AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
COACH USA, INC.*
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4141
(STATE OR OTHER (PRIMARY STANDARD
JURISDICTION OF INDUSTRIAL 76-0496471
INCORPORATION OR CLASSIFICATION CODE (I.R.S. EMPLOYER
ORGANIZATION) NUMBER) IDENTIFICATION NO.)
DOUGLAS M. CERNY
ONE RIVERWAY, SUITE 600 ONE RIVERWAY, SUITE 600
HOUSTON, TEXAS 77056-1903 HOUSTON, TEXAS 77056-1903
(888) COACH-US (888) COACH-US
(ADDRESS, INCLUDING ZIP CODE, AND (NAME, ADDRESS, INCLUDING ZIP CODE,
TELEPHONE AND
NUMBER, INCLUDING AREA CODE, OF TELEPHONE NUMBER, INCLUDING AREA
REGISTRANT'S CODE,
PRINCIPAL EXECUTIVE OFFICES) OF AGENT FOR SERVICE)
------------------------
COPIES TO:
DAVID P. OELMAN
ANDREWS & KURTH L.L.P.
4200 TEXAS COMMERCE TOWER
HOUSTON, TEXAS 77002
(713) 220-4200
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) FEE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 3/8% Senior Notes due 2007,
Series B...................... $150,000,000 100% $150,000,000 $45,455(1)
- ----------------------------------------------------------------------------------------------------------------
Guarantees of 9 3/8% Senior
Notes due 2007, Series B...... -- -- -- (2)
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated in accordance with Rule 457(f)(2). For purposes of this
calculation, the Offering Price per Senior Note was assumed to be the stated
principal amount of each Senior Note which may be received by the Registrant
in the exchange transaction in which the Senior Notes will be offered.
(2) Pursuant to Rule 457(n), no registration fee is required for the Guarantees
of the Senior Exchange Notes registered hereby.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
* The domestic subsidiaries of Coach USA, Inc. will guarantee the securities
being registered hereby and therefore are also registrants. Information about
such additional registrants appears on the following page.
<PAGE>
ADDITIONAL REGISTRANTS
AIROCAR, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4111 59-1292777
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
AIRPORT RENT-A-CAR, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 59-1379573
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
AMERICAN BUS LINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4111 59-2228740
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ANTELOPE VALLEY BUS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 4141 95-1984207
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ARROW STAGE LINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEBRASKA 4141 47-0354909
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
BARCLAY AIRPORT SERVICE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4111 22-2440127
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
BAYOU CITY COACHES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4141 76-0342814
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
CALIFORNIA CHARTERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4141 88-0268122
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
CAPE TRANSIT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-2385699
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
CENTRAL JERSEY TRANSIT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4111 22-1536884
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
COACH USA ADMINISTRATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 8741 76-0530869
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
COMMUNITY BUS LINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-1640714
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
COMMUNITY COACH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-0748733
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
COMMUNITY TOURS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-2469770
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
COMMUNITY TRANSIT LINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4111 22-2244779
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
COMMUNITY TRANSPORTATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-2771172
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
FIVE STAR TOURS, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4141 59-2118791
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GROSVENOR BUS LINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 4141 94-2681100
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GULF COAST TRANSPORTATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4141 74-1851629
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
H.A.M.L. CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-1852802
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
INTERNATIONAL EXPRESS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA 4141 41-1421825
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
K-T CONTRACT SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4141 74-2522792
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
KERRVILLE BUS COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4141 74-0724360
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
L.E.R. TRANSPORTATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 8741 22-1706927
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
LND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 65-0528082
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
LEISURE TIME TOURS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-1909654
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO TRANSPORTATION SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4121 APPLIED FOR
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
MIDTOWN BUS TERMINAL OF NEW YORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 8741 13-1043100
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
MISTER SPARKLE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 7542 22-3254259
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
NEW DELAWARE COACH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 8741 76-0544709
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ORLANDO TRANSPORTATION, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4141 59-2397891
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
PCSTC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 4111 33-0078438
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
POWDER RIVER TRANSPORTATION SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WYOMING 4141 83-0249542
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
PROGRESSIVE TRANSPORTATION SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 4141 16-1422632
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
RED AND TAN ENTERPRISES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 8741 22-1949682
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
SUBURBAN MANAGEMENT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-3182287
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
SUBURBAN TRAILS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-2255681
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
SUBURBAN TRANSIT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-1313572
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
TEXAS BUS LINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4141 74-0938050
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
TRANSPORTATION CONTRACTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 65-0619752
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
WORTHEN VAN SERVICE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WYOMING 4141 83-0237962
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
YELLOW CAB SERVICE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4121 76-0164227
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
AIGLON CAR RENTALS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 76-0127619
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
AMERICAN COACH LINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4141 59-2663132
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
AMERICAN LIMOUSINE SERVICE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4119 59-2633362
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
AMERICAN SIGHTSEEING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4141 65-0332986
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
AMERICAN SIGHTSEEING TOURS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4141 59-0611101
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ANTELOPE NEVADA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 4141 76-0544698
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ARROW LEASING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONNECTICUT 8741 06-1067762
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ASTI, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4141 65-0083469
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
CAB SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 75-1434460
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
COLORADO SPRINGS AIRPORT TRANSPORTATION SERVICE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLORADO 4121 84-1203981
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
COMPREHENSIVE COMMUNICATION SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 59-2619611
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
CORPORATE CAR U.S.A., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4119 65-0239242
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
DESERT STAGE LINES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 4141 76-0544699
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
EAGLE EXECUTIVE TRANSPORTATION SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 76-0309982
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
FALCON CHARTER SERVICE
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 8741 94-1672050
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
FIESTA CAB COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 76-0202048
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
FIESTA CAB COMPANY OF SAN ANTONIO
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 76-0544701
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GARDEN STATE LEASING CO., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 8741 22-1809323
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GOLDEN VACATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 8741 94-2867788
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GREATER AUSTIN TRANSPORTATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 74-1761038
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GREATER BOULDER TRANSPORTATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLORADO 4121 84-1293012
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GREATER COLORADO SPRINGS TRANSPORTATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLORADO 4121 93-0923540
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GREATER DENVER TRANSPORTATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLORADO 4121 84-0636347
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
GREATER HOUSTON TRANSPORTATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 74-1721348
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
GROSVENOR LIMOUSINE SERVICE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ALIFORNIA 8741 94-3109477
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
HEALTHTRANS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4121 65-0613681
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
HOUSTON CAB COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 74-1752306
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO DIVERSIFIED INSURANCE GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 65-0357291
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO JITNEY, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4111 65-0447374
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO LIMO, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4119 59-2003809
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO MEDICAL TRANSPORTATION SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4121 65-0447401
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
NEVADA CORPORATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 8741 88-0285950
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
R&T LEASING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 8741 22-1612729
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
RED & TAN TRANSPORTATION SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-3256701
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
RED TOP SEDAN SERVICE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 59-0527433
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
RED TOP TRANSPORTATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 59-2499262
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ROCKLAND COACHES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-1525368
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ROCKLAND TRANSIT CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4111 22-1003830
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
S.E.M. INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 65-0288824
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
SHUTTLE SERVICES MIA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4111 65-0088880
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
TEXAS SHUTTLE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4142 74-2184325
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
THE HUDSON BUS TRANSPORTATION CO., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-1002280
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
TOTAL VEHICLE SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 75-0614929
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
YELLOW CAB COMPANY OF HOUSTON, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 74-1206048
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
ZONE TAXICAB OF COLORADO SPRINGS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLORADO 4121 76-0544702
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
AIRCRAFT TAXI, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4121 59-0660167
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
ART-MAR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 59-1148433
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
EIGHTS TAXI, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4121 65-0121287
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
FIESTA TRANSPORTATION COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 4121 76-0544703
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO CAB, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4121 76-0544705
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO MINI-BUS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4121 65-0447315
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO TAXI, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4121 76-0544706
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
METRO TAXICAB CO., INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4121 76-0544707
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
RED & TAN CHARTER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-2850702
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
RED & TAN OF BOCA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4141 65-0240635
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
RED & TAN TOURS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-2240064
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
RED & TAN TOURS OF FLORIDA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 4141 65-0205051
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
RED & TAN UNLIMITED, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 4141 22-3269769
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
AAA AUTO LEASING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 8741 59-1158211
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
------------------------
<PAGE>
******************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR *
* SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH *
* OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR *
* QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. *
* *
******************************************************************************
SUBJECT TO COMPLETION, DATED AUGUST 8, 1997
PROSPECTUS
[COACH USA, INC. LOGO]
OFFER TO EXCHANGE
$1,000 PRINCIPAL AMOUNT OF 9 3/8% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
FOR EACH $1,000 PRINCIPAL AMOUNT OF OUTSTANDING
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
($150,000,000 IN AGGREGATE PRINCIPAL AMOUNT OUTSTANDING)
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
------------------------
Coach USA, Inc., a Delaware corporation (the "Company"), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal, to exchange $1,000 principal amount of
its 9 3/8% Senior Subordinated Notes, Due 2007, Series B (the "Exchange
Notes"), in a transaction registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement (as
defined herein) of which this Prospectus constitutes a part, for each $1,000
principal amount of the outstanding 9 3/8% Senior Subordinated Notes due 2007,
Series A (the "Old Notes"), of which $150,000,000 aggregate principal amount
is outstanding (the "Exchange Offer"). The Exchange Notes and the Old Notes
are sometimes referred to herein collectively as the "Notes."
The Company will accept for exchange any and all Old Notes that are validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on the date
the Exchange Offer expires, which will be , 1997 unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of Old Notes may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. The Exchange Offer is not conditioned upon any minimum
principal amount of Old Notes being tendered for exchange. However, the Exchange
Offer is subject to certain conditions that may be waived by the Company and to
the terms and provisions of the Registration Rights Agreement (as defined
herein). See "The Exchange Offer." Old Notes may be tendered only in
denominations of $1,000 and integral multiples thereof. The Company has agreed
to pay the expenses of the Exchange Offer. There will be no cash proceeds to the
Company from the Exchange Offer. See "Use of Proceeds."
The Exchange Notes will be obligations of the Company entitled to the
benefits of the indenture relating to the Notes (the "Indenture"). The Notes
will be guaranteed on a senior subordinated basis (the "Subsidiary
Guarantees") by its domestic subsidiaries (the "Guarantors"). The form and
terms of the Exchange Notes are identical in all material respects to the form
and terms of the Old Notes, except that (i) the offering of the Exchange Notes
has been registered under the Securities Act, (ii) the Exchange Notes will not
be subject to transfer restrictions and (iii) certain provisions relating to an
increase in the stated interest rate on the Old Notes provided for under certain
circumstances will be eliminated. Following the Exchange Offer, any holders of
Old Notes will continue to be subject to the existing restrictions on transfer
thereof and, as a general matter, the Company will not have any further
obligation to such holders to provide for registration under the Securities Act
of transfers of the Old Notes held by them. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered and tendered but unaccepted Old Notes could be adversely affected.
See "The Exchange Offer -- Purpose and Effect of the Exchange Offer."
(CONTINUED ON NEXT PAGE)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN
FACTORS WHICH INVESTORS SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER
AND AN INVESTMENT IN THE EXCHANGE NOTES OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
The Old Notes were sold by the Company on June 24, 1997, to Donaldson,
Lufkin & Jenrette Securities Corporation, Merrill Lynch & Co., Inc., Alex. Brown
& Sons Incorporated and Montgomery Securities (the "Initial Purchasers") in
transactions not registered under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act (the "Offering"). The
Initial Purchasers placed the Old Notes with qualified institutional buyers (as
defined in Rule 144A under the Securities Act) ("Qualified Institutional
Buyers" or "QIBs"), each of whom agreed to comply with certain transfer
restrictions and other restrictions. Accordingly, the Old Notes may not be
reoffered, resold or otherwise transferred in the United States unless such
transaction is registered under the Securities Act or an applicable exemption
from the registration requirements of the Securities Act is available. The
Exchange Notes are being offered hereby in order to satisfy the obligations of
the Company under the Registration Rights Agreement.
The Exchange Notes will bear interest at a rate of 9 3/8% per annum,
payable semi-annually on January 1 and July 1 of each year, commencing January
1, 1998. Holders of Exchange Notes of record on December 15, 1997, will receive
on January 1, 1998, an interest payment in an amount equal to (x) the accrued
interest on such Exchange Notes from the date of issuance thereof to January 1,
1998, plus (y) the accrued interest on the previously held Old Notes from the
date of issuance of such Old Notes (June 24, 1997) to the date of exchange
thereof. Interest will not be paid on Old Notes that are accepted for exchange.
The Notes mature on July 1, 2007.
Old Notes were initially represented by a single, global Old Note (the
"Old Global Note") in registered form, registered in the name of Cede & Co.,
as nominee for The Depository Trust Company (the "Depositary"), as depositary.
The Exchange Notes exchanged for Old Notes represented by the Old Global Note
will be initially represented by a single, global Exchange Note (the "Exchange
Global Note") in registered form, registered in the name of the Depositary. See
"Book-Entry; Delivery and Form." References herein to "Global Note" shall be
references to the Old Global Note and the Exchange Global Note.
Based on an interpretation of the Securities Act by the staff of the
Securities and Exchange Commission (the "SEC"), Exchange Notes issued pursuant
to the Exchange Offer in exchange for Old Notes may be offered for resale,
resold and otherwise transferred by a holder thereof (other than (i) a
broker-dealer who purchased such Old Notes directly from the Company for resale
pursuant to Rule 144A or any other available exemption under the Securities Act
or (ii) a person that is an "affiliate" (within the meaning of Rule 405 of the
Securities Act) of the Company), without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the holder
is acquiring the Exchange Notes in its ordinary course of business and is not
participating, and has no arrangement or understanding with any person to
participate, in the distribution of the Exchange Notes. Holders of Old Notes
wishing to accept the Exchange Offer must represent to the Company that such
conditions have been met.
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must agree that it will deliver a prospectus in
connection with any resale of such Exchange Notes. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Old Notes where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 180 days after
the Expiration Date, it will make this Prospectus available to any broker-dealer
for use in connection with any such resale. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the Old
Notes or the Exchange Notes. The Company does not intend to apply for listing of
the Exchange Notes on any securities exchange or for quotation through The
Nasdaq Stock Market. There can be no assurance that an active market for the
Exchange Notes will develop. To the extent that a market for the Exchange Notes
does develop, future trading prices of the Exchange Notes will depend on many
factors, including, among other things,
ii
<PAGE>
prevailing interest rates, and the market for similar securities as well as the
Company's results of operations and its financial condition. See "Risk
Factors."
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATIONS THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT
FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH
FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR
A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE
MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY
PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH
THE PROVISIONS OF THIS PARAGRAPH.
OTHER INFORMATION
The Company has filed with the SEC a registration statement (the
"Registration Statement") under the Securities Act on Form S-4 (Reg. No.
333- ) with respect to the Exchange Notes offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits thereto, certain parts which are omitted in
accordance with the rules and regulations of the SEC. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved. The Registration Statement and any amendments thereto, including
exhibits filed or incorporated by reference as a part thereof, are available for
inspection and copying at the Public Reference Section of the SEC, at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates, and
at the SEC's regional offices at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, Suite 1300, New
York, New York 10048. The SEC maintains a web site (http:www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
SEC. The Company intends to furnish its noteholders with annual reports
containing audited financial statements certified by independent public
accountants.
iii
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549; and at the
following regional offices of the Commission: 7 World Trade Center, New York,
New York 10048; and 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
at prescribed rates. Such material may also be accessed electronically by means
of the Commission's home page on the Internet at http://www.sec.gov.
The Company has agreed that, whether or not it is required to do so by the
rules and regulations of the Commission, for so long as any of the Notes remain
outstanding, it will furnish to the holders of the Notes and file with the
Commission (unless the Commission will not accept such a filing) (i) all
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K as if the
Company were required to file such forms, including a "Management's Discussion
and Analysis of Results of Operations and Financial Condition" and, with
respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all reports that would be required to
be filed with the Commission on Form 8-K if the Company were required to file
such reports in each case within the time periods set forth in the Commission's
rules and regulations. In addition, for so long as any of the Notes remain
outstanding, the Company has agreed to make available to any prospective
purchaser of the Notes or beneficial owner of the Notes in connection with any
sale thereof the information required by Rule 144A(d)(4) under the Securities
Act.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The financial statements of K-T Contract Services, Inc., Texas Bus Lines,
Inc. and California Charters, Inc. contained in the Current Report of the
Company on Form 8-K dated September 13, 1996, and as amended on November 12,
1996, and the Company's Current Report on Form 8-K dated August 8, 1997 are
incorporated herein by reference and shall be deemed to be a part hereof.
The Company will provide, without charge to each person, including any
beneficial owner, to whom this Offering Memorandum is delivered, upon written or
oral request of such person, a copy of any or all of the documents incorporated
herein by reference. Requests for such documents should be submitted in writing,
addressed to the Secretary, Coach USA, Inc., One Riverway, Suite 600, Houston,
Texas 77056, telephone (713) 888-0104.
iv
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE PRO FORMA AND
HISTORICAL FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS WHICH CONTAIN RISKS AND UNCERTAINTIES. DISCUSSIONS CONTAINING SUCH
FORWARD-LOOKING STATEMENTS MAY BE FOUND IN THE INFORMATION SET FORTH UNDER THE
CAPTIONS "RISK FACTORS," "USE OF PROCEEDS," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," AS
WELL AS IN THE PROSPECTUS GENERALLY. ACTUAL EVENTS OR RESULTS MAY DIFFER
MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF
VARIOUS FACTORS, INCLUDING, WITHOUT LIMITATION, THE RISK FACTORS SET FORTH
HEREIN AND THE MATTERS SET FORTH IN THIS PROSPECTUS GENERALLY.
THE COMPANY
Coach USA is the largest provider of motorcoach charter, tour and
sightseeing services and one of the five largest non-municipal providers of
commuter and transit motorcoach services in the United States. The Company also
provides airport ground transportation, paratransit and taxicab and other
related passenger ground transportation services. The Company operates across
the U.S., serving a broad customer base (no single customer accounted for more
than 3% of revenues in 1996) with a fleet of approximately 3,400 motorcoaches
and other high occupancy vehicles. For the twelve months ended March 31, 1997,
the Company generated pro forma total operating revenues of $439.5 million and
pro forma EBITDA of $80.8 million.
The motorcoach industry is highly fragmented with approximately 5,000
motorcoach operators which collectively generated approximately $20 billion in
revenues in 1995. The motorcoach industry in the United States can be broadly
divided into three types of services: (i) recreation and excursion (charter,
tour and sightseeing); (ii) commuter and transit; and (iii) regularly scheduled
intercity services. The Company operates primarily in the first two categories,
which collectively generated approximately $19 billion in revenues in 1995. The
Company believes there will be increasing demand for recreation and excursion
services, commuter and transit motorcoach services and airport related services
for a broad range of customers based on a number of factors, including: growing
travel and tourism industry, privatization, outsourcing, expanding metropolitan
areas and increasing airport congestion.
The Company enjoys a number of business attributes that position it to
benefit, both financially and operationally, from the consolidation of this
highly fragmented industry. The Company believes that it can continue to achieve
significant economies of scale as it acquires and integrates additional
motorcoach operators (such as savings in insurance, equipment purchases,
financing and the centralization of certain administrative functions), which
should provide continued margin expansion. The Company also believes that the
centralization of these attention-diverting administrative and support functions
will allow the management of the operating companies and any other acquired
businesses to focus on pursuing new business opportunities and improving
equipment utilization and yields. The Company is diversified from the standpoint
of geography, customer base and type of business, characteristics which provide
it with insulation from disruption in any particular area, customer or business.
In addition, the Company benefits from a strong balance sheet as a result of its
two 1996 equity offerings in which it raised $96.6 million, as well as from its
strategy of using its common stock, par value $.01 per share (the "Common
Stock"), as a significant component of the consideration for its acquisitions.
The Company's objective is to be the largest provider of regional and local
motorcoach and passenger ground transportation services in the United States by
implementing a growth strategy which concentrates on acquisitions, internal
growth and economies of scale.
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<PAGE>
ACQUISITION STRATEGY
The Company has used Common Stock and convertible securities to finance
approximately 45.8% of the acquisition consideration (including debt assumed) to
date and plans to continue using its Common Stock for acquisitions as
appropriate in the future. In anticipation of such use, the Company has
registered 3.5 million additional shares of Common Stock under the Securities
Act.
ENTER NEW GEOGRAPHIC MARKETS
The Company intends to expand into geographic markets it does not currently
serve by acquiring well-established motorcoach and other passenger ground
transportation service providers that, like its existing operating subsidiaries,
are leaders in their regional markets. Since its founding in 1995 and through
June 30, 1997, the Company has completed 13 new-market acquisitions.
EXPAND EXISTING MARKETS
The Company also plans to acquire additional motorcoach and other passenger
ground transportation service providers in many of the markets in which it
operates, including acquisitions that either broaden the range of services
provided by the Company in that market or expand the geographic scope of the
Company's operations in that market, as well as "tuck-in" acquisitions of
smaller operations. The Company believes that tuck-in acquisitions will increase
operating efficiencies without a proportionate increase in administrative costs
and, in some instances, will broaden the Company's range of services. Since its
founding in 1995 and through June 30, 1997, the Company has completed seven
existing-market acquisitions.
INTERNAL GROWTH STRATEGY
OFFER OF A FULL RANGE OF SERVICES IN EACH REGION
The Company intends to increase growth in each of its regions by adding
complementary services, as appropriate, including motorcoach charter, tour and
sightseeing, commuter and transit, airport ground transportation, paratransit
and taxicab services. Many of the acquired companies do not offer all of such
services and the Company believes they will benefit from the expertise of
affiliated operations.
DEVELOP PRIVATIZATION AND OUTSOURCING
The Company believes that it is well positioned to benefit from the
accelerating trend toward governmental privatization and corporate outsourcing,
as more transit authorities and businesses such as hotels, casinos, rental car
agencies, colleges and other institutions that operate their own fleets decide
to privatize or outsource non-core operations. For example, in February 1997 the
Company was awarded a three-year commuter service contract in the Seattle,
Washington area, which is expected to generate approximately $19 million in
revenues and which may be extended at the option of the customer for two
additional one-year periods. The Company is actively pursuing other
privatization contracts.
ESTABLISH A NATIONAL SALES AND MARKETING PROGRAM
The Company has begun to establish a national sales and marketing program
as a means to expand its recreational and excursion business to position itself
to benefit from the significant growth in the travel and tourism industry. This
program will target travel and tour companies, national and international travel
agencies and convention organizers, as well as organizations such as AAA, AARP
and professional and amateur athletic teams.
ECONOMIES OF SCALE
CENTRALIZE ADMINISTRATIVE FUNCTIONS
The Company believes that it will continue to have greater purchasing
power, resulting in significant cost savings in such areas as equipment and
parts, tires, insurance and financing, than the acquired
2
<PAGE>
companies had independently. The Company has begun to realize cost savings
through the consolidation of administrative functions such as employee benefits,
safety and maintenance programs and risk management. The Company believes that
by continuing to remove the burden and attention-diverting responsibility of
administrative and support functions, the management of the operating companies
and any other acquired businesses will be able to focus on pursuing new business
opportunities and improving equipment utilization and yields.
INCREASE OPERATING EFFICIENCIES
The Company believes that there are additional opportunities to eliminate
redundant facilities and equipment through coordination among its current
operations as well as operations to be acquired in the future. The Company also
expects to continue to benefit from cross-marketing, increased equipment
utilization and implementation of best practices throughout its operating
regions. For example, the Company has consolidated the operational and
maintenance facilities of two of the companies it acquired in Houston into one
location.
BACKGROUND AND RECENT DEVELOPMENTS
The Company was founded in September 1995 to create a nationwide provider
of motorcoach and other ground transportation services. On May 17, 1996, the
Company acquired, simultaneously with the closing of its initial public offering
(the "Initial Public Offering") six companies (the "Founding Companies").
During the remainder of 1996, the Company acquired nine additional companies,
six of which were accounted for as poolings-of-interest and three of which were
accounted for as purchases.
From January 1, 1997 through June 30, 1997 the Company completed the
acquisition of eleven companies. These eleven companies have aggregate annual
revenues of approximately $180 million and the Company has paid, or agreed to
pay, aggregate consideration consisting of approximately $42.8 million in cash,
1,958,280 shares of Common Stock, $22.1 million in aggregate principal amount of
subordinated notes convertible into 586,367 shares of Common Stock, as well as
the assumption of certain indebtedness. Six of the eleven completed acquisitions
were accounted for as poolings-of-interest while the other five were accounted
for as purchases. The recently acquired companies include America Charters of
Gastonia, North Carolina, Antelope Valley Bus, Inc. of Lancaster, California,
The Arrow Line, Inc. of Hartford, Connecticut, Gray Line of Fort Lauderdale,
Florida, Gray Line of Montreal, Canada, International Express Corp. of
Minneapolis, Minnesota, Kerrville Bus Company of Kerrville, Texas, Metro
Transportation Services, Inc. of Miami, Florida, MTC, Inc. of Phoenix, Arizona,
Red & Tan Enterprises of Bergenfield, New Jersey and Trentway-Wagar, Inc. of
Toronto, Canada. The Company believes that each of these acquisitions is
consistent with its strategy of entering new markets and expanding in existing
markets.
The Company has publicly announced pro forma revenues of $199.3 million,
pro forma income before extraordinary item of $10.3 million and earnings per
share before extraordinary item of $0.52 for the six months ended June 30, 1997.
The Company is currently a party to an $181 million Credit Facility (the
"Credit Facility"). The Company has recently announced that it anticipates
that such facility will be amended to provide for borrowings of up to $300
million and additional borrowings outside such facility of up to $80 million.
3
<PAGE>
SUMMARY OF TERMS OF EXCHANGE OFFER
The Exchange Offer relates to the exchange of up to $150,000,000 aggregate
principal amount of Exchange Notes for up to an equal aggregate principal amount
of Old Notes. The Exchange Notes will be obligations of the Company entitled to
the benefits of the Indenture. The form and terms of the Exchange Notes are
identical in all material respects to the form and terms of the Old Notes,
except that (i) the offering of the Exchange Notes has been registered under the
Securities Act, (ii) the Exchange Notes will not be subject to transfer
restrictions and (iii) certain provisions relating to an increase in the stated
interest rate on the Old Notes provided for under certain circumstances will be
eliminated. See "Description of the Notes."
Registration Rights
Agreement............................. The Old Notes were sold by the Company
on June 25, 1997 to the Initial
Purchasers pursuant to a Purchase
Agreement, dated June 18, 1997 (the
"Purchase Agreement"). Pursuant to the
Purchase Agreement, the Company, the
Guarantors and the Initial Purchasers
entered into the Registration Rights
Agreement which, among other things,
grants the holders of the Old Notes
certain exchange and registration
rights. The Exchange Offer is intended
to satisfy certain obligations of the
Company under the Registration Rights
Agreement.
The Exchange Offer...................... $1,000 principal amount of Exchange
Notes will be issued in exchange for
each $1,000 principal amount of Old
Notes validly tendered and accepted
pursuant to the Exchange Offer. As of
the date hereof, $150,000,000 in
aggregate principal amount of Old
Notes are outstanding. The Company
will issue the Exchange Notes to
tendering holders of Old Notes
promptly following the Expiration
Date.
The terms of the Exchange Notes are
identical in all material respects to
the Old Notes except for certain
transfer restrictions and registration
rights relating to the Old Notes and
except that the Old Notes provide that
if, (i) the Exchange Offer has not
been consummated by the date required
by the Registration Rights Agreement,
or (ii) a shelf registration statement
relating to the sale of the Old Notes
has not been declared effective by the
date required by the Registration
Rights Agreement, the Company will pay
liquidated damages in an amount equal
to $0.05 per week per $1,000 principal
amount of Notes held by such Holder,
until but excluding the date of the
consummation of the Exchange Offer or
the date such shelf registration
statement is declared effective, as
the case may be. The amount of
liquidated damages will increase by an
additional $0.05 per week per $1,000
principal amount of Old Notes with
respect to each subsequent 90-day
period until all defaults have been
cured, up to a maximum amount of
liquidated damages of $0.50 per week
per $1,000 principal amount of Notes.
In addition, to comply with the
securities laws of certain states of
the United States, it may be necessary
to qualify for sale or register
thereunder the Exchange Notes prior to
offering or selling such Exchange
Notes. The Company has agreed,
pursuant to the Registration Rights
Agreement, subject to certain
limitations specified therein, to
register or qualify the Exchange Notes
for offer or sale under the securities
laws of such states as any holder
reasonably requests in writing. Unless
a holder so requests, the Company does
not intend to register or qualify the
offer or sale of the Exchange Notes in
any such jurisdiction.
4
<PAGE>
Resale.................................. Based on existing interpretations of
the Securities Act by the staff of the
SEC set forth in several no-action
letters to third parties, and subject
to the immediately following sentence,
the Company believes that Exchange
Notes issued pursuant to the Exchange
Offer in exchange for Old` Notes may
be offered for resale, resold and
otherwise transferred by a holder
thereof (other than (i) a
broker-dealer who purchased such Old
Notes directly from the Company for
resale pursuant to Rule 144A or any
other available exemption under the
Securities Act or (ii) a person that
is an "affiliate" (within the meaning
of Rule 405 of the Securities Act) of
the Company), without compliance with
the registration and prospectus
delivery provisions of the Securities
Act, provided that the holder is
acquiring the Exchange Notes in its
ordinary course of business and is not
participating, and has no arrangement
or understanding with any person to
participate, in the distribution of
the Exchange Notes. However, any
purchaser of Old Notes who is an
affiliate of the Company or who
intends to participate in the Exchange
Offer for the purpose of distributing
the Exchange Notes, or any
broker-dealer who purchased the Old
Notes from the Company to resell
pursuant to Rule 144A or any other
available exemption under the
Securities Act, (i) will not be able
to rely on the interpretations by the
staff of the SEC set forthX in the
above-mentioned no-action letters,
(ii) will not be able to tender its
Old Notes in the Exchange Offer and
(iii) must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any sale or transfer
of the Old Notes unless suchX sale or
transfer is made pursuant to an
exemption from such requirements. The
Company does not intend to seek its
own no-action letter and there is no
assurance that the staff of the SEC
would make a similar determination
with respect to the Exchange Notes as
it has in such no-action letters to
third parties. See "The Exchange Offer
-- Purpose and Effect of the Exchange
Offer" and "Plan of Distribution."
Each broker-dealer that receives
Exchange Notes for its own account
pursuant to the Exchange Offer must
acknowledge that it will` deliver a
prospectus in connection with any
resale of such Exchange Notes. The
Letter of Transmittal states that by
so acknowledging and by delivering a
prospectus, a broker-dealer will not
be deemed to admit that it is an
"underwriter" within the meaning of
the Securities Act. This Prospectus,
as it may be amended or supplemented
from time to time, may be used by a
broker-dealer in connection with
resales of Exchange Notes received in
connection with resales of Exchange
Notes received in exchange for Old
Notes where such Old Notes were
acquired by such broker-dealer as a
result of market-making activities or
other trading activities. The Company
has agreed that, for a period of 180
days after the Expiration Date, it
will make this Prospectus available to
any broker-dealer for use in
connection with any such resale. See
"Plan of Distribution."
Expiration Date......................... 5:00 p.m., New York City time, on
, 1997, unless the
Exchange Offer is extended, in which
case the term "Expiration Date" means
the latest date and time to which the
Exchange Offer is extended. See "The
Exchange Offer -- Expiration Date;
Extensions; Amendments."
5
<PAGE>
Accrued Interest on the Exchange Notes
and the Old Notes..................... The Exchange Notes will bear interest
at a rate of 9 3/8% per annum, payable
semi-annually on January 1 and July 1
of each year, commencing January 1,
1998. Holders of Exchange Notes of
record on December 15, 1997, will
receive on January 1, 1998, an
interest payment in an amount equal to
(x) the accrued interest on such
Exchange Notes from the date of
issuance thereof to January 1, 1998,
plus (y) the accrued interest on the
previously held Old Notes from the
date of issuance of such Old Notes
(June 24, 1997) to the date of
exchange thereof. Interest will not be
paid on Old Notes that are accepted
for exchange. The Notes mature on July
1, 2007.
Conditions to the Exchange Offer........ The Company may terminate the Exchange
Offer if it determines that its
ability to proceed with the Exchange
Offer could be materially impaired due
to the occurrence of certain
conditions. The Company does not
expect any of such conditions to
occur, although there can be no
assurance that such conditions will
not occur. Holders of Old Notes will
have certain rights under the
Registration Rights Agreement should
the Company fail to consummate the
Exchange Offer. See "The Exchange
Offer -- Conditions to the Exchange
Offer" and "Description of the Notes
-- Registration Rights; Liquidated
Damages."
Procedures for Tendering Old Notes...... Each holder of Old Notes wishing to
accept the Exchange Offer must
complete, sign and date the Letter of
Transmittal, or a facsimile thereof,
in accordance with the instructions
contained herein and therein, and mail
or otherwise deliver such Letter of
Transmittal, or such facsimile,
together with the Old Notes to be
exchanged and any other required
documentation, to The Bank of New
York, as Exchange Agent, at the
address set forth herein and therein
or effect a tender of Old Notes
pursuant to the procedures for
book-entry transfer as provided for
herein and therein. By executing the
Letter of Transmittal, each holder
will represent to the Company that,
among other things, the Exchange Notes
acquired pursuant to the Exchange
Offer are being acquired in the
ordinary course of business of the
person receiving such Exchange Notes,
whether or not such person is the
holder, that neither the holder nor
any such other person has any
arrangement or understanding with any
person to participate in the
distribution of such Exchange Notes
and that neither the holder nor any
such other person is an "affiliate,"
as defined in Rule 405 under the
Securities Act, of the Company. See
"The Exchange Offer -- Procedures for
Tendering." Following consummation of
the Exchange Offer, holders of Old
Notes not tendered as a general matter
will not have any further registration
rights, and the Old Notes will
continue to be subject to certain
restrictions on transfer. Accordingly,
the liquidity of the market for the
Old Notes could be adversely affected.
See "The Exchange Offer --
Consequences of Failure to Exchange."
6
<PAGE>
Special Procedures for Beneficial
Owners................................ Any beneficial owner whose Old Notes
are registered in the name of a
broker, dealer, commercial bank, trust
company or other nominee and who
wishes to tender in the Exchange Offer
should contact such registered holder
promptly and instruct such registered
holder to tender on his behalf. If
such beneficial owner wishes to tender
on his own behalf, such beneficial
owner must, prior to completing and
executing the Letter of Transmittal
and delivering his Old Notes, either
(a) make appropriate arrangements to
register ownership of the Old Notes in
such holder's name or (b) obtain a
properly completed bond power from the
registered holder or endorsed
certificates representing the Old
Notes to be tendered. The transfer of
record ownership may take considerable
time, and completion of such transfer
prior to the Expiration Date may not
be possible. See "The Exchange Offer
-- Procedures for Tendering."
Guaranteed Delivery Procedures.......... Holders of Old Notes who wish to
tender their Old Notes and whose Old
Notes are not immediately available,
or who cannot deliver their Old Notes
(or complete the procedures for
book-entry transfer) and deliver a
properly completed Letter of
Transmittal and any other documents
required by the Letter of Transmittal
to the Exchange Agent prior to the
Expiration Date may tender their Old
Notes according to the guaranteed
delivery procedures set forth in "The
Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights....................... Tenders of Old Notes may be withdrawn
at any time prior to the Expiration
Date by furnishing a written or
facsimile transmission notice of
withdrawal to the Exchange Agent
containing the information set forth
in "The Exchange Offer -- Withdrawal
of Tenders."
Acceptance of Old Notes and Delivery of
Exchange Notes........................ Subject to certain conditions (as
summarized above in "Conditions to the
Exchange Offer" and described more
fully in "The Exchange Offer --
Conditions to the Exchange Offer"),
the Company will accept for exchange
any and all Old Notes that are
properly tendered in the Exchange
Offer prior to the Expiration Date.
See "The Exchange Offer -- Procedures
for Tendering." The Exchange Notes
issued pursuant to the Exchange Offer
will be delivered promptly following
the Expiration Date.
Exchange Agent.......................... The Bank of New York, the Trustee
under the Indenture, is serving as
exchange agent (the "Exchange Agent")
in connection with the Exchange Offer.
The registered or certified mail
address of the Exchange Agent is The
Bank of New York, 101 Barclay Street,
7E, New York, New York 10286
Attention: Reorganization Department,
George Johnson. The hand or overnight
delivery address of the Exchange Agent
is The Bank of New York, 101 Barclay
Street, Corporate Trust Services
Window, Ground Level, New York, New
York 10286 Attention: Reorganization
Department, George Johnson. For
assistance and request for additional
copies of this Prospectus, the Letter
of Transmittal or the Notice of
Guaranteed Delivery, the telephone
number for the Exchange Agent is (212)
815-4997, and the facsimile number for
the Exchange Agent is (212) 571-3080.
All communications should be directed
to the attention of Reorganization
Department, George Johnson.
7
<PAGE>
Effect on Holders of Old Notes.......... Holders of Old Notes who do not tender
their Old Notes in the exchange offer
will continue to hold their Old Notes
and will be entitled to all ` the
rights and limitations applicable
thereto under the Indenture. All
untendered, and tendered but
unaccepted, Old Notes will continue to
be subject to the restrictions on
transfer provided for in the Old Notes
and the Indenture. To the extent that
Old Notes are tendered and accepted in
the Exchange Offer, the trading
market, if any, for the Old Notes
could be adversely affected. See "Risk
Factors -- Consequences of Exchange
and Failure to Exchange."
SEE "THE EXCHANGE OFFER" FOR MORE DETAILED INFORMATION CONCERNING
THE TERMS OF THE EXCHANGE OFFER.
8
<PAGE>
THE EXCHANGE NOTES
Securities Offered....... $150.0 million in aggregate principal amount of
9 3/8% Senior Subordinated Notes, Series B (the
"Exchange Notes").
Issuer................... The Company.
Maturity Date............ July 1, 2007.
Interest Payment Dates... January 1 and July 1 of each year, commencing January
1, 1998.
Optional Redemption...... The Exchange Notes will be redeemable at the option
of the Company, in whole or in part, at any time on
or after July 1, 2002, at the redemption prices set
forth herein, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of
redemption. In addition, at any time on or prior to
July 1, 2000, the Company may redeem up to 33 1/3% of
the aggregate principal amount of the Exchange Notes
originally issued with the net proceeds of one or
more offerings of Common Stock at a redemption price
equal to 109.375% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption; provided
that at least 66 2/3% of the aggregate principal
amount of the Exchange Notes originally issued
remains outstanding immediately after such
redemption. See "Description of the Notes -- Optional
Redemption."
Mandatory Redemption..... None.
Ranking.................. The Exchange Notes will be senior subordinated
obligations of the Company and will be subordinated
to all existing and future senior indebtedness of the
Company, including amounts outstanding under the
Company's Credit Facility. As of March 31, 1997,
after giving pro forma effect to the Subsequent
Acquisitions (as defined), the Offering and
application of the estimated net proceeds therefrom,
the Company would have had approximately $59.0
million of senior indebtedness outstanding. See
"Description of the Notes -- Subordination."
Guarantees............... The Exchange Notes will be unconditionally guaranteed
(the "Subsidiary Guarantees") on a senior
subordinated basis by the Company's existing domestic
subsidiaries and each future domestic Restricted
Subsidiary (as defined) of the Company (collectively,
the "Guarantors"). The Subsidiary Guarantees will be
subordinated in right of payment to all existing and
future senior indebtedness of the Guarantors,
including guarantees under the Credit Facility, and
will rank PARI PASSU or senior in right of payment to
any future subordinated indebtedness of the
Guarantors. See "Description of the Notes --
Subsidiary Guarantees."
Change of Control........ Upon the occurrence of a Change of Control (as
defined), holders of the Exchange Notes will have the
right to require the Company to purchase their
Exchange Notes, in whole or in part, at a purchase
price equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase.
See "Description of the Notes -- Repurchase at the
Option of Holders -- Change of Control."
9
<PAGE>
Certain Covenants........ The Indenture (as defined) governing the Exchange
Notes contains certain covenants, including, but not
limited to, covenants limiting the Company and the
Guarantors with respect to the following: restricted
payments, incurrence of additional indebtedness,
transactions with affiliates, asset sales,
investments, issuances and dispositions of capital
stock of subsidiaries, payment restrictions affecting
subsidiaries and mergers and consolidations. See
"Description of the Notes -- Certain Covenants."
Exchange Offer;
Registration Rights.... Pursuant to a registration rights agreement entered
between the Company, the Guarantors and the Initial
Purchasers (the "Registration Rights Agreement"), the
Company agreed to file a registration statement (of
which this Prospectus forms a part) with the
Commission (the "Exchange Offer Registration
Statement") with respect to an offer to exchange the
Old Notes for the Exchange Notes registered under the
Securities Act, with terms identical to those of the
Notes (the "Exchange Offer"). If (i) the Exchange
Offer is not permitted by applicable law or
Commission X policy or (ii) any Holder of Transfer
Restricted Securities (as defined) notifies the
Company that (A) it is prohibited by law or
Commission policy from participating in the Exchange
Offer, (B) that it may not resell the Exchange Notes
acquired by it in the Exchange Offer to the public
without delivering a prospectus and the prospectus
contained in the Exchange Offer Registration
Statement is not appropriate or available for such
resales or (C) that it is a broker-dealer and owns
Old Notes acquired directly from the Company or an
affiliate of the Company, the Company will file a
shelf registration statement (the "Shelf Registration
Statement") with the Commission to cover the resales
of the Old Notes by the holders thereof under the
Registration Rights Agreement. If the Company fails
to satisfy its registration obligations, it will be
required to pay liquidated damages ("Liquidated
Damages") to the holders of Notes under certain
circumstances.
RISK FACTORS
An investment in the Notes involves certain risks that a potential investor
should carefully evaluate prior to making an investment in the Notes. See "Risk
Factors."
10
<PAGE>
SUMMARY PRO FORMA FINANCIAL INFORMATION
The Company acquired, simultaneously with the closing of the Initial Public
Offering in May 1996, the Founding Companies. During the remainder of 1996 and
through March 31, 1997 the Company completed twelve acquisitions, seven of which
were accounted for as poolings (the "Pooled Companies") and five of which were
accounted for as purchases (the "Purchased Companies"). The Pro Forma
Statement of Income Data presented below includes (i) the Company (including the
Pooled Companies) combined with historical financial statement data of the
Founding Companies at historical cost for all periods presented and the
Purchased Companies since their date of acquisition; (ii) certain reductions in
salaries and benefits attributed to pre-acquisition periods, as well as a
non-recurring, non-cash charge recorded by the Company (collectively, the
"Compensation Differential"); (iii) certain tax adjustments related to the
taxation of certain of the predecessor businesses as S Corporations prior to
their acquisition by the Company and the tax effect of the other adjustments to
income included herein; (iv) for 1995 and 1996, the conversion of debt to equity
at one of the Pooled Companies; and (v) the elimination of non-recurring pooling
costs. Pro Forma As Adjusted information adjusts the Pro Forma Statement of
Income Data to give effect to the acquisition of the Purchased Companies, and
the acquisition of eight companies subsequent to March 31, 1997 (the eight
collectively referred to as the "Subsequent Acquisitions") as well as the
impact on interest expense of the issuance of the Notes, as if all such
transactions had occurred on January 1, 1996. The As Adjusted Balance Sheet Data
are adjusted to give effect to the Subsequent Acquisitions, and the issuance of
the Notes and the application of the net proceeds from the Offering, as if the
same had occurred on March 31, 1997. See "Selected Consolidated Pro Forma
Financial Data," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Unaudited Pro Forma Combined Financial
Statements.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
YEAR ENDED DECEMBER 31, TWELVE MONTHS --------------------
------------------------------------------------------------------ ENDED
MARCH 31, PRO FORMA
PRO FORMA COMBINED PRO FORMA 1997 COMBINED
----------------------------------------------------- AS ADJUSTED PRO FORMA --------------------
1992 1993 1994 1995 1996 1996 AS ADJUSTED 1996 1997
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PRO FORMA STATEMENT OF
INCOME DATA:
Total revenues........ $ 172,974 $ 180,705 $ 194,814 $ 216,892 $ 250,776 $ 436,372 $ 439,497 $ 52,515 $ 69,311
Gross profit.......... 36,015 35,347 41,507 51,365 61,692 104,074 105,499 9,737 14,925
General and
administrative
expenses............ 22,667 21,166 23,188 23,724 26,554 49,923 50,204 6,122 8,131
Operating income...... 13,348 14,181 18,319 27,641 35,138 54,151 55,295 3,615 6,794
Interest expense...... 6,307 6,362 7,422 8,207 9,934 23,965(1) 23,182(1) 2,250 3,199
Income tax
provision........... 2,873 3,690 4,376 8,217 9,958 12,161 12,965 549 1,445
Income (loss) before
extraordinary
items............... 4,168 4,129 6,521 11,217 15,246 18,025 19,148 816 2,150
OTHER PRO FORMA DATA:
EBITDA(2)............. $ 23,006 $ 24,398 $ 29,028 $ 40,335 $ 50,357 $ 78,561 $ 80,833 $ 6,994 $ 12,082
Compensation
Differential........ 2,615 3,656 4,506 6,061 6,794 8,430 4,859 3,255 224
Depreciation and
amortization........ 9,658 10,217 10,709 12,694 15,219 24,410 25,538 3,379 5,288
Capital
expenditures(3)..... 2,713 10,857 28,449 25,610 40,688 69,023 85,881 10,409 31,970
Gross profit margin... 20.8% 19.6% 21.3% 23.7% 24.6% 23.8% 24.0% 18.5% 21.5%
EBITDA margin......... 13.3 13.5 14.9 18.6 20.1 18.0 18.4 13.3 17.4
PRO FORMA RATIOS:
Ratio of earnings to
fixed charges(4).... 1.93x 2.02x 2.24x 3.01x 3.19x 2.14x 2.26x 1.52x 2.01x
EBITDA/interest
expense(1)(2)....... 3.28 3.49
Net debt/
EBITDA(2)(5)........ 2.33 3.00
</TABLE>
THREE MONTHS ENDED
MARCH 31,
--------------------
PRO FORMA
AS ADJUSTED
1997
PRO FORMA STATEMENT OF
INCOME DATA:
Total revenues........ $ 97,361
Gross profit.......... 17,621
General and
administrative
expenses............ 12,383
Operating income...... 5,238
Interest expense...... 5,409(1)
Income tax
provision........... (25)
Income (loss) before
extraordinary
items............... (146)
OTHER PRO FORMA DATA:
EBITDA(2)............. $ 12,323
Compensation
Differential........ 465
Depreciation and
amortization........ 7,085
Capital
expenditures(3)..... 34,529
Gross profit margin... 18.1%
EBITDA margin......... 12.7
PRO FORMA RATIOS:
Ratio of earnings to
fixed charges(4).... --
EBITDA/interest
expense(1)(2).......
Net debt/
EBITDA(2)(5)........
AT MARCH 31, 1997
--------------------------
ACTUAL AS ADJUSTED
(IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash
equivalents......... $ 6,544 $ 7,251
Working capital
(deficit)........... (20,789) (32,854)
Total assets......... 416,124 495,808
Total debt, including
current portion..... 203,650 249,581
Stockholders'
equity.............. 111,806 124,491
- ------------
(1) Pro Forma As Adjusted interest expense includes the effect of the issuance
of the Notes in the Offering.
(2) EBITDA represents net income plus depreciation and amortization, income
taxes, net interest expense and extraordinary items as adjusted to reflect
the Compensation Differential. While EBITDA should not be construed as a
substitute for income from operations, net income or cash flows from
operating activities in analyzing the Company's operating performance,
financial position or cash flows, the Company has included EBITDA because
it is commonly used by certain investors and analysts to analyze and
compare companies on the basis of operating performance, leverage and
liquidity and to determine a company's ability to service debt.
(3) Capital expenditures represent current capital additions less the net book
value of capital equipment retired plus assets acquired under capital
leases.
(4) For purposes of calculating this ratio, "earnings" consist of income
before taxes and extraordinary items plus fixed charges. "Fixed charges"
consist of interest expense plus one-third of rental expense, which the
Company estimates to be representative of the interest factors therein.
(5) Pro Forma As Adjusted net debt represents total debt (which includes the
convertible subordinated notes) less cash and cash equivalents. The ratio
of net debt to EBITDA was calculated based on pro forma net debt of $183.3
million and $242.3 million as of December 31, 1996 and March 31, 1997,
respectively. See "Capitalization."
11
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN
ADDITION TO OTHER INFORMATION INCLUDED IN THIS PROSPECTUS BEFORE MAKING AN
INVESTMENT IN THE NOTES. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
CONCERNING THE COMPANY'S OPERATIONS, ECONOMIC PERFORMANCE AND FINANCIAL
CONDITION, INCLUDING, IN PARTICULAR, THE LIKELIHOOD OF THE COMPANY'S SUCCESS IN
DEVELOPING AND EXPANDING ITS BUSINESS. THESE STATEMENTS ARE BASED UPON A NUMBER
OF ASSUMPTIONS AND ESTIMATES THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE
COMPANY, AND REFLECT FUTURE BUSINESS DECISIONS THAT ARE SUBJECT TO CHANGE. SOME
OF THESE ASSUMPTIONS INEVITABLY WILL NOT MATERIALIZE, AND UNANTICIPATED EVENTS
WILL OCCUR THAT WILL AFFECT THE COMPANY'S RESULTS.
CONSEQUENCES OF EXCHANGE AND FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Old Notes under the Securities Act. In addition, upon the
consummation of the Exchange Offer holders of Old Notes which remain outstanding
will not be entitled to any rights to have such Old Notes registered under the
Securities Act or to any similar rights under the Registration Rights Agreement,
subject to certain exceptions. To the extent that Old Notes are tendered and
accepted in the Exchange Offer, a holder's ability to sell untendered, or
tendered but unaccepted, Old Notes could be adversely affected. The Old Notes
provide that if, (i) the Exchange Offer has not been consummated by the date
required in the Registration Rights Agreement, or (ii) a shelf registration
statement relating to the sale of the Old Notes has not been declared effective
by the date required in the Registration Rights Agreement, the Company will pay
liquidated damages in an amount equal to $0.192 per week per $1,000 principal
amount of the Old Notes outstanding until but excluding the date on which the
Exchange Offer is consummated or such shelf registration statement is declared
effective.
EFFECTS OF LEVERAGE
The Company is highly leveraged. On March 31, 1997, after giving pro forma
effect to the Subsequent Acquisitions, the Offering and application of the net
proceeds therefrom, the Company would have had total indebtedness of
approximately $249.6 million (of which $150.0 million would have consisted of
the Notes, $40.6 million would have consisted of convertible subordinated notes
issued in connection with the acquisition of certain businesses and the balance
would have consisted of capital lease and other obligations) and stockholders'
equity of approximately $124.5 million. Also after giving pro forma effect to
such transactions, the Company's ratio of earnings to fixed charges would have
been 2.14 and less than 1.00 for the year-ended December 31, 1996 and for the
three months ended March 31, 1997, respectively. The Company and its
subsidiaries will be permitted to incur substantial additional indebtedness in
the future. See "Capitalization", "Selected Consolidated Pro Forma Financial
Data" and "Description of the Notes."
The Company's ability to make scheduled payments of principal of, or to pay
the interest or Liquidated Damages, if any, on, or to refinance, its
indebtedness (including the Notes), or to fund planned capital expenditures or
future acquisitions will depend on its future performance, which, to a certain
extent, is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond its control. Based upon the current
level of operations and anticipated cost savings and revenue growth, management
believes that cash flow from operations and available cash, together with
available borrowings under the Credit Facility, will be adequate to meet the
Company's anticipated future requirements for working capital, budgeted capital
expenditures, acquisitions and scheduled payments of principal and interest on
its indebtedness, including the Notes, for the next several years. The Company
may, however, need to refinance all or a portion of the principal of the Notes
on or prior to maturity. There can be no assurance that the Company's business
will generate sufficient cash flow from operations or that anticipated
12
<PAGE>
revenue growth and operating improvements will be realized or that future
borrowings will be available under the Credit Facility in an amount sufficient
to enable the Company to service its indebtedness, including the Notes, make
anticipated capital expenditures or fund future acquisitions. In addition, there
can be no assurance that the Company will be able to effect any such refinancing
on commercially reasonable terms or at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including but not limited to: (i) making
it more difficult for the Company to satisfy its obligations with respect to the
Notes, (ii) increasing the Company's vulnerability to general adverse economic
and industry conditions, (iii) limiting the Company's ability to obtain
additional financing to fund future working capital, capital expenditures,
future acquisitions and other general corporate purposes, (iv) requiring the
dedication of a substantial portion of the Company's cash flow from operations
to the payment of principal of, and interest on, its indebtedness, thereby
reducing the availability of such cash flow to fund working capital, capital
expenditures, acquisitions or other general corporate purposes, (v) limiting the
Company's flexibility in planning for, or reacting to, changes in its business
and the industry, and (vi) placing the Company at a competitive disadvantage
vis-a-vis less-leveraged competitors. In addition, both the Indenture and the
Credit Facility contain financial and other restrictive covenants that limit the
ability of the Company to, among other things, borrow additional funds. Failure
by the Company to comply with such covenants could result in an event of default
which, if not cured or waived, could have a material adverse effect on the
Company. In addition, the degree to which the Company is leveraged, could
prevent it from repurchasing all of the Notes tendered to it upon the occurrence
of a Change of Control. See "Description of the Notes -- Repurchase at the
Option of Holders -- Change of Control" and "Description of Certain
Indebtedness -- Credit Facility."
LIMITED COMBINED OPERATING HISTORY
The Company was founded in September 1995 but conducted no operations and
generated no revenues prior to the closing of the Initial Public Offering. The
Company acquired the Founding Companies simultaneously with the closing of the
Initial Public Offering. Prior to their acquisition by the Company, the Founding
Companies and all subsequent acquisitions operated as separate independent
entities, and there can be no assurance that the Company will be able to
successfully integrate the operations of these businesses or institute the
necessary Company-wide systems and procedures to successfully manage the
combined enterprise on a profitable basis. The Company's management group has
been assembled for approximately one year, and there can be no assurance that
the management group will be able to effectively manage the combined entity or
effectively implement the Company's internal growth strategy and acquisition
program. The historical financial results of the Company, the Founding Companies
and the subsequent acquisitions cover periods when the Company, the Founding
Companies and the subsequent acquisitions were not under common control or
management and, therefore, may not be indicative of the Company's future
financial or operating results. The inability of the Company to successfully
integrate the Founding Companies and the subsequent acquisitions could have a
material adverse effect on the Company's business, financial condition and
results of operations and would make it unlikely that the Company's acquisition
program could continue to be successful. See "Management."
HOLDING COMPANY STRUCTURE AND SUBORDINATION OF NOTES AND GUARANTEES
The Company conducts all of its operations through subsidiaries.
Accordingly, the Company relies on dividends and cash advances from its
subsidiaries to provide funds necessary to meet its obligations, including the
payment of principal and interest on the Notes. The ability of any such
subsidiary to pay dividends or make cash advances is subject to applicable laws
and contractual restrictions, including restrictions under credit agreements
between such subsidiaries and third party lenders.
The Notes are unsecured obligations of the Company and are subordinated in
right of payment to all existing and future senior indebtedness of the Company,
which will include borrowings under the Credit Facility. The Credit Facility
provides for a revolving facility of $181 million through a syndicate of eight
13
<PAGE>
banks, and allows the Company to have borrowings of up to $40 million (in
addition to Subordinated Debt (as defined therein)) outside the Credit Facility.
The Company has recently announced that it anticipates that such facility will
be amended to provide for borrowings of up to $300 million and additional senior
borrowings outside such facility of up to $80 million. The Credit Facility is
guaranteed by substantially all of the Company's subsidiaries and is secured by
substantially all of the assets of the Company and matures on August 14, 1999 at
which time all amounts then outstanding become due. The Notes rank PARI PASSU in
right of payment with all other existing and future senior subordinated debt of
the Company and will rank senior to other indebtedness that expressly provides
that it is subordinated in right of payment of the Notes. In the event of
bankruptcy, liquidation or reorganization of the Company, the assets of the
Company will be available to pay obligations on the Notes only after all senior
indebtedness has been paid in full, and there may not be sufficient assets
remaining to pay amounts due on any or all of the Notes outstanding. As of March
31, 1997, the aggregate principal amount of senior indebtedness of the Company
would have been $59.0 million on a pro forma basis after giving effect to the
Subsequent Acquisitions, the Offering and the application of the net proceeds
therefrom and the aggregate principal amount of subordinated indebtedness, not
including the Notes, would have been $40.6 million on a pro forma basis giving
effect to the Offering and the application of the net proceeds therefrom.
Additional senior indebtedness may be incurred by the Company from time to time,
subject to certain restrictions. In addition to being subordinated to all
existing and future senior indebtedness of the Company, the Notes are
effectively subordinated to all secured debt of the Company.
Should the Company fail to satisfy any payment obligation with respect to
the Notes, the holders of the Notes would have a direct claim against the
Guarantors, pursuant to their respective Subsidiary Guarantees, however, (i) the
Subsidiary Guarantees are subordinated to senior indebtedness of the Guarantors
to the same extent and in the same manner as the Notes are subordinated to
senior indebtedness, (ii) the Subsidiary Guarantee are effectively subordinated
to all secured debt of the Guarantors and (iii) the Subsidiary Guarantee rank
PARI PASSU with the claims of unsecured creditors (including trade creditors and
tort claimants) of the Guarantors that have not agreed to be subordinated in
right of payment to the Subsidiary Guarantee.
CAPITAL AVAILABILITY AND RISKS RELATED TO ACQUISITION FINANCING
The Company intends to continue to finance future acquisitions by issuing
shares of its Common Stock for all or a substantial portion of the consideration
to be paid. In the event that the Common Stock does not maintain a sufficient
market value, or potential acquisition candidates are otherwise unwilling to
accept Common Stock as part of the consideration for the sale of their
businesses, the Company may be required to utilize more of its cash resources,
if available, in order to maintain its acquisition program. If the Company does
not have sufficient cash resources, its growth could be limited unless it is
able to obtain additional capital through debt or equity financings. Although
the Company has established a line of credit which provides for aggregate credit
capacity of $221 million, there can be no assurance that the Company will be
able to obtain all the financing it will need in the future on terms the Company
deems acceptable. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
The Credit Facility contains customary restrictive covenants, including
requiring the Company to maintain: consolidated Net Worth, as defined therein,
plus consolidated Subordinated Debt, as defined therein, at a level not less
than (i) the greater of 90% of the consolidated Net Worth of the Company as of
June 30, 1996, or $35 million, plus (ii) 90% of the Company's cumulative annual
consolidated net earnings, plus (iii) 100% of the net proceeds resulting from
any sale, issuance or assumption of stock or Subordinated Debt (as defined
therein); consolidated Tangible Net Worth, as defined therein, of the Company at
not less than 40% of the consolidated Net Worth of the Company; a ratio of
consolidated Funded Debt, as defined therein, of the Company less the
Subordinated Debt, as defined therein, of the Company to the consolidated
EBITDA, as defined therein, of the Company of no greater than 3.0 to 1.0; and a
Fixed Charge Coverage Ratio, as defined therein, of not less than 1.25 to 1.0.
At March 31, 1997, on a pro forma as adjusted basis (see "Selected Consolidated
Pro Forma Financial Data"), the Company's consolidated Net Worth plus the
14
<PAGE>
consolidated Subordinated Debt exceeded the net worth test by $4.0 million, the
consolidated Tangible Net Worth was 45.7% of the consolidated Net Worth and the
Fixed Charge Coverage Ratio was 1.28. The Company believes it will be in
compliance with such covenants on the date of closing of the Offering. The
Indenture will contain restrictions on the Company's ability to incur additional
indebtedness, and other contractual arrangements to which the Company may become
subject in the future could contain similar restrictions. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
RISKS RELATED TO THE COMPANY'S ACQUISITION STRATEGY
The Company intends to continue to grow primarily through the acquisition
of additional motorcoach and other passenger ground transportation businesses.
Increased competition for acquisition candidates may develop, in which event
there may be fewer acquisition opportunities available to the Company as well as
higher acquisition prices. There can be no assurance that the Company will be
able to continue to identify, acquire or profitably manage additional businesses
or successfully integrate acquired businesses, if any, into the Company without
substantial costs, delays or other operational or financial problems. Further,
acquisitions involve a number of special risks, including possible adverse
effects on the Company's operating results, diversion of management's attention,
failure to retain key acquired personnel, risks associated with unanticipated
events or liabilities and amortization of acquired intangible assets, some or
all of which could have a material adverse effect on the Company's business,
financial condition and results of operations. In addition, there can be no
assurance that the acquired companies or other businesses acquired in the future
will achieve anticipated revenues and earnings. See "Business -- Business
Strategy."
RANKING AND FRAUDULENT CONVEYANCE CONSIDERATIONS
Holders of the Notes will have a direct claim on the assets of the
Guarantors pursuant to the Subsidiary Guarantees. However, each Guarantor's
guarantee of the obligations of the Company under the Notes may be subject to
review under relevant federal and state fraudulent conveyance statutes (the
"Fraudulent Conveyance Statutes") in a bankruptcy, reorganization or
rehabilitation case or similar proceeding or a lawsuit by or on behalf of unpaid
creditors of such Guarantors. If a court were to find under relevant Fraudulent
Conveyance Statutes that, at the time the Notes were issued, (a) a Guarantor
guaranteed the Notes with the intent of hindering, delaying or defrauding
current or future creditors or (b)(i) a Guarantor received less than reasonably
equivalent value or fair consideration for guaranteeing the Notes and (ii)(A)
was insolvent or was rendered insolvent by reason of such Subsidiary Guarantee,
(B) was engaged, or about to engage, in a business or transaction for which its
assets constituted unreasonably small capital, (C) intended to incur, or
believed that it would incur, obligations beyond its ability to pay as such
obligations matured (as all of the foregoing terms are defined in or interpreted
under such Fraudulent Conveyance Statutes) or (D) was a defendant in an action
for money damages, or had a judgment for money damages docketed against it (if,
in either case, after final judgment, the judgment is unsatisfied), such court
could avoid or subordinate such guarantee of the Notes to presently existing and
future indebtedness of such Guarantor and take other action detrimental to the
holders of the Notes, including, under certain circumstances, invalidating such
guarantee of the Notes.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or state law that is being applied in any such
proceeding. Generally, however, a Guarantor would be considered insolvent if
either (i) the fair market value (or fair saleable value) of its assets is less
than the amount required to pay the probable liability on its total existing
indebtedness and liabilities (including contingent liabilities) as they become
absolute and mature or (ii) it is incurring obligations beyond its ability to
pay as such obligations mature or become due.
The Boards of Directors and management of each of the Company and each
Guarantor believe that at the time of issuance of the Notes and the Subsidiary
Guarantees of the Notes, each Guarantor (i) will be (a) neither insolvent nor
rendered insolvent thereby, (b) in possession of sufficient capital to meet its
obligations as the same mature or become due and to operate its business
effectively and (c) incurring obligations within its ability to pay as the same
mature or become due and (ii) will have sufficient assets to
15
<PAGE>
satisfy any probable judgment against it in any pending action. There can be no
assurance, however, that such beliefs will prove to be correct or that a court
passing on such questions would reach the same conclusions.
LABOR RELATIONS
The Company currently has approximately 7,600 employees, approximately
5,000 of whom are motorcoach drivers. At March 31, 1997 approximately 2,800 of
the Company's employees were members of various labor unions. The Company's
inability to negotiate acceptable contracts with these unions as existing
agreements expire could result in strikes by the affected workers and increased
operating costs as a result of higher wages or benefits paid to union members.
If the unionized employees were to engage in a strike or other work stoppage, or
other employees were to become unionized, the Company could experience a
significant disruption of its operations and higher ongoing labor costs, which
could have a material adverse effect on the Company's business and results of
operations. See "Business -- Drivers and Other Personnel."
SUBSTANTIAL SEASONALITY OF THE MOTORCOACH BUSINESS
The motorcoach business is subject to seasonal variations in operations.
During the winter months, operating costs are higher due to the cold weather and
demand for motorcoach services is lower, particularly because of a decline in
tourism. As a result, the Company expects its revenues and results of operations
to be lower in the first and fourth quarters than in the second and third
quarters of each year, which may impact the Company's ability to make scheduled
payments of principal or interest on outstanding indebtedness. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
FUEL PRICES AND TAXES
Fuel is a significant cost to the Company. Fuel prices are subject to
sudden increases as a result of variations in supply levels and demand. Any
sustained increase in fuel prices could adversely affect the Company's results
of operations unless it were able to increase prices. From time to time, there
are efforts at the Federal or state level to increase fuel or highway use taxes,
which, if enacted, also could adversely affect the Company's results of
operations.
INSURANCE COSTS; CLAIMS
The Company's cost of maintaining personal injury, property damage and
workers' compensation insurance is significant. The Company could experience
higher insurance premiums as a result of adverse claims experience or because of
general increases in premiums by insurance carriers for reasons unrelated to the
Company's own claims experience. As an operator of motorcoaches and other
vehicles, the Company is exposed to claims for personal injury or death and
property damage as a result of accidents. The Company is self-insured for the
first $100,000 of losses per incident involving a motorcoach and is self-insured
for the first $250,000 of losses per incident involving a taxicab. If the
Company were to experience a significant increase in the number of claims for
which it is self-insured or claims in excess of its insurance limits, its
results of operations and financial condition would be adversely affected. See
"Business -- Risk Management and Insurance."
CAPITAL REQUIREMENTS
The Company's operations require significant capital in order to maintain a
modern fleet of motorcoaches and to achieve internal growth. The Company has
historically financed the acquisition of new motorcoaches with debt financing. A
new motorcoach costs in excess of $300,000, and there can be no assurance that
adequate financing will be available in the future on terms favorable to the
Company to enable the Company to efficiently maintain operations and implement
any expansion of service through a larger fleet. In addition, as motorcoaches
age, they require increasing amounts of maintenance and, therefore, are more
expensive to operate. The Company's inability to obtain, or a material delay in
obtaining, the financing necessary to acquire replacement motorcoaches as needed
would have an adverse
16
<PAGE>
effect on the Company's results of operations due to higher operating costs
associated with operating an aging fleet. See "Business -- Equipment."
GOVERNMENT SUBSIDIES
Payments to the Company under a number of its commuter and transit
contracts are funded through Federal or state subsidy programs, and, without
these subsidies, the state or local transit authority may be unwilling to
continue to renew these contracts. In addition, many of the motorcoaches
provided at nominal rent to the Company under these contracts are purchased with
funds provided by Federal programs. If funding for these Federal programs were
eliminated or curtailed, the Company would be required to operate existing
motorcoaches longer than economically practicable or be forced to acquire
replacement equipment. Either alternative could result in an increase in the
Company's costs of operations or could cause the Company to decide not to renew
some of its contracts.
SIGNIFICANT REGULATION
As a result of the enactment of the ICC Termination Act of 1995, interstate
motorcoach operations previously regulated by the Interstate Commerce Commission
became subject, as of January 1, 1996, to regulatory requirements administered
by the Federal Highway Administration (the "FHWA") and the new Surface
Transportation Board, both units of the United States Department of
Transportation. Motorcoach operators subject to FHWA jurisdiction are required
to be registered with the FHWA and to maintain minimum amounts of insurance. The
Surface Transportation Board (the "STB") must approve or exempt any
consolidation or merger of two or more regulated interstate motorcoach operators
or the acquisition of one such operator by another. As of May 15, 1997, the STB
had exempted from regulatory approval requirements each of the acquisition
transactions involving federally-regulated interstate motorcoach operators
entered into by the Company through February 1997. However, acquisitions
subsequent to March 1, 1997 and future acquisitions of other motorcoach
operators must be approved or exempted from the need for regulatory approval by
the STB. There can be no assurance that the Company will be able to obtain such
approval or exemption with respect to such acquisitions. Motorcoach operators
are also subject to extensive safety requirements and requirements imposed by
environmental laws, workplace safety and anti-discrimination laws, including the
Americans with Disabilities Act. Safety, environmental and vehicle accessibility
requirements for motorcoach operators have increased in recent years, and this
trend could continue. The FHWA and state regulatory agencies have broad power to
suspend, amend or revoke the Company's operating authorizations for failure to
comply with statutory requirements, including safety and insurance requirements.
A number of states, such as New Jersey, Nevada and Pennsylvania, require
motorcoach operators to obtain authority to operate over certain specified
intrastate routes, and, in some instances, such authority cannot be obtained if
another operator already has obtained authority to operate on that route. As a
result, there may be regulatory constraints on the expansion of the Company's
operations in these states. Furthermore, the Company currently has a competitive
advantage with respect to certain of its existing route authorities as a result
of this regulatory posture. Therefore, if New Jersey or another highly regulated
state in which the Company has operations were to reduce the level of
regulation, the Company's competitive advantage arising from such regulation
could be lost. Similarly, the Company's taxicab service operations are regulated
primarily at the local municipality level. Local regulations applicable to
taxicab services focus on the entry of new operators into the marketplace and
the aggregate number of vehicles which will have authority to operate as well as
the fares that can be charged for providing transportation services via
taxicabs. These regulations may limit the Company's ability to expand the size
of its taxicab fleet. See "Business -- Regulation."
POTENTIAL EXPOSURE TO ENVIRONMENTAL LIABILITIES
The Company's operations are subject to various environmental laws and
regulations, including those dealing with air emissions, water discharges and
the storage, handling and disposal of petroleum and hazardous substances. The
motorcoach and ground passenger transportation services industry may in the
future become subject to stricter regulations which could impose significant
compliance costs on the Company. In addition to compliance costs, there have
been spills and releases of hazardous substances,
17
<PAGE>
including petroleum and petroleum related products, at several of the Company's
operating facilities in the past. As a result of past and future operations at
these facilities, the Company may be required to incur significant remediation
costs and may be subject to penalties for noncompliance with applicable
environmental laws and regulations. The Company believes that its liabilities
for existing environmental matters will not have a material adverse effect on
its financial condition, liquidity, results of operations or competitive
position; however, there can be no assurance that the Company will not incur
costs in the future that will have a material adverse effect on the Company. In
addition, although the Company intends to conduct appropriate due diligence with
respect to environmental matters in connection with future acquisitions, there
can be no assurance that the Company will be able to identify or be indemnified
for all potential environmental liabilities relating to any acquired business.
See "Business -- Environmental Matters."
SUBSTANTIAL COMPETITION
The motorcoach and ground transportation industry is highly competitive,
fragmented and subject to rapid change, particularly with regard to recreational
and excursion services and commuter and transit services. There are numerous
other companies that provide these services, a number of which are as large or
larger than the Company on a national or regional basis and thousands of which
are small, independent and serve local populations. Certain competitors operate
in several of the Company's existing or target markets, and others may choose to
enter those markets in the future. The majority of the Company's competition is
made up of smaller regional or local operators with a strong presence in their
respective local markets. As a result of these factors, the Company may lose
customers or have difficulty in acquiring new customers. See
"Business -- Competition."
RELIANCE ON KEY PERSONNEL
The Company's operations are dependent on the continued efforts of its
executive officers and the senior management of the operating subsidiaries.
Furthermore, the Company will likely be dependent on the senior management of
any businesses acquired in the future. If any of these persons becomes unable to
continue in his or her present role, or if the Company is unable to attract and
retain other qualified employees, the Company's business or prospects could be
adversely affected. Although the Company or an operating subsidiary has entered
into an employment agreement with each of the Company's executive officers and
key managers, there can be no assurance that any individual will continue in his
present capacity with the Company or operating subsidiary for any particular
period of time. The Company does not intend to obtain key man life insurance
covering any of its executive officers or other members of senior management.
See "Management."
RISKS RELATING TO A CHANGE OF CONTROL
Upon a Change of Control (as defined), holders of the Notes will have the
right to require the Company to repurchase all or any part of such holders'
Notes at a price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages (as defined), if any, to the date of
repurchase. The events that constitute a Change of Control under the Indenture
relating to the Notes would constitute a default under the Credit Agreement,
which prohibits the purchase of the Notes by the Company in the event of certain
Change of Control events unless and until such time as the Company's
indebtedness under the Credit Agreement is repaid in full. There can be no
assurance that the Company and the Guarantors would have sufficient financial
resources available to satisfy all of its or their obligations under the Credit
Agreement and the Notes in the event of a Change of Control. The Company's
failure to purchase the Notes would result in a default under the Indenture and
under the Credit Agreement, each of which could have adverse consequences for
the Company and the holders of the Notes. See "Description of the
Notes -- Repurchase at the Option of Holders -- Change of Control." The
definition of "Change of Control" in the Indenture includes a sale, lease,
conveyance or other disposition of "all or substantially all" of the assets of
the Company and its Subsidiaries taken as a whole to a person or a group of
persons. There is little case law interpreting the phrase "all or substantially
all" in the context of an indenture. Because there is no precise established
definition of this phrase, the ability of a holder of the Notes to
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require the Company to repurchase such Notes as a result of a sale, lease,
conveyance or transfer of all or substantially all of the Company's assets to a
person or group of persons may be uncertain.
ABSENCE OF A PUBLIC MARKET FOR NOTES
There is no existing market for the Notes. The Company does not intend to
apply for listing of the Notes on a securities exchange or to seek approval for
quotation through an automated quotation system. Accordingly, there can be no
assurance that an active market for the Notes will develop following the
completion of the Exchange Offer or, if developed, that such market will be
sustained or as to the liquidity of the market.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on June 24, 1997, to the Initial
Purchasers pursuant to a Purchase Agreement, dated June 18, 1997, between the
Company, the Guarantors and the Initial Purchasers (the "Purchase Agreement").
The Initial Purchasers subsequently resold all of the Old Notes to Qualified
Institutional Buyers, each of whom agreed to comply with certain transfer
restrictions and other conditions. As a condition to the purchase of the Old
Notes by the Initial Purchasers, the Company entered into a registration rights
agreement with the Initial Purchasers (the "Registration Rights Agreement"),
which requires, among other things, that promptly following the issuance and
sale of the Old Notes, the Company file with the SEC the Registration Statement
with respect to the Exchange Notes, use its best efforts to cause the
Registration Statement to become effective under the Securities Act and, upon
the effectiveness of the Registration Statement, offer to the holders of the Old
Notes the opportunity to exchange their Old Notes for a like principal amount of
Exchange Notes, which will be issued without a restrictive legend and may be
reoffered and resold by the holder without restrictions or limitations under the
Securities Act subject to certain exceptions described below. A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The term "holder" with respect
to the Exchange Offer means any person in whose name Old Notes are registered on
the Company's books or any other person who has obtained a properly completed
bond power from the registered holder or any person whose Old Notes are held of
record by the Depositary who desires to deliver such Old Notes by book-entry
transfer of the Depositary. The Old Notes provide that if, (i) the Exchange
Offer has not been consummated by the date required by the Registration Rights
Agreement, or (ii) a shelf registration statement relating to the sale of the
Old Notes has not been declared effective by the date required by the
Registration Rights Agreement, the Company will pay liquidated damages in an
amount equal to $0.05 per week per $1,000 principal amount of the Old Notes
outstanding until but excluding the date the Exchange Offer is consummated or
such shelf registration statement is declared effective. The amount of
liquidated damages will increase by an additional $0.05 per $1,000 principal
amount of Old Notes with respect to each subsequent 90 day period until all
defaults have been cured, up to a maximum amount of liquidated damages of $0.50
per week per $1,000 principal amount of Notes.
Based on existing interpretations of the Securities Act by the staff of the
SEC set forth in several no-action letters to third parties, and subject to the
immediately following sentence, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for Old Notes may be offered for
resale, resold and otherwise transferred by a holder thereof (other than (i) a
broker-dealer who purchased such Old Notes directly from the Company for resale
pursuant to Rule 144A or by any other available exemption under the Securities
Act or (ii) a person that is an "affiliate" (within the meaning of Rule 405 of
the Securities Act) of the Company), without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that the
holder is acquiring the Exchange Notes in its ordinary course of business and is
not participating, and has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes. However, any purchaser of
Old Notes who is an affiliate of the Company or who intends to participate in
the Exchange Offer for the purpose of distributing the Exchange Notes, or any
broker-dealer who purchased the Old Notes from the Company to resell pursuant to
Rule 144A or any other available exemption under the Securities Act, (i) will
not be able to rely on the interpretations by the staff of the SEC set forth in
the above-mentioned no-action letters, (ii) will not be able to tender its Old
Notes in the Exchange Offer and (iii) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
sale or transfer of the Old Notes unless such sale or transfer is made pursuant
to an exemption from such requirements. Accordingly, any holder who tenders in
the Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. See "Plan of Distribution."
As a result of the filing and effectiveness of the Registration Statement
of which this Prospectus is a part, the Company will not be required to pay an
increased interest rate on the Old Notes. Following the
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consummation of the Exchange Offer, holders of Old Notes not tendered will not
have any further registration rights except in certain limited circumstances
requiring the filing of a Shelf Registration Statement (as defined herein), and
the Old Notes will continue to be subject to certain restrictions on transfer.
See "Description of the Notes -- Registered Exchange Offer; Registration
Rights." Accordingly, the liquidity of the market for the Old Notes could be
adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept all Old Notes properly
tendered and not withdrawn prior to 5:00 p.m. New York City time, on the
Expiration Date. After authentication of the Exchange Notes by the Trustee or an
authenticating agent, the Company will issue and deliver $1,000 principal amount
of Exchange Notes in exchange for each $1,000 principal amount of outstanding
Old Notes accepted in the Exchange Offer. Holders may tender some or all of
their Old Notes pursuant to the Exchange Offer in denominations of $1,000 and
integral multiples thereof.
Each holder of Old Notes who wishes to exchange Old Notes for Exchange
Notes in the Exchange Offer will be required to represent that (i) it is not an
affiliate of the Company, (ii) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Series B Notes to be issued in the
Exchange Offer, (iii) it is acquiring the Series B Notes in its ordinary course
of business and (iv) if such Holder is a broker-dealer, that it will receive
Exchange Securities for its own account in exchange for Securities that were
acquired as a result of market-making activities or other trading activities and
that it will deliver a prospectus in connection with any resale of such Exchange
Notes. See "Plan of Distribution."
The form and terms of the Exchange Notes are identical in all material
respects to the form and terms of the Old Notes, except that (i) the offering of
the Exchange Notes has been registered under the Securities Act, (ii) the
Exchange Notes will not be subject to transfer restrictions and (iii) certain
provisions relating to an increase in the stated interest rate on the Old Notes
provided for under certain circumstances will be eliminated. The Exchange Notes
will evidence the same debt as the Old Notes. The Exchange Notes will be issued
under and entitled to the benefits of the Indenture.
As of the date of this Prospectus, $150,000,000 aggregate principal amount
of the Old Notes is outstanding. In connection with the issuance of the Old
Notes, the Company arranged for the Old Notes to be issued and transferable in
book-entry form through the facilities of the Depositary, acting as depositary.
The Exchange Notes will also be issuable and transferable in book-entry form
through the Depositary.
This Prospectus, together with the accompanying Letter of Transmittal, is
initially being sent to all registered holders of the Old Notes as of the close
of business on , 1997. The Company intends to conduct the Exchange Offer
in accordance with the applicable requirements of the Exchange Act, and the
rules and regulations of the SEC thereunder, including Rule 14e-1, to the extent
applicable. The Exchange Offer is not conditioned upon any minimum aggregate
principal amount of Old Notes being tendered, and holders of the Old Notes do
not have any appraisal or dissenters' rights under the General Corporation Law
of the State of Delaware or under the Indenture in connection with the Exchange
Offer. The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. See "-- Exchange Agent." The Exchange Agent will act as agent
for the tendering holders for the purpose of receiving Exchange Notes from the
Company and delivering Exchange Notes to such holders.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender or the occurrence of certain other events set forth herein,
certificates for any such unaccepted Old Notes will be returned, at the
Company's cost, to the tendering holder thereof as promptly as practicable after
the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and
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expenses, other than certain applicable taxes, in connection with the Exchange
Offer. See "-- Solicitation of Tenders, Fees and Expenses."
NEITHER THE BOARD OF DIRECTORS OF THE COMPANY NOR THE COMPANY MAKES ANY
RECOMMENDATION TO HOLDERS OF OLD NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ALL OR ANY PORTION OF THEIR OLD NOTES PURSUANT TO THE EXCHANGE OFFER.
MOREOVER, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF
OLD NOTES MUST MAKE THEIR OWN DECISION WHETHER TO TENDER PURSUANT TO THE
EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER
READING THIS PROSPECTUS AND THE LETTER OF TRANSMITTAL AND CONSULTING WITH THEIR
ADVISORS, IF ANY, BASED ON THEIR OWN FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date to which the Exchange Offer is extended. The Company may extend the
Exchange Offer at any time and from time to time by giving oral or written
notice to the Exchange Agent and by timely public announcement.
The Company expressly reserves the right, in its sole discretion (i) to
delay acceptance of any Old Notes, to extend the Exchange Offer or to terminate
the Exchange Offer and to refuse to accept Old Notes not previously accepted, if
any of the conditions set forth herein under "-- Conditions of the Exchange
Offer" shall have occurred and shall not have been waived by the Company (if
permitted to be waived by the Company), by giving oral or written notice of such
delay, extension or termination to the Exchange Agent and (ii) to amend the
terms of the Exchange Offer in any manner. Any such delay in acceptance,
extension, termination or amendment will be followed as promptly as practicable
by oral or written notice thereof by the Company to the registered holders of
the Old Notes. If the Exchange Offer is amended in a manner determined by the
Company to constitute a material change, the Company will promptly disclose such
amendment in a manner reasonably calculated to inform the holders of such
amendment and the Company will extend the Exchange Offer to the extent required
by law.
Without limiting the manner in which the Company may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the Exchange Offer, the Company shall have no obligation to publish, advise, or
otherwise communicate any such public announcement, other than by making a
timely release thereof to the Dow Jones News Service.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate of 9 3/8% per annum,
payable semi-annually on January 1 and July 1 of each year, commencing January
1, 1998. Holders of Exchange Notes of record on December 15, 1997, will receive
on January 1, 1998, an interest payment in an amount equal to (x) the accrued
interest on such Exchange Notes from the date of issuance thereof to January 1,
1998, plus (y) the accrued interest on the previously held Old Notes from the
date of issuance of such Old Notes (June 24, 1997) to the date of exchange
thereof. Interest will not be paid on Old Notes that are accepted for exchange.
The Notes mature on July 1, 2007.
PROCEDURES FOR TENDERING
Each holder of Old Notes wishing to accept the Exchange Offer must
complete, sign and date the Letter of Transmittal, or a facsimile thereof, in
accordance with the instructions contained herein and therein, and mail or
otherwise deliver such Letter of Transmittal, or such facsimile, together with
the Old Notes to be exchanged and any other required documentation, to The Bank
of New York, as Exchange Agent, at the address set forth herein and therein or
effect a tender of Old Notes pursuant to the procedures for book-entry transfer
as provided for herein and therein. By executing the Letter of Transmittal, each
holder will represent to the Company, that, among other things, the Exchange
Notes acquired pursuant to
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the Exchange Offer are being acquired in the ordinary course of business of the
person receiving such Exchange Notes, whether or not such person is the holder,
that neither the holder nor any such other person has any arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and that neither the holder nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company.
Any financial institution that is a participant in the Depositary's
Book-entry Transfer Facility system may make book-entry delivery of the Old
Notes by causing the Depositary to transfer such Old Notes into the Exchange
Agent's account in accordance with the Depositary's procedure for such transfer.
Although delivery of Old Notes may be effected through book-entry transfer into
the Exchange Agent's account at the Depositary, the Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by the
Exchange Agent at its address set forth herein under "-- Exchange Agent" prior
to 5:00 p.m., New York City time, on the Expiration Date. DELIVERY OF DOCUMENTS
TO THE DEPOSITARY IN ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY
TO THE EXCHANGE AGENT.
Only a holder may tender its Old Notes in the Exchange Offer. To tender in
the Exchange Offer, a holder must complete, sign and date the Letter of
Transmittal or a facsimile thereof, have the signatures thereof guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver such Letter
of Transmittal or such facsimile, together with the Old Notes (unless such
tender is being effected pursuant to the procedure for book-entry transfer) and
any other required documents, to the Exchange Agent, prior to 5:00 p.m., New
York City time, on the Expiration Date.
The Tender by a holder will constitute an agreement between such holder,
The Company and the Exchange Agent in accordance with the terms and subject to
the conditions set forth herein and in the Letter of Transmittal. If less than
all of the Old Notes are tendered, a tendering holder should fill in the amount
of Old Notes being tendered in the appropriate box on the Letter of Transmittal.
The entire amount of Old Notes delivered to the Exchange Agent will be deemed to
have been tendered unless otherwise indicated.
THE LETTER OF TRANSMITTAL WILL INCLUDE REPRESENTATIONS TO THE COMPANY THAT,
AMONG OTHER THINGS, (1) THE EXCHANGE NOTES ACQUIRED PURSUANT TO THE EXCHANGE
OFFER ARE BEING ACQUIRED IN THE ORDINARY COURSE OF BUSINESS OF THE PERSON
RECEIVING SUCH EXCHANGE NOTES (WHETHER OR NOT SUCH PERSON IS THE HOLDER), (2)
NEITHER THE HOLDER NOR ANY SUCH OTHER PERSON IS ENGAGED IN, INTENDS TO ENGAGE IN
OR HAS ANY ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN THE
DISTRIBUTION OF SUCH EXCHANGE NOTES, (3) NEITHER THE HOLDER NOR ANY SUCH OTHER
PERSON IS AN "AFFILIATE," AS DEFINED IN RULE 405 UNDER THE SECURITIES ACT, OF
THE COMPANY AND (4) IF THE TENDERING HOLDER IS A BROKER OR DEALER (AS DEFINED IN
THE EXCHANGE ACT) (A) IT ACQUIRED THE OLD NOTES FOR ITS OWN ACCOUNT AS A RESULT
OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND (B) IT HAS NOT
ENTERED INTO ANY ARRANGEMENT OR UNDERSTANDING WITH THE COMPANY OR ANY
"AFFILIATE" THEREOF (WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT)
TO DISTRIBUTE THE EXCHANGE NOTES TO BE RECEIVED IN THE EXCHANGE OFFER. IN THE
CASE OF A BROKER-DEALER THAT RECEIVES EXCHANGE NOTES FOR ITS OWN ACCOUNT IN
EXCHANGE FOR OLD NOTES WHICH WERE ACQUIRED BY IT AS A RESULT OF MARKET-MAKING OR
OTHER TRADING ACTIVITIES, THE LETTER OF TRANSMITTAL WILL ALSO INCLUDE AN
ACKNOWLEDGMENT THAT THE BROKER-DEALER WILL DELIVER A COPY OF THIS PROSPECTUS IN
CONNECTION WITH THE RESALE BY IT OF EXCHANGE NOTES RECEIVED PURSUANT TO THE
EXCHANGE OFFER; HOWEVER, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS,
SUCH HOLDER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE
MEANING OF THE SECURITIES ACT. SEE "PLAN OF DISTRIBUTION."
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDERS. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
ALSO REQUEST
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THAT THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES EFFECT SUCH TENDER FOR HOLDERS, IN EACH CASE AS SET FORTH HEREIN AND IN
THE LETTER OF TRANSMITTAL.
Any beneficial owner whose Old Notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder promptly and instruct such
registered holder to tender on his behalf. If such beneficial owner wishes to
tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Notes, either make
appropriate arrangements to register ownership of the Old Notes in such owner's
name or obtain a properly completed bond power from the registered holder. The
transfer of record ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution"), unless
the Old Notes tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" of the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If the Letter of Transmittal is signed by a
person other than the registered holder listed therein, such Old Notes must be
endorsed or accompanied by appropriate bond powers which authorize such person
to tender the Old Notes on behalf of the registered holder, in either case
signed as the name of the registered holder or holders appears on the Old Notes.
If the Letter of Transmittal or any Old Notes or bond powers are signed or
endorsed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with such Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Old Notes will be determined
by the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the absolute right to waive an irregularities or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent nor any other person shall be
under any duty to give notification of defects or irregularities with respect to
tenders of Old Notes, nor shall any of them incur any liability for failure to
give such notification. Tenders of Old Notes will not be deemed to have been
made until such irregularities have been cured or waived. Any Old Notes received
by the Exchange Agent that the Company determines are not properly tendered or
the tender of which is otherwise rejected by the Company and as to which the
defects or irregularities have not been cured or waived by the Company will be
returned by the Exchange Agent to the tendering holder unless otherwise provided
in the Letter of Transmittal, as soon as practicable following the Expiration
Date.
In addition, the Company reserves the right in its sole discretion (a) to
purchase or make offers for any Old Notes that remain outstanding subsequent to
the Expiration Date, or, as set forth under "-- Conditions of the Exchange
Offer," terminate the Exchange Offer and (b) to the extent permitted by
applicable law, to purchase Old Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or offers
may differ from the terms of the Exchange Offer.
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BOOK-ENTRY TRANSFER
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Old Notes at the DTC (the "Book-Entry Transfer Facility") for the purpose
of facilitating the Exchange Offer, and subject to the establishment thereof,
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry deliver of Old Notes by causing such
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account with respect to the Old Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. ALTHOUGH DELIVERY OF OLD NOTES
MAY BE EFFECTED THROUGH BOOK-ENTRY TRANSFER INTO THE EXCHANGE AGENT'S ACCOUNT AT
THE BOOK-ENTRY TRANSFER FACILITY, AN APPROPRIATE LETTER OF TRANSMITTAL PROPERLY
COMPLETED AND DULY EXECUTED WITH ANY REQUIRED SIGNATURE GUARANTEE AND ALL OTHER
REQUIRED DOCUMENTS MUST IN EACH CASE BE TRANSMITTED TO AND RECEIVED OR CONFIRMED
BY THE EXCHANGE AGENT AT ITS ADDRESS SET FORTH BELOW ON OR PRIOR TO THE
EXPIRATION DATE, OR, IF THE GUARANTEED DELIVERY PROCEDURES DESCRIBED BELOW ARE
COMPLIED WITH, WITH THE TIME PERIOD PROVIDED UNDER SUCH PROCEDURES. DELIVERY OF
DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO
THE EXCHANGE AGENT.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent prior to the
Expiration Date, or who cannot complete the procedure for book-entry transfer on
a timely basis, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmittal, mail or hand delivery)
setting forth the name and address of the holder, the certificate number or
numbers of such holder's Old Notes and the principal amount of such Old
Notes tendered, stating that the tender is being made thereby, and
guaranteeing that, within three New York Stock Exchange ("NYSE") trading
days after the Expiration Date, the Letter of Transmittal (or facsimile
thereof), together with the certificate(s) representing the Old Notes to be
tendered in proper form for transfer (or confirmation of a book-entry
transfer into the Exchange Agent's account at the Depositary of Old Notes
delivered electronically) and any other documents required by the Letter of
Transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), together with the certificate(s) representing all
tendered Old Notes in proper form for transfer (or confirmation of a
book-entry transfer into the Exchange Agent's account at the Depositary of
Old Notes delivered electronically) and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within three NYSE
trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be received by the Exchange Agent at its address set
forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any
such notice of withdrawal must (i) specify the name of the person having
deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify the
Old Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Old Notes or, in the case of Old Notes transferred by
book-entry transfer, the name and number of the account at the Depositary to be
credited), (iii) be signed by the Depositor in the same manner as the original
signature on the Letter of
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Transmittal by which such Old Notes were tendered (including any required
signature guarantee) or be accompanied by documents of transfer sufficient to
permit the Trustee with respect to the Old Notes to register the transfer of
such Old Notes into the name of the Depositor withdrawing the tender and (iv)
specify the name in which any such Old Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time of receipt) of such withdrawal notices will be
determined by the Company, whose determination shall be final and binding on all
parties. Any Old Notes so withdrawn will be deemed not to have been validly
tendered for purposes of the Exchange Offer, and no Exchange Notes will be
issued with respect thereto unless the Old Notes so withdrawn are validly
retendered. Any Old Notes that have been tendered but are not accepted for
exchange will be returned to the holder thereof without cost to such holder as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures described above under "-- Procedures for Tendering" at any
time prior to the Expiration Date.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company will not
be required to accept for exchange, or to exchange Exchange Notes for, any Old
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Old Notes if, in the Company's judgment, any of the
following conditions has occurred or exists or has not been satisfied: (i) that
the Exchange Offer, or the making of any exchange by a holder, violates
applicable law or any applicable interpretation of the staff of the SEC, (ii)
that any action or proceeding shall have been instituted or threatened in any
court or by or before any governmental agency or body with respect to the
Exchange Offer, (iii) that there has been adopted or enacted any law, statute,
rule or regulation that can reasonably be expected to impair the ability of the
Company to proceed with the Exchange Offer, (iv) that there has been declared by
United States federal or Texas or New York state authorities a banking
moratorium; or (v) that trading on the New York Stock Exchange or generally in
the United States over-the-counter market has been suspended by order of the SEC
or any other governmental agency, in each of clauses (i) through (iv) which, in
the Company's judgment, would reasonably be expected to impair the ability of
the Company to proceed with the Exchange Offer.
If the Company determines that it may terminate the Exchange Offer for any
of the reasons set forth above, the Company may (i) refuse to accept any Old
Notes and return any Old Notes that have been tendered to the holders thereof,
(ii) extend the Exchange Offer and retain all Old Notes tendered prior to the
Expiration Date of the Exchange Offer, subject to the rights of such holders of
tendered Old Notes to withdraw their tendered Old Notes or (iii) waive such
termination event with respect to the Exchange Offer and accept all properly
tendered Old Notes that have not been withdrawn. If such waiver constitutes a
material change in the Exchange Offer, the Company will disclose such change by
means of a supplement to this Prospectus that will be distributed to each
registered holder, and the Company will extend the Exchange Offer for a period
of five to ten business days, depending upon the significance of the waiver and
the manner of disclosure to the registered holders, if the Exchange Offer would
otherwise expire during such period.
26
<PAGE>
EXCHANGE AGENT
The Bank of New York, the Trustee under the Indenture, has been appointed
as Exchange Agent for the Exchange Offer. In such capacity, the Exchange Agent
has no fiduciary duties and will be acting solely on the basis of directions of
the Company. Requests for assistance and requests for additional copies of this
Prospectus or of the Letter of Transmittal should be directed to the Exchange
Agent addressed as follows:
THE BANK OF NEW YORK, EXCHANGE AGENT
<TABLE>
<CAPTION>
<S> <C> <C>
By Hand or Overnight Delivery: By Registered or Certified Mail: By Facsimile Transmission:
The Bank of New York The Bank of New York (FOR ELIGIBLE INSTITUTIONS ONLY):
101 Barclay Street 101 Barclay Street, 7E (212) 571-3080
Corporate Trust Services Window New York, New York 10286 Attention: George Johnson
Ground Level Attention: Reorganization Department, CONFIRM BY TELEPHONE:
New York, New York 10286 George Johnson (212) 815-4997
Attention: Reorganization Department,
George Johnson
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
Delivery to an address or facsimile number other than those listed above will
not constitute a valid delivery.
SOLICITATION OF TENDERS; FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation pursuant to the Exchange Offer
is being made by mail. Additional solicitations may be made by officers and
regular employees of the Company and its affiliates in person, by telegraph,
telephone or telecopier.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company will, however,
pay the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for its reasonable out-of-pocket costs and expenses
in connection therewith and will indemnify the Exchange Agent for all losses and
claims incurred by it as a result of the Exchange Offer. The Company may also
pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
Prospectus, Letters of Transmittal and related documents to the beneficial
owners of the Old Notes and in handling or forwarding tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer,
including fees and expenses of the Exchange Agent and Trustee and accounting and
legal fees and printing costs, will be paid by the Company.
The Company will pay all transfer taxes, if any, applicable to the exchange
of Old Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Old Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be registered or issued
in the name of, any person other than the registered holder of the Old Notes
tendered, or if tendered Old Notes are registered in the name of any person
other than the person signing the Letter of Transmittal, or if a transfer tax is
imposed for any reason other than the exchange of Old Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption therefrom
is not submitted with the Letter of Transmittal, the amount of such transfer
taxes will be billed by the Company directly to such tendering holder.
27
<PAGE>
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, as reflected in the Company's accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company as a result of the consummation of the Exchange Offer.
The expenses of the Exchange Offer will be amortized by the Company over the
term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Old Notes
are urged to consult their financial and tax advisors in making their own
decisions as to what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Old Notes pursuant to the terms of, this Exchange Offer, the
Company will have fulfilled a covenant contained in the Registration Rights
Agreement. Holders of the Old Notes who do not tender their Old Notes in the
Exchange Offer will continue to hold such Old Notes and will be entitled to all
the rights, and subject to the limitations applicable thereto, under the
Indenture and the Registration Rights Agreement, except for any such rights
under the Registration Rights Agreement that by their terms terminate or cease
to have further effect as a result of the making of this Exchange Offer. See
"Description of the Notes." All untendered Old Notes will continue to be
subject to the restrictions on transfer set forth in the Indenture. The Old
Notes may not be offered, resold, pledged or otherwise transferred, prior to the
date that is two years after the later of June 24, 1997 and the last date on
which the Company or any "affiliate" (within the meaning of Rule 144 of the
Securities Act) of the Company was the owner of such Old Note except (i) to the
Company, (ii) pursuant to a registration statement which has been declared
effective under the Securities Act, (iii) to Qualified Institutional Buyers in
reliance upon the exemption from the registration requirements of the Securities
Act provided by Rule 144A, (iv) to institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) in
transactions exempt from the registration requirements of the Securities Act,
(v) in transactions complying with the provisions of Regulation S under the
Securities Act or (vi) pursuant to any other available exemption from the
registration requirements under the Securities Act. To the extent that Old Notes
are tendered and accepted in the Exchange Offer, the liquidity of the trading
market for untendered Old Notes could be adversely affected.
The Company may in the future seek to acquire untendered Old Notes in the
open market or through privately negotiated transactions, through subsequent
exchange offers or otherwise. The Company intends to make any such acquisitions
of Old Notes in accordance with the applicable requirements of the Exchange Act
and the rules and regulations of the SEC thereunder, including Rule 14e-1, to
the extent applicable. The Company has no present plan to acquire any Old Notes
that are not tendered in the Exchange Offer or to file a registration statement
to permit resales of any Old Notes that are not tendered in the Exchange Offer.
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the
Exchange Notes offered hereby. In consideration for issuing the Exchange Notes
as contemplated in this Prospectus, the Company will receive in exchange Old
Notes in like principal amount. The form and terms of the Exchange Notes are
identical in all material respects to the form and terms of the Old Notes,
except that (i) the offering of the Exchange Notes has been registered under the
Securities Act, (ii) the Exchange Notes will not be subject to transfer
restrictions and (iii) certain provisions relating to an increase in the stated
interest rate on the Old Notes provided for under certain circumstances will be
eliminated. The Old Notes surrendered in exchange for Exchange Notes will be
retired and canceled and cannot be reissued. Accordingly, issuance of the
Exchange Notes will not result in a change in the indebtedness of the Company.
28
<PAGE>
CAPITALIZATION
The following table sets forth the current maturities of long-term
obligations and total capitalization of the Company as of March 31, 1997,
Actual, and As Adjusted to reflect the Subsequent Acquisitions, the issuance of
the Old Notes and the application of the proceeds therefrom and the exchange of
the Old Notes for the Exchange Notes. See "Selected Consolidated Pro Forma
Financial Data." This table should be read in conjunction with the Unaudited
Pro Forma Combined Financial Statements of the Company and the related notes
thereto included elsewhere in this Prospectus.
ACTUAL AS ADJUSTED
Current maturities of long-term
obligations........................... $ 6,452 $ 13,284
========= ===========
Long-term obligations:
Credit Facility.................... $ 126,739 $ --
Capital lease obligations and
other............................ 33,629 45,717
Exchange Notes..................... -- 150,000
Convertible subordinated
notes(1)......................... 36,830 40,580
--------- -----------
Total long-term obligations... 197,198 236,297
Stockholders' equity:
Common Stock: $0.01 par value,
30,000,000 shares authorized;
17,778,107 and 18,629,096 shares
outstanding, respectively........ 178 193
Additional paid-in capital......... 101,325 113,608
Cumulative translation
adjustment....................... -- (218)
Retained earnings.................. 10,303 10,908
--------- -----------
Total stockholders' equity.... 111,806 124,491
--------- -----------
Total capitalization..... $ 309,004 $ 360,788
========= ===========
- ------------
(1) The Company issued $22.5 million of convertible subordinated notes in August
1996 ($4 million of which were repaid in January 1997) and $18.3 million of
convertible subordinated notes in February 1997. Subsequent to March 31,
1997, the Company issued $3.8 million of additional convertible subordinated
notes. All of such notes were issued as consideration to former owners of
certain acquired businesses.
29
<PAGE>
SELECTED CONSOLIDATED PRO FORMA FINANCIAL DATA
The Company acquired, simultaneously with the closing of the Initial Public
Offering in May 1996, the Founding Companies. During the remainder of 1996 and
through March 31, 1997 the Company completed twelve acquisitions, seven of which
were accounted for as poolings and five of which were accounted for as
purchases. The Statement of Income Data for the Pro Forma Combined periods below
include the Company (including the Pooled Companies through March 31, 1997)
combined with historical financial statement data of the Founding Companies at
historical cost for all periods presented and the Purchased Companies since
their date of acquisition. The Pro Forma Statement of Income Data presented
below includes (i) the Statement of Income Data discussed above; (ii) the
Compensation Differential; (iii) certain tax adjustments related to the taxation
of certain of the predecessor businesses as S Corporations prior to their
acquisition by the Company and the tax effect of the other adjustments to income
included herein; (iv) for 1995 and 1996, the conversion of debt to equity at one
of the companies acquired in a pooling; and (v) the elimination of non-recurring
pooling costs. Pro Forma As Adjusted information adjusts the Pro Forma Statement
of Income Data to give effect to the acquisition of the Purchased Companies, the
Subsequent Acquisitions as well as the impact on interest expense of the
issuance of the Notes as if all such transactions had occurred on January 1,
1996. The As Adjusted Balance Sheet Data are adjusted to give effect to the
Subsequent Acquisitions, the issuance of the Notes and the application of the
net proceeds therefrom, as if the same had occurred on March 31, 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Unaudited Pro Forma Combined Financial Statements.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31,
YEAR ENDED DECEMBER 31, ---------
--------------------------------------------------------------------- TWELVE MONTHS
ENDED PRO FORMA
PRO FORMA COMBINED PRO FORMA MARCH 31, 1997 COMBINED
----------------------------------------------------- AS ADJUSTED PRO FORMA ---------
1992 1993 1994 1995 1996 1996 AS ADJUSTED 1996
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total revenues........ $ 172,974 $ 180,705 $ 194,814 $ 216,892 $ 250,776 $ 52,515
Gross profit.......... 36,015 35,347 41,507 51,365 61,692 9,737
General and
administrative
expenses............ 25,282 24,822 27,694 29,785 33,348 9,377
Operating income...... 10,733 10,525 13,813 21,580 28,344 360
Interest expense...... 6,307 6,362 7,422 9,505 10,826 2,587
Income tax
provision........... 417 915 1,748 2,979 7,726 45
Income (loss) before
extraordinary
items............... 4,009 3,248 4,643 9,096 9,792 (2,272)
PRO FORMA STATEMENT OF
INCOME DATA:
Total revenues........ $ 172,974 $ 180,705 $ 194,814 $ 216,892 $ 250,776 $436,372 $439,497 $ 52,515
Gross profit.......... 36,015 35,347 41,507 51,365 61,692 104,074 105,499 9,737
General and
administrative
expenses............ 22,667 21,166 23,188 23,724 26,554 49,923 50,204 6,122
Operating income...... 13,348 14,181 18,319 27,641 35,138 54,151 55,295 3,615
Interest expense...... 6,307 6,362 7,422 8,207 9,934 23,965(1) 23,182(1) 2,250
Income tax
provision........... 2,873 3,690 4,376 8,217 9,958 12,161 12,965 549
Income before
extraordinary
items............... 4,168 4,129 6,521 11,217 15,246 18,025 19,148 816
OTHER PRO FORMA DATA:
EBITDA(2)............. $ 23,006 $ 24,398 $ 29,028 $ 40,335 $ 50,357 $ 78,561 $ 80,883 $ 6,994
Compensation
Differential........ 2,615 3,656 4,506 6,061 6,794 8,430 4,859 3,255
Depreciation and
amortization........ 9,658 10,217 10,709 12,694 15,219 24,410 25,538 3,379
Capital
expenditures(3)..... 2,713 10,857 28,449 25,610 40,688 69,203 85,881 10,409
Gross profit margin... 20.8% 19.6% 21.3% 23.7% 24.6% 23.8% 24.0% 18.5%
EBITDA margin......... 13.3 13.5 14.9 18.6 20.1 18.0 18.4 13.3
PRO FORMA RATIOS:
Ratio of earnings to
fixed charges(4).... 1.93x 2.02x 2.24x 3.01x 3.19x 2.14x 2.26x 1.52x
EBITDA/interest
expense(1)(2)....... 3.28 3.49
Net debt/
EBITDA(2)(5)........ 2.33 3.00
</TABLE>
THREE
MONTHS
ENDED
MARCH 31,
---------
PRO FORMA
COMBINED PRO FORMA
--------- AS ADJUSTED
1997 1997
STATEMENT OF INCOME DATA:
Total revenues........ $ 69,311
Gross profit.......... 14,925
General and
administrative
expenses............ 8,355
Operating income...... 6,570
Interest expense...... 3,199
Income tax
provision........... 1,402
Income (loss) before
extraordinary
items............... 1,969
PRO FORMA STATEMENT OF
INCOME DATA:
Total revenues........ $ 69,311 $ 97,361
Gross profit.......... 14,925 17,621
General and
administrative
expenses............ 8,131 12,383
Operating income...... 6,794 5,238
Interest expense...... 3,199 5,409(1)
Income tax
provision........... 1,445 (25)
Income before
extraordinary
items............... 2,150 (146)
OTHER PRO FORMA DATA:
EBITDA(2)............. $ 12,082 $ 12,323
Compensation
Differential........ 224 465
Depreciation and
amortization........ 5,288 7,085
Capital
expenditures(3)..... 31,970 34,529
Gross profit margin... 21.5% 18.1%
EBITDA margin......... 17.4 12.7
PRO FORMA RATIOS:
Ratio of earnings to
fixed charges(4).... 2.01x --
EBITDA/interest
expense(1)(2).......
Net debt/
EBITDA(2)(5)........
30
<PAGE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31, 1997
------------------------------------------------------- -----------------------
PRO FORMA COMBINED
------------------------------------------
1992 1993 1994 1995 1996 ACTUAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents....................... $ 6,301 $ 6,433 $ 7,058 $ 7,503 $ 1,470 $ 6,544 $ 7,251
Working capital (deficit)........... (8,753) (8,355) (10,158) (12,060) (7,499) (20,789) (32,854)
Total assets........................ 135,201 138,220 161,403 184,794 299,950 416,124 495,808
Total debt, including current
portion........................... 79,577 75,918 93,963 104,290 131,483 203,650 249,581
Stockholders' equity................ 17,197 20,614 23,911 29,093 109,926 111,806 124,491
</TABLE>
- ------------
(1) Pro Forma As Adjusted interest expense includes the effect of the issuance
of the Notes.
(2) EBITDA represents net income plus depreciation and amortization, income
taxes, net interest expense and extraordinary items as adjusted to reflect
the Compensation Differential. While EBITDA should not be construed as a
substitute for income from operations, net income or cash flows from
operating activities in analyzing the Company's operating performance,
financial position or cash flows, the Company has included EBITDA because
it is commonly used by certain investors and analysts to analyze and
compare companies on the basis of operating performance, leverage and
liquidity and to determine a company's ability to service debt.
(3) Capital expenditures represent current capital additions less the net book
value of capital equipment retired plus assets acquired under capital
leases.
(4) For purposes of calculating this ratio, "earinings" consist of income
before taxes and extraordinary items plus fixed charges. "Fixed charges"
consist of interest expense plus one-third of rental expense, which the
Company estimates to be representative of the interest factors therein.
(5) Pro Forma As Adjusted net debt represents total debt (which includes the
convertible subordinated notes) less cash and cash equivalents. The ratio
of net debt to EBITDA was calculated based on pro forma net debt of $183.3
million and $242.3 million as of December 31, 1996 and March 31, 1997,
respectively. See "Capitalization."
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company was founded in September 1995 to create a nationwide provider
of motorcoach and other ground transportation services. On May 17, 1996, the
Company acquired, simultaneously with the closing of the Initial Public
Offering, the six Founding Companies. Through the remainder of 1996 and the
first quarter of 1997, the Company acquired twelve additional businesses. The
acquisition of seven of these businesses has been accounted for under the
pooling-of-interests method of accounting (the "Pooled Companies") and the
remaining five have been accounted for under the purchase method of accounting
(the "Purchased Companies"). As a result, the pro forma financial statements,
including the pro forma results discussed below, include the historical
financial statements of the Founding Companies and the Company (including the
Pooled Companies) for all periods presented at historical cost, as if these
companies had always been members of the same operating group and give effect to
(i) the Compensation Differential; (ii) the elimination of merger costs related
to pooled acquisitions; (iii) certain tax adjustments related to the taxation of
certain Founding Companies and Pooled Companies as S Corporations prior to the
consummation of the mergers of the Founding Companies and the Subsequent
Acquisitions; and (iv) the tax impact of the Compensation Differential in each
period.
The Company has begun to realize savings by consolidating certain general
administrative and purchasing functions and reducing insurance expenses. In
addition, the Company has begun to realize savings from its ability to borrow at
lower interest rates than the Founding Companies and the subsequent
acquisitions. These savings are being partially offset by the costs of being a
public company and the incremental increase in costs related to the Company's
new corporate management. Neither these savings nor the costs associated
therewith for the periods prior to the Initial Public Offering have been
included in the pro forma financial information discussed below. As a result,
historical pro forma results may not be comparable to, or indicative of, future
performance.
The Company's motorcoach revenues are derived from fares charged to
individual passengers and fees charged under contracts to provide motorcoach
services. Taxicab operation revenues are derived from fees and other services
charged to independent taxicab operators. Operating expenses consist primarily
of salaries and benefits for motorcoach drivers and mechanics, depreciation,
maintenance, fuel, oil, insurance and commissions to agents. General and
administrative expenses consist primarily of compensation and related benefits
to the owners and certain key employees of the Founding Companies and the Pooled
Companies, administrative salaries and benefits, marketing, communications and
professional fees.
PRO FORMA COMBINED RESULTS FOR THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO
THREE MONTHS ENDED MARCH 31, 1997
The pro forma combined results discussed below occurred when the combined
Founding Companies were under common control and management from June 1, 1996,
and the Pooled and Purchased Companies were under common control from the date
of their respective acquisitions. All other periods reflected were not under
common control or management and may not be comparable to, or indicative of,
future performance.
Revenues increased by 32.0% to $69.3 million for the three months ended
March 31, 1997. The increase in revenues was largely due to the revenues of the
Purchased Companies of approximately $14.1 million, and incremental increases at
certain other locations.
Operating expenses increased 27.1% to $54.4 million for the three months
ended March 31, 1997. The increase in operating expenses was the result of the
increased operations offset by savings in the Company's insurance program and
parts buying program.
General and administrative expenses, after elimination of the Compensation
Differential and acquisition related costs, increased 32.8% as compared to the
three months ended March 31, 1996. The increase in general and administrative
expenses in the three month period ended March 31, 1997 was largely due to an
increase of $0.7 million related to the establishment of the corporate
management group required to execute the acquisition program and to manage the
consolidated group of companies and the overall increase in
32
<PAGE>
operations and $0.3 million of cost associated with goodwill amortization
related to the acquisitions of the Purchased Companies.
Interest expense increased $0.6 million as compared to the three months
ended March 31, 1996, due to the higher level of debt related to additional
equipment and debt related to the Purchased Companies, partially offset by the
repayment of debt through the use of proceeds of the Initial Public Offering, a
secondary offering of Common Stock, and due to lower interest rates for
borrowings under the Credit Facility.
Pro forma net income before extraordinary items, which has been adjusted
for the Compensation Differential and the pro forma provision for taxes,
increased during the three months ended March 31, 1997 as compared to the three
months ended March 31, 1996 primarily due to continued revenue growth and the
effects of increased purchasing power on lowering certain costs.
PRO FORMA RESULTS FOR 1995 COMPARED TO 1996
Total revenues increased $33.9 million, or 15.6%, to $250.8 million for the
year 1996. The increase in revenues was largely due to: (i) an increase in
taxicab service revenues of $7.3 million, primarily attributable to internal
expansion, (ii) an increase of $7.2 million in special destination services
revenues primarily to the Atlantic City and Louisiana casinos, and (iii) an
increase of $4.1 million in per capita tour revenue attributable in part to the
acquisition of the Company's Los Angeles operations in 1995. In addition,
revenues from the Purchased Companies totaled $12.7 million since their
acquisition.
Operating expenses increased 14.2% to $189.1 million for 1996. The increase
in operating expenses was largely due to a combined increase of $3.1 million at
all of the locations attributable to higher fuel costs in 1996. Approximately
$1.4 million of the additional fuel cost related to higher prices and the
remainder related to higher consumption consistent with the Company's increased
operations. The increase in fuel expense was offset by savings in the Company's
insurance program. The remaining increase was consistent with increased
operations throughout the Company.
General and administrative expenses in 1996, after elimination of the
Compensation Differential, increased $2.8 million, or 11.9%, from $23.7 million
in 1995 to $26.6 million. The increase in general and administrative expenses
was largely due to an increase of $1.5 million related to the establishment of
the corporate management group required to execute the acquisition program and
to manage the consolidated group of companies. The remaining increase was
consistent with the increased operations throughout the Company.
Interest expense increased $1.7 million in 1996 as compared to 1995 due to
the higher level of debt related to additional equipment and debt related to the
Purchased Companies, partially offset by the repayment of debt through the use
of proceeds of the Initial Public Offering, a subsequent offering of Common
Stock completed in November 1996 and due to lower rates from the Credit
Facility.
Pro forma net income (before giving effect to the extraordinary items),
which has been adjusted for the Compensation Differential and the pro forma
provision for taxes, increased during 1996 as compared to 1995 primarily due to
continued revenue growth and the effects of increased purchasing power.
The extraordinary items recorded in 1996 include an extraordinary gain that
was recognized in connection with the mergers of the Pooled Companies with the
Company in August 1996 and extraordinary losses related to prepayment penalties
on certain debt retired. Obligations due to stockholders of $17.2 million were
retired in exchange for shares of Common Stock. The transactions resulted in an
extraordinary gain on early extinguishment of debt of approximately $4.2
million, net of taxes, representing the excess of the recorded value of the
obligations exchanged over the market value of the Common Stock. In addition,
extraordinary losses of $1.5 million, net of taxes, for prepayment penalties on
certain retired debt were recorded in 1996.
PRO FORMA RESULTS FOR 1994 COMPARED TO 1995
Total revenues increased $22.1 million, or 11.3%, from $194.8 million in
1994 to $216.9 million in 1995. The increase was largely due to an increase in
motorcoach charter and special destination revenues of $9.0 million, primarily
attributable to increased service to the Louisiana casinos, an increase in
motorcoach
33
<PAGE>
transit revenues of $5.7 million, primarily attributable to additional transit
contracts in Northern California and New York, an increase in taxicab service
revenues of $2.9 million, primarily attributable to the purchase of additional
taxicab operations in Austin, Texas in July 1995, and an increase in per capita
revenue of $2.5 million primarily attributable to the acquisition of the
Company's Los Angeles operations in 1995.
Operating expenses increased $12.2 million, or 8.0%, from $153.3 million in
1994 to $165.5 million in 1995, but declined as a percentage of revenues from
78.7% in 1994 to 76.3% in 1995. The dollar increase was largely due to an
increase in operating expenses of $3.8 million, primarily attributable to
increased service to the Louisiana casinos, an increase in operating expenses of
$4.6 million, primarily attributable to the increase in transit services, and
$2.1 million, primarily attributable to higher per capita sales. These increases
were partially offset by a $2.2 million reduction in operating expenses
primarily due to a decision not to renew a municipal contract in the Northeast,
and lower salaries, wages and related benefits from favorable revisions of a
collective bargaining agreement.
General and administrative expenses, after elimination of the Compensation
Differential, increased $0.5 million, or 2.3%, from $23.2 million in 1994 to
$23.7 million in 1995. This increase was consistent with the increase in
revenues.
Interest expense increased $2.1 million, or 28.1%, from $7.4 million in
1994 to $9.5 million in 1995. The increase was largely due to higher levels of
debt during 1995 as a result of equipment purchases.
Net income, adjusted for the Compensation Differential, interest and taxes,
increased $4.7 million, from $6.5 million in 1994 to $11.2 million in 1995, and
represented 3.3% of revenues in 1994 compared to 5.2% of revenues in 1995.
34
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following consolidated financial information represents the operations
of the Pooled Companies for all periods presented and the Founding Companies and
the Company for the seven months ended December 31, 1996 and the Purchased
Companies since their date of acquisition. This financial information has been
derived from the Consolidated Financial Statements of the Company. Pro forma net
income before extraordinary items gives effect to (i) the Compensation
Differential; (ii) the elimination of non-recurring pooling costs associated
with the 1996 acquisitions; and (iii) the tax impact of the Compensation
Differential in each period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total revenues................... $ 76,046 $ 77,633 $ 88,060 $ 103,403 $ 205,838 $ 28,294 $ 69,311
Gross profit..................... 18,665 17,329 22,600 28,401 53,540 7,060 14,925
Operating income................. 5,278 4,997 7,377 11,629 27,968 2,749 6,570
Income before extraordinary
items.......................... 631 899 1,343 2,952 10,817 450 1,969
PRO FORMA:
Operating income................. 7,762 6,817 9,825 14,483 35,138 3,333 6,794
Income before extraordinary
items.......................... 2,281 2,446 2,953 4,409 15,246 1,098 2,150
BALANCE SHEET DATA:
Working capital (deficit)........ $ (5,901) $ (6,390) $ (6,759) $ (7,847) $ (7,499) $ (8,835) $ (20,789)
Total assets..................... 66,587 69,764 86,562 102,607 299,950 109,942 416,124
Total debt, including current
portion........................ 47,008 45,905 62,080 72,217 108,983(1) 77,279 166,820(2)
Stockholders' equity (deficit)... (238) 1,647 2,270 4,379 109,926 4,342 111,806
</TABLE>
- ------------
(1) Does not include $22.5 million of convertible debt issued in connection with
the acquisitions of the Purchased Companies.
(2) Does not include $36.8 million of convertible debt issued in connection with
the acquisitions of the Purchased Companies.
HISTORICAL RESULTS FOR THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1997
Revenues increased by 145% to $69.3 million for the three months ended
March 1997. The increase in revenues was largely due to the revenues of the
Founding Companies of $24.5 million and revenues of the Purchased Companies of
approximately $14.1 million, and incremental increases at certain Pooled
Companies.
Operating expenses increased 156% to $54.4 million for the three months
ended March 31, 1997. The increase in operating expenses was the result of the
increased operations.
General and administrative expenses increased 94% as compared to the three
months ended March 31, 1996. The increase in general and administrative expenses
in the three month period ended March 31, 1997 was primarily due to the overall
increase in operations and the establishment of the corporate management group
required to execute the acquisition program and to manage the consolidated group
of companies.
Interest expense increased $1.3 million as compared to the three months
ending March 31, 1996, due to the higher level of debt related to additional
equipment and debt related to the Purchased Companies, partially offset by
repayment of debt through the use of proceeds of the Initial Public Offering, a
secondary offering of Common Stock, and due to lower rates from the Credit
Facility.
Net income before extraordinary items increased during the three months
ended March 31, 1997 as compared to the three months ended March 31, 1996
primarily due to the acquisitions of the Founding Companies and Purchased
Companies and the effects of increased purchasing power on lowering certain
costs.
35
<PAGE>
HISTORICAL RESULTS FOR 1995 COMPARED TO 1996
Total revenues increased $102.4 million, or 99.1%, to $205.8 million for
the year 1996. The increase in revenues was largely due to: (i) the acquisition
of the Founding Companies with revenues of $72.9 million, (ii) the acquisition
of the Purchased Companies with revenues of $12.7 million, (iii) an increase in
taxicab service revenues of $7.3 million, primarily attributable to internal
expansion, (iv) an increase of $3.8 million in special destination services
revenues primarily to the Louisiana casinos, and (v) an increase of $4.1 million
in per capita tour revenue attributable in part to the acquisition of the
Company's Los Angeles operations in 1995.
Operating expenses increased 103.1% to $152.3 million for 1996. The
increase in operating expenses was consistent with increased operations
throughout the Company. The remaining increase was due to higher fuel costs in
1996, offset by savings in the Company's insurance program.
General and administrative expenses in 1996, after elimination of the
Compensation Differential and the elimination of non-recurring pooling costs
associated with the 1996 acquisitions, increased $4.5 million, or 32.2%, from
$13.9 million in 1995 to $18.4 million in 1996. The increase in general and
administrative expenses was largely due to the increase in operations and an
increase related to the establishment of the corporate management group required
to execute the acquisition program and to manage the consolidated group of
companies.
Interest expense increased $3.2 million in 1996 as compared to 1995 due to
the higher level of debt related to additional equipment and subordinated debt
related to the Purchased Companies, partially offset by the repayment of debt
through the use of proceeds of the Initial Public Offering, Secondary Stock
Offering and due to lower rates from the Credit Facility.
Pro forma net income (before giving effect to the extraordinary gain),
which has been adjusted for the Compensation Differential and the pro forma
provision for taxes, increased during 1996 as compared to 1995 primarily due to
continued revenue growth and the effects of increased purchasing power.
The extraordinary items recorded in 1996 include an extraordinary gain that
was recognized in connection with the mergers of the Pooled Companies with the
Company in August 1996 and extraordinary losses related to prepayment penalties
on certain debt retired. Obligations due to stockholders of $17.2 million were
retired in exchange for shares of Common Stock. The transactions resulted in an
extraordinary gain on early extinguishment of debt of approximately $4.2
million, net of taxes, representing the excess of the recorded value of the
obligations exchanged over the market value of the Common Stock. In addition,
extraordinary losses of $1.5 million, net of taxes, for prepayment penalties on
certain retired debt were recorded in 1996.
HISTORICAL RESULTS FOR 1994 COMPARED TO 1995
Total revenues increased $15.3 million, or 17.4%, from $88.1 million in
1994 to $103.4 million in 1995. The increase was largely due to an increase in
motorcoach charter and special destination revenues of $6.6 million, primarily
attributable to increased service to the Louisiana casinos, an increase in
taxicab service revenues of $2.9 million, partially attributable to the purchase
of additional taxicab operations in Austin, Texas in July 1995, and an increase
in per capita revenue of $2.5 million partially attributable to the acquisition
of the Company's Los Angeles operations in 1995.
Operating expenses increased $9.5 million, or 14.6%, from $65.5 million in
1994 to $75.0 million in 1995, but declined as a percentage of revenues from
74.3% in 1994 to 72.5% in 1995. The dollar increase was largely due to an
increase in operating expenses of $3.8 million, primarily attributable to
increased service to the Louisiana casinos, and $2.1 million, primarily
attributable to higher per capita sales.
General and administrative expenses, after elimination of the Compensation
Differential, increased $1.1 million, or 8.9%, from $12.8 million in 1994 to
$13.9 million in 1995. This increase was consistent with the increase in
revenues.
Interest expense increased $1.7 million, or 35.1%, from $4.9 million in
1994 to $6.6 million in 1995. The increase was largely due to higher levels of
debt during 1995 as a result of equipment purchases.
36
<PAGE>
Net income, adjusted for the Compensation Differential and taxes, increased
$1.4 million, from $3.0 million in 1994 to $4.4 million in 1995, and represented
3.4% of revenues in 1994 compared to 4.3% of revenues in 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by historical operating activities was $6.6 million, $7.4
million, $9.0 million and $25.8 million for 1994, 1995, 1996, and the three
months ended March 31, 1997 respectively.
Cash used in historical investing activities was $21.7 million, $12.4
million, $54.4 million and $55.7 million for 1994, 1995, 1996, and the three
months ended March 31, 1997 respectively. Cash used in investing activities was
primarily for additions and replacements of motorcoaches and for expansion of
facilities, net of sales of property and equipment. In addition, in 1996 and
1997 the Company paid $34.8 million and $26.1 million, respectively, in cash for
the Founding Companies and Purchased Companies, net of cash acquired.
Cash provided by historical financing activities was $13.8 million, $6.6
million, $43.4 million, and $35.0 million for 1994, 1995, 1996, and the three
months ended March 31, 1997, respectively. Cash provided by financing activities
for 1995 was primarily attributable to the issuance of $7.6 million of long-term
obligations, net of repayments, partially offset by $1.1 million in S
Corporation distributions paid to the former owners of the Pooled Companies.
Cash provided by financing activities of $43.4 million for 1996 was primarily
attributable to $48.1 million from the Initial Public Offering and $48.5 million
from its second public offering partially offset by $51.4 million of net
payments on long-term obligations and $1.8 million in S Corporation
distributions paid to the former owners of the Pooled Companies. Cash provided
by financing activities of $35.0 million for the three months ended March 31,
1997 related to borrowings under the Company's credit agreement used to pay down
existing debt and finance equipment additions.
Cash and cash equivalents decreased $1.3 million and $1.9 million for 1994
and 1996, respectively. For 1995 and the three months ended March 31, 1997, cash
and cash equivalents increased $1.6 million and $5.1 million.
Capital expenditures during 1994, 1995, 1996 and the three months ended
March 31, 1997 were $23.4 million, $15.4 million, $29.3 million and $32.0
million, respectively. These expenditures were primarily incurred to purchase
motorcoaches and other vehicles and were principally financed with debt and cash
flows from operations. Capital expenditures are net of trade-ins and proceeds
and related gains or losses from sales of property and equipment plus the cost
of assets acquired under capital leases. As of December 31, 1996, the Company
had entered into commitments to purchase 108 motorcoaches for approximately
$32.6 million. The Company expects to finance additional vehicle purchases
primarily from cash flows from operations, trade-ins of older equipment
supplemented, as necessary, with borrowings under the Credit Facility.
In November and December 1996, the Company sold 2,084,307 shares of Common
Stock in a public offering, resulting in net proceeds of approximately $48.5
million. The net proceeds were used to repay outstanding debt freeing the
existing credit facility for additional working capital and general corporate
purposes, including acquisitions.
From January 1, 1997 through June 30, 1997 the Company completed the
acquisition of eleven companies. These eleven companies have aggregate annual
revenues of approximately $180 million and the Company has paid, or agreed to
pay, aggregate consideration consisting of approximately $42.8 million in cash,
1,958,280 shares of Common Stock, $22.1 million in aggregate principal amount of
subordinated notes convertible into 586,367 shares of Common Stock, as well as
the assumption of certain indebtedness. Six of the eleven completed acquisitions
were accounted for as poolings-of-interest while the other five were accounted
for as purchases. The recently acquired companies include America Charters of
Gastonia, North Carolina, Antelope Valley Bus, Inc. of Lancaster, California,
The Arrow Line, Inc. of Hartford, Connecticut, Gray Line of Fort Lauderdale,
Florida, Gray Line of Montreal, Canada, International Express Corp. of
Minneapolis, Minnesota, Kerrville Bus Company of Kerrville, Texas, Metro
Transportation Services, Inc. of Miami, Florida, MTC, Inc. of Phoenix, Arizona,
Red & Tan Enterprises of Bergenfield,
37
<PAGE>
New Jersey and Trentway-Wagar, Inc. of Toronto, Canada. The Company believes
that each of these acquisitions is consistent with its strategy of entering new
markets and expanding in existing markets.
The Credit Facility provides for a revolving facility of $181 million
through a syndicate of eight banks, and allows the Company to have borrowings of
up to $40 million (in addition to Subordinated Debt (as defined therein))
outside the Credit Facility. The Company has recently announced that it
anticipates that such facility will be amended to provide for borrowings of up
to $300 million and additional senior borrowings outside such facility of up to
$80 million. The Credit Facility is secured by substantially all of the assets
of the Company and matures August 14, 1999 at which time all amounts then
outstanding become due. Interest on outstanding borrowings is charged, at the
Company's option, at the banks' prime rate plus up to 1.0% or the London
Interbank Offered Rate ("LIBOR") plus 1.0% to 2.25% (7.44% at March 31, 1997),
both as determined by the ratio of the Company's funded debt to cash flow (as
defined). A commitment fee ranging from 0.25% to 0.50% is payable on the unused
portion of the Credit Facility. Under the terms of the Credit Facility, the
Company must maintain certain minimum financial ratios. The Credit Facility
restricts the Company's ability to make distributions, including but not limited
to prohibiting the Company from declaring or paying any dividends. As of March
31, 1997, the Company had a total of $166.8 million outstanding under the Credit
Facility and other sources and had utilized $4.9 million of the facility for
letters of credit securing certain insurance obligations and performance bonds,
resulting in a borrowing availability of $49.3 million under the Credit Facility
and other sources. The Company's obligations under the Credit Facility are
guaranteed by substantially all of the domestic subsidiaries of the Company.
The obligations of the lenders under the Credit Facility to advance funds
is subject to the satisfaction of certain conditions customary in agreements of
this type. In addition, the Company and its subsidiaries are subject to certain
customary affirmative and negative covenants contained in the Credit Facility,
including, without limitation, covenants that restrict, subject to specified
exceptions, (i) incurring additional indebtedness and other obligations; (ii) a
merger or consolidation with any other person, or a liquidation, dissolution or
winding up; (iii) acquisitions; (iv) distributions in respect to its shares of
capital stock; (v) engaging in transactions with affiliates; (vi) investing
funds of the Company; (vii) granting of liens to secure any other indebtedness
(including the Notes) and (viii) changing the character of its lines of
business. Many of these covenants will be more restrictive than those in favor
of holders of the Notes as described herein and as set forth in the Indenture.
Moreover, the Credit Facility requires the Company to meet certain
financial tests, including: consolidated Net Worth, as defined therein, plus
consolidated Subordinated Debt, as defined therein, at a level not less than (i)
the greater of 90% of the consolidated Net Worth of the Company as of June 30,
1996, or $35 million, plus (ii) 90% of the Company's cumulative annual
consolidated net earnings, plus (iii) 100% of the net proceeds resulting from
any sale, issuance or assumption of stock or Subordinated Debt (as defined
therein); consolidated Tangible Net Worth, as defined therein, of the Company at
not less than 40% of the consolidated Net Worth of the Company; a ratio of
consolidated Funded Debt, as defined therein, of the Company less the
Subordinated Debt, as defined therein, of the Company to the consolidated
EBITDA, as defined therein, of the Company of no greater than 3.0 to 1.0; and a
Fixed Charge Coverage Ratio, as defined therein, of not less than 1.25 to 1.0.
At March 31, 1997, on a pro forma as adjusted basis (see "Selected Consolidated
Pro Forma Financial Data"), the Company's consolidated Net Worth plus the
consolidated Subordinated Debt exceeded the net worth test by $4.0 million, the
consolidated Tangible Net Worth was 45.7% of the consolidated Net Worth and the
Fixed Charge Coverage Ratio was 1.28. The Company believes it will be in
compliance with such covenants on the date of closing of the Offering. The
Indenture will contain restrictions on the Company's ability to incur additional
indebtedness, and other contractual arrangements to which the Company may become
subject in the future could contain similar restrictions.
The Credit Facility also provides for customary events of default.
Occurrence of any of such events of default could result in acceleration of the
Company's obligations under the Credit Facility and foreclosure on the
collateral securing such obligations, with material adverse results to holders
of the Notes. See "Risk Factors -- Holding Company Structure and Subordination
of Notes and Guarantees."
38
<PAGE>
In September 1996, the Company entered into an interest rate cap agreement
with a bank. The agreement has a term of one year and a notional amount of $50
million. The agreement provides that if the 90 day LIBOR rate exceeds 6.5% for
certain measurement periods, the bank will pay to the Company the difference
between such rate and 6.5%. As of March 31, 1997, the 90-day LIBOR rate was
5.81%. The cost of the agreement is being amortized over its term.
The Company's ability to make scheduled payments of principal or interest
on its indebtedness (including the Notes), or to fund planned capital
expenditures or future acquisitions will depend on its future performance,
which, to a certain extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors that are beyond its
control. Based upon the current level of operations and anticipated cost savings
and revenue growth, management believes that cash flow from operations and
available cash, together with available borrowings under the Credit Facility,
will be adequate to meet the Company's anticipated future requirements for
working capital and budgeted capital expenditures. There can be no assurance
that the Company's business will generate sufficient cash flow from operations
or that anticipated revenue growth and operating improvements will be realized
or that future borrowings will be available under the Credit Facility in an
amount sufficient to enable the Company to service its indebtedness, make
anticipated capital expenditures or fund future acquisitions. See "Risk
Factors."
SELECTED SUPPLEMENTAL CONSOLIDATED FINANCIAL DATA
The following supplemental consolidated financial information represents
the operations of the Pooled Companies for all periods presented and the
Founding Companies and the Company for the seven months ended December 31, 1996
and the Purchased Companies since their date of acquisition. This financial
information has been derived from the Supplemental Consolidated Financial
Statements of the Company. Pro forma net income before extraordinary items gives
effect to (i) the Compensation Differential; (ii) the elimination of
non-recurring pooling costs associated with the 1996 acquisitions; and (iii) the
tax impact of the Compensation Differential in each period.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Total revenues...................... $ 116,318 $ 135,342 $ 127,484 $ 147,042 $ 258,130 $ 37,617 $ 79,868
Gross profit........................ 25,222 26,309 28,542 37,579 63,995 7,707 15,631
Operating income.................... 7,442 8,571 8,326 14,586 31,984 1,909 5,732
Income before extraordinary items... 834 2,076 1,271 3,971 12,392 (116) 1,280
PRO FORMA:
Operating income.................... 10,535 11,017 11,635 18,303 40,089 2,741 6,128
Income before extraordinary items... 2,847 3,997 3,395 5,937 17,484 679 1,563
BALANCE SHEET DATA:
Working capital (deficit)........... $ (8,551) $ (9,308) $ (9,390) $ (10,341) $ (13,477) $ (11,984) $ (25,681)
Total assets........................ 85,262 90,541 105,828 123,367 329,818 129,371 445,129
Total debt, including current
portion........................... 57,698 56,911 73,917 83,105 124,827(1) 87,971 183,485(2)
Stockholders' equity................ 2,479 4,546 2,463 5,590 112,579 4,846 113,766
</TABLE>
- ------------
(1) Does not include $22.5 million of convertible debt issued in connection with
the acquisitions of the Purchased Companies.
(2) Does not include $36.8 million of convertible debt issued in connection with
the acquisitions of the Purchased Companies.
HISTORICAL RESULTS FOR THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1997
Revenues increased by 112.3% to $79.9 million for the three months ended
March 1997. The increase in revenues was largely due to the revenues of the
Founding Companies of $24.5 million and revenues of the Purchased Companies of
approximately $14.1 million, and incremental increases at certain Pooled
Companies.
39
<PAGE>
Operating expenses increased 114.8% to $64.2 million for the three months
ended March 31, 1997. The increase in operating expenses was the result of the
increased operations.
General and administrative expenses increased 70.7% as compared to the
three months ended March 31, 1996. The increase in general and administrative
expenses in the three month period ended March 31, 1997 was primarily due to the
overall increase in operations and the establishment of the corporate management
group required to execute the acquisition program and to manage the consolidated
group of companies.
Interest expense increased $1.5 million as compared to the three months
ending March 31, 1996, due to the higher level of debt related to additional
equipment and debt related to the Purchased Companies, partially offset by
repayment of debt through the use of proceeds of the Initial Public Offering, a
secondary offering of Common Stock, and due to lower rates from the Credit
Facility.
Net income before extraordinary items increased during the three months
ended March 31, 1997 as compared to the three months ended March 31, 1996
primarily due to the acquisitions of the Founding Companies and Purchased
Companies and the effects of increased purchasing power on lowering certain
costs.
HISTORICAL RESULTS FOR 1995 COMPARED TO 1996
Total revenues increased $111.1 million, or 75.5%, to $258.1 million for
the year 1996. The increase in revenues was largely due to: (i) the acquisitions
of the Founding Companies with revenues of $72.9 million, (ii) the acquisition
of the Purchased Companies with revenues of $12.7 million, (iii) an increase in
taxicab service revenues of $7.3 million, primarily attributable to internal
expansion, (iv) an increase of $3.8 million in special destination services
revenues primarily to the Louisiana casinos, and (v) an increase of $4.1 million
in per capita tour revenue attributable in part to the acquisition of the
Company's Los Angeles operations in 1995.
Operating expenses increased 77.4% to $194.1 million for 1996. The increase
in operating expenses was consistent with increased operations throughout the
Company. The remaining increase was due to higher fuel costs in 1996, offset by
savings in the Company's insurance program.
General and administrative expenses in 1996, after elimination of the
Compensation Differential and the elimination of non-recurring pooling costs
associated with the 1996 acquisitions, increased $4.6 million, or 24.0%, from
$19.3 million in 1995 to $23.9 million in 1996. The increase in general and
administrative expenses was largely due to the increase in operations and an
increase related to the establishment of the corporate management group required
to execute the acquisition program and to manage the consolidated group of
companies.
Interest expense increased $3.1 million in 1996 as compared to 1995 due to
the higher level of debt related to additional equipment and subordinated debt
related to the Purchased Companies, partially offset by the repayment of debt
through the use of proceeds of the Initial Public Offering, Secondary Stock
Offering and due to lower rates from the Credit Facility.
Pro forma net income (before giving effect to the extraordinary gain),
which has been adjusted for the Compensation Differential and the pro forma
provision for taxes, increased during 1996 as compared to 1995 primarily due to
continued revenue growth and the effects of increased purchasing power.
The extraordinary items recorded in 1996 include an extraordinary gain that
was recognized in connection with the mergers of the Pooled Companies with the
Company in August 1996 and extraordinary losses related to prepayment penalties
on certain debt retired. Obligations due to stockholders of $17.2 million were
retired in exchange for shares of Common Stock. The transactions resulted in an
extraordinary gain on early extinguishment of debt of approximately $4.2
million, net of taxes, representing the excess of the recorded value of the
obligations exchanged over the market value of the Common Stock. In addition,
extraordinary losses of $1.5 million, net of taxes, for prepayment penalties on
certain retired debt were recorded in 1996.
HISTORICAL RESULTS FOR 1994 COMPARED TO 1995
Total revenues increased $19.6 million, or 15.3%,from $127.5 million in
1994 to $147.0 million in 1995. The increase was largely due to an increase in
motorcoach charter and special destination revenues of
40
<PAGE>
$6.6 million, primarily attributable to increased service to the Louisiana
casinos, an increase in taxicab service revenues of $2.9 million, partially
attributable to the purchase of additional taxicab operations in Austin, Texas
in July 1997, and an increase in per capita revenue of $2.5 million partially
attributable to the acquisition of the Company's Los Angeles operations in 1995.
Operating expenses increased $10.5 million, or 10.6%, from $98.9 million in
1994 to $109.5 million in 1995, but declined as a percentage of revenues from
77.6% in 1994 to 74.4% in 1995. The dollar increase was largely due to an
increase in operating expenses of $3.8 million, primarily attributable to
increased service to the Louisiana casinos, and $2.1 million, primarily
attributable to higher per capita sales.
General and administrative expenses, after elimination of the Compensation
Differential, increased $2.4 million, or 14.0%, from $16.9 million in 1994 to
$19.3 million in 1995. This increase was consistent with the increase in
revenues.
Interest expense increased $1.8 million, or 30.7%, from $5.7 million in
1994 to $7.5 million in 1995. The increase was largely due to higher levels of
debt during 1995 as a result of equipment purchases.
Net income, adjusted for the Compensation Differential and taxes, increased
$2.5 million, from $3.4 million in 1994 to $5.9 million in 1995, and represented
2.7% of revenues in 1994 compared to 4.0% of revenues in 1995.
SEASONALITY
The timing of certain holidays, weather conditions and seasonal vacation
patterns may cause the Company's quarterly results of operations to fluctuate
significantly. The Company expects to realize higher revenues, operating income
and net income during the second and third quarters and lower revenues,
operating income and net income during the first and fourth quarters.
INFLATION
Inflation has not had a material impact on the Company's results of
operations.
41
<PAGE>
BUSINESS
The Company is the largest provider of motorcoach charter, tour and
sightseeing services and one of the five largest non-municipal providers of
commuter and transit motorcoach services in the United States. The Company also
provides airport ground transportation, paratransit and other related passenger
ground transportation services. The Company's services are provided through a
fleet of approximately 3,400 motorcoaches, including 500 motorcoaches provided
by various transit authorities pursuant to service contracts, as well as various
other high occupancy vehicles. The Company's charter and tour fleet features
luxury, European style motorcoaches with plush seats, televisions, VCRs and
other amenities. The Company's taxicab and high occupancy vehicle services
include dispatching and vehicle sales, leasing and financing for more than 1,450
vehicles, primarily owned by independent contractor drivers.
The Company was founded in September 1995 to create a nationwide provider
of motorcoach and other ground transportation services; however, it conducted no
operations prior to the Initial Public Offering. The Company acquired,
simultaneously with the closing of the Initial Public Offering, the six Founding
Companies. Through December 31, 1996, the Company acquired eight additional
motorcoach businesses and one taxicab service business. Subsequent to year-end
and through June 30, 1997, the Company has acquired eleven additional motorcoach
businesses and has executed a definitive agreement to acquire one additional
company.
The Company enjoys a number of business attributes that position it to
benefit, both financially and operationally, from the consolidation of this
highly fragmented industry. The Company believes that it can continue to achieve
significant economies of scale as it acquires and integrates additional
motorcoach operators (such as savings in insurance, equipment purchases,
financing and the centralization of certain administrative functions), which
should provide continued margin expansion. The Company also believes that the
centralization of these attention-diverting administrative and support functions
will allow the management of the operating companies and any other acquired
businesses to focus on pursuing new business opportunities and improving
equipment utilization and yields. The Company is diversified from the standpoint
of geography, customer base and type of business, characteristics which provide
it with insulation from disruption in any particular area, customer or business.
In addition, the Company benefits from a strong balance sheet as a result of its
two 1996 equity offerings in which it raised $96.6 million, as well as from its
strategy of using its Common Stock as a significant component of the
consideration for its acquisitions.
INDUSTRY OVERVIEW
The motorcoach industry is highly fragmented with approximately 5,000
motorcoach operators which collectively generated approximately $20 billion in
revenues in 1995. The motorcoach industry in the United States can be broadly
divided into three types of services: (i) recreation and excursion (charter,
tour and sightseeing); (ii) commuter and transit; and (iii) regularly scheduled
intercity services. The Company operates primarily in the first two categories,
which collectively generated approximately $19 billion in revenues in 1995.
The Company believes that there will be increasing demand for recreation
and excursion services, commuter and transit motorcoach services and airport
related services for a broad range of customers based on a number of factors,
including:
GROWING TRAVEL AND TOURISM INDUSTRY
The Company believes that the travel and tourism is among the fastest
growing industries in the United States. Nationwide charter users include such
large organizations as AAA, AARP and convention organizers, whose members are
potential users of motorcoach services. As the population of the United States
continues to age, the Company believes more people will find motorcoach touring
an attractive, low cost alternative to travel by automobile. Also, the number of
European and Asian tourists traveling to the United States continues to
increase, and motorcoach travel is a popular way for these tourists to travel in
the United States.
42
<PAGE>
PRIVATIZATION
The Company expects state and local governments to accelerate their efforts
to privatize capital intensive operations, such as commuter and transit
services, and ancillary services, such as paratransit services required under
the Americans with Disabilities Act ("ADA"). The Company believes that this
growth will continue to accelerate primarily from a decrease in Federal funds
available to subsidize operations and the increasing capital cost of acquiring
equipment. For example, in February 1997 the Company was awarded a three-year
commuter service contract in the Seattle, Washington area, which is expected to
generate approximately $19 million in revenues and which may be extended at the
option of the customer for two additional one-year periods.
OUTSOURCING
Many hotels, casinos, rental car companies, colleges and other institutions
operate large motorcoach fleets and other high occupancy vehicles. These
entities are increasingly seeking to outsource these non-core activities as a
means to better manage their capital and operating resources and to improve
their profits.
EXPANDING METROPOLITAN AREAS
Metropolitan areas are continuing to expand geographically and in
population. As a result, state and local governments face increasing automobile
traffic congestion, deteriorating infrastructures and a continuing migration of
offices and commuters to suburban locations. These trends should increase the
Company's opportunities to provide motorcoach commuter and transit services. The
Company believes that the fuel and emissions efficiency, flexibility and low
capital cost of motorcoaches and other high occupancy vehicles will make them
increasingly viable alternatives to the high cost of widening existing roads or
establishing or expanding other transit and commuter systems, such as subways
and commuter trains.
ALLEVIATING AIRPORT CONGESTION
Currently, there is no coordinated effort to provide seamless
transportation between planes and motorcoaches or other modes of ground
transportation, and many passengers continue to use private automobiles for
local or regional travel to and from airports. The Company believes that
motorcoaches, vans and other high occupancy vehicles can alleviate much of this
congestion and address the shortage of convenient parking at many airports. In
addition, taxicab service is an integral part of passenger ground transportation
to and from most major airports.
BUSINESS STRATEGY
The Company's objective is to be the largest provider of regional and local
motorcoach and passenger ground transportation services in the United States by
implementing a growth strategy which concentrates on acquisitions, internal
growth and economies of scale.
ACQUISITION STRATEGY
The Company has used Common Stock and convertible securities to finance
approximately 45.8% of the acquisition consideration (including debt assumed) to
date and plans to continue using its Common Stock for acquisitions as
appropriate in the future. In anticipation of such use, the Company has
registered 3.5 million additional shares of Common Stock under the Securities
Act of 1933, as amended (the "Securities Act").
ENTER NEW GEOGRAPHIC MARKETS. The Company intends to expand into
geographic markets it does not currently serve by acquiring well-established
motorcoach and other passenger ground transportation service providers that,
like its existing operating subsidiaries, are leaders in their regional markets.
Since its founding in 1995 and through June 30, 1997, the Company has completed
13 new-market acquisitions.
EXPAND EXISTING MARKETS. The Company also plans to acquire additional
motorcoach and other passenger ground transportation service providers in many
of the markets in which it operates, including acquisitions that either broaden
the range of services provided by the Company in that market or expand the
geographic scope of the Company's operations in that market, as well as
"tuck-in" acquisitions of smaller
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operations. The Company believes that tuck-in acquisitions will increase
operating efficiencies without a proportionate increase in administrative costs
and, in some instances, will broaden the Company's range of services. Since its
founding in 1995 and through June 30, 1997, the Company has completed seven
existing-market acquisitions.
INTERNAL GROWTH STRATEGY
OFFER OF A FULL RANGE OF SERVICES IN EACH REGION. The Company intends to
increase growth in each of its regions by adding complementary services, as
appropriate, including motorcoach charter, tour and sightseeing, commuter and
transit, airport ground transportation, paratransit and taxicab services. Many
of the acquired companies do not offer all of such services and the Company
believes they will benefit from the expertise of affiliated operations.
DEVELOP PRIVATIZATION AND OUTSOURCING. The Company believes that it is
well positioned to benefit from the accelerating trend toward governmental
privatization and corporate outsourcing, as more transit authorities and
businesses such as hotels, casinos, rental car agencies, colleges and other
institutions that operate their own fleets decide to privatize or outsource
non-core operations. For example, in February 1997 the Company was awarded a
three-year commuter service contract in the Seattle, Washington area, which is
expected to generate approximately $19 million in revenues and which may be
extended at the option of the customer for two additional one-year periods. The
Company is actively pursuing other privatization contracts.
ESTABLISH A NATIONAL SALES AND MARKETING PROGRAM. The Company has begun to
establish a national sales and marketing program as a means to expand its
recreational and excursion business in order to position itself to benefit from
the significant growth in the travel and tourism industry. This program will
target travel and tour companies, national and international travel agencies and
convention organizers, as well as organizations such as AAA, AARP and
professional and amateur athletic teams.
ECONOMIES OF SCALE
CENTRALIZE ADMINISTRATIVE FUNCTIONS. The Company believes that it will
continue to have greater purchasing power, resulting in significant cost savings
in such areas as equipment and parts, tires, insurance and financing, than the
acquired companies had independently. The Company has begun to realize cost
savings through the consolidation of administrative functions such as employee
benefits, safety and maintenance programs and risk management. The Company
believes that by continuing to remove the burden and attention-diverting
responsibility of administrative and support functions, the management of the
operating companies and any other acquired businesses will be able to focus on
pursuing new business opportunities and improving equipment utilization and
yields.
INCREASE OPERATING EFFICIENCIES. The Company believes that there are
opportunities to eliminate redundant facilities and equipment through
coordination among its current operations as well as operations to be acquired
in the future. The Company also expects to continue to benefit from
cross-marketing, increased equipment utilization and implementation of best
practices throughout its operating regions. For example, the Company has
consolidated the operational and maintenance facilities of two of the companies
it acquired in Houston into one location.
ACQUISITION PROGRAM
The Company believes that there are many attractive acquisition candidates
in the motorcoach and passenger ground transportation services industry because
of the highly fragmented nature of the industry, industry participants' need for
capital and their owners' desire for liquidity. The Company will continue to
pursue an aggressive acquisition program to consolidate and enhance its position
in its current markets and to acquire operations in new markets.
The Company acquired the six Founding Companies simultaneously with the
completion of the Initial Public Offering. The Founding Companies include four
companies in New Jersey, and one each in San Francisco and Phoenix. Through the
remainder of fiscal 1996, the Company completed the acquisition of eight
additional motorcoach service businesses and one taxicab service business. From
January 1, 1997
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through June 30, 1997 the Company completed the acquisition of eleven companies.
These eleven companies have aggregate annual revenues of approximately $180
million and the Company has paid, or agreed to pay, aggregate consideration
consisting of approximately $42.8 million in cash, 1,958,280 shares of Common
Stock, $22.1 million in aggregate principal amount of subordinated notes
convertible into 586,367 shares of Common Stock, as well as the assumption of
certain indebtedness. Six of the eleven completed acquisitions were accounted
for as poolings-of-interest while the other five were accounted for as
purchases. The recently acquired companies include America Charters of Gastonia,
North Carolina, Antelope Valley Bus, Inc. of Lancaster, California, The Arrow
Line, Inc. of Hartford, Connecticut, Gray Line of Fort Lauderdale, Florida, Gray
Line of Montreal, Canada, International Express Corp. of Minneapolis, Minnesota,
Kerrville Bus Company of Kerrville, Texas, MTC, Inc. of Phoenix, Arizona, Metro
Transportation Services, Inc. of Miami, Florida and Red & Tan Enterprises of
Bergenfield, New Jersey and Trentway-Wagar, Inc. of Toronto, Canada. The Company
believes that each of these acquisitions is consistent with its strategy of
entering new markets and expanding in existing markets.
The Company has analyzed a substantial amount of data on the motorcoach and
passenger ground transportation services industry and individual businesses
within the industry and believes it is well positioned to continue implementing
its acquisition program. Several of the principals of the current operating
subsidiaries have leadership roles in both national and regional motorcoach and
taxicab service trade associations, which has allowed these principals to become
personally acquainted with operators of motorcoach and passenger ground
transportation services businesses across the country. The Company believes that
the visibility of these individuals within these associations will increase the
industry's awareness of the Company thereby attracting interest from local and
regional operators.
SERVICES PROVIDED
The type and level of services provided by the Company vary by market
served. The services offered in each of the Company's markets are determined by
the management team responsible for that market location and are based on such
management's estimate of the demand for a particular service in the market,
competition to provide that service and the Company's ability to provide that
service consistent with the quality standard that the Company seeks.
The Company provides motorcoach services on both a contracted and per seat
basis. For contracted services, the Company arranges a fee for the use of the
equipment. In these arrangements, the customer contracts the vehicle for use and
the Company is paid a rate, generally on a daily or per mile basis, that is not
dependent on passenger load factors. In per seat operations, the Company is paid
by each individual customer. Fares for these per seat services are usually
determined by the Company and payment is received from individual passengers or
through a commissioned agent. In some states, these fares are subject to
regulatory approval.
The Company's taxicab service revenues are derived primarily from services
provided to independent contractors that own or lease and operate taxicabs under
one of the Company's trade names. The independent contractor drivers pay a
weekly or daily fee in advance to the Company for dispatching, use and
maintenance of taxicab equipment, liability insurance coverage, use of operating
rights, charge account and other services. The independent contractor collects
and retains the fares from the passenger. Fares charged to passengers are
subject to municipal or state regulatory approval.
MOTORCOACH SERVICES
The Company's motorcoaches are either owned by the Company or leased under
long-term leases, pursuant to which the Company is responsible for all
maintenance, insurance and upkeep. Certain transit privatization contracts
provide equipment and insurance to the Company. The majority of the Company's
motorcoach drivers are employees of the Company with the remainder provided
pursuant to a leasing arrangement. In certain of the motorcoach operations, the
drivers are independent contractors.
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RECREATION AND EXCURSION
CHARTER AND TOUR SERVICES. Charter services are provided on a fixed daily
rate, based on mileage and hours of operation. The Company offers both daily and
long-term charter and tour arrangements (as long as 14 days) with various levels
of luxury and price. The Company has arrangements with tour agencies to provide
various levels of service and equipment for agent-sponsored and organized tours.
Under these arrangements, the Company contracts with tour agencies to provide
the motorcoach and driver at a fixed daily rate. To increase equipment
utilization, the Company also regularly offers shorter charter service to
various social groups or other organizers for transportation to events or
specific destinations. In some instances, the Company organizes its own tours
and markets them on a per passenger basis.
SIGHTSEEING. Per seat sightseeing services are provided on a scheduled
basis at an advertised or published price. Typically, customers will make
reservations for the tours or can simply board on an "open-door" basis at
scheduled locations. Payment is made by the customer, or through the travel
agent or the hotel. The Company uses a network of hotel lobby ticket counters,
hotel concierges and travel agents to sell the Company's sightseeing tours.
AIRPORT SERVICE. The Company picks up passengers at airports in Atlantic
City, Colorado Springs, Denver, Houston, Las Vegas, Los Angeles, Miami, Newark
and Philadelphia and transports them to and from their hotel, casino, cruise
ship or convention site. The Company provides passenger ground transportation
services into, from and between airports in certain cities in which the Company
has operations using motorcoaches and other high occupancy vehicles. This
service is provided on either a fixed schedule or on demand service basis. In
fixed schedule services, the Company provides regular pick-up and drop-off
services while fixed fee services can be arranged through computerized
reservations systems or through purchase at a service desk at the airport.
Taxicab service operations are an integral part of the passenger ground
transportation services to and from the airports in the cities in which the
Company operates.
SPECIALIZED DESTINATION ROUTE. The Company provides specialized
destination route services, including daily scheduled service to casinos in New
Jersey, Louisiana, Nevada and Connecticut. Luxury motorcoaches pick passengers
up at specified locations. Tickets are sold through agents and at specified
locations. Customers are taken on an "open-door" basis or by reservation.
COMMUTER AND TRANSIT SERVICES
COMMUTER SERVICES. In most of its commuter services, the Company has fixed
routes serviced on a daily basis. Most of these routes are owned (as a result of
having received Federal or state route authority) by the individual operating
subsidiaries. Many of the Company's motorcoaches that are dedicated to commuter
service are owned by a state or municipal transit authority and provided to the
Company at nominal rent or given by such authority to the Company to service a
particular route. In all cases, the drivers and operations personnel are
employed by the Company and the Company is responsible for maintenance of the
equipment. The Company is paid through individual ticket purchases or through a
fare box. Contracts with transit authorities for this service typically have one
to three year terms and are periodically reviewed for rate and fare increases.
Commuter service is provided daily.
OUTSOURCING CONTRACTS. The Company has agreements with various
corporations, institutions and government entities to provide motorcoaches,
drivers and equipment for their employees and customers. The Company contracts
with the customer to provide the schedule of service required by the customer,
sometimes 24 hours per day.
PRIVATIZATION TRANSIT CONTRACTS. In privatization transit contracts, the
Company has a contract with a transit authority for fixed routes on a daily
basis, with the schedule established by the transit authority. The Company
operates dedicated equipment owned by the Company or by the transit authority.
In each instance, the drivers and operations personnel are employees of the
Company and the Company is responsible for equipment maintenance. The Company is
paid a fixed amount from the municipality based on number of miles or hours
operated. Contracts for this service range from three to five years and are
periodically reviewed for rate increases.
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PARATRANSIT SERVICES. The Company has contracts with agencies of various
counties that are responsible for coordinating the non-emergency transportation
of medical aid patients, many of whom are transported to the hospital or
doctor's office on a regular basis for treatment. Following delivery to the
Company of patient reservation schedules, the Company provides the scheduled
service, usually through use of independent contractor drivers, and invoices the
county organization for services provided. These contracts are generally on a
multi-year basis and require the Company to meet certain performance standards.
TAXICAB SERVICES
The majority of the taxicabs included in the Company's taxicab service
operations are owned by independent contractor drivers, with the remainder being
owned by the Company and leased on a daily or weekly basis to independent
contractor drivers. None of the taxicab drivers are employees of the Company. In
addition to the daily or weekly fee paid by the drivers to the Company for
dispatching and other support services, the Company derives revenues through
vehicle sales and financing services to drivers, maintenance, parts and labor
provided to drivers and vehicle mini-billboard advertising.
RADIO DISPATCHED SERVICES
Radio dispatched services are provided primarily on a call-in basis. When
the request is made for taxicab service, the closest available taxicab is
notified through the Company's computer dispatching system. An independent
contractor driver of the identified vehicle accepts the trip and picks up the
customer.
AIRPORT SERVICES
Taxicab services are provided to passengers going to and coming from the
airports in the municipalities in which the Company provides taxicab services.
Most services provided to passengers coming from the airports are provided on a
demand basis as passengers depart the airport and summon a taxicab at the
airport cab station.
PARATRANSIT SERVICES
Pursuant to contracts with local transit authorities, the Company provides
on demand transportation services for disabled and other persons that are in
need of transportation services. These contracts are generally on a multi-year
basis and require the Company to meet certain performance standards.
SALES AND MARKETING
The Company has a broad customer base. No single customer of the Company
accounted for more than 3% of revenues in 1996. Management at the Company's
operating locations has been responsible for establishing and maintaining
relationships with tour organizers, travel agencies and other regular users of
charter and tour services as well as pursuing outsourcing and privatization
opportunities. Each of the motorcoach operations also has a sales staff that
focuses primarily on obtaining specific charter and tour business.
The principal means of marketing charter and tour services has been in
telephone directories and through direct mail or personal contact with customers
included in each operating location's data bases, which include civic groups,
schools and domestic and foreign tour organizers and travel agencies. The
Company uses ticket counters in hotel lobbies and concierges to market and
promote sightseeing services.
The Company's specialized destination route services to casinos in New
Jersey, Connecticut, Nevada and Louisiana are promoted primarily by individual
casinos. These casinos will either pay the Company for the transportation or
provide incentives to passengers transported by the Company to the casino. In
some instances, the casinos actively advertise these promotions in various
media, such as newspapers, television and billboards.
The Company has begun to establish a targeted national sales and marketing
campaign for its recreation and excursion services. The focus of this campaign
is on national users of motorcoach service, such as domestic and international
travel and tour agencies, convention organizers and sports teams. The
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Company believes that it will have a marketing advantage over its competitors
since it will be able to offer consistent, dependable, quality service in
various metropolitan areas in the United States, thereby enabling its customers
to use the Company's services in multiple locations rather than dealing with
numerous regional or local motorcoach operators.
Contracts with counties and municipalities to provide commuter and transit
and paratransit services are generally obtained through a competitive bidding
process. In some instances where the Company is the existing provider, the
county or municipality may elect to renegotiate the Company's existing contract
instead of putting the contract out for rebid. The Company believes that
counties and municipalities consider quality of service, reliability and price
to be the most important factors in awarding contracts although other factors,
such as financial stability, personnel policies and practices and total cost
both to the municipality and the public, are also considered.
The Company's taxicab service operations utilize the yellow pages,
billboards and signs on the taxicabs as the primary means of marketing services.
Paratransit contracts are obtained through a competitive bidding process.
OPERATIONS
All aspects of the Company's daily motorcoach and passenger ground
transportation services operations are handled on a local basis. Each location
has an operations center staffed by customer service personnel, fleet managers
and dispatchers. All of the Company's commuter and transit services as well as
its sightseeing and specialized destination route services are operated with
dedicated fleets of motorcoaches and drivers, and most fleets include back-up
vehicles in case of equipment breakdown or higher passenger volume. Because
commuter and transit services and specialized destination route services involve
fixed routes which rarely vary, the dispatch function is limited to
communicating with drivers by radio to determine that the motorcoach is in
service, the number of passengers embarked and whether the motorcoach is on
schedule and to deal with any problems in route. When necessary, dispatchers can
communicate necessary modifications in schedules to meet customer demand and
increase utilization. Computerized dispatch services are an integral part of the
daily support services provided to the independent contractor drivers.
Operations personnel schedule individual motorcoaches for recreation and
excursion services as charter business is obtained. In many instances, the
Company receives bookings for tours and charters well in advance, which enables
the Company to predict periods during which equipment utilization is likely to
be low. When this occurs, the Company more actively solicits charter business in
an effort to maintain equipment utilization or schedules alternative uses for
its equipment, particularly during the winter months when tourism declines.
The Company maintains a decentralized management structure. Most operating
decisions are made at the operating location level. At the same time, the
Company has begun to centralize and maintain certain administrative support
activities. The Company believes that by continuing to remove the burden and
attention-diverting responsibility of administrative and support functions, the
management of the operating companies and any other acquired businesses will be
able to focus on pursuing new business opportunities and improving equipment
utilization and yields.
The Company has initiated and believes there will continue to be
opportunities to increase equipment utilization by coordination among the
various operating locations. For example, some motorcoaches that transport
passengers into New York City or Atlantic City in the morning are parked until
they run the reverse trip at the end of the day. The use of these motorcoaches
for day charters and sightseeing could be increased. In addition, equipment
stored during the "off-season" could be transported and utilized by another
location that has more business during that time.
EQUIPMENT
The Company operates approximately 3,400 motorcoaches and other high
occupancy vehicles. Approximately 400 of these motorcoaches are provided by
various transit authorities for nominal rent, with the Company assuming full
responsibility for maintenance and repairs. These motorcoaches are provided
under contracts to perform transit and commuter services and must be returned to
the transit authorities in the event the contracts for them are not renewed. In
addition, approximately 100 other motorcoaches have
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been provided by certain transit authorities to the Company to operate for the
normal useful operating lives thereof, and these motorcoaches must only be
returned to such transit authorities if the Company surrenders its routes for
which such motorcoaches were provided, or at the end of the normal useful
operating lives thereof. The Company's owned fleet of motorcoaches has an
average age of five years. Motorcoaches have a useful operating life in excess
of 10 years, depending on the vehicles' location and use. The Company's
replacement policy will depend on the use being made of the particular
motorcoach, but the Company expects that on average it will replace motorcoaches
every 10 to 12 years based on its ability to redeploy its motorcoach fleet. A
majority of the Company's current fleet of motorcoaches are from one
manufacturer, Motorcoach Industries Incorporated, although other manufacturers
are represented in the Company's fleet. Most engines and drive trains are
manufactured by Detroit Diesel and Allison Transmissions, respectively. This
continuity of engine and drive train should enable the Company to implement a
standardized, Company-wide maintenance program and allow it to reduce its spare
parts inventory. The Company leases most of its tires from Firestone, with the
lease payments based on mileage driven on the tires.
The Company's taxicab service operations provide dispatch and related
services to a fleet of over 1,450 vehicles, of which approximately 900 are owned
and operated by independent contractor drivers and the remainder of which are
owned by the Company and leased on a daily or weekly basis to independent
contractor drivers. The Company offers full service maintenance and repairs on
vehicles owned by the independent contractor drivers and provides maintenance on
the vehicles owned by the Company.
MAINTENANCE
Each of the Company's motorcoach operating locations has a comprehensive
preventive maintenance program for its equipment to minimize equipment downtime
and prolong equipment life. This program includes regular safety checks when a
motorcoach returns to the terminal, regular oil and filter changes, lubrication,
cooling system checks and wheel alignment on average every 6,000 to 12,000
miles, and more extensive maintenance procedures at greater intervals. Interiors
of motorcoaches are cleaned and exteriors washed usually on a daily basis.
Repairs and maintenance are primarily performed at various maintenance
facilities operated by the Company. Most maintenance provided by outside
facilities results from on-the-road breakdowns or involves major engine
overhauls.
To the extent economically and logistically practicable, the Company shares
maintenance facilities and personnel among the operating locations. The Company
expects this will result in a decrease in the percentage of maintenance costs
incurred at outside shops and a decrease in total maintenance costs. It also may
be possible to close some maintenance facilities in areas where there will be
multiple maintenance facilities.
The Company expects that replacement of older motorcoaches with newer
equipment will reduce maintenance costs largely because late model motorcoaches
are more reliable and have better engine and power train warranties. In
addition, the Company believes that it may be able to negotiate better warranty
terms than the individual operating locations could because of the increased
negotiating power of the Company. The Company intends to purchase most of its
motorcoaches with standard component specifications, particularly engines and
drive trains, thereby reducing the complexity of maintenance and spare parts
management. The Company has entered into a leasing agreement for tires on terms
more favorable than previously available to the operating companies
individually.
FACILITIES
At March 31, 1997, the Company's facilities consisted principally of
offices, garages and maintenance facilities. Some of these are single
facilities, and other facilities have limited operations, which may not include
complete maintenance services. The Company owns eighteen of the facilities on
which motorcoach or taxicab operations are located. The remaining facilities are
leased, including some from related parties. The Company believes that its
facilities are adequate for its current needs. See "Certain Transactions --
Leases of Facilities."
The Company leases its executive and administrative offices in Houston,
Texas.
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DRIVERS AND OTHER PERSONNEL
The Company has approximately 7,600 employees, of whom approximately 5,000
are motorcoach drivers and approximately 1,150 are maintenance personnel. The
balance includes administrative personnel, sales personnel, customer service
personnel, fleet managers, dispatchers and safety and training personnel. Of
these employees, approximately 5,300 are full-time employees. The Company's
taxicab and paratransit services are provided through independent contractor
drivers that are not employees of the Company.
The Company has established motorcoach driver retention programs which seek
to maintain a sufficient number of qualified drivers to handle passenger
service. Each operating location historically has had relatively minimal driver
turnover among full-time drivers other than for sightseeing and tour services,
where the need for motorcoach drivers varies seasonally. Safety and
dependability of drivers are critical to the Company's operations. Motorcoach
drivers are required to comply with all applicable Federal and state driver
qualification and safety regulations, including hours of service and medical
qualifications, and to hold a Commercial Driver's License issued in conformity
with regulations of the FHWA. Drivers are also subjected to drug and alcohol
testing requirements imposed by the FHWA, including random, reasonable suspicion
and post-accident testing. Driver applicants are required to have significant
driving experience and to pass medical examinations. Taxicab drivers are subject
to laws and regulations governing driving records, appearance and presentation
which are monitored by local municipalities.
At March 31, 1997, several different unions represented approximately 2,800
employees of the Company, of whom approximately 2,450 were motorcoach drivers.
The Company is a party to a number of different collective bargaining agreements
which expire at various dates through 2000. In the last 10 years, the various
operating companies have not experienced any material work stoppages and the
Company believes that relationships with union representatives and union
employees are satisfactory.
SAFETY
The Company is dedicated to safe operations. The Company vigorously adheres
to the FHWA and comparable state motor carrier safety rules, including rules
concerning safe motor vehicle equipment, driver qualifications and safe
operation of vehicles. The Company maintains drug and alcohol testing programs
for its motorcoach drivers in conformity with FHWA and comparable state
requirements. The Company also addresses accidents and other incidents and takes
follow-up steps intended to reduce the risk of repeat accidents and incidents.
The Company employs safety specialists and maintains safety programs
designed to meet the specific needs of the operating location, including field
spotters and riders who assess motorcoach driver performance. In addition, the
Company employs specialists to perform compliance checks and conduct safety
tests throughout the operations. The Company conducts a number of safety
programs designed to promote compliance with rules and regulations and to reduce
accidents and injury claims. These programs include incentive programs for
accident-free driving, driver safety meetings, distribution of safety bulletins
to drivers and participation in national safety associations.
RISK MANAGEMENT AND INSURANCE
The primary risks in the Company's operations are bodily injury and
property damage to third parties and workers' compensation. The Company
maintains insurance against these risks in amounts which it considers sufficient
and is subject to loss deductibles per incident ranging from $5,000 to $250,000.
The Company is self-insured for the first $100,000 of losses per incident
involving a motorcoach and is self-insured for the first $250,000 of losses per
incident involving a taxicab. If the Company were to experience a significant
increase in the number of claims for which it is self-insured or claims in
excess of its insurance limits, its results of operations and financial
condition would be adversely affected. As such, any claim within the deductible
per incident would be a financial obligation of the Company.
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COMPETITION
The portions of the motorcoach and ground transportation industry in which
the Company operates are highly competitive, fragmented and served by numerous
operators, most of which serve only a single area or region. The Company's
competitors include other operators of motorcoaches and other high occupancy and
taxicab and luxury sedan vehicles, rent-a-car companies and, to a more limited
extent, airlines, Amtrak and commuter rail service providers. A number of the
Company's competitors are as large or larger than the Company on a national or
regional basis and some of these competitors have greater financial, technical
and marketing resources and generate greater revenues than the Company in
specific regions. The majority of the Company's motorcoach competitors consist
of small, independent regional or local operators with a strong presence in
their respective markets. The Company believes that as it expands
geographically, it may compete with additional national, regional and local
transportation service providers.
The Company believes that the principal competitive factors in the
motorcoach industry are reliability, customer service and price, as well as
equipment comfort and appearance. In addition, competition with respect to some
services is limited in some locations by the difficulty in obtaining required
state route authorizations. The Company believes that its ownership of route
authorizations provides it with a competitive advantage in certain markets
because of the relative difficulty of obtaining these authorizations.
The Company from time to time competes for acquisition candidates. The
Company believes that its decentralized management philosophy and operating
strategies will make it an attractive acquiror to other motorcoach and ground
transportation companies. However, no assurance can be given that the Company's
acquisition program will continue to be successful or that the Company will be
able to compete effectively in its chosen markets.
REGULATION
As a result of the ICC Termination Act of 1995 (the "Termination Act"),
the Interstate Commerce Commission (the "ICC"), which previously regulated
motorcoach operators engaged in interstate commerce, was abolished effective
January 1, 1996. However, certain of the ICC's regulatory functions were
transferred as of that date to the STB, a new regulatory body established within
the United States Department of Transportation (the "USDOT"), and certain
other functions were transferred to the United States Secretary of
Transportation (the "Secretary"). Under the Termination Act, motorcoach
operators engaged in interstate commerce are generally required to be registered
with the Secretary, who has delegated responsibility for registration to the
Office of Motor Carriers of the FHWA, another body of the USDOT. By virtue of
the Termination Act, persons who held operating authority issued by the ICC
prior to December 31, 1995 were automatically deemed registered with the
Secretary. Most of the Company's operating companies held authority issued by
the ICC prior to December 31, 1995, and, accordingly, were deemed registered
with the FHWA and are now subject to the regulatory requirements of the STB and
the FHWA.
The Bus Regulatory Reform Act of 1982 significantly reduced federal
regulation of the motorcoach industry. The Termination Act further lessened
regulatory requirements, with the result that the Secretary, the STB and the
FHWA have only limited regulatory authority over interstate motorcoach
operations. The level of fares is not subject to federal regulation, and
motorcoach operators are not required to file tariffs. Motorcoach operators are,
however, required by the Termination Act to provide transportation service on
reasonable request and to provide safe and adequate service, equipment and
facilities. They must also maintain minimum amounts of insurance and file
evidence of such insurance with the FHWA. The Secretary and the STB are vested
with enforcement authority, including authority to impose civil penalties, with
respect to violations of applicable regulatory requirements. The Secretary may
also suspend, amend or revoke a registration for willful failure to comply with
the Termination Act, with the regulations of the Secretary, the STB or the FHWA
or with any condition of the operator's registration.
The Termination Act preempts states, their political subdivisions and
multi-state agencies from regulating the scheduling or rates of interstate or
intrastate transportation provided by motorcoach operators
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on interstate routes. However, states may require motorcoach operators to
provide notice, not in excess of 30 days, of changes in their schedules. These
preemption provisions do not apply to commuter service.
The Company is subject to extensive FHWA and state regulations with respect
to the qualifications of its drivers and the safety of its vehicles and their
operation. See "Drivers and Other Personnel" and "Safety." In addition, the
high occupancy vehicles operated by the Company are required by FHWA regulations
to meet Federal noise standards established by the Environmental Protection
Agency. The Company believes that it has conducted its operations in substantial
compliance with FHWA regulations, and the Company does not believe that ongoing
compliance with such regulations will require substantial capital expenditures.
Under the ADA, the Company could become obligated to provide accessible vehicles
to persons who are disabled under certain circumstances defined in that statute
and in USDOT regulations. If the Company were required to make its motorcoaches
compatible with ADA regulations, it could result in significant capital
expenditures by the Company. The Company is subject to regulation by the
Occupational Safety and Health Administration with respect to worker and
workplace safety.
Certain states in which the Company operates, such as New Jersey, Nevada
and Pennsylvania, have a comprehensive regulatory scheme in connection with the
operation of high occupancy vehicles and with respect to the safety of operation
and equipment. Although some of the regulatory restrictions of these states have
been preempted by federal legislation, as described above, these states still
maintain strong regulatory control over wholly intrastate routes. Because
certain operations of the Company have been granted authority to provide
commuter service and scheduled intrastate service, the Company has a competitive
advantage. However, there can be no assurance that these states will maintain
their current regulatory postures, and any reduction in regulation of motorcoach
operators could adversely affect the Company.
The Termination Act requires the STB's approval of any transaction under
which a person that is not a regulated motorcoach operator, such as the Company,
acquires control of two or more STB-regulated motorcoach operators. However, the
STB is empowered to exempt persons from this requirement for approval of
motorcoach acquisitions. The Company filed a petition with the STB seeking such
exemption in order to permit the acquisition by the Company of those of the
Founding Companies and their affiliates that are regulated by the STB, and the
exemption was granted and became effective on May 3, 1996. The STB has
subsequently granted three additional petitions filed by the Company seeking
exemption from regulatory approval requirements with respect to the acquisition
of additional federally-regulated interstate motorcoach operators. As of May 15,
1997, when the STB issued a decision granting two of these petitions for
exemption, the Company had achieved regulatory exemption for all of the
acquisition transactions involving federally-regulated motorcoach operators that
it had entered through February 1997.
The Company's taxicab service operations are regulated at the state and
local level. Local regulations focus on the number of vehicles that are
authorized to provide taxicab services and whether new entries into the local
marketplace will be granted authority to do business. These regulatory
authorities also set and periodically review the maximum fares that can be
charged to passengers.
ENVIRONMENTAL MATTERS
COMPLIANCE MATTERS
The Company's operations are subject to various Federal, state and local
environmental laws and regulations governing vehicle emissions, underground and
aboveground fuel tanks and the storage, use and disposal of hazardous materials
and hazardous waste in connection with the Company's in-house maintenance
operations. These laws include the Water Pollution Control Act, the Clean Air
Act, as amended, the Resource Conservation and Recovery Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") and various state and local laws. The Company believes that its
costs for complying with applicable environmental laws and regulations will not
have a material adverse effect on its financial condition, liquidity, results of
operations or competitive position; however, there can be no assurance that the
Company will not incur costs in the future that will have a material adverse
effect on the Company. The motorcoach and ground passenger transportation
services industry may in the future become subject to stricter regulations. For
example, future vehicle purchases made by the
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Company may be subject to clean fuel fleet rules promulgated under the Clean Air
Act or comparable state laws.
REMEDIATION MATTERS
In addition to the expense of complying with environmental laws that
regulate the Company's ongoing operations, the Company may be liable for the
cost of investigating and remediating existing and future contamination related
to its operations. Owners and occupiers of sites containing hazardous
substances, as well as generators of hazardous substances who arrange for the
treatment and/or disposal of such substances at off-site locations, are subject
to broad liability under various federal and state environmental laws and
regulations for cleanup costs, damages and other expenses arising out of past
disposal activities at such sites. Many such laws, including CERCLA, impose
joint and several liability regardless of fault or the legality of the original
disposal activity on any party who owns or operates a contaminated site or who
has arranged for the treatment and/or disposal of hazardous substances. There
are or have been underground storage tanks which contain hazardous substances at
most of the Company's facilities. The Company also conducts motorcoach washing
at certain of its facilities and the resulting waste must be disposed of in
accordance with regulatory requirements. In the event of a spill, the Company
would be responsible for the cost of the clean-up, which could be significant.
There have been spills and releases of hazardous substances, including petroleum
and petroleum products, at several of the Company's facilities. At certain
locations, the Company has had to remediate these spills and releases at a
significant cost to the Company. Additional spills and releases of hazardous
substances of which the Company is unaware, including spills and releases of
petroleum and petroleum products, may have occurred at the Company facilities.
With respect to unknown pre-existing contamination at a facility, in most
instances, each of the stockholders of the applicable business acquired by the
Company has agreed to indemnify the Company (up to the amount of consideration
such stockholder received, after satisfaction of a threshold payable by the
Company, which varies depending on the transaction) for liabilities in
connection with such contamination. If and to the extent that any stockholder of
such a business had actual knowledge of a spill or release and did not disclose
it to the Company, such stockholder has agreed to indemnify the Company for all
liabilities in connection with such contamination, not subject to any limit on
such indemnification obligation. Some of the operating companies have disclosed
that from time to time they have spilled or released certain hazardous
substances in the course of operating their businesses.
Capital expenditures and other expenses in 1996 and in the first half of
1997 that are attributable to environmental matters (including both compliance
and remediation matters) were not material in relation to the Company's
consolidated financial position or results of operations. However, there can be
no assurance that the Company will not incur costs or liabilities in the future
that will have a material adverse effect on the Company. The Company has begun
to initiate the implementation of an environmental compliance program at all of
its facilities in an effort to ensure compliance with applicable environmental
laws and regulations and to prevent or reduce future releases of hazardous
substances.
LEGAL PROCEEDINGS
One or more of the operations of the Company (or other operations acquired
in the future by the Company) may become subject to litigation in connection
with the competitive bidding process for a contract to provide transit, commuter
or paratransit services on behalf of a transit authority. Unsuccessful bidders
occasionally will challenge, through a regulatory appeals process or in court,
the awarding of the contract and will often name the successful bidder as an
additional defendant. The cost of defending such an action can be significant,
and if the required competitive bidding procedures were not followed by the
transit authority, the authority could be ordered to begin the process over or
even award the contract to another bidder. The Company is not currently a party
to any such claims or proceedings.
From time to time, the Company is a party to routine litigation incidental
to its business, primarily involving claims for personal injury or property
damage incurred in the transportation of its passengers. The Company is not
aware of any pending claims or threatened claims which, if adversely determined,
might materially affect the Company's operating results or financial condition.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of April 15, 1997 concerning
the Company's directors, executive officers and certain key employees.
NAME AGE POSITION
Richard H. Kristinik................ 57 Chairman of the Board and Chief
Executive Officer
John Mercadante, Jr................. 52 President and Chief Operating
Officer; Director; President and
Chief Executive Officer of
Adventure
Douglas M. Cerny.................... 38 Senior Vice President, General
Counsel and Secretary
Frank P. Gallagher.................. 53 Senior Vice President -- Corporate
Development; Director; President
and Chief Executive Officer of
Community
Lawrence K. King.................... 40 Senior Vice President and Chief
Financial Officer; Director
Gerald Mercadante................... 50 Senior Vice President -- Northeast
Region Operations; Director;
President of Leisure
Charles D. Busskohl................. 64 Director; Chairman and Chief
Executive Officer of Arrow
Steven S. Harter.................... 34 Director
William J. Lynch.................... 54 Director
Paul M. Verrochi.................... 48 Director
Thomas A. Werbe..................... 45 Director; President of Gray Line SF
Richard H. Kristinik has served as Chairman of the Board of Directors and
Chief Executive Officer of the Company since March 1996. Prior to that time, Mr.
Kristinik was a Partner with Arthur Andersen LLP from 1973 to March 1996,
serving in its Houston office for all those years, except for the period from
1979 to 1984, when he served as Managing Partner of the Tulsa office, and the
period from 1985 to 1989, when he served as Managing Partner of the Denver
office.
John Mercadante, Jr. has been President and Chief Operating Officer and a
director of the Company since the Initial Public Offering. Mr. Mercadante
co-founded Leisure with his brother, Gerald Mercadante, in 1970 and acquired
Adventure in 1988. He has served as Adventure's President and Chief Operating
Officer since 1988. Mr Mercadante is currently the President of the Atlantic
City Bus Operators Association and a director of the New Jersey Motor Bus
Association, both motorcoach trade associations.
Douglas M. Cerny has been Senior Vice President, General Counsel and
Secretary of the Company since January 1996. From February 1994 through January
1996, he was Vice President and General Counsel of Medical Review Systems, Inc.,
a privately held health care cost-containment services company which was
acquired by Equifax, Inc. in March 1995. Between March 1995 and January 1996,
Mr. Cerny provided operational support in the transition of operations to
Equifax, Inc. From July 1988 through February 1994, Mr. Cerny was Vice President
and Corporate Counsel and then Vice President and General Counsel of Allwaste,
Inc., a publicly traded environmental services company.
Frank P. Gallagher has been a Senior Vice President -- Corporate
Development and a director of the Company since the Initial Public Offering. Mr.
Gallagher has served as President and Chief Executive Officer of Community since
1969. Mr. Gallagher currently serves as the President of the New Jersey Motor
Bus Association and President of Bus Park of Atlantic City, a bus parking
cooperative.
Lawrence K. King has served as Senior Vice President and Chief Financial
Officer and a director of the Company since December 1995. From 1992 until
September 1995, Mr. King was Executive Vice President, Secretary, Treasurer and
Chief Financial Officer of SI Diamond Technology, Inc., a publicly traded
technology development company. From 1988 to 1991, he served as Assistant
Secretary and Treasurer of The Permian Corporation, the general partner of
Permian Partners L.P., a publicly traded crude oil, trucking, transportation and
distribution master limited partnership. From 1979 to 1988, Mr. King served in a
number of positions as a certified public accountant with Arthur Andersen LLP.
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Gerald Mercadante has been a Senior Vice President -- Northeast Region
Operations and a director of the Company since the Initial Public Offering. Mr.
Mercadante co-founded Leisure in 1970 and has been President and Chief Executive
Officer of Leisure since 1980.
Charles D. Busskohl has been a director of the Company since the Initial
Public Offering. He has been employed by Arrow since 1960 and has served as
Arrow's Chairman for six years and has served as Chief Executive Officer of
Arrow for 34 years. Mr. Busskohl was a founder of the United Motorcoach
Association, a motorcoach trade association.
Steven S. Harter has been a director of the Company since September 1995.
Mr. Harter is President of Notre Capital Ventures II, L.L.C., a consolidator of
highly fragmented businesses. Mr. Harter was Senior Vice President of Notre
Capital Ventures, Ltd. from June 1993 through July 1995 and was the Notre
principal primarily responsible for the initial public offerings of US Delivery
Systems, Inc. and Physicians Resource Group, Inc. From April 1989 to June 1993,
Mr. Harter was Director of Mergers and Acquisitions for Allwaste, Inc. From May
1984 to April 1989, Mr. Harter was a certified public accountant with Arthur
Andersen LLP.
William J. Lynch has been a director of the Company since the Initial
Public Offering. Mr. Lynch is a Managing Director of Capstone Partners, LLC, a
special situations venture capital firm. From October 1989 to March 1996, Mr.
Lynch was a partner of the law firm of Morgan, Lewis & Bockius LLP. Mr. Lynch is
an investor in Notre Capital Ventures II, L.L.C. Mr. Lynch also serves as a
director of StaffMark, Inc.
Paul M. Verrochi has been a director of the Company since the Initial
Public Offering. Since February 1992, he has been a Principal of Exel Holdings,
Ltd., and since March 1996, he has been a Principal of Exel Motorcoach Partners,
LLC, a privately-held investment firm he co-founded. Mr. Verrochi formerly
served as Chairman of the Board of American Medical Response, Inc., a publicly
traded provider of ambulance services, from its inception in February 1992 to
February 1997 when it was acquired by Laidlaw, Inc. From April 1989 to December
1990, Mr. Verrochi was President of Allwaste Asbestos Abatement, Inc., a
subsidiary of Allwaste, Inc. Mr. Verrochi was a founder of American
Environmental Group, a regional asbestos abatement company, and served as
Chairman of its Board of Directors from July 1987 until April 1989, when it was
acquired by Allwaste, Inc.
Thomas A. Werbe has been a director of the Company since the Initial Public
Offering. Mr. Werbe is the President of Gray Line SF and has been a director of
Gray Line SF for more than five years.
The Board of Directors is divided into three classes of four, three and
three directors, respectively, with directors serving staggered three-year
terms, expiring at the annual meeting of stockholders in 1997, 1998 and 1999,
respectively. At each annual meeting of stockholders, one class of directors
will be elected for a full term of three years to succeed that class of
directors whose terms are expiring. All officers serve at the discretion of the
Board of Directors.
The Board of Directors has established an Audit Committee and a
Compensation Committee. The members of the Audit Committee and the Compensation
Committee are Messrs. Harter, Lynch and Verrochi.
DIRECTOR COMPENSATION
Directors who are also employees of the Company or one of its subsidiaries
do not receive additional compensation for serving as directors. During 1996,
the Company paid aggregate fees of $30,000 to nonemployee directors of the
Company in connection with the Board of Directors' and committee meetings. Each
director who is not an employee of the Company or one of its subsidiaries
receives a fee of $2,000 for attendance at each Board of Directors' meeting and
$1,000 for each committee meeting (unless held on the same day as a Board of
Directors' meeting). In addition, under the Company's 1996 Non-Employee
Directors' Stock Plan, each non-employee director is automatically granted an
option to acquire 10,000 shares of Common Stock upon such person's initial
election as a director, and, subject to a certain exception, an annual option to
acquire 5,000 shares at each annual meeting of the Company's stockholders
thereafter at which such director is re-elected or remains a director. Each
non-employee director also may
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elect to receive shares of Common Stock or credits representing "deferred
shares" in lieu of cash directors' fees. See "-- 1996 Non-Employee Directors'
Stock Plan." Directors are also reimbursed for out-of-pocket expenses incurred
in attending meetings of the Board of Directors or committees thereof incurred
in their capacity as directors.
EXECUTIVE COMPENSATION; EMPLOYMENT AGREEMENTS; COVENANTS-NOT-TO-COMPETE
The Company was incorporated in September 1995, conducted no operations and
generated no revenue prior to the closing of the Initial Public Offering and did
not pay any of its executive officers compensation during 1995.
The following table provides certain summary information concerning
compensation earned by the Company's Chief Executive Officer and each of the
four other most highly compensated executive officers (the "Named Executive
Officers") during the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
-------------
SECURITIES
UNDERLYING
PRINCIPAL POSITION YEAR SALARY OPTIONS(#)
Richard H. Kristinik................. 1996 $94,355(1) 200,000
Chief Executive Officer.........
John Mercadante, Jr.................. 1996 94,355(2)(3) 100,000
President and Chief Operating
Officer
Lawrence K. King..................... 1996 94,355(1) 100,000
Senior Vice President -- Chief
Financial Officer
Frank P. Gallagher................... 1996 94,355(2) 100,000
Senior Vice
President -- Corporate
Development
Douglas M. Cerny..................... 1996 94,355(1)(3) 100,000
Senior Vice President -- General
Counsel
- ------------
(1) Represents less than one full year's compensation; pursuant to an employment
agreement between the officer and the Company, no compensation was paid to
such officer until May 14, 1996, the date on which the registration
statement with respect to the Company's initial public offering became
effective.
(2) Represents less than one full year's compensation; pursuant to an employment
agreement between the officer and the Company, such officer did not begin to
earn compensation until May 17, 1996, the date of the closing of the
Company's initial public offering. Does not include amounts paid to each
such officer by subsidiaries of the Company prior to the May 17, 1996
mergers between the Company and such subsidiaries.
(3) Messrs. Mercadante and Cerny had relocation and dual housing expenses paid
for by the Company in the amounts of $32,617 and $38,286, respectively,
which are not included in the amounts listed.
Each of Messrs. John Mercadante, Gallagher and Gerald Mercadante has
entered into an employment agreement with the Company and a Founding Company
providing for an annual base salary of $150,000 and a bonus to be determined
annually pursuant to an incentive bonus plan to be established by the Company.
Each employment agreement is for a term of five years, and unless terminated or
not renewed by the Company or not renewed by the employee, the term will
continue thereafter on a year-to-year basis on the same terms and conditions
existing at the time of renewal. Each of these agreements provides that, in the
event of a termination of employment by the Company without cause during the
first three years of the employment term (the "Initial Term"), the employee
will be entitled to receive from the Company an amount equal to his then current
salary for the remainder of the Initial Term or for one year, whichever is
greater. In the event of a termination of employment without cause during the
final two years of the initial five year term of the employment agreement, the
employee will be entitled to receive an amount equal to his then current salary
for one year. In either case, payment is due in one lump sum on the effective
date of termination. In the event of a change in control of the Company (as
defined in the agreement) during the Initial Term, if the employee is not given
at least five days' notice of such change in control, the employee
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may elect to terminate his employment and receive in one lump sum three times
the amount he would receive pursuant to a termination without cause during the
Initial Term. In addition, the non-competition provisions of the employment
agreement would not apply. In the event the employee is given at least five
days' notice of such change in control, the employee may elect to terminate his
employment agreement and receive in one lump sum two times the amount he would
receive pursuant to a termination without cause during the Initial Term. In such
an event, the non-competition provisions of the employment agreement would apply
for two years from the effective date of termination. Each of Messrs. Busskohl
and Robert Werbe has entered into an employment agreement with Arrow and Gray
Line SF, respectively, containing substantially similar terms.
Each employment agreement contains a covenant not to compete with the
Company for a period equivalent to the longer of two years immediately following
termination of employment or, in the case of a termination by the Company
without cause in the absence of a change in control, for a period of one year
following termination of employment.
Each of Messrs. Kristinik, Cerny and King has entered into an employment
agreement with the Company providing for an annual base salary of $150,000 and a
bonus to be determined annually pursuant to an incentive bonus plan to be
established by the Company. Each employment agreement is for a term of three
years, and unless terminated or not renewed by the Company or not renewed by the
employee, the term will continue thereafter on a year-to-year basis on the same
terms and conditions existing at the time of renewal. Each of these agreements
provides that, in the event of a termination of employment by the Company
without cause, the employee will be entitled to receive from the Company an
amount equal to one year's salary, payable in one lump sum on the effective date
of termination. In the event of a change in control of the Company (as defined
in the agreement) during the initial three-year term, if the employee is not
given at least five days' notice of such change in control, the employee may
elect to terminate his employment and receive in one lump sum three times the
amount he would receive pursuant to a termination without cause during such
initial term. In addition, the non-competition provisions of the employment
agreement would not apply. In the event the employee is given at least five
days' notice of such change in control, the employee may elect to terminate his
employment and receive in one lump sum three times the amount he would receive
pursuant to a termination without cause during such initial term. In such an
event, the non-competition provisions of the employment agreement would apply
for two years from the effective date of termination.
Each employment agreement contains a covenant not to compete with the
Company for a period equivalent to the longer of two years immediately following
termination of employment or, in the case of a termination by the Company
without cause in the absence of a change in control, for a period of one year
following termination of employment.
1996 LONG-TERM INCENTIVE PLAN
No stock options were granted to, or exercised by or held by any executive
officer in 1995. In March 1996, the Board of Directors and the Company's
stockholders approved the Company's 1996 Long-Term Incentive Plan (the
"Plan"). The purpose of the Plan is to provide directors, officers, key
employees, consultants and other service providers with additional incentives by
increasing their ownership interests in the Company. Individual awards under the
Plan may take the form of one or more of: (i) either incentive stock options
("ISOs") or non-qualified stock options ("NQSOs"); (ii) stock appreciation
rights ("SARs"); (iii) restricted or deferred stock; (iv) dividend
equivalents; and (v) other awards not otherwise provided for, the value of which
is based in whole or in part upon the value of the Common Stock.
The Compensation Committee administers the Plan and generally selects the
individuals who will receive awards and the terms and conditions of those
awards. The maximum number of shares of Common Stock that may be subject to
outstanding awards, determined immediately after the grant of any award, may not
exceed the greater of 1,500,000 shares or 15% of the aggregate number of shares
of Common Stock outstanding. Shares of Common Stock attributable to awards which
have expired, terminated or been canceled or forfeited are available for
issuance or use in connection with future awards.
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The Plan will remain in effect until terminated by the Board of Directors.
The Plan may be amended by the Board of Directors without the consent of the
stockholders of the Company, except that any amendment, although effective when
made, will be subject to stockholder approval if required by any Federal or
state law or regulation or by the rules of any stock exchange or automated
quotation system on which the Common Stock may then be listed or quoted.
In connection with the Initial Public Offering, NQSOs to purchase a total
of 510,000 shares of Common Stock of the Company were granted as follows:
200,000 shares to Mr. Kristinik, 100,000 shares to Mr. Cerny, 100,000 shares to
Mr. King and 95,000 shares to other management. In addition, options to purchase
654,517 shares were granted to the employees of the Founding Companies. The
grants of all of the foregoing options were effective as of the Initial Public
Offering and each has an exercise price equal to $14 per share, the initial
public offering price. These options vest at the rate of 20% per year commencing
on June 30, 1997, and expire 10 years from the date of grant or three months
following termination of employment.
In August 1996 Messrs. Mercadante and Gallagher were each granted options
to purchase 100,000 shares of Common Stock of the Company at an exercise price
of $23.75 per share. These options vest at the rate of 20% per year commencing
on September 30, 1997, and expire 10 years from the date of grant or three
months following termination of employment.
The Company has outstanding NQSOs to purchase a total of 2,099,717 shares
of Common Stock as follows: (i) 1,144,217 shares of Common Stock at $14 per
share granted in May 1996; (ii) 492,500 shares of Common Stock at $23.75 per
share and 35,000 shares of Common Stock at $26.75 per share granted in August
1996; and (iii) 108,000 shares of Common Stock at $27.25 per share granted in
December 1996; (iv) 20,000 shares of Common Stock at $28.00 per share granted in
January 1997; and (v) 290,000 shares at $30.00 per share and 10,000 shares at
$29.00 per share granted in February 1997.
1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN
The Company's 1996 Non-Employee Directors' Stock Plan (the "Directors'
Plan"), which was adopted by the Board of Directors and approved by the
Company's stockholders in March 1996, provides for (i) the automatic grant to
each non-employee director serving at the commencement of the Initial Public
Offering of an option to purchase 10,000 shares; and thereafter (ii) the
automatic grant to each non-employee director of an option to purchase 10,000
shares upon such person's initial election as a director. In addition, the
Directors' Plan provides for an automatic annual grant to each non-employee
director of an option to purchase 5,000 shares at each annual meeting of
stockholders following the Initial Public Offering; provided, however, that if
the first annual meeting of stockholders following a person's initial election
as a non-employee director is within three months of the date of such election,
such person will not be granted an option to purchase 5,000 shares of Common
Stock at such annual meeting. These options will have an exercise price per
share equal to the fair market value of a share at the date of grant. The
options granted to Messrs. Harter, Lynch and Verrochi, effective upon the
commencement of the Initial Public Offering, have an exercise price equal to $14
per share, the initial public offering price. Options granted under the
Directors' Plan will expire at the earlier of 10 years from the date of grant or
one year after termination of service as a director, and options will be
immediately exercisable. In addition, the Directors' Plan permits non-employee
directors to elect to receive, in lieu of cash directors' fees, shares or
credits representing "deferred shares" that may be settled at future dates, as
elected by the director. The number of shares or deferred shares received will
be equal to the number of shares which, at the date the fees would otherwise be
payable, will have an aggregate fair market value equal to the amount of such
fees.
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CERTAIN TRANSACTIONS
ORGANIZATION OF THE COMPANY
In connection with the formation of the Company, the Company issued
approximately 147 shares of Common Stock for $1,000 to Notre Capital Ventures
II, L.L.C., a Texas limited liability company ("Notre"). Mr. Harter is the
President of Notre and a director of the Company. Subsequently, the Company
declared a stock dividend of 9,999 shares of Common Stock for each share of
Common Stock outstanding. In addition, the Company sold 692,000 shares (as
adjusted for the stock dividend) of Common Stock at $.01 per share to various
members of management, including: Richard H. Kristinik -- 200,000 shares of
Common Stock, Lawrence K. King -- 114,000 shares of Common Stock and Douglas M.
Cerny -- 114,000 shares of Common Stock. The Company issued 75,000 shares of
Common Stock to a trust for the benefit of the children of Paul M. Verrochi, who
became a director of the Company upon the commencement of the Initial Public
Offering, and granted options to purchase 10,000 shares of Common Stock,
effective upon the commencement of the Initial Public Offering, to Messrs.
Verrochi and Harter and to William J. Lynch, who also became a director of the
Company upon the commencement of the Initial Public Offering and who is an
investor in Notre. In addition, Notre advanced funds in order to effect the
mergers of the Founding Companies (the "Mergers") and the Initial Public
Offering and had outstanding as of March 31, 1996 advances to the Company in the
aggregate amount of $2.7 million, all of which were on a noninterest-bearing
basis. Portions of Notre's advances were repaid out of the proceeds of the
Initial Public Offering.
Simultaneously with the closing of the Initial Public Offering, the Company
acquired by merger all of the issued and outstanding stock of the six Founding
Companies, at which time each of the Founding Companies became a wholly-owned
subsidiary of the Company. The Founding Companies include Suburban Transit Corp.
and its affiliated entities operating out of New Jersey and New York
("Suburban"), Grosvenor Bus Lines, Inc. operating out of San Francisco ("Gray
Line SF"), Leisure Time Tours operating out of New Jersey, New York and
Philadelphia ("Leisure"), Community Bus Lines, Inc. and its affiliated
entities operating out of New Jersey ("Community"), Cape Transit Corp. doing
business as Adventure Trails and operating out of Atlantic City, New Jersey and
Philadelphia ("Adventure") and Arrow Stage Lines, Inc. operating out of
Phoenix, Arizona ("Arrow"). The aggregate consideration paid by the Company in
the Mergers was approximately $95.2 million, consisting of approximately $23.8
million in cash and 5,099,687 shares of Common Stock. In addition, immediately
prior to the Mergers certain of the Founding Companies made distributions of
approximately $4.5 million, representing S Corporation earnings previously taxed
to their respective stockholders. Also, prior to the Mergers, certain of the
Founding Companies distributed to their respective stockholders approximately
$4.2 million in net book value of assets and approximately $700,000 of related
liabilities.
Pursuant to the agreements entered into in connection with the Mergers, the
stockholders of the Founding Companies agreed not to compete with the Company
for five years, commencing on the date of consummation of the initial public
offering.
Prior to the Initial Public Offering, each of the Founding Companies
incurred indebtedness which was personally guaranteed by its stockholders or by
entities controlled by its stockholders. At December 31, 1995, the aggregate
amount of indebtedness of these Founding Companies that was subject to personal
guarantees was approximately $11.6 million. The Company repaid substantially all
of such indebtedness immediately following the consummation of the Initial
Public Offering and has assumed all remaining payment obligations.
In connection with the Mergers, and as consideration for their interests in
the Founding Companies, certain executive officers, directors, key employees and
holders of more than 5% of the outstanding shares of the Company, together with
their spouses and trusts for which they act as trustees, received cash and
shares of Common Stock of the Company as follows: Mr. Kenneth Kuchin (former
director and officer of the Company) -- $7.3 million and 1,211,219 shares of
Common Stock; Mr. Thomas Werbe -- $2.1 million and 351,038 shares of Common
Stock; Mr. Robert Werbe -- $526,558 and 87,760 shares of Common Stock; Mr.
Gerald Mercadante -- $3.5 million and 1,056,400 shares of Common Stock; Mr.
Gallagher --
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$934,036 and 197,810 shares of Common Stock; Mr. John Mercadante -- $2.4 million
and 397,425 shares of Common Stock; and Mr. Busskohl -- $585,892 and 550,451
shares of Common Stock.
In November and December 1996, in connection with a second public offering
and pursuant to registration rights previously granted to each of them by the
Company, Kenneth Kuchin, Douglas M. Cerny, Charles D. Busskohl, the Robert K.
Werbe Grantor Retained Annuity Trust and George D. Kamins (a beneficial owner of
more than 5% of the Company's Common Stock) sold 96,000, 25,000, 137,310, 25,000
and 353,582 shares of the Company's Common Stock, respectively, at a price of
$25.00 per share less underwriting discounts.
LEASES OF FACILITIES
In connection with the Mergers, the Company assumed six leases by Suburban
of properties in South Plainfield, Hightstown and New Brunswick, New Jersey that
are owned by the estate of Mr. Sidney Kuchin and used by Suburban for its
motorcoach operations. Mr. Sidney Kuchin is Mr. Kenneth Kuchin's father and a
former shareholder of Suburban. Suburban is responsible for all real estate
taxes, insurance and maintenance. The terms of the leases are through October
31, 2030 and provide for aggregate annual rentals of approximately $342,000 with
periodic 10% increases every five years commencing November 1, 1998. The Company
believes that the rent for such properties does not exceed the fair market
rental thereof.
In connection with the Mergers, the Company assumed three leases by
Community of properties in Passaic, New Jersey used by Community in its
motorcoach operations that are owned by companies controlled by Mr. Frank P.
Gallagher and members of his family. Community is responsible for all real
estate taxes, insurance and maintenance. The terms of the leases are for five
years and one lease provides for five five-year extensions and one two-year
extension in favor of the Company and two leases provide for seven five-year
extensions in favor of the Company. The leases commenced May 13, 1996 and
provide for aggregate annual rentals of approximately $224,000. The Company
believes that the rent for such properties does not exceed the fair market
rental thereof.
The Company has adopted a policy that, wherever possible, it will not own
any real property. Accordingly, two properties previously owned by Leisure and
used for its motorcoach operations with a net book value of $1.9 million as of
December 31, 1995 were distributed, without payment of consideration to Leisure
or the Company, to an entity controlled by the stockholders thereof, including
Mr. Gerald Mercadante, prior to the Mergers and then leased to the Company under
four leases between Leisure and Mr. Gerdaneu. These leases were negotiated
between the General Counsel of the Company and counsel for Leisure. Two of the
leases have a term of five years with an option in favor of the Company to
extend the leases for seven five-year periods. One of the leases is for ten
years with an option in favor of the Company to extend the lease for three
ten-year periods. The fourth lease is for five years with an option in favor of
the Company to extend the lease for seven five-year periods. These leases
provide for aggregate annual rentals of approximately $77,000. Leisure is
responsible for all real estate taxes, insurance and maintenance. See the Pro
Forma Financial Statements of the Company and the notes thereto.
Certain properties owned by Arrow with a net book value of $1.4 million as
of September 30, 1995 were distributed, without payment of consideration to
Arrow or the Company, to the stockholders thereof, including trusts for which
Mr. Charles Busskohl acts as a trustee, prior to the Mergers and then leased to
the Company under a lease between Arrow and Busskohl Realty. This lease was
negotiated between the General Counsel of the Company and counsel for Arrow and
are for a term of ten years with three renewal options for five years and
provides for aggregate annual rentals of approximately $76,000. Arrow is
responsible for all real estate taxes, insurance and maintenance. See the Pro
Forma Financial Statements of the Company and the notes thereto.
Because the Company does not want to own any real property, it did not
value the properties distributed to the stockholders of Leisure and Arrow or
take any such value into account when negotiating the consideration to be paid
for those Founding Companies. The rent paid by the Company on the leases back to
it of such properties was negotiated as described above based on the historical
cost to Leisure and
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Arrow of having those properties in their respective businesses and is believed
by the Company not to exceed the fair market rental thereof.
OTHER TRANSACTIONS
Gray Line SF owed Grosvenor Properties, Ltd., a company owned by Mr. Robert
K. Werbe and his brother, approximately $1.6 million as of October 31, 1994 and
approximately $300,000 as of October 31, 1995. This loan bore interest at the
prime rate plus 1% and was to mature in October 2000. Gray Line SF owed Mr.
Robert K. Werbe approximately $256,000 as of October 31, 1994, and Mr. Robert K.
Werbe owed Gray Line SF approximately $225,000 and $229,000 as of October 31,
1994 and 1995, respectively. These were unsecured, noninterest-bearing and
payable upon demand.
Community owed Ms. Alice Gallagher, a shareholder of Community,
approximately $132,000 and $171,000 as of December 31, 1994 and 1995,
respectively. These loans were unsecured, bore interest at 10.5% and were
payable in monthly installments of approximately $12,000.
Adventure owed Mr. John Mercadante and his sister approximately $315,000 as
of December 31, 1994 and 1995, respectively. These loans were unsecured,
noninterest-bearing and payable upon demand.
Suburban had outstanding accounts receivable from Mr. Kenneth Kuchin
totaling $194,000 and Sidney Kuchin totaling $458,000 as of December 31, 1995.
These receivables were unsecured, noninterest-bearing and payable on demand.
George D. Kamins owed Yellow Cab Service Corporation ("Yellow Cab")
$303,000 as of August 29, 1996. This advance was offset against accrued interest
payable to him in connection with the August acquisition of Yellow Cab. In
addition, approximately $8.1 million of Yellow Cab's indebtedness was subject to
Mr. Kamins' personal guarantee.
The Company had previously negotiated agreements with Exel Holdings, Ltd.
and Exel Motorcoach Partners LLC (collectively referred to as "Exel") whereby
Exel would provide introductions to other motorcoach businesses and other
consulting services for a term of three years. The consideration payable to Exel
was approximately $100,000 per year. In addition, Exel was to be paid a
commission on any acquisition completed by the Company with motorcoach
businesses introduced to it by Exel, based on a formula ranging from 5% of the
first $1.0 million of consideration paid for the acquired business to 1% of the
consideration in excess of $4.0 million paid for such business. In connection
with the acquisition of two businesses in 1996, the Company paid Exel a
commission of $503,000 based on this formula. Mr. Verrochi, who became a
director of the Company upon the commencement of the Initial Public Offering, is
a principal of Exel. The Company and Exel have subsequently agreed to the
termination of this agreement, whereby Exel shall receive, upon completion of
the next acquisition of a motorcoach business identified by Exel with aggregate
consideration paid in excess of $5.0 million, $275,000 in cash and the grant of
a warrant to purchase 100,000 shares of Company Common Stock at an exercise
price of $26 per share. The warrant will be exercisable beginning six months
from the date of the agreement to terminate and expire two years from the date
of the agreement to terminate.
All of the loans described above have been repaid by the Company.
COMPANY POLICY
Subsequent to the Initial Public Offering, any transactions with officers,
directors and holders of more than 5% of the Common Stock require the approval
of a majority of the Board of Directors, including a majority of the
disinterested members of the Board of Directors.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as of August 5, 1997
regarding the beneficial ownership of the Common Stock of the Company by (i)
each person known to beneficially own more than 5% of the outstanding shares of
Common Stock; (ii) each of the Company's directors; (iii) each named executive
officer; and (iv) all executive officers and directors as a group. All persons
listed have an address in care of the Company's principal executive offices and
have sole voting and investment power with respect to their shares unless
otherwise indicated.
SHARES
BENEFICIALLY OWNED
----------------------
NAME NUMBER PERCENT
Richard H. Kristinik(1).............. 240,000 1.2%
John Mercadante, Jr.(2).............. 392,425 2.0
Douglas M. Cerny(3).................. 109,000 *
Frank P. Gallagher(4)................ 199,810 1.0
Lawrence K. King(3).................. 134,000 *
Gerald Mercadante(5)................. 951,400 4.9
Charles D. Busskohl(6)............... 401,141 2.1
Steven S. Harter(7).................. 353,095 1.8
William J. Lynch(8).................. 38,468 *
Paul M. Verrochi(9).................. 65,000 *
Thomas A. Werbe(10).................. 326,038 1.8
All executive officers and directors
as a group (11 persons)............ 3,210,377 16.3
- ------------
* Less than 1%.
(1) These shares are held by the Kristinik Family Partnership, of which Mr.
Kristinik is a general partner. Includes 40,000 shares which may be
acquired upon the exercise of options exercisable within 60 days; excludes
160,000 shares which may be acquired upon the exercise of options not
exercisable within 60 days.
(2) Includes 137,774 shares held by Mr. Mercadante's spouse, as to which shares
Mr. Mercadante disclaims beneficial ownership. Includes 20,000 shares which
may be acquired upon the exercise of options exercisable within 60 days;
excludes 80,000 shares which may be acquired upon the exercise of options
not exercisable within 60 days.
(3) Includes 20,000 shares which may be acquired upon the exercise of options
exercisable within 60 days; excludes 80,000 shares which may be acquired
upon the exercise of options not exercisable within 60 days.
(4) Includes 90,885 shares held by Mr. Gallagher's spouse, as to which shares
Mr. Gallagher disclaims beneficial ownership, and 16,039 shares held in a
trust for the benefit of Mr. Gallagher's daughter for which Mr. Gallagher
is a trustee. Includes 20,000 shares which may be acquired upon the
exercise of options exercisable within 60 days; excludes 80,000 shares
which may be acquired upon the exercise of options not exercisable within
60 days.
(5) Includes 186,423 shares held by Mr. Mercadante's spouse, as to which shares
Mr. Mercadante disclaims beneficial ownership.
(6) These shares are held by two family trusts for which Mr. Busskohl is a
trustee.
(7) These shares are held by Harter Investment Partners, Ltd., of which Mr.
Harter is a general partner. Includes 15,000 shares which may be issued
upon exercise of options granted under the Directors' Plan and 33,714
shares held by the Victoria Harter and Phyllis Spisak Educational Trust, of
which Mr. Harter's minor children are beneficiaries, as to which shares Mr.
Harter disclaims beneficial ownership.
(8) Includes 15,000 shares which may be acquired upon exercise of options
granted under the Directors' Plan.
(9) Includes 15,000 shares which may be acquired upon exercise of options
granted under the Directors' Plan and 50,000 shares held in a trust for the
benefit of Mr. Verrochi's children, as to which shares Mr. Verrochi
disclaims beneficial ownership.
(10) These shares are held by the Robert K. Werbe Grantor Retained Annuity Trust
for which Mr. Thomas Werbe is a trustee.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
CREDIT FACILITY
The following is a summary of the Credit Facility and is qualified in its
entirety by reference to such Credit Facility, a copy of which is available on
request. See "Available Information."
The Credit Facility provides for a revolving credit facility of $181
million through a syndicate of eight banks and allows the Company to have
borrowings of up to $40 million (in addition to Subordinated Debt (as defined
therein)) outside the Credit Facility. The Company has recently announced that
it anticipates that such facility will be amended to provide for borrowings of
up to $300 million and additional senior borrowings outside such facility of up
to $80 million. The proceeds of the Credit Facility have been used for working
capital, capital expenditures and acquisitions, including refinancing of
indebtedness related to acquisitions. The Credit Facility is secured by
substantially all of the assets of the Company and matures on August 14, 1999,
at which time all amounts then outstanding become due. Interest on outstanding
borrowings is charged, at the Company's option, at the bank's prime rate plus up
to 1.0% or LIBOR plus 1.0% to 2.25%, both as determined by the ratio of the
Company's funded debt cash flow (as defined). Applicable interest rates will be
increased by 2.0% per annum during the continuance of any specified event of
default under the Credit Facility. A commitment fee ranging from 0.25% to 0.50%
is payable on the unused portion of the Credit Facility. Under the terms of the
Credit Facility, the Company must maintain certain minimum financial ratios. The
Credit Facility restricts the Company's ability to make distributions, including
but not limited to prohibiting the Company from declaring or paying any
dividends. As of March 31, 1997, the Company had a total of $166.8 million
outstanding under the Credit Facility and other sources and had utilized $4.9
million of the facility for letters of credit securing certain insurance
obligations and performance bonds, resulting in a borrowing availability of
$49.3 million under the Credit Facility and other sources. The Company's
obligations under the Credit Facility are guaranteed by substantially all of the
domestic subsidiaries of the Company.
The obligations of the lenders under the Credit Facility to advance funds
is subject to the satisfaction of certain conditions customary in agreements of
this type. In addition, the Company and its subsidiaries are subject to certain
customary affirmative and negative covenants contained in the Credit Facility,
including, without limitation, covenants that restrict, subject to specified
exceptions, (i) incurring additional indebtedness and other obligations; (ii) a
merger or consolidation with any other person, or a liquidation, dissolution or
winding up; (iii) acquisitions; (iv) distributions in respect to its shares of
capital stock; (v) engaging in transactions with affiliates; (vi) investing
funds of the Company; (vii) granting of liens to secure any other indebtedness
(including the Notes) and (viii) changing the character of its lines of
business. Many of these covenants are more restrictive than those in favor of
holders of the Notes as described herein and as set forth in the Indenture.
Moreover, the Credit Facility requires the Company to meet certain
financial tests, including: consolidated Net Worth, as defined therein, plus
consolidated Subordinated Debt, as defined therein, at a level not less than (i)
the greater of 90% of the consolidated Net Worth of the Company as of June 30,
1996, or $35 million, plus (ii) 90% of the Company's cumulative annual
consolidated net earnings, plus (iii) 100% of the net proceeds resulting from
any sale, issuance or assumption of stock or Subordinated Debt (as defined
therein); consolidated Tangible Net Worth, as defined therein, of the Company at
not less than 40% of the consolidated Net Worth of the Company; a ratio of
consolidated Funded Debt, as defined therein, of the Company less the
Subordinated Debt, as defined therein, of the Company to the consolidated
EBITDA, as defined therein, of the Company of no greater than 3.0 to 1.0; and a
Fixed Charge Coverage Ratio, as defined therein, of not less than 1.25 to 1.0.
At March 31, 1997, on a pro forma as adjusted basis (see "Selected Consolidated
Pro Forma Financial Data"), the Company's consolidated Net Worth plus the
consolidated Subordinated Debt exceeded the net worth test by $4.0 million, the
consolidated Tangible Net Worth was 45.7% of the consolidated Net Worth and the
Fixed Charge Coverage Ratio was 1.28. The Company believes it will be in
compliance with such covenants on the date of closing of the Offering. The
Indenture will contain restrictions on the Company's ability to incur additional
indebtedness, and other contractual arrangements to which the Company may become
subject in the future could contain similar restrictions.
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The Credit Facility also provides for customary events of default.
Occurrence of any of such events of default could result in acceleration of the
Company's obligations under the Credit Facility and foreclosure on the
collateral securing such obligations, with material adverse results to holders
of the Notes. See "Risk Factors -- Holding Company Structure and Subordination
of Notes and Guarantees."
In September 1996, the Company entered into an interest rate cap agreement
with a bank. The agreement has a term of one year and a notional principal
amount of $50 million. The agreement provides that if the 90-day LIBOR rate
exceeds 6.5% for certain measurement periods, the bank will pay to the Company
the difference between such rate and 6.5%. The cost of the agreement is being
amortized over its term.
CONVERTIBLE SUBORDINATED NOTES
The Company issued $22.5 million of convertible subordinated notes in
August 1996 ($4 million of which were repaid in January 1997) and $18.3 million
of convertible subordinated notes in February 1997. Subsequent to March 31,
1997, the Company issued $3.8 million of additional convertible subordinated
notes. All of such notes were issued as consideration to former owners of
certain acquired businesses. The currently outstanding convertible subordinated
notes bear interest, payable quarterly, at a weighted average interest rate of
5.1% are convertible by the holder into shares of the Company's Common Stock at
a weighted average price of $33.94 per share. The convertible subordinated notes
are redeemable at the option of the Company at various times, ranging from ten
months to three years from the date of issuance. The terms of the currently
outstanding convertible subordinated notes require $30.6 million of principal
payments in 1999 and $10.0 million in 2000.
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DESCRIPTION OF THE NOTES
GENERAL
The Exchange Notes will be issued, and the Old Notes were issued, pursuant
to the Indenture between the Company and The Bank of New York, as Trustee. The
following is a summary of material provisions of the Indenture. This summary
does not purport to be complete and is subject to and is qualified in its
entirety by reference to all provisions of the Notes and the Indenture
(including provisions made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended), including the definitions therein of terms
not defined herein. Certain terms used herein are defined below under
" -- Certain Definitions." Copies of the proposed form of Indenture and
Registration Rights Agreement are available as set forth under "Available
Information."
The Exchange Notes will be issued solely in exchange for an equal principal
amount of Old Notes pursuant to the Exchange Offer. The form and terms of the
Exchange Notes will be identical in all material respects to the form and terms
of the Old Notes except that the offering of the Exchange Notes has been
registered under the Securities Act, and the Exchange Notes will therefore not
be subject to transfer restrictions, registration rights and certain provisions
relating to an increase in the stated interest rate on the Old Notes under
certain circumstances. See " -- Registered Exchange Offer; Registration
Rights." The Notes are subject to the terms stated in the Indenture, a copy of
which has been filed as an exhibit to the Registration Statement, and holders of
the Notes are referred thereto for a statement of those terms. The statements
and definitions of terms under this caption relating to the Notes and the
Indenture described below are summaries and do not purport to be complete. Such
summaries make use of certain terms defined in the Indenture and are qualified
in their entirety by express reference to the Indenture. Certain terms used
herein are defined below under " -- Certain Definitions."
The Old Notes and the Exchange Notes will constitute a single series of
debt securities under the Indenture. If the Exchange Offer is consummated,
holders of Old Notes who do not exchange their Old Notes for Exchange Notes will
vote together with holders of the Exchange Notes for all relevant purposes under
the Indenture. In that regard, the Indenture requires that certain actions by
the holders thereunder (including acceleration following an Event of Default)
must be taken, and certain rights must be exercised, by specified minimum
percentages of the aggregate principal amount of the outstanding securities
issued under the Indenture. In determining whether holders of the requisite
percentage in principal amount have given any notice, consent or waiver or taken
any other action permitted under the Indenture, any Old Notes that remain
outstanding after the Exchange Offer will be aggregated with the Exchange Notes,
and the holders of such Old Notes and the Exchange Notes will vote together as a
single series for all such purposes. Accordingly, all references herein to
specified percentages in aggregate principal amount of the outstanding Notes
shall be deemed to mean, at any time after the Exchange Offer is consummated,
such percentages in aggregate principal amount of the Old Notes and the Exchange
Notes then outstanding.
The Notes are general unsecured obligations of the Company and are
subordinated in right of payment to Senior Debt. See " -- Ranking and
Subordination." As of the date of the Indenture, all of the Company's
Subsidiaries are Restricted Subsidiaries and all of the Company's domestic
Subsidiaries are Guarantors of the Notes. Under certain circumstances, however,
the Company will be able to designate current and future Subsidiaries as
Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to any
of the restrictive covenants set forth in the Indenture. See " -- Certain
Covenants."
The Notes are general unsecured obligations of the Company and are
subordinated in right of payment to all current and future Senior Debt. As of
March 31, 1997, on a pro forma basis giving effect to the Subsequent
Acquisitions, the Offering and the application of the net proceeds therefrom,
the Company would have had Senior Debt of approximately $19.0 million and,
through its Subsidiaries, would have had additional liabilities (including trade
payables and lease obligations) aggregating approximately $40.0 million. The
Indenture will permit the incurrence of additional Senior Debt in the future.
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PRINCIPAL, MATURITY AND INTEREST
The Company issued $150.0 million in aggregate principal amount of Old
Notes in the Offering. The Notes are limited to such amount and will mature on
July 1, 2007. Interest on the Notes accrues at the rate of 9 3/8% per annum and
is payable semi-annually in arrears on January 1 and July 1, commencing on
January 1, 1998, to Holders of record on the immediately preceding December 15
and June 15, respectively. Interest on the Notes accrues from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of original issuance. Interest is computed on the basis of a 360-day year
comprised of twelve 30-day months. Principal, premium, if any, and interest and
Liquidated Damages on the Notes is payable at the office or agency of the
Company maintained for such purpose within the City and State of New York or, at
the option of the Company, payment of interest and Liquidated Damages may be
made by check mailed to the Holders of the Notes at their respective addresses
set forth in the register of Holders of Notes; PROVIDED that all payments of
principal, premium, interest and Liquidated Damages with respect to Notes the
Holders of which have given wire transfer instructions to the Company will be
required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by the
Company, the Company's office or agency in New York is the office of the Trustee
maintained for such purpose. The Notes are issued in denominations of $1,000 and
integral multiples thereof.
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes are jointly and severally
guaranteed (the "Subsidiary Guarantees") by the Guarantors. The Subsidiary
Guarantee of each Guarantor is subordinated to the prior payment in full of all
Senior Debt of such Guarantor, which would include approximately $59.0 million
of Senior Debt outstanding as of March 31, 1997 on a pro forma basis giving
effect to the Subsequent Acquisitions, the Offering and the application of the
net proceeds therefrom, and the amounts for which the Guarantors will be liable
under the guarantees issued from time to time with respect to Senior Debt. The
obligations of each Guarantor under its Subsidiary Guarantee are limited so as
not to constitute a fraudulent conveyance under applicable law. See "Risk
Factors -- Ranking and Fraudulent Conveyance Considerations."
The Indenture provides that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person), another
corporation, Person or entity whether or not affiliated with such Guarantor
unless (i) subject to the provisions of the following paragraph, the Person
formed by or surviving any such consolidation or merger (if other than such
Guarantor) assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Subsidiary Guarantee; (ii)
immediately after giving effect to such transaction, no Default or Event of
Default exists; and (iii) the Company would be permitted by virtue of the
Company's pro forma Fixed Charge Coverage Ratio, immediately after giving effect
to such transaction, to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage Ratio test set forth in the covenant described
above under the caption "-- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock."
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Guarantor to a third party or an Unrestricted
Subsidiary in a transaction that does not violate any of the covenants in the
Indenture, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, then such Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise, of all of the capital stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor) will be
released and relieved of any obligations under its Subsidiary Guarantee;
PROVIDED that the Net Proceeds of such sale or other disposition are applied in
accordance with the applicable provisions of the Indenture. See "-- Repurchase
at the Option of Holders -- Asset Sales."
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SUBORDINATION
The payment of principal of, premium, if any, and interest on the Notes and
any other payment obligations of the Company in respect of the Notes (including
any obligation to repurchase Notes) is subordinated in right of payment, as set
forth in the Indenture, to the prior payment in full of all Senior Debt, whether
outstanding on the date of the Indenture or thereafter incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt) before the Holders of Notes will be entitled to
receive any payment with respect to the Notes, and until all Obligations with
respect to Senior Debt are paid in full, any distribution to which the Holders
of Notes would be entitled shall be made to the holders of Senior Debt (except
that Holders of Notes may receive and retain Permitted Junior Securities and
payments made from the trust described under "-- Legal Defeasance and Covenant
Defeasance").
The Company also may not make any payment upon or in respect of the Notes
(except in Permitted Junior Securities or from the trust described under
"-- Legal Defeasance and Covenant Defeasance") if (i) a default in the payment
of the principal of, premium, if any, or interest on Designated Senior Debt
occurs and is continuing beyond any applicable period of grace or (ii) any other
default occurs and is continuing with respect to Designated Senior Debt that
permits, or with the giving of notice or passage of time or both (unless cured
or waived) will permit holders of the Designated Senior Debt as to which such
default relates to accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from the Company or the holders of
any Designated Senior Debt. Payments on the Notes may and shall be resumed (a)
in the case of a payment default, upon the date on which such default is cured
or waived and (b) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the maturity of
any Designated Senior Debt has been accelerated. No new period of payment
blockage may be commenced unless and until (i) 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal, premium, if any, and interest on the Notes that
have come due have been paid in full in cash. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice. In the event that, notwithstanding the foregoing, the Company makes any
payment or distribution to the Trustee or the Holder of any Note prohibited by
the subordination provisions of the Indenture, then such payments or
distribution will be required to be paid over and delivered forthwith to the
holders (or their representative) of Designated Senior Debt.
The Indenture further requires that the Company promptly notify holders of
Senior Debt if payment of the Notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency of the Company, Holders of Notes may recover less
ratably than creditors of the Company who are holders of Senior Debt.
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OPTIONAL REDEMPTION
Except as otherwise described below, the Notes are not be redeemable at the
Company's option prior to July 1, 2002. Thereafter, the Notes will be subject to
redemption at any time at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 1 of the
years indicated below:
YEAR PERCENTAGE
2002................................. 104.688%
2003................................. 103.125
2004................................. 101.563
2005 and thereafter.................. 100.000%
Notwithstanding the foregoing, at any time on or prior to July 1, 2000, the
Company may (but shall not have the obligation to) redeem, on one or more
occasions, up to an aggregate of 33 1/3% of the aggregate principal amount of
Notes issued at a redemption price equal to 109.375% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the redemption date, with the net cash proceeds of one or more Public
Equity Offerings; PROVIDED that at least 66 2/3% of the aggregate principal
amount of Notes issued remain outstanding immediately after the occurrence of
such redemption; and PROVIDED FURTHER, that such redemption shall occur within
60 days of the date of the closing of such Public Equity Offering.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed or repurchased in an offer
to purchase at any time, selection of Notes for redemption or repurchase will be
made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed, or, if the
Notes are not so listed, on a pro rata basis, by lot or by such other method as
the Trustee shall deem fair and appropriate; PROVIDED that no Notes of $1,000 or
less shall be redeemed or repurchased in part. Notices of redemption may not be
conditional. Notices of redemption or repurchase shall be mailed by first class
mail at least 30 but not more than 60 days before the redemption date or
repurchase date to each Holder of Notes to be redeemed or repurchased at its
registered address. If any Note is to be redeemed or repurchased in part only,
the notice of redemption or repurchase that relates to such Note shall state the
portion of the principal amount thereof to be redeemed or repurchased. A new
Note in principal amount equal to the unredeemed or unrepurchased portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption or repurchase date, interest
ceases to accrue on Notes or portions of them called for redemption or
repurchase.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such
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notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures required by the Indenture and described in such notice. The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of the covenant
described hereunder, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under the covenant described hereunder by virtue thereof.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; PROVIDED that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Indenture provides that,
prior to complying with the provisions of this covenant, but in any event within
90 days following a Change of Control, the Company will either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of Notes
required by this covenant. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization,
restructuring or similar transaction. Although the existence of a Holder's right
to require the Company to repurchase the Notes in respect of a Change of Control
may deter a third party from acquiring the Company in a transaction that
constitutes a Change of Control, the provisions of the Indenture relating to a
Change of Control in and of themselves may not afford Holders of the Notes
protection in the event of a highly leveraged transaction, reorganization,
recapitalization, restructuring, merger or similar transaction involving the
Company that may adversely affect Holders, if such transaction is not the type
of transaction included within the definition of a Change of Control.
The Existing Credit Facility currently prohibits the Company from
purchasing any Notes prior to their stated maturity, and also provides that
certain change of control events with respect to the Company would constitute a
default thereunder. Any future credit agreements or other agreements relating to
Senior Debt to which the Company becomes a party may contain similar
restrictions and provisions. Moreover, the exercise of by the Holders of their
rights to require the Company to repurchase the Notes could cause a default
under such other indebtedness, even if the Change of Control itself does not,
due to the financial effect of such repurchase on the Company. In the event a
Change of Control occurs at a time when the Company is prohibited from
purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Notes. In either
case, the Company's failure to purchase tendered Notes would constitute an Event
of Default under the Indenture which would, in turn, constitute a default under
the Existing Credit Facility. In such circumstances, the subordination
provisions in the Indenture would likely restrict payments to the Holders of
Notes. Finally, the Company's ability to pay cash to the holders of Notes
following the occurrence of a Change of Control may be limited by the Company's
then existing financial resources. There can be no assurance that sufficient
funds will be available when necessary to make any required repurchases. The
provisions under the Indenture relating to the Company's obligation to make an
offer to
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repurchase the Notes as a result of a Change of Control may be waived or
modified with the prior written consent of the Holders of a majority in
principal amount of the Notes.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Subsidiaries taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder of Notes to require the Company to
repurchase such Notes as a result of a sale, lease, transfer, conveyance or
other disposition of less than all of the assets of the Company and its
Subsidiaries taken as a whole to another Person or group may be uncertain.
ASSET SALES
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee, which resolution shall be
conclusive evidence of compliance with this provision) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash or Cash Equivalents, long-term assets that are useful in a
Permitted Business ("Permitted Business Assets") and/or Voting Stock of a
Person primarily engaged in a Permitted Business that becomes a Guarantor, so
long as such Voting Stock constitutes a majority of the Voting Stock of such
Person ("Permitted Business Securities"); PROVIDED that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet), of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (y) any securities,
notes or other obligations received by the Company or any such Restricted
Subsidiary from such transferee that are converted by the Company or such
Restricted Subsidiary into cash or Cash Equivalents within 180 days of closing
such Asset Sale (to the extent of the cash received), shall be deemed to be cash
for purposes of this provision. Notwithstanding the foregoing, the provisions of
this paragraph will not apply to (i) sales of used coaches or obsolete equipment
in the ordinary course of business or (ii) the trade or exchange by the Company
or any Subsidiary of the Company of any property or assets owned or held by the
Company or such Subsidiary for any property or assets owned or held by another
Person; PROVIDED that the fair market value of the properties traded or
exchanged by the Company or such Subsidiary (including any cash or Cash
Equivalents to be delivered by the Company or such Subsidiary) is reasonably
equivalent to the fair market value of the properties (together with any cash or
Cash Equivalents) to be received by the Company or such Subsidiary as determined
in good faith by (a) any officer of the Company if such fair market value is
less than $5 million and (b) the Board of Directors of the Company (evidenced by
a resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) if such fair market value is equal to or in excess of
$5.0 million.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay Senior Debt
or Pari Passu Indebtedness (provided that if the Company shall so reduce
Obligations under Pari Passu Indebtedness, it will equally and ratably reduce
Obligations under the Notes if the Notes are then prepayable or, if the Notes
may not be then prepaid, the Company shall make an offer (in accordance with the
procedures set forth below for an Asset Sale Offer) to all Holders to purchase
at 100% of the principal amount thereof, plus accrued interest to the date of
repurchase, the amount of Notes that would otherwise be prepaid), or, (b) to the
acquisition of Permitted
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Business Assets or Permitted Business Securities or the making of a capital
expenditure. Pending the final application of any such Net Proceeds, the Company
may temporarily reduce Senior Debt or otherwise invest such Net Proceeds in any
manner that is not prohibited by the Indenture. Any Net Proceeds from Asset
Sales that are not applied or invested as provided in the first sentence of this
paragraph will (after the expiration of the 360-day period specified in the
first sentence of this paragraph) be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
will be required to make an offer to all Holders of Notes (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes that may be purchased
out of the Excess Proceeds, at an offer price in cash in an amount equal to 100%
of the principal amount thereof plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. To the extent that the aggregate amount
of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a pro rata basis. Upon completion of such offer to
purchase, the amount of Excess Proceeds shall be reset at zero.
The Company's obligation to purchase Notes with Excess Proceeds could
create an event of default under Senior Debt as a result of which any purchase
could, absent a waiver, be blocked by the subordination provisions of the Notes.
Failure to purchase the Notes when required will result in an Event of Default
with respect to the Notes whether or not such a purchase is permitted by the
subordination provisions of the Indenture.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the Company's or
any of its Restricted Subsidiaries' Equity Interests in their capacity as such
(other than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company); (ii) purchase, redeem or otherwise acquire
or retire for value (including, without limitation, in connection with any
merger or consolidation involving the Company) any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any payment
on or with respect to, or purchase, redeem, defease or otherwise acquire or
retire for value any Indebtedness that is subordinated to the Notes, except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless,
at the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described below under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock";
and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii) and (iv) of the next succeeding
paragraph), is less than the sum (without duplication) of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
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commencing after the date of the Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company from
the issue or sale since the date of the Indenture of Equity Interests of
the Company (other than Disqualified Stock) or of Disqualified Stock or
debt securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date of the Indenture is sold
for cash or otherwise liquidated or repaid for cash, the lesser of (A) the
net cash proceeds of such sale, liquidation or repayment and (B) the
initial amount of such Restricted Investment, plus (iv) the amount
resulting from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries, such amount not to exceed the amount of Investments made by
the Company or any Restricted Subsidiary in such Unrestricted Subsidiary
since the date of the Indenture that was treated as a Restricted Payment
under the Indenture.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); PROVIDED that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or
other acquisition of subordinated Indebtedness with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend by a Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Subsidiary of the Company held by any member of the Company's (or any of its
Subsidiaries') management, employees or consultants pursuant to any management,
employee or consultant equity subscription agreement or stock option agreement;
PROVIDED that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $1.0 million in any
twelve-month period and no Default or Event of Default shall have occurred and
be continuing immediately after such transaction; (vi) cash payments in lieu of
fractional shares issuable as dividends on preferred securities of the Company
or any of its Restricted Subsidiaries; PROVIDED that such cash payments shall
not exceed $20,000 in the aggregate in any twelve-month period and no Default or
Event of Default shall have occurred and be continuing immediately after such
transaction; (vii) repurchases of Equity Interests deemed to occur upon exercise
of stock options if such Equity Interests represent a portion of the exercise
price of such options; (viii) the payment of the redemption price of rights
issued pursuant to any shareholders' rights plan not in excess of $0.05 per
right and not in excess of $1.0 million in the aggregate since the date of the
Indenture; and (ix) other Restricted Payments in an aggregate amount since the
date of the Indenture not to exceed $5.0 million.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation, (y) the fair market value of such Investments at the time of such
designation and (z) the original fair market value of such Investments at the
time they were made. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
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The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the covenant "Restricted Payments" were computed.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Subsidiaries to issue any shares of preferred stock;
PROVIDED, HOWEVER, that the Company or any of the Guarantors may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock if
the Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least 2.0 to 1, if such
incurrence or issuance is on or prior to July 1, 2000, or 2.5 to 1, if such
incurrence or issuance is after July 1, 2000, in each case determined on a pro
forma basis (as set forth in the definition of Fixed Charge Coverage Ratio and
including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company and the Guarantors of Indebtedness
under Credit Facilities and the issuance and creation of letters of credit
thereunder (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and the Guarantors
thereunder); PROVIDED that the aggregate principal amount of all
Indebtedness and letters of credit outstanding under all Credit Facilities
after giving effect to such incurrence, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (i), does not exceed an
amount equal to $100.0 million less the aggregate amount of all Net
Proceeds of Asset Sales applied to repay any such Indebtedness (or any such
Permitted Refinancing Indebtedness) pursuant to the covenant described
above under the caption "-- Repurchase at the Option of Holders -- Asset
Sales";
(ii) the incurrence by Foreign Subsidiaries of Indebtedness under
Credit Facilities and the issuance and creation of letters of credit
thereunder (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Foreign Subsidiaries
thereunder); PROVIDED that the aggregate principal amount of all
Indebtedness of Foreign Subsidiaries outstanding under Credit Facilities
and letters of credit thereunder after giving effect to such incurrence,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (ii), does not exceed an amount equal to $40.0 million less the
aggregate amount of all Net Proceeds of Asset Sales applied to repay any
such Indebtedness (or any such Permitted Refinancing Indebtedness) pursuant
to the covenant described under the caption "-- Repurchase at the Option
of Holders -- Asset Sales";
(iii) the incurrence by the Company and the Guarantors of the
Existing Indebtedness;
(iv) the incurrence by the Company of Indebtedness represented by the
Notes and the Subsidiary Guarantees;
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(v) the incurrence by the Company or any of the Guarantors of
Indebtedness (in addition to Existing Indebtedness) represented by Capital
Lease Obligations, mortgage financings or purchase money obligations, in
each case incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Guarantor, in an
aggregate principal amount not to exceed $7.5 million at any time
outstanding;
(vi) the incurrence by the Company or any of the Guarantors of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance, extend, renew, defease, or replace
Indebtedness (other than intercompany Indebtedness) that was permitted by
the Indenture to be incurred;
(vii) the incurrence by the Company or any of the Guarantors of
intercompany Indebtedness between or among the Company and any of the
Guarantors or between or among Wholly Owned Subsidiaries; PROVIDED,
HOWEVER, that (i) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in cash
of all Obligations with respect to the Notes and (ii)(A) any subsequent
issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Guarantor
and (B) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Guarantor shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Guarantor, as the case may be;
(viii) the incurrence by the Company or any of the Guarantors of
Hedging Obligations that are incurred for the purpose of fixing or hedging
(i) interest rate risk with respect to any floating rate Indebtedness that
is permitted by the terms of this Indenture to be outstanding, (ii) the
value of foreign currencies purchased or received by the Company in the
ordinary course of business, or (iii) commodities purchased in the ordinary
course of business for use in a Permitted Business and not for speculation;
(ix) the issuance of preferred stock or the incurrence by the
Company's Unrestricted Subsidiaries of Non-Recourse Debt, PROVIDED,
HOWEVER, that if any such Indebtedness ceases to be Non-Recourse Debt of an
Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of the Company;
(x) Indebtedness in connection with one or more standby letters of
credit, guarantees, performance bonds or other reimbursement obligations,
in each case, issued in the ordinary course of business and not in
connection with the borrowing of money or the obtaining of advances or
credit (other than advances or credit on open account, includible in
current liabilities, for goods and services in the ordinary course of
business and on terms and conditions which are customary in the Permitted
Business, and other than the extension of credit represented by such letter
of credit, guarantee or performance bond itself), not to exceed in the
aggregate at any given time 10% of Total Assets; PROVIDED, that any draw
under or call upon any of the foregoing is repaid in full within 30 days;
(xi) accounts payable or other liabilities of the Company or any
Restricted Subsidiary to trade creditors created or assumed by the Company
or such Subsidiary in the ordinary course of business in connection with
the obtaining of goods and services;
(xii) Indebtedness consisting of obligations in respect of purchase
price adjustments, guarantees or indemnities in connection with the
disposition of assets;
(xiii) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Guarantor of the Company that was
permitted to be incurred by another provision of this covenant; and
(xiv) the incurrence by the Company or any of the Guarantors of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any other
Indebtedness incurred pursuant to this clause (xiv), not to exceed $5.0
million.
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For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xiv) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof. Accrual of interest, the accretion of accreted
value and the payment of interest in the form of additional Indebtedness will
not be deemed to be an incurrence of Indebtedness for purposes of this covenant.
LIENS
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries on its
Capital Stock, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of the Indenture, (b) the Existing Credit Facility as in
effect as of the date of the Indenture, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, PROVIDED that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive with respect to such dividend and other
payment restrictions than those contained in the Credit Facility as in effect on
the date of the Indenture, (c) the Indenture, the Notes and the Subsidiary
Guarantees, (d) applicable law or regulations or any order, ruling or other
determination by a governmental regulatory authority, (e) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries (through the acquisition of Capital Stock or
through merger or consolidation) as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, PROVIDED that,
in the case of Indebtedness, such Indebtedness was permitted by the terms of the
Indenture to be incurred, (f) by reason of customary non-assignment provisions
in leases, licenses, encumbrances, contracts or similar assets entered into or
acquired in the ordinary course of business and consistent with past practices,
(g) purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (iii) above
on the property so acquired, (h) Permitted Refinancing Indebtedness, PROVIDED
that the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in the
agreements governing the Indebtedness being refinanced, (i) any instrument
governing Indebtedness or preferred stock of a Subsidiary in existence on the
date of the Indenture, or (j) any instrument governing Indebtedness of a Foreign
Subsidiary permitted by the covenant described above under the caption
"-- Certain Covenants -- Incurrence of Indebtedness and the Issuance of
Preferred Stock."
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation,
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Person or entity unless (i) the Company is the surviving corporation or the
entity or the Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made is a corporation organized
or existing under the laws of the United States, any state thereof or the
District of Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Notes
and the Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no Default
or Event of Default exists; and (iv) except in the case of a merger of the
Company with or into a Wholly Owned Subsidiary of the Company, the Company or
the entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant described
above under the caption "-- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock."
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to or Investment in, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person and (ii) the
Company delivers to the Trustee (a) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction complies with
clause (i) above and that such Affiliate Transaction has been approved by a
majority of the disinterested members of the Board of Directors, which
resolution shall be conclusive evidence of compliance with this provision, and
(b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking
firm of national standing; PROVIDED that (A) any employment agreement entered
into by the Company or any of its Restricted Subsidiaries in the ordinary course
of business and consistent with the past practice of the Company or such
Restricted Subsidiary, (B) transactions between or among the Company and/or its
Restricted Subsidiaries, (C) Restricted Payments that are permitted by the
provisions of the Indenture described above under the caption "-- Certain
Covenants-- Restricted Payments," (D) Affiliate Transactions assumed or entered
into in connection with acquisitions of Permitted Businesses with persons who
were not Affiliates prior to such transactions, and (E) Affiliate Transactions
existing on the date of the Indenture, in each case, shall not be deemed
Affiliate Transactions.
SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, enter into any sale and leaseback
transaction; PROVIDED that the Company may enter into a sale and leaseback
transaction if (i) the Company could have (a) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described above under the caption "-- Certain
Covenants -- Incurrence of Additional Indebtedness and Issuance of Preferred
Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to the
covenant described above under the caption "-- Certain Covenants -- Liens,"
(ii) the gross cash proceeds of such sale and leaseback transaction are at
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least equal to the fair market value (as determined in good faith by the Board
of Directors and set forth in an Officers' Certificate delivered to the Trustee,
which determination shall be conclusive evidence of compliance with this
provision) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the covenant described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales."
NO SENIOR SUBORDINATED DEBT
The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes, and (ii) no Guarantor will incur,
create, issue, assume, guarantee or otherwise become liable for any Indebtedness
that is subordinate or junior in right of payment to Senior Debt of such
Guarantor and senior in any respect in right of payment to the Subsidiary
Guarantee of such Guarantor; PROVIDED, HOWEVER, that the foregoing limitations
will not apply to distinctions between categories of Indebtedness that exist by
reason of any Liens arising or created in accordance with the provisions of the
Indenture in respect of some but not all such Indebtedness.
AMENDMENT OF CONVERTIBLE NOTES
The Indenture provides that the Company will not amend the subordination
provisions of the convertible notes outstanding on the date of the Indenture in
a manner that is adverse to the Holders of the Notes.
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED RESTRICTED
SUBSIDIARIES
The Indenture provides that the Company (i) will not, and will not permit
any Wholly Owned Restricted Subsidiary of the Company to, transfer, convey,
sell, lease or otherwise dispose of any Capital Stock of any Wholly Owned
Restricted Subsidiary of the Company to any Person (other than the Company or a
Wholly Owned Subsidiary of the Company), unless (a) such transfer, conveyance,
sale, lease or other disposition is of all the Capital Stock of such Wholly
Owned Restricted Subsidiary and (b) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with the
covenant described above under the caption "-- Repurchase at the Option of
Holders -- Asset Sales," and (ii) will not permit any Wholly Owned Restricted
Subsidiary of the Company to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Company or a Guarantor.
BUSINESS ACTIVITIES
The Indenture provides that the Company will not, and will not permit any
Subsidiary to, engage in any business other than Permitted Businesses, except to
such extent as would not be material to the Company and its Subsidiaries taken
as a whole.
ADDITIONAL SUBSIDIARY GUARANTEES
The Indenture provides that if the Company or any of its Restricted
Subsidiaries shall acquire or create another Restricted Subsidiary after the
date of the Indenture, then such newly acquired or created Restricted Subsidiary
(other than a Restricted Subsidiary which is a Foreign Subsidiary) shall execute
a Subsidiary Guarantee and deliver an opinion of counsel, in accordance with the
terms of the Indenture.
REPORTS
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, the Company will furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such Forms and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company were required to file such reports, in
each case within the time periods set
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forth in the Commission's rules and regulations. In addition, whether or not
required by the rules and regulations of the Commission, at any time after the
effectiveness of the Exchange Offer contemplated by the Registration Rights
Agreement, the Company will file a copy of all such information and reports with
the Commission for public availability within the time periods set forth in the
Commission's rules and regulations (unless the Commission will not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request. In addition, the Company and the Guarantors
have agreed that, for so long as any Notes remain outstanding (unless the
Company is subject to the reporting requirements of the Exchange Act), they will
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company or
any of its Subsidiaries to comply with the provisions described under the
captions "-- Repurchase at the Option of Holders -- Change of Control,"
"-- Repurchase at the Option of Holders -- Asset Sales," "-- Certain
Covenants -- Restricted Payments," "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock" or "-- Certain
Covenants -- Merger, Consolidation or Sale of Assets" and the continuance of
such failure for a period of 30 days after written notice is given to the
Company by the Trustee or to the Company and the Trustee by the Holders of at
least 25% in aggregate principal amount of the Notes outstanding; (iv) failure
by the Company or any of its Subsidiaries for 60 days after notice by the
Trustee or by the Holders of at least 25% of Notes then outstanding to comply
with any of its other agreements in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (or the payment of which is guaranteed
by the Company or any of its Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment
Default") or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more and any such default is not
cured or waived or any such acceleration is not rescinded, or such Indebtedness
is not repaid, within a period of 10 days from the continuation of such default
beyond the applicable grace period or the occurrence of such acceleration; (vi)
failure by the Company or any of its Subsidiaries to pay final judgments by
courts of competent jurisdiction aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 90 days (net of
applicable insurance coverage which is acknowledged in writing by the insurer or
which has been determined to be applicable by a final nonappealable
determination by a court of competent jurisdiction); (vii) except as permitted
by the Indenture, any Subsidiary Guarantee of a Significant Subsidiary shall be
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Significant Subsidiary
Guarantor, or any Person acting on behalf of any Significant Subsidiary
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and (viii) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Guarantor
constituting a Significant Subsidiary or any
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group of Guarantors that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without further
action or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or interest) if it determines that withholding notice is in their
interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to July
1, 2002, by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to July 1, 2002, then the premium specified in the
Indenture shall also become immediately due and payable to the extent permitted
by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required within five
business days of becoming aware of any Default or Event of Default, to deliver
to the Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or any Guarantor under the Notes, the Indenture or the Subsidiary
Guarantees or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations and the obligations of the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance") except for (i) the rights of Holders of
outstanding Notes to receive payments in respect of the principal of, premium,
if any, and interest and Liquidated Damages on such Notes when such payments are
due from the trust referred to below, (ii) the Company's obligations with
respect to the Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance of an office or
agency for payment and money for security payments held in trust, (iii) the
rights, powers, trusts, duties and immunities of the Trustee, and the Company's
obligations in connection therewith and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with respect to certain
covenants that are described in the Indenture ("Covenant Defeasance") and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
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In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (vi) the Company must have delivered to the Trustee an
opinion of counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others; and (viii) the Company must deliver to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture,
the Subsidiary Guarantees or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Notes), and any
existing default or compliance with any provision of the Indenture, the
Subsidiary Guarantees or the Notes may be waived
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with the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"-- Repurchase at the Option of Holders"), (iii) reduce the rate of or change
the time for payment of interest on any Note, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration), (v) make any Note payable
in money other than that stated in the Notes, (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of Holders of Notes to receive payments of principal of or premium, if any, or
interest on the Notes, (vii) waive a redemption payment with respect to any Note
(other than a payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders"), (viii) release any
Significant Subsidiary Guarantor from any of its obligations under its
Subsidiary Guarantee or the Indenture, or amend the provisions of the Indenture
relating to the release of Guarantors, or (ix) make any change in the foregoing
amendment and waiver provisions. In addition, any amendment to the provisions of
Article 10 of the Indenture (which relate to subordination) will require the
consent of the Holders of at least 66 2/3% in aggregate principal amount of the
Notes then outstanding if such amendment would adversely affect the rights of
Holders of Notes.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company, the Guarantors and the Trustee may amend or supplement the
Indenture, the Subsidiary Guarantees or the Notes to cure any ambiguity, defect
or inconsistency, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to provide for the assumption of the Company's or a
Guarantor's obligations to Holders of Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under the Indenture of any such Holder, or to comply with requirements of
the Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
BOOK-ENTRY, DELIVERY AND FORM
The Old Notes were initially represented in the form of one registered Note
in global form without coupons (the "Global Old Note"). The Global Old Note
was deposited on the date of the closing of the sale of the Notes (the "Closing
Date") with, or on behalf of, the Depository Trust Company (the "Depository")
and registered in the name of Cede & Co., as nominee of the Depository, or will
remain in the custody of the Trustee pursuant to the FAST Balance Certificate
Agreement between the Depository and the Trustee.
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The Exchange Notes also will be issued in the form of one or more Global Notes
(the "Global Exchange Notes" and, together with the Global Old Note, the
"Global Notes"). The Global Exchange Notes will be deposited on the original
date of issuance of the Exchange Notes with, or on behalf of, the Depository and
registered in the name of Cede & Co., as nominee of the Depository.
Notes that are issued as described below under "-- Certificated
Securities" will be issued in the form of registered definitive certificates
(the "Certificated Securities"). Upon the transfer of Certificated Securities,
such Certificated Securities may, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Notes being transferred.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between Participants
through electronic book-entry changes in accounts of its Participants. The
Depositary's Participants include securities brokers and dealers (including the
Initial Purchasers), banks and trust companies, clearing corporations and
certain other organizations. Access to the Depositary's system is also available
to other entities such as banks, brokers, dealers and trust companies
(collectively, the "Indirect Participants" or the "Depositary's Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by or on behalf of the Depositary only through
the Depositary's Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Initial Purchasers with portions of
the principal amount of the Global Note and (ii) ownership of the Notes
evidenced by the Global Note will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that the laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own. Consequently, the ability to transfer Notes evidenced by the Global
Note will be limited to such extent. For certain other restrictions on the
transferability of the Notes, see "Notice to Investors."
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Note. Beneficial owners of Notes evidenced by the
Global Note will not be considered the owners or Holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Company nor the Trustee will have any responsibility or liability for any aspect
of the records of the Depositary or for maintaining, supervising or reviewing
any records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, and interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names Notes, including the Global
Note, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Notes. The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Depositary's Participants or the Depositary's Indirect Participants.
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CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). All such certificated Notes would be subject to the
legend requirements described herein under "Notice to Investors." In addition,
if (i) the Company notifies the Trustee in writing that the Depositary is no
longer willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
the form of Certificated Securities under the Indenture, then, upon surrender by
the Global Note Holder of its Global Note, Notes in such form will be issued to
each person that the Global Note Holder and the Depositary identify as being the
beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented by
the Global Note (including principal, premium, if any, interest and Liquidated
Damages, if any) be made by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. With respect to Certificated
Securities, the Company will make all payments of principal, premium, if any,
interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each such Holder's registered
address.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and the Initial Purchaser entered into the Registration Rights
Agreement on June 24, 1997. Pursuant to the Registration Rights Agreement, the
Company agreed to file with the Commission the Exchange Offer Registration
Statement on the appropriate form under the Securities Act with respect to the
Exchange Notes. This Prospectus forms a part of such Exchange Offer Registration
Statement. Upon the effectiveness of the Exchange Offer Registration Statement,
the Company will offer to the Holders of Old Notes pursuant to the Exchange
Offer who are able to make certain representations the opportunity to exchange
their Transfer Restricted Securities for Exchange Notes. If (i) the Company is
not required to file an Exchange Offer Registration Statement with respect to
the Series B Notes because the Exchange Offer is not permitted by applicable law
or (ii) if any Holder of Transfer Restricted Securities shall notify the Company
within 20 Business Days following the Consummation of the Exchange Offer that
(A) such Holder has been advised by counsel that such Holder may be prohibited
by law or Commission policy from participating in the Exchange Offer or (B) such
Holder has been advised by counsel that it may not resell the Series B Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Notes acquired directly from
the Company or one of its affiliates, then the Company and the Guarantors shall
file with the Commission a Shelf Registration Statement to cover resales of the
Notes by the Holders thereof who satisfy certain conditions relating to the
provision of information in connection with the Shelf Registration Statement.
The Company will use its best efforts to cause the applicable registration
statement to be declared effective as promptly as possible by the Commission.
For purposes of the foregoing, "Transfer Restricted Securities" means each Old
Note until (i) the date on which such Note has been exchanged by a person other
than a broker-dealer for an Exchange Note in the Exchange Offer, (ii) following
the exchange by a broker-dealer in the Exchange Offer of an Old Note for an
Exchange Note, the date on which such Exchange Note is sold to a purchaser who
receives from such broker-dealer on or prior to the date of such
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sale a copy of the prospectus contained in the Exchange Offer Registration
Statement, (iii) the date on which such Old Note has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Old Note is distributed to
the public pursuant to Rule 144 under the Act.
The Registration Rights Agreement provides that (i) the Company shall file
the Exchange Offer Registration Statement with the Commission on or prior to 45
days after the Closing Date, (ii) the Company will use its best efforts to have
the Exchange Offer Registration Statement declared effective by the Commission
on or prior to 120 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, Exchange Notes in exchange for all
Notes tendered prior thereto in the Exchange Offer and (iv) if obligated to file
the Shelf Registration Statement, the Company will use its best efforts to file
the Shelf Registration Statement with the Commission on or prior to 45 days
after such filing obligation arises and to cause the Shelf Registration to be
declared effective by the Commission on or prior to 120 days after such
obligation arises. If (a) the Company fails to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), or (c) the Company fails to
consummate the Exchange Offer within 30 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement, or (d)
the Shelf Registration Statement or the Exchange Offer Registration Statement is
declared effective but thereafter ceases to be effective or usable in connection
with resales of Transfer Restricted Securities during the periods specified in
the Registration Rights Agreement (each such event referred to in clauses (a)
through (d) above a "Registration Default"), then the Company will pay
Liquidated Damages to each Holder of Old Notes, with respect to such 90-day
period immediately following the occurrence of the first Registration Default in
an amount equal to $0.05 per week per $1,000 principal amount of Old Notes held
by such Holder. The amount of the Liquidated Damages will increase by an
additional $0.05 per week per $1,000 principal amount of Old Notes with respect
to each subsequent 90-day period until all Registration Defaults have been
cured, up to a maximum amount of Liquidated Damages of $0.50 per week per $1,000
principal amount of Old Notes. All accrued Liquidated Damages will be paid by
the Company on each Damages Payment Date to the Global Note Holder by wire
transfer of immediately available funds or by federal funds check and to Holders
of Certificated Securities by wire transfer to the accounts specified by them or
by mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Old Notes will be required to make certain representations to
the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture and
Registration Rights Agreement without charge by writing to Coach USA, Inc., One
Riverway, Suite 600, Houston, Texas 77056-1903, Attention: Lawrence K. King,
Senior Vice President and Chief Financial Officer.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
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"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition
of any assets or rights (including, without limitation, by way of a sale and
leaseback) other than in the ordinary course of business consistent with past
practices (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole will be governed by the provisions of the Indenture described above
under the caption "-- Repurchase at the Option of Holders -- Change of
Control" and/or the provisions described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales" and not by the
provisions of the Asset Sale covenant), and (ii) the issue or sale by the
Company or any of its Subsidiaries of Equity Interests of any of the Company's
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions that have a fair market value
(as determined in good faith by the Board of Directors) in excess of $1.0
million or for net cash proceeds in excess of $1.0 million. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a Guarantor or by a
Guarantor to the Company or to another Guarantor, (ii) an issuance of Equity
Interests by a Guarantor to the Company or to another Guarantor, and (iii) a
Restricted Payment that is permitted by the covenant described above under the
caption "-- Certain Covenants -- Restricted Payments" will not be deemed to be
Asset Sales.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the full faith and credit
of the United States government or any agency or instrumentality thereof having
maturities of not more than one year from the date of acquisition, (iii) demand
or time deposits, certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any lender party to the Existing Credit Facility or with any
domestic commercial bank having capital and surplus in excess of $500.0 million
and a Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations
with a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the
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qualifications specified in clause (iii) above, (v) commercial paper having the
highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within one year after the date of
acquisition, and (vi) investments in money market or other mutual funds at least
95% of whose assets comprise securities described in clauses (ii) through (v)
above.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above) becomes the "beneficial owner" (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except
that a person shall be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of 50% or more of the Voting Stock of the
Company (measured by voting power rather than number of shares), (iv) the first
day on which a majority of the members of the Board of Directors of the Company
are not Continuing Directors or (v) the Company consolidates with, or merges
with or into, any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance).
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation and amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash expenses and charges (excluding any such non-cash expense or
charge to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of a
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of
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its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Subsidiary or
its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, and (v) the Net Income (but not loss)
of any Unrestricted Subsidiary shall be excluded, whether or not distributed to
the Company or one of its Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"CREDIT FACILITIES" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Existing Credit Facility) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time. Indebtedness under Credit Facilities
outstanding on the date on which Senior Notes are first issued and authenticated
under the Indenture shall be deemed to have been incurred on such date in
reliance on the exception provided by clause (i) of the definition of Permitted
Debt.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DESIGNATED SENIOR DEBT" means (i) any Indebtedness outstanding under a
Credit Facility and (ii) any other Senior Debt permitted under the Indenture the
principal amount of which is $20.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; PROVIDED, HOWEVER, that a class of Capital Stock shall
not be Disqualified Stock hereunder solely as the result of any maturity or
redemption that is conditioned upon, and subject to, compliance with the
covenant described above under the caption "-- Certain Covenants -- Restricted
Payments."
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXISTING CREDIT FACILITY" means that certain credit facility, dated as
of August 14, 1996, as amended, by and among the Company, as borrower,
NationsBank of Texas, N.A. as agent and the financial institutions named
therein, providing for up to $181.0 million of revolving credit borrowings,
including any
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related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, extended,
modified, renewed, refunded, replaced or refinanced, in whole or in part, from
time to time whether or not with the same lenders or agents.
"EXISTING INDEBTEDNESS" means up to $40.0 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Existing Credit Facility) in existence on the date of the
Indenture, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of debt issuance costs and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations) and (ii) the consolidated interest expense of
such Person and its Restricted Subsidiaries that was capitalized during such
period, and (iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash
dividend payments on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests (other than Disqualified Stock) of the
Company, times (b) a fraction, the numerator of which is one and the denominator
of which is one minus the then current combined federal, state and local
statutory tax rate of such Person, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation
Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro
forma effect to such incurrence, assumption, Guarantee or redemption of
Indebtedness, or such issuance or redemption of preferred stock, as if the same
had occurred at the beginning of the applicable four-quarter reference period.
In addition, for purposes of making the computation referred to above
Consolidated Cash Flow and Fixed Charges shall be calculated on a pro forma
basis, in the manner specified below, with respect to the following events: (i)
acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
(a) without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income and (b) giving effect to pro forma
adjustments relating to such acquisition that would be permitted under
Regulation S-X to be reflected in the pro forma financial statements included in
registration statements on Form S-1 under the Securities Act, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"FOREIGN SUBSIDIARY" means any non-U.S. domiciled Subsidiary.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by
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such other entity as have been approved by a significant segment of the
accounting profession, which are in effect from time to time.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"GUARANTORS" means all current and future Subsidiaries of the Company
that execute a Subsidiary Guarantee in accordance with the provisions of the
Indenture, and their respective successors and assigns.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or the value of foreign currencies purchased or received by the Company in
the ordinary course of business.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be (i) the
accreted value thereof, in the case of any Indebtedness that does not require
current payments of interest, and (ii) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP
PROVIDED that Investments shall not include Hedging Obligations entered into in
accordance with the limitations set forth in clause (viii) of the second
paragraph of the covenant described under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." If
the Company or any Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant described
above under the caption "-- Certain Covenants -- Restricted Payments."
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries
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<PAGE>
and (ii) any extraordinary or nonrecurring gain (but not loss), together with
any related provision for taxes on such extraordinary or nonrecurring gain (but
not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under the Credit Facilities) secured by a Lien on the
asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any Indebtedness (other than the
Notes being offered hereby) of the Company or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment thereof to
be accelerated or payable prior to its stated maturity; and (iii) as to which
the lenders have been notified in writing that they will not have any recourse
to the stock or assets of the Company or any of its Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest(including interest accruing
after the filing of a petition initiating any proceeding pursuant to any
bankruptcy law, whether or not the claim for such interest is allowed as a claim
in such proceeding), penalties, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documentation governing any
Indebtedness.
"PARI PASSU INDEBTEDNESS" means (a) with respect to the Notes,
Indebtedness which ranks PARI PASSU in right of payment to the Notes and (b)
with respect to any Subsidiary Guarantee, Indebtedness which ranks PARI PASSU in
right of payment to such Subsidiary Guarantee.
"PERMITTED BUSINESS" means the provision of charter, tour, sight seeing,
commuter and transit services as well as the provision of airport ground
transportation, paratransit and taxicab and other transportation services.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in a
Guarantor; (b) any Investment in Cash Equivalents; (c) any Investment by the
Company or any Guarantor in a Person, if as a result of such Investment (i) such
Person becomes a Guarantor or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Guarantor; (d) any Restricted
Investment made as a result of the receipt of non-cash consideration from an
Asset Sale that was made pursuant to and in compliance with the covenant
described above under the caption "-- Repurchase at the Option of
Holders -- Asset Sales;" (e) any acquisition of assets solely in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the Company;
(f) Investments by the Company or any Restricted Subsidiary in any Person which
is, or becomes as a result of such Investment, a Foreign Subsidiary; PROVIDED,
that in no event will the total assets of Foreign Subsidiaries constitute more
than 20% of the total assets of the Company; (g) any Investment in Permitted
Business Assets; (h) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to the Company or any
Subsidiary or in satisfaction of judgments; (i) the acceptance of notes payable
from employees of the Company or its Subsidiaries in payment for the purchase of
Capital Stock by such employees; (j) endorsements of negotiable instruments and
documents in the ordinary course of business; (k) any Investments outstanding on
the date of the Indenture; (l) Investments by the Company or any Restricted
Subsidiary in any wholly owned Unrestricted Subsidiary exclusively engaged in
the business of insuring the Company and Wholly Owned Subsidiaries against risks
arising in their business ("Unrestricted Insurance Subsidiaries"); PROVIDED,
that in no event will the total assets of Unrestricted Insurance Subsidiaries
constitute more than 5% of the total assets of the Company; and (m) other
Investments in any Person having an aggregate fair market value (measured on the
date each
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such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this
clause (e) that are at the time outstanding, not to exceed $10.0 million.
"PERMITTED JUNIOR SECURITIES" means Equity Interests in the Company or
debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes are subordinated to Senior Debt
pursuant to Article 10 of the Indenture.
"PERMITTED LIENS" means (i) Liens on assets of the Company or any of its
Subsidiaries securing Senior Debt that was permitted by the terms of the
Indenture to be incurred and Liens securing Permitted Refinancing Indebtedness
relating to Indebtedness or Senior Debt referred to in this clause (i) (provided
that such Liens extend to or cover only the property or assets securing the
Indebtedness or Senior Debt being refinanced); (ii) Liens in favor of the
Company; (iii) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Subsidiary of the Company,
PROVIDED that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company; (iv) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company, PROVIDED that such Liens were in existence prior to the
contemplation of such acquisition; (v) Liens to secure the performance of
statutory or regulatory obligations, leases, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (v) of the second paragraph of the covenant
entitled "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock" covering only the assets acquired with such Indebtedness;
(vii) Liens existing on the date of the Indenture; (viii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, PROVIDED that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (ix) Liens incurred in the ordinary course of business of
the Company or any Subsidiary of the Company with respect to obligations that do
not exceed $5.0 million at any one time outstanding and that (a) are not
incurred in connection with the borrowing of money or the obtaining of advances
or credit (other than trade credit in the ordinary course of business) and (b)
do not in the aggregate materially detract from the value of the property or
materially impair the use thereof in the operation of business by the Company or
such Subsidiary; (x) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries; (xi) Liens on assets of
Guarantors to secure Senior Guarantor Debt of such Guarantors that was permitted
by the Indenture to be incurred; (xii) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance or other kinds of social security, old age pension or
public liability obligations or to secure the payment or performance of bids,
tenders, statutory or regulatory obligations, surety, stay, or appeal bonds,
performance bonds or other obligations of a like nature incurred in the ordinary
course of business; (xiii) statutory liens of landlords, mechanics, suppliers,
vendors, warehousemen, carriers or other like Liens arising in the ordinary
course of business; (xiv) judgment Liens not giving rise to an Event of Default
so long as any appropriate legal proceeding that may have been duly initiated
for the review of such judgment shall not have been finally terminated or the
period within which such proceeding may be initiated shall not have expired;
(xv) Liens securing Hedging Obligations permitted to be entered into pursuant to
the debt incurrence covenant; (xvi) survey exceptions, encumbrances, easements
or reservations of, or rights of others for, rights of way, zoning or other
restrictions as to the use of real properties, and minor defects in title which,
in the case of any of the foregoing, were not incurred or created to secure the
payment of borrowed money or the deferred purchase price of property or
services, and in the aggregate do not materially adversely affect the value of
such properties or materially impair use for the purposes of which such
properties are held by the Company or its Subsidiaries; (xvii) judgment and
attachment Liens not giving rise to an Event of Default or Liens created by or
existing from any litigation or legal proceeding that are currently being
contested in good faith by appropriate proceedings and for which adequate
reserves have been made; (xviii) Liens in favor of collecting or payor banks
having a right of setoff, revocation, refund or chargeback with respect to money
or instruments of the Company or any Subsidiary on deposit with or in possession
of such bank; (xix) Liens to secure Non-Recourse Indebtedness and (xx) Liens not
otherwise
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<PAGE>
permitted by clauses (i) through (xix) that are incurred in the ordinary course
of business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $5.0 million at any one time outstanding.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund Indebtedness of the Company or any of its Restricted Subsidiaries;
PROVIDED that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness (or if such Indebtedness is issued at a
price less than the principal amount thereof, the aggregate amount of gross
proceeds therefrom) does not exceed the principal amount of (or accreted value,
if applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
reasonable expenses incurred in connection therewith including premiums paid, if
any, to the holders thereof); (ii) such Permitted Refinancing Indebtedness has a
final maturity date at or later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Notes on terms at least as favorable to the Holders of
Notes as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iv) such
Indebtedness is incurred either by the Company or by the Restricted Subsidiary
who is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (v) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded was incurred by a Foreign
Subsidiary, then such Indebtedness is incurred by the same or another Foreign
Subsidiary.
"PUBLIC EQUITY OFFERING" means an underwritten public offering of common
stock (other than Disqualified Stock) of the Company, pursuant to an effective
registration statement filed with the Commission in accordance with the
Securities Act other than an offering pursuant to Form S-8 (or any successor
thereto).
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"SENIOR DEBT" means (i) all Indebtedness of the Company or any of its
Subsidiaries outstanding under Credit Facilities and all Hedging Obligations
with respect thereto, (ii) any other Indebtedness of the Company or any of its
Subsidiaries permitted to be incurred by the Company or any of its Subsidiaries
under the terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes and (iii) all Obligations with
respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (w) any liability for federal, state,
local or other taxes owed or owing by the Company, (x) any Indebtedness of the
Company to any of its Subsidiaries or other Affiliates, (y) any trade payables
or (z) any Indebtedness that is incurred in violation of the Indenture (other
than Indebtedness under a Credit Facility that is incurred on the basis of a
representation by the Company to the applicable lenders that it is permitted to
incur such Indebtedness under the Indenture).
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard
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<PAGE>
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such Person or of
one or more Subsidiaries of such Person (or any combination thereof).
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and (e) has at least one director
on its board of directors that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries; PROVIDED, HOWEVER, that the death or resignation of any
such director or executive officer shall not cause a Subsidiary that would
otherwise be an Unrestricted Subsidiary to be deemed to be a Restricted
Subsidiary unless 10 days have elapsed in which the Company has failed to
appoint or elect a successor or replace such director or executive officer who
satisfies the criteria set forth in this clause (e). Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption "-- Certain Covenants -- Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," the
Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the covenant described
under the caption "-- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
Prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1997, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a Prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commission or concessions received by any
such person may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter", within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Notes), other than commissions or concessions of any
broker-dealers, and will indemnify the holders of the Notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the Exchange Offer will be passed
upon for the Company by Douglas M. Cerny, Senior Vice President and General
Counsel of the Company.
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INDEX TO FINANCIAL STATEMENTS
Page
----
COACH USA, INC. AND SUBSIDIARIES
Report of Independent Public Accountants ...................... F-2
Consolidated Balance Sheets ................................... F-3
Consolidated Statements of Income ............................. F-4
Consolidated Statements of Stockholders' Equity ............... F-5
Consolidated Statements of Cash Flows ......................... F-6
Notes to Consolidated Financial Statements .................... F-7
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Coach USA, Inc.:
We have audited the accompanying consolidated balance sheets of Coach USA,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 1995 and 1996,
and the related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Coach USA, Inc. and subsidiaries as of December 31, 1995 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
March 31, 1997
F-2
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31,
---------------------- MARCH 31,
1995 1996 1997
---------- ---------- -----------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......... $ 3,411 $ 1,470 $ 6,544
Accounts receivable, less allowance
of $996, $2,096, and $2,213...... 8,890 18,659 22,526
Inventories........................ 3,641 8,758 9,701
Notes receivable, current
portion.......................... 3,045 2,811 4,098
Prepaid expenses and other current
assets........................... 4,540 12,628 14,925
---------- ---------- -----------
Total current assets.......... 23,527 44,326 57,794
PROPERTY AND EQUIPMENT, net............. 65,395 210,754 269,925
NOTES RECEIVABLE, less allowance of
$500.................................. 1,978 4,231 5,013
GOODWILL, net........................... 71 30,142 72,447
OTHER ASSETS, net....................... 11,636 10,497 10,945
---------- ---------- -----------
Total assets.................. $ 102,607 $ 299,950 $ 416,124
========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of convertible
subordinated notes............... $ -- $ 4,000 $ --
Current maturities of long-term
obligations...................... 12,065 10,877 6,452
Accounts payable and accrued
liabilities...................... 19,309 36,948 72,131
---------- ---------- -----------
Total current liabilities..... 31,374 51,825 78,583
LONG-TERM OBLIGATIONS, net of current
maturities............................ 43,685 98,106 160,368
CONVERTIBLE SUBORDINATED NOTES, net of
current maturities.................... -- 18,500 36,830
LONG-TERM OBLIGATIONS DUE TO
STOCKHOLDERS, net of current
maturities............................ 16,467 -- --
DEFERRED INCOME TAXES................... 6,702 21,593 28,537
---------- ---------- -----------
Total liabilities............. 98,228 190,024 304,318
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par, 30,000,000
shares authorized, 3,862,369,
17,777,126 and 17,778,107 shares
issued and outstanding,
respectively..................... 39 178 178
Additional paid-in capital......... 5,160 101,325 101,325
Retained earnings (deficit)........ (820) 8,423 10,303
---------- ---------- -----------
Total stockholders' equity.... 4,379 109,926 111,806
---------- ---------- -----------
Total liabilities and
stockholders' equity....... $ 102,607 $ 299,950 $ 416,124
========== ========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------ THREE MONTHS ENDED
PRO FORMA MARCH 31,
COMBINED ----------------------
1994 1995 1996 1996 1996 1997
--------- ---------- ---------- ----------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
REVENUES................................ $ 88,060 $ 103,403 $ 205,838 $ 250,776 $ 28,294 $ 69,311
OPERATING EXPENSES...................... 65,460 75,002 152,298 189,084 21,234 54,386
--------- ---------- ---------- ----------- ---------- ----------
Gross profit....................... 22,600 28,401 53,540 61,692 7,060 14,925
GENERAL AND ADMINISTRATIVE EXPENSES..... 15,223 16,772 24,471 26,554 4,311 8,238
ACQUISITION RELATED COSTS............... -- -- 1,101 -- -- 117
--------- ---------- ---------- ----------- ---------- ----------
Operating income................... 7,377 11,629 27,968 35,138 2,749 6,570
INTEREST EXPENSE........................ 4,904 6,627 9,467 9,934 1,868 3,199
--------- ---------- ---------- ----------- ---------- ----------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS................... 2,473 5,002 18,501 25,204 881 3,371
PROVISION FOR INCOME TAXES.............. 1,130 2,050 7,684 9,958 431 1,402
--------- ---------- ---------- ----------- ---------- ----------
INCOME BEFORE EXTRAORDINARY ITEMS....... 1,343 2,952 10,817 15,246 450 1,969
EXTRAORDINARY ITEMS, net of income
taxes................................. -- -- 2,723 2,723 -- (89)
--------- ---------- ---------- ----------- ---------- ----------
NET INCOME.............................. $ 1,343 $ 2,952 $ 13,540 $ 17,969 $ 450 $ 1,880
========= ========== ========== =========== ========== ==========
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
INCOME BEFORE EXTRAORDINARY
ITEMS............................ $ .35 $ .76 $ .91 $ 1.00 .12 .10
EXTRAORDINARY ITEMS................ -- -- .23 .18 -- --
--------- ---------- ---------- ----------- ---------- ----------
NET INCOME......................... $ .35 $ .76 $ 1.14 $ 1.18 $ .12 $ .10
========= ========== ========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED TOTAL
---------------- PAID-IN EARNINGS STOCKHOLDERS'
SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
------ ------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993............ 3,863 $ 39 $ 4,954 $ (3,346) $ 1,647
S Corporation dividends paid by
certain Pooled Companies......... -- -- -- (690) (690)
Net income......................... -- -- -- 1,343 1,343
Other.............................. -- -- (30) -- (30)
------ ------ ---------- -------- -------------
BALANCE AT DECEMBER 31, 1994............ 3,863 39 4,924 (2,693) 2,270
S Corporation dividends paid by
certain Pooled Companies......... -- -- -- (1,079) (1,079)
Net income......................... -- -- -- 2,952 2,952
Other.............................. -- -- 236 -- 236
------ ------ ---------- -------- -------------
BALANCE AT DECEMBER 31, 1995............ 3,863 39 5,160 (820) 4,379
Issuance of Common Stock:
Proceeds of stock offerings...... 6,224 62 96,502 -- 96,564
Merger with Predecessor.......... 2,166 22 2,055 (2,053) 24
Acquisition of Founding
Companies..................... 5,099 51 6,323 9,155 15,529
Cash Distribution to Founding
Companies' Shareholders.......... -- -- (23,810) -- (23,810)
Reorganization..................... -- -- 4,402 (4,402) --
Conversion from S Corporation to C
Corporation for Founding
Companies........................ -- -- -- (5,426) (5,426)
Conversion of debt to equity....... 425 4 10,198 -- 10,202
S Corporation dividends paid by
certain Pooled Companies......... -- -- -- (1,838) (1,838)
Adjustment to conform fiscal year
ends of Pooled Companies......... -- -- -- 267 267
Net income......................... -- -- -- 13,540 13,540
Capital contributions equal to
the current income taxes of S
Corporations..................... -- -- 341 -- 341
Other.............................. -- -- 154 -- 154
------ ------ ---------- -------- -------------
BALANCE AT DECEMBER 31, 1996............ 17,777 178 101,325 8,423 109,926
Net income (unaudited)............. -- -- -- 1,880 1,880
Other (unaudited).................. 1 -- -- -- --
------ ------ ---------- -------- -------------
BALANCE AT MARCH 31, 1997 (unaudited)... 17,778 $ 178 $ 101,325 $ 10,303 $ 111,806
====== ====== ========== ======== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- --------------------
1994 1995 1996 1996 1997
--------- --------- ---------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $ 1,343 $ 2,952 $ 13,540 $ 450 $ 1,880
Adjustments to reconcile net income to
net cash provided by operating
activities --
Adjustment to conform fiscal year
ends of Pooled Companies....... -- -- 267 -- --
Extraordinary gain................ -- -- (7,007) -- --
Depreciation and amortization..... 5,937 7,702 13,744 2,213 5,288
(Gain) loss on sale of assets..... 216 (620) (350) -- --
Deferred income tax provision..... 1,206 1,743 7,026 521 1,930
Changes in operating assets and
liabilities, net of effect of
Purchased Companies --
Accounts receivable, net..... 115 (1,337) (944) 37 (56)
Inventories.................. (1,094) (2,593) (4,507) (826) (372)
Notes receivable, net........ 175 (1,828) (1,672) (2,618) (2,069)
Prepaid expenses and other
current assets............. (631) (611) (3,856) 15 (1,149)
Accounts payable and accrued
liabilities................ (1,523) 2,111 (6,761) 1,822 20,278
Other........................ 850 (163) (473) 309 93
--------- --------- ---------- --------- ---------
Net cash provided by
operating activities..... 6,594 7,356 9,007 1,923 25,823
--------- --------- ---------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment... (22,926) (14,359) (25,714) (4,058) (31,672)
Proceeds from sales of property and
equipment........................... 1,196 1,961 4,685 -- 2,057
Cash consideration paid for the
Founding Companies, net of cash
acquired............................ -- -- (22,112) -- --
Cash consideration paid for Purchased
Companies, net of cash acquired..... -- -- (12,666) -- (26,128)
Proceeds from sales of investments.... -- -- 1,419 -- --
--------- --------- ---------- --------- ---------
Net cash used in investing
activities............... (21,730) (12,398) (54,388) (4,058) (55,743)
--------- --------- ---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term
obligations......................... (12,032) (18,544) (125,638) (2,276) (34,384)
Proceeds from issuance of long-term
obligations......................... 26,276 26,091 74,198 4,048 69,378
Sales of Common Stock................. -- -- 96,564 -- --
S Corporation Dividends paid by
certain Pooled Companies............ (690) (1,079) (1,838) (487) --
Other................................. 286 181 154 -- --
--------- --------- ---------- --------- ---------
Net cash provided by
financing activities..... 13,840 6,649 43,440 1,285 34,994
--------- --------- ---------- --------- ---------
NET INCREASE (DECREASE) IN CASH......... (1,296) 1,607 (1,941) (850) 5,074
CASH AND CASH EQUIVALENTS, beginning of
year.................................. 3,100 1,804 3,411 3,411 1,470
--------- --------- ---------- --------- ---------
CASH AND CASH EQUIVALENTS, end of
year.................................. $ 1,804 $ 3,411 $ 1,470 $ 2,561 $ 6,544
========= ========= ========== ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash paid for interest.............. $ 3,524 $ 5,329 $ 9,236 1,647 3,520
Cash paid for income taxes.......... 410 125 4,732 82 477
Assets acquired under capital
leases............................ 1,931 2,404 7,891 2,981 2,355
Convertible debt issued for
Purchased Companies............... -- -- 22,500 -- 18,330
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION:
In September 1995, Coach USA, Inc. (Coach USA), was founded to create a
national company providing motorcoach transportation services, including charter
and tour services, and related passenger ground transportation services.
In May 1996, Coach USA acquired, simultaneously with the closing of its
initial public offering (the Offering), six established businesses.
Consideration for these businesses consisted of a combination of cash and common
stock of Coach USA (the Common Stock). These six businesses are referred to
herein as the "Founding Companies." Coach USA acquired nine additional
businesses in 1996. Of these nine additional businesses acquired, six were
accounted for as poolings-of-interests and, together with an additional business
acquired in February 1997 accounted for as a pooling-of-interests, are referred
to herein as the "Pooled Companies." The remaining three businesses acquired
in 1996, and two additional businesses acquired in February 1997 were accounted
for as purchases and are referred to herein as the "Purchased Companies" (see
Note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Coach USA and the Founding Companies from June 1, 1996, the effective date used
to account for the acquisitions of the Founding Companies, the Purchased
Companies since their date of acquisition, and give retroactive effect to the
acquisitions of the Pooled Companies. The Pooled Companies, the Founding
Companies subsequent to May 31, 1996, and the Purchased Companies since date of
acquisition, are collectively referred to herein as the "Company." All
significant intercompany transactions and balances have been eliminated in
consolidation.
The unaudited pro forma combined statement of income for the year ended
December 31, 1996 includes the accounts of Coach USA and the Founding Companies
from January 1, 1996, the Purchased Companies since their date of acquisition,
and gives retroactive effect to the acquisitions of the Pooled Companies.
Certain pro forma adjustments further discussed in Note 3 have been made to the
unaudited pro forma combined statement of income.
Two of the Pooled Companies have previously reported on an October fiscal
year end. As such, the accounts of these companies for their 1994 and 1995
fiscal years have been consolidated with the accounts of the Company as of
December 31, 1994 and 1995, respectively. Unaudited revenues and net income for
these two companies for the two-month period ended December 31, 1995, were
approximately $6,292,000 and $267,000, respectively. Accordingly, an adjustment
is included in the consolidated statement of stockholders' equity for the net
income attributed to this two-month period.
INTERIM FINANCIAL INFORMATION
The interim consolidated financial statements are unaudited, and certain
information and footnote disclosures, normally included in financial statements
prepared in accordance with generally accepted accounting principles, have been
omitted. In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary to fairly present the financial
position, results of operations and cash flows with respect to the interim
consolidated financial statements, have been included. The results of operations
for the interim periods are not necessarily indicative of the results for the
entire fiscal year.
F-7
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less as cash equivalents.
INVENTORIES
Inventories consist of motorcoach and taxicab replacement parts and
taxicabs held for sale. Inventory cost for replacement parts is accounted for on
the first-in, first-out basis and inventory cost for taxicabs held for sale or
on short-term leases are accounted for on the specific identification basis, and
both are reported at the lower of cost or market. Taxicabs held for sale are
depreciated over their estimated useful lives of 4.5 years. Depreciation and
amortization expense in the accompanying consolidated financial statements
includes $1,053,000, $1,457,000 and $1,940,000 of depreciation related to
taxicabs held for sale in 1994, 1995 and 1996.
NOTES RECEIVABLE
Notes receivable result from the sale of taxicabs to independent
contractors. The notes bear interest and are due in weekly installments over
periods ranging up to 42 months.
NOTES RECEIVABLE FROM STOCKHOLDERS
The Company had notes receivable from former stockholders of certain of the
Pooled Companies totaling $439,000 at December 31, 1995. These notes receivable
were unsecured, noninterest-bearing and payable on demand and were repaid in
full in connection with the respective mergers with Coach USA.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Expenditures for maintenance
and repairs, including replacement of engines and certain other significant
costs, are expensed as costs are incurred.
Depreciation on transportation equipment and other assets for financial
reporting purposes is computed on the straight-line basis over the estimated
useful lives of the assets, net of their estimated residual values. Gains or
losses on the sale of equipment are included in operating expenses.
GOODWILL
Goodwill represents the excess of the aggregate price paid by the Company
in acquisitions accounted for as purchases over the fair market value of the net
tangible assets acquired. Goodwill is amortized on a straight-line basis
generally over 40 years.
OTHER ASSETS
Taxicab permits are carried at cost, less accumulated amortization. The
permit costs are amortized using the straight-line method over a period of 40
years. Annual renewal fees are charged to expense as incurred.
The Company applies Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". Management continually evaluates whether events or
circumstances have occurred that indicate that the remaining estimated useful
lives of property and equipment, other identifiable intangible assets and
goodwill may warrant revision or that the remaining balances may not be
recoverable.
F-8
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CONCENTRATIONS OF CREDIT RISK
The Company provides services to a broad range of geographical regions. The
Company's credit risk primarily consists of receivables from a variety of
customers, including casinos and various other tourism-based companies and
governmental units. In addition, the Company's accounts and notes receivable
include amounts due from independent taxicab contractors. Management performs
ongoing credit evaluations of its customers and independent taxicab contractors
and provides allowances as deemed necessary.
The activity in the allowance for doubtful accounts is as follows (in
thousands):
<TABLE>
<CAPTION>
BEGINNING
BALANCE OF
BALANCE AT FOUNDING AND CHARGED TO BALANCE AT
BEGINNING PURCHASED COSTS AND END OF
OF PERIOD COMPANIES EXPENSES WRITE-OFFS PERIOD
---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994............ $1,088 $-- $ 821 $ (1,049) $ 860
Year ended December 31, 1995............ 860 -- 870 (734) 996
Year ended December 31, 1996............ 996 955 931 (786) 2,096
</TABLE>
REVENUE RECOGNITION
The Company recognizes revenue from recreation, excursion, commuter,
transit and taxicab support services and sales to independent taxicab operators
when such services and sales are performed. The Company recognizes financing
income on notes receivable using the effective interest method over the term of
the notes. Costs associated with the revenues are incurred and recorded as
services and sales are performed.
The Company has a 50 percent interest in a joint venture which provides
various paratransit services to a governmental agency in South Florida. Income
from this joint venture was $1.0 million, $0.6 million and $0.7 million in 1994,
1995 and 1996, respectively, and is included in revenues in the accompanying
consolidated financial statements.
INCOME TAXES
The Company will file a consolidated return for federal income tax
purposes. Income taxes are provided under the liability method considering the
tax effects of transactions reported in the financial statements which are
different from the tax return. The deferred income tax assets and liabilities
represent the future tax consequences of those differences, which will either be
taxable or deductible when the underlying assets or liabilities are realized or
settled.
Certain of the Pooled Companies were S Corporations for income tax purposes
and, accordingly, any income tax liabilities for the periods prior to the
acquisition date are the responsibility of the respective stockholders. For
purposes of these consolidated financial statements, federal and state income
taxes have been provided as if these companies had filed C Corporation tax
returns for the pre-acquisition periods. The current income tax expense of these
S Corporations is reflected in the consolidated financial statements in the
provision for income taxes and as an increase to additional paid-in capital.
USE OF ESTIMATES
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
F-9
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
The computation of net income per common and common equivalent share for
the years ended December 31, 1994 and 1995 and for the three months ended March
31, 1996 includes 3,862,369 shares issued in connection with the acquisitions of
the Pooled Companies.
The computation of net income per common and common equivalent share for
the year ended December 31, 1996 is based upon 11,923,064 weighted average
shares outstanding which includes (a) the 3,862,369 shares discussed above, (b)
the weighted average portion of the 2,165,724 shares issued prior to the Initial
Public Offering, (c) the weighted average portion of the 5,099,687 shares issued
to the stockholders of the Founding Companies, (d) the weighted average portion
of the 4,140,000 shares sold in the Initial Public Offering, (e) the weighted
average portion of the 425,039 shares issued in connection with the conversion
of indebtedness to equity at one of the Pooled Companies, (f) the weighted
average portion of the 2,084,307 shares sold in a secondary stock offering, and
(g) 305,605 shares representing the weighted average portion of shares for the
dilution attributable to outstanding options to purchase common stock, using the
treasury stock method.
The computation of net income per share for the three months ended March
31, 1997 is based upon 18,512,629 weighted average shares outstanding which
include (i) 17,778,107 shares issued and outstanding for the entire three month
period, (ii) 981 shares issued to a minority interest of one of the Pooled
Companies, and (iii) 734,522 shares representing the weighted average portion of
shares for the dilution attributable to outstanding options to purchase common
stock, using the treasury stock method.
The computation of unaudited pro forma combined net income per common and
common equivalent share for the year ended December 31, 1996 is based upon
15,254,806 weighted average shares outstanding which includes (a) the 3,862,369
shares discussed above, (b) the 2,165,724 shares issued prior to the Initial
Public Offering, (c) 5,099,687 shares issued to the stockholders of the Founding
Companies, (d) 1,700,714 of the 4,140,000 shares sold in the Initial Public
Offering to pay the cash portion of the consideration for the Founding
Companies; (e) 118,142 of the 4,140,000 shares sold in the Initial Public
Offering to pay excess S Corporation distributions, (f) the weighted average of
the remaining 2,321,144 shares issued in the Initial Public Offering, (g) the
weighted average portion of 425,039 shares issued in connection with the
conversion of indebtedness to equity at one of the Pooled Companies, (h) the
weighted average portion of the 2,084,307 shares sold in the secondary stock
offering, and (i) 227,743 shares representing the weighted average portion of
shares for the dilution attributable to outstanding options to purchase common
stock, using the treasury stock method.
In March 1996, the Company authorized 500,000 shares of $.01 par value
preferred stock, none of which has been issued.
NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share." SFAS No. 128 revises the methodology to be used in
computing earnings per share (EPS) such that the computations required for
primary and fully diluted EPS are to be replaced with "basic" and "diluted"
EPS. Basic EPS is computed by dividing net income by the weighted average number
of shares of common stock outstanding during the year. Diluted EPS is computed
in the same manner as fully diluted EPS, except that, among other changes, the
average share price for the period is used in all cases when applying the
treasury stock method to potentially dilutive outstanding options.
The Company will adopt SFAS No. 128 effective December 15, 1997, and will
restate EPS for all periods presented. The Company anticipates that the amounts
reported for basic EPS for the years ended December 31, 1994, 1995 and 1996 will
be $0.35, $0.76 and $1.17, and that basic EPS for the unaudited pro forma twelve
months ended December 31, 1996 will be $1.20. The Company anticipates that the
amounts
F-10
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
reported for diluted EPS for the years ended December 31, 1994, 1995 and 1996
will be $0.35, $0.76 and $1.14 and that diluted EPS for the unaudited pro forma
twelve months ended December 31, 1996 will be $1.18.
3. BUSINESS COMBINATIONS:
The Founding Companies were merged with Coach USA effective June 1, 1996,
for financial reporting purposes. The unaudited pro forma data presented below
consists of the income statement data as presented in these consolidated
financial statements combined with the Founding Companies, including certain pro
forma adjustments further discussed below, as if the Founding Companies were
combined with the Pooled Companies and Coach USA as of January 1, 1995 (in
thousands):
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1996
------------- -------------
(UNAUDITED)
Revenues............................. $ 216,892 $ 250,776
Income before extraordinary items.... 11,140 15,246
Income per share before extraordinary
items.............................. .83 1.00
POOLINGS
During 1996 and through February 28, 1997, the Company acquired all of the
outstanding stock of the Pooled Companies in exchange for 3,862,369 shares of
Common Stock. Six of these companies provide motorcoach transportation services
and one provides primarily taxicab services. These acquisitions have been
accounted for as poolings-of-interests and the results of operations of these
seven companies are included for all periods presented herein.
The consolidated financial statements for 1994 and 1995 represent the
operations of the Pooled Companies prior to their acquisition by the Company.
The combined revenues, income before extraordinary items, and net income of the
Pooled Companies for the preacquisition period in 1996 were $107.7 million, $4.9
million and $4.8 million, respectively. In addition, the Consolidated Statements
of Cash Flows reflect an acquisition by one of the Pooled Companies during the
pre acquisition period in 1996 which was accounted for as a purchase for a total
cash price of $323,000.
The following table reconciles the consolidated revenues and net income of
the Company after giving retroactive effect to the one pooling-of-interests
transaction completed subsequent to year end with the consolidated revenues and
net income previously reported in the Company's 1996 Form 10-K filing (in
thousands, except per share data).
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1994 1995 1996
------------------ ------------------ -------------------
NET NET NET
REVENUES INCOME REVENUES INCOME REVENUES INCOME
-------- ------ -------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
As previously reported in
10-K................... $ 68,421 $ 649 $ 83,925 $2,411 $185,728 $12,915
Subsequent Pooling....... 19,639 694 19,478 541 20,110 625
-------- ------ -------- ------ -------- -------
After Subsequent
Pooling................ $ 88,060 $1,343 $103,403 $2,952 $205,838 $13,540
======== ====== ======== ====== ======== =======
Net income per share --
After Subsequent
Pooling............. $ .35 $ .76 $ 1.14
====== ====== =======
</TABLE>
F-11
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PURCHASES
On August 29, 1996, the Company acquired three businesses which were
accounted for as purchases. The aggregate consideration paid in these
transactions was $14.5 million in cash and $22.5 million in the form of
subordinated notes convertible into 750,460 shares of Common Stock. The
accompanying consolidated balance sheet as of December 31, 1996 includes
allocations of the respective purchase prices and is subject to final
adjustment. The allocations resulted in goodwill recognized of $30.3 million
representing the excess of purchase price over fair value of the net assets
acquired. In conjunction with the acquisitions, liabilities were assumed as
follows (in thousands):
YEAR ENDED
DECEMBER 31, 1996
-----------------
Fair value of assets acquired, net of
cash acquired......................... $ 63,963
Goodwill................................ 30,341
Cash paid, net of cash acquired......... (12,343)
Issuance of convertible notes........... (22,500)
-----------------
Liabilities assumed..................... $ 59,461
=================
The following table sets forth further adjustments to the unaudited pro
forma income statement data above to present the effect of the acquisitions of
the Purchased Companies on the Company's results of operations for the years
ended December 31, 1995 and 1996. The following unaudited pro forma income
statement data includes the Founding Companies and the Pooled Companies, plus
all Purchased Companies through December 31, 1996 as if the acquisitions were
effective on the first day of the year being reported (in thousands):
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
(UNAUDITED)
Revenues................................ $252,744 $276,796
Income before extraordinary items....... 12,531 16,153
Income per share before extraordinary
items................................. .94 1.06
Pro forma adjustments included in the preceding tables regarding the
Founding Companies and the Purchased Companies primarily relate to (a) owners'
compensation differential, (b) adjustments to depreciation and amortization due
to the purchase price allocations, (c) adjustments of historical interest
expense related to certain subordinated debt and cash payments related to the
Purchased Companies, (d) elimination of interest on debt converted to equity of
one of the Pooled Companies, (e) elimination of merger costs in connection with
the acquisition of the Pooled Companies, and (f) adjustments to the federal and
state income tax provisions based on the combined operations.
The pro forma combined results presented above are not necessarily
indicative of actual results which might have occurred had the operations and
management teams of the Company, the Founding Companies, the Pooled Companies
and the Purchased Companies been combined at the beginning of the periods
presented.
Through March 31, 1997, the Company acquired two additional companies
accounted for as purchases. The aggregate consideration paid in these
transactions was $34.3 million in cash and $18.3 million of subordinated notes
convertible into 484,239 shares of the Company's Common Stock.
F-12
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS:
Prepaid expenses and other current assets consist of the following (in
thousands):
DECEMBER 31
--------------------
1995 1996
--------- ---------
Prepaid insurance....................... $ 1,410 $ 2,757
Deferred income tax asset, current...... 1,283 3,392
Prepaid licenses, registrations and
other taxes........................... 918 3,683
Other................................... 929 2,796
--------- ---------
$ 4,540 $ 12,628
========= =========
5. PROPERTY AND EQUIPMENT:
Property and equipment consist of the following (in thousands):
DECEMBER 31
ESTIMATED ----------------------
USEFUL LIVES 1995 1996
------------ ---------- ----------
(YEARS)
Transportation equipment............. 3-15 $ 79,681 $ 241,371
Building and leasehold
improvements....................... 5-31.5 6,624 11,527
Computer equipment................... 5-7 7,960 9,022
Other................................ 3-10 2,519 12,496
---------- ----------
96,784 274,416
Less -- Accumulated depreciation..... (31,389) (63,662)
---------- ----------
$ 65,395 $ 210,754
========== ==========
Included in transportation equipment at December 31, 1995 and 1996, are
approximately $10.9 million and $21.0 million, respectively, of assets held
under capital leases.
6. OTHER ASSETS:
Other assets consist of the following (in thousands):
DECEMBER 31
--------------------
1995 1996
--------- ---------
Taxicab permits, net of accumulated
amortization of $2,194 and $2,298..... $ 4,263 $ 4,159
Noncurrent deferred income tax asset.... 6,089 3,782
Other, net of accumulated amortization
of $672 and $838...................... 1,284 2,556
--------- ---------
$ 11,636 $ 10,497
========= =========
Amortization expense related to other assets for the years ended December
31, 1995 and 1996 was $201,000 and $270,000, respectively.
F-13
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
Accounts payable and accrued liabilities consist of the following (in
thousands):
DECEMBER 31
--------------------
1995 1996
--------- ---------
Trade accounts payable.................. $ 3,900 $ 8,721
Accrued insurance claims................ 6,608 13,847
Accrued compensation.................... 2,929 4,422
Due to affiliates....................... 642 --
Property and other taxes................ 941 1,237
Accrued interest payable................ 889 849
Deferred revenue........................ 883 1,448
Other................................... 2,517 6,424
--------- ---------
$ 19,309 $ 36,948
========= =========
8. LONG-TERM OBLIGATIONS:
Long-term obligations consist of the following:
DECEMBER 31
----------------------
1995 1996
---------- ----------
(IN THOUSANDS)
Revolving credit facility with a bank
syndicate, interest at LIBOR plus
1.50% (7.03% at December 31, 1996),
secured by substantially all of the
assets of the Company................. $ -- $ 60,110
Notes payable to finance companies,
interest rates ranging from 7.70% to
15.00%, due in monthly installments of
$567,098, maturing at various dates
through 2011; secured by certain
transportation equipment and real
property.............................. 38,971 20,728
Obligations under capital leases of
certain transportation equipment,
implicit interest rates ranging from
5.00% to 11.00%, due in monthly
installments of $344,508, maturing at
various dates through 2003............ 6,643 18,037
Various notes payable to stockholders,
including $600 of accrued interest
payable in 1996....................... 18,387 259
Other................................... 8,816 9,849
---------- ----------
Total Long-term Obligations............. 72,817 108,983
Less -- Current maturities.............. (12,065) (10,877)
Less -- Accrued Interest................ (600) --
---------- ----------
$ 60,152 $ 98,106
========== ==========
F-14
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1996, future principal payments of long-term debt and
minimum lease payments under capital lease obligations are as follows (in
thousands):
LONG-TERM CAPITAL LEASE
DEBT OBLIGATIONS
--------- -------------
Year ending December 31 --
1997............................... $ 8,300 $ 4,201
1998............................... 4,998 3,341
1999............................... 65,189 3,221
2000............................... 4,816 3,976
2001............................... 3,247 2,858
Thereafter......................... 4,397 6,404
--------- -------------
$ 90,947 24,001
=========
Less -- Amounts representing
interest......................... (5,964)
-------------
$ 18,037
=============
REVOLVING CREDIT AGREEMENT
In May 1996, the Company entered into a $30 million revolving credit
agreement with one bank. This credit facility was primarily utilized to
refinance certain indebtedness of the Founding Companies not repaid with
proceeds of the Offering.
In August 1996 and February 1997, the Company amended and restated the
credit agreement. The credit agreement, as amended, provides for a revolving
credit facility of $181 million through a syndicate of eight banks and allows
for an additional $40 million of debt outside the credit facility (in addition
to the convertible subordinated notes). The proceeds of the facility are to be
used for working capital, capital expenditures and acquisitions, including
refinancing of indebtedness related to acquisitions. The facility is secured by
substantially all of the assets of the Company and matures in August 1999, at
which time all amounts then outstanding become due. Interest on outstanding
borrowings is charged, at the Company's option, at the bank's prime rate plus up
to 1.0% or the London Interbank Offered Rate ("LIBOR") plus 1.0% to 2.25%,
both as determined by the ratio of the Company's funded debt to cash flow, as
defined. A commitment fee ranging from 0.25% to 0.50% is payable on the unused
portion of the facility. Under the terms of the credit agreement, the Company
must maintain certain minimum financial ratios. The credit agreement prohibits
the payment of cash dividends. As of December 31, 1996, the Company had a total
of $109.0 million outstanding under the revolving and other outside credit
facilities and had utilized $5.0 million of the facility for letters of credit
securing certain insurance obligations and performance bonds, resulting in a
borrowing availability of $16.0 million under the revolving and other outside
credit facilities.
In September 1996, the Company entered into an interest rate cap agreement
with a bank. The agreement has a term of one year and a notional principal
amount of $50 million. The agreement provides that if the 90-day LIBOR rate
exceeds 6.5% for certain measurement periods, the bank will pay to the Company
the difference between such rate and 6.5%. The cost of the agreement is being
amortized over its term.
CONVERTIBLE SUBORDINATED NOTES
In August 1996, the Company issued $22.5 million of convertible
subordinated notes to former owners of the Purchased Companies as partial
consideration of the acquisition purchase price. The convertible subordinated
notes bear interest, payable quarterly, at a weighted average interest rate of
5.0% and are convertible by the holder into shares of the Company's Common Stock
at a weighted average price of $29.98 per share. The convertible subordinated
notes are redeemable for cash at the option of the Company
F-15
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
at any time after one year of issuance. The terms of the convertible
subordinated notes require $4.0 million of principal payments in 1997 and $18.5
million in 1999.
Management estimates that the fair value of its debt obligations is
$112,619,000, compared to the historical value of $114,659,000 at December 31,
1996. The estimated fair value was determined by applying an estimated discount
rate to the scheduled cash payments under the obligations.
9. INCOME TAXES:
The Company has implemented SFAS No. 109, "Accounting for Income Taxes,"
which provides for a liability approach to accounting for income taxes. The
provision for income taxes consists of the following (in thousands):
YEAR ENDED DECEMBER 31
-------------------------------
1994 1995 1996
--------- --------- ---------
Current --
Federal............................ $ (129) $ 335 $ 612
State.............................. 53 (28) 171
--------- --------- ---------
(76) 307 783
--------- --------- ---------
Deferred --
Federal............................ 1,115 1,464 5,663
State.............................. 91 279 1,238
--------- --------- ---------
1,206 1,743 6,901
--------- --------- ---------
Provision for income taxes before
extraordinary items................... 1,130 2,050 7,684
--------- --------- ---------
Extraordinary Items --
Current............................ -- -- 1,690
Deferred........................... -- -- 125
--------- --------- ---------
-- -- 1,815
--------- --------- ---------
$ 1,130 $ 2,050 $ 9,499
========= ========= =========
Deferred income taxes result from the effect of transactions which are
recognized in different periods for financial and tax reporting purposes and
relate primarily to depreciation, accrued insurance claims payable and net
operating loss carryforwards. Deferred income taxes are recognized for the tax
consequences of temporary differences by applying enacted statutory tax rates to
differences between the financial reporting and the tax bases of existing assets
and liabilities.
F-16
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of deferred income tax liabilities and assets are as follows
(in thousands):
DECEMBER 31
----------------------
1995 1996
---------- ----------
Deferred income tax liabilities --
Property and equipment............. $ 9,529 $ 30,648
Other.............................. 558 679
---------- ----------
Total deferred income tax
liabilities................ 10,087 31,327
---------- ----------
Deferred income tax assets --
Accounts receivable/allowance for
doubtful accounts................ (148) (854)
Accrued liabilities/expenses....... (5,190) (8,574)
Net operating losses............... (3,357) (2,520)
Other assets....................... (2,074) (1,965)
Tax credits........................ (268) (2,775)
Other.............................. (227) (824)
---------- ----------
Total deferred income tax
assets..................... (11,264) (17,512)
Less -- Valuation allowance............. 5 904
---------- ----------
Net deferred income tax
(assets) liabilities....... $ (1,172) $ 14,719
========== ==========
The differences in income taxes provided and the amounts determined by
applying the federal statutory tax rate to income before income taxes result
from the following (in thousands):
YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------
Tax at federal statutory rate........ $ 866 $ 1,751 $ 8,064
Add (deduct) --
State income taxes, net of
federal benefit.......... 119 162 983
Nondeductible expenses..... 124 155 383
Tax-exempt income.......... (9) (3) --
Other...................... 30 (15) 69
--------- --------- ---------
$ 1,130 $ 2,050 $ 9,499
========= ========= =========
For purposes of the consolidated federal tax return, the Company has net
operating loss carryforwards available to offset taxable income of the Company
in the future. The net operating loss carryforwards will expire at various dates
from 1997 to 2010. The Company also has tax credit carryforwards which have been
partially offset by a valuation allowance. Certain tax credit carryforwards will
expire at various periods from 1996 through 2002. In connection with the
acquisition of the Pooled Companies, ownership changes occurred resulting in
various limitations on certain tax attributes of the Pooled Companies. However,
the Company expects full utilization of these tax attributes prior to their
expiration.
F-17
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. COMMITMENTS AND CONTINGENCIES:
PURCHASE COMMITMENTS
As of December 31, 1996, the Company has entered into commitments to
purchase 108 motorcoaches for approximately $32,636,000. The Company intends to
sell or trade-in a number of older motorcoaches and finance the balance of the
new motorcoaches under the revolving and other outside credit facilities. In
addition, at December 31, 1996, the Company has entered into a commitment to
purchase certain property for approximately $1,050,000.
LEASES
The Company leases certain facilities and equipment under cancelable and
noncancelable operating leases. Rental expense for the years ended December 31,
1994, 1995 and 1996 was $1,808,000, $1,952,000 and $3,594,000, respectively.
Concurrent with the acquisitions of certain Founding and Purchased Companies,
the Company entered into various agreements with previous owners to lease land
and buildings used in the Company's operations. The terms of these leases range
from May 1996 through October 2030 and provide for certain escalations in the
rent expense each year. Included in the 1996 rent expenses above is
approximately $467,000 of rent paid to these related parties. The following
represents future minimum rental payments under noncancelable operating leases
(in thousands):
Year ending December 31 --
1997............................ $ 3,224
1998............................ 2,424
1999............................ 2,182
2000............................ 2,019
2001............................ 1,557
Thereafter...................... 16,260
---------
$ 27,666
=========
CLAIMS AND LAWSUITS
The Company is subject to certain claims and lawsuits arising in the normal
course of business, most of which involve claims for personal injury and
property damage incurred in connection with its operations. The Company
maintains various insurance coverages in order to minimize financial risk
associated with the claims. The Company has provided accruals for certain of
these actions in the accompanying supplemental consolidated financial
statements. In the opinion of management, uninsured losses, if any, resulting
from the ultimate resolution of these matters will not have a material effect on
the Company's financial position or results of operations.
REGULATORY MATTERS
The Surface Transportation Board ("STB") must approve or exempt any
consolidation or merger of two or more regulated interstate motorcoach operators
or the acquisition of one such operator by another. On November 7, 1996, the STB
granted the Company's petition for exemption in connection with the Pooled
Companies acquired in August 1996 and the Purchased Companies. However, future
acquisitions of other motorcoach operators must be approved or exempted from the
need for regulatory approval by the Surface Transportation Board. There can be
no assurance that the Company will be able to obtain such approval or exemption
with respect to future acquisitions, including the acquisitions of businesses in
December 1996 and acquisitions subsequent to year-end.
F-18
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
ESTIMATED INSURANCE CLAIMS PAYABLE
The primary risks in the Company's operations are bodily injury and
property damage to third parties and workers' compensation. The Company has
commercial liability insurance policies that provide coverage by the insurance
company, subject to deductibles ranging from $5,000 to $250,000. The Company is
consolidating its insurance program under a program which provides for
deductibles ranging from $100,000 to $250,000. As such, any claim within the
deductible per incident would be the financial obligation of the Company.
The accrued insurance claims payable represents management's estimate of
the Company's potential claims costs in satisfying the deductible provisions of
the insurance policies for claims occurring through December 31, 1996. The
accrual is based on known facts and historical trends. Management believes such
accrual to be adequate.
EMPLOYEE BENEFIT PLANS
The Company maintains certain 401(k) plans which allow eligible employees
to defer a portion of their income through contributions to the plans. The
Company contributed $69,000, $85,000 and $246,000 to its plans during the year
ended December 31, 1994, 1995 and 1996, respectively.
COLLECTIVE BARGAINING AGREEMENTS
The Company is a party to various collective bargaining agreements with
certain of its employees. The agreements require the Company to pay specified
wages and provide certain benefits to its union employees. These agreements will
expire at various times through 2000.
COMMITMENTS
The Company has entered into agreements with Exel Motorcoach Partnership
("Exel") whereby Exel will provide introductions to other motorcoach
businesses and provide other consulting services for a term of three years. The
consideration to be paid to Exel will be approximately $100,000 per year. In
addition, Exel will be paid a commission on any acquisition completed by the
Company with motorcoach businesses introduced to it by Exel, based on a formula
ranging from 5% of the first $1,000,000 of consideration paid for the acquired
business, and decreasing to a level of 1% of the consideration in excess of
$4,000,000 paid for such business. A director of the Company is a principal of
Exel. In connection with several acquisitions, the Company paid Exel commissions
of $503,600 in 1996, based on the formula outlined above.
RISK FACTORS
An investment in shares of Common Stock or debt obligations of the Company
involve a high degree of risk, including, among others, those risks related to
the effects of leverage of the Company, the Company's limited combined operating
history, risks related to acquisition financing and implementation of the
Company's acquisition strategy, seasonality of the motor coach business, fuel
price volatility, potential exposure to environmental liabilities, and reliance
on key personnel.
F-19
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. EMPLOYEE STOCK OPTION PLAN:
The Company's 1996 Long-Term Incentive Plan provides for the granting of
options to key employees to purchase an aggregate of not more than the greater
of 1,500,000 shares or 15% of the total number of shares of the Company's Common
Stock outstanding at the time of grant at fair market value on the date of
grant. One-fifth of granted options generally become exercisable after one year,
and continue to become exercisable in one-fifth increments each year thereafter.
The options expire after ten years from the date of grant if unexercised.
Outstanding options may be canceled and reissued under terms specified in the
plan.
The following table summarizes activity under the Company's stock option
plans:
1996
-----------
Options outstanding, beginning of
year.................................. --
Granted (exercise price per share)
1996 ($14.00 to $27.25).......... 1,807,017
Forfeited (exercise price per
share)
1996 ($14.00 to $23.75).......... (15,500)
-----------
Options outstanding, end of year........ 1,791,517
===========
The Company accounts for its stock-based compensation under Accounting
Principles Board Statement No. 25 "Accounting for Stock Issued to Employees."
Under this accounting method, no compensation expense is recognized in the
supplemental consolidated statements of income if no intrinsic value of the
option exists at the date of grant. In October 1995, the Financial Accounting
Standards Board issued SFAS No. 123, "Accounting for Stock Based
Compensation." SFAS No. 123 encourages companies to account for stock based
compensation awards based on the fair value of the awards at the date they are
granted. The resulting compensation cost would be shown as an expense in the
statement of income. Adoption of the standard is required for fiscal years
beginning after December 15, 1995. Companies can choose not to apply the new
accounting method and continue to apply current accounting requirements;
however, disclosure is required as to what net income and earnings per share
would have been had the new accounting method been followed. While the Company
did not adopt SFAS No. 123 for accounting purposes, it has implemented the
disclosure requirements below which include annual pro forma disclosures of its
effects on options granted since the initial grant in May 1996. Had compensation
cost for these plans been determined consistent with SFAS No. 123, the Company's
net income and earnings per share would have been reduced to the following pro
forma amounts (in thousands except per share data):
1996
---------
Net Earnings As reported............................. $ 13,540
Pro forma............................... $ 12,023
Earnings Per Share As reported............................. $ 1.14
Pro forma............................... $ 1.01
The effects of applying SFAS No. 123 in the pro forma disclosure may not be
indicative of future amounts as additional awards in future years are
anticipated. The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option-pricing model with the following
assumptions:
Expected dividend yield................. 0.00%
Expected stock price volatility......... 34.59% - 34.78%
Risk free interest rate................. 6.43% - 6.96%
Expected life of options................ 10 years
F-20
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Options outstanding at December 31, 1996, had exercise prices ranging from
$14.00 to $27.25, a weighted average remaining contractual life of 9.5 years, a
weighted average fair value of $14.29 per option and a weighted average exercise
price of $17.71 per option.
12. EXTRAORDINARY ITEMS:
In connection with the merger of a Pooled Company with Coach USA in August
1996, obligations due to stockholders of $17.2 million were retired in exchange
for shares of Coach USA Common Stock. The transactions resulted in an
extraordinary gain on early extinguishment of debt of approximately $4.2
million, net of taxes, representing the excess of the recorded value of the
obligations exchanged over the market value of the Coach USA Common Stock. This
gain was partially offset by extraordinary losses of approximately $1.5 million,
net of taxes, resulting from early extinguishment of debt at certain other
companies.
13. EVENTS SUBSEQUENT TO DATE OF AUDITORS' REPORT (UNAUDITED):
Subsequent to March 31, 1997, the Company acquired eight additional
companies. The aggregate consideration for these transactions was $8.5 million
in cash, 1,380,247 shares of the Company's Common Stock, and $3.8 million of
subordinated notes convertible into 102,128 shares of the Company's Common
Stock. The Company has entered into an agreement to acquire an additional
business, which is subject to regulatory approval, for consideration amounting
to 300,000 shares of the Company's common stock.
The Company completed the sale of $150 million 9 3/8% Senior Subordinated
Notes due 2007 during the second quarter of 1997.
The Company has recently announced that it anticipates the $181 million
Credit Facility will be amended to provide for borrowings of up to $300 million
and additional borrowings outside such facility of up to $80 million.
The Company and Exel have subsequently agreed to the termination of the
agreement discussed in Note 10, whereby Exel shall receive, upon completion of
the next acquisition of a motorcoach business identified by Exel with aggregate
consideration paid in excess of $5.0 million, $275,000 in cash and the grant of
a warrant to purchase 100,000 shares of Company Common Stock at an exercise
price of $26 per share. The warrant will be exercisable beginning six months
from the date of the agreement to terminate and expire two years from the date
of the agreement to terminate.
F-21
<PAGE>
================================================================================
ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED
DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE
AGENT AS FOLLOWS:
BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York
Reorganization Section
101 Barclay Street, 7E
New York, New York 10286
Attention: George Johnson
BY HAND OR OVERNIGHT DELIVERY:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, New York 10286
Attention: Reorganization Department,
George Johnson
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions only)
(212) 571-3080
Attention: George Johnson
Confirm by Telephone
(212) 815-4997
(Originals of all documents submitted by facsimile should be sent promptly by
hand, overnight delivery, or registered or certified mail.)
------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL
NOR BOTH TOGETHER CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THE PROSPECTUS RELATES OR
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS OR THE LETTER OF TRANSMITTAL OR BOTH TOGETHER NOR
ANY EXCHANGE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREIN OR THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
================================================================================
================================================================================
$150,000,000
EXCHANGE OFFER
[LOGO] -- COACH USA
9 3/8% SENIOR SUBORDINATED
NOTES DUE 2007, SERIES B
TABLE OF CONTENTS
Page
----
Prospectus Summary ................................................ 1
Risk Factors ...................................................... 12
The Exchange Offer ................................................ 20
Use of Proceeds ................................................... 28
Capitalization .................................................... 29
Selected Consolidated Pro Forma Financial Data .................... 30
Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................. 32
Business .......................................................... 42
Management ........................................................ 54
Certain Transactions .............................................. 59
Principal Stockholders ............................................ 62
Description of Certain Indebtedness ............................... 63
Description of the Notes .......................................... 65
Plan of Distribution .............................................. 94
Legal Matters ..................................................... 94
Index to Financial Statements ..................................... F-1
, 1997
================================================================================
<PAGE>
PART II
All capitalized terms used and not defined in Part II of this Registration
Statement shall have the meanings assigned to them in the Prospectus which forms
a part of this Registration Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By-laws provide that the Company shall, to the fullest extent
permitted by Section 145 of the General Corporation Law of the State of
Delaware, as amended from time to time, indemnify all persons whom it may
indemnify pursuant thereto.
Section 145 of the General Corporation Law of the State of Delaware permits
a corporation, under specified circumstances, to indemnify its directors,
officers, employees or agents against expenses (including attorney's fees),
judgments, fines and amounts paid in settlements actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties by reason of the fact that they were or are directors, officers,
employees or agents of the corporation, if such directors, officers, employees
or agents acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers, employees or agents are
fairly and reasonably entitled to indemnity for such expenses despite such
adjudication of liability.
Article Seven of the Company's Certificate of Incorporation provides that
the Company's directors will not be personally liable to the Company or its
stockholders for monetary damages resulting from breaches of their fiduciary
duty as directors except (a) for any breach of the duty of loyalty to the
Company or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the General Corporation Law of the State of Delaware, which makes
directors liable for unlawful dividends or unlawful stock repurchases or
redemptions, or (d) for transactions from which directors derive improper
personal benefit.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTIONS
- -------------- ----------------------------------------------------------------
3.1 -- Second Amended and Restated Certificate of Incorporation
4.1 -- Indenture, dated as of June 24, 1997, between Coach USA, Inc.,
the Guarantors named therein and the Bank of New York, as
Trustee, with respect to the 9 3/8% Senior Subordinated Notes
Due 2007 (including form of 9 3/8% Senior Subordinated Note Due
2007).
4.2 -- Registration Rights Agreement, dated as of June 24, 1997, among
Coach USA, Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Merrill Lynch & Co., Alex. Brown & Sons
Incorporated and Montgomery Securities.
5.1 -- Opinion of Douglas M. Cerny
10.1 -- Amendment Dated June 24, 1997 to Agreement Between Coach USA,
Inc. and Exel Motorcoach Partners LLC
12.1 -- Computation of Earnings to Fixed Charges
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Burnside & Rishebarger PLLC
23.3 -- Consent of Douglas M. Cerny (contained in Exhibit 5.1)
25.1 -- Statement of Eligibility and Qualification of Form T-1 of The
Bank of New York.
27 -- Financial Data Schedule
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
II-1
<PAGE>
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes that:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement:
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS,
ON THE 8TH DAY OF AUGUST, 1997.
COACH USA, INC.
By: /s/ RICHARD H. KRISTINIK
RICHARD H. KRISTINIK
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard H. Kristinik, Lawrence K. King and
Douglas M. Cerny and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities, to sign, execute and file this
registration statement under the Securities Act and any and all amendments
(including, without limitation, post-effective amendments and any amendment or
amendments or additional registration statement filed pursuant to Rule 462 under
the Securities Act increasing the amount of securities for which registration is
being sought) to this registration statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, to sign any and all applications,
registration statements, notices or other documents necessary or advisable to
comply with the applicable state security laws, and to file the same, together
with other documents in connection therewith, with the appropriate state
securities authorities, granting unto said attorney-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- --------------------------------------------------------------------------------
/s/RICHARD H. KRISTINIK Chairman of the Board and Chief August 8, 1997
RICHARD H. KRISTINIK Executive Officer (Principal
Executive Officer)
/s/LAWRENCE K. KING Senior Vice President, Chief August 8, 1997
LAWRENCE K. KING Financial Officer and Director
(Principal Financial and Accounting
Officer)
/s/STEVEN S. HARTER Director August 8, 1997
STEVEN S. HARTER
II-3
<PAGE>
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- --------------------------------------------------------------------------------
/s/JOHN MERCADANTE, JR. President, Chief Operating Officer August 8, 1997
JOHN MERCADANTE, JR. and Director
/s/FRANK P. GALLAGHER Senior Vice President -- Corporate August 8, 1997
FRANK P. GALLAGHER Development and Director
/s/GERALD MERCADANTE Senior Vice President -- Northeast August 8, 1997
GERALD MERCADANTE Region Operations and Director
/s/CHARLES D. BUSSKOHL Director August 8, 1997
CHARLES D. BUSSKOHL
Director
WILLIAM J. LYNCH
/s/PAUL M. VERROCHI Director August 8, 1997
PAUL M. VERROCHI
Director
THOMAS A. WERBE
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANTS
SET FORTH BELOW HAVE DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON,
STATE OF TEXAS ON THE 8TH DAY OF AUGUST, 1997.
EACH OF THE GUARANTORS
NAMED ON SCHEDULE A
HERETO (the "GUARANTORS")
By /s/ DOUGLAS M. CERNY
DOUGLAS M. CERNY
VICE PRESIDENT OF EACH
OF THE GUARANTORS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard H. Kristinik, Lawrence K. King and
Douglas M. Cerny and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacities, to sign, execute and file this
registration statement under the Securities Act and any and all amendments
(including, without limitation, post-effective amendments and any amendment or
amendments or additional registration statement filed pursuant to Rule 462 under
the Securities Act increasing the amount of securities for which registration is
being sought) to this registration statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, to sign any and all applications,
registration statements, notices or other documents necessary or advisable to
comply with the applicable state security laws, and to file the same, together
with other documents in connection therewith, with the appropriate state
securities authorities, granting unto said attorney-in-fact and agents full
power and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
- --------------------------------------------------------------------------------
/s/RICHARD M. KRISTINIK Principal Executive Officer and August 8, 1997
RICHARD M. KRISTINIK Director of each of the Guarantors
/s/LAWRENCE K. KING Principal Financial and Accounting August 8, 1997
LAWRENCE K. KING Officer of each of the Guarantors
/s/JOHN MERCADANTE, JR. Director of each of the Guarantors August 8, 1997
JOHN MERCADANTE, JR.
/s/DOUGLAS M. CERNY Director of each of the Guarantors August 8, 1997
DOUGLAS M. CERNY
II-5
<PAGE>
SCHEDULE A
Airocar, Inc.
Airport Rent-A-Car, Inc.
American Bus Lines, Inc.
Antelope Valley Bus, Inc.
Arrow Stage Lines, Inc.
Barclay Airport Service, Inc.
Bayou City Coaches, Inc.
California Charters, Inc.
Cape Transit Corp.
Central Jersey Transit, Inc.
Coach USA Administration, Inc.
Community Bus Lines, Inc.
Community Coach, Inc.
Community Tours, Inc.
Community Transit Lines, Inc.
Community Transportation, Inc.
Five Star Tours, Ltd.
Grosvenor Bus Lines, Inc.
Gulf Coast Transportation Company
H.A.M.L. Corporation
International Express Corporation
K-T Contract Services, Inc.
Kerrville Bus Company, Inc.
L.E.R. Transportation Company
LND, Inc.
Leisure Time Tours
Metro Transportation Services, Inc.
Midtown Bus Terminal of New York, Inc.
Mister Sparkle, Inc.
New Delaware Coach, Inc.
Orlando Transportation, Ltd.
PCSTC, Inc.
Powder River Transportation Services, Inc.
Progressive Transportation Services, Inc.
Red and Tan Enterprises
Suburban Management Corp.
Suburban Trails, Inc.
Suburban Transit Corp.
Texas Bus Lines, Inc.
Transportation Contractors, Inc.
Worthen Van Service, Inc.
Yellow Cab Service Corporation
Aiglon Car Rentals, Inc.
American Coach Lines, Inc.
American Limousine Service, Inc.
American Sightseeing, Inc.
American Sightseeing Tours, Inc.
Antelope Nevada
A-1
<PAGE>
SCHEDULE A
Arrow Leasing, Inc.
ASTI, Inc.
Cab Services, Inc.
Colorado Springs Airport Transportation Service, Inc.
Comprehensive Communication Services Inc.
Corporate Car U.S.A., Inc.
Desert Stage Lines
Eagle Executive Transportation Services, Inc.
Falcon Charter Service
Fiesta Cab Company
Fiesta Cab Company of San Antonio
Garden State Leasing Co., Inc.
Golden Vacations, Inc.
Greater Austin Transportation Company
Great Boulder Transportation Company
Greater Colorado Springs Transportation Company
Greater Denver Transportation Company
Greater Houston Transportation Company
Grosvenor Limousine Service, Inc.
HealthTrans, Inc.
Houston Cab Company
Metro Diversified Insurance Group, Inc.
Metro Jitney, Incorporated
Metro Limo, Inc.
Metro Medical Transportation Services, Inc.
Nevada Corporation, Inc.
R&T Leasing, Inc.
Red & Tan Transportation Systems, Inc.
Red Top Sedan Service, Inc.
Red Top Transportation, Inc.
Rockland Coaches, Inc.
Rockland Transit Corporation
S.E.M. Incorporated
Shuttle Services MIA, Inc.
Texas Shuttle, Inc.
The Hudson Bus Transportation Co., Inc.
Total Vehicle Services, Inc.
Yellow Cab Company of Houston, Inc.
Zone Taxicab of Colorado Springs, Inc.
Aircraft Taxi, Inc.
Art-Mar Corporation
Eights Taxi, Inc.
Fiesta Transportation Company
Metro Cab, Inc.
Metro Mini-Bus, Inc.
Metro Taxi, Inc.
Metro Taxicab Co., Inc.
A-2
<PAGE>
SCHEDULE A
Red & Tan Charter, Inc.
Red & Tan of Boca, Inc.
Red & Tan Tours, Inc.
Red & Tan Tours of Florida, Inc.
Red & Tan Unlimited, Inc.
AAA Auto Leasing, Inc.
A-3
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTIONS
- -------------- ----------------------------------------------------------------
3.1 -- Second Amended and Restated Certificate of Incorporation
4.1 -- Indenture, dated as of June 24, 1997, between Coach USA, Inc.,
the Guarantors named therein and the Bank of New York, as
Trustee, with respect to the 9 3/8% Senior Subordinated Notes
Due 2007 (including form of 9 3/8% Senior Subordinated Note Due
2007).
4.2 -- Registration Rights Agreement, dated as of June 24, 1997, among
Coach USA, Inc., Donaldson, Lufkin & Jenrette Securities
Corporation, Merrill Lynch & Co., Alex. Brown & Sons
Incorporated and Montgomery Securities.
5.1 -- Opinion of Douglas M. Cerny
10.1 -- Amendment Dated June 24, 1997 to Agreement Between Coach USA,
Inc. and Exel Motorcoach Partners LLC
12.1 -- Computation of Earnings to Fixed Charges
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Burnside & Rishebarger PLLC
23.3 -- Consent of Douglas M. Cerny (contained in Exhibit 5.1)
25.1 -- Statement of Eligibility and Qualification of Form T-1 of The
Bank of New York.
27 -- Financial Data Schedule
99.1 -- Form of Letter of Transmittal
99.2 -- Form of Notice of Guaranteed Delivery
EXHIBIT 3.1
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
COACH USA, INC.
The undersigned, Douglas Cerny, Senior Vice President of Coach USA,
Inc., a corporation organized and existing under the laws of the State of
Delaware (the "Corporation"), do hereby certify as follows:
FIRST: The name of the corporation is
Coach USA, Inc.
SECOND: The Certificate of Incorporation of the Corporation was
filed in the Office of the Secretary of State of the State of Delaware on
September 29, 1995 under the name Victor USA Acquisition Corp.
THIRD: This Second Amended and Restated Certificate of Incorporation
was duly adopted in accordance with the provisions of Sections 242 and 245 of
the Delaware General Corporation Law, the Board of Directors having duly adopted
resolutions setting forth and declaring advisable this Amended and Restated
Certificate of Incorporation, and in lieu of a meeting of the stockholders,
written consent to this Second Amended and Restated Certificate of Incorporation
having been given by the holders of a majority of the outstanding stock of the
Corporation in accordance with Section 228 of the General Corporation Law of the
Delaware General Corporation Law.
FOURTH: This Second Amended and Restated Certificate of
Incorporation is being filed pursuant to Sections 242 and 245 of the Delaware
General Corporation Law in order to restate the Amended and Restated Certificate
of Incorporation of the Corporation and also to amend the Certificate of
Incorporation to increase the authorized capital stock of the Corporation.
FIFTH: The Certificate of Incorporation of the Corporation is hereby
amended and restated in its entirety as follows:
ARTICLE ONE
The name of the corporation is:
<PAGE>
Coach USA, Inc.
ARTICLE TWO
The address of the Corporation's registered office in the State of
Delaware is 15 East North Street, in the City of Dover, County of Kent. The name
of its registered agent at such address is United Corporate Services, Inc.
ARTICLE THREE
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE FOUR
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is one hundred million five hundred
thousand (100,500,000) shares, of which five hundred thousand (500,000) shares,
designated as Preferred Stock, shall have a par value of One Cent ($.01) per
share (the "Preferred Stock"), and one hundred million (100,000,000) shares,
designated as Common Stock, shall have a par value of One Cent ($.01) per share
(the "Common Stock").
A statement of the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof, in respect of each class of
stock of the Corporation is as follows:
PREFERRED STOCK
The Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more classes or series. Subject to the provisions
of this Certificate of Incorporation
-2-
<PAGE>
and the limitations prescribed by law, the Board of Directors is expressly
authorized by adopting resolutions to issue the shares, fix the number of shares
and change the number of shares constituting any series, and to provide for or
change the voting powers, designations, preferences and relative, participating,
optional or other special rights, qualifications, limitations or restrictions
thereof, including dividend rights (and whether dividends are cumulative),
dividend rates, terms of redemption (including sinking fund provisions), a
redemption price or prices, conversion rights and liquidation preferences of the
shares constituting any class or series of the Preferred Stock, without any
further action or vote by the stockholders.
COMMON STOCK
1. DIVIDENDS.
Subject to the preferred rights of the holders of shares of any
class or series of Preferred Stock as provided by the Board of Directors with
respect to any such class or series of Preferred Stock, the holders of the
Common Stock shall be entitled to receive, as and when declared by the Board of
Directors out of the funds of the Corporation legally available therefor, such
dividends (payable in cash, stock or otherwise) as the Board of Directors may
from time to time determine, payable to stockholders of record on such dates,
not exceeding 60 days preceding the dividend payment dates, as shall be fixed
for such purpose by the Board of Directors in advance of payment of each
particular dividend.
2. LIQUIDATION.
In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, after the distribution or payment
to the holders of shares of any class or
-3-
<PAGE>
series of Preferred Stock as provided by the Board of Directors with respect to
any such class or series of Preferred Stock, the remaining assets of the
Corporation available for distribution to stockholders shall be distributed
among and paid to the holders of Common Stock ratably in proportion to the
number of shares of Common Stock held by them respectively.
3. VOTING RIGHTS.
Except as otherwise required by law or as provided by the Board of
Directors with respect to any class or series of Preferred Stock, the entire
voting power and all voting rights shall be vested exclusively in the Common
Stock. Each holder of shares of Common Stock shall be entitled to one vote for
each share standing in such holder's name of the books of the Corporation.
ARTICLE FIVE
1. BOARD OF DIRECTORS
The Directors shall be classified with respect to the time for which
they shall severally hold office into three classes as nearly equal in number as
possible. The Class I directors shall be elected to hold office for an initial
term expiring at the 1997 annual meeting of stockholders, the Class II Directors
shall be elected to hold office for an initial term expiring at the 1998 annual
meeting of stockholders and the Class III Directors shall be elected to hold
office for an initial term expiring at the 1999 annual meeting of stockholders,
with the members of each class of directors to hold office until their
successors have been duly elected and qualified. At each annual meeting of
stockholders, the successors to the class of directors whose term expires at
that meeting shall be elected to hold office for a term expiring at the annual
meeting of stockholders held in the third year following the year of their
election and until their successors have been duly elected and qualified.
-4-
<PAGE>
At each annual meeting of stockholders at which a quorum is present, the persons
receiving a plurality of the votes cast shall be directors. No director or class
of directors may be removed from office by a vote of the stockholders at any
time except for cause. Election of directors need not be by written ballot
unless the By-laws of the Corporation so provide.
2. VACANCIES.
Any vacancy on the Board of Directors resulting from death,
retirement, resignation, disqualification or removal from office or other cause,
as well as any vacancy resulting from an increase in the number of directors
which occurs between annual meetings of the stockholders at which directors are
elected, shall be filled only by a majority vote of the remaining directors then
in office, though less than a quorum, except that those vacancies resulting from
removal from office by a vote of the stockholders may be filled by a vote of the
stockholders at the same meeting at which such removal occurs. The directors
chosen to fill vacancies shall hold office for a term expiring at the end of the
next annual meeting of stockholders at which the term of the class to which they
have been elected expires. No decrease in the number of directors constituting
the Board of Directors shall shorten the term of any incumbent director.
Notwithstanding the foregoing, whenever the holders of one or more
classes or series of Preferred Stock shall have the right, voting separately, as
a class or series, to elect directors, the election, term of office, filling of
vacancies, removal and other features of such directorships shall be governed by
the terms of the resolution or resolutions adopted by the Board of Directors
pursuant to ARTICLE FOUR applicable thereto, and each director so elected shall
not be subject to the provisions of this ARTICLE FIVE unless otherwise provided
therein.
-5-
<PAGE>
3. POWER TO MAKE, ALTER AND REPEAL BY-LAWS.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter and
repeal the By-laws of the Corporation.
4. AMENDMENT AND REPEAL OF ARTICLE FIVE
Notwithstanding any provision of this Certificate of Incorporation
and of the By-laws, and notwithstanding the fact that a lesser percentage may be
specified by Delaware law, unless such action has been approved by a majority
vote of the full Board of Directors, the affirmative vote of 66 2/3 percent of
the votes which all stockholders of the then outstanding shares of capital stock
of the Corporation would be entitled to cast thereon, voting together as a
single class, shall be required to amend or repeal any provisions of this
ARTICLE FIVE or to adopt any provision inconsistent with this ARTICLE FIVE. In
the event such action has been previously approved by a majority vote of the
full Board of Directors, the affirmative vote of a majority of the outstanding
stock entitled to vote thereon shall be sufficient to amend or repeal any
provisions of this ARTICLE FIVE or adopt any provision inconsistent with this
ARTICLE FIVE.
ARTICLE SIX
The Corporation reserves the right to amend, alter, change or repeal
any provision in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute.
ARTICLE SEVEN
No director of the corporation shall be liable to the Corporation of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
-6-
<PAGE>
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law of (iv) for
any transactions from which the director derived an improper personal benefit.
ARTICLE EIGHT
The Corporation shall, to the fullest extent permitted by Section
145 of the Delaware General Corporation Law, as the same may be amended and
supplemented, indemnify each director and officer of the Corporation from and
against any and all of the expenses, liabilities or other matters referred to in
or covered by said section and the indemnification provided for herein shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under By-law, agreement, vote of stockholders, vote of disinterested
directors or otherwise, and shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors and
administrators of such persons and the Corporation may purchase and maintain
insurance on behalf of any director or officer to the extent permitted by
Section 145 of the Delaware General Corporation Law.
ARTICLE NINE
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers
-7-
<PAGE>
appointed for the Corporation under the provisions of section 279 of Title 8 of
the Delaware Code order a meeting of the creditors or class of creditors, and/or
of the stockholder or class of stockholders of the Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
IN WITNESS WHEREOF, the undersigned has executed this Amended and
Restated Certificate of Incorporation on behalf of the Corporation and has
attested such execution and do verify and affirm, under penalty of perjury, that
this Amended and Restated Certification of Incorporation is the act and deed of
the Corporation and that the facts stated herein are true as of this
day of June, 1997.
COACH USA, INC.
By:
Douglas Cerny
Senior Vice President
-8-
EXHIBIT 4.1
EXECUTION COPY
==============================================================================
COACH USA, INC.
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007
---------------------------
INDENTURE
Dated as of June 24, 1997
---------------------------
---------------------------
THE BANK OF NEW YORK
---------------------------
Trustee
==============================================================================
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a)(1).................................................. 7.10
(a)(2).................................................. 7.10
(a)(3).................................................. N.A.
(a)(4).................................................. N.A.
(a)(5).................................................. 7.10
(b)..................................................... 7.10
(c)..................................................... N.A.
311 (a)..................................................... 7.11
(b)..................................................... 7.11
(c)..................................................... N.A.
312 (a)..................................................... 2.05
(b)..................................................... 11.03
(c)..................................................... 11.03
313 (a)..................................................... 7.06
(b)(1).................................................. N.A.
(b)(2).................................................. 7.07
(c)..................................................... 7.06; 11.02
(d)..................................................... 7.06
314 (a)..................................................... 4.03;11.02
(b)..................................................... N.A.
(c)(1).................................................. 11.04
(c)(2).................................................. 11.04
(c)(3).................................................. N.A.
(d)..................................................... N.A.
(e)..................................................... 11.05
(f)..................................................... N.A.
315 (a)..................................................... 7.01
(b)..................................................... 7.05,11.02
(c)..................................................... 7.01
(d)..................................................... 7.01
(e)..................................................... 6.11
316 (a)(last sentence)...................................... 2.09
(a)(1)(A)............................................... 6.05
(a)(1)(B)............................................... 6.04
(a)(2).................................................. N.A.
(b)..................................................... 6.07
(c)..................................................... 2.12
317 (a)(1).................................................. 6.08
(a)(2).................................................. 6.09
(b)..................................................... 2.04
318 (a)..................................................... 11.01
(b)..................................................... N.A.
(c)..................................................... 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.........................1
Section 1.01. Definitions.................................................1
Section 1.02. Other Definitions..........................................15
Section 1.03. Incorporation by Reference of Trust Indenture Act..........16
Section 1.04. Rules of Construction......................................16
ARTICLE 2 THE NOTES.........................................................16
Section 2.01. Form and Dating............................................17
Section 2.02. Execution and Authentication...............................18
Section 2.03. Registrar and Paying Agent.................................18
Section 2.04. Paying Agent to Hold Money in Trust........................19
Section 2.05. Holder Lists...............................................19
Section 2.06. Transfer and Exchange......................................19
Section 2.07. Replacement Notes..........................................31
Section 2.08. Outstanding Notes..........................................32
Section 2.09. Treasury Notes.............................................32
Section 2.10. Temporary Notes............................................32
Section 2.11. Cancellation...............................................32
Section 2.12. Defaulted Interest.........................................33
Section 2.13. CUSIP Numbers..............................................33
ARTICLE 3 REDEMPTION AND PREPAYMENT.........................................33
Section 3.01. Notices to Trustee.........................................33
Section 3.02. Selection of Notes to Be Redeemed..........................33
Section 3.03. Notice of Redemption.......................................34
Section 3.04. Effect of Notice of Redemption.............................34
Section 3.05. Deposit of Redemption Price................................35
Section 3.06. Notes Redeemed in Part.....................................35
Section 3.07. Optional Redemption........................................35
Section 3.08. Mandatory Redemption.......................................36
Section 3.09. Offer to Purchase by Application of Excess Proceeds........36
ARTICLE 4 COVENANTS.........................................................37
Section 4.01. Payment of Notes...........................................37
Section 4.02. Maintenance of Office or Agency............................38
Section 4.03. Reports....................................................38
Section 4.04. Compliance Certificate.....................................39
Section 4.05. Taxes......................................................39
Section 4.06. Stay, Extension and Usury Laws.............................39
Section 4.07. Restricted Payments........................................40
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.................................................42
i
<PAGE>
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.42
Section 4.10. Asset Sales................................................45
Section 4.11. Transactions with Affiliates...............................46
Section 4.12. Liens......................................................46
Section 4.13. Business Activities........................................46
Section 4.14. Corporate Existence........................................47
Section 4.15. Offer to Repurchase Upon Change of Control.................47
Section 4.16. No Senior Subordinated Debt................................48
Section 4.17. No Amendment of Convertible Notes..........................48
Section 4.18. Limitation on Sale and Leaseback Transactions..............48
Section 4.19. Limitation on Issuances and Sales of Capital Stock of
Wholly Owned Restricted Subsidiaries.........................49
Section 4.20. Additional Subsidiary Guarantees...........................49
ARTICLE 5 SUCCESSORS........................................................49
Section 5.01. Merger, Consolidation, or Sale of Assets...................49
Section 5.02. Successor Corporation Substituted..........................50
ARTICLE 6 DEFAULTS AND REMEDIES.............................................50
Section 6.01. Events of Default..........................................50
Section 6.02. Acceleration...............................................52
Section 6.03. Other Remedies.............................................52
Section 6.04. Waiver of Past Defaults....................................53
Section 6.05. Control by Majority........................................53
Section 6.06. Limitation on Suits........................................53
Section 6.07. Rights of Holders of Notes to Receive Payment..............53
Section 6.08. Collection Suit by Trustee.................................54
Section 6.09. Trustee May File Proofs of Claim...........................54
Section 6.10. Priorities.................................................54
Section 6.11. Undertaking for Costs......................................55
ARTICLE 7 TRUSTEE...........................................................55
Section 7.01. Duties of Trustee..........................................55
Section 7.02. Rights of Trustee..........................................56
Section 7.03. Individual Rights of Trustee...............................57
Section 7.04. Trustee's Disclaimer.......................................57
Section 7.05. Notice of Defaults.........................................57
Section 7.06. Reports by Trustee to Holders of the Notes.................57
Section 7.07. Compensation and Indemnity.................................57
Section 7.08. Replacement of Trustee.....................................58
Section 7.09. Successor Trustee by Merger, etc...........................59
Section 7.10. Eligibility; Disqualification..............................59
Section 7.11. Preferential Collection of Claims Against Company..........59
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE..........................60
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance...60
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Section 8.02. Legal Defeasance and Discharge.............................60
Section 8.03. Covenant Defeasance........................................60
Section 8.04. Conditions to Legal or Covenant Defeasance.................61
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions........................62
Section 8.06. Repayment to Company.......................................62
Section 8.07. Reinstatement..............................................63
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER..................................63
Section 9.01. Without Consent of Holders of Notes........................63
Section 9.02. With Consent of Holders of Notes...........................63
Section 9.03. Compliance with Trust Indenture Act........................65
Section 9.04. Revocation and Effect of Consents..........................65
Section 9.05. Notation on or Exchange of Notes...........................65
Section 9.06. Trustee to Sign Amendments, etc............................65
ARTICLE 10 SUBORDINATION....................................................66
Section 10.01. Agreement to Subordinate..................................66
Section 10.02. [Intentionally Omitted]...................................66
Section 10.03. Liquidation; Dissolution; Bankruptcy......................66
Section 10.04. Default on Designated Senior Debt.........................66
Section 10.05. Acceleration of Notes.....................................67
Section 10.06. When Distribution Must Be Paid Over.......................67
Section 10.07. Notice by Company.........................................68
Section 10.08. Subrogation...............................................68
Section 10.09. Relative Rights...........................................68
Section 10.10. Subordination May Not Be Impaired by Company..............68
Section 10.11. Distribution or Notice to Representative..................68
Section 10.12. Rights of Trustee and Paying Agent........................69
Section 10.13. Authorization to Effect Subordination.....................69
Section 10.14. Amendments................................................69
ARTICLE 11 SUBSIDIARY GUARANTEES............................................69
Section 11.01. Subsidiary Guarantees.....................................69
Section 11.02. Limitation of Guarantor's Liability.......................70
Section 11.03. Execution and Delivery of Subsidiary Guarantees...........71
Section 11.04. Guarantors May Consolidate, etc., on Certain Terms........71
Section 11.05. Releases Following Sale of Assets.........................72
Section 11.06. "Trustee" to Include Paying Agent.........................72
Section 11.07. Subordination of Subsidiary Guarantees....................72
ARTICLE 12 MISCELLANEOUS....................................................73
Section 12.01. Trust Indenture Act Controls..............................73
Section 12.02. Notices...................................................73
Section 12.03. Communication by Holders of Notes with Other Holders of
Notes........................................................74
Section 12.04. Certificate and Opinion as to Conditions Precedent........74
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Section 12.05. Statements Required in Certificate or Opinion.............74
Section 12.06. Rules by Trustee and Agents...............................75
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.................................................75
Section 12.08. Governing Law.............................................75
Section 12.09. No Adverse Interpretation of Other Agreements.............75
Section 12.10. Successors................................................75
Section 12.11. Severability..............................................75
Section 12.12. Counterpart Originals.....................................75
Section 12.13. Table of Contents, Headings, etc..........................75
EXHIBITS
Exhibit A-1 FORM OF NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF SUBSIDIARY GUARANTEE
Exhibit E FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED
INVESTOR
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INDENTURE dated as of June 24, 1997 among Coach USA, Inc., a Delaware
corporation (the "Company"), the entities listed on Schedule A hereto (each a
"Guarantor" and collectively, the "Guarantors"), and The Bank of New York, a New
York banking corporation, as trustee (the "Trustee").
The Company, the Guarantors, and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 9 3/8% Series A Senior Subordinated Notes due 2007 (the "Series A Notes")
and the 9 3/8% Series B Senior Subordinated Notes due 2007 (the "Series B Notes"
and, together with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A GLOBAL NOTE" means the Global Note in the form of Exhibit A-1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with and registered in the name of the Depositary or its nominee that will be
issued in a denomination equal to the outstanding principal amount of the Notes
sold in reliance on Rule 144A.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"APPLICABLE PROCEDURES" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel Bank that apply to such transfer or exchange.
"ASSET SALE" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than in the ordinary course of business consistent with past
practices (provided that the sale, lease, conveyance or other disposition of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole will be governed by the provisions of Section 4.15 hereof and/or the
provisions of Article 5 hereof and not by Section 4.10 hereof), and (ii) the
issue or sale by the Company or any of its Subsidiaries of Equity Interests of
any of the Company's Subsidiaries, in the case of either clause (i) or (ii),
whether in a single transaction or a series of related transactions that have a
fair market value (as determined in good faith by the Board of Directors) in
excess of $1.0 million or for net cash proceeds in excess of $1.0 million.
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Notwithstanding the foregoing: (i) a transfer of assets by the Company to a
Guarantor or by a Guarantor to the Company or to another Guarantor, (ii) an
issuance of Equity Interests by a Guarantor to the Company or to another
Guarantor, and (iii) a Restricted Payment that is permitted by Section 4.07
hereof will not be deemed to be Asset Sales.
"ATTRIBUTABLE DEBT" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors of the Company, or any
authorized committee of the Board of Directors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the full faith and credit of the
United States government or any agency or instrumentality thereof having
maturities of not more than one year from the date of acquisition, (iii) demand
or time deposits, certificates of deposit and eurodollar time deposits with
maturities of one year or less from the date of acquisition, bankers'
acceptances with maturities not exceeding one year and overnight bank deposits,
in each case with any lender party to the Existing Credit Facility or with any
domestic commercial bank having capital and surplus in excess of $500.0 million
and a Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
one year after the date of acquisition, and (vi) investments in money market or
other mutual funds at least 95% of whose assets comprise securities described in
clauses (ii) through (v) above.
"CEDEL BANK" means Cedel Bank, societe anonyme.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
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taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of 50% or more of the Voting Stock of the
Company (measured by voting power rather than number of shares), (iv) the first
day on which a majority of the members of the Board of Directors of the Company
are not Continuing Directors or (v) the Company consolidates with, or merges
with or into, any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any of
the outstanding Voting Stock of the Company is converted into or exchanged for
cash, securities or other property, other than any such transaction where the
Voting Stock of the Company outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee Person constituting a majority of the outstanding
shares of such Voting Stock of such surviving or transferee Person (immediately
after giving effect to such issuance).
"COMPANY" means Coach USA, Inc., a Delaware corporation, and any and
all successors thereto.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations), to the extent that any such expense was deducted in
computing such Consolidated Net Income, plus (iv) depreciation and amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash expenses and charges (excluding any such non-cash expense or
charge to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses were
deducted in computing such Consolidated Net Income, minus (v) non-cash items
increasing such Consolidated Net Income for such period, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of a
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
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"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP;PROVIDED that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof that is a Guarantor, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, and (v) the Net Income (but not loss)
of any Unrestricted Subsidiary shall be excluded, whether or not distributed to
the Company or one of its Subsidiaries.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"CONVERTIBLE NOTES" means the convertible subordinated notes of the
Company outstanding as of the date of this Indenture.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 12.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"CREDIT FACILITIES" means, with respect to the Company, one or more debt
facilities (including, without limitation, the Existing Credit Facility) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time. Indebtedness under Credit Facilities
outstanding on the date on which Senior Notes are first issued and authenticated
under the Indenture shall be deemed to have been incurred on such date in
reliance on the exception provided by clause (i) of the definition of Permitted
Debt.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFINITIVE NOTE" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, in the form of
Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend
and shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"DEPOSITARY" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
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"DESIGNATED SENIOR DEBT" means (i) any Indebtedness outstanding under a
Credit Facility and (ii) any other Senior Debt permitted under the Indenture the
principal amount of which is $20.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; PROVIDED, HOWEVER, that a class of Capital Stock shall
not be Disqualified Stock hereunder solely as the result of any maturity or
redemption that is conditioned upon, and subject to, compliance with Section
4.07 hereof.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE NOTES" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f).
"EXCHANGE OFFER" has the meaning set forth in the Registration Rights
Agreement.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in
the Registration Rights Agreement.
"EXISTING CREDIT FACILITY" means that certain credit facility, dated as of
August 14, 1996, as amended, by and among the Company, as borrower, NationsBank
of Texas, N.A. as agent and the financial institutions named therein, providing
for up to $181.0 million of revolving credit borrowings, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, extended, modified, renewed,
refunded, replaced or refinanced, in whole or in part, from time to time whether
or not with the same lenders or agents.
"EXISTING INDEBTEDNESS" means up to $40.0 million in aggregate principal
amount of Indebtedness of the Company and its Subsidiaries (other than
Indebtedness under the Existing Credit Facility) in existence on the date of the
Indenture, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any Person for any period, the sum,
without duplication, of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations) and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and
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(iv) the product of (a) all cash dividend payments on any series of preferred
stock of such Person or any of its Restricted Subsidiaries, other than dividend
payments on Equity Interests payable solely in Equity Interests (other than
Disqualified Stock) of the Company, times (b) a fraction, the numerator of which
is one and the denominator of which is one minus the then current combined
federal, state and local statutory tax rate of such Person, expressed as a
decimal, in each case, on a consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above Consolidated Cash Flow and
Fixed Charges shall be calculated on a pro forma basis, in the manner specified
below, with respect to the following events: (i) acquisitions that have been
made by the Company or any of its Restricted Subsidiaries, including through
mergers or consolidations and including any related financing transactions,
during the four-quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date shall be deemed to have occurred on the
first day of the four-quarter reference period and Consolidated Cash Flow for
such reference period shall be calculated (a) without giving effect to clause
(iii) of the proviso set forth in the definition of Consolidated Net Income and
(b) giving effect to pro forma adjustments relating to such acquisition that
would be permitted under Regulation S-X to be reflected in the pro forma
financial statements included in registration statements on Form S-1 under the
Securities Act, and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"FOREIGN SUBSIDIARY" means any non-U.S. domiciled Subsidiary.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"GLOBAL NOTES" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A-1 hereto issued in accordance with Section 2.01, 2.06(b), 2.06(d) or
2.06(f) hereof.
"GLOBAL NOTE LEGEND" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
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"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"GUARANTORS" means each of the entities named on Schedule A hereto and any
other Subsidiary of the Company that executes a Subsidiary Guarantee in
accordance with the provisions of the Indenture, and their respective successors
and assigns.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or the value of foreign currencies purchased or received by the Company in
the ordinary course of business.
"HOLDER" means a Person in whose name a Note is registered.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of others
secured by a Lien on any asset of such Person (whether or not such indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount of
any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness that does not require current payments
of interest, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"INDENTURE" means this Indenture, as amended or supplemented from time
to time.
"INDIRECT PARTICIPANT" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"INSTITUTIONAL ACCREDITED INVESTOR" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP
provided that Investments shall not include Hedging Obligations entered into in
accordance with the limitations set
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forth in clause (viii) of the second paragraph of Section 4.09 hereof. If the
Company or any Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of Section 4.07 hereof.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"LETTER OF TRANSMITTAL" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness under the Credit Facilities) secured by a Lien on the
asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights
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that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any Indebtedness (other than the Notes being offered hereby) of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"NON-U.S. PERSON" means a person who is not a U.S. Person.
"NOTE CUSTODIAN" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"NOTES" has the meaning assigned to it in the preamble to this
Indenture.
"OBLIGATIONS" means any principal, interest(including interest accruing
after the filing of a petition initiating any proceeding pursuant to any
bankruptcy law, whether or not the claim for such interest is allowed as a claim
in such proceeding), penalties, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documentation governing any
Indebtedness.
"OFFERING" means the Offering of the Notes by the Company.
"OFFICER" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller,
the Secretary or any Vice-President of such Person, or any Guarantor, as
applicable.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company, that meets the requirements of Section 12.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 12.05 hereof.
The counsel may be an employee of or counsel to the Company (or any Guarantor,
if applicable), any Subsidiary of the Company or the Trustee.
"PARTICIPANT" means, with respect to DTC, Euroclear or Cedel Bank, a
Person who has an account with DTC, Euroclear or Cedel Bank, respectively (and,
with respect to DTC, shall include Euroclear and Cedel Bank).
"PARI PASSU INDEBTEDNESS" means (a) with respect to the Notes,
Indebtedness which ranks PARI PASSU in right of payment to the Notes and (b)
with respect to any Subsidiary Guarantee, Indebtedness which ranks PARI PASSU in
right of payment to such Subsidiary Guarantee.
"PERMITTED BUSINESS" means the provision of charter, tour, sight seeing,
commuter and transit services as well as the provision of airport ground
transportation, paratransit and taxicab and other transportation services.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in a
Guarantor; (b) any Investment in Cash Equivalents; (c) any Investment by the
Company or any Guarantor in a Person, if as a result of such Investment (i) such
Person becomes a Guarantor or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Guarantor; (d) any Restricted
Investment made as a result of the
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receipt of non-cash consideration from an Asset Sale that was made pursuant to
and in compliance with Section 4.10 hereof; (e) any acquisition of assets solely
in exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; (f) Investments by the Company or any Restricted Subsidiary in
any Person which is, or becomes as a result of such Investment, a Foreign
Subsidiary; PROVIDED, that in no event will the total assets of Foreign
Subsidiaries constitute more than 20% of the total assets of the Company; (g)
any Investment in Permitted Business Assets; (h) stock, obligations or
securities received in settlement of debts created in the ordinary course of
business and owing to the Company or any Subsidiary or in satisfaction of
judgments; (i) the acceptance of notes payable from employees of the Company or
its Subsidiaries in payment for the purchase of Capital Stock by such employees;
(j) endorsements of negotiable instruments and documents in the ordinary course
of business; (k) any Investments outstanding on the date of the Indenture; (l)
Investments by the Company or any Restricted Subsidiary in any wholly owned
Unrestricted Subsidiary exclusively engaged in the business of insuring the
Company and Wholly Owned Subsidiaries against risks arising in their business
("Unrestricted Insurance Subsidiaries"); PROVIDED, that in no event will the
total assets of Unrestricted Insurance Subsidiaries constitute more than 5% of
the total assets of the Company; and (m) other Investments in any Person having
an aggregate fair market value (measured on the date each such Investment was
made and without giving effect to subsequent changes in value), when taken
together with all other Investments made pursuant to this clause (e) that are at
the time outstanding, not to exceed $10.0 million.
"PERMITTED JUNIOR SECURITIES" means Equity Interests in the Company or
debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes are subordinated to Senior Debt
pursuant to Article 10 of this Indenture.
"PERMITTED LIENS" means (i) Liens on assets of the Company or any of its
Subsidiaries securing Senior Debt that was permitted by the terms of the
Indenture to be incurred and Liens securing Permitted Refinancing Indebtedness
relating to Indebtedness or Senior Debt referred to in this clause (i) (provided
that such Liens extend to or cover only the property or assets securing the
Indebtedness or Senior Debt being refinanced); (ii) Liens in favor of the
Company; (iii) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Subsidiary of the Company,
PROVIDED that such Liens were in existence prior to the contemplation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Company; (iv) Liens on property
existing at the time of acquisition thereof by the Company or any Subsidiary of
the Company, PROVIDED that such Liens were in existence prior to the
contemplation of such acquisition; (v) Liens to secure the performance of
statutory or regulatory obligations, leases, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (v) of the second paragraph of Section 4.09
hereof, covering only the assets acquired with such Indebtedness; (vii) Liens
existing on the date of the Indenture; (viii) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, PROVIDED that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (ix)
Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Subsidiary; (x)
Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of
Unrestricted Subsidiaries; (xi) Liens on assets of Guarantors to secure Senior
Guarantor Debt of such
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Guarantors that was permitted by the Indenture to be incurred; (xii) Liens
incurred or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance or other kinds of social security,
old age pension or public liability obligations or to secure the payment or
performance of bids, tenders, statutory or regulatory obligations, surety, stay,
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (xiii) statutory liens of
landlords, mechanics, suppliers, vendors, warehousemen, carriers or other like
Liens arising in the ordinary course of business; (xiv) judgment Liens not
giving rise to an Event of Default so long as any appropriate legal proceeding
that may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceeding may be
initiated shall not have expired; (xv) Liens securing Hedging Obligations
permitted to be entered into pursuant to the debt incurrence covenant; (xvi)
survey exceptions, encumbrances, easements or reservations of, or rights of
others for, rights of way, zoning or other restrictions as to the use of real
properties, and minor defects in title which, in the case of any of the
foregoing, were not incurred or created to secure the payment of borrowed money
or the deferred purchase price of property or services, and in the aggregate do
not materially adversely affect the value of such properties or materially
impair use for the purposes of which such properties are held by the Company or
its Subsidiaries; (xvii) judgment and attachment Liens not giving rise to an
Event of Default or Liens created by or existing from any litigation or legal
proceeding that are currently being contested in good faith by appropriate
proceedings and for which adequate reserves have been made; (xviii) Liens in
favor of collecting or payor banks having a right of setoff, revocation, refund
or chargeback with respect to money or instruments of the Company or any
Subsidiary on deposit with or in possession of such bank; (xix) Liens to secure
Non-Recourse Indebtedness and (xx) Liens not otherwise permitted by clauses (i)
through (xix) that are incurred in the ordinary course of business of the
Company or any Subsidiary of the Company with respect to obligations that do not
exceed $5.0 million at any one time outstanding.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund Indebtedness of the Company or any of its Restricted
SUBSIDIARIES;PROVIDED that: (i) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness (or if such Indebtedness
is issued at a price less than the principal amount thereof, the aggregate
amount of gross proceeds therefrom) does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith including premiums paid,
if any, to the holders thereof); (ii) such Permitted Refinancing Indebtedness
has a final maturity date at or later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the Notes on terms at least as favorable to the Holders of
Notes as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iv) such
Indebtedness is incurred either by the Company or by the Restricted Subsidiary
who is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (v) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded was incurred by a Foreign
Subsidiary, then such Indebtedness is incurred by the same or another Foreign
Subsidiary.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof
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(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"PRIVATE PLACEMENT LEGEND" means the legend set forth in Section
2.07(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"PUBLIC EQUITY OFFERING" means an underwritten public offering of common
stock (other than Disqualified Stock) of the Company, pursuant to an effective
registration statement filed with the Commission in accordance with the
Securities Act other than an offering pursuant to Form S-8 (or any successor
thereto).
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"RSTD GLOBAL NOTE" means the Global Note in the form of Exhibit A-1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with and registered in the name of the Depositary or its nominee that will be
issued in a denomination equal to the outstanding principal amount of the Notes
transferred or exchanged to the Company or any of its Subsidiaries, pursuant to
an effective registration statement under the Securities Act or pursuant to Rule
144 under the Securities Act.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of June 24, 1997, by and among the Company, the Guarantors and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S GLOBAL NOTE" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"REGULATION S PERMANENT GLOBAL NOTE" means a permanent global Note in the
form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"REGULATION S TEMPORARY GLOBAL NOTE" means a temporary global Note in the
form of Exhibit A-2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"REPRESENTATIVE" means this Indenture trustee or other trustee, agent or
representative for any Senior Debt.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means any
officer within the corporate trust department of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"RESTRICTED BROKER-DEALER" has the meaning set forth in the Registration
Rights Agreement.
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"RESTRICTED DEFINITIVE NOTE" means a Definitive Note bearing the Private
Placement Legend.
"RESTRICTED GLOBAL NOTE" means a Global Note bearing the Private Placement
Legend.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED PERIOD" means the 40-day restricted period as defined in
Regulation S.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated the Securities Act.i
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR DEBT" means (i) all Indebtedness of the Company or any of its
Subsidiaries outstanding under Credit Facilities and all Hedging Obligations
with respect thereto, (ii) any other Indebtedness of the Company or any of its
Subsidiaries permitted to be incurred by the Company or any of its Subsidiaries
under the terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes and (iii) all Obligations with
respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (w) any liability for federal, state,
local or other taxes owed or owing by the Company, (x) any Indebtedness of the
Company to any of its Subsidiaries or other Affiliates, (y) any trade payables
or (z) any Indebtedness that is incurred in violation of this Indenture (other
than Indebtedness under a Credit Facility that is incurred on the basis of a
representation by the Company to the applicable lenders that it is permitted to
incur such Indebtedness under this Indenture).
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or
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trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"SUBSIDIARY GUARANTEE" means, individually and collectively, the
guarantees given by the Guarantors pursuant to Article 11 hereof, including a
notation in the Notes substantially in the form attached hereto as Exhibit D.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 hereof.
"TRUSTEE" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"UNRESTRICTED DEFINITIVE NOTE" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"UNRESTRICTED GLOBAL NOTE" means a permanent global Note in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and (e) has at least one director
on its board of directors that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has at least one executive
officer that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries; PROVIDED, HOWEVER, that the death or resignation of any
such director or executive officer shall not cause a Subsidiary that would
otherwise be an Unrestricted Subsidiary to be deemed to be a Restricted
Subsidiary unless 10 days have elapsed in which the Company has failed to
appoint or elect a successor or replace such director or executive officer who
satisfies the criteria set forth in this clause (e). Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under Section 4.09 hereof, the Company shall be in default of such
covenant). The Board of
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Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; PROVIDED that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
Section 4.09 hereof, calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period, and (ii) no
Default or Event of Default would be in existence following such designation.
"U.S. PERSON" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Term Defined in
Section
"Affiliate Transaction"................... 4.11
"Asset Sale Offer"........................ 3.09
"Change of Control Offer"................. 4.15
"Change of Control Payment"............... 4.15
"Change of Control Payment Date".......... 4.15
"Covenant Defeasance"..................... 8.03
"DTC"..................................... 2.03
"Event of Default"........................ 6.01
"Excess Proceeds"......................... 4.10
"incur"................................... 4.09
"Legal Defeasance"........................ 8.02
"Offer Amount"............................ 3.09
"Offer Period"............................ 3.09
"Paying Agent"............................ 2.03
"Payment Default"......................... 6.01
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"Permitted Business Assets"............... 4.10
"Permitted Business Securities"........... 4.10
"Permitted Debt".......................... 4.09
"Purchase Date"........................... 3.09
"Registrar"............................... 2.03
"Restricted Payments"..................... 4.07
"Registrar"............................... 2.03
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Notes and the Subsidiary Guarantees;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company or any Guarantor and any
successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections
or rules adopted by the SEC from time to time.
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ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The notation on each Note
relating to the Subsidiary Guarantees shall be substantially in the form set
forth on Exhibit D, which is a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes (including the Subsidiary
Guarantees) shall constitute, and are hereby expressly made, a part of this
Indenture and the Company, the Guarantors, and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions and
to be bound thereby. However, to the extent any provision of any Note conflicts
with the express provisions of this Indenture, the provisions of this Indenture
shall govern and be controlling.
Notes issued in global form shall be substantially in the form of Exhibits
A-1 or A-2 attached hereto (including the Global Note Legend and the "Schedule
of Exchanges in the Global Note" attached thereto). Notes issued in definitive
form shall be substantially in the form of Exhibit A-1 attached hereto (but
without the Global Note Legend and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges and redemptions.
Any endorsement of a Global Note to reflect the amount of any increase or
decrease in the aggregate principal amount of outstanding Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note (accompanied by
a notation of the Subsidiary Guarantees duly endorsed by the Guarantors), which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel Bank,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel Bank certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note (except to the extent
of any beneficial owners thereof who acquired an interest therein during the
Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note or a RSTD Global Note bearing a Private Placement Legend, all
as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company. Following the termination of the Restricted
Period, beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication of
Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S
Temporary Global Note. The aggregate principal amount of the Regulation S
Temporary Global Note and the Regulation S Permanent Global Notes may from time
to time be increased or decreased by adjustments made on the
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records of the Trustee and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Permanent Global Notes that are held by the
Agent Members through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers, authenticate Notes, with the Subsidiary Guarantees endorsed thereon,
for original issue up to the aggregate principal amount stated in paragraph 4 of
the Notes. The aggregate principal amount of Notes outstanding at any time may
not exceed such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company and the Guarantors shall maintain an office or agency where
Notes may be presented for registration of transfer or for exchange
("REGISTRAR") and an office or agency where Notes may be presented for payment
("PAYING AGENT"). The Registrar shall keep a register of the Notes and of their
transfer and exchange. The Company may appoint one or more co-registrars and one
or more additional paying agents. The term "Registrar" includes any co-registrar
and the term "Paying Agent" includes any additional paying agent. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company shall notify the Trustee in writing of the name and address of any Agent
not a party to this Indenture. If the Company fails to appoint or maintain
another entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of the Guarantors may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
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SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee of any default by the Company or the Guarantors in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Guarantor) shall have no further liability for the money. If the
Company or a Guarantor acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company and/or the Guarantors shall furnish to the
Trustee at least seven Business Days before each interest payment date and at
such other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company and the Guarantors shall otherwise
comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF GLOBAL NOTES. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 90 days after the date of such notice from the Depositary or (ii)
the Company in its sole discretion determines that the Global Notes (in whole
but not in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee; PROVIDED that in no event shall the
Regulation S Temporary Global Note be exchanged by the Company for Definitive
Notes prior to (x) the expiration of the Restricted Period and (y) the receipt
by the Registrar of any certificates required pursuant to Rule 903 under the
Securities Act. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Notes (accompanied by a notation of the Subsidiary
Guarantees duly endorsed by the Guarantors) shall be issued in such names as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.11 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to Section 2.07 or 2.11 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f) hereof.
(b) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN THE GLOBAL Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in
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accordance with the provisions of this Indenture and the Applicable Procedures.
Beneficial interests in the Restricted Global Notes shall be subject to
restrictions on transfer comparable to those set forth herein to the extent
required by the Securities Act. Transfers of beneficial interests in the Global
Notes also shall require compliance with either subparagraph (i) or (ii) below,
as applicable, as well as one or more of the other following subparagraphs as
applicable:
(i) TRANSFER OF BENEFICIAL INTERESTS IN THE SAME GLOBAL NOTE.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in accordance with the transfer
restrictions set forth in the Private Placement Legend; PROVIDED, HOWEVER,
that prior to the expiration of the Restricted Period transfers of
beneficial interests in the Regulation S Temporary Global Note may not be
made to a U.S. Person or for the account or benefit of a U.S. Person
(other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred only to Persons who take
delivery thereof in the form of a beneficial interest in an Unrestricted
Global Note. No written orders or instructions shall be required to be
delivered to the Registrar to effect the transfers described in this
Section 2.06(b)(i).
(ii) ALL OTHER TRANSFERS AND EXCHANGES OF BENEFICIAL INTERESTS IN
GLOBAL NOTES. In connection with all transfers and exchanges of beneficial
interests (other than a transfer of a beneficial interest in a Global Note
to a Person who takes delivery thereof in the form of a beneficial
interest in the same Global Note), the transferor of such beneficial
interest must deliver to the Registrar either (A) (1) a written order from
a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Note in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a Participant
or an Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to
the Registrar containing information regarding the Person in whose name
such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above; PROVIDED that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903 under the Securities
Act. Upon an Exchange Offer by the Company in accordance with Section
2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall be
deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the
Holder of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture, the
Notes and otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) TRANSFER OF BENEFICIAL INTERESTS TO ANOTHER RESTRICTED GLOBAL
NOTE. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of clause (ii) above and the Registrar
receives the following:
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(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the RSTD Global Note, then the transferor
must deliver (x) a certificate in the form of Exhibit B hereto,
including the certifications and certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(iv) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN A RESTRICTED
GLOBAL NOTE FOR BENEFICIAL INTERESTS IN THE UNRESTRICTED GLOBAL NOTE. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of clause (ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note,
a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to
the Registrar to the effect that such
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exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein and in
the Private Placement Legend are not required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes (accompanied by a notation of the Subsidiary Guarantees duly
endorsed by the Guarantors) in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraph
(B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) TRANSFER OR EXCHANGE OF BENEFICIAL INTERESTS FOR DEFINITIVE NOTES.
(i) If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive Note
or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule
903 or Rule 904 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications
in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
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(G) if such beneficial interest is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
Person designated in the instructions a Definitive Note (accompanied by a
notation of the Subsidiary Guarantees duly endorsed by the Guarantors) in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)
shall be registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest in a Restricted Global Note pursuant to
this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be
subject to all restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
(A) exchanged for a Definitive Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903(c)(3)(B) under the Securities Act or (B)
transferred to a Person who takes delivery thereof in the form of a
Definitive Note prior to the conditions set forth in clause (A) above or
unless the transfer is pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Notwithstanding 2.06(c)(i) hereof, a holder of a beneficial
interest in a Restricted Global Note may exchange such beneficial interest
for an Unrestricted Definitive Note or may transfer such beneficial
interest to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in
Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item
(1)(b) thereof;
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(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to
the Company, to the effect that such exchange or transfer is
in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are not required in order to maintain
compliance with the Securities Act.
(iv) If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon satisfaction
of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee
shall cause the aggregate principal amount of the applicable Global Note
to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to
the Person designated in the instructions a Definitive Note (accompanied
by a notation of the Subsidiary Guarantees duly endorsed by the
Guarantors) in the appropriate principal amount. Any Definitive Note
issued in exchange for a beneficial interest pursuant to this Section
2.06(c)(iv) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iv) shall not bear the Private
Placement Legend. A beneficial interest in an Unrestricted Global Note
cannot be exchanged for a Definitive Note bearing the Private Placement
Legend or transferred to a Person who takes delivery thereof in the form
of a Definitive Note bearing the Private Placement Legend.
(d) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR BENEFICIAL INTERESTS.
(i) If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note
or to transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes
to exchange such Note for a beneficial interest in a Restricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (2)(b) thereof;
(B) if such Definitive Note is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Definitive Note is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a
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certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (2) thereof;
(D) if such Definitive Note is being transferred pursuant to
an exemption from the registration requirements of the Securities
Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(a) thereof;
(E) if such Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Definitive Note is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including
the certifications in item (3)(c) thereof,
the Trustee shall cancel the Definitive Note, increase or cause to be increased
the aggregate principal amount of, in the case of clause (A) above, the
appropriate Restricted Global Note, in the case of clause (B) above, the 144A
Global Note, in the case of clause (C) above, the Regulation S Global Note, and
in all other cases, the RSTD Global Note.
(ii) A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Restricted
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate
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from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(c) thereof;
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in
the form of Exhibit B hereto, including the certifications in
item (4) thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such exchange or transfer is in
compliance with the Securities Act, that the restrictions on
transfer contained herein and in the Private Placement Legend
are not required in order to maintain compliance with the
Securities Act, and such Definitive Notes are being exchanged
or transferred in compliance with any applicable blue sky
securities laws of any State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) A Holder of an Unrestricted Definitive Note may exchange such
Note for a beneficial interest in an Unrestricted Global Note or transfer
such Definitive Notes to a Person who takes delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note at any time. Upon
receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause
to be increased the aggregate principal amount of one of the Unrestricted
Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an authentication order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes (accompanied by a notation of the Subsidiary Guarantees duly
endorsed by the Guarantors) in an aggregate principal amount equal to the
principal amount of beneficial interests transferred pursuant to subparagraphs
(ii)(B), (ii)(D) or (iii) above.
(e) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES FOR DEFINITIVE NOTES. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and registered
in the name of Persons who take delivery thereof if the Registrar receives
the following:
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(A) if the transfer will be made pursuant to Rule 144A under
the Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in
item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities Act,
then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable.
(ii) Any Restricted Definitive Note may be exchanged by the Holder
thereof for an Unrestricted Definitive Note or transferred to a Person or
Persons who take delivery thereof in the form of an Unrestricted
Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in
the case of a transfer, is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration Statement
in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to
the Company to the effect that such exchange or transfer is in
compliance with the Securities Act, that the restrictions on
transfer contained herein and in the Private Placement Legend
are not required in order to maintain compliance with the
Securities Act, and such Restricted Definitive Note is being
exchanged or transferred in compliance with any applicable
blue sky securities laws of any State of the United States.
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(iii) A Holder of Unrestricted Definitive Notes may transfer such
Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request for such a
transfer, the Registrar shall register the Unrestricted Definitive Notes
pursuant to the instructions from the Holder thereof. Unrestricted
Definitive Notes cannot be exchanged for or transferred to Persons who
take delivery thereof in the form of a Restricted Definitive Note.
(f) EXCHANGE OFFER. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an authentication order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes
(accompanied by a notation of the Subsidiary Guarantees duly endorsed by the
Guarantors) in an aggregate principal amount equal to the principal amount of
the beneficial interests in the Restricted Global Notes tendered for acceptance
by persons that are not (x) broker-dealers, (y) Persons participating in the
distribution of the Exchange Notes or (z) Persons who are affiliates (as defined
in Rule 144) of the Company and accepted for exchange in the Exchange Offer and
(ii) Definitive Notes (accompanied by a notation of the Subsidiary Guarantees
duly endorsed by the Guarantors) in an aggregate principal amount equal to the
principal amount of the Restricted Definitive Notes accepted for exchange in the
Exchange Offer. Concurrent with the issuance of such Notes, the Trustee shall
cause the aggregate principal amount of the applicable Restricted Global Notes
to be reduced accordingly, and the Company shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) LEGENDS. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) PRIVATE PLACEMENT LEGEND.
(A) Except as permitted by subparagraph (b) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE
ACCOUNT OR BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES
ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN
RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT
(AN "IAI"), (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED
TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE SECURITIES ACT AS IN
EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE
TRANSFER THIS
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NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON
WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO
THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE REGISTRATION OF TRANSFER OF THIS NOTE (THE FORM
OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE) AND AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS NOTE OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD
REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON
THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS
CERTIFICATE TO THE TRUSTEE. EACH IAI THAT IS NOT A QIB WILL BE REQUIRED TO
EFFECT ANY TRANSFER OF NOTES OR INTERESTS THEREIN (OTHER THAN PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT) THROUGH ONE OF THE INITIAL
PURCHASERS. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv), (c)(iii),
(c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section
2.06 (and all Notes issued in exchange therefor or substitution
thereof) shall not bear the Private Placement Legend.
(ii) GLOBAL NOTE LEGEND. Each Global Note shall bear a legend
in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION
2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION
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PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(iii) REGULATION S TEMPORARY GLOBAL NOTE LEGEND. The Regulation
S Temporary Global Note shall bear a legend in substantially the
following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
cancelled in whole and not in part, each such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depositary at the direction of the Trustee, to reflect such
reduction; and if the beneficial interest is being exchanged for or transferred
to a Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased accordingly
and an endorsement shall be made on such Global Note, by the Trustee or by the
Depositary at the direction of the Trustee, to reflect such increase.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes (in each case, accompanied by a notation of the
Subsidiary Guarantees duly endorsed by the Guarantors) upon the Company's
order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental
charge payable in connection therewith (other than any such transfer taxes
or similar governmental charge payable upon exchange or transfer pursuant
to Sections 2.10, 3.06, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Note selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes (in each case,
accompanied by a notation of the Subsidiary Guarantees duly endorsed by
the Guarantors) issued upon any registration of transfer or exchange of
Global Notes or Definitive Notes shall be the valid obligations of the
Company and the Guarantors, evidencing the same debt, and entitled to the
same benefits under
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this Indenture, as the Global Notes or Definitive Notes surrendered upon
such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the
transfer of or to exchange Notes during a period beginning at the opening
of business 15 days before the day of mailing of notice of redemption and
ending at the close of business on the day of such mailing, (B) to
register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part or (C) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on
such Notes and for all other purposes, and none of the Trustee, any Agent
or the Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes (in each case, accompanied by a notation of the Subsidiary
Guarantees duly endorsed by the Guarantors) in accordance with the
provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a transfer or exchange may be submitted by facsimile.
(ix) Each Holder of a Note agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange
or assignment of such Holder's Note in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.
(x) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Note (including any transfers between or
among Depositary participants or beneficial owners of interests in any
Global Note) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by the terms of, this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by two Officers of the Company, shall authenticate a
replacement Note (accompanied by a notation of the Subsidiary Guarantees duly
endorsed by the Guarantors) if the Trustee's requirements are met. An indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Guarantors, the Trustee, any
Agent and any authenticating agent from any loss that any of them may suffer if
a Note is replaced. The Company may charge for its expenses in replacing a Note.
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Every replacement Note is an additional obligation of the Company and the
Guarantors and shall be entitled to all of the benefits of this Indenture
equally and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, by any Guarantor or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
Guarantor, shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes (accompanied by a notation of the
Subsidiary Guarantees duly endorsed by the Guarantors) upon a written order of
the Company signed by two Officers of the Company. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate definitive Notes (accompanied by a notation
of the Subsidiary Guarantees duly endorsed by the Guarantors) in exchange for
temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
cancelled Notes to the
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Company. The Company may not issue new Notes to replace Notes that it has paid
or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If either the Company or any Guarantor defaults in a payment of interest
on the Notes, it or they (to the extent of their obligations under the
Subsidiary Guarantees) shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.01 hereof. The Company shall notify
the Trustee in writing of the amount of defaulted interest proposed to be paid
on each Note and the date of the proposed payment. The Company shall fix or
cause to be fixed each such special record date and payment date, PROVIDED that
no such special record date shall be less than 10 days prior to the related
payment date for such defaulted interest. At least 15 days before the special
record date, the Company (or, upon the written request of the Company, the
Trustee in the name and at the expense of the Company) shall mail or cause to be
mailed to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; PROVIDED that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the Trustee
shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
PRO RATA basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
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The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including CUSIP
numbers) and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; PROVIDED, HOWEVER, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
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SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note (accompanied by a notation of
the Subsidiary Guarantees duly endorsed by the Guarantors) equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.07
prior to July 1, 2002. Thereafter, the Company shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the applicable redemption
date, if redeemed during the twelve-month period beginning on July 1, of the
years indicated below:
YEAR PERCENTAGE
2002................................... 104.688%
2003................................... 103.125%
2004................................... 101.563%
2005 and thereafter.................... 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to July 1, 2000, the Company may redeem Notes with the net cash
proceeds of one or more Public Equity Offerings at a redemption price equal to
109.375% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date; PROVIDED that at
least 66 2/3% in aggregate principal amount of the Notes originally issued
remain outstanding immediately after the occurrence of such redemption and that
such redemption occurs within 60 days of the date of the closing of such Public
Equity Offering.
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(c) Any redemption pursuant to this Section 3.07 shall be made pursuant to
the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Company shall
not be required to make mandatory redemption payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "ASSET SALE
OFFER"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "OFFER PERIOD"). No later than five
Business Days after the termination of the Offer Period (the "PURCHASE DATE"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "OFFER AMOUNT") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may only elect to have all of such Note purchased and may not elect
to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if
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appointed by the Company, or a Paying Agent at the Address specified in the
notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a PRO RATA basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes (accompanied by a notation of the Subsidiary Guarantees duly endorsed
by the Guarantors) equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a PRO RATA basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note (in each
case, accompanied by a notation of the Subsidiary Guarantees duly endorsed by
the Guarantors), and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or any Guarantor
thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal, premium, if any, and interest then due. The Company shall pay
all Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company or the Guarantors in respect of the Notes and this Indenture
may be served. The Company shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED, HOWEVER,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Company
were required to file such forms and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants and
(ii) all current reports that would be required to be filed with the SEC on Form
8-K if the Company were required to file such reports, in each case within the
time periods set forth in the Commission's rules and regulations. In addition,
whether or not required by the rules and regulations of the Commission, at any
time after the effectiveness of the
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Exchange Offer contemplated by the Registration Rights Agreement, the Company
will file a copy of all such information and reports with the Commission for
public availability within the time periods set forth in the Commission's rules
and regulations (unless the Commission will not accept such a filing) and make
such information available to securities analysts and prospective investors upon
request.
(b) For so long as any Notes remain outstanding (unless the Company is
subject to the reporting requirements of the Exchange Act), the Company and the
Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and the Guarantors shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company or such Guarantor, as
the case may be, has kept, observed, performed and fulfilled its obligations
under this Indenture and the Subsidiary Guarantees, respectively, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company or such Guarantor, as the case may be, has
kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company or
such Guarantor, as the case may be, is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of
or interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company or such Guarantor, as the
case may be, is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) Each of the Company and the Guarantors shall, so long as any of the
Notes are outstanding, deliver to the Trustee, forthwith upon any Officer of the
Company or any Guarantor becoming aware of any Default or Event of Default, an
Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
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SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company) or
to the direct or indirect holders of the Company's or any of its Restricted
Subsidiaries' Equity Interests in their capacity as such (other than dividends
or distributions payable in Equity Interests (other than Disqualified Stock) of
the Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company; (iii) make any payment on or with respect to, or
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated to the Notes, except a payment of interest or
principal at Stated Maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less than the
sum (without duplication) of (i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) from the beginning of
the first fiscal quarter commencing after the date of this Indenture to the end
of the Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
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Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the date of this Indenture of Equity
Interests of the Company (other than Disqualified Stock) or of Disqualified
Stock or debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other than
Disqualified Stock or convertible debt securities that have been converted into
Disqualified Stock), plus (iii) to the extent that any Restricted Investment
that was made after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the net cash proceeds of such
sale, liquidation or repayment and (B) the initial amount of such Restricted
Investment, plus (iv) the amount resulting from redesignations of Unrestricted
Subsidiaries as Restricted Subsidiaries, such amount not to exceed the amount of
Investments made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary since the date of this Indenture that was treated as a
Restricted Payment under this Indenture.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of, other Equity Interests of
the Company (other than any Disqualified Stock); PROVIDED that the amount of any
such net cash proceeds that are utilized for any such redemption, repurchase,
retirement, defeasance or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (iii) the defeasance, redemption, repurchase or
other acquisition of subordinated Indebtedness with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend by a Subsidiary of the Company to the holders of its common Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Subsidiary of the Company held by any member of the Company's (or any of its
Subsidiaries') management, employees or consultants pursuant to any management,
employee or consultant equity subscription agreement or stock option agreement;
PROVIDED that the aggregate price paid for all such repurchased, redeemed,
acquired or retired Equity Interests shall not exceed $1.0 million in any
twelve-month period and no Default or Event of Default shall have occurred and
be continuing immediately after such transaction; (vi) cash payments in lieu of
fractional shares issuable as dividends on preferred securities of the Company
or any of its Restricted Subsidiaries; PROVIDED that such cash payments shall
not exceed $20,000 in the aggregate in any twelve-month period and no Default or
Event of Default shall have occurred and be continuing immediately after such
transaction; (vii) repurchases of Equity Interests deemed to occur upon exercise
of stock options if such Equity Interests represent a portion of the exercise
price of such options; (viii) the payment of the redemption price of rights
issued pursuant to any shareholders' rights plan not in excess of $0.05 per
right and not in excess of $1.0 million in the aggregate since the date of this
Indenture; and (ix) other Restricted Payments in an aggregate amount since the
date of this Indenture not to exceed $5.0 million.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation, (y) the fair market value of such Investments at the time of such
designation and (z) the original fair market value of such Investments at the
time they were made. Such designation will only be permitted if such
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Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Subsidiary, as the
case may be, pursuant to the Restricted Payment. The fair market value of any
non-cash Restricted Payment shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee. Not later
than the date of making any Restricted Payment, the Company shall deliver to the
Trustee an Officers' Certificate stating that such Restricted Payment is
permitted and setting forth the basis upon which the calculations required by
the provisions of this Section 4.07 were computed.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries on its Capital Stock, or (b)
pay any indebtedness owed to the Company or any of its Restricted Subsidiaries,
(ii) make loans or advances to the Company or any of its Restricted Subsidiaries
or (iii) transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date of this
Indenture, (b) the Existing Credit Facility as in effect as of the date of this
Indenture, and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, PROVIDED that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive with respect to
such dividend and other payment restrictions than those contained in the Credit
Facility as in effect on the date of this Indenture, (c) this Indenture, the
Notes and the Subsidiary Guarantees, (d) applicable law or regulations or any
order, ruling or other determination by a governmental regulatory authority, (e)
any instrument governing Indebtedness or Capital Stock of a Person acquired by
the Company or any of its Restricted Subsidiaries (through the acquisition of
Capital Stock or through merger or consolidation) as in effect at the time of
such acquisition (except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases, licenses, encumbrances, contracts
or similar assets entered into or acquired in the ordinary course of business
and consistent with past practices, (g) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (h)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive than those contained in the agreements governing the Indebtedness
being refinanced, (i) any instrument governing Indebtedness or preferred stock
of a Subsidiary in existence on the date of this Indenture, (j) any instrument
governing Indebtedness of a Foreign Subsidiary permitted by Section 4.09 hereof,
or (k) restrictions on the sale or transfer of assets secured by Permitted
Liens.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.
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The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "INCUR") any Indebtedness (including Acquired Debt) and that the
Company will not issue any Disqualified Stock and will not permit any of its
Subsidiaries to issue any shares of preferred stock; PROVIDED, HOWEVER, that the
Company or any of the Guarantors may incur Indebtedness (including Acquired
Debt) or issue shares of Disqualified Stock if the Fixed Charge Coverage Ratio
for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.0 to 1, if such incurrence or issuance is on
or prior to July 1, 2000, or 2.5 to 1, if such incurrence or issuance is after
July 1, 2000, in each case determined on a pro forma basis (as set forth in the
definition of Fixed Charge Coverage Ratio and including a pro forma application
of the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"PERMITTED DEBT"):
(i) the incurrence by the Company and the Guarantors of Indebtedness
under Credit Facilities and the issuance and creation of letters of credit
thereunder (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and the Guarantors
thereunder); PROVIDED that the aggregate principal amount of all
Indebtedness and letters of credit outstanding under all Credit Facilities
after giving effect to such incurrence, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
other Indebtedness incurred pursuant to this clause (i), does not exceed
an amount equal to $100.0 million less the aggregate amount of all Net
Proceeds of Asset Sales applied to repay any such Indebtedness (or any
such Permitted Refinancing Indebtedness) pursuant to Section 4.10 hereof;
(ii) the incurrence by Foreign Subsidiaries of Indebtedness under
Credit Facilities and the issuance and creation of letters of credit
thereunder (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Foreign Subsidiaries
thereunder); PROVIDED that the aggregate principal amount of all
Indebtedness of Foreign Subsidiaries outstanding under Credit Facilities
and letters of credit thereunder after giving effect to such incurrence,
including all Permitted Refinancing Indebtedness incurred to refund,
refinance or replace any other Indebtedness incurred pursuant to this
clause (ii), does not exceed an amount equal to $40.0 million less the
aggregate amount of all Net Proceeds of Asset Sales applied to repay any
such Indebtedness (or any such Permitted Refinancing Indebtedness)
pursuant to Section 4.10 hereof;
(iii) the incurrence by the Company and the Guarantors of the
Existing Indebtedness;
(iv) the incurrence by the Company of Indebtedness represented
by the Notes and the Subsidiary Guarantees;
(v) the incurrence by the Company or any of the Guarantors of
Indebtedness (in addition to Existing Indebtedness) represented by Capital
Lease Obligations, mortgage financings or purchase money obligations, in
each case incurred for the purpose of financing all or any part of the
purchase price or cost of construction or improvement of property, plant
or
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equipment used in the business of the Company or such Guarantor, in an
aggregate principal amount not to exceed $7.5 million at any time
outstanding;
(vi) the incurrence by the Company or any of the Guarantors of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance, extend, renew, defease, or replace
Indebtedness (other than intercompany Indebtedness) that was permitted by
this Indenture to be incurred;
(vii) the incurrence by the Company or any of the Guarantors of
intercompany Indebtedness between or among the Company and any of the
Guarantors or between or among Wholly Owned Subsidiaries; PROVIDED,
HOWEVER, that (i) if the Company is the obligor on such Indebtedness, such
Indebtedness is expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Notes and (ii)(A) any
subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a
Guarantor and (B) any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Guarantor shall be deemed, in
each case, to constitute an incurrence of such Indebtedness by the Company
or such Guarantor, as the case may be;
(viii) the incurrence by the Company or any of the Guarantors of
Hedging Obligations that are incurred for the purpose of fixing or hedging
(i) interest rate risk with respect to any floating rate Indebtedness that
is permitted by the terms of this Indenture to be outstanding, (ii) the
value of foreign currencies purchased or received by the Company in the
ordinary course of business, or (iii) commodities purchased in the
ordinary course of business for use in a Permitted Business and not for
speculation;
(ix) the issuance of preferred stock or the incurrence by the
Company's Unrestricted Subsidiaries of Non-Recourse Debt, PROVIDED,
HOWEVER, that if any such Indebtedness ceases to be Non-Recourse Debt of
an Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of the Company;
(x) Indebtedness in connection with one or more standby letters of
credit, guarantees, performance bonds or other reimbursement obligations,
in each case, issued in the ordinary course of business and not in
connection with the borrowing of money or the obtaining of advances or
credit (other than advances or credit on open account, includible in
current liabilities, for goods and services in the ordinary course of
business and on terms and conditions which are customary in the Permitted
Business, and other than the extension of credit represented by such
letter of credit, guarantee or performance bond itself), not to exceed in
the aggregate at any given time 10% of Total Assets; PROVIDED, that any
draw under or call upon any of the foregoing is repaid in full within 30
days;
(xi) accounts payable or other liabilities of the Company or any
Restricted Subsidiary to trade creditors created or assumed by the Company
or such Subsidiary in the ordinary course of business in connection with
the obtaining of goods and services;
(xii) Indebtedness consisting of obligations in respect of purchase
price adjustments, guarantees or indemnities in connection with the
disposition of assets;
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(xiii) the guarantee by the Company or any of the Guarantors of
Indebtedness of the Company or a Guarantor of the Company that was
permitted to be incurred by another provision of this covenant; and
(xiv) the incurrence by the Company or any of the Guarantors of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
other Indebtedness incurred pursuant to this clause (xiv), not to exceed
$5.0 million.
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xiv) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant and such item of Indebtedness will be
treated as having been incurred pursuant to only one of such clauses or pursuant
to the first paragraph hereof. Accrual of interest, the accretion of accreted
value and the payment of interest in the form of additional Indebtedness will
not be deemed to be an incurrence of Indebtedness for purposes of this Section
4.09.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee, which resolution shall be conclusive evidence of
compliance with this provision) of the assets or Equity Interests issued or sold
or otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents, long-term assets that are useful in a Permitted Business
("PERMITTED BUSINESS ASSETS") and/or Voting Stock of a Person primarily engaged
in a Permitted Business that becomes a Guarantor, so long as such Voting Stock
constitutes a majority of the Voting Stock of such Person ("PERMITTED BUSINESS
SECURITIES"); PROVIDED that the amount of (x) any liabilities (as shown on the
Company's or such Restricted Subsidiary's most recent balance sheet), of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any securities, notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are converted by the Company or such Restricted Subsidiary into
cash or Cash Equivalents within 180 days of closing such Asset Sale (to the
extent of the cash received), shall be deemed to be cash for purposes of this
provision. Notwithstanding the foregoing, the provisions of this paragraph will
not apply to (i) sales of used coaches or obsolete equipment in the ordinary
course of business or (ii) the trade or exchange by the Company or any
Subsidiary of the Company of any property or assets owned or held by the Company
or such Subsidiary for any property or assets owned or held by another Person;
provided that the fair market value of the properties traded or exchanged by the
Company or such Subsidiary (including any cash or Cash Equivalents to be
delivered by the Company or such Subsidiary) is reasonably equivalent to the
fair market value of the properties (together with any cash or Cash Equivalents)
to be received by the Company or such Subsidiary as determined in good faith by
(a) any officer of the Company if such fair market value is less than $5 million
and (b) the Board of Directors of the Company (evidenced by a resolution of the
Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) if such fair market value is equal to or in excess of $5.0 million.
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Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay Senior Debt
or Pari Passu Indebtedness (provided that if the Company shall so reduce
Obligations under Pari Passu Indebtedness, it will equally and ratably reduce
Obligations under the Notes if the Notes are then prepayable or, if the Notes
may not be then prepaid, the Company shall make an offer (in accordance with the
procedures set forth below for an Asset Sale Offer) to all Holders to purchase
at 100% of the principal amount thereof, plus accrued interest to the date of
repurchase, the amount of Notes that would otherwise be prepaid), or, (b) to the
acquisition of Permitted Business Assets or Permitted Business Securities or the
making of a capital expenditure. Pending the final application of any such Net
Proceeds, the Company may temporarily reduce Senior Debt or otherwise invest
such Net Proceeds in any manner that is not prohibited by this Indenture. Any
Net Proceeds from Asset Sales that are not applied or invested as provided in
the first sentence of this paragraph will (after the expiration of the 360-day
period specified in the first sentence of this paragraph) be deemed to
constitute "EXCESS PROCEEDS." When the aggregate amount of Excess Proceeds
exceeds $10.0 million, the Company will be required to make an Asset Sale Offer
to purchase the maximum principal amount of Notes that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase, in accordance with the procedures set
forth in this Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes. If
the aggregate principal amount of Notes surrendered by Holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Upon completion of such offer to purchase, the
amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to or Investment in, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors, which resolution shall be
conclusive evidence of compliance with this provision, and (b) with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $5.0 million, an opinion as to the fairness
to the Holders of such Affiliate Transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing; PROVIDED that (A) any employment agreement entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such Restricted Subsidiary,
(B) transactions between or among the Company and/or its Restricted
Subsidiaries, (C) Restricted Payments that are permitted by the provisions of
Section 4.07 hereof, (D) Affiliate Transactions assumed or entered into in
connection with acquisitions of Permitted Businesses with persons who were not
Affiliates prior to such transactions, and (E) Affiliate Transactions existing
on the date of this Indenture, in each case, shall not be deemed Affiliate
Transactions.
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SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens.
SECTION 4.13. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Subsidiary to, engage in
any business other than Permitted Businesses, except to such extent as would not
be material to the Company and its Subsidiaries taken as a whole.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "CHANGE OF CONTROL OFFER") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"CHANGE OF CONTROL PAYMENT"). Within 30 days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"CHANGE OF CONTROL PAYMENT DATE"), pursuant to the procedures required by this
Indenture and described in such notice. Such notice shall further state that:
(1) all Notes accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date; (2) that
Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the third Business Day preceding the Change of Control Payment Date; (3) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes delivered
for purchase, and a statement that such Holder is withdrawing his election to
have the Notes purchased; and (4) that Holders whose Notes are being purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion must be
equal to $1,000 in principal amount or an integral multiple thereof.
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The Company will comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control. To the extent that the provisions of
any securities laws or regulations conflict with the provisions of this Section
4.15, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.15 by virtue thereof.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Paying Agent will promptly mail to each Holder of Notes so tendered
the Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; PROVIDED that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company shall publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date.
The Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by the Company
and purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
SECTION 4.16. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not incur, create, issue, assume, guarantee or otherwise become liable for
any Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the Notes and (ii) no
Guarantor shall incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
Senior Debt of such Guarantor and senior in any respect in right of payment to
the Subsidiary Guarantee of such Guarantor; PROVIDED, HOWEVER, that the
foregoing limitations will not apply to distinctions between categories of
Indebtedness that exist by reason of any Liens arising or created in accordance
with the provisions of this Indenture in respect of some but not all such
Indebtedness.
SECTION 4.17. NO AMENDMENT OF CONVERTIBLE NOTES.
Without the consent of each Holder of Notes outstanding, the Company will
not amend, modify or alter the subordination provisions of the Convertible Notes
in a manner that is adverse to the Holders of the Notes.
SECTION 4.18. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; PROVIDED that
the Company may enter into a sale and leaseback transaction if (i) the Company
could have (a) incurred Indebtedness in an amount equal to the Attributable Debt
relating to such sale and leaseback transaction pursuant to the Fixed Charge
Coverage
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Ratio test set forth in the first paragraph of Section 4.09 hereof and (b)
incurred a Lien to secure such Indebtedness pursuant to the provisions of
Section 4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors and set forth in an Officers' Certificate
delivered to the Trustee, which determination shall be conclusive evidence of
compliance with this provision) of the property that is the subject of such sale
and leaseback transaction and (iii) the transfer of assets in such sale and
leaseback transaction is permitted by, and the Company applies the proceeds of
such transaction in compliance with Section 4.10 hereof.
SECTION 4.19. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF
WHOLLY OWNED RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary
of the Company to any Person (other than the Company or a Wholly Owned
Subsidiary of the Company), unless (a) such transfer, conveyance, sale, lease or
other disposition is of all the Capital Stock of such Wholly Owned Restricted
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with Section 4.10 hereof
and (ii) will not permit any Wholly Owned Restricted Subsidiary of the Company
to issue any of its Equity Interests (other than, if necessary, shares of its
Capital Stock constituting directors' qualifying shares) to any Person other
than to the Company or a Guarantor.
SECTION 4.20. ADDITIONAL SUBSIDIARY GUARANTEES.
(a) If the Company or any of its Restricted Subsidiaries shall acquire or
create another Restricted Subsidiary after the date of this Indenture, then such
newly acquired or created Restricted Subsidiary (other than a Foreign Restricted
Subsidiary) shall execute a Subsidiary Guarantee and deliver an opinion of
counsel, in accordance with the terms of this Indenture.
(b) If on the date of this Indenture any Restricted Subsidiary (other
than a Foreign Restricted Subsidiary) is prohibited by the terms of a voting
trust or other similar agreement from executing a Subsidiary Guarantee, such
Subsidiary shall execute a Subsidiary Guarantee and deliver an opinion of
counsel, in accordance with the terms of this Indenture, promptly after the
earlier of (i) the dissolution of such voting trust or similar agreement or (ii)
such provisions no longer restricting the execution of such Subsidiary
Guarantee.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether or not
the Company is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall
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have been made assumes all the obligations of the Company under the Notes and
this Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no Default
or Event of Default exists; and (iv) except in the case of a merger of the
Company with or into a Wholly Owned Subsidiary of the Company, the Company or
the entity or Person formed by or surviving any such consolidation or merger (if
other than the Company), or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made will, at the time of such
transaction and after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Company in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made shall succeed to, and be substituted for (so that from and after the date
of such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" or the "Guarantor," as
the case may be, shall refer instead to the successor corporation and not to the
Company or the Guarantor, as the case may be), and may exercise every right and
power of the Company or applicable Guarantor, as the case may be, under this
Indenture with the same effect as if such successor Person had been named as the
Company herein; PROVIDED, HOWEVER, that the predecessor Company and the
predecessor Subsidiaries that are Guarantors shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "Event of Default":
(a) a default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes (whether or not
prohibited by Article 10 hereof);
(b) a default in payment when due of the principal or premium, if any, on
the Notes (whether or not prohibited by Article 10 hereof);
(c) the Company or any of its Subsidiaries fail to comply with any of the
provisions of Section 3.09, 4.07, 4.09, 4.10, 4.15 or 5.01 hereof, and the
continuance of such failure for a period of 30 days after written notice is
given to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Notes outstanding;
(d) the Company or any of its Subsidiaries fail to observe or perform any
other covenant, representation, warranty or other agreement in this Indenture or
the Notes for 60 days after notice to the Company by the Trustee or the Holders
of at least 25% in aggregate principal amount of the Notes then outstanding;
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(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Subsidiaries (or
the payment of which is Guaranteed by the Company or any of its Subsidiaries),
whether such Indebtedness or Guarantee now exists or shall be created hereafter,
which default (a) is caused by a failure to pay principal of or premium, if any,
or interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "PAYMENT DEFAULT")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness, together
with the principal amount of any other Indebtedness as to which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10.0 million or more and any such default is not cured or waived or any such
acceleration is not rescinded, or such Indebtedness is not repaid, within a
period of 10 days from the continuation of such default beyond the applicable
grace period or the occurrence of such acceleration;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 90 days (net
of applicable insurance coverage which is acknowledged in writing by the insurer
or which has been determined to be applicable by a final nonappealable
determination by a court of competent jurisdiction), PROVIDED that the aggregate
of all such undischarged judgments exceeds $5 million;
(g) except as permitted by this Indenture, any Subsidiary Guarantee of a
Significant Subsidiary shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Significant Subsidiary Guarantor, or any Person acting on behalf
of any Significant Subsidiary Guarantor, shall deny or disaffirm its obligations
under its Subsidiary Guarantee;
(h) the Company, any Guarantor, or any of the Company's Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company, any Guarantor, or any of the
Company's Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Company, any Guarantor, or any of
the Company's Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a
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Significant Subsidiary or for all or substantially all of the property of
the Company, any Guarantor, or any of the Company's Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary; or
(iii) orders the liquidation of the Company, any Guarantor, or any
of the Company's Significant Subsidiaries or any group of Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60 consecutive
days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof with respect to the Company, any
Guarantor, any Significant Subsidiary or any group of Significant Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Upon any such declaration, the Notes shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (h) or (i) of Section 6.01 hereof occurs with respect to the Company, any
Guarantor constituting a Significant Subsidiary or any group of Guarantors that,
taken together, would constitute a Significant Subsidiary, all outstanding Notes
shall be due and payable immediately without further action or notice. The
Holders of a majority in aggregate principal amount of the then outstanding
Notes by written notice to the Trustee may on behalf of all of the Holders
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due solely
because of the acceleration) have been cured or waived.
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the Notes pursuant to Section 3.07 hereof,
then, upon acceleration of the Notes, an equivalent premium shall also become
and be immediately due and payable, to the extent permitted by law, anything in
this Indenture or in the Notes to the contrary notwithstanding. If an Event of
Default occurs prior to July 1, 2002 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Notes prior to such date, then,
upon acceleration of the Notes, an additional premium shall also become and be
immediately due and payable in an amount, for each of the years beginning on
July 1, of the years set forth below, as set forth below (expressed as
percentages of principal amount):
YEAR PERCENTAGE
1997................................... 112.503%
1998................................... 110.940%
1999................................... 109.377%
2000................................... 107.814%
2001................................... 106.251%
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SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (PROVIDED,
HOWEVER, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
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A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
or any of the Guarantors (or any other obligor upon the Notes), its creditors or
its property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such claims
and any custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee, and in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07 hereof. To the extent that the
payment of any such compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
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FIRST: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
SECOND: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
THIRD: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture.
However, in the case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations or other
facts stated therein).
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(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or any Guarantor.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have
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offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
(g) The Trustee shall not be deemed to have notice of any Default or
Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company, any Guarantors or
any Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, the Notes or the Subsidiary
Guarantees, it shall not be accountable for the Company's use of the proceeds
from the Notes or any money paid to the Company or upon the Company's direction
under any provision of this Indenture, it shall not be responsible for the use
or application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA ss. 313(a) (but if no event described in TIA ss.
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA ss. 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
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SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors shall pay to the Trustee from time to time
such compensation as shall be agreed upon in writing between the Company and the
Trustee for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company and the Guarantors shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel.
The Company and the Guarantors shall indemnify each of the Trustee or any
predecessor Trustee against any and all losses, damages, claims, liabilities or
expenses (including taxes (other than taxes based on the income of the Trustee))
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company and the Guarantors
(including this Section 7.07) and defending itself against any claim (whether
asserted by the Company, any Guarantor, or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or expense may
be attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company and the
Guarantors of their obligations hereunder. The Company and the Guarantors shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company and the Guarantors shall pay the
reasonable fees and expenses of such counsel. The Company and the Guarantors
need not pay for any settlement made without their consent, which consent shall
not be unreasonably withheld.
The obligations of the Company and the Guarantors under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment obligations in this
Section, the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the
extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
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(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, any
Guarantor or the Holders of Notes of at least 10% in principal amount of the
then outstanding Notes may petition, at the expense of the Company, any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's and the Guarantors' obligations under Section 7.07 hereof
shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
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SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their respective obligations with respect to
all outstanding Notes and Subsidiary Guarantees, as applicable, on the date the
conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For
this purpose, Legal Defeasance means that the Company and the Guarantors shall
be deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, and interest and Liquidated Damages on such
Notes when such payments are due, (b) the Company's and the Guarantors'
obligations with respect to such Notes under Article 2 and Section 4.02 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's and the Guarantors' obligations in connection therewith and
(d) this Article 8. Subject to compliance with this Article 8, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from its obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13 and 4.15 hereof with respect to the
outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Notes shall thereafter
be deemed not "Outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant,
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whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply
shall not constitute a Default or an Event of Default under Section 6.01 hereof,
but, except as specified above, the remainder of this Indenture and such Notes
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and Liquidated Damages,
and interest on the outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article 8 concurrently with
such incurrence) or insofar as Sections 6.01(h) or 6.01(i) hereof is concerned,
at any time in the period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to
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which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an opinion of counsel
to the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or the
Guarantors or with the intent of defeating, hindering, delaying or defrauding
any other creditors of the Company or the Guarantors ; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"TRUSTEE") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, Liquidated Damages
and interest, but such money need not be segregated from other funds except to
the extent required by law.
The Company and the Guarantors shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof or
the principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any,
Liquidated Damages or interest on any Note and remaining unclaimed for two years
after such principal, and premium, if any, Liquidated Damages or interest has
become due and payable shall be paid to the Company on its request or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
Note shall thereafter, as a secured creditor, look only to the Company or
Guarantors for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof,
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shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' obligations under this
Indenture, the Notes and the Subsidiary Guarantees, as applicable, shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted
to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the
case may be; PROVIDED, HOWEVER, that, if the Company or the Guarantors make any
payment of principal of, premium, if any, Liquidated Damages or interest on any
Note following the reinstatement of its obligations, the Company and the
Guarantors shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Guarantors and the Trustee may amend or supplement this Indenture, the
Subsidiary Guarantees, or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Company's or a Guarantors
obligations to the Holders of the Notes in the case of a merger or consolidation
pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; or
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of the Board
of Directors of the Company and each of the Guarantors, authorizing the
execution of any such amended or supplemental Indenture, and upon receipt by the
Trustee of the documents described in Section 7.02 hereof, the Trustee shall
join with the Company and each of the Guarantors in the execution of any amended
or supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be
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obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, the Guarantors
and the Trustee may amend or supplement this Indenture (including Sections 3.09,
4.10 and 4.15 hereof), the Subsidiary Guarantees, and the Notes with the consent
of the Holders of at least a majority in principal amount of the Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, the Notes), and, subject
to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default
(other than a Default or Event of Default in the payment of the principal of,
premium, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture, the Subsidiary Guarantees or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with a tender offer or exchange
offer for the Notes).
Upon the request of the Company accompanied by a resolution of the Board
of Directors of the Company and each of the Guarantors authorizing the execution
of any such amended or supplemental Indenture, and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 7.02 hereof, the Trustee shall join with the Company and each of the
Guarantors in the execution of such amended or supplemental Indenture unless
such amended or supplemental Indenture affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding may waive
compliance in a particular instance by the Company with any provision of this
Indenture or the Notes. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the
Notes, except as provided above with respect to Sections 3.09, 4.10 and 4.15
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
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(d) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the then outstanding Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by the covenants contained in Sections 3.09, 4.10 or 4.15
hereof;
(h) release any Significant Subsidiary Guarantor from any of its
obligations under its Subsidiary Guarantee or this Indenture, or amend the
provisions of this Indenture relating to the release of Guarantors; or
(i) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions.
In addition, any amendment to the provisions of Article 10 of this
Indenture (which relate to subordination) will require the consent of the
Holders of at least 662/3% in aggregate principal amount of the Notes then
outstanding if such amendment would adversely affect the rights of Holders of
Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Subsidiary
Guarantees, or the Notes shall be set forth in a amended or supplemental
Indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
(accompanied by a notation of the Subsidiary Guarantees duly ensorsed by the
Guarantors) that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Company
and the Guarantors may not sign an amendment or supplemental Indenture until the
Board of Directors approves it. In executing any amended or supplemental
indenture, the Trustee shall be entitled to receive and (subject to Section
7.01) shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that the execution of such amended or supplemental
indenture is authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company and the Guarantors agree, and each Holder by accepting a Note
agrees, that the Indebtedness evidenced by the Notes is subordinated in right of
payment, to the extent and in the manner provided in this Article 10, to the
prior payment in full of all Senior Debt (whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt.
SECTION 10.02. [INTENTIONALLY OMITTED]
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company or any Guarantor in a
liquidation or dissolution of the Company or such Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or such Guarantor or its property, in an assignment for the benefit of
creditors or any marshalling of the Company's or such Guarantor's assets and
liabilities:
(1) holders of Senior Debt shall be entitled to receive payment in
full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt) before Holders of the Notes shall
be entitled to receive any payment with respect to the Notes (except that
Holders may receive (i) Permitted Junior Securities and (ii) payments and
other distributions made from any defeasance trust created pursuant to
Section 8.01 hereof); and
(2) until all Obligations with respect to Senior Debt (as provided
in subsection (1) above) are paid in full, any distribution to which
Holders would be entitled but for this Article 10 shall be made to holders
of Senior Debt (except that Holders of Notes may receive and retain (i)
Permitted Junior Securities and (ii) payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof), as
their interests may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company and the Guarantors may not make any payment or distribution to
the Trustee or any Holder in respect of Obligations with respect to the Notes
and may not acquire from the Trustee or any Holder any Notes for cash or
property (other than (i) Permitted Junior Securities and (ii) payments
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and other distributions made from any defeasance trust created pursuant to
Section 8.01 hereof) until all principal and other Obligations with respect to
the Senior Debt have been paid in full if:
(i) a default in the payment of any principal, premium, if any, or
interest on Designated Senior Debt occurs and is continuing beyond any
applicable grace period in the agreement, indenture or other document
governing such Designated Senior Debt; or
(ii) any other default on Designated Senior Debt occurs and is
continuing that then permits, or with the giving of notice or passage of
time or both (unless cured or waived) will permit holders of the
Designated Senior Debt as to which such default relates to accelerate its
maturity and the Trustee receives a notice of the default (a "PAYMENT
BLOCKAGE NOTICE") from a Person who may give it pursuant to Section 10.12
hereof. If the Trustee receives any such Payment Blockage Notice, no
subsequent Payment Blockage Notice shall be effective for purposes of this
Section unless and until (i) at least 360 days shall have elapsed since
the effectiveness of the immediately prior Payment Blockage Notice and
(ii) all scheduled payments of principal, premium, if any, and interest on
the Securities that have come due have been paid in full in cash. No
nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the
basis for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in respect
of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.04(ii)
hereof, 179 days pass after notice is received if the maturity of such
Designated Senior Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.05. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.04 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture
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against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Debt, and shall not be liable to any such holders if
the Trustee shall pay over or distribute to or on behalf of Holders or the
Company or any other Person money or assets to which any holders of Senior Debt
shall be entitled by virtue of this Article 10, except if such payment is made
as a result of the willful misconduct or gross negligence of the Trustee.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article 10, but failure to give such notice
shall not affect the subordination of the Notes to the Senior Debt as provided
in this Article 10.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness PARI PASSU with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt;
or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.
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SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as such Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Representative of the Designated Senior Debt are hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Notes.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Debt.
ARTICLE 11
SUBSIDIARY GUARANTEES
SECTION 11.01. SUBSIDIARY GUARANTEES.
Subject to the provisions of this Article 11, each of the Guarantors
hereby, jointly and severally, unconditionally guarantee to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of, premium
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and Liquidated Damages, if any, and interest on the Notes will be promptly paid
in full when due, whether at the maturity or interest payment or mandatory
redemption date, by acceleration, redemption or otherwise, and interest on the
overdue principal of, premium and Liquidated Damages, if any, and interest on
the Notes, if any, if lawful, and all other obligations of the Company to the
Holders or the Trustee under this Indenture and the Notes will be promptly paid
in full or performed, all in accordance with the terms of this Indenture and the
Notes; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise. Failing payment when
due of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors will be jointly and severally obligated to pay the same
immediately. The Guarantors hereby agree that their obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions of
this Indenture and the Notes, the recovery of any judgment against the Company,
any action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest, notice and all
demands whatsoever and covenant that the Subsidiary Guarantees will not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company or Guarantors, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either the Company or Guarantors,
any amount paid by either to the Trustee or such Holder, these Subsidiary
Guarantees, to the extent theretofore discharged, shall be reinstated in full
force and effect. Each Guarantor agrees that they shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one
hand, and the Holders and the Trustee, on the other hand, (x) the maturity of
the obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of these Subsidiary Guarantees, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of these Subsidiary Guarantees. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under these Subsidiary Guarantees.
SECTION 11.02. LIMITATION OF GUARANTOR'S LIABILITY
Each Guarantor and, by its acceptance hereof, each Holder hereof, hereby
confirm that it is their intention that the Subsidiary Guarantee by such
Guarantor not constitute a fraudulent transfer or conveyance for purposes of the
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to the
Subsidiary Guarantees. To effectuate the foregoing intention, each such person
hereby irrevocably agrees that the obligation of such Guarantor under its
Subsidiary Guarantee under this Article 11 shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other
(contingent or otherwise) liabilities of such Guarantor that are relevant under
such laws, and after giving effect to any rights to contribution of such
Guarantor pursuant to any agreement providing for an equitable contribution
among such Guarantor and other Affiliates of the Company of payments made by
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guarantees by such parties, result in the obligations of such Guarantor in
respect of such maximum amount not constituting a fraudulent conveyance. Each
Holder, by accepting the benefits hereof, confirms its intention that, in the
event of bankruptcy, reorganization or other similar proceeding of the Company
or any Guarantor in which concurrent claims are made upon such Guarantor
hereunder, to the extent such claims will not be fully satisfied, each such
claimant with a valid claim against the Company shall be entitled to a ratable
share of all payments by such Guarantor in respect of such concurrent claims.
SECTION 11.03. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEES.
To evidence the Subsidiary Guarantees set forth in Section 11.01 hereof,
each Guarantor hereby agrees that a notation of the Subsidiary Guarantees
substantially in the form of Exhibit D shall be endorsed by an officer of such
Guarantor on each Note authenticated and delivered by the Trustee and that this
Indenture shall be executed on behalf of such Guarantor by its President or one
of its Vice Presidents and attested to by an Officer.
Each Guarantor hereby agrees that the Subsidiary Guarantees set forth in
Section 11.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of the Subsidiary Guarantees.
If an officer or Officer whose signature is on this Indenture or on the
Subsidiary Guarantees no longer holds that office at the time the Trustee
authenticates the Note on which the Subsidiary Guarantees are endorsed, the
Subsidiary Guarantees shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantees set forth
in this Indenture on behalf of the Guarantors.
SECTION 11.04. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or shall prevent any sale or conveyance
of the property of a Guarantor as an entirety or substantially as an entirety,
to the Company.
(b) Except as set forth in Articles 4 and 5 hereof, nothing contained in
this Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into a corporation or corporations other than the Company
(whether or not affiliated with the Guarantor), or successive consolidations or
mergers in which a Guarantor or its successor or successors shall be a party or
parties, or shall prevent any sale or conveyance of the property of a Guarantor
as an entirety or substantially as an entirety, to a corporation other than the
Company (whether or not affiliated with the Guarantor) authorized to acquire and
operate the same; PROVIDED, HOWEVER, that such transaction meets all of the
following requirements: (i) each Guarantor hereby covenants and agrees that,
upon any such consolidation, merger, sale or conveyance, the Subsidiary
Guarantee endorsed on the Notes, and the due and punctual performance and
observance of all of the covenants and conditions of this Indenture to be
performed by such Guarantor, shall be expressly assumed (in the event that the
Guarantor is not the surviving corporation in the merger), by supplemental
indenture satisfactory in form to the Trustee, executed and delivered to the
Trustee, by the corporation formed by such consolidation, or into which the
Guarantor shall have been merged, or by the corporation which shall have
acquired such property. In case of any such consolidation, merger, sale or
conveyance and upon the assumption by the successor
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corporation, by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the Subsidiary Guarantees endorsed
upon the Notes and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Guarantor, such successor
corporation shall succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Subsidiary Guaranties to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Subsidiary
Guaranties so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Subsidiary Guaranties theretofore and thereafter
issued in accordance with the terms of this Indenture as though all of such
Subsidiary Guaranties had been issued at the date of the execution hereof; (ii)
immediately after giving effect to such transaction, no Default or Event of
Default exists; and (iii) the Company would be permitted by virtue of the
Company's pro forma Fixed Charge Coverage Ratio, immediately after giving effect
to such transaction, to incur at least $1.00 of additional Indebtedness pursuant
to the Fixed Charge Coverage ratio test set for in Section 4.09 hereof.
SECTION 11.05. RELEASES FOLLOWING SALE OF ASSETS.
Concurrently with any sale of assets (including, if applicable, all of the
capital stock of any Guarantor), any Liens in favor of the Trustee in the assets
sold thereby shall be released; provided that in the event of an Asset Sale, the
Net Proceeds from such sale or other disposition are treated in accordance with
the provisions of Section 4.10 hereof. If the assets sold in such sale or other
disposition include all or substantially all of the assets of any Guarantor or
all of the capital stock of any Guarantor, then such Guarantor (in the event of
a sale or other disposition of all of the capital stock of such Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of a Guarantor) shall be
released and relieved of its obligations under its Subsidiary Guarantee or
Section 11.04 hereof, as the case may be; PROVIDED that in the event of an Asset
Sale, the Net Proceeds from such sale or other disposition are treated in
accordance with the provisions of Section 4.10 hereof. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to
the effect that such sale or other disposition was made by the Company in
accordance with the provisions of this Indenture, including without limitation
Section 4.10 hereof, the Trustee shall execute any documents reasonably required
in order to evidence the release of any Guarantor from its obligations under its
Subsidiary Guarantees. Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor under the
Indenture as provided in this Article 11.
SECTION 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
SECTION 11.07. SUBORDINATION OF SUBSIDIARY GUARANTEES.
The obligations of each Guarantor under its Subsidiary Guarantee pursuant
to this Article 11 shall be junior and subordinated to the prior payment in full
of all Senior Debt of such Guarantor and the amounts for which the Guarantors
will be liable under the guarantees issued from time to time with respect to
Senior Debt on the same basis as the Notes are junior and subordinated to Senior
Debt. For the purposes of the foregoing sentence, the Trustee and the Holders
shall have the right to receive and/or retain payments by any of the Guarantors
only at such times as they may receive and/or
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retain payments in respect of the Notes pursuant to this Indenture, including
Article 11 hereof.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA ss. 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company or the Trustee to the others is
duly given if in writing and delivered in Person or mailed by first class mail
(registered or certified, return receipt requested), telecopier or overnight air
courier guaranteeing next day delivery, to the others' address:
If to the Company or any Guarantor:
Coach USA, Inc.
One Riverway, Suite 600
Houston, Texas 77056
Telecopier No.: (713) 888-0218
Attention: President
With a copy to:
Andrews & Kurth LLP
4200 Texas Commerce Tower
Houston, Texas 77002
Telecopier No.: (713) 220-4285
Attention: David P. Oelman, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, NY 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
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Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA ss. 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS
OF NOTES.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Guarantors, the Trustee, the Registrar and anyone else shall have the protection
of TIA ss. 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantors
shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss.
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
74
<PAGE>
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND STOCKHOLDERS.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or any Guarantor under the Notes, this
Indenture or the Subsidiary Guarantees or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each Holder by accepting a
Note waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture or the Subsidiary Guarantees.
SECTION 12.10. SUCCESSORS.
All agreements of the Company and the Guarantors in this Indenture, the
Notes and the Subsidiary Guarantees shall bind its successors. All agreements of
the Trustee in this Indenture shall bind their respective successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture, the Notes or the Subsidiary
Guarantees shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
75
<PAGE>
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
76
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Indenture as of the
date first written above.
COACH USA, INC.
By: __________________________________
Name:
Title:
EACH ENTITY LISTED ON SCHEDULE I HERETO
By: __________________________________
Douglas Cerny
Title: Vice President of each such entity
THE BANK OF NEW YORK, as Trustee
By: __________________________________
Name:
Title:
77
<PAGE>
EXHIBIT A-1
(Face of Note)
==============================================================================
CUSIP/CINS ____________
9 3/8% [Series A] [Series B] Senior Subordinated Notes due 2007
No. ___ $__________
COACH USA, INC.
promises to pay to _________________________________________________
or registered assigns,
the principal sum of ________________________________________________
Dollars on July 1, 2007.
Interest Payment Dates: January 1, and July 1
Record Dates: December 15, and June 15
Dated:
Coach USA, Inc.
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By:__________________________________
Authorized Signatory
==============================================================================
A1-1
<PAGE>
(Back of Note)
9 3/8% [Series A] [Series B] Senior Subordinated Notes due 2007
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Coach USA, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 9 3/8% per
annum from the date hereof until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages semi-annually on
January 1 and July 1 of each year, or if any such day is not a Business Day, on
the next succeeding Business Day (each an "INTEREST PAYMENT DATE"). Interest on
the Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of issuance; PROVIDED that if
there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; PROVIDED, FURTHER, that the first Interest
Payment Date shall be January 1, 1998. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the December 15, or June 15, next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Liquidated Damages on,
all Global Notes and all other Notes the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of the Guarantors may act in any such capacity.
A1-2
<PAGE>
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
June 24, 1997 ("INDENTURE") among the Company, the Guarantors and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $150.0 million
in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to July 1, 2002.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on July 1
of the years indicated below:
YEAR PERCENTAGE
---- ----------
2002 ............................. 104.688%
2003 ............................. 103.125%
2004 ............................. 101.563%
2005 and thereafter .............. 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, at any time prior to July 1, 2000, the Company may (but shall not have the
obligation to) redeem, on one or more occasions, up to an aggregate of 331/3% of
the aggregate principal amount of Notes issued at a redemption price equal to
109.375% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date, with the net cash
proceeds of one or more Public Equity Offerings; PROVIDED that at least 662/3%
of the aggregate principal amount of Notes issued remain outstanding immediately
after the occurrence of such redemption; and PROVIDED FURTHER, that such
redemption shall occur within 60 days of the date of the closing of such Public
Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, each Holder of Notes will have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of each Holder's Notes (the "CHANGE OF CONTROL
OFFER") at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date of purchase (the "CHANGE OF CONTROL PAYMENT"). Within 30 days
following any Change of Control, the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
A1-3
<PAGE>
(b) If the Company or any of its Restricted Subsidiaries consummate an
Asset Sale, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $10.0 million, the Company shall commence an offer to
all Holders of Notes (as "ASSET SALE OFFER") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Subsidiary) may use such deficiency for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased on a PRO RATA basis. Holders of Notes that are the
subject of an offer to purchase will receive an Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before
the mailing of a notice of redemption or during the period between a record date
and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture, the Subsidiary Guarantees, or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes. Without the consent of any Holder of a Note, the Indenture, the
Subsidiary Guarantees, or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's or a Guarantor's obligations to Holders of the Notes in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
A1-4
<PAGE>
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages, if any, with
respect to, the Notes; (ii) default in payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by Article 10 of the
Indenture); (iii) failure by the Company or any of its Subsidiaries to comply
with Sections 3.09, 4.07, 4.09, 4.10, 4.15 or 5.01 of the Indenture, which
failure remains uncured for 30 days; (iv) failure by the Company or any of its
Subsidiaries for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding to
comply with certain other agreements in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (or the payment of which is guaranteed
by the Company or any of its Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more and any such default is not cured
or waived or any such acceleration is not rescinded, or such Indebtedness is not
repaid, within a period of 10 days from the continuation of such default beyond
the applicable grace period of the occurrence of such acceleration; (vi) the
failure by the Company or any of its Subsidiaries to pay final judgments by
courts of competent jurisdiction aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 90 days (net of
applicable insurance coverage which is acknowledged in writing by the insurer or
which has been determined to be applicable by a final nonappealable
determination by a court of competent jurisdiction); (vii) except as permitted
by the Indenture, any Subsidiary Guarantee of a Significant Subsidiary shall be
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Significant Subsidiary
Guarantor, or any Person acting on behalf of any Significant Subsidiary
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and (viii) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect to
the Company, any Guarantor constituting a Significant Subsidiary or any group of
Guarantors that, taken together, would constitute a Significant Subsidiary, all
outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
A1-5
<PAGE>
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder of the Company or the Guarantors, as such, shall not
have any liability for any obligations of the Company or the Guarantors under
the Notes, the Indenture or the Subsidiary Guarantees, or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND RESTRICTED
DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the Registration Rights Agreement
dated as of June 24, 1997, among the Company, the Guarantors and the parties
named on the signature pages thereof (the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Coach USA, Inc.
One Riverway, Suite 600
Houston, Texas 77056
Attention: Secretary
A1-6
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date: _______________________
Your Signature: _______________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee: _____________________________
A1-7
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date: ___________________ Your Signature: _____________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.: _____________________
Signature Guarantee: ________________________
A1-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
Amount of Amount of
decrease in increase in Principal Amount
Principal Principal [at maturity] of Signature of
Amount Amount this Global authorized
[at maturity] [at maturity] Note following signatory of
of of such Trustee or
Date of this Global this Global decrease (or Note
Exchange Note Note increase) Custodian
-------- ---- ---- --------- ---------
A1-9
<PAGE>
EXHIBIT A-2
(Face of Regulation S Temporary Global Notes)
==============================================================================
CUSIP/CINS ____________
9 3/8% [Series A] [Series B] Senior Subordinated Notes due 2007
No. ___ $__________
COACH USA, INC.
promises to pay to _________________________________________________
or registered assigns,
the principal sum of ________________________________________________
Dollars on July 1, 2007.
Interest Payment Dates: January 1, and July 1
Record Dates: December 15, and June 15
Dated:
COACH USA, INC.
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
This is one of the Notes referred to in the within-mentioned Indenture:
The Bank of New York,
as Trustee
By:__________________________________
Authorized Signatory
==============================================================================
A2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
9 3/8% [Series A] [Series B] Senior Subordinated Notes due 2007
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (the "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
A2-2
<PAGE>
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
I. INTEREST. Coach USA, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 9 3/8% per
annum from the date hereof until maturity and shall pay the Liquidated Damages
payable pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages semi-annually on
January 1, and July 1, of each year, or if any such day is not a Business Day,
on the next succeeding Business Day (each an "INTEREST PAYMENT DATE"). Interest
on the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the date of issuance; PROVIDED that
if there is no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; PROVIDED, FURTHER, that the first Interest
Payment Date shall be January 1, 1998. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
II. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the December 15 or June 15 next
preceding the Interest Payment Date, even if such Notes are cancelled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Liquidated Damages on,
all Global Notes and all other Notes the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
III. PAYING AGENT AND REGISTRAR. Initially, The Bank of New York, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of the Guarantors may act in any such capacity.
IV. INDENTURE. The Company issued the Notes under an Indenture dated as of
June 24, 1997 ("INDENTURE") among the Company, the Guarantors and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15
U.S. Code ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the Indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $150.0 million
in aggregate principal amount.
A2-3
<PAGE>
V. OPTIONAL REDEMPTION.
A. Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to July 1, 2002.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on July 1,
of the years indicated below:
YEAR PERCENTAGE
---- ----------
2002 ............................. 104.688%
2003 ............................. 103.125%
2004 ............................. 101.563%
2005 and thereafter .............. 100.000%
B. Notwithstanding the provisions of subparagraph (a) of this Paragraph 5,
at any time prior to July 1, 2000, the Company may (but shall not have the
obligation to) redeem, on one or more occasions, up to an aggregate of 331/3% of
the aggregate principal amount of Notes issued at a redemption price equal to
109.375% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date, with the net cash
proceeds of one or more Public Equity Offerings; PROVIDED that at least 662/3%
of the aggregate principal amount of Notes issued remain outstanding immediately
after the occurrence of such redemption; and PROVIDED FURTHER, that such
redemption shall occur within 60 days of the date of the closing of such Public
Equity Offering.
VI. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Notes.
VII. REPURCHASE AT OPTION OF HOLDER.
A. If there is a Change of Control, each Holder of Notes will have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of each Holder's Notes (the "CHANGE OF CONTROL
OFFER") at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to the date of purchase (the "CHANGE OF CONTROL PAYMENT"). Within 30 days
following any Change of Control, the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
B. If the Company or any of its Restricted Subsidiaries consummate an
Asset Sale, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $10.0 million, the Company shall commence an offer to
all Holders of Notes (as "ASSET SALE OFFER") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds at an offer price in cash in an amount
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of purchase in accordance
with the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company (or such Subsidiary) may use such deficiency for general
corporate purposes. If the aggregate principal amount of
A2-4
<PAGE>
Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased on a PRO RATA basis. Holders of
Notes that are the subject of an offer to purchase will receive an Asset Sale
Offer from the Company prior to any related purchase date and may elect to have
such Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
VIII. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
IX. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it need not
exchange or register the transfer of any Notes for a period of 15 days before
the mailing of a notice of redemption or during the period between a record date
and the corresponding Interest Payment Date.
X. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
XI. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture, the Subsidiary Guarantees, or the Notes may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes. Without the consent of any Holder of a Note, the Indenture, the
Subsidiary Guarantees, or the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's or a Guarantor's obligations to Holders of the Notes in case of a
merger or consolidation, to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not adversely affect
the legal rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act.
XII. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages, if any, with
respect to, the Notes; (ii) default in payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by Article 10 of the
Indenture); (iii) failure by the Company or any of its Subsidiaries to comply
with Sections 3.09, 4.07, 4.09, 4.10, 4.15 or 5.01 of the Indenture, which
failure remains uncured for 30 days; (iv) failure by the Company or any of its
Subsidiaries for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding to
comply with certain other agreements in the Indenture or the Notes; (v) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (or the payment of which is
<PAGE>
guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness
or guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "Payment Default")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $10.0 million or more and any such default is not cured
or waived or any such acceleration is not rescinded, or such Indebtedness is not
repaid, within a period of 10 days from the continuation of such default beyond
the applicable grace period of the occurrence of such acceleration; (vi) the
failure by the Company or any of its Subsidiaries to pay final judgments by
courts of competent jurisdiction aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 90 days (net of
applicable insurance coverage which is acknowledged in writing by the insurer or
which has been determined to be applicable by a final nonappealable
determination by a court of competent jurisdiction); (vii) except as permitted
by the Indenture, any Subsidiary Guarantee of a Significant Subsidiary shall be
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Significant Subsidiary
Guarantor, or any Person acting on behalf of any Significant Subsidiary
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and (viii) certain events of bankruptcy or insolvency with respect to
the Company or any of its Significant Subsidiaries. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, with respect to
the Company, any Guarantor constituting a Significant Subsidiary or any group of
Guarantors that, taken together, would constitute a Significant Subsidiary, all
outstanding Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
XIII. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
XIV. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder of the Company or the Guarantors, as such, shall not
have any liability for any obligations of the Company or the Guarantors under
the Notes, the Indenture or the Subsidiary Guarantees, or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
A2-6
<PAGE>
XV. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
XVI. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
XVII. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to Holders of
Notes under the Indenture, Holders of Restricted Global Notes and Restricted
Definitive Notes shall have all the rights set forth in the Registration Rights
Agreement dated as of June 24, 1997, among the Company, the Guarantors and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
XVIII. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Coach USA, Inc.
One Riverway, Suite 600
Houston, Texas 77056
Attention: Secretary
A2-7
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: _______________________
Your Signature: _______________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee: _____________________________
A2-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the
amount you elect to have purchased: $___________
Date: ___________________ Your Signature: _____________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.: _____________________
Signature Guarantee: ________________________
A2-9
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
Amount of Amount of
decrease in increase in Principal Amount
Principal Principal [at maturity] of Signature of
Amount Amount this Global authorized
[at maturity] [at maturity] Note following signatory of
of of such Trustee or
Date of this Global this Global decrease (or Note
Exchange Note Note increase) Custodian
-------- ---- ---- --------- ---------
A2-10
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Coach USA, Inc.
One Riverway, Suite 600
Houston, Texas 77056
[Registrar address block]
Re: 9 3/8% Senior Subordinated Notes due 2007 of Coach USA, Inc.
Reference is hereby made to the Indenture, dated as of June 24, 1997 (the
"INDENTURE"), between Coach USA, Inc., as issuer (the "COMPANY"), and The Bank
of New York, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
______________, (the "TRANSFEROR") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________ (the "TRANSFEREE"), as further specified in Annex A hereto. In
connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "SECURITIES ACT"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
REGULATION S TEMPORARY GLOBAL NOTE, THE REGULATION S GLOBAL NOTE OR A DEFINITIVE
NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in
accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly,
the Transferor hereby further certifies that (i) the Transfer is not being made
to a person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor and
any Person acting on its behalf reasonably believed and believes that the
Transferee was outside the United States or (y) the transaction was executed in,
on or through the facilities of a designated offshore securities market and
neither such Transferor nor any Person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States, (ii) no directed
selling efforts have been made in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act, and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or
B-1
<PAGE>
for the account or benefit of a U.S. Person (other than an Initial Purchaser).
Upon consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note, the Temporary Regulation S
Global Note and/or the Definitive Note and in the Indenture and the Securities
Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN THE RSTD GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION
OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) [ ] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that the Transfer complies with the transfer
restrictions applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed, which
certification is supported by (1) a certificate executed by the Transferee in
the form of Exhibit E to the Indenture and (2) if such Transfer is in respect of
a principal amount of Notes at the time of transfer of less than $250,000, an
Opinion of Counsel provided by the Transferor or the Transferee (a copy of which
the Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the RSTD Global
Note and/or the Definitive Notes and in the Indenture and the Securities Act.
4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the
B-2
<PAGE>
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_______________________________________
[Insert Name of Transferor]
By: _______________________________________
Name:
Title:
Dated: _____________________, ______
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (A) OR (B)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Regulation S Global Note (CUSIP ), or
(iii) [ ] RSTD Global Note (CUSIP ______); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ), or
(ii) [ ] Regulation S Global Note (CUSIP ), or
(iii) [ ] RSTD Global Note (CUSIP ______), or
(iv) [ ] Unrestricted Global Note (CUSIP ); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Coach USA, Inc.
One Riverway, Suite 600
Houston, Texas 77056
[Registrar address block]
Re: 9 3/8% SENIOR SUBORDINATED NOTES DUE 2007 OF COACH USA, INC.
(CUSIP _____________)
Reference is hereby made to the Indenture, dated as of June 24, 1997, (the
"INDENTURE"), between Coach USA, Inc., as issuer (the "COMPANY"), and The Bank
of New York, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
, (the "OWNER") owns and proposes to exchange the Note[s] or
interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "EXCHANGE"). In connection with
the Exchange, the Owner hereby certifies that:
1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A
RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN AN UNRESTRICTED GLOBAL NOTE
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "SECURITIES ACT"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been
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effected in compliance with the transfer restrictions applicable to Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act,
(iii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO
UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED
GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED
GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL
INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the
Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE]
[ ] 144A Global Note, [ ] Regulation S Global Note, [ ] RSTD Global Note, with
an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer and (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, and in compliance with any applicable blue sky securities
laws of any state of the United States. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the beneficial interest
issued will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the relevant Restricted Global Note and in the
Indenture and the Securities Act.
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<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
___________________________________
[Insert Name of Owner]
By: _______________________________
Name:
Title:
Dated: _____________________, ______
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EXHIBIT D
FORM OF SUBSIDIARY GUARANTEE
Each of the corporations listed on Schedule I hereto (hereinafter referred
to as the "Guarantors", which term includes any successor or additional
Guarantor under the Indenture (the "Indenture") referred to in the Note upon
which this notation is endorsed), (i) has unconditionally guaranteed (a) the due
and punctual payment of the principal of and interest on the Notes, whether at
maturity or interest payment date, by acceleration, call for redemption or
otherwise, (b) the due and punctual payment of interest on the overdue principal
of and (if lawful) interest on the Notes, (c) the due and punctual performance
of all other obligations of the Company to the Holders or the Trustee, all in
accordance with the terms set forth in the Indenture, and (d) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise and (ii) has agreed to pay any and all
costs and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Subsidiary Guarantee.
No stockholder, officer, director or incorporator, as such, past, present
or future, of the Guarantors shall have any personal liability under this
Subsidiary Guarantee by reason of his or its status as such stockholder,
officer, director or incorporator.
This Subsidiary Guarantee shall be binding upon each Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
herein conferred upon that party shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
The obligations of the Guarantors to the Holders of Notes and to the
Trustee pursuant to the Subsidiary Guarantees and the Indenture are expressly
subordinated to the extent set forth in Article 10 of the Indenture and
reference is hereby made to such Indenture for the precise terms of such
subordination.
EACH ENTITY LISTED ON SCHEDULE I HERETO
By: ______________________________
Name:
Title:
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<PAGE>
EXHIBIT E
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Coach USA, Inc.
One Riverway, Suite 600
Houston, Texas 77056
[Registrar address block]
Re: 9 3/8% Senior Subordinated Notes due 2007 of Coach USA, Inc.
Reference is hereby made to the Indenture, dated as of June 24, 1997 (the
"INDENTURE"), among Coach USA, Inc., as issuer (the "COMPANY"), the Guarantors
listed on Schedule A thereto and The Bank of New York, as trustee. Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the United States Securities Act of
1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "Qualified institutional
buyer" (as defined therein), (C) to an institutional "Accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act, and we
further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other
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information as you and the Company may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further understand
that the Notes purchased by us will bear a legend to the foregoing effect. We
further understand that any subsequent transfer by us of the Notes or beneficial
interest therein acquired by us must be effected through one of the Placement
Agents.
4. We are an institutional "Accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "Accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
___________________________________
[Insert Name of Accredited Investor]
By: _______________________________
Name:
Title:
Dated: _____________________, ______
E-2
EXHIBIT 4.2
================================================================================
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
Dated as of June 24, 1997
by and among
Coach USA, Inc.,
The Subsidiaries of Coach USA, Inc. listed on Schedule A
and
Donaldson, Lufkin & Jenrette Securities Corporation
Merrill Lynch & Co.
Alex. Brown & Sons Incorporated
Montgomery Securities
================================================================================
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of June 24, 1997, by and among Coach USA, Inc., a Delaware
corporation (the "COMPANY"), each of the entities listed on Schedule A, attached
hereto (each a "GUARANTOR" and, collectively, the "GUARANTORS"), and Donaldson,
Lufkin & Jenrette Securities Corporation, Merrill Lynch & Co., Alex. Brown &
Sons Incorporated, and Montgomery Securities (each an "INITIAL PURCHASER" and,
collectively, the "INITIAL PURCHASERS"), each of whom has agreed to purchase the
Company's 9 3/8% Series A Senior Subordinated Notes due 2007 (the "SERIES A
NOTES") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated June
18, 1997 (the "PURCHASE AGREEMENT"), by and among the Company, the Guarantors
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase the Series A Notes, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
9 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the City
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
BROKER-DEALER: Any broker or dealer registered under the Exchange Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Series B Notes that are
acquired by a Broker- Dealer in the Exchange Offer in exchange for Series A
Notes that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its affiliates).
CERTIFICATED SECURITIES: As defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate
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<PAGE>
principal amount as the aggregate principal amount of Series A Notes tendered by
Holders thereof pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Series A Notes, each Interest
Payment Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the Company under the Act of the
Series B Notes pursuant to the Exchange Offer Registration Statement pursuant to
which the Company shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers propose
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to certain "accredited
investors," as such term is defined in Rule 501(a)(1), (2), (3), (5) and (7) of
Regulation D under the Act.
GLOBAL NOTEHOLDER: As defined in the Indenture.
HOLDERS: As defined in Section 2 hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated the Closing Date, among the Company, the
Guarantors and The Bank of New York, as trustee (the "TRUSTEE"), pursuant to
which the Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
INTEREST PAYMENT DATE: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
NOTES: The Series A Notes and the Series B Notes.
PERSON: An individual, partnership, corporation, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
PROSPECTUS: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
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<PAGE>
RECORD HOLDER: With respect to any Damages Payment Date, each Person who
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and
the Guarantors relating to (a) an offering of Series B Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) which
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
SERIES B NOTES: The Company's 9 3/8% Series B Senior Subordinated Notes
due 2007 to be issued pursuant to the Indenture (i) in the Exchange Offer or
(ii) upon the request of any Holder of Series A Notes covered by a Shelf
Registration Statement, in exchange for such Series A Notes.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77, ET SEQ.) as
in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such Note
has been disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company and the Guarantors
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<PAGE>
shall (i) cause to be filed with the Commission as soon as practicable after the
Closing Date, but in no event later than 45 days after the Closing Date, the
Exchange Offer Registration Statement, (ii) use its best efforts to cause such
Exchange Offer Registration Statement to become effective at the earliest
possible time, but in no event later than 120 days after the Closing Date, (iii)
in connection with the foregoing, (A) file all pre-effective amendments to such
Exchange Offer Registration Statement as may be necessary in order to cause such
Exchange Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
Series B Notes to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, commence and
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting registration of the Series B Notes to be offered in exchange for
the Series A Notes that are Transfer Restricted Securities and to permit sales
of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no event shall
such period be less than 20 Business Days. The Company and the Guarantors shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Notes shall be included in the
Exchange Offer Registration Statement. The Company and the Guarantors shall use
their respective best efforts to cause the Exchange Offer to be Consummated on
the earliest practicable date after the Exchange Offer Registration Statement
has become effective, but in no event later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Series A Notes that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Series A Notes (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company)
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with its initial
sale of each Series B Note received by such Broker- Dealer in the Exchange
Offer, which prospectus delivery requirement may be satisfied by the delivery by
such Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also contain
all other information with respect to such sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.
The Exchange Offer shall not be subject to any conditions, other than
(i) that the Exchange Offer, or the making of any exchange by a Holder, does not
violate applicable law or any applicable interpretation of the staff of the
Commission, (ii) that no action or proceeding shall have been instituted or
threatened in any court or by or before any governmental agency or body with
respect to the Exchange Offer, (iii) that there shall not have been adopted or
enacted any law, statute, rule or regulation, (iv) that there shall not have
been declared by United States federal or New York state authorities a banking
moratorium, (v) that
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<PAGE>
trading on the New York Stock Exchange or generally in the United States
over-the-counter market shall not have been suspended by order of the Commission
or any other governmental authority and (vi) such other conditions as may be
reasonably acceptable to the Initial Purchasers, in each of clauses (ii) through
(v), which, in the Company's judgment, would reasonably be expected to impair
the ability of the Company to proceed with the Registered Exchange Offer.
The Company and the Guarantors shall use their respective best efforts
to keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for sales of Broker- Dealer
Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that
such Registration Statement conforms with the requirements of this Agreement,
the Act and the policies, rules and regulations of the Commission as announced
from time to time, for a period of one year, if required, from the date on which
the Exchange Offer is Consummated.
The Company and the Guarantors shall promptly provide sufficient copies
of the latest version of such Prospectus to such Restricted Broker-Dealers
promptly upon request, at any time during such one-year period in order to
facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the Series B Notes because
the Exchange Offer is not permitted by applicable law (after the procedures set
forth in Section 6(a)(i) below have been complied with) or (ii) if any Holder of
Transfer Restricted Securities shall notify the Company within 20 Business Days
following the Consummation of the Exchange Offer that (A) such Holder has been
advised by counsel that such Holder may be prohibited by law or Commission
policy from participating in the Exchange Offer or (B) such Holder has been
advised by counsel that it may not resell the Series B Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Series A Notes acquired directly from the Company or one
of its affiliates, then the Company and the Guarantors shall (x) cause to be
filed on or prior to 45 days after the date on which the Company determines that
it is not required to file the Exchange Offer Registration Statement pursuant to
clause (i) above or 45 days after the date on which the Company receives the
notice specified in clause (ii) above a shelf registration statement pursuant to
Rule 415 under the Act (which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "SHELF REGISTRATION STATEMENT")),
relating to all Transfer Restricted Securities the Holders of which shall have
provided the information required pursuant to Section 4(b) hereof, and shall (y)
use their respective best efforts to cause such Shelf Registration Statement to
become effective on or prior to 120 days after the date on which the Company
becomes obligated to file such Shelf Registration Statement. If, after the
Company has filed an Exchange Offer Registration Statement which satisfies the
requirements of Section 3(a) above, the Company is required to file and make
effective a Shelf Registration Statement solely because the Exchange Offer shall
not be permitted under applicable federal law, then the filing of the Exchange
Offer Registration Statement shall be deemed to satisfy the requirements of
clause (x) above. Such an event shall have no effect on the requirements of
clause (y) above. The Company and the Guarantors shall use their respective best
efforts to keep the Shelf Registration Statement discussed in this Section 4(a)
continuously effective, supplemented and amended as required by and subject to
the provisions of Sections 6(b) and (c) hereof to
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<PAGE>
the extent necessary to ensure that it is available for sales of Transfer
Restricted Securities by the Holders thereof entitled to the benefit of this
Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i)) following the date on which such Shelf Registration
Statement first becomes effective under the Act or such shorter period that will
terminate when all the Transfer Restricted Securities covered by the Shelf
Registration Statement (i) have been sold pursuant thereto (in any such case,
such period being called the "SHELF REGISTRATION PERIOD"), (ii) are distributed
to the public pursuant to Rule 144 of the Securities Act or are saleable
pursuant to Rule 144(k) under the Securities Act can be sold pursuant to Rule
144 without any limitations under clauses (c), (e), (f) and (h) of Rule 144 (or
any successor rule thereof); PROVIDED, HOWEVER, that the Company shall not be
obligated to keep the Shelf Registration Statement effective if (i) the Company
determines, in its reasonable judgment, upon advice of counsel, as authorized by
a resolution of its Board of Directors, that the continued effectiveness and
usability of the Shelf Registration Statement would (x) require the disclosure
of material information, which the Company has a BONA FIDE business reason for
preserving as confidential, or (y) interfere with any financing, acquisition,
corporate reorganization or other material transaction involving the Company or
any of its subsidiaries, provided that the failure to keep the Shelf
Registration Statement effective and usable for offers and sales of Transfer
Restricted Securities for such reasons shall last no longer than 45 days in any
12-month period (whereafter a Registration Default), and (ii) the Company
promptly thereafter complies with the requirements of Section 6(c)(i) hereof, if
applicable. Any such period during which the Company is excused from keeping the
Shelf Registration Statement effective and usable for offers and sales of
Transfer Restricted Securities is referred to herein as a "Suspension Period." A
Suspension Period shall commence on and include the date that the Company gives
notice that the Shelf Registration Statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of Transfer
Restricted Securities as a result of the application of this proviso and shall
end on the earlier to occur of (1) the date on which each seller of Transfer
Restricted Securities covered by the Shelf Registration Statement either
receives the copies of the supplemented or amended prospectus contemplated by
Section 6(c)(i) hereof or is advised in writing by the Company that use of the
prospectus may be resumed and (2) the expiration of the 45 days in any 12-month
period during which one or more Suspension Periods has been in effect.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH THE
SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, such
information specified in item 507 of Regulation S-K under the Act for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such information.
Each Holder as to which any Shelf Registration Statement is being effected
agrees to furnish promptly to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Registration Statement has not
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<PAGE>
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement, (iii) the Exchange Offer has not been
Consummated within 30 Business Days after the Exchange Offer Registration
Statement is first declared effective by the Commission or (iv) any Registration
Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective or fail to be usable for its intended purpose
without being succeeded within three business days by a post-effective amendment
to such Registration Statement that cures such failure and that is itself
declared effective within such three business day period (each such event
referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), then the
Company and the Guarantors hereby jointly and severally agree to pay liquidated
damages to each Holder of Transfer Restricted Securities with respect to the
first 90-day period immediately following the occurrence of such Registration
Default, in an amount equal to $.05 per week per $1,000 principal amount of
Transfer Restricted Securities held by such Holder for each week or portion
thereof that the Registration Default continues. The amount of the liquidated
damages shall increase by an additional $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities with respect to each subsequent 90-day
period until all Registration Defaults have been cured, up to a maximum amount
of liquidated damages of $.50 per week per $1,000 principal amount of Transfer
Restricted Securities. Notwithstanding the foregoing, Holders of Transfer
Restricted Securities who do not provide in all material respects the
information required in Sections 4(b) or 6(a)(ii) hereof will not be entitled to
such Liquidated Damages. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the liquidated
damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Global Note Holder
by wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities by mailing checks to their registered
addresses on each Damages Payment Date. All obligations of the Company and the
Guarantors set forth in the preceding paragraph that are outstanding with
respect to any Transfer Restricted Security at the time such security ceases to
be a Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
effect such exchange and to permit the sale of Broker-Dealer Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, such that in the reasonable opinion of counsel to the Company there
is a substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek
a no-action letter or
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other favorable decision from the Commission allowing the Company and the
Guarantors to Consummate an Exchange Offer for such Series A Notes. The
Company and the Guarantors hereby agree to pursue the issuance of such a
decision to the Commission staff level, but shall not be required to take
action to effect a change of stated or recognized Commission policy. In
connection with the foregoing, the Company and the Guarantors hereby agree
to (A) participate in telephonic conferences with the Commission, (B)
deliver to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C) diligently
pursue a resolution (which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
and the Guarantors (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the effect
that (A) it is not an affiliate of the Company, (B) it is not engaged in,
and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the Series B Notes to
be issued in the Exchange Offer, (C) it is acquiring the Series B Notes in
its ordinary course of business and (D) if such Holder is a broker-dealer,
that it will receive Exchange Securities for its own account in exchange for
Securities that were acquired as a result of market-making activities or
other trading activities and that it will deliver a prospectus in connection
with any resale of such Exchange Securities. Each Holder shall be required
to make such other representations as may be reasonably necessary under
applicable Commission rules, regulations or interpretations to render the
use of Form S-4 or another appropriate form under the Securities Act
available and will be required to agree to comply with their agreements and
covenants set forth in this Agreement. Each Holder hereby acknowledges and
agrees that any Broker- Dealer and any such Holder using the Exchange Offer
to participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on the
date of this Agreement rely on the position of the Commission enunciated in
MORGAN STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and similar
no- action letters (including, if applicable, any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Series B Notes obtained by such Holder
in exchange for Series A Notes acquired by such Holder directly from the
Company or an affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall, if requested by the
Commission, provide a supplemental letter to the Commission (A) stating that
the Company and the Guarantors are registering the Exchange Offer in
reliance on the position of the Commission enunciated in EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above, (B) including a representation that neither
the Company nor any Guarantor has entered into any arrangement or
understanding with any Person to distribute the Series B Notes to be
received in the Exchange Offer and that, to the best of the Company's and
each Guarantor's information and belief, each Holder participating in the
Exchange Offer is acquiring the
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Series B Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their respective best efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the Company
pursuant to Section 4(b) hereof), and pursuant thereto the Company and the
Guarantors will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Registration Statement
and any related Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities (including, without limitation, any
Exchange Offer Registration Statement and the related Prospectus, to the extent
that the same are required to be available to permit sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers), the Company and
the Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by this
Agreement, the Company and the Guarantors shall file promptly an appropriate
amendment to such Registration Statement, (1) in the case of clause (A),
correcting any such misstatement or omission, and (2) in the case of clauses
(A) and (B), use their respective best efforts to cause such amendment to be
declared effective and such Registration Statement and the related
Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462,
as applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement to
the Prospectus;
(iii) advise the underwriters, if any, and selling Holders promptly
and, if requested by such Persons, confirm such advice in writing, (A) when
the Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B) of
any request by the
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Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated
by reference therein untrue, or that requires the making of any additions to
or changes in the Registration Statement in order to make the statements
therein not misleading, or that requires the making of any additions to or
changes in the Prospectus in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer Restricted
Securities under state securities or Blue Sky laws, the Company and the
Guarantors shall use their respective best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time;
(iv) If requested by Initial Purchasers or the managing underwriter,
if any, with respect to the Registration Statment, the Company shall furnish
to each Initial Purchaser or such managing underwriter, prior to the filing
thereof with the Commission, a copy of the applicable registration statement
and each amendment thereof and each supplement, if any, to the prospectus
included therein. The Company shall use its best efforts to reflect in each
such document, when so filed with the Commission, such comments as such
Initial Purchasers or managing underwriter reasonably may propose.
(v) make available at reasonable times for inspection by
representatives appointed by Holders of a majority in aggregate principal
amount of Transfer Restricted Securities (the "MAJORITY HOLDERS"), any
managing underwriter participating in any disposition pursuant to such
Registration Statement and one attorney or accountant retained by such
Majority Holders or such managing underwriters, all relevant financial and
other records, pertinent corporate documents and properties of the Company
and the Guarantors and cause the Company's and the Guarantors' officers,
directors and employees to supply relevant information reasonably requested
by any such Holder, underwriter, attorney or accountant in connection with
such Registration Statement or any post-effective amendment thereto
subsequent to the filing thereof and prior to its effectiveness; PROVIDED,
HOWEVER, that any information that is designated in writing by the Company,
in good faith, as confidential at the time of delivery of such information
shall be kept confidential by the Holders or any such underwriter, attorney,
accountant or agent, unless such disclosure is made in connection with a
court proceeding or required by law, or such information becomes available
to the public generally through a third party without an accompanying
obligation of confidentiality.
(vi) if requested by any selling Holders or the underwriters in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriters, if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being sold
to such underwriters, the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to
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be sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(vii) furnish to each selling Holder and each of the underwriters in
connection with such sale, if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference therein
and all exhibits (including exhibits incorporated therein by reference);
(viii) deliver to each selling Holder and each of the underwriters,
if any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company and the Guarantors hereby
consent to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each of
the underwriters, if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(ix) enter into such agreements (including an underwriting agreement)
and make such representations and warranties and take all such other actions
in connection therewith in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably requested by the
Majority Holders of Transfer Restricted Securities or managing underwriter
in connection with any sale or resale pursuant to any Registration Statement
contemplated by this Agreement (provided, however, that the Company shall
have no obligation to enter into an underwriting agreement or permit an
underwritten offering unless a request therefor shall have been received
from the holders of not less than 33 1/3% of the aggregate principal amount
of Transfer Restricted Securities) and in such connection the Company and
the Guarantors shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its best
efforts to furnish) to each selling Holder and each underwriter, if any,
upon the effectiveness of the Shelf Registration Statement and to each
Restricted Broker-Dealer upon Consummation of the Exchange Offer:
(1) a certificate, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, signed on behalf of the Company and
each Guarantor by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company and such
Guarantor, confirming, as of the date thereof, the matters set forth
in paragraphs (a) through (d) of Section 9 of the Purchase Agreement
and such other similar matters as the representative of the Majority
Holders and/or managing underwriter(s) may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for the Company and the
Guarantors covering matters similar to those set forth in paragraph
(e) of Section 9 of the Purchase Agreement and such other matter as
the representative of the Majority Holders and/or managing
underwriters may reasonably request, and in any event including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company
and the Guarantors, representatives of the
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independent public accountants for the Company and the Guarantors and
have considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of such
statements; and that such counsel advises that, on the basis of the
foregoing (relying as to materiality to a large extent upon facts
provided to such counsel by officers and other representatives of the
Company and the Guarantors and without independent check or
verification), no facts came to such counsel's attention that caused
such counsel to believe that the applicable Registration Statement,
at the time such Registration Statement or any post-effective
amendment thereto became effective and, in the case of the Exchange
Offer Registration Statement, as of the date of Consummation of the
Exchange Offer, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus contained in such Registration Statement as of its date
and, in the case of the opinion dated the date of Consummation of the
Exchange Offer, as of the date of Consummation, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. Without
limiting the foregoing, such counsel may state further that such
counsel assumes no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in
any Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement or the date of
Consummation of the Exchange Offer, as the case may be, from the
Company's independent accountants, in the customary form and covering
matters of the type customarily covered in comfort letters to
underwriters in connection with primary underwritten offerings, and
affirming the matters set forth in the comfort letters delivered
pursuant to Section 9 of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, in connection with any sale or resale pursuant to any
Shelf Registration Statement the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the representative of the Majority Holders, the
managing underwriters, if any, and Restricted Broker Dealers, if any, to
evidence compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Company and the Guarantors pursuant to this clause
(x).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company and the Guarantors
contemplated in (A)(1) above cease to be true and correct, the Company and
the Guarantors shall so advise the underwriters, if any, the selling Holders
and each Restricted Broker-Dealer promptly and if requested by such Persons,
shall confirm such advice in writing;
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(x) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders, the underwriters, if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the selling Holders or underwriters, if any, may
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration Statement; PROVIDED,
HOWEVER, that neither the Company nor any Guarantor shall be required to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it is not
now so subject;
(xi) issue, upon the request of any Holder of Series A Notes covered
by any Shelf Registration Statement contemplated by this Agreement, Series B
Notes having an aggregate principal amount equal to the aggregate principal
amount of Series A Notes surrendered to the Company by such Holder in
exchange therefor or being sold by such Holder; such Series B Notes to be
registered in the name of such Holder or in the name of the purchasers of
such Notes, as the case may be; in return, the Series A Notes held by such
Holder shall be surrendered to the Company for cancellation;
(xii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the selling Holders and the underwriters, if any,
to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to register such Transfer Restricted Securities in
such denominations and such names as the Holders or the underwriters, if
any, may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xiii) use their respective best efforts to cause the disposition of
the Transfer Restricted Securities covered by the Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof or
the underwriters, if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xi)
above;
(xiv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvi) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified
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independent underwriter") that is required to be retained in accordance with
the rules and regulations of the NASD, and use their respective best efforts
to cause such Registration Statement to become effective and approved by
such governmental agencies or authorities as may be necessary to enable the
Holders selling Transfer Restricted Securities to consummate the disposition
of such Transfer Restricted Securities;
(xvii) otherwise use their respective best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders with regard to any applicable Registration
Statement, as soon as practicable, a consolidated earnings statement meeting
the requirements of Rule 158 (which need not be audited) covering a
twelve-month period beginning after the effective date of the Registration
Statement (as such term is defined in paragraph (c) of Rule 158 under the
Act);
(xviii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders of Notes to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use its best efforts to cause the Trustee to execute,
all documents that may be required to effect such changes and all other
forms and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner; and
(xix) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (the "Advice"). If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of either such notice. In the
event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section 6(c)(i)
or Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof
or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
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filings made by any Purchaser or Holder with the NASD (and, if applicable, the
fees and expenses of any "qualified independent underwriter") and its counsel
that may be required by the rules and regulations of the NASD); (ii) all fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Series B Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone relating to
printing expenses; (iv) all fees and disbursements of counsel for the Company,
the Guarantors and the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Notes on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and (vi) all fees and disbursements of independent certified public
accountants of the Company and the Guarantors (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Purchasers and the Holders of Transfer Restricted Securities
being tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "INDEMNIFIED HOLDER"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
promptly after receipt of a bill therefor, reimbursement of all reasonable costs
of investigating, preparing, pursuing or defending any claim or action, or any
investigation or pro ceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto),
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with information
relating to any of the Holders furnished in writing to the Company by any of the
Holders expressly for use therein, PROVIDED,
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that with respect to any such untrue statement in or omission from the
preliminary prospectus, the indemnity agreement contained in this Section 8
shall not inure to the benefit of any such Holder to the extent that the sale to
the person asserting any such loss, claim, damage, liability or action was an
initial resale by such Holder and any such loss, claim, damage, liability or
action of or with respect to such Holder results from the fact that (A) to the
extent required by applicable law, a copy of the Prospectus was not sent or
given to such person at or prior to the written confirmation of the sale of such
Transfer Restricted Securities to such person, (B) the untrue statement in or
omission from the preliminary prospectus was corrected in the Prospectus and
such statement or omission formed the basis for the claim giving rise to such
loss, and (C) sufficient quantities of the Prospectus were delivered to the
Holder on a timely basis.
In case any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
of the Indemnified Holders with respect to which in demnity may be sought
against the Company or the Guarantors, such Indemnified Holder (or the
Indemnified Holder controlled by such controlling person) shall promptly notify
the Company and the Guarantors in writing (PROVIDED, that the failure to give
such notice shall not relieve the Company or the Guarantors of their obligations
pursuant to this Agreement), except to the extent that the Company and the
Guarantors are materially prejudiced or forfeit substantive rights and defenses
by reason of such failure. Such Indemnified Holder shall have the right to
employ its own counsel in any such action and the fees and expenses of such
counsel shall be paid, as incurred, by the Company and the Guarantors
(regardless of whether it is ultimately determined that an Indemnified Holder is
not entitled to indemnification hereunder). The Company and the Guarantors shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for such Indemnified Holders, which
firm shall be designated by the Holders. The Company and the Guarantors shall be
liable for any settlement of any such action or proceeding effected with the
Company's prior written consent, which consent shall not be withheld
unreasonably, and the Company and the Guarantors agree to indemnify and hold
harmless each Indemnified Holder from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action effected with the
written consent of the Company. Neither the Company nor any Guarantor shall,
without the prior written consent of each Indemnified Holder, settle or
compromise or consent to the entry of judgment in or otherwise seek to terminate
any pending or threatened action, claim, litigation or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors, officers, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company,
and the respective officers, directors, partners, employees, representatives and
agents of each such person, to the same extent as the foregoing indemnity from
the Company and the Guarantors to each of the Indemnified Holders, but only with
respect to claims and actions based on information relating to such Holder
furnished in writing by such Holder expressly for use in any Registration
Statement. In case any action or proceeding shall be brought against the
Company, any Guarantor or its directors or officers or any such controlling
person in respect of which indemnity may be sought against a Holder of Transfer
Restricted Securities, such Holder shall have the rights and duties given the
Company and the Guarantors,
16
<PAGE>
and the Company, such Guarantor, such directors or officers or such controlling
person shall have the rights and duties given to each Holder by the preceding
paragraph. In no event shall any Holder be liable or responsible for any amount
in excess of the amount by which the total received by such Holder with respect
to its sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or if such allocation is not
permitted by applicable law, the relative fault of the Company and the
Guarantors, on the one hand, and of the Indemnified Holder, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company and the Guarantors,
on the one hand, and of the Indemnified Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or such Guarantor
or by the Indemnified Holder and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
The Company, the Guarantors and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or expenses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Holder or its related Indemnified Holders shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the total received by such Holder with respect to the sale of its
Transfer Restricted Securities pursuant to a Registration Statement exceeds the
sum of (A) the amount paid by such Holder for such Transfer Restricted
Securities PLUS (B) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Series A Notes held by each of the Holders hereunder and not joint.
17
<PAGE>
SECTION 9. RULE 144A
The Company and each Guarantor hereby agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which the Company or such Guarantor is not subject to Section 13 or
15(d) of the Securities Exchange Act, to make available, upon request of any
Holder of Transfer Restricted Securities, to any Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment
bankers and manager or managers for any Underwritten Offering that will
administer such offering will be selected by the Company and reasonably
acceptable to the Majority Holders. Such investment bankers and managers are
referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Guarantors agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by them of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any Guarantor
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's and
the Guarantors' securities under any agreement in effect on the date hereof.
18
<PAGE>
(c) ADJUSTMENTS AFFECTING THE NOTES. Neither the Company nor any
Guarantor will take any action, or voluntarily permit any change to occur, with
respect to the Notes that would materially and adversely affect the ability of
the Holders to Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of the Majority Holders. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities subject to such Exchange Offer.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
Coach USA, Inc.
One Riverway, Suite 600
Houston, Texas 77056-1903
Telecopier No.: (713) 888-0218
Attention: Douglas M. Cerny
With a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77007
Telecopier No.: (713) 220-4285
Attention: David P. Oelman
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an
19
<PAGE>
express assignment, subsequent Holders of Transfer Restricted Securities;
PROVIDED, HOWEVER, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign acquired Transfer Restricted Securities directly from such
Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COACH USA, INC.
By: ______________________________
Name:
Title:
EACH ENTITY LISTED ON SCHEDULE A HERETO
By: ______________________________
Name:
Title:
21
<PAGE>
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH & CO.
ALEX. BROWN & SONS INCORPORATED
MONTGOMERY SECURITIES
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: ______________________________
Name:
Title:
22
EXHIBIT 5.1
August 6, 1997
Board of Directors
Coach USA, Inc.
One Riverway, Suite 600
Houston, Texas 77056
Ladies and Gentlemen:
The undersigned, Senior Vice President and General Counsel to Coach
USA, Inc., a Delaware corporation (the "Company") is delivering this opinion in
connection with the Company's Registration Statement on Form S-4 (the
"Registration Statement") relating to the registration under the Securities Act
of 1933, as amended (the "Securities Act"), of the offer by the Company to
exchange up to $150,000,000 aggregate principal amount of its 9 3/8% Senior
Subordinated Notes Due 2007, Series B (the "Exchange Notes") for its existing
9 3/8% Senior Subordinated Notes Due 2007, Series A (the "Existing Notes"). The
Exchange Notes are proposed to be issued in accordance with the provisions of
the indenture (the "Indenture"), dated as of June 24, 1997, between the Company,
the guarantors named therein (the "Guarantors") and The Bank of New York, as
Trustee.
In arriving at the opinions expressed below, I have examined the
Registration Statement, the Prospectus contained therein, the Indenture which is
filed as an exhibit to the Registration Statement, and the originals or copies
certified or otherwise identified to my satisfaction of such other instruments
and other certificates of public officials and officers and representatives of
the Company. In such examination, I have assumed and have not verified (i) that
the signatures on all documents that I have examined are genuine, (ii) the
authenticity of all documents submitted to me as originals, (iii) the conformity
with the authentic originals of all documents submitted to me as certified,
photostatic or faxed copies, and (iv) that all documents in respect of which
forms were filed with the Securities and Exchange Commission as exhibits to the
Registration Statement will conform in all material respects to the forms
thereof that I have examined. In addition, as the basis for the opinion
hereinafter expressed, I have examined such statutes, regulations, corporate
records and documents, certificates of corporate and public officials and other
instruments as I have deemed necessary or advisable for the purposes of this
opinion.
<PAGE>
Board of Directors
Coach USA, Inc.
August 6, 1997
Based upon the foregoing, having due regard for such legal
considerations as I deem relevant and assuming the due authorization, execution
and delivery of the Exchange Notes by the Company, I am of the opinion that the
Indenture, Exchange Notes and the guarantee of each of the Guarantors (the
"Guarantees"), (a) when the Notes have been exchanged in the manner described in
the Registration Statement, (b) when the Exchange Notes have been duly executed,
authenticated, issued and delivered in accordance with the terms of the
Indenture, (c) when the Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and (d) when applicable provisions of "blue
sky" laws have been complied with, will constitute valid and legally binding
obligations of the Company and the Guarantors, entitled to the benefits of the
Indenture and enforceable against the Company and the Guarantors in accordance
with their terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability and (iii) rights to indemnity and
contribution thereunder may be limited by federal or state securities laws of
public policy relating thereto.
This opinion is limited in all respects to the laws of the State of
Texas and the Delaware General Corporation Law. I express no opinion as to, and
for the purposes of the opinions set forth herein, I have conducted no
investigation of, and do not purport to be an expert on, any laws other than the
laws of the State of Texas and the Delaware General Corporation Law. I hereby
consent to the use of this opinion as an exhibit to the Registration Statement.
Very truly yours,
Douglas M. Cerney
Senior Vice President and General Counsel
Coach USA, Inc.
EXHIBIT 10.1
AMENDMENT DATED JUNE 24, 1997 TO AGREEMENT
BETWEEN
COACH USA, INC. AND EXEL MOTORCOACH PARTNERS LLC
Coach USA, Inc. (hereinafter Coach) and Exel Motorcoach Partners LLC
(hereinafter Exel) agree to enter into this Amendment, dated June 24, 1997, to
amend their Agreement dated March 21, 1996.
WHEREAS, pursuant to the Agreement dated March 21, 1996, Coach has paid Exel
aggregate consideration of $503,000 in cash during 1996, as compensation for its
services in connection with the acquisitions of American Bus Lines Inc. and
Pacific Coast Sightseeing Tours; and
WHEREAS, Coach desires to amend and terminate the Agreement dated March 21,
1996. As a result of the development of the Coach acquisition program, Coach and
Exel each believe that Coach no longer needs the services of Exel in its
acquisition program.
IT IS AGREED that Coach will, promptly following the close of business on the
day on which Coach receives satisfactory assurances from regulatory authorities
regarding approval of the next acquisition of a motorcoach business identified
on the List of Motorcoach Businesses in the Agreement dated March 21, 1996 which
acquisition has aggregate consideration in excess of $5 million, pay
compensation to Exel in the amount of $275,000 in cash and grant Exel a warrant
to purchase 100,000 shares of Coach common stock at an exercise price of $26 per
share and the Agreement dated March 21, 1996 will be terminated. Such warrant
will be exercisable beginning six months from, and expire two years after, the
date of issuance. All terms of the warrant are attached hereto as Exhibit A.
Upon payment of this compensation, Coach and Exel will have no remaining
obligations to each other in connection with Coach's acquisitions of motorcoach
businesses and will terminate the Agreement dated March 21, 1996.
Coach USA, Inc. Exel Motorcoach Partners LLC
By: /s/ ILLEGIBLE By: ___________________________
Title: Senior Vice President Title: ________________________
<PAGE>
EXHIBIT A
Date: ___________
WARRANTS TO PURCHASE 100,000 SHARES
OF
COMMON STOCK OF COACH USA, INC.
HELD BY
EXEL MOTORCOACH PARTNERS LLC
Pursuant to the Amendment dated June 24, 1997 to Agreement Between Coach
USA, Inc. and Exel Motorcoach Partners LLC (the "Amendment Agreement"), Coach
USA, Inc. ("Coach") hereby grants to Exel Motorocoach Partners LLC ("Exel") the
right to purchase 100,000 shares of common stock of Coach pursuant to the terms
provided for below.
1. WARRANTS. The warrants granted to Exel entitle Exel, or its permitted
assigns, to purchase 100,000 shares of common stock, $.01 par value, of
Coach at an exercise price of $26.00 per share (such warrants to purchase
shares of Coach common stock are hereinafter referred to as the
"Warrants").
2. PERMITTED ASSIGNS. Exel (and Exel's member upon distribution of warrants
by Exel to its members) shall have the right to assign any portion of the
Warrants (a) to Paul Verrochi, Dominic Puopolo, Don Glazer and Don Boyles
and (b) to anyone else as permitted by law (which assignment can be made
by any of the persons listed in (a) above). Any person or entity that owns
any Warrants is herein referred to as a "Holder." In the event of the
death of any Holder, then such Warrants shall be exercisable by the heirs
of such Holder pursuant to the terms hereunder. IN THE EVENT OF AN
ASSIGNMENT TO ANYONE OTHER THAN AMERICAN BUSINESS PARTNERS LLC AND THOSE
LISTED IN (a) ABOVE OR THEIR HEIRS, COACH SHALL HAVE THE RIGHT FOR TWENTY
BUSINESS DAYS PRIOR TO SUCH ASSIGNMENT TO ACQUIRE ANY SUCH WARRANTS
PROPOSED FOR ASSIGNMENT UPON THE SAME TERMS AND CONDITIONS AS PROPOSED BY
ANY SUCH TRANSFEREE.
3. EXERCISE PERIOD. The right to exercise any of the Warrants shall begin on
______________ (six months after date of Warrant) and shall expire on
______________ (two years after date of Warrant). Coach has no obligation
to remind or otherwise inform Exel or any Holder of a portion or all of
the rights to exercise Warrants of the pending expiration or expiration of
the Warrant exercise period.
4. EXERCISE OF WARRANTS. During the period in which any Warrants can be
exercised the Holder shall deliver written notice to Coach setting forth
the number of shares with respect to which the Warrant is to be exercised,
together with cash, certified check, bank draft, wire transfer, or postal
or express money order payable to the order of Coach for an amount equal
to the exercise price of the shares being purchased.
<PAGE>
5. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the event that any dividend
or other distribution (whether in the form of cash, common stock or other
property), recapitalization, forward or reverse split, reorganization,
merger, consolidation, spin-off, combination, repurchase or exchange of
common stock or other securities, liquidation, dissolution, or other
similar corporate transaction or event, affects the common stock such that
an adjustment is appropriate in order to prevent dilution or enlargement
of the rights of Holders, then the Board of Directors shall, in such
manner as it may deem equitable, adjust any or all of the number and kind
of shares that may be issued in respect of Warrants and the exercise price
of Warrants (or, if deemed appropriate, the Board may make provision for a
cash payment with respect to any Warrants). In addition, the Board is
authorized to make adjustments in the terms and conditions of Warrants in
recognition of unusual of nonrecurring events (including, without
limitation, events described in the preceeding sentence) affecting the
Company or any subsidiary or the financial statements of the Company or
any subsidiary, or in response to changes in applicable laws, regulations,
or accounting principles.
6. REGISTRATION UNDER SECURITIES LAWS. Coach shall prepare and file with the
United States Securities and Exchange Commission a registration statement
on Form S-3 in which it registers the sale to the Holders of the shares of
common stock to be issued upon exercise of Warrants. Coach shall use
reasonable efforts to secure and maintain the effectiveness of such
registration statement. Coach shall also list for trading the shares
issuable upon exercise of any Warrants on the New York Stock Exchange or
such other primary exchange on which the share of Coach common stock are
traded. Coach shall not be obligated to make any other filings with any
other regulatory authorities in connection with making the shares issued
upon exercise of any Warrants available for public resale.
7. ADMINISTRATION. In the event a dispute or interpretation of the provisions
of the Warrants is required then the Board of Directors of Coach shall be
the administrator and ultimate decision maker in connection with such
interpretation.
EXHIBIT 12.1
COACH USA, INC.
COMPUTATION OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Twelve Mths Three Mths Ended March 31,
Ended -----------------------------
Pro Forma Combined Pro Forma 3/31/97 Pro Forma Combined Pro Forma
------------------------------------------ As Adjusted Pro Forma --------------- As Adjusted
1992 1993 1994 1995 1996 1996 As Adjusted 1996 1997 1997
------ ------ ------ ------ ------ ----------- ----------- ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest on debt and
capitalized leases ..... 6,307 6,362 7,422 8,207 9,934 23,965 23,182 2,250 3,199 5,409
Interest element of
rentals ................ 1,240 1,305 1,396 1,439 1,562 2,416 2,347 391 360 519
------ ------ ------ ------ ------ ----------- ----------- ------ ------ -----------
TOTAL FIXED CHARGES . 7,547 7,667 8,818 9,646 11,496 26,381 25,529 2,641 3,559 5,928
====== ====== ====== ====== ====== =========== =========== ====== ====== ===========
EARNINGS:
Income before
extraordinary items .... 4,169 4,128 6,521 11,217 15,246 18,025 19,148 816 2,150 (146)
Income taxes ............. 2,873 3,690 4,376 8,217 9,958 12,161 12,965 549 1,445 (25)
Fixed charges ............ 7,547 7,667 8,818 9,646 11,496 26,381 25,529 2,641 3,559 5,928
------ ------ ------ ------ ------ ----------- ----------- ------ ------ -----------
TOTAL EARNINGS ...... 14,589 15,485 19,715 29,080 36,700 56,567 57,642 4,006 7,154 5,757
====== ====== ====== ====== ====== =========== =========== ====== ====== ===========
RATIO OF EARNINGS
TO FIXED CHARGES ....... 1.93 2.02 2.24 3.01 3.19 2.14 2.26 1.52 2.01 0.97
====== ====== ====== ====== ====== =========== =========== ====== ====== ===========
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report included in Coach USA,
Inc.'s Form 8-K dated August 8, 1997 and to the use of our reports (and to all
references to our Firm) included in or made a part of this registration
statement.
ARTHUR ANDERSEN LLP
Houston, Texas
August 8, 1997
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
BURNSIDE & RISHEBARGER PLLC
August 6, 1997
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
COACH USA, INC.
(Exact name of obligor as specified in its charter)
Delaware 76-0496471
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Riverway, Suite 600
Houston, Texas 77056
(Address of principal executive offices) (Zip code)
----------------------
9 3/8% Senior Notes due 2007, Series B
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of 2 Rector Street, New York,
the State of New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE
7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit
1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form
T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 4th day of August, 1997.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
Name: Walter N. Gitlin
Title: Vice President
-4-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,836,000
<SECURITIES> 0
<RECEIVABLES> 28,697,000
<ALLOWANCES> (2,694,000)
<INVENTORY> 10,650,000
<CURRENT-ASSETS> 63,683,000
<PP&E> 363,693,000
<DEPRECIATION> (78,355,000)
<TOTAL-ASSETS> 445,129,000
<CURRENT-LIABILITIES> 89,364,000
<BONDS> 36,830,000
0
0
<COMMON> 189,000
<OTHER-SE> 113,577,000
<TOTAL-LIABILITY-AND-EQUITY> 445,129,000
<SALES> 79,868,000
<TOTAL-REVENUES> 79,868,000
<CGS> 64,237,000
<TOTAL-COSTS> 74,019,000
<OTHER-EXPENSES> 117,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,508,000
<INCOME-PRETAX> 2,224,000
<INCOME-TAX> 944,000
<INCOME-CONTINUING> 1,280,000
<DISCONTINUED> 0
<EXTRAORDINARY> 89,000
<CHANGES> 0
<NET-INCOME> 1,191,000
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
EXHIBIT 99.1
COACH USA, INC.
FORM OF LETTER OF TRANSMITTAL
FOR TENDER OF ALL OUTSTANDING
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
IN EXCHANGE FOR
9 3/8% SENIOR SUBORDINATED NOTES DUE 2007, SERIES B
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
PURSUANT TO THE PROSPECTUS DATED AUGUST , 1997
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS THE EXCHANGE OFFER IS EXTENDED.
TO: THE BANK OF NEW YORK (THE "EXCHANGE AGENT")
BY HAND OR OVERNIGHT DELIVERY: BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Floor Attention: Reorganization Department,
New York, New York 10286 George Johnson
Attention: Reorganization Department,
George Johnson
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions only)
The Bank of New York
(212) 571-3080
Attention: Reorganization Department,
George Johnson
FOR INFORMATION OR CONFIRMATION BY TELEPHONE:
(212) 815-4997
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OR TRANSMISSION TO A FACSIMILE
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE
METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES, IS AT THE RISK OF
THE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned acknowledges that he or she has received the Prospectus,
dated August , 1997 (the "Prospectus") of Coach USA, Inc., a Delaware
Corporation (the "Company") and this Letter of Transmittal and the instructions
hereto (the "Letter of Transmittal"), which together constitute the Company's
offer (the "Exchange Offer") to exchange $1,000 principal amount of its 9 3/8%
Senior Subordinated Notes due 2007, Series B (the "Exchange Notes") that have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"),
<PAGE>
pursuant to a Registration Statement of which the Prospectus is a part, for each
$1,000 principal amount of its outstanding 9 3/8% Senior Subordinated Notes due
2007, Series A (the "Old Notes"), of which $150,000,000 aggregate principal
amount is outstanding, upon the terms and subject to the conditions set forth in
the Prospectus. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on , 1997, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term shall mean the latest date and time to
which the Exchange Offer is extended by the Company. Capitalized terms used but
not defined herein have the meaning given to them in the Prospectus.
This Letter of Transmittal is to be used either if (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders, (ii) tender of Old Notes is to be made by book-entry
transfer to an account maintained by the Exchange Agent at The Depository Trust
Company ("DTC"), pursuant to the procedures set forth in "The Exchange
Offer--Procedures for Tendering" in the Prospectus by any financial institution
that is a participant in DTC and whose name appears on a security position
listing as the owner of Old Notes or (iii) tender of Old Notes is to be made
according to the guaranteed delivery procedures set forth in the Prospectus
under "The Exchange Offer--Guaranteed Delivery Procedures." Delivery of this
Letter of Transmittal and any other required documents must be made to the
Exchange Agent. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
The term "Holder" as used herein means any person in whose name Old
Notes are registered on the books of the Company or any other person who has
obtained a properly completed bond power from the registered holder.
All Holders of Old Notes who wish to tender their Old Notes must, prior
to the Expiration Date: (1) complete, sign, and deliver this Letter of
Transmittal, or a facsimile thereof, to the Exchange Agent, in person or to the
address set forth above; and (2) tender (and not withdraw) his or her Old Notes
or, if a tender of Old Notes is to be made by book-entry transfer to the account
maintained by the Exchange Agent at DTC, confirm such book-entry transfer (a
"Book-Entry Confirmation"), in each case in accordance with the procedures for
tendering described in the Instructions to this Letter of Transmittal. Holders
of Old Notes whose certificates are not immediately available, or who are unable
to deliver their certificates or Book-Entry Confirmation and all other documents
required by this Letter of Transmittal to be delivered to the Exchange Agent on
or prior to the Expiration Date, must tender their Old Notes according to the
guaranteed delivery procedures set forth under the caption "The Exchange Offer
- -- Guaranteed Delivery Procedures" in the Prospectus. (See Instruction 2.)
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of the Old Notes validly tendered and not withdrawn and
the issuance of the Exchange Notes will be made promptly following the
Expiration Date. For the purposes of the Exchange Offer, the Company shall be
deemed to have accepted for exchange validly tendered Old Notes when, as and if
the Company has given written notice thereof to the Exchange Agent.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Old Notes must complete
this Letter of Transmittal in its entirety.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS
CAREFULLY BEFORE CHECKING ANY BOX BELOW. THE INSTRUCTIONS INCLUDED IN THIS
LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR
FOR ADDITIONAL COPIES OF THE PROSPECTUS, THIS LETTER OF TRANSMITTAL AND THE
NOTICE OF GUARANTEED DELIVERY MAY BE DIRECTED TO THE EXCHANGE AGENT. SEE
INSTRUCTION 12 HEREIN.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY AND COMPLY WITH ALL OF
ITS TERMS.
-2-
<PAGE>
List below the Old Notes to which this Letter of Transmittal relates. If
the space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule, attached hereto. The
minimum permitted tender is $1,000 in principal amount of 9 3/8% Senior
Subordinated Notes due 2007, Series A. All other tenders must be in integral
multiples of $1,000.
<TABLE>
<CAPTION>
DESCRIPTION OF 9 3/8% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
BOX I
Name(s) and Address(es) of Registered Holder(s) *
(Please fill in, if blank)
<S> <C> <C>
- ------------------------------------------------------ -------------------------------------------
(A) (B)
Aggregate Principal
Amount Tendered
Certificate Number(s)* (if less than all)**
====================================================== ---------------------- --------------------
---------------------- --------------------
---------------------- --------------------
---------------------- --------------------
---------------------- --------------------
Total Principal
Amount of Old Notes
Tendered
====================== ====================
</TABLE>
* Need not be completed by book-entry holders.
** Need not be completed by Holders who wish to tender with respect to all Old
Notes listed.
-3-
<PAGE>
PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS
BOX II SPECIAL REGISTRATION INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Old Notes accepted for
exchange, are to be issued in the name of someone other than the undersigned.
Issue certificate(s) to:
Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT)
Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(INCLUDING ZIP CODE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
BOX III SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Old Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Old Notes accepted for
exchange, are to be delivered to someone other than the undersigned.
Deliver certificate(s) to:
Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(PLEASE PRINT)
Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(INCLUDING ZIP CODE)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER)
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE HEREOF (TOGETHER
WITH THE CERTIFICATE(S) FOR OLD NOTES OR A CONFIRMATION OF BOOK-ENTRY TRANSFER
OF SUCH OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS) OR, IF GUARANTEED DELIVERY
PROCEDURES ARE TO BE COMPLIED WITH, A NOTICE OF GUARANTEED DELIVERY, MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
[] CHECK HERE IF OLD NOTES ARE BEING DELIVERED BY DTC TO AN ACCOUNT
MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution_____________[]The Depository Trust Company
Account Number__________________________________________________________
Transaction Code Number_________________________________________________
Holders whose Old Notes are not immediately available or who cannot
deliver their Old Notes and all other documents required hereby to the Exchange
Agent on or prior to the Expiration Date may tender their Old Notes according to
the guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." (See Instruction 2.)
-4-
<PAGE>
[] CHECK HERE IF OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of tendering Holder(s)__________________________________________
Date of Execution of Notice of Guaranteed Delivery______________________
Name of Institution which Guaranteed Delivery___________________________
Transaction Code Number_________________________________________________
[] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:___________________________________________________________________
Address:________________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Exchange Notes. If the undesigned is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Old Notes that were acquired as a
result of market-making activities or other trading activities, it acknowledges
that it will deliver a prospectus in connection with any resale of such Exchange
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to Coach USA, Inc. (the "Company") the principal
amount of Old Notes indicated above.
Subject to and effective upon the acceptance for exchange of the
principal amount of Old Notes tendered hereby in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Old Notes tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as its agent and attorney-in-fact (with full knowledge that the Exchange
Agent also acts as the agent of the Company and as Trustee and Registrar under
the Indenture for the Old Notes and the Exchange Notes) with respect to the
tendered Old Notes with full power of substitution (such power of attorney being
deemed an irrevocable power coupled with an interest), subject only to the right
of withdrawal described in the Prospectus, to (i) deliver certificates for such
Old Notes to the Company or transfer ownership of such Old Notes on the account
books maintained by DTC, together, in either such case, with all accompanying
evidences of transfer and authenticity to, or upon the order of, the Company and
(ii) present such Old Notes for transfer on the books of the Company and receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Old Notes, all in accordance with the terms of the Exchange Offer.
-5-
<PAGE>
The undersigned acknowledges that the Exchange Offer is being made in
reliance upon interpretative advice given by the staff of the Securities and
Exchange Commission to third parties in connection with transactions similar to
the Exchange Offer, so that the Exchange Notes issued pursuant to the Exchange
Offer in exchange for the Old Notes may be offered for resale, resold and
otherwise transferred by holders thereof (other than a broker-dealer who
purchased such Old Notes directly from the Company for resale pursuant to Rule
144A or any other available exemption under the Securities Act or a person that
is an "affiliate" of the Company or any Guarantor within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holders' business and
such holders have no arrangement with any person to participate in the
distribution of such Exchange Notes.
The undersigned agrees that acceptance of any tendered Old Notes by the
Company and the issuance of Exchange Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement, (as defined in the Prospectus) and that, upon the issuance of
the Exchange Notes, the Company will have no further obligations or liabilities
thereunder (except in certain limited circumstances).
The undersigned represents and warrants that (i) the Exchange Notes
acquired pursuant to the Exchange Offer are being acquired in the ordinary
course of business of the person receiving Exchange Notes (which shall be the
undersigned unless otherwise indicated in the box entitled "Special Delivery
Instructions" above) (the "Recipient"), (ii) neither the undersigned nor the
Recipient (if different) is engaged in, intends to engage in or has any
arrangement or understanding with any person to participate in the distribution
of such Exchange Notes, and (iii) neither the undersigned nor the Recipient (if
different) is an "affiliate" of the Company or any Guarantor as defined in Rule
405 under the Securities Act. If the undersigned is not a broker-dealer, the
undersigned further represents that it is not engaged in, and does not intend to
engage in, a distribution of the Exchange Notes. If the undersigned is a
broker-dealer, the undersigned further (x) represents that it acquired Old Notes
for the undersigned's own account as a result of market-making activities or
other trading activities, (y) represents that it has not entered into any
arrangement or understanding with the Company or any "affiliate" of the Company
(within the meaning of Rule 405 under the Securities Act) to distribute the
Exchange Notes to be received in the Exchange Offer and (z) acknowledges that it
will deliver a prospectus meeting the requirements of the Securities Act (for
which purposes delivery of the Prospectus, as the same may be hereafter
supplemented or amended, shall be sufficient) in connection with any resale of
Exchange Notes received in the Exchange Offer. Such a broker-dealer will not be
deemed, solely by reason of such acknowledgment and prospectus delivery, to
admit that it is an "underwriter" within the meaning of the Securities Act.
The undersigned understands and agrees that the Company reserves the
right not to accept tendered Old Notes from any tendering holder if the Company
determines, in its sole and absolute discretion, that such acceptance could
result in a violation of applicable securities laws.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign and transfer the Old Notes
tendered hereby and to acquire Exchange Notes issuable upon the exchange of such
tendered Old Notes, and that, when the same are accepted for exchange, the
Company will acquire good and unencumbered title thereto, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim. The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed to be necessary or desirable by the
Exchange Agent or the Company in order to complete the exchange, assignment and
transfer of tendered Old Notes or transfer of ownership of such Old Notes on the
account books maintained by a book-entry transfer facility.
The undersigned understands and acknowledges that the Company reserves
the right in its sole discretion to purchase or make offers for any Old Notes
that remain outstanding subsequent to the Expiration Date or, as set forth in
the Prospectus under the caption "The Exchange Offer--Procedures for Tendering,"
to terminate the Exchange Offer
-6-
<PAGE>
and, to the extent permitted by applicable law, purchase Old Notes in the open
market, in privately negotiated transactions or otherwise. The terms of any such
purchases or offers could differ from the terms of the Exchange Offer.
The undersigned understands that the Company may accept the
undersigned's tender by delivering written notice of acceptance to the Exchange
Agent, at which time the undersigned's right to withdraw such tender will
terminate. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted validly tendered Old Notes when, as and if the Company has given
oral (which shall be confirmed in writing) or written notice thereof to the
Exchange Agent.
The undersigned understands that the first interest payment following
the Expiration Date will include unpaid interest on the Old Notes accrued
through the date of issuance of the Exchange Notes.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer.
The undersigned acknowledges that the Exchange Offer is subject to the
more detailed terms set forth in the Prospectus and, in case of any conflict
between the terms of the Prospectus and this Letter of Transmittal, the
Prospectus shall prevail.
If any tendered Old Notes are not accepted for exchange pursuant to the
Exchange Offer for any reason, certificates for any such unaccepted Old Notes
will be returned (except as noted below with respect to tenders through DTC), at
the Company's cost and expense, to the undersigned at the address shown below or
at a different address as may be indicated herein under "Special Delivery
Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns. This tender may be withdrawn only in
accordance with the procedures set forth in this Letter of Transmittal.
By acceptance of the Exchange Offer, each broker-dealer that receives
Exchange Notes pursuant to the Exchange Offer hereby acknowledges and agrees
that upon the receipt of notice by the Company of the happening of any event
which makes any statement in the Prospectus untrue in any material respect or
which requires the making of any changes in the Prospectus in order to make the
statements therein not misleading (which notice the Company agrees to deliver
promptly to such broker-dealer), such broker-dealer will suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemented prospectus to such broker-dealer.
Unless otherwise indicated under "Special Registration Instructions,"
please issue the certificates representing the Exchange Notes issued in exchange
for the Old Notes accepted for exchange and return any certificates for Old
Notes not tendered or not exchanged, in the name(s) of the undersigned (or, in
either such event in the case of Old Notes tendered by DTC, by credit to the
account at DTC). Similarly, unless otherwise indicated under "Special Delivery
Instructions," please send the certificates representing the Exchange Notes
issued in exchange for the Old Notes accepted for exchange and any certificates
for Old Notes not tendered or not exchanged (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s), unless, in either event, tender is being made through DTC. In the
event that both "Special Registration Instructions" and "Special Delivery
Instructions" are completed, please issue the certificates representing the
Exchange Notes issued in exchange for the Old Notes accepted for exchange in the
name(s) of, and return any certificates for Old Notes not tendered or not
-7-
<PAGE>
exchanged to, the person(s) so indicated. The undersigned understands that the
Company has no obligations pursuant to the "Special Registration Instructions"
or "Special Delivery Instructions" to transfer any Old Notes from the name of
the registered Holder(s) thereof if the Company does not accept for exchange any
of the Old Notes so tendered.
Holders who wish to tender the Old Notes and (i) whose Old Notes are not
immediately available or (ii) who cannot deliver their Old Notes, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date, may tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures." See Instruction 1 regarding the
completion of the Letter of Transmittal.
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
AND WHETHER OR NOT TENDER IS TO BE MADE
PURSUANT TO THE GUARANTEED DELIVERY PROCEDURES
This Letter of Transmittal must be signed by the registered holder(s) as
their name(s) appear on the Old Notes or, if tendered by a participant in DTC,
exactly as such participant's name appears on a security listing as the owner of
Old Notes, or by person(s) authorized to become registered holder(s) by a
properly completed bond power from the registered holder(s), a copy of which
must be transmitted with this Letter of Transmittal. If Old Notes to which this
Letter of Transmittal relate are held of record by two or more joint holders,
then all such holders must sign this Letter of Transmittal. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
then such person must (i) set forth his or her full title below and (ii) unless
waived by the Company, submit evidence satisfactory to the Company of such
person's authority so to act. (See Instruction 4.)
X____________________________________________________________ _______________
Date
X____________________________________________________________ _______________
Date
Signature(s) of Holder(s) or
Authorized Signatory
Name(s):_________________________________ Address:____________________________
_________________________________ ____________________________
(Please Print) (including Zip Code)
Capacity:_________________________ Area Code and Telephone Number:_____________
Social Security No.:____________________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
-10-
<PAGE>
BOX IV
SIGNATURE GUARANTEE (SEE INSTRUCTION 1)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
________________________________________________________________________________
(Name of Eligible Institution Guaranteeing Signatures)
________________________________________________________________________________
(Address (including zip code) and Telephone Number
(including area code) of Firm)
________________________________________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Printed Name)
________________________________________________________________________________
(Title)
Date:_______________________
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal
need not be guaranteed if (a) this Letter of Transmittal is signed by the
registered holder(s) of the Old Notes tendered herewith and such holder(s) have
not completed the box set forth herein entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" or (b) such
Old Notes are tendered for the account of an Eligible Institution. (See
Instruction 6.) Otherwise, all signatures on this Letter of Transmittal or a
notice of withdrawal, as the case may be, must be guaranteed by a member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States (an "Eligible Institution"). All
signatures on bond powers and endorsements on certificates must also be
guaranteed by an Eligible Institution.
2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES. Certificates
for all physically delivered Old Notes or confirmation of any book-entry
transfer to the Exchange Agent at DTC of Old Notes tendered by book-entry
transfer, as well as, in each case (including cases where tender is affected by
book-entry transfer), a properly completed and duly executed copy of this Letter
of Transmittal or facsimile hereof and any other documents required by this
Letter of Transmittal must be received by the Exchange Agent at its address set
forth herein prior to 5:00 p.m., New York City time, on the Expiration Date.
The method of delivery of the tendered Old Notes, this Letter of
Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder and the delivery will be deemed made only when
actually received by the Exchange Agent. If Old Notes are sent by mail,
registered mail with return receipt requested, properly insured, is recommended.
In all cases, sufficient time should be allowed to ensure timely delivery. No
Letter of Transmittal or Old Notes should be sent to the Company.
-11-
<PAGE>
The Exchange Agent will make a request to establish an account with
respect to the Old Notes at the Depositary for purposes of the Exchange Offer
within two business days after receipt of this Prospectus, and any financial
institution that is a participant in the Depositary may make book-entry delivery
of Old Notes by causing the Depositary to transfer such Old Notes into the
Exchange Agent's account at the Depositary in accordance with the Depositary's
procedures for transfer. However, although delivery of Old Notes may be effected
through book-entry transfer at the Depositary, the Letter of Transmittal, with
any required signature guarantees or an Agent's Message (as defined below) in
connection with a book-entry transfer and any other required documents, must, in
any case, be transmitted to and received by the Exchange Agent at the address
specified on the cover page of the Letter of Transmittal on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
A Holder may tender Old Notes that are held through the Depositary by
transmitting its acceptance through the Depositary's Automatic Tender Offer
Program, for which the transaction will be eligible, and the Depositary will
then edit and verify the acceptance and send an Agent's Message to the Exchange
Agent for its acceptance. The term "Agent's Message" means a message transmitted
by the Depositary to, and received by, the Exchange Agent and forming part of
the Book-Entry Confirmation, which states that the Depositary has received an
express acknowledgment from each participant in the Depositary tendering the Old
Notes and that such participant has received the Letter of Transmittal and
agrees to be bound by the terms of the Letter of Transmittal and the Company may
enforce such agreement against such participant.
Holders who wish to tender their Old Notes and (i) whose Old Notes are
not immediately available, or (ii) who cannot deliver their Old Notes, this
Letter of Transmittal or any other documents required hereby to the Exchange
Agent prior to the Expiration Date or comply with book-entry transfer procedures
on a timely basis must tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus. See "Exchange Offer
- --Guaranteed Delivery Procedures." Pursuant to such procedure: (i) such tender
must be made by or through an Eligible Institution; (ii) prior to the Expiration
Date, the Exchange Agent must have received from the Eligible Institution a
properly completed and duly executed Notice of Guaranteed Delivery (by facsimile
transmission, overnight courier, mail or hand delivery) setting forth the name
and address of the Holder of the Old Notes, the certificate number or numbers of
such Old Notes and the principal amount of Old Notes tendered, stating that the
tender is being made thereby and guaranteeing that, within three New York Stock
Exchange trading days after the Expiration Date, this Letter of Transmittal (or
facsimile hereof) together with the certificate(s) representing the Old Notes
and any other required documents will be deposited by the Eligible Institution
with the Exchange Agent; and (iii) such properly completed and executed Letter
of Transmittal (or facsimile hereof), as well as all other documents required by
this Letter of Transmittal and the certificate(s) representing all tendered Old
Notes in proper form for transfer (or a confirmation of book-entry transfer of
such Old Notes into the Exchange Agent's account at DTC), must be received by
the Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date, all in the manner provided in the Prospectus under the caption
"The Exchange Offer--Guaranteed Delivery Procedures." Any Holder who wishes to
tender his Old Notes pursuant to the guaranteed delivery procedures described
above must ensure that the Exchange Agent receives the Notice of Guaranteed
Delivery prior to 5:00 p.m., New York City time, on the Expiration Date. Upon
request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to
Holders who wish to tender their Old Notes according to the guaranteed delivery
procedures set forth above.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes, and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. All tendering holders, by execution of this Letter of
Transmittal (or facsimile thereof), shall waive any right to receive notice of
the acceptance of the Old Notes for exchange. The Company reserves the absolute
right to reject any and all Old Notes not properly tendered or any Old Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation of
the terms and conditions of the Exchange Offer (including the instructions in
this Letter of Transmittal) shall be final and binding on all parties. Unless
waived, any
-12-
<PAGE>
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Old Notes, nor shall any
of them incur any liability for failure to give such notification. Tenders of
Old Notes will not be deemed to have been made until such defects or
irregularities have been cured to the Company's satisfaction or waived. Any Old
Notes received by the Exchange Agent that are not properly tendered and as to
which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holders pursuant to the
Company's determination, unless otherwise provided in this Letter of Transmittal
as soon as practicable following the Expiration Date. The Exchange Agent has no
fiduciary duties to the Holders with respect to the Exchange Offer and is acting
solely on the basis of directions of the Company.
3. INADEQUATE SPACE. If the space provided is inadequate, the
certificate numbers and/or the number of Old Notes should be listed on a
separate signed schedule attached hereto.
4. TENDER BY HOLDER. Only a Holder of Old Notes may tender such Old
Notes in the Exchange Offer. Any beneficial owner of Old Notes who is not the
registered Holder and who wishes to tender should arrange with such registered
holder to execute and deliver this Letter of Transmittal on such beneficial
owner's behalf or must, prior to completing and executing this Letter of
Transmittal and delivering his Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such beneficial owner's name or obtain
a properly completed bond power from the registered holder or properly endorsed
certificates representing such Old Notes.
5. PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Notes will be accepted
only in integral multiples of $1,000. If less than the entire principal amount
of any Old Notes is tendered, the tendering Holder should fill in the principal
amount tendered in the third column of the box entitled "Description of 9 3/8%
Senior Subordinated Notes due 2007, Series A" above. The entire principal amount
of any Old Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. If the entire principal amount of all Old
Notes is not tendered, then Old Notes for the principal amount of Old Notes not
tendered and a certificate or certificates representing Exchange Notes issued in
exchange for any Old Notes accepted will be sent to the Holder at his or her
registered address, unless a different address is provided in the "Special
Delivery Instructions" box above on this Letter of Transmittal or unless tender
is made through DTC, promptly after the Old Notes are accepted for exchange.
Except as otherwise provided herein, tenders of Old Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date. To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Old Notes to be withdrawn (the "Depositor"),
(ii) identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes, or, in the case of Old Notes
transferred by book-entry transfer the name and number of the account at DTC to
be credited), (iii) be signed by the Depositor in the same manner as the
original signature on the Letter of Transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Registrar with respect to the Old
Notes register the transfer of such Old Notes into the name of the person
withdrawing the tender and (iv) specify the name in which any such Old Notes are
to be registered, if different from that of the Depositor. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for purposes of the Exchange Offer and no Exchange Notes
will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Any Old Notes which have been tendered but which are not
accepted for exchange by the Company will be returned to the Holder thereof
without cost to such Holder as soon as practicable after withdrawal, rejection
of tender or termination of the Exchange Offer. Properly withdrawn Old Notes may
be retendered by following one of the procedures described in the Prospectus
under "The Exchange Offer--Procedures for Tendering" at any time prior to the
Expiration Date.
-13-
<PAGE>
6. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND
ENDORSEMENTS. If this Letter of Transmittal (or facsimile hereof) is signed by
the registered holder(s) of the Old Notes tendered hereby, the signature must
correspond with the name(s) as written on the face of the Old Note without
alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it
will be necessary to complete, sign and submit as many copies of this Letter of
Transmittal as there are different registrations of Old Notes.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder or Holders (which term, for the Purposes described herein,
shall include a book-entry transfer facility whose name appears on a security
listing as the owner of the Old Notes) of Old Notes tendered and the certificate
or certificates for Exchange Notes issued in exchange therefor is to be issued
(or any untendered principal amount of Old Notes to be reissued) to the
registered Holder, then such Holder need not and should not endorse any tendered
Old Notes, nor provide a separate bond power. In any other case, such Holder
must either properly endorse the Old Notes tendered or transmit a properly
completed separate bond power with this Letter of Transmittal with the
signatures on the endorsement or bond power guaranteed by an Eligible
Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a
person other than the registered Holder or Holders of any Old Notes listed, such
Old Notes must be endorsed or accompanied by appropriate bond powers in each
case signed as the name of the registered Holder or Holders appears on the Old
Notes.
If this Letter of Transmittal (or facsimile hereof) or any Old Notes or
bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, or officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate when signing, and
unless waived by the Company, evidence satisfactory to the Company of their
authority so to act must be submitted with this Letter of Transmittal.
Endorsements on Old Notes or signatures on bond powers required by this
Instruction 6 must be guaranteed by an Eligible Institution.
7. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders
should indicate, in the applicable box or boxes, the name and address to which
Exchange Notes or substitute Old Notes for principal amounts not tendered or not
accepted for exchange are to be issued or sent, if different from the name and
address of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the taxpayer identification or social security
number of the person named must also be indicated.
8. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under
the federal income tax laws, payments that may be made by the Company on account
of Exchange Notes issued pursuant to the Exchange Offer may be subject to backup
withholding at the rate of 31%. In order to avoid such backup withholding, each
tendering holder should complete and sign the Substitute Form W-9 included in
this Letter of Transmittal and either (a) provide the correct taxpayer
identification number ("TIN") and certify, under penalties of perjury, that the
TIN provided is correct and that (i) the holder has not been notified by the
Internal Revenue Service (the "IRS") that the holder is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the IRS has notified the holder that the holder is no longer subject to backup
withholding; or (b) provide an adequate basis for exemption. If the tendering
holder has not been issued a TIN and has applied for one, or intends to apply
for one in the near future, such holder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9 and sign the Certificate of Payee Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I, the Company (or
the Paying Agent under the Indenture governing the Exchange Notes) shall retain
31% of
-14-
<PAGE>
payments made to the tendering holder during the sixty-day period following the
date of the Substitute Form W-9. If the Holder furnishes the Exchange Agent or
the Company with its TIN within sixty days after the date of the Substitute Form
W-9, the Company (or the Paying Agent) shall remit such amounts retained during
the sixty-day period to the Holder and no further amounts shall be retained or
withheld from payments made to the Holder thereafter. If, however, the Holder
has not provided the Exchange Agent or the Company with its TIN within such
sixty-day period, the Company (or the Paying Agent) shall remit such previously
retained amounts to the IRS as backup withholding. In general, if a Holder is an
individual, the TIN is the Social Security number of such individual. If the
Exchange Agent or the Company are not provided with the correct TIN, the Holder
may be subject to a $50 penalty imposed by the Internal Revenue Service. Certain
Holders (including, among others, all corporations and certain foreign
individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such Holder must submit a statement (generally, IRS Form W-8), signed
under penalties of perjury, attesting to that individual's exempt status. Such
statements can be obtained from the Exchange Agent. For further information
concerning backup withholding and instructions for completing the Substitute
Form W-9 (including how to obtain a taxpayer identification number if you do not
have one and how to complete the Substitute Form W-9 if Old Notes are registered
in more than one name), consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Old Notes to be deemed invalidly tendered, but may require the Company (or the
Paying Agent) to withhold 31% of the amount of any payments made on account of
the Exchange Notes. Backup withholding is not an additional federal income tax.
Rather, the federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the IRS.
9. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing Exchange Notes or Old Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be registered in the name of, any person other than the registered holder of the
Old Notes tendered hereby, or if tendered Old Notes are registered in the name
of a person other than the person signing this Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or on any other persons) will be
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with this Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
Holder. See the Prospectus under "The Exchange Offer--Solicitation of Tenders;
Fees and Expenses."
Except as provided in this Instruction 9, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
10. WAIVER OF CONDITIONS. The Company reserves the right, in their
sole discretion, to amend, waive or modify specified conditions in the Exchange
Offer in the case of any Old Notes tendered.
11. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering Holder
whose Old Notes have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instructions.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address specified in
the Prospectus. Holder may also contact their broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Exchange Offer.
-15-
<PAGE>
(DO NOT WRITE IN SPACE BELOW)
CERTIFICATE SURRENDERED OLD NOTES TENDERED OLD NOTES ACCEPTED
Date Received___________ Accepted by_______ Checked by____________
Delivery Prepared by____ Checked by________ Date__________________
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Old Notes are
accepted for payment is required to provide the Exchange Agent (as payer) with
such Holder's correct TIN on Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his social security number. If the Exchange Agent is not provided
with the correct TIN, a $50 penalty may be imposed by the Internal Revenue
Service, and payments made pursuant to the Exchange Offer may be subject to
backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Substitute
Form W-9. A foreign person may qualify as an exempt recipient by submitting to
the Exchange Agent a properly completed Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status. A
Form W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Exchange Agent is required to
withhold 20% of any payments made to the Holder or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to the
Exchange Offer, the Holder is required to provide the Exchange Agent with
either: (i) the Holder's correct TIN by completing the form below, certifying
that the TIN provided on Substitute Form W-9 is correct (or that such Holder is
awaiting a TIN) and that (A) the Holder has been notified by the Internal
Revenue Service that the Holder is subject to backup withholding as a result of
failure to report all interest or dividends or (B) the Internal Revenue Service
has notified the Holder that the Holder is no longer subject to backup
withholding or (ii) an adequate basis for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (E.G., social
security number or employer identification number) of the registered Holder of
the Old Notes. If the Old Notes are held in more than one name or are held not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
-16-
<PAGE>
CERTIFICATION OF PAYEE AWAITING TAXPAYER INDEMNIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification
Number has not been issued to me, and that I mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, 31% of all payments made
to me on account of the Exchange Notes shall be retained until I provide a
Taxpayer Identification Number to the payer and that, if I do not provide my
Taxpayer Identification Number within sixty days, such retained amounts shall be
remitted to the Internal Revenue Service as backup withholding and 31% of all
reportable payments made to me thereafter will be withheld and remitted to the
Internal Revenue Service until I provide a Taxpayer Identification Number.
SIGNATURE_____________________________________________ DATE__________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31 % OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE
EXCHANGE NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
-17-
<PAGE>
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
PAYER'S NAME: COACH USA, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
SUBSTITUTE PART 1 - TAXPAYER IDENTIFICATION NUMBER (TIN) SOCIAL SECURITY NUMBER
FORM W-9 ENTER YOUR TIN IN THE APPROPRIATE BOX. FOR ______________________________
INDIVIDUALS, THIS IS YOUR SOCIAL SECURITY NUMBER (SSN). OR
DEPARTMENT OF THE TREASURY FOR SOLE PROPRIETORS, SEE THE INSTRUCTIONS IN THE
INTERNAL REVENUE SERVICE ENCLOSED GUIDELINES. FOR OTHER ENTITIES, IT IS YOUR EMPLOYEE IDENTIFICATION NUMBER
EMPLOYER IDENTIFICATION NUMBER (EIN). IF YOU DO NOT
REQUEST FOR TAXPAYER HAVE A NUMBER, SEE HOW TO GET A TIN IN THE ENCLOSED ______________________________
IDENTIFICATION NUMBER GUIDELINES.
AND CERTIFICATION
NOTE: IF THE ACCOUNT IS IN MORE THAN ONE NAME, SEE
THE CHART ON PAGE 2 OF THE ENCLOSED GUIDELINES ON WHOSE
NUMBER TO ENTER.
PART II - FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
(See Part II instructions in the enclosed Guidelines.)
PART III - CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to
me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by
the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest
or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding.
Signature ____________________________________________________________________ Date ________________________, 1997
</TABLE>
CERTIFICATION INSTRUCTIONS.-You must cross out item 2 above if you have
been notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. For real
estate transactions, item 2 does not apply. For mortgage interest paid, the
acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and generally
payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN.
-18-
EXHIBIT 99.2
FORM OF NOTICE OF GUARANTEED DELIVERY
FOR 9 3/8% SENIOR SUBORDINATED NOTES DUE 2007, SERIES A
OF COACH USA, INC.
As set forth in the Prospectus dated August , 1997 (the "Prospectus") of
Coach USA, Inc. (the "Company") and in the Letter of Transmittal (the "Letter of
Transmittal"), this form or a form substantially equivalent to this form must be
used to accept the Exchange Offer (as defined below) if the certificates for the
outstanding 9 3/8% Senior Subordinated Notes due 2007, Series A (the "Old
Notes") of the Company and all other documents required by the Letter of
Transmittal cannot be delivered to the Exchange Agent by the expiration of the
Exchange Offer or compliance with book-entry transfer procedures cannot be
effected on a timely basis. Such form may be delivered by hand or transmitted by
facsimile transmission, telex or mail to the Exchange Agent no later than the
Expiration Date, and must include a signature guarantee by an Eligible
Institution as set forth below. Capitalized terms used herein but not defined
herein have the meanings ascribed thereto in the Prospectus.
TO:
The Bank of New York (the "Exchange Agent")
BY MAIL OR HAND DELIVERY: BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York The Bank of New York
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286
Ground Level Attention: Reorganization Department,
New York, New York 10286 George Johnson
Attention: Reorganization Department,
George Johnson
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions only)
The Bank of New York
(212) 571-3080
Attention: Reorganization Department
George Johnson
FOR INFORMATION OR CONFIRMATION BY TELEPHONE:
(212) 815-4997
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES, IS AT THE RISK OF THE HOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
THE INSTRUCTIONS ACCOMPANYING THE LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY
BEFORE THIS NOTICE OF GUARANTEED DELIVERY IS COMPLETED.
<PAGE>
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the instruction thereto, such
signatures must appear in the applicable space provided on the Letter of
Transmittal for Guarantee of Signature(s).
-2-
<PAGE>
Ladies and Gentlemen:
The undersigned acknowledges receipt of the Prospectus and the related
Letter of Transmittal which describes the Company's offer (the "Exchange Offer")
to exchange $1,000 in principal amount of a new series of 9 3/8% Senior
Subordinated Notes due 2007, Series B (the "Exchange Notes") for each $1,000 in
principal amount of the Old Notes.
The undersigned hereby tenders to the Company the aggregate principal
amount of Old Notes set forth below on the terms and conditions set forth in the
Prospectus and the related Letter of Transmittal pursuant to the guaranteed
delivery procedure set forth in the "The Exchange Offer--Guaranteed Delivery
Procedures" section in the Prospectus and the accompanying Letter of
Transmittal.
The undersigned understands that no withdrawal of a tender of Old Notes
may be made on or after the Expiration Date. The undersigned understands that
for a withdrawal of a tender of Old Notes to be effective, a written notice of
withdrawal that complies with the requirements of the Exchange Offer must be
timely received by the Exchange Agent at one of its addresses specified on the
cover of this Notice of Guaranteed Delivery prior to the Expiration Date.
The undersigned understands that the exchange of Old Notes for Exchange
Notes pursuant to the Exchange Offer will be made only after timely receipt by
the Exchange Agent of (i) such Old Notes (or Book-Entry Confirmation of the
transfer of such Old Notes into the Exchange Agent's account at The Depository
Trust Company (the "Depositary" or "DTC")) and (ii) a Letter of Transmittal (or
facsimile thereof) with respect to such Old Notes, properly completed and duly
executed, with any required signature guarantees, this Notice of Guaranteed
Delivery and any other documents required by the Letter of Transmittal or a
properly transmitted Agent's Message. The term "Agent's Message" means a message
transmitted by the Depositary to, and received by, the Exchange Agent and
forming part of the confirmation of a book-entry transfer, which states that the
Depositary has received an express acknowledgment from each participant in the
Depositary tendering the Old Notes and that such participant has received the
Letter of Transmittal and agrees to be bound by the terms of the Letter of
Transmittal and the Company may enforce such agreement against such participant.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
-3-
<PAGE>
PLEASE SIGN AND COMPLETE
Signature(s) of Registered Owner(s) or Authorized
Signatory:______________________________________________________________________
Principal Amount of Old Notes Tendered:_________________________________________
Certificate No(s) of Old Notes (if available):__________________________________
Date:___________________________________________________________________________
Name(s) of Registered Holder(s)_________________________________________________
Address:________________________________________________________________________
Area Code and Telephone No.:____________________________________________________
If Old Notes will be delivered by book-entry transfer at The Depository Trust
Company, insert Depository Account No.:_________________________________________
This Notice of Guaranteed Delivery must be signed by the registered Holder(s) of
Old Notes exactly as its (their) name(s) appear on certificates for Old Notes or
on a security position listing as the owner of Old Notes, or by person(s)
authorized to become registered Holder(s) by endorsements and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must
provide the following information.
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):________________________________________________________________________
Capacity:_______________________________________________________________________
Address(es):____________________________________________________________________
DO NOT SEND OLD NOTES WITH THIS FORM. OLD NOTES SHOULD BE SENT TO THE EXCHANGE
AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
-4-
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or a correspondent in the
United States, or otherwise an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended,
hereby (a) represents that each holder of Old Notes on whose behalf this tender
is being made "own(s)" the Old Notes covered hereby within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (b) represents that such tender of Old Notes complies with Rule 14e-4 of
the Exchange Act and (c) guarantees that, within three New York Stock Exchange
trading days from the expiration date of the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof),
together with certificates representing the Old Notes covered hereby in proper
form for transfer (or confirmation of the book-entry transfer of such Old Notes
into the Exchange Agent's account at The Depository Trust Company, pursuant to
the procedure for book-entry transfer set forth in the Prospectus) and required
documents will be deposited by the undersigned with the Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of
Transmittal and Old Notes tendered hereby to the Exchange Agent within the time
period set forth above and that failure to do so could result in financial loss
to the undersigned.
Name of Firm:___________________________________________________________________
Address:________________________________________________________________________
Area Code and Telephone No.:____________________________________________________
________________________________________________________________________________
Authorized Signature
Name:___________________________________________________________________________
Title:__________________________________________________________________________
Date:___________________________________________________________________________
-5-
