivery by the Company and the Stockholders,
constitutes a valid and binding agreement of Coach and Newco, enforceable
against Coach and Newco in accordance with its terms.
The execution and delivery of this Agreement by Coach do not, and the
consummation by Coach of the transactions contemplated hereby will not, violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Coach or any of its subsidiaries under
any of the terms, conditions or provisions of (i) the Restated Certificate of
Incorporation or By-Laws of Coach, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Coach, any of its subsidiaries or
any of their respective properties or assets or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which Coach or
any of its subsidiaries is now a party or by which Coach, any of its
subsidiaries or any of their respective properties or assets may be bound or
affected, excluding from the foregoing clauses (ii) and (iii) such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of Coach.
Except for the Merger Filing, any required filings with or approvals
from state and local transportation authorities and such filings as may be
required under federal or state securities laws, no declaration, filing or
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by Coach or the consummation by Coach of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of Coach.
SECTION 4.3 COACH COMMON STOCK. The authorized capital stock of Coach
consists solely of 30,000,000 shares of common stock, par value $.01 per share,
of which 11,405,411 shares were issued and outstanding as of August 28, 1996,
and 500,000 shares of preferred stock, par value $.01 per share, none of which
are outstanding. All of the issued and outstanding shares of Coach Common Stock
have been duly authorized and validly issued, are fully paid and nonassessable,
and were offered, issued, sold and delivered by Coach in compliance with all
applicable state and federal laws concerning the issuance of securities. None of
such shares were issued in violation of the preemptive rights of any past or
present stockholder. The shares of Coach Common Stock to be issued to the
Stockholders and the Equus Stockholder and all other stockholders of the Company
(collectively the "Company Stockholders") pursuant to the Merger and for the
Property, when issued in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable. The issuance of
Coach Common Stock pursuant to the Merger and for the Property will transfer to
the Company Stockholders valid title to such shares of Coach Common Stock, free
and clear of all liens, encumbrances and claims of every kind except for any
created by the Company Stockholders. The shares of Coach Common Stock issued to
the Company Stockholders pursuant to the Merger are issued pursuant to, and in
conformity with, the applicable exemptions under federal and state securities
laws.
SECTION 4.4 SEC FILINGS; DISCLOSURE. Coach has filed with the Securities
and Exchange Commission ("SEC") all material forms, statements, reports and
documents required to be filed by it under each of the Securities Act of 1933,
as amended (the "1933 Act"), the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and the respective rules and regulations thereunder, all of
which, as amended, if applicable, complied when filed in all material respects
with all applicable requirements of the appropriate Act and the rules and
regulations thereunder. Coach has previously delivered to the Stockholders and
the Equus Stockholder copies of the Prospectus, dated July 16, 1996 (the
"Prospectus"), contained in the Company's Registration Statement on Form S-1
filed under Rule 415 of the 1933 Act, and certain additional information
concerning Coach. As of its date, the Prospectus did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
There is no fact known to Coach, which is not otherwise disclosed in the
Prospectus or the Schedules attached hereto, which has specific application to
Coach (other than general economic or industry conditions) which materially
adversely affects or, so far as Coach can reasonably foresee, materially
threatens the assets, business, condition (financial or otherwise), results of
operations or prospects of Coach.
SECTION 4.5 ABSENCE OF CHANGES. As of August 28, 1996, since the date of
the Prospectus, Coach has conducted its operations in the ordinary course and
there has not been:
(i) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities
(contingent or otherwise) or income of Coach;
(ii)any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
Coach as a whole;
(iii) any change in the authorized capital stock of Coach or in its
securities outstanding or any grant of any options, warrants, calls,
conversion rights or commitments (other than in connection with its
acquisition program) or the declaration or payment of any dividend or
other distribution;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of Coach;
(v) any increase in the compensation payable or to become payable by
Coach to any of its officers, directors, stockholders, employees,
consultants or agents, except for ordinary and customary bonuses and
salary increases for employees in accordance with past practice;
(vi) any work interruptions, labor grievances or claims filed, or any
proposed law, regulation or event or condition of any character
materially adversely affecting the business or future prospects of
Coach;
(vii) any sale or transfer, or any agreement to sell or transfer, any
material assets, properties or rights of Coach to any person;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to Coach;
(ix) any increase in Coach's indebtedness, other than the
$115,000,000 Credit Agreement dated August 14, 1996 between Coach and
NationsBank of Texas, N.A., as Agent (the "Credit Agreement") and
accounts payable incurred in the ordinary course of business;
(x) any plan, agreement or arrangement, other than the Credit
Agreement, granting any preferential rights to purchase or acquire any
interest in any of the assets, property or rights of Coach or requiring
consent of any party to the transfer and assignment of any such assets,
property or rights;
(xi) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of Coach's business, except in connection
with Coach's acquisition program;
(xii) any waiver of any material rights or claims of Coach;
(xiii) any material breach, amendment or termination of any material
contract, agreement, license, permit or other right to which Coach is a
party; or
(xiv) any transaction by Coach outside the ordinary course of
business, other than with respect to the Credit Agreement and in
connection with Coach's acquisition program.
SECTION 4.6 NO RELIANCE ON FORECASTS. In the negotiation and
consideration of the Merger and transactions contemplated hereby, Coach has not
relied upon any information or documents concerning the Company and its business
or financial results except: (a) information or documents that are publicly
available; (b) representations and warranties made by the Stockholders and the
Equus Stockholder in this Agreement and the Schedules attached hereto, and (c)
the disclosure or delivery of the Company's financial reports made pursuant to
this Agreement. Coach acknowledges that in the negotiation of the Merger, the
Company and Coach have exchanged information, based on various assumptions, of
the results of operations of the Company or the combined companies. Except as
provided in this Agreement and the Schedules attached hereto, neither the
Stockholders nor the Equus Stockholder made any representations or warranties
regarding any forecasts or projections of the Company's future operating results
and Coach disclaims reliance on any such forecasts or projections.
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 RELEASE FROM GUARANTEES. Coach shall use its best efforts to
have the Stockholders released from the personal guarantees of the Company's
indebtedness (and Kamins with respect to indebtedness on the Property)
identified on Schedule 5.1. In the event that Coach cannot obtain releases of
any such guarantees on or prior to one hundred and twenty (120) days subsequent
to the date hereof, Coach shall pay off or otherwise refinance or retire such
indebtedness. Prior to such time, Coach agrees to indemnify and hold harmless
all Stockholders from any liability whatsoever with respect to such personal
guarantees or debt.
SECTION 5.2 FUTURE COOPERATION; TAX MATTERS. The Stockholders and Coach
shall each deliver or cause to be delivered to the other following the Effective
Time such additional instruments as the other may reasonably request for the
purpose of fully carrying out this Agreement. The Stockholders will cooperate
and use their reasonable best efforts to have the present officers, directors
and employees of the Company cooperate with Coach and/or Newco at and after the
Effective Time in furnishing information, evidence, testimony and other
assistance in connection with any actions, proceedings, arrangements or disputes
of any nature with respect to matters pertaining to all periods prior to the
Effective Time. Coach will cooperate with the Stockholders and the Equus
Stockholder in the preparation of all tax returns covering the period from the
beginning of the Company's current tax year through the Closing. In addition,
Coach will provide the Stockholders and the Equus Stockholder with access to
such of its books and records as may be reasonably requested by the Stockholders
and/or the Equus Stockholder in connection with federal, state and local tax
matters relating to periods prior to the Closing.
SECTION 5.3 EXPENSES. Coach will pay the fees, expenses and
disbursements of Coach and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments thereto. The Stockholders and the Equus Stockholder
will pay the fees, expenses and disbursements of the Stockholders and the Equus
Stockholder, respectively, and their respective agents, representatives,
financial advisors, accountants and counsel incurred in connection with the
execution, delivery and performance of this Agreement and any amendments hereto.
SECTION 5.4 EMPLOYMENT AGREEMENT(S). Concurrently with the execution of
this Agreement, the Company shall enter into the Employment Agreements attached
as Exhibit 5.4(A) and 5.4(B) with George D. Kamins and Joseph Chernow,
respectively.
SECTION 5.5 REPAYMENT OF RELATED PARTY INDEBTEDNESS. Concurrently with
the execution of this Agreement, (i) the Stockholders and the Equus Stockholder
shall repay to the Company all amounts outstanding as advances to or receivables
from the Stockholders and the Equus Stockholder, respectively, and (ii) the
Company shall repay all amounts outstanding under loans to the Company from the
Stockholders and the Equus Stockholder not canceled pursuant to Article II.
ARTICLE VI
INDEMNIFICATION
The Stockholders, the Equus Stockholder, Coach and Newco each make the
following covenants:
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. Subject to the
provisions of Section 6.5 below, the Stockholders covenant and agree that they,
jointly and severally, will indemnify, defend, protect and hold harmless Coach,
Newco and the Company, and their respective officers, directors, employees,
stockholders, agents, representatives and affiliates, at all times from and
after the date of this Agreement until the Expiration Date (as defined in
Section 11.7) from and against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by any of such indemnified persons as a result of or
arising from (i) any breach of the representations and warranties of the
Stockholders set forth herein or in the Schedules or certificates delivered in
connection herewith, except to the extent that such representation or warranty
applies to the Equus Stockholder and (ii) any breach or nonfulfillment of any
covenant or agreement on the part of the Stockholders or the Company under this
Agreement.
SECTION 6.2 GENERAL INDEMNIFICATION BY THE EQUUS STOCKHOLDER. Subject to
the provisions of Section 6.5 below, the Equus Stockholder covenants and agrees
that it will indemnify, defend, protect and hold harmless Coach, Newco and the
Company, and their respective officers, directors, employees, stockholders,
agents, representatives and affiliates, at all times from and after the date of
this Agreement until the Expiration Date (as defined in Section 11.7) from and
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by any of
such indemnified persons as a result of or arising from any breach of the
representations and warranties of the Equus Stockholder set forth herein or in
the Schedules or certificates delivered in connection herewith to the extent
that such representations or warranties apply to the Equus Stockholder.
SECTION 6.3 INDEMNIFICATION BY COACH. Subject to the provisions of
Section 6.5 below, Coach covenants and agrees that it will indemnify, defend,
protect and hold harmless the Stockholders and the Equus Stockholder and their
respective officers, directors, employees, stockholders, agents, representatives
and affiliates, at all times from and after the date of this Agreement until the
Expiration Date from and against all claims, damages, actions, suits, proceed
ings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by the Stockholders and the Equus Stockholder as a
result of or arising from (i) any breach of the representations and warranties
of Coach or Newco set forth herein or in the Schedules or certificates attached
hereto, and (ii) any breach or nonfulfillment of any covenant or agreement on
the part of Coach or Newco under this Agreement or in the representation letter
attached hereto as Exhibit 6.3.
SECTION 6.4 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), or the
commencement of any action or proceeding by a Third Person, which gives rise to
rights of indemnification under Sections 6.1, 6.2 or 6.3 above, the Indemnified
Party shall give to the party obligated to provide indemnification pursuant to
Section 6.1, 6.2 or 6.3 hereof (hereinafter the "Indemnifying Party") written
notice of such claim or the commencement of such action or proceeding. Such
notice shall state the nature and the basis of such claim and a reasonable
estimate of the amount thereof. The Indemnifying Party shall have the right to
defend and settle, at its own expense and by its own counsel, any such matter so
long as the Indemnifying Party pursues the same diligently and in good faith. If
the Indemnifying Party undertakes to defend or settle, it shall promptly notify
the Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records and other
information reasonably requested by the Indemnifying Party and in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
PROVIDED that if counsel to the Indemnifying Party shall have a conflict of
interest that prevents such counsel from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the expenses of its counsel. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person and the Indemnified Party shall reimburse the Indemnifying Party
for any additional costs of defense which it subsequently incurs with respect to
such claim and all additional costs of settlement or judgment. If the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, HOWEVER, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
SECTION 6.5 LIMITATION UPON INDEMNITY.
(i) The Stockholders and the Equus Stockholder, on the one hand, and
Coach, on the other hand, shall be entitled to indemnification from the other
under the provisions of this Article VI for all claims subject to
indemnification by such party, but only after the amount of, and to the extent
that, such claims exceeds, in the aggregate, one percent (1%) of the value of
the Coach Common Stock delivered to the Stockholders and the Equus Stockholder,
valued at $24.00 per share.
(ii) The indemnification obligations of the Stockholders and the Equus
Stockholder under this Article VI shall be limited, in the aggregate, to the
aggregate value of the Coach Common Stock delivered to the Stockholders and the
Equus Stockholder and individually to the value of the Coach Common Stock
received by each Stockholder and the Equus Stockholder, valued at $24.00 per
share.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES. The Stockholders will not, for a
period of five (5) years following the Closing Date, directly or indirectly, for
themselves or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial or advisory capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering any services or products in
direct competition with Coach or any of its subsidiaries within 100
miles of where Coach or any of its subsidiaries conducts business,
including any territory serviced by Coach or any of such subsidiaries
(the "Territory");
(ii)call upon any person who is, at that time, within the Territory,
an employee of Coach or any of its subsidiaries for the purpose or with
the intent of enticing such employee away from or out of the employ of
Coach or any of its subsidiaries; or
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of Coach or
any of its subsidiaries within the Territory for the purpose of
soliciting or selling services or products in direct competition with
Coach or any of its subsidiaries within the Territory. Notwithstanding
the above, the foregoing covenant shall not be deemed to prohibit any
Stockholder from acquiring, as a passive investor with no involvement in the
operations of the business, not more than one percent (1%) of the capital stock
of a business providing taxicab or similar services or any such services which
are in competition with taxicabs, such as limousine, van, town car, minibus,
etc., whose stock is publicly traded on a national securities exchange or
over-the-counter.
SECTION 7.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to Coach as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to Coach
for which it would have no other adequate remedy, each Stockholder agrees that
the foregoing covenant may be enforced by Coach by injunctions, restraining
orders and other equitable actions.
SECTION 7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto
that the foregoing covenants in this Article VII impose a reasonable restraint
on the Stockholders in light of the activities and business of Coach on the date
of the execution of this Agreement and the current plans of Coach.
SECTION 7.4 SEVERABILITY; REFORMATION. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in this Article VII are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable and this
Agreement shall thereby be reformed.
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT. The Stockholders
acknowledge that their agreements with the covenants set forth in this Article
VII are material conditions to Coach's agreement to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All of the
covenants in this Article VII shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any claim or cause
of action of any Stockholder against Coach or one of its subsidiaries, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Coach of such covenants. It is specifically agreed that the
five-year period during which the agreements and covenants of each Stockholder
made in this Article VII shall survive shall be computed by excluding from such
computation any time during which such Stockholder is in violation of any
provision of this Article VII. The covenants contained in this Article VII shall
not be affected by any breach of any other provision hereof by any party hereto.
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL. The Stockholders and the Equus Stockholder
recognize and acknowledge that they had in the past, currently have, and in the
future will have, access to certain confidential information of the Company
and/or Coach, such as lists of customers, operational policies, and pricing and
cost policies that are valuable, special and unique assets of the Company and/or
Coach. The Stockholders and the Equus Stockholder agree that they will not
disclose such confidential information to any person, firm, corporation,
association or other entity for any purpose whatsoever, except as is required in
the course of performing their duties to the Company and/or Coach, unless (i)
such information becomes known to the public generally through no fault of the
Stockholders or the Equus Stockholder, or (ii) disclosure is required by law or
the order of any governmental authority, provided, that prior to disclosing any
information pursuant to this clause (ii) the Stockholders or the Equus
Stockholder shall, if possible, give prior written notice thereof to Coach and
provide Coach with the opportunity to contest such disclosure. In the event of a
breach or threatened breach by the Stockholders or the Equus Stockholder of the
provisions of this Section, Coach shall be entitled to an injunction restraining
the Stockholders or the Equus Stockholder from disclosing, in whole or in part,
such confidential information. Nothing herein shall be construed as prohibiting
Coach from pursuing any other available remedy for such breach or threatened
breach, including the recovery of damages.
SECTION 8.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
the Company and/or Coach would have no other adequate remedy, the Stockholders
and the Equus Stockholder agree that the foregoing covenants may be enforced
against them by injunctions, restraining orders and other equitable actions.
SECTION 8.3 SURVIVAL. The obligations of the parties under this Article
VIII shall survive the termination of this Agreement.
ARTICLE IX
TRANSFER RESTRICTIONS RELATED TO POOLING-OF-INTERESTS
ACCOUNTING AND INTENDED TAX TREATMENT
SECTION 9.1 RESTRICTIONS ON RESALE. Coach has informed the Stockholders
and the Equus Stockholder that Coach intends to account for the Merger as a
pooling-of-interests under Opinion No. 16. Coach has also informed the
Stockholders and the Equus Stockholder that its ability to account for the
Merger as a pooling-of-interests was a material factor considered by Coach in
Coach's decision to enter into this Agreement. Therefore, pursuant to Opinion
No. 16, prior to the publication and dissemination by Coach of consolidated
financial results which include results of the combined operations of the
Company and Coach for at least thirty days on a consolidated basis following the
Effective Time, the Stockholders and the Equus Stockholder shall not sell, offer
to sell, or otherwise transfer or dispose of, any shares of the Coach Common
Stock received by Stockholders or the Equus Stockholder, engage in put, call,
short-sale, straddle or similar transactions, or in any other way reduce the
Stockholders' or the Equus Stockholder' risk of owning shares of Coach. The
certificates evidencing the Coach Common Stock to be received by the
Stockholders and the Equus Stockholder will bear a legend substantially in the
form set forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED
OR ASSIGNED, AND THE ISSUER SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, TRANSFER OR ASSIGNMENT, PRIOR TO THE PUBLICATION AND
DISSEMINATION OF FINANCIAL STATEMENTS BY THE ISSUER WHICH INCLUDE THE
RESULTS OF AT LEAST THIRTY (30) DAYS OF COMBINED OPERATIONS OF THE
ISSUER AND THE COMPANY ACQUIRED BY THE ISSUER FOR WHICH THESE SHARES ARE
ISSUED. UPON THE WRITTEN REQUEST OF THE HOLDER OF THIS CERTIFICATE, THE
ISSUER WILL REMOVE THIS RESTRICTIVE LEGEND WHEN THIS REQUIREMENT HAS
BEEN MET.
SECTION 9.2 TAX-FREE REORGANIZATION. Coach, the Stockholders and the
Equus Stockholder are entering into this Agreement with the intention that the
Merger qualify as a tax-free reorganization for federal income tax purposes,
except to the extent of any "boot" received, and the Stockholders, the Equus
Stockholder, Coach and Newco will not take any actions that disqualify the
Merger for such treatment.
ARTICLE X
REGISTRATION OF COACH STOCK; FEDERAL SECURITIES ACT
SECTION 10.1 REGISTRATION OBLIGATION. As soon as practicable after the
date hereof, but in no event later than October 1, 1996, Coach shall file a
registration statement under the 1933 Act, covering the registration of
forty-nine percent (49%) of the Coach Common Stock (such shares of Coach Common
Stock are referred to herein as "Shelf Shares") to be received by the Company
Stockholders pursuant to this Agreement for resale by the Company Stockholders.
In connection with such registration statement, Coach shall, as expeditiously as
reasonably possible:
(a) use its best efforts to cause such registration statement to
become effective and keep such registration statement effective for two
years (or such shorter period after which Coach Common Stock may be sold
by the Company Stockholders in accordance with the requirements of Rule
144 under the 1933 Act); provided, however, that Coach shall not be
deemed to have used its best efforts to keep the registration statement
effective during the applicable period if Coach voluntarily takes any
action (except for a public offering as provided in (f) below) that
results in the Company Stockholders not being able to sell the Shelf
Shares during such period, unless such action is required by law;
(b) use its best efforts to prepare and file with the SEC such
amendments and supplements to such registration statement as may be
necessary to comply with the provisions of the 1933 Act;
(c) no less than twenty-four (24) hours prior to filing a
registration statement or prospectus or any amendment or supplement
thereto, furnish to each Company Stockholder copies of all documents
proposed to be filed to permit the reasonable and timely review of
statements contained in such documents pertaining to such parties and
thereafter furnish to the Company Stockholders such number of copies of
such registration statement, each amendment and supplement thereto, such
numbers of copies of a prospectus, including a preliminary prospectus,
in conformity with the requirements of the 1933 Act, and such other
documents as they may reasonably request in order to facilitate the
disposition of the Shelf Shares to be received by them pursuant to this
Agreement;
(d) use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Company Stockholders, and to keep such registration or qualification
effective during the period such registration statement is to be kept
effective, provided that Coach shall not be required to become subject
to taxation, to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(e) use its best efforts to maintain the authorization for
quotation of the securities covered by such registration statement on
the NASDAQ National Market of the Nasdaq Stock Market, Inc.;
(f) notify each Company Stockholder, at any time when the Company
Stock holders must suspend offers or sales of Shelf Shares under the
registration statement, either because the prospectus included in such
registration statement is required to be amended for any reason, such as
an amendment under the 1933 Act to provide current information, or
because the prospectus includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing, or because underwriters of Coach Common
Stock have insisted on suspension of such offerings and sales in
connection with a public offering by Coach of its shares of common
stock; provided, however, that any suspension relating to a public
offering by Coach or acquisition requiring an amendment to such
registration statement shall not exceed ninety (90) days and provided
further that the period during which the registration statement is to be
kept effective shall be extended by a number of days equal to the period
during which it is suspended as a result of such public offering or
acquisition. Coach shall use its best efforts to enable the Company
Stockholders to recommence offers and sales under the registration
statement. Notwithstanding the foregoing and anything to the contrary
set forth in this Section 10.1, each Company Stockholder acknowledges
that there may occasionally be times when Coach must suspend the use of
the prospectus included in such registration statement until such time
as an amendment to the registration statement has been filed by Coach
and declared effective by the SEC, or until such time as Coach has filed
an appropriate report with the SEC pursuant to the 1934 Act. Each
Company Stockholder hereby covenants that he will not offer or sell any
shares of Coach stock pursuant to such prospectus during the period
commencing when Coach notifies the Company Stockholder of the suspension
of the use of such prospectus and ending when Coach notifies the Company
Stockholder that he may thereafter effect offers and sales pursuant to
such prospectus; and
(g) use its best efforts to cause all Shelf Shares to be listed,
by the date of the first sale of Shelf Shares pursuant to such
registration statement, on each securities exchange on which the shares
of Common Stock of Coach are then listed or proposed to be listed.
SECTION 10.2 FURNISH INFORMATION. It is a condition precedent to the
obligations of Coach to take any action pursuant to Section 10.1 hereof with
respect to the Shelf Shares of any Company Stockholder that such Company
Stockholder shall furnish to Coach such information regarding himself or itself,
the Coach Common Stock held by him or it and the intended method of disposition
of such securities as shall be required to effect the registration of such
Company Stockholder's Shelf Shares and as may be required from time to time to
keep such registration current.
SECTION 10.3 EXPENSES OF REGISTRATION. Except as otherwise provided, all
expenses incurred by or on behalf of Coach in connection with registrations,
filings or qualifications pursuant to Section 10.1 hereof, including without
limitation all registration, filing and qualification fees, the fees and
expenses incurred in connection with the listing of the Shelf Shares to be
registered on each security exchange on which shares of Common Stock of Coach
are then listed, printers' and accounting fees, and fees and disbursements of
counsel for Coach, shall be borne by Coach. In no event shall Coach be obligated
to bear underwriting, brokerage or related fees, discounts or commissions or the
fees or expenses of counsel to the Company Stockholders.
SECTION 10.4 FURTHER ASSURANCES. Each of Coach and the Company
Stockholders shall agree to such other reasonable and customary arrangements,
undertakings and indemnifications with respect to the registration of the Shelf
Shares to be received by the Company Stockholders pursuant to the Agreement as
may be requested by any of them, but shall not be obligated to enter into any
underwriting arrangements. Such indemnifications shall include Coach's indemnity
of Company Stockholders and their brokers or dealers which may be deemed to be
underwriters as reasonably requested by the Company Stockholders and their
brokers or dealers against liability, including liability arising under the 1933
Act.
SECTION 10.5 RULE 144. Coach covenants that it will at all times use its
best efforts to timely file any reports required to be filed by it under the
1933 Act and the 1934 Act and that it will take such other actions as may be
necessary or any Company Stockholder may reasonably request to enable the
Company Stockholders to sell the Coach Common Stock without registration under
applicable exemptions provided for under the 1933 Act including, without
limitation, Rule 144.
SECTION 10.6 ECONOMIC RISK; SOPHISTICATION.
(a) Each Company Stockholder represents and warrants that such Company
Stockholder has not relied on any purchaser representative, or on the Company or
any other Company Stockholder, in connection with the acquisition of shares of
Coach Common Stock hereunder. The Company Stockholders (A) have such knowledge,
sophistication and experience in business and financial matters that they are
capable of evaluating the merits and risks of an investment in the shares of
Coach Common Stock, (B) fully understand the nature, scope and duration of the
limitations on transfer described in this Agreement and (C) can bear the
economic risk of an investment in the shares of Coach Common Stock and can
afford a complete loss of such investment. The Company Stockholders have had an
adequate opportunity to ask questions and receive answers from the officers of
Coach concerning any and all matters relating to the transactions described
herein including without limitation the background and experience of the
officers and directors of Coach, the plans for the operations of the business of
Coach, the business, operations and financial condition of Coach, and any plans
for additional acquisitions and the like. The Company Stockholders have asked
any and all questions in the nature described in the preceding sentence and all
questions have been answered to their satisfaction.
(b) Each Company Stockholder further represents, warrants, acknowledges
and agrees that (x) he is acquiring the shares of Coach Common Stock under this
Agreement for his own account, as principal and not on behalf of other persons,
and for investment and not with a view to the resale or distribution of all or
any part of such shares, (y) he will not sell or otherwise transfer such shares
unless, in the opinion of counsel who is satisfactory to the Company, the
transfer can be made without violating the registration provisions of the 1933
Act, as amended, and the rules and regulations thereunder, unless such sale or
transfer is under an effective registration statement, and (z) the certificate
representing such shares will also bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SHARES
REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
PLEDGED OR HYPOTHECATED, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH
SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR, IN THE
OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. SECTION 10.7 SALES OF
STOCK. By its execution and delivery of this Agreement, each
executing Company Stockholder represents and warrants to the Company and each of
the other Company Stockholders that the representing Company Stockholder does
not have any contract, undertaking, agreement or arrangement, written or oral,
with any other person to sell, transfer or grant participation in any shares of
Coach Common Stock to be acquired by such Company Stockholder.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of
the parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors of Coach, Newco and the Company, and the heirs, legal representatives
or successors of the Stockholders and the Equus Stockholder.
SECTION 11.2 ENTIRE AGREEMENT. This Agreement (including the Schedules,
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholders,
the Equus Stockholder, the Company, Newco and Coach and supersede any prior
agreement and understanding relating to the subject matter of this Agreement.
This Agreement may be modified or amended only by a written instrument executed
by the Stockholders, the Equus Stockholder, the Company, Newco and Coach, acting
through their respective officers, duly authorized by their respective Boards of
Directors.
SECTION 11.3 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
SECTION 11.4 BROKERS AND AGENTS. Each party represents and warrants that
it employed no broker or agent in connection with this transaction and agrees to
indemnify the other against all loss, cost, damages or expense arising out of
claims for fees or commissions of brokers employed or alleged to have been
employed by such indemnifying party.
SECTION 11.5 NOTICES. All notices and communications required or
permitted hereunder shall be in writing and may be given by depositing the same
in the United States mail, addressed to the party to be notified, postage
prepaid certified mail, with return receipt requested, or by delivering the same
in person to an officer or agent of such party, as follows:
(A) If to Coach or Newco, addressed to them at:
One Riverway, Suite 600
Houston, Texas 77056-1903
Attn: Law Department
(B) If to the Stockholders, addressed to them at:
Mr. George D. Kamins
210 Fleetway
Houston, Texas 77024
Mr. Joseph M. Chernow
536 West 17th Street
Houston, Texas 77008
If to the Equus Stockholder, addressed to them at:
Equus II Incorporated
2929 Allen Parkway, 25th Floor
Houston, Texas 77019
Attention: Nolan Lehmann
With a copy to:
Seth Freedman, Esq.
Hirsch & Westheimer, P.C.
700 Louisiana Street, 25th Floor
Houston, Texas 77002-2728
or to such other address as any party hereto shall specify pursuant to
this Section 11.5 from time to time. Notice shall be deemed given and effective
on the earlier of three (3) days after deposit in the U.S. mail of a writing
addressed as provided and sent first-class mail, certified, return receipt
requested, or when actually received. Any party may change its address for
notice by notifying the other party of such change in accordance with this
Section 11.5.
SECTION 11.6 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas (except for its principles
governing conflicts of laws) and the federal laws of the United States of
America.
SECTION 11.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Articles III and IV shall survive
the Closing for a period of twelve (12) months from the Closing Date (which date
is hereinafter called the "Expiration Date"), and no party shall have a right to
indemnity unless notice of a claim therefor shall be given on or before the
Expiration Date, except that the warranties and representations set forth in
Section 3.18 hereof shall survive until such time as the limitations period has
run for all tax periods ended prior to the Closing Date, which shall be deemed
to be the Expiration Date for Section 3.18.
SECTION 11.8 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default occurring before or after that waiver.
SECTION 11.9 TIME. Time is of the essence with respect to this
Agreement.
SECTION 11.10 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
COACH USA, INC. YELLOW CAB SERVICE CORPORATION
By: By:
Name: Richard H. Kristinik Name:
Title: Chief Executive Officer Title:
COACH V ACQUISITION, INC. STOCKHOLDERS:
By:
Name: Douglas M. Cerny George D. Kamins
Title: President
Joseph M. Chernow
Equus Stockholder:
EQUUS II INCORPORATED
By:
Name:
Title:
EXHIBIT 2.4
STOCK PURCHASE AGREEMENT
by and among
COACH USA, INC.,
CALIFORNIA CHARTER, INC.,
AND
THE STOCKHOLDERS NAMED HEREIN
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE PURCHASE AND SALE OF THE SHARES
SECTION 1.1 GENERAL
SECTION 1.2 PURCHASE PRICE
SECTION 1.3 ALLOCATION OF PURCHASE PRICE
ARTICLE II
CLOSING
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
SECTION 3.1 DUE ORGANIZATION
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 3.3 CAPITALIZATION
SECTION 3.4 SUBSIDIARIES
SECTION 3.5 FINANCIAL STATEMENTS
SECTION 3.6 LIABILITIES AND OBLIGATIONS
SECTION 3.7 ACCOUNTS AND NOTES RECEIVABLE
SECTION 3.8 ASSETS
SECTION 3.9 MATERIAL CUSTOMERS AND CONTRACTS
SECTION 3.10 PERMITS
SECTION 3.11 ENVIRONMENTAL MATTERS
SECTION 3.12 LABOR AND EMPLOYEE RELATIONS
SECTION 3.13 INSURANCE
SECTION 3.14 COMPENSATION; EMPLOYMENT AGREEMENTS
SECTION 3.15 EMPLOYEE BENEFIT PLANS
SECTION 3.16 LITIGATION AND COMPLIANCE WITH LAW
SECTION 3.17 TAXES
SECTION 3.18 ABSENCE OF CHANGES
SECTION 3.19 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY
SECTION 3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES
SECTION 3.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS
SECTION 3.22 INTANGIBLE PROPERTY
SECTION 3.23 DISCLOSURE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
SECTION 4.1 ORGANIZATION
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 4.3
SECTION 4.4 [Intentionally omitted.]
SECTION 4.5 INVESTMENT REPRESENTATIONS
SECTION 4.6 NO VIOLATIONS
SECTION 4.7 COACH INVESTIGATION
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 REPAYMENT OF INDEBTEDNESS AND RELEASE FROM GUARANTEES
SECTION 5.2 REPAYMENT OF STOCKHOLDERS AND AFFILIATE INDEBTEDNESS;
RELEASE OF CERTAIN OBLIGATIONS
SECTION 5.3 FUTURE COOPERATION
SECTION 5.4 EXPENSES
SECTION 5.5 DTPA WAIVER
SECTION 5.6 REQUIRED APPROVALS
SECTION 5.7 SECTION 338(H)(10) ELECTION
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS
SECTION 6.2 INDEMNIFICATION BY COACH
SECTION 6.3 THIRD PERSON CLAIMS
SECTION 6.4 LIMITATION UPON INDEMNITY
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES
SECTION 7.2 EQUITABLE RELIEF
SECTION 7.3 REASONABLE RESTRAINT
SECTION 7.4 SEVERABILITY; REFORMATION
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL
SECTION 8.2 EQUITABLE RELIEF
ARTICLE IX
[INTENTIONALLY OMITTED.]
ARTICLE X
MISCELLANEOUS.
SECTION 10.1 SUCCESSORS AND ASSIGNS
SECTION 10.2 ENTIRE AGREEMENT
SECTION 10.3 COUNTERPARTS
SECTION 10.4 BROKERS AND AGENTS
SECTION 10.5 NOTICES
SECTION 10.6 GOVERNING LAW
SECTION 10.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 10.8 CLOSING OBLIGATIONS
SECTION 10.9 CONDITIONS PRECEDENT TO COACH'S OBLIGATION TO CLOSE
SECTION 10.10 CONDITIONS PRECEDENT TO STOCKHOLDERS' OBLIGATION
TO CLOSE
SECTION 10.11 TERMINATION EVENTS
SECTION 10.12 EFFECT OF TERMINATION
SECTION 10.13 EXERCISE OF RIGHTS AND REMEDIES
SECTION 10.14 ARBITRATION
SECTION 10.15 TIME
SECTION 10.16 REFORMATION AND SEVERABILITY
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 29th
day of August 1996, by and among Coach USA, Inc., a Delaware corporation
("Coach"), California Charter, Inc., a Texas Subchapter-S corporation (the
"Company"), Scott Keller, a stockholder of the Company ("Keller"), and Fred
Kaiser, a stockholder of the Company ("Kaiser"). Keller and Kaiser together hold
all the outstanding shares of the Company and are hereinafter collectively
referred to as the "Stockholders."
WHEREAS, the Stockholders are the beneficial owners of all of the
outstanding capital stock of the Company in amounts set out on SCHEDULE 3.3
below (the "Shares");
WHEREAS, pursuant to the terms of that certain Voting Trust Agreement of
even date herewith among Keller, Kaiser and Paul Angenend, Esq. (the "Trustee")
(the "Voting Trust Agreement"), the Stockholders have delivered to the Trustee
stock certificates representing all of the Shares and have received Trust
Certificates representing the Shares (the "Trust Certificates");
WHEREAS, the Stockholders desire to sell the Shares to Coach, and Coach
desires to purchase the Shares from the Stockholders;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE PURCHASE AND SALE OF THE SHARES
SECTION 1.1 GENERAL. Upon the terms and subject to the conditions of
this Agreement, the Stockholders hereby agree to sell, assign, transfer and
deliver to Coach, and Coach hereby agrees to purchase, the Shares.
SECTION 1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") for the Shares shall consist of (i) Ten Million Nine Hundred
Seventy-Three Thousand, Six Hundred Dollars ($10,973,600) in readily available
funds to be delivered concurrently with the execution of this Agreement. At the
Closing (as defined in Article II), the Stockholders will deliver to Coach
Voting Trust Certificates representing the Shares, duly endorsed in blank or
accompanied by blank stock powers, and Coach will deliver $5,486,800 to Keller
and $5,486,800 to Kaiser by check or wire transfer of readily available funds.
SECTION 1.3 ALLOCATION OF PURCHASE PRICE. The Parties agree that the
Purchase Price and the liabilities of the Company will be allocated to the
assets of the Company for tax purposes as shown on the Allocation Schedule
attached hereto as SCHEDULE 1.3. Coach, the Company and the Stockholders will
file all tax returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
ARTICLE II
CLOSING
The sale and purchase of the Shares described in Article I hereof and
the other transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Coach, One Riverway, Suite 600, Houston, Texas 77056,
concurrently with the execution of this Agreement on August 29, 1996. The date
on which the Closing actually occurs shall be referred to in this Agreement as
the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
The Stockholders jointly and severally represent and warrant to Coach as
follows: STOCKHOLDERS' LIMITATION AS TO KNOWLEDGE. Notwithstanding anything
contained in this Agreement to the contrary, the Stockholders' representations
and warranties are qualified as to the "knowledge" of such Stockholders with
respect to the facts or matters represented or warrantied by such Stockholders
in the following sections:
(i) 3.10 (Permits),
(ii) 3.12 (Labor Matters),
(iii) 3.13 (Insurance), (iv) 3.14 (Compensation), (v) 3.15
(Employee Benefit Plans), (vi) 3.18 (Absence of Changes),
(vii) 3.19 (Accounts with Banks and Brokerage Firms), (viii)3.20
(Absence of Certain Business Practices), (ix) 3.21 (Competing Lines of
Business), (x) 3.22 (Intangible Property), and (xi) 3.23 (Disclosure).
As used herein, "knowledge" of a Stockholder shall mean the current
actual knowledge of Scott Keller or Fred Kaiser, each without obligation to
conduct further inquiry outside the ordinary course of business.
SECTION 3.1 DUE ORGANIZATION. The Company is a "Subchapter-S"
corporation as defined under the Internal Revenue Code of 1986 as amended, and
the rules and regulations promulgated pursuant to it ("Code"). The Company is
duly organized, validly existing and in good standing under the laws of the
state of Texas. The Company is duly authorized and qualified to do business in
the states set out on SCHEDULE 3.1 to carry on its businesses and in the manner
as now conducted and to the knowledge of the Company and the Stockholders, no
qualification is required in any other jurisdiction. True, complete and correct
copies of the Articles of Incorporation and By-laws, each as amended, of the
Company are attached hereto as SCHEDULE 3.1.
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. The Company,
upon approval by all applicable federal, state and local regulatory bodies, will
have the full legal right, power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The Stockholders have the
full legal right, power and authority to enter into this Agreement. The
execution, delivery and performance of this Agreement have been approved by the
board of directors of the Company and by the Stockholders. No additional
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company, and, assuming the due authorization,
execution and delivery hereof by Coach, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors rights.
The execution and delivery of this Agreement by the Company do not, and
the consummation by the Company of the transactions contemplated hereby will
not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company under
any of the terms, conditions or provisions of (i) the Articles of Incorporation
or By-laws of the Company, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to the Company or any of its properties or
assets, or (iii) any agreement, note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, lease or other instrument, obligation or
agreement of any kind to which the Company is now a party or by which the
Company or any of its properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security interests,
charges or encumbrances that would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the Company.
Except as set forth on SCHEDULE 3.2 and except for any required filings
with or approvals from the Surface Transportation Board ("STB") and state and
local transportation authorities and any required filings under federal and
state securities laws, no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, other than as required or requested by Coach, or in such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. Except as set forth on SCHEDULE 3.2, none of the
customer contracts or other material agreements to which the Company is a party
requires notice to, or the consent or approval of, any governmental agency or
other third party to any of the transactions contemplated hereby to remain in
full force and effect following such transactions.
SECTION 3.3 CAPITALIZATION. SCHEDULE 3.3 accurately describes the
authorized capital stock of the Company. All of the issued and outstanding
shares of the capital stock of the Company are owned beneficially and of record
by the Stockholders and constitute the Shares. All of the Shares held by the
Stockholders have been duly authorized and validly issued, are fully paid and
nonassessable, are owned by the Stockholders as set forth in SCHEDULE 3.3 free
and clear of all liens, encumbrances and claims of every kind. None of such
shares was issued in violation of the preemptive rights of any past or present
stockholder. Except as set forth in SCHEDULE 3.3, no subscription, option,
warrant, call, convertible or exchangeable security, other conversion right or
commitment of any kind exists which obligates the Company to issue any of its
capital stock or the Stockholders to transfer any of the Shares.
SECTION 3.4 SUBSIDIARIES. Except as set forth in SCHEDULE 3.4, the
Company does not presently own, of record or beneficially, or control, directly
or indirectly, any capital stock, securities convertible into or exchangeable
for capital stock or any other equity interest in any corporation, association
or business entity. Except as set forth in SCHEDULE 3.4, the Company is not,
directly or indirectly, a participant in any joint venture, partnership or other
noncorporate entity. To the extent that such subsidiary companies or affiliated
entities are set out on SCHEDULE 3.4, such Schedule contains a complete and
accurate list for each company of its name, its jurisdiction of incorporation,
the jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder and the number of
shares held by each). Each company set out on SCHEDULE 3.4 is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations.
Each company set out on SCHEDULE 3.4 is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each state or
other jurisdiction set out in SCHEDULE 3.4, and, to the knowledge of the Company
and the Stockholders, no other qualification is required in any other
jurisdiction.
SECTION 3.5 FINANCIAL STATEMENTS. The Stockholders have delivered to
Coach complete and correct copies of the following financial statements:
(i) the balance sheets of the Company as of December 31, 1993, 1994
and 1995 and the related statements of operations, of stockholders'
equity and of cash flows for the three-year period ended December 31,
1995, together with the related notes and Schedules (such balance
sheets, the related statements of operations, of Stockholders' equity
and of cash flows and the related notes and Schedules are referred to
herein as the "Year-end Financial Statements"); and
(ii) the unaudited balance sheet of the Company as of June 30,
1996, the unaudited balance sheet (the "Interim Balance Sheet") of the
Company as of June 30, 1996 (the "Interim Balance Sheet Date") and the
related unaudited statements of operations, of stockholders' equity and
of cash flows for the six-month periods ended June 30, 1995 and 1996,
together with the related notes and Schedules (such balance sheets, the
related statements of operations, of stockholders' equity and of cash
flows and the related notes and Schedules are referred to herein as the
"Interim Financial Statements"). The Year-end Financial Statements and
the Interim Financial Statements are attached as SCHEDULE 3.5 to this
Agreement and are referred to hereinafter as the "Financial Statements."
The Financial Statements have been prepared from the books and records
of the Company in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years and
throughout the periods involved ("GAAP"), except as provided in the
Financial Statements or the notes thereto, and present fairly the
financial position and results of operations of the Company as of the
dates of such statements and for the periods covered thereby. The books
of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered
therein represent bona fide transactions, and the revenues, expenses,
assets and liabilities of the Company have been properly recorded
therein in all material respects.
SECTION 3.6 LIABILITIES AND OBLIGATIONS. SCHEDULE 3.6 sets forth an
accurate list as of the Interim Balance Sheet Date of (i) all liabilities of the
Company which are reflected in the Interim Balance Sheet and (ii) any
liabilities of any kind of the Company which are not reflected in the Interim
Balance Sheet. Except as set forth on SCHEDULE 3.6, since the Interim Balance
Sheet Date the Company has not incurred any liabilities of any kind, character
or description, whether accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in the ordinary course of business
which are not materially greater than the corresponding liabilities reflected in
the Interim Balance Sheet. SCHEDULE 3.6 contains a reasonable estimate by the
Stockholders of the maximum amount which may be payable with respect to
liabilities which are not fixed.
SECTION 3.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 3.7 sets forth an
accurate list of the accounts and notes receivable of the Company as of the
Interim Balance Sheet Date and generated subsequent to the Interim Balance Sheet
Date. Receivables from and advances to employees, the Stockholders and any
entities or persons related to or affiliated with the Stockholders are
separately identified on SCHEDULE 3.7. SCHEDULE 3.7 also sets forth an accurate
aging of all accounts and notes receivable as of the Interim Balance Sheet Date,
showing amounts due in 30-day aging categories. The trade and other accounts
receivable of the Company which are classified as current assets on the Interim
Balance Sheet are bona fide receivables, were acquired or arose in the ordinary
course of business, are stated in accordance with GAAP and, subject to the
reserve for doubtful accounts, need not be written-off as uncollectible. Such
accounts and notes are collectible in the amount shown on SCHEDULE 3.7, net of
reserves for doubtful accounts reflected in the Interim Balance Sheet.
SECTION 3.8 ASSETS. The depreciation schedule attached to SCHEDULE 3.8
sets forth an accurate list of all real and personal property included in
"property and equipment" on the balance sheet of the Company and all other
tangible assets of the Company with a value in excess of $5,000 (i) owned by the
Company as of the Interim Balance Sheet Date and (ii) acquired since the Interim
Balance Sheet Date, including in each case true, complete and correct copies of
leases for significant equipment and for all real property leased by the Company
and descriptions of all real property on which buildings, warehouses, workshops,
garages and other structures used in the operation of the business of the
Company are situated. SCHEDULE 3.8 indicates which assets are currently owned,
or were formerly owned, by the Stockholders or affiliates of the Company or
Stockholders. Except as specifically identified on SCHEDULE 3.8, all of the
tangible assets, vehicles and other significant machinery and equipment of the
Company listed on SCHEDULE 3.8 are in good working order and condition, ordinary
wear and tear excepted, and have been maintained in accordance with standard
industry practices. All fixed assets used by the Company that are material to
the operation of the Company's business are either owned by the Company or
leased under an agreement identified on SCHEDULE 3.8. All leases set forth on
SCHEDULE 3.8 are in full force and effect and constitute valid and binding
agreements of the parties thereto in accordance with their respective terms.
SCHEDULE 3.8 contains true, complete and correct copies of all title reports and
title insurance policies received or owned by the Company with respect to any of
its properties. The Company has good and indefeasible title to the tangible and
intangible personal property and the real property owned and used in its
business, including the properties identified on SCHEDULE 3.8, subject to no
mortgage, pledge, lien, claim, conditional sales agreement, encumbrance or
charge, except for liens reflected on SCHEDULE 3.8, liens for current taxes not
yet payable and assessments not in default, easements for utilities serving only
the property (unless otherwise revealed by title report or title insurance
policy), and easements, covenants and restrictions and other exceptions or
reservations to title shown of record in the office of the County Clerks in
which the properties, assets and leasehold estates are located, which do not
adversely affect the Company's use of the property.
SECTION 3.9 MATERIAL CUSTOMERS AND CONTRACTS. SCHEDULE 3.9 sets forth an
accurate list of (i) all customers representing 5% or more of the Company's
revenues in the year ended December 31, 1995 and the six-month period ended June
30, 1996, and (ii) all material contracts, commitments and similar agreements to
which the Company is currently a party or by which the Company or any of its
properties are bound, including, but not limited to, contracts with customers,
contracts with any labor organizations, leases, loan agreements, pledge and
security agreements, indemnity or guaranty agreements, bonds, notes, mortgages,
joint venture or partnership agreements, options to purchase real or personal
property, and agreements relating to the purchase or sale by the Company of
assets or securities. SCHEDULE 3.9 contains true, complete and correct copies of
all such agreements. Except to the extent set forth on SCHEDULE 3.9, (i) none of
the Company's material customers has canceled or substantially reduced, to the
knowledge of the Stockholders, or is currently attempting or threatening to
cancel or substantially reduce its use of the Company's services and (ii) the
Company has complied with all material commitments and obligations pertaining to
it under such agreements and is not in default under any such agreements, no
notice of default has been received by the Company and the Stockholders are
aware of no basis therefor. Except as set forth on SCHEDULE 3.9, the Company is
not now nor has it ever been party to any governmental contracts subject to
price redetermination or renegotiation.
SECTION 3.10 PERMITS. SCHEDULE 3.10 contains an accurate list, summary
description of and copies all licenses, franchises, permits, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business including, without
limitation, permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel permits, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company. The licenses, operating authorizations,
franchises, permits and other governmental authorizations listed on SCHEDULE
3.10 are valid, and the Company has not received any notice that any
governmental authority intends to cancel, terminate or not renew any such
license, operating authorization, franchise, permit or other governmental
authorization. The Company holds all licenses, operating authorizations,
franchises, permits and other governmental authorizations, the absence of any of
which could have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. The Company has conducted and is conducting its
business in substantial compliance with the requirements, standards, criteria
and conditions set forth in its licenses, operating authorizations, franchises,
permits and other governmental authorizations as well as the applicable orders,
approvals and variances related thereto, and is not in violation of any of the
foregoing except for any violations that would not have a material and adverse
effect on the business, operations, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company. Except as
specifically provided in SCHEDULE 3.10, and provided the regulatory consents
required or requested by Coach are obtained, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
material licenses, operating authorizations, franchises, permits and other
government authorizations.
SECTION 3.11 ENVIRONMENTAL MATTERS. The Company has complied with and is
in compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to it or any of its properties, assets, operations
and businesses relating to the protection of the environment (collectively,
"Environmental Laws") including, without limitation, Environmental Laws relating
to air, water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (as such terms are defined in any applicable Environmental Law)
except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, does not and would not (i) have a material adverse
effect on the Company or its business as a whole or (ii) necessitate a material
expenditure by or on behalf of the Company. The Company has obtained and
complied with all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances and has reported, to the extent required by
all Environmental Laws, all past and present sites owned and operated by the
Company where Hazardous Wastes, Hazardous Materials or Hazardous Substances have
been treated, stored, disposed of or otherwise handled. Except as disclosed on
SCHEDULE 3.11, to the knowledge of the Stockholders, there have been no
"releases" (as defined in any Environmental Laws) at, from, in or on any
property owned or operated by the Company except as permitted by Environmental
Laws. To the knowledge of the Stockholders, there is no on-site or off-site
location to which the Company has transported and disposed of Hazardous Wastes,
Hazardous Materials and Hazardous Substances or arranged for the transportation
and disposal of Hazardous Wastes, Hazardous Materials and Hazardous Substances
which is the subject of any federal, state, local or foreign enforcement action
or any other investigation which could lead to any claim against the Company or
Coach for any clean-up cost, remedial work, damage to natural resources or
personal injury, including, but not limited to, any claim under (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (ii) the Resource Conservation and Recovery Act, (iii) the Hazardous
Materials Transportation Act or (iv) comparable state and local statutes and
regulations. To the knowledge of the Stockholders, the Company has no contingent
liability in connection with any release of any Hazardous Waste, Hazardous
Material or Hazardous Substance into the environment.
SECTION 3.12 LABOR AND EMPLOYEE RELATIONS. Except for such labor unions
as set forth in SCHEDULE 3.12, the Company is neither bound by nor subject to
any arrangement with any labor union. There is no pending or threatened labor
dispute involving the Company and any group of its employees nor has the Company
experienced any labor interruptions over the past five years. The Company
considers its relationship with its employees to be good.
SECTION 3.13 INSURANCE. SCHEDULE 3.13 sets forth an accurate list as of
the Interim Balance Sheet Date of all insurance policies carried by the Company
and of all insurance loss runs or worker's compensation claims received for the
past three (3) policy years. Also attached to SCHEDULE 3.13 are true, complete
and correct copies of all of the Company's insurance policies, covering at least
the past three years. None of such policies is a "claims made" policy. The
insurance policies set forth on SCHEDULE 3.13 provide adequate coverage against
the risks involved in the Company's business. Such policies are currently in
full force and effect.
SECTION 3.14 COMPENSATION; EMPLOYMENT AGREEMENTS. SCHEDULE 3.14 sets
forth an accurate Schedule of all officers, directors and key employees of the
Company, listing all employment agreements with such officers, directors and
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus, benefits and other compensation, respectively) of each of such
persons as of the Interim Balance Sheet Date. Attached to SCHEDULE 3.14 are
true, complete and correct copies of all such employment agreements and all
other employment agreements and other similar agreements or arrangements
containing "golden parachute" or other similar provisions.
SECTION 3.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.15 sets forth an
accurate Schedule of all employee benefit plans of the Company and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Interim Balance Sheet Date. Except for the
employee benefit plans described on SCHEDULE 3.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning given that term in Section 3(2) of ERISA. The Company has not
sponsored, maintained or contributed to any employee pension benefit plan other
than the plans set forth on SCHEDULE 3.15, nor is the Company required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement.
The Company is not now, nor will it become as a result of its past
activities, liable to the Pension Benefit Guaranty Corporation or to any
multi-employer employee pension benefit plan under the provisions of Title IV of
ERISA. All employee benefit plans listed on SCHEDULE 3.15 are in substantial
compliance with all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal, state and local
statutes, ordinances and regulations. All accrued contribution obligations of
the Company with respect to any plan listed on SCHEDULE 3.15 have either been
fulfilled in their entirety or are fully reflected on the balance sheet of the
Company as of the Interim Balance Sheet Date.
All plans listed on SCHEDULE 3.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Code have been determined by the
Internal Revenue Service to be so qualified, and copies of such determination
letters are included as part of SCHEDULE 3.15 hereof. Except as disclosed on
SCHEDULE 3.15, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of
SCHEDULE 3.15 hereof. Neither the Stockholders, any such plan listed in SCHEDULE
3.15, nor the Company has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No such plan
listed in SCHEDULE 3.15 has incurred an "accumulated funding deficiency," as
defined in Section 412(a) of the Code and Section 302(1) of ERISA, and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service nor any liability to the Pension Benefit Guaranty
Corporation. There have been no terminations, partial terminations or
discontinuances of contri butions to any such Qualified Plan without notice to
and approval by the Internal Revenue Service; no plan listed in SCHEDULE 3.15
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan; and the Company has not incurred liability under
Section 4062 of ERISA.
SECTION 3.16 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in
SCHEDULE 3.16, there are no claims, actions, suits or proceedings pending
against or affecting the Company, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over the Company which
either singly, or in the aggregate, if decided against the Company, would have a
material adverse effect on the Company as a whole, and no notice of any such
claim, action, suit or proceeding, including any which may be pending, has been
received by the Company, and the Stockholders are not aware of any basis
therefor. Except to the extent set forth on SCHEDULE 3.16, the Company has
conducted for the past three (3) years and does conduct its business in
compliance with all laws, regulations, writs, injunctions, decrees and orders
applicable to the Company and its assets.
SECTION 3.17 TAXES. For purposes of this Agreement, the term "Taxes"
shall mean all taxes, charges, fees, levies or other assessments including,
without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments. The Company has
timely filed all requisite federal, state, local and other tax returns for all
fiscal periods ended on or before the date hereof, and has duly paid in full or
made adequate provision in the Financial Statements for the payment of all Taxes
for all periods ending at or prior to the date hereof. Except as set forth on
SCHEDULE 3.17, there are no examinations in progress or claims against the
Company for any period or periods prior to and including the Interim Balance
Sheet Date and no notice of any claim for Taxes, whether pending or threatened,
has been received. The amounts shown as accruals for Taxes on the financial
statements of the Company as of the Interim Balance Sheet Date are sufficient
for the payment of all Taxes for all fiscal periods ended on or before that
date. Copies of (i) any tax examinations, (ii) extensions of statutory
limitations and (iii) the federal, state and local Tax returns of the Company
for the last three fiscal years are attached hereto as SCHEDULE 3.17. The
Company currently utilizes the accrual method of accounting for income tax
purposes. Such method of accounting has not changed in the past five years.
During all tax periods ended prior to the Closing Date for which the
statute of limitations has not expired, the Company has conducted its business
in a manner which entitles it to protection under the safe harbor provisions of
Section 530(a) of the Revenue Act of 1978, which was extended indefinitely by
Section 269(c) of the Tax Equity and Fiscal Responsibility Act of 1982.
SECTION 3.18 ABSENCE OF CHANGES. Since the Interim Balance Sheet Date,
the Company has conducted its operations in the ordinary course of business and,
except as set forth on SCHEDULE 3.18, there has not been:
(i) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities
(contingent or otherwise), income or business of the Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the Company;
(iii) any change in the authorized or outstanding capital stock
of the Company or any change in the Stockholders' ownership interests in
the Company or any grant of any options, warrants, calls, conversion
rights or commitments;
(iv) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
Company;
(v) any increase in the compensation payable or to become
payable by the Company to the Stockholders or to the Company's officers,
directors, employees, consultants or agents, except for ordinary and
customary bonuses and salary increases for employees in accordance with
past practice;
(vi) any work interruptions, labor grievances or claims filed,
or any proposed law, regulation or event or condition of any character
materially adversely affecting the business or future prospects of the
Company;
(vii) any sale or transfer, or any agreement to sell or
transfer, any material assets, properties or rights of the Company to
any person, including, without limitation, the Stockholders or their
affiliates;
(viii)any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company;
(ix) any increase in the Company's indebtedness, other than
accounts payable incurred in the ordinary course of business;
(x) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to
the transfer and assignment of any such assets, property or rights;
(xi) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xii) any waiver of any material rights or claims of the
Company;
(xiii)any breach, amendment or termination of any material
contract, agreement, license, permit or other right to which the Company
is a party; or
(xiv) any transaction by the Company outside the ordinary course
of business.
SECTION 3.19 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.
SCHEDULE 3.19 sets forth an accurate Schedule as of the Closing Date, of (i) the
name of each financial institution or brokerage firm in which the Company has
accounts or safe deposit boxes; (ii) the names in which the accounts or boxes
are held; (iii) the type of account and the cash, cash equivalents and
securities held in such account; and (iv) the name of each person authorized to
draw thereon or have access thereto. SCHEDULE 3.19 also sets forth the name of
each person, corporation, firm or other entity holding a general or special
power of attorney from the Company and a description of the terms thereof.
SECTION 3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except for political
contributions made in a lawful manner, the Company has not given or offered to
give anything of value to any governmental official, political party or
candidate for government office nor has it otherwise taken any action which
would constitute a violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any similar law.
SECTION 3.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.
Except as set forth in SCHEDULE 3.21, neither the Stockholders nor any other
affiliate of the Company owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of or otherwise receives remuneration
from, any business which is a competitor, lessor, lessee, customer or supplier
of the Company. Except as set forth in SCHEDULE 3.21, no officer, director or
stockholder of the Company has nor, during the period beginning January 1, 1990
through the date hereof, had any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business. As of
the date of this Agreement, any indebtedness owed to the Company by the
Stockholders and/or affiliates of the Stockholders has been repaid, and all
indebtedness owed to the Stockholders and/or affiliates of the Stockholders by
the Company has been repaid.
SECTION 3.22 INTANGIBLE PROPERTY. SCHEDULE 3.22 sets forth an accurate
list of all patents, patent applications, trademarks, service marks, trade
names, copyrights, and other intellectual property or proprietary property
rights owned or used by the Company. Except as described on SCHEDULE 3.22, the
Company owns or possesses sufficient legal rights to use all of such items and
no notice of any challenge to the Company's rights by a third party has been
received.
SECTION 3.23 DISCLOSURE. The Stockholders have fully provided Coach or
its representatives with all the information that Coach has requested in
analyzing whether to consummate the transactions contemplated hereby. None of
the information so provided nor any representation or warranty of the
Stockholders contained in this Agreement contains any misstatement of a material
fact or omits to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Stockholders which has specific
application to the Company (other than general economic or industry conditions)
and which the Stockholders reasonably believe may materially adversely affect
or, so far as the Stockholders can reasonably foresee, materially threatens, the
assets, business, condition (financial or otherwise), results of operations or
prospects of the Company which has not been described in this Agreement or the
Schedules hereto or otherwise disclosed in writing to Coach.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
Coach represents and warrants to the Stockholders as follows:
SECTION 4.1 ORGANIZATION. Coach is duly organized, validly existing and
in good standing under the laws of the state of its incorporation, and is duly
authorized and qualified under all applicable laws, regulations, and ordinances
of public authorities to carry on its business in the places and in the manner
now conducted except where the failure to be so authorized or qualified would
not have a material adverse effect on its business.
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. Coach has the
full legal right, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement have been approved by the board of directors of
Coach. No additional corporate proceedings on the part of Coach are necessary to
authorize the execution and delivery of this Agreement and the consummation by
Coach of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Coach and, assuming the due authorization,
execution and delivery by the Company and the Stockholders, constitutes a valid
and binding agreement of Coach, enforceable against Coach in accordance with its
terms.
The execution and delivery of this Agreement by Coach do not, and the
consummation by Coach of the transactions contemplated hereby will not, violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Coach or any of its subsidiaries under
any of the terms, conditions or provisions of (i) the Restated Certificate of
Incorporation or By-Laws of Coach, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Coach or any of its properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Coach is now a party or by which Coach or any
of its properties or assets may be bound or affected, excluding from the
foregoing clauses (ii) and (iii) such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances that would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Coach except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights.
Except for any required filings with or approvals from the STB and state
and local transportation authorities and such filings as may be required under
federal or state securities laws, no declaration, filing or registration with,
or notice to, or authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and delivery of this
Agreement by Coach or the consummation by Coach of the transactions contemplated
hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as the
case may be, would not, in the aggregate, have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Coach.
SECTION 4.3 [Intentionally omitted.]
SECTION 4.4 [Intentionally omitted.]
SECTION 4.5 INVESTMENT REPRESENTATIONS.
(i) Coach is acquiring the Shares for its own account and for
purposes of investment and without expectation, desire, or need for
resale and not with the view toward distribution, resale or subdivision
of the Shares.
(ii) During the course of the negotiation of this Agreement, Coach
has reviewed all information provided to it by the Stockholders and the
Company and has had the opportunity to ask questions of and receive
answers from representatives of the Company and the Stockholders
concerning the Company, the securities offered and sold hereby, and this
purchase, and to obtain certain additional information requested by
Coach.
(iii) Coach understands and acknowledges that the Shares to be
purchased have not been registered under the 1933 Act, or any state
securities law.
(iv) Coach understands that the Shares cannot be resold in a
transaction to which the 1933 Act and state securities laws apply unless
(a) subsequently registered under the 1933 1933 Act and applicable state
securities laws or (b) exemptions from such registrations are available.
Coach is aware of the provisions of Rule 144 promulgated under the 1933
Act which permit limited resale of Shares purchased in a private
transaction subject to the satisfaction of certain conditions.
(v) Coach understands that no public market now exists for the Shares
and that it is uncertain that a public market will ever exist for the
Shares.
(vi) Coach understands that the certificates for the Shares will bear
the following legend:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THE CORPORATION WILL NOT TRANSFER THIS CERTIFICATE
UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION COVERING THE
SHARES REPRESENTED BY THIS CERTIFICATE UNDER THE SECURITIES ACT
OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS, (B) IT FIRST
RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE BOARD OF
DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE
ATTORNEY THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 AND UNDER ALL APPLICABLE STATE
SECURITIES LAWS, OR (C) THE TRANSFER IS MADE PURSUANT TO RULE
144 UNDER THE SECURITIES ACT OF 1933.
SECTION 4.6 NO VIOLATIONS. Coach is not in violation of its Restated
Certificate of Incorporation or Bylaws. Coach, or to the knowledge of Coach, any
party thereto, is in default under any lease, instrument, agreement, license or
permit to which Coach is a party or by which Coach or any of its respective
properties are bound; and (a) the rights and benefits of Coach under any such
lease, instrument, agreement, license or permit will not be adversely affected
by the transactions contemplated hereby; and (b) the execution of this Agreement
and the performance of the obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any material violation or
breach of constitute a default under, any such lease, instrument, agreement,
license or permit or the Restated Certificate of Incorporation or Bylaws of
Coach. Except as set forth on Schedule 4.6, the execution delivery of this
Agreement does not require nor does any such lease instrument, agreement,
license or permit require notice to or the consent or approval of, any
governmental agency or third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect and consummation
of the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or lose any right or benefit.
SECTION 4.7 COACH INVESTIGATION. Based upon Coach's review of the
Schedules attached hereto and its own due diligence of the Company, as of the
date hereof, and as of the Closing Date, nothing has come to the attention of
Coach that could give rise to a claim against the Stockholders for a breach of a
representation or warranty made in this Agreement or any other document or
agreement executed or delivered in connection herewith.
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 REPAYMENT OF INDEBTEDNESS AND RELEASE FROM GUARANTEES. The
Stockholders agree to assist Coach in obtaining the necessary payoff letters and
wiring instructions to facilitate paying off all debts and obtaining the release
of all personal guarantees of the Stockholders for the debts identified on
SCHEDULE 5.1. If Coach has not already paid off such debts, in the event that
Coach cannot obtain releases of any such guarantees on or prior to one hundred
and twenty (120) days subsequent to the Closing, Coach shall either indemnify
the Stockholders with respect to their obligations under such debts, or pay off
or otherwise refinance or retire the indebtedness related to guarantees and
cause such guarantees to be terminated. In any event, after Closing and prior to
such date, Coach shall indemnify the Stockholders with respect to the payment of
such debts identified on SCHEDULE 5.1.
SECTION 5.2 REPAYMENT OF STOCKHOLDERS AND AFFILIATE INDEBTEDNESS;
RELEASE OF CERTAIN OBLIGATIONS. Concurrently with the Closing Date, the
Stockholders shall repay all loans from the Company to the Stockholders, if any.
SECTION 5.3 FUTURE COOPERATION. The Stockholders and Coach shall each
deliver or cause to be delivered to the other following the Closing Date such
additional instruments as the other may reasonably request for the purpose of
fully carrying out this Agreement. The Stockholders will cooperate and use their
reasonable best efforts to have the present officers, directors and employees of
the Company cooperate with Coach before and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods prior to the Closing Date.
SECTION 5.4 EXPENSES. Coach will pay the fees, expenses and
disbursements of Coach and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments thereto, including but not limited to the brokerage
fee set out in Section 10.4. The Company will pay the reasonable fees, expenses
and disbursements of the Stockholders and their respective agents,
representatives, financial advisors and counsel incurred in connection with the
execution, delivery and performance of this Agreement and any amendments hereto.
The Company will pay the auditing costs of Arthur Andersen LLP incurred to
produce the financial statements required by Section 3.5.
SECTION 5.5 DTPA WAIVER. IN CONSIDERATION OF THE STOCKHOLDERS ENTERING
INTO THIS AGREEMENTS, COACH HEREBY WAIVES AND RELEASES ALL OF COACH'S RIGHTS AND
REMEDIES UNDER THE DECEPTIVE TRADE PRACTICES ACT - CONSUMER PROTECTION ACT,
SECTION 17.41 ET SEQ, OF SUBCHAPTER E OF CHAPTER 17 OF THE TEXAS BUSINESS AND
COMMERCE CODE (HEREINAFTER REFERRED TO AS THE "DTPA", IF ANY, INCLUDING WITHOUT
LIMITATION, ALL RIGHTS AND REMEDIES RESULTING FROM ARISING OUT OF OR ASSOCIATED
WITH ANY AND ALL ACTS AND PRACTICES OF THE STOCKHOLDERS IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, WHETHER SUCH ACTS OR PRACTICES
OCCUR BEFORE OR AFTER THE EXECUTION OF THIS AGREEMENT. THE DTPA PROVIDES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. SUCH WAIVERS HAVE BEEN MADE
VOLUNTARILY BY COACH ONLY AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION. COACH FURTHER UNDERSTANDS THAT COACH'S RIGHTS AND REMEDIES WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND WITH RESPECT TO
ALL ACTS OR TRANSACTIONS SHALL BE GOVERNED BY LEGAL PRINCIPALS OTHER THAN DTPA;
PROVIDED, HOWEVER, THAT COACH DOES NOT WAIVE SUBCHAPTER 17.555 OF THE DTPA. IN
CONNECTION WITH THIS WAIVER, COACH ACKNOWLEDGES, REPRESENTS, AND WARRANTS THAT
IT HAS ASSETS OF $25,000,000 OR MORE, CALCULATED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPALS. IT HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND
BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF TRANSACTIONS
SUCH AS THOSE CONTEMPLATED BY THIS AGREEMENT AND THAT IT IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH THE STOCKHOLDERS.
SECTION 5.6 REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, the Stockholders will, and will cause each Company and
its subsidiaries, if any, to make all filings or post-Closing undertakings
required or requested to be made by them in order to consummate this Agreement
and the transactions contemplated herein. The Stockholders will, and will cause
the Company and its subsidiaries, if any, to, (a) cooperate with Coach with
respect to all filings that Coach elects to make or is required to make in
connection with this Agreement and the transactions contemplated herein, and (b)
cooperate with Coach in obtaining all consents requested by Coach, including,
but not limited to, those identified in Sections or SCHEDULEs 3.2, 3.10 and 5.1,
and taking all actions requested by Coach to cause early completion of any
applicable approval period before the STB, state or local authority. All actual
additional costs associated with such assistance shall be borne by Coach.
SECTION 5.7 SECTION 338(H)(10) ELECTION. At Coach's option, the
Stockholders agree to join with Coach in making a timely election on Form 8023
under Sections 338(g) and 338(h)(10) of the Code (and any corresponding
elections under state local or foreign law)(collectively a "Section 338(h)(10)
Election") with respect to the purchase and sale of the stock of the Company
hereunder. The Stockholders will pay any tax attributable to the making of the
Section 338(h)(10) Election and will indemnify Coach and the Company against any
adverse consequences arising out of any failure to pay such tax.
ARTICLE VI
INDEMNIFICATION
The Stockholders and Coach each make the following covenants:
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDERS. The
Stockholders covenant and agree that they will indemnify, defend, protect and
hold harmless Coach and the Company, and their respective officers, directors,
employees, stockholders, agents, representatives and affiliates (collectively,
the "Coach Indemnitees"), at all times from and after the date of this Agreement
until the Expiration Date (as defined in Section 10.7) from and against all
claims, damages, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by any of the Coach
Indemnitees as a result of or arising from (i) any breach of the representations
and warranties of the Stockholders set forth in this Agreement or other
documents or agreements delivered in connection with it, or (ii) any breach or
nonfulfillment of any covenant or agreement on the part of the Stockholders or
the Company under this Agreement or other documents or agreements delivered in
connection with it; PROVIDED THAT such indemnification is limited for each
Stockholder to his pro rata interest in the capital stock of the Company at
Closing as set out in SCHEDULE 3.3 attached hereto, and provided that such
indemnification shall not apply to any consequential, punitive or exemplary
damages.
SECTION 6.2 INDEMNIFICATION BY COACH. Coach covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholders and the
respective officers, directors, employees, stockholders, agents, representatives
and affiliates of the Stockholders (collectively, the "Stockholder Indemnitees")
at all times from and after the date of this Agreement until the Expiration Date
from and against all claims, damages, actions, suits, proceed ings, demands,
assessments, adjustments, costs and expenses (including specifically, but
without limitation, reasonable attorneys' fees and expenses of investigation)
incurred by any of the Stockholder Indemnitees as a result of or arising from
(i) any breach of the representations and warranties of Coach in this Agreement
or other documents delivered in connection with it, or (ii) any breach or
nonfulfillment of any covenant or agreement on the part of Coach under this
Agreement or other documents or agreement delivered in connection with it;
provided that such indemnification shall not apply to any consequential,
punitive or exemplary damages.
SECTION 6.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall give to the party obligated to provide indemnification pursuant to
Section 6.1 or 6.2 hereof (hereinafter the "Indemnifying Party") written notice
of such claim or the commencement of such action or proceeding. Such notice
shall state the nature and the basis of such claim and a reasonable estimate of
the amount thereof. The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel, any such matter so long as
the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records and other
information reasonably requested by the Indemnifying Party and in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
PROVIDED that if counsel to the Indemnifying Party shall have a conflict of
interest that prevents such counsel from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the expenses of its counsel. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person and the Indemnified Party shall reimburse the Indemnifying Party
for any additional costs of defense which it subsequently incurs with respect to
such claim and all additional costs of settlement or judgment. If the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, HOWEVER, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
SECTION 6.4 LIMITATION UPON INDEMNITY.
(i) Coach shall be entitled to indemnification from the Stockholders
under the provisions of this Article VI for all claims subject to
indemnification by such party, but only after the amount of such claims exceeds,
in the aggregate, One Hundred Ten Thousand Dollars ($110,000).
(ii) The indemnification obligations of the Stockholders under this
Article VI shall be limited, in the aggregate, to $10,973,500 less any amounts
paid by Kerrville Bus Company, Inc. ("Kerrville") to Coach pursuant to its
indemnification obligations under that certain Stock Purchase Agreement of even
date herewith among Kaiser, Kerrville and Coach.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES. Except for Fred Kaiser, who shall be
allowed to continue to operate other other motor coach services businesses in
all states except Nevada and California, on the Closing Date, the Stockholders
will not, for a period of five (5) years following the Closing Date, directly or
indirectly, for themselves or on behalf of or in conjunction with any other
person, company, partnership, corporation or business of whatever nature, unless
approved in writing in advance by Coach:
(i) engage, as an officer, director, stockholder, owner, partner,
joint venturer or in a managerial or advisory capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering any services or products in
direct competition with Coach or any of its subsidiaries within 100
miles of where Coach or any of its subsidiaries conducts business,
including any territory serviced by Coach or any of such subsidiaries
(the "Territory");
(ii) call upon any person who is, at that time, within the Territory,
an employee of Coach or any of its subsidiaries for the purpose or with
the intent of enticing such employee away from or out of the employ of
Coach or any of its subsidiaries; or
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of
Coach or any of its subsidiaries within the Territory for the purpose of
soliciting or selling services or products in direct competition with
Coach or any of its subsidiaries within the Territory. Notwithstanding
the above, the foregoing covenant shall not be deemed to prohibit any of
the Stockholders from acquiring, as a passive investor with no
involvement in the operations of the business, not more than one percent
(1%) of the capital stock of the Company or another motorcoach services
business whose stock is publicly traded on a national securities
exchange or over-the-counter.
SECTION 7.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to Coach as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to Coach
for which it would have no other adequate remedy, the Stockholders agree that
the foregoing covenant may be enforced by Coach by injunctions, restraining
orders and other equitable actions.
SECTION 7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto
that the foregoing covenants in this Article VII impose a reasonable restraint
on the Stockholders in light of the activities and business of Coach on the date
of the execution of this Agreement and the current plans of Coach; but it is
also the intent of Coach and the Stockholders that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of Coach and its subsidiaries engaged in providing motorcoach charter, tour,
sightseeing and municipal commuter and transit motorcoach services throughout
the term of this covenant. During the term of this covenant, if Coach or one of
its subsidiaries engages in new and different activities, enters a new business
or establishes new locations for its current activities or business in addition
to or other than the activities or business it is currently conducting in the
locations currently established therefor, then, provided the Stockholders were
not first competing in such geographical areas, and were not otherwise
prohibited from competing with Coach, the Stockholders will be precluded from
soliciting the customers or employees of such new activities or business or from
such new location and from directly competing with such new activities or
business within 100 miles of its then-established operating location(s) through
the term of this covenant.
SECTION 7.4 SEVERABILITY; REFORMATION. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in this Article VII are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable and this
Agreement shall thereby be reformed.
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT. The Stockholders
acknowledge that their agreement with the covenants set forth in this Article
VII are material conditions to Coach's agreement to EXECUTE and deliver this
Agreement and to consummate the transactions contemplated hereby. All of the
covenants in this Article VII shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any claim or cause
of action of the Stockholders against Coach or one of its subsidiaries, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Coach of such covenants. It is specifically agreed that the
period of five (5) years during which the agreements and covenants of the
Stockholders made in this Article VII shall be effective shall be computed by
excluding from such computation any time during which such Stockholder is in
violation of any provision of this Article VII. The covenants contained in this
Article VII shall not be affected by any breach of any other provision hereof by
any party hereto.
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL. The Stockholders recognize and acknowledge that
they had in the past, currently have, and in the future will have, access to
certain confidential information of the Company and/or Coach, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company and/or Coach. The
Stockholders agree that they will not disclose such confidential information to
any person, firm, corporation, association or other entity for any purpose
whatsoever, except as is required in the course of performing their duties to
the Company and/or Coach, unless (i) such information becomes known to the
public generally through no fault of the Stockholders, or (ii) disclosure is
required by law or the order of any governmental authority, provided, that prior
to disclosing any information pursuant to this clause (ii) the Stockholders
shall, if possible, give prior written notice thereof to Coach and provide Coach
with the opportunity to contest such disclosure. In the event of a breach or
threatened breach by the Stockholders of the provisions of this Section, Coach
shall be entitled to an injunction restraining the Stockholders from disclosing,
in whole or in part, such confidential information. Nothing herein shall be
construed as prohibiting Coach from pursuing any other available remedy for such
breach or threatened breach, including the recovery of damages.
SECTION 8.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
the Company and/or Coach would have no other adequate remedy, the Stockholders
agree that the foregoing covenants may be enforced against them by injunctions,
restraining orders and other equitable actions.
ARTICLE IX
[INTENTIONALLY OMITTED.]
ARTICLE X
MISCELLANEOUS
SECTION 10.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of
the parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors of Coach and the Company, and the heirs and legal representatives of
the Stockholders.
SECTION 10.2 ENTIRE AGREEMENT. This Agreement, the Voting Trust and the
Master General Agreement (including the Schedules and any Exhibits and annexes
attached thereto) and the documents delivered pursuant hereto constitute the
entire agreement and understanding among the Stockholders, the Company and Coach
relating to the subject matter of this Agreement and supersede any prior
agreement and understanding relating to the subject matter of this Agreement
including but not limited to the Letter of Intent. Reference to this Agreement
incorporates by reference all Exhibits and Schedules thereto. This Agreement may
be modified or amended only by a written instrument executed by the Stockholders
and the Company and Coach, acting through their respective officers, duly
authorized by their respective Boards of Directors.
SECTION 10.3 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
SECTION 10.4 BROKERS AND AGENTS. Each party agrees to indemnify the
other against any and all losses, costs, damages or expenses arising out of
claims for fees or commissions of brokers employed or alleged to have been
employed by such indemnifying party. The parties acknowledge and agree that
Coach has retained First Continental Advisers, Inc. as broker pursuant to that
certain Agreement, dated May 20, 1996, attached hereto as SCHEDULE 10.4 and
Coach shall be solely responsible for the payment of all costs arising therefrom
in accordance with the terms of Section 5.4 above.
SECTION 10.5 NOTICES. All notices and communications required or
permitted hereunder shall be in writing and may be given to the party to be
notified (i) by depositing the same in the United States mail, proper postage
prepaid and registered or certified with return receipt requested, (ii) by
delivery through an express courier or delivery service with receipt requested,
or (iii) by delivering the same in person or to a senior officer of such party
in a corporation, as follows:
(A) If to Coach, addressed to it at:
One Riverway, Suite 600
Houston, Texas 77056-1903
Attn: Law Department
(B) If to the Company, addressed to it at:
4020 E. Lone Mountain Road
Las Vegas, Nevada, 89030
(C) If to the Stockholders, addressed to them at:
Mr. Scott Keller Mr. Fred Kaiser
4020 E. Lone Mountain Road 819 Water Street, Suite 320
Las Vegas, Nevada 89030 Kerrville, Texas 78028
With copies to:
Brown, Parker & Leahy, LLP
1200 Smith Street, Suite 3600
Houston, Texas 77002-4592
Attn: Timothy R. Brown, Esq.
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 10.5 from time to time. Failure to correct or provide an
accurate address, or to accept delivery of a notice, will not thwart the purpose
of this notice section. Notice given shall be deemed received when (i) if given
by deposit in the United States mail, registered or return receipt requested
with proper postage prepaid, five (5) days after its deposit in the United
States mail; (ii) if given by express courier or delivery service, on the date
stated on the courier's documents specifying the actual delivery date; or (iii)
if by personal delivery to such person or, a senior officer of a corporation if
the party is a corporation, upon actual receipt.
SECTION 10.6 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas (except for its principles
governing conflicts of laws).
SECTION 10.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Articles III and IV shall survive
the Closing for a period of twelve (12) months from the Closing Date (which date
is hereinafter called the "Expiration Date"), except that all warranties and
representations set forth in Section 3.17 hereof shall survive through such date
or until such time as the limitations period has run for all tax periods ended
prior to the Closing Date, which shall be deemed to be the Expiration Date for
Section 3.17.
SECTION 10.8 CLOSING OBLIGATIONS. At the Closing:
(a) Stockholders will deliver to Coach:
(i) Voting Trust Certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers), with signatures
guaranteed by a commercial bank or by a member firm of the New York
Stock Exchange, for transfer to Coach;
(ii) Employment Agreement in the form attached hereto as EXHIBIT
10.8(A)(II), executed by Scott Keller (the "Employment Agreement");
(iii) a certificate executed by the Company and the Stockholders
to the effect that, except as otherwise stated in such certificate, each
of Stockholders' representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date; and
(iv) such additional agreements or letters, in duly executed form,
as mutually agreeable among the parties, including but not limited to a
resignation from the Company by each of its officers and directors, and
the Master General Agreement attached hereto as EXHIBIT 10.8(V) (the
"Master General Agreement").
(b) Coach will deliver to Stockholders:
(i) the amounts by check or wire transfer to accounts specified
in Section 1.2;
(ii) such additional agreements or letters, in duly executed
form, as mutually agreeable among the parties, including but not limited
to the Master General Agreement;
(iii) a certificate executed by Coach to the effect that, except
as otherwise stated in such certificate, each of Coach's representations
and warranties in this Agreement was accurate in all respects as of the
date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date; and
(iv) the Employment Agreement, duly executed by the Company as a
subsidiary of Coach.
SECTION 10.9 CONDITIONS PRECEDENT TO COACH'S OBLIGATION TO CLOSE.
Coach's obligation to purchase the Shares and to take the other actions required
to be taken by Coach at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Coach, in whole or in part):
(a) ACCURACY OF REPRESENTATIONS. Each of Stockholders' representations
and warranties must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date.
(b) STOCKHOLDERS' PERFORMANCE.
(i) All of the covenants and obligations that Stockholders are
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects (or unless waived
by Coach which shall make them subject to completion post-Closing by the
Stockholders).
(ii) Each document required to be delivered pursuant to Section
10.8 must have been delivered, and each of the other covenants and
obligations in this Agreement must have been performed and complied with
in all respects. (c) NO PROCEEDINGS. Since the date of this Agreement,
there must not have been commenced or threatened in writing against
Coach, or against any person affiliated with Coach, any proceeding (i)
involving any challenge to, or seeking damages or other relief in
connection with, this Agreement or any of the transactions contemplated
herein, or (ii) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the transactions
contemplated herein.
SECTION 10.10 CONDITIONS PRECEDENT TO STOCKHOLDERS' OBLIGATION TO CLOSE.
Stockholders' obligation to sell the Shares and to take the other actions
required to be taken by Stockholders at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Stockholders, in whole or in part):
(a) ACCURACY OF REPRESENTATIONS. All of Coach's representations and
warranties in this Agreement must have been accurate as of the date of this
Agreement and must be accurate as of the Closing Date.
(b) COACH'S PERFORMANCE.
(i) All of the covenants and obligations that Coach is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and
complied with in all material respects or waived by the Stockholders, or
unless waived by the Stockholders, which shall make them subject to
post-Closing completion by Coach.
(ii) Coach must have delivered each of the documents required to
be delivered by Coach pursuant to Section 10.8, and must have made the
cash payments required to be made by Coach pursuant to Section 10.8. (c)
CONSENTS. Each of the Consents identified in Sections and SCHEDULEs 3.2,
3.10 and 5.1 of this Agreement, including but not limited to approval by
the STB and all state and local transportation authorities, must have
been obtained and must be in full force and effect (or unless waived by
the Stockholders, which shall make them subject to completion
post-Closing by both parties).
SECTION 10.11 TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(i) by either Coach or Stockholders if a material breach of any
provision of this Agreement has been committed by the other party and such
breach has not been waived;
(ii) (a) by Coach if any of the conditions in Section 10.9 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Coach to comply with its
obligations under this Agreement) and Coach has not waived such condition on or
before the Closing Date; or (b) by Stockholders, if any of the conditions in
Section 10.10 has not been satisfied as of the Closing Date or if satisfaction
of such a condition is or becomes impossible (other than through the failure of
Stockholders to comply with their obligations under this Agreement) and
Stockholders have not waived such condition on or before the Closing Date;
(iii) by mutual consent of Coach and Stockholders; or
(iv) by either Coach or Stockholders if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before December 31, 1996, or such later date as the parties may agree upon.
SECTION 10.12 EFFECT OF TERMINATION. Each party's right of termination
under Section 10.11 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
10.11, all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 5.4 (Expenses) and 5.8
(Confidentiality) will survive; provided, however, that if this Agreement is
terminated by a party because of the breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
SECTION 10.13 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default occurring before or after that waiver.
SECTION 10.14 ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Houston,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to detract from,
or modify any provision hereof nor to award punitive damages to any injured
party.
SECTION 10.15 TIME. Time is of the essence with respect to this
Agreement.
SECTION 10.16 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COACH USA, INC. CALIFORNIA CHARTERS, INC.
By: By:
Name: Richard H. Kristinik Name:
Title: Chief Executive Officer Title: President
THE STOCKHOLDERS:
Scott Keller, Individually
Fred Kaiser, Individually
EXHIBIT 2.5
STOCK PURCHASE AGREEMENT
by and among
COACH USA, INC.,
TEXAS BUS LINES, INC.
AND
SCOTT KELLER
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE PURCHASE AND SALE OF THE SHARES
SECTION 1.1 GENERAL
SECTION 1.2 PURCHASE PRICE
SECTION 1.3 ALLOCATION OF PURCHASE PRICE
ARTICLE II
CLOSING.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
SECTION 3.1 DUE ORGANIZATION
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 3.3 CAPITALIZATION
SECTION 3.4 SUBSIDIARIES
SECTION 3.5 FINANCIAL STATEMENTS
SECTION 3.6 LIABILITIES AND OBLIGATIONS
SECTION 3.7 ACCOUNTS AND NOTES RECEIVABLE
SECTION 3.8 ASSETS
SECTION 3.9 MATERIAL CUSTOMERS AND CONTRACTS
SECTION 3.10 PERMITS
SECTION 3.11 ENVIRONMENTAL MATTERS
SECTION 3.12 LABOR AND EMPLOYEE RELATIONS
SECTION 3.13 INSURANCE
SECTION 3.14 COMPENSATION; EMPLOYMENT AGREEMENTS
SECTION 3.15 EMPLOYEE BENEFIT PLANS
SECTION 3.16 LITIGATION AND COMPLIANCE WITH LAW
SECTION 3.17 TAXES
SECTION 3.18 ABSENCE OF CHANGES
SECTION 3.19 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF
ATTORNEY
SECTION 3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES
SECTION 3.21 COMPETING LINES OF BUSINESS; RELATED-PARTY
TRANSACTIONS
SECTION 3.22 INTANGIBLE PROPERTY
SECTION 3.23 DISCLOSURE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
SECTION 4.1 ORGANIZATION
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 4.3 CAPITALIZATION
SECTION 4.4 SEC FILINGS; DISCLOSURE
SECTION 4.5 INVESTMENT REPRESENTATIONS
SECTION 4.6 NO VIOLATIONS
SECTION 4.7 COACH INVESTIGATION
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 REPAYMENT OF INDEBTEDNESS AND RELEASE FROM GUARANTEES
SECTION 5.2 REPAYMENT OF STOCKHOLDER AND AFFILIATE INDEBTEDNESS;
RELEASE OF CERTAIN OBLIGATIONS
SECTION 5.3 FUTURE COOPERATION
SECTION 5.4 EXPENSES
SECTION 5.5 DTPA WAIVER
SECTION 5.6 [INTENTIONALLY OMITTED]
SECTION 5.7 REQUIRED APPROVALS
SECTION 5.8 SECTION 338(H)(10) ELECTION
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDER
SECTION 6.2 INDEMNIFICATION BY COACH
SECTION 6.3 THIRD PERSON CLAIMS
SECTION 6.4 LIMITATION UPON INDEMNITY
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES
SECTION 7.2 EQUITABLE RELIEF
SECTION 7.3 REASONABLE RESTRAINT
SECTION 7.4 SEVERABILITY; REFORMATION
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL
SECTION 8.2 EQUITABLE RELIEF
ARTICLE IX
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS
ON COACH SECURITIES
SECTION 9.1 COMPLIANCE WITH LAW
SECTION 9.2 ECONOMIC RISK; SOPHISTICATION
ARTICLE X
MISCELLANEOUS.
SECTION 10.1 SUCCESSORS AND ASSIGNS
SECTION 10.2 ENTIRE AGREEMENT
SECTION 10.3 COUNTERPARTS
SECTION 10.4 BROKERS AND AGENTS
SECTION 10.5 NOTICES
SECTION 10.6 GOVERNING LAW
SECTION 10.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 10.8 CLOSING OBLIGATIONS
SECTION 10.9 CONDITIONS PRECEDENT TO COACH'S OBLIGATION TO CLOSE
SECTION 10.10 CONDITIONS PRECEDENT TO STOCKHOLDER'S OBLIGATION
TO CLOSE
SECTION 10.11 TERMINATION EVENTS
SECTION 10.12 EFFECT OF TERMINATION
SECTION 10.13 EXERCISE OF RIGHTS AND REMEDIES
SECTION 10.14 ARBITRATION
SECTION 10.15 TIME
SECTION 10.16 REFORMATION AND SEVERABILITY
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 29th
day of August 1996, by and among Coach USA, Inc., a Delaware corporation
("Coach"), Texas Bus Lines, Inc., a Texas corporation (the "Company"), and Scott
Keller (the "Stockholder").
WHEREAS, the Stockholder is the beneficial owner of all of the
outstanding capital stock of the Company, in the amount set forth on SCHEDULE
3.3 below (the "Shares"); and
WHEREAS, pursuant to the terms of that certain Voting Trust Agreement of
even date herewith among Coach, the Stockholder and Ed Rishebarger (the
"Trustee") (the "Voting Trust Agreement"), the Stockholder has delivered to the
Trustee stock certificates representing all of the Shares and have received
Trust Certificates representing the Shares (the "Trust Certificates");
WHEREAS, the Stockholder desires to sell the Shares to Coach, and Coach
desires to purchase the Shares from the Stockholder;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE PURCHASE AND SALE OF THE SHARES
SECTION 1.1 GENERAL. Upon the terms and subject to the conditions of
this Agreement, the Stockholder hereby agrees to sell, assign, transfer and
deliver to Coach, and Coach hereby agrees to purchase, the Shares.
SECTION 1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") for the Shares shall consist of three Convertible Subordinated Notes of
Coach in the original aggregate principal amount of $17,513,200 (the "Notes"),
to be delivered concurrently with the execution of this Agreement and cash (by
wire transfer) in the amount of $3,526,400. At the Closing (as defined in
Article II), the Stockholder will deliver to Coach Voting Trust Certificates
representing the Shares, duly endorsed in blank or accompanied by blank stock
powers, and Coach will deliver to the Stockholder the Notes. A copy of the Notes
is attached hereto as EXHIBIT 1.2.
SECTION 1.3 ALLOCATION OF PURCHASE PRICE. The Parties agree that the
Purchase Price and the liabilities of the Company will be allocated to the
assets of the Company for tax purposes as shown on the Allocation Schedule
attached hereto as SCHEDULE 1.3. Coach, the Company and the Stockholder will
file all tax returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
ARTICLE II
CLOSING
The sale and purchase of the Shares described in Article I hereof and
the other transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Coach, One Riverway, Suite 600, Houston, Texas 77056,
concurrently with the execution of this Agreement on August 29, 1996. The date
on which the Closing actually occurs shall be referred to in this Agreement as
the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder represents and warrants to Coach as follows:
Notwithstanding anything contained in this Agreement to the contrary,
the Stockholder's representations and warranties are qualified as to the
"knowledge" of such Stockholder with respect to the facts or matters represented
or warrantied by such Stockholder in the following sections:
(i) 3.10 (Permits),
(ii) 3.12 (Labor Matters),
(iii) 3.13 (Insurance),
(iv) 3.14 (Compensation),
(v) 3.15 (Employee Benefit Plans),
(vi) 3.18 (Absence of Charges),
(vii) 3.19 (Accounts with Banks and Brokerage Firms),
(viii)3.20 (Absence of Certain Business Practices),
(ix) 3.21 (Competing Lines of Business),
(x) 3.22 (Intangible Property), and
(xi) 3.23 (Disclosure).
As used herein, "knowledge" of a Stockholder shall mean the current
actual knowledge of Scott Keller without obligation to conduct further inquiry
outside the ordinary course of business.
SECTION 3.1 DUE ORGANIZATION. The Company is duly organized, validly
existing and in good standing under the laws of the state of Texas. The Company
is duly authorized and qualified to do business in the states set out on
SCHEDULE 3.1 to carry on its businesses and in the manner as now conducted and
to the knowledge of the Company and the Stockholder, no qualification is
required in any other jurisdiction. True, complete and correct copies of the
Articles of Incorporation and By-laws, each as amended, of the Company are
attached hereto as SCHEDULE 3.1.
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. The Company,
upon approval by all applicable federal, state and local regulatory bodies, will
have the full legal right, power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The Stockholder have the
full legal right, power and authority to enter into this Agreement. The
execution, delivery and performance of this Agreement have been approved by the
board of directors of the Company and by the Stockholder. No additional
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company, and, assuming the due authorization,
execution and delivery hereof by Coach, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors rights.
The execution and delivery of this Agreement by the Company do not, and
the consummation by the Company of the transactions contemplated hereby will
not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company under
any of the terms, conditions or provisions of (i) the Articles of Incorporation
or By-laws of the Company, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to the Company or any of its properties or
assets, or (iii) any agreement, note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, lease or other instrument, obligation or
agreement of any kind to which the Company is now a party or by which the
Company or any of its properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security interests,
charges or encumbrances that would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the Company.
Except as set forth on SCHEDULE 3.2 and except for any required filings
with or approvals from the Surface Transportation Board ("STB") and state and
local transportation authorities and any required filings under federal and
state securities laws, no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, other than as required or requested by Coach, or in such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. Except as set forth on SCHEDULE 3.2, none of the
customer contracts or other material agreements to which the Company is a party
requires notice to, or the consent or approval of, any governmental agency or
other third party to any of the transactions contemplated hereby to remain in
full force and effect following such transactions.
SECTION 3.3 CAPITALIZATION. SCHEDULE 3.3 accurately describes the
authorized capital stock of the Company. All of the issued and outstanding
shares of the capital stock of the Company are owned beneficially and of record
by the Stockholder and constitute the Shares. All of the Shares held by the
Stockholder have been duly authorized and validly issued, are fully paid and
nonassessable, are owned by the Stockholder as set forth in SCHEDULE 3.3 free
and clear of all liens, encumbrances and claims of every kind. None of such
shares was issued in violation of the preemptive rights of any past or present
stockholder. Except as set forth in SCHEDULE 3.3, no subscription, option,
warrant, call, convertible or exchangeable security, other conversion right or
commitment of any kind exists which obligates the Company to issue any of its
capital stock or the Stockholder to transfer any of the Shares.
SECTION 3.4 SUBSIDIARIES. Except as set forth in SCHEDULE 3.4, the
Company does not presently own, of record or beneficially, or control, directly
or indirectly, any capital stock, securities convertible into or exchangeable
for capital stock or any other equity interest in any corporation, association
or business entity. Except as set forth in SCHEDULE 3.4, the Company is not,
directly or indirectly, a participant in any joint venture, partnership or other
noncorporate entity. To the extent that such subsidiary companies are set out on
SCHEDULE 3.4, such Schedule contains a complete and accurate list for each
company of its name, its jurisdiction of incorporation, the jurisdictions in
which it is authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by each). Each
company set out on SCHEDULE 3.4 is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations. Each company set out
on SCHEDULE 3.4 is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each state or other jurisdiction set out in
SCHEDULE 3.4, and, to the knowledge of the Company and the Stockholder, no other
qualification is required in any other jurisdiction.
SECTION 3.5 FINANCIAL STATEMENTS. The Stockholder have delivered to
Coach complete and correct copies of the following financial statements:
(i) the balance sheets of the Company as of December 31, 1993, 1994
and 1995 and the related statements of operations, of Stockholder'
equity and of cash flows for the three-year period ended December 31,
1995, together with the related notes and Schedules (such balance
sheets, the related statements of operations, of Stockholder' equity and
of cash flows and the related notes and Schedules are referred to herein
as the "Year-end Financial Statements"); and
(ii) the unaudited balance sheet of the Company as of June 30, 1996,
the unaudited balance sheet (the "Interim Balance Sheet") of the Company
as of June 30, 1996 (the "Interim Balance Sheet Date") and the related
unaudited statements of operations, of Stockholder' equity and of cash
flows for the six-month periods ended June 30, 1995 and 1996, together
with the related notes and Schedules (such balance sheets, the related
statements of operations, of stockholder's equity and of cash flows and
the related notes and Schedules are referred to herein as the "Interim
Financial Statements"). The Year-end Financial Statements and the
Interim Financial Statements are attached as SCHEDULE 3.5 to this
Agreement and are referred to hereinafter as the "Financial Statements."
The Financial Statements have been prepared from the books and records
of the Company
in conformity with generally accepted accounting principles applied on a basis
consistent with preceding years and throughout the periods involved ("GAAP"),
except as provided in the Financial Statements or the notes thereto, and present
fairly the financial position and results of operations of the Company as of the
dates of such statements and for the periods covered thereby. The books of
account of the Company have been kept accurately in all material respects in the
ordinary course of business, the transactions entered therein represent bona
fide transactions, and the revenues, expenses, assets and liabilities of the
Company have been properly recorded therein in all material respects.
SECTION 3.6 LIABILITIES AND OBLIGATIONS. SCHEDULE 3.6 sets forth an
accurate list as of the Interim Balance Sheet Date of (i) all liabilities of the
Company which are reflected in the Interim Balance Sheet and (ii) any
liabilities of any kind of the Company which are not reflected in the Interim
Balance Sheet. Except as set forth on SCHEDULE 3.6, since the Interim Balance
Sheet Date the Company has not incurred any liabilities of any kind, character
or description, whether accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in the ordinary course of business
which are not materially greater than the corresponding liabilities reflected in
the Interim Balance Sheet. SCHEDULE 3.6 contains a reasonable estimate by the
Stockholder of the maximum amount which may be payable with respect to
liabilities which are not fixed.
SECTION 3.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 3.7 sets forth an
accurate list of the accounts and notes receivable of the Company as of the
Interim Balance Sheet Date and generated subsequent to the Interim Balance Sheet
Date. Receivables from and advances to employees, the Stockholder and any
entities or persons related to or affiliated with the Stockholder are separately
identified on SCHEDULE 3.7. SCHEDULE 3.7 also sets forth an accurate aging of
all accounts and notes receivable as of the Interim Balance Sheet Date, showing
amounts due in 30- day aging categories. The trade and other accounts receivable
of the Company which are classified as current assets on the Interim Balance
Sheet are bona fide receivables, were acquired or arose in the ordinary course
of business, are stated in accordance with GAAP and, subject to the reserve for
doubtful accounts, need not be written-off as uncollectible. Such accounts and
notes are collectible in the amount shown on SCHEDULE 3.7, net of reserves for
doubtful accounts reflected in the Interim Balance Sheet.
SECTION 3.8 ASSETS. The depreciation schedule attached to SCHEDULE 3.8
sets forth an accurate list of all real and personal property included in
"property and equipment" on the balance sheet of the Company and all other
tangible assets of the Company with a value in excess of $5,000 (i) owned by the
Company as of the Interim Balance Sheet Date and (ii) acquired since the Interim
Balance Sheet Date, including in each case true, complete and correct copies of
leases for significant equipment and for all real property leased by the Company
and descriptions of all real property on which buildings, warehouses, workshops,
garages and other structures used in the operation of the business of the
Company are situated. SCHEDULE 3.8 indicates which assets are currently owned,
or were formerly owned, by the Stockholder or affiliates of the Company or
Stockholder. Except as specifically identified on SCHEDULE 3.8, all of the
tangible assets, vehicles and other significant machinery and equipment of the
Company listed on SCHEDULE 3.8 are in good working order and condition, ordinary
wear and tear excepted, and have been maintained in accordance with standard
industry practices. All fixed assets used by the Company that are material to
the operation of the Company's business are either owned by the Company or
leased under an agreement identified on SCHEDULE 3.8. All leases set forth on
SCHEDULE 3.8 are in full force and effect and constitute valid and binding
agreements of the parties thereto in accordance with their respective terms.
SCHEDULE 3.8 contains true, complete and correct copies of all title reports and
title insurance policies received or owned by the Company with respect to any of
its properties. The Company has good and indefeasible title to the tangible and
intangible personal property and the real property owned and used in its
business, including the properties identified on SCHEDULE 3.8, subject to no
mortgage, pledge, lien, claim, conditional sales agreement, encumbrance or
charge, except for liens reflected on SCHEDULE 3.8, liens for current taxes not
yet payable and assessments not in default, easements for utilities serving only
the property (unless otherwise revealed by title report or title insurance
policy), and easements, covenants and restrictions and other exceptions or
reservations to title shown of record in the office of the County Clerks in
which the properties, assets and leasehold estates are located, which do not
adversely affect the Company's use of the property.
SECTION 3.9 MATERIAL CUSTOMERS AND CONTRACTS. SCHEDULE 3.9 sets forth an
accurate list of (i) all customers representing 5% or more of the Company's
revenues in the year ended December 31, 1995 and the six-month period ended June
30, 1996, and (ii) all material contracts, commitments and similar agreements to
which the Company is currently a party or by which the Company or any of its
properties are bound, including, but not limited to, contracts with customers,
contracts with any labor organizations, leases, loan agreements, pledge and
security agreements, indemnity or guaranty agreements, bonds, notes, mortgages,
joint venture or partnership agreements, options to purchase real or personal
property, and agreements relating to the purchase or sale by the Company of
assets or securities. SCHEDULE 3.9 contains true, complete and correct copies of
all such agreements. Except to the extent set forth on SCHEDULE 3.9, (i) none of
the Company's material customers has canceled or substantially reduced, to the
knowledge of the Stockholder, or is currently attempting or threatening to
cancel or substantially reduce its use of the Company's services and (ii) the
Company has complied with all material commitments and obligations pertaining to
it under such agreements and is not in default under any such agreements, no
notice of default has been received by the Company and the Stockholder is aware
of no basis therefor. Except as set forth on SCHEDULE 3.9, the Company is not
now nor has it ever been party to any governmental contracts subject to price
redetermination or renegotiation.
SECTION 3.10 PERMITS. SCHEDULE 3.10 contains an accurate list, summary
description of and copies all licenses, franchises, permits, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business including, without
limitation, permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel permits, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company. The licenses, operating authorizations,
franchises, permits and other governmental authorizations listed on SCHEDULE
3.10 are valid, and the Company has not received any notice that any
governmental authority intends to cancel, terminate or not renew any such
license, operating authorization, franchise, permit or other governmental
authorization. The Company holds all licenses, operating authorizations,
franchises, permits and other governmental authorizations, the absence of any of
which could have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. The Company has conducted and is conducting its
business in substantial compliance with the requirements, standards, criteria
and conditions set forth in its licenses, operating authorizations, franchises,
permits and other governmental authorizations as well as the applicable orders,
approvals and variances related thereto, and is not in violation of any of the
foregoing except for any violations that would not have a material and adverse
effect on the business, operations, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company. Except as
specifically provided in SCHEDULE 3.10, and provided the regulatory consents
required or requested by Coach are obtained, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
material licenses, operating authorizations, franchises, permits and other
government authorizations.
SECTION 3.11 ENVIRONMENTAL MATTERS. The Company has complied with and is
in compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to it or any of its properties, assets, operations
and businesses relating to the protection of the environment (collectively,
"Environmental Laws") including, without limitation, Environmental Laws relating
to air, water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (as such terms are defined in any applicable Environmental Law)
except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, does not and would not (i) have a material adverse
effect on the Company or its business as a whole or (ii) necessitate a material
expenditure by or on behalf of the Company. The Company has obtained and
complied with all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances and has reported, to the extent required by
all Environmental Laws, all past and present sites owned and operated by the
Company where Hazardous Wastes, Hazardous Materials or Hazardous Substances have
been treated, stored, disposed of or otherwise handled. Except as disclosed on
SCHEDULE 3.11, to the knowledge of the Stockholder, there have been no
"releases" (as defined in any Environmental Laws) at, from, in or on any
property owned or operated by the Company except as permitted by Environmental
Laws. To the knowledge of the Stockholder, there is no on-site or off-site
location to which the Company has transported and disposed of Hazardous Wastes,
Hazardous Materials and Hazardous Substances or arranged for the transportation
and disposal of Hazardous Wastes, Hazardous Materials and Hazardous Substances
which is the subject of any federal, state, local or foreign enforcement action
or any other investigation which could lead to any claim against the Company or
Coach for any clean-up cost, remedial work, damage to natural resources or
personal injury, including, but not limited to, any claim under (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (ii) the Resource Conservation and Recovery Act, (iii) the Hazardous
Materials Transportation Act or (iv) comparable state and local statutes and
regulations. To the knowledge of the Stockholder, the Company has no contingent
liability in connection with any release of any Hazardous Waste, Hazardous
Material or Hazardous Substance into the environment.
SECTION 3.12 LABOR AND EMPLOYEE RELATIONS. Except for such labor unions
as set forth in SCHEDULE 3.12, the Company is neither bound by nor subject to
any arrangement with any labor union. There is no pending or threatened labor
dispute involving the Company and any group of its employees nor has the Company
experienced any labor interruptions over the past five years. The Company
considers its relationship with its employees to be good.
SECTION 3.13 INSURANCE. SCHEDULE 3.13 sets forth an accurate list as of
the Interim Balance Sheet Date of all insurance policies carried by the Company
and of all insurance loss runs or worker's compensation claims received for the
past three (3) policy years. Also attached to SCHEDULE 3.13 are true, complete
and correct copies of all of the Company's insurance policies, covering at least
the past three years. None of such policies is a "claims made" policy. The
insurance policies set forth on SCHEDULE 3.13 provide adequate coverage against
the risks involved in the Company's business. Such policies are currently in
full force and effect.
SECTION 3.14 COMPENSATION; EMPLOYMENT AGREEMENTS. SCHEDULE 3.14 sets
forth an accurate Schedule of all officers, directors and key employees of the
Company, listing all employment agreements with such officers, directors and
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus, benefits and other compensation, respectively) of each of such
persons as of the Interim Balance Sheet Date. Attached to SCHEDULE 3.14 are
true, complete and correct copies of all such employment agreements and all
other employment agreements and other similar agreements or arrangements
containing "golden parachute" or other similar provisions.
SECTION 3.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.15 sets forth an
accurate Schedule of all employee benefit plans of the Company and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Interim Balance Sheet Date. Except for the
employee benefit plans described on SCHEDULE 3.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning given that term in Section 3(2) of ERISA. The Company has not
sponsored, maintained or contributed to any employee pension benefit plan other
than the plans set forth on SCHEDULE 3.15, nor is the Company required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement.
The Company is not now, nor will it become as a result of its past
activities, liable to the Pension Benefit Guaranty Corporation or to any
multi-employer employee pension benefit plan under the provisions of Title IV of
ERISA. All employee benefit plans listed on SCHEDULE 3.15 are in substantial
compliance with all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal, state and local
statutes, ordinances and regulations. All accrued contribution obligations of
the Company with respect to any plan listed on SCHEDULE 3.15 have either been
fulfilled in their entirety or are fully reflected on the balance sheet of the
Company as of the Interim Balance Sheet Date.
All plans listed on SCHEDULE 3.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Code have been determined by the
Internal Revenue Service to be so qualified, and copies of such determination
letters are included as part of SCHEDULE 3.15 hereof. Except as disclosed on
SCHEDULE 3.15, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of
SCHEDULE 3.15 hereof. Neither the Stockholder, any such plan listed in SCHEDULE
3.15, nor the Company has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No such plan
listed in SCHEDULE 3.15 has incurred an "accumulated funding deficiency," as
defined in Section 412(a) of the Code and Section 302(1) of ERISA, and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service nor any liability to the Pension Benefit Guaranty
Corporation. There have been no terminations, partial terminations or
discontinuances of contri butions to any such Qualified Plan without notice to
and approval by the Internal Revenue Service; no plan listed in SCHEDULE 3.15
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan; and the Company has not incurred liability under
Section 4062 of ERISA.
SECTION 3.16 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in
SCHEDULE 3.16, there are no claims, actions, suits or proceedings pending
against or affecting the Company, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over the Company which
either singly, or in the aggregate, if decided against the Company, would have a
material adverse effect on the Company as a whole, and no notice of any such
claim, action, suit or proceeding, including any which may be pending, has been
received by the Company, and the Stockholders is not aware of any basis
therefor. Except to the extent set forth on SCHEDULE 3.16, the Company has
conducted for the past three (3) years and does conduct its business in
compliance with all laws, regulations, writs, injunctions, decrees and orders
applicable to the Company and its assets.
SECTION 3.17 TAXES. For purposes of this Agreement, the term "Taxes"
shall mean all taxes, charges, fees, levies or other assessments including,
without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments. The Company has
timely filed all requisite federal, state, local and other tax returns for all
fiscal periods ended on or before the date hereof, and has duly paid in full or
made adequate provision in the Financial Statements for the payment of all Taxes
for all periods ending at or prior to the date hereof. Except as set forth on
SCHEDULE 3.17, there are no examinations in progress or claims against the
Company for any period or periods prior to and including the Interim Balance
Sheet Date and no notice of any claim for Taxes, whether pending or threatened,
has been received. The amounts shown as accruals for Taxes on the financial
statements of the Company as of the Interim Balance Sheet Date are sufficient
for the payment of all Taxes for all fiscal periods ended on or before that
date. Copies of (i) any tax examinations, (ii) extensions of statutory
limitations and (iii) the federal, state and local Tax returns of the Company
for the last three fiscal years are attached hereto as SCHEDULE 3.17. The
Company currently utilizes the accrual method of accounting for income tax
purposes. Such method of accounting has not changed in the past five years.
During all tax periods ended prior to the Closing Date for which the
statute of limitations has not expired, the Company has conducted its business
in a manner which entitles it to protection under the safe harbor provisions of
Section 530(a) of the Revenue Act of 1978, which was extended indefinitely by
Section 269(c) of the Tax Equity and Fiscal Responsibility Act of 1982.
SECTION 3.18 ABSENCE OF CHANGES. Since the Interim Balance Sheet Date,
the Company has conducted its operations in the ordinary course of business and,
except as set forth on SCHEDULE 3.18, there has not been:
(i) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities
(contingent or otherwise), income or business of the Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the Company;
(iii) any change in the authorized or outstanding capital stock of
the Company or any change in the Stockholder's ownership interests in
the Company or any grant of any options, warrants, calls, conversion
rights or commitments;
(iv) any declaration or payment of any dividend or distribution in
respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
Company;
(v) any increase in the compensation payable or to become payable by
the Company to the Stockholder or to the Company's officers, directors,
employees, consultants or agents, except for ordinary and customary
bonuses and salary increases for employees in accordance with past
practice;
(vi) any work interruptions, labor grievances or claims filed, or any
proposed law, regulation or event or condition of any character
materially adversely affecting the business or future prospects of the
Company;
(vii) any sale or transfer, or any agreement to sell or transfer, any
material assets, properties or rights of the Company to any person,
including, without limitation, the Stockholder or his affiliates;
(viii) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company;
(ix) any increase in the Company's indebtedness, other than accounts
payable incurred in the ordinary course of business;
(x) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to
the transfer and assignment of any such assets, property or rights;
(xi) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xii) any waiver of any material rights or claims of the Company;
(xiii) any breach, amendment or termination of any material contract,
agreement, license, permit or other right to which the Company is a
party; or
(xiv) any transaction by the Company outside the ordinary course of
business.
SECTION 3.19 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.
SCHEDULE 3.19 sets forth an accurate Schedule as of the Closing Date, of (i) the
name of each financial institution or brokerage firm in which the Company has
accounts or safe deposit boxes; (ii) the names in which the accounts or boxes
are held; (iii) the type of account and the cash, cash equivalents and
securities held in such account; and (iv) the name of each person authorized to
draw thereon or have access thereto. SCHEDULE 3.19 also sets forth the name of
each person, corporation, firm or other entity holding a general or special
power of attorney from the Company and a description of the terms thereof.
SECTION 3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except for political
contributions made in a lawful manner, the Company has not given or offered to
give anything of value to any governmental official, political party or
candidate for government office nor has it otherwise taken any action which
would constitute a violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any similar law.
SECTION 3.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.
Except as set forth in SCHEDULE 3.21, neither the Stockholders nor any other
affiliate of the Company owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of or otherwise receives remuneration
from, any business which is a competitor, lessor, lessee, customer or supplier
of the Company. Except as set forth in SCHEDULE 3.21, no officer, director or
stockholder of the Company has nor, during the period beginning January 1, 1990
through the date hereof, had any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business. As of
the date of this Agreement, any indebtedness owed to the Company by the
Stockholder and/or affiliates of the Stockholder has been repaid, and all
indebtedness owed to the Stockholder and/or affiliates of the Stockholder by the
Company has been repaid.
SECTION 3.22 INTANGIBLE PROPERTY. SCHEDULE 3.22 sets forth an accurate
list of all patents, patent applications, trademarks, service marks, trade
names, copyrights, and other intellectual property or proprietary property
rights owned or used by the Company. Except as described on SCHEDULE 3.22, the
Company owns or possesses sufficient legal rights to use all of such items and
no notice of any challenge to the Company's rights by a third party has been
received.
SECTION 3.23 DISCLOSURE. The Stockholders has fully provided Coach or
its representatives with all the information that Coach has requested in
analyzing whether to consummate the transactions contemplated hereby. None of
the information so provided nor any representation or warranty of the
Stockholder contained in this Agreement contains any misstatement of a material
fact or omits to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Stockholder which has specific
application to the Company (other than general economic or industry conditions)
and which the Stockholder reasonably believes may materially adversely affect
or, so far as the Stockholder can reasonably foresee, materially threatens, the
assets, business, condition (financial or otherwise), results of operations or
prospects of the Company which has not been described in this Agreement or the
Schedules hereto or otherwise disclosed in writing to Coach.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
Coach represents and warrants to the Stockholder as follows:
SECTION 4.1 ORGANIZATION. Coach is duly organized, validly existing and
in good standing under the laws of the state of its incorporation, and is duly
authorized and qualified under all applicable laws, regulations, and ordinances
of public authorities to carry on its business in the places and in the manner
now conducted except where the failure to be so authorized or qualified would
not have a material adverse effect on its business.
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. Coach has the
full legal right, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement have been approved by the board of directors of
Coach. No additional corporate proceedings on the part of Coach are necessary to
authorize the execution and delivery of this Agreement and the consummation by
Coach of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Coach and, assuming the due authorization,
execution and delivery by the Company and the Stockholder, constitutes a valid
and binding agreement of Coach, enforceable against Coach in accordance with its
terms.
The execution and delivery of this Agreement by Coach do not, and the
consummation by Coach of the transactions contemplated hereby will not, violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Coach or any of its subsidiaries under
any of the terms, conditions or provisions of (i) the Restated Certificate of
Incorporation or By-Laws of Coach, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Coach or any of its properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Coach is now a party or by which Coach or any
of its properties or assets may be bound or affected, excluding from the
foregoing clauses (ii) and (iii) such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances that would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Coach except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights.
Except for any required filings with or approvals from the STB and state
and local transportation authorities and such filings as may be required under
federal or state securities laws, no declaration, filing or registration with,
or notice to, or authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and delivery of this
Agreement by Coach or the consummation by Coach of the transactions contemplated
hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as the
case may be, would not, in the aggregate, have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Coach.
SECTION 4.3 CAPITALIZATION. The authorized capital stock of Coach
consists of 30,000,000 shares of common stock, par value $.01 per share, of
which 11,405,411 shares were issued and outstanding as of August 28, 1996, and
500,000 shares of preferred stock, par value $.01 per share, of which none is
currently outstanding. All of the currently issued and outstanding shares of
common stock of Coach have been duly authorized and validly issued, are fully
paid and nonassessable, and were offered, issued, sold and delivered by Coach in
compliance with all applicable state and federal laws concerning the issuance of
securities. None of such shares was issued in violation of the preemptive rights
of any past or present stockholder. The shares of Coach Common Stock to be
issued to the Stockholder, if and when issued in accordance with the terms of
the Notes, will be duly authorized, validly issued, fully paid and
nonassessable. The shares of Coach Common Stock if and when issued in accordance
with the terms of the Notes will transfer to the Stockholder valid title to such
shares of Coach Common Stock, free and clear of all liens, encumbrances and
claims of every kind except for any created by the Stockholder.
SECTION 4.4 SEC FILINGS; DISCLOSURE. Coach has filed with the U.S.
Securities and Exchange Commission ("SEC") all material forms, statements,
reports and documents required to be filed by it under each of the Securities
Act of 1933, as amended (the "1933 Act"), the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the respective rules and regulations
thereunder, all of which, as amended, if applicable, complied in all material
respects with all applicable requirements of the appropriate Act and the rules
and regulations thereunder. Coach has previously delivered to the Stockholder
copies of the Prospectus, dated July 16, 1996 (the "Prospectus"), contained in
Coach's Registration Statement on Form S-1 filed under Rule 415 of the 1933 Act,
as supplemented and its Form 10-Q for the period ended June 30, 1996. As of its
date, the Prospectus did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 4.5 INVESTMENT REPRESENTATIONS.
(i) Coach is acquiring the Shares for its own account and for
purposes of investment and without expectation, desire, or need for
resale and not with the view toward distribution, resale or subdivision
of the Shares.
(ii) During the course of the negotiation of this Agreement,
Coach has reviewed all information provided to it by the Stockholder and
the Company and has had the opportunity to ask questions of and receive
answers from representatives of the Company and the Stockholder
concerning the Company, the securities offered and sold hereby, and this
purchase, and to obtain certain additional information requested by
Coach.
(iii) Coach understands and acknowledges that the Shares to be
purchased have not been registered under the 1933 Act, or any state
securities law.
(iv) Coach understands that the Shares cannot be resold in a
transaction to which the 1933 Act and state securities laws apply unless
(a) subsequently registered under the 1933 1933 Act and applicable state
securities laws or (b) exemptions from such registrations are available.
Coach is aware of the provisions of Rule 144 promulgated under the 1933
Act which permit limited resale of Shares purchased in a private
transaction subject to the satisfaction of certain conditions.
(v) Coach understands that no public market now exists for the Shares
and that it is uncertain that a public market will ever exist for the
Shares.
(vi) Coach understands that the certificates for the Shares will bear
the following legend:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THE CORPORATION WILL NOT TRANSFER THIS CERTIFICATE
UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION COVERING THE
SHARES REPRESENTED BY THIS CERTIFICATE UNDER THE SECURITIES ACT
OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS, (B) IT FIRST
RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE BOARD OF
DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE
ATTORNEY THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 AND UNDER ALL APPLICABLE STATE
SECURITIES LAWS, OR (C) THE TRANSFER IS MADE PURSUANT TO RULE
144 UNDER THE SECURITIES ACT OF 1933.
SECTION 4.6 NO VIOLATIONS. Coach is not in violation of its Restated
Certificate of Incorporation or Bylaws. Coach, or to the knowledge of Coach, any
party thereto, is in default under any lease, instrument, agreement, license or
permit to which Coach is a party or by which Coach or any of its respective
properties are bound; and (a) the rights and benefits of Coach under any such
lease, instrument, agreement, license or permit will not be adversely affected
by the transactions contemplated hereby; and (b) the execution of this Agreement
and the performance of the obligations hereunder and the consummation of the
transactions contemplated hereby will not result in any material violation or
breach of constitute a default under, any such lease, instrument, agreement,
license or permit or the Restated Certificate of Incorporation or Bylaws of
Coach. Except as set forth on Schedule 4.6, the execution delivery of this
Agreement does not require nor does any such lease instrument, agreement,
license or permit require notice to or the consent or approval of, any
governmental agency or third party with respect to any of the transactions
contemplated hereby in order to remain in full force and effect and consummation
of the transactions contemplated hereby will not give rise to any right to
termination, cancellation or acceleration or lose any right or benefit.
SECTION 4.7 COACH INVESTIGATION. Based upon Coach's review of the
Schedules attached hereto and its own due diligence of the Company, as of the
date hereof, and as of the Closing Date, nothing has come to the attention of
Coach that could give rise to a claim against the Stockholder for a breach of a
representation or warranty made in this Agreement or any other document or
agreement executed or delivered in connection herewith.
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 REPAYMENT OF INDEBTEDNESS AND RELEASE FROM GUARANTEES. The
Stockholder agrees to assist Coach in obtaining the necessary payoff letters and
wiring instructions to facilitate paying off all debts and obtaining the release
of all personal guarantees of the Stockholder for the debts identified on
SCHEDULE 5.1. If Coach has not already paid off such debts, in the event that
Coach cannot obtain releases of any such guarantees on or prior to one hundred
and twenty (120) days subsequent to the Closing, Coach shall either indemnify
the Stockholder with respect to his obligations under such debts, or pay off or
otherwise refinance or retire the indebtedness related to guarantees and cause
such guarantees to be terminated. In any event, after Closing and prior to such
date, Coach shall indemnify the Stockholder with respect to the payment of such
debts identified on SCHEDULE 5.1.
SECTION 5.2 REPAYMENT OF STOCKHOLDER AND AFFILIATE INDEBTEDNESS; RELEASE
OF CERTAIN OBLIGATIONS. Concurrently with the Closing Date, the Stockholder
shall repay all loans from the Company to the Stockholder, if any.
SECTION 5.3 FUTURE COOPERATION. The Stockholder and Coach shall each
deliver or cause to be delivered to the other following the Closing Date such
additional instruments as the other may reasonably request for the purpose of
fully carrying out this Agreement. The Stockholder will cooperate and use his
reasonable best efforts to have the present officers, directors and employees of
the Company cooperate with Coach before and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods prior to the Closing Date.
SECTION 5.4 EXPENSES. Coach will pay the fees, expenses and
disbursements of Coach and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments thereto, including but not limited to the brokerage
fee set out in Section 10.4. The Company will pay the reasonable fees, expenses
and disbursements of the Stockholder and his respective agents, representatives,
financial advisors and counsel incurred in connection with the execution,
delivery and performance of this Agreement and any amendments hereto. The
Company will pay the auditing costs of Arthur Andersen LLP incurred to produce
the financial statements required by Section 3.5.
SECTION 5.5 DTPA WAIVER. IN CONSIDERATION OF THE STOCKHOLDER ENTERING
INTO THIS AGREEMENT, COACH HEREBY WAIVES AND RELEASES ALL OF COACH'S RIGHTS AND
REMEDIES UNDER THE DECEPTIVE TRADE PRACTICES ACT - CONSUMER PROTECTION ACT,
SECTION 17.41 ET SEQ, OF SUBCHAPTER E OF CHAPTER 17 OF THE TEXAS BUSINESS AND
COMMERCE CODE (HEREINAFTER REFERRED TO AS THE "DTPA", IF ANY, INCLUDING WITHOUT
LIMITATION, ALL RIGHTS AND REMEDIES RESULTING FROM ARISING OUT OF OR ASSOCIATED
WITH ANY AND ALL ACTS AND PRACTICES OF THE STOCKHOLDER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, WHETHER SUCH ACTS OR PRACTICES
OCCUR BEFORE OR AFTER THE EXECUTION OF THIS AGREEMENT. THE DTPA PROVIDES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. SUCH WAIVERS HAVE BEEN MADE
VOLUNTARILY BY COACH ONLY AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION. COACH FURTHER UNDERSTANDS THAT COACH'S RIGHTS AND REMEDIES WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND WITH RESPECT TO
ALL ACTS OR TRANSACTIONS SHALL BE GOVERNED BY LEGAL PRINCIPALS OTHER THAN DTPA;
PROVIDED, HOWEVER, THAT COACH DOES NOT WAIVE SUBCHAPTER 17.555 OF THE DTPA. IN
CONNECTION WITH THIS WAIVER, COACH ACKNOWLEDGES, REPRESENTS, AND WARRANTS THAT
IT HAS ASSETS OF $25,000,000 OR MORE, CALCULATED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPALS. IT HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND
BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF TRANSACTIONS
SUCH AS THOSE CONTEMPLATED BY THIS AGREEMENT AND THAT IT IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH THE STOCKHOLDER.
SECTION 5.6 [INTENTIONALLY OMITTED].
SECTION 5.7 REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, the Stockholder will, and will cause each Company and
its subsidiaries, if any, to make all filings or post-Closing undertakings
required or requested to be made by them in order to consummate this Agreement
and the transactions contemplated herein. The Stockholder will, and will cause
the Company and its subsidiaries, if any, to, (a) cooperate with Coach with
respect to all filings that Coach elects to make or is required to make in
connection with this Agreement and the transactions contemplated herein, and (b)
cooperate with Coach in obtaining all consents requested by Coach, including,
but not limited to, those identified in Sections or SCHEDULEs 3.2, 3.10 and 5.1,
and taking all actions requested by Coach to cause early completion of any
applicable approval period before the STB, state or local authority. All actual
additional costs associated with such assistance shall be borne by Coach.
SECTION 5.8 SECTION 338(H)(10) ELECTION. At Coach's option, the
Stockholder agrees to join with Coach in making a timely election on Form 8023
under Sections 338(g) and 338(h)(10) of the Code (and any corresponding
elections under state local or foreign law)(collectively a "Section 338(h)(10)
Election") with respect to the purchase and sale of the stock of the Company
hereunder. The Stockholder will pay any tax attributable to the making of the
Section 338(h)(10) Election and will indemnify Coach and the Company against any
adverse consequences arising out of any failure to pay such tax.
ARTICLE VI
INDEMNIFICATION
The Stockholder and Coach each make the following covenants:
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDER. The Stockholder
covenants and agrees that he will indemnify, defend, protect and hold harmless
Coach and the Company, and their respective officers, directors, employees,
stockholders, agents, representatives and affiliates (collectively, the "Coach
Indemnitees"), at all times from and after the date of this Agreement until the
Expiration Date (as defined in Section 10.7) from and against all claims,
damages, actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) incurred by any of the Coach
Indemnitees as a result of or arising from (i) any breach of the representations
and warranties of the Stockholder set forth in this Agreement or other documents
or agreements delivered in connection with it, or (ii) any breach or
nonfulfillment of any covenant or agreement on the part of the Stockholder or
the Company under this Agreement or other documents or agreements delivered in
connection with it; PROVIDED THAT such indemnification shall not apply to any
consequential, punitive or exemplary damages.
SECTION 6.2 INDEMNIFICATION BY COACH. Coach covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder and his
agents, representatives and affiliates (collectively, the "Stockholder
Indemnitees") at all times from and after the date of this Agreement until the
Expiration Date from and against all claims, damages, actions, suits, proceed
ings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by any of the Stockholder Indemnitees as a result of or
arising from (i) any breach of the representations and warranties of Coach in
this Agreement or other documents delivered in connection with it, or (ii) any
breach or nonfulfillment of any covenant or agreement on the part of Coach under
this Agreement or other documents or agreement delivered in connection with it;
provided that such indemnification shall not apply to any consequential,
punitive or exemplary damages.
SECTION 6.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall give to the party obligated to provide indemnification pursuant to
Section 6.1 or 6.2 hereof (hereinafter the "Indemnifying Party") written notice
of such claim or the commencement of such action or proceeding. Such notice
shall state the nature and the basis of such claim and a reasonable estimate of
the amount thereof. The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel, any such matter so long as
the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records and other
information reasonably requested by the Indemnifying Party and in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
PROVIDED that if counsel to the Indemnifying Party shall have a conflict of
interest that prevents such counsel from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the expenses of its counsel. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person and the Indemnified Party shall reimburse the Indemnifying Party
for any additional costs of defense which it subsequently incurs with respect to
such claim and all additional costs of settlement or judgment. If the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, HOWEVER, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
SECTION 6.4 LIMITATION UPON INDEMNITY.
(i) Coach shall be entitled to indemnification from the Stockholder
under the provisions of this Article VI for all claims subject to
indemnification by such party, but only after the amount of such claims exceeds,
in the aggregate, One Hundred Seventy-Five Thousand Dollars ($175,000).
(ii) The indemnification obligations of the Stockholder under this
Article VI shall be limited, in the aggregate, to $17,500,000. Any payments for
indemnification owed by the Stockholder to a Coach Indemnitee may, at teh
election of the Stockholder, be satisfied by, to the extent available, a
corresponding reduction of the outstanding balance on the Notes.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES. The Stockholder will not, for a
period of five (5) years following the Closing Date, directly or indirectly, for
himself or on behalf of or in conjunction with any other person, company,
partnership, corporation or business of whatever nature, unless approved in
writing in advance by Coach:
(i) engage, as an officer, director, stockholder, owner, partner,
joint venturer or in a managerial or advisory capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business offering any services or products in
direct competition with Coach or any of its subsidiaries within 100
miles of where Coach or any of its subsidiaries conducts business,
including any territory serviced by Coach or any of such subsidiaries
(the "Territory");
(ii) call upon any person who is, at that time, within the Territory,
an employee of Coach or any of its subsidiaries for the purpose or with
the intent of enticing such employee away from or out of the employ of
Coach or any of its subsidiaries; or
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of Coach or
any of its subsidiaries within the Territory for the purpose of
soliciting or selling services or products in direct competition with
Coach or any of its subsidiaries within the Territory. Notwithstanding
the above, the foregoing covenant shall not be deemed to prohibit the
Stockholder from acquiring, as a passive investor with no involvement in the
operations of the business, not more than one percent (1%) of the capital stock
of the Company or another motorcoach services business whose stock is publicly
traded on a national securities exchange or over-the-counter.
SECTION 7.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to Coach as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to Coach
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by Coach by injunctions, restraining
orders and other equitable actions.
SECTION 7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto
that the foregoing covenants in this Article VII impose a reasonable restraint
on the Stockholder in light of the activities and business of Coach on the date
of the execution of this Agreement and the current plans of Coach; but it is
also the intent of Coach and the Stockholder that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of Coach and its subsidiaries engaged in providing motorcoach charter, tour,
sightseeing and municipal commuter and transit motorcoach services throughout
the term of this covenant. During the term of this covenant, if Coach or one of
its subsidiaries engages in new and different activities, enters a new business
or establishes new locations for its current activities or business in addition
to or other than the activities or business it is currently conducting in the
locations currently established therefor, then, provided the Stockholder were
not first competing in such geographical areas, and were not otherwise
prohibited from competing with Coach, the Stockholder will be precluded from
soliciting the customers or employees of such new activities or business or from
such new location and from directly competing with such new activities or
business within 100 miles of its then-established operating location(s) through
the term of this covenant.
SECTION 7.4 SEVERABILITY; REFORMATION. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in this Article VII are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable and this
Agreement shall thereby be reformed.
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT. The Stockholder
acknowledges that their agreement with the covenants set forth in this Article
VII are material conditions to Coach's agreement to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All of the
covenants in this Article VII shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any claim or cause
of action of the Stockholder against Coach or one of its subsidiaries, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Coach of such covenants. It is specifically agreed that the
period of five (5) years during which the agreements and covenants of the
Stockholder made in this Article VII shall be effective shall be computed by
excluding from such computation any time during which such Stockholder is in
violation of any provision of this Article VII. The covenants contained in this
Article VII shall not be affected by any breach of any other provision hereof by
any party hereto.
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL. The Stockholder recognize and acknowledge that they
had in the past, currently have, and in the future will have, access to certain
confidential information of the Company and/or Coach, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company and/or Coach. The Stockholder
agrees that they will not disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose whatsoever,
except as is required in the course of performing their duties to the Company
and/or Coach, unless (i) such information becomes known to the public generally
through no fault of the Stockholder, or (ii) disclosure is required by law or
the order of any governmental authority, provided, that prior to disclosing any
information pursuant to this clause (ii) the Stockholder shall, if possible,
give prior written notice thereof to Coach and provide Coach with the
opportunity to contest such disclosure. In the event of a breach or threatened
breach by the Stockholder of the provisions of this Section, Coach shall be
entitled to an injunction restraining the Stockholder from disclosing, in whole
or in part, such confidential information. Nothing herein shall be construed as
prohibiting Coach from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
SECTION 8.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
the Company and/or Coach would have no other adequate remedy, the Stockholder
agrees that the foregoing covenants may be enforced against them by injunctions,
restraining orders and other equitable actions.
ARTICLE IX
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS
ON COACH SECURITIES
SECTION 9.1 COMPLIANCE WITH LAW. The Stockholder acknowledges that the
Note to be delivered to the Stockholder pursuant to this Agreement has not been
and will not be registered under the 1933 Act and therefore may not be resold
without compliance with the 1933 Act. The Note is being acquired by the
Stockholder solely for their own account, for investment purposes only, and with
no present intention of distributing, selling or otherwise disposing of them in
connection with a distribution. The Stockholder covenants, warrants and
represents that the Note will not be offered, sold, assigned, pledged,
hypothecated, transferred or otherwise disposed of except after full compliance
with all of the applicable provisions of the Act and the rules and regulations
of the SEC, and, during the two years following the date of this Agreement, the
Stockholder shall not engage in put, call, short-sale, straddle or similar
transactions intended to reduce the Stockholder's risk of owning the Note. The
Note shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY WERE NOT ISSUED IN A TRANSACTION
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES
ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD
OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR, IN THE OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
SECTION 9.2 ECONOMIC RISK; SOPHISTICATION. The Stockholder is able to
bear the
economic risk of an investment in the Note acquired pursuant to this Agreement,
can afford to sustain a total loss of such investment and has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of the proposed investment and therefore has the capacity
to protect his own interests in connection with his acquisition of the Note. As
of the date of this Agreement, the Stockholder is an "accredited investor," as
that term is defined in Regulation D under the 1933 Act. The Stockholder or his
representatives have had an adequate opportunity to ask questions and receive
answers from the officers of Coach concerning, among other matters, Coach, its
management and its plans for the operation of its business.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of
the parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors of Coach and the Company, and the heirs and legal representatives of
the Stockholder.
SECTION 10.2 ENTIRE AGREEMENT. This Agreement, the Notes, the Voting
Trust, the Escrow Agreement, and the Master General Agreement (including the
Schedules and any Exhibits and annexes attached thereto) and the documents
delivered pursuant hereto constitute the entire agreement and understanding
among the Stockholder, the Company and Coach relating to the subject matter of
this Agreement and supersede any prior agreement and understanding relating to
the subject matter of this Agreement including but not limited to the Letter of
Intent. Reference to this Agreement incorporates by reference all Exhibits and
Schedules thereto. This Agreement may be modified or amended only by a written
instrument executed by the Stockholder and the Company and Coach, acting through
their respective officers, duly authorized by their respective Boards of
Directors.
SECTION 10.3 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
SECTION 10.4 BROKERS AND AGENTS. Each party agrees to indemnify the
other against any and all losses, costs, damages or expenses arising out of
claims for fees or commissions of brokers employed or alleged to have been
employed by such indemnifying party. The parties acknowledge and agree that
Coach has retained First Continental Advisers, Inc. as broker pursuant to that
certain Agreement, dated May 20, 1996, attached hereto as SCHEDULE 10.4 and
Coach shall be solely responsible for the payment of all costs arising therefrom
in accordance with the terms of Section 5.4 above.
SECTION 10.5 NOTICES. All notices and communications required or
permitted hereunder shall be in writing and may be given to the party to be
notified (i) by depositing the same in the United States mail, proper postage
prepaid and registered or certified with return receipt requested, (ii) by
delivery through an express courier or delivery service with receipt requested,
or (iii) by delivering the same in person or to a senior officer of such party
in a corporation, as follows:
(A) If to Coach, addressed to it at:
One Riverway, Suite 600
Houston, Texas 77056-1903
Attn: Law Department
(B) If to the Stockholder, addressed to him at:
Mr.Scott Keller
4020 E. Lone Mountain Road
Las Vegas, Nevada 89030
20
With copies to:
Brown, Parker & Leahy, LLP
1200 Smith Street, Suite 3600
Houston, Texas 77002-4592
Attn: Timothy R. Brown, Esq.
(C) If to the Company, addressed to it at:
2222 Cleburne Street
Houston, Texas 77004
Attn: President
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 10.5 from time to time. Failure to correct or provide an
accurate address, or to accept delivery of a notice, will not thwart the purpose
of this notice section. Notice given shall be deemed received when (i) if given
by deposit in the United States mail, registered or return receipt requested
with proper postage prepaid, five (5) days after its deposit in the United
States mail; (ii) if given by express courier or delivery service, on the date
stated on the courier's documents specifying the actual delivery date; or (iii)
if by personal delivery to such person or, a senior officer of a corporation if
the party is a corporation, upon actual receipt.
SECTION 10.6 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas (except for its principles
governing conflicts of laws).
SECTION 10.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Articles III and IV shall survive
the Closing for a period of twelve (12) months from the Closing Date (which date
is hereinafter called the "Expiration Date"), except that all warranties and
representations set forth in Section 3.17 hereof shall survive through such date
or until such time as the limitations period has run for all tax periods ended
prior to the Closing Date, which shall be deemed to be the Expiration Date for
Section 3.17.
SECTION 10.8 CLOSING OBLIGATIONS. At the Closing:
(a) Stockholder will deliver to Coach:
(i) Voting Trust Certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers), with signatures
guaranteed by a commercial bank or by a member firm of the New York
Stock Exchange, for transfer to Coach;
(ii) [Intentionally Omitted]
(iii) a certificate executed by the Company and the Stockholder to
the effect that, except as otherwise stated in such certificate, each of
Stockholder's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date;
(iv) the duly executed Voting Trust Agreement attached hereto as
EXHIBIT 10.8(A)(IV) ("Voting Trust Agreement"); and
(v) such additional agreements or letters, in duly executed
form, as mutually agreeable among the parties, including but not limited
to a resignation from the Company by each of its officers and directors,
and the Master General Agreement attached hereto as EXHIBIT
10.8(V)("Master General Agreement").
(b) Coach will deliver to Stockholder:
(i) the amounts by wire transfer to accounts specified in
Section 1.2;
(ii) the Note(s);
(iii) the duly executed Voting Trust Agreement;
(iv) such additional agreements or letters, in duly executed
form, as mutually agreeable among the parties, including but not limited
to the Master General Agreement attached hereto as EXHIBIT 10.8(A)(V);
and
(v) a certificate executed by Coach to the effect that, except
as otherwise stated in such certificate, each of Coach's representations
and warranties in this Agreement was accurate in all respects as of the
date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date.
SECTION 10.9 CONDITIONS PRECEDENT TO COACH'S OBLIGATION TO CLOSE.
Coach's obligation to purchase the Shares and to take the other actions required
to be taken by Coach at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Coach, in whole or in part):
(a) ACCURACY OF REPRESENTATIONS. Each of Stockholder's representations
and warranties must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date.
(b) STOCKHOLDER'S PERFORMANCE.
(i) All of the covenants and obligations that Stockholder is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects (or unless waived
by Coach which shall make them subject to completion post-Closing by the
Stockholder).
(ii) Each document required to be delivered pursuant to Section
10.8 must have been delivered, and each of the other covenants and
obligations in this Agreement must have been performed and complied with
in all respects.
(c) NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or threatened in writing against Coach, or against any
person affiliated with Coach, any proceeding (i) involving any challenge to, or
seeking damages or other relief in connection with, this Agreement or any of the
transactions contemplated herein, or (ii) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
transactions contemplated herein.
(d) NO PROHIBITION. Neither the consummation nor the performance of this
Agreement or any of the transactions contemplated herein will, directly or
indirectly (with or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause Coach or any
person affiliated with Coach to suffer any material adverse consequence under,
(i) any applicable legal requirement or order, or (ii) any legal requirement or
order that has been published, introduced, or otherwise proposed by or before
any governmental body.
SECTION 10.10 CONDITIONS PRECEDENT TO STOCKHOLDER'S OBLIGATION TO CLOSE.
Stockholder's obligation to sell the Shares and to take the other actions
required to be taken by Stockholder at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Stockholder, in whole or in part):
(a) ACCURACY OF REPRESENTATIONS. All of Coach's representations and
warranties in this Agreement must have been accurate as of the date of this
Agreement and must be accurate as of the Closing Date.
(b) COACH'S PERFORMANCE.
(i) All of the covenants and obligations that Coach is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and
complied with in all material respects or waived by the Stockholder, or
unless waived by the Stockholder, which shall make them subject to post-
Closing completion by Coach.
(ii) Coach must have delivered each of the documents required to
be delivered by Coach pursuant to Section 10.8, including but not
limited to the Note(s), and must have made the cash payments required to
be made by Coach pursuant to Section 10.8. (c) CONSENTS. Each of the
Consents identified in Sections and SCHEDULEs 3.2, 3.10 and 5.1 of this
Agreement, including but not limited to approval by the STB and all
state and local transportation authorities, must have been obtained and
must be in full force and effect (or unless waived by the Stockholder,
which shall make them subject to completion post-Closing by both
parties).
(d) NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or threatened in writing against the Stockholder, or against
any person affiliated with the Stockholder, any proceeding (i) involving any
challenge to, or seeking damages or other relief in connection with, this
Agreement or any of the transactions contemplated herein, or (ii) that may have
the effect of preventing, delaying, making illegal, or otherwise interfering
with any of the transactions contemplated herein.
(e) NO PROHIBITION. Neither the consummation nor the performance of this
Agreement or any of the transactions contemplated herein will, directly or
indirectly (with or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause the Stockholder or
any person affiliated with the Stockholder to suffer any material adverse
consequence under, (i) any applicable legal requirement or order, or (ii) any
legal requirement or order that has been published, introduced, or otherwise
proposed by or before any governmental body.
SECTION 10.11 TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(i) by either Coach or Stockholder if a material breach of any provision
of this Agreement has been committed by the other party and such breach has not
been waived;
(ii) (a) by Coach if any of the conditions in Section 10.9 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Coach to comply with its
obligations under this Agreement) and Coach has not waived such condition on or
before the Closing Date; or (b) by Stockholder, if any of the conditions in
Section 10.10 has not been satisfied as of the Closing Date or if satisfaction
of such a condition is or becomes impossible (other than through the failure of
Stockholder to comply with his obligations under this Agreement) and Stockholder
has not waived such condition on or before the Closing Date;
(iii) by mutual consent of Coach and Stockholder; or
(iv) by either Coach or Stockholder if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before December
31, 1996, or such later date as the parties may agree upon.
SECTION 10.12 EFFECT OF TERMINATION. Each party's right of termination
under Section 10.11 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
10.11, all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 5.4 (Expenses) and 5.8
(Confidentiality) will survive; provided, however, that if this Agreement is
terminated by a party because of the breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
SECTION 10.13 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach or
default occurring before or after that waiver.
SECTION 10.14 ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Houston,
Texas, in accordance with the rules of the American Arbitration Association then
in effect. The arbitrators shall not have the authority to detract from, or
modify any provision hereof nor to award punitive damages to any injured party.
SECTION 10.15 TIME. Time is of the essence with respect to this
Agreement.
SECTION 10.16 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COACH USA, INC. TEXAS BUS LINES, INC.
By: By:
Name: Richard H. Kristinik Name: Scott Keller
Title: Chief Executive Officer Title: President
Scott Keller, Individually
EXHIBIT 2.6
STOCK PURCHASE AGREEMENT
by and among
COACH USA, INC.,
KERRVILLE BUS COMPANY, INC.,
K-T CONTRACT SERVICES, INC.
AND
FRED KAISER
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE PURCHASE AND SALE OF THE SHARES
SECTION 1.1 GENERAL
SECTION 1.2 PURCHASE PRICE
SECTION 1.3 ALLOCATION OF PURCHASE PRICE
ARTICLE II
CLOSING
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
SECTION 3.1 DUE ORGANIZATION
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 3.3 CAPITALIZATION
SECTION 3.4 SUBSIDIARIES
SECTION 3.5 FINANCIAL STATEMENTS
SECTION 3.6 LIABILITIES AND OBLIGATIONS
SECTION 3.7 ACCOUNTS AND NOTES RECEIVABLE
SECTION 3.8 ASSETS
SECTION 3.9 MATERIAL CUSTOMERS AND CONTRACTS
SECTION 3.10 PERMITS
SECTION 3.11 ENVIRONMENTAL MATTERS
SECTION 3.12 LABOR AND EMPLOYEE RELATIONS
SECTION 3.13 INSURANCE
SECTION 3.14 COMPENSATION; EMPLOYMENT AGREEMENTS
SECTION 3.15 EMPLOYEE BENEFIT PLANS
SECTION 3.16 LITIGATION AND COMPLIANCE WITH LAW
SECTION 3.17 TAXES
SECTION 3.18 ABSENCE OF CHANGES
SECTION 3.19 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY
SECTION 3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES
SECTION 3.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS
SECTION 3.22 INTANGIBLE PROPERTY
SECTION 3.23 DISCLOSURE
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
SECTION 4.1 ORGANIZATION
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS
SECTION 4.3 CAPITALIZATION
SECTION 4.4 SEC FILINGS; DISCLOSURE
SECTION 4.5 INVESTMENT REPRESENTATIONS
SECTION 4.6 NO VIOLATIONS
SECTION 4.7 COACH INVESTIGATION
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 REPAYMENT OF INDEBTEDNESS AND RELEASE FROM GUARANTEES
SECTION 5.2 REPAYMENT OF STOCKHOLDER AND AFFILIATE INDEBTEDNESS;
RELEASE OF CERTAIN OBLIGATIONS
SECTION 5.3 FUTURE COOPERATION
SECTION 5.4 EXPENSES
SECTION 5.5 DTPA WAIVER
SECTION 5.6 OPERATION OF THE BUSINESS OF THE COMPANY AND SUBSIDIARIES
SECTION 5.7 REQUIRED APPROVALS
SECTION 5.8 SECTION 338(H)(10) ELECTION
ARTICLE VI
INDEMNIFICATION
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDER AND KAISER
SECTION 6.2 INDEMNIFICATION BY COACH
SECTION 6.3 THIRD PERSON CLAIMS
SECTION 6.4 LIMITATION UPON INDEMNITY
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES
SECTION 7.2 EQUITABLE RELIEF
SECTION 7.3 REASONABLE RESTRAINT
SECTION 7.4 SEVERABILITY; REFORMATION
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL
SECTION 8.2 EQUITABLE RELIEF
ARTICLE IX
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS
ON COACH SECURITIES
SECTION 9.1 COMPLIANCE WITH LAW
SECTION 9.2 ECONOMIC RISK; SOPHISTICATION
ARTICLE X
MISCELLANEOUS
SECTION 10.1 SUCCESSORS AND ASSIGNS
SECTION 10.2 ENTIRE AGREEMENT
SECTION 10.3 COUNTERPARTS
SECTION 10.4 BROKERS AND AGENTS
SECTION 10.5 NOTICES
SECTION 10.6 GOVERNING LAW
SECTION 10.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
SECTION 10.8 CLOSING OBLIGATIONS
SECTION 10.9 CONDITIONS PRECEDENT TO COACH'S OBLIGATION TO CLOSE
SECTION 10.10 CONDITIONS PRECEDENT TO STOCKHOLDER'S OBLIGATION TO CLOSE
SECTION 10.11 TERMINATION EVENTS
SECTION 10.12 EFFECT OF TERMINATION
SECTION 10.13 EXERCISE OF RIGHTS AND REMEDIES
SECTION 10.14 ARBITRATION
SECTION 10.15 TIME
SECTION 10.16 REFORMATION AND SEVERABILITY
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 29th
day of August 1996, by and among Coach USA, Inc., a Delaware corporation
("Coach"), and Kerrville Bus Company, Inc., a Texas corporation and a fifty
percent (50%) stockholder (the "Stockholder") of K-T Contract Sevices, Inc., a
Texas corporation (the "Company"),the Company and Fred Kaiser, the sole
stockholder of the Stockholder ("Kaiser").
WHEREAS, the Stockholder is the beneficial owner of fifty percent (50%)
of the outstanding capital stock of the Company, in the amount set forth on
SCHEDULE 3.3 below (the "Shares"); and
WHEREAS, the Stockholder desires to sell the Shares to Coach, and Coach
desires to purchase the Shares from the Stockholder;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE PURCHASE AND SALE OF THE SHARES
SECTION 1.1 GENERAL. Upon the terms and subject to the conditions of
this Agreement, the Stockholder hereby agrees to sell, assign, transfer and
deliver to Coach, and Coach hereby agrees to purchase, the Shares.
SECTION 1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") for the Shares shall consist of three Convertible Subordinated Notes of
Coach in the original aggregate principal amount of $8,513,200 (the "Notes"), to
be delivered concurrently with the execution of this Agreement. At the Closing
(as defined in Article II), the Stockholder will deliver to Coach certificates
representing the Shares, duly endorsed in blank or accompanied by blank stock
powers, and Coach will deliver to the Stockholder the Notes. A copy of the Notes
is attached hereto as EXHIBIT 1.2.
SECTION 1.3 ALLOCATION OF PURCHASE PRICE. The Parties agree that the
Purchase Price and the liabilities of the Company will be allocated to the
assets of the Company for tax purposes as shown on the Allocation Schedule
attached hereto as SCHEDULE 1.3. Coach, the Company and the Stockholder will
file all tax returns (including amended returns and claims for refund) and
information reports in a manner consistent with such allocation.
ARTICLE II
CLOSING
The sale and purchase of the Shares described in Article I hereof and
the other transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Coach, One Riverway, Suite 600, Houston, Texas 77056,
concurrently with the execution of this Agreement on August 29, 1996. The date
on which the Closing actually occurs shall be referred to in this Agreement as
the "Closing Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER
The Stockholder represents and warrants to Coach as follows:
STOCKHOLDER'S LIMITATION AS TO KNOWLEDGE. Notwithstanding anything contained in
this Agreement to the contrary, the Stockholder's representations and warranties
are qualified as to the "knowledge" of such Stockholder with respect to the
facts or matters represented or warrantied by such Stockholder in the following
sections:
(i) 3.10 (Permits),
(ii) 3.12 (Labor Matters),
(iii) 3.13 (Insurance),
(iv) 3.14 (Compensation),
(v) 3.15 (Employee Benefit Plans),
(vi) 3.18 (Absence of Changes),
(vii) 3.19 (Accounts with Banks and Brokerage Firms),
(viii)3.20 (Absence of Certain Business Practices),
(ix) 3.21 (Competing Lines of Business),
(x) 3.22 (Intangible Property), and
(xi) 3.23 (Disclosure).
As used herein, "knowledge" of a Stockholder shall mean the current
actual knowledge of Fred Kaiser without obligation to conduct further inquiry
outside the ordinary course of business.
SECTION 3.1 DUE ORGANIZATION. The Company is duly organized, validly
existing and in good standing under the laws of the state of Texas. The Company
is duly authorized and qualified to do business in the states set out on
SCHEDULE 3.1 to carry on its businesses and in the manner as now conducted and
to the knowledge of the Company and the Stockholder, no qualification is
required in any other jurisdiction. True, complete and correct copies of the
Articles of Incorporation and By-laws, each as amended, of the Company are
attached hereto as SCHEDULE 3.1.
SECTION 3.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. The Company,
upon approval by all applicable federal, state and local regulatory bodies, will
have the full legal right, power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. The Stockholder have the
full legal right, power and authority to enter into this Agreement. The
execution, delivery and performance of this Agreement have been approved by the
board of directors of the Company and by the Stockholder. No additional
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement and the consummation by the Company of
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company, and, assuming the due authorization,
execution and delivery hereof by Coach, constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors rights.
The execution and delivery of this Agreement by the Company do not, and
the consummation by the Company of the transactions contemplated hereby will
not, violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company under
any of the terms, conditions or provisions of (i) the Articles of Incorporation
or By-laws of the Company, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any court or
governmental authority applicable to the Company or any of its properties or
assets, or (iii) any agreement, note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, lease or other instrument, obligation or
agreement of any kind to which the Company is now a party or by which the
Company or any of its properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security interests,
charges or encumbrances that would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other), results of operations or prospects of the Company.
Except as set forth on SCHEDULE 3.2 and except for any required filings
with or approvals from the Surface Transportation Board ("STB") and state and
local transportation authorities and any required filings under federal and
state securities laws, no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, other than as required or requested by Coach, or in such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. Except as set forth on SCHEDULE 3.2, none of the
customer contracts or other material agreements to which the Company is a party
requires notice to, or the consent or approval of, any governmental agency or
other third party to any of the transactions contemplated hereby to remain in
full force and effect following such transactions.
SECTION 3.3 CAPITALIZATION. SCHEDULE 3.3 accurately describes the
authorized capital stock of the Company. Fifty percent (50%) of the issued and
outstanding shares of the capital stock of the Company are owned beneficially
and of record by the Stockholder and constitute the Shares. All of the Shares
held by the Stockholder have been duly authorized and validly issued, are fully
paid and nonassessable, are owned by the Stockholder as set forth in SCHEDULE
3.3 free and clear of all liens, encumbrances and claims of every kind. None of
such shares was issued in violation of the preemptive rights of any past or
present stockholder. Except as set forth in SCHEDULE 3.3, no subscription,
option, warrant, call, convertible or exchangeable security, other conversion
right or commitment of any kind exists which obligates the Company to issue any
of its capital stock or the Stockholder to transfer any of the Shares.
SECTION 3.4 SUBSIDIARIES. Except as set forth in SCHEDULE 3.4, the
Company does not presently own, of record or beneficially, or control, directly
or indirectly, any capital stock, securities convertible into or exchangeable
for capital stock or any other equity interest in any corporation, association
or business entity. Except as set forth in SCHEDULE 3.4, the Company is not,
directly or indirectly, a participant in any joint venture, partnership or other
noncorporate entity. To the extent that such subsidiary companies are set out on
SCHEDULE 3.4, such Schedule contains a complete and accurate list for each
company of its name, its jurisdiction of incorporation, the jurisdictions in
which it is authorized to do business, and its capitalization (including the
identity of each stockholder and the number of shares held by each). Each
company set out on SCHEDULE 3.4 is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations. Each company set out
on SCHEDULE 3.4 is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each state or other jurisdiction set out in
SCHEDULE 3.4, and, to the knowledge of the Company and the Stockholder, no other
qualification is required in any other jurisdiction.
SECTION 3.5 FINANCIAL STATEMENTS. The Stockholder have delivered to
Coach complete and correct copies of the following financial statements:
(i) the balance sheets of the Company as of December 31, 1993,
1994 and 1995 and the related statements of operations, of Stockholder'
equity and of cash flows for the three-year period ended December 31,
1995, together with the related notes and Schedules (such balance
sheets, the related statements of operations, of Stockholder' equity and
of cash flows and the related notes and Schedules are referred to herein
as the "Year-end Financial Statements"); and
(ii) the unaudited balance sheet of the Company as of June 30,
1996, the unaudited balance sheet (the "Interim Balance Sheet") of the
Company as of June 30, 1996 (the "Interim Balance Sheet Date") and the
related unaudited statements of operations, of Stockholder' equity and
of cash flows for the six-month periods ended June 30, 1995 and 1996,
together with the related notes and Schedules (such balance sheets, the
related statements of operations, of stockholder's equity and of cash
flows and the related notes and Schedules are referred to herein as the
"Interim Financial Statements"). The Year-end Financial Statements and
the Interim Financial Statements are attached as SCHEDULE 3.5 to this
Agreement and are referred to hereinafter as the "Financial Statements."
The Financial Statements have been prepared from the books and records
of the Company in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years and
throughout the periods involved ("GAAP"), except as provided in the
Financial Statements or the notes thereto, and present fairly the
financial position and results of operations of the Company as of the
dates of such statements and for the periods covered thereby. The books
of account of the Company have been kept accurately in all material
respects in the ordinary course of business, the transactions entered
therein represent bona fide transactions, and the revenues, expenses,
assets and liabilities of the Company have been properly recorded
therein in all material respects.
SECTION 3.6 LIABILITIES AND OBLIGATIONS. SCHEDULE 3.6 sets forth an
accurate list as of the Interim Balance Sheet Date of (i) all liabilities of the
Company which are reflected in the Interim Balance Sheet and (ii) any
liabilities of any kind of the Company which are not reflected in the Interim
Balance Sheet. Except as set forth on SCHEDULE 3.6, since the Interim Balance
Sheet Date the Company has not incurred any liabilities of any kind, character
or description, whether accrued, absolute, secured or unsecured, contingent or
otherwise, other than liabilities incurred in the ordinary course of business
which are not materially greater than the corresponding liabilities reflected in
the Interim Balance Sheet. SCHEDULE 3.6 contains a reasonable estimate by the
Stockholder of the maximum amount which may be payable with respect to
liabilities which are not fixed.
SECTION 3.7 ACCOUNTS AND NOTES RECEIVABLE. SCHEDULE 3.7 sets forth an
accurate list of the accounts and notes receivable of the Company as of the
Interim Balance Sheet Date and generated subsequent to the Interim Balance Sheet
Date. Receivables from and advances to employees, the Stockholder and any
entities or persons related to or affiliated with the Stockholder are separately
identified on SCHEDULE 3.7. SCHEDULE 3.7 also sets forth an accurate aging of
all accounts and notes receivable as of the Interim Balance Sheet Date, showing
amounts due in 30- day aging categories. The trade and other accounts receivable
of the Company which are classified as current assets on the Interim Balance
Sheet are bona fide receivables, were acquired or arose in the ordinary course
of business, are stated in accordance with GAAP and, subject to the reserve for
doubtful accounts, need not be written-off as uncollectible. Such accounts and
notes are collectible in the amount shown on SCHEDULE 3.7, net of reserves for
doubtful accounts reflected in the Interim Balance Sheet.
SECTION 3.8 ASSETS. The depreciation schedule attached to SCHEDULE 3.8
sets forth an accurate list of all real and personal property included in
"property and equipment" on the balance sheet of the Company and all other
tangible assets of the Company with a value in excess of $5,000 (i) owned by the
Company as of the Interim Balance Sheet Date and (ii) acquired since the Interim
Balance Sheet Date, including in each case true, complete and correct copies of
leases for significant equipment and for all real property leased by the Company
and descriptions of all real property on which buildings, warehouses, workshops,
garages and other structures used in the operation of the business of the
Company are situated. SCHEDULE 3.8 indicates which assets are currently owned,
or were formerly owned, by the Stockholder or affiliates of the Company or
Stockholder. Except as specifically identified on SCHEDULE 3.8, all of the
tangible assets, vehicles and other significant machinery and equipment of the
Company listed on SCHEDULE 3.8 are in good working order and condition, ordinary
wear and tear excepted, and have been maintained in accordance with standard
industry practices. All fixed assets used by the Company that are material to
the operation of the Company's business are either owned by the Company or
leased under an agreement identified on SCHEDULE 3.8. All leases set forth on
SCHEDULE 3.8 are in full force and effect and constitute valid and binding
agreements of the parties thereto in accordance with their respective terms.
SCHEDULE 3.8 contains true, complete and correct copies of all title reports and
title insurance policies received or owned by the Company with respect to any of
its properties. The Company has good and indefeasible title to the tangible and
intangible personal property and the real property owned and used in its
business, including the properties identified on SCHEDULE 3.8, subject to no
mortgage, pledge, lien, claim, conditional sales agreement, encumbrance or
charge, except for liens reflected on SCHEDULE 3.8, liens for current taxes not
yet payable and assessments not in default, easements for utilities serving only
the property (unless otherwise revealed by title report or title insurance
policy), and easements, covenants and restrictions and other exceptions or
reservations to title shown of record in the office of the County Clerks in
which the properties, assets and leasehold estates are located, which do not
adversely affect the Company's use of the property.
SECTION 3.9 MATERIAL CUSTOMERS AND CONTRACTS. SCHEDULE 3.9 sets forth an
accurate list of (i) all customers representing 5% or more of the Company's
revenues in the year ended December 31, 1995 and the six-month period ended June
30, 1996, and (ii) all material contracts, commitments and similar agreements to
which the Company is currently a party or by which the Company or any of its
properties are bound, including, but not limited to, contracts with customers,
contracts with any labor organizations, leases, loan agreements, pledge and
security agreements, indemnity or guaranty agreements, bonds, notes, mortgages,
joint venture or partnership agreements, options to purchase real or personal
property, and agreements relating to the purchase or sale by the Company of
assets or securities. SCHEDULE 3.9 contains true, complete and correct copies of
all such agreements. Except to the extent set forth on SCHEDULE 3.9, (i) none of
the Company's material customers has canceled or substantially reduced, to the
knowledge of the Stockholder, or is currently attempting or threatening to
cancel or substantially reduce its use of the Company's services and (ii) the
Company has complied with all material commitments and obligations pertaining to
it under such agreements and is not in default under any such agreements, no
notice of default has been received by the Company and theStockholder is aware
of no basis therefor. Except as set forth on SCHEDULE 3.9, the Company is not
now nor has it ever been party to any governmental contracts subject to price
redetermination or renegotiation.
SECTION 3.10 PERMITS. SCHEDULE 3.10 contains an accurate list, summary
description of and copies all licenses, franchises, permits, transportation
authorities and other governmental authorizations and intangible assets held by
the Company that are material to the conduct of its business including, without
limitation, permits, licenses and operating authorizations, titles (including
motor vehicle titles and current registrations), fuel permits, franchises,
certificates, trademarks, trade names, patents, patent applications and
copyrights owned or held by the Company. The licenses, operating authorizations,
franchises, permits and other governmental authorizations listed on SCHEDULE
3.10 are valid, and the Company has not received any notice that any
governmental authority intends to cancel, terminate or not renew any such
license, operating authorization, franchise, permit or other governmental
authorization. The Company holds all licenses, operating authorizations,
franchises, permits and other governmental authorizations, the absence of any of
which could have a material adverse effect on the business, operations,
properties, assets, condition (financial or other), results of operations or
prospects of the Company. The Company has conducted and is conducting its
business in substantial compliance with the requirements, standards, criteria
and conditions set forth in its licenses, operating authorizations, franchises,
permits and other governmental authorizations as well as the applicable orders,
approvals and variances related thereto, and is not in violation of any of the
foregoing except for any violations that would not have a material and adverse
effect on the business, operations, properties, assets, condition (financial or
otherwise), results of operations or prospects of the Company. Except as
specifically provided in SCHEDULE 3.10, and provided the regulatory consents
required or requested by Coach are obtained, the transactions contemplated by
this Agreement will not result in a default under or a breach or violation of,
or adversely affect the rights and benefits afforded to the Company by, any such
material licenses, operating authorizations, franchises, permits and other
government authorizations.
SECTION 3.11 ENVIRONMENTAL MATTERS. The Company has complied with and is
in compliance with all federal, state, local and foreign statutes (civil and
criminal), laws, ordinances, regulations, rules, notices, permits, judgments,
orders and decrees applicable to it or any of its properties, assets, operations
and businesses relating to the protection of the environment (collectively,
"Environmental Laws") including, without limitation, Environmental Laws relating
to air, water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Wastes, Hazardous Materials and Hazardous
Substances (as such terms are defined in any applicable Environmental Law)
except to the extent that noncompliance with any Environmental Laws, either
singly or in the aggregate, does not and would not (i) have a material adverse
effect on the Company or its business as a whole or (ii) necessitate a material
expenditure by or on behalf of the Company. The Company has obtained and
complied with all necessary permits and other approvals necessary to treat,
transport, store, dispose of and otherwise handle Hazardous Wastes, Hazardous
Materials and Hazardous Substances and has reported, to the extent required by
all Environmental Laws, all past and present sites owned and operated by the
Company where Hazardous Wastes, Hazardous Materials or Hazardous Substances have
been treated, stored, disposed of or otherwise handled. Except as disclosed on
SCHEDULE 3.11, to the knowledge of the Stockholder, there have been no
"releases" (as defined in any Environmental Laws) at, from, in or on any
property owned or operated by the Company except as permitted by Environmental
Laws. To the knowledge of the Stockholder, there is no on-site or off-site
location to which the Company has transported and disposed of Hazardous Wastes,
Hazardous Materials and Hazardous Substances or arranged for the transportation
and disposal of Hazardous Wastes, Hazardous Materials and Hazardous Substances
which is the subject of any federal, state, local or foreign enforcement action
or any other investigation which could lead to any claim against the Company or
Coach for any clean-up cost, remedial work, damage to natural resources or
personal injury, including, but not limited to, any claim under (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (ii) the Resource Conservation and Recovery Act, (iii) the Hazardous
Materials Transportation Act or (iv) comparable state and local statutes and
regulations. To the knowledge of the Stockholder, the Company has no contingent
liability in connection with any release of any Hazardous Waste, Hazardous
Material or Hazardous Substance into the environment.
SECTION 3.12 LABOR AND EMPLOYEE RELATIONS. Except for such labor unions
as set forth in SCHEDULE 3.12, the Company is neither bound by nor subject to
any arrangement with any labor union. There is no pending or threatened labor
dispute involving the Company and any group of its employees nor has the Company
experienced any labor interruptions over the past five years. The Company
considers its relationship with its employees to be good.
SECTION 3.13 INSURANCE. SCHEDULE 3.13 sets forth an accurate list as of
the Interim Balance Sheet Date of all insurance policies carried by the Company
and of all insurance loss runs or worker's compensation claims received for the
past three (3) policy years. Also attached to SCHEDULE 3.13 are true, complete
and correct copies of all of the Company's insurance policies, covering at least
the past three years. None of such policies is a "claims made" policy. The
insurance policies set forth on SCHEDULE 3.13 provide adequate coverage against
the risks involved in the Company's business. Such policies are currently in
full force and effect.
SECTION 3.14 COMPENSATION; EMPLOYMENT AGREEMENTS. SCHEDULE 3.14 sets
forth an accurate Schedule of all officers, directors and key employees of the
Company, listing all employment agreements with such officers, directors and
employees and the rate of compensation (and the portions thereof attributable to
salary, bonus, benefits and other compensation, respectively) of each of such
persons as of the Interim Balance Sheet Date. Attached to SCHEDULE 3.14 are
true, complete and correct copies of all such employment agreements and all
other employment agreements and other similar agreements or arrangements
containing "golden parachute" or other similar provisions.
SECTION 3.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.15 sets forth an
accurate Schedule of all employee benefit plans of the Company and deferred
compensation agreements, together with true, complete and correct copies of such
plans, agreements and any trusts related thereto, and classifications of
employees covered thereby as of the Interim Balance Sheet Date. Except for the
employee benefit plans described on SCHEDULE 3.15, the Company does not sponsor,
maintain or contribute to any plan, program, fund or arrangement that
constitutes an "employee pension benefit plan," nor does the Company have any
obligation to contribute to or accrue or pay any benefits under any deferred
compensation or retirement funding arrangement on behalf of any employee or
employees (such as, for example, and without limitation, any individual
retirement account or annuity, any "excess benefit plan" (within the meaning of
Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any non-qualified deferred compensation arrangement). For the
purposes of this Agreement, the term "employee pension benefit plan" shall have
the same meaning given that term in Section 3(2) of ERISA. The Company has not
sponsored, maintained or contributed to any employee pension benefit plan other
than the plans set forth on SCHEDULE 3.15, nor is the Company required to
contribute to any retirement plan pursuant to the provisions of any collective
bargaining agreement.
The Company is not now, nor will it become as a result of its past
activities, liable to the Pension Benefit Guaranty Corporation or to any
multi-employer employee pension benefit plan under the provisions of Title IV of
ERISA. All employee benefit plans listed on SCHEDULE 3.15 are in substantial
compliance with all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other applicable federal, state and local
statutes, ordinances and regulations. All accrued contribution obligations of
the Company with respect to any plan listed on SCHEDULE 3.15 have either been
fulfilled in their entirety or are fully reflected on the balance sheet of the
Company as of the Interim Balance Sheet Date.
All plans listed on SCHEDULE 3.15 that are intended to qualify (the
"Qualified Plans") under Section 401(a) of the Code have been determined by the
Internal Revenue Service to be so qualified, and copies of such determination
letters are included as part of SCHEDULE 3.15 hereof. Except as disclosed on
SCHEDULE 3.15, all reports and other documents required to be filed with any
governmental agency or distributed to plan participants or beneficiaries
(including, but not limited to, actuarial reports, audits or tax returns) have
been timely filed or distributed, and copies thereof are included as part of
SCHEDULE 3.15 hereof. Neither the Stockholder, any such plan listed in SCHEDULE
3.15, nor the Company has engaged in any transaction prohibited under the
provisions of Section 4975 of the Code or Section 406 of ERISA. No such plan
listed in SCHEDULE 3.15 has incurred an "accumulated funding deficiency," as
defined in Section 412(a) of the Code and Section 302(1) of ERISA, and the
Company has not incurred any liability for excise tax or penalty due to the
Internal Revenue Service nor any liability to the Pension Benefit Guaranty
Corporation. There have been no terminations, partial terminations or
discontinuances of contri butions to any such Qualified Plan without notice to
and approval by the Internal Revenue Service; no plan listed in SCHEDULE 3.15
subject to the provisions of Title IV of ERISA has been terminated; there have
been no "reportable events" (as that phrase is defined in Section 4043 of ERISA)
with respect to any such plan; and the Company has not incurred liability under
Section 4062 of ERISA.
SECTION 3.16 LITIGATION AND COMPLIANCE WITH LAW. Except as set forth in
SCHEDULE 3.16, there are no claims, actions, suits or proceedings pending
against or affecting the Company, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over the Company which
either singly, or in the aggregate, if decided against the Company, would have a
material adverse effect on the Company as a whole, and no notice of any such
claim, action, suit or proceeding, including any which may be pending, has been
received by the Company, and the Stockholders is not aware of any basis
therefor. Except to the extent set forth on SCHEDULE 3.16, the Company has
conducted for the past three (3) years and does conduct its business in
compliance with all laws, regulations, writs, injunctions, decrees and orders
applicable to the Company and its assets.
SECTION 3.17 TAXES. For purposes of this Agreement, the term "Taxes"
shall mean all taxes, charges, fees, levies or other assessments including,
without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, service
use, license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States or any state, local or foreign government
or subdivision or agency thereof, whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to or imposed with respect
to any such taxes, charges, fees, levies or other assessments. The Company has
timely filed all requisite federal, state, local and other tax returns for all
fiscal periods ended on or before the date hereof, and has duly paid in full or
made adequate provision in the Financial Statements for the payment of all Taxes
for all periods ending at or prior to the date hereof. Except as set forth on
SCHEDULE 3.17, there are no examinations in progress or claims against the
Company for any period or periods prior to and including the Interim Balance
Sheet Date and no notice of any claim for Taxes, whether pending or threatened,
has been received. The amounts shown as accruals for Taxes on the financial
statements of the Company as of the Interim Balance Sheet Date are sufficient
for the payment of all Taxes for all fiscal periods ended on or before that
date. Copies of (i) any tax examinations, (ii) extensions of statutory
limitations and (iii) the federal, state and local Tax returns of the Company
for the last three fiscal years are attached hereto as SCHEDULE 3.17. The
Company currently utilizes the accrual method of accounting for income tax
purposes. Such method of accounting has not changed in the past five years.
During all tax periods ended prior to the Closing Date for which the
statute of limitations has not expired, the Company has conducted its business
in a manner which entitles it to protection under the safe harbor provisions of
Section 530(a) of the Revenue Act of 1978, which was extended indefinitely by
Section 269(c) of the Tax Equity and Fiscal Responsibility Act of 1982.
SECTION 3.18 ABSENCE OF CHANGES. Since the Interim Balance Sheet Date,
the Company has conducted its operations in the ordinary course of business and,
except as set forth on SCHEDULE 3.18, there has not been:
(i) any material adverse change in the business, operations,
properties, condition (financial or other), assets, liabilities
(contingent or otherwise), income or business of the Company;
(ii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
the Company;
(iii) any change in the authorized or outstanding capital stock
of the Company or any change in the Stockholder's ownership interests in
the Company or any grant of any options, warrants, calls, conversion
rights or commitments;
(iv) any declaration or payment of any dividend or distribution
in respect of the capital stock or any direct or indirect redemption,
purchase or other acquisition of any of the capital stock of the
Company;
(v) any increase in the compensation payable or to become
payable by the Company to the Stockholder or to the Company's officers,
directors, employees, consultants or agents, except for ordinary and
customary bonuses and salary increases for employees in accordance with
past practice;
(vi) any work interruptions, labor grievances or claims filed,
or any proposed law, regulation or event or condition of any character
materially adversely affecting the business or future prospects of the
Company;
(vii) any sale or transfer, or any agreement to sell or
transfer, any material assets, properties or rights of the Company to
any person, including, without limitation, the Stockholder or his
affiliates;
(viii)any cancellation, or agreement to cancel, any indebtedness
or other obligation owing to the Company;
(ix) any increase in the Company's indebtedness, other than
accounts payable incurred in the ordinary course of business;
(x) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets,
property or rights of the Company or requiring consent of any party to
the transfer and assignment of any such assets, property or rights;
(xi) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets
outside of the ordinary course of the Company's business;
(xii) any waiver of any material rights or claims of the
Company;
(xiii)any breach, amendment or termination of any material
contract, agreement, license, permit or other right to which the Company
is a party; or
(xiv) any transaction by the Company outside the ordinary course
of business.
SECTION 3.19 ACCOUNTS WITH BANKS AND BROKERAGES; POWERS OF ATTORNEY.
SCHEDULE 3.19 sets forth an accurate Schedule as of the Closing Date, of (i) the
name of each financial institution or brokerage firm in which the Company has
accounts or safe deposit boxes; (ii) the names in which the accounts or boxes
are held; (iii) the type of account and the cash, cash equivalents and
securities held in such account; and (iv) the name of each person authorized to
draw thereon or have access thereto. SCHEDULE 3.19 also sets forth the name of
each person, corporation, firm or other entity holding a general or special
power of attorney from the Company and a description of the terms thereof.
SECTION 3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES. Except for political
contributions made in a lawful manner, the Company has not given or offered to
give anything of value to any governmental official, political party or
candidate for government office nor has it otherwise taken any action which
would constitute a violation of the Foreign Corrupt Practices Act of 1977, as
amended, or any similar law.
SECTION 3.21 COMPETING LINES OF BUSINESS; RELATED-PARTY TRANSACTIONS.
Except as set forth in SCHEDULE 3.21, neither the Stockholders nor any other
affiliate of the Company owns, directly or indirectly, any interest in, or is an
officer, director, employee or consultant of or otherwise receives remuneration
from, any business which is a competitor, lessor, lessee, customer or supplier
of the Company. Except as set forth in SCHEDULE 3.21, no officer, director or
stockholder of the Company has nor, during the period beginning January 1, 1990
through the date hereof, had any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the Company's business. As of
the date of this Agreement, any indebtedness owed to the Company by the
Stockholder and/or affiliates of the Stockholder has been repaid, and all
indebtedness owed to the Stockholder and/or affiliates of the Stockholder by the
Company has been repaid.
SECTION 3.22 INTANGIBLE PROPERTY. SCHEDULE 3.22 sets forth an accurate
list of all patents, patent applications, trademarks, service marks, trade
names, copyrights, and other intellectual property or proprietary property
rights owned or used by the Company. Except as described on SCHEDULE 3.22, the
Company owns or possesses sufficient legal rights to use all of such items and
no notice of any challenge to the Company's rights by a third party has been
received.
SECTION 3.23 DISCLOSURE. The Stockholders has fully provided Coach or
its representatives with all the information that Coach has requested in
analyzing whether to consummate the transactions contemplated hereby. None of
the information so provided nor any representation or warranty of the
Stockholder contained in this Agreement contains any misstatement of a material
fact or omits to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Stockholder which has specific
application to the Company (other than general economic or industry conditions)
and which the Stockholder reasonably believes may materially adversely affect
or, so far as the Stockholder can reasonably foresee, materially threatens, the
assets, business, condition (financial or otherwise), results of operations or
prospects of the Company which has not been described in this Agreement or the
Schedules hereto or otherwise disclosed in writing to Coach.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COACH
Coach represents and warrants to the Stockholder as follows:
SECTION 4.1 ORGANIZATION. Coach is duly organized, validly existing and
in good standing under the laws of the state of its incorporation, and is duly
authorized and qualified under all applicable laws, regulations, and ordinances
of public authorities to carry on its business in the places and in the manner
now conducted except where the failure to be so authorized or qualified would
not have a material adverse effect on its business.
SECTION 4.2 AUTHORIZATION; NON-CONTRAVENTION; APPROVALS. Coach has the
full legal right, power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement have been approved by the board of directors of
Coach. No additional corporate proceedings on the part of Coach are necessary to
authorize the execution and delivery of this Agreement and the consummation by
Coach of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Coach and, assuming the due authorization,
execution and delivery by the Company and the Stockholder, constitutes a valid
and binding agreement of Coach, enforceable against Coach in accordance with its
terms. The execution and delivery of this Agreement by Coach do not, and the
consummation by Coach of the transactions contemplated hereby will not, violate,
conflict with or result in a breach of any provision of, or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration under, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Coach or any of its subsidiaries under
any of the terms, conditions or provisions of (i) the Restated Certificate of
Incorporation or By-Laws of Coach, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to Coach or any of its properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Coach is now a party or by which Coach or any
of its properties or assets may be bound or affected, excluding from the
foregoing clauses (ii) and (iii) such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances that would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Coach except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights.
Except for any required filings with or approvals from the STB and state
and local transportation authorities and such filings as may be required under
federal or state securities laws, no declaration, filing or registration with,
or notice to, or authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and delivery of this
Agreement by Coach or the consummation by Coach of the transactions contemplated
hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as the
case may be, would not, in the aggregate, have a material adverse effect on the
business, operations, properties, assets, condition (financial or other),
results of operations or prospects of Coach.
SECTION 4.3 CAPITALIZATION. The authorized capital stock of Coach
consists of 30,000,000 shares of common stock, par value $.01 per share, of
which 11,405,411 shares were issued and outstanding as of August 28, 1996, and
500,000 shares of preferred stock, par value $.01 per share, of which none is
currently outstanding. All of the currently issued and outstanding shares of
common stock of Coach have been duly authorized and validly issued, are fully
paid and nonassessable, and were offered, issued, sold and delivered by Coach in
compliance with all applicable state and federal laws concerning the issuance of
securities. None of such shares was issued in violation of the preemptive rights
of any past or present stockholder. The shares of Coach Common Stock to be
issued to the Stockholder, if and when issued in accordance with the terms of
the Notes, will be duly authorized, validly issued, fully paid and
nonassessable. The shares of Coach Common Stock if and when issued in accordance
with the terms of the Notes will transfer to the Stockholder valid title to such
shares of Coach Common Stock, free and clear of all liens, encumbrances and
claims of every kind except for any created by the Stockholder.
SECTION 4.4 SEC FILINGS; DISCLOSURE. Coach has filed with the U.S.
Securities and Exchange Commission ("SEC") all material forms, statements,
reports and documents required to be filed by it under each of the Securities
Act of 1933, as amended (the "1933 Act"), the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and the respective rules and regulations
thereunder, all of which, as amended, if applicable, complied in all material
respects with all applicable requirements of the appropriate Act and the rules
and regulations thereunder. Coach has previously delivered to the Stockholder
copies of the Prospectus, dated July 16, 1996 (the "Prospectus"), contained in
Coach's Registration Statement on Form S-1 filed under Rule 415 of the 1933 Act,
as supplemented and its Form 10-Q for the period ended June 30, 1996. As of its
date, the Prospectus did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 4.5 INVESTMENT REPRESENTATIONS.
(i) Coach is acquiring the Shares for its own account and for
purposes of investment and without expectation, desire, or need for
resale and not with the view toward distribution, resale or subdivision
of the Shares.
(ii) During the course of the negotiation of this Agreement, Coach
has reviewed all information provided to it by the Stockholder and the
Company and has had the opportunity to ask questions of and receive
answers from representatives of the Company and the Stockholder
concerning the Company, the securities offered and sold hereby, and this
purchase, and to obtain certain additional information requested by
Coach.
(iii) Coach understands and acknowledges that the Shares to be
purchased have not been registered under the 1933 Act, or any state
securities law.
(iv) Coach understands that the Shares cannot be resold in a
transaction to which the 1933 Act and state securities laws apply unless
(a) subsequently registered under the 1933 1933 Act and applicable state
securities laws or (b) exemptions from such registrations are available.
Coach is aware of the provisions of Rule 144 promulgated under the 1933
Act which permit limited resale of Shares purchased in a private
transaction subject to the satisfaction of certain conditions.
(v) Coach understands that no public market now exists for the Shares
and that it is uncertain that a public market will ever exist for the
Shares.
(vi) Coach understands that the certificates for the Shares will bear
the following legend:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THE CORPORATION WILL NOT TRANSFER THIS CERTIFICATE
UNLESS (A) THERE IS AN EFFECTIVE REGISTRATION COVERING THE
SHARES REPRESENTED BY THIS CERTIFICATE UNDER THE SECURITIES ACT
OF 1933 AND ALL APPLICABLE STATE SECURITIES LAWS, (B) IT FIRST
RECEIVES A LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE BOARD OF
DIRECTORS OR ITS AGENTS, STATING THAT IN THE OPINION OF THE
ATTORNEY THE PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933 AND UNDER ALL APPLICABLE STATE
SECURITIES LAWS, OR (C) THE TRANSFER IS MADE PURSUANT TO RULE
144 UNDER THE SECURITIES ACT OF 1933.
SECTION 4.6 NO VIOLATIONS. Coach is not in violation of its Restated
Certificate of Incorporation or Bylaws. Coach, or to the knowledge of Coach, any
party thereto, is in default under any lease, instrument, agreement, license or
permit to which Coach is a party or by which Coach or any of its respective
properties are bound; and (a) the rights and benefits of Coach under any such
lease, instrument, agreement, license or permit will not be adversely affected
by the transactions contemplated hereby; and (b) the execution of this Agreement
and the performance of the obligations hereunder and the consummation of the
transactions contemplated hereby will
not result in any material violation or breach of constitute a default under,
any such lease, instrument, agreement, license or permit or the Restated
Certificate of Incorporation or Bylaws of Coach. Except as set forth on Schedule
4.6, the execution delivery of this Agreement does not require nor does any such
lease instrument, agreement, license or permit require notice to or the consent
or approval of, any governmental agency or third party with respect to any of
the transactions contemplated hereby in order to remain in full force and effect
and consummation of the transactions contemplated hereby will not give rise to
any right to termination, cancellation or acceleration or lose any right or
benefit.
SECTION 4.7 COACH INVESTIGATION. Based upon Coach's review of the
Schedules attached hereto and its own due diligence of the Company, as of the
date hereof, and as of the Closing Date, nothing has come to the attention of
Coach that could give rise to a claim against the Stockholder for a breach of a
representation or warranty made in this Agreement or any other document or
agreement executed or delivered in connection herewith.
ARTICLE V
POST-CLOSING COVENANTS
SECTION 5.1 REPAYMENT OF INDEBTEDNESS AND RELEASE FROM GUARANTEES. The
Stockholder agrees to assist Coach in obtaining the necessary payoff letters and
wiring instructions to facilitate paying off all debts and obtaining the release
of all personal guarantees of the Stockholder for the debts identified on
SCHEDULE 5.1. If Coach has not already paid off such debts, in the event that
Coach cannot obtain releases of any such guarantees on or prior to one hundred
and twenty (120) days subsequent to the Closing, Coach shall either indemnify
the Stockholder with respect to his obligations under such debts, or pay off or
otherwise refinance or retire the indebtedness related to guarantees and cause
such guarantees to be terminated. In any event, after Closing and prior to such
date, Coach shall indemnify the Stockholder with respect to the payment of such
debts identified on SCHEDULE 5.1.
SECTION 5.2 REPAYMENT OF STOCKHOLDER AND AFFILIATE INDEBTEDNESS; RELEASE
OF CERTAIN OBLIGATIONS. Concurrently with the Closing Date, the Stockholder
shall repay all loans from the Company to the Stockholder, if any.
SECTION 5.3 FUTURE COOPERATION. The Stockholder and Coach shall each
deliver or cause to be delivered to the other following the Closing Date such
additional instruments as the other may reasonably request for the purpose of
fully carrying out this Agreement. The Stockholder will cooperate and use his
reasonable best efforts to have the present officers, directors and employees of
the Company cooperate with Coach before and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
actions, proceedings, arrangements or disputes of any nature with respect to
matters pertaining to all periods prior to the Closing Date.
SECTION 5.4 EXPENSES. Coach will pay the fees, expenses and
disbursements of Coach and its agents, representatives, accountants and counsel
incurred in connection with the execution, delivery and performance of this
Agreement and any amendments thereto, including but not limited to the brokerage
fee set out in Section 10.4. The Company will pay the reasonable fees, expenses
and disbursements of the Stockholder and his respective agents, representatives,
financial advisors and counsel incurred in connection with the execution,
delivery and performance of this Agreement and any amendments hereto. The
Company will pay the auditing costs of Arthur Andersen LLP incurred to produce
the financial statements required by Section 3.5.
SECTION 5.5 DTPA WAIVER. IN CONSIDERATION OF THE STOCKHOLDER ENTERING
INTO THIS AGREEMENT, COACH HEREBY WAIVES AND RELEASES ALL OF COACH'S RIGHTS AND
REMEDIES UNDER THE DECEPTIVE TRADE PRACTICES ACT - CONSUMER PROTECTION ACT,
SECTION 17.41 ET SEQ, OF SUBCHAPTER E OF CHAPTER 17 OF THE TEXAS BUSINESS AND
COMMERCE CODE (HEREINAFTER REFERRED TO AS THE "DTPA", IF ANY, INCLUDING WITHOUT
LIMITATION, ALL RIGHTS AND REMEDIES RESULTING FROM ARISING OUT OF OR ASSOCIATED
WITH ANY AND ALL ACTS AND PRACTICES OF THE STOCKHOLDER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, WHETHER SUCH ACTS OR PRACTICES
OCCUR BEFORE OR AFTER THE EXECUTION OF THIS AGREEMENT. THE DTPA PROVIDES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. SUCH WAIVERS HAVE BEEN MADE
VOLUNTARILY BY COACH ONLY AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION. COACH FURTHER UNDERSTANDS THAT COACH'S RIGHTS AND REMEDIES WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND WITH RESPECT TO
ALL ACTS OR TRANSACTIONS SHALL BE GOVERNED BY LEGAL PRINCIPALS OTHER THAN DTPA;
PROVIDED, HOWEVER, THAT COACH DOES NOT WAIVE SUBCHAPTER 17.555 OF THE DTPA. IN
CONNECTION WITH THIS WAIVER, COACH ACKNOWLEDGES, REPRESENTS, AND WARRANTS THAT
IT HAS ASSETS OF $25,000,000 OR MORE, CALCULATED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPALS. IT HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND
BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF TRANSACTIONS
SUCH AS THOSE CONTEMPLATED BY THIS AGREEMENT AND THAT IT IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH THE STOCKHOLDER.
SECTION 5.6 OPERATION OF THE BUSINESS OF THE COMPANY AND SUBSIDIARIES.
Between the date of this Agreement and the date the escrow is terminated, the
Stockholder will, and will cause the Company and its subsidiaries, if any, to:
(a) conduct the business of such Company and its subsidiaries, if any,
only in the ordinary course of business;
(b) use their best efforts to preserve intact the current business
organization of such Company and its subsidiaries, if any, keep available the
services of the current officers, employees, and agents of such Company and its
subsidiaries, if any, and maintain the relations and good will with suppliers,
customers, landlords, creditors, employees, agents, and others having business
relationships with such Company and its subsidiaries, if any;
(c) confer with Coach concerning operational matters of a material
nature;
(d) otherwise report periodically to Coach concerning the status of the
business operations, and finances of the Company; and
(e) except as otherwise expressly permitted by this Agreement, between
the date of this Agreement and the date the escrow is terminated, the
Stockholder will not, and will cause the Company and its subsidiaries, if any,
not to, without the prior consent of Coach, take any affirmative action, or fail
to take any reasonable action within their or its control, as a result of which
any of the changes or events listed in Section 3.18 is likely to occur.
SECTION 5.7 REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, the Stockholder will, and will cause each Company and
its subsidiaries, if any, to make all filings or post-Closing undertakings
required or requested to be made by them in order to consummate this Agreement
and the transactions contemplated herein. The Stockholder will, and will cause
the Company and its subsidiaries, if any, to, (a) cooperate with Coach with
respect to all filings that Coach elects to make or is required to make in
connection with this Agreement and the transactions contemplated herein, and (b)
cooperate with Coach in obtaining all consents requested by Coach, including,
but not limited to, those identified in Sections or SCHEDULEs 3.2, 3.10 and 5.1,
and taking all actions requested by Coach to cause early completion of any
applicable approval period before the STB, state or local authority. All actual
additional costs associated with such assistance shall be borne by Coach.
SECTION 5.8 SECTION 338(H)(10) ELECTION. At Coach's option, the
Stockholder agrees to join with Coach in making a timely election on Form 8023
under Sections 338(g) and 338(h)(10) of the Code (and any corresponding
elections under state local or foreign law)(collectively a "Section 338(h)(10)
Election") with respect to the purchase and sale of the stock of the Company
hereunder. The Stockholder will pay any tax attributable to the making of the
Section 338(h)(10) Election and will indemnify Coach and the Company against any
adverse consequences arising out of any failure to pay such tax.
ARTICLE VI
INDEMNIFICATION
The Stockholder and Coach each make the following covenants:
SECTION 6.1 GENERAL INDEMNIFICATION BY THE STOCKHOLDER AND KAISER. The
Stockholder and Kaiser each covenants and agrees that he will indemnify, defend,
protect and hold harmless Coach and the Company, and their respective officers,
directors, employees, stockholders, agents, representatives and affiliates
(collectively, the "Coach Indemnitees"), at all times from and after the date of
this Agreement until the Expiration Date (as defined in Section 10.7) from and
against all claims, damages, actions, suits, proceedings, demands, assessments,
adjustments, costs and expenses (including specifically, but without limitation,
reasonable attorneys' fees and expenses of investigation) incurred by any of the
Coach Indemnitees as a result of or arising from (i) any breach of the
representations and warranties of the Stockholder set forth in this Agreement or
other documents or agreements delivered in connection with it, or (ii) any
breach or nonfulfillment of any covenant or agreement on the part of the
Stockholder or the Company under this Agreement or other documents or agreements
delivered in connection with it; PROVIDED THAT such indemnification shall not
apply to any consequential, punitive or exemplary damages.
SECTION 6.2 INDEMNIFICATION BY COACH. Coach covenants and agrees that it
will indemnify, defend, protect and hold harmless the Stockholder and his
agents, representatives and affiliates (collectively, the "Stockholder
Indemnitees") at all times from and after the date of this Agreement until the
Expiration Date from and against all claims, damages, actions, suits, proceed
ings, demands, assessments, adjustments, costs and expenses (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) incurred by any of the Stockholder Indemnitees as a result of or
arising from (i) any breach of the representations and warranties of Coach in
this Agreement or other documents delivered in connection with it, or (ii) any
breach or nonfulfillment of any covenant or agreement on the part of Coach under
this Agreement or other documents or agreement delivered in connection with it;
provided that such indemnification shall not apply to any consequential,
punitive or exemplary damages.
SECTION 6.3 THIRD PERSON CLAIMS. Promptly after any party hereto
(hereinafter the "Indemnified Party") has received notice of or has knowledge of
any claim by a person not a party to this Agreement ("Third Person"), of the
commencement of any action or proceeding by a Third Person, the Indemnified
Party shall give to the party obligated to provide indemnification pursuant to
Section 6.1 or 6.2 hereof (hereinafter the "Indemnifying Party") written notice
of such claim or the commencement of such action or proceeding. Such notice
shall state the nature and the basis of such claim and a reasonable estimate of
the amount thereof. The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel, any such matter so long as
the Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in the defense thereof and
in any settlement thereof. Such cooperation shall include, but shall not be
limited to, furnishing the Indemnifying Party with any books, records and other
information reasonably requested by the Indemnifying Party and in the
Indemnified Party's possession or control. All Indemnified Parties shall use the
same counsel, which shall be the counsel selected by Indemnifying Party,
PROVIDED that if counsel to the Indemnifying Party shall have a conflict of
interest that prevents such counsel from representing the Indemnified Party, the
Indemnified Party shall have the right to participate in such matter through
counsel of its own choosing and the Indemnifying Party will reimburse the
Indemnified Party for the expenses of its counsel. After the Indemnifying Party
has notified the Indemnified Party of its intention to undertake to defend or
settle any such asserted liability, and for so long as the Indemnifying Party
diligently pursues such defense, the Indemnifying Party shall not be liable for
any additional legal expenses incurred by the Indemnified Party in connection
with any defense or settlement of such asserted liability. If the Indemnifying
Party desires to accept a final and complete settlement of any such Third Person
claim and the Indemnified Party refuses to consent to such settlement, then the
Indemnifying Party's liability under this Section with respect to such Third
Person claim shall be limited to the amount so offered in settlement by said
Third Person and the Indemnified Party shall reimburse the Indemnifying Party
for any additional costs of defense which it subsequently incurs with respect to
such claim and all additional costs of settlement or judgment. If the
Indemnifying Party does not undertake to defend such matter to which the
Indemnified Party is entitled to indemnification hereunder, or fails diligently
to pursue such defense, the Indemnified Party may undertake such defense through
counsel of its choice, at the cost and expense of the Indemnifying Party, and
the Indemnified Party may settle such matter, and the Indemnifying Party shall
reimburse the Indemnified Party for the amount paid in such settlement and any
other liabilities or expenses incurred by the Indemnified Party in connection
therewith, provided, HOWEVER, that under no circumstances shall the Indemnified
Party settle any Third Person claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld.
SECTION 6.4 LIMITATION UPON INDEMNITY.
(i) Coach shall be entitled to indemnification from the Stockholder
under the provisions of this Article VI for all claims subject to
indemnification by such party, but only after the amount of such claims exceeds,
in the aggregate, One Hundred Seventy-Five Thousand Dollars ($175,000).
(ii) The indemnification obligations of the Stockholder under this
Article VI shall be limited, in the aggregate, to $19,500,000 less any amounts
paid by Kaiser or Scott Keller to Coach pursuant to their indemnification
obligations under that certain Stock Purchase Agreement of even date herwith
among Kaiser, Scott Keller, California Charter, Inc. and Coach. Any payments for
indemnification owed by the Stockholder to a Coach Indemnitee may, at the
election of the Stockholder, be satisfied by, to the extent available, a
corresponding reduction of the outstanding balance on the Notes.
ARTICLE VII
NONCOMPETITION COVENANTS
SECTION 7.1 PROHIBITED ACTIVITIES. Except for Fred Kaiser, who shall be
allowed to continue to operate other other motor coach services businesses in
all states except Nevada and California, on the Closing Date, the Stockholder
will not, for a period of five (5) years following the Closing Date, directly or
indirectly, for himself or on behalf of or in conjunction with any other person,
company, partnership, corporation or business of whatever nature, unless
approved in writing in advance by Coach:
(i) engage, as an officer, director, stockholder, owner,
partner, joint venturer or in a managerial or advisory capacity, whether
as an employee, independent contractor, consultant or advisor, or as a
sales representative, in any business offering any services or products
in direct competition with Coach or any of its subsidiaries within 100
miles of where Coach or any of its subsidiaries conducts business,
including any territory serviced by Coach or any of such subsidiaries
(the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of Coach or any of its subsidiaries for the
purpose or with the intent of enticing such employee away from or out of
the employ of Coach or any of its subsidiaries; or
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of
Coach or any of its subsidiaries within the Territory for the purpose of
soliciting or selling services or products in direct competition with
Coach or any of its subsidiaries within the Territory. Notwithstanding
the above, the foregoing covenant shall not be deemed to prohibit the
Stockholder from acquiring, as a passive investor with no involvement in
the operations of the business, not more than one percent (1%) of the
capital stock of the Company or another motorcoach services business
whose stock is publicly traded on a national securities exchange or
over-the-counter.
SECTION 7.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses to Coach as a result of a breach of the foregoing covenant, and
because of the immediate and irreparable damage that could be caused to Coach
for which it would have no other adequate remedy, the Stockholder agrees that
the foregoing covenant may be enforced by Coach by injunctions, restraining
orders and other equitable actions.
SECTION 7.3 REASONABLE RESTRAINT. It is agreed by the parties hereto
that the foregoing covenants in this Article VII impose a reasonable restraint
on the Stockholder in light of the activities and business of Coach on the date
of the execution of this Agreement and the current plans of Coach; but it is
also the intent of Coach and the Stockholder that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of Coach and its subsidiaries engaged in providing motorcoach charter, tour,
sightseeing and municipal commuter and transit motorcoach services throughout
the term of this covenant. During the term of this covenant, if Coach or one of
its subsidiaries engages in new and different activities, enters a new business
or establishes new locations for its current activities or business in addition
to or other than the activities or business it is currently conducting in the
locations currently established therefor, then, provided the Stockholder were
not first competing in such geographical areas, and were not otherwise
prohibited from competing with Coach, the Stockholder will be precluded from
soliciting the customers or employees of such new activities or business or from
such new location and from directly competing with such new activities or
business within 100 miles of its then-established operating location(s) through
the term of this covenant.
SECTION 7.4 SEVERABILITY; REFORMATION. The covenants in this Article VII
are severable and separate, and the unenforceability of any specific covenant
shall not affect the continuing validity and enforceability of any other
covenant. In the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth in this Article VII are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable and this
Agreement shall thereby be reformed.
SECTION 7.5 MATERIAL AND INDEPENDENT COVENANT. The Stockholder
acknowledges that their agreement with the covenants set forth in this Article
VII are material conditions to Coach's agreement to EXECUTE and deliver this
Agreement and to consummate the transactions contemplated hereby. All of the
covenants in this Article VII shall be construed as an agreement independent of
any other provision in this Agreement, and the existence of any claim or cause
of action of the Stockholder against Coach or one of its subsidiaries, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Coach of such covenants. It is specifically agreed that the
period of five (5) years during which the agreements and covenants of the
Stockholder made in this Article VII shall be effective shall be computed by
excluding from such computation any time during which such Stockholder is in
violation of any provision of this Article VII. The covenants contained in this
Article VII shall not be affected by any breach of any other provision hereof by
any party hereto.
ARTICLE VIII
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
SECTION 8.1 GENERAL. The Stockholder recognize and acknowledge that they
had in the past, currently have, and in the future will have, access to certain
confidential information of the Company and/or Coach, such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Company and/or Coach. The Stockholder
agrees that they will not disclose such confidential information to any person,
firm, corporation, association or other entity for any purpose whatsoever,
except as is required in the course of performing their duties to the Company
and/or Coach, unless (i) such information becomes known to the public generally
through no fault of the Stockholder, or (ii) disclosure is required by law or
the order of any governmental authority, provided, that prior to disclosing any
information pursuant to this clause (ii) the Stockholder shall, if possible,
give prior written notice thereof to Coach and provide Coach with the
opportunity to contest such disclosure. In the event of a breach or threatened
breach by the Stockholder of the provisions of this Section, Coach shall be
entitled to an injunction restraining the Stockholder from disclosing, in whole
or in part, such confidential information. Nothing herein shall be construed as
prohibiting Coach from pursuing any other available remedy for such breach or
threatened breach, including the recovery of damages.
SECTION 8.2 EQUITABLE RELIEF. Because of the difficulty of measuring
economic losses as a result of the breach of the foregoing covenants, and
because of the immediate and irreparable damage that would be caused for which
the Company and/or Coach would have no other adequate remedy, the Stockholder
agrees that the foregoing covenants may be enforced against them by injunctions,
restraining orders and other equitable actions.
ARTICLE IX
FEDERAL SECURITIES ACT AND CONTRACTUAL RESTRICTIONS
ON COACH SECURITIES
SECTION 9.1 COMPLIANCE WITH LAW. The Stockholder acknowledges that the
Note to be delivered to the Stockholder pursuant to this Agreement has not been
and will not be registered under the 1933 Act and therefore may not be resold
without compliance with the 1933 Act. The Note is being acquired by the
Stockholder solely for their own account, for investment purposes only, and with
no present intention of distributing, selling or otherwise disposing of them in
connection with a distribution. The Stockholder covenants, warrants and
represents that the Note will not be offered, sold, assigned, pledged,
hypothecated, transferred or otherwise disposed of except after full compliance
with all of the applicable provisions of the Act and the rules and regulations
of the SEC, and, during the two years following the date of this Agreement, the
Stockholder shall not engage in put, call, short-sale, straddle or similar
transactions intended to reduce the Stockholder's risk of owning the Note. The
Note shall bear the following legend:
THE SECURITIES REPRESENTED HEREBY WERE NOT ISSUED IN A TRANSACTION
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES
ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD
OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS COVERED BY AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS OR, IN THE OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
SECTION 9.2 ECONOMIC RISK; SOPHISTICATION. The Stockholder is able to
bear the economic risk of an investment in the Note acquired pursuant to this
Agreement, can afford to sustain a total loss of such investment and has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and risks of the proposed investment and therefore has the
capacity to protect his own interests in connection with his acquisition of the
Note. As of the date of this Agreement, the Stockholder is an "accredited
investor," as that term is defined in Regulation D under the 1933 Act. The
Stockholder or his representatives have had an adequate opportunity to ask
questions and receive answers from the officers of Coach concerning, among other
matters, Coach, its management and its plans for the operation of its business.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 SUCCESSORS AND ASSIGNS. This Agreement and the rights of
the parties hereunder may not be assigned (except by operation of law) and shall
be binding upon and shall inure to the benefit of the parties hereto, the
successors of Coach and the Company, and the heirs and legal representatives of
the Stockholder.
SECTION 10.2 ENTIRE AGREEMENT. This Agreement, the Notes, the Escrow
Agreement, and the Master General Agreement (including the Schedules and any
Exhibits and annexes attached thereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among the Stockholder,
the Company and Coach relating to the subject matter of this Agreement and
supersede any prior agreement and understanding relating to the subject matter
of this Agreement including but not limited to the Letter of Intent. Reference
to this Agreement incorporates by reference all Exhibits and Schedules thereto.
This Agreement may be modified or amended only by a written instrument executed
by the Stockholder and the Company and Coach, acting through their respective
officers, duly authorized by their respective Boards of Directors.
SECTION 10.3 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument.
SECTION 10.4 BROKERS AND AGENTS. Each party agrees to indemnify the
other against any and all losses, costs, damages or expenses arising out of
claims for fees or commissions of brokers employed or alleged to have been
employed by such indemnifying party. The parties acknowledge and agree that
Coach has retained First Continental Advisers, Inc. as broker pursuant to that
certain Agreement, dated May 20, 1996, attached hereto as SCHEDULE 10.4 and
Coach shall be solely responsible for the payment of all costs arising therefrom
in accordance with the terms of Section 5.4 above.
SECTION 10.5 NOTICES. All notices and communications required or
permitted hereunder shall be in writing and may be given to the party to be
notified (i) by depositing the same in the United States mail, proper postage
prepaid and registered or certified with return receipt requested, (ii) by
delivery through an express courier or delivery service with receipt requested,
or (iii) by delivering the same in person or to a senior officer of such party
in a corporation, as follows:
(A) If to Coach, addressed to it at:
One Riverway, Suite 600
Houston, Texas 77056-1903
Attn: Law Department
(B) If to Kaiser, addressed to him at:
819 Water Street, Suite 320
Kerrville, Texas 78028
With copies to:
Brown, Parker & Leahy, LLP
1200 Smith Street, Suite 3600
Houston, Texas 77002-4592
Attn: Timothy R. Brown, Esq.
(C) If to Kerrville, addressed to it at:
P.O. Box 712
Kerrville, Texas 78029
(D) If to the Company, addressed to it at:
4020 E. Lone Mountain Road
Las Vegas, Nevada 89030
or to such other address or counsel as any party hereto shall specify pursuant
to this Section 10.5 from time to time. Failure to correct or provide an
accurate address, or to accept delivery of a notice, will not thwart the purpose
of this notice section. Notice given shall be deemed received when (i) if given
by deposit in the United States mail, registered or return receipt requested
with proper postage prepaid, five (5) days after its deposit in the United
States mail; (ii) if given by express courier or delivery service, on the date
stated on the courier's documents specifying the actual delivery date; or (iii)
if by personal delivery to such person or, a senior officer of a corporation if
the party is a corporation, upon actual receipt.
SECTION 10.6 GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas (except for its principles
governing conflicts of laws).
SECTION 10.7 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Articles III and IV shall survive
the Closing for a period of twelve (12) months from the Closing Date (which date
is hereinafter called the "Expiration Date"), except that all warranties and
representations set forth in Section 3.17 hereof shall survive through such date
or until such time as the limitations period has run for all tax periods ended
prior to the Closing Date, which shall be deemed to be the Expiration Date for
Section 3.17.
SECTION 10.8 CLOSING OBLIGATIONS. At the Closing:
(a) Stockholder will deliver to Coach:
(i) Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), with signatures guaranteed
by a commercial bank or by a member firm of the New York Stock Exchange,
for transfer to Coach;
(ii) a certificate executed by the Company and the Stockholder to
the effect that, except as otherwise stated in such certificate, each of
Stockholder's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and is
accurate in all respects as of the Closing Date as if made on the
Closing Date;and
(iii) such additional agreements or letters, in duly executed
form, as mutually agreeable among the parties, including but not limited
to a resignation from the Company by each of its officers and directors,
and the Master General Agreement attached hereto as
EXHIBIT 10.8(III)("Master General Agreement").
(b) Coach will deliver to Stockholder:
(i) the amounts by wire transfer to accounts specified in
Section 1.2;
(ii) the Note(s);
(iii) such additional agreements or letters, in duly executed
form, as mutually agreeable among the parties, including but not limited
to the Master General Agreement attached hereto as EXHIBIT 10.8(A)(III)
and;
(iv) a certificate executed by Coach to the effect that, except
as otherwise stated in such certificate, each of Coach's representations
and warranties in this Agreement was accurate in all respects as of the
date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date.
(c) Coach and Stockholder will enter into an escrow agreement in the
form of EXHIBIT 10.8(C) (the "Escrow Agreement") pursuant to which Burnside &
Rishebarger, LLC shall hold all documents and considerations associated with
this Agreement.
SECTION 10.9 CONDITIONS PRECEDENT TO COACH'S OBLIGATION TO CLOSE.
Coach's obligation to purchase the Shares and to take the other actions required
to be taken by Coach at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Coach, in whole or in part):
(a) ACCURACY OF REPRESENTATIONS. Each of Stockholder's representations
and warranties must have been accurate in all respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date.
(b) STOCKHOLDER'S PERFORMANCE.
(i) All of the covenants and obligations that Stockholder is
required to perform or to comply with pursuant to this Agreement at or
prior to the Closing (considered collectively), and each of these
covenants and obligations (considered individually), must have been duly
performed and complied with in all material respects (or unless waived
by Coach which shall make them subject to completion post-Closing by the
Stockholder).
(ii) Each document required to be delivered pursuant to Section
10.8 must have been delivered, and each of the other covenants and
obligations in this Agreement must have been performed and complied with
in all respects.
(c) NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or threatened in writing against Coach, or against any
person affiliated with Coach, any proceeding (i) involving any challenge to, or
seeking damages or other relief in connection with, this Agreement or any of the
transactions contemplated herein, or (ii) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
transactions contemplated herein.
(d) NO PROHIBITION. Neither the consummation nor the performance of this
Agreement or any of the transactions contemplated herein will, directly or
indirectly (with or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause Coach or any
person affiliated with Coach to suffer any material adverse consequence under,
(i) any applicable legal requirement or order, or (ii) any legal requirement or
order that has been published, introduced, or otherwise proposed by or before
any governmental body.
SECTION 10.10 CONDITIONS PRECEDENT TO STOCKHOLDER'S OBLIGATION TO CLOSE.
Stockholder's obligation to sell the Shares and to take the other actions
required to be taken by Stockholder at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Stockholder, in whole or in part):
(a) ACCURACY OF REPRESENTATIONS. All of Coach's representations and
warranties in this Agreement must have been accurate as of the date of this
Agreement and must be accurate as of the Closing Date.
(b) COACH'S PERFORMANCE.
(i) All of the covenants and obligations that Coach is required to
perform or to comply with pursuant to this Agreement at or prior to the
Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and
complied with in all material respects or waived by the Stockholder, or
unless waived by the Stockholder, which shall make them subject to post-
Closing completion by Coach.
(ii) Coach must have delivered each of the documents required to
be delivered by Coach pursuant to Section 10.8, including but not
limited to the Note(s) [, and must have made the cash payments required
to be made by Coach pursuant to Section 10.8]. (c) CONSENTS. Each of the
Consents identified in Sections and SCHEDULEs 3.2, 3.10 and 5.1 of this
Agreement, including but not limited to approval by the STB and all
state and local transportation authorities, must have been obtained and
must be in full force and effect (or unless waived by the Stockholder,
which shall make them subject to completion post-Closing by both
parties).
(d) NO PROCEEDINGS. Since the date of this Agreement, there must not
have been commenced or threatened in writing against the Stockholder, or
against any person affiliated with the Stockholder, any proceeding (i)
involving any challenge to, or seeking damages or other relief in connection
with, this Agreement or any of the transactions contemplated herein, or (ii)
that may have the effect of preventing, delaying, making illegal, or otherwise
interfering with any of the transactions contemplated herein.
(e) NO PROHIBITION. Neither the consummation nor the performance of this
Agreement or any of the transactions contemplated herein will, directly or
indirectly (with or without notice or lapse of time), materially contravene, or
conflict with, or result in a material violation of, or cause the Stockholder
or any person affiliated with the Stockholder to suffer any material adverse
consequence under, (i) any applicable legal requirement or order, or (ii) any
legal requirement or order that has been published, introduced, or otherwise
proposed by or before any governmental body.
SECTION 10.11 TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
(i) by either Coach or Stockholder if a material breach of any provision
of this Agreement has been committed by the other party and such breach has not
been waived;
(ii) (a) by Coach if any of the conditions in Section 10.9 has not been
satisfied as of the Closing Date or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Coach to comply with its
obligations under this Agreement) and Coach has not waived such condition on or
before the Closing Date; or (b) by Stockholder, if any of the conditions in
Section 10.10 has not been satisfied as of the Closing Date or if satisfaction
of such a condition is or becomes impossible (other than through the failure of
Stockholder to comply with his obligations under this Agreement) and
Stockholder has not waived such condition on or before the Closing Date;
(iii) by mutual consent of Coach and Stockholder; or
(iv) by either Coach or Stockholder if the Closing has not occurred
(other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before December 31, 1996, or such later date as the parties may agree upon.
SECTION 10.12 EFFECT OF TERMINATION. Each party's right of termination
under Section 10.11 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
10.11, all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 5.4 (Expenses) and 5.8
(Confidentiality) will survive; provided, however, that if this Agreement is
terminated by a party because of the breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's failure
to comply with its obligations under this Agreement, the terminating party's
right to pursue all legal remedies will survive such termination unimpaired.
SECTION 10.13 EXERCISE OF RIGHTS AND REMEDIES. Except as otherwise
provided herein, no delay of or omission in the exercise of any right, power or
remedy accruing to any party as a result of any breach or default by any other
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed as a waiver of or acquiescence in any such breach or
default, or of any similar breach or default occurring later; nor shall any
waiver of any single breach or default be deemed a waiver of any other breach
or default occurring before or after that waiver.
SECTION 10.14 ARBITRATION. Any unresolved dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Houston,
Texas, in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to detract from,
or modify any provision hereof nor to award punitive damages to any injured
party.
SECTION 10.15 TIME. Time is of the essence with respect to this
Agreement.
SECTION 10.16 REFORMATION AND SEVERABILITY. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, it shall, to the
extent possible, be modified in such manner as to be valid, legal and
enforceable but so as to most nearly retain the intent of the parties, and if
such modification is not possible, such provision shall be severed from this
Agreement, and in either case the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COACH USA, INC. KERRVILLE BUS COMPANY, INC.
By: By:
Name: Richard H. Kristinik Name: Fred Kaiser
Title: Chief Executive Officer Title: President
K-T CONTRACT SERVICES, INC.
By:
Name:
Title:
Fred Kaiser, Individually
EXHIBIT 99.1
[Execution Version]
CREDIT AGREEMENT
Among
COACH USA, INC.
as Borrower,
THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,
and
NATIONSBANK OF TEXAS, N.A.,
as Agent for the Banks
$115,000,000
August 14, 1996
Arranged by:
NATIONSBANC CAPITAL MARKETS, INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS................................1
1.1 Certain Defined Terms...........................................1
1.2 Computation of Time Periods....................................18
1.3 Accounting Terms; Preparation of Financials....................18
1.4 Types..........................................................18
1.5 Interpretation.................................................18
ARTICLE 2. CREDIT FACILITIES..............................................19
2.1 Revolving Loan Facility........................................19
2.2 Letter of Credit Facility......................................22
2.3 Swing Line Facility............................................26
2.4 Fees...........................................................27
2.5 Interest.......................................................28
2.6 Breakage Costs.................................................31
2.7 Increased Costs................................................31
2.8 Illegality.....................................................32
2.9 Market Failure.................................................32
2.10 Payment Procedures and Computations............................33
2.11 Taxes..........................................................35
ARTICLE 3. CONDITIONS PRECEDENT...........................................36
3.1 Conditions Precedent to Initial Extensions of Credit...........36
3.2 Conditions Precedent to Each Extension of Credit...............37
ARTICLE 4. REPRESENTATIONS AND WARRANTIES.................................37
4.1 Organization...................................................37
4.2 Authorization..................................................37
4.3 Enforceability.................................................38
4.4 Absence of Conflicts and Approvals.............................38
4.5 Investment Companies...........................................38
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4.6 Public Utilities...............................................38
4.7 Financial Condition............................................38
4.8 Condition of Assets............................................39
4.9 Litigation.....................................................39
4.10 Subsidiaries...................................................39
4.11 Laws and Regulations...........................................39
4.12 Environmental Compliance.......................................40
4.13 ERISA..........................................................40
4.14 Taxes..........................................................40
4.15 True and Complete Disclosure...................................41
ARTICLE 5. COVENANTS......................................................41
5.1 Organization...................................................41
5.2 Reporting......................................................41
5.3 Inspection.....................................................43
5.4 Use of Proceeds................................................44
5.5 Financial Covenants............................................44
5.6 Debt...........................................................46
5.7 Liens..........................................................46
5.8 Other Obligations..............................................46
5.9 Corporate Transactions.........................................46
5.10 Distributions..................................................48
5.11 Transactions with Affiliates...................................48
5.12 Insurance......................................................48
5.13 Investments....................................................49
5.14 Lines of Business; Distribution................................49
5.15 Compliance with Laws...........................................49
5.16 Environmental Compliance.......................................49
5.17 ERISA Compliance...............................................50
5.18 Payment of Certain Claims......................................50
5.19 Subsidiaries...................................................50
ARTICLE 6. DEFAULT AND REMEDIES...........................................51
6.1 Events of Default..............................................51
6.2 Termination of Commitments.....................................52
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6.3 Acceleration of Credit Obligations.............................53
6.4 Cash Collateralization of Letters of Credit....................53
6.5 Default Interest...............................................53
6.6 Right of Setoff................................................53
6.7 Actions Under Credit Documents.................................54
6.8 Remedies Cumulative............................................54
6.9 Application of Payments........................................54
ARTICLE 7. THE AGENT AND THE ISSUING BANK....................................55
7.1 Authorization and Action.......................................55
7.2 Reliance, Etc..................................................55
7.3 Affiliates.....................................................56
7.4 Bank Credit Decision...........................................56
7.5 Expenses.......................................................57
7.6 Indemnification................................................57
7.7 Successor Agent and Issuing Bank...............................57
ARTICLE 8. MISCELLANEOUS..................................................58
8.1 Expenses.......................................................58
8.2 Indemnification................................................58
8.3 Modifications, Waivers, and Consents...........................59
8.4 Survival of Agreements.........................................59
8.5 Assignment and Participation...................................59
8.6 Notice.........................................................62
8.7 Choice of Law..................................................62
8.8 Forum Selection................................................62
8.9 Service of Process.............................................63
8.10 Waiver of Jury Trial...........................................63
8.11 Amendment and Restatement......................................63
8.12 Counterparts...................................................63
8.13 No Further Agreements..........................................64
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EXHIBITS
Exhibit A - Form of Compliance Certificate
Exhibit B - Form of Borrowing Request
Exhibit C - Form of Continuation/Conversion Request
Exhibit D - Form of Revolving Loan Note
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Closing Documents List
Exhibit G - Form of Joinder Agreement
SCHEDULES
Schedule I - Administrative Information
Schedule II - Disclosures
-iv-
CREDIT AGREEMENT
This Credit Agreement dated as of August 14, 1996, is among Coach USA,
Inc., a Delaware corporation, as Borrower, the financial institutions named
herein, as Banks, and NationsBank of Texas, N.A., as Agent for the Banks.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (unless otherwise indicated, such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"ACQUISITION" means the direct or indirect purchase or acquisition,
whether in one or more related transactions, of any Person or group of Persons
or any related group of assets, liabilities, or securities of any Person or
group of Persons. With respect to the Borrower, the term Acquisition includes
the acquisition of Suburban Transit Corp., Grosvenor Bus Lines, Inc., Leisure
Time Tours, Community Bus Lines, Inc., Cape Transit Corp., and Arrow Stage
Lines, Inc. in connection with the initial public offering of the Borrower's
common stock.
"ADJUSTED PRIME RATE" means, for any day, the fluctuating rate per annum
of interest equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Rate in effect on such day plus 0.50%.
"ADVANCE" means any Revolving Loan Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership, by contract, or otherwise.
"AGENT" means NationsBank in its capacity as an agent pursuant to
Article 7 and any successor agent pursuant to Section 7.7.
-1-
"AGENT FEE LETTER" means the letter agreement dated as of July 27, 1996,
among the Borrower, NationsBank, and NationsBanc Capital Markets, Inc.,
regarding certain fees owed by the Borrower to NationsBank and NationsBanc
Capital Markets, Inc. in connection with this Agreement.
"AGREEMENT" means this Credit Agreement.
"APPLICABLE MARGIN" means, with respect to interest rates, commitment
fees, and letter of credit fees and as of any date of its determination, an
amount equal to the percentage amount set forth in the table below opposite the
applicable ratio of (i) the consolidated Funded Debt of the Borrower less the
Subordinated Debt of the Borrower as of the end of the fiscal quarter then most
recently ended to (ii) the consolidated EBITDA of the Borrower for the four
fiscal quarters then most recently ended, (provided that for both (i) and (ii)
above, the financial results and balance sheet effects of any Acquisitions shall
be included in such calculations for the full period and on the relevant dates):
FUNDED DEBT TO APPLICABLE MARGIN APPLICABLE MARGIN
EBITDA LIBOR TRANCHES PRIME RATE TRANCHES
------ -------------- -------------------
(less than)1.00 1.00% 0.00%
(greater than)=1.00 but (less than)1.50 1.25% 0.00%
(greater than)=1.50 but (less than)2.00 1.50% 0.25%
(greater than)=2.00 but (less than)2.50 1.75% 0.50%
(greater than)=2.50 2.25% 1.00%
FUNDED DEBT TO APPLICABLE MARGIN APPLICABLE MARGIN
EBITDA COMMITMENT FEE LETTER OF CREDIT FEE
------ -------------- --------------------
(less than)1.00 0.250% 1.00%
(greater than)=1.00 but (less than)1.50 0.250% 1.25%
(greater than)=1.50 but (less than)2.00 0.300% 1.50%
(greater than)=2.00 but (less than)2.50 0.375% 1.75%
(greater than)=2.50 0.500% 2.25%
Initially, the Agent shall determine the Applicable Margin based upon the June
30, 1996, financial statements delivered to the Agent prior to the execution of
this Agreement, as such financial statements have been adjusted in accordance
with Section 1.3(c) to reflect the Acquisitions that occurred in connection with
the initial public offering of the Borrower's common stock and therefore
reflecting the financial status and results of the Borrower and its Subsidiaries
as if such Acquisitions had occurred prior to the period.
-2-
Thereafter, the Agent shall periodically determine the Applicable Margin based
upon the most recent financial statements dated as of the end of a fiscal
quarter delivered to the Agent pursuant to Section 5.2(b) (subject to revisions
in subsequent periods based upon audited financial statements delivered pursuant
to Section 5.2(a)) or, if any Acquisitions have occurred that are not reflected
in such financial statements, based upon historical proforma financial
statements for the Borrower and its Subsidiaries as of such date and for the
appropriate period prepared in accordance with Section 1.3(c) reflecting the
financial status and results of the Borrower and its Subsidiaries as if such
Acquisitions had occurred prior to the period. Any such adjustments to the
Applicable Margin shall become effective on the 45th day following the last day
of each fiscal quarter; provided, however, that if such financial statements or
historical proforma financial statements are not delivered when required
hereunder, the Applicable Margin shall increase to the maximum percentage amount
set forth in the table above from such 45th day following the last day of the
applicable quarter until such financial statements or historical financial
statements are received by the Agent.
In the event there shall occur any Acquisition since the date the Applicable
Margin was last redetermined as set forth above, the Agent shall make an interim
redetermination of the Applicable Margin using the method described above but
with the historical proforma financial statements revised to reflect the
Acquisition. Any such adjustment to the Applicable Margin shall become effective
on the effective date of the Acquisition.
Upon any change in the Applicable Margin, the Agent shall promptly notify the
Borrower and the Banks of the new Applicable Margin.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank and for any
particular type of transaction, the office of such Bank set forth in SCHEDULE I
to this Agreement (or in the applicable Assignment and Acceptance by which such
Bank joined this Agreement) as its applicable lending office for such type of
transaction or such other office of such Bank as such Bank may from time to time
specify in writing to the Borrower and the Agent for such particular type of
transaction.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in
substantially the form of EXHIBIT E executed by an assignor Bank, an assignee
Bank, and the Agent, in accordance with Section 8.5.
"BANKS" means the lenders listed as Banks on the signature pages of this
Agreement and each Eligible Assignee that shall become a party to this Agreement
pursuant to Section 8.5(b).
"BORROWER" means Coach USA, Inc., a Delaware corporation.
-3-
"BORROWER ACCOUNT" means the principal operating account of Borrower
with the Agent or any other account of Borrower with the Agent which is
designated as Borrower's "Borrower Account" in writing by the Borrower to the
Agent.
"BORROWING" means any Revolving Loan Borrowing.
"BORROWING REQUEST" means a Borrowing Request in substantially the form
of EXHIBIT B executed by a Responsible Officer of the Borrower and delivered to
the Agent.
"BUSINESS DAY" means any Monday through Friday during which commercial
banks are open for business in Houston, Texas, Dallas, Texas, and, if the
applicable Business Day relates to any LIBOR Tranche, on which dealings are
carried on in the London interbank market.
"CAPITAL EXPENDITURES" means, with respect to any Person and with
respect to any period of its determination, the consolidated expenditures of
such Person during such period that are required to be included in or are
reflected by the consolidated property, plant, or equipment accounts of such
Person, or any similar fixed asset or long term capitalized asset accounts of
such Person, on the consolidated balance sheet of such Person in conformity with
generally accepted accounting principles.
"CAPITAL LEASES" means, with respect to any Person, any lease of any
property by such Person which would, in accordance with generally accepted
accounting principles, be required to be classified and accounted for as a
capital lease on the balance sheet of such Person.
"CHANGE OF CONTROL" means, with respect to the Borrower, the direct or
indirect acquisition after the date hereof by any Person or related Persons
constituting a group of (a) beneficial ownership of issued and outstanding
shares of Voting Securities of the Borrower, the result of which acquisition is
that such Person or such group possesses 30% or more of the combined voting
power of all then-issued and outstanding Voting Securities of the Borrower, or
(b) the power to elect, appoint, or cause the election or appointment of at
least a majority of the members of the board of directors of the Borrower.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"COMMITMENTS" means the Revolving Loan Commitments.
-4-
"COMMONLY CONTROLLED ENTITY" means, with respect to any Person, any
other Person which is under common control with such Person within the meaning
of Section 414 of the Code.
"COMPLIANCE CERTIFICATE" means a compliance certificate executed by a
Responsible Officer of the Borrower in substantially the form of EXHIBIT A.
"CONTINUATION/CONVERSION REQUEST" means a Continuation/Conversion
Request in substantially the form of EXHIBIT C executed by a Responsible Officer
of the Borrower and delivered to the Agent.
"CREDIT DOCUMENTS" means this Agreement, the Notes, the Swing Line Note,
the Agent Fee Letter, the Letter of Credit Documents, the Guaranty, the Security
Documents, the Interest Hedge Agreements, and each other agreement, instrument,
or document executed at any time in connection with this Agreement.
"CREDIT OBLIGATIONS" means all principal, interest, fees,
reimbursements, indemnifications, and other amounts now or hereafter owed by the
Borrower to the Agent and the Banks (or with respect to the Interest Hedge
Agreements, any Affiliates of the Banks) under this Agreement, the Notes, the
Letter of Credit Documents, and the other Credit Documents and any increases,
extensions, and rearrangements of those obligations under any amendments,
supplements, and other modifications of the documents and agreements creating
those obligations.
"CREDIT PARTIES" means the Borrower and the Guarantors.
"DEBT" means, with respect to any Person, without duplication, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
evidenced by bonds, debentures, notes, or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of property or
services (other than trade debt and normal operating liabilities incurred in the
ordinary course of business), (d) obligations of such Person as lessee under
Capital Leases, (e) obligations of such Person under or relating to letters of
credit, guaranties, purchase agreements, or other creditor assurances assuring a
creditor against loss in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (d) of this definition, and (f)
nonrecourse indebtedness or obligations of others of the kinds referred to in
clauses (a) through (e) of this definition secured by any Lien on or in respect
of any property of such Person. For the purposes of determining the amount of
any Debt, the amount of any Debt described in clause (e) of the definition of
Debt shall be valued at the maximum amount of the contingent liability
thereunder and the amount of any Debt
-5-
described in clause (f) that is not covered by clause (e) shall be valued at the
lesser of the amount of the Debt secured or the book value of the property
securing such Debt.
"DEFAULT" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived, become
an Event of Default.
"DEFAULT RATE" means, with respect to any amount due hereunder, a per
annum interest rate equal to (a) if such amount is either outstanding principal
accruing interest based upon a rate established elsewhere in this Agreement or
accrued but unpaid interest thereon, the sum of (i) the interest rate
established elsewhere in this Agreement from time to time for such principal
amount, including any applicable margin, plus (ii) 2.00% per annum or (b) in all
other cases, the Adjusted Prime Rate in effect from time to time plus the
Applicable Margin for Prime Rate Tranches in effect from time to time plus 2.00%
per annum.
"DERIVATIVES" means any swap, hedge, cap, collar, or similar arrangement
providing for the exchange of risks related to price changes in any commodity,
including money.
"DOLLARS OR $" means lawful money of the United States of America.
"EBIT" means, with respect to any Person and for any period of its
determination, the consolidated net income of such Person for such period, plus
the consolidated interest expense and income taxes of such Person for such
period.
"EBITDA" means, with respect to any Person and for any period of its
determination, the EBIT of such Person for such period, plus the consolidated
depreciation and amortization of such Person for such period.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ELIGIBLE ASSIGNEE" means, with respect to any assignment hereunder at
the time of such assignment, any commercial bank organized under the laws of the
United States or any of the countries parties to the Organization for Economic
Cooperation and Development or any political subdivision of any thereof which
has primary capital (or its equivalent) of not less than $250,000,000, is
approved by the Agent, and, so long as no Event of Default exists, is approved
by the Borrower, in either case, such approval not to be unreasonably withheld.
-6-
"ENVIRONMENTAL LAW" means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements
now or hereafter in effect relating to the pollution, destruction, loss, or
injury of the environment, the presence of any contaminant in the environment,
the protection, cleanup, remediation, or restoration of the environment, the
creation, handling, transportation, use, or disposal of any waste product in the
environment, exposure of persons to any contaminant, waste, or hazardous
substance in the environment, and the health and safety of employees in relation
to their environment.
"EVENT OF DEFAULT" has the meaning specified in Section 6.1.
"EXISTING LETTERS OF CREDIT" means the standby letters of credit issued
by the Issuing Bank for the account of the Borrower prior to the date of this
Agreement and listed in the attached SCHEDULE II under Existing Letters of
Credit.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating per annum
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for any such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any of its successors.
"FUNDED DEBT" means, with respect to any Person, without duplication,
(a) indebtedness of such Person for borrowed money, (b) obligations of such
Person evidenced by bonds, debentures, notes, or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of property or
services (other than accounts payable to trade creditors and current operating
liabilities incurred in the ordinary course of business), and (d) obligations of
such Person as lessee under Capital Leases.
"GUARANTY" means the Guaranty dated as of August 14, 1996, made by the
Subsidiaries of the Borrower in favor of the Agent guaranteeing the Credit
Obligations.
-7-
"GUARANTORS" means (a) the Subsidiaries of the Borrower listed in
SCHEDULE II that have executed the Guaranty dated as of August 14, 1996, and (b)
any future Subsidiaries of the Borrower that execute the Guaranty pursuant to
Section 5.19.
"HAZARDOUS MATERIALS" means any substance or material identified as a
hazardous substance pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended and as now or hereafter in
effect; any substance or material regulated as a hazardous waste pursuant to the
Resource Conservation and Recovery Act of 1976, as amended and as now or
hereafter in effect; and any substance or material designated as a hazardous
substance or hazardous waste pursuant to any other Environmental Law.
"HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to the relevant Bank which are presently in
effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow. The maximum lawful rate under this
Agreement shall be the weekly indicated rate ceiling under Article 5069-1.04 of
the Texas Revised Civil Statutes, unless any other lawful rate ceiling exceeds
the rate ceiling so determined, and then the higher rate ceiling shall apply.
"INITIAL ACQUISITIONS" means Acquisitions that the Borrower has
requested the Agent to review prior to the execution of this Agreement and have
been represented by the Borrower in writing as acquisition targets "A," "B," and
"C" to the Agent and the Banks prior to the execution of this Agreement.
"INTANGIBLE ASSETS" means, with respect to any Person and as of any date
of its determination, the goodwill, patents, trade names, trade marks,
copyrights, franchises, experimental expense, organization expense, unamortized
debt discount and expense, deferred assets (other than prepaid insurance and
prepaid taxes), the excess of cost of shares acquired over book value of related
assets, and such other assets of such Person as are properly classified as
"intangible assets" in accordance with generally accepted accounting principles.
"INTEREST HEDGE AGREEMENTS" means any swap, hedge, cap, collar, or
similar arrangement between the Borrower and any Bank (or any Affiliate of any
Bank) providing for the exchange of risks related to price changes in the
interest rate on the Advances under this Agreement.
-8-
"INTEREST PERIOD" means, with respect to each LIBOR Tranche, the period
commencing on the date of such LIBOR Tranche and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The duration
of each such Interest Period shall be one, two, three, or six months, in each
case as the Borrower may select in the applicable Borrowing Request or
Continuation/Conversion Request (unless there shall exist any Default or Event
of Default, in which case the Borrower may only select one month Interest
Periods); provided, however, that:
(a) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period shall
be extended to occur on the next succeeding Business Day; provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;
(b) any Interest Period which begins on the last Business Day of the
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month; and
(c) the Borrower may not select an Interest Period for any LIBOR Tranche
under any Loan which ends after any date when outstanding principal amounts of
such Loan must be repaid unless, after giving effect to such selection, the
aggregate outstanding principal amount of Prime Rate Tranches under such Loan
and LIBOR Tranches under such Loan having Interest Periods which end on or
before such repayment date shall be at least equal to or greater than the
principal amount of such Loan due and payable on or before such date (and
therefore in no event shall any Interest Period for any LIBOR Tranche extend
beyond the applicable Maturity Date).
"ISSUING BANK" means NationsBank and any successor issuing bank pursuant
to Section 7.7.
"LIBOR" means, for any LIBOR Tranche for any Interest Period therefor,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBOR" shall mean, for any LIBOR Tranche for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest
-9-
Period; provided, however, if more than one rate is specified on Reuters Screen
LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.
"LIBOR TRANCHE" shall mean any Tranche which bears interest based upon
the LIBOR, as determined in accordance with Section 2.5.
"LETTER OF CREDIT" means any commercial or standby letter of credit
issued by the Issuing Bank for the account of the Borrower pursuant to the terms
of this Agreement, including the Existing Letters of Credit.
"LETTER OF CREDIT APPLICATION" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by a Borrower and accepted
by the Issuing Bank in connection with the issuance of a Letter of Credit.
"LETTER OF CREDIT APPLICATION AMENDMENT" means the Issuing Bank's
standard form application to amend a letter of credit for either a commercial or
standby letter of credit, as the case may be, which has been executed by a
Borrower and accepted by the Issuing Bank in connection with the increase or
extension of a Letter of Credit.
"LETTER OF CREDIT COLLATERAL ACCOUNT" means a special cash collateral
account pledged to the Agent containing cash deposited pursuant to Section 6.4
to be maintained with the Agent in accordance with Section 2.2(f).
"LETTER OF CREDIT DOCUMENTS" means all Letters of Credit, Letter of
Credit Applications, Letter of Credit Application Amendments, and agreements,
documents, and instruments entered into in connection with or relating thereto.
"LETTER OF CREDIT EXPOSURE" means, as of any date of its determination,
the aggregate outstanding undrawn amount of Letters of Credit plus the aggregate
of the reimbursement obligations of the Borrower under the Letter of Credit
Applications and this Agreement.
"LETTER OF CREDIT SUBLIMIT" means $15,000,000.
"LIEN" means any mortgage, lien, pledge, charge, deed of trust, security
interest, encumbrance, or other type of preferential arrangement to secure or
provide for the payment of any obligation of any Person, whether arising by
contract, operation of law, or otherwise (including any
-10-
title retention for such purposes under any conditional sale agreement, any
Capital Lease, or any other title transfer or retention agreement).
"LOAN" means the Revolving Loan.
"MAINTENANCE CAPITAL EXPENDITURES" means, with respect to any Person and
with respect to any period of its determination, the consolidated Capital
Expenditures of such Person resulting from the scheduled or routine maintenance
of the assets of such Person.
"MAJORITY BANKS" means, at any time, Banks holding more than 51% of the
then aggregate unpaid principal amount of the Notes held by the Banks and the
Letter of Credit Exposure of the Banks at such time; provided that if no such
principal amount or Letter of Credit Exposure is then outstanding, "Majority
Banks" shall mean Banks having more than 51% of the aggregate amount of the
Commitments at such time; provided further that with respect to any
determination made by the Majority Banks in Section 5.2(e) of the Security
Agreement, the applicable percentages set forth above shall be reduced from
"51%" to "40%".
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
business, operations, or financial condition of the Borrower and its
Subsidiaries on a consolidated basis.
"MATURITY DATE" means the Revolving Loan Maturity Date.
"MINIMUM BORROWING AMOUNT" means, with respect to any Revolving Loan
Borrowing, $1,000,000.
"MINIMUM BORROWING MULTIPLE" means $500,000.
"MINIMUM TRANCHE AMOUNT" means, with respect to any Tranche, $1,000,000.
"MINIMUM TRANCHE MULTIPLE" means $500,000.
"NATIONSBANK" means NationsBank of Texas, N.A., in its individual
capacity.
"NET WORTH" means, with respect to any Person and as of any date of its
determination, the excess of (a) the assets of such Person over (b) the
liabilities of such Person.
"NOTE" means any Revolving Loan Note.
-11-
"PBGC" means Pension Benefit Guaranty Corporation or its successor.
"PERMITTED DEBT" means all of the following Debt:
(a) Debt in the form of the Credit Obligations;
(b) Debt (i) existing on the date of this Agreement and listed in
SCHEDULE II and (ii) incurred after the date of this Agreement provided
that the aggregate outstanding amount of Debt under clause (i) and (ii)
does not exceed $15,000,000;
(c) Debt in the form of intercompany Debt among the Borrower and
its Subsidiaries provided that in each case the Debt is subordinated
upon terms satisfactory to the Agent to the obligations of the Borrower
and its Subsidiaries with respect to the Credit Obligations;
(d) Debt in the form of Subordinated Debt;
(e) Debt in the form of obligations to insurance providers for
the Borrower and its Subsidiaries for financing insurance premiums in an
aggregate outstanding amount not to exceed $1,000,000; and
(f) Debt in the form of indebtedness for borrowed money and
letters of credit owed by any Subsidiary of the Borrower prior to the
acquisition of such Subsidiary by the Borrower in an Acquisition
transaction, or owed by any Person that is the subject of any
Acquisition assumed by the Borrower or any Subsidiary of the Borrower in
connection with such Acquisition, provided that (i) with respect to any
such indebtedness for borrowed money, arrangements satisfactory to the
Agent for the repayment of such indebtedness within 10 days following
the closing of the Acquisition are made prior to the closing of the
Acquisition and such arrangements are executed, (ii) with respect to
such Debt in the form of letters of credit, arrangements satisfactory to
the Agent for the repayment of such indebtedness within 60 days
following the closing of the Acquisition are made prior to the closing
of the Acquisition and such arrangements are executed, and (iii) with
respect to all such Debt, the Borrower could obtain Advances or Letters
of Credit, respectively, under this Agreement in the aggregate
outstanding amount of such corresponding Debt.
-12-
"PERMITTED INVESTMENTS" means all of the following investments:
(a) investments in wholly-owned Subsidiaries of the Borrower and
investments in other Persons made in connection with Acquisitions that
have been approved by the Majority Banks, but no further investments
therein unless such further investments have been approved by the
Majority Banks;
(b) investments in the form of loans, guaranties, open accounts,
and other extensions of trade credit in the ordinary course of business;
(c) investments in commercial paper and bankers' acceptances
maturing in twelve months or less from the date of issuance and which,
at the time of acquisition are rated A-2 or better by Standard & Poor's
Corporation and P-2 or better by Moody's Investors Services, Inc;
(d) investments in direct obligations of the United States, or
investments in any Person which investments are guaranteed by the full
faith and credit of the United States, in either case maturing in twelve
months or less from the date of acquisition thereof and repurchase
agreements having a term of less than one year and fully collateralized
by such obligations which are entered into with banks or trust companies
described in clause (e) below or brokerage companies having net worth in
excess of $250,000,000;
(e) investments in time deposits or certificates of deposit
maturing within one year from the date such investment is made, issued
by a bank or trust company organized under the laws of the United States
or any state thereof having capital, surplus, and undivided profits
aggregating at least $250,000,000 or a foreign branch thereof and whose
long-term certificates of deposit are, at the time of acquisition
thereof, rated A-2 by Standard & Poor's Corporation or Prime-2 by
Moody's Investors Services, Inc.; and
(f) investments in money market funds which invest solely in the
types of investments described in paragraphs (c) through (e) above.
In valuing any investments for the purpose of applying the limitations set forth
in this Agreement, such investments shall be taken at the original cost thereof
(but without reduction for any subsequent appreciation or depreciation thereof)
less any amount actually repaid or recovered on account of capital or principal
(but without reduction for any offsetting investments made by the investee in
the investor). For purposes of this Agreement, at any time when a corporation
becomes a Subsidiary
-13-
of the Borrower, all investments of such corporation at such time shall be
deemed to have been made by such corporation at such time.
"PERMITTED LIENS" means all of the following Liens:
(a) Liens securing the Credit Obligations;
(b) Liens securing purchase money debt or Capital Leases
permitted under clause (b) of the definition of Permitted Debt provided
that no such Lien is spread to cover any property not purchased or
leased in connection with the incurrence of such Debt;
(c) Liens on assets acquired in Acquisitions securing Debt
described under clause (f) of the definition of Permitted Debt provided
that all such Liens and the notations, filings, and recordings
reflecting such Liens are released within 90 days following the closing
of the Acquisition; and
(d) Liens arising in the ordinary course of business which are
not incurred in connection with the borrowing of money or the obtaining
of advances or credit and which do not materially detract from the value
of any Restricted Entity's assets or materially interfere with any
Restricted Entity's business, including (i) Liens for taxes,
assessments, or other governmental charges or levies; (ii) Liens in
connection with worker's compensation, unemployment insurance, or other
social security, old age pension, or public liability obligations; (iii)
Liens in the form of legal or equitable encumbrances deemed to exist by
reason of negative pledge covenants and other covenants or undertakings
of like nature; (iv) Liens in the form of vendors', carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction, or other like Liens arising by operation of law in the
ordinary course of business or incident to the construction or
improvement of any property; and (v) Liens in the form of zoning
restrictions, easements, licenses, and other restrictions on the use of
real property or minor irregularities in title thereto which do not
materially impair the use of such property in the operation of the
business of the applicable Restricted Entity or the value of such
property.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, or other entity, or a government or any political subdivision or agency
thereof, or any trustee, receiver, custodian, or similar official.
-14-
"PLAN" means any (a) employee medical benefit plan under Section 3(1) of
ERISA, (b) employee pension benefit plan under Section 3(2) of ERISA, (c)
multiemployer plan under Section 4001(a)(3) of ERISA, and (d) employee account
benefit plan under Section 3(2) of ERISA.
"PRIME RATE" means, for any day, the fluctuating per annum interest rate
in effect on such day equal to the rate of interest publicly announced by the
Agent as its prime rate, whether or not the Borrower has notice thereof.
"PRIME RATE TRANCHE" shall mean any Tranche which bears interest based
upon the Adjusted Prime Rate, as determined in accordance with Section 2.5.
"PROHIBITED TRANSACTION" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
"RATABLE SHARE" OR "PRO RATA SHARE" means, with respect to any Bank and
as of any date of its determination, either (a) the ratio of such Bank's
Commitment at such time to the aggregate Commitments at such time or (b) if the
Commitments have been terminated, the ratio of such Bank's aggregate outstanding
Advances and share of the Letter of Credit Exposure at such time to the
aggregate outstanding Advances and Letter of Credit Exposure at such time.
"REGISTRATION STATEMENT" means the public offering registration
statement of the Borrower referred to in Section 4.7(a).
"RELATED PARTIES" means, with respect to any Person, such Person's
stockholders, directors, officers, employees, agents, Affiliates, successors,
and assigns, and their respective stockholders, directors, officers, employees,
and agents, and, with respect to any Person that is an individual, such Person's
family relations and heirs.
"REPORTABLE EVENT" means any of the events set forth in Section 4043 of
ERISA.
"RESPONSIBLE OFFICER" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, Secretary,
Treasurer, or any other officer of such Person designated by any of the
foregoing in writing from time to time.
"RESTRICTED ENTITIES" means the Borrower and each Subsidiary of the
Borrower.
-15-
"REVOLVING LOAN" means the aggregate outstanding principal amount of the
Revolving Loan Borrowings.
"REVOLVING LOAN ADVANCE" means the outstanding principal from a Bank
which represents such Bank's ratable share of a Revolving Loan Borrowing.
"REVOLVING LOAN BORROWING" means any aggregate amount of principal
advanced on the same day and pursuant to the same Borrowing Request under the
revolving loan facility created in Section 2.1.
"REVOLVING LOAN COMMITMENT" means, for any Bank, the amount set forth
below such Bank's name on the signature pages hereof as its Revolving Loan
Commitment, or if such Bank has entered into any Assignment and Acceptance, as
set forth for such Bank as its Revolving Loan Commitment in the Register
maintained by the Agent pursuant to Section 8.5(c), in each case as such amount
may be terminated pursuant to Section 6.2.
"REVOLVING LOAN MATURITY DATE" means August 14, 1999.
"REVOLVING LOAN NOTE" means a promissory note of the Borrower payable to
the order of a Bank, in substantially the form of EXHIBIT D, evidencing the
indebtedness of the Borrower to such Bank resulting from Revolving Loan Advances
made by such Bank to the Borrower.
"SECURITY AGREEMENT" means the Security Agreement dated as of August 14,
1996, made by the Borrower and the Subsidiaries of the Borrower in favor of the
Agent granting the Agent a security interest in the accounts receivable,
equipment, and inventory of each such Credit Party to secure the Credit
Obligations.
"SECURITY DOCUMENTS" means the Security Agreement and any other document
creating or consenting to Liens in favor of the Agent securing Credit
Obligations.
"SUBORDINATED DEBT" means, with respect to the Borrower and as of any
date of its determination, any unsecured indebtedness for borrowed money for
which the Borrower is directly and primarily obligated that (a) arises after the
date of this Agreement, (b) does not have any stated maturity before the latest
maturity of any of the Credit Obligations, (c) has terms that are no more
restrictive than the terms of the Credit Documents, and (d) is subordinated and
has payment terms satisfactory to the Agent and the Majority Banks, to the
payment and collection of the Credit Obligations.
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"SUBSIDIARY" means, with respect to any Person, any other Person, a
majority of whose outstanding Voting Securities (other than directors'
qualifying shares) shall at any time be owned by such Person or one or more
Subsidiaries of such person.
"SWING LINE LENDER" means NationsBank.
"SWING LINE LOAN" means the aggregate outstanding principal amount of
the advances made under the Swing Line Note.
"SWING LINE NOTE" means the promissory note of the Borrower in the
principal amount of $5,000,000 payable to the order of the Swing Line Lender
evidencing the indebtedness of the Borrower to the Swing Line Lender resulting
from advances to the Borrower under the line of credit created thereunder.
"TANGIBLE ASSETS" means, with respect to any Person and as of any date
of its determination, the assets of such Person less the Intangible Assets of
such Person.
"TANGIBLE NET WORTH" means, with respect to any Person and as of any
date of its determination, the Net Worth of such Person less the Intangible
Assets of such Person.
"TRANCHE" means any tranche of principal outstanding under the same Loan
accruing interest on the same basis whether created in connection with new
advances of principal under such Loan pursuant to Section 2.5(a)(i) or by the
continuation or conversion of existing tranches of principal under such Loan
pursuant to Section 2.5(a)(ii) and shall include any Prime Rate Tranche or LIBOR
Tranche.
"TYPE" has the meaning set forth in Section 1.4.
"VOTING SECURITIES" means (a) with respect to any corporation, any
capital stock of the corporation having general voting power under ordinary
circumstances to elect directors of such corporation, (b) with respect to any
partnership, any partnership interest having general voting power under ordinary
circumstances to elect the general partner or other management of the
partnership, and (c) with respect to any other Person, such ownership interests
in such Person having general voting power under ordinary circumstances to elect
the management of such Person, in each case irrespective of whether at the time
any other class of stock, partnership interests, or other ownership interest
might have special voting power or rights by reason of the happening of any
contingency.
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1.2 COMPUTATION OF TIME PERIODS. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding."
1.3 ACCOUNTING TERMS; PREPARATION OF FINANCIALS.
(a) All accounting terms, definitions, ratios, and other tests
described herein shall be construed in accordance with United States generally
accepted accounting principles applied on a consistent basis with those applied
in the preparation of the Registration Statement, except as expressly set forth
in this Agreement.
(b) The Restricted Entities shall prepare their financial
statements in accordance with United States generally accepted accounting
principles applied on a consistent basis with those applied in the preparation
of the Registration Statement, unless otherwise approved in writing by the
Agent.
(c) The Restricted Entities shall prepare all proforma financial
statements reflecting Acquisitions in accordance with the requirements
established by the Securities and Exchange Commission for acquisition accounting
for reported acquisitions by public companies, whether or not the applicable
Acquisitions are required to be publicly reported, and applying such
requirements to make such proforma financial statements reflect the accounting
procedures used in the preparation of the regular financial statements of the
Restricted Entities unless otherwise approved in writing by the Agent. All
applications of the foregoing requirements regarding proforma financial
statements must be approved by the Agent prior to the consummation of any
Acquisition.
1.4 TYPES. The "Type" of a Tranche refers to the determination whether
such tranche is a LIBOR Tranche or a Prime Rate Tranche.
1.5 INTERPRETATION. Article, Section, Schedule, and Exhibit references
are to this Agreement, unless otherwise specified. All references to
instruments, documents, contracts, and agreements are references to such
instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise
specified. The word "including" shall mean "including but not limited to." The
word "or" shall mean "and/or" wherever necessary to prevent interpretation of
any provision against the Agent or the Banks. Whenever the Borrower has an
obligation under this Agreement and the Credit Documents the expense of
complying with that obligation shall be an expense of the Borrower
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unless otherwise specified. Whenever any determination is to be made by the
Agent or any Bank, such determination shall be in such Person's sole discretion
unless otherwise specified in this Agreement. If any provision in this Agreement
and the Credit Documents is held to be illegal, invalid, not binding, or
unenforceable, such provision shall be fully severable and this Agreement and
the Credit Documents shall be construed and enforced as if such illegal,
invalid, not binding, or unenforceable provision had never comprised a part of
this Agreement and the Credit Documents, and the remaining provisions shall
remain in full force and effect. This Agreement and the Credit Documents have
been reviewed and negotiated by sophisticated parties with access to legal
counsel and shall not be construed against the drafter. In the event of a
conflict between this Agreement and the Credit Documents, this Agreement shall
control.
ARTICLE 2. CREDIT FACILITIES.
2.1 REVOLVING LOAN FACILITY.
(a) COMMITMENT. Each Bank severally agrees, on the terms and
conditions set forth in this Agreement and for the purposes set forth in Section
5.4, to make Revolving Loan Advances to the Borrower as such Bank's ratable
share of Revolving Loan Borrowings requested by the Borrower from time to time
on any Business Day during the period from the date of this Agreement until the
Revolving Loan Maturity Date provided that the aggregate outstanding principal
amount of Revolving Loan Advances made by such Bank plus such Bank's ratable
share of the Letter of Credit Exposure plus such Bank's ratable share of the
Swing Line Loan shall not exceed such Bank's Revolving Loan Commitment.
Revolving Loan Borrowings must be made in an amount equal to or greater than the
Minimum Borrowing Amount and be made in multiples of the Minimum Borrowing
Multiple. Within the limits expressed in this Agreement, the Borrower may from
time to time borrow, prepay, and reborrow Revolving Loan Borrowings. The
indebtedness of the Borrower to the Banks resulting from the Revolving Loan
Advances made by the Banks shall be evidenced by Revolving Loan Notes made by
the Borrower.
(b) METHOD OF ADVANCING
(i) Each Revolving Loan Borrowing shall be made pursuant
to a Borrowing Request given by the Borrower to the Agent in writing or by
telecopy not later than the time required pursuant to Section 2.5(a)(i) to
select the interest rate basis for the Revolving Loan Borrowing. Each Borrowing
Request shall be fully completed and shall specify the information required
therein, and shall be irrevocable and binding on the Borrower unless such
Borrowing Request is rejected by the Agent as incomplete or improper. If the
Borrowing Request is accepted
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by the Agent, the Agent shall promptly forward notice of the Revolving Loan
Borrowing to the Banks. Each Bank shall, before 2:00 p.m. (local time at the
Applicable Lending Office of the Agent) on the date of the requested Revolving
Loan Borrowing, make available from its Applicable Lending Office to the Agent
at the Agent's Applicable Lending Office, in immediately available funds, such
Bank's ratable share of such Revolving Loan Borrowing. Subject to the
satisfaction of all applicable conditions precedent, after receipt by the Agent
of such funds, the Agent shall before close of business on the date requested
for such Revolving Loan Borrowing make such Revolving Loan Borrowing available
to the Borrower in immediately available funds at the Borrower Account.
(ii) Unless the Agent shall have received notice from a
Bank before the date of any Revolving Loan Borrowing that such Bank shall not
make available to the Agent such Bank's ratable share of such Revolving Loan
Borrowing, the Agent may assume that such Bank has made its ratable share of
such Revolving Loan Borrowing available to the Agent on the date of such
Revolving Loan Borrowing in accordance with paragraph (i) above and the Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Bank shall not have
so made its ratable share of such Revolving Loan Borrowing available to the
Agent, such Bank agrees that it shall pay interest on such amount for each day
from the date such amount is made available to the Borrower by the Agent until
the date such amount is paid to the Agent by such Bank at the Federal Funds Rate
in effect from time to time, provided that with respect to such Bank if such
amount is not paid by such Bank by the end of the second day after the Agent
makes such amount available to the Borrower, the interest rates specified above
shall be increased by a per annum amount equal to 2.00% on the third day and
shall remain at such increased rate thereafter. Interest on such amount shall be
due and payable by such Bank upon demand by the Agent. If such Bank shall pay to
the Agent such amount and interest as provided above, such amount so paid shall
constitute such Bank's Revolving Loan Advance as part of such Revolving Loan
Borrowing for all purposes of this Agreement even though not made on the same
day as the other Advances comprising such Revolving Loan Borrowing. In the event
that such Bank has not repaid such amount by the end of the fifth day after such
amount was made available to the Borrower, the Borrower agrees to repay to the
Agent on demand such amount, together with interest on such amount for each day
from the date such amount was made available to the Borrower until the date such
amount is repaid to the Agent at the interest rate charged to the Borrower for
such Revolving Loan Borrowing under the terms of this Agreement.
(iii) The failure of any Bank to make available its
ratable share of any Revolving Loan Borrowing shall not relieve any other Bank
of its obligation, if any, to make available its ratable share of such Revolving
Loan Borrowing. No Bank shall be responsible for the
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failure of any other Bank to honor such other Bank's obligations hereunder,
including any failure to make available any funds as part of any Revolving Loan
Borrowing.
(c) PREPAYMENT.
(i) The Borrower may prepay the outstanding principal
amount of the Revolving Loan pursuant to written notice given by the Borrower to
the Agent in writing or by telecopy not later than (A) 2:00 p.m. (local time at
the Applicable Lending Office of the Agent) on the third Business Day before the
date of the proposed prepayment, in the case of the prepayment of any portion of
the Revolving Loan which is comprised of LIBOR Tranches, or (B) 12:00 noon
(local time at the Applicable Lending Office of the Agent) on the same Business
Day of the proposed prepayment, in the case of the prepayment of any portion of
the Revolving Loan comprised solely of Prime Rate Tranches. Each such notice
shall specify the principal amount and the Tranches of the Revolving Loan which
shall be prepaid, the date of the prepayment, and shall be irrevocable and
binding on the Borrower. Prepayments of the Revolving Loan shall be made in
integral multiples of the Minimum Borrowing Multiple. If the prepayment would
cause the aggregate outstanding principal amount of any LIBOR Tranche comprising
the Revolving Loan or the aggregate outstanding principal amount of all Prime
Rate Tranches comprising the Revolving Loan, to be less than the Minimum Tranche
Amount, the prepayment must be in an amount equal to the entire outstanding
principal amount of such LIBOR Tranche under the Revolving Loan or the entire
outstanding principal amount of all such Prime Rate Tranches under the Revolving
Loan, as the case may be. Upon receipt of any notice of prepayment, the Agent
shall give prompt notice of the intended prepayment to the Banks. For each such
notice given by the Borrower, the Borrower shall prepay the Revolving Loan in
the specified amount on the specified date as set forth in such notice. The
Borrower shall have no right to prepay any principal amount of the Revolving
Loan except as provided in this Section 2.1(c)(i).
(ii) Each prepayment of principal of any LIBOR Tranche
under the Revolving Loan pursuant to this Section 2.1(c) shall be accompanied by
payment of all accrued but unpaid interest on the principal amount prepaid and
any amounts required to be paid pursuant to Section 2.5 as a result of such
prepayment.
(d) REPAYMENT. The Borrower shall pay to the Agent for the
ratable benefit of the Banks the aggregate outstanding principal amount of the
Revolving Loan on the Revolving Loan Maturity Date.
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2.2 LETTER OF CREDIT FACILITY.
(a) COMMITMENT FOR LETTERS OF CREDIT. The Issuing Bank shall, on
the terms and conditions set forth in this Agreement and for the purposes set
forth in Section 5.4, issue, increase, and extend Letters of Credit at the
request of the Borrower from time to time on any Business Day during the period
from the date of this Agreement until the Revolving Loan Maturity Date provided
that (i) the Letter of Credit Exposure shall not exceed the Letter of Credit
Sublimit and (ii) the aggregate outstanding principal amount of Revolving Loan
Borrowings plus the Letter of Credit Exposure plus the Swing Line Loan shall not
exceed the aggregate amount of the Revolving Loan Commitments. No Letter of
Credit may have an expiration date later than 12 months after its issuance date,
and each Letter of Credit which is self-extending beyond its expiration date
must be cancelable upon at least 30 days notice given by the Issuing Bank to the
beneficiary of such Letter of Credit. No Letter of Credit may have an expiration
date later than 12 months after the Revolving Loan Maturity Date unless approved
by the Issuing Bank, the Agent, and the Banks. Each Letter of Credit must be in
form and substance acceptable to the Issuing Bank. The indebtedness of the
Borrower to the Issuing Bank resulting from Letters of Credit requested by the
Borrower shall be evidenced by the Letter of Credit Applications made by the
Borrower.
(b) REQUESTING LETTERS OF CREDIT. Each Letter of Credit shall be
issued, increased, or extended pursuant to a Letter of Credit Application or
Letter of Credit Application Amendment, as applicable, given by the Borrower to
the Issuing Bank in writing or by telecopy promptly confirmed in writing, such
Letter of Credit Application or Letter of Credit Application Amendment being
given not later than 2:00 p.m. (local time at the Applicable Lending Office of
the Agent) on the third Business Day before the date of the proposed issuance,
increase, or extension of the Letter of Credit. Each Letter of Credit
Application or Letter of Credit Application Amendment shall be fully completed
and shall specify the information required therein (including the proposed form
of the Letter of Credit or change thereto), and shall be irrevocable and binding
on the Borrower unless such Letter of Credit Application or Letter of Credit
Application Amendment is rejected by the Issuing Bank as incomplete or improper.
If the Issuing Bank accepts the Letter of Credit Application or Letter of Credit
Application Amendment, the Issuing Bank shall give prompt notice thereof to the
Agent, and the Agent shall promptly inform the Banks of the proposed Letter of
Credit or change thereto. Subject to the satisfaction of all applicable
conditions precedent, the Issuing Bank shall before close of business on the
date requested by the Borrower for the issuance, increase, or extension of such
Letter of Credit issue, increase, or extend such Letter of Credit to the
specified beneficiary. Upon the date of the issuance, increase, or extension of
a Letter of Credit, the Issuing Bank shall be deemed to have sold to each other
Bank and each other Bank shall be deemed to have purchased from the Issuing Bank
a ratable participation in the related Letter of Credit. The Issuing
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Bank shall notify the Agent of each Letter of Credit issued, increased, or
extended and the date and amount of each Bank's participation in such Letter of
Credit, and the Agent shall in turn notify the Banks.
(c) REIMBURSEMENTS FOR LETTERS OF CREDIT. With respect to any
Letter of Credit and in accordance with the related Letter of Credit
Application, the Borrower agrees to pay to the Issuing Bank on demand of the
Issuing Bank any amount due to the Issuing Bank under such Letter of Credit
Application (provided that fees due with respect to such Letter of Credit shall
be payable as specified in Section 2.4(c)). If the Borrower does not pay upon
demand of the Issuing Bank any amount due to the Issuing Bank under any Letter
of Credit Application, in addition to any rights the Issuing Bank may have under
such Letter of Credit Application, the Issuing Bank may upon written notice to
the Agent request the satisfaction of such obligation by the making of a
Revolving Loan Borrowing. Upon such request, the Borrower shall be deemed to
have requested the making of a Revolving Loan Borrowing in the amount of such
obligation and the transfer of the proceeds thereof to the Issuing Bank. Such
Revolving Loan Borrowing shall be comprised of a Prime Rate Tranche. The Agent
shall promptly forward notice of such Revolving Loan Borrowing to the Borrower
and the Banks, and each Bank shall, in accordance with the procedures of Section
2.1(b), other than limitations on the size of Revolving Loan Borrowings, and
notwithstanding the failure of any conditions precedent, make available such
Bank's ratable share of such Revolving Loan Borrowing to the Agent, and the
Agent shall promptly deliver the proceeds thereof to the Issuing Bank for
application to such Bank's share of the obligations under such Letter of Credit.
The Borrower hereby unconditionally and irrevocably authorizes, empowers, and
directs the Issuing Bank to make such requests for Revolving Loan Borrowings on
behalf of the Borrower, and the Banks to make Revolving Loan Advances to the
Agent for the benefit of the Issuing Bank in satisfaction of such obligations.
The Agent and each Bank may record and otherwise treat the making of such
Revolving Loan Borrowings as the making of a Revolving Loan Borrowing to the
Borrower under this Agreement as if requested by the Borrower. Nothing herein is
intended to release the Borrower's obligations under any Letter of Credit
Application, but only to provide an additional method of payment therefor. The
making of any Borrowing under this Section 2.2(c) shall not constitute a cure or
waiver of any Default or Event of Default caused by the Borrower's failure to
comply with the provisions of this Agreement or any Letter of Credit
Application.
(d) PREPAYMENTS OF LETTERS OF CREDIT. In the event that any
Letters of Credit shall be outstanding according to their terms after the
Revolving Loan Maturity Date, the Borrower shall pay to the Agent an amount
equal to the Letter of Credit Exposure allocable to such Letters of Credit to be
held in the Letter of Credit Collateral Account and applied in accordance with
paragraph (g) below.
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(e) OBLIGATIONS UNCONDITIONAL. The obligations of the Borrower
and each Bank under this Agreement and the Letter of Credit Applications to
reimburse the Issuing Bank for draws under Letters of Credit and to make other
payments due in respect of Letters of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and the Letter of Credit Applications under all circumstances,
including: (i) any lack of validity or enforceability of any Letter of Credit
Document; (ii) any amendment, waiver, or consent to departure from any Letter of
Credit Document; (iii) the existence of any claim, set-off, defense, or other
right which the Borrower or any Bank may have at any time against any
beneficiary or transferee of any Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing Bank, or any
other person or entity, whether in connection with the transactions contemplated
in this Agreement or any unrelated transaction; (iv) any statement or any other
document presented under such Letter of Credit proving to be forged, fraudulent,
invalid, or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or (v) payment by the Issuing Bank under any Letter
of Credit against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit; provided, however, that nothing
contained in this paragraph (d) shall be deemed to constitute a waiver of any
remedies of the Borrower or any Bank in connection with the Letters of Credit or
the Borrower's or such Bank's rights under paragraph (e) below.
(f) LIABILITY OF ISSUING BANK. The Issuing Bank shall not be
liable or responsible for: (i) the use which may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency, or genuineness of documents related
to Letters of Credit, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent, or
forged; (iii) payment by the Issuing Bank against presentation of documents
which do not strictly comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
relevant Letter of Credit; or (iv) any other circumstances whatsoever in making
or failing to make payment under any Letter of Credit (INCLUDING THE ISSUING
BANK'S OWN NEGLIGENCE); except that the Issuing Bank shall be liable to the
Borrower or any Bank to the extent of any direct, as opposed to consequential,
damages suffered by the Borrower or such Bank which the Borrower or such Bank
proves were caused by (A) the Issuing Bank's gross negligence or willful
misconduct in determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit or (B) the Issuing Bank's willful
failure to make or delay in making lawful payment under any Letter of Credit
after the presentation to it of documentation strictly complying with the terms
and conditions of such Letter of Credit.
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(g) LETTER OF CREDIT COLLATERAL ACCOUNT.
(i) If the Borrower is required to deposit funds in the
Letter of Credit Collateral Account pursuant to Sections 2.2(d) or 6.4, then the
Borrower and the Agent shall establish the Letter of Credit Collateral Account
and the Borrower shall execute any documents and agreements, including the
Agent's standard form assignment of deposit accounts, that the Agent requests in
connection therewith to establish the Letter of Credit Collateral Account and
grant the Agent a first priority security interest in such account and the funds
therein. The Borrower hereby pledges to the Agent and grants the Agent a
security interest in the Letter of Credit Collateral Account, whenever
established, all funds held in the Letter of Credit Collateral Account from time
to time, and all proceeds thereof as security for the payment of the
Obligations.
(ii) Funds held in the Letter of Credit Collateral Account
shall be held as cash collateral for obligations with respect to Letters of
Credit and promptly applied by the Agent to any reimbursement or other
obligations under Letters of Credit that exist or occur. To the extent that any
surplus funds are held in the Letter of Credit Collateral Account above the
Letter of Credit Exposure, during the existence of an Event of Default the Agent
may (A) hold such surplus funds in the Letter of Credit Collateral Account as
cash collateral for the Credit Obligations or (B) apply such surplus funds to
any Credit Obligations in accordance with Section 6.9. If no Default exists, the
Agent shall release to the Borrower at the Borrower's written request any funds
held in the Letter of Credit Collateral Account above the amounts required by
Section 2.2(d).
(iii) Funds held in the Letter of Credit Collateral
Account shall be invested in money market funds of the Agent or in another
investment if mutually agreed upon by the Borrower and the Agent, but the Agent
shall have no other obligation to make any other investment of the funds
therein. The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Letter of Credit Collateral Account and
shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Agent accords its own property, it
being understood that the Agent shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with respect to any such
funds.
(h) EXISTING LETTERS OF CREDIT. Upon the date of the execution of
this Agreement, the Issuing Bank shall be deemed to have sold to each other Bank
and each other Bank shall be deemed to have purchased from the Issuing Bank a
ratable participation in each Existing Letter of Credit. The Issuing Bank shall
arrange with the Agent and the Banks to prorate and ratably distribute to the
Banks the fees previously paid to the Issuing Bank with respect to such Existing
Letters of Credit.
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2.3 SWING LINE FACILITY.
(a) COMMITMENT. The Swing Line Lender agrees, on the terms and
conditions set forth in the Swing Line Note, to make advances to the Borrower
under the Swing Line Note. No Bank shall have any rights thereunder (but each
Bank shall have the obligation to reimburse the Swing Line Lender in accordance
with paragraph (b) below). The indebtedness of the Borrower to the Swing Line
Lender resulting from the advances under the Swing Line Note made by the Swing
Line Lender shall be evidenced by the Swing Line Note made by the Borrower.
(b) REIMBURSEMENTS FOR SWING LINE LOAN OBLIGATIONS. With respect
to the Swing Line Loan and the interest, premium, fees, and other amounts owed
by the Borrower to the Swing Line Lender in connection with the Swing Line Note,
and in accordance with the terms of the Swing Line Note, the Borrower agrees to
pay to the Swing Line Lender such amounts when due and payable to the Swing Line
Lender under the Swing Line Note. If the Borrower does not pay to the Swing Line
Lender any such amounts when due and payable to the Swing Line Lender under the
Swing Line Note, in addition to any rights the Swing Line Lender may have under
such Swing Line Note, the Swing Line Lender may upon written notice to the Agent
request the satisfaction of such obligation by the making of a Revolving Loan
Borrowing in the amount of any such amounts not paid when due and payable. Upon
such request, the Borrower shall be deemed to have requested the making of a
Revolving Loan Borrowing in the amount of such obligation and the transfer of
the proceeds thereof to the Swing Line Lender. Such Revolving Loan Borrowing
shall be comprised of a Prime Rate Tranche. The Agent shall promptly forward
notice of such Revolving Loan Borrowing to the Borrower and the Banks, and each
Bank shall, in accordance with the procedures of Section 2.1(b), other than
limitations on the size of Revolving Loan Borrowings, and notwithstanding the
failure of any conditions precedent, make available such Bank's ratable share of
such Revolving Loan Borrowing to the Agent, and the Agent shall promptly deliver
the proceeds thereof to the Swing Line Lender for application to such amounts
owed to the Swing Line Lender. The Borrower hereby unconditionally and
irrevocably authorizes, empowers, and directs the Swing Line Lender to make such
requests for Revolving Loan Borrowings on behalf of the Borrower, and the Banks
to make Revolving Loan Advances to the Agent for the benefit of the Swing Line
Lender in satisfaction of such obligations. The Agent and each Bank may record
and otherwise treat the making of such Revolving Loan Borrowings as the making
of a Revolving Loan Borrowing to the Borrower under this Agreement as if
requested by the Borrower. Nothing herein is intended to release the Borrower's
obligations under the Swing Line Note, but only to provide an additional method
of payment therefor. The making of any Borrowing under this Section 2.4(b) shall
not
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constitute a cure or waiver of any Default or Event of Default caused by the
Borrower's failure to comply with the provisions of this Agreement or the Swing
Line Note.
2.4 FEES.
(a) UPFRONT FEES. The Borrower shall pay to the Agent for the
ratable benefit of each Bank an upfront fee for such Bank equal to the product
of the Commitment of such Bank multiplied by the upfront fee percentage set
forth below for the applicable level of commitment such Bank offered to the
Borrower and NationsBanc Capital Markets, Inc., in writing prior to the
allocation of Commitments under this Agreement:
OFFERED COMMITMENT LEVEL UPFRONT FEE
------------------------ -----------
(greater than)=$25,000,000 0.30%
(less than)$25,000,000 but (greater than)=$15,000,000 0.20%
(less than)$15,000,000 but (greater than)=$10,000,000 0.15%
(less than)$10,000,000 0.10%
(b) COMMITMENT FEES. The Borrower shall pay to the Agent for the
ratable benefit of the Banks a commitment fee in an amount equal to the product
of the Applicable Margin for commitment fees in effect from time to time
multiplied by the average daily amount by which (i) the aggregate amount of the
Revolving Loan Commitments exceeds (ii) the aggregate outstanding principal
amount of the Revolving Loan plus the Letter of Credit Exposure. The commitment
fee shall be due and payable in arrears on the last day of each calendar quarter
and the Revolving Loan Maturity Date.
(c) FEES FOR LETTERS OF CREDIT. For each Letter of Credit issued
by the Issuing Bank, the Borrower shall pay to the Agent for the ratable benefit
of the Banks a letter of credit fee equal to the Applicable Margin for letter of
credit fees per annum on the face amount of such Letter of Credit for the stated
term of such Letter of Credit, with a minimum fee of $500. In addition, for each
Letter of Credit issued by the Issuing Bank, the Borrower shall pay to the Agent
for the benefit of the Issuing Bank a fronting fee of 0.125% per annum on the
face amount of such Letter of Credit for the stated term of such Letter of
Credit, with a minimum fee of $500. The Borrower shall pay such letter of credit
fees for each Letter of Credit quarterly in arrears within ten days after when
billed therefor by the Issuing Bank.
(d) AGENT FEE LETTER. The Borrower shall pay to the parties
specified therein the fees and other amounts payable under the Agent Fee Letter.
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2.5 INTEREST.
(a) ELECTION OF INTEREST RATE BASIS. The Borrower may select the
interest rate basis for each Loan to the Borrower in accordance with the terms
of this Section 2.5(a):
(i) Under the Borrowing Request provided to the Agent in
connection with the making of each Borrowing under any Loan, the Borrower shall
select the amount and the Type of the Tranches, and for each LIBOR Tranche
selected, any permitted Interest Period for each such LIBOR Tranche, which will
comprise such Borrowing, provided that (A) at no time shall there be more than
six separate LIBOR Tranches outstanding under any Loan and (B) each Tranche must
be in a principal amount equal to or greater than the Minimum Tranche Amount and
be made in multiples of the Minimum Tranche Multiple. Such interest rate
elections must be provided to the Agent in writing or by telecopy not later than
1:00 p.m. (local time at the Applicable Lending Office of the Agent) on the
third Business Day before the date of any proposed Borrowing comprised of a
LIBOR Tranche or 11:00 a.m. (local time at the Applicable Lending Office of the
Agent) on the same day of any proposed Borrowing comprised solely of a Prime
Rate Tranche. The Agent shall promptly forward copies of such interest rate
elections to the Banks. In the case of any Borrowing comprised of a LIBOR
Tranche, upon determination by the Agent, the Agent shall promptly notify the
Borrower and the Banks of the applicable interest rate to such Tranche.
(ii) With respect to any Tranche under any Loan, the
Borrower may continue or convert any portion of any LIBOR Tranche or Prime Rate
Tranche to form new LIBOR Tranches or Prime Rate Tranches under the same Loan in
accordance with this paragraph. Each such continuation or conversion shall be
deemed to create a new Tranche for all purposes of this Agreement. Each such
continuation or conversion shall be made pursuant to a Continuation/Conversion
Request given by the Borrower to the Agent in writing or by telecopy not later
than 2:00 p.m. (local time at the Applicable Lending Office of the Agent) on the
third Business Day before the date of the proposed continuation or conversion.
Each Continuation/Conversion Request shall be fully completed and shall specify
the information required therein, and shall be irrevocable and binding on the
Borrower. If the Continuation/Conversion Request is accepted by the Agent, the
Agent shall promptly forward notice of the continuation or conversion to the
Banks. In the case of any continuation or conversion into LIBOR Tranches, upon
determination by the Agent, the Agent shall notify the Borrower and the Banks of
the applicable interest rate. Continuations and conversions of Tranches shall be
made in integral multiples of the Minimum Tranche Multiple. No continuation or
conversion shall be permitted if such continuation or conversion would cause the
aggregate outstanding principal amount of any LIBOR Tranche which would remain
outstanding or the aggregate outstanding principal amount of all Prime Rate
Tranches
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which would remain outstanding to be less than the Minimum Tranche Amount. At no
time shall there be more than six separate LIBOR Tranches outstanding under any
Loan. Any conversion of an existing LIBOR Tranche is subject to Section 2.6.
Subject to the satisfaction of all applicable conditions precedent, the Agent
and the Banks shall before close of business on the date requested by the
Borrower for the continuation or conversion, make such continuation or
conversion.
(iii) At the end of the Interest Period for any LIBOR
Tranche if the Borrower has not continued or converted such LIBOR Tranche into
new Tranches as provided for in paragraph (ii) above, the Borrower shall be
deemed to have continued such LIBOR Tranche as a new LIBOR Tranche under the
same Loan with an Interest Period of one month. Each Prime Rate Tranche shall
continue as a Prime Rate Tranche under the same Loan unless the Borrower
converts such Prime Rate Tranche as provided for in paragraph (ii) above.
(b) LIBOR TRANCHES. Each LIBOR Tranche shall bear interest during
its Interest Period at a per annum interest rate equal to the sum of the LIBOR
for such Tranche plus the Applicable Margin for LIBOR Tranches in effect from
time to time. The Borrower shall pay to the Agent for the ratable benefit of the
Banks all accrued but unpaid interest on each LIBOR Tranche on the last day of
the applicable Interest Period for such LIBOR Tranche (and with respect to LIBOR
Tranches with Interest Periods of greater than three months, on the date which
is three months after the first date of the Interest Period for such LIBOR
Tranche), when required upon prepayment as specified elsewhere in this
Agreement, on any date when any portion of any LIBOR Tranche is prepaid in full
(but only to the extent of the portion of any such LIBOR Tranche is prepaid),
and on the applicable Maturity Date for each such LIBOR Tranche.
(c) PRIME RATE TRANCHES. Each Prime Rate Tranche shall bear
interest at a per annum interest rate equal to the Adjusted Prime Rate in effect
from time to time plus the Applicable Margin for Prime Rate Tranches in effect
from time to time. The Borrower shall pay to the Agent for the ratable benefit
of the Banks all accrued but unpaid interest on outstanding Prime Rate Tranches
on the last day of each calendar quarter, when required upon prepayment as
specified elsewhere in this Agreement, on any date all Prime Rate Tranches are
prepaid in full, and on the applicable Maturity Date for each such Prime Rate
Tranche.
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(d) USURY PROTECTION.
(i) If, with respect to any Bank and the Borrower, the
effective rate of interest contracted for by such Bank with the Borrower under
the Credit Documents, including the stated rates of interest contracted for
hereunder and any other amounts contracted for under the Credit Documents which
are deemed to be interest, at any time exceeds the Highest Lawful Rate, then the
outstanding principal amount of the loans made by such Bank to the Borrower
hereunder shall bear interest at a rate which would make the effective rate of
interest on the loans made by such Bank to the Borrower under the Credit
Documents equal the Highest Lawful Rate until the difference between the amounts
which would have been due by the Borrower to such Bank at the stated rates and
the amounts which were due by the Borrower to such Bank at the Highest Lawful
Rate (the "Lost Interest") has been recaptured by such Bank. If, when the loans
made hereunder are repaid in full, the Lost Interest has not been fully
recaptured by such Bank pursuant to the preceding paragraph, then, to the extent
permitted by law, the interest rates charged by such Bank to the Borrower
hereunder shall be retroactively increased such that the effective rate of
interest on the loans made by such Bank to the Borrower under the Credit
Documents was at the Highest Lawful Rate since the effectiveness of this
Agreement to the extent necessary to recapture the Lost Interest not recaptured
pursuant to the preceding sentence and, to the extent allowed by law, the
Borrower shall pay to such Bank the amount of the Lost Interest remaining to be
recaptured by such Bank.
(ii) In calculating all sums paid or agreed to be paid to
any Bank by the Borrower for the use, forbearance, or detention of money under
the Credit Documents, such amounts shall, to the extent permitted by applicable
law, be amortized, prorated, allocated, and spread in equal parts throughout the
term of the Credit Documents.
(iii) NOTWITHSTANDING THE FOREGOING OR ANY OTHER TERM IN
THIS AGREEMENT AND THE CREDIT DOCUMENTS TO THE CONTRARY, it is the intention of
each Bank and the Borrower to conform strictly to any applicable usury laws.
Accordingly, if any Bank contracts for, charges, or receives any consideration
from the Borrower which constitutes interest in excess of the Highest Lawful
Rate, then any such excess shall be canceled automatically and, if previously
paid, shall at such Bank's option be applied to the outstanding amount of the
loans made hereunder by such Bank to the Borrower or be refunded to the
Borrower.
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2.6 BREAKAGE COSTS. If (i) any payment of principal on or any conversion
of any LIBOR Tranche is made on any date other than the last day of the Interest
Period for such LIBOR Tranche, whether as a result of any voluntary or mandatory
prepayment, any acceleration of maturity, or any other cause, (ii) any payment
of principal on any LIBOR Tranche is not made when due, or (iii) any LIBOR
Tranche is not borrowed, converted, or prepaid in accordance with the respective
notice thereof provided by the Borrower to the Agent, whether as a result of any
failure to meet any applicable conditions precedent for borrowing, conversion,
or prepayment, the permitted cancellation of any request for borrowing,
conversion, or prepayment, the failure of the Borrower to provide the respective
notice of borrowing, conversion, or prepayment, or any other cause not specified
above which is created by the Borrower, then the Borrower shall pay to each Bank
upon demand any amounts required to compensate such Bank for any losses, costs,
or expenses, including lost profits and administrative expenses, which are
reasonably allocable to such action, including losses, costs, and expenses
related to the liquidation or redeployment of funds acquired or designated by
such Bank to fund or maintain such Bank's ratable share of such LIBOR Tranche or
related to the reacquisition or redesignation of funds by such Bank to fund or
maintain such Bank's ratable share of such LIBOR Tranche following any
liquidation or redeployment of such funds caused by such action. A certificate
as to the amount of such loss, cost, or expense detailing the calculation
thereof and certifying that such Bank customarily charges such amounts to its
other customers in similar circumstances submitted by such Bank to the Borrower
shall be conclusive and binding for all purposes, absent manifest error.
2.7 INCREASED COSTS.
(a) COST OF FUNDS. If due to either (i) any introduction of,
change in, or change in the interpretation of any law or regulation after the
date of this Agreement or (ii) compliance with any guideline or request from any
central bank or other governmental authority having appropriate jurisdiction
(whether or not having the force of law) given after the date of this Agreement,
there shall be any increase in the costs of any Bank allocable to (x) committing
to make any Advance or obtaining funds for the making, funding, or maintaining
of such Bank's ratable share of any LIBOR Tranche in the relevant interbank
market or (y) committing to make Letters of Credit or issuing, funding, or
maintaining Letters of Credit (including any increase in any applicable reserve
requirement specified by the Federal Reserve Board, including those for
emergency, marginal, supplemental, or other reserves), then the Borrower shall
pay to such Bank upon demand any amounts required to compensate such Bank for
such increased costs, such amounts being due and payable upon demand by such
Bank. A certificate as to the cause and amount of such increased cost detailing
the calculation of such cost and certifying that such Bank customarily charges
such amounts to its other customers in similar circumstances submitted by such
Bank to the Borrower
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shall be conclusive and binding for all purposes, absent manifest error. No Bank
may make any claim for compensation under this Section 2.7(a) for increased
costs incurred before 90 days prior to the delivery of any such certificate.
(b) CAPITAL ADEQUACY. If, due to either (i) any introduction of,
change in, or change in the interpretation of any law or regulation after the
date of this Agreement or (ii) compliance with any guideline or request from any
central bank or other governmental authority having appropriate jurisdiction
(whether or not having the force of law) given after the date of this Agreement,
there shall be any increase in the capital requirements of any Bank or its
parent or holding company allocable to (x) committing to make Advances or
making, funding, or maintaining Advances or (y) committing to make Letters of
Credit or issuing, funding, or maintaining Letters of Credit, as such capital
requirements are allocated by such Bank, then the Borrower shall pay to such
Bank upon demand any amounts required to compensate such Bank or its parent or
holding company for such increase in costs (including an amount equal to any
reduction in the rate of return on assets or equity of such Bank or its parent
or holding company), such amounts being due and payable upon demand by such
Bank. A certificate as to the cause and amounts detailing the calculation of
such amounts and certifying that such Bank customarily charges such amounts to
its other customers in similar circumstances submitted by such Bank to the
Borrower shall be conclusive and binding for all purposes, absent manifest
error. No Bank may make any claim for compensation under this Section 2.7(b) for
increased costs incurred before 90 days prior to the delivery of any such
certificate.
2.8 ILLEGALITY. Notwithstanding any other provision in this Agreement,
if it becomes unlawful for any Bank to obtain deposits or other funds for making
or funding such Bank's ratable share of any LIBOR Tranche in the relevant
interbank market, such Bank shall so notify the Borrower and the Agent and such
Bank's commitment to create LIBOR Tranches shall be suspended until such
condition has passed, all LIBOR Tranches applicable to such Bank shall be
converted to Prime Rate Tranches as of the end of each applicable Interest
Period or earlier if necessary, and all subsequent requests for LIBOR Tranches
shall be deemed to be requests for Prime Rate Tranches with respect to such
Bank.
2.9 MARKET FAILURE. Notwithstanding any other provision in this
Agreement, if the Agent determines that: (a) quotations of interest rates for
the relevant deposits referred to in the definition of "LIBOR" are not being
provided in the relevant amounts, or maturities for purposes of determining the
rate of interest referred to in the definition of "LIBOR" or (b) the relevant
rates of interest referred to in the definition of "LIBOR" which are used as the
basis to determine the rate of interest for LIBOR Tranches are not likely to
adequately cover the cost to any Bank of making or
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maintaining such Bank's ratable share of any LIBOR Tranche, then if the Agent so
notifies the Borrower, the Agent and the Banks' commitment to create LIBOR
Tranches shall be suspended until such condition has passed, all LIBOR Tranches
shall be converted to Prime Rate Tranches as of the end of each applicable
Interest Period or earlier if necessary, and all subsequent requests for LIBOR
Tranches shall be deemed to be requests for Prime Rate Tranches.
2.10 PAYMENT PROCEDURES AND COMPUTATIONS.
(a) PAYMENT PROCEDURES. Time is of the essence in this Agreement
and the Credit Documents. All payment hereunder shall be made in Dollars. The
Borrower shall make each payment under this Agreement and under the Notes not
later than 12:00 noon (local time at the Applicable Lending Office of the Agent)
on the day when due to the Agent at the Agent's Applicable Lending Office in
immediately available funds. All payments by the Borrower hereunder shall be
made without any offset, abatement, withholding, or reduction. Upon receipt of
payment from the Borrower of any principal, interest, or fees due to the Banks,
the Agent shall promptly after receipt thereof distribute to the Banks their
ratable share of such payments for the account of their respective Applicable
Lending Offices. If and to the extent that the Agent shall not have so
distributed to any Bank its ratable share of such payments, the Agent agrees
that it shall pay interest on such amount for each day after the day when such
amount is made available to the Agent by the Borrower until the date such amount
is paid to such Bank by the Agent at the Federal Funds Rate in effect from time
to time, provided that if such amount is not paid by the Agent by the end of the
third day after the Borrower makes such amount available to the Agent, the
interest rates specified above shall be increased by a per annum amount equal to
2.00% on the fourth day and shall remain at such increased rate thereafter.
Interest on such amount shall be due and payable by the Agent upon demand by
such Bank. Upon receipt of other amounts due solely to the Agent, the Issuing
Bank, the Swing Line Lender, or a specific Bank, the Agent shall distribute such
amounts to the appropriate party to be applied in accordance with the terms of
this Agreement.
(b) AGENT RELIANCE. Unless the Agent shall have received written
notice from the Borrower prior to any date on which any payment is due to the
Banks that the Borrower shall not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such date an amount equal to the amount then due such Bank. If and
to the extent the Borrower shall not have so made such payment in full to the
Agent, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank, together with interest thereon from the date such
amount is distributed to such Bank until the date such Bank repays such amount
to the Agent, at an interest rate equal to, the Federal Funds Rate in effect
from time to time,
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provided that with respect to such Bank, if such amount is not repaid by such
Bank by the end of the second day after the date of the Agent's demand, the
interest rates specified above shall be increased by a per annum amount equal to
2.00% on the third day after the date of the Agent's demand and shall remain at
such increased rate thereafter.
(c) SHARING OF PAYMENTS. Each Bank agrees that if it should
receive any payment (whether by voluntary payment, by realization upon security,
by the exercise of the right of setoff or banker's lien, by counterclaim or
cross action, by the enforcement of any right under the Credit Documents, or
otherwise) in respect of any obligation of the Borrower to pay principal,
interest, fees, or any other obligation incurred under the Credit Documents in a
proportion greater than the total amount of such principal, interest, fees, or
other obligation then owed and due by the Borrower to such Bank bears to the
total amount of principal, interest, fees, or other obligation then owed and due
by the Borrower to all of the Banks immediately prior to such receipt, then such
Bank receiving such excess payment shall purchase for cash without recourse from
the other Banks an interest in the obligations of the Borrower to such Banks in
such amount as shall result in a participation by all of the Banks, in
proportion with the Banks' respective pro rata shares, in the aggregate unpaid
amount of principal, interest, fees, or any such other obligation, as the case
may be, owed by the Borrower to all of the Banks; provided that if all or any
portion of such excess payment is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, in proportion with the Banks' respective pro rata shares, but
without interest.
(d) AUTHORITY TO CHARGE ACCOUNTS. The Agent, if and to the extent
payment owed to the Agent or any Bank is not made when due, may charge from time
to time against any account of the Borrower with the Agent any amount so due.
The Agent agrees promptly to notify the Borrower after any such charge and
application made by the Agent provided that the failure to give such notice
shall not affect the validity of such charge and application.
(e) INTEREST AND FEES. Unless expressly provided for in this
Agreement, (i) all computations of interest based on the Prime Rate (including
the Adjusted Prime Rate, when applicable) shall be made on the basis of a
365/366 day year, as the case may be, (ii) all computations of interest based on
the Federal Funds Rate (including the Adjusted Prime Rate, when applicable)
shall be made on the basis of a 360 day year, (iii) all computations of interest
based upon the LIBOR shall be made on the basis of a 360 day year, and (iv) all
computations of fees shall be made on the basis of a 360 day year, in each case
for the actual number of days (including the first day, but excluding the last
day) occurring in the period for which such interest or fees are payable. Each
determination by the Agent of an interest rate or fee shall be conclusive and
binding for all purposes, absent manifest error.
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(f) PAYMENT DATES. Whenever any payment shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.
If the time for payment for an amount payable is not specified in this Agreement
or in any other Credit Document, the payment shall be due and payable on demand
by the Agent or the applicable Bank.
2.11 TAXES.
(a) NO DEDUCTION FOR CERTAIN TAXES. Any and all payments by the
Borrower shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges, or withholdings,
and all liabilities with respect thereto, other than taxes imposed on the income
and franchise taxes imposed on the Agent, any Bank, or the Applicable Lending
Office thereof by any jurisdiction in which any such entity is a citizen or
resident or any political subdivision of such jurisdiction (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable to the Agent, any Bank,
or the Applicable Lending Office thereof, (i) the sum payable shall be increased
as may be necessary so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.11), such
Person receives an amount equal to the sum it would have received had no such
deductions been made; (ii) the Borrower shall make such deductions; and (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) OTHER TAXES. The Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges, or
similar levies which arise from any payment made or from the execution,
delivery, or registration of, or otherwise with respect to, this Agreement or
the other Credit Documents (other than those which become due as a result of any
Bank joining this Agreement as a result of any Assignment and Acceptance, which
shall be paid by the Bank which becomes a Bank hereunder as a result of such
Assignment and Acceptance).
(c) FOREIGN BANK WITHHOLDING EXEMPTION. Each Bank and Issuing
Bank that is not incorporated under the laws of the United States of America or
a state thereof agrees that it shall deliver to the Borrower and the Agent (i)
two duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such Bank is entitled to receive payments under this Agreement and the
Notes payable to it, without deduction or withholding of any United States
federal income taxes, (ii) if applicable,
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an Internal Revenue Service Form W-8 or W-9 or successor applicable form, as the
case may be, to establish an exemption from United States backup withholding
tax, and (iii) any other governmental forms which are necessary or required
under an applicable tax treaty or otherwise by law to reduce or eliminate any
withholding tax, which have been reasonably requested by the Borrower. Each Bank
which delivers to the Borrower and the Agent a Form 1001 or 4224 and Form W-8 or
W-9 pursuant to the next preceding sentence further undertakes to deliver to the
Borrower and the Agent two further copies of the said letter and Form 1001 or
4224 and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such letter or
form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent letter and form previously delivered by it to the
Borrower and the Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrower and the Agent certifying in the case of
a Form 1001 or 4224 that such Bank is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes. If an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any delivery required by the
preceding sentence would otherwise be required which renders all such forms
inapplicable or which would prevent any Bank from duly completing and delivering
any such letter or form with respect to it and such Bank advises the Borrower
and the Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax, and in the case of a Form
W-8 or W-9, establishing an exemption from United States backup withholding tax,
such Bank shall not be required to deliver such letter or forms. The Borrower
shall withhold tax at the rate and in the manner required by the laws of the
United States with respect to payments made to a Bank failing to provide the
requisite Internal Revenue Service forms in a timely manner. Each Bank which
fails to provide to the Borrower in a timely manner such forms shall reimburse
the Borrower upon demand for any penalties paid by the Borrower as a result of
any failure of the Borrower to withhold the required amounts that are caused by
such Bank's failure to provide the required forms in a timely manner.
ARTICLE 3. CONDITIONS PRECEDENT.
3.1 CONDITIONS PRECEDENT TO INITIAL EXTENSIONS OF CREDIT. The obligation
of each Bank to make the initial extension of credit under this Agreement,
including the making of any Advances, and the issuance of any Letters of Credit,
shall be subject to the condition precedent that the Borrower shall have
delivered or shall have caused to be delivered the documents and other items
listed on EXHIBIT F, together with any other documents requested by the Agent to
document the agreements and intent of the Credit Documents, each in form and
with substance satisfactory to the Agent;
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3.2 CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. The obligation of
each Bank to make any extension of credit under this Agreement, including the
making of any Advances, and the issuance, increase, or extension of any Letters
of Credit, shall be subject to the further conditions precedent that on the date
of such extension of credit:
(a) REPRESENTATIONS AND WARRANTIES. As of the date of the making
of any extension of credit hereunder, the representations and warranties
contained in each Credit Document shall be true and correct in all material
respects as of such date (and the Borrower's request for the making of any
extension of credit hereunder shall be deemed to be a restatement,
representation, and additional warranty of the representations and warranties
contained in each Credit Document as of such date);
(b) DEFAULT. As of the date of the making of any extension of
credit hereunder, there shall exist no Default or Event of Default, and the
making of the extension of credit would not cause or be reasonably expected to
cause a Default or Event of Default; and
(c) MATERIAL ADVERSE CHANGE. There shall not have occurred any
Material Adverse Change since May 14, 1996.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
to the Agent and each Bank, and with each request for any extension of credit
hereunder, including the making of any Advances, and the issuance, increase, or
extension of any Letters of Credit, again represents and warrants to the Agent
and each Bank, as follows:
4.1 ORGANIZATION. As of the date of this Agreement, each Restricted
Entity (a) is duly organized, validly existing, and in good standing under the
laws of such Person's respective jurisdiction of organization and (b) is duly
licensed, qualified to do business, and in good standing in each jurisdiction in
which such Person is organized, owns property, or conducts operations to the
extent that any failure to be so licensed, qualified, or in good standing could
reasonably be expected to cause a Material Adverse Change.
4.2 AUTHORIZATION. The execution, delivery, and performance by each
Credit Party of the Credit Documents to which such Credit Party is a party and
the consummation of the transactions contemplated thereby (a) do not contravene
the organizational documents of such Credit Party, (b) have been duly authorized
by all necessary corporate action of each Credit Party, and (c) are within each
Credit Party's corporate powers.
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4.3 ENFORCEABILITY. Each Credit Document to which any Credit Party is a
party has been duly executed and delivered by each Credit Party which is a party
to such Credit Document and constitutes the legal, valid, and binding obligation
of each such Credit Party, enforceable against each such Credit Party in
accordance with such Credit Document's terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time
in effect affecting the rights of creditors generally and subject to the
availability of equitable remedies.
4.4 ABSENCE OF CONFLICTS AND APPROVALS. The execution, delivery, and
performance by each Credit Party of the Credit Documents to which such Credit
Party is a party and the consummation of the transactions contemplated thereby,
(a) do not result in any violation or breach of any provisions of, or constitute
a default under, any note, indenture, credit agreement, security agreement,
credit support agreement, or other similar agreement to which such Credit Party
is a party or any other material contract or agreement to which such Credit
Party is a party, (b) do not violate any law or regulation binding on or
affecting such Credit Party, (c) do not require any authorization, approval, or
other action by, or any notice to or filing with, any governmental authority,
and (d) do not result in or require the creation or imposition of any Lien
prohibited by this Agreement.
4.5 INVESTMENT COMPANIES. No Restricted Entity or Affiliate thereof is
an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.6 PUBLIC UTILITIES. No Restricted Entity or Affiliate thereof is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended. No Restricted Entity or Affiliate thereof is a regulated public
utility.
4.7 FINANCIAL CONDITION.
(a) The Borrower has delivered to the Agent the Registration
Statement for the Borrower dated as of May 14, 1996, including therein the
proforma combined balance sheet of the Borrower following the public offering of
securities contemplated therein and proforma combined statement of income for
the periods shown therein. Each of these financial statements are accurate and
complete in all material respects and present fairly the financial condition of
Borrower, as of such date in accordance with generally accepted accounting
principles.
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(b) As of the date of the Registration Statement, there were no
material contingent obligations, liabilities for taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses of the Borrower or
any of the Borrower's Subsidiaries, except as disclosed in the Registration
Statement and adequate reserves for such items have been made in accordance with
generally accepted accounting principles. No Material Adverse Change has
occurred since the date of the Registration Statement. No Default exists.
4.8 CONDITION OF ASSETS. Each Restricted Entity has good and
indefeasible title to substantially all of its owned property and valid
leasehold rights in all of its leased property, as reflected in the financial
statements most recently provided to the Agent free and clear of all Liens
except Permitted Liens. Each Restricted Entity possesses and has properly
approved, recorded, and filed, where applicable, all permits, licenses, patents,
patent rights or licenses, trademarks, trademark rights, trade names rights, and
copyrights which are useful in the conduct of its business and which the failure
to possess could reasonably be expected to cause a Material Adverse Change. The
material properties used or to be used in the continuing operations of each
Restricted Entity are in good repair, working order, and condition, normal wear
and tear excepted. The properties of each Restricted Entity have not been
adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of property or cancellation of contracts, permits, or
concessions by a governmental authority, riot, activities of armed forces, or
acts of God or of any public enemy in any manner which (after giving effect to
any insurance proceeds) could reasonably be expected to cause a Material Adverse
Change.
4.9 LITIGATION. There are no actions, suits, or proceedings pending or,
to the knowledge of any Restricted Entity, threatened against any Restricted
Entity at law, in equity, or in admiralty, or by or before any governmental
department, commission, board, bureau, agency, or instrumentality, domestic or
foreign, or any arbitrator which could reasonably be expected to cause a
Material Adverse Change.
4.10 SUBSIDIARIES. As of the date of this Agreement, the Borrower has no
Subsidiaries except as disclosed in SCHEDULE II. The Borrower has no
Subsidiaries which have not been disclosed in writing to the Agent.
4.11 LAWS AND REGULATIONS. Each Restricted Entity has been and is in
compliance with all federal, state, and local laws and regulations which are
applicable to the operations and property of such Person and which the failure
to comply with could reasonably be expected to cause a Material Adverse Change.
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4.12 ENVIRONMENTAL COMPLIANCE. Each Restricted Entity has been and is in
compliance with all Environmental Laws and has obtained and is in compliance
with all related permits necessary for the ownership and operation of any such
Person's properties which the failure to be in compliance with could reasonably
be expected to cause a Material Adverse Change. Each Restricted Entity has never
received notice of and has never been investigated for any violation or alleged
violation of any Environmental Law in connection with any such Person's
presently or previously owned properties which threaten action or suggest
liabilities which could reasonably be expected to cause a Material Adverse
Change. Each Restricted Entity does not and has not created, handled,
transported, used, or disposed of any Hazardous Materials on or about any such
Person's properties (nor has any such Person's properties been used for those
purposes), except in compliance with all Environmental Laws and related permits;
has never been responsible for the release of any Hazardous Materials into the
environment in connection with any such Person's operations and have not
contaminated any properties with Hazardous Materials; and does not and has not
owned any properties contaminated by any Hazardous Materials, in each case in
any manner which could reasonably be expected to cause a Material Adverse
Change. For the purposes of this Section 4.12, any losses covered by the
Borrower's reserve for environmental losses set forth on its most recent
consolidated balance sheet shall be excluded in determining whether any Material
Adverse Change has occurred.
4.13 ERISA. Each Restricted Entity and each of their respective Commonly
Controlled Entities are in compliance in all material respects with all
provisions of ERISA. No Restricted Entity nor any of their respective Commonly
Controlled Entities participates in or during the past five years has
participated in any employee pension benefit plan covered by Title IV of ERISA
or any multiemployer plan under Section 4001(a)(3) of ERISA. With respect to the
Plans of the Restricted Entities, no Material Reportable Event or Prohibited
Transaction has occurred and exists.
4.14 TAXES. Each Restricted Entity has filed all United States federal,
state, and local income tax returns and all other domestic and foreign tax
returns which are required to be filed by such Person and has paid, or provided
for the payment before the same became delinquent of, all taxes due pursuant to
such returns or pursuant to any assessment received by the such Person except
for tax payments being contested in good faith for which adequate reserves have
been made and reported in accordance with general accepted accounting principals
and which could not reasonably be expected to cause a Material Adverse Change.
The charges, accruals, and reserves on the books of the Restricted Entities in
respect of taxes are adequate in accordance with generally accepted accounting
principles.
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4.15 TRUE AND COMPLETE DISCLOSURE. All factual information furnished by
or on behalf of any Credit Party in writing to the Agent or any Bank in
connection with the Credit Documents and the transactions contemplated thereby
is true and accurate in all material respects on the date as of which such
information was dated or certified and does not contain any untrue statement of
material fact or omit to state any material fact necessary to make the
statements contained therein not misleading. All projections, estimates, and pro
forma financial information furnished by any Credit Party were prepared on the
basis of assumptions, data, information, tests, or conditions believed to be
reasonable at the time such projections, estimates, and pro forma financial
information were furnished.
ARTICLE 5. COVENANTS. Until the Agent and the Banks receive irrevocable payment
of the Credit Obligations and have terminated this Agreement and each other
Credit Document, the Borrower shall comply with and cause compliance with the
following covenants:
5.1 ORGANIZATION. The Borrower shall cause each Restricted Entity to (a)
maintain itself as an entity duly organized, validly existing, and in good
standing under the laws of each such Person's respective jurisdiction of
organization and (b) duly licensed, qualified to do business, and in good
standing in each jurisdiction in which such Person is organized, owns property,
or conducts operations and which requires such licensing or qualification and
where failure to be so licensed, qualified, or in good standing could reasonably
be expected to cause a Material Adverse Change.
5.2 REPORTING. The Borrower shall furnish to the Agent all of the
following:
(a) ANNUAL FINANCIAL REPORTS. As soon as available and in any
event not later than 120 days after the end of each fiscal year of the Borrower,
(i) a copy of the annual audit report for such fiscal year for the Borrower,
including therein the consolidated balance sheets of the Borrower as of the end
of such fiscal year and the consolidated statements of income, stockholders'
equity, and cash flows for the Borrower for such fiscal year, setting forth the
consolidated financial position and results of the Borrower for such fiscal year
and certified, without any qualification or limit of the scope of the
examination of matters relevant to the financial statements, by a nationally
recognized certified public accounting firm and (ii) a completed Compliance
Certificate duly certified by a Responsible Officer of the Borrower;
(b) QUARTERLY FINANCIAL REPORTS. As soon as available and in any
event not later than 45 days after the end of each fiscal quarter, (i) a copy of
the internally prepared consolidated financial statements of the Borrower for
such fiscal quarter and for the fiscal year to date period ending on the last
day of such fiscal quarter, including therein the consolidated balance sheets of
the
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Borrower as of the end of such fiscal quarter and the consolidated statements of
income, and cash flows for such fiscal quarter and for such fiscal year to date
period, setting forth the consolidated financial position and results of the
Borrower for such fiscal quarter and fiscal year to date period, all in
reasonable detail and duly certified by a Responsible Officer of the Borrower as
having been prepared in accordance with generally accepted accounting
principles, including those applicable to interim financial reports which permit
normal year end adjustments and do not require complete financial notes and (ii)
a completed Compliance Certificate duly certified by a Responsible Officer of
the Borrower;
(c) ACQUISITION INFORMATION. As soon as available but in any
event with sufficient time prior to any Acquisition for the Agent to determine
compliance with this Agreement and discuss such matters with the Banks, (i) a
summary of the proposed Acquisition and the effects of the Acquisition on the
Borrower, including the price, assumed liabilities, and other terms thereof,
(ii) drafts of the acquisition documents regarding the acquired assets, and
(iii) historical and proforma financial statements regarding the acquired assets
(including, at a minimum, historical financial statements on a quarterly basis
for the most recently completed four fiscal quarters of the acquired assets,
together with consolidated historical proforma financial statements for the
Borrower for the most recently completed four fiscal quarters of the Borrower
giving effect to the Acquisition and consolidated proforma financial statements
for the Borrower for the next four fiscal quarters of the Borrower giving effect
to the Acquisition, and the schedules and methods used to prepare such proforma
financial statements); and as soon as available prior to the closing of the
Acquisition, reasonable information regarding, (iv) complete acquisition
documents regarding the acquired assets, including opinion letters (which may
only be available for review prior to closing), (v) organization information
regarding the acquired assets, (vi) certificate of title information, lien
searches, and other title information regarding the acquired assets, (vii)
environmental reports regarding the acquired assets, (viii) litigation reports
regarding the acquired assets, (ix) insurance reports regarding insurance
coverage on the acquired assets, (x) summaries of any material liabilities
regarding the acquired assets, and (xi) such other information regarding the
acquired assets as the Agent or the Majority Banks may reasonably request;
(d) SEC FILINGS. As soon as available and in any event not later
than thirty days after the filing or delivery thereof, copies of all financial
statements, reports, and proxy statements which the Borrower shall have sent to
its stockholders generally and copies of all regular and periodic reports, if
any, which any Restricted Entity shall have filed with the Securities and
Exchange Commission;
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(e) DEFAULTS. Promptly, but in any event within five Business
Days after the discovery thereof, a notice of any facts known to any Restricted
Entity which constitute a Default, together with a statement of a Responsible
Officer of the Borrower setting forth the details of such facts and the actions
which the Borrower has taken and proposes to take with respect thereto (and the
Agent shall, promptly upon receipt from the Borrower of a notice pursuant to
this Section 5.2(e), forward a copy of such notice to each Bank);
(f) LITIGATION; MATERIAL CONTINGENT LIABILITIES; MATERIAL
AGREEMENT DEFAULT. The Borrower shall provide to the Agent:
(i) promptly after the commencement thereof, notice of all
actions, suits, and proceedings before any court or governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign,
affecting any Restricted Entity which, if determined adversely, could reasonably
be expected to cause a Material Adverse Change;
(ii) promptly after acquiring knowledge thereof, notice of
any material contingent liabilities; and
(iii) promptly after obtaining knowledge thereof, notice
of any breach by any Restricted Entity of any contract or agreement which breach
could reasonably be expected to cause a Material Adverse Change;
(g) MATERIAL CHANGES. Prompt written notice of any condition or
event of which any Restricted Entity has knowledge, which condition or event has
resulted or could reasonably be expected to cause a Material Adverse Change; and
(h) OTHER INFORMATION. Such other information respecting the
business operations or property of any Restricted Entity, financial or
otherwise, as the Agent or the Majority Banks may from time to time reasonably
request.
5.3 INSPECTION. The Borrower shall cause each Restricted Entity to
permit the Agent and the Banks to visit and inspect any of the properties of
such Restricted Entity, to examine all of such Person's books of account,
records, reports, and other papers, to make copies and extracts therefrom, and
to discuss their respective affairs, finances, and accounts with their
respective officers, employees, and independent public accountants all at such
reasonable times and as often as may be reasonably requested provided that the
Borrower is given at least one Business Day advance notice
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thereof and reasonable opportunity to be present when independent public
accountants or other third parties are contacted.
5.4 USE OF PROCEEDS. The proceeds of the Revolving Loan Borrowings shall
be used by the Borrower only for general corporate and working capital purposes,
including refinancing existing indebtedness of the Borrower and its Subsidiaries
and making Capital Expenditures for transportation equipment, and for financing
Acquisitions in accordance with Section 5.9. The Borrower shall not, directly or
indirectly, use any part of such proceeds for any purpose which violates, or is
inconsistent with, Regulations G, T, U, or X of the Board of Governors of the
Federal Reserve System.
5.5 FINANCIAL COVENANTS. The Agent shall determine compliance with the
following financial covenants based upon the most recent financial statements
dated as of the end of a fiscal quarter delivered to the Agent pursuant to
Section 5.2(b) (subject to revisions on subsequent testing dates based upon
audited financial statements delivered pursuant to Section 5.2(a)) or, if so
noted and if any Acquisitions have occurred that are not reflected in such
financial statements, based upon historical proforma financial statements for
the Borrower and its Subsidiaries as of such date and for the appropriate period
that are prepared in accordance with Section 1.3(c).
(a) NET WORTH. The Borrower shall not permit the consolidated Net
Worth of the Borrower plus the consolidated Subordinated Debt of the Borrower as
of the last day of each fiscal quarter to be less than (i) the greater of 90% of
the consolidated Net Worth of the Borrower as of June 30, 1996, or $35,000,000,
plus (ii) 90% of the cumulative annual consolidated net earnings of the Borrower
for each fiscal year during which the Borrower has positive consolidated net
earnings (and therefore without reduction for any annual consolidated net
losses), plus (iii) 100% of the net proceeds resulting from any sale, issuance,
or assumption of any stock or Subordinated Debt of the Borrower or its
Subsidiaries since the date of this Agreement (provided that the earnings and
net proceeds from any assets acquired in an Acquisition shall be excluded in
such calculations prior to the date of the acquisition thereof except to the
extent an Acquisition is accounted for as a pooling of interests, in which case
the consolidated Net Worth of the Borrower shall be increased (but not
decreased) by the increase in the consolidated Net Worth of the Borrower
resulting from the Acquisition as determined by such accounting method).
(b) TANGIBLE NET WORTH. The Borrower shall not permit the
consolidated Tangible Net Worth of the Borrower as of the last day of each
fiscal quarter to be less than 50% of the consolidated Net Worth of the Borrower
as of such date.
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(c) FUNDED DEBT TO EBITDA RATIO. As of the last day of each
fiscal quarter of the Borrower, the Borrower shall not permit the ratio of (i)
the consolidated Funded Debt of the Borrower less the Subordinated Debt of the
Borrower as of end of the fiscal quarter then ended to (ii) the consolidated
EBITDA of the Borrower for the preceding four fiscal quarters then ended, to be
greater than 3.00 to 1.00 (provided that for both (i) and (ii) above, the
financial results and balance sheet effects of any Acquisitions shall be
included in such calculations for the full period and on the relevant dates).
(d) FIXED CHARGE COVERAGE RATIO. As of the last day of each
fiscal quarter, the Borrower shall not permit the ratio of (i) the consolidated
EBIT of the Borrower for the preceding four fiscal quarters then ended less the
sum of the consolidated Maintenance Capital Expenditures and cash taxes paid by
the Borrower during the preceding four fiscal quarters then ended to (ii) the
consolidated interest expense of the Borrower for the preceding four fiscal
quarters then ended plus the consolidated current maturities of long-term debt
of the Borrower on such day, to be less than 1.25 to 1.00 (provided that for
both (i) and (ii) above, the financial results and balance sheet effects of any
Acquisitions shall be included in such calculations for the full period and on
the relevant dates).
(e) CAPITAL EXPENDITURES. The Borrower shall not permit any
Restricted Entity to make any Capital Expenditure (other than Capital
Expenditures that are deemed to occur because of the making of an Acquisition
and Maintenance Capital Expenditures) that would cause (i) the sum of such
Capital Expenditures of the Restricted Entities during the periods set forth
below, net of the trade-in value of any motorcoaches disposed of by trade-in, to
exceed (ii) the percentage of the consolidated Net Worth of the Borrower, as
reflected on the balance sheet of the Borrower dated as of the fiscal quarter
ending immediately preceding the first day of each such period, set forth below:
Maximum % of
PERIOD CONSOLIDATED NET WORTH
July 1, 1996, through
June 30, 1997 30%
July 1, 1997, through
June 30, 1998 25%
July 1, 1998, through
June 30, 1999 25%
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5.6 DEBT.
(a) The Borrower shall not permit any Restricted Entity to
create, assume, incur, suffer to exist, or in any manner become liable,
directly, indirectly, or contingently in respect of, any Debt other than
Permitted Debt.
(b) The Borrower shall not permit any Restricted Entity to
declare or make any voluntary prepayment or redemption of any amounts owing with
respect to Subordinated Debt prior to the stated due date or maturity thereof.
5.7 LIENS. The Borrower shall not permit any Restricted Entity to
create, assume, incur, or suffer to exist any Lien on any of its real or
personal property whether now owned or hereafter acquired, or assign any right
to receive its income, except for Permitted Liens.
5.8 OTHER OBLIGATIONS.
(a) The Borrower shall not permit any Restricted Entity to
create, incur, assume, or suffer to exist any obligations in respect of unfunded
vested benefits under any pension Plan or deferred compensation agreement.
(b) The Borrower shall not permit any Restricted Entity to
create, incur, assume, or suffer to exist any obligations in respect of
Derivatives, other than Derivatives used by any Restricted Entity in such
Restricted Entity's respective business operations in aggregate notional
quantities not to exceed the reasonably anticipated consumption of such
Restricted Entity of the underlying commodity for the relevant period, but no
Derivatives which are speculative in nature.
5.9 CORPORATE TRANSACTIONS. No Restricted Entity shall (a) merge,
consolidate, or amalgamate with another Person, or liquidate, wind up, or
dissolve itself (or take any action towards any of the foregoing), (b) make any
Acquisition, or (c) convey, sell, lease, assign, transfer, or otherwise dispose
of any of its property, businesses, or other assets except that:
(i) Any Subsidiary of the Borrower may merge, consolidate, or
amalgamate into any wholly owned Subsidiary of the Borrower or convey,
sell, lease, assign, transfer, or otherwise dispose of any of its assets
to any wholly-owned Subsidiary of the Borrower (and if such disposition
transfers all or substantially all of the assets of transferring
Subsidiary, such subsidiary may then liquidate, wind up, or dissolve
itself); provided that the wholly-owned Subsidiary is the surviving or
acquiring Subsidiary;
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(ii) Any Subsidiary of the Borrower may make any Acquisition (by
purchase or merger) provided that (A) the Subsidiary of the Borrower is
the acquiring or surviving entity, (B) the aggregate consideration paid
or incurred by the Restricted Entities (in either case including cash,
indebtedness, assumed indebtedness, transaction related contractual
payments, including amounts payable under noncompete, consulting, and
similar agreements, preferred stock, and stock of Subsidiaries, but
excluding common stock of the Borrower and excluding Subordinated Debt
of the Borrower to the extent the Agent determines that such
Subordinated Debt should not be included in such calculation) in
connection with any Acquisition other than the Initial Acquisitions does
not exceed $20,000,000, (C) the aggregate of such consideration paid or
incurred by the Restricted Entities in connection with all Acquisitions
other than the Initial Acquisitions during any twelve months does not
exceed $30,000,000, (D) the Agent is provided with the information
required under Section 5.2(c), (E) the Agent determines that no Default
or Event of Default exists and the Acquisition would not reasonably be
expected to cause a Default or Event of Default (including any default
under Section 5.5 with respect to historical and future proforma
financial status and results) and with respect to the Initial
Acquisitions, the Agent approves the Initial Acquisitions prior to the
consummation thereof, (F) the acquired assets are in substantially the
same business as the Borrower or any of its Subsidiaries, and (G) the
transaction is not hostile, as reasonably determined by the Agent;
(iii) Any Subsidiary of the Borrower may sell inventory in the
ordinary course of business; and
(iv) Any Subsidiary of the Borrower may merge, consolidate, or
amalgamate with another Person with the other Person as the surviving
entity or convey, sell, lease, assign, transfer, or otherwise dispose of
any of its assets to another Person (and if such disposition transfers
all or substantially all of the assets of transferring Subsidiary, such
Subsidiary may then liquidate, wind up, or dissolve itself) provided
that the result of such transaction would not cause the net book value
of the assets of the Restricted Entities so merged out of the
Subsidiaries of the Borrower or disposed of during any fiscal year of
the Borrower to exceed 10% of the consolidated book value, net of
depreciation, of the transportation equipment of the Borrower as of the
end of the prior fiscal year of the Borrower.
In connection with any mergers or dispositions described in paragraph (iv)
above, and provided that no Default or Event of Default exists or would be
caused thereby, upon reasonable advance written notice from the Borrower of the
intent to so merge or dispose of assets, the Agent shall release at the
Borrower's expense any obligations under the Guaranty of any Subsidiary so
merged and the Lien
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of the Agent in any assets so disposed of and shall execute and deliver in favor
of such Subsidiary any releases reasonably requested by the Borrower to evidence
such release.
5.10 DISTRIBUTIONS. The Borrower shall not (a) declare or pay any
dividends; (b) purchase, redeem, retire, or otherwise acquire for value any of
its capital stock now or hereafter outstanding; or make any distribution of
assets to its stockholders as such, whether in cash, assets, or in obligations
of it; (c) allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption, or retirement of,
any shares of its capital stock; or (d) make any other distribution by reduction
of capital or otherwise in respect of any shares of its capital stock.
5.11 TRANSACTIONS WITH AFFILIATES. The Borrower shall not permit any
Restricted Entity to enter into any transaction directly or indirectly with or
for the benefit of an Affiliate except transactions with an Affiliate for the
leasing of property, the rendering or receipt of services, or the purchase or
sale of inventory or other assets in the ordinary course of business if the
monetary or business consideration arising from such a transaction would be
substantially as advantageous to such Restricted Entity as the monetary or
business consideration which such Restricted Entity would obtain in a comparable
arm's length transaction.
5.12 INSURANCE.
(a) The Borrower shall cause each Restricted Entity to maintain
insurance with responsible and reputable insurance companies or associations
reasonably acceptable to the Agent in such amounts and covering such risks as
are usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which such Persons operate.
Without limiting the foregoing, the Borrower shall maintain insurance coverage
for the Restricted Entities equal to or better than, on an item by item basis
for each item, the coverage for the Restricted Entities existing on the date of
this Agreement. The Borrower shall deliver to the Agent certificates evidencing
such policies or copies of such policies at the Agent's request following a
reasonable period to obtain such certificates taking into account the
jurisdiction where the insurance is maintained.
(b) All policies of the Restricted Entities representing property
insurance shall name the Agent as mortgagee in a form satisfactory to the Agent.
All policies representing liability insurance of the Restricted Entities shall
name the Agent and the Banks as additional named insureds in a form satisfactory
to the Agent. All proceeds of any such property insurance shall be paid directly
to the Agent. If no payments are due under Section 2.1(c)(ii) and no Default
exists, the Agent shall
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dispose of such proceeds in accordance with the instructions of the Borrower,
otherwise such proceeds shall be applied to the Credit Obligations in accordance
with Section 6.9. All proceeds of such liability insurance coverage for the
Agent and the Banks shall be paid as directed by the Agent to indemnify the
Agent or the applicable Bank for the liability covered. In the event that the
proceeds are paid to any Restricted Entity in violation of the foregoing, the
Restricted Entity shall hold the proceeds in trust for the Agent, segregate the
proceeds from the other funds of such Restricted Entity, and promptly pay the
proceeds to the Agent with any necessary endorsement. The Agent shall have the
right, but not the obligation, during the existence of an Event of Default, to
make proof of loss under, settle and adjust any claim under, and receive the
proceeds under the insurance, and the reasonable expenses incurred by the Agent
in the adjustment and collection of such proceeds shall be paid by the Borrower.
The Borrower irrevocably appoints the Agent as its attorney in fact to take such
actions in its name. If the Agent does not take such actions, the Borrower may
take such actions subject to the approval of any final action by the Agent. The
Agent shall not be liable or responsible for failure to collect or exercise
diligence in the collection of any proceeds.
5.13 INVESTMENTS. The Borrower shall not permit any Restricted Entity to
make or hold any direct or indirect investment in any Person, including capital
contributions to the Person, investments in the debt or equity securities of the
Person, and loans, guaranties, trade credit, or other extensions of credit to
the Person, except for Permitted Investments and normal and reasonable advances
in the ordinary course of business to officers and employees.
5.14 LINES OF BUSINESS; DISTRIBUTION. The Borrower shall not permit the
Restricted Entities to change the character of their business as conducted on
the date of this Agreement, or engage in any type of business not reasonably
related to such business as presently and normally conducted; provided that
nothing contained in the foregoing shall prohibit any Restricted Entity from
expanding its business into any of the other types of businesses of any of the
other Restricted Entities as of the date of this Agreement.
5.15 COMPLIANCE WITH LAWS. The Borrower shall cause each Restricted
Entity to comply with all federal, state, and local laws and regulations which
are applicable to the operations and property of such Persons and which the
failure to comply with could reasonably be expected to cause a Material Adverse
Change.
5.16 ENVIRONMENTAL COMPLIANCE. The Borrower shall cause each Restricted
Entity to comply with all Environmental Laws and obtain and comply with all
related permits necessary for the ownership and operation of any such Person's
properties which the failure to comply with could
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reasonably be expected to cause a Material Adverse Change. The Borrower shall
cause each Restricted Entity to promptly disclose to the Agent any notice to or
investigation of such Persons for any violation or alleged violation of any
Environmental Law in connection with any such Person's presently or previously
owned properties which represent liabilities which could reasonably be expected
to cause a Material Adverse Change. The Borrower shall not permit any Restricted
Entity to create, handle, transport, use, or dispose of any Hazardous Materials
on or about any such Person's properties except in compliance with all
Environmental Laws and related permits; release any Hazardous Materials into the
environment in connection with any such Person's operations or contaminate any
properties with Hazardous Materials; or own properties contaminated by any
Hazardous Materials, in each case if such action could reasonably be expected to
cause a Material Adverse Change. For the purposes of this Section 5.16, any
losses covered by the Borrower's reserve for environmental losses set forth on
its most recent consolidated balance sheet shall be excluded in determining
whether any Material Adverse Change has occurred.
5.17 ERISA COMPLIANCE. The Borrower shall cause each Restricted Entity
to (i) comply in all material respects with all applicable provisions of ERISA
and prevent the occurrence of any Reportable Event or Prohibited Transaction
with respect to, or the termination of, any of their respective Plans where the
failure to do so could reasonably be expected to cause a Material Adverse Change
and (ii) not create or participate in any employee pension benefit plan covered
by Title IV of ERISA or any multiemployer plan under Section 4001(a)(3) of
ERISA.
5.18 PAYMENT OF CERTAIN CLAIMS. The Borrower shall cause each Restricted
Entity to pay and discharge, before the same shall become delinquent, (a) all
taxes, assessments, levies, and like charges imposed upon any such Person or
upon any such Person's income, profits, or property by authorities having
competent jurisdiction prior to the date on which penalties attach thereto
except for tax payments being contested in good faith for which adequate
reserves have been made and reported in accordance with generally accepted
accounting principals and which could not reasonably be expected to cause a
Material Adverse Change, (b) all lawful claims which are secured by or which, if
unpaid, would by law become secured by a Lien upon any such Person's property,
and (c) all trade payables and current operating liabilities, unless the same
are less than 90 days past due or are being contested in good faith, have
adequate reserves established and reported in accordance with general accepted
accounting principals, and could not reasonably be expected to cause a Material
Adverse Change.
5.19 SUBSIDIARIES. Upon the formation or acquisition of any new
Subsidiary, the Borrower shall cause such Subsidiary to promptly execute and
deliver to the Agent a Joinder Agreement in substantially the form of EXHIBIT G
with such modifications thereto as the Agent may reasonably
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request for the purpose of joining such Subsidiary as a party to the Guaranty
and the Security Agreement and providing to the Agent the rights of the Agent
intended to be provided thereunder. In connection therewith, the Borrower shall
provide corporate documentation and opinion letters reasonably satisfactory to
the Agent reflecting the corporate status of such new Subsidiary of the Borrower
and the enforceability of such agreements.
ARTICLE 6. DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. Each of the following shall be an "Event of
Default" for the purposes of this Agreement and for each of the Credit
Documents:
(a) PAYMENT FAILURE. The Borrower (i) fails to pay when due any
principal amounts due under this Agreement or any other Credit Document or (ii)
fails to pay when due any interest, fees, reimbursements, indemnifications, or
other amounts due under this Agreement or any other Credit Document and such
failure has not been cured within five Business Days;
(b) FALSE REPRESENTATION. Any written representation or warranty
made by any Credit Party or any Responsible Officer thereof in this Agreement or
in any other Credit Document proves to have been false or erroneous in any
material respect at the time it was made or deemed made;
(c) BREACH OF COVENANT. (i) Any breach by the Borrower of any of
the covenants contained in Sections 5.1(a), 5.2, 5.3, 5.4, 5.5, 5.6, 5.7, 5.8,
5.9, 5.10, 5.13, or 5.19 or (ii) any breach by the Borrower of any other
covenants contained in this Agreement, or any other Credit Document and such
breach is not cured within 10 days following the earlier of knowledge of such
breach by the Borrower or the receipt of written notice thereof from the Agent;
(d) SECURITY DOCUMENTS. Any Security Document shall at any time
and for any reason cease to create the Lien on the property purported to be
subject to such agreement in accordance with the terms of such agreement, or
cease to be in full force and effect, or shall be contested by any party
thereto;
(e) GUARANTY. (i) the Guaranty shall at any time and for any
reason cease to be in full force and effect with respect to any Guarantor
(except as permitted under Section 5.9 hereof) or shall be contested by any
Guarantor, or any Guarantor shall deny it has any further liability or
obligation thereunder, (ii) any breach by any Guarantor of any of the covenants
contained in Sections 1.1 or 1.2 of the Guaranty, or (iii) or any breach by any
Guarantor of any other covenants contained
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in the Guaranty or any other Credit Document and such breach is not cured within
10 days following the earlier of knowledge of such breach by such Guarantor or
the receipt of written notice thereof from the Agent;
(f) MATERIAL DEBT DEFAULT. (i) Any principal, interest, fees, or
other amounts due on any Debt of any Restricted Entity (other than the Credit
Obligations) is not paid when due, whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise, and such failure is not cured
within the applicable grace period, if any, and the aggregate amount of all Debt
of such Persons so in default exceeds $250,000; (ii) any other event shall occur
or condition shall exist under any agreement or instrument relating to any Debt
of any such Person (other than the Credit Obligations) the effect of which is to
accelerate or to permit the acceleration of the maturity of any such Debt,
whether or not any such Debt is actually accelerated, and such event or
condition shall not be cured within the applicable grace period, if any, and the
aggregate amount of all Debt of such Persons so in default exceeds $250,000;
(iii) any Debt of any such Person shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled prepayment) prior to
the stated maturity thereof, and the aggregate amount of all Debt of such
Persons so accelerated exceeds $250,000; or (iv) any default or event of
default, however denominated, occurs under the Swing Line Note;
(g) BANKRUPTCY AND INSOLVENCY. (i) there shall have been filed
against any Restricted Entity or any such Person's properties, without such
Person's consent, any petition or other request for relief seeking an
arrangement, receivership, reorganization, liquidation, or similar relief under
bankruptcy or other laws for the relief of debtors and such request for relief
(A) remains in effect for 60 or more days, whether or not consecutive, or (B) is
approved by a final nonappealable order, or (ii) any such Person consents to or
files any petition or other request for relief of the type described in clause
(i) above seeking relief from creditors, makes any assignment for the benefit of
creditors or other arrangement with creditors, or admits in writing such
Person's inability to pay such Person's debts as they become due;
(h) ADVERSE JUDGMENT. The aggregate outstanding amount of
judgments against the Restricted Parties not discharged or stayed pending appeal
or other court action within 30 days following entry is greater than $500,000;
or
(i) CHANGE OF CONTROL. There shall occur any Change of Control.
6.2 TERMINATION OF COMMITMENTS. Upon the occurrence of any Event of
Default under Section 6.1(g), all of the commitments of the Agent and the Banks
hereunder shall terminate.
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During the existence of any Event of Default other than an Event of Default
under Section 6.1(g), the Agent shall at the request of the Majority Banks
declare by written notice to the Borrower all of the commitments of the Agent
and the Banks hereunder terminated, whereupon the same shall immediately
terminate.
6.3 ACCELERATION OF CREDIT OBLIGATIONS. Upon the occurrence of any Event
of Default under Section 6.1(g), the aggregate outstanding principal amount of
all loans made hereunder, all accrued interest thereon, and all other Credit
Obligations shall immediately and automatically become due and payable. During
the existence of any Event of Default other than an Event of Default under
Section 6.1(g), the Agent shall at the request of the Majority Banks declare by
written notice to the Borrower the aggregate outstanding principal amount of all
loans made hereunder, all accrued interest thereon, and all other Credit
Obligations to be immediately due and payable. In connection with the foregoing,
except for the notice provided for above, the Borrower waives notice of intent
to demand, demand, presentment for payment, notice of nonpayment, protest,
notice of protest, grace, notice of dishonor, notice of intent to accelerate,
notice of acceleration, and all other notices.
6.4 CASH COLLATERALIZATION OF LETTERS OF CREDIT. Upon the occurrence of
any Event of Default under Section 6.1(g), the Borrower shall pay to the Agent
an amount equal to the Letter of Credit Exposure allocable to the Letters of
Credit requested by the Borrower to be held in the Letter of Credit Collateral
Account for disposition in accordance with Section 2.2(g). During the existence
of any Event of Default other than an Event of Default under Section 6.1(g), the
Agent shall at the request of the Majority Banks require by written notice to
the Borrower that the Borrower pay to the Agent an amount equal to the Letter of
Credit Exposure allocable to the Letters of Credit requested by the Borrower to
be held in the Letter of Credit Collateral Account for disposition in accordance
with Section 2.2(g).
6.5 DEFAULT INTEREST. If any Event of Default exists, the Agent shall at
the request of the Majority Banks declare by written notice to the Borrower that
the Credit Obligations specified in such notice shall bear interest beginning on
the date specified in such notice until paid in full at the applicable Default
Rate for such Credit Obligations, and the Borrower shall pay such interest to
the Agent for the benefit of the Agent and the Banks, as applicable, upon
demand.
6.6 RIGHT OF SETOFF. During the existence of an Event of Default, the
Agent and each Bank is hereby authorized at any time, to the fullest extent
permitted by law, to set off and apply any indebtedness owed by the Agent or
such Bank to the Borrower against any and all of the obligations of the Borrower
under this Agreement and the Credit Documents, irrespective of whether or not
the
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Agent or such Bank shall have made any demand under this Agreement or the Credit
Documents and although such obligations may be contingent and unmatured. The
Agent and each Bank, as the case may be, agrees promptly to notify the Borrower
after any such setoff and application made by such party provided that the
failure to give such notice shall not affect the validity of such setoff and
application.
6.7 ACTIONS UNDER CREDIT DOCUMENTS. Following an Event of Default, the
Agent shall at the request of the Majority Banks take any and all actions
permitted under the other Credit Documents, including the Guaranty and the
Security Documents.
6.8 REMEDIES CUMULATIVE. No right, power, or remedy conferred to the
Agent or the Banks in this Agreement and the Credit Documents, or now or
hereafter existing at law, in equity, by statute, or otherwise, shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right, power,
or remedy. No course of dealing and no delay in exercising any right, power, or
remedy conferred to the Agent or the Banks in this Agreement and the Credit
Documents, or now or hereafter existing at law, in equity, by statute, or
otherwise, shall operate as a waiver of or otherwise prejudice any such right,
power, or remedy.
6.9 APPLICATION OF PAYMENTS. Prior to an Event of Default, all payments
made hereunder shall be applied to the Credit Obligations as directed by the
Borrower, subject to the rules regarding the application of payments to certain
Credit Obligations provided for hereunder and in the Credit Documents. During
the existence of an Event of Default, all payments and collections shall be
applied to the Credit Obligations in the following order:
First, to the payment of the costs, expenses, reimbursements
(other than reimbursement obligations with respect to draws under
Letters of Credit), and indemnifications of the Agent that are
due and payable under the Credit Documents;
Then, ratably to the payment of the costs, expenses,
reimbursements (other than reimbursement obligations with respect
to draws under Letters of Credit), and indemnifications of the
Banks that are due and payable under the Credit Documents;
Then, ratably to the payment of all accrued but unpaid interest
and fees and obligations under Interest Hedge Agreements due and
payable under the Credit Documents;
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Then, ratably to the payment of all outstanding principal and
reimbursement obligations for draws under Letters of Credit due
and payable under the Credit Documents;
Then, ratably to the payment of any other amounts due and owing
with respect to the Credit Obligations; and
Finally, any surplus held by the Agent and remaining after
payment in full of all the Credit Obligations and reserve for
Credit Obligations not yet due and payable shall be promptly paid
over to the Borrower or to whomever may be lawfully entitled to
receive such surplus. All applications shall be distributed in
accordance with Section 2.10(a).
ARTICLE 7. THE AGENT AND THE ISSUING BANK
7.1 AUTHORIZATION AND ACTION. Each Bank hereby appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof and of
the other Credit Documents, together with such powers as are reasonably
incidental thereto. Statements under the Credit Documents that the Agent may
take certain actions, without further qualification, means that the Agent may
take such actions with or without the consent of the Banks or the Majority
Banks, but where the Credit Documents expressly require the determination of the
Banks or the Majority Banks, the Agent shall not take any such action without
the prior written consent thereof. As to any matters not expressly provided for
by this Agreement or any other Credit Document (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the written instructions of the Majority Banks, and such
instructions shall be binding upon all Banks and all holders of Notes; provided,
however, that the Agent shall not be required to take any action which exposes
the Agent to personal liability or which is contrary to this Agreement, any
other Credit Document, or applicable law.
7.2 RELIANCE, ETC. Neither the Agent, the Issuing Bank, nor any of their
respective Related Parties (for the purposes of this Section 7.2, collectively,
the "Indemnified Parties") shall be liable for any action taken or omitted to be
taken by any Indemnified Party under or in connection with this Agreement or the
other Credit Documents, INCLUDING ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, except
for any Indemnified Party's gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent and the Issuing Bank:
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(a) may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent; (b) may consult with legal counsel
(including counsel for the Borrower), independent public accountants, and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants, or experts; (c) makes no warranty or representation to any Bank and
shall not be responsible to any Bank for any statements, warranties, or
representations made in or in connection with this Agreement or the other Credit
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants, or conditions of this
Agreement or any other Credit Document on the part of the Credit Parties or to
inspect the property (including the books and records) of the Credit Parties;
(e) shall not be responsible to any Bank for the due execution, legality,
validity, enforceability, genuineness, sufficiency, or value of this Agreement
or any other Credit Document; and (f) shall incur no liability under or in
respect of this Agreement or any other Credit Document by acting upon any
notice, consent, certificate, or other instrument or writing (which may be by
telecopier or telex) reasonably believed by it to be genuine and signed or sent
by the proper party or parties.
7.3 AFFILIATES. With respect to its Commitments, the Advances made by
it, its interests in the Letters of Credit, and the Notes issued to it, the
Agent and the Issuing Bank shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though it were not the
Agent. The term "Bank" or "Banks" shall, unless otherwise expressly indicated,
include the Agent and the Issuing Bank in their individual capacity. The Agent,
the Issuing Bank, and their respective Affiliates may accept deposits from, lend
money to, act as trustee under indentures of, and generally engage in any kind
of business with, any Credit Party, and any Person who may do business with or
own securities of any Credit Party, all as if the Agent were not an agent
hereunder and the Issuing Bank were not the issuer of Letters of Credit
hereunder and without any duty to account therefor to the Banks.
7.4 BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the Registration Statement and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it shall, independently and without
reliance upon the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.
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7.5 EXPENSES. To the extent not paid by the Borrower, each Bank
severally agrees to pay to the Agent and the Issuing Bank on demand such Bank's
ratable share of the following: (a) all reasonable out-of-pocket costs and
expenses of the Agent and the Issuing Bank in connection with the preparation,
execution, delivery, administration, modification, and amendment of this
Agreement and the other Credit Documents, including the reasonable fees and
expenses of outside counsel for the Agent and the Issuing Bank with respect to
advising the Agent and the Issuing Bank as to their respective rights and
responsibilities under this Agreement and the Credit Documents, and (b) all
out-of-pocket costs and expenses of the Agent and the Issuing Bank in connection
with the preservation or enforcement of the rights of the Agent, the Issuing
Bank, and the Banks under this Agreement and the other Credit Documents, whether
through negotiations, legal proceedings, or otherwise, including fees and
expenses of counsel for the Agent and the Issuing Bank. The provisions of this
paragraph shall survive the repayment and termination of the credit provided for
under this Agreement and any purported termination of this Agreement which does
not expressly refer to this paragraph.
7.6 INDEMNIFICATION. To the extent not reimbursed by the Borrower, each
Bank severally agrees to protect, defend, indemnify, and hold harmless the
Agent, the Issuing Bank, and each of their respective Related Parties (for the
purposes of this Section 7.6, collectively, the "Indemnified Parties"), from and
against all demands, claims, actions, suits, damages, judgments, fines,
penalties, liabilities, and out-of-pocket costs and expenses, including
reasonable costs of attorneys and related costs of experts such as accountants
(collectively, the "Indemnified Liabilities"), actually incurred by any
Indemnified Party which are related to any litigation or proceeding relating to
this Agreement, the Credit Documents, or the transactions contemplated
thereunder, INCLUDING ANY INDEMNIFIED LIABILITIES CAUSED BY ANY INDEMNIFIED
PARTY'S OWN NEGLIGENCE, but not Indemnified Liabilities which are a result of
any Indemnified Party's gross negligence or willful misconduct. The provisions
of this paragraph shall survive the repayment and termination of the credit
provided for under this Agreement and any purported termination of this
Agreement which does not expressly refer to this paragraph.
7.7 SUCCESSOR AGENT AND ISSUING BANK. The Agent or the Issuing Bank may
resign at any time by giving written notice thereof to the Banks and the
Borrower and may be removed at any time with or without cause by the Majority
Banks upon receipt of written notice from the Majority Banks to such effect.
Upon receipt of notice of any such resignation or removal, the Majority Banks
shall have the right to appoint a successor Agent or Issuing Bank with the
consent of the Borrower, which consent shall not be unreasonably withheld. If no
successor Agent or Issuing Bank shall have been so appointed by the Majority
Banks with the consent of the Borrower, and shall have accepted such
appointment, within 30 days after the retiring Agent's or Issuing Bank's giving
of notice of
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resignation or the Majority Banks' removal of the retiring Agent or Issuing
Bank, then the retiring Agent or Issuing Bank may, on behalf of the Banks and
the Borrower, appoint a successor Agent or Issuing Bank, which shall be, in the
case of a successor agent, a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $500,000,000 and, in the case of the Issuing Bank, a
Bank. Upon the acceptance of any appointment as Agent or Issuing Bank by a
successor Agent or Issuing Bank, such successor Agent or Issuing Bank shall
thereupon succeed to and become vested with all the rights, powers, privileges,
and duties of the retiring Agent or Issuing Bank, and the retiring Agent or
Issuing Bank shall be discharged from any duties and obligations under this
Agreement and the other Credit Documents after such acceptance, except that the
retiring Issuing Bank shall remain the Issuing Bank with respect to any Letters
of Credit outstanding on the effective date of its resignation or removal and
the provisions affecting the Issuing Bank with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Bank until the termination of
all such Letters of Credit. After any Agent's or Issuing Bank's resignation or
removal hereunder as Agent or Issuing Bank, the provisions of this Article 7
shall inure to such Person's benefit as to any actions taken or omitted to be
taken by such Person while such Person was Agent or Issuing Bank under this
Agreement and the other Credit Documents.
ARTICLE 8. MISCELLANEOUS.
8.1 EXPENSES. The Borrower shall pay on demand of the applicable party
specified herein (a) all reasonable out-of-pocket costs and expenses of the
Agent and the Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, and amendment of this Agreement and the
other Credit Documents, including the reasonable fees and expenses of outside
counsel for the Agent and the Issuing Bank, and (b) all out-of-pocket costs and
expenses of the Agent, the Issuing Bank, and each Bank in connection with the
preservation or enforcement of their respective rights under this Agreement and
the other Credit Documents, whether through negotiations, legal proceedings, or
otherwise, including fees and expenses of counsel for the Agent, the Issuing
Bank, and each Bank. The provisions of this paragraph shall survive the
repayment and termination of the credit provided for under this Agreement and
any purported termination of this Agreement which does not expressly refer to
this paragraph.
8.2 INDEMNIFICATION. The Borrower agrees to protect, defend, indemnify,
and hold harmless the Agent, the Issuing Bank, each Bank, and each of their
respective Related Parties (for the purposes of this Section 8.2, collectively,
the "Indemnified Parties"), from and against all demands, claims, actions,
suits, damages, judgments, fines, penalties, liabilities, and out-of-pocket
costs and expenses, including reasonable costs of attorneys and related costs of
experts such as
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accountants (collectively, the "Indemnified Liabilities"), actually incurred by
any Indemnified Party which are related to any litigation or proceeding relating
to this Agreement, the Credit Documents, or the transactions contemplated
thereunder, INCLUDING ANY INDEMNIFIED LIABILITIES CAUSED BY ANY INDEMNIFIED
PARTY'S OWN NEGLIGENCE, but not Indemnified Liabilities which are a result of
any Indemnified Party's gross negligence or willful misconduct. The provisions
of this paragraph shall survive the repayment and termination of the credit
provided for under this Agreement and any purported termination of this
Agreement which does not expressly refer to this paragraph.
8.3 MODIFICATIONS, WAIVERS, AND CONSENTS. No modification or waiver of
any provision of this Agreement or the Notes, nor any consent required under
this Agreement or the Notes, shall be effective unless the same shall be in
writing and signed by the Agent and Majority Banks and the Borrower, and then
such modification, waiver, or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no modification, waiver, or consent shall, unless in writing and signed by the
Agent, all the Banks, and the Borrower do any of the following: (a) waive any of
the conditions specified in Section 3.1 or 3.2, (b) increase the Commitments of
the Banks, (c) forgive or reduce the amount or rate of any principal, interest,
or fees payable under the Credit Documents, or postpone or extend the time for
payment thereof, (d) release any Guaranty or any material collateral securing
the Credit Obligations (except as otherwise permitted or required herein), or
(e) change the percentage of Banks required to take any action under this
Agreement, the Notes, or the Security Agreement, including any amendment of the
definition of "Majority Banks" or this Section 8.3. No modification, waiver, or
consent shall, unless in writing and signed by the Agent or the Issuing Bank
affect the rights or obligations of the Agent or the Issuing Bank, as the case
may be, under the Credit Documents. The Agent shall not modify or waive or grant
any consent under any other Credit Document of such action would be prohibited
under this Section 8.3 with respect to the Credit Agreement or the Notes.
8.4 SURVIVAL OF AGREEMENTS. All representations, warranties, and
covenants of the Borrower in this Agreement and the Credit Documents shall
survive the execution of this Agreement and the Credit Documents and any other
document or agreement.
8.5 ASSIGNMENT AND PARTICIPATION. This Agreement and the Credit
Documents shall bind and inure to the benefit of the Borrower and their
respective successors and assigns and the Agent and the Banks and their
respective successors and assigns. The Borrower may not assign its rights or
delegate its duties under this Agreement or any Credit Document.
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(a) ASSIGNMENTS. Any Bank may assign to one or more banks or
other entities all or any portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments,
the Advances owing to it, the Notes held by it, and the participation interest
in the Letters of Credit owned by it); provided, however, that (i) each such
assignment shall be of a constant, and not a varying, percentage of all of such
Bank's rights and obligations under this Agreement, (ii) assignments of
Commitments shall be made in minimum amounts of $5,000,000 and be made in
integral multiples of $1,000,000 and the assigning Bank, if it retains any
Commitments, shall maintain at least $5,000,000 in Commitments, (iii) each such
assignment shall be to an Eligible Assignee, (iv) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with the Notes
subject to such assignment, and (v) each Eligible Assignee (other than the
Eligible Assignee of the Agent) shall pay to the Agent a $3,000 administrative
fee. Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least three Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto for all purposes and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and (B) such Bank thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of such Bank's rights and obligations under this Agreement, such Bank
shall cease to be a party hereto).
(b) TERM OF ASSIGNMENTS. By executing and delivering an
Assignment and Acceptance, the Bank thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency of value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Credit Party or the performance or observance by any Credit Party of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the Registration Statement and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such assignee shall, independently and without reliance upon the Agent, such
Bank or any other Bank and
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based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee agrees that
it shall perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Bank.
(c) THE REGISTER. The Agent shall maintain at its address
referred to in Section 8.6 a copy of each Assignment and Acceptance delivered to
and accepted by it and a register for the recordation of the names and addresses
of the Banks and the Commitments of each Bank from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent, the Issuing Bank,
and the Banks may treat each Person whose name is recorded in the Register as a
Bank hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrower or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(d) PROCEDURES. Upon its receipt of an Assignment and Acceptance
executed by a Bank and an Eligible Assignee, together with the Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed in the appropriate form, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register, and (iii) give
prompt notice thereof to the Borrower. Within five Business Days after its
receipt of such notice, the Borrower shall execute and deliver to the Agent in
exchange for the surrendered Notes a new Note to the order of such Eligible
Assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and, if such Bank has retained any Commitment
hereunder, a new Note to the order of such Bank in an amount equal to the
Commitment retained by it hereunder. Such new Notes shall be dated the effective
date of such Assignment and Acceptance and shall be in the appropriate form.
(e) PARTICIPATION. Each Bank may sell participation to one or
more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Advances owing to it, its participation interest
in the Letters of Credit, and the Notes held by it); provided, however, that (i)
such Bank's obligations under this Agreement (including, without limitation, its
Commitments to the Borrower hereunder) shall remain unchanged, (ii) such Bank
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Bank shall remain the holder of any such Notes
for all purposes of this Agreement, (iv) the Borrower, the Agent, and the
Issuing Bank and the other
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Banks shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement, and (v) such Bank
shall not require the participant's consent to any matter under this Agreement,
except for change in the principal amount of the Notes, reductions in fees or
interest, extending the applicable maturity date, or releasing any collateral or
guarantor (except to the extent otherwise permitted herein or in any of the
other Credit Documents). The Borrower hereby agrees that participants shall have
the same rights under Sections 2.5, 2.6, 2.7, 2.8, 2.10, and 8.2 as a Bank to
the extent of their respective participation.
8.6 NOTICE. All notices and other communications under this Agreement
and the Notes shall be in writing and mailed by certified mail (return receipt
requested), telecopied, telexed, hand delivered, or delivered by a nationally
recognized overnight courier, to the address for the appropriate party specified
in SCHEDULE I or at such other address as shall be designated by such party in a
written notice to the other parties. Mailed notices shall be effective when
received. Telecopied or telexed notices shall be effective when transmission is
completed or confirmed by telex answerback. Delivered notices shall be effective
when delivered by messenger or courier. Notwithstanding the foregoing, notices
and communications to the Agent pursuant to Article 2 or 7 shall not be
effective until received by the Agent.
8.7 CHOICE OF LAW. This Agreement and the Notes have been prepared, are
being executed and delivered, and are intended to be performed in the State of
Texas, and the substantive laws of the State of Texas and the applicable federal
laws of the United States shall govern the validity, construction, enforcement,
and interpretation of this Agreement and the Notes; provided however, Chapter 15
of the Texas Credit Code does not apply to this Agreement or the Notes. Each
Letter of Credit shall be governed by the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce Publication No. 500 (1993
version).
8.8 FORUM SELECTION. THE BORROWER IRREVOCABLY CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATED THERETO. THE
BORROWER AGREES AND SHALL NOT CONTEST THAT PROPER FORUM AND VENUE FOR ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THE CREDIT DOCUMENTS OR ANY
TRANSACTIONS RELATING THERETO ARE IN THE COURTS OF THE STATE OF TEXAS IN HARRIS
COUNTY, TEXAS, AND THE FEDERAL COURTS LOCATED IN HARRIS COUNTY, TEXAS. THE
BORROWER IRREVOCABLY WAIVES ANY OBJECTION WHICH
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IT MAY NOW OR HEREAFTER HAVE TO THE FOREGOING BASED UPON CLAIMS THAT THE
FOREGOING COURTS ARE AN INCONVENIENT FORUM.
8.9 SERVICE OF PROCESS. IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO, THE
BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR OTHER PROCESS OR
NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT REQUESTED, TO
THE BORROWER AT ITS ADDRESS FOR NOTICES HEREUNDER, OR ANY OTHER FORM OF SERVICE
PROVIDED FOR IN THE TEXAS CIVIL PRACTICE LAW AND RULES THEN IN EFFECT SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON THE BORROWER.
8.10 WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE CREDIT
DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.
8.11 AMENDMENT AND RESTATEMENT. This Agreement represents a full and
complete amendment and restatement of the Credit Agreement dated as of May 17,
1996, among the Borrower, the Agent, and the Banks named therein, and that prior
version is deemed replaced hereby. The indebtedness under such prior version of
this Agreement continues under this Agreement (as reallocated among the Banks in
connection with the execution of this Agreement) and the execution of this
Agreement does not indicate a payment, satisfaction, novation, or discharge
thereof. All security and support for the indebtedness under the prior version
of this Agreement continues to secure and support the indebtedness hereunder.
8.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts which together shall constitute one and the same instrument.
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8.13 NO FURTHER AGREEMENTS. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED as of the date first above written.
BORROWER:
COACH USA, INC.
By:
Raymond K. Turner
Treasurer
AGENT:
NATIONSBANK OF TEXAS, N.A., as Agent
By:
James D. Recer
Vice President
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BANKS:
NATIONSBANK OF TEXAS, N.A.
By:
James D. Recer
Vice President
Revolving Loan Commitment: $24,000,000
BANK ONE, TEXAS, N.A.
By:
Name:
Title:
Revolving Loan Commitment: $19,000,000
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:
Name:
Title:
Revolving Loan Commitment: $14,000,000
FLEET BANK, N.A.
By:
Name:
Title:
Revolving Loan Commitment: $14,000,000
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SUMMIT BANK
By:
Name:
Title:
Revolving Loan Commitment: $14,000,000
WELLS FARGO BANK OF ARIZONA, N.A.
By:
Name:
Title:
Revolving Loan Commitment: $14,000,000
THE SUMITOMO BANK, LIMITED
By:
Name:
Title:
By:
Name:
Title:
Revolving Loan Commitment: $9,000,000
BANQUE PARIBAS
By:
Name:
Title:
By:
Name:
Title:
Revolving Loan Commitment: $7,000,000
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