<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
STATEMENT ON
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
COACH USA, INC.
(NAME OF SUBJECT COMPANY)
STAGECOACH HOLDINGS PLC
AND
SCH HOLDINGS CORP.
(BIDDER)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
18975L106
(CUSIP NUMBER OF CLASS OF SECURITIES)
KEITH COCHRANE
CHARLOTTE HOUSE
20 CHARLOTTE STREET
PERTH PH15LL
SCOTLAND
TELEPHONE: +44-1738-442-111
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
COPIES TO:
MICHAEL O. WOLFSON, ESQ.
99 BISHOPSGATE, 21ST FLOOR
LONDON EC2M 3YH
TELEPHONE: +44-207-422-4000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
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$1,314,470,220 $262,895
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* Based on the offer to purchase all of the outstanding shares of Common Stock
of the Subject Company at a purchase price of $42.00 cash per share,
25,420,777 shares outstanding, 4,034,645 shares issuable upon the exercise of
outstanding options, 40,000 shares issuable upon the exercise of outstanding
warrants, 1,757,845 shares issuable upon conversion of convertible
subordinated notes outstanding and 63,643 shares issuable in respect of
certain securities of a subsidiary of the Subject Company.
** 1/50 of 1% of Transaction Valuation.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(a)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
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<PAGE> 2
CUSIP NO. 18975L106
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1 NAMES OF REPORTING PERSONS:
SCH Holdings Corp.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS:
76-0608391
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS AF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,499,921*
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
5.9% (based on 25,420,777 shares outstanding)
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
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* SCH Holdings Corp., a Delaware Corporation, has entered into a Tender
Agreement with the directors of Coach USA, Inc., pursuant to which the
directors have agreed to validly tender (and not withdraw) pursuant to and in
accordance with the terms of the Offer, all of the Coach USA, Inc. Shares
beneficially owned by them, and any Shares acquired by them after the date of
the Tender Agreement.
2
<PAGE> 3
CUSIP NO. 18975L106
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<S> <C> <C>
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1 NAMES OF REPORTING PERSONS:
Stagecoach Holdings plc
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: N/A
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS WC and BK
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(e) OR 2(f) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
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7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,499,921*
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8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
5.9% (based on 25,420,777 shares outstanding)
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10 TYPE OF REPORTING PERSON CO
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</TABLE>
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* The footnote on page 2 is incorporated herein by reference.
3
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by SCH Holdings Corp., a Delaware corporation ("Purchaser"), to
purchase all of the outstanding shares of Common Stock, par value $0.01 per
share (the "Shares"), of Coach USA, Inc., a Delaware corporation (the
"Company"), at a purchase price of $42.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated June 18, 1999 (the "Offer to Purchase"), a copy
of which is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer"), a copy of which is attached hereto as Exhibit (a)(2). Purchaser is a
subsidiary of Stagecoach Holdings plc, a public limited company organized under
the laws of Scotland ("Parent"). This Statement also constitutes a Schedule 13D
of Purchaser and Parent.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Coach USA, Inc. The information set
forth in Section 7 ("Certain Information Concerning the Company") of the Offer
to Purchase is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is Common Stock, par value $0.01 per share, of the Company. The
information set forth in the Introduction (the "Introduction") of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares; No Cash
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by Parent and Purchaser. The
information set forth in Section 8 ("Certain Information Concerning Parent and
Purchaser") of the Offer to Purchase and in Schedule I thereto is incorporated
herein by reference.
(e) and (f) During the last five years, neither Parent nor Purchaser, nor,
to the best knowledge of Parent or Purchaser, any of the persons listed in
Schedule I to the Offer to Purchase (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Parent and Purchaser") of the Offer to Purchase is incorporated herein by
reference. Except as set forth in Sections 8 of the Offer to Purchase, since
January 1, 1996, there have been no transactions which would be required to be
disclosed under this Item 3(a) between Parent or Purchaser or, to the best
knowledge of Parent or Purchaser, any of the persons listed in Schedule I to the
Offer to Purchase and the Company or any of its executive offices, directors or
affiliates.
(b) The information set forth in Section 8 ("Certain Information Concerning
Parent and Purchaser") and Section 10 ("Background of the Offer; Contacts with
the Company"), Section 11 ("The Merger Agreement and Other Agreements") and
Section 12 ("Purpose of the Offer; the Merger; Plans for the Company") of the
Offer to Purchase is incorporated herein by reference. Except as set forth in
Sections 8, 10, 11 and 12 of the Offer to Purchase, since January 1, 1996, there
have been no contacts, negotiations or transactions which would be required to
be disclosed under Item 3(b) between any of Parent and Purchaser or any of their
respective subsidiaries or, to the best knowledge of Parent and Purchaser, any
of those persons listed in Schedule I to the Offer to Purchase and the Company
or its affiliates concerning a merger, consolidation or acquisition, a tender
offer or other acquisition of securities, an election of directors or a sale or
other transfer of a material amount of assets.
4
<PAGE> 5
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction, Section 6 ("Price
Range of Shares; No Cash Dividends"), Section 10 ("Background of the Offer;
Contacts with the Company"), Section 11 ("The Merger Agreement and Other
Agreements"), Section 12 ("Purpose of the Offer; the Merger; Plans for the
Company") and Section 14 ("Effect of the Offer on the Market for the Shares, New
York Stock Exchange Listing and Exchange Act Registration") of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 8 ("Certain
Information Concerning Parent and Purchaser") of the Offer to Purchase is
incorporated herein by reference. Except as set forth in the Introduction and
Section 8 of the Offer to Purchase, neither Parent nor Purchaser, nor, to the
best knowledge of Parent or Purchaser, any of the persons listed in Schedule I
to the Offer to Purchase or any associate or majority-owned subsidiary of Parent
or Purchaser or any of the persons so listed beneficially owns or has any right
to acquire, directly or indirectly, any Shares.
(b) The information set forth in the Introduction and Section 11 ("The
Merger Agreement and Other Agreements") of the Offer to Purchase is incorporated
herein by reference. Except as set forth in the Introduction and Section 11 of
the Offer to Purchase, neither Parent nor Purchaser nor, to the best knowledge
of Parent, Purchaser, any of the persons or entities referred to above or any
executive officer, director or subsidiary of any of the foregoing has effected
any transactions in the Shares during the past sixty days.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction and Section 9 ("Source and
Amount of Funds"), Section 10 ("Background of the Offer; Contacts with the
Company"), Section 11 ("The Merger Agreement and Other Agreements"), Section 12
("Purpose of the Offer; the Merger; Plans for the Company"), Section 16
("Certain Legal Matters and Regulatory Approvals") and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference. Except
as set forth in the Introduction and Sections 9, 10, 11, 12, 16 and 17 of the
Offer to Purchase, Parent and Purchaser, nor, to the best knowledge of Parent or
Purchaser, any of the persons listed in Schedule I to the Offer to Purchase, has
any contract, arrangement, understanding or relationship with any other person
with respect to any securities of the Company (including, but not limited to,
any contract, arrangement, understanding or relationship concerning the transfer
or the voting of any such securities, joint ventures, loans or option
arrangements, puts or calls, guarantees of loans, guarantee agreements or any
giving or withholding of proxies).
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Parent and Purchaser") of the Offer to Purchase is incorporated herein by
reference.
5
<PAGE> 6
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("The Merger Agreement and
Other Agreements") and Section 12 ("Purpose of the Offer; the Merger; Plans for
the Company") of the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal Matters
and Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 16 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated June 18, 1999.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published on June 18, 1999.
(a)(8) Press Release issued by Parent on June 14, 1999.
(b)(1) Commitment Letter dated June 11, 1999 among Stagecoach Holdings plc,
Credit Suisse First Boston, J.P. Morgan Securities Ltd., The Royal Bank of
Scotland plc and The Governor and Company of The Bank of Scotland.
(c)(1) Agreement and Plan of Merger dated as of June 12, 1999 among Coach
USA, Inc., SCH Holdings Corp., SCH Acquisition Corp. and Stagecoach Holdings
plc.
(c)(2) Form of Voting Trust Agreement (filed as Exhibit A to Exhibit
11(c)(1)).
(c)(3) Tender Agreement dated June 12, 1999 among Stagecoach Holdings plc,
SCH Holdings Corp. and the directors of Coach USA, Inc.
(c)(4) Employment Term Sheet dated June 12, 1999, executed by Lawrence K.
King, John Mercadante, Jr., Frank Gallagher and Gerald Mercadante and delivered
to Stagecoach Holdings plc.
(c)(5) Undertaking to Vote, dated June 12, 1999, by Ann Gloag in favor of
Parent and the Company.
(c)(6) Undertaking to Vote, dated June 12, 1999, by Brain Souter in favor
of Parent and the Company.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
6
<PAGE> 7
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify the
information set forth in this Statement is true, complete and correct.
STAGECOACH HOLDINGS PLC
By: /s/ KEITH COCHRANE
------------------------------------
Name: Keith Cochrane
Title: Group Finance Director
SCH HOLDINGS CORP.
By: /s/ KEITH COCHRANE
------------------------------------
Name: Keith Cochrane
Title: President
Date: June 18, 1999
7
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EXHIBIT INDEX
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EXHIBIT PAGE
NO. DESCRIPTION NO.
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11(a)(1) Offer to Purchase, dated June 18, 1999......................
11(a)(2) Letter of Transmittal.......................................
11(a)(3) Notice of Guaranteed Delivery...............................
11(a)(4) Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees..............
11(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.........................
11(a)(6) Guidelines for Certification of Taxpayer Identification
Number on
Substitute Form W-9.........................................
11(a)(7) Summary Advertisement as published on June 18, 1999.........
11(a)(8) Press Release issued by Parent on June 14, 1999.............
11(b)(1) Commitment Letter dated June 11, 1999 among Stagecoach
Holdings plc, Credit Suisse First Boston, J.P. Morgan
Securities Ltd., The Royal Bank of Scotland plc, and The
Governor and Company of The Bank of Scotland................
11(c)(1) Agreement and Plan of Merger dated as of June 12, 1999 among
Coach USA, Inc., SCH Holdings Corp., SCH Acquisition Corp.
and Stagecoach Holdings plc.................................
11(c)(2) Form of Voting Trust Agreement (filed as Exhibit A to
Exhibit 11(c)(1))...........................................
11(c)(3) Tender Agreement dated June 12, 1999 among Stagecoach
Holdings plc, SCH Holdings Corp. and the directors of Coach
USA, Inc....................................................
11(c)(4) Employment Term Sheet dated June 12, 1999, executed by
Lawrence K. King, John Mercadante, Jr., Frank Gallagher and
Gerald Mercadante and delivered to Stagecoach Holdings
plc.........................................................
11(c)(5) Undertaking to Vote, dated June 12, 1999, by Ann Gloag in
favor of Parent and the Company.............................
11(c)(6) Undertaking to Vote, dated June 12, 1999, by Brain Souter in
favor of Parent and the Company.............................
</TABLE>
8
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COACH USA, INC.
AT
$42.00 NET PER SHARE
BY
SCH HOLDINGS CORP.
A WHOLLY OWNED SUBSIDIARY OF
STAGECOACH HOLDINGS PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK
CITY TIME, ON MONDAY, JULY 26, 1999, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT THE EXPIRATION OF
THE OFFER THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE
EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER
SHARE (THE "COMMON STOCK"), OF COACH USA, INC. (THE "COMPANY"), WHICH
CONSTITUTES MORE THAN 50% OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED
BASIS) ON THE DATE OF PURCHASE OF ALL THE COMMON STOCK ENTITLED TO VOTE
GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER, (2) THE EXPIRATION OR
TERMINATION OF ANY AND ALL APPLICABLE WAITING PERIODS UNDER THE
HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), (3) (A) RECEIPT BY STAGECOACH HOLDINGS PLC ("STAGECOACH") OF A FAVORABLE
INFORMAL ADVISORY OPINION FROM THE STAFF OF THE UNITED STATES SURFACE
TRANSPORTATION BOARD (THE "STB") TO THE EFFECT THAT THE PROPOSED USE OF THE
VOTING TRUST (AS DEFINED HEREIN) WILL EFFECTIVELY INSULATE STAGECOACH FROM
ACQUIRING UNLAWFUL CONTROL OF THE COMPANY AND SUCH ADVISORY OPINION NOT HAVING
BEEN WITHDRAWN OR (B) THE STB HAVING APPROVED STAGECOACH'S AND SCH HOLDINGS
CORP.'S ACQUISITION OF THE FEDERALLY REGULATED CARRIERS CONTROLLED BY THE
COMPANY AND (4) A MAJORITY OF THE ORDINARY SHARES OF STAGECOACH PRESENT AND
VOTING AT AN EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS HAVING DULY ADOPTED
RESOLUTIONS APPROVING THE ACQUISITION BY STAGECOACH OF THE COMPANY PURSUANT TO
THE OFFER AND THE MERGER (AS DEFINED HEREIN) AND CERTAIN RELATED MATTERS. THE
OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND
SECTIONS 1, 11, AND 15.
------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO,
AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES OF COMMON STOCK OF THE
COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY TENDER THEIR SHARES TO
PURCHASER PURSUANT TO THE OFFER.
------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile) and any other required documents to the Depositary (as defined
herein), and either deliver the certificates representing the tendered Shares
and any other required documents to the Depositary or tender such Shares
pursuant to the procedure for book-entry transfer set forth in Section 3 or (2)
request such stockholder's broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for such stockholder. Stockholders
having Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee must contact such broker, dealer, commercial bank,
trust company or other nominee if they desire to tender Shares so registered.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot deliver
the certificates for Shares and all other required documents to reach the
Depositary on or prior to the Expiration Date (as defined herein), or who cannot
comply with the procedure for book-entry transfer on a timely basis may tender
such Shares by following the procedures for guaranteed delivery set forth in
Section 3.
Questions and requests for assistance may be directed to J.P. Morgan
Securities Inc. (the "Dealer Manager") or to MacKenzie Partners, Inc. (the
"Information Agent") at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or the Dealer Manager,
or from brokers, dealers, commercial banks or trust companies.
THE DEALER MANAGER FOR THE OFFER IS:
J.P. MORGAN & CO.
June 18, 1999
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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INTRODUCTION................................................ 1
THE TENDER OFFER............................................ 3
1. Terms of the Offer; Expiration Date..................... 3
2. Acceptance for Payment and Payment for Shares........... 4
3. Procedure for Tendering Shares.......................... 5
4. Withdrawal Rights....................................... 8
5. Certain Federal Income Tax Consequences................. 8
6. Price Range of Shares; No Cash Dividends................ 9
7. Certain Information Concerning the Company.............. 10
8. Certain Information Concerning Parent and Purchaser..... 15
9. Source and Amount of Funds.............................. 17
10. Background of the Offer; Contacts with the Company...... 18
11. The Merger Agreement and Other Agreements............... 19
12. Purpose of the Offer; the Merger; Plans for the
Company................................................... 37
13. Dividends and Distributions............................. 38
14. Effect of the Offer on the Market for the Shares, New
York Stock Exchange Listing and Exchange Act
Registration............................................ 39
15. Certain Conditions of the Offer......................... 39
16. Certain Legal Matters and Regulatory Approvals.......... 41
17. Fees and Expenses....................................... 44
18. Miscellaneous........................................... 45
SCHEDULE I -- DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND
PURCHASER
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i
<PAGE> 3
To the Stockholders of
COACH USA, INC.
INTRODUCTION
SCH Holdings Corp., a Delaware corporation ("Purchaser"), which is a
subsidiary of Stagecoach Holdings plc, a public limited company organized under
the laws of Scotland ("Parent"), hereby offers to purchase all of the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Coach USA, Inc., a Delaware corporation (the "Company"), at a purchase price of
$42.00 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer").
Promptly upon the purchase by Parent, Purchaser or their affiliates of
Shares, such Shares will be deposited in one of several independent voting
trusts (collectively, the "Voting Trust") in accordance with the terms of one of
the Voting Trust Agreements (the "Voting Trust Agreements") among Parent,
Purchaser and various voting trustees (the "Voting Trustees"), pending approval
by the Surface Transportation Board (the "STB") of the acquisition of control by
Parent of the Company. The Offer is not conditioned upon such STB approval. The
Merger (as defined below) is also not conditioned on such STB approval.
All the directors of the Company have entered into a Tender Agreement with
Parent and Purchaser pursuant to which such persons have agreed, among other
things, to tender an aggregate of 1,499,921 Shares, or approximately 5.9% of the
Shares outstanding on the date hereof, and any Shares acquired after the date of
the Tender Agreement, pursuant to the Offer.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares pursuant to the Offer.
Purchaser will pay all fees and expenses of J.P. Morgan Securities Inc. ("JP
Morgan"), which is acting as Dealer Manager for the Offer, IBJ Whitehall Bank &
Trust Company, which is acting as the Depositary (in such capacity, the
"Depositary"), and MacKenzie Partners, Inc., which is acting as the Information
Agent, incurred in connection with the Offer. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS APPROVED
THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER (AS DEFINED BELOW), AND DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF,
THE HOLDERS OF THE SHARES AND RECOMMENDS THAT THE HOLDERS OF THE SHARES TENDER
THEIR SHARES TO PURCHASER PURSUANT TO THE OFFER.
The Company Board has received the written opinion dated June 12, 1999 of
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), financial advisor to the
Company, to the effect that, as of such date and based upon and subject to
certain matters stated therein, the $42.00 per Share cash consideration to be
received in the Offer and the Merger by holders of Shares (other than Parent and
its affiliates) was fair to such holders from a financial point of view. A copy
of the written opinion of Morgan Stanley is attached to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being
distributed to the stockholders of the Company and enclosed herewith, and
stockholders are urged to read the opinion carefully in its entirety for the
assumptions made, matters considered and limitations on the review undertaken by
Morgan Stanley.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) AT THE EXPIRATION OF
THE OFFER THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION
DATE (AS DEFINED IN SECTION 1) A NUMBER OF SHARES WHICH CONSTITUTES MORE THAN
50% OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED BASIS) ON THE DATE OF
PURCHASE OF ALL THE SHARES ENTITLED TO VOTE GENERALLY IN THE ELECTION OF
DIRECTORS OR IN A MERGER (THE "MINIMUM CONDITION"), (2) THE EXPIRATION OR
TERMINATION OF ANY AND ALL APPLICABLE WAITING PERIODS UNDER THE HSR ACT (THE
"HSR ACT CONDITION"), (3) (A) RECEIPT BY PARENT OF A FAVORABLE INFORMAL ADVISORY
OPINION FROM THE STAFF OF THE STB TO THE EFFECT THAT THE PROPOSED USE OF THE
VOTING TRUST WILL EFFECTIVELY INSULATE PARENT FROM ACQUIRING UNLAWFUL CONTROL OF
THE COMPANY AND SUCH ADVISORY OPINION NOT HAVING BEEN WITHDRAWN OR (B) THE STB
HAVING APPROVED PARENT'S AND PURCHASER'S ACQUISITION OF THE FEDERALLY REGULATED
CARRIERS CONTROLLED BY
1
<PAGE> 4
THE COMPANY (THE "STB CONDITION") AND (4) A MAJORITY OF THE ORDINARY SHARES OF
PARENT PRESENT AND VOTING AT AN EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
HAVING DULY ADOPTED RESOLUTIONS APPROVING THE ACQUISITION BY PARENT OF THE
COMPANY PURSUANT TO THE OFFER AND THE MERGER (AS DEFINED BELOW) AND CERTAIN
RELATED MATTERS (THE "PARENT SHAREHOLDER APPROVAL CONDITION"). SEE SECTIONS 1,
11 AND 15. IF PURCHASER PURCHASES NOT LESS THAN THAT NUMBER OF SHARES NEEDED TO
SATISFY THE MINIMUM CONDITION, IT WILL BE ABLE TO EFFECT THE MERGER WITHOUT THE
AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY. SEE SECTION 12.
Each of Brian Souter and Ann Gloag has signed an irrevocable undertaking
dated June 12, 1999, pursuant to which each of them has agreed to vote his or
her shares of voting stock of Parent in favor of the Merger. Mr. Souter and Ms.
Gloag together beneficially own approximately 24% of the shares of Parent.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 12, 1999 (as it may be amended or supplemented from time to time, the
"Merger Agreement"), among Parent, Purchaser SCH Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Purchaser ("Merger Sub"), and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer by Purchaser, and further provides that, following the completion of
the Offer, upon the terms and subject to the conditions of the Merger Agreement,
and in accordance with the Delaware General Corporation Law (the "DGCL"), Merger
Sub will be merged with and into the Company (the "Merger"). Following the
effective time of the Merger (the "Effective Time"), the Company will continue
as the surviving corporation (the "Surviving Corporation") and become a wholly
owned subsidiary of Purchaser and, indirectly, Parent, and the separate
corporate existence of Merger Sub will cease. See Section 11. Following the
Merger, Parent may, at its option, cause the Surviving Corporation to be merged
with and into Purchaser (the "Subsequent Merger"). The Subsequent Merger would
be effected in order to cause the Company's outstanding convertible subordinated
notes, which presently are convertible into Shares, to instead become
convertible pursuant to their terms into the same consideration as would be
received by holders of Shares in the Merger. Alternatively, Parent may elect to
structure the Merger so that the Company is merged with and into Purchaser,
Merger Sub, or another direct or indirect wholly owned subsidiary of Parent, or
another direct or indirect wholly owned subsidiary of Parent is merged with and
into the Company; provided, however, that no such change shall (i) alter or
change the amount or kind of the consideration to be issued to the Company's
stockholders in the Merger or the treatment of the holders of the Company Stock
Options (as hereinafter defined), (ii) materially impede or delay consummation
of the Merger, or (iii) release Parent from any of its obligations under the
Merger Agreement. If more than 80% of the Shares are purchased by Purchaser in
the Offer, Parent currently intends to restructure the Merger as a merger of the
Company with and into Purchaser, which would obviate the need for the Subsequent
Merger.
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than Shares held by the Company or owned by Parent,
Purchaser or any other subsidiary of Parent or the Company, which shall be
canceled, and other than Shares, if any (collectively, "Dissenting Shares"),
held by stockholders who have properly exercised appraisal rights under Section
262 of the DGCL) will, by virtue of the Merger and without any action on the
part of the holders of the Shares be converted into the right to receive in cash
the per Share price paid in the Offer (the "Merger Consideration"), payable to
the holder thereof, without interest, upon surrender of the certificate formerly
representing such Share, less any required withholding taxes.
The Merger Agreement is more fully described in Section 11. Certain federal
income tax consequences of the sale of the Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
The Company has represented to Parent and Purchaser that as of the close of
business on June 14, 1999, there were 25,420,777 Shares issued and outstanding,
4,034,645 Shares issuable upon the exercise of outstanding stock options,
1,737,845 Shares issuable upon the exercise of convertible subordinated notes,
40,000 Shares issuable upon the exercise of warrants and 63,643 Shares issuable
in respect of certain securities of a subsidiary of the Company. Based upon the
foregoing, Purchaser believes that approximately 15,648,455 Shares constitutes
50% of the outstanding Shares on a fully-diluted basis.
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<PAGE> 5
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered on or prior to the Expiration
Date and not properly withdrawn as permitted by Section 4. The term "Expiration
Date" means 10:00 a.m., New York City time, on July 26, 1999, unless and until
Purchaser, in its sole discretion (but subject to the terms and conditions of
the Merger Agreement), shall have extended the period during which the Offer is
open, in which event the term "Expiration Date" shall mean the latest time and
date at which the Offer, as so extended by Purchaser, shall expire. The initial
Expiration Date is five business days following the expected earliest date of
the Parent's shareholders meeting, in order to provide sufficient time for
notice to be given to the Company's stockholders of the satisfaction of the
Parent Shareholder Approval Condition following the Parent's shareholders
meeting. If the Parent's shareholders meeting takes place on a later date,
Purchaser expects that, subject to the Merger Agreement and the other
considerations set forth below, it would extend the Offer until five business
days following such later date.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION, THE HSR ACT CONDITION, THE STB CONDITION, THE PARENT
SHAREHOLDER APPROVAL CONDITION AND CERTAIN OTHER CONDITIONS. SEE SECTION 15,
WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER. SUBJECT TO THE PROVISIONS
OF THE MERGER AGREEMENT AND THE APPLICABLE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION" OR THE "SEC"), PURCHASER
RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO WAIVE ANY OR ALL CONDITIONS TO
THE OFFER (OTHER THAN THE MINIMUM CONDITION, THE HSR ACT CONDITION, THE STB
CONDITION, THE PARENT SHAREHOLDER APPROVAL CONDITION AND THE CONDITION DESCRIBED
IN PARAGRAPH (C) OF SECTION 15 HEREOF) AND TO MODIFY THE TERMS OF THE OFFER
(OTHER THAN AMENDING THE CONDITIONS, REDUCING THE MERGER CONSIDERATION, CHANGING
THE FORM OF THE MERGER CONSIDERATION (OTHER THAN BY ADDING CASH CONSIDERATION),
REDUCING THE MAXIMUM NUMBER OF SHARES TO BE PURCHASED OR AMENDING ANY OTHER TERM
IN A MANNER WHICH IS ADVERSE TO THE HOLDERS OF THE SHARES). SUBJECT TO THE
PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THE PROVISIONS OF THE MERGER
AGREEMENT DESCRIBED IN THE NEXT PARAGRAPH, AND THE APPLICABLE RULES AND
REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION DATE ANY OR ALL OF SUCH
CONDITIONS TO THE OFFER HAVE NOT BEEN SATISFIED, PURCHASER RESERVES THE RIGHT
(BUT SHALL NOT BE OBLIGATED) TO (I) TERMINATE THE OFFER AND RETURN ALL TENDERED
SHARES TO TENDERING STOCKHOLDERS, (II) WAIVE SUCH UNSATISFIED CONDITIONS AND
PURCHASE ALL SHARES VALIDLY TENDERED OR (III) EXTEND THE OFFER AND, SUBJECT TO
THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF STOCKHOLDERS TO WITHDRAW THEIR
SHARES), RETAIN THE SHARES WHICH HAVE BEEN TENDERED, UNTIL THE TERMINATION OF
THE OFFER, AS EXTENDED.
Subject to the applicable rules and regulations of the Commission and the
provisions of the Merger Agreement, Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 15 shall have occurred, to
(i) extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and payment for, any Shares, by giving oral or
written notice of such extension to the Depositary or (ii) amend the Offer in
any respect permitted by the Merger Agreement by giving oral or written notice
of such amendment to the Depositary. During any such extension, all Shares
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the right of a tendering stockholder to withdraw such stockholder's
Shares. Under the terms of the Merger Agreement, Purchaser has agreed with the
Company that it will not, without the prior written consent of the Company,
impose additional conditions to the Offer, decrease the price per Share payable
in the Offer, change the form of consideration payable in the Offer (other than
by adding cash consideration), reduce the number of Shares sought to be
purchased in the Offer, extend the Expiration Date (except as described below in
this paragraph) or otherwise change any term of the Offer in any manner adverse
to any holder of Shares. The Merger Agreement provides that Purchaser may,
without the consent of the Company, (i) extend the Offer (on one or more
occasions) beyond the scheduled expiration date if at any such date any of the
conditions to Purchaser's obligation to purchase Shares has not been satisfied
or waived,
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<PAGE> 6
until such time as such conditions are satisfied or waived, and, at the request
of the Company, Purchaser will, subject to Parent's right to terminate the
Merger Agreement, extend the Offer for additional periods up to but not later
than January 31, 2000, but will not be required to so extend if any of the
conditions not satisfied or earlier waived on the then-scheduled expiration date
are one or more of the Minimum Condition or the conditions described in
paragraphs (a), (c) or (d) of Section 15 hereof, provided that (x) if the only
condition not satisfied is the Minimum Condition, the satisfaction or waiver of
all other conditions will have been publicly disclosed at least five business
days before termination of the Offer and (y) if the conditions described in
paragraph (a) or (d) of Section 15 hereof have not been satisfied and the
failure to so satisfy can be remedied, the Offer will not be terminated unless
the failure is not remedied within 10 business days after Parent has furnished
the Company with written notice of such failure, (ii) extend the Offer to the
extent required by any rule or regulation of the Commission or (iii) extend the
Offer (on a one-time basis only) for not more than five business days beyond the
latest expiration date otherwise permitted under clause (i) or (ii) above if all
of the conditions thereto have been satisfied or waived but less than 90% of the
outstanding Shares have been validly tendered and not properly withdrawn
pursuant to the Offer.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, and such announcement in
the case of an extension will be made in accordance with Rule 14e-1(d) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which Purchaser may
choose to make any public announcement, except as provided by applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that material changes be promptly disseminated to holders of Shares), Purchaser
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.
If Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, Purchaser will disseminate additional
tender offer material and extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer, other than a change in price or a change in the percentage of securities
sought, will depend upon the facts and circumstances, including the materiality,
of the changes. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought, a minimum ten
business day period from the day of such change is generally required to allow
for adequate dissemination to stockholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday, or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by Purchaser to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will accept for payment and will pay for all Shares validly tendered and not
properly withdrawn on or prior to the Expiration Date as soon as practicable
after the later to occur of (i) the Expiration Date and (ii) the satisfaction or
waiver of the conditions of the Offer set forth in Section 15, including without
limitation the Minimum Condition, the HSR Act Condition, the STB Condition and
the Parent Shareholder Approval Condition. In addition, subject to applicable
rules of the Commission, Purchaser expressly reserves the right to delay
acceptance for payment of or payment for Shares pending receipt of any other
regulatory approvals specified in Section 16. Any such delays will be effected
in compliance with Rule 14e-1(c) under the Exchange Act (relating to a bidder's
obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including the HSR Act and the STB, see Section
16.
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<PAGE> 7
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing Shares (the "Share Certificates"), or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and (iii) any other documents required by the Letter
of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to stockholders whose Shares have been accepted for
payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES
BE PAID BY PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT. If, for any reason whatsoever, acceptance for payment of or
payment for any Shares tendered pursuant to the Offer is delayed or Purchaser is
unable to accept for payment or pay for Shares tendered pursuant to the Offer,
then without prejudice to Purchaser's rights set forth herein, the Depositary
may nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares and such Shares may not be withdrawn except
to the extent that the tendering stockholder is entitled to and duly exercises
withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned
without expense to the tendering stockholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will be
credited to an account maintained at such Book-Entry Transfer Facility), as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its affiliates the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. Except as set forth below, in order for Shares to be
validly tendered pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date and either (i) Share Certificates evidencing tendered Shares must be
received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case on or
prior to the Expiration Date or (ii) the guaranteed delivery procedures
described below must be complied with.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facilities for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of any
Book-Entry
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<PAGE> 8
Transfer Facility may make book-entry delivery of Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other
documents required by the Letter of Transmittal, must in any case be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedures described below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF
BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"), except in cases where Shares are tendered (i) by a
registered holder of Shares who has not completed either the box labeled
"Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates not accepted for payment or not tendered are to be returned, to a
person other than the registered holder, the Share Certificates must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name of the registered holder appears on such certificates, with the
signatures on such certificates or stock powers guaranteed as aforesaid. See
Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available, or such stockholder cannot deliver the Share Certificates and all
other required documents to reach the Depositary on or prior to the Expiration
Date, or such stockholder cannot complete the procedure for delivery by
book-entry transfer on a timely basis, such Shares may nevertheless be tendered,
provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form made available by Purchaser is received
by the Depositary as provided below on or prior to the Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation),
representing all tendered Shares in proper form for transfer, together with
the Letter of Transmittal (or a facsimile thereof) properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed
Delivery. A trading day is any day on which the New York Stock Exchange is
open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares tendered within the meaning of, and that the tender
of the
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<PAGE> 9
Shares effected thereby complies with, Rule 14e-4 under the Exchange Act, each
in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time and will depend upon when Share Certificates or Book-Entry Confirmations
with respect to such Shares are received into the Depositary's account at a
Book-Entry Transfer Facility.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of Purchaser and each of them
(including, until receipt of STB approval for the acquisition of control by
Parent of the Company's regulated carriers, the Voting Trustee of the respective
Voting Trust into which the tendering stockholder's Shares are deposited) as
such stockholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by Purchaser (and with respect to any and
all other Shares or other securities issued or issuable in respect of such
Shares on or after the date hereof). All such powers of attorney and proxies
shall be considered irrevocable and coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
Purchaser accepts such Shares for payment. Upon such acceptance for payment, all
prior powers of attorney and proxies given by such stockholder with respect to
such Shares (and such other Shares and other securities) will be revoked without
further action, and no subsequent powers of attorney and proxies may be given
nor any subsequent written consents executed (and, if given or executed, will
not be deemed effective). The designees of Purchaser will, with respect to the
Shares (and such other Shares and other securities) for which such appointment
is effective, be empowered subject to the terms of the Voting Trust to exercise
all voting and other rights of such stockholder as they in their sole discretion
may deem proper at any annual or special meeting of the Company's stockholders
or any adjournment or postponement thereof, by written consent in lieu of any
such meeting or otherwise. Purchaser reserves the right to require that, in
order for Shares to be deemed validly tendered, immediately upon Purchaser's
payment for such Shares, Purchaser (including through the Voting Trust) must be
able to exercise full voting rights with respect to such Shares, and other
securities, including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding. Purchaser reserves the absolute right
to reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of which may in the opinion of its counsel be unlawful.
Purchaser also reserves the absolute right to waive any of the conditions of the
Offer (subject to the provisions of the Merger Agreement) or any defect or
irregularity in any tender of Shares of any particular stockholder whether or
not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. None of Purchaser,
Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
Backup U.S. Federal Income Tax Withholding and Substitute Form W-9. Under
the "backup withholding" provisions of U.S. federal income tax law, the
Depositary may be required to withhold 31% of the amount of any payments of cash
pursuant to the Offer or the Merger. In order to avoid backup withholding, each
stockholder surrendering Shares in the Offer must, unless an exemption applies,
provide the payor of such cash with such stockholder's correct taxpayer
identification number ("TIN") on a substitute Form W-9 and certify, under
penalties of perjury, that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such
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<PAGE> 10
stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 31%. All stockholders surrendering Shares
pursuant to the Offer should complete and sign the substitute Form W-9 included
in the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists and
is proved in a manner satisfactory to the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign a Form W-8, Certificate of Foreign Status,
a copy of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 of the Letter of Transmittal.
Other Requirements. Purchaser's acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering stockholder and Purchaser upon the terms and
subject to the conditions of the Offer, including the tendering stockholder's
representation and warranty that the stockholder is the holder of the Shares
within the meaning of, and that the tender of the Shares complies with, Rule
14e-4 under the Exchange Act.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after August 16, 1999. If Purchaser extends the Offer, is delayed in its
acceptance for payment of Shares or is unable to purchase Shares validly
tendered pursuant to the Offer for any reason, then without prejudice to
Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf
of Purchaser, retain tendered Shares and such Shares may not be withdrawn except
to the extent that tendering stockholders are entitled to withdrawal rights as
described in this Section 4. Any such delay in acceptance for payment will be
accompanied by an extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signatures on the notice of withdrawal must
be guaranteed by an Eligible Institution unless such Shares have been tendered
for the account of an Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The summary of
tax consequences set forth below is for general information only and is based on
the law as currently in effect. The tax treatment of each stockholder will
depend in part upon such stockholder's particular situation. Special tax
consequences not described herein may be applicable to particular classes of
taxpayers, such as financial institutions, broker-dealers, life insurance
companies, stockholders who acquired their Shares through the exercise of an
employee stock option or otherwise as compensation, and persons who received
payments in respect of options to acquire Shares. Unless otherwise indicated,
this summary deals only with stockholders who are "United States persons" (as
defined below) and who hold their Shares as capital assets. For purposes of this
discussion (i) "United States person" means a person who is (a) a citizen or
resident of the United States, (b) a
8
<PAGE> 11
corporation or partnership created or organized in the United States or under
the laws of the United States or any political subdivision thereof, (c) an
estate the income of which is subject to the United States federal income
taxation regardless of its source or (d) a trust which is subject to the
supervision of a court within the United States and the control of one or more
United States persons (as defined in Section 7701 (a)(30) of the Code), and (ii)
the term "Non-U.S. person" means a stockholder who is not a United States
person. ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR
FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for U.S. federal income tax purposes, and may also be a taxable
transaction under applicable state, local, foreign income or other tax laws.
Generally, for U.S. federal income tax purposes, a stockholder will recognize
gain or loss in an amount equal to the difference between the cash received by
the stockholder pursuant to the Offer or the Merger and the stockholder's
adjusted tax basis in the Shares exchanged therefor. For U.S. federal income tax
purposes, such gain or loss will be a capital gain or loss if the Shares are a
capital asset in the hands of the stockholder, and a long-term capital gain or
loss if the stockholder's holding period is more than one year as of the date
Purchaser accepts such Shares for payment pursuant to the Offer or the effective
date of the Merger, as the case may be. There are limitations on the
deductibility of capital losses. The long-term capital gains of individuals,
estates and certain trusts generally are eligible for reduced rates of taxation.
Capital losses generally must be used only to offset capital gains.
Any gain realized by a Non-U.S. person upon an exchange of Shares pursuant
to the Offer or the Merger generally will not be subject to U.S. federal income
or withholding tax unless (i) such gain is effectively connected with a U.S.
trade or business conducted by the Non-U.S. person in the United States or (ii)
in the case of a Non-U.S. person who is an individual, such individual is
present in the United States for 183 days or more in the taxable year during
which the exchange occurs and certain other conditions are met.
6. PRICE RANGE OF SHARES; NO CASH DIVIDENDS. The Shares are listed and
traded on the New York Stock Exchange under the symbol "CUI". The Shares were
traded on the Nasdaq National Market from May 14, 1996 until May 7, 1997. Since
May 8, 1997, the Shares have traded on the New York Stock Exchange (the "NYSE").
The following table sets forth, for the quarters indicated, the high and low
sales prices per Share on the NYSE and Nasdaq National Market, as applicable, as
reported in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (the "1998 Annual Report") with respect to the fiscal years
covered by such Annual Report and as reported by the Dow Jones News Service
thereafter. According to the 1998 Annual Report, the Company has not paid cash
dividends on the Shares and has no plans to do so.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
Fiscal Year Ended December 31, 1997:
First Quarter............................................. $34 1/4 $27 5/8
Second Quarter............................................ 31 1/4 24 1/2
Third Quarter............................................. 31 7/6 24 7/8
Fourth Quarter............................................ 35 1/6 27
Fiscal Year Ended December 31, 1998:
First Quarter............................................. 46 7/8 28 15/16
Second Quarter............................................ 48 3/16 42 3/8
Third Quarter............................................. 51 1/2 21 7/16
Fourth Quarter............................................ 34 7/8 15 1/16
Fiscal Year Ending December 31, 1999:
First Quarter............................................. 39 9/16 22 7/8
Second Quarter (through June 17, 1999).................... 41 3/8 20 7/8
</TABLE>
On June 8, 1999, the last full trading day prior to the Company's
announcement that it was in exclusive discussions regarding a possible business
combination at $42.00 per Share, the closing sale price per Share reported on
the NYSE was $31.0625. On June 11, 1999, the last full trading day prior to
announcement of the Offer, the closing sale price per Share reported on the NYSE
was $38.625. On June 17, 1999, the last full
9
<PAGE> 12
trading day before commencement of the Offer, the closing sale price per Share
reported on the NYSE was $41.375. See Section 10. STOCKHOLDERS ARE URGED TO
OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The summary information
concerning the Company in this Section 7 and elsewhere in this Offer to Purchase
is derived from the 1998 Annual Report, the Quarterly Report on Form 10-Q for
the quarter ended March 31, 1999 (the "Quarterly Report") and other publicly
available information. The summary information set forth below is qualified in
its entirety by reference to such reports (which may be obtained and inspected
as described below) and should be considered in conjunction with the more
comprehensive financial and other information in such reports and other publicly
available reports and documents filed by the Company with the Commission and
other publicly available information. Although Purchaser does not have any
knowledge that would indicate that any statements contained herein based upon
such reports are untrue, Purchaser does not assume any responsibility for the
accuracy or completeness of the information contained therein, or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information but which are unknown to
Parent and Purchaser.
General. Coach USA, Inc., through its operating subsidiaries, is the
largest provider of motorcoach charter, tour and sightseeing services and one of
the largest non-municipal providers of commuter and transit motorcoach services
in the United States. The Company through its subsidiaries also provides airport
ground transportation, paratransit, taxicab and other related passenger ground
transportation services. The Company's operating subsidiaries conduct operations
throughout the United States and Canada with operating locations in over 120
cities. These subsidiaries operate approximately 9,500 motorcoaches, taxicabs
and other high occupancy vehicles which transported passengers across more than
250 million miles in 1998. The Company believes that collectively, its
subsidiaries have one of the most modern motorcoach fleets in the industry, with
50% of the fleet being less than five years old. Its taxicab services, also
provided through subsidiaries, include dispatching and related services to a
fleet of approximately 3,300 vehicles, which are either owned by or leased to
independent contractor drivers.
The Company was founded in September 1995 to create a nationwide provider
of motorcoach and other ground transportation services. From its initial public
offering in May 1996 through the end of 1997, the Company acquired over 45
motorcoach and taxicab businesses. During 1998, the Company acquired over 25
motorcoach and taxicab businesses. The Company's principal executive offices are
located at One Riverway, Suite 500, Houston, Texas 77056-1921. The telephone
number of the Company at such offices is (713) 888-0104.
Financial Information. Set forth below are certain selected consolidated
financial data for the Company's last five fiscal years which were derived from
the 1998 Annual Report and the Quarterly Report. More comprehensive financial
information is included in the reports (including management's discussion and
analysis of financial condition and results of operations) and other documents
filed by the Company with the Commission, and the following financial data are
qualified in their entirety by reference to such reports and other documents
including the financial information and related notes contained therein. Such
reports and other documents may be examined and copies thereof may be obtained
from the offices of the Commission and the NYSE in the manner set forth below.
10
<PAGE> 13
COACH USA, INC.
SELECTED FINANCIAL DATA
The Company acquired, simultaneously with the closing of its initial public
offering in May 1996, six founding companies. Through the end of 1998, the
Company has completed in excess of 70 acquisitions, several of which were
accounted for as poolings-of-interests (the "Pooled Companies") and the
remainder of which were accounted for as purchases (the "Purchased Companies").
The Historical Statement of Income Data below includes historical financial
statement data for the six founding companies from May 31, 1996 at historical
cost, the Company (including the Pooled Companies) for all periods presented,
and the Purchased Companies since the dates of their respective acquisition. The
Pro Forma Statement of Income Data Including Compensation Differential and Other
Adjustments includes the historical data above and includes the six founding
companies for all periods presented at historical cost. In addition, the pro
forma data below gives effect to (1) certain reductions in salaries and benefits
to the former owners of the six founding companies and the Pooled Companies
which were agreed to in connection with the mergers of the six founding
companies and the acquisition of the Pooled Companies, as well as a
non-recurring, non-cash charge recorded by the Company (collectively, the
"Compensation Differential"); (2) certain tax adjustments related to the
taxation of certain of the founding companies and Pooled Companies as S
Corporations prior to the consummation of the mergers of the six founding
companies and the acquisitions completed through 1997; (3) the tax impact of the
Compensation Differential in each period; (4) for 1995 and 1996, the conversion
of debt to equity at one of the Pooled Companies; and (5) the elimination of
non-recurring pooling costs associated with the 1996 and 1997 acquisitions. The
Pro Forma for Purchased Companies data below gives effect to all items above and
also gives effect to the acquisitions of the Purchased Companies as if those
acquisitions occurred on January 1, 1997, and gives pro forma effect to (i)
Compensation Differential of the Purchased Companies, (ii) the amortization of
goodwill, (iii) interest expense attributable to cash expended and convertible
and other subordinated notes issued, (iv) an adjustment in 1997 to record
interest expense on the senior subordinated notes and amortization of deferred
financing costs as if the notes had been outstanding for the entire year, (v) an
adjustment to record the pro forma interest savings resulting from the secondary
offering of Common Stock and the conversion of approximately $21.2 million of
convertible subordinated notes in May 1998, as if those transactions had
occurred on January 1, 1997, and (vi) income tax adjustments attributable to the
above adjustments.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF INCOME DATA:
Total revenues........................ $175,643 $202,786 $325,717 $542,790 $803,563
Operating expenses.................... 133,992 150,578 244,854 398,945 582,917
Gross profit.......................... 41,651 52,208 80,863 143,845 220,646
General and administrative expenses... 30,810 35,310 43,581 66,344 94,577
Operating income...................... 10,841 16,898 37,282 77,501 126,069
Income before extraordinary items..... 2,457 4,197 14,140 32,337 54,389
Extraordinary items................... -- -- 2,648 (929) (631)
Net income............................ 2,457 4,197 16,788 31,408 53,758
PRO FORMA STATEMENT OF INCOME DATA
INCLUDING COMPENSATION DIFFERENTIAL
AND OTHER ADJUSTMENTS:
Total revenues........................ 282,397 316,275 370,781 542,790 803,563
Operating expenses.................... 221,839 241,103 281,924 398,945 582,917
Gross profit.......................... 60,558 75,172 88,857 143,845 220,646
General and administrative expenses... 37,253 40,527 41,365 62,029 94,577
Operating income...................... 23,305 34,645 47,492 81,816 126,069
Income before extraordinary items..... 7,961 13,494 20,461 35,682 54,389
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Income before extraordinary items per
share.............................. $ 1.67 $ 2.25
Net income per share.................. 1.62 2.23
Weighted average shares(2)............ 21,412 24,137
DILUTED EARNINGS PER SHARE:
Income before extraordinary items per
share.............................. 1.61 2.14
Net income per share.................. 1.57 2.12
Weighted average shares(2)............ 22,954 26,250
PRO FORMA FOR PURCHASED COMPANIES:
Total revenues........................ 843,207 907,070
Operating expenses.................... 616,457 657,456
Gross profit.......................... 226,750 249,614
General and administrative
expenses(1)........................ 112,386 111,755
Operating income...................... 114,364 137,859
Income before extraordinary items..... 42,988 58,312
BALANCE SHEET DATA (AT END OF PERIOD):
HISTORICAL:
Working capital (deficit)............. $(15,328) $(15,101) $(22,036) $ (5,311) $(25,428)
Total assets.......................... 132,244 159,351 366,040 665,870 1,179,243
Total debt, including current
portion(3)......................... 89,395 106,052 176,478 373,064 624,308
Stockholders' equity.................. 2,876 6,489 114,270 160,555 351,042
</TABLE>
- ---------------
(1) General and administrative expenses include amortization expense and merger
related costs.
(2) See Note 11 of the Notes to Consolidated Financial Statements in the 1998
Annual Report for a reconciliation of weighted average shares outstanding
for the years ended December 31, 1997 and 1998.
(3) Includes $22.5 million, $52.3 million and $78.8 million of outstanding
convertible subordinated notes as of December 31, 1996, 1997 and 1998,
respectively, issued in connection with the acquisitions of the Purchased
Companies.
12
<PAGE> 15
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1998 1999
-------- --------
<S> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
Revenues.................................................... $149,983 $201,599
Operating Expenses.......................................... 117,980 155,946
-------- --------
Gross profit.............................................. 32,003 45,653
General and Administrative Expenses......................... 18,814 26,038
Amortization Expense........................................ 1,439 2,687
-------- --------
Operating income.......................................... 11,750 16,928
Interest Expense............................................ 7,745 10,990
-------- --------
Income Before Income Taxes, Extraordinary Items and
Cumulative Effect of Change in Accounting Principle....... 4,005 5,938
Provision for Income Taxes.................................. 1,562 2,375
-------- --------
Income Before Extraordinary Items and Cumulative Effect of
Change in Accounting Principle............................ 2,443 3,563
Extraordinary Items, net of income taxes.................... (88) --
Cumulative Effect of Change in Accounting Principle, net of
income taxes.............................................. -- (5,152)
Net Income (Loss)........................................... $ 2,355 $ (1,589)
-------- --------
Basic Earnings Per Common Share:
Income Before Extraordinary Items and Cumulative Effect of
Change in Accounting Principle......................... $ .11 $ .14
Extraordinary Items......................................... -- --
Cumulative Effect of Change in Accounting Principle......... -- (.20)
Net Income (Loss)........................................... $ .11 $ (.06)
-------- --------
Diluted Earnings per Common and Common Equivalent Share:
Income Before Extraordinary Items and Cumulative Effect of
Change in Accounting Principle............................ $ .11 $ .14
Extraordinary Items......................................... (.01) --
Cumulative Effect of Change in Accounting Principle......... -- (.20)
Net Income (Loss)........................................... $ .10 $ (.06)
-------- --------
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1998 1999
------------ ----------
<S> <C> <C>
(UNAUDITED)
<CAPTION>
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 8,267 $ 8,079
Accounts receivable, net of allowance of $5,330 and
$5,149................................................. 76,748 75,782
Inventories............................................... 35,196 37,769
Notes receivable, current portion......................... 4,856 5,160
Prepaid expenses and other current assets................. 23,749 30,416
---------- ----------
Total current assets.............................. 148,816 157,206
Property and Equipment, net................................. 574,313 596,349
Notes Receivable, net of allowance of $500 and $500......... 23,658 24,571
Goodwill, net............................................... 404,992 406,344
Other Assets, net........................................... 27,464 19,457
---------- ----------
Total assets...................................... $1,179,243 $1,203,927
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term obligations............... $ 23,072 $ 16,059
Current maturities of convertible subordinated notes...... 12,415 13,250
Accounts payable and accrued liabilities.................. 138,757 144,056
---------- ----------
Total current liabilities......................... 174,244 173,365
Long-Term Obligations, net of current maturities............ 372,482 405,453
Senior Subordinated Notes................................... 150,000 150,000
Convertible Subordinated Notes, net of current maturities... 66,339 61,348
Deferred Income Taxes....................................... 65,136 63,957
---------- ----------
Total liabilities................................. $ 828,201 $ 854,123
---------- ----------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock $.01 par, 500,000 shares authorized, 1
share issued and outstanding........................... -- --
Common stock $.01 par, 100,000,000 shares authorized,
25,412,130 and 25,427,140 shares issued and
outstanding, respectively.............................. 254 254
Additional paid-in capital................................ 258,709 259,003
Cumulative other comprehensive income..................... (961) (904)
Retained earnings......................................... 93,040 91,451
---------- ----------
Total stockholders' equity........................ 351,042 349,804
---------- ----------
Total liabilities and stockholders' equity........ $1,179,243 $1,203,927
---------- ----------
</TABLE>
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and in
accordance therewith is obligated to file periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
such proxy statements and distributed to the Company's stockholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also
14
<PAGE> 17
be available for inspection and copying at prescribed rates at the regional
offices of the Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300,
New York, New York 10048. Such reports, proxy statements and other information
may also be obtained at the Web site that the Commission maintains at
http://www.sec.gov. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such
material should also be available for inspection at the library of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. Except as otherwise
noted in this Offer to Purchase, all of the information with respect to the
Company set forth in this Offer to Purchase has been derived from publicly
available information.
8. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER.
Purchaser. Purchaser is a newly formed Delaware corporation organized at
the direction of Parent in connection with the Offer and the Merger. The address
of Purchaser is c/o Stagecoach Holdings plc, Charlotte House, 30 Charlotte
Street, Perth PH1 5LL, Scotland.
Parent. Parent is a public limited company organized under the laws of
Scotland. It was formed in 1980 and registered as a public limited company in
1991. Stagecoach is one of the world's largest providers of public
transportation services through the operation of bus and train services.
Stagecoach has operations in eight countries. Stagecoach's business consists of
five operating divisions: (1) U.K. Bus Division, (2) Overseas Bus Division, (3)
Rail Division, (4) Porterbrook Leasing Division and (5) Aviation Division.
Stagecoach also holds strategic investments in Road King Infrastructure Limited
and Virgin Rail Group Limited.
The U.K. Bus Division currently operates approximately 7,415 buses and
coaches through 17 regional bus companies in the U.K. The Overseas Bus Division
operates approximately 5,730 buses and coaches through operating companies in
Scandinavia, Hong Kong, New Zealand, Portugal, Australia and China. The Rail
Division operates two rail franchises in the U.K., South West Trains and Island
Line. Porterbrook Leasing Company Ltd owns more than 3,742 units of rolling
stock, and leases these to 18 train operating companies in the U.K. Stagecoach
acquired Prestwick Aviation Holdings Limited on April 30, 1998, which operates
Glasgow Prestwick International Airport. Stagecoach holds a 30% (assuming
conversion of convertible preference shares) equity interest in Road King, which
operates toll highways in China, and a 49% equity interest in Virgin Rail, which
operates two rail franchises in the U.K. Parent's principal executive offices
are located at Charlotte House, 20 Charlotte Street, Perth PH1 5LL, Scotland.
The telephone number of Parent at such offices is ###-##-#### 442-111.
The name, citizenship, business address, present principal occupation or
employment and five year employment history of each of the directors and
executive officers of Parent and Purchaser are set forth on Schedule I hereto.
Certain Transactions. Except as set forth in this Offer to Purchase, none
of Parent or Purchaser or, to the best knowledge of Parent or Purchaser, any of
the persons listed in Schedule I hereto, or any associate or majority-owned
subsidiary of such persons, beneficially owns any equity security of the
Company, and none of Parent or Purchaser or, to the best knowledge of Parent or
Purchaser, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
Simultaneously with the execution of the Merger Agreement, Parent,
Purchaser and each of the Company's directors entered into a Tender Agreement
(the "Tender Agreement") pursuant to which each of such director agreed to
validly tender his respective Shares in the Offer. As of the date of the Tender
Agreement, such directors beneficially owned 1,499,921 Shares (together with any
other Shares acquired by such persons, the "Owned Shares"), representing
approximately 5.9% of the outstanding shares on the date hereof. Each such
person also agreed to: (i) vote the Owned Shares in favor of the Merger; and
(ii) vote the Owned Shares against any action or agreement (other than the
Merger Agreement or the transactions contemplated thereby) that would impede,
interfere with, delay, postpone or attempt to discourage the Merger or the
Offer, including, but not limited to: (A) any extraordinary corporate
transaction, such as a merger,
15
<PAGE> 18
consolidation or other business combination involving the Company and its
subsidiaries; (B) a sale or transfer of a material amount of assets of the
Company and its subsidiaries or a reorganization, recapitalization or
liquidation of the Company and its subsidiaries; (C) any change in the
management or board of directors of the Company, except as otherwise agreed to
in writing by Purchaser; (D) any material change in the present capitalization
or dividend policy of the Company; or (E) any other material change in the
Company's corporate structure or business.
Except as set forth in this Offer to Purchase, none of Parent or Purchaser
or, to the best knowledge of Parent and Purchaser, any of the persons listed in
Schedule I hereto has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
without limitation, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies. Except as set
forth in this Offer to Purchase, none of Parent or Purchaser or, to the best
knowledge of Parent and Purchaser, any of the persons listed in Schedule I
hereto has had any transactions with the Company, or any of its executive
officers, directors or affiliates that would be required to be reported under
the rules of the Commission.
Except as set forth in this Offer to Purchaser, there have been no
contacts, negotiations or transactions between Parent or Purchaser, or their
respective subsidiaries, or, to the best knowledge of Parent and Purchaser, any
of the persons listed in Schedule I hereto, on the one hand, and the Company or
its executive officers, directors or affiliates, on the other hand, concerning a
merger, consolidation or acquisition, tender offer or other acquisition of
securities, election of directors, or a sale or other transfer of a material
amount of assets. See Introduction and Section 11.
16
<PAGE> 19
STAGECOACH HOLDINGS PLC
CERTAIN FINANCIAL DATA
Because the only consideration in the Offer and Merger is cash, and in view
of the amount of consideration payable in relation to the financial capability
of Parent and its affiliates, Purchaser believes the financial condition of
Parent and its affiliates is not material to a decision by a holder of Shares
whether to sell, tender or hold Shares pursuant to the Offer. Set forth below is
a summary of certain consolidated financial information with respect to Parent
for the fiscal years ended April 30, 1998 and 1999. The consolidated financial
information is stated in pounds sterling. Such information is provided for
supplemental information purposes only and is neither intended nor required to
comply with the requirements of the Exchange Act. On June 17, 1999, The Wall
Street Journal reported that, as of June 16, 1999, one pound sterling equalled
1.5878 U.S. dollars. The following information was prepared in accordance with
accounting principles generally accepted in the United Kingdom and has not been
reconciled to generally accepted accounting principles in the United States.
<TABLE>
<CAPTION>
YEAR ENDED APRIL 30,
-----------------------
L L
1999 1998
----------- --------
(UNAUDITED)
(IN MILLIONS OF POUNDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA
Group turnover.............................................. 1,548.4 1,347.0
Total operating profit (including shares of joint ventures
and associates)........................................... 274.7 216.3
Profit on ordinary activities before income taxes........... 210.1 155.7
Profit/(loss) for the year.................................. 158.4 113.5
Earnings per ordinary share(1).............................. 12.0p 9.5p
Dividends per ordinary share................................ 3.0p 2.4p
CONSOLIDATED BALANCE SHEET DATA
Fixed assets................................................ 2,105.8 1,520.1
Current assets.............................................. 516.4 331.0
Creditors -- amounts falling due within one year............ (706.3) (600.0)
Net current liabilities..................................... 189.9 269.0
Total assets less current liabilities....................... 1,915.9 1,251.1
Creditors -- amounts falling due after more than one year... (950.8) (741.7)
Provisions.................................................. (234.1) (239.3)
Net assets.................................................. 731.0 270.1
Equity shareholders' funds.................................. 731.0 269.8
Minority interests.......................................... 0.0 0.3
Capital employed............................................ 731.0 270.1
</TABLE>
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(1) All earnings per share data has been restated to reflect the subdivision of
Parent shares on October 19, 1998, from 2.5p to 0.5p.
9. SOURCE AND AMOUNT OF FUNDS. Purchaser will require approximately $1.35
billion to (i) purchase the Shares (on a fully diluted basis) pursuant to the
Offer and the Merger and (ii) pay fees and expenses to be incurred in connection
with the completion of the Offer and the Merger. All of the funds required to
finance the foregoing will be furnished to Purchaser by Parent. Parent will
obtain such funds from the proceeds from its working capital and other corporate
funds and a $2.25 billion credit facility among Parent and its wholly-owned
subsidiaries, including Purchaser, and Credit Suisse First Boston, J.P. Morgan
Securities Ltd., The Royal Bank of Scotland plc and The Governor and Company of
The Bank of Scotland, as arrangers (together, the "Banks"), and certain other
financial institutions. Parent and the Banks entered into a Commitment Letter
regarding the credit facility on June 11, 1999. The credit facility will include
three facilities -- two term loan facilities and one revolving facility. One
term loan has a principal amount of $1.0 billion, repayable on termination on
December 31, 2000. The second term loan has a principal amount of $750.0
million, repayable
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<PAGE> 20
by equal, semi-annual installments, beginning six months from the signing of the
credit facility and terminating five years from the signing of the credit
facility. The third facility is a $500.0 million revolving credit facility,
repayable on termination five years from the signing of the credit facility. The
facilities will bear interest at a rate equal to the aggregate of either the
London inter-bank offered rate, the Euribor rate or the Paris inter-bank offered
rate plus 0.75 to 1.125 per cent per annum depending upon the amounts
outstanding under the particular facilities and whether Parent completes an
equity offering by December 31, 1999. The credit facility will include customary
covenants and events of default. Parent intends to refinance any borrowings that
will be made under the credit facility by means of equity and/or debt capital
markets offerings. The term loans will be used to finance the Offer and the
Merger and to refinance certain existing borrowings of Parent and the Company.
The revolving loan will be used to refinance certain existing borrowings and for
general corporate purposes.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In November 1998,
Lawrence K. King, Chairman of the Board and Chief Executive Officer of the
Company, contacted Mr. Brian Souter, Executive Chairman of Parent, concerning
the possibility of certain strategic opportunities the two companies might be
able to pursue jointly.
In March 1999, Mr. King contacted Mr. Souter to request a meeting to
discuss Parent's acquisition strategy in North America and ways in which the two
companies might be able to work together to pursue this strategy.
On April 26, 1999, Mr. King, Mr. John Mercandante, Jr., President of the
Company, and Mr. Frank P. Gallagher, Executive Vice President and Chief
Operating Officer of the Company, met with Mr. Souter and Mr. Keith Cochrane,
Group Finance Director of Parent, in Perth, Scotland to discuss Parent's
acquisition strategy in North America, ways in which Parent and the Company
might work together as part of that strategy, the motor coach operating market
in North America and other strategic matters.
On May 17, 1999, Mr. Souter met with Mr. King and certain other Company
management team members in Houston, Texas and expressed an interest in acquiring
the Company or merging the Company into Parent.
On May 24, 1999, Mr. King and Mr. Souter and other representatives of their
respective companies discussed a possible structure for a business combination
transaction between Parent and the Company, involving consideration consisting
of cash and Parent equity securities to be paid to the Company's stockholders in
a merger. Mr. Souter indicated, however, that Parent did not want to be involved
in an auction of the Company, and therefore needed a period of four weeks of
exclusivity during which it could conduct due diligence and, assuming
satisfaction with the results thereof, negotiate and enter into a definitive
transaction agreement with the Company.
The next day, Mr. Cochrane and representatives of Parent's legal and
financial advisors met in Houston, Texas, with Mr. King, Mr. Mercadante and
certain other executives of the Company, and the Company's legal advisors, to
discuss the terms of Parent's transaction proposal and the terms of a
confidentiality and standstill agreement and exclusivity agreement proposed by
Parent. Mr. King informed Mr. Cochrane that the Company had received a proposal
for a transaction from another company, and that the Company could not enter
into an exclusivity agreement until the Company's Board of Directors and its
financial advisor had considered Parent's and the other company's proposals. A
Company Board of Directors meeting was scheduled for the next morning. Mr. King
also asked for clarification of the terms of Parent's proposal.
On May 26, 1999 before the Company's Board of Directors meeting, Parent
submitted a written proposal for a business combination transaction involving
equity securities of Parent and the opportunity for Company shareholders to
receive up to 50% of their consideration in cash, at an increased valuation for
the Company from the valuation that was indicated on May 24. Parent's ongoing
interest in the Company was subject to the condition that Parent would have an
exclusive period to conduct a due diligence investigation of the Company.
After the Company's Board meeting, Mr. King informed Mr. Cochrane that the
Company was interested in pursuing a transaction with Parent, but that the Board
and its financial advisor would need time to consider valuation and other
matters before the Company would be willing to consider an exclusivity
arrangement with Parent. The Company advised Parent it would be willing to enter
into a confidentiality and standstill
18
<PAGE> 21
agreement with Parent so as to permit Parent to commence promptly its due
diligence investigation of the Company, but Parent indicated it was unwilling to
conduct due diligence without an exclusivity agreement.
During June 2 and June 3, 1999, Parent and the Company engaged in
negotiations of the terms of a confidentiality and standstill agreement and an
exclusivity agreement. The Company also informed Parent that its Board would be
meeting on June 3 to discuss the Company's progress in evaluating its strategic
alternatives.
After the Board meeting on June 3, 1999, Mr. King informed Mr. Cochrane
that another company had proposed an all cash transaction, but Mr. King did not
specify the price of such other proposal. Parent continued to insist on an
exclusivity period until June 21, 1999 to conduct due diligence, but indicated a
willingness to accelerate its work to the extent practicable in an effort to
meet a June 14, 1999 transaction announcement date. Parent also indicated that
it was prepared to value the Company at up to $42.00 per Share in cash, subject
to reaching agreement regarding exclusivity, the Company's agreement to the cost
reimbursement provision described below, Parent's satisfaction with its due
diligence investigation and the parties' negotiation of a mutually satisfactory
definitive merger agreement.
On June 3, 1999, the Company and Parent entered into the confidentiality
and standstill agreement and the exclusivity agreement. The exclusivity
agreement provided that Parent would have the exclusive right until June 18,
1999 to conduct due diligence and negotiate in good faith a definitive
transaction agreement. The agreement further provided that the Company would pay
Parent's reasonable costs, fees and expenses in connection with its review of
the Company and other matters relating to the proposed transaction, up to a
maximum of $5 million, if the parties failed to enter into a definitive
agreement providing for the transaction and the Company executed and delivered a
definitive agreement providing for a competing transaction with any third party
on or prior to the 45th day after the end of the exclusivity period.
From June 3, 1999 until June 12, 1999 Parent conducted and completed its
due diligence review of the Company, and Parent and the Company negotiated the
terms of the Merger Agreement. During the course of this review, the Company
made available to Parent certain information and discussed the Company's
business and operations.
On June 9, 1999, in response to unusual market activity in the Shares, the
Company issued a press release to the effect that it was in discussions with a
third party regarding a possible acquisition of the Company for consideration of
$42.00 per Share in cash.
At a Parent Board of Directors meeting held on the evening of June 11 and
into the early morning of June 12, 1999 (London time) the Board of Directors of
Parent adopted resolutions approving the acquisition of the Company pursuant to
the terms of the Merger Agreement. The Merger Agreement and related agreements
were finalized and executed and delivered on June 12, 1999, and the transaction
was announced before the New York Stock Exchange opened for trading on June 14,
1999.
11. THE MERGER AGREEMENT AND OTHER AGREEMENTS. The following is a summary
of the Merger Agreement and certain other agreements which summary is qualified
in its entirety by reference to the copies thereof filed as exhibits to the
Tender Offer Statement on Schedule 14D-1.
The Offer. The Merger Agreement provides that no later than five business
days after the announcement of the Merger Agreement, Parent will cause Purchaser
to, and Purchaser will, commence the Offer. The parties to the Merger Agreement
have agreed in the Merger Agreement that the obligation of Purchaser to
consummate the Offer, and to accept for payment and pay for the Shares tendered
pursuant to the Offer, is subject to the conditions of the Offer described in
Section 15 hereof (the "Offer Conditions"). Pursuant to the Merger Agreement,
the Offer will be made by means of an offer to purchase which will contain as
conditions only the Minimum Condition and the other conditions described in
Section 15 hereof, and, subject to the succeeding sentence, will otherwise
contain, and be entirely consistent with, the terms and conditions of the Offer
as described in the Merger Agreement. Under the Merger Agreement, each of
Purchaser and Parent expressly reserved the right, in its sole discretion, to
waive any such condition and to make any other changes to the terms of the
Offer, provided, that, without the consent of the Company, neither Parent nor
Purchaser will (i) amend or waive (A) the Minimum Condition, (B) the HSR
Condition, (C) the STB Condition, or (D) the condition described in paragraph
(c) of Section 15 hereof, (ii) amend any other Offer Condition,
19
<PAGE> 22
(iii) reduce the price per Share payable in the Offer, (iv) change the form of
consideration to be paid in the Offer (other than by adding cash consideration),
(v) reduce the maximum number of Shares to be purchased in the Offer or (vi)
amend any other term of the Offer in a manner which is adverse to the holders of
Shares. The Merger Agreement provides that the price per Share will be net to
the sellers in cash, without interest, subject to reduction only for any
applicable federal back-up withholding taxes.
Under the Merger Agreement, Purchaser may, without the consent of the
Company, subject to the Company's right to terminate the Merger Agreement, (i)
extend the Offer on one or more occasions for up to ten business days for each
such extension beyond the then-scheduled expiration date, if at the
then-scheduled expiration date of the Offer any of the conditions to Purchaser's
obligation to accept for payment and pay for the Shares will not be satisfied or
waived, until such time as such conditions are satisfied or waived, and, at the
request of the Company, Purchaser will, subject to Parent's right to terminate
the Merger Agreement, extend the Offer for additional periods up to but not
later than January 31, 2000, but will not be required to so extend if any of the
conditions not satisfied or earlier waived on the then-scheduled expiration date
are one or more of the Minimum Condition or the conditions described in
paragraphs (a), (c) or (d) of Section 15 hereof, provided that (x) if the only
condition not satisfied is the Minimum Condition, the satisfaction or waiver of
all other conditions will have been publicly disclosed at least five business
days before termination of the Offer and (y) if the conditions described in
paragraph (a) or (d) of Section 15 hereof has not been satisfied and the failure
to so satisfy can be remedied, the Offer will not be terminated unless the
failure is not remedied within 10 business days after Parent has furnished the
Company with written notice of such failure, (ii) extend the Offer for any
period required by any rule, regulation, interpretation or position of the
Commission or the staff thereof applicable to the Offer, and (iii) extend the
Offer for an aggregate period of not more than five business days beyond the
latest expiration date that would otherwise be permitted under clause (i) or
(ii) of this sentence if there will not have been tendered sufficient Shares so
that the Merger could be effected without a meeting of the Company's
stockholders in accordance with Section 253 of the DGCL. The Merger Agreement
provides that, subject to the terms of the Offer, including the Offer
Conditions, Purchaser will accept for payment and pay for all Shares duly
tendered at the earliest time at which it is permitted to do so under applicable
provisions of the Exchange Act; provided, that, as set forth above, Purchaser
will have the right, in its sole discretion, to extend the Offer for up to five
business days notwithstanding the prior satisfaction of the Offer Conditions, in
order to attempt to satisfy the requirements of Section 253 of the DGCL. The
Merger Agreement further provides that the Offer Conditions other than the
Minimum Condition, the HSR Condition, the STB Condition and the condition
described in paragraph (c) of Section 15 hereof are solely for the benefit of
Purchaser and that all Offer Conditions may be asserted by Purchaser regardless
of the circumstances resulting in a condition not being satisfied (except for
any action or inaction by Purchaser, Merger Sub or Parent constituting a breach
of the Merger Agreement) and, except with respect to the Minimum Condition, the
HSR Condition, the STB Condition and the condition described in paragraph (c) of
Section 15 hereof, may be waived by Purchaser, in whole or in part at any time
and from time to time, in its sole discretion.
Company Recommendation. The Merger Agreement provides that the Company
will file with the Commission and mail to its stockholders contemporaneously
with the commencement of the Offer a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") which will comply in all material respects
with the provisions of applicable federal securities laws. Pursuant to the
Merger Agreement, the Schedule 14D-9 will contain the recommendation of the
Board of Directors of the Company that the holders of Shares accept the Offer,
unless and until the Company's Board of Directors determines in good faith, only
after receipt of and based upon advice from outside legal counsel to the
Company, that it is required by fiduciary duties under applicable law to change
its recommendation in response to a Superior Proposal (as defined under "No
Solicitation" below).
Directors Following the Offer. The Merger Agreement provides that,
effective upon the payment by Purchaser for the Shares tendered pursuant to the
Offer in accordance with the terms of the Merger Agreement, and subject to the
provisions of the Interstate Commerce Act, as amended by the ICC Termination Act
(the "ICA"), and the rules, regulations and practices of the STB, the Company
will be required to use its reasonable best efforts to cause to be appointed to
the Board of Directors of the Company an individual designated by Parent, who
will be identified as a suitable candidate by Parent prior to the
20
<PAGE> 23
consummation of the Offer and who will not be a director, officer or employee of
Parent and will be reasonably satisfactory to the Board of Directors of the
Company. The Merger Agreement further provides that the Company's obligations to
appoint such individual to the Board of Directors of the Company will be subject
to the provisions of the ICA and the rules, regulations and practices of the
STB.
The Merger Agreement provides that promptly upon the later of (x) payment
by Purchaser for the Shares tendered pursuant to the Offer in accordance with
the terms of the Merger Agreement and (y) the date on which Parent is lawfully
permitted to assume control over the Company's common carrier motor coach
subsidiaries pursuant to STB approval or exemption (the later of (x) and (y),
the "Control Date"), Parent will be entitled to designate a number of directors
on the Board of Directors of the Company (including any designated pursuant to
the provision described in the paragraph immediately above) equal to the product
of the total number of the directors on such Board (after giving effect to the
directors elected pursuant to this sentence) multiplied by the percentage that
such number of Shares owned by Purchaser and its affiliates bears to the number
of Shares outstanding, rounded to the nearest whole number, but in no event less
than a majority.
At the time specified in the preceding two paragraphs, as the case may be,
the Company will, upon request of Parent, use its reasonable best efforts
promptly either to increase the size of the Board of Directors of the Company
or, at the Company's election or at Parent's request, secure the resignations of
such number of its incumbent directors as is necessary to enable Parent's
designees pursuant to the provisions described in the preceding two paragraphs,
as the case may be, to be so elected or appointed to the Company's Board, and
will cause Parent's designees to be so elected or appointed. The Merger
Agreement further provides that the Company will use its reasonable best efforts
to cause directors designated by Parent pursuant to the provisions described in
the preceding paragraph to constitute the same percentage as is on the Board
(but in any event at least one Parent designee) (i) of each committee of the
Board of Directors, (ii) of each board of directors of each subsidiary of the
Company and (iii) of each committee of each such board, in each case only to the
extent permitted by law and the rules of the NYSE to the extent applicable. The
Merger Agreement provides that notwithstanding the foregoing, until the
Effective Time, the Company and Parent will use all reasonable best efforts to
retain as members of the Company's Board of Directors at least two directors who
are directors of the Company on the date of the Merger Agreement and who are not
designated by Parent or employees of the Company or its subsidiaries (the
"Independent Directors"). The Merger Agreement further provides that the
Company's obligations to appoint designees to the Board of Directors will be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder.
The Merger Agreement provides that, following the election or appointment
of Parent's designees, after the payment for the Shares pursuant to the Offer
and prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors (who will act as an independent committee of the Board of
Directors for this purpose) will be required, and alone will be sufficient, to
take action by the Company to (i) amend or terminate the Merger Agreement, (ii)
exercise or waive any of the Company's rights or remedies under the Merger
Agreement, (iii) extend the time for performance of Parent's and Merger Sub's
respective obligations under the Merger Agreement, or (iv) approve any other
action by the Company that could adversely affect the interests of the
stockholders of the Company (other than Parent, Purchaser and their affiliates)
with respect to the transactions contemplated thereby.
Voting Trust. Pursuant to the Merger Agreement, the parties agreed that,
(i) immediately upon the purchase by Parent, Purchaser or their affiliates of
Shares pursuant to the Offer or otherwise, such Shares will be deposited in one
or more separate, independent, irrevocable voting trusts in accordance with the
terms and conditions of one or more Voting Trust Agreements, (ii) upon
consummation of the Merger, all outstanding shares of the Surviving Corporation
will be deposited in such Voting Trust and (iii) upon consummation of the
Subsequent Merger (if Parent elects to effectuate that transaction), all
outstanding shares of Purchaser will be deposited in such Voting Trust. The
Merger Agreement provides that, subject to applicable law and to the rules,
regulations and practices of the STB, the Voting Trust Agreements may be
modified or amended at any time by Parent in its sole discretion; provided, that
(i) prior to the Effective Time, the Voting Trust Agreements may not be modified
or amended without the prior written approval of the Company unless such
modification or amendment is not inconsistent with the Merger Agreement and is
not adverse to the Company
21
<PAGE> 24
or its stockholders and would not reasonably be expected to have an adverse
effect on receipt of a favorable informal advisory opinion from the STB and (ii)
the Voting Trust Agreements may not be modified or amended without the prior
written approval of the Company if such modification or amendment would
reasonably be expected to increase the liability exposure of the Board of
Directors of the Surviving Corporation under applicable law. The Merger
Agreement further provides that no power of Parent or Purchaser provided for in
the Voting Trust Agreements may be exercised in a manner which violates the
Merger Agreement. Pursuant to the Merger Agreement, Parent, in consultation with
the Company, will use its reasonable best efforts to take, or cause to be taken,
all actions necessary, proper or advisable to obtain a favorable informal
advisory opinion from the STB staff to the effect that the Voting Trust
effectively insulates Parent from any violation of the ICA and STB rules or
policies against unauthorized acquisition of control of regulated carriers. The
Merger Agreement provides that in furtherance and not in limitation of the
foregoing: (i) Parent will make any filings required by the STB with respect to
the Voting Trust and the Company will make any filings reasonably required by
Parent with respect thereto; (ii) Parent will consult with the Company in
connection with any discussions or proceedings initiated by Parent with the STB
with respect to the Voting Trust; provided, that the Company will not initiate
any such discussions or proceedings without Parent's prior written consent; and
(iii) Parent, with the Company's consent, will change or modify the terms of the
Voting Trust Agreements to the extent required by the STB as a condition to the
issuance of such advisory opinion, so long as the required changes or
modifications do not, in the aggregate, materially affect Parent's rights
thereunder. The Merger Agreement further provides that any Voting Trustee of the
Voting Trust appointed by Parent and Purchaser pursuant to the Voting Trust
Agreements will be reasonably satisfactory to the Board of Directors of the
Company.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions of the Merger Agreement, and in accordance with the DGCL, at
the Effective Time, Merger Sub will be merged with and into the Company. The
Merger Agreement provides that as a result of the Merger, the separate corporate
existence of Merger Sub will cease and the Company will continue as the
Surviving Corporation.
The Merger Agreement provides that at the Effective Time, the Certificate
of Incorporation of the Surviving Corporation will be amended to be identical to
the Certificate of Incorporation of Merger Sub as in effect immediately prior to
the Effective Time; provided, that (i) the name of the Surviving Corporation
will be the name of the Company; (ii) the number of shares of authorized common
stock will be equal to the number of shares of authorized Company Common Stock
set forth in the Certificate of Incorporation of the Company as in effect
immediately prior to the Effective Time; and (iii) the Certificate of
Incorporation of the Surviving Corporation will include the provisions of
Articles Seven and Eight of the Certificate of Incorporation of the Company as
in effect on the date of the Merger Agreement. The Merger Agreement further
provides that at the Effective Time and without any further action on the part
of the Company or Merger Sub, the By-laws of Merger Sub will be the By-laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Surviving
Corporation and as provided by law.
The Merger Agreement provides that the directors of Merger Sub (if the
Effective Time follows the Control Date) or the Company (if the Effective Time
precedes the Control Date), in either case immediately prior to the Effective
Time, will be the initial directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-laws of the
Surviving Corporation, and the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation, in
each case until their resignation or removal or until their respective
successors are duly elected or appointed (as the case may be) and qualified.
The Merger Agreement provides that, following the Effective Time, at
Parent's election, the Surviving Corporation will be merged with and into
Purchaser. The Subsequent Merger will be effected on terms and have effects
substantially similar to the Merger. The Merger Agreement further provides that
at Parent's election the Merger may alternatively be structured so that the
Company is merged with and into Merger Sub, Purchaser or another direct or
indirect wholly owned subsidiary of Parent, or another direct or indirect wholly
owned subsidiary of Parent is merged with and into the Company; provided,
however, that no such change will (i) alter or change the amount or kind of the
consideration to be issued to the Company's stockholders in the
22
<PAGE> 25
Merger or the treatment of the holders of the Company Stock Options, (ii)
materially impede or delay consummation of the Merger, or (iii) release Parent
from any of its obligations under the Merger Agreement; provided, however, that
the Company will be deemed not to have breached any of its representations and
warranties and covenants therein if and to the extent such breach would have
been attributable to such election. In the event of such an election, the
Company agreed to execute any appropriate documentation as may be reasonably
requested by Parent to reflect such election.
The Merger Agreement provides that at the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities: (i) each Share (other than any
Shares to be canceled pursuant to clause (ii) below and any Dissenting Shares)
will be canceled, extinguished and converted automatically into the right to
receive an amount per share in cash equal to the price per Share paid in the
Offer (the "Per Share Price"), payable to the holder thereof, without interest,
upon surrender of the certificate that prior to the Merger represented such
Share, less any required withholding taxes; (ii) each Share held in the treasury
of the Company and each Share owned by Parent, Purchaser or any other direct or
indirect subsidiary of Parent or of the Company (including the Shares held in
the Voting Trust), in each case immediately prior to the Effective Time, will be
canceled and retired without any conversion thereof and no payment or
distribution will be made with respect thereto; (iii) the shares of common stock
of Merger Sub issued and outstanding immediately prior to the Effective Time
will be converted into and become equal to a number of identical validly issued,
fully paid and nonassessable shares of common stock of the Surviving Corporation
as is equal to the number of Shares immediately prior to the Effective Time;
(iv) each share of preferred or other capital stock of Merger Sub issued and
outstanding immediately prior to the Effective Time will be converted into and
become one validly issued, fully paid and nonassessable share of identical
preferred or other capital stock of the Surviving Corporation and, in the case
of each of (iii) and (iv), if the Effective Time precedes the Control Date, each
such share will be deposited in the Voting Trust and (v) each share of Series A
Voting Preferred Stock, par value $.01 per share, of the Company (the "Voting
Preferred Stock") outstanding immediately prior to the Effective Time will be
canceled and retired without any conversion thereof and no payment or
distribution will be made with respect thereto.
The Merger Agreement provides that, upon the consummation of the Offer,
except as otherwise agreed between the Company and any holder thereof, each then
outstanding employee stock option and any other stock or stock-based right and
each then outstanding director stock option and any other stock or stock-based
right (a "Company Stock Option"), whether or not then vested or exercisable,
will be (or, if not previously vested and exercisable, will become), consistent
with the plans and agreements applicable to such Company Stock Options, vested
and exercisable and such Company Stock Options immediately thereafter will be
canceled by the Company, and each holder of a canceled Company Stock Option with
an exercise price that is less than the Per Share Price will be entitled to
receive at the consummation of the Offer or as soon as practicable thereafter
(or if the grant of the Company Stock Option does not qualify as an exempt
acquisition pursuant to Rule 16b-3 under the Exchange Act, the date six months
and one day following the grant of such Company Stock Option, if later) from the
Company (and, if necessary, Parent will provide funds to the Company sufficient
for such payments) in consideration for the cancellation of such Company Stock
Option an amount in cash equal to the product of (i) the number of shares of
Company Common Stock previously subject to such Company Stock Option and (ii)
the excess, if any, of the Per Share Price over the exercise price per share of
Company Common Stock previously subject to such Company Stock Option.
The Merger Agreement provides that the Company will use its reasonable best
efforts to take all such actions as are reasonably necessary to provide that (i)
no further issuance, transfer or grant of any capital stock of the Surviving
Corporation or any interest in respect of any capital stock of the Surviving
Corporation will be made on or after the consummation of the Offer under any
Company Plan and (ii) following the consummation of the Offer, no holder of a
Company Stock Option or any participant in any Company Plan will have the right
thereunder to acquire any capital stock of the Surviving Corporation.
The Merger Agreement provides that shares of Company Common Stock that are
issued and outstanding immediately prior to the Effective Time and which are
held by stockholders who have not voted in favor of or consented to the Merger
and who have delivered a written demand for appraisal of such shares of Company
23
<PAGE> 26
Common Stock in the time and manner provided in Section 262 of the DGCL and have
not failed to perfect or have not effectively withdrawn or lost their rights to
appraisal and payment under the DGCL will not be converted into the right to
receive the Merger Consideration, but will be entitled to receive the
consideration as will be determined pursuant to Section 262 of the DGCL;
provided, however, that if such holder failed to perfect or has effectively
withdrawn or lost his, her or its right to appraisal and payment under the DGCL,
such holder's shares of Company Common Stock will thereupon be deemed to have
been converted, at the Effective Time, into the right to receive the Merger
Consideration, without any interest thereon, less any required withholding
taxes.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's organization, standing and corporate power, subsidiaries, capital
structure, authorization, recommendation and required stockholder vote for the
Merger Agreement, noncontravention of any governing instruments, laws or other
agreements, filings with the Commission, financial statements, and undisclosed
liabilities, information provided in the Offer documents and Schedule 14D-9,
absence of certain changes or events, litigation, labor matters and compliance
with laws, employee benefit plans, taxes, environmental matters, contracts,
absence of rights plan, intellectual property, year 2000 matters, ownership of
assets, insurance, brokers, and opinion of the Company's financial advisor.
In addition, the Merger Agreement contains representations and warranties
of Parent, Purchaser and Merger Sub concerning their organization and standing,
authorization, recommendation and required stockholder vote for the agreement,
noncontravention of any governing instruments, laws or other agreements,
information provided in the Offer documents and Schedule 14D-9, financing, and
brokers.
Interim Operations of the Company. Pursuant to the Merger Agreement, the
Company has covenanted and agreed that, except (i) as expressly provided in the
Merger Agreement, (ii) with the prior written consent of Parent or (iii) as set
forth on a disclosure schedule to the Merger Agreement delivered by the Company,
after the date of the Merger Agreement and prior to the Control Date, the
business of the Company and its subsidiaries will be conducted only in the
ordinary course of business consistent with past practice and each of the
Company and its subsidiaries will use all reasonable efforts to preserve its
business organization intact and preserve and maintain its rights and franchises
and its relationships with its customers, suppliers, employees, independent
contractors, creditors, business partners and others with whom it deals; the
Company, in conducting its business and operations, will have due regard for the
interests of the holders of the Trust Certificates (as defined in the Voting
Trust Agreements) as investors in the Company; and neither the Company nor any
of its subsidiaries will:
(a) (i) amend its certificate of incorporation or by-laws or similar
organizational documents; (ii) declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to any
of its capital stock other than dividends or distributions by the Company's
wholly owned subsidiaries; (iii) split, combine or reclassify any of its
capital stock; or (iii) issue, sell, transfer, pledge, dispose of or
encumber, or redeem, purchase or otherwise acquire directly or indirectly,
any shares of, or securities convertible into or exchangeable or redeemable
for, or options, warrants, calls, commitments or rights of any kind to
acquire, any shares of capital stock of any class of, or any other
ownership or equity interest (including, without limitation, any phantom
interest or stock appreciation rights) in, the Company or its subsidiaries
other than pursuant to exercises of Company Stock Options, conversions of
the convertible subordinated notes, redemptions of exchangeable subsidiary
shares and exercises of warrants;
(b) transfer, lease, license, sell, mortgage, pledge, dispose of, or
create or suffer to exist any lien on any assets that are material to the
Company and its subsidiaries, taken as a whole, other than liens pursuant
to the Company's primary credit agreement, purchase money security
interests under certain other indebtedness and related documents and other
than sales of assets in the ordinary course of business consistent with
past practice;
(c) acquire (by merger, consolidation, acquisition of stock or assets
or otherwise) any corporation, partnership or other business organization
or division thereof, or any substantial portion of any assets thereof,
other than acquisitions for total value not in excess of $50 million in the
aggregate;
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(d) (i) grant any increase in the compensation payable or to become
payable by the Company or any of its subsidiaries to any employee other
than increases in the ordinary course of business consistent as to timing
and amount with past practice; (ii) except to the extent currently required
under applicable law or the terms of the applicable agreement or
arrangement, adopt any new, or amend or otherwise increase, or accelerate
the payment or vesting of the amounts payable or to become payable under
any existing, bonus, incentive compensation, deferred compensation,
severance, profit sharing, stock option, stock purchase, insurance,
pension, retirement or other employee benefit plan agreement or
arrangement; (iii) enter into any, or amend any existing, employment,
consulting or severance agreement with, or grant any severance or
termination pay to, any officer, director or employee of the Company or any
of its subsidiaries, other than pursuant to existing plans or agreements;
(iv) except with respect to the Company's foreign operations, as required
by law or existing arrangements, make any additional contributions to any
grantor trust created by the Company to provide funding for
non-tax-qualified employee benefits or compensation; or (v) provide any
severance program to any subsidiary which does not have a severance program
as of the date of the Merger Agreement;
(e) enter into or materially modify any collective bargaining
agreement, including any successor collective bargaining agreement;
(f) enter into, modify or terminate any material contract except in
the ordinary course of business consistent with past practice;
(g) permit any material insurance policy naming it as a beneficiary or
a loss payable payee to be canceled or terminated, except in the ordinary
course of business consistent with past practice;
(h) (i) incur or assume any debt except for borrowings under existing
credit facilities, debt incurred in connection with permitted acquisitions
in an aggregate outstanding amount not to exceed $65 million at any one
time (including no more than $15 million in assumed debt) and additional
borrowings in an aggregate outstanding amount not to exceed $20 million at
any time (any newly incurred debt to be on terms no less favorable to the
Company and its subsidiaries in any material respect than its existing
credit facilities); (ii) assume, guarantee, endorse, enter into any "keep
well" or other similar agreement, or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations or
financial condition of any person other than the Company or its wholly
owned subsidiaries, except in the ordinary course of business consistent
with past practice and where the amount involved, individually or in the
aggregate, is not material; (iii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to wholly
owned subsidiaries of the Company or customary loans or advances to
employees in accordance with past practice); or (iv) make any capital
expenditure in excess of $1 million with respect to any individual or
series of related capital expenditures or $15 million in the aggregate for
all capital expenditures;
(i) change any of its material accounting principles, except as
required by generally accepted accounting principles;
(j) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other material
reorganization of the Company or any of its subsidiaries or any agreement
(other than a confidentiality agreement pursuant to the provisions
described under "No Solicitation" below) relating to an Acquisition
Proposal (as defined below);
(k) engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of the
Company's affiliates, other than the Company or its wholly owned
subsidiaries, including, without limitation, any transactions, agreements,
arrangements or understandings with any affiliate or other person covered
under Item 404 of Regulation S-K under the Securities Act that would be
required to be disclosed under such Item 404;
(l) make any material tax election;
(m) (i) pay, discharge or satisfy any claim, liability or obligation
(including contingent claims, liabilities and obligations), other than in
the ordinary course of business consistent with past practice; or (ii)
settle or compromise any litigation (whether or not commenced prior to the
date of the Merger Agreement) other than settlements or compromises of
litigation not relating to the transactions
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<PAGE> 28
contemplated hereby and which could not reasonably be expected to prejudice
materially the Company or its subsidiaries in any other pending or future
litigation, where the amount paid (after giving effect to insurance
proceeds actually received) in settlement or compromise does not exceed $1
million, provided that the aggregate amount paid in connection with the
settlement or compromise of all such litigation matters will not exceed $5
million;
(n) take any action which would make any of the Company's
representations and warranties in the Merger Agreement untrue or incorrect
in a manner that would, or any other action that would, result in any of
the Offer Conditions not being satisfied; or
(o) enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or authorize, recommend, propose or announce an
intention to do, or to agree to do, any of the foregoing.
Access to Information. The Merger Agreement provides that Company will
(and will cause each of its subsidiaries to) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of Parent,
reasonable access, during normal business hours, during the period prior to the
Effective Time, to all of its and its subsidiaries' personnel, properties,
books, contracts, commitments and records (including any tax returns or other
tax related information pertaining to the Company and its subsidiaries) and,
during such period, the Company will (and will cause each of its subsidiaries
to) furnish promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of the federal securities laws or which is otherwise
material to the Company and its subsidiaries and (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request (including any tax returns or other tax related information pertaining
to the Company and its subsidiaries). The Merger Agreement further provides that
Parent will hold any such information in confidence to the extent required by
and in accordance with the provisions of the existing confidentiality agreement
between the Company and Parent.
Consents and Approvals. The Merger Agreement provides that each of the
Company, Parent, Purchaser and Merger Sub will use all reasonable best efforts
to comply promptly with all legal requirements which may be imposed on it with
respect to the Merger Agreement and the transactions contemplated thereby which
actions will include, without limitation, furnishing all information in
connection with approvals of or filings with any Governmental Entity, including,
without limitation, any schedule, or reports required to be filed with the
Commission, and will promptly cooperate with and furnish information to each
other in connection with any such requirements imposed upon any of them or any
of their subsidiaries in connection with the Merger Agreement and the
transactions contemplated thereby. The Merger Agreement further provides that
each of the Company, Parent, Purchaser and Merger Sub will, and will cause its
subsidiaries to, use all reasonable best efforts to obtain any consent,
authorization, order or approval of, or any exemption by, any governmental
entity or other public or private third party, required to be obtained or made
by Parent, Purchaser, Merger Sub, the Company or any of their subsidiaries in
connection with the Offer, the Merger or the taking of any other action
contemplated by the Merger Agreement.
The Merger Agreement provides that Parent, on the one hand, and the Company
on the other will, and each will cause its subsidiaries to, subject to the
following sentences, (i) cooperate with one another to prepare and present to
the STB, as soon as practicable, all filings and other presentations in
connection with seeking any STB approval, exemption or other authorization
necessary to consummate the transactions contemplated by the Merger Agreement,
(ii) prosecute such filings and other presentations with diligence, (iii)
diligently oppose any objections to, appeals from or petitions to reconsider or
reopen any such STB approval by persons not party to the Merger Agreement, and
(iv) take all such further action as in the reasonable judgment of Parent and
the Company may facilitate obtaining a final order or orders of the STB
approving such transactions consistent with the Merger Agreement and the
transactions contemplated therein. The Merger Agreement further provides that
without in any way limiting Parent's obligations under Section 1.4 of the Merger
Agreement relating to the Voting Trust and subject to consultations with the
Company and, after giving good faith consideration to the views of the Company,
Parent will have final authority over the development, presentation and conduct
of the STB case, including over decisions as to whether to agree to or acquiesce
in conditions.
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<PAGE> 29
Employee Matters. The Merger Agreement provides that for a period of one
year following the Effective Time, Parent will or will cause the Surviving
Corporation to either continue the existing Company employee benefit plans or
provide benefits to employees of the Company and its subsidiaries under
substitute plans or arrangements ("Parent Benefit Plans") that are no less
favorable, in the aggregate, to such employees than those provided under such
existing Company plans.
The Merger Agreement further provides that with respect to any Parent
Benefit Plan in which the Company's or its subsidiaries' employees participate
effective as of the Merger, Parent will, or will cause the Surviving Corporation
to: (A) waive all limitations as to pre-existing conditions, exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the employees under any Parent Benefit Plan in which such
employees may be eligible to participate after the Effective Time, (B) provide
each employee with credit for any co-payments and deductibles paid prior to the
Effective Time in satisfying any applicable deductible or out-of-pocket
requirements under any Parent Benefit Plan in which such employees may be
eligible to participate after the Effective Time, and (C) recognize all service
of the employees with the Company or any subsidiary for all purposes (excluding
for benefit accrual) in any Parent Benefit Plan in which such employees may be
eligible to participate after the Effective Time, to the same extent taken into
account under a comparable Company plan immediately prior to the Closing Date;
provided, however, that such service will not be recognized to the extent that
such recognition would result in a duplication of benefits.
No Solicitation. The Merger Agreement provides that the Company will not,
and it will cause its subsidiaries, directors, officers, employees, financial
and other advisors, agents, representatives, affiliates and others working on
its behalf or at its direction (collectively, "Company Representatives") not to,
initiate, solicit, encourage or facilitate offers, inquiries or proposals with
respect to, or furnish any information relating to or participate in any
negotiations or discussions concerning, any merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries, or any purchase or sale of more than 10% of the assets (including
stock of subsidiaries) of the Company and its subsidiaries taken as a whole, or
any purchase or sale of, or tender or exchange offer for, 10% or more of the
equity securities of the Company or any of its subsidiaries (an "Acquisition
Proposal"), other than as contemplated by the Merger Agreement.
The Merger Agreement further provides that notwithstanding the above
paragraph, if the Company is not otherwise in breach or violation of the
provisions described in this subsection, until the Offer has been consummated,
the Board of Directors of the Company may, directly or indirectly through
Company Representatives: (x) furnish information concerning the Company and its
subsidiaries to any person with respect to an Acquisition Proposal pursuant to
appropriate confidentiality agreements with terms substantially similar to those
contained in the confidentiality agreement with Parent (including with respect
to "standstill" provisions), and (y) negotiate and participate in discussions
and negotiations with such person concerning an Acquisition Proposal, if in
either case (x) or (y), (i) such person has submitted a bona fide written
Acquisition Proposal to the Company after the date hereof which constitutes a
Superior Proposal (as defined below) and (ii) in the good faith judgment of the
Board of Directors of the Company, only after receipt of and based upon advice
from outside legal counsel to the Company, the failure to provide such
information or access or to engage in such discussions or negotiations would
cause the Board of Directors to violate its fiduciary duties to the Company's
stockholders under applicable law. In addition, the Merger Agreement will not
restrict the Company Board of Directors from, to the extent required, complying
with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to
an Acquisition Proposal, subject to any rights of Parent to terminate the Merger
Agreement and receive payment of any fee due as a result thereof under the
provisions of the Merger Agreement -- described under "Termination" and "Effect
of Termination" below.
Pursuant to the Merger Agreement, the Company will notify Parent
immediately of any inquiries, proposals or offers received by, information
requested from, or discussions or negotiations sought to be initiated or
continued with, it or any Company Representatives with respect to, or which
could reasonably be expected to lead to, an Acquisition Proposal indicating, in
connection with each such notice, the name of such person (unless the proposed
consideration consists solely of cash) and the material terms, conditions and
other aspects of any such inquiries, proposals, offers, requests, discussions or
negotiations, including promptly
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<PAGE> 30
forwarding copies of any written Acquisition Proposals (with redactions of the
proposing party's identity, if the proposed consideration consists solely of
cash), and promptly keep Parent informed of the status and terms of any such
proposals or offers and the status and terms of any such discussions or
negotiations. The Merger Agreement provides that the Company immediately cease
and to cause to be terminated any activities, discussions or negotiations
conducted on or prior to the date of the Merger Agreement with any parties other
than Parent with respect to any of the foregoing. The Merger Agreement further
provides that neither the Company nor any subsidiary of the Company will waive
or fail to enforce any provision of any confidentiality or standstill or similar
agreement to which it is a party without the prior written consent of Parent
unless the Company's Board of Directors determines in good faith, only after
receipt of and based upon advice from outside legal counsel to the Company, that
it is required by fiduciary duties under applicable law to take such action in
response to a Superior Proposal.
A "Superior Proposal" means, for purposes of the Merger Agreement, a bona
fide written Acquisition Proposal made by a third party after the date of the
Merger Agreement:
(i) as a result of which (A) the Company's stockholders prior to such
transaction would in the aggregate cease to own at least 50% of the voting
securities of the ultimate parent entity resulting from such transaction or
(B) at least 50% of the assets of the Company and its subsidiaries taken as
a whole would be transferred to an unaffiliated third party; and
(ii) which the Board of Directors of the Company in its good faith
judgment, taking into account the various legal, financial and regulatory
aspects of the proposal and the person making such proposal and after
consultation with and based on the advice of outside counsel and a
nationally recognized financial advisor, determines (A) if accepted, is
reasonably likely to be consummated, and (B) if consummated, is reasonably
likely to result in a transaction that is financially superior and more
favorable to the holders of Company Common Stock than the Offer and the
Merger (taken together).
Certain Financing Matters. The Merger Agreement provides that the Company
will provide, and will cause its subsidiaries and its and their respective
officers, employees and advisors to provide, all necessary cooperation in
connection with the arrangement of any financing to be consummated
contemporaneous with or at or after the consummation of the Offer, including
without limitation any financing to be provided to the Company or any of its
subsidiaries by Parent. The Merger Agreement further provides that, in addition,
in conjunction with the obtaining of any such financing, the Company agrees, at
the request of Parent, to call for prepayment or redemption, conduct a tender
offer for, or prepay, redeem and/or renegotiate, as the case may be, any then
existing indebtedness of the Company and its subsidiaries, including, without
limitation, indebtedness under the Credit Agreement, the Senior Subordinated
Notes and the Convertible Subordinated Notes; provided that no such prepayment
or redemption or purchase under any tender offer will themselves actually be
required to be made or consummated until contemporaneously with or after the
consummation of the Offer.
Reasonable Best Efforts. The Merger Agreement provides that, subject to
the terms and conditions therein provided, each of the parties thereto agreed to
use all reasonable best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable, whether
under applicable laws and regulations or otherwise, and to remove any
injunctions or other impediments or delays, legal or otherwise, to consummate
the Offer and make effective the Merger and the other transactions contemplated
by the Merger Agreement as expeditiously as practicable. Pursuant to the Merger
Agreement, in case at any time after the Effective Time any further action
becomes necessary or desirable to carry out the purposes of the Merger
Agreement, the proper officers and directors of the Company, Parent, Purchaser
and Merger Sub will use all reasonable efforts to take, or cause to be taken,
all such necessary actions.
Publicity. The Merger Agreement provides that so long as the Merger
Agreement is in effect, neither the Company nor Parent nor their affiliates will
issue or cause the publication of any press release or other public statement or
announcement with respect to the Merger Agreement or the transactions
contemplated thereby without prior consultation with and approval (not to be
unreasonably withheld or delayed) of the other party, except as may be required
by law or by obligations pursuant to any listing agreement with, or the listing
rules of, a national securities exchange, and in such case will use all
reasonable efforts to consult with and obtain approval of the other party prior
to such release or announcement being issued.
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Notification of Certain Matters. The Merger Agreement provides that the
Company will give prompt notice to Parent, and Parent will give prompt notice to
the Company, of (a) the occurrence or non-occurrence of any event which would be
likely to cause any representation or warranty of the Company or Parent,
Purchaser and Merger Sub, as the case may be, contained in the Merger Agreement
to be untrue or inaccurate in any material respect at or prior to the Effective
Time and (b) any material failure or inability of the Company or Parent, as the
case may be, to comply with or satisfy any covenant, condition or agreement to
be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this provision will not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
Directors' and Officers' Insurance and Indemnification. The Merger
Agreement provides that at all times after the Effective Time, Parent and the
Surviving Corporation will jointly and severally indemnify each person who was
at the date of the Merger Agreement, or at any time prior to the date thereof, a
director or officer of the Company or of any of the Company's subsidiaries or
person entitled to indemnification (individually an "Indemnified Party" and
collectively the "Indemnified Parties"), subject to applicable law, to the same
extent and in the same manner as was being provided in the respective
certificates of incorporation or by-laws or similar organizational documents of
the Company and such subsidiaries or otherwise in effect on the date thereof.
The Merger Agreement further provides that the Surviving Corporation will
maintain in effect for not less than six years after consummation of the Merger
the policies of directors' and officers' liability insurance maintained by the
Company and its subsidiaries on the date of the Merger Agreement or policies
having comparable coverage, terms and conditions, with respect to matters
existing or occurring at or prior to the Effective Time, to the extent
available; provided, that in no event will the Surviving Corporation be required
to expend in any one year an amount in excess of 200% of the annual premiums
paid by the Company for such insurance (as disclosed to Parent in writing prior
to the date of the Merger Agreement), although it will be obligated to obtain a
policy with the greatest coverage available for a cost not exceeding such
amount.
The Merger Agreement provides that, without limitation of the foregoing, in
the event any such Indemnified Party is or becomes involved in any capacity in
any action, proceeding or investigation in connection with any matter,
including, without limitation, the transactions contemplated by the Merger
Agreement, Parent will pay as incurred such Indemnified Party's legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith, subject to the provision by such Indemnified Party of an
undertaking to reimburse such payments in the event of a final determination by
a court of competent jurisdiction that such Indemnified Party is not entitled
thereto. The Merger Agreement further provides that Parent will pay all
expenses, including attorneys' fees, that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided for in the
above-described provisions or any action involving an Indemnified Party
resulting from the transactions contemplated by the Merger Agreement.
The Merger Agreement provides that any determination to be made as to
whether any Indemnified Party has met any standard of conduct imposed by law
will be made by legal counsel reasonably acceptable to such Indemnified Party,
Parent and the Surviving Corporation, retained at Parent's and the Surviving
Corporation's expense.
The Merger Agreement provides that the provisions described above are
intended to benefit and will be enforceable by the Indemnified Parties and their
respective heirs, executors and personal representatives and will be binding on
and enforceable against Parent, Purchaser, Merger Sub and the Surviving
Corporation and their successors and assigns in accordance with Delaware law.
Proxy Statement; Company Stockholders Meeting. The Merger Agreement
provides that as soon as practicable following the date thereof at the request
of Parent, the Company will prepare and file with the Commission a proxy or
information statement with respect to the required Company stockholder approval
of the Merger Agreement (the "Proxy Statement") and will use all reasonable
efforts to resolve any comments of the Commission with respect to the Proxy
Statement as promptly as practicable. The Merger Agreement further provides that
Parent will cooperate with the Company in the preparation of the Proxy
Statement. The Merger Agreement also provides that Company will give Parent and
its counsel a reasonable opportunity to review the Proxy Statement prior to its
being filed with the Commission and will give Parent and its counsel a
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<PAGE> 32
reasonable opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with, or sent to, the Commission, all of
which filings and responses will be subject to Parent's prior consent, not to be
unreasonably withheld. The Company will provide to Parent promptly copies of all
correspondence between it or any of its representatives and the Commission.
Pursuant to the Merger Agreement, Parent will furnish all information concerning
it required to be included in the Proxy Statement, and as promptly as
practicable, the Proxy Statement will be mailed to the stockholders of the
Company. The Merger Agreement provides that the Company will advise Parent
promptly after it receives notice thereof of any request or demand by the
Commission or the NYSE for amendment of the Proxy Statement.
The Merger Agreement provides that if Company stockholder approval is
required under the DGCL to consummate the Merger and is required to be given at
a duly held meeting of stockholders, the Company will, as promptly as reasonably
practicable following the execution of the Merger Agreement, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Company
Stockholders Meeting") for the purpose of obtaining the Company stockholder
approval and will take all lawful action to solicit the Company stockholder
approval. The Merger Agreement further provides that unless otherwise required
by their fiduciary duties under applicable law, the Board of Directors of the
Company will (i) recommend adoption of the Merger Agreement by the stockholders
of the Company, and (ii) not withdraw, modify or qualify in any manner adverse
to Parent such recommendation (or its recommendation that holders of Shares
tender their Shares in the Offer) or take any action or make any statement in
connection with the Company Stockholders Meeting (or the Offer) inconsistent
with such recommendation (collectively, an "Adverse Change in the Company
Recommendation"). Pursuant to the Merger Agreement, the Company will use all
reasonable efforts to obtain any necessary approvals to permit the Company
stockholder approval to be effected by written consent. The Merger Agreement
provides that, subject to its right to terminate the Merger Agreement in
accordance with its terms, the Company will be required to take the actions
specified in the provisions described above, and satisfy all its other
obligations under the Merger Agreement, whether or not the Company Board of
Directors makes an Adverse Change in the Company Recommendation after the date
thereof.
The Merger Agreement provides that Parent will vote at the Company
Stockholders' Meeting or give consents with respect to, or cause to be voted or
to have consents given with respect of (including, prior to the Control Date, by
causing the Voting Trustees to vote pursuant to the Voting Trust Agreements),
all Shares then owned by it or Purchaser or any of Parent's other subsidiaries
and affiliates (including any shares held in the Voting Trust) in favor of the
adoption of the Merger Agreement.
The Merger Agreement provides that, notwithstanding the foregoing, in the
event that Purchaser has acquired at least 90% of the then-outstanding Shares,
the parties will, at the request of Purchaser, subject to the conditions to the
Merger, the DGCL, the ICA and the rules and regulations of the STB, to take (and
prior to the Control Date to cause the Voting Trustees to take) all necessary
and appropriate action to cause the Merger to become effective, in accordance
with Section 253 of the DGCL, as soon as reasonably practicable after such
acquisition, without a meeting of the stockholders of the Company.
Parent Circular; Parent Shareholders Meeting. The Merger Agreement
provides that as soon as practicable following the date of the Merger Agreement,
Parent will prepare and obtain the approval of the London Stock Exchange of a
circular (the "Parent Circular") to be sent to Parent's shareholders in
connection with the Parent Shareholder Meeting (as defined below). The Company
will cooperate with Parent in the preparation of the Parent Circular. The Merger
Agreement further provides that Parent will give the Company and its counsel a
reasonable opportunity to review the Parent Circular prior to its being lodged
with the LSE for approval and will give the Company and its counsel a reasonable
opportunity to review all amendments and supplements to the Parent Circular and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the LSE. The Merger Agreement also
provides that Parent will provide to the Company promptly copies of all
correspondence between it or any of its representatives and the LSE. Pursuant to
the Merger Agreement, the Company will furnish all information concerning it
required to be included in the Parent Circular, and as promptly as practicable,
the Parent Circular will be mailed to the shareholders of Parent. The Merger
Agreement provides that Parent will advise the Company promptly after it
receives notice thereof of any request or demand by the LSE for amendment of
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<PAGE> 33
the Parent Circular. The Merger Agreement further provides that the Parent
Circular and any supplements thereto and any other circulars or documents issued
to shareholders or employees of Parent will contain all particulars relating to
Parent and the Company required to comply in all material respects with all
United Kingdom statutory and other legal provisions (including, without
limitation, the Companies Act of 1985 of the United Kingdom, as amended, the
Financial Services Act 1986 and the rules and regulations made thereunder, and
the rules and requirements of the LSE and the City Code) and, at the date filed
with the LSE or distributed to Parent's shareholders or at the time of the
Parent Shareholders Meeting, all such information contained in such documents
will be substantially in accordance with the facts and will not omit anything
material likely to affect the import of such information.
(b) The Merger Agreement provides that Parent will, as promptly as
reasonably practicable following the execution of the Merger Agreement, duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Parent Shareholders Meeting") for the purpose of obtaining the approval of the
Merger by Parent's shareholders (the "Parent Shareholder Approval") and will
take all lawful action to solicit such Parent Shareholder Approval. The Merger
Agreement further provides that Parent will use its reasonable best efforts to
hold the Parent Shareholders Meeting on or before July 26, 1999. Pursuant to the
Merger Agreement, unless otherwise required by their fiduciary duties under
applicable law, the Board of Directors of Parent will (i) recommend that the
shareholders of Parent vote in favor of the resolution to be proposed at the
Parent Shareholders Meeting and required for the implementation of the Offer and
the Merger, and (ii) not withdraw, modify or qualify in any manner adverse to
the Company such recommendation or take any action or make any statement in
connection with the Parent Shareholders Meeting inconsistent with such
recommendation (collectively, an "Adverse Change in the Parent Recommendation").
The Merger Agreement provides that, subject to its right to terminate the Merger
Agreement in accordance with its terms, Parent will be required to take the
actions specified in clause (a) above and the first sentence of this clause (b),
and satisfy all its other obligations under the Merger Agreement, whether or not
Parent's Board of Directors makes an Adverse Change in the Parent Recommendation
after the date of the Merger Agreement.
Registration Rights for Shares Deposited in Voting Trust. The Merger
Agreement provides that the Company will, if requested by any Voting Trustee at
any time and from time to time within three years after the termination of the
Merger Agreement while any securities of the Company or any of its subsidiaries
remain in the Voting Trust, as expeditiously as possible prepare and file up to
three registration statements under the Securities Act of 1933, as amended, if
such registration is necessary in order to permit the sale or other disposition
of any or all securities that have been deposited in the Voting Trust, in
accordance with the intended method of sale or other disposition stated by the
Voting Trustee, including a "shelf" registration statement under Rule 415 under
the Securities Act or any successor provision; and the Company will use its
reasonable best efforts to qualify such securities under any applicable state
securities laws. The Merger Agreement further provides that the Voting Trustee
and Parent will use reasonable efforts to cause, and to cause any underwriters
of any sale or other disposition to cause, any sale or other disposition
pursuant to such registration statement to be effected on a widely distributed
basis. The Merger Agreement also provides that the Company will use reasonable
efforts to cause each such registration statement to become effective, to obtain
all consents or waivers of other parties which are required therefore, and to
keep such registration statement effective for such period not in excess of 180
calendar days from the day such registration statement first becomes effective
as may be reasonably necessary to effect such sale or other disposition.
Pursuant to the Merger Agreement, the obligations of the Company thereunder to
file a registration statement and to maintain its effectiveness may be suspended
for one or more periods of time not exceeding 60 calendar days in the aggregate
with respect to any registration statement if the Board of Directors of the
Company determines that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect the Company. Pursuant to
the Merger Agreement, the costs of any registration statement prepared and filed
under the provisions described hereby, and any sale covered thereby, will be
shared equally by the Company and Parent except for underwriting discounts or
commission, brokers' fees and the fees and disbursements of the Voting Trustee's
and Parents' counsel related thereto (which will be paid by Parent). The Merger
Agreement provides that the Voting Trustee and Parent will provide all
information reasonably requested by the Company for inclusion in any
registration statement to be filed hereunder. The Merger Agreement further
provides that if, during the time
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periods referred to in the first sentence of this paragraph, the Company effects
a registration under the Securities Act of the Company's securities for its own
account or for any other of its stockholders (other than on Form S-4, Form S-8,
or any successor form), it will allow the Voting Trustee the right to
participate in such registration, and such participation will not affect the
obligation of the Company to effect demand registration statements for the
Voting Trustee under the Section described hereby; provided, that, if the
managing underwriters of such offering advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering, the Company
will include the securities requested to be included therein by the Voting
Trustee only after including all securities intended to be included therein by
the Company. The Merger Agreement also provides that in connection with any
registration pursuant to the Section described hereby, the Company and Parent
will provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification, and contribution in
connection with such registration.
Dividend Access Shares. The Merger Agreement provides that prior to the
commencement of the Offer, the Company will enter into an agreement (the
"Dividend Access Share Purchase Agreements") with each holder of Dividend Access
Shares of par value $.01 per share (the "Dividend Access Shares"), of 3376249
Canada, Inc., a subsidiary of the Company (the "Canadian Subsidiary") which will
be substantially in the form previously furnished to Parent, and take any other
necessary action to ensure that none of the Company, the Canadian Subsidiary,
the Surviving Corporation, Parent or any other affiliate of Parent will be
required under the terms of the Dividend Access Shares, the Support Agreement
with respect to the Dividend Access Shares (the "Support Agreement") or
otherwise, to, and none of them will bear any liability or other obligation for
failing to: (i) permit the holders of Dividend Access Shares to retract their
Dividend Access Shares as against the Canadian Subsidiary and receive Shares in
exchange therefor for the sole purpose of tendering such Shares in the Offer,
effective and conditional only upon the consummation of the Offer, all as
contemplated by the Support Agreement (it being understood that Purchaser will
not be required to accept tenders of, nor will Parent or Purchaser otherwise be
required to acquire, Dividend Access Shares in the Offer or otherwise); or (ii)
following the Effective Time, issue or otherwise deliver any shares in the
capital stock of the Company, the Surviving Corporation, the Canadian
Subsidiary, Parent or any other affiliate of Parent or any other securities or
property other than a sum in United States Dollars equal to the Per Share Price,
without any interest thereon, in respect of or in exchange for, whether pursuant
to a retraction or otherwise, any Dividend Access Share. Pursuant to the Merger
Agreement, true and complete copies of all executed Dividend Access Share
Purchase Agreements will be provided to Parent upon execution thereof.
Conditions. The Merger Agreement provides that the obligations of the
Company, on the one hand, and Parent and Merger Sub, on the other hand, to
consummate the Merger are subject to the satisfaction (or, if permissible,
waiver by the party for whose benefit such conditions exist) of the following
conditions: (1) Purchaser shall have purchased the Shares pursuant to the Offer
(provided that the purchase of Shares pursuant to the Offer will not be a
condition to the obligations of Parent and Merger Sub hereunder if Purchaser
fails to accept for payment and pay for Shares pursuant to the Offer in
violation of the terms hereof or of the Merger Agreement); (2) if required under
the DGCL, Company stockholder approval for the Merger shall have been obtained;
and (3) no court, arbitrator or other governmental entity shall have issued any
order, injunction, decree or ruling, and there will not be any other judgment,
order, decree, arbitration award, statute, law, ordinance, rule, or regulation
("Law"), restraining, enjoining or prohibiting the consummation of the Merger.
Termination. The Merger Agreement provides that notwithstanding anything
to the contrary in the Merger Agreement, it may be terminated and the
transactions contemplated therein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a) by the mutual written consent of Parent and the Company;
(b) by either of the Company or Parent:
(i) if (A) the Offer expires or terminates in accordance with the
terms thereof without the purchase of any Shares thereunder or (B)
Purchaser has not purchased Shares under the Offer prior to January 31,
2000; provided, however, that the right to terminate the Merger
Agreement under this
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clause will not be available to any party to the extent that the delay
in consummating the Offer is due to such party's material breach of the
Merger Agreement;
(ii) if any governmental entity has issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties thereto will use their reasonable best efforts to
lift), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by the Merger Agreement and
such order, decree, ruling or other action will have become final and
non-appealable;
(iii) prior to the consummation of the Offer, if the other party
has breached any of its representations, warranties, covenants or
agreements set forth herein such that any of the Offer Conditions would
not be satisfied, which breach, to the extent curable, is not cured
within ten business days of receipt of written notice of breach by the
breaching party; or
(iv) the Parent Shareholder Approval has not been obtained at the
Parent Shareholders Meeting;
(c) by the Company, prior to consummation of the Offer, upon three
business days' prior written notice to Parent (which notice will entitle
Parent to terminate the Merger Agreement pursuant to clause (d) below), in
order to accept a proposal which its Board of Directors will have
determined as of the date of such notice is a Superior Proposal and such
Board of Directors will have concluded in good faith, only after receipt of
and based on advice of its outside legal counsel, that its fiduciary duties
would require it to accept such Superior Proposal; provided, however, that
(i) any financing with respect thereto is committed for the full amount
required, (ii) the Company will have fully complied with its obligations
described under "No Solicitation" above, (iii) such notice will include a
copy of any proposed or definitive documentation relating to such Superior
Proposal, and will otherwise indicate all material terms and conditions
with respect thereto, (iv) prior to any such termination, the Company will,
if requested by Parent in connection with any revised proposal Parent might
make, negotiate in good faith for such three business day period with
Parent, (v) the Board of Directors of the Company will have concluded in
good faith, only after receipt of and based on advice of its outside legal
counsel and a nationally recognized financial advisor, as of the effective
date of such termination, after taking into account any revised proposal by
Parent during such three business day period, that such third party
proposal remains a Superior Proposal (and such financing remains so
committed) which the Board of Directors of the Company is obligated to
accept under its fiduciary duties and (vi) immediately following such
termination, the Company enters into definitive and binding documentation
with respect to such Superior Proposal; and provided, further, that it will
be a condition to termination pursuant to this clause (c) that the Company
will have made the payment of the fee to Parent described under "Effect of
Termination" below;
(d) by Parent if prior to the consummation of the Offer: (i) the
Company delivers the notice described in clause (c) above, (ii) the Board
of Directors of the Company effects an Adverse Change in the Company
Recommendation or approves or recommends another Acquisition Proposal or
fails to reconfirm its recommendation, if so requested by Parent, within
fifteen days following such request, or (iii) the Company engages in
negotiations with a third party after the date of the Merger Agreement with
respect to any Acquisition Proposal and has not fully and unconditionally
rejected such proposal (including, if such Acquisition Proposal was
publicly announced or known, by publicly announcing such rejection) within
three business days of first engaging in any negotiations with respect to
such Acquisition Proposal; or
(e) by Parent if prior to the consummation of the Offer any person or
group (within the meaning of Section 13(d)(3) of the Exchange Act) acquires
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of more than 20% of the combined voting power of the Company Common
Stock and the Voting Preferred Stock.
Effect of Termination. The Merger Agreement provides that in the event of
the termination of the Merger Agreement as described above, written notice
thereof will forthwith be given to the other party or parties specifying the
provision thereof pursuant to which such termination is made, and the Merger
Agreement will forthwith become null and void, and there will be no liability on
the part of Parent, Purchaser,
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Merger Sub or the Company except (i) for fraud or for breach of the Merger
Agreement or the confidentiality agreement and (ii) the provisions described
under "Registration Rights for Shares Deposited in Voting Trust" above, "Effect
of Termination" herein, and "Costs and Expenses" below and in the last sentence
of under "Access to Information" above.
The Merger Agreement provides that the Company will pay Parent the sum of
$35 million if the Merger Agreement is terminated solely as follows:
(i) by Parent pursuant to clause (b)(iii) under "Termination"
described above if the breach giving rise to such termination right
occurred at a time after the Company will have received or become aware of
an Acquisition Proposal (other than any such proposal submitted prior to
the date of the Merger Agreement) and within twelve months of such
termination, the Company enters into a definitive agreement with respect to
an Acquisition Proposal or an Acquisition Proposal is consummated (which
fee will be payable immediately upon the earlier of execution of such
agreement or consummation of an Acquisition Proposal); or
(ii) by the Company pursuant to clause (c) under "Termination" above
(which fee will be payable as a condition to such termination) or by Parent
pursuant to clause (d)(i) under "Termination" above (which fee will be
payable immediately upon such termination); or
(iii) (A) by Parent or the Company pursuant to clause (b)(i)(A) under
"Termination" above (provided that (1) prior to such termination an
Acquisition Proposal with respect to the Company will have been publicly
announced or otherwise become public, (2) on the date of expiration or
termination of the Offer the Minimum Condition has not been satisfied, and
(3) on such date there is no other condition to the Offer which has failed
to be satisfied as a result of a material breach of the Merger Agreement by
Parent, Purchaser or Merger Sub), or (B) by Parent pursuant to clause
(d)(ii) or (iii) or clause (e) under "Termination" above, if, in the case
of either clause (A) or (B), within twelve months of any such termination,
the Company enters into a definitive agreement with respect to an
Acquisition Proposal or an Acquisition Proposal is consummated (which fee
will be payable immediately upon the earlier of execution of such agreement
or consummation of an Acquisition Proposal); or
(iv) by Parent pursuant to clause (e) under "Termination" above, if
prior to or within twelve months after any such termination, any person or
group acquired or acquires beneficial ownership of more than 40% of the
combined voting power of the Company Common Stock, the Voting Preferred
Stock and any other voting capital stock of the Company (which fee will be
payable immediately upon the later of such acquisition or such
termination).
The Merger Agreement provides that Parent will pay the Company the sum of
$25 million if the Merger Agreement is terminated by either party pursuant to
clause (b)(iv) under "Termination" above and prior to the Parent Shareholders
Meeting there has been an Adverse Change in the Parent Recommendation.
The Merger Agreement further provides that if the Merger Agreement is
terminated by either party pursuant to clause (b)(i)(A) under "Termination"
above (provided that (1) on the date of expiration or termination of the Offer
the Minimum Condition has not been satisfied and (2) on such date all other
conditions to the Offer have been satisfied or waived), then upon and following
such termination the Company will be required to reimburse Parent and its
affiliates for all reasonable out-of-pocket fees and expenses actually incurred
by any of them or on their behalf in connection with the Offer and the Merger,
any financing thereof or in respect therewith, and the negotiation, preparation,
execution and diligence in respect of the Merger Agreement (including, without
limitation, fees and disbursements payable to banks, investment banking firms,
dealer managers and other financial institutions, and their respective agents
and counsel, and all fees of counsel, accountants, financial printers,
depositaries, information agents, experts and consultants) ("Expenses") up to an
aggregate maximum reimbursement of $5 million. The Merger Agreement also
provides that the Company will pay the amounts requested within three business
days of such requests (accompanied by a submission of statements therefor).
Pursuant to the Merger Agreement, the maximum aggregate amount that the Company
will be required to pay pursuant to the provisions described in this paragraph
and the second preceding paragraph will be $35 million.
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The Merger Agreement provides that if the Merger Agreement is terminated by
either party pursuant to clause (b)(iv) under "Termination" above and prior to
the Parent Shareholders Meeting there has not been an Adverse Change in the
Parent Recommendation, then upon and following such termination Parent will be
required to reimburse the Company and its affiliates for all Expenses actually
incurred by any of them or on their behalf up to an aggregate maximum
reimbursement of $5 million. The Merger Agreement further provides that Parent
will pay the amounts requested within three business days of such requests
(accompanied by a submission of statements therefor). Pursuant to the Merger
Agreement, the maximum aggregate amount that Parent will be required to pay
pursuant to the provisions described in this paragraph and the second preceding
paragraph will be $25 million.
The Merger Agreement provides that in addition to the above described
provisions, in the event a fee or Expenses is or becomes payable pursuant to the
above-described provision, the party required to pay such fee or Expenses will
promptly, but in no event later than three business days following written
notice thereof, together with related bills or receipts, to reimburse the other
party for all reasonable out-of-pocket costs, fees and expenses, including,
without limitation, the reasonable fees and disbursements of counsel and the
expenses of litigation, incurred in connection with collecting such fee or
Expenses as a result of any breach by the party required to pay such fee or
Expenses of its obligations under Section 7.2 of the Merger Agreement described
hereby.
Costs and Expenses. The Merger Agreement provides that except as expressly
otherwise provided in the Merger Agreement, all costs and expenses incurred in
connection with the Merger Agreement and the consummation of the transactions
contemplated thereby will be paid by the party incurring such expenses.
Amendment and Modification. The Merger Agreement provides that, subject to
applicable law, the Merger Agreement may be amended, modified and supplemented
in any and all respects, whether before or after any vote of the stockholders of
the Company or the shareholders of Parent contemplated thereby, only by written
agreement of the parties thereto, pursuant to action taken by their respective
Boards of Directors, at any time prior to the Effective Time with respect to any
of the terms contained therein; provided, however, that after the approval of
the Merger Agreement by the stockholders of the Company or the shareholders of
Parent, no such amendment, modification or supplement which by law requires
prior approval of the stockholders of the Company or shareholders of Parent will
be made unless such approval has been obtained.
Waiver; Remedies Cumulative. The Merger Agreement provides that at any
time prior to the Effective Time, any party to the Merger Agreement may with
respect to any other party thereto: (i) extend the time for the performance of
any of the obligations or other acts; (ii) waive any inaccuracies in the
representations and warranties contained therein or in any document delivered
pursuant thereto; or (iii) waive compliance with any of the agreements or
conditions contained therein. Pursuant to the Merger Agreement, any such
extension or waiver will be valid only if set forth in an instrument in writing
signed by the party or parties to be bound. The Merger Agreement provides that
no failure or delay on the part of any party to the Merger Agreement in the
exercise of any right thereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement therein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. Pursuant to
the Merger Agreement, all rights and remedies existing under the Merger
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
TENDER AGREEMENT. Concurrently with the execution and delivery of the
Merger Agreement, Parent and Merger Sub entered into a Tender Agreement (the
"Tender Agreement") with each of the directors of the Company (each, a
"Stockholder" and, together, the "Stockholders") who together beneficially own
1,499,921 shares of Company Common Stock (the "Existing Shares" and, together
with any shares of Company Common Stock acquired after the date of the Tender
Agreement and prior to the termination thereof, whether upon the exercise of
options, conversion of convertible securities or otherwise, the "Subject
Shares"). Pursuant to the Tender Agreement, each of the Stockholders agreed,
among other things, to validly tender (and not withdraw) his Subject Shares to
Purchaser pursuant to the Offer.
Additionally, pursuant to the Tender Agreement, each of the Stockholders
agreed that, during the time that the Tender Agreement is in effect, at any
meeting of the stockholders of the Company, however called, or in any written
consent in lieu thereof, such Stockholder will (i) vote the Subject Shares owned
by him in favor
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of the Merger; and (ii) vote the Subject Shares owned by him against any action
or agreement (other than the Merger Agreement or the transactions contemplated
thereby) that could reasonably be expected to impede, interfere with, delay,
postpone or attempt to discourage the Merger or the Offer, including, but not
limited to: (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company and its
subsidiaries; (B) a sale or transfer of a material amount of assets of the
Company and its subsidiaries or a reorganization, recapitalization or
liquidation of the Company and its subsidiaries; (C) any change in the
management or board of directors of the Company, except as otherwise agreed to
in writing by Purchaser; (D) any material change in the present capitalization
or dividend policy of the Company; or (E) any other material change in the
Company's corporate structure or business.
The Tender Agreement provides that, from and after the date of the Tender
Agreement, each of the Stockholders will not, and will cause his financial and
other advisors, agents, representatives, affiliates and others working on its
behalf or at its direction not to, initiate, solicit, encourage or facilitate
offers, inquiries or proposals with respect to, or furnish any information
relating to or participate in any negotiations or discussions concerning, any
merger, reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries, or any purchase or sale of more than 10% of
the assets (including stock of subsidiaries) of the Company and its subsidiaries
taken as a whole, or any purchase or sale of, or tender or exchange offer for,
10% or more of the equity securities of the Company or any of its subsidiaries
other than as contemplated or permitted by the Merger Agreement.
Pursuant to the Tender Agreement, each of the Stockholders agreed, while
the Tender Agreement is in effect, and except as contemplated thereby, not to
(i) sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
the sale, transfer, pledge, encumbrance, assignment or other disposition of, any
of the Subject Shares or (ii) grant any proxies, deposit any Subject Shares into
a voting trust or enter into a voting agreement with respect to any Subject
Shares or (iii) take any action that would make any representation or warranty
of such Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Stockholder from performing his obligations under
the Tender Agreement.
The Tender Agreement provides that each of the Stockholders will, while the
Tender Agreement is in effect, promptly notify Parent of the number of any new
shares of Company Common Stock acquired by such Stockholder, if any, after the
date thereof.
IRREVOCABLE UNDERTAKINGS. Each of Brian Souter and Ann Gloag has signed an
irrevocable undertaking dated June 12, 1999, pursuant to which each of them has
agreed to vote his or her shares of voting stock of Parent in favor of the
Merger. Mr. Souter and Ms. Gloag together beneficially own approximately 24% of
the shares of Parent.
EMPLOYEE TERM SHEET. Pursuant to an Employee Term Sheet dated June 12, 1999
and delivered to Parent and subject to the good faith negotiation and execution
of definitive service agreements, (1) each of Lawrence K. King, Frank Gallagher
and Gerald Mercanante agreed to enter into new service agreements with the
Company or one of its subsidiaries for three years from the closing of the
Merger, (2) Lawrence K. King will be appointed as a director of Parent (subject
to Parent's articles of association and the rules of the LSE) and (3) Lawrence
K. King, Frank Gallagher, Gerald Mercadante and John Mercadante, Jr.
(collectively, the "Investors"), agreed to invest between them $9 million in the
purchase of Parent ordinary shares, as soon as reasonably practicable, and,
subject to certain customary exceptions, not dispose of the shares acquired by
them for a period of one year from the purchase. Subject to the Investors
continuing to be employed by the Company (except where prior termination by the
employer was without cause), certain performance criteria being achieved and the
approval of Parent's shareholders being obtained, three years after the
Effective Time each Investor will be entitled to receive one Parent ordinary
share for every ten Parent ordinary shares purchased under (3) above. The
Company has indicated to Parent that certain additional executives would be
prepared to invest an additional $1 million in the purchase of Parent ordinary
shares on the terms described above.
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12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer and the Merger is to acquire the entire
equity interest in the Company and, subject to receipt of STB approval, control
of the Company. The Offer is being made pursuant to the Merger Agreement. As
promptly as practicable following consummation of the Offer and after
satisfaction or waiver of all conditions to the Merger set forth in the Merger
Agreement, Parent intends to acquire the remaining equity interest in the
Company not acquired in the Offer by consummating the Merger.
Vote Required to Approve the Merger. The Board of Directors of the Company
has approved the Merger Agreement in accordance with the DGCL. If required for
approval of the Merger, the Company has agreed, subject to the satisfaction of
the conditions to the Merger set forth in the Merger Agreement, in accordance
with and subject to the DGCL, to duly convene a meeting of its stockholders as
promptly as practicable following the purchase of Shares pursuant to the Offer
for the purpose of considering and taking action on the Merger Agreement. If
stockholder approval is required, the Merger Agreement must generally be
approved by the vote or consent of the holders of a majority of the outstanding
Shares. As a result, if the Minimum Condition is satisfied, Purchaser will have
the power to approve the Merger Agreement without the affirmative vote of any
other stockholder.
Pursuant to the terms of the Voting Trust Agreements, the Voting Trustees
will vote, give consent and take all other actions with respect to all Shares
held in the Voting Trust at any meeting of Company shareholders or otherwise in
favor of the Merger, in favor of any proposal or action necessary or desirable
to effect, or consistent with the effectuation of, the Merger and in favor of a
slate of nominees for director of the Company which favors the Merger and
against any other acquisition transaction involving the Company but not
involving Parent or one of its subsidiaries or affiliates.
Appraisal Rights. Stockholders do not have appraisal rights as a result of
the Offer. However, if the Merger is consummated, stockholders of the Company at
the time of the Merger who do not vote or consent in favor of the Merger and
comply with all statutory requirements will have the right under the DGCL to
demand appraisal of, and receive payment in cash of the fair value of, their
Shares outstanding immediately prior to the effective date of the Merger in
accordance with Section 262 of the DGCL.
Under the DGCL, stockholders who properly demand appraisal and otherwise
comply with the applicable statutory procedures will be entitled to receive a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Stockholders should recognize that the value so determined
could be equal to or higher or lower than the price per Share paid pursuant to
the Offer or the consideration per Share to be paid in the Merger.
In addition, several decisions by Delaware courts have held that in certain
circumstances a controlling stockholder of a corporation involved in a merger
has a fiduciary duty to other stockholders that requires that the merger be fair
to other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of the consideration to be received by the stockholders and whether there
was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of unfairness, including
fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF STOCKHOLDERS DOES NOT PURPORT TO BE
A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING
TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESENTATION AND EXERCISE OF
APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE
DELAWARE LAW.
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The foregoing description of certain provisions of the DGCL is not
necessarily complete and is qualified in its entirety by reference to the DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger following the purchase of
Shares pursuant to the Offer in which Purchaser seeks to acquire any remaining
Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is
consummated within one year after the expiration or termination of the Offer and
the price paid in the Merger is not less than the per Share price paid pursuant
to the Offer. However, in the event that Purchaser is deemed to have acquired
control of the Company pursuant to the Offer and the Merger is consummated more
than one year after completion of the Offer or an alternative acquisition
transaction is effected whereby stockholders of the Company receive
consideration less or in a different form than that paid pursuant to the Offer,
in either case at a time when the Shares are still registered under the Exchange
Act, Purchaser may be required to comply with Rule 13e-3 under the Exchange Act.
If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger or such alternative transaction and the consideration
offered to minority stockholders in the Merger or such alternative transaction,
be filed with the Commission and disclosed to stockholders prior to consummation
of the Merger or such alternative transaction. The purchase of a substantial
number of Shares pursuant to the Offer may result in the Company being able to
terminate its Exchange Act registration. See Section 14. If such registration
were terminated, Rule 13e-3 would be inapplicable to any such future Merger or
such alternative transaction.
Plans for the Company. If Purchaser consummates the Offer, Parent expects
to conduct a detailed review of the Company and its businesses, assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and to consider what, if any, changes would be
desirable in light of the circumstances that then exist. Parent does not,
however, currently anticipate making any such changes, other than changes
contemplated by the Merger Agreement. Parent currently intends to support and
build on the Company's existing strategy to expand and enhance its position as a
leading provider of motorcoach, airport ground transportation and taxicab
services in the United States.
Except as described in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would relate to or result in an
extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries or a sale or other
transfer of a material amount of assets of the Company or any of its
subsidiaries, any material change in the capitalization or dividend policy of
the Company or any other material change in the Company's corporate structure or
business or the composition of its Board of Directors or management.
13. DIVIDENDS AND DISTRIBUTIONS. If the Company should, on or after the
date of the Merger Agreement (except as contemplated thereby), split, combine or
otherwise change the Shares or its capitalization, or disclose that it has taken
any such action, then without prejudice to Purchaser's rights under Section 15,
Purchaser may make such adjustments to the purchase price and other terms of the
Offer as it deems appropriate to reflect such split, combination or other
change.
If on or after the date of the Merger Agreement (except as contemplated
thereby), the Company should declare or pay any cash or stock dividend or other
distribution on, or issue any right with respect to, the Shares that is payable
or distributable to stockholders of record on a date prior to the transfer to
the name of Purchaser, the Voting Trustees or the nominee or transferee of
Purchaser on the Company's stock transfer records of such Shares that are
purchased pursuant to the Offer, then without prejudice to Purchaser's rights
under Section 15, (i) the purchase price payable per Share by Purchaser pursuant
to the Offer will be reduced to the extent any such dividend or distribution is
payable in cash and (ii) any non-cash dividend, distribution (including
additional Shares) or right received and held by a tendering stockholder shall
be required to be promptly remitted and transferred by the tendering stockholder
to the Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer. Pending such remittance or appropriate assurance
thereof, Purchaser will, subject to applicable law, be entitled to all rights
and privileges as owner of any such non-cash dividend, distribution or right and
may withhold the entire purchase price or deduct from the purchase price the
amount or value thereof, as determined by Purchaser in its sole discretion.
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14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NEW YORK STOCK
EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant
to the Offer will reduce the number of Shares that might otherwise trade
publicly and will reduce the number of holders of Shares. This could adversely
affect the liquidity and market value of the remaining Shares held by the
public.
According to the NYSE's published guidelines, the NYSE would consider
delisting the Shares if, among other things, the number of record holders of at
least 100 Shares should fall below 1,200, the number of publicly held Shares
(exclusive of holdings of officers, directors and their families and other
concentrated holdings of 10% or more (the "NYSE Excluded Holdings")) should fall
below 600,000 or the aggregate market value of publicly held Shares (exclusive
of NYSE Excluded Holdings) should fall below $5,000,000. If the Shares no longer
meet the requirements of the NYSE for continued listing and the listing of the
Shares is discontinued, the market for the Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on another securities exchange or in the over-the-counter
market and that price or other quotations would be reported by such exchange or
through Nasdaq or other sources. The extent of the public market therefor and
the availability of such quotations would depend, however, upon such factors as
the number of shareholders and/or the aggregate market value of such securities
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below and other factors. Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares or whether it would cause future market prices to be
higher or lower than the Offer price.
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to holders of the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act of 1933.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provisions
of the Offer, and in addition to the conditions that (i) at the expiration of
the Offer there will have been validly tendered and not properly withdrawn prior
to the expiration of the Offer a number of Shares which constitutes more than
50% of the voting power (determined on a fully-diluted basis) on the date of
purchase, of all the securities of the Company entitled to vote generally in the
election of directors or in a merger (for purposes of determining at any time
whether the Minimum Condition has been met, each outstanding Share legally or
beneficially owned by Parent or Purchaser or any of its affiliates at the
commencement of the Offer will be deemed validly tendered under the Offer and
not withdrawn), (ii) any and all applicable waiting periods under the HSR Act
having expired or been terminated and (iii) the staff of the STB having given
Parent a favorable informal advisory opinion to the effect that the proposed use
of the Voting Trust will effectively insulate Parent from acquiring unlawful
control of the Company and such advisory opinion not having been withdrawn or
the STB having approved Parent's and Purchaser's acquisition of the federally
regulated carriers controlled by the Company, Purchaser will not be required to
accept for payment, or subject to applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered Shares promptly after
termination or withdrawal of the Offer), purchase or pay for any Shares tendered
pursuant to the Offer, may postpone the acceptance for payment of Shares
tendered, and subject to the terms and conditions of the Merger Agreement may
terminate the Offer, if at any time on or
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after June 12, 1999 and at or before the time of payment for any such Shares any
of the following conditions occurs or has occurred:
(a) (i) the representations and warranties of the Company set forth in
the Merger Agreement shall not have been true and correct as of the date of
the Merger Agreement, or shall not be true and correct (in all material
respects, in the case of representations and warranties not already
qualified as to materiality or Material Adverse Effect (as defined below)
by their terms) as of the expiration of the Offer as though made on and as
of the expiration of the Offer (except to the extent that such
representations and warranties speak as of a specific date, which
representations and warranties will have been true and correct as of such
date), or (ii) the Company will have breached in any material respect any
covenants contained in the Merger Agreement;
(b) there shall have been any Law promulgated, enacted, entered,
enforced or issued by any governmental entity which would have the effect
of (i) making the purchase of, or payment for, some or all of the Shares by
Parent or Purchaser or their affiliates pursuant to the Offer or the Merger
illegal, or making the Voting Trust illegal, (ii) otherwise preventing
consummation of the Offer or Merger; (iii) except for the Voting Trust,
prohibiting the ownership or operation by the Company or any of its
subsidiaries, or Parent or any of its subsidiaries, of all or any material
portion of the business or assets of the Company or any of its
subsidiaries, taken as a whole, or Parent or its subsidiaries, taken as a
whole; (iv) except for the Voting Trust, materially limiting the ownership
or operation by the Company or any of its subsidiaries, or Parent or any of
its subsidiaries, of all or any material portion of the business or assets
of the Company or any of its subsidiaries, taken as a whole, or Parent or
its subsidiaries, taken as a whole, as a result of the transactions
contemplated by the Offer or the Merger; (v) except for the Voting Trust,
imposing limitations on the ability of Parent, Purchaser or any of Parent's
affiliates effectively to acquire or hold or to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
any Shares acquired or owned by Parent or Purchaser or any of its
affiliates on all matters properly presented to the stockholders of the
Company, including, without limitation, the adoption of the Agreement or
the right to vote any shares of capital stock of any significant subsidiary
(as defined in Regulation S-X), directly or indirectly owned by the
Company; or (vi) requiring divestiture by Parent or Purchaser or any of
their affiliates of any Shares; and, in each case, no action or proceeding
seeking to do any of the foregoing which has been instituted by any
governmental entity or other person shall be pending;
(c) the Merger Agreement shall have been terminated by the Company or
Parent in accordance with its terms;
(d) there shall have occurred or exist any condition, event or
occurrence which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(e) any approval or filing required to be obtained from or made with
Governmental Entities or third parties in connection with the Offer or the
Merger shall not have been obtained or made or will not be in full force
and effect, other than any the failure of which to obtain or make,
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect or to materially reduce the benefits to Parent of
ownership of the Company and its subsidiaries; or
(f) the Parent Shareholder Approval shall not have been obtained.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to such
condition. The foregoing conditions (other than the Minimum Condition, the HSR
Condition, the STB Condition and the condition set forth in clause (c) above)
may be waived by Purchaser in whole or in part at any time and from time to time
in its sole discretion. The failure by Purchaser at any time to exercise any of
the foregoing rights will not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and other circumstances will
not be deemed a waiver with respect to any other facts and circumstances, and
each such right will be deemed an ongoing right that may be asserted at any time
and from time to time.
Pursuant to the Merger Agreement, a "Material Adverse Effect" means an
effect or change that either individually or in the aggregate with all other
such effects or changes is or would be materially adverse to the
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business, assets, operations, properties, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, or would
prevent, hinder or materially delay the consummation of the transactions
contemplated by the Merger Agreement; provided that (i) any adverse effect or
change after the date of the Merger Agreement resulting from or relating to
general business or economic conditions shall be disregarded, (ii) any adverse
effect or change after the of the Merger Agreement resulting from or relating to
conditions generally affecting the industry in which the Company competes shall
be disregarded, (iii) any adverse effect or change resulting from or relating to
the announcement or pendency of the Offer, the Merger or any other transaction
contemplated by the Merger Agreement (other than any default of the Company
under its primary credit agreement or any related agreement, its senior
subordinated notes, or the terms of any other indebtedness of the Company or its
subsidiaries resulting from such announcement or pendency or from the
negotiation, execution or announcement of the Merger Agreement) shall be
disregarded, and (iv) any adverse effect or change resulting from compliance
with any limitation on the Company's and its subsidiaries' operations imposed by
the Merger Agreement shall be disregarded.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as set forth below, neither Purchaser nor Parent is aware
of any licenses or other regulatory permits that appear to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) as contemplated herein,
or of any filings, approvals or other actions by or with any domestic (federal
or state), foreign or supranational governmental authority or administrative or
regulatory agency that would be required prior to the acquisition of Shares (or
the indirect acquisition of the stock of the Company's subsidiaries) by
Purchaser pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, it is Parent's present intention to seek such
approval or action. There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, Parent or
Purchaser or that certain parts of the businesses of the Company, Parent or
Purchaser might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or other action or in
the event that such approval was not obtained or such other action was not
taken, any of which could cause Purchaser to elect (subject to the terms of the
Merger Agreement) to terminate the Offer without the purchase of the Shares
thereunder. Purchaser's obligation under the Offer to accept for payment and pay
for Shares is subject to certain conditions, including conditions relating to
the legal matters discussed in this Section 16.
State Takeover Laws. A number of states have adopted takeover laws and
regulations which purport to varying degrees to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, principal
executive offices or principal places of business therein. In 1982, the Supreme
Court of the United States, in Edgar v. Mite Corp., invalidated on
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to certain
other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court of the United States held that the State of
Indiana could, as a matter of corporate law and in particular those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders, provided that such laws were
applicable only under certain conditions. Subsequently, in TLX Acquisition Corp.
v. Telex Corp., a federal district court in Oklahoma ruled that the Oklahoma
statutes were unconstitutional insofar as they applied to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a
federal district court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in Grand
Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.
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In the Merger Agreement, the Company represents that its Board of Directors
has taken all actions necessary to render the provisions of Section 203 of the
DGCL inapplicable to the Merger Agreement, the Offer, the Merger and the Tender
Agreement. Except as described herein, Purchaser has not attempted to comply
with any state takeover statutes in connection with the Offer. Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor any
action taken in connection herewith is intended as a waiver of that right. In
the event that any state takeover statute is found applicable to the Offer,
Purchaser might be unable to accept for payment or purchase Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer. In
such case, Purchaser may not be obligated to accept for purchase or pay for, any
Shares tendered. See Section 16.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied.
On June 18, 1999, Parent filed with the FTC and the Antitrust Division a
Premerger Notification and Report Form in connection with the purchase of Shares
pursuant to the Offer. Under the provisions of the HSR Act applicable to the
Offer, the purchase of Shares pursuant to the Offer may not be consummated until
the expiration of a 15-calendar day waiting period following the filing by
Parent, unless both the Antitrust Division and the FTC terminate the waiting
period prior thereto. If, within such 15-calendar day waiting period, either the
Antitrust Division or the FTC requests additional information or documentary
material from Parent, the waiting period would be extended for an additional 10
calendar days following substantial compliance by Parent with such request.
Thereafter, the waiting period could be extended only by court order. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not (except as otherwise provided in the
Merger Agreement), be extended and in any event the purchase of and payment for
Shares will be deferred until 10 days after the request is substantially
complied with, unless the waiting period is sooner terminated by the FTC and the
Antitrust Division. See Section 2. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Any such extension
of the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase by
Purchaser of Shares pursuant to the Offer, either of the FTC and the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, its subsidiaries
or the Company. Private parties and state attorneys general may also bring legal
action under federal or state antitrust laws under certain circumstances.
Based upon an examination of publicly available information relating to the
businesses in which the Company and its subsidiaries are engaged, and because
Parent does not presently conduct any operations in the United States, Parent
and Purchaser believe that the acquisition of Shares pursuant to the Offer would
not violate the antitrust laws. There can be no assurance, however, that a
challenge to the Offer on antitrust grounds will not be made or, if such
challenge is made, what the outcome will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain government actions.
Competition Act of Canada and Investment Canada Act. Subject to certain
thresholds, Canada's Competition Act requires prenotification to the
Commissioner of Competition (the "Commissioner") of an acquisition of voting
shares of a corporation that directly or through subsidiaries conducts an
operating business in Canada where the parties to the transaction and their
affiliates have assets in Canada, or annual gross revenues from sales in, from
or into Canada, in excess of C$400 million, and where the corporation whose
shares are being acquired or its affiliates own Canadian assets the value of
which exceeds C$35 million or the gross revenues from sales in or from Canada
generated from such assets exceeds C$35 million in the
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last fiscal year. The Company's Canadian assets and revenues fall below the
threshold; therefore, no prenotification was made to the Commissioner.
The Investment Canada Act requires that notice of the acquisition of
"control" by "non-Canadians" (as defined in the Investment Canada Act) be
furnished to Investment Canada, a Canadian governmental agency (the "Agency"),
and that certain of these investments to acquire control of a Canadian business
be reviewed and approved by the Minister (as defined in the Investment Canada
Act) as investments that are likely to be of net benefit to Canada based upon
criteria set forth in the Investment Canada Act. Transactions which involve the
acquisition of control of "transportation services" may be subject to review and
approval under the Investment Canada Act. An indirect acquisition of a
corporation in Canada carrying on a Canadian business through the purchase of
voting shares of a corporation incorporated outside of Canada may be implemented
without prior approval but the application for review must be filed not later
than 30 days after the acquisition. Accordingly, the Offer and the Merger can be
completed without securing prior approval from Investment Canada. While being
subject to review will not preclude completion of the Offer or the Merger, there
is some risk that the Minister may reject the application as not being a "net
benefit" to Canada. The Minister may alternatively, require that additional
representations and undertakings be given.
STB Matters; The Voting Trust. Certain activities of subsidiaries of the
Company are regulated by the STB. Provisions of subtitle IV, title 49 of the
United States Code require approval of, or the granting of an exemption from
approval by, the STB for the acquisition of control of two or more carriers
subject to the jurisdiction of the STB ("Carriers") by a person that is not a
Carrier and for the acquisition or control of a Carrier by a person that is not
a Carrier but that controls any number of Carriers. STB approval or exemption is
required for, among other things, Parent's acquisition of control of the
Company. Purchaser intends, immediately upon the acquisition of the Shares
pursuant to the Offer, to deposit the Shares purchased pursuant to the Offer in
the Voting Trust in order to ensure that Parent and its affiliates do not
acquire and directly or indirectly exercise control over the Company and its
affiliates prior to obtaining necessary STB approvals or exemptions. STB
approval of the acquisition by Parent of control of the Company and its
subsidiaries is not a condition to the Offer. On June 15, 1999, Parent requested
from the staff of the STB an informal, non-binding opinion that the use of one
or more voting trusts substantially as set forth in the Voting Trust Agreement
is consistent with the policies of the STB against unauthorized acquisition of
control of a regulated carrier. Under STB regulations that have been in effect
since 1979, the STB staff has the power to issue such opinions. The proposed
Voting Trust Agreement is modeled closely upon voting trust agreements that have
been approved by the STB. However, there can be no assurance that the STB will
not seek changes in, or request public comment regarding, the proposed Voting
Trust Agreement.
Pursuant to the terms of the Voting Trust Agreements, the Voting Trustees
will hold such Shares until (i) the receipt of STB approval or (ii) the Shares
are sold to a third party or otherwise disposed of or (iii) the Voting Trust is
otherwise terminated. The Voting Trust Agreements provide that the Voting
Trustees will have sole power to vote the Shares in the Voting Trust, will vote,
give consent and take all other action with respect to those Shares in favor of
the Merger, in favor of any proposal or action necessary or desirable to effect,
or consistent with the effectuation of, the Merger and in favor of a slate of
nominees for director of the Company which favors the Merger, and against any
other acquisition transaction involving the Company but not involving Parent or
one of its subsidiaries or affiliates, will vote the Shares in favor of any
permitted disposition of the Shares and, on all other matters, will vote the
Shares in accordance with its best judgment concerning the interests of the
Company. The Voting Trust Agreements contain certain other terms and conditions
designed to ensure that neither Purchaser nor Parent will control the Company
during the pendency of the STB control proceedings. In addition, the Voting
Trust Agreements provide that Purchaser or its successor in interest will be
entitled to receive any cash dividends paid by the Company.
STB Matters: Acquisition of Control. Set forth below is information
relating to approval by the STB of the acquisition of control over the Company
by Parent and Purchaser. Parent and Purchaser plan to file an application (the
"STB Application") seeking approval of the STB for the acquisition of control
over the Company and its affiliates by Parent and Purchaser. Under applicable
law and regulations, the STB will provide interested persons the opportunity to
file written comments on the proposed transaction. The statute requires the STB
to approve and authorize a control transaction when it finds the transaction is
consistent with
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the public interest. In determining whether the proposed transaction is
consistent with the public interest, the STB is expected to consider at least
the following: (a) the effect of the proposed control transaction on the
adequacy of transportation to the public; (b) the total fixed charges that
result from the proposed transaction, and (c) the interest of carrier employees
affected by the proposed transaction. The STB has the authority to impose
conditions on its approval of a control transaction to alleviate competitive or
other concerns. If such conditions are imposed and would result in a failure of
any Offer Condition, Purchaser can elect, subject to the terms and conditions
hereof, to consummate the Offer subject to the STB conditions or can elect not
to consummate the Offer.
Parent and Purchaser will present to the STB their case that acquisition of
control of the Company and its motor passenger carrier subsidiaries by Parent
and Purchaser, satisfies this public interest standard. Applicants will seek to
show that the transaction will result in significant benefits to the traveling
public largely by assisting the Company in the form of additional financial and
management resources in making its existing carrier subsidiaries stronger and
more efficient competitors, expanding the scope of their services to the public
and facilitating the Company's plan to acquire additional carriers and extend
the same benefits to them. Because Parent does not presently conduct any
operations in the United States, the transaction is expected to have no adverse
impact on competition or any adverse impact on the employees of the Company's
carrier subsidiaries. As for the effect on fixed charges, the capital structure
of the Surviving Company will be sufficiently strong that this factor is
unlikely, in Purchaser's view, to be given weight by the STB in its
consideration of the proposed transaction.
Parent and Purchaser plan to file the STB Application shortly. The STB will
review the application and if it finds that such application is complete, will
publish notice of its acceptance of the application and issue a tentative grant
of control authority to applicants. Under existing law, if no written comments
are filed with the STB, control authority automatically becomes effective 45
days after the publication of the notice of acceptance. Other motorcoach
operators and other interested parties may oppose the STB Application or seek
conditions on STB approval. If written comments are filed with the STB, the STB
is required to enter a final order with respect to the STB Application within
approximately 13 months after such application is accepted. However, the STB can
process such cases more quickly under its current regulations. Applicants, in
such circumstances, would request an expedited decision on the issues raised by
the comments. In addition, any appeals from the STB final order might not be
resolved for a substantial period of time after the entry of such order by the
STB.
Pending receipt of the STB approval, it is expected that the business and
operations of the Company will be conducted in the usual and ordinary course of
business, and the Company's employees and management will continue in their
present positions.
RECEIPT OF STB APPROVAL IS NOT A CONDITION TO THE OFFER OR THE MERGER. IF
THE STB APPROVAL IS NOT OBTAINED OR THE STB IMPOSES UNACCEPTABLE CONDITIONS,
PURCHASER WILL BE REQUIRED TO USE ITS BEST EFFORTS TO SELL OR OTHERWISE DISPOSE
OF THE SHARES DEPOSITED IN THE VOTING TRUST AFTER THE STB ORDER DENYING SUCH
APPROVAL BECOMES FINAL OR PARENT DETERMINES NOT TO CONSUMMATE THE PROPOSED
CONTROL TRANSACTION BECAUSE OF UNACCEPTABLE CONDITIONS. IN SUCH CASE, PARENT
WOULD BE ENTITLED TO ANY PROCEEDS OF SUCH SALE OR OTHER DISPOSITION.
Margin Credit Regulations. Federal Reserve Board Regulations G, T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock and the maximum loan value thereof is generally 50% of
their current market value. The definition of "indirectly secured" contained in
the Margin Credit Regulations provides that the term does not include an
arrangement with a customer if the lender in good faith has not relied upon
margin stock as collateral in extending or maintaining the particular credit.
17. FEES AND EXPENSES. JP Morgan is acting as Dealer Manager in
connection with the Offer, and its affiliate, J.P. Morgan Securities Ltd., is
providing certain financial advisory services to Parent in connection
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with the Offer. Parent has agreed to pay J.P. Morgan Securities Ltd. a fee of
L650,000 upon announcement of the Offer and an additional fee of L3.85 million
if the Offer is consummated. Parent will also reimburse J.P. Morgan and J.P.
Morgan Securities Ltd. for reasonable out-of-pocket expenses including
reasonable attorney's fees and has also agreed to indemnify J.P. Morgan and J.P.
Morgan Securities Ltd. against certain liabilities and expenses in connection
with the Offer, including certain liabilities under the federal securities laws.
Purchaser has retained MacKenzie Partners, Inc. to act as the Information
Agent and IBJ Whitehall Bank & Trust Company to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee stockholders to forward the Offer materials
to beneficial owners. The Information Agent and the Depositary will receive
reasonable and customary compensation for services relating to the Offer and
will be reimbursed for certain out-of-pocket expenses. Purchaser and Parent have
also agreed to indemnify the Information Agent and the Depositary against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
Purchaser will not pay any fees or commissions to any broker or dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Dealer Manager, the Information Agent and the Depositary). Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
18. MISCELLANEOUS. The Offer is being made solely by this Offer to
Purchase and the related Letter of Transmittal and is being made to all holders
of Shares. Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with any such state statute. If after such
good faith effort, Purchaser cannot comply with such state statute, the Offer
will not be made to nor will tenders be accepted from or on behalf of the
holders of Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser by the Dealer
Manager or one or more registered brokers or dealers that are licensed under the
laws of such jurisdiction.
Purchaser and Parent have filed with the Commission a Schedule 14D-1
(including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained from the offices of the Commission (except that they will not be
available at the regional offices of the Commission) in the manner set forth in
Section 8 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
SCH HOLDINGS CORP.
June 18, 1999
45
<PAGE> 48
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PARENT AND PURCHASER
1. Directors and executive officers of Parent. The name, age, present
principal occupation or employment and five-year employment history of each
director and executive officer of Parent (also referred to hereafter as
Stagecoach) and Purchaser are set forth below. All directors and executive
officers listed below are citizens of the United Kingdom. The business address
of Messrs. Souter, Kinski, Cochrane, Hinkley, Cox and Scott and Ms. Gloag is
Charlotte House, 20 Charlotte Street, Perth PH1 5LL Scotland. The business
address of Mr. Brown is Noble Grossart, 48 Queen Street, Edinburgh, EH2 3NR
Scotland. The business address of Mr. Sealey is 4 Castlelaw Road, Edinburgh,
EH13 ODN Scotland. The business address of Mr. Speirs is 17 Kings Cresent,
Helensburgh, G84 7RS Scotland.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND POSITION EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
- ----------------- -------------------------------------------
<S> <C>
Brian Souter............ Mr. Brian Souter (45) became Executive Chairman of
Executive Chairman Stagecoach in 1986. Mr. Souter is a co-founder of Stagecoach
and has responsibility for business developments, management
philosophy and strategy.
Mike Kinski............. Mr. Mike Kinski (47) became Group Chief Executive in April
Group Chief Executive 1998. Prior to joining Stagecoach, Mr. Kinski was Chief
Executive, Power Distribution and Water Operations and on
the board of Scottish Power from 1997. From 1995 to 1996,
Mr. Kinski served as Chief Executive of Manweb. Mr. Kinski
is responsible for the management of the Stagecoach
businesses and for the integration of new businesses into
the group. He is also non-executive director of the Post
Office.
Keith Cochrane.......... Mr. Keith Cochrane (34) became Group Finance Director in
Group Finance Director 1996. Mr. Cochrane joined Stagecoach in 1993 as Financial
Controller and Company Secretary. Mr. Cochrane is
responsible for the overall financial policy and treasury
management and supports the Executive Chairman in investor
relations and business development.
Ann Gloag............... Ms. Ann Gloag (56) became an Executive Director of
Executive Director Stagecoach in 1986. Ms. Gloag is a co-founder of Stagecoach,
and is responsible for property management.
Barry Hinkley........... Mr. Barry Hinkley (50) became an Executive Director of
Executive Director Stagecoach in 1992 and has over 30 years experience in the
bus industry. Mr. Hinkley is the U.K. Bus Division chairman
and is also responsible for restructuring new acquisitions,
engineering and group purchasing.
Brian Cox............... Mr. Brian Cox (52) became an Executive Director of
Executive Director Stagecoach in 1992. Mr. Cox joined Stagecoach in 1987 and
was Managing Director of Stagecoach (South) Ltd. from 1987
to 1993. Mr. Cox currently serves as Chairman of South West
Trains and is Group Commercial Director with responsibility
for identifying integrated transport opportunities and other
commercial developments across the group.
Derek Scott............. Mr. Derek Scott (46) became Company Secretary in 1996. Mr.
Company Secretary Scott was Group Finance Director from 1986 to 1995 and
chairs Stagecoach's pensions trustees and supports the
Chairman in corporate affairs.
Ewan Brown.............. Mr. Ewan Brown (57) became a Non-Executive Director of
Non-Executive Director Stagecoach in 1988. Mr. Brown is an Executive Director of
Noble Grossart Ltd and a non-executive director of Lloyds
TSB Bank plc.
</TABLE>
I-1
<PAGE> 49
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND POSITION EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
- ----------------- -------------------------------------------
<S> <C>
Barry Sealey............ Mr. Barry Sealey (63) became a Non-Executive Director of
Non-Executive Director Stagecoach in 1992. Mr. Sealey is Chairman of the Audit
Committee. Mr. Sealey was Managing Director of Christian
Salvesen from 1981 to 1989. He is currently non-executive
director of Scottish Equitable plc and Scottish American
Investment Company plc.
Robert Speirs........... Mr. Robert Speirs (62) became a Non-Executive Director of
Non Executive Director Stagecoach in 1995. Mr. Speirs is Chairman of the
Remuneration Committee. Until 1998 Mr. Speirs was Group
Finance Director of The Royal Bank of Scotland and Chairman
of Direct Line Insurance. He has over 20 years experience in
the oil and property sectors.
</TABLE>
2. Directors and executive officers of Purchaser. The name, age, present
principal occupation or employment and five-year employment history of each
director and executive officer of Purchaser are set forth below. All directors
and executive officers listed below are citizens of the United Kingdom. The
business address of Messrs. Cochrane, Guest, Griffiths and Whitnall is Charlotte
House, 20 Charlotte Street, Perth PH1 5LL Scotland.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND POSITION EMPLOYMENT AND FIVE YEAR EMPLOYMENT HISTORY
- ----------------- -------------------------------------------
<S> <C>
Keith Cochrane.......... Mr. Keith Cochrane (34) became Group Finance Director of
President/Director Stagecoach in 1996. Mr. Cochrane joined Stagecoach in 1993
as Financial Controller and Company Secretary.
Nick Guest.............. Mr. Nick Guest (32) became Group Finance Manager of
Vice President/ Stagecoach in 1998. From May 1997 to September 1998, Mr.
Treasurer/Director Guest was Head of Finance at DX Communications Limited, from
September 1995 to May 1997, Mr. Guest was Head of Internal
Audit at Scottish Amicable Life Assurance Society.
Martin Griffiths........ Mr. Martin Griffiths (33) became Group Business Development
Vice Manager of Stagecoach in 1997. Prior to joining Stagecoach,
President/Director he was a senior manager at Arthur Andersen with particular
responsibility in corporate advisory, due diligence and
finance raising services.
Alan Whitnall........... Mr. Alan Whitnall (51) became Group Administration Manager
Secretary in June 1992. Mr. Whitnall joined Stagecoach in 1987 as
Company Secretary of Stagecoach South Ltd.
</TABLE>
I-2
<PAGE> 50
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The U.S. Depositary for the Offer is:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Carrier Delivery:
P.O. Box 84 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274-0084 Attn:
Attn: Reorganization Dept. Securities Processing Window, SC-1
</TABLE>
By Facsimile Transmission:
(212) 858-2611
Confirm by Telephone:
(212) 858-2103
Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and addresses listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained
from the Information Agent. You may also contact your broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, NY 10010
Call Collect (212) 929-5500
or
Call Toll Free (800) 322-2885
The Dealer Manager for the Offer is:
J.P. MORGAN & CO.
60 Wall Street
New York, NY 10260
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
COACH USA, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED JUNE 18, 1999
BY
SCH HOLDINGS CORP.
A WHOLLY OWNED SUBSIDIARY OF
STAGECOACH HOLDINGS PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK
CITY TIME, ON MONDAY, JULY 26, 1999, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Courier Delivery:
P.O. Box 84 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Window, SC-1
Attn: Reorganization Dept.
</TABLE>
By Facsimile Transmission:
(212) 858-2611
Confirm by Telephone:
(212) 858-2103
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders, either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if
tenders of Shares are to be made by book-entry transfer into the account of IBJ
Whitehall Bank & Trust Company, as Depositary (the "Depositary"), at the
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PDTC") (each a "Book-Entry Transfer Facility" and collectively the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase (as defined below). Stockholders who tender Shares by
book-entry transfer are referred to herein as "Book-Entry Stockholders".
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or who
cannot complete the procedure for book-entry transfer on a timely basis, must
tender their Shares according to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2. Delivery of documents to
a Book-Entry Transfer Facility does not constitute delivery to the Depositary.
<PAGE> 2
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES CERTIFICATE(S) AND SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)*
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARES OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S) TENDERED**
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, all Shares represented by certificates delivered to the Depositary will be deemed to
have been tendered. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
Check box of Book-Entry Transfer Facility (check one):
[ ] The Depository Trust Company
[ ] The Philadelphia Depository Trust Company
Account Number:
Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
Window Ticket Number (if any):
Date of execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
If delivered by Book-Entry Transfer, check box of Book-Entry Transfer
Facility (check one):
[ ] The Depository Trust Company
[ ] The Philadelphia Depository Trust Company
Account Number:
Transaction Code Number:
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to SCH Holdings Corp., a Delaware
corporation ("Purchaser"), which is a wholly owned subsidiary of Stagecoach
Holdings plc, a public limited company organized under the laws of Scotland
("Parent"), the above-described shares of Common Stock, par value $0.01 per
share (the "Shares"), of Coach USA, Inc., a Delaware corporation (the
"Company"), at a purchase price of $42.00 per Share, net to the seller in cash
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated June 18, 1999 (the "Offer to Purchase") and in
this Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"). The undersigned understands that Purchaser reserves the
right to transfer or assign from time to time, in whole or in part, to one or
more of its affiliates, the right to purchase all or any portion of the Shares
tendered pursuant to the Offer, receipt of which is hereby acknowledged.
Subject to, and effective upon, acceptance of payment for the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby and any and all dividends, distributions (including additional Shares) or
rights declared, paid or issued with respect to the tendered Shares on or after
the date hereof and payable or distributable to the undersigned on a date prior
to the transfer to the name of Purchaser or nominee or transferee of Purchaser
on the Company's stock transfer records of the Shares tendered herewith
(collectively, a "Distribution"), and appoints the Depositary the true and
lawful agent and attorney-in-fact of the undersigned with respect to such Shares
(and any Distribution) with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) to (a) deliver
such Share Certificates (as defined herein) (and any Distribution) or transfer
ownership of such Shares (and any Distribution) on the account books maintained
by a Book-Entry Transfer Facility, together in either case with appropriate
evidences of transfer, to the Depositary for the account of Purchaser, (b)
present such Shares (and any Distribution) for transfer on the books of the
Company and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any Distribution), all in accordance
with the terms and subject to the conditions of the Offer.
The undersigned irrevocably appoints designees of Purchaser as such
stockholder's proxy, with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by Purchaser and with respect to any and all other Shares
or other securities issued or issuable in respect of such Shares on or after the
date hereof. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such stockholder with respect to such Shares
(and such other shares and securities) will be revoked without further action,
and no subsequent proxies may be given nor any subsequent written consents
executed (and, if given or executed, will not be deemed effective). The
designees of Purchaser will be empowered, subject to the applicable Voting Trust
Agreement (as defined in the Offer to Purchase), to exercise all voting and
other rights of such stockholder as they in their sole discretion may deem
proper at any annual or special meeting of the Company's stockholders or any
adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon Purchaser's payment for
such Shares Purchaser (including through the Voting Trust) must be able to
exercise full voting rights with respect to such Shares.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distribution) tendered hereby and (b) when the Shares are accepted for
payment by Purchaser, Purchaser will acquire good, marketable and unencumbered
title to the Shares (and any Distribution), free and clear of all liens,
restrictions, charges and encumbrances, and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or Purchaser to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby (and any Distribution). In addition, the undersigned shall promptly remit
and transfer to the Depositary for the account of Purchaser any and all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer; and pending such remittance or
appropriate assurance thereof, Purchaser will be, subject to applicable law,
entitled to all rights and privileges as owner of any such Distribution and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Tenders of
Shares made pursuant to the Offer are irrevocable, except that Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date
(as defined in the Offer to Purchase) and, unless theretofore accepted for
payment by Purchaser pursuant to the Offer, may also be withdrawn at any time
after August 16, 1999. See Section 4 of the Offer to Purchase.
<PAGE> 4
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation that the undersigned owns the
Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered". Similarly, unless otherwise indicated herein under "Special Delivery
Instructions", please mail the check for the purchase price and/or any
certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered". In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or any
certificate(s) for Shares not tendered or accepted for payment in the name of,
and deliver such check and/or such certificates to, the person or persons so
indicated. Unless otherwise indicated herein under "Special Payment
Instructions", please credit any Shares tendered herewith by book-entry transfer
that are not accepted for payment by crediting the account at the Book-Entry
Transfer Facility (as defined herein) designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name(s) of the registered
holder(s) thereof if Purchaser does not accept for payment any of the Shares so
tendered.
[ ] CHECK HERE IF ANY CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE BEEN
LOST, STOLEN OR DESTROYED AND SEE INSTRUCTION 11
Number of Shares represented by lost, stolen or destroyed certificates:
--------------------------------------------------
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned or if Shares tendered by book-entry transfer which are not
accepted for payment are to be returned by credit to an account maintained
at a Book-Entry Transfer Facility.
Issue: [ ] check [ ] certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit Shares tendered by book-entry transfer that are not accepted
for payment to (Check one):
[ ] DTC [ ] PDTC
------------------------------------------------------------
(DTC OR PDTC ACCOUNT NO.)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown above.
Mail: [ ] check [ ] certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
------------------------------------------------------------
<PAGE> 6
SIGN SIGN HERE SIGN
HERE AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE HERE
ARROW RIGHT
- --------------------------------------------------------------------------------
ARROW LEFT
ARROW RIGHT
- --------------------------------------------------------------------------------
ARROW LEFT
(SIGNATURE(S) OF HOLDER(S))
Dated:
- --------------------------- , 1999
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s) ------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
------------------------------------------------------------
Address-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number -------------------------------------------
Tax Identification or
Social Security No. ------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature ----------------------------------------------------------
Name --------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm -----------------------------------------------------------------
Address-------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number -------------------------------------------
Dated:
- ---------------------------- , 1999
<PAGE> 7
INSTRUCTIONS
Forming Part Of The Terms And Conditions Of The Offer
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears on
a security position listing as the owner of Shares) tendered herewith, unless
such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" above, or (b)
if such Shares are tendered for the account of a firm which is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of the Securities Transfer Agents Medallion Program (each of the
foregoing being referred to as an "Eligible Institution"). In all other cases,
all signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5 of this Letter of Transmittal.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message is utilized, if tenders are to be made pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Share Certificates evidencing tendered Shares, or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of Shares
into the Depositary's account at a Book-Entry Transfer Facility, as well as this
Letter of Transmittal (or a facsimile hereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other documents required by this
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in Section 1
of the Offer to Purchase). Stockholders whose Share Certificates are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary prior to the Expiration Date or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by Purchaser, must be received by the Depositary prior to
the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer, in
each case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry delivery, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery. If Share Certificates are
forwarded separately to the Depositary, a properly completed and duly executed
Letter of Transmittal must accompany each such delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS 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 alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
4. PARTIAL TENDERS. (Not Applicable to Book-Entry Stockholders) If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered". In such cases, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
<PAGE> 8
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal. If any of
the tendered Shares are registered in different names on several certificates,
it will be necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or not purchased are to be issued in the
name of a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificate(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or if certificate(s) for Shares not
tendered or accepted for payment are to be registered in the name of, any person
other than the registered holder(s), or if tendered certificate(s) are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or an exemption therefrom, is submitted.
Except as otherwise provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the certificate(s) listed in
this Letter of Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be returned
to a person other than the person(s) signing this Letter of Transmittal or to an
address other than that shown in this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal must be completed. A Book-Entry Stockholder
may request that Shares not accepted for payment be credited to such account
maintained at a Book-Entry Transfer Facility as such Book-Entry Stockholder may
designate under "Special Payment Instructions". If no such instructions are
given, such Shares not accepted for payment will be returned by crediting the
account at the Book-Entry Transfer Facility designated above.
8. WAIVER OF CONDITIONS. Subject to the terms and conditions of the Merger
Agreement (as defined in the Offer to Purchase), the conditions of the Offer
(other than the Minimum Condition, the HSR Act Condition, the STB Condition
(each as defined in the Offer to Purchase) and the condition described in
paragraph (c) of Section 15 of the Offer to Purchase) may be waived by Purchaser
in whole or in part at any time and from time to time in its sole discretion.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. federal income
tax law, a stockholder who tenders Shares pursuant to the Offer is required to
provide the Depositary with his or her correct taxpayer identification number
("TIN") on Substitute Form W-9 and to certify that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN). If
such stockholder is an individual, the TIN is his or her social security number.
If the Depositary is not provided with the correct TIN, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service and payments
that are made to such stockholder with respect to Shares pursuant to the Offer
or may be subject to backup withholding (see below).
<PAGE> 9
A stockholder who does not have a TIN may check the box in Part 3 of the
Substitute Form W-9 if the stockholder has applied for a number or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
stockholder must also complete the Certificate of Awaiting Taxpayer
Identification Number below in order to avoid backup withholding. If the box is
checked, payments made within 60 days of the date of the form will be subject to
backup withholding unless the stockholder has furnished the Depositary with his
or her TIN. A stockholder who checks the box in Part 3 in lieu of furnishing his
or her TIN should furnish the Depositary with his or her TIN as soon as it is
received.
Certain stockholders (including, among others, all corporations and certain
foreign individuals), are not subject to these backup withholding requirements.
In order for a foreign individual to qualify as an exempt recipient, that
stockholder must submit a statement, signed under penalty of perjury, attesting
to that individual's exempt status (Form W-8). Forms for such statements can be
obtained from the Depositary. Stockholders are urged to consult their own tax
advisors to determine whether they are exempt from these backup withholding and
reporting requirements.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments to be made to the stockholder. Backup withholding is not an
additional tax. Rather, the 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 by filing a tax
return with the Internal Revenue service. The Depositary cannot refund amounts
withheld by reason of backup withholding.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests
for assistance may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or the
Dealer Manager or from brokers, dealers, commercial banks or trust companies.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF
GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
<PAGE> 10
<TABLE>
<C> <S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: IBJ WHITEHALL BANK & TRUST COMPANY
- ------------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND ----------------------------
FORM W-9 CERTIFY BY SIGNING AND DATING BELOW. Social Security Number
OR
----------------------------
Employer Identification
Number
--------------------------------------------------------------------------------------------------
DEPARTMENT OF THE PART 2 PART 3 --
TREASURY Certification -- Under penalties of perjury, I certify that: [ ] Awaiting TIN
INTERNAL REVENUE (1) The number shown on this form is my correct Taxpayer
SERVICE Identification Number (or I am waiting for a number to be
issued to me), and
PAYER'S REQUEST FOR (2) I am not subject to backup withholding because (a) I am
TAXPAYER exempt from backup withholding, or (b) I have not been
IDENTIFICATION notified by the Internal Revenue Service (the "IRS") that
NUMBER (TIN) 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.
--------------------------------------------------------------------------------------------------
CERTIFICATE 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 under-reporting interest
or dividends on your tax return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out such item (2).
- --------------------------------------------------------------------------------------------------------------------------
Sign Here SIGNATURE ---------------------------------------------------------------------------------
DATE ----------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable payments made to me will be withheld.
Signature
- --------------------------------------------------- Date
- ------------------------------ , 1999
<PAGE> 11
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, NY 10010
Call Collect (212) 929-5500
Call Toll Free (800) 323-2885
The Dealer Manager for the Offer is:
J.P. MORGAN & CO.
60 Wall Street
New York, New York 10260
(212) 929-5500 (Call Collect)
or
Call Toll Free (800) 322-2885
June 18, 1999
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
OF
COACH USA, INC.
As set forth in Section 3 of the Offer to Purchase described below, this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates for Shares (as defined below) are not
immediately available or the certificates for Shares and all other required
documents cannot be delivered to IBJ Whitehall Bank & Trust Company (the
"Depositary") on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) or if the procedure for delivery by book-entry transfer
cannot be completed on a timely basis. This instrument may be delivered by hand
or transmitted by facsimile transmission or mailed to the Depositary.
The Depositary for the Offer is:
IBJ WHITEHALL BANK & TRUST COMPANY
<TABLE>
<S> <C>
By Mail: By Hand/Overnight Courier Delivery:
P.O. Box 84 One State Street
Bowling Green Station New York, NY 10004
New York, NY 10274-0084 Attn: Securities Processing Window, SC-1
Attn: Reorganization Department
</TABLE>
By Facsimile Transmission:
(212) 858-2611
Confirm by Telephone:
(212) 858-2103
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form 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 instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tender(s) to SCH Holdings Corp., a Delaware
corporation and a wholly owned subsidiary of Stagecoach Holdings plc, a public
limited company organized under the laws of Scotland, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated June 18, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer"), receipt of which is hereby acknowledged, the number of
shares of Common Stock, par value $0.01 per share (the "Shares"), of Coach USA,
Inc., a Delaware corporation, indicated below pursuant to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase.
SIGN HERE
Number of Shares:
----------------------------------
Certificate No(s) (if available):
-----------------------------------------------------
-----------------------------------------------------
If Securities will be tendered by
book-entry transfer:
----------------------------------
Name of Tendering Institution:
-----------------------------------------------------
Account No.:
------------------------------------- at
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Dated:
----------------------------------------------
Name(s) of Record Holder(s):
- -----------------------------------------------------
- -----------------------------------------------------
(Please Print)
Address(es):
- ----------------------------------------
- -----------------------------------------------------
(Zip Code)
Area Code and Telephone No(s):
- -----------------------------------------------------
Signature(s):
- ----------------------------------------
- -----------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, (a) represents that the above
named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"),
(b) represents that such tender of Shares complies with Rule 14e-4, and (c)
guarantees to deliver to the Depositary either the certificates evidencing all
tendered Shares, in proper form for transfer, or to deliver Shares pursuant to
the procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility"), in either case together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or an Agent's Message (as defined in
the Offer to Purchase) in the case of a book-entry delivery, and any other
required documents, all within three New York Stock Exchange trading days
after the date hereof.
Name of Firm:
--------------------------------------
-----------------------------------------------------
(Authorized Signature)
Address:
--------------------------------------------
-----------------------------------------------------
(Zip Code)
Title:
- -----------------------------------------------
Name:
- ----------------------------------------------
(Please Print or Type)
Area Code and Telephone No.:
- ----------------------
Dated:
- ----------------------------------------------
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR SHARES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COACH USA, INC.
AT
$42.00 NET PER SHARE
BY
SCH HOLDINGS CORP.
A WHOLLY OWNED SUBSIDIARY
OF
STAGECOACH HOLDINGS PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK
CITY TIME, ON MONDAY, JULY 26, 1999, UNLESS THE OFFER IS EXTENDED.
June 18, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by SCH Holdings Corp., a Delaware corporation
("Purchaser") and a wholly owned subsidiary of Stagecoach Holdings plc, a public
limited company organized under the laws of Scotland ("Parent"), to act as
Dealer Manager in connection with Purchaser's offer to purchase for cash all the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Coach USA, Inc., a Delaware corporation (the "Company"), at a purchase price of
$42.00 per Share, net to the seller in cash without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
June 18, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer") enclosed herewith. Holders of Shares whose certificates for such Shares
(the "Share Certificates") are not immediately available or who cannot deliver
their Share Certificates and all other required documents to the Depositary (as
defined below) prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot complete the procedures for book-entry transfer on a
timely basis, must tender their Shares according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated June 18, 1999.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
<PAGE> 2
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates are not immediately available or if such
certificates and all other required documents cannot be delivered to IBJ
Whitehall Bank & Trust Company (the "Depositary") by the Expiration Date
or if the procedure for book-entry transfer cannot be completed by the
Expiration Date.
4. The Letter to Stockholders of the Company from the Chairman of the Board
and Chief Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
5. A printed form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
7. A return envelope addressed to IBJ Whitehall Bank & Trust Company, P.O.
Box 84, Bowling Green Station, New York, NY 10274-0084 Attn:
Reorganization Dept., the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
10:00 A.M., NEW YORK CITY TIME, MONDAY, JULY 26, 1999 UNLESS THE OFFER IS
EXTENDED.
The Offer is conditioned upon, among other things, (i) at the expiration of
the Offer there being validly tendered and not properly withdrawn prior to the
expiration of the Offer a number of Shares which constitutes more than 50% of
the voting power (determined on a fully diluted basis) on the date of purchase
of all Shares entitled to vote generally in the election of directors or in a
merger, (ii) the expiration or termination of any and all applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, (iii)(A) the receipt by Parent of a favorable informal advisory opinion
from the staff of the United States Surface Transportation Board ("STB") to the
effect that the proposed use of the Voting Trust (as defined in the Offer to
Purchase) will effectively insulate Parent from acquiring unlawful control of
the Company and such advisory opinion not having been withdrawn or (B) the STB
having approved Parent's and Purchaser's acquisition of the federally regulated
carriers controlled by the Company and (iv) a majority of the ordinary shares of
Parent present and voting at an extraordinary general meeting of shareholders
(the "Parent Shareholder Approval Condition") having duly adopted resolutions
approving the acquisition by Parent of the Company pursuant to the Offer and the
Merger (as defined below), and certain related matters.
The Board of Directors of the Company has approved the Merger Agreement (as
defined below) and the transactions contemplated thereby, including the Offer
and the Merger (as defined below) and determined that terms of the Offer and the
Merger are advisable and fair to, and in the best interests of, the holders of
the Shares and recommends that the holders of the Shares tender their Shares to
Purchaser.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 12, 1999 (the "Merger Agreement"), among Parent, Purchaser, SCH
Acquisition Corp. ("Merger Sub"), and the Company. The Merger Agreement
provides, among other things, for the making of the Offer by Purchaser, and
further provides that, following the completion of the Offer, upon the terms and
subject to the conditions of the Merger Agreement, and in accordance with the
Delaware General Corporation Law (the "DGCL"), Merger Sub will be merged with
and into the Company (the "Merger"). In the Merger, each Share issued and
outstanding immediately prior to the Merger (other than Shares held by the
Company or owned by the Parent, Purchaser or any other subsidiary of the Parent
or the Company, which shall be canceled, and other than Shares, if any, held by
stockholders who have properly exercised appraisal rights under Section 262 of
the DGCL) will by virtue of the Merger and without any action on the part of the
holders of the Shares be converted into the right to receive in cash the per
Share price paid in the Offer, payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such Share, less any
required withholding taxes. Following the Merger, the Company will continue as
the surviving corporation and become a wholly owned subsidiary of Parent, and
the separate corporate existence of Merger Sub will cease.
2
<PAGE> 3
The initial Expiration Date is five business days following the expected
earliest date of the Parent's shareholders meeting, in order to provide
sufficient time for notice to be given to the Company's stockholders of the
satisfaction of the Parent Shareholder Approval Condition following the Parent's
shareholders meeting. If the Parent's shareholders meeting takes place on a
later date, Purchaser expects that, subject to the Merger Agreement and the
other considerations set forth in Section 1 of the Offer to Purchase, it would
extend the Offer until five business days following such later date.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and other required documents should be sent to
the Depositary, and (ii) either Share Certificates, representing the tendered
Shares should be delivered to the Depositary, or such Shares should be tendered
by book-entry transfer into the Depositary's account maintained at one of the
Book-Entry Transfer Facilities (as described in the Offer to Purchase), all in
accordance with the instructions set forth in the Letter of Transmittal and the
Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or other required documents on or prior to the
Expiration Date or to comply with the book-entry transfer procedures on a timely
basis, a tender may be effected by following the guaranteed delivery procedures
specified in Section 3 of the Offer to Purchase.
Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and MacKenzie
Partners, Inc. (the "Information Agent") (as described in the Offer to
Purchase)) for soliciting tenders of Shares pursuant to the Offer. Purchaser
will, however, upon request, reimburse you for customary clerical and mailing
expenses incurred by you in forwarding any of the enclosed materials to your
clients. Purchaser will pay or cause to be paid any stock transfer taxes payable
on the transfer of Shares to it, except as otherwise provided in Instruction 6
of the Letter of Transmittal.
Inquiries you may have with respect to the Offer should be addressed to the
Information Agent or the undersigned, at the respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase. Additional copies
of the enclosed materials may be obtained from the Information Agent.
Very truly yours,
J.P. MORGAN SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, PARENT, THE DEALER MANAGER, THE
COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COACH USA, INC.
AT
$42.00 NET PER SHARE
BY
SCH HOLDINGS CORP.
A WHOLLY OWNED SUBSIDIARY
OF
STAGECOACH HOLDINGS PLC
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK CITY TIME,
ON MONDAY, JULY 26, 1999, UNLESS THE OFFER IS EXTENDED.
June 18, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated June 18, 1999
(the "Offer to Purchase"), and the related Letter of Transmittal relating to an
offer by SCH Holdings Corp., a Delaware corporation ("Purchaser") and a
wholly-owned subsidiary of Stagecoach Holdings plc, a public limited company
organized under the laws of Scotland ("Parent"), to purchase all of the
outstanding shares of Common Stock, $0.01 par value per share (the "Shares"), of
Coach USA, Inc., a Delaware corporation (the "Company"), at a purchase price of
$42.00 per Share, net to the seller in cash without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase and in
the related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer") enclosed herewith. Holders of Shares whose certificates
for such Shares (the "Share Certificates") are not immediately available or who
cannot deliver their Share Certificates and all other required documents to IBJ
Whitehall Bank & Trust Company, the Depositary, prior to the Expiration Date (as
defined in the Offer to Purchase), or who cannot complete the procedures for
book-entry transfer on a timely basis, must tender their Shares according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
<PAGE> 2
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer to Purchase.
Your attention is directed to the following:
1. The Offer price is $42.00 per share, net to the seller in cash without
interest thereon.
2. The Offer is made for all of the outstanding Shares.
3. The Board of Directors of the Company has approved the Merger Agreement
(as defined below) and the transactions contemplated thereby, including
the Offer and the Merger (as defined below) and determined that the
terms of the Offer and the Merger are advisable and fair to, and in the
best interests of, the holders of Shares and recommends that holders of
the Shares accept the Offer and tender their Shares to Purchaser.
4. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of June 12, 1999 (the "Merger Agreement") by and among Parent,
Purchaser, SCH Acquisition Corp. ("Merger Sub"), and the Company. The
Merger Agreement provides, among other things, that subsequent to the
consummation of the Offer, Merger Sub will merge with and into the
Company (the "Merger"). At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior
to the Effective Time (other than Shares owned by the Company or any
subsidiary of the Company and each Share owned by Parent, Purchaser or
any other subsidiary of Parent, which shall be canceled, and other than
Shares, if any, held by stockholders who have properly exercised
appraisal rights under Section 262 of the Delaware General Corporation
Law) will, by virtue of the Merger and without any action on the part of
the holders of the Shares be converted into the right to receive in cash
the per share price paid in the Offer, payable to the holder thereof,
without interest, upon surrender of the certificate formerly
representing such Share, less any required withholding taxes.
5. The Offer and withdrawal rights will expire at 10:00 a.m., New York City
time, on July 26, 1999, unless the Offer is extended. The initial
Expiration Date is five business days following the expected earliest
date of the Parent shareholders meeting in order to provide sufficient
time for notice to be given to the Company's stockholders of the
satisfaction of the Parent Shareholder Approval Condition (as defined
below) following the Parent shareholders meeting. If the Parent
shareholders meeting takes place on a later date, Purchaser expects
that, subject to the Merger Agreement and the other considerations set
forth in Section 1 of the Offer to Purchase, it would extend the Offer
until five business days following such later date.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to
the Offer.
7. The Offer is conditioned upon, among other things, (i) at the expiration
of the Offer there being validly tendered and not properly withdrawn
prior to the expiration of the Offer a number of Shares which constitute
more than 50% of the voting power (determined on a fully diluted basis)
on the date of purchase of all Shares entitled to vote generally in the
election of directors or in a merger, (ii) the expiration or termination
of any and all applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, (iii) (A) the receipt by
Parent of a favorable informal advisory opinion from the staff of the
United States Surface Transportation Board ("STB") to the effect that
the proposed use of the Voting Trust (as defined in the Offer to
Purchase) will effectively insulate Parent from acquiring unlawful
control of the Company and such advisory opinion not having been
withdrawn or (B) the STB having approved Parent's and Purchaser's
acquisition of the federally regulated carriers controlled by the
Company and (iv) a majority of the ordinary shares of Parent present and
voting at an extraordinary general meeting of shareholders having duly
adopted resolutions approving the acquisition by Parent of the Company
pursuant to the Offer and the Merger and certain related matters (the
"Parent Shareholder Approval Condition").
2
<PAGE> 3
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to, nor will tenders be accepted from or on behalf of, the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by J.P. Morgan
Securities Inc., or one or more registered brokers or dealers that are licensed
under the laws of such jurisdiction.
IF YOU WISH TO HAVE US TENDER ANY OR ALL OF THE SHARES HELD BY US FOR YOUR
ACCOUNT, PLEASE INSTRUCT US BY COMPLETING, EXECUTING AND RETURNING TO US THE
INSTRUCTION FORM CONTAINED IN THIS LETTER. IF YOU AUTHORIZE A TENDER OF YOUR
SHARES, ALL SUCH SHARES WILL BE TENDERED UNLESS OTHERWISE SPECIFIED IN SUCH
INSTRUCTION FORM. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
3
<PAGE> 4
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COACH USA, INC.
BY
SCH HOLDINGS CORP.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated June 18, 1999 (the "Offer to Purchase") and the related Letter
of Transmittal pursuant to an offer by SCH Holdings Corp., a Delaware
corporation and a wholly owned subsidiary of Stagecoach Holdings plc, a public
limited company organized under the laws of Scotland, to purchase all
outstanding shares of Common Stock, $0.01 par value per share (the "Shares"), of
Coach USA, Inc., a Delaware corporation at a purchase price of $42.00 per Share,
net to the seller in cash without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) which are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
<TABLE>
<S> <C>
Number of Shares to be Tendered* SIGN HERE
- ---------------------------------------- --------------------------------------------
--------------------------------------------
SIGNATURE(S)
Dated , 1999 --------------------------------------------
PLEASE PRINT NAME(S)
--------------------------------------------
ADDRESS
--------------------------------------------
AREA CODE AND TELEPHONE NUMBER
--------------------------------------------
TAX IDENTIFICATION, OR SOCIAL SECURITY
NUMBER
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered.
4
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The Owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension The legal entity
trust (Do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security Number or your Employer Identification
Number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan, or
a custodial account under Section 403(b)(7), if the account satisfies the
requirements of Section 40(f)(7).
- The United States or any agency or instrumentalities.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An exempt charitable remainder trust, or non-exempt trust described in
section 4947(a)(1) of the Code.
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
- A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441 of
the Code.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
- Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- Payments described in section 6049(b)(5) of the Code to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
- Mortgage interest paid by you.
Exempt payees described above should file a Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see sections 6041, 6041A(a), 6045, 6050A and 6050N of
the Code and the regulations promulgated therein.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividends and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make
a false statement with no reasonable basis that results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated June 18, 1999 and the related Letter of
Transmittal (and any amendments thereto) and is being made to all holders of
Shares. The Purchaser (as defined below) is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action pursuant
to state statute. If the Purchaser becomes aware of any valid state statute
prohibiting the making of the Offer or the acceptance of Shares pursuant
thereto, the Purchaser will make a good faith effort to comply with such state
statute. If, after such good faith effort, the Purchaser cannot comply with such
state statute, the Offer will not be made to (nor will tenders be accepted from
or on behalf of) the holders of Shares in such state. In any jurisdictions where
the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by J.P. Morgan Securities Inc. or one or more registered brokers or
dealers licensed under the laws of such jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
COACH USA, INC.
AT
$42.00 NET PER SHARE
BY
SCH HOLDINGS CORP.
A SUBSIDIARY OF
STAGECOACH HOLDINGS PLC
SCH Holdings Corp., a Delaware corporation (the "Purchaser") and a
subsidiary of Stagecoach Holdings Plc, a public limited company organized under
the laws of Scotland (the "Parent"), is offering to purchase all of the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Coach USA, Inc., a Delaware corporation (the "Company"), at a purchase price of
$42.00 per Share, net to the seller in cash without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
June 18, 1999 (the "Offer to Purchase") and in the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 10:00 A.M., NEW YORK CITY TIME,
ON MONDAY, JULY 26, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (1) at the expiration of
the Offer there being validly tendered and not properly withdrawn prior to the
expiration of the Offer a number of Shares which constitutes more than 50% of
the voting power (determined on a fully diluted basis) on the date of purchase
of all Shares entitled to vote generally in the election of directors or in a
merger, (2) the expiration or termination of any and all applicable waiting
periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, (3) (A) the receipt by the Parent of a favorable informal advisory
opinion from the staff of the United States Surface Transportation Board (the
"STB") to the effect that the proposed use of the Voting Trust (as defined
below) will effectively insulate the Parent from acquiring unlawful control of
the Company and such advisory opinion not having been withdrawn or (B) the STB
having approved the Parent's acquisition of the federally regulated carriers
controlled by the Company and (4) a majority of the ordinary
<PAGE> 2
shares of the Parent present and voting at an extraordinary meeting of
shareholders having duly adopted resolutions approving the acquisition by the
Parent of the Company pursuant to the Offer and the Merger (as defined below),
and certain related matters.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Following the consummation of the Offer, the Purchaser
intends to effect the Merger, as described below.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 12, 1999 (the "Merger Agreement"), by and among the Parent, the
Purchaser, SCH Acquisition Corp. ("Merger Sub") and the Company. The Merger
Agreement provides, among other things, for the making of the Offer by the
Purchaser, and further provides that, following the completion of the Offer,
upon the terms and subject to the conditions of the Merger Agreement, and in
accordance with the Delaware General Corporation Law (the "DGCL"), Merger Sub
will be merged with and into the Company (the "Merger"), and each Share issued
and outstanding immediately prior to the effective time of the Merger (other
than Shares owned by the Company or any subsidiary of the Company and each Share
owned by the Parent, the Purchaser or any other subsidiary of the Parent, which
shall be cancelled, and other than Shares, if any, held by stockholders who have
properly exercised appraisal rights under the DGCL) will, by virtue of the
Merger and without any action on the part of the holders of the Shares, be
converted into the right to receive $42.00 in cash, the per Share price paid in
the Offer payable to the holder thereof, without interest, upon the surrender of
the certificate formerly representing such Share, less any required withholding
taxes. Following the effective time of the Merger, the Parent may, at its
option, cause the Company to be merged with and into the Purchaser.
Alternatively, the Parent may elect to structure the Merger so that the Company
is merged with and into the Purchaser, Merger Sub, or another direct or indirect
wholly owned subsidiary of the Parent, or another direct or indirect wholly
owned subsidiary of the Parent is merged with and into the Company; provided,
however, that no such change shall (i) alter or change the amount or kind of the
consideration to be issued to the Company's stockholders in the Merger or the
treatment of the holders of the Company Stock Options (as defined in Section 11
of the Offer to Purchase), (ii) materially impede or delay consummation of the
Merger, or (iii) release the Parent from any of its obligations under the Merger
Agreement. If more than 80% of the Shares are purchased by the Purchaser in the
Offer, the Parent currently intends to restructure the Merger as a merger of the
Company with and into the Purchaser. The Merger Agreement is more fully
described in Section 11 of the Offer to Purchase.
The Board of Directors of the Company has approved the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger, and
determined that the terms of the Offer and the Merger are advisable and fair to,
and in the best interests of, the holders of Shares and recommends that holders
of Shares tender their Shares to the Purchaser pursuant to the Offer. Each of
the directors of the Company has entered into a Tender Agreement with the Parent
and the Purchaser pursuant to which such persons have agreed to tender to the
Purchaser pursuant to the Offer an aggregate of 1,499,921 Shares, or
approximately 5.9% of the Shares outstanding on the date hereof, and any other
Shares acquired by such directors.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to IBJ
Whitehall Bank & Trust Company (the "Depositary") of the Purchaser's acceptance
of such Shares for payment pursuant to the Offer. Upon the terms and subject to
the conditions of the Offer, payment for Shares accepted for payment pursuant to
the Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payments from the Purchaser and transmitting such payments to
stockholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES
WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. In
all cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (1)
certificates representing Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at The Depositary Trust Company or the Philadelphia Depositary Trust
Company (each a "Book-Entry Transfer Facility") pursuant to the procedures
2
<PAGE> 3
set forth in Section 3 of the Offer to Purchase, (2) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees, or an Agent's Message (as defined in Section 2 of
the Offer to Purchase) in connection with a book-entry transfer, and (3) any
other documents required by the Letter of Transmittal.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission and the terms of the Merger Agreement, the Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, and regardless of whether or not any of the events set forth in Section
15 of the Offer to Purchase shall have occurred, to (1) extend the period of
time during which the Offer is open and thereby delay acceptance for payment of,
and the payment for, any Shares, by giving oral or written notice of such
extension to the Depositary and (2) amend the Offer in any respect by giving
oral or written notice of such amendment to the Depositary. Any extension,
delay, termination, waiver or amendment will be followed as promptly as
practicable by public announcement to be made no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date. During any such extension, all Shares previously tendered and not properly
withdrawn will remain subject to the Offer, subject to the rights of a tendering
stockholder to withdraw such stockholder's Shares.
The term "Expiration Date" means 10:00 a.m., New York City time, on July
26, 1999, unless and until the Purchaser, in its sole discretion (but subject to
the terms and conditions of the Merger Agreement), shall have extended the
period during which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after August
16, 1999. For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered such Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase) unless such Shares have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3 of the Offer to
Purchase, in which case any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares. A notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in the second sentence of
this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding.
Promptly upon the purchase by the Parent, the Purchaser or their affiliates
of Shares, such Shares will be deposited in one of several independent voting
trusts (collectively, the "Voting Trust") in accordance with the terms of one of
the voting trust agreements to be entered into among the Parent, the Purchaser
and various voting trustees, pending approval by the STB of the acquisition of
control by the Parent of the Company.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the
3
<PAGE> 4
names of whose nominees, appear on the stockholder list or, if applicable, who
are listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer Manager
or the Information Agent as set forth below. Requests for copies of the Offer to
Purchase and the related Letter of Transmittal and all other tender offer
materials may be directed to the Information Agent or the Dealer Manager, and
copies will be furnished promptly at the Purchaser's expense. The Purchaser will
not pay any fees or commissions to any broker or dealer or any other person
(other than the Dealer Manager and the Information Agent) for soliciting tenders
of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll Free (800) 322-2885
The Dealer Manager for the Offer is:
J.P. MORGAN & CO.
60 Wall Street
New York, New York 10260
(212) 648-3509
or
Call Toll-Free (877) 874-2781
June 18, 1999
4
<PAGE> 1
EXHIBIT 11(a)(8)
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO CANADA OR JAPAN
FOR IMMEDIATE RELEASE 14TH JUNE, 1999
STAGECOACH AGREES TO ACQUIRE COACH USA FOR $1.2 BILLION
- - Stagecoach, the international passenger transport company, today
announces the agreed acquisition of Coach USA, the largest provider of
motorcoach charter, tour and sightseeing services and one of the
largest non-municipal providers of commuter and transit motorcoach
services in the United States.
- - Stagecoach and Coach USA have entered into an agreement under which a
subsidiary of Stagecoach will make a tender offer of $42 per share in
cash to acquire the common stock of Coach USA. The offer values Coach
USA's fully diluted share capital as at 31st March, 1999 at
approximately $1,237 million (pound sterling773 million). This
represents a premium of 41% to the closing price on the New York Stock
Exchange on 7th June, 1999, the day prior to speculation regarding a
possible acquisition of Coach USA for $42 per share. In addition,
Stagecoach will assume Coach USA's net indebtedness which, as at 31st
March, 1999, was $638 million (pound sterling399 million). Net of
proceeds to be received from the exercise of options, this figure would
be adjusted to $571 million (pound sterling357 million).
- - Coach USA is already established as a successful US carrier with strong
operational management and financial disciplines. The acquisition of
Coach USA offers Stagecoach a strategic entry into the North American
market with a leading market position and a successful and committed
management team.
- - Stagecoach is entering the fragmented North American market at an early
phase in its consolidation. Coach USA is one of the leading
consolidators in the US market, having completed over 70 acquisitions
since its initial public offering in May 1996. The enlarged group will
enjoy a stronger financial platform from which to continue Coach USA's
successful growth strategy.
- - Stagecoach intends that the senior management of Coach USA will be
incentivised to participate in the continuing growth of the business.
In addition, certain executives of Coach USA intend to invest $10
million in Stagecoach shares and to enter into other incentivisation
arrangements.
- - Stagecoach has agreed the terms of a $2.25 billion loan facility with
Credit Suisse First Boston, J.P. Morgan, The Royal Bank of Scotland plc
and Bank of Scotland, part of which will also be used to refinance
Coach USA and existing Stagecoach facilities. Following completion of
the tender offer, Stagecoach intends in due course to refinance
<PAGE> 2
at least $1 billion of the facility through access to the debt capital
markets and an internationally marketed offering of equity or
equity-related securities.
- The Acquisition is conditional, inter alia, on tender of at least a
majority of the Coach USA shares on a fully diluted basis and on
approval by Stagecoach shareholders, as well as certain regulatory and
other consents. The tender offer for Coach USA is expected to close in
the third quarter of 1999.
- The Merger Agreement provides for the payment to Stagecoach of a $35
million termination fee in certain circumstances.
- Directors of Coach USA have irrevocably undertaken to tender their
shares in the offer and not to withdraw such tender in respect of
approximately 8% of Coach USA's issued share capital.
- Stagecoach's earnings per share before goodwill amortisation are
expected to be immediately enhanced following completion of the
Acquisition.
Commenting on the transaction, Brian Souter, Chairman of Stagecoach, said:
"I am delighted that we are entering the North American market at an early stage
in its consolidation with the prospect of exciting growth opportunities. In
Coach USA we are acquiring an excellent company which has already built a strong
position in North America. Our two companies have a shared background of
successful growth by acquisition and we have found a high degree of
compatibility between the two management teams."
Larry King, Chairman and Chief Executive of Coach USA, said:
"I believe that in Stagecoach we have identified the ideal partner who can
provide the financial flexibility and resources to support our next growth
phase. The Coach USA management team looks forward to working alongside the
management of Stagecoach to meet our collective objectives in North America."
This summary should be read in conjunction with the full text of this
announcement.
In connection with the proposed acquisition, Stagecoach has been advised by J.P.
Morgan and Noble Grossart Limited. Credit Suisse First Boston is acting as
corporate broker to Stagecoach. Coach USA has been advised by Morgan Stanley
Dean Witter.
An analysts' and investor meeting regarding the acquisition will be held today
at 10:00 a.m. at J.P. Morgan, 60 Victoria Embankment, London, EC4Y 0JP. A press
conference will be held at 12:00 noon at the same location.
2
<PAGE> 3
ENQUIRIES:
STAGECOACH HOLDINGS PLC
Brian Souter 0171 325 8900
Executive Chairman
Mike Kinski 0171 325 8900
Group Chief Executive
Keith Cochrane 0171 325 8900
Group Finance Director
Rob Ballantyne 0171 325 8900
Head of Corporate Communications
SMITHFIELD FINANCIAL
John Kiely 0171 360 4900
KEKST AND COMPANY
Ruth Pachman 00 1 212 521 4891
J.P. MORGAN
Daniel Chamier (London) 0171 325 5506
Jim Hamilton (New York) 00 1 212 648 7801
NOBLE GROSSART
David Mathewson 0131 226 7011
COACH USA
Larry King 0171 325 8900
Chairman and Chief Executive Officer
J.P. Morgan and Noble Grossart Limited, which are regulated by The Securities &
Futures Authority Limited, are acting for Stagecoach in connection with this
transaction and for no one else and will not be responsible to anyone other than
Stagecoach for providing the protections afforded to customers of J.P. Morgan
and Noble Grossart Limited or for providing advice in relation to this
transaction.
3
<PAGE> 4
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO CANADA OR JAPAN
FOR IMMEDIATE RELEASE 14TH JUNE, 1999
STAGECOACH AGREES TO ACQUIRE COACH USA FOR $1.2 BILLION
Stagecoach and Coach USA have entered into an agreement under which a subsidiary
of Stagecoach will make a tender offer of $42 per share in cash to acquire the
common stock of Coach USA. The offer values Coach USA's fully diluted share
capital as at 31st March, 1999 at approximately $1,237 million (pound
sterling773 million). This represents a premium of 41% to the closing price on
the New York Stock Exchange on 7th June, 1999, the day prior to speculation
regarding a possible acquisition of Coach USA for $42 per share. In addition,
Stagecoach will assume Coach USA's net indebtedness which, as at 31st March,
1999, was $638 million (pound sterling399 million). Net of proceeds to be
received from the exercise of options, this figure would be adjusted to $571
million (pound sterling357 million).
INFORMATION ON COACH USA AND ITS MARKETPLACE
The US motorcoach industry is highly fragmented with approximately 5,000
motorcoach operators in a c. $20 billion market; similar fragmentation exists in
the c.$5 billion airport ground transportation, taxicab and paratransit service
markets. Opportunities also exist in the $15 billion schoolbus market. The
motorcoach industry in the United States can be broadly divided into three types
of services:
- - Recreation and excursion (charter, tour and sightseeing); -
- - Commuter and transit (including outsourcing and privatisation contracts);
and
- - Regularly scheduled intercity service.
Coach USA was founded in September 1995 to create a nationwide provider of
motorcoach and other ground transportation services. Since Coach USA's initial
public offering in May 1996, Coach USA has acquired over 70 motorcoach and
taxicab businesses.
Coach USA is the largest provider of motorcoach charter, tour and sightseeing
services and one of the largest non-municipal providers of commuter and transit
motorcoach services in the United States. Coach USA also provides airport ground
transportation, paratransit, taxicab and other related passenger ground
transportation services. Coach USA operates in 33 states across North America,
with operating locations in over 120 cities, including 23 of the top 25
motorcoach and convention cities. It operates approximately 9,500 motorcoaches,
taxicabs and other high occupancy vehicles, with over half of the fleet less
than five years old.
4
<PAGE> 5
Summary financial information on Coach USA
<TABLE>
<CAPTION>
YEAR ENDED 31 DECEMBER
--------------------------------------------------
1996 1997 1998
<S> <C> <C> <C>
Revenues ($ million) 325.7 542.8 803.6
Income from Operations ($ million) 37.3 77.5 126.1
Net Income ($ million) 16.8 31.4 53.8
Basic EPS ($) 1.14 1.46 2.23
Diluted EPS ($) 0.95 1.46 2.14
</TABLE>
Note:
(1) Coach USA figures shown under US GAAP.
Further information on Coach USA is set out in Appendix II.
BENEFITS OF AND STRATEGIC RATIONALE FOR THE ACQUISITION
The Board of Stagecoach believes that Coach USA represents an ideal opportunity
for Stagecoach to transfer its proven acquisition and operational skills to the
North American market. Since its flotation Coach USA has focused on establishing
strong regional positions across the US through an aggressive acquisition
programme. Stagecoach intends to support and build on Coach USA's existing
strategy to expand and enhance its position as the leading provider of
motorcoach, airport ground transportation and taxicab services in the United
States.
Coach USA brings with it a number of key strengths which differentiate it as a
suitable platform for Stagecoach to develop its North American presence.
Although it is not an interstate bus line, Coach USA has established a national
presence in the US motorcoach industry enabling regional and national marketing,
cross-servicing of its vehicle fleet and additional value creation through
further acquisitions. As the leading US consolidator of motorcoach companies,
Coach USA's management team has proven adept at identifying, acquiring and
integrating a large number of complementary businesses. Furthermore, Coach USA
is well placed to take advantage of further opportunities in the $15 billion
schoolbus market. Stagecoach intends that the senior management of Coach USA
will be incentivised to participate in the continuing growth of the business. In
addition, certain executives of Coach USA intend to invest $10 million in
Stagecoach shares and to enter into other incentivisation arrangements.
In addition to consolidation opportunities through further acquisitions, a
number of industry trends suggest increasing demand for Coach USA's services,
with significant opportunities for organic growth. These include the expected
growth of the US travel and tourism industry, a fast growing industry in the US;
continued privatisations by both state and local governments of commuter and
transit services and ancillary services such as paratransit services; the
continued outsourcing of transport services by hotels, casinos, rental car
companies and colleges that operate large motorcoach fleets and other high
occupancy vehicles; increasing traffic congestion in metropolitan areas where
motorcoach and related carriers are an increasingly viable alternative to
capital intensive projects; increasing traffic congestion at airports where
Coach USA is
5
<PAGE> 6
introducing its Express Shuttle US brand in all airports; and the continued use
of taxicabs at airports and by local commuters seeking to avoid congestion.
Stagecoach's earnings per share before goodwill amortisation are expected to be
immediately enhanced following completion of the transaction.
BOARD AND MANAGEMENT
Larry King will remain as Chairman and CEO of Coach USA. Coach USA's Board will
be strengthened by the appointment of Mike Kinski, Brian Souter and Keith
Cochrane. Larry King will be invited to join the Board of Stagecoach as an
executive director once the Acquisition is completed and all necessary
regulatory approvals have been received.
FINANCING
Stagecoach has agreed the terms of a $2.25 billion loan facility with Credit
Suisse First Boston, J.P. Morgan, The Royal Bank of Scotland plc and Bank of
Scotland, part of which will also be used to refinance Coach USA and existing
Stagecoach facilities. Following completion of the tender offer for Coach USA,
Stagecoach intends in due course to refinance at least $1 billion of the
facility through access to the debt capital markets and an internationally
marketed offering of equity or equity-related securities.
INFORMATION ON STAGECOACH
Stagecoach is an international passenger transport company with its head office
in Perth, Scotland. It operates bus, train and airport businesses in the United
Kingdom, buses and ferries in New Zealand, buses in Sweden, Finland, Portugal,
Australia, Hong Kong and China together with strategic investments in railways
in the United Kingdom and toll roads in China. The Stagecoach group employs
approximately 37,000 people worldwide.
At the close of business on 11th June, 1999, Stagecoach had a market
capitalisation of pound sterling3,091 million.
6
<PAGE> 7
Summary financial information on Stagecoach
<TABLE>
<CAPTION>
YEAR ENDED 30 APRIL
-----------------------------------------
1998 1999 (UNAUDITED)
<S> <C> <C>
Turnover (pound sterlingmillion) 1,347.0 1,548.4
Total operating profit (pound sterlingmillion) 216.3 274.7
Profit after tax (pound sterlingmillion) 113.6 158.3
EPS (basic) 9.5p 12.0p
DPS net 2.4p 3.0p
</TABLE>
Notes:
(1) Stagecoach figures shown in UK GAAP.
(2) 1998 EPS restated to take into account 5:1 stock split on 19 October 1998.
(3) 1998 figures restated to reflect Financial Reporting Standard Numbers 11
and 12
Further information on Stagecoach is set out in Appendix I.
TERMS AND STRUCTURE OF THE ACQUISITION
Stagecoach and Coach USA have entered into a definitive Merger Agreement under
which a subsidiary of Stagecoach will make a tender offer for all Coach USA
shares for $42 per share in cash. Following successful completion of the tender
offer, Coach USA will merge with a wholly owned subsidiary of Stagecoach and
holders of Coach USA shares will receive $42 per share in cash. The tender offer
for Coach USA is expected to close in the third quarter of 1999.
Shareholder, Regulatory and Other Approvals
The transaction is conditional on a number of approvals and other customary
conditions. Principal requirements are acceptance or approval by both Stagecoach
and Coach USA shareholders and approval by various regulatory bodies, including
receipt of an informal advisory opinion from the staff of the United States
Surface Transportation Board ("STB") relating to the voting trust agreement
described below.
Shareholder approval - Stagecoach
The transaction will be subject to the approval of Stagecoach shareholders at an
extraordinary general meeting which is expected to take place in July 1999.
Formal documentation relating to the transaction will be dispatched to
Stagecoach shareholders as soon as possible. This documentation will include the
notice of the extraordinary general meeting, full details of the transaction
(including further information on Coach USA), and will specify the necessary
action to be taken by Stagecoach shareholders. Brian Souter and Ann Gloag, both
directors of Stagecoach, have undertaken to vote in favour of the resolution to
be proposed at the forthcoming extraordinary general meeting to approve the
Acquisition in respect of their beneficial holdings of Stagecoach shares
representing, in aggregate, 24% of the current issued share capital.
7
<PAGE> 8
Shareholder acceptance - Coach USA
The tender offer will be conditional on, among other things, the tender of at
least a majority of the shares of Coach USA common stock on a fully diluted
basis. Following successful completion of the tender offer, Stagecoach and its
subsidiaries will be able to approve a second step merger, in which remaining
Coach USA shareholders will receive the same $42 cash price per share, without
the approval of any other Coach USA shareholders. A formal Offer to Purchase and
related documentation will be dispatched to Coach USA shareholders no later than
18th June, 1999, and will include details of the transaction and instructions
for tendering Coach USA shares. The tender offer will close 20 business days
after its commencement, unless extended in accordance with the terms of the
offer and the Merger Agreement.
Regulatory approvals
The tender offer will be subject to receipt of informal approval by the staff of
the STB of a required voting trust agreement. Coach USA shares acquired by
Stagecoach in the tender offer and the merger will be placed in the voting trust
pending full approval by the STB. However, other than the informal approval of
the voting trust agreement, STB approval will not be a condition to the
transaction.
The US Department of Justice and Federal Trade Commission will be given formal
notice of the Merger Agreement under the Hart-Scott-Rodino Antitrust
Improvements Act, and the transaction is subject to expiration or termination of
the applicable waiting period. In addition, the transaction is subject to
various requirements of other relevant authorities.
Merger Agreement
The Merger Agreement sets out the conditions to the tender offer and the merger.
The Offer to Purchase will also describe these conditions. The Merger Agreement
also contains certain termination rights, mutual representations and warranties
and various covenants relating to the operation of Coach USA and other matters.
The Merger Agreement provides for a termination fee of $35 million to be paid by
Coach USA to Stagecoach if the Merger Agreement is terminated in certain
circumstances. The Merger Agreement also provides for a termination fee of $25
million to be paid to Coach following, in certain circumstances, a change in the
recommendation of the Stagecoach board to Stagecoach shareholders to vote in
favour of the Acquisition. A summary of all the terms of the Merger Agreement
will be included in the documentation sent to Coach USA shareholders in
connection with the tender offer.
8
<PAGE> 9
ENQUIRIES:
STAGECOACH HOLDINGS PLC
Brian Souter 0171 325 8900
Executive Chairman
Mike Kinski 0171 325 8900
Group Chief Executive
Keith Cochrane 0171 325 8900
Group Finance Director
Rob Ballantyne 0171 325 8900
Head of Corporate Communications
SMITHFIELD FINANCIAL
John Kiely 0171 360 4900
KEKST AND COMPANY
Ruth Pachman 00 1 212 521 4891
J.P. MORGAN
Daniel Chamier (London) 0171 325 5506
Jim Hamilton (New York) 00 1 212 648 7801
NOBLE GROSSART
David Mathewson 0131 226 7011
COACH USA
Larry King 0171 325 8900
Chairman and Chief Executive Officer
J.P. Morgan and Noble Grossart Limited, which are regulated by The Securities &
Futures Authority Limited, are acting for Stagecoach in connection with this
transaction and for no one else and will not be responsible to anyone other than
Stagecoach for providing the protections afforded to customers of J.P. Morgan
and Noble Grossart Limited or for providing advice in relation to this
transaction.
9
<PAGE> 10
APPENDIX I: INFORMATION ON STAGECOACH
DESCRIPTION
UK Bus
Stagecoach has approximately a 16% share of the UK bus market. The company has a
fleet of 7,500 buses with an average age of seven years, the lowest in the
industry. In 1998, the UK bus business was restructured from nineteen individual
companies into three regions.
Overseas Bus
Outside the UK Stagecoach runs bus services in Sweden, Finland, Portugal, New
Zealand (in conjunction with ferries), Australia, Hong Kong and China.
Train Operations
Stagecoach holds two UK rail franchises - South West Trains, which is the
biggest single franchise in the UK, and the Island Line. Both franchises were
awarded for seven years in 1996. In 1998, Stagecoach purchased a 49%
shareholding in Virgin Rail Group, operator of the West Coast Main Line and
CrossCountry franchises, both of which run to 2012.
Porterbrook
Porterbrook is one of three rolling stock companies which currently own the
entire fleet of UK railway stock. Porterbrook provides rolling stock under
operating leases to eighteen of the twenty-five UK train operating companies and
carries out heavy maintenance on the rolling stock.
Prestwick Airport
Stagecoach acquired Prestwick Airport in April 1998. Prestwick currently handles
over 600,000 passengers per annum and 52,000 freight tonnes per annum.
Road King
Stagecoach acquired a minority stake in Road King, a Chinese toll road operator,
in April 1998.
10
<PAGE> 11
STAGECOACH SUMMARY GROUP PROFIT AND LOSS ACCOUNTS
PRESENTED UNDER UK GAAP
<TABLE>
<CAPTION>
YEARS ENDED 30 APRIL
------------------------------------
(pound sterling million) 1998 1999 (unaudited)
<S> <C> <C>
Group Turnover 1,347.0 1,548.4
Total Operating Profit (including share of joint
ventures and associates) 216.3 274.7
Profit on ordinary activities before taxation 155.7 210.1
------- -------
Profit/(loss) for the year 113.5 158.4
------- -------
Earnings per ordinary share (basic) 9.5p 12.0p
Dividends per ordinary share 2.4p 3.0p
</TABLE>
1998 EPS restated to take into account subdivision of ordinary shares from 2.5p
to 0.5p on 19 October 1998.
STAGECOACH SUMMARY GROUP BALANCE SHEETS
PRESENTED UNDER UK GAAP
<TABLE>
<CAPTION>
YEARS ENDED 30 APRIL
------------------------------------
(pound sterling million) 1998 1999 (unaudited)
<S> <C> <C>
Fixed assets 1,520.1 2,105.8
------- -------
Current assets 331.0 516.4
Creditors: amounts falling due within (600.0) (706.3)
one year
------- -------
Net current liabilities (269.0) (189.9)
------- -------
Total assets less current liabilities 1,251.1 1,915.9
------- -------
Creditors: amounts falling due after (741.7) (950.8)
more than one year
Provisions (239.3) (234.1)
------- -------
Net assets 270.1 731.0
------- -------
Equity shareholders' funds 269.8 731.0
Minority interests 0.3 0.0
------- -------
Capital employed 270.1 731.0
------- -------
</TABLE>
1998 figures restated to reflect Financial Reporting Standard Numbers 11 and 12.
11
<PAGE> 12
APPENDIX II: INFORMATION ON COACH USA
DESCRIPTION
Coach USA was founded in September 1995 to create a nationwide provider of
motorcoach and other ground transportation services.
It is the largest provider of motorcoach charter, tour and sightseeing services
and one of the largest non-municipal providers of commuter and transit
motorcoach services in the United States. Coach USA also provides airport ground
transportation, paratransit, taxicab and other related passenger ground
transportation services. Coach USA operates in 33 states and provinces across
North America, with operating locations in over 120 cities, including 23 of the
top 25 motorcoach and convention cities. It operates approximately 9,800
motorcoaches, taxicabs and other high occupancy vehicles, with over half of the
fleet less than five years old.
A detailed description of the services provided by Coach USA is set out below.
Recreation and Excursion
- - Charter and Tour Services
Charter services are provided on a fixed daily rate, based on mileage and hours
of operation. Coach USA offers both daily and long-term charter and tour
arrangements (as long as 30 days) with various levels of luxury and price. Coach
USA has arrangements with tour agencies to provide various levels of service and
equipment for agent-sponsored and organised tours. Under these arrangements,
Coach USA contracts with tour agencies to provide the motorcoach and driver at a
fixed daily rate. To increase equipment utilisation, it also regularly offers
shorter charter services to various social groups or other organisers for
transportation to events or specific destinations. In some instances, Coach USA
organises its own tours and markets them on a per passenger basis.
- - Sightseeing
Coach USA provides per seat sightseeing services on a scheduled basis at an
advertised or published price. Customers can make reservations for the tours or
simply board on an "open-door" basis at scheduled locations. Payment is made by
the customer, or through a travel agent or a hotel on a per seat basis. Coach
USA uses a network of hotel lobby ticket counters, hotel concierges and travel
agents to sell sightseeing tours.
- - Airport Service
Coach USA picks up passengers at airports in various cities and transports them
to and from their hotel, casino, cruise ship or convention site. Coach USA uses
motorcoaches and other high occupancy vehicles to provide passenger ground
transportation services to, from and between airports in certain cities in which
Coach USA operates. These services are provided on either a fixed schedule or on
a demand basis. Customers can arrange for services through computerised
reservations systems or through ticket purchases at a service desk at the
airport.
12
<PAGE> 13
- - Specialised Destination Route Services
Coach USA provides specialised destination route services, including daily
scheduled services to casinos in various gaming states including Connecticut,
New Jersey, Louisiana, Nevada, Colorado and Mississippi. Luxury motorcoaches
pick passengers up at specified locations. Customers are taken on an "open-door"
basis or by reservation. Tickets are also sold on a per seat basis through
agents and at specified locations.
Commuter and Transit Services
- - Commuter Services
In most of Coach USA's commuter services, fixed routes are serviced on a daily
basis. Most of these routes are owned (as a result of federal or state regular
route authority) by one of Coach USA's individual operating subsidiaries. Many
of the motorcoaches that are dedicated to commuter service are owned by a state
or municipal transit authority and provided to Coach USA at nominal rent or
given by such authority at a nominal rent or given by such authority to service
a particular route. In all cases, Coach USA employs the drivers and operations
personnel and is responsible for maintenance of the equipment. Coach USA is paid
through individual ticket purchases or through a fare box. Contracts with
transit authorities for commuter services typically have one to three year terms
and are periodically reviewed for rate and fare increases. Commuter services are
provided daily.
- - Outsourcing Contracts
Coach USA has agreements with various corporations, institutions and government
entities to provide motorcoaches, drivers and equipment for their employees and
customers. Coach USA believes that these entities look for opportunities to
outsource non-core activities as a means to better manage their capital and
operating revenues and improve their profitability.
- - Privatisation Transit Contracts
In privatisation transit contracts, Coach USA contracts with a transit authority
to service fixed routes on a daily basis. The route schedules are established by
the transit authority. Coach USA operates dedicated equipment owned either by
the company or by the transit authority. In each instance, Coach USA employs the
drivers and operations personnel and is responsible for equipment maintenance.
Coach USA receives a fixed amount from the municipality based on a number of
miles or hours operated. Contracts for this service range in length from three
to five years and are periodically reviewed for rate increases.
- - Regional Line Runs
Coach USA operates motorcoach transportation services in certain limited
regional areas of the country on a daily basis. The route schedules are
established in advance to provide seamless ground transportation services to
customers. Coach USA is generally paid for these services through individual
tickets, which are either pre-sold or are purchased on the date Coach USA
renders service.
- - Paratransit Services
Coach USA contracts with agencies of various counties that are responsible for
co-ordinating the non-emergency transportation of medical aid patients.
Following receipt of patient reservation
13
<PAGE> 14
schedules, it provides the scheduled services, usually through the use of
independent contractor drivers, and invoices the county organisation for the
services provided. These contracts are generally on a multi-year basis and
require that certain performance standards are met.
Taxicab Services
Coach USA's taxicab revenues are derived primarily from services provided to
independent contractors that own or lease and operate vehicles under one of
Coach USA's trade names. The independent contractor drivers pay a weekly or
daily fee for dispatching and use of the vehicle equipment, use of operating
rights, charge account, contractual liability indemnity 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. In
addition to the daily or weekly fee paid to Coach USA by the drivers for
dispatching and other support services, revenues are derived through vehicle
sales and financing services to drivers, maintenance, parts and labour provided
to drivers and vehicle mini-billboard advertising.
- - Radio Dispatched Services
Radio dispatched services are provided primarily on a call-in basis. When a
customer makes a request for the services, the closest available vehicle is
notified through Coach's computer dispatching system. The driver of the
identified vehicle accepts the trip and picks up the customer.
- - Airport Services
Coach USA provides taxicab services to passengers going to and coming from
airports in certain municipalities. Most services are provided on a demand basis
as passengers exit the airport and summon a taxicab at the airport cab station.
Services for passengers travelling to the airport are provided through advance
reservations.
14
<PAGE> 15
COACH USA SUMMARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED
EARNINGS
PRESENTED UNDER US GAAP
<TABLE>
<CAPTION>
3 MONTHS ENDED 31 MARCH YEARS ENDED 31 DECEMBER
----------------------------- -----------------------------------
($ million) 1998 1999 1996 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues 150.0 201.6 325.7 542.8 803.6
Income from operations 11.8 16.9 37.3 77.5 126.1
Income before income taxes and
extraordinary items 4.0 5.9 24.3 54.4 89.2
Income before extraordinary items and 2.4 3.6 14.1 32.3 54.4
change in accounting principle
Extraordinary items and effect of
change in accounting principle (net
of tax) - (5.2) 2.6 (0.9) (0.6)
Net income/(loss) 2.4 (1.6) 16.7 31.4 53.8
</TABLE>
<TABLE>
<CAPTION>
3 MONTHS ENDED 31 MARCH YEARS ENDED 31 DECEMBER
($ million) 1998 1999 1996 1997 1998
------------------------------- ----------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Retained earnings 41.6 91.5 8.7 39.3 93.0
----- ----- ---- ----- -----
($)
Earnings per share - basic
Income before extraordinary items 0.11 0.14 0.96 1.51 2.25
Extraordinary items - (0.20) 0.18 (0.05) (0.02)
----- ----- ---- ----- -----
Total 0.10 (0.06) 1.14 1.46 2.23
----- ----- ---- ----- -----
Earnings per share - diluted
Income before extraordinary items 0.11 0.14 0.95 1.46 2.14
Extraordinary items (0.01) (0.20) 0.17 (0.04) (0.02)
----- ----- ---- ----- -----
Total 0.10 (0.06) 1.12 1.42 2.12
----- ----- ---- ----- -----
</TABLE>
15
<PAGE> 16
COACH USA SUMMARY CONSOLIDATED BALANCE SHEETS
PRESENTED UNDER US GAAP
ASSETS
<TABLE>
<CAPTION>
3 MONTHS ENDED 31 MARCH YEARS ENDED 31 DECEMBER
($ million) 1998 1999 1996 1997 1998
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total current assets 107.0 157.2 40.5 97.8 148.8
Property plant and equipment - net 460.9 596.3 191.1 395.8 574.3
Other assets 202.1 450.4 45.2 172.3 456.1
----- ----- ----- ----- -------
TOTAL ASSETS 770.0 1,203.9 276.8 665.9 1,179.2
----- ------- ----- ----- -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities 116.6 173.4 45.1 103.2 174.2
Other liabilities 45.4 64.0 58.1 41.1 65.1
Long-term debt 436.3 616.8 109.6 361.1 588.8
Total stockholders' equity 171.7 349.8 104.0 160.6 351.0
----- ------- ----- ----- -----
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 770.0 1,203.9 276.8 665.9 1,179.2
----- ------- ----- ----- -------
</TABLE>
16
<PAGE> 17
BIOGRAPHICAL DETAILS ON THE SENIOR EXECUTIVE COMMITTEE OF COACH USA
Larry K. King
Chairman and Chief Executive Officer
Age 42, became a director of Coach USA in May 1996. Mr. King has served as
Chairman of the Board of Directors and Chief Executive Officer since December
1998. Mr. King served as Senior Vice President and Chief Financial Officer of
Coach USA from December 1995 to December 1998. Mr. King is also currently a
director of Transportation Components, Inc.
John Mercadante, Jr.
President
Age 54, has been a director of Coach USA since May 1996. Mr Mercadante has
served as President of Coach USA since May 1996 and previously served as
President and Chief Operating Officer from May 1996 to December 1997. Mr
Mercadante is currently a director of the Atlantic City Bus Operators
Association and a director of the New Jersey Motor Bus Association.
Frank P. Gallagher
Executive Vice-President, Chief Operating Officer
Age 55, became a director of Coach USA in May 1996. Mr Gallagher has served as
Executive Vice President and Chief Operating Officer of Coach USA since December
1997 and formerly served as Senior Vice President - Corporate Development from
May 1996 to December 1997.
17
<PAGE> 18
APPENDIX III: SOURCES AND BASES OF INFORMATION
For ease of reference, in this document all currency conversions between Pounds
Sterling and US dollars have been made at a rate of pound sterling 1.00 = $1.60.
The total consideration of $1,808 million is based on an offer price of $42 per
share applied to 25.4 million shares in issue as at 7th May 1999, including
compensation for the holders of 4.0 million Coach USA shares under option. In
addition, Stagecoach will assume Coach USA's net indebtedness which, as at 31st
March, 1999, was $638 million. Net of proceeds to be received from the exercise
of options, this figure would be adjusted to $571 million.
The information on Coach USA and its markets is based on the Form 10-K of Coach
USA for the fiscal years ended 31st December, 1998, 1997 and 1996 and the Form
10-Q of Coach USA for the three months ended 31st March, 1999 and 31st March,
1998.
The financial information relating to Stagecoach set out in Appendix I has been
derived from the audited consolidated accounts of Stagecoach for the financial
period ended 30th April, 1998, and the preliminary announcement of the 30th
April, 1999 results approved by the Board on 7th June, 1999. The financial
information contained in this announcement does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. Statutory
consolidated accounts of Stagecoach for the financial period ended 30th April,
1998 received an unqualified audit opinion, did not contain a statement under
section 237(2) or (3) of the Companies Act and have been delivered to the
Registrar of Companies. The statutory consolidated accounts of Stagecoach for
the financial year ended 30th April, 1999 will be submitted to shareholders and
delivered to the Registrar of Companies in due course.
This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
the current plans and expectations of Coach USA, and involve risks and
uncertainties that could cause actual future results to be materially different
from those set forth in the forward-looking statements. Important factors that
could cause actual results to differ include, among others, risks that no
transaction will occur and risks associated with the valuation of possible
business combination transactions.
18
<PAGE> 19
APPENDIX IV: DEFINITIONS
<TABLE>
<S> <C>
Acquisition The proposed acquisition of Coach USA by Stagecoach, as
described in this announcement
Coach USA Coach USA, Inc
Merger Agreement Agreement and Plan of Merger, dated 12th June, 1999
among Stagecoach, SCH Holding Corp., SCH Acquisition
Corp. and Coach USA
J.P. Morgan J. P. Morgan Securities Ltd
London Stock Exchange London Stock Exchange Limited
Stagecoach Stagecoach Holdings plc
United Kingdom or UK The United Kingdom of Great Britain and Northern Ireland
United States or US The United States of America, its territories and
possessions and any state of the United States and the
District of Columbia
</TABLE>
19
<PAGE> 1
Exhibit 11(b)(1)
Stagecoach Holdings PLC,
Charlotte House,
20 Charlotte Street,
Perth PH1 5LL,
Scotland
Attention: Mr Keith Cochrane
Finance Director 12 June, 1999
Dear Keith,
PROJECT LACHLAN II
We, the undersigned, are writing to confirm that we have committed, in
the proportions set out below, to underwrite and arrange for you the loan
facilities necessary for the purchase of Court on the terms set out in the Term
Sheet which you and we have signed today. We have seen and approved the terms of
the tender offer as set out in the Press Release, which we understand you will
make today.
In addition, this commitment is subject to the negotiation and
execution of satisfactory facility and guarantee documentation on conditions
which will substantially reflect those set out in this letter and the above Term
Sheet. We agree to negotiate such documentation in good faith with the intention
that it is signed on or before Wednesday 23 June, 1999.
<TABLE>
<CAPTION>
BANK AGREED COMMITMENTS
<S> <C>
Credit Suisse First Boston US$ 610,000,000
J.P. Morgan Securities Ltd. US$ 610,000,000
The Royal Bank of Scotland plc US$ 610,000,000
The Governor and Company of the Bank of Scotland US$ 420,000,000
</TABLE>
<PAGE> 2
Yours faithfully,
<TABLE>
<S> <C> <C>
/s/ /s/ /s/
...................................................................................
for and on behalf of for and on behalf of For and on behalf of
CREDIT SUISSE FIRST BOSTON CREDIT SUISSE FIRST BOSTON J.P. MORGAN SECURITIES LTD.
</TABLE>
/s/ /s/
................................................................................
for and on behalf of For and on behalf of
THE ROYAL BANK THE GOVERNOR AND COMPANY OF THE
OF SCOTLAND PLC BANK OF SCOTLAND
<PAGE> 3
PROJECT LACHLAN II
US$ 2,250,000,000 FACILITY
SUMMARY OF TERMS & CONDITIONS
Borrowers: Street Holdings plc (the "Parent") and specified
wholly-owned subsidiaries of the Parent. To the
extent borrowers will be US companies, US regulatory
provisions will be required.
[NB: Arthur Andersen working on tax structure]
Guarantors: The Parent, any other Borrowers, Court (to the extent
permitted, and when permitted, by US law) and the
Subsidiaries of Street listed in the Appendix. The
cross guarantees to be released upon the raising of
funds in the capital markets for the repayment of
Tranche A in full.
Guarantee: On a joint and several basis.
Facility Amount: US$ 2,250,000,000 allocated as follows:
Tranche A: term loan: US$1,000,000,000;
Tranche B: 5-year term loan: US$750,000,000;
Tranche C: 5-year revolving credit facility:
US$500,000,000.
Facility Description: US$ denominated term and revolving credit facilities
available for drawing in US$ or any freely available
Euro-currency.
Facility Purpose: Tranches A & B: To finance the Acquisition and to
refinance certain existing borrowings of Court and/or
Street.
Tranche C: To refinance certain existing borrowings
of Court and/or Street and for general corporate
purposes.
Final Maturity Date: Tranche A: 31 December 2000.
Tranches B & C: 5-years from signing of the Facility
Agreement.
Repayment: Tranches A & C: Bullet repayment of amounts
outstanding on the Final Maturity Date.
Tranche B: Repayment by equal, semi-annual
instalments, beginning six months from the date of
signing.
Availability: Upon satisfaction of conditions precedent and subject
to no actual or potential Event of Default and upon a
minimum of three
<PAGE> 4
business days' notice in the case of a drawing
denominated in US$ and upon a minimum of five
business days' notice in the case of a drawing
denominated in any other permitted currency, any
Borrower shall have the ability to make drawings
under the Facility as follows:
Tranche A: Available for drawing until 31 January
2000
Tranche B: Available for drawing until to 31 January
2000
Tranche C: US$250,000,000 available for drawing on a
revolving basis at any time during the life of the
facility and the remaining US$250,000,000 available
for drawing on a revolving basis during the life of
the facility upon the Parent having issued new equity
of not less than (the equivalent of) US$500,000,000.
However, none of the Facility will be available
unless the Tender is made. Drawings will be in
minimum amounts of US$50,000,000 and in integral
multiples of US$5,000,000. Any amount of Tranches A
and B not drawn by the end of the availability period
will be automatically cancelled.
Interest Periods: 1, 3 or 6 months, at the Borrower's option, or such
periods as the Banks may agree. Up to one months
periods before completion of syndication.
Interest Rate: The Borrower will pay interest at the London
Interbank Offered Rate ("LIBOR"), plus the Applicable
Margin and any applicable ECB costs. LIBOR will be
set by reference to Telerate page 3750, or if not
available, by Reference Banks.
Arrangers: Credit Suisse First Boston, J.P. Morgan Securities
Ltd., Royal Bank of Scotland, The Bank of Scotland.
Applicable Margin: 100bps on all Tranches while commitments are
outstanding under Tranche A. If the amount
outstanding under Tranche C exceeds US$250,000,000,
the Applicable Margin on all Tranches shall be
increased to 112.5 bps while commitments are
outstanding under Tranche A. If Street fails to
complete a new issue of shares in Street of at least
(the equivalent of) US$500,000,000 on or before 31
December 1999 the Applicable Margin on all Tranches
shall increase to 125bps. Grid based pricing after
Tranche A repaid in full based on Total Debt/EBITDA
on a twelve months rolling basis with reference to
the most recent published six-monthly financial
statements and according to the following schedule:
Total Debt/EBITDA (Applicable Margin)
4.00-4.50x (112.5bps)
3.50-4.00x (100.0bps)
3.00-3.50x (87.5bps)
<PAGE> 5
2.50-3.00x (75.0bps)
Default margin will be 1% above the Applicable Margin
set out above.
Interest Payment: Interest will be payable at the end of each Interest
Period and will be calculated on the basis of the
actual number of days elapsed in a year of 360 days.
If the Interest Period is longer than six months,
then accrued interest will be paid on the last day of
each successive period of six months.
Front End Fees: As per side letters, inclusive of co-ordination,
arrangement, underwriting and participation fees.
Commitment Fee: The lower of 50% of the Applicable Margin or 40bps,
payable quarterly in arrears.
Voluntary Prepayment: Upon 10 days' written notice, the Borrowers may
prepay without penalty all or part of the Facility at
any time. Prepayments will be made in a minimum
amount of US$50,000,000 and integral multiples of
US$5,000,000. If the prepayment takes place otherwise
than at the end of an Interest Period, the Borrower
will be responsible for breakage costs, if any. No
amount of Tranches A and B prepaid may be redrawn.
The Borrower shall allocate prepayments between
Tranches A and B.
Mandatory Prepayment: Mandatory prepayment of the full net (i.e. after
expenses) proceeds will be required on:
(a) The sale of material assets (including after
the date of STB approval, sales by Court or
any of its Subsidiaries) (size threshold to
be agreed)
(b) The raising of any funds in the
international debt and/or equity capital
markets
(c) The raising of any funds in the loan market
at any time when any part of Tranche A is outstanding
or the outstanding amount of Tranche B is more than
$500,000,000. While commitments remain outstanding
under Tranche A, Mandatory Prepayment will repay
Tranche A in full before being applied to Tranche B.
Cancellation: Upon 10 days' written notice, the Borrowers may
cancel without penalty all or part of the undrawn
Facility.
Conditions Precedent: Customary for facilities of this type, including, but
not limited to:
a) A certified copy of the constitutional
documents of the Obligors;
b) Copies of relevant board resolutions of the
Obligors;
<PAGE> 6
c) Copies of relevant consents and
authorisations;
d) Satisfactory legal opinions;
e) There shall have been validly tendered to
Street sufficient common stock of Court to
enable Street to effect the Merger, without
the requirement of any action by any other
Court security holder, all conditions to the
purchase set forth in the Tender Documents
shall have been satisfied without waiver or
amendment (except prior written consent of
the Banks) and Street shall have accepted
for purchase all such tendered common stock;
f) Approval of the Tender at a general meeting
of shareholders of Street together with
approval of the increase in Street's share
capital, if required, and the increase in
Street's limit on borrowings contained in
its Articles of Association, in all cases
necessary to implement the Tender;
g) Board approval for the Press Release (which
must announce the intention to make a new
issue of shares in Street of at least (the
equivalent of) US$500,000,000);
h) Evidence that all governmental approvals and
regulatory and/or tax rulings have been
obtained for the Tender, other than the
approval of the STB;
i) The STB shall have approved the terms of the
Voting Trust and such terms shall be
acceptable to the Banks;
j) A copy of all Tender Documents and
confirmation that there have been no
amendments or waivers in relation thereto;
k) A certificate from the finance director of
each Obligor that full utilisation of the
Facility will not breach any of that
Obligor's borrowing limits;
l) A letter from Oppenheimer Wolff & Donnelly
to Street, in a form acceptable to the
Banks, assessing the likelihood of obtaining
unconditional STB approval to the merger;
m) A first priority security interest in the
voting trust certificates in Court.
Representations and Customary for facilities of this type, at signing,
Warranties: and to be repeated where appropriate on drawdown and
on the first day of each interest period, including,
but not limited to:
a) The Obligors are duly constituted and
validly existing, and have the power to
enter into and comply with the Finance and
Tender Documents;
b) All relevant authorisations and consents
have been obtained;
c) Execution and performance of the Finance
Documents and the Tender Documents will not
conflict with laws, other agreements,
contracts and constitutional documents of
any of the Obligors;
d) All necessary consents, authorisations and
approvals etc. that are required for the
performance of the Obligors' obligations
under the Finance Documents and the Tender
Documents, the Tender and the transaction
generally and for
<PAGE> 7
the business, have been or will be obtained
and are in full force;
e) The Borrowers shall use all reasonable
endeavours to cause the Tender to be
successful, the STB approval to be obtained
and the acquisition of Court to be
consummated, all at the earliest practicable
times;
f) The full utilisation of the Facility will
not contravene any borrowing limitation on
any of the Obligors, nor any law or
agreement;
g) Obligations of the Obligors in relation to
the Facility are legally valid, binding and
enforceable;
h) No breach by the Obligors of any applicable
laws and regulations, including
environmental, or any agreements, which
could have a Material Adverse Effect;
i) No existing Event of Default;
j) The Parent's audited, consolidated 1998/1999
financial statements (the "Parent's Original
Financial Statements") were prepared in
accordance with UK GAAP and present a true
and fair view of [or fairly represent] the
Group's financial condition at the date to
which they were drawn up;
k) No change in the financial condition,
business or operations of the Parent or the
Group (including Stagecoach Porterbrook
Limited and its Subsidiaries) since 30 April
1999 which would have a Material Adverse
Effect;
l) No litigation or other proceedings current,
pending or threatened which if adversely
determined would have a Material Adverse
Effect;
m) No proceedings current, pending or
threatened for the winding-up of the Parent
or any Material Subsidiary;
n) The Obligors' respective obligations under
the Finance Documents will rank at least
pari passu with all their other unsecured
and unsubordinated obligations;
o) No encumbrances exist over any assets of any
Obligor except for those disclosed at
signing or permitted as set out below;
p) No stamp, registration or similar tax, or
registration requirement;
q) The projections for the merged businesses
supplied to the Banks on or before signing
have been prepared after taking due care and
are based on reasonable assumptions and all
information contained in the Information
Memorandum, the circular to Street
shareholders or supplied by the Parent is
true, complete and accurate and all
forecasts and projections have been prepared
after taking due care and are based on
reasonable assumptions;
r) Year 2000 compliance;
s) [Representation and warranty which will not
be given at signing, it will be repeated
when the others are repeated and will cease
to be repeated when Tranche A is repaid in
full. If
<PAGE> 8
breached will prevent any drawings of
Tranche C for acquisitions] The actual
performance of the merged businesses is
materially in accordance with, or is
superior to, the projections in
Representation and Warranty (q).
Undertakings: Customary for facilities of this type, with respect
to the Borrower(s) and its subsidiaries, including
but not limited to:
Undertakings as to Information
(i) Delivery of audited annual accounts (for
Parent and Group) as soon as available, and
in any event within 120 days after the end
of each financial year;
(ii) Delivery of six-monthly financial
information (for Parent and Group) as soon
as available, and in any event within 90
days;
(iii) Prompt notification of any actual or
potential Event of Default;
(iv) Prompt notification of material litigation;
(v) Delivery of such other information as the
Banks may reasonably request;
(vi) Certificates as to compliance with financial
covenants;
(vii) Certificate confirming that consolidated
Group accounts comply with UK GAAP; and
(viii) Delivery of adjusted financial statements
excluding Stagecoach Porterbrook Limited and
its Subsidiaries for the purposes of the
financial covenants and further
reconciliation statements for the purposes
of the financial covenants if UK GAAP
changes.
General Undertakings (to be given by each Obligor)
(i) The Obligors' payment obligations under this
Facility will rank equally and rateably with
all other unsecured and unsubordinated
indebtedness;
(ii) Negative Pledge: Neither any Obligor nor any
Material Subsidiary shall create or have
outstanding any security or other
encumbrance on or over any of its assets to
secure any of its present or future
borrowings except for:
- Any security existing at the date
of the Facility
- Agreement disclosed in writing by
any Obligor;
- Any security arising by operation
of law;
- Any security arising in the
ordinary course of business,
provided that any such security is
limited to the assets which are the
subject of the relevant
transaction;
- Any security in respect of
Financial Indebtedness, provided
that the aggregate outstanding
amount
<PAGE> 9
secured under this exception shall
not at any time exceed an amount
equal to 5% of the share capital
and reserves of the Parent, as
provided in its most recent audited
accounts, and
- Any security created or outstanding
with the prior consent of the
Majority Banks;
(iii) No guarantees to third parties (including to
Stagecoach Porterbrook Limited and its
Subsidiaries) to be provided by Material
Subsidiaries until Tranche A has been repaid
in full and Street has completed a new issue
of Street shares of at least (the equivalent
of) US$500,000,000 and thereafter such
guarantees not to exceed US$25,000,000;
(iv) No disposal by sale, transfer, lease or
otherwise of all or any part of its assets,
except in the ordinary course of trading or
at arm's length and on normal commercial
terms or as agreed by the Majority Banks;
(v) Acquisitions of companies or shares in
companies (other than short-term minority
investments) or businesses or parts of
businesses restricted to US$125,000,000 in
aggregate until Street has issued new equity
of (the equivalent of) at least
US$500,000,000 and then restricted to
US$250,000,000 in aggregate until Tranche A
has been repaid in full and STB has granted
its consent to the Acquisition, following
the issue of new equity by Street described
above. Such acquisitions will be limited to
companies or shares in companies in the bus,
rail and aviation sectors only;
(vi) No material change in the nature of any
Obligors' or any Material Subsidiary's
business;
(vii) Maintaining compliance with all relevant
laws and regulations;
(viii) Parent will obtain the prior approval of the
Banks1 with respect to the contents of the
Tender Documents before they are dispatched
to Street shareholders or Court stockholders
or filed or otherwise made public and with
respect to submissions to STB before they
are made;
(ix) Parent will not, without the consent of the
Banks(1):
- Vary or waive any term of the
Tender
- Treat any condition of the Tender
as having been waived
- Increase the cash portion of
consideration offered to Court
stockholders above the figure
agreed between the Borrower and the
Banks
- Change the way in which the cash
consideration is funded
(1) Initially the Arrangers; if facility syndicated further- Special Majority
Banks.
<PAGE> 10
(x) Parent will keep the Agent informed of all
material developments in relation to the
Tender;
(xi) Parent will co-operate fully with the
Arrangers in the syndication process to
ensure a successful outcome;
(xii) Neither Street nor any of its other
Subsidiaries will inject funds into
Stagecoach Porterbrook Limited or its
Subsidiaries (whether by way of debt or
equity) without the consent of Majority
Banks while any amount is outstanding under
Tranche A; [This point still under
consideration]
(xiii) Maintenance of proper insurance.
Financial Covenants
(i) Total Debt/EBITDA;
(ii) EBITDA/net int. expense; and
(iii) Tangible net worth.
Stagecoach Porterbrook Limited and its Subsidiaries
will be excluded from these calculations. Covenants
to be tested every six-months with reference to the
most recent published accounts on a twelve month
rolling basis.
[Still considering treatment of any debt or capital
injection to Stagecoach Porterbrook Limited
Events of Default: Events of Default shall include, but not be limited
to the following:
a) Non-payment of principal or interest on
their due date. Grace period of 3 business
days' for non-payment of interest only.
b) Breach of representation or warranty when
made or deemed repeated;
c) Breach of undertaking, which, where capable
of remedy, is not remedied within 10 days.
Undertakings relating to the conduct of the
Tender will carry no grace period;
d) Any Financial Indebtedness of the Parent or
its Subsidiaries (excluding Stagecoach
Porterbrook Limited and its Subsidiaries)
exceeding (in aggregate) US$25,000,000 (or
its equivalent in any other currency)
becomes due and payable or capable of being
declared due and payable before its normal
maturity, or is not paid when due or within
any applicable grace period;
e) Insolvency, winding up or enforcement
proceedings of or against the Parent or any
of its Material Subsidiaries, provided that
such proceedings are not frivolous or
vexatious;
f) It is or becomes unlawful for any Obligor to
comply with its obligations under the
Facility;
g) Litigation is current, pending or threatened
against the Parent or any of its
Subsidiaries which [will restrain
performance of obligations under the
Facility or,] if adversely determined, would
have a Material Adverse Effect;
h) The Parent or any of its Material
Subsidiaries is unable to
<PAGE> 11
pay its debts as and when they fall due;
i) Any change in the financial condition or
operations or prospects of the Group
(including Stagecoach Porterbrook Limited
and its Subsidiaries) since 30 April, 1999
having a Material Adverse Effect;
j) Any change in control of the Parent or,
after the Tender, the merger subsidiary
ceases to be a [wholly-owned] subsidiary of
the Parent;
k) Any of the Finance Documents ceases to be
valid obligation of any Obligor;
l) Any approvals or authorisations cease to be
in full force and effect or Street fails to
obtain STB approval and does not comply with
the terms of the divestment set out in the
Voting Trust.
Court and its Subsidiaries to be excluded from the
effect of Events of Default (b), (c), (d), (g) and
(l) for a period of 90 days after the completion of
the Tender.
Documentation: The documentation will be market standard for
transactions of this type and will include provisions
for, inter alia, the following:
a) Changes in circumstances, including
illegality and increased costs;
b) The ability of a Bank freely to transfer its
rights and obligations without the consent
of the Parent.
Taxation: All payments of principal, interest and fees will be
made free and clear of any deductions or
withholdings, levied either presently or in the
future. If a deduction or withholding is required the
Obligors will gross-up the payment.
Amendments and Waivers: Amendments to the Facility Agreement will require the
approval of the Majority Banks except for the
following items, which will require the consent of
all of the Banks:
a) Extension of the Final Maturity Date;
b) Any change in the Interest Rate, Applicable
Margin or Commitment Fee;
c) Alteration of the date of payment of any
sum;
d) Any increase in the Facility Amount;
e) Any change in the definition of Majority
Banks or Special Majority Banks;
f) Any change to the amendment clause;
g) Any change to any clause relating to the
conduct of the Tender;
h) Other specified clauses.
Syndication strategy and The Parent will provide the Arrangers with the
the role of the necessary assistance during syndication. The Parent's
assistance will
<PAGE> 12
Parent: include providing all requested information for the
Information Memorandum, making management
presentations and if necessary hosting site visits in
addition to assisting with answering banks'
questions. The Parent will co-operate fully with the
Arrangers to ensure the participation of banks in
syndication.
The Arrangers reserve the right to launch syndication
at any time following the announcement of the Tender.
Market Conditions: The Arrangers will use all reasonable efforts to
complete the syndication on the terms and conditions
contained herein. Subject to the Facility Amount
remaining unchanged, the Arrangers shall be entitled
to change the pricing, terms or structure of the
Facility if the Arrangers determines that such
changes are advisable in order to ensure a successful
syndication of the Facility. Such steps will only be
taken after full discussion with the Borrowers and
changes relating to increases in the margins shall be
capped at 75bps and upfront fees shall be capped at
25bps (in both cases, of the total Facility Amount).
The provisions in this paragraph shall not be
superseded by the terms of the Facility Agreement
(but shall be documented in a separate side letter)
and shall remain in full force and effect until
syndication has been completed in a manner
satisfactory to the Arrangers.
Clear Market: During the period between the award of the mandate
and close of syndication of the Facility, neither the
Parent nor its subsidiaries will launch into the
market any bank or bond financing other than that
contemplated hereunder, or enter into discussions
with other debt providers without the prior consent
of the Arrangers.
Facility Agent: Morgan Guaranty Trust Company of New York
Agency Fee: As per side letter.
Expenses: All costs and expenses, including legal fees of
counsel acting on behalf of the Banks, reasonably
incurred in connection with the arrangement and
syndication of the Facility or in protecting their
rights, will be for the account of the Borrower.
Counsel to Lenders: Slaughter and May
Governing Law: Laws of England
Jurisdiction: The Obligors will submit to the non-exclusive
jurisdiction of the courts of England
Definitions: "Acquisition" shall mean the proposed acquisition by
Street of all the common stock in Court by means of
the Tender and Merger.
<PAGE> 13
"Finance Documents" shall mean the Facility Agreement
and the fee letters.
"Financial Indebtedness" shall mean:
(i) any indebtedness for monies
borrowed and debit balances at
banks;
(ii) any indebtedness (actual or
contingent) under guarantee, bond,
security, indemnity or other
commitment designed to assure any
creditor against loss in respect of
any Financial Indebtedness of any
third party;
(iii) any indebtedness under any
acceptance credit;
(iv) any indebtedness under any
debenture, note, bill of exchange
or commercial paper;
(v) any indebtedness for money owing in
respect of any interest rate swap
or cross-currency swap or forward
sale or purchase contract or other
form of interest or currency
hedging transaction;
(vi) any payment obligations under
finance leases; or
(vii) any other liability (actual or
contingent) in connection with
amounts raised under any other
transaction having the commercial
effect of a borrowing or raising of
money.
"Group" shall mean the Parent and all its
subsidiaries and subsidiary undertakings (including
Court and its subsidiaries and subsidiary
undertakings after the Tender).
"Information Memorandum" shall mean the information
memorandum prepared for the purpose of syndication of
the Facility.
"Majority Banks" shall mean at least 66.66% of the
Banks by reference to total Commitments at the
relevant time.
"Material Adverse Effect" shall mean a material
adverse effect on the ability of any Obligor to
perform its obligations under the Finance Documents.
"Material Subsidiary" shall mean any Subsidiary of
the Parent (other than Stagecoach Porterbrook Limited
and any Subsidiary of Stagecoach Porterbrook Limited)
whose consolidated turnover or gross assets represent
10% or more of the consolidated turnover or gross
assets of the Group.
"Merger" shall mean the proposed merger of Court and
a wholly-owned Subsidiary of Street.
"Obligors" shall mean the Borrowers and the
Guarantors.
"Press Release" shall mean the first public
announcement [by Street] in connection with the
Tender.
"Special Majority Banks" shall mean at least 75% of
the Banks by reference to total Commitments at the
relevant time.
"STB" shall mean the Surface Transportation Board.
"Subsidiary" shall mean a subsidiary as described in
section 736 of the Companies Act 1985.
<PAGE> 14
"Tender" shall mean the tender by [Street] for all
the common stock in Coach.
"Tender Documents" shall mean the Press Release and
any subsequent press release by Street relating to
the Tender, the offer document addressed to Court
stockholders and the Merger agreement (inclusion of
other documents in the definition to be discussed).
"Voting Trust" shall mean the voting trust
constituted by [trust document].
This offer will expire on 12 June 1999, unless extended by mutual consent.
/s/ /s/
- ------------------------------ ------------------------------
for and on behalf of for and on behalf of
CREDIT SUISSE FIRST BOSTON J.P. MORGAN SECURITIES LTD.
/s/ /s/
- ------------------------------ ------------------------------
for and on behalf of for and on behalf of
THE ROYAL BANK OF THE GOVERNOR AND COMPANY OF
SCOTLAND PLC THE BANK OF SCOTLAND
Agreed and accepted by
/s/ Keith Cochrane
- ------------------------------
For and on behalf of
Stagecoach Holdings PLC
<PAGE> 1
Exhibit 11(c)(1)
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 12, 1999
AMONG
STAGECOACH HOLDINGS PLC,
SCH HOLDINGS CORP.,
SCH ACQUISITION CORP.
AND
COACH USA, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
THE OFFER AND THE MERGER
Section 1.1 The Offer................................................................ 1
Section 1.2 Company Action........................................................... 3
Section 1.3 Directors Following the Offer............................................ 4
Section 1.4 Voting Trust............................................................. 6
Section 1.5 The Merger............................................................... 6
Section 1.6 Effective Time........................................................... 6
Section 1.7 Effects of the Merger.................................................... 7
Section 1.8 Certificate of Incorporation; By-laws.................................... 7
Section 1.9 Directors and Officers................................................... 7
Section 1.10 Subsequent Merger........................................................ 7
Section 1.11 Right to Revise Structure of Merger...................................... 7
ARTICLE II
CONVERSION OF SHARES; STOCKHOLDERS MEETING
Section 2.1 Conversion of Securities................................................. 8
Section 2.2 Treatment of Company Stock Options....................................... 9
Section 2.3 Dissenting Shares........................................................ 9
Section 2.4 Surrender of Shares; Stock Transfer Books................................ 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization, Standing and Corporate Power............................... 11
Section 3.2 Subsidiaries............................................................. 12
Section 3.3 Capital Structure........................................................ 12
Section 3.4 Authority; Noncontravention.............................................. 14
Section 3.5 SEC Documents; Financial Statements; Undisclosed Liabilities............. 16
Section 3.6 Offer Documents, Etc..................................................... 16
Section 3.7 Absence of Certain Changes or Events..................................... 17
Section 3.8 Litigation; Labor Matters; Compliance with Laws.......................... 17
Section 3.9 Employee Benefit Plans................................................... 18
Section 3.10 Taxes.................................................................... 20
Section 3.11 Environmental Matters...................................................... 21
Section 3.13 No Rights Plan........................................................... 23
Section 3.14 Intellectual Property.................................................... 23
Section 3.15 Year 2000................................................................ 23
Section 3.16 Ownership of Assets...................................................... 24
Section 3.17 Insurance................................................................ 24
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
Section 3.18 Brokers.................................................................. 24
Section 3.19 Opinion of Company Financial Advisor..................................... 24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.1 Organization and Standing................................................ 25
Section 4.2 Authority; Noncontravention.............................................. 25
Section 4.3 Offer Documents, Proxy Statement, Etc.................................... 26
Section 4.4 Financing................................................................ 26
Section 4.5 Brokers.................................................................. 27
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company........................................ 27
Section 5.2 Access to Information.................................................... 29
Section 5.3 Consents and Approvals................................................... 30
Section 5.4 Employee Matters......................................................... 30
Section 5.5 No Solicitation.......................................................... 31
Section 5.6 Certain Financing Matters................................................ 32
Section 5.7 Reasonable Best Efforts.................................................. 33
Section 5.8 Publicity................................................................ 33
Section 5.9 Notification of Certain Matters.......................................... 33
Section 5.10 Directors' and Officers' Insurance and Indemnification................... 33
Section 5.11 Proxy Statement; Company Stockholders Meeting............................ 34
Section 5.12 Parent Circular; Parent Shareholders Meeting............................. 35
Section 5.13 Registration Rights...................................................... 36
Section 5.14 Dividend Access Shares................................................... 37
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to the Obligations of Each Party.............................. 38
ARTICLE VII
TERMINATION
Section 7.1 Termination.............................................................. 38
Section 7.2 Effect of Termination.................................................... 40
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Costs and Expenses....................................................... 42
Section 8.2 Amendment and Modification............................................... 42
Section 8.3 Waiver; Remedies Cumulative.............................................. 42
Section 8.4 Nonsurvival of Representations and Warranties............................ 42
Section 8.5 Notices.................................................................. 42
Section 8.6 Interpretation........................................................... 43
Section 8.7 Counterparts; Facsimile.................................................. 44
Section 8.8 Entire Agreement; No Third Party Beneficiaries........................... 44
Section 8.9 Severability............................................................. 44
Section 8.10 Specific Performance..................................................... 44
Section 8.11 Governing Law............................................................ 44
Section 8.12 Assignment............................................................... 45
Section 8.13 Consent to Jurisdiction.................................................. 45
</TABLE>
Annex I -- Conditions to the Offer
Annex II -- Terms of Subsequent Merger
Exhibit A -- Voting Trust Agreement
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 12, 1999,
among STAGECOACH HOLDINGS plc, a public limited company organized under the laws
of Scotland ("Parent"), SCH HOLDINGS CORP., a Delaware corporation and a wholly
owned subsidiary of Parent ("Holding Sub"), SCH ACQUISITION CORP., a Delaware
corporation and a wholly owned subsidiary of Holding Sub ("Merger Sub"), and
COACH USA, INC., a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of the Company has (i)
determined that this Agreement and the transactions contemplated hereby,
including the $42.00 (such amount, or such higher amount as may be paid per
Share pursuant to the Offer, the "Per Share Price") to be paid for each
outstanding share (collectively, the "Shares") of Common Stock, par value $.01
per share (the "Company Common Stock"), in the Offer (as defined in Section 1.1)
and the Merger (as defined in Section 1.5), is advisable and fair to and in the
best interests of the stockholders of the Company, (ii) approved this Agreement
and the transactions contemplated hereby and (iii) resolved to recommend
acceptance of the Offer, and adoption of this Agreement, by such stockholders;
WHEREAS, the Boards of Directors of Parent, Holding Sub and
Merger Sub have approved, and deem it in the best interests of their respective
shareholders to consummate, the Offer, the Merger and the other transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of the Company has approved
the transactions contemplated by this Agreement, including the transactions
contemplated by the various Tender Agreements executed as of the date hereof
between Parent, Holding Sub and certain stockholders of the Company (the "Tender
Agreements"), in accordance with the provisions of Section 203 of the Delaware
General Corporation Law (the "DGCL").
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
Section 1.1 The Offer. (a) Parent shall cause Holding Sub to,
and Holding Sub shall, as soon as practicable after the date hereof, but in any
event within five business days after the public announcement of the execution
hereof, commence (within the meaning of Rule 14d-2(a) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), a tender offer (the
"Offer") for all of the outstanding Shares at a per share price equal to the Per
Share Price, net to the sellers thereof in cash, subject to the conditions set
forth in Annex I hereto (the "Offer Conditions") including the Minimum Condition
(as defined therein) and the termination provisions of Article VII hereof.
Holding Sub shall consummate the Offer on the terms and subject to the
conditions provided in this Section 1.1. Subject to the terms and conditions of
this
<PAGE> 6
2
Agreement, the obligation of Holding Sub to accept for payment Shares tendered
pursuant to the Offer shall be subject to the satisfaction or waiver by Holding
Sub of the Offer Conditions.
(b) The Offer shall be made by means of an offer to purchase
which shall contain as conditions only the Minimum Condition and the other
conditions set forth in Annex I hereto, and, subject to the succeeding sentence,
shall otherwise contain, and be entirely consistent with, the terms and
conditions of the Offer as described in this Agreement. Each of Holding Sub and
Parent expressly reserves the right, in its sole discretion, to waive any such
condition and make any other changes to the terms of the Offer, provided that,
without the consent of the Company, neither Parent nor Holding Sub shall (i)
amend or waive the Minimum Condition or the condition (the "HSR Condition")
relating to the termination or expiration of applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), or the condition (the "STB Condition") relating to the receipt of a
favorable informal advisory opinion regarding the Voting Trust Agreement (as
defined in Section 1.4) or an approval of Parent's and Holding Sub's acquisition
of the federally regulated carriers controlled by the Company from the United
States Surface Transportation Board (the "STB"), (ii) amend any other condition
of the Offer as set forth herein or in Annex I hereto, (iii) reduce the Per
Share Price, (iv) change the form of consideration to be paid in the Offer
(other than by adding cash consideration), (v) reduce the maximum number of
Shares to be purchased in the Offer, or (vi) amend any other term of the Offer
in a manner which is adverse to the holders of Shares. The Per Share Price shall
be net to the sellers in cash, without interest, subject to reduction only for
any applicable federal back-up withholding taxes. Notwithstanding the foregoing,
Holding Sub may, without the consent of the Company, subject to the Company's
right to terminate this Agreement pursuant to Article VII, (i) extend the Offer
on one or more occasions for up to ten business days for each such extension
beyond the then-scheduled expiration date (the initial scheduled expiration date
being 20 business days following commencement of the Offer), if at the
then-scheduled expiration date of the Offer any of the conditions to Holding
Sub's obligation to accept for payment and pay for the Shares shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
and, at the request of the Company, Holding Sub shall, subject to Parent's right
to terminate this Agreement pursuant to Article VII, extend the Offer for
additional periods up to but not later than January 31, 2000, but shall not be
required to so extend if any of the conditions not satisfied or earlier waived
on the then-scheduled expiration date are one or more of the Minimum Condition
or the conditions set forth in paragraphs (a), (c) or (d) of Annex I hereto,
provided that (x) if the only condition not satisfied is the Minimum Condition,
the satisfaction or waiver of all other conditions shall have been publicly
disclosed at least five business days before termination of the Offer and (y) if
paragraph (a) or (d) of Annex I hereto has not been satisfied and the failure to
so satisfy can be remedied, the Offer shall not be terminated unless the failure
is not remedied within 10 business days after Parent has furnished the Company
with written notice of such failure, (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer, and (iii) extend the Offer for an aggregate period of not more than five
business days beyond the latest expiration date that would otherwise be
permitted under clause (i) or (ii) of this sentence if there shall not have been
tendered sufficient Shares so that the Merger could be effected without a
meeting of the Company's stockholders in accordance with Section 253 of the
DGCL. Subject to the terms of the Offer, including the Offer Conditions, Holding
Sub shall
<PAGE> 7
3
accept for payment and pay for all Shares duly tendered at the earliest time at
which it is permitted to do so under applicable provisions of the Exchange Act;
provided that, as set forth above, Holding Sub shall have the right, in its sole
discretion, to extend the Offer for up to five business days notwithstanding the
prior satisfaction of the Offer Conditions, in order to attempt to satisfy the
requirements of Section 253 of the DGCL. It is agreed that the Offer Conditions
other than the Minimum Condition, the HSR Condition, the STB Condition and the
condition contained in clause (c) of Annex I are solely for the benefit of
Holding Sub and that all Offer Conditions may be asserted by Holding Sub
regardless of the circumstances resulting in a condition not being satisfied
(except for any action or inaction by Holding Sub, Merger Sub or Parent
constituting a breach of this Agreement) and, except with respect to the Minimum
Condition, the HSR Condition, the STB Condition and the condition contained in
clause (c) of Annex I, may be waived by Holding Sub, in whole or in part at any
time and from time to time, in its sole discretion.
(c) On the date of commencement of the Offer, Parent and
Holding Sub, with the cooperation of, and prior review thereof by, the Company,
shall file with the SEC a Schedule 14D-1 (the "Schedule 14D-1") with respect to
the Offer that will contain or will incorporate by reference the Offer (or
portions thereof) and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents"). The
Schedule 14D-1, and all amendments and supplements thereto, shall comply as to
form in all material respects with the provisions of all applicable federal
securities laws. Parent, Holding Sub, and the Company with respect to
information supplied by it for use in the Schedule 14D-1 or the Offer Documents,
agree promptly to correct the Schedule 14D-1 or the Offer Documents if and to
the extent that any of them shall have become false or misleading in any
material respect or any event occurs which should be set forth in an amendment
or supplement to the Schedule 14D-1, and Holding Sub shall take all steps
necessary to cause the Schedule 14D-1 as so corrected or supplemented to be
filed with the SEC and such Offer Documents as so corrected to be disseminated
to holders of Shares and any other holders of securities of the Company (if
any), in each case as and to the extent required by applicable federal
securities laws. In addition, Parent and Holding Sub agree to promptly provide
the Company and its counsel in writing with any comments Parent, Holding Sub or
their counsel may receive from time to time from the SEC or its staff regarding
the Schedule 14D-1 or the Offer Documents.
Section 1.2 Company Action. (a) The Board of Directors of the
Company has received the opinion of Morgan Stanley & Co. Incorporated (the
"Company Financial Advisor") to the effect set forth in Section 3.19. The
Company has been authorized by the Company Financial Advisor to permit, subject
to its prior review and consent (such consent not to be unreasonably withheld),
the inclusion of such opinion and appropriate references thereto in the Offer
Documents and in the Schedule 14D-9 referred to below and the Proxy Statement
referred to in Section 5.11. The Company hereby consents to the inclusion in the
Offer Documents of the recommendation of the Company's Board of Directors
described in Section 3.4, unless the Company's Board of Directors determines in
good faith, only after receipt of and based upon advice from outside legal
counsel to the Company, that it is required by fiduciary duties under applicable
law to make an Adverse Change in the Company Recommendation (as defined in
Section 5.11) in response to a Superior Proposal (as defined in Section 5.5).
<PAGE> 8
4
(b) The Company agrees to file with the SEC and mail to its
stockholders contemporaneously with the commencement of the Offer a
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
which shall reflect the actions of the Board of Directors referred to above and
shall comply in all material respects with the provisions of applicable federal
securities laws. The Company, and Parent, Holding Sub and Merger Sub with
respect to information supplied by either of them for use in the Schedule 14D-9,
agree promptly to correct the Schedule 14D-9 if and to the extent that it shall
have become false or misleading in any material respect, and the Company shall
take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and mailed to holders of Shares and any other holders of securities
of the Company (if any) to the extent required by applicable federal securities
laws. The Schedule 14D-9 shall contain the recommendation of the Board of
Directors of the Company that the holders of Shares accept the Offer, unless and
until the Company's Board of Directors determines in good faith, only after
receipt of and based upon advice from outside legal counsel to the Company, that
it is required by fiduciary duties under applicable law to make an Adverse
Change in the Company Recommendation in response to a Superior Proposal. In
addition, the Company agrees to promptly provide Parent and their counsel in
writing with any comments the Company or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9.
(c) The Company shall promptly furnish Parent or Holding Sub
with a list of the record holders of Shares and their addresses, as well as
mailing labels containing the names and addresses of the record holders of
Shares and lists of securities positions of Shares held in stock depositories,
each as of the most recent practicable date, and shall furnish Parent or Holding
Sub with such additional information, including updated lists of holders of
Shares, mailing labels and lists of securities positions, and other assistance
as Parent, Holding Sub or their agents may reasonably request for the purpose of
disseminating the Offer Documents and communicating with the record and
beneficial holders of Shares with respect thereto.
Section 1.3 Directors Following the Offer. (a) Effective upon
the payment by Holding Sub for the Shares tendered pursuant to the Offer in
accordance with the terms of this Agreement, and subject to the provisions of
the Interstate Commerce Act, as amended by the ICC Termination Act (the "ICA"),
and the rules, regulations and practices of the STB, the Company shall be
required to use its reasonable best efforts as set forth in Section 1.3(c) to
cause to be appointed to the Board of Directors of the Company an individual
designated by Parent, who shall be identified as a suitable candidate by Parent
prior to the consummation of the Offer and who shall not be a director, officer
or employee of Parent and shall be reasonably satisfactory to the Board of
Directors of the Company. The Company's obligations to appoint such individual
to the Board of Directors of the Company shall be subject to the provisions of
the ICA and the rules, regulations and practices of the STB.
(b) Promptly upon the later of (x) payment by Holding Sub for
the Shares tendered pursuant to the Offer in accordance with the terms of this
Agreement and (y) the date on which Parent is lawfully permitted to assume
control over the Company's common carrier motor coach subsidiaries pursuant to
STB approval or exemption (the later of (x) and (y), the "Control Date"), Parent
shall be entitled to designate a number of directors on the Board of Directors
of
<PAGE> 9
5
the Company (including any designated pursuant to Section 1.3(a)) equal to the
product of the total number of the directors on such Board (after giving effect
to the directors elected pursuant to this sentence) multiplied by the percentage
that such number of Shares owned by Holding Sub and its affiliates bears to the
number of Shares outstanding, rounded to the nearest whole number, but in no
event less than a majority.
(c) At the time specified in Section 1.3(a) or (b), as the case
may be, the Company shall, upon request of Parent, use its reasonable best
efforts promptly either to increase the size of the Board of Directors of the
Company or, at the Company's election or at Parent's request, secure the
resignations of such number of its incumbent directors as is necessary to enable
Parent's designees pursuant to Section 1.3(a) or (b), as the case may be, to be
so elected or appointed to the Company's Board, and shall cause Parent's
designees to be so elected or appointed. The Company will use its reasonable
best efforts to cause directors designated by Parent pursuant to Section 1.3(b)
to constitute the same percentage as is on the board (but in any event at least
one Parent designee) (i) of each committee of the Board of Directors, (ii) of
each board of directors of each subsidiary of the Company and (iii) of each
committee of each such board, in each case only to the extent permitted by law
and the rules of the New York Stock Exchange (the "NYSE") to the extent
applicable. Notwithstanding the foregoing, until the Effective Time (as defined
in Section 1.6 hereof), the Company and Parent shall use all reasonable best
efforts to retain as members of the Company's Board of Directors at least two
directors who are directors of the Company on the date hereof and who are not
designated by Parent or employees of the Company or its subsidiaries (the
"Independent Directors").
(d) The Company's obligations to appoint designees to the Board
of Directors pursuant to Section 1.3(b) shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to
fulfill its obligations under this Section 1.3 and shall include in the Schedule
14D-9 or a separate Rule 14f-1 information statement mailed to stockholders
promptly after the commencement of the Offer such information with respect to
the Company and its officers and directors as is required under Section 14(f)
and Rule 14f-1 to fulfill its obligations under this Section 1.3. Parent or
Holding Sub will supply to the Company and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
(e) Notwithstanding anything in this Agreement to the contrary,
in the event that Parent's designees are appointed or elected pursuant to this
Section 1.3, after the payment for the Shares pursuant to the Offer and prior to
the Effective Time, the affirmative vote of a majority of the Independent
Directors (who shall act as an independent committee of the Board of Directors
for this purpose) shall be required, and alone shall be sufficient, to take
action by the Company to (i) amend or terminate this Agreement, (ii) exercise or
waive any of the Company's rights or remedies hereunder, (iii) extend the time
for performance of Parent's and Merger Sub's respective obligations hereunder,
or (iv) approve any other action by the Company that could adversely affect the
interests of the stockholders of the Company (other than Parent, Holding Sub and
their affiliates) with respect to the transactions contemplated hereby.
<PAGE> 10
6
Section 1.4 Voting Trust. The parties agree that, (i)
immediately upon the purchase by Parent, Holding Sub or their affiliates of
shares of the Company Common Stock pursuant to the Offer or otherwise, such
shares shall be deposited in one or more separate, independent, irrevocable
voting trusts (collectively, the "Voting Trust") in accordance with the terms
and conditions of one or more voting trust agreements (collectively, the "Voting
Trust Agreement") substantially in the form attached hereto as Exhibit A and
(ii) upon consummation of the Merger, all outstanding shares of the Surviving
Corporation shall be deposited in the Voting Trust. Subject to applicable law
and to the rules, regulations and practices of the STB, the Voting Trust
Agreement may be modified or amended at any time by Parent in its sole
discretion; provided that (i) prior to the Effective Time, the Voting Trust
Agreement may not be modified or amended without the prior written approval of
the Company unless such modification or amendment is not inconsistent with this
Agreement and is not adverse to the Company or its stockholders and would not
reasonably be expected to have an adverse effect on receipt of a favorable
informal advisory opinion from the STB and (ii) the Voting Trust Agreement may
not be modified or amended without the prior written approval of the Company if
such modification or amendment would reasonably be expected to increase the
liability exposure of the Board of Directors of the Surviving Corporation under
applicable law. No power of Parent or Holding Sub provided for in the Voting
Trust Agreement may be exercised in a manner which violates this Agreement.
Parent, in consultation with the Company, shall use its reasonable best efforts
to take, or cause to be taken, all actions necessary, proper or advisable to
obtain a favorable informal advisory opinion from the STB staff to the effect
that the Voting Trust effectively insulates Parent from any violation of the ICA
and STB rules or policies against unauthorized acquisition of control of
regulated carriers. In furtherance and not in limitation of the foregoing,
Parent and the Company agree that: (i) Parent shall make any filings required by
the STB with respect to the Voting Trust and the Company shall make any filings
reasonably required by Parent with respect thereto; (ii) Parent shall consult
with the Company in connection with any discussions or proceedings initiated by
Parent with the STB with respect to the Voting Trust; provided that the Company
shall not initiate any such discussions or proceedings without Parent's prior
written consent; and (iii) Parent, with the Company's consent, shall change or
modify the terms of the Voting Trust Agreement to the extent required by the STB
as a condition to the issuance of such advisory opinion, so long as the required
changes or modifications do not, in the aggregate, materially affect Parent's
rights thereunder. Any trustee of the Voting Trust appointed by Parent and
Holding Sub pursuant to the Voting Trust Agreement (a "Trustee") shall be
reasonably satisfactory to the Board of Directors of the Company.
Section 1.5 The Merger. Upon the terms and subject to the
conditions of this Agreement, and in accordance with the DGCL, at the Effective
Time, Merger Sub shall be merged with and into the Company (the "Merger"). As a
result of the Merger, the separate corporate existence of Merger Sub shall cease
and the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
Section 1.6 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the DGCL. The date and time of the
filing of the
<PAGE> 11
7
Certificate of Merger with the Secretary of State of the State of Delaware (or
such later time as shall be agreed to in writing by the parties hereto and is
specified in the Certificate of Merger) will be the "Effective Time". At or
prior to the Effective Time, a closing shall be held at the offices of Simpson
Thacher & Bartlett, 425 Lexington Avenue, New York, New York 10017, or such
other place as the parties shall agree.
Section 1.7 Effects of the Merger. The Merger shall have the
effects set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
properties, rights, privileges, immunities, powers and franchises of the Company
and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.8 Certificate of Incorporation; By-laws. (a) At the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended to be identical to the Certificate of Incorporation of Merger
Sub as in effect immediately prior to the Effective Time; provided that (i) the
name of the Surviving Corporation shall be the name of the Company; (ii) the
number of shares of authorized common stock shall be equal to the number of
shares of authorized Company Common Stock set forth in the Certificate of
Incorporation of the Company as in effect immediately prior to the Effective
Time; and (iii) the Certificate of Incorporation of the Surviving Corporation
shall include the provisions of Articles Seven and Eight of the Certificate of
Incorporation of the Company as in effect on the date hereof.
(b) At the Effective Time and without any further action on the
part of the Company or Merger Sub, the By-laws of Merger Sub shall be the
By-laws of the Surviving Corporation and thereafter may be amended or repealed
in accordance with their terms or the Certificate of Incorporation of the
Surviving Corporation and as provided by law.
Section 1.9 Directors and Officers. The directors of Merger Sub
(if the Effective Time follows the Control Date) or the Company (if the
Effective Time precedes the Control Date), in either case immediately prior to
the Effective Time, shall be the initial directors of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
By-laws of the Surviving Corporation, and the officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their resignation or removal or until
their respective successors are duly elected or appointed (as the case may be)
and qualified.
Section 1.10 Subsequent Merger. Following the Effective Time, at
Parent's election, the Surviving Corporation shall be merged with and into
Holding Sub (the "Subsequent Merger"). The Subsequent Merger shall be effected
on the terms and have the effects as are set forth on Annex II hereto.
Section 1.11 Right to Revise Structure of Merger. At Parent's
election, the Merger may alternatively be structured so that the Company is
merged with and into Merger Sub, Holding Sub or another direct or indirect
wholly owned subsidiary of Parent, or another direct or indirect wholly owned
subsidiary of Parent is merged with and into the Company; provided,
<PAGE> 12
8
however, that no such change shall (i) alter or change the amount or kind of the
consideration to be issued to the Company's stockholders in the Merger as set
forth in Article II hereof or the treatment of the holders of the Company Stock
Options (as hereinafter defined), (ii) materially impede or delay consummation
of the Merger, or (iii) release Parent from any of its obligations hereunder;
provided, however, that the Company shall be deemed not to have breached any of
its representations and warranties and covenants herein if and to the extent
such breach would have been attributable to such election. In the event of such
an election, the Company agrees to execute any appropriate documentation as may
be reasonably requested by Parent to reflect such election.
ARTICLE II
CONVERSION OF SHARES; STOCKHOLDERS MEETING
Section 2.1 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) Each Share (other than any Shares to be canceled pursuant to
Section 2.1(b) and any Dissenting Shares (as defined in Section 2.3(a))
shall be canceled, extinguished and converted automatically into the
right to receive an amount per share in cash equal to the Per Share
Price (the "Merger Consideration") payable to the holder thereof,
without interest, upon surrender of the certificate that prior to the
Merger represented such Share in the manner provided in Section 2.4,
less any required withholding taxes.
(b) Each Share held in the treasury of the Company and each
Share owned by Parent, Holding Sub or any other direct or indirect
subsidiary of Parent or of the Company (including the Shares held in the
Voting Trust), in each case immediately prior to the Effective Time,
shall be canceled and retired without any conversion thereof and no
payment or distribution shall be made with respect thereto.
(c) (i) The shares of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted
into and become equal to a number of identical validly issued, fully
paid and nonassessable shares of common stock of the Surviving
Corporation as is equal to the number of Shares immediately prior to the
Effective Time, and (ii) each share of preferred or other capital stock
of Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid
and nonassessable share of identical preferred or other capital stock of
the Surviving Corporation and, in the case of each of (i) and (ii), if
the Effective Time precedes the Control Date, each such share shall be
deposited in the Voting Trust.
(d) Each share of Series A Voting Preferred Stock, par value
$.01 per share (the "Voting Preferred Stock"), of the Company
outstanding immediately prior to the
<PAGE> 13
9
Effective Time shall be cancelled and retired without any conversion
thereof and no payment or distribution shall be made with respect
thereto.
Section 2.2 Treatment of Company Stock Options. (a) Upon the
consummation of the Offer, except as otherwise agreed between the Company and
any holder of any Company Stock Option, each then outstanding employee stock
option and any other stock or stock-based right and each then outstanding
director stock option and any other stock or stock-based right (each, a "Company
Stock Option"), whether or not then vested or exercisable, shall be (or, if not
previously vested and exercisable, shall become), consistent with the plans and
agreements applicable to such Company Stock Options, vested and exercisable and
such Company Stock Options immediately thereafter shall be canceled by the
Company, and each holder of a canceled Company Stock Option with an exercise
price that is less than the Per Share Price shall be entitled to receive at the
consummation of the Offer or as soon as practicable thereafter (or if the grant
of the Company Stock Option does not qualify as an exempt acquisition pursuant
to Rule 16b-3 under the Exchange Act, the date six months and one day following
the grant of such Company Stock Option, if later) from the Company (and, if
necessary, Parent shall provide funds to the Company sufficient for such
payments) in consideration for the cancellation of such Company Stock Option an
amount in cash equal to the product of (i) the number of shares of Company
Common Stock previously subject to such Company Stock Option and (ii) the
excess, if any, of the Per Share Price over the exercise price per share of
Company Common Stock previously subject to such Company Stock Option.
(b) The Company shall use its reasonable best efforts to take
all such actions as are reasonably necessary to provide that (i) no further
issuance, transfer or grant of any capital stock of the Surviving Corporation or
any interest in respect of any capital stock of the Surviving Corporation shall
be made on or after the consummation of the Offer under any Company Plan and
(ii) following the consummation of the Offer, no holder of a Company Stock
Option or any participant in any Company Plan shall have the right thereunder to
acquire any capital stock of the Surviving Corporation.
Section 2.3 Dissenting Shares. (a) Notwithstanding anything in
this Agreement to the contrary, shares of Company Common Stock that are issued
and outstanding immediately prior to the Effective Time and which are held by
stockholders who have not voted in favor of or consented to the Merger and who
shall have delivered a written demand for appraisal of such shares of Company
Common Stock in the time and manner provided in Section 262 of the DGCL and
shall not have failed to perfect or shall not have effectively withdrawn or lost
their rights to appraisal and payment under the DGCL (the "Dissenting Shares")
shall not be converted into the right to receive the Merger Consideration, but
shall be entitled to receive the consideration as shall be determined pursuant
to Section 262 of the DGCL; provided, however, that if such holder shall have
failed to perfect or shall have effectively withdrawn or lost his, her or its
right to appraisal and payment under the DGCL, such holder's shares of Company
Common Stock shall thereupon be deemed to have been converted, at the Effective
Time, into the right to receive the Merger Consideration set forth in Section
2.1(a) of this Agreement, without any interest thereon, less any required
withholding taxes.
<PAGE> 14
10
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal pursuant to Section 262 received by the Company,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company shall not, except with the prior written consent of Parent,
make any payment with respect to any such demands for appraisal or offer to
settle or settle any such demands.
Section 2.4 Surrender of Shares; Stock Transfer Books. (a) Prior
to the Effective Time, Parent shall designate a bank or trust company (which
shall be reasonably satisfactory to the Company) to act as agent for the holders
of Shares in connection with the Merger (the "Paying Agent") to receive and
disburse the Merger Consideration to which holders of Shares shall become
entitled pursuant to Section 2.1(a). At or prior to the Effective Time, Parent
or Holding Sub will make available to the Paying Agent sufficient funds to make
all payments pursuant to Section 2.4(b). Such funds shall be invested by the
Paying Agent as directed by Parent, provided that such investments shall be in
obligations of or guaranteed by the United States of America, in commercial
paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc.
or Standard & Poor's Rating Services, respectively, or in deposit accounts,
certificates of deposit, bank repurchase or reverse repurchase agreements or
banker's acceptances of, or Eurodollar time deposits purchased from, commercial
banks with capital exceeding $500 million. Any net profit resulting from, or
interest or income produced by, such investments will be payable to the
Surviving Corporation or Parent, as Parent directs.
(b) As soon as practicable after the Effective Time, the
Surviving Corporation shall cause to be mailed to each record holder as of the
Effective Time of an outstanding certificate or certificates which immediately
prior to the Effective Time represented Shares (the "Certificates"), a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Paying Agent) and instructions for use in effecting
the surrender of the Certificates for payment of the Merger Consideration
therefor. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
represented by such Certificate, and such Certificate shall then be canceled. No
interest shall be paid or accrued for the benefit of holders of the Certificates
on the Merger Consideration payable upon the surrender of the Certificates. If
payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered, it shall be a
condition of payment that the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Parent that such tax either has been paid or is not
applicable.
(c) At any time following six months after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds (including any
<PAGE> 15
11
interest and other income received with respect thereto) which had been made
available to the Paying Agent and which have not been disbursed to holders of
Certificates, and thereafter such holders shall be entitled to look to the
Surviving Corporation (subject to abandoned property, escheat or other similar
laws) only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates. If any Certificates shall not
have been surrendered immediately prior to the date on which any Merger
Consideration in respect of such certificate would escheat to or become the
property of any Governmental Entity (as defined below), any such Merger
Consideration shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto. Notwithstanding the foregoing, none
of the Surviving Corporation, Parent or the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(d) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of shares of Company Common Stock
on the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares except
as otherwise provided for herein or by applicable law. All cash paid upon the
surrender for exchange of Certificates in accordance with the terms of this
Article II shall be deemed to have been in full satisfaction of all rights
pertaining to the shares of Company Common Stock exchanged theretofore
represented by such Certificates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, Holding Sub and
Merger Sub that, except as set forth in the disclosure schedule (the "Disclosure
Schedule") delivered to Parent by the Company at the time of execution of this
Agreement, it being agreed that disclosure of any item on the Disclosure
Schedule shall be deemed to be disclosed with respect to the Section of this
Agreement to which such item is correspondingly numbered and all other Sections
of this Agreement to which the relevance of such item is reasonably apparent
from the face of the Disclosure Schedule:
Section 3.1 Organization, Standing and Corporate Power. (a) Each
of the Company and each of its Significant Subsidiaries (within the meaning of
Rule 1-02 of Regulation S-X of the SEC) is duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is incorporated
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of the Company and each of its subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, could not reasonably be expected to have a
Material
<PAGE> 16
12
Adverse Effect. For the purposes of this Agreement, a "Material Adverse Effect"
or a "Material Adverse Change" shall mean an effect or change that either
individually or in the aggregate with all other such effects or changes is or
would be materially adverse to the business, assets, operations, properties,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole, or would prevent, hinder or materially delay the consummation
of the transactions contemplated by this Agreement; provided that (i) any
adverse effect or change after the date hereof resulting from or relating to
general business or economic conditions shall be disregarded, (ii) any adverse
effect or change after the date hereof resulting from or relating to conditions
generally affecting the industry in which the Company competes shall be
disregarded, (iii) any adverse effect or change resulting from or relating to
the announcement or pendency of the Offer, the Merger or any other transaction
contemplated by this Agreement (other than any default of the Company under the
Credit Agreement or any related agreement, the Senior Subordinated Notes, or the
terms of any other indebtedness of the Company or its subsidiaries resulting
from such announcement or pendency or from the negotiation, execution or
announcement of this Agreement) shall be disregarded, and (iv) any adverse
effect or change resulting from compliance with any limitation on the Company's
and its subsidiaries' operations imposed by this Agreement shall be disregarded.
(b) Prior to the date of this Agreement, the Company has
delivered to Parent complete and correct copies of the Company's Certificate of
Incorporation and the By-laws and has made available complete and correct copies
of the certificates of incorporation and by-laws (or other organizational
documents) of each of its subsidiaries, in each case as in effect on the date of
this Agreement.
Section 3.2 Subsidiaries. Section 3.2 of the Disclosure Schedule
lists all direct or indirect subsidiaries of the Company. Except as set forth in
Section 3.2 of the Disclosure Schedule, all the outstanding shares of capital
stock of each such subsidiary have been validly issued and are fully paid and
nonassessable and are owned (of record and beneficially) by the Company and/or
one or more of its wholly owned subsidiaries, free and clear of all pledges,
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever (collectively, "Liens"), other than Liens pursuant to the
Credit Agreement and related documents. Except as set forth in Section 3.2 of
the Disclosure Schedule, the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation, partnership,
business association, joint venture or other entity.
Section 3.3 Capital Structure. (a) The authorized capital stock
of the Company consists of (i) 100,000,000 shares of Company Common and (ii)
500,000 shares of preferred stock, par value $.01 per share (the "Preferred
Stock"). As of the close of business on June 7, 1999 there were: (i) 25,367,387
shares of Company Common Stock issued and outstanding (including no shares held
in the treasury of the Company); (ii) 4,087,755 shares of Company Common Stock
issuable upon exercise of outstanding Company Stock Options (with an average
exercise price of $25.2533 for all such Company Stock Options), of which
4,012,755 shares are issuable under Company Stock Options at an exercise price
below the Merger Consideration (the average exercise price for all such Company
Stock Options being $24.8971), in all cases without taking into account Company
Stock Options forfeited after March 30, 1999; (iii) 728,374 shares of Company
Common Stock reserved for issuance upon exercise of authorized but unissued
<PAGE> 17
13
Company Stock Options; (iv) 63,643 shares of Company Common Stock issuable upon
redemption by the holders of the 63,643 outstanding Dividend Access Shares, par
value $.01 per share (the "Dividend Access Shares"), of 3376249 Canada Inc., a
Canadian corporation (the "Canadian Subsidiary"); (v) 1,737,845 shares of
Company Common Stock issuable upon conversion by the holders of the $76,692,809
in aggregate principal amount of outstanding convertible subordinated notes of
the Company (the "Convertible Subordinated Notes") (with a weighted average
conversion price of $46.31 for all such Convertible Subordinated Notes), of
which $31,367,000 in aggregate principal amount have conversion prices less than
the Merger Consideration (the weighted average conversion price thereof being
$35.395) and are convertible into 887,714 shares of Company Common Stock; (vi)
one share of Voting Preferred Stock issued and outstanding with total voting
power equal to the number of outstanding Dividend Access Shares; and (vii)
40,000 shares of Company Common Stock issuable upon the exercise of outstanding
warrants with a per share exercise price of $26.00 and an expiration date of
July 26, 1999 (the "Warrants"). No shares of Company Common Stock have been
issued since June 7, 1999 except for any issued pursuant to the Company Stock
Options described above. Except as set forth above, no shares of capital stock
or outstanding other equity securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are duly authorized, validly issued, fully paid and nonassessable and were not
issued in violation of, and are not entitled to, preemptive rights. Except as
set forth above, there are no outstanding bonds, debentures, notes or other
indebtedness or other securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of the Company may vote. Except as set forth
above, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by which any of them is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of the Company or of any of its subsidiaries
or obligating the Company or any of its subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking.
(b) Other than as set forth above or in Section 3.3 of the
Disclosure Schedule , (i) there are no outstanding contractual obligations,
commitments, understandings or arrangements of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire or make any payment in
respect of any shares of capital stock of the Company or any of its subsidiaries
and (ii) there are no voting trusts or other agreements or understandings to
which the Company or any of its subsidiaries is a party with respect to the
voting of the capital stock of the Company or any of its subsidiaries.
(c) The Company and the Company's Board of Directors have taken
all actions necessary and required under the terms of the Warrants to provide
that, effective simultaneously with the Effective Time, each Warrant will be
exercisable solely for a sum in United States Dollars equal to the Per Share
Price, without any interest thereon, and will no longer entitle the holder
thereto to receive any capital stock of the Surviving Corporation. True and
complete copies of the documentation effecting the aforementioned actions have
been provided to Parent prior to the date hereof.
<PAGE> 18
14
(d) As of June 12, 1999, except as disclosed in the Company's
proxy statement relating to its 1999 Annual Meeting of Stockholders, to the
knowledge of the Company: (i) no person or group (within the meaning of Section
13(d)(3) of the Exchange Act) has beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of more than 5% of the outstanding Company
Common Stock and (ii) no person has made any filing under the HSR Act with
respect to the Company or the Company Common Stock.
(e) As of June 7, 1999, the only outstanding indebtedness for
borrowed money of the Company and its subsidiaries was (i) $150,000,000 in
aggregate principal amount of 9-3/8% Senior Subordinated Notes Due 2007 (the
"Senior Subordinated Notes"), (ii) the Convertible Subordinated Notes, (iii)
debt under the credit agreement dated as of August 14, 1998 among the Company,
NationsBank, N.A., as Agent and the financial institutions named therein (the
"Credit Agreement") of $398,000,000, and (iv) other indebtedness not exceeding
$100,000,000, the sources of which, and amounts attributable to each such
source, are set forth in Section 3.3(e) of the Disclosure Schedule (the "Other
Indebtedness"). True and complete copies of the Senior Subordinated Notes, the
Convertible Subordinated Notes, and the Credit Agreement (in each case, together
with any related agreements) have been made available to Parent prior to the
date hereof. Other than under the Credit Agreement and the Senior Subordinated
Notes, no indebtedness for borrowed money of the Company or its subsidiaries is
on terms which include any restriction upon the incurrence of indebtedness for
borrowed money by the Company or any of its subsidiaries or restricts the
ability of the Company or any of its subsidiaries to grant any Liens on its
properties or assets.
Section 3.4 Authority; Noncontravention. (a) The Company has the
requisite corporate and other power and authority to enter into this Agreement
and, subject to obtaining the Company Stockholder Approval (as defined in
Section 3.4(c)) (if required under the DGCL), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company, subject, in the case of the Merger, to the Company Stockholder Approval
(if required under the DGCL). This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(b) The Board of Directors of the Company, at a meeting duly
called and held, has by unanimous vote of the entire board (i) determined that
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, are advisable and fair to and in the best interests of the
stockholders of the Company and has taken all actions necessary to render the
provisions of Section 203 of the DGCL inapplicable to this Agreement, the Offer,
the Merger and the Tender Agreements, and (ii) resolved to recommend that the
stockholders of the Company tender their Shares in the Offer and adopt this
Agreement.
(c) The affirmative vote of a majority of the voting power of
the outstanding shares of the Company Common Stock and the Voting Preferred
Stock, voting together as a single class (the "Company Stockholder Approval"),
is the only vote of the holders of any class or series of the Company's or its
subsidiaries' securities necessary to approve this Agreement, the
<PAGE> 19
15
Merger and the other transactions contemplated hereby. Each of the directors of
the Company has committed to tender Shares owned by such director in the Offer
and not to withdraw such Shares (and the Company will furnish to Parent written
Tender Agreements from Mr. Frank AtLee, William Lynch, Paul Verrochi and Barnett
Rukin as promptly as practicable after the date hereof and in any event no later
than the date on which the Offer is commenced).
(d) Except as disclosed in Section 3.4 of the Disclosure
Schedule, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions hereof will not, conflict with, or result in any breach or
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of,
"put" right with respect to or other imposition of any obligation, or to loss of
any benefit under (each, a "Violation"), or result in the creation of any Lien
upon any of the properties or assets of the Company or any of its subsidiaries
under, (i) the Certificate of Incorporation or By-laws of the Company or the
comparable organizational documents of any of its subsidiaries, (ii) any loan or
credit agreement, note, note purchase agreement, bond, mortgage, indenture,
lease or other contract, agreement, instrument, permit, concession, franchise or
license (any of the foregoing, a "Contract") applicable to the Company or any of
its subsidiaries or their respective properties or assets or (iii) subject to
the Filings and Approvals referred to in Section 3.4(e), any judgment, order,
decree, arbitration award, statute, law, ordinance, rule or regulation ("Laws")
applicable to the Company or any of its subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such Violations and Liens that could not, individually or in the aggregate,
reasonably be reasonably be expected to have a Material Adverse Effect.
(e) No consent, approval, order or authorization ("Approvals")
of or from, or registration, declaration, filing or notice ("Filings") with or
to, any Federal, national, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity") or third party is required by, of
or with respect to the Company or any of its subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby except for (i) filing of a
premerger notification and report form under the HSR Act, the filing of any
applicable pre-merger notification under the Canada Competition Act and
obtaining a "no action" letter or similar approval ("Competition Act Approval")
and the filing of an application for review and an approval under the Investment
Canada Act ("Investment Canada Approval"), if applicable, and such Canadian
federal, provincial, territorial or municipal regulatory authorities as may be
applicable, (ii) the filing with the SEC of (x) the Schedule 14D-9, (y) if the
Company Stockholder Approval is required under the DGCL, a proxy or information
statement relating thereto (such proxy or information statement, as amended or
supplemented from time to time, the "Proxy Statement") and (z) a Current Report
on Form 8-K under the Exchange Act, as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (iii) the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iv) the applicable
requirements of the ICA and the rules and regulations of the STB; (v) required
filings with and notifications to the NYSE; (vi) the Approvals and Filings set
forth in Section 3.4 of the Disclosure Schedule, and (vii) such other Approvals
and Filings the failure of which to obtain or
<PAGE> 20
16
make could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
Section 3.5 SEC Documents; Financial Statements; Undisclosed
Liabilities. (a) The Company has filed all required reports, schedules, forms,
statements and other documents with the SEC since May 14, 1996 (collectively,
and in each case including all exhibits and schedules thereto and documents
incorporated by reference therein, the "SEC Documents"). As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents (including any and all financial statements included therein) filed
after January 1, 1998 (the "Recent SEC Documents") as of their respective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except to the extent revised or superseded by a subsequent filing
with the SEC (a copy of which has been provided to Parent prior to the date of
this Agreement). None of the Company's subsidiaries has been required to file
any reports, schedules, forms, statements or other documents with the SEC.
(b) The consolidated financial statements of the Company
included in the Recent SEC Documents (the "Financial Statements") complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles (except, in the case
of unaudited consolidated quarterly statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present, in all material respects,
the consolidated financial position of the Company and its subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited quarterly
statements, to normal year-end audit adjustments in amounts not material
individually or in the aggregate).
(c) Except as set forth in the Financial Statements and except
as disclosed in Section 3.5 of the Disclosure Schedule, at the date of the most
recent audited financial statements of the Company included in the Recent SEC
Documents, neither the Company nor any of its subsidiaries had, and since such
date neither the Company nor any of such subsidiaries has incurred, any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) other than those which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
Section 3.6 Offer Documents, Etc. Neither:
(i) the information supplied by the Company for inclusion or
incorporation by reference in the Offer Documents (including any
corrected information supplied by the Company), at the date filed with
the SEC or distributed to the Company's stockholders, or at the
consummation of the Offer; nor
<PAGE> 21
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(ii) the Schedule 14D-9, at the date filed with the SEC or
distributed to the Company's stockholders, or at the consummation of the
Offer
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, provided, however, that no representation is made by the Company
with respect to statements made in the Schedule 14D-9 in conformity with written
information supplied by Parent, Holding Sub or Merger Sub expressly for
inclusion therein. The Schedule 14D-9 and the Proxy Statement will comply in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. The information supplied by the Company (including any
corrected information supplied by the Company) for inclusion in the Parent
Circular (as defined in Section 4.2(e)), or any amendment thereof or supplement
thereto, at the date filed with the LSE or distributed to Parent's shareholders
or at the time of the Parent Shareholders Meeting, will be substantially in
accordance with the facts and will not omit anything material likely to affect
the import of such information.
Section 3.7 Absence of Certain Changes or Events. Except as
disclosed on Section 3.7 of the Disclosure Schedule, since January 1, 1999, the
Company has conducted its business only in the ordinary course consistent with
past practice, and there is not and has not been: (i) any Material Adverse
Change; or (ii) any condition, event or occurrence which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
Section 3.8 Litigation; Labor Matters; Compliance with Laws. (a)
Except as disclosed in the Recent SEC Documents, there is no suit, action,
proceeding or investigation pending, or to the knowledge of the Company
threatened, against or affecting the Company or any of its subsidiaries and to
the knowledge of the Company there is no basis for any such suit, action,
proceeding or investigation, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against the
Company or any of its subsidiaries, other than any of the foregoing that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Section 3.8(b) of the Disclosure
Schedule or as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect: (i) neither the Company nor any of
its subsidiaries is, or within the past three years was, the subject of any
proceeding asserting that it or any subsidiary has committed an unfair labor
practice or seeking to compel it to bargain with any labor organization as to
wages or conditions of employment; (ii) there is no, and during the past three
years has not been any, strike, work stoppage or other labor dispute involving
it or any of its subsidiaries pending or, to its knowledge, threatened; (iii) no
action, suit, complaint, charge, arbitration, inquiry, proceeding or
investigation by or before any court, governmental agency, administrative agency
or commission brought by or on behalf of any employee, prospective employee,
former employee, retiree, labor organization or other representative of the
Company's employees is pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries; (iv) no grievance is pending or,
to the knowledge of the Company, threatened against the Company or any of its
subsidiaries; and (v) neither the Company nor any of its subsidiaries is a party
to, or otherwise
<PAGE> 22
18
bound by, any consent decree with, or citation by, any government agency
relating to employees or employment practices.
(c) The conduct of the business of each of the Company and each
of its subsidiaries complies, and during the past three years has complied, with
all Laws applicable thereto, except for violations or failures so to comply, if
any, that, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(d) Except for any of the following as could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect:
(i) each of the Company and its subsidiaries is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exemptions,
consents, certificates, approvals and orders, including all motor carrier
operating authorities from Governmental Entities (collectively, the "Company
Permits"), that are necessary to own, lease and operate the properties of the
Company and its subsidiaries and to carry on their business as owned, leased,
operated or carried on as of the date of this Agreement; (ii) the Company
Permits are in full force and effect; and (iii) there is no action, proceeding
or investigation pending or, to the knowledge of the Company, threatened
regarding suspension or cancellation of any of the Company Permits.
Section 3.9 Employee Benefit Plans.
(a) Except for Subsidiary Plans (as hereafter defined), Section
3.9 of the Disclosure Schedule contains a true and complete list of each
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (including, without
limitation, multiemployer plans within the meaning of ERISA Section 3(37)),
stock purchase, stock option, severance, employment, change-in-control, fringe
benefit, collective bargaining, bonus, incentive, deferred compensation and all
other employee benefit plans, agreements, programs, policies or other
arrangements relating to employment, benefits or entitlements, whether or not
subject to ERISA (including any funding mechanism therefor now in effect or
required in the future as a result of the transaction contemplated by this
Agreement or otherwise), whether formal or informal, oral or written, legally
binding or not under which any employee or former employee of the Company has
any present or future right to benefits or under which the Company has any
present or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "Company Plans"; provided,
however, that any Company Plan sponsored or maintained by any subsidiary of the
Company which could not, individually or in the aggregate, reasonably be
expected to result in material liability to the Company shall be called a
"Subsidiary Plan".
(b) Except as set forth in Section 3.9 of the Disclosure
Schedule, with respect to each Company Plan other than a Subsidiary Plan, the
Company has delivered to Parent prior to the date hereof a current, accurate and
complete copy (or, to the extent no such copy exists, an accurate description)
thereof and, to the extent applicable, (i) any related trust agreement, annuity
contract or other funding instrument; (ii) the most recent determination letter;
(iii) any summary plan description and other written communications (or a
description of any oral communications) by the Company to its employees
concerning the extent of the benefits provided under a Company Plan; and (iv)
for the three most recent years (I) the Form 5500 and attached schedules;
<PAGE> 23
19
(II) audited financial statements; (III) actuarial valuation reports; and (IV)
attorney's response to an auditor's request for information.
(c) Except as set forth in Section 3.9 of the Disclosure
Schedule, (i) each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions of
ERISA, the Internal Revenue Code of 1986, as amended (the "Code"), and other
applicable laws, rules and regulations (including the applicable laws, rules and
regulations of any foreign jurisdiction), in each case, in all material
respects; and (ii) each Company Plan which is intended to be qualified within
the meaning of Code Section 401(a) is so qualified and has received a favorable
determination letter as to its qualification and nothing has occurred, whether
by action or failure to act, which would cause the loss of such qualification;
provided, however, with respect to any Subsidiary Plan, the foregoing
representations shall only be made to the best knowledge of the Company.
(d) Except to the extent that each of the following,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, or as disclosed in the Recent SEC Reports filed prior
to the date hereof, (i) no Company Plan has incurred any "accumulated funding
deficiency" as such term is defined in ERISA Section 302 and Code Section 412
(whether or not waived); (ii) no event or condition exists which could be deemed
a reportable event within the meaning of ERISA Section 4043 which could result
in a liability to the Company or any member of its Controlled Group and no
condition exists which could subject the Company or any member of its Controlled
Group to a fine under ERISA Section 4971; (iii) with respect to any Company
Plan, no actions, suits or claims (other than routine claims for benefits in the
ordinary course) are pending or, to the knowledge of the Company, threatened, no
facts or circumstances exist which could give rise to any such actions, suits or
claims and the Company will promptly notify Parent in writing of any pending
claims or, to the knowledge of the Company, any threatened claims arising
between the date hereof and the Effective Time of the Merger; (iv) neither the
Company nor any other party has engaged in a prohibited transaction, as such
term is defined under Code Section 4975 or ERISA Section 406, which would
subject the Company or Parent to any taxes, penalties or other liabilities under
the Code or ERISA; (v) no event has occurred and no condition exists that would
subject the Company, either directly or by reason of its affiliation with any
member of its Controlled Group (defined as any organization which is a member of
a controlled group of organizations within the meaning of Code Sections 414(b),
(c), (m) or (o)), to any tax, fine or penalty imposed by ERISA, the Code or
other applicable laws, rules and regulations (including the applicable laws,
rules and regulations of any foreign jurisdiction); (vi) all insurance premiums
required to be paid and all contributions required to be made under the terms of
any Company Plan, the Code, ERISA or other applicable laws, rules and
regulations (including the applicable laws, rules and regulations of any foreign
jurisdiction) as of the Effective Time of the Merger have been or will be timely
paid or made prior thereto and adequate reserves have been provided for on the
Company's balance sheet for any premiums (or portions thereof) and for all
benefits attributable to service on or prior to the Effective Time of the
Merger; (vii) for each Company Plan with respect to which a Form 5500 has been
filed, no change has occurred with respect to the matters covered by the most
recent Form since the date thereof; (viii) no Company Plan provides for an
increase in benefits on or after the Effective Time of the Merger; (ix) as of
the Effective Time of the Merger, the Company and each member of its Controlled
Group have made all required premium payments when due
<PAGE> 24
20
to the PBGC; (x) neither the Company nor any member of its Controlled Group is
subject to any liability to the PBGC for any plan termination occurring on or
prior to the Effective Time of the Merger; (xi) no amendment has occurred which
has required or could require the Company or any member of its Controlled Group
to provide security pursuant to Code Section 401(a)(29); and (xii) neither the
Company nor any member of its Controlled Group has engaged in a transaction
which could subject it to liability under ERISA Section 4069.
(e) With respect to each of the Company Plans which is not a
multiemployer plan within the meaning of Section 4001(a)(3) of ERISA but is
subject to Title IV of ERISA (or a substantially similar provision of a foreign
jurisdiction), as of the Effective Time of the Merger, except as disclosed in
Section 3.9 of the Disclosure Schedule, the assets of each such Company Plan are
at least equal in value to the present value of the accrued benefits (vested and
unvested) of the participants in such Company Plan on a termination and
projected basis, based on the actuarial methods and assumptions indicated in the
most recent actuarial valuation reports.
(f) With respect to any multiemployer plan (within the meaning
of Section 4001(a)(3) of ERISA) to which the Company or any member of its
Controlled Group has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (i) the Company and each member
of its Controlled Group has or will have, as of the Effective Time of the
Merger, made all contributions to each such multiemployer plan required by the
terms of such multiemployer plan or any collective bargaining agreement; (ii)
neither the Company nor any member of its Controlled Group has incurred any
withdrawal liability under Title IV of ERISA or, to the Company's knowledge,
would be subject to such liability if, as of the Effective Time of the Merger,
the Company or any member of its Controlled Group were to engage in a complete
withdrawal (as defined in ERISA Section 4203) or partial withdrawal (as defined
in ERISA Section 4205) from any such multiemployer plan; (iii) no such
multiemployer plan is in reorganization or insolvent (as those terms are defined
in ERISA Sections 4241 and 4245, respectively); and (iv) neither the Company nor
any member of its Controlled Group has engaged in a transaction which could
subject it to liability under ERISA Section 4212(c).
(g) Except as set forth in Section 3.9(g) of the Disclosure
Schedule or as it relates to a Subsidiary Plan where the liability, individually
or in the aggregate, could not reasonably be expected to result in material
liability to the Company, no Company Plan exists which could result in the
payment to any Company employee of any money or other property or accelerate or
provide any other rights or benefits to any Company employee as a result of the
transaction contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code Section 280G.
Section 3.10 Taxes. Except as disclosed in Section 3.10 of the
Disclosure Schedule: (i) the Company and each of its subsidiaries have prepared
in good faith and duly and timely filed (taking into account any extension of
time within which to file) all material Tax Returns required to be filed by any
of them and all such filed Tax Returns are complete and accurate in all material
respects; (ii) the Company and each of its subsidiaries have paid all Taxes
whether or not shown as due on such filed Tax Returns, (iii) the Company and
each of its subsidiaries has withheld and paid all material taxes required to be
withheld from amounts owing to any employee, creditor or third party; (iv) there
are no pending or threatened in writing
<PAGE> 25
21
material audits, examinations, investigations or other proceedings in respect of
Taxes or Tax matters relating to the Company or any of its subsidiaries; (v)
there are no material unresolved questions or claims concerning the Company's or
any of its subsidiaries' Tax liability and there are no material deficiencies or
claims for any Taxes that have been proposed, asserted or assessed against the
Company or any of its subsidiaries; (vi) neither the Company nor any of its
subsidiaries has any liability with respect to Taxes which exceeds by any
material amount the amounts accrued in respect thereof that are reflected in the
Financial Statements (as defined below); (vii) there are no material Liens for
Taxes upon the assets of the Company or any of its subsidiaries, other than
Liens for current Taxes not yet due and payable and Liens for Taxes that are
being contested in good faith by appropriate proceedings; (viii) neither the
Company nor any of its subsidiaries has agreed to or is required to make any
adjustment under Section 481(a) of the Code (or any predecessor provision) or
pursuant to any similar provision of foreign, state or local law and no amounts
that are economically attributable to Taxable periods ending on or prior to the
Closing Date will be required, for U.S. federal income tax purposes, to be taken
into account in Taxable periods beginning after the Closing Date which, in each
case, could materially increase Taxable income or reduce Taxable loss of the
Company or any subsidiary in any Taxable period ending after the Closing Date.
For purposes hereof, (i) "Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and (ii) "Tax Return" means all returns and reports (including
elections, claims, declarations, disclosures, schedules, estimates, computations
and information returns) required to be supplied to a Tax authority in any
jurisdiction relating to Taxes.
Section 3.11 Environmental Matters. (a) Other than exceptions to
any of the following that could not, individually or in any aggregation,
reasonably be expected to have a Material Adverse Effect: (i) the Company and
each of its subsidiaries complies and has complied with all applicable
Environmental Laws, and possesses and complies with and has possessed and
complied with all Environmental Permits required under such laws; (ii) to the
knowledge of the Company, there are no past, present, or anticipated future
events, conditions, circumstances, practices, plans, or legal requirements that
could be expected to prevent the Company or any of its subsidiaries from (or
increase the burden on the Company or any of its subsidiaries of) complying with
applicable Environmental Laws or obtaining, renewing, or complying with all
Environmental Permits required under such laws; (iii) no modification,
revocation, reissuance, alteration, transfer, or amendment of any Environmental
Permits held by the Company or any of its subsidiaries, and no review by, or
approval of, any third party of such Environmental Permits, is required in
connection with the execution or delivery of this Agreement or the consummation
of the transactions contemplated hereby or the continuation of the business of
the Company or any of its subsidiaries following such consummation; (iv) there
are and have been no Materials of Environmental Concern, or other conditions, at
any property owned, operated, or otherwise used by the Company or any of its
subsidiaries now or, to the knowledge of the Company, in the past (including,
without limitation, with respect to assets or businesses formerly owned, leased
or operated by the Company or any of its subsidiaries), or at any other
location, that could give rise to any liability of the Company or any of its
subsidiaries
<PAGE> 26
22
under any Environmental Law or result in costs to the Company or any of its
subsidiaries arising out of any Environmental Law; (v) no judicial,
administrative, or arbitral proceeding (including any notice of violation or
alleged violation) under any Environmental Law to which the Company or any of
its subsidiaries is, or to the knowledge of the Company will be, named as a
party is pending or, to the knowledge of the Company, threatened, nor is the
Company the subject of any investigation or the recipient of any request for
information in connection with any such proceeding or potential proceeding; (vi)
none of the Company or any of its subsidiaries has entered into or agreed to any
consent decree, order or agreement under any Environmental Law, and none of the
Company or any of its subsidiaries is subject to any material judgment, decree,
order or other material requirement relating to compliance with any
Environmental Law or to Materials of Environmental Concern; and (vii) none of
the Company or any of its subsidiaries has assumed or retained, by contract or
by operation of law, any liabilities or obligations under any Environmental Laws
or with respect to any Materials of Environmental Concern.
(b) The Company has provided to Parent prior to the date hereof
true and complete copies of all material Environmental Reports.
(c) For purposes of this Agreement, the terms below are defined
as follows:
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other
legally enforceable requirement (including, without limitation, common
law) of any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of the
environment or of human health, or employee health and safety.
"Environmental Permits" means any and all permits, licenses,
registrations, approvals, notifications, exemptions and any other
authorization required under any Environmental Law in order to continue
the business and operations of the Company and each of its subsidiaries
and maintain the possession of each of their assets, as they are and
have been operated or possessed, as the case may be.
"Environmental Report" means any report, study, assessment,
audit, or other similar document in the possession or control of the
Company or any of its subsidiaries that addresses any issue of actual or
potential noncompliance with, actual or potential liability under or
cost arising out of, or actual or potential impact on business in
connection with, any Environmental Law or any proposed or anticipated
change in or addition to Environmental Law, that may in any way affect
the Company or any of its subsidiaries.
"Materials of Environmental Concern" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products, polychlorinated biphenyls, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactivity, and any other
substances of any kind, whether or not any such substance is defined as
hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental Law.
<PAGE> 27
23
Section 3.12 Contracts. Neither the Company nor any of its
subsidiaries is, or has received any notice or has any knowledge that any other
party is, or would with the passage of time or the giving of notice or both be,
in default in any respect under any Contract to which it or any of its
subsidiaries is a party or by which it or any such subsidiary is bound, except
for those defaults which could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. Except as set forth in Section
3.12 of the Disclosure Schedule, neither the Company nor any of its subsidiaries
is subject to or bound by any exclusive dealing arrangement or other Contract
containing covenants which limit the ability of the Company or any subsidiary to
compete in any line of business or with any person or which involve any
restriction of geographical area in which, or method by which, the Company or
any subsidiary may carry on its business.
Section 3.13 No Rights Plan. Neither the Company nor any of its
subsidiaries has any stockholder rights plan, preferred stock purchase plan or
similar arrangement.
Section 3.14 Intellectual Property. Section 3.14 of the
Disclosure Schedule sets forth all material patents, copyrights and trademarks
owned or used by the Company and its subsidiaries and all other Intellectual
Property which is registered or filed with, or has been submitted to, any
Governmental Entity, and the nature of the Company's or such subsidiary' rights
therein and thereto. The Company and its subsidiaries own and possess all
Intellectual Property rights necessary for them to conduct their business as it
is currently conducted and consistent with past practice, other than any
failures thereof which could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
For purposes of this Agreement "Intellectual Property" shall mean
all rights, privileges and priorities provided under U.S., state and foreign law
relating to intellectual property, including without limitation all:
(i) (A) inventions, discoveries, processes, formulae, designs,
methods, techniques, procedures, machines, manufactures, concepts,
developments, technology, new and useful improvements thereof and
know-how relating thereto, whether or not patented or eligible for
patent protection; (B) copyrights and copyrightable works, including
computer applications, programs, software, databases and related items;
(C) trademarks, service marks, trade names, and trade dress, the
goodwill of any business symbolized thereby, and all common-law rights
relating thereto; and (D) trade secrets and other confidential
information; and
(ii) all registrations, applications, recordings, and licenses or
other similar agreements related to the foregoing.
Section 3.15 Year 2000. The Company and its subsidiaries have
adopted a plan of testing and replacement (the "Y2K Plan") for the purpose of
assuring that all computer hardware, software, databases, automated systems and
other computer and telecommunications equipment owned or licensed by the Company
and its subsidiaries ("Systems") can be used prior to, during and after the
calendar year 2000 A.D., and will operate during each such time period, either
on a stand-alone basis or by interacting or interoperating with third-party
software
<PAGE> 28
24
(provided that such third-party software is Y2K Compliant), without material
error relating to the processing, calculating, comparing, sequencing or other
use of date-related data (the foregoing ability, "Y2K Compliant"). The Y2K Plan
has been made available to Parent, and the Company and its subsidiaries are in
the process of effecting the Y2K Plan. All such Systems will be reprogrammed or
replaced and tested and will be Y2K Compliant before any failure to be so
compliant could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, and the costs of implementing the Y2K Plan and
making such Systems Y2K Compliant could not reasonably be expected to have a
Material Adverse Effect.
Section 3.16 Ownership of Assets. Each of the Company and its
subsidiaries has good and valid title to its properties and assets, and valid
and subsisting leasehold interests in all properties or assets of which it is
lessee or licensee, including all motorcoaches and other vehicles owned or
operated by it, in each case free and clear of any Liens, except for Liens
pursuant to the Credit Agreement, purchase money security interests under the
Other Indebtedness and related documents and such defects and Liens which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
Section 3.17 Insurance. The Company and its subsidiaries are
insured with reputable insurers against such risks and in such amounts as the
management of the Company reasonably has determined to be prudent in accordance
with industry practices or is required by law. All of the insurance policies,
binders, or bonds maintained by the Company or its subsidiaries are in full
force and effect; the Company and its subsidiaries are not in default
thereunder; and all claims thereunder have been filed in due and timely fashion,
in each instance except for cases which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.18 Brokers. No broker, investment banker, financial
advisor or other person, other than the Company Financial Advisor, the fees and
expenses of which will be paid by the Company (pursuant to a fee agreement, a
copy of which has been provided to Parent), is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
Section 3.19 Opinion of Company Financial Advisor. The Company
has received the written opinion of the Company Financial Advisor dated the date
of this Agreement, to the effect that the Per Share Price and the Merger
Consideration are fair to the holders of the Company Common Stock from a
financial point of view, a signed copy of which opinion has been delivered to
Parent.
<PAGE> 29
25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent, Holding Sub and Merger Sub represent and warrant to the
Company as follows:
Section 4.1 Organization and Standing. Each of Parent, Holding
Sub and Merger Sub is duly organized, validly existing and, in the case of
Holding Sub and Merger Sub, in good standing under the laws of the jurisdiction
in which it is incorporated.
Section 4.2 Authority; Noncontravention. (a) Each of Parent,
Holding Sub and Merger Sub has the requisite corporate and other power and
authority to enter into this Agreement and, subject to the Parent Shareholder
Approval (as defined in Section 4.2(c)) to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Parent,
Holding Sub and Merger Sub and the consummation by Parent, Holding Sub and
Merger Sub of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of Parent, Holding Sub and Merger
Sub, subject, in the case of the consummation of the Offer and the Merger, to
the Parent Shareholder Approval. This Agreement has been duly executed and
delivered by Parent, Holding Sub and Merger Sub and constitutes a valid and
binding obligation of each of Parent, Holding Sub and Merger Sub, enforceable
against each of Parent, Holding Sub and Merger Sub in accordance with its terms.
(b) The Board of Directors of Parent, at a meeting duly called
and held, has (i) determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are in the best
interests of the Parent and its shareholders, (ii) resolved to recommend that
the shareholders of Parent approve such transactions in accordance with the
requirements of the LSE and (iii) appointed a committee to authorize and
dispatch a circular, including a notice of extraordinary general meeting, to
Parent's shareholders.
(c) The affirmative vote of ordinary shareholders of Parent by
way of ordinary resolution (the "Parent Shareholder Approval") is the only vote
of the holders of any class or series of the Parent's or its subsidiaries'
securities necessary to approve this Agreement, the Offer, the Merger and the
other transactions contemplated hereby.
(d) The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated by this Agreement and
compliance with the provisions hereof will not result in any Violation under, or
result in the creation of any Lien upon any of the properties or assets of
Parent or any of its subsidiaries under, (i) the Memorandum and Articles of
Association of Parent or the comparable organizational documents of any of its
subsidiaries, (ii) any Contract applicable to Parent or any of its subsidiaries
or their respective properties or assets or (iii) subject to the Filings and
Approvals referred to in Section 4.2(e), any Law applicable to Parent or any of
its subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) and (iii), any such Violations and Liens that individually
or in the aggregate could not reasonably be expected to prevent, hinder or
materially delay the ability of
<PAGE> 30
26
Parent, Holding Sub or Merger Sub to consummate the transactions contemplated by
this Agreement.
(e) No Approval of or from or Filing with or to any Governmental
Entity or third party is required by, of or with respect to Parent or any of its
subsidiaries in connection with the execution and delivery of this Agreement by
Parent, Holding Sub and Merger Sub or the consummation by Parent, Holding Sub
and Merger Sub of the transactions contemplated hereby, except for (i) the
filing of a premerger notification and report form under the HSR Act, the
Competition Act Approval, the Investment Canada Approval, if applicable, and
such Canadian federal, provincial, territorial or municipal transportation
regulatory authorities as may be applicable; (ii) the filing of the Schedule
14D-1, a Statement of Beneficial Ownership on Schedule 13D, if required, and any
requirements amendments thereto with the SEC; (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which the
Company is qualified to do business; (iv) the applicable requirements of the ICA
and the rules and regulations of the STB; (v) required filings with and
notifications to the LSE, including a circular to be sent to Parent's
shareholders in connection with the Parent Shareholders Meeting (the "Parent
Circular"), containing (1) a notice convening the Parent Shareholders Meeting,
(2) such information as may be required by the listing rules of the LSE, (3)
such other information (if any) as may be required by the LSE and (4) such other
information as Parent and the Company shall agree to include therein; and (vi)
such other Approvals and Filings the failure of which to obtain or make could
not, individually or in the aggregate, reasonably be expected to prevent, hinder
or materially delay the ability of Parent, Holding Sub or Merger Sub to
consummate the transactions contemplated by this Agreement.
Section 4.3 Offer Documents, Proxy Statement, Etc. Neither:
(i) the Offer Documents, at the date filed with the SEC or
distributed to the Company's stockholders, or at the consummation of the
Offer; nor
(ii) the information supplied by Parent for inclusion in the
Schedule 14D-9 (including any corrected information supplied by Parent),
at the date filed with the SEC or distributed to the Company's
stockholders, or at the consummation of the Offer
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, provided, however, that no representation is made by Parent with
respect to statements made in the Offer Documents in conformity with written
information supplied by the Company expressly for inclusion or incorporation by
reference in the Offer Documents. The Schedule 14D-1 and the Offer Documents
will comply in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder.
Section 4.4 Financing. Either Parent or Holding Sub has, or will
have prior to the consummation of the Offer, sufficient funds available to
satisfy the obligation to pay for the Shares accepted for payment in the Offer.
Either Parent or Merger Sub has, or will have prior to
<PAGE> 31
27
the Effective Time, sufficient funds available to satisfy the obligation to pay
the Merger Consideration in the Merger.
Section 4.5 Brokers. No broker, investment banker, financial
advisor or other person, other than J.P. Morgan & Co. Incorporated and Noble
Grossart Limited, the fees and expenses of which will be paid by Parent, is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Parent.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as expressly provided in this Agreement,
(ii) with the prior written consent of Parent or (iii) as set forth on Section
5.1 of the Disclosure Schedule, after the date hereof and prior to the Control
Date, the business of the Company and its subsidiaries shall be conducted only
in the ordinary course of business consistent with past practice and each of the
Company and its subsidiaries shall use all reasonable efforts to preserve its
business organization intact and preserve and maintain its rights and franchises
and its relationships with its customers, suppliers, employees, independent
contractors, creditors, business partners and others with whom it deals; the
Company, in conducting its business and operations, shall have due regard for
the interests of the holders of the Trust Certificates (as defined in the Voting
Trust Agreement) as investors in the Company; and neither the Company nor any of
its subsidiaries shall:
(a) (i) amend its certificate of incorporation or by-laws or
similar organizational documents; (ii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with
respect to any of its capital stock other than dividends or
distributions by the Company's wholly owned subsidiaries; (iii) split,
combine or reclassify any of its capital stock; or (iii) issue, sell,
transfer, pledge, dispose of or encumber, or redeem, purchase or
otherwise acquire directly or indirectly, any shares of, or securities
convertible into or exchangeable or redeemable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of, or any other ownership or
equity interest (including, without limitation, any phantom interest or
stock appreciation rights) in, the Company or its subsidiaries other
than pursuant to exercises of Company Stock Options, conversions of the
Convertible Subordinated Notes, redemptions of Dividend Access Shares
and exercises of Warrants, in each case to the extent disclosed pursuant
to Section 3.3;
(b) transfer, lease, license, sell, mortgage, pledge, dispose of,
or create or suffer to exist any Lien on any assets that are material to
the Company and its subsidiaries, taken as a whole, other than Liens
pursuant to the Credit Agreement, purchase money security interests
under the Other Indebtedness and related documents and other than sales
of assets in the ordinary course of business consistent with past
practice;
<PAGE> 32
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(c) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, partnership or other business
organization or division thereof, or any substantial portion of any
assets thereof, other than acquisitions for total value not in excess of
$50 million in the aggregate;
(d) (i) grant any increase in the compensation payable or to
become payable by the Company or any of its subsidiaries to any employee
other than increases in the ordinary course of business consistent as to
timing and amount with past practice; (ii) except to the extent
currently required under applicable law or the terms of the applicable
agreement or arrangement, adopt any new, or amend or otherwise increase,
or accelerate the payment or vesting of the amounts payable or to become
payable under any existing, bonus, incentive compensation, deferred
compensation, severance, profit sharing, stock option, stock purchase,
insurance, pension, retirement or other employee benefit plan agreement
or arrangement; (iii) enter into any, or amend any existing, employment,
consulting or severance agreement with, or grant any severance or
termination pay to, any officer, director or employee of the Company or
any of its subsidiaries, other than pursuant to existing plans or
agreements copies of which have been made available to Parent prior to
the date hereof; (iv) except with respect to the Company's foreign
operations, as required by law or existing arrangements, make any
additional contributions to any grantor trust created by the Company to
provide funding for non-tax-qualified employee benefits or compensation;
or (v) provide any severance program to any subsidiary which does not
have a severance program as of the date of this Agreement;
(e) enter into or materially modify any collective bargaining
agreement, including any successor collective bargaining agreement;
(f) enter into, modify or terminate any material Contract except
in the ordinary course of business consistent with past practice;
(g) permit any material insurance policy naming it as a
beneficiary or a loss payable payee to be canceled or terminated, except
in the ordinary course of business consistent with past practice;
(h) (i) incur or assume any debt except for borrowings under
existing credit facilities, debt incurred in connection with permitted
acquisitions in an aggregate outstanding amount not to exceed $65
million at any one time (including no more than $15 million in assumed
debt) and additional borrowings in an aggregate outstanding amount not
to exceed $20 million at any time (any newly incurred debt to be on
terms no less favorable to the Company and its subsidiaries in any
material respect than the existing credit facilities); (ii) assume,
guarantee, endorse, enter into any "keep well" or other similar
agreement, or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations or financial condition of
any person other than the Company or its wholly owned subsidiaries,
except in the ordinary course of business consistent with past practice
and where the amount involved, individually or in the aggregate, is not
material; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly owned
subsidiaries of the
<PAGE> 33
29
Company or customary loans or advances to employees in accordance with
past practice); or (iv) make any capital expenditure in excess of $1
million with respect to any individual or series of related capital
expenditures or $15 million in the aggregate for all capital
expenditures;
(i) change any of its material accounting principles, except as
required by generally accepted accounting principles;
(j) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other material
reorganization of the Company or any of its subsidiaries or any
agreement (other than a confidentiality agreement pursuant to Section
5.5) relating to an Acquisition Proposal (as defined in Section 5.5);
(k) engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of the
Company's affiliates, other than the Company or its wholly owned
subsidiaries, including, without limitation, any transactions,
agreements, arrangements or understandings with any affiliate or other
Person covered under Item 404 of Regulation S-K under the Securities Act
that would be required to be disclosed under such Item 404;
(l) make any material Tax election;
(m) (i) pay, discharge or satisfy any claim, liability or
obligation (including contingent claims, liabilities and obligations),
other than in the ordinary course of business consistent with past
practice; or (ii) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement) other than settlements or
compromises of litigation not relating to the transactions contemplated
hereby and which could not reasonably be expected to prejudice
materially the Company or its subsidiaries in any other pending or
future litigation, where the amount paid (after giving effect to
insurance proceeds actually received) in settlement or compromise does
not exceed $1 million, provided that the aggregate amount paid in
connection with the settlement or compromise of all such litigation
matters shall not exceed $5 million;
(n) take any action which would make any of the Company's
representations and warranties herein untrue or incorrect in a manner
that would, or any other action that would, result in any of the
conditions set forth in Annex I not being satisfied; or
(o) enter into an agreement, contract, commitment or arrangement
to do any of the foregoing, or authorize, recommend, propose or announce
an intention to do, or to agree to do, any of the foregoing.
Section 5.2 Access to Information. The Company shall (and shall
cause each of its subsidiaries to) afford to the officers, employees,
accountants, counsel, financing sources and other representatives of Parent,
reasonable access, during normal business hours, during the period prior to the
Effective Time, to all of its and its subsidiaries' personnel, properties,
books,
<PAGE> 34
30
contracts, commitments and records (including any Tax Returns or other Tax
related information pertaining to the Company and its subsidiaries) and, during
such period, the Company shall (and shall cause each of its subsidiaries to)
furnish promptly to Parent (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of the federal securities laws or which is otherwise
material to the Company and its subsidiaries and (ii) all other information
concerning its business, properties and personnel as Parent may reasonably
request (including any Tax Returns or other Tax related information pertaining
to the Company and its subsidiaries). Parent will hold any such information in
confidence to the extent required by and in accordance with the provisions of
the existing letter agreement dated June 2, 1999 (the "Confidentiality
Agreement") addressed to the Company from Parent and executed and delivered by
each of them. No investigation pursuant to this Section 5.2 or otherwise shall
affect any representations or warranties of the parties herein or the conditions
to the obligations of the parties hereto.
Section 5.3 Consents and Approvals. (a) Each of the Company,
Parent, Holding Sub and Merger Sub will use all reasonable best efforts to
comply promptly with all legal requirements which may be imposed on it with
respect to this Agreement and the transactions contemplated hereby which actions
shall include, without limitation, furnishing all information in connection with
approvals of or filings with any Governmental Entity, including, without
limitation, any schedule, or reports required to be filed with the SEC, and will
promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon any of them or any of their subsidiaries in
connection with this Agreement and the transactions contemplated hereby. Each of
the Company, Parent, Holding Sub and Merger Sub will, and will cause its
subsidiaries to, use all reasonable best efforts to obtain any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public or private third party, required to be obtained or made
by Parent, Holding Sub, Merger Sub, the Company or any of their subsidiaries in
connection with the Offer, the Merger or the taking of any other action
contemplated by this Agreement.
(b) Parent, on the one hand and the Company on the other shall,
and each shall cause its subsidiaries to, subject to the following sentences,
(i) cooperate with one another to prepare and present to the STB, as soon as
practicable, all filings and other presentations in connection with seeking any
STB approval, exemption or other authorization necessary to consummate the
transactions contemplated by this Agreement, (ii) prosecute such filings and
other presentations with diligence, (iii) diligently oppose any objections to,
appeals from or petitions to reconsider or reopen any such STB approval by
persons not party to this Agreement, and (iv) take all such further action as in
the reasonable judgment of Parent and the Company may facilitate obtaining a
final order or orders of the STB approving such transactions consistent with
this Agreement and the transactions contemplated herein. Without in any way
limiting Parent's obligations under Section 1.4 and subject to consultations
with the Company and, after giving good faith consideration to the views of the
Company, Parent shall have final authority over the development, presentation
and conduct of the STB case, including over decisions as to whether to agree to
or acquiesce in conditions.
Section 5.4 Employee Matters. (a) For a period of one year
following the Effective Time, Parent shall or shall cause the Surviving
Corporation to either continue the
<PAGE> 35
31
existing Company Plans or provide benefits to employees of the Company and its
subsidiaries under substitute plans or arrangements ("Parent Benefit Plans")
that are no less favorable, in the aggregate, to such employees than those
provided under such existing Company Plans.
(b) With respect to any Parent Benefit Plan in which the
Company's or its subsidiaries' employees participate effective as of the Closing
Date, Parent shall, or shall cause the Surviving Corporation to: (A) waive all
limitations as to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to the employees
under any Parent Benefit Plan in which such employees may be eligible to
participate after the Effective Time, (B) provide each employee with credit for
any co-payments and deductibles paid prior to the Effective Time in satisfying
any applicable deductible or out-of-pocket requirements under any Parent Benefit
Plan in which such employees may be eligible to participate after the Effective
Time, and (C) recognize all service of the employees with the Company or any
subsidiary for all purposes (excluding for benefit accrual) in any Parent
Benefit Plan in which such employees may be eligible to participate after the
Effective Time, to the same extent taken into account under a comparable Company
Plan immediately prior to the Closing Date; provided, however, that such service
shall not be recognized to the extent that such recognition would result in a
duplication of benefits.
Section 5.5 No Solicitation. (a) The Company shall not, and it
shall cause its subsidiaries, directors, officers, employees, financial and
other advisors, agents, representatives, affiliates and others working on its
behalf or at its direction (collectively, "Company Representatives") not to,
initiate, solicit, encourage or facilitate offers, inquiries or proposals with
respect to, or furnish any information relating to or participate in any
negotiations or discussions concerning, any merger, reorganization, share
exchange, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
subsidiaries, or any purchase or sale of more than 10% of the assets (including
stock of subsidiaries) of the Company and its subsidiaries taken as a whole, or
any purchase or sale of, or tender or exchange offer for, 10% or more of the
equity securities of the Company or any of its subsidiaries (an "Acquisition
Proposal"), other than as contemplated by this Agreement.
(b) Notwithstanding Section 5.5(a), if the Company is not
otherwise in breach or violation of this Section 5.5, until the Offer shall have
been consummated, the Board of Directors of the Company may, directly or
indirectly through Company Representatives: (x) furnish information concerning
the Company and its subsidiaries to any Person with respect to an Acquisition
Proposal pursuant to appropriate confidentiality agreements with terms
substantially similar to those contained in the Confidentiality Agreement
(including with respect to "standstill" provisions), and (y) negotiate and
participate in discussions and negotiations with such Person concerning an
Acquisition Proposal, if in either case (x) or (y), (i) such Person has
submitted a bona fide written Acquisition Proposal to the Company after the date
hereof which constitutes a Superior Proposal (as defined below) and (ii) in the
good faith judgment of the Board of Directors of the Company, only after receipt
of and based upon advice from outside legal counsel to the Company, the failure
to provide such information or access or to engage in such discussions or
negotiations would cause the Board of Directors to violate its fiduciary duties
to the Company's stockholders under applicable law. In addition, nothing herein
shall restrict the
<PAGE> 36
32
Company Board of Directors from, to the extent required, complying with Rule
14d-9 and Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal, subject to any rights of Parent to terminate this
Agreement and receive payment of any fee due under Article VII as a result
thereof.
(c) The Company shall notify Parent immediately of any inquiries,
proposals or offers received by, information requested from, or discussions or
negotiations sought to be initiated or continued with, it or any of Company
Representatives with respect to, or which could reasonably be expected to lead
to, an Acquisition Proposal indicating, in connection with each such notice, the
name of such person (unless the proposed consideration consists solely of cash)
and the material terms, conditions and other aspects of any such inquiries,
proposals, offers, requests, discussions or negotiations, including promptly
forwarding copies of any written Acquisition Proposals (with redactions of the
proposing party's identity, if the proposed consideration consists solely of
cash), and promptly keep Parent informed of the status and terms of any such
proposals or offers and the status and terms of any such discussions or
negotiations. The Company agrees immediately to cease and to cause to be
terminated any activities, discussions or negotiations conducted on or prior to
the date of this Agreement with any parties other than Parent, with respect to
any of the foregoing. Neither the Company nor any subsidiary of the Company will
waive or fail to enforce any provision of any confidentiality or standstill or
similar agreement to which it is a party without the prior written consent of
Parent unless the Company's Board of Directors determines in good faith, only
after receipt of and based upon advice from outside legal counsel to the
Company, that it is required by fiduciary duties under applicable law to take
such action in response to a Superior Proposal.
(d) For purposes of this Agreement, a "Superior Proposal" means a
bona fide written Acquisition Proposal made by a third party after the date
hereof:
(i) as a result of which (A) the Company's stockholders prior to
such transaction would in the aggregate cease to own at least 50% of the
voting securities of the ultimate parent entity resulting from such
transaction or (B) at least 50% of the assets of the Company and its
subsidiaries taken as a whole would be transferred to an unaffiliated
third party; and
(ii) which the Board of Directors of the Company in its good
faith judgment, taking into account the various legal, financial and
regulatory aspects of the proposal and the person making such proposal
and after consultation with and based on the advice of outside counsel
and a nationally recognized financial advisor, determines (A) if
accepted, is reasonably likely to be consummated, and (B) if
consummated, is reasonably likely to result in a transaction that is
financially superior and more favorable to the holders of Company Common
Stock than the Offer and the Merger (taken together).
Section 5.6 Certain Financing Matters. The Company agrees to
provide, and will cause its subsidiaries and its and their respective officers,
employees and advisors to provide, all necessary cooperation in connection with
the arrangement of any financing to be consummated contemporaneous with or at or
after the consummation of the Offer, including without limitation any financing
to be provided to the Company or any of its subsidiaries by the Parent. In
addition,
<PAGE> 37
33
in conjunction with the obtaining of any such financing, the Company agrees, at
the request of Parent, to call for prepayment or redemption, conduct a tender
offer for, or prepay, redeem and/or renegotiate, as the case may be, any then
existing indebtedness of the Company and its subsidiaries, including, without
limitation, indebtedness under the Credit Agreement, the Senior Subordinated
Notes and the Convertible Subordinated Notes; provided that no such prepayment
or redemption or purchase under any tender offer shall themselves actually be
required to be made or consummated until contemporaneously with or after the
consummation of the Offer.
Section 5.7 Reasonable Best Efforts. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable, whether under
applicable laws and regulations or otherwise, and to remove any injunctions or
other impediments or delays, legal or otherwise, to consummate the Offer and
make effective the Merger and the other transactions contemplated by this
Agreement as expeditiously as practicable. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of the Company,
Parent, Holding Sub and Merger Sub shall use all reasonable efforts to take, or
cause to be taken, all such necessary actions.
Section 5.8 Publicity. So long as this Agreement is in effect,
neither the Company nor Parent nor their affiliates shall issue or cause the
publication of any press release or other public statement or announcement with
respect to this Agreement or the transactions contemplated hereby without prior
consultation with and approval (not to be unreasonably withheld or delayed) of
the other party, except as may be required by law or by obligations pursuant to
any listing agreement with, or the listing rules of, a national securities
exchange, and in such case shall use all reasonable efforts to consult with and
obtain approval of the other party prior to such release or announcement being
issued.
Section 5.9 Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (a) the occurrence or non-occurrence of any event which would be
likely to cause any representation or warranty of the Company or Parent, Holding
Sub and Merger Sub, as the case may be, contained in this Agreement to be untrue
or inaccurate in any material respect at or prior to the Effective Time and (b)
any material failure or inability of the Company or Parent, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 5.9 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
Section 5.10 Directors' and Officers' Insurance and
Indemnification. (a) Parent agrees that at all times after the Effective Time,
Parent and the Surviving Corporation shall jointly and severally indemnify each
person who is now, or has been at any time prior to the date hereof, a director
or officer of the Company or of any of the Company's subsidiaries or person
entitled to indemnification (individually an "Indemnified Party" and
collectively the "Indemnified Parties"), subject to applicable law, to the same
extent and in the same manner as is now provided in the respective certificates
of incorporation or by-laws or similar organizational documents of the Company
and such subsidiaries or otherwise in effect on the date hereof. The
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34
Surviving Corporation shall maintain in effect for not less than six (6) years
after consummation of the Merger the current policies of directors' and
officers' liability insurance maintained by the Company and its subsidiaries on
the date of this Agreement or policies having comparable coverage, terms and
conditions, with respect to matters existing or occurring at or prior to the
Effective Time, to the extent available; provided that in no event shall the
Surviving Corporation be required to expend in any one year an amount in excess
of 200% of the annual premiums currently paid by the Company for such insurance
(as disclosed to Parent in writing prior to the date hereof), although it shall
be obligated to obtain a policy with the greatest coverage available for a cost
not exceeding such amount.
(b) Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any capacity in any action,
proceeding or investigation in connection with any matter, including, without
limitation, the transactions contemplated by this Agreement, Parent shall pay as
incurred such Indemnified Party's legal and other expenses (including the cost
of any investigation and preparation) incurred in connection therewith, subject
to the provision by such Indemnified Party of an undertaking to reimburse such
payments in the event of a final determination by a court of competent
jurisdiction that such Indemnified Party is not entitled thereto. Parent shall
pay all expenses, including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing the indemnity and other obligations provided for
in this Section 5.10 or any action involving an Indemnified Party resulting from
the transactions contemplated by this Agreement.
(c) Any determination to be made as to whether any Indemnified
Party has met any standard of conduct imposed by law shall be made by legal
counsel reasonably acceptable to such Indemnified Party, Parent and the
Surviving Corporation, retained at Parent's and the Surviving Corporation's
expense.
(d) This Section 5.10 is intended to benefit and shall be
enforceable by the Indemnified Parties and their respective heirs, executors and
personal representatives and shall be binding on and enforceable against Parent,
Holding Sub, Merger Sub and the Surviving Corporation and their successors and
assigns in accordance with Delaware law.
Section 5.11 Proxy Statement; Company Stockholders Meeting. (a)
As soon as practicable following the date hereof at the request of Parent, the
Company shall prepare and file with the SEC the Proxy Statement and shall use
all reasonable efforts to resolve any comments of the SEC with respect to the
Proxy Statement as promptly as practicable. Parent shall cooperate with the
Company in the preparation of the Proxy Statement. The Company shall give Parent
and its counsel a reasonable opportunity to review the Proxy Statement prior to
its being filed with the SEC and shall give Parent and its counsel a reasonable
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC, all of which filings and
responses shall be subject to Parent's prior consent, not to be unreasonably
withheld. The Company will provide to Parent promptly copies of all
correspondence between it or any of its representatives and the SEC. Parent
shall furnish all information concerning it required to be included in the Proxy
Statement, and as promptly as practicable, the Proxy Statement will be mailed to
the stockholders of the Company. The Company will advise Parent
<PAGE> 39
35
promptly after it receives notice thereof of any request or demand by the SEC or
the NYSE for amendment of the Proxy Statement.
(b) If the Company Stockholder Approval is required under the
DGCL to consummate the Merger and is required to be given at a duly held meeting
of stockholders, the Company shall, as promptly as reasonably practicable
following the execution of this Agreement, duly call, give notice of, convene
and hold a meeting of its stockholders (the "Company Stockholders Meeting") for
the purpose of obtaining the Company Stockholder Approval and shall take all
lawful action to solicit the Company Stockholder Approval. Unless otherwise
required by their fiduciary duties under applicable law, the Board of Directors
of the Company shall (i) recommend adoption of this Agreement by the
stockholders of the Company to the effect as set forth in Section 3.4, and (ii)
not withdraw, modify or qualify in any manner adverse to Parent such
recommendation (or its recommendation that holders of Shares tender their Shares
in the Offer) or take any action or make any statement in connection with the
Company Stockholders Meeting (or the Offer) inconsistent with such
recommendation (collectively, an "Adverse Change in the Company
Recommendation"). The Company shall use all reasonable efforts to obtain any
necessary Approvals to permit the Company Stockholder Approval to be effected by
written consent. Subject to its right to terminate this Agreement in accordance
with its terms, the Company shall be required to take the actions specified in
Section 5.11(a) and the first sentence of this Section 5.11(b), and satisfy all
its other obligations under this Agreement, whether or not the Company Board of
Directors makes an Adverse Change in the Company Recommendation after the date
hereof.
(c) Parent agrees that it will vote at the Company Stockholders'
Meeting or give consents with respect to, or cause to be voted or to have
consents given with respect of (including, prior to the Control Date, by causing
the Trustees to vote pursuant to the Voting Trust Agreement), all Shares then
owned by it or Holding Sub or any of Parent's other subsidiaries and affiliates
(including any shares held in the Voting Trust) in favor of the adoption of this
Agreement.
(d) Notwithstanding the foregoing, in the event that Holding Sub
shall acquire at least 90% of the then-outstanding Shares, the parties hereto
agree, at the request of Holding Sub, subject to Article VI, the DGCL, the ICA
and the rules and regulations of the STB, to take (and prior to the Control Date
to cause the Trustees to take) all necessary and appropriate action to cause the
Merger to become effective, in accordance with Section 253 of the DGCL, as soon
as reasonably practicable after such acquisition, without a meeting of the
stockholders of the Company.
Section 5.12 Parent Circular; Parent Shareholders Meeting. (a) As
soon as practicable following the date of this Agreement, Parent shall prepare
and obtain the approval of the LSE of the Parent Circular. The Company shall
cooperate with Parent in the preparation of the Parent Circular. Parent shall
give the Company and its counsel a reasonable opportunity to review the Parent
Circular prior to its being lodged with the LSE for approval and shall give the
Company and its counsel a reasonable opportunity to review all amendments and
supplements to the Parent Circular and all responses to requests for additional
information and replies to comments prior to their being filed with, or sent to,
the LSE. Parent will provide to the Company
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36
promptly copies of all correspondence between it or any of its representatives
and the LSE. The Company shall furnish all information concerning it required to
be included in the Parent Circular, and as promptly as practicable, the Parent
Circular will be mailed to the shareholders of Parent. Parent will advise the
Company promptly after it receives notice thereof of any request or demand by
the LSE for amendment of the Parent Circular. The Parent Circular and any
supplements thereto and any other circulars or documents issued to shareholders
or employees of Parent will contain all particulars relating to Parent and the
Company required to comply in all material respects with all United Kingdom
statutory and other legal provisions (including, without limitation, the
Companies Act of 1985 of the United Kingdom, as amended (the "Companies Act"),
the Financial Services Act 1986 and the rules and regulations made thereunder,
and the rules and requirements of the LSE and the City Code) and, at the date
filed with the LSE or distributed to Parent's shareholders or at the time of the
Parent Shareholders Meeting, all such information contained in such documents
will be substantially in accordance with the facts and will not omit anything
material likely to affect the import of such information.
(b) Parent shall, as promptly as reasonably practicable following
the execution of this Agreement, duly call, give notice of, convene and hold a
meeting of its shareholders (the "Parent Shareholders Meeting") for the purpose
of obtaining the Parent Shareholder Approval and shall take all lawful action to
solicit the Parent Shareholder Approval. Parent shall use its reasonable best
efforts to hold the Parent Shareholders Meeting on or before July 26, 1999.
Unless otherwise required by their fiduciary duties under applicable law, the
Board of Directors of the Parent shall (i) recommend that the shareholders of
the Parent vote in favor of the resolution to be proposed at the Parent
Shareholders Meeting and required for the implementation of the Offer and the
Merger, and (ii) not withdraw, modify or qualify in any manner adverse to the
Company such recommendation or take any action or make any statement in
connection with the Parent Shareholders Meeting inconsistent with such
recommendation (collectively, an "Adverse Change in the Parent Recommendation").
Subject to its right to terminate this Agreement in accordance with its terms,
Parent shall be required to take the actions specified in Section 5.12(a) and
the first sentence of this Section 5.12(b), and satisfy all its other
obligations under this Agreement, whether or not the Parent Board of Directors
makes an Adverse Change in the Parent Recommendation after the date hereof.
Section 5.13 Registration Rights for Shares Deposited in Voting
Trust. The Company shall, if requested by any Trustee at any time and from time
to time within three years after the termination of this Agreement while any
securities of the Company or any of its subsidiaries remain in the Voting Trust,
as expeditiously as possible prepare and file up to three registration
statements under the Securities Act if such registration is necessary in order
to permit the sale or other disposition of any or all securities that have been
deposited in the Voting Trust, in accordance with the intended method of sale or
other disposition stated by the Trustee, including a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision;
and the Company shall use its reasonable best efforts to qualify such securities
under any applicable state securities laws. The Trustee and Parent shall use
reasonable efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis. The Company
shall use reasonable efforts to cause each such registration statement to become
effective, to obtain all consents or waivers of other parties which are required
therefore,
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37
and to keep such registration statement effective for such period not in excess
of 180 calendar days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sale or other
disposition. The obligations of the Company hereunder to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding 60 calendar days in the aggregate with respect to
any registration statement if the Board of Directors of the Company shall have
determined that the filing of such registration statement or the maintenance of
its effectiveness would require disclosure of nonpublic information that would
materially and adversely affect the Company. The costs of any registration
statement prepared and filed under this Section, and any sale covered thereby,
shall be shared equally by the Company and Parent except for underwriting
discounts or commission, brokers' fees and the fees and disbursements of the
Trustee's and Parents' counsel related thereto (which shall be paid by Parent).
The Trustee and Parent shall provide all information reasonably requested by the
Company for inclusion in any registration statement to be filed hereunder. If,
during the time periods referred to in the first sentence of this Section, the
Company effects a registration under the Securities Act of the Company's
securities for its own account or for any other of its stockholders (other than
on Form S-4, Form S-8, or any successor form), it shall allow the Trustee the
right to participate in such registration, and such participation shall not
affect the obligation of the Company to effect demand registration statements
for the Trustee under this Section; provided that, if the managing underwriters
of such offering advise the Company in writing that in their opinion the number
of securities requested to be included in such registration exceeds the number
which can be sold in such offering, the Company shall include the securities
requested to be included therein by the Trustee only after including all
securities intended to be included therein by the Company. In connection with
any registration pursuant to this Section, the Company and Parent shall provide
each other and any underwriter of the offering with customary representations,
warranties, covenants, indemnification, and contribution in connection with such
registration.
Section 5.14 Dividend Access Shares. Prior to the commencement of
the Offer, the Company will enter into an agreement with each holder of Dividend
Access Shares (the "Dividend Access Share Purchase Agreements"), which shall be
substantially in the form previously furnished to Parent, and take any other
necessary action to ensure that none of the Company, the Canadian Subsidiary,
the Surviving Corporation, Parent or any other affiliate of Parent will be
required under the terms of the Dividend Access Shares, the Support Agreement
with respect to the Dividend Access Shares (the "Support Agreement") or
otherwise, to, and none of them will bear any liability or other obligation for
failing to: (i) permit the holders of Dividend Access Shares to retract their
Dividend Access Shares as against the Canadian Subsidiary and receive Shares in
exchange therefor for the sole purpose of tendering such Shares in the Offer,
effective and conditional only upon the consummation of the Offer, all as
contemplated by the Support Agreement (it being understood that Holding Sub
shall not be required to accept tenders of, nor shall Parent or Holding Sub
otherwise be required to acquire, Dividend Access Shares in the Offer or
otherwise); or (ii) following the Effective Time, issue or otherwise deliver any
shares in the capital stock of the Company, the Surviving Corporation, the
Canadian Subsidiary, Parent or any other affiliate of Parent or any other
securities or property other than a sum in United States Dollars equal to the
Per Share Price, without any interest thereon, in respect of or in exchange for,
whether pursuant to a retraction or otherwise, any
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Dividend Access Share. True and complete copies of all executed Dividend Access
Share Purchase Agreements will be provided to Parent upon execution thereof.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to the Obligations of Each Party. The
obligations of the Company, on the one hand, and Parent and Merger Sub, on the
other hand, to consummate the Merger are subject to the satisfaction (or, if
permissible, waiver by the party for whose benefit such conditions exist) of the
following conditions:
(a) Holding Sub shall have purchased the Shares pursuant to the
Offer (provided that the purchase of Shares pursuant to the Offer shall
not be a condition to the obligations of Parent and Merger Sub hereunder
if Holding Sub shall fail to accept for payment and pay for Shares
pursuant to the Offer in violation of the terms thereof or of this
Agreement).
(b) If required under the DGCL, the Company Stockholder Approval
shall have been obtained.
(c) No court, arbitrator or other Governmental Entity shall have
issued any order, injunction, decree or ruling, and there shall not be
any other Law, restraining, enjoining or prohibiting the consummation of
the Merger.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval thereof:
(a) by the mutual written consent of Parent and the Company;
(b) by either of the Company or Parent:
(i) if (A) the Offer expires or terminates in accordance
with the terms hereof without the purchase of any Shares
thereunder or (B) Holding Sub shall not have purchased Shares
under the Offer prior to January 31, 2000; provided, however,
that the right to terminate this Agreement under this Section
7.1(b)(i) shall not be available to any party to the extent that
the delay in consummating the Offer is due to such party's
material breach of this Agreement;
<PAGE> 43
39
(ii) if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties hereto shall use their
reasonable best efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable;
(iii) prior to the consummation of the Offer, if the
other party has breached any of its representations, warranties,
covenants or agreements set forth herein such that any of the
conditions set forth in Annex I would not be satisfied, which
breach, to the extent curable, is not cured within ten business
days of receipt of written notice of breach by the breaching
party; or
(iv) the Parent Shareholder Approval shall not have been
obtained at the Parent Shareholders Meeting;
(c) by the Company, prior to consummation of the Offer, upon
three business days' prior written notice to Parent (which notice shall
entitle Parent to terminate this Agreement pursuant to Section 7.1(d)),
in order to accept a proposal which its Board of Directors shall have
determined as of the date of such notice is a Superior Proposal and such
Board of Directors shall have concluded in good faith, only after
receipt of and based on advice of its outside legal counsel, that its
fiduciary duties would require it to accept such Superior Proposal;
provided, however, that (i) any financing with respect thereto is
committed for the full amount required, (ii) the Company shall have
fully complied with its obligations under Section 5.5, (iii) such notice
shall include a copy of any proposed or definitive documentation
relating to such Superior Proposal, and shall otherwise indicate all
material terms and conditions with respect thereto, (iv) prior to any
such termination, the Company shall, if requested by Parent in
connection with any revised proposal Parent might make, negotiate in
good faith for such three business day period with Parent, (v) the Board
of Directors of the Company shall have concluded in good faith, only
after receipt of and based on advice of its outside legal counsel and a
nationally recognized financial advisor, as of the effective date of
such termination, after taking into account any revised proposal by
Parent during such three business day period, that such third party
proposal remains a Superior Proposal (and such financing remains so
committed) which the Board of Directors of the Company is obligated to
accept under its fiduciary duties and (vi) immediately following such
termination, the Company enters into definitive and binding
documentation with respect to such Superior Proposal; and provided,
further, that it shall be a condition to termination pursuant to this
Section 7.1(c) that the Company shall have made the payment of the fee
to Parent required by Section 7.2;
(d) by Parent if prior to the consummation of the Offer: (i) the
Company shall have delivered the notice described in Section 7.1(c),
(ii) the Board of Directors of the Company shall have effected an
Adverse Change in the Company Recommendation or shall have approved or
recommended another Acquisition Proposal or failed to reconfirm its
recommendation set forth in Section 3.4, if so requested by Parent,
within fifteen days
<PAGE> 44
40
following such request, or (iii) the Company shall have engaged in
negotiations with a third party after the date hereof with respect to
any Acquisition Proposal and shall not have fully and unconditionally
rejected such proposal (including, if such Acquisition Proposal was
publicly announced or known, by publicly announcing such rejection)
within three business days of first engaging in any negotiations with
respect to such Acquisition Proposal; or
(e) by Parent if prior to the consummation of the Offer any
person or group (within the meaning of Section 13(d)(3) of the Exchange
Act) acquires beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of more than 20% of the combined voting power of
the Company Common Stock and the Voting Preferred Stock.
Section 7.2 Effect of Termination. (a) In the event of the
termination of this Agreement as provided in Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, and there shall be no liability on the part of
Parent, Holding Sub, Merger Sub or the Company except (i) for fraud or for
breach of this Agreement or the Confidentiality Agreement and (ii) as set forth
in Sections 5.13, 7.2 and 8.1 hereof and in the penultimate sentence of Section
5.2.
(b) The Company shall pay Parent the sum of $35 million if this
Agreement is terminated solely as follows:
(i) by Parent pursuant to Section 7.1(b)(iii) if the breach
giving rise to such termination right occurred at a time after the
Company shall have received or become aware of an Acquisition Proposal
(other than any such proposal submitted prior to the date hereof) and
within twelve months of such termination, the Company enters into a
definitive agreement with respect to an Acquisition Proposal or an
Acquisition Proposal is consummated (which fee shall be payable
immediately upon the earlier of execution of such agreement or
consummation of an Acquisition Proposal); or
(ii) by the Company pursuant to Section 7.1(c) (which fee shall
be payable as a condition to such termination) or by Parent pursuant to
Section 7.1(d)(i) (which fee shall be payable immediately upon such
termination); or
(iii) (A) by Parent or the Company pursuant to Section
7.1(b)(i)(A) (provided that (1) prior to such termination an Acquisition
Proposal with respect to the Company shall have been publicly announced
or otherwise become public, (2) on the date of expiration or termination
of the Offer the Minimum Condition has not been satisfied, and (3) on
such date there is no other condition to the Offer which has failed to
be satisfied as a result of a material breach of this Agreement by
Parent, Holding Sub or Merger Sub), or (B) by Parent pursuant to Section
7.1(d)(ii) or (iii) or 7.1(e), if, in the case of either clause (A) or
(B), within twelve months of any such termination, the Company enters
into a definitive agreement with respect to an Acquisition Proposal or
an Acquisition Proposal
<PAGE> 45
41
is consummated (which fee shall be payable immediately upon the earlier
of execution of such agreement or consummation of an Acquisition
Proposal); or
(iv) by Parent pursuant to Section 7.1(e), if prior to or within
twelve months after any such termination, any person or group acquired
or acquires beneficial ownership of more than 40% of the combined voting
power of the Company Common Stock, the Voting Preferred Stock and any
other voting capital stock of the Company (which fee shall be payable
immediately upon the later of such acquisition or such termination).
(c) Parent shall pay the Company the sum of $25 million if this
Agreement is terminated by either party pursuant to Section 7.1(b)(iv) and prior
to the Parent Shareholders Meeting there shall have been an Adverse Change in
the Parent Recommendation.
(d) If this Agreement is terminated by either party pursuant to
Section 7.1(b)(i)(A) (provided that (1) on the date of expiration or termination
of the Offer the Minimum Condition has not been satisfied and (2) on such date
all other conditions to the Offer have been satisfied or waived), then upon and
following such termination the Company shall be required to reimburse Parent and
its affiliates for all reasonable out-of-pocket fees and expenses actually
incurred by any of them or on their behalf in connection with the Offer and the
Merger, any financing thereof or in respect therewith, and the negotiation,
preparation, execution and diligence in respect of this Agreement (including,
without limitation, fees and disbursements payable to banks, investment banking
firms, dealer managers and other financial institutions, and their respective
agents and counsel, and all fees of counsel, accountants, financial printers,
depositaries, information agents, experts and consultants) ("Expenses") up to an
aggregate maximum reimbursement of $5 million. The Company shall pay the amounts
requested within three business days of such requests (accompanied by a
submission of statements therefor). Notwithstanding anything to the contrary in
this Section 7.2, the maximum aggregate amount that the Company shall be
required to pay pursuant to Section 7.2(b) and 7.2(d) shall be $35 million.
(e) If this Agreement is terminated by either party pursuant to
Section 7.1(b)(iv) and prior to the Parent Shareholders Meeting there shall not
have been an Adverse Change in the Parent Recommendation, then upon and
following such termination Parent shall be required to reimburse the Company and
its affiliates for all Expenses actually incurred by any of them or on their
behalf up to an aggregate maximum reimbursement of $5 million. Parent shall pay
the amounts requested within three business days of such requests (accompanied
by a submission of statements therefor). Notwithstanding anything to the
contrary in this Section 7.2, the maximum aggregate amount that Parent shall be
required to pay pursuant to Section 7.2(c) and 7.2(e) shall be $25 million.
(f) In addition to the other provisions of this Section 7.2, in
the event a fee or Expenses is or becomes payable pursuant to Section 7.2(b),
(c), (d) or (e) hereof, the party required to pay such fee or Expenses shall
promptly, but in no event later than three business days following written
notice thereof, together with related bills or receipts, to reimburse the other
party for all reasonable out-of-pocket costs, fees and expenses, including,
without limitation, the reasonable fees and disbursements of counsel and the
expenses of litigation,
<PAGE> 46
42
incurred in connection with collecting such fee or Expenses as a result of any
breach by the party required to pay such fee or Expenses of its obligations
under this Section 7.2.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Costs and Expenses. Except as expressly otherwise
provided herein, all costs and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be
paid by the party incurring such expenses.
Section 8.2 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company or
the shareholders of Parent contemplated hereby, only by written agreement of the
parties hereto, pursuant to action taken by their respective Boards of
Directors, at any time prior to the Effective Time with respect to any of the
terms contained herein; provided, however, that after the approval of this
Agreement by the stockholders of the Company or Parent, no such amendment,
modification or supplement which by law requires prior approval of the
stockholders of the Company or Parent shall be made unless such approval has
been obtained.
Section 8.3 Waiver; Remedies Cumulative. At any time prior to the
Effective Time, any party hereto may with respect to any other party hereto: (i)
extend the time for the performance of any of the obligations or other acts;
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; or (iii) waive compliance
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound. No failure or delay on the part of any party
hereto in the exercise of any right hereunder shall impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
Section 8.4 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.5 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
<PAGE> 47
43
(a) if to Parent, Holding Sub or Merger Sub, to:
Stagecoach Holdings plc
20 Charlotte Street
Perth PH1 5LL
Scotland
Attention: Keith Cochrane
Telecopy No.: +44-1738-643-648
with a copy to:
Simpson Thacher & Bartlett
99 Bishopsgate
21st Floor
London, England EC2M 3YH
Attention: Michael O. Wolfson, Esq.
Telecopy No.: +44-207-422-4022
(b) if to the Company, to:
Coach USA, Inc.
One Riverway
Suite 600
Houston, Texas 77056
Attention: Douglas M. Cerny
Telecopy No.: +1-713-888-0257
with a copy to:
Locke Liddell & Sapp LLP
3400 Chase Tower
600 Travis Street
Houston, Texas 77002-3095
Attention: Gene G. Lewis, Esq.
Telecopy No.: +1-713-223-3717
Section 8.6 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation". As used in this Agreement, the term
"business day" shall mean any day other than a Saturday, a Sunday, or a day on
which banking institutions in New York, New York; Houston, Texas; or London,
England are authorized or obligated by law or executive order to close; provided
that, for purposes of calculating business days in connection with the Offer,
the term "business day" shall have the meaning assigned in Rule 14d-1(e)(6)
<PAGE> 48
44
under the Exchange Act. As used in this Agreement, the term "affiliate(s)" shall
have the meaning set forth in Rule 12b-2 of the Exchange Act. As used in this
Agreement, the term "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act), and
the term "subsidiary" means, with respect to Parent, the Company or any other
person, any corporation, partnership, limited liability company, joint venture
or other legal entity of which Parent, the Company or such other person owns,
directly or indirectly, stock or other equity interests the holders of which are
generally entitled to more than 50% of the vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
References to the Company and its subsidiaries in relation to prior periods
shall be deemed to include any persons or entities from whom they acquired any
portion of the business conducted by them, but only with respect to the
businesses so acquired.
Section 8.7 Counterparts; Facsimile. This Agreement may be
executed in two or more counterparts, all of which shall be considered one and
the same agreement and shall become effective when two or more counterparts have
been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart. This Agreement
may be executed by facsimile signatures of the parties hereto.
Section 8.8 Entire Agreement; No Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the exhibits hereto and
the documents and the instruments referred to herein and therein): (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, including the Exclusivity Letter Agreement dated June 3,
1999 and (b) except as provided in Section 5.10 with respect to the Indemnified
Parties, are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
Section 8.9 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby may be consummated as
originally contemplated to the fullest extent possible.
Section 8.10 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to the remedy of specific performance of the terms hereof without the
posting of any bond or security, in addition to any other remedy at law or
equity.
Section 8.11 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of
<PAGE> 49
45
conflicts of law thereof except, in the case of Parent, to the extent that the
Companies Act or English or Scottish law are applicable to it.
Section 8.12 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Holding Sub or Merger Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent; provided, however, that no such assignment shall relieve
Parent from any of its obligations hereunder. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
Section 8.13 Consent to Jurisdiction; Waiver of Jury Trial. (a)
Each of the parties hereto:
(i) consents to submit itself to the personal jurisdiction
of (A) the United States District Court for the Southern District of New
York and any appellate courts therefrom in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this
Agreement to the extent such court would have subject matter
jurisdiction with respect to such dispute and (B) the Chancery or other
Courts of the State of Delaware otherwise;
(ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction or venue by motion or other request for leave from
any such court;
(iii) agrees that it will not bring any action relating to
this Agreement or any of the transactions contemplated by this Agreement
in any court other than such courts;
(iv) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to a party at its address set forth in Section 8.5 or at such
other address of which a party shall have been notified pursuant
thereto;
(v) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction; and
(vi) agrees to appoint an agent for service of process in
Delaware.
<PAGE> 50
46
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING IN RELATION TO THIS
AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
[Continued on next page.]
<PAGE> 51
47
IN WITNESS WHEREOF, Parent, Holding Sub, Merger Sub and the
Company have caused this Agreement to be signed by their respective officers
thereunto duly authorized as of the date first written above.
STAGECOACH HOLDINGS plc
By: /s/ Keith Cochrane
----------------------------------
Name: Keith Cochrane
Title: Group Finance Director
SCH HOLDINGS CORP.
By: /s/ Keith Cochrane
----------------------------------
Name: Keith Cochrane
Title: President
SCH ACQUISITION CORP.
By: /s/ Keith Cochrane
----------------------------------
Name: Keith Cochrane
Title: President
COACH USA, INC.
By: /s/ Lawrence K. King
----------------------------------
Name: Lawrence K. King
Title: Chief Executive Officer
<PAGE> 52
ANNEX I
CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I have the meanings
set forth in the attached Agreement, except that the term "Merger Agreement"
shall be deemed to refer to the attached Agreement.
Notwithstanding any other provisions of the Offer, and in
addition to the conditions that (i) at the expiration of the Offer there shall
have been validly tendered and not properly withdrawn prior to the expiration of
the Offer a number of Shares which constitutes more than 50% of the voting power
(determined on a fully-diluted basis) on the date of purchase, of all the
securities of the Company entitled to vote generally in the election of
directors or in a merger (the "Minimum Condition") (for purposes of determining
at any time whether the Minimum Condition has been met, each outstanding Share
legally or beneficially owned by Parent or Holding Sub or any of its affiliates
at the commencement of the Offer shall be deemed validly tendered under the
Offer and not withdrawn), (ii) any and all applicable waiting periods under the
HSR Act shall have expired or been terminated and (iii) the staff of the STB
shall have given Parent a favorable informal advisory opinion to the effect that
the proposed use of the Voting Trust will effectively insulate Parent from
acquiring unlawful control of the Company and such advisory opinion shall not
have been withdrawn or the STB shall have approved Parent's and Holding Sub's
acquisition of the federally regulated carriers controlled by the Company,
Holding Sub shall not be required to accept for payment, or subject to
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Holding Sub's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), purchase or pay
for any Shares tendered pursuant to the Offer, may postpone the acceptance for
payment of Shares tendered, and subject to the terms and conditions of the
Merger Agreement may terminate the Offer, if at any time on or after June 12,
1999 and at or before the time of payment for any such Shares any of the
following conditions shall occur or has occurred:
(a) (i) the representations and warranties of the Company set
forth in the Merger Agreement shall not have been true and correct as
of the date of the Merger Agreement, or shall not be true and correct
(in all material respects, in the case of representations and
warranties not already qualified as to materiality or Material Adverse
Effect by their terms) as of the expiration of the Offer as though made
on and as of the expiration of the Offer (except to the extent that
such representations and warranties speak as of a specific date, which
representations and warranties shall have been true and correct as of
such date), or (ii) the Company shall have breached in any material
respect any covenants contained in the Merger Agreement;
(b) there shall have been any Law promulgated, enacted,
entered, enforced or issued by any Governmental Entity which would have
the effect of (i) making the purchase of, or payment for, some or all
of the Shares by Parent or Holding Sub or their affiliates pursuant to
the Offer or the Merger illegal, or making the Voting Trust illegal,
(ii) otherwise preventing consummation of the Offer or Merger; (iii)
except for the Voting Trust, prohibiting the ownership or operation by
the Company or any of its subsidiaries,
I-1
<PAGE> 53
or Parent or any of its subsidiaries, of all or any material portion of
the business or assets of the Company or any of its subsidiaries, taken
as a whole, or Parent or its subsidiaries, taken as a whole; (iv)
except for the Voting Trust, materially limiting the ownership or
operation by the Company or any of its subsidiaries, or Parent or any
of its subsidiaries, of all or any material portion of the business or
assets of the Company or any of its subsidiaries, taken as a whole, or
Parent or its subsidiaries, taken as a whole, as a result of the
transactions contemplated by the Offer or the Merger; (v) except for
the Voting Trust, imposing limitations on the ability of Parent,
Holding Sub or any of Parent's affiliates effectively to acquire or
hold or to exercise full rights of ownership of the Shares, including,
without limitation, the right to vote any Shares acquired or owned by
Parent or Holding Sub or any of its affiliates on all matters properly
presented to the stockholders of the Company, including, without
limitation, the adoption of the Agreement or the right to vote any
shares of capital stock of any significant subsidiary (as defined in
Regulation S-X), directly or indirectly owned by the Company; or (vi)
requiring divestiture by Parent or Holding Sub or any of their
affiliates of any Shares; and, in each case, no action or proceeding
seeking to do any of the foregoing which has been instituted by any
Governmental Entity or other person shall be pending;
(c) the Merger Agreement shall have been terminated by the
Company or Parent in accordance with its terms;
(d) there shall have occurred or exist any condition, event or
occurrence which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect;
(e) any Approval or Filing required to be obtained from or
made with Governmental Entities or third parties in connection with the
Offer or the Merger shall not have been obtained or made or shall not
be in full force and effect, other than any the failure of which to
obtain or make, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect or to materially reduce
the benefits to Parent of ownership of the Company and its
subsidiaries; or
(f) the Parent Shareholder Approval shall not have been
obtained.
The foregoing conditions are for the sole benefit of Holding
Sub and may be asserted by Holding Sub regardless of the circumstances giving
rise to such condition. The foregoing conditions (other than the Minimum
Condition, the HSR Condition, the STB Condition and the condition set forth in
clause (c) above) may be waived by Holding Sub in whole or in part at any time
and from time to time in its sole discretion. The failure by Holding Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
I-2
<PAGE> 54
ANNEX II
TERMS OF SUBSEQUENT MERGER
The capitalized terms used in this Annex II have the meanings
set forth in the attached Agreement (the "Merger Agreement"), except as
otherwise defined herein. Section references in this Annex II are to Sections of
this Annex II unless otherwise indicated
Section 1.1 Subsequent Merger. Upon the terms and subject to
the conditions of this Annex II, and in accordance with the DGCL, at the
Effective Time (as defined in Section 1.2), the Surviving Corporation of the
Merger (hereinafter, the "Company") shall be merged with and into Holding Sub
(the "Subsequent Merger"). As a result of the Subsequent Merger, the separate
corporate existence of the Company shall cease and Holding Sub shall continue as
the surviving corporation of the Subsequent Merger (the "Surviving
Corporation").
Section 1.2 Effective Time. Upon notice of Parent following
the Merger, subject to the approval of the holders of a majority of the
outstanding shares (the "Shares") of common stock of the Company ("Company
Common Stock"), the parties to the Merger Agreement shall cause the Subsequent
Merger to be consummated by filing a certificate of merger (the "Certificate of
Merger") with the Secretary of State of the State of Delaware, in such form as
required by, and executed in accordance with the relevant provisions of, the
DGCL. The date and time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (or such later time as shall be
agreed to in writing by the parties to the Merger Agreement and is specified in
the Certificate of Merger) will be the "Effective Time".
Section 1.3 Effects of the Subsequent Merger. The Subsequent
Merger shall have the effects set forth in the applicable provisions of the
DGCL. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the properties, rights, privileges, immunities, powers
and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Certificate of Incorporation; By-laws. (a) At the
Effective Time, the Certificate of Incorporation of the Surviving Corporation
shall be amended to provide that (i) the name of the Surviving Corporation shall
be the name of the Company; and (ii) the Certificate of Incorporation of the
Surviving Corporation shall include the provisions of Articles Seven and Eight
of the Certificate of Incorporation of the Company as in effect immediately
prior to the Effective Time.
(b) At the Effective Time and without any further action on
the part of the Company or Holding Sub, the By-laws of Holding Sub shall be the
By-laws of the Surviving Corporation and thereafter may be amended or repealed
in accordance with their terms or the Certificate of Incorporation of the
Surviving Corporation and as provided by law.
Section 1.5 Directors and Officers. The directors of the
Company immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving
II-1
<PAGE> 55
Corporation, and the officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each case
until their resignation or removal or until their respective successors are duly
elected or appointed (as the case may be) and qualified.
Section 1.6 Conversion of Securities. At the Effective Time,
by virtue of the Subsequent Merger and without any action on the part of Holding
Sub, the Company or the holders of any of the following securities:
(a) Each Share (other than any Shares to be canceled pursuant
to Section 1.6(b) and any Dissenting Shares (as defined in Section
1.7(a)) shall be canceled, extinguished and converted automatically
into the right to receive an amount per share in cash equal to the Per
Share Price (the "Merger Consideration") payable to the holder thereof,
without interest, upon surrender of the certificate that prior to the
Subsequent Merger represented such Share in the manner provided in
Section 1.8, less any required withholding taxes.
(b) Each Share held in the treasury of the Company and each
Share owned by Parent, Holding Sub or any other direct or indirect
subsidiary of Parent or of the Company (including the Shares held in
the Voting Trust), in each case immediately prior to the Effective
Time, shall be canceled and retired without any conversion thereof and
no payment or distribution shall be made with respect thereto.
(c) Each share of common, preferred or other capital stock of
Holding Sub issued and outstanding immediately prior to the Effective
Time shall be converted into and become one validly issued, fully paid
and nonassessable share of identical common, preferred or other capital
stock of the Surviving Corporation and, if the Effective Time precedes
the Control Date, each such share shall be deposited in the Voting
Trust.
Section 1.7 Dissenting Shares. (a) Notwithstanding anything in
this Annex II to the contrary, shares of Company Common Stock that are issued
and outstanding immediately prior to the Effective Time and which are held by
stockholders who have not voted in favor of or consented to the Subsequent
Merger and who shall have delivered a written demand for appraisal of such
shares of Company Common Stock in the time and manner provided in Section 262 of
the DGCL and shall not have failed to perfect or shall not have effectively
withdrawn or lost their rights to appraisal and payment under the DGCL (the
"Dissenting Shares") shall not be converted into the right to receive the
Subsequent Merger Consideration, but shall be entitled to receive the
consideration as shall be determined pursuant to Section 262 of the DGCL;
provided, however, that if such holder shall have failed to perfect or shall
have effectively withdrawn or lost his, her or its right to appraisal and
payment under the DGCL, such holder's shares of Company Common Stock shall
thereupon be deemed to have been converted, at the Effective Time, into the
right to receive the Subsequent Merger Consideration set forth in Section 1.6(a)
of this Agreement, without any interest thereon, less any required withholding
taxes.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal pursuant to Section 262 received by the Company,
withdrawals of such demands, and any other instruments served pursuant to the
DGCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal
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<PAGE> 56
under the DGCL. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such demands for appraisal or offer
to settle or settle any such demands.
Section 1.8 Surrender of Shares; Stock Transfer Books. (a) As
soon as practicable after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder as of the Effective Time of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Surviving Corporation) and instructions for use in effecting the surrender
of the Certificates for payment of the Subsequent Merger Consideration therefor.
Upon surrender to the Surviving Corporation of a Certificate, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, and such other documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor the Subsequent Merger Consideration for each Share
formerly represented by such Certificate, and such Certificate shall then be
canceled. No interest shall be paid or accrued for the benefit of holders of the
Certificates on the Subsequent Merger Consideration payable upon the surrender
of the Certificates. If payment of the Subsequent Merger Consideration is to be
made to a person other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Subsequent
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Parent that such tax either has been paid or is not applicable.
(b) If any Certificates shall not have been surrendered
immediately prior to the date on which any Subsequent Merger Consideration in
respect of such certificate would escheat to or become the property of any
Governmental Entity, any such Subsequent Merger Consideration shall, to the
extent permitted by applicable law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any person previously
entitled thereto. Notwithstanding the foregoing, none of the Surviving
Corporation or Parent shall be liable to any holder of a Certificate for
Subsequent Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(c) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of shares of Company Common Stock
on the records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares except
as otherwise provided for herein or by applicable law. All cash paid upon the
surrender for exchange of Certificates in accordance with the terms of this
Annex II shall be deemed to have been in full satisfaction of all rights
pertaining to the shares of Company Common Stock exchanged theretofore
represented by such Certificates.
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Exhibit A
THIS VOTING TRUST AGREEMENT, dated as of June , 1999, by and among
STAGECOACH HOLDINGS PLC, a public limited company organized under the laws of
Scotland ("PARENT"), SCH HOLDINGS CORP., a Delaware corporation and wholly owned
subsidiary of Parent ("SUB") and , a
corporation (the "TRUSTEE"),
WITNESSETH:
WHEREAS, it is intended that Sub will commence and complete a cash
tender offer (the "OFFER") for up to all of the outstanding shares of common
stock ("SHARES") of Coach USA, Inc., a Delaware corporation (the "COMPANY"), to
be followed by a merger of SCH Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Sub ("MERGER SUB") with and into the Company (as such
merger may be restructured pursuant to the Merger Agreement, as defined below,
the "MERGER") and the subsequent merger of the Company, as survivor of the
Merger, with and into Sub (the "SUBSEQUENT MERGER" and, together with the
Merger, the "MERGERS"), all pursuant to, and upon the terms and conditions set
forth in, the Agreement and Plan of Merger dated as of June 12, 1999 among the
Company, Parent, Sub and Merger Sub, as it may be amended from time to time (the
"MERGER AGREEMENT") (a copy of which is attached hereto as Exhibit A);
WHEREAS, it is intended that the consummation of the Offer and the
Mergers will occur prior to any issuance by the Surface Transportation Board
(the "STB") of any required approval for, or exemption of, Parent's control of
the Company;
WHEREAS, Parent and Sub intend, immediately upon the acquisition of
the Shares of the Company pursuant to the Offer, to cause the deposit of such
shares into five separate independent, irrevocable voting trusts, and Parent and
Sub intend, immediately upon the effectiveness of each of the Mergers, to cause
the deposit of the Shares of the corporation surviving each of the Mergers (such
corporation also referred to herein as the "Company") into such voting trusts,
in all instances pursuant to the rules of the STB, in order to avoid any
possibility that Parent or any of its affiliates is controlling or has the power
to control the Company prior to the receipt of any required STB approval or
exemption;
WHEREAS, neither the Trustee nor any of its affiliates has any
officers or board members in common or any direct or indirect business
arrangements or dealings (as described in Paragraph 9 hereof) with Parent or any
of its affiliates; and
WHEREAS, the Trustee is willing to act as voting trustee pursuant to
the terms of this Trust Agreement and the rules of the STB,
NOW, THEREFORE, the parties hereto agree as follows:
1. Parent and Sub hereby appoint as
Trustee hereunder, and hereby accepts said
appointment and agrees to act as Trustee under this Trust Agreement as provided
herein.
<PAGE> 58
2. Parent and Sub agree that, prior to acceptance of any tendered Shares
pursuant to the Offer, Sub will direct the depository for the Offer to transfer
to the Trustee one-fifth (1/5) of the total number of any Shares accepted for
payment pursuant to the Offer. Parent and Sub further agree that immediately
upon receipt, acquisition or purchase by either of them or by any of their
affiliates of any additional Shares, or any other voting securities of the
Company, they will transfer or cause to be transferred to the Trustee the
certificate or certificates representing one-fifth (1/5) of the total number of
such additional Shares or other securities. Parent and Sub agree that,
immediately upon the effectiveness of the Merger, they will transfer or cause to
be transferred to the Trustee the certificate or certificates representing no
more than twenty percent (20%) of the issued and outstanding shares of the
Company, as the corporation surviving the Merger. Parent agrees that,
immediately upon the effectiveness of the Subsequent Merger, Parent will
transfer or cause to be transferred to the Trustee the certificate or
certificates representing twenty percent (20%) of the issued and outstanding
shares of Sub, as the corporation surviving the Subsequent Merger (herein also
referred to as the Company). All such certificates shall be duly endorsed or
accompanied by proper instruments duly executed for transfer thereof to the
Trustee, and shall be exchanged for one or more Voting Trust Certificates
substantially in the form attached hereto as Attachment A (the "TRUST
CERTIFICATES"), with the blanks therein appropriately filled. All Shares at any
time delivered to the Trustee hereunder are hereinafter called the "COMPANY
TRUST STOCK." The Trustee shall present to the Company all certificates
representing Company Trust Stock for surrender and cancellation and for the
issuance and delivery to the Trustee of new certificates (the "TRUST STOCK")
registered in the name of the Trustee or its nominee.
3. The Trustee shall be present, in person or represented by proxy, at all
annual and special meetings of shareholders of the Company so that all Trust
Stock may be counted for the purposes of determining the presence of a quorum at
such meetings. The Trustee shall be entitled and it shall be its duty to
exercise any and all voting rights in respect of the Trust Stock either in
person or by proxy or consent, as hereinafter provided, unless otherwise
directed by an order of the STB or a court of competent jurisdiction. Parent and
Sub agree, and the Trustee acknowledges, that the Trustee shall not participate
in or interfere with the management of the Company and shall take no other
actions with respect to the Company except in accordance with the terms hereof.
The Trustee shall exercise all voting, consent and other rights in respect of
the Trust Stock to approve and effect the Mergers and in favor of any proposal
or action necessary or desirable to effect, or consistent with the effectuation
of, the acquisition of the Company by Parent and Sub pursuant to, and the other
transactions contemplated by, the Merger Agreement. Without limiting the
generality of the foregoing, if there shall be with respect to the Board of
Directors of the Company an "ELECTION Contest" as defined in the Proxy Rules of
the Securities and Exchange Commission (the "SEC"), in which one slate of
nominees shall support the effectuation of the Offer and the Mergers and another
oppose it, the Trustee shall vote all shares of Trust Stock in favor of the
slate supporting the effectuation of the Offer and the Mergers. In addition, for
so long as the Merger Agreement is in effect, the Trustee shall vote all shares
of Trust Stock to cause any other proposed merger, business combination or
similar transaction (including, without limitation, any consolidation, sale of
all or substantially all the assets, reorganization, recapitalization,
liquidation or winding up of or by the Company) involving the Company, but not
involving Parent or one of its affiliates (other than in connection with a
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disposition pursuant to paragraph 8), not to be effected. The Trustee shall vote
all shares of Trust Stock in favor of any proposal or action necessary or
desirable to dispose of Trust Stock in accordance with Paragraph 8 hereof.
Except as otherwise expressly provided in the three immediately preceding
sentences, the Trustee shall vote all shares of Trust Stock with respect to all
matters, including, without limitation, the election or removal of directors,
voted on by the shareholders of the Company (whether at a regular or special
meeting or pursuant to a unanimous written consent) in the Trustee's sole
discretion, having due regard for the interests of the holders of the Trust
Certificates as investors in the Company; provided that the Trustee shall not
vote the Trust Stock in favor of taking or doing any act which would violate any
provision of the Merger Agreement or impede the Company's performance thereunder
or which if taken or done prior to the consummation of the Merger would have
been a violation of the Merger Agreement. Notwithstanding the foregoing
provisions of this Paragraph 3 or any other provision of this Agreement, the
registered holder of a Trust Certificate may at any time -- but only with the
prior written approval of the STB -- instruct the Trustee in writing to vote the
Trust Stock represented by such Trust Certificate in any manner, in which case
the Trustee shall vote such shares in accordance with such instructions. In
exercising its voting rights in accordance with this Paragraph 3, the Trustee
shall take such actions at all annual, special or other meetings of stockholders
of the Company or in connection with any action by consent in lieu of a meeting.
4. This Trust Agreement and the nomination of the Trustee during the term
of the trust shall be irrevocable by Parent and its affiliates and shall
terminate only in accordance with the provisions of Paragraphs 8 and 14 hereof.
5. Subject to Paragraphs 3 and 8(c), the Trustee shall not exercise the
voting powers of the Trust Stock in any way so as to create (a) any dependence
or intercorporate relationship between (i) Parent and its affiliates, on the one
hand, and (ii) the Company and its affiliates, on the other hand or (b) any
dependence or relationship, with respect to the affairs of the Company, between
the Trustee and any other trustee holding Shares of the Company pursuant to
voting trust agreements substantially similar to this Agreement ("OTHER
TRUSTEES"). The Trustee shall not, without the prior approval of the STB, vote
the Trust Stock to elect any officer, director, nominee or representative of
Parent or any of its affiliates as an officer or director of the Company or of
any affiliate of the Company. The Trustee shall be kept informed respecting the
business operations of the Company by means of the financial statements and
other public disclosure documents periodically filed by the Company and
affiliates of the Company with the SEC and with the STB, and by means of
information respecting the Company contained in such statements and other
documents filed by Parent with the SEC and the STB, copies of which shall be
promptly furnished to the Trustee by the Company or Parent, as the case may be,
and the Trustee shall be fully protected in relying upon such information. The
Trustee may request additional information from the Company as reasonably
required to fulfill the Trustee's duties and obligations under this Trust
Agreement. The Trustee shall not be liable for any mistakes of fact or law or
any error of judgment, or for any act or omission, except as a result of the
Trustee's willful misconduct or gross negligence.
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<PAGE> 60
6. All Trust Certificates shall be transferable on the books of the
Trustee by the registered holder upon the surrender thereof properly assigned,
in accordance with rules from time to time established for the purpose by the
Trustee. Until so transferred, the Trustee may treat the registered holder as
owner for all purposes. Each transferee of a Trust Certificate issued hereunder
shall, by acceptance thereof, assent to and become a party to this Trust
Agreement, and shall assume all attendant rights and obligations.
7. Pending the termination of this Trust as hereinafter provided, the
Trustee shall, immediately following the receipt of each cash dividend or cash
distribution as may be declared and paid upon the Trust Stock, pay the same over
to or as directed by the registered holder(s) of Trust Certificates hereunder as
then known to the Trustee. The Trustee shall receive and hold dividends and
distributions other than cash upon the same terms and conditions as the Trust
Stock and shall issue Trust Certificates representing any new or additional
securities that may be paid as dividends upon the Trust Stock or otherwise
distributed upon the Trust Stock to the registered holder(s) of Trust
Certificates in proportion to their respective interests.
8. (a) This Trust is accepted by the Trustee subject to the right hereby
reserved in Parent at any time to sell or make any other disposition of the
whole or any part of the Trust Stock, whether or not an event described in
subparagraph (b) below has occurred. Any such disposition shall be subject to
any jurisdiction of the STB to oversee Parent's divestiture of Trust Stock. The
Trustee shall take all actions reasonably requested by Parent with respect to
(including, without limitation, exercising all voting, consent and other rights
in respect of the Trust Stock in favor of any proposal or action necessary or
desirable to effect, or consistent with the effectuation of, or exercising any
registration rights granted under the Merger Agreement or otherwise necessary
for) any proposed sale or other disposition of the whole or any part of the
Trust Stock by Parent. The Trustee shall at any time upon the receipt of a
direction from Parent signed by its President or one of its Vice Presidents and
under its corporate seal designating the person or entity to whom Parent has
directly or indirectly sold or otherwise disposed of the whole or any part of
the Trust Stock and certifying that such person or entity is not an affiliate of
Parent and has all necessary regulatory authority, if any be required, to
purchase the Trust Stock (upon which certification the Trustee shall be entitled
to rely), immediately transfer to the person or entity therein named all the
Trustee's right, title and interest in such amount of the Trust Stock as may be
set forth in said direction. If the foregoing direction shall specify all of the
Trust Stock, then following transfer of the Trustee's right, title and interest
therein, and in the event of a sale thereof, upon delivery to or upon the order
of the registered holder(s) of the Trust Certificates of the proceeds of such
sale, this Trust shall cease and come to an end. If the foregoing direction is
as to only a part of the Trust Stock, then this Trust shall cease as to said
part upon such transfer, and distribution of the net proceeds therefrom in the
event of sale, but shall remain in full force and effect as to the remaining
part of the Trust Stock. In the event of a direct or indirect sale of Trust
Stock by Parent, the Trustee shall, to the extent the consideration therefor is
payable to or controllable by the Trustee, promptly pay, or cause to be paid
upon the order of Parent the net proceeds of such sale on a pro rata basis to
the registered holder(s) of the Trust Certificates. It is the intention of this
paragraph that no violations of 49 U.S.C. Section 14303 will result from a
termination of this Trust.
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<PAGE> 61
(b) In the event that STB Approval (as defined below) shall have
been granted, then immediately upon the direction of Parent and the delivery of
a certified copy of such order of the STB or other governmental authority with
respect thereof, or, in the event that the Interstate Commerce Act, or other
controlling law, shall allow, or is amended or determined by final order of the
STB to allow, Parent or its affiliates to acquire control of the Company without
obtaining STB or other governmental approval, upon delivery of an opinion of
independent counsel selected by the Trustee that no order of the STB or other
governmental authority is required, the Trustee shall either (i) transfer to or
upon the order of the registered holder(s) of Trust Certificates hereunder as
then known to the Trustee, its right, title and interest in and to all of the
Trust Stock then held by it in accordance with the terms, conditions and
agreements of this Trust Agreement and not theretofore transferred by it as
provided in subparagraph (a) hereof, or (ii) if shareholder approval of the
Mergers has not previously been obtained, vote, give consents or take other
action with respect to the Trust Stock regarding the Mergers or any other merger
between the Company and Sub or any other affiliate of Parent as directed by the
registered holder(s) of the Trust Certificates; and upon any such transfer or
merger this Trust shall cease and come to an end.
(c) In the event that there shall have been an STB Denial (as
defined below), Parent shall use its best efforts to sell the Trust Stock to one
or more eligible purchasers, or otherwise to dispose of the Trust Stock, during
a period of two years after such STB Denial or such extension of that period as
the STB shall approve. Any such disposition shall be subject to any jurisdiction
of the STB to oversee Parent's divestiture of Trust Stock. The Trustee agrees to
cooperate with Parent in effecting such disposition, including without
limitation providing for the preparation and filing by the Company, pursuant to
Merger Agreement or otherwise, of one or more registration statements under the
Securities Exchange Act of 1934 if such registration is necessary in order to
permit the sale or other disposition of the Trust Stock. At all times, the
Trustee shall continue to perform its duties under this Trust Agreement and,
should Parent be unsuccessful in its efforts to sell or distribute the Trust
Stock during the period referred to, the Trustee shall, in consultation and
cooperation with the Other Trustees and as soon as practicable, sell the Trust
Stock for cash to one or more eligible purchasers in such manner and for such
price as the Trustee in its discretion shall deem reasonable after consultation
with the Parent. (An "ELIGIBLE PURCHASER" hereunder shall be a person or entity
that is not affiliated with Parent and which has all necessary regulatory
authority, if any be required, to purchase the Trust Stock.) Parent agrees to
cooperate with the Trustee in effecting such disposition, and the Trustee agrees
to act in accordance with any direction made by Parent as to any specific terms
or method of disposition, to the extent not inconsistent with the requirements
of the terms of any STB or court order. The proceeds of the sale shall be
distributed on a pro rata basis to or upon the order of the registered holder(s)
of the Trust Certificates hereunder as then known to the Trustee. The Trustee
may, in its reasonable discretion, require the surrender to it of the Trust
Certificates hereunder before paying to the holder its share of the proceeds.
Upon disposition of the Trust Stock pursuant to this Paragraph 8(c), this Trust
shall cease and come to an end.
(d) Unless sooner terminated pursuant to any other provision herein
contained, this Trust Agreement shall terminate on June 30, 2002 and may be
extended by the parties hereto, so long as no violation of 49 U.S.C. Section
14303 will result from such termination or
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<PAGE> 62
extension. All Trust Stock and any other property held by the Trustee hereunder
upon such termination shall be distributed on a pro rata basis to or upon the
order of the registered holder(s) of Trust Certificates hereunder as then known
to the Trustee. The Trustee may, in its reasonable discretion, require the
surrender to it of the Trust Certificates hereunder before the release or
transfer of the stock interests evidenced thereby.
(e) The Trustee shall promptly inform the STB of any transfer or
disposition of Trust Stock pursuant to this Paragraph 8.
(f) Except as provided in this Paragraph 8, the Trustee shall not
dispose of, or in any way encumber, the Trust Stock.
(g) Within sixty (60) days of the termination of this Trust
Agreement, the Trustee shall render a final accounting to the registered
holder(s) of Trust Certificates and shall distribute any funds or other assets
held by the Trustee to the parties entitled thereto.
(h) Notwithstanding the foregoing, if the STB issues a declaratory
order that the termination of the Trust will not cause Parent or its affiliates
to have control of the Company, the Trustee shall transfer on a pro rata basis
to or upon the order of the registered holder(s) of Trust Certificates hereunder
as then known to the Trustee, its right, title and interest in and to all of the
Trust Stock then held by it in accordance with the terms and conditions of this
Trust Agreement and not theretofore transferred by it as provided in
subparagraph (a) hereof, and this Trust shall cease and come to an end. The
Trustee may, in its reasonable discretion, require the surrender to it of the
Trust Certificates hereunder before the release or transfer of the stock
interests evidenced thereby.
(i) As used in this Paragraph 8, the terms "STB APPROVAL" and "STB
DENIAL" shall have the following meanings:
"STB APPROVAL" means the issuance by the STB of a decision, which
decision shall have become effective and shall not have been stayed or enjoined,
that (A) constitutes a final agency action approving, exempting or otherwise
authorizing the acquisition of control over the Company's motor passenger
carrier subsidiaries by Parent and its affiliates, without the imposition of
conditions that Parent, by written notice to the Trustee, has deemed to be
unacceptable, and (B) does not require any change in the consideration paid or
to be paid pursuant to the Merger Agreement or other material provisions
thereof, unless Parent, by written notice to the Trustee, has determined any
such change to be acceptable to Parent.
"STB DENIAL" means (i) STB Approval shall not have been obtained by
December 31, 2000 or (ii) the STB shall have, by an order which shall have
become final and no longer subject to review by the courts, refused to approve
the control referred to in clause (A) of the definition of STB Approval.
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9. Neither the Trustee nor any affiliate of the Trustee has or may have
(i) any officers, or members of their respective boards of directors, in common
with (a) Parent or any of its affiliates, (b) any other Trustee or any of its
affiliates, or (c) the Company or any of its affiliates, or (ii) any direct or
indirect business arrangements or dealings, financial or otherwise, with Parent
or any of its affiliates, other than dealings pertaining to establishment and
carrying out of this Trust. Mere investment in the stock or securities of Parent
or any of its affiliates by the Trustee, short of obtaining a controlling
interest, will not be considered a proscribed business arrangement or dealing,
but in no event shall any such investment by the Trustee in voting securities of
Parent or its affiliates exceed 5 percent of their outstanding voting
securities; and in no event shall the Trustee hold a proportion of such voting
securities so substantial as to permit the Trustee in any way to control or
direct the affairs of Parent or its affiliates. Neither Parent nor its
affiliates shall purchase the stock or securities of the Trustee or any
affiliate of the Trustee.
10. The Trustee shall be entitled to receive reasonable and customary
compensation for all services rendered by it as Trustee under the terms hereof,
and said compensation to the Trustee, together with all counsel fees, taxes, or
other expenses reasonably incurred hereunder, shall be promptly paid by Parent.
11. The Trustee may at any time or from time to time appoint an agent or
agents and may delegate to such agent or agents the performance of any
administrative duty of the Trustee and be entitled to reimbursement for the fees
and expenses of such agents.
12. The Trustee shall not be answerable for the default or misconduct of
any agent or attorney appointed by it in pursuance hereof if such agent or
attorney shall have been selected with reasonable care. The duties and
responsibilities of the Trustee shall be limited to those expressly set forth in
this Trust Agreement. The Trustee shall be fully protected by acting in reliance
upon any notice, advice, direction or other document or signature believed by
the Trustee to be genuine. The Trustee shall not be responsible for the
sufficiency or accuracy of the form, execution, validity or genuineness of the
Trust Stock, or of any other documents, or of any endorsement thereon, or for
any lack of endorsement thereon, or for any description therein, nor shall the
Trustee be responsible or liable in any respect on account of the identity,
authority or rights of the persons executing or delivering or purporting to
execute or deliver any such Trust Stock or other document or endorsement or this
Trust Agreement, except for the execution and delivery of this Trust Agreement
by this Trustee. The Parent agrees that it will at all times protect, indemnify
and save harmless the Trustee from any loss, damages, liability, cost or expense
of any kind or character whatsoever in connection with this Trust, except those,
if any, resulting from the gross negligence or willful misconduct of the
Trustee, and will at all times undertake, assume full responsibility for, and
pay on a current basis, but at least quarterly, all cost and expense of any suit
or litigation of any character, whether or not involving a third party,
including any proceedings before the STB, with respect to the Trust Stock or
this Trust Agreement, and if the Trustee shall be made a party thereto, or be
the subject of any investigation or proceeding (whether formal or informal), the
Parent will pay all costs, damages and expense, including reasonable counsel
fees, to which the Trustee may be subject by reason thereof; provided, however,
that Parent shall not be responsible for the cost and expense of any suit that
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<PAGE> 64
the Trustee shall settle without first obtaining Parent's written consent. The
indemnification obligations of Parent shall survive any termination of this
Trust Agreement or the removal, resignation or other replacement of the Trustee.
The Trustee may consult with counsel selected by it and the opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken or omitted or suffered by the Trustee hereunder in good faith
and in accordance with such opinion.
13. To the extent requested to do so by Parent, Sub or any registered
holder of a Trust Certificate, the Trustee shall furnish to the party making
such request full information with respect to (i) all property theretofore
delivered to it as Trustee, (ii) all property then held by it as Trustee, and
(iii) all action theretofore taken by it as Trustee.
14. The Trustee, or any trustee hereafter appointed, may at any time
resign by giving thirty (30) days written notice of resignation to Parent and
the STB. Parent shall at least fifteen days prior to the effective date of such
notice appoint a successor trustee which shall (i) satisfy the requirements of
Paragraph 9 hereof and (ii) be a corporation organized and doing business under
the laws of the United States or of any State thereof and authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by federal or
state authority. If no successor trustee shall have been appointed and shall
have accepted appointment at least fifteen days prior to the effective date of
such notice of resignation, the resigning Trustee may petition any authority or
court of competent jurisdiction for the appointment of a successor trustee. Upon
written assumption by the successor trustee of the Trustee's powers and duties
hereunder, a copy of the assumption shall be delivered by the Trustee to Parent,
and the STB and all registered holders of Trust Certificates shall be notified
of such assumption, whereupon the Trustee shall be discharged of its powers and
duties hereunder and the successor trustee shall become vested therewith. In the
event of any material violation by the Trustee of the terms and conditions of
this Trust Agreement, the Trustee shall become disqualified from acting as
trustee hereunder as soon as a successor trustee shall have been selected in the
manner provided by this paragraph.
15. This Trust Agreement may from time to time be modified or amended by
agreement executed by the Trustee, Parent, Sub (prior to the Subsequent Merger)
and the registered holder(s) of the Trust Certificates (i) pursuant to an order
of the STB, (ii) with the prior approval of the STB, (iii) in order to comply
with any order of the STB, or (iv) upon receipt of an opinion of counsel
satisfactory to the Trustee and the registered holder(s) of Trust Certificates
that an order of the STB approving such modification or amendment is not
required and that the amendment is permitted under the Merger Agreement and is
consistent with the regulations of the STB regarding voting trusts.
16. The provisions of this Trust Agreement and the rights and obligations
of the parties hereunder shall be governed by the laws of the State of Delaware,
except that, to the extent any provision hereof may be found inconsistent with
the Interstate Commerce Act or regulations promulgated thereunder by the STB,
such Act and regulations shall control and such provision hereof shall be given
effect only to the extent permitted by such Act and regulations. In the event
that the STB shall, at any time hereafter by final order, find that compliance
with law
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<PAGE> 65
requires any other or different action by the Trustee than is provided herein,
the Trustee shall act in accordance with such final order instead of the
provisions of this Trust Agreement.
17. This Trust Agreement is executed in three counterparts, each of which
shall constitute an original, and one of which shall be retained by Parent, one
by Sub, and the other by the Trustee.
18. A copy of this Agreement and any amendments or modifications thereto
shall be filed with the STB by Parent.
19. This Trust Agreement shall be binding upon the successors and assigns
to the parties hereto, including without limitation successors to Parent by
merger, consolidation or otherwise.
20. For purposes of this Trust Agreement, the term "SURFACE TRANSPORTATION
BOARD" or "STB", includes any successor agency or governmental department that
is authorized to carry out the responsibilities now carried out by the STB with
respect to voting trusts and control of motor common carriers of passengers.
21. (a) Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be mailed by U.S. mail, certified
mail, return receipt requested or by Federal Express, Express Mail, or similar
overnight delivery or courier service or delivered (in person or by telecopy)
against receipt to the party to whom it is to be given at the address of such
party set forth below (or to such other address as the party shall have given
notice of):
To the Trustee:
To Parent and (prior to the Subsequent Merger) Sub:
STAGECOACH HOLDINGS PLC
Charlotte House
20 Charlotte Street
Perth, Scotland
PH 1 5 LL
Attention:
(b) Unless otherwise specifically provided herein, any notice to or
communication with the registered holder(s) of the Trust Certificates hereunder
shall be deemed to be sufficiently given or made if enclosed in postpaid
envelopes (regular not registered mail) addressed to such holders at their
respective addresses appearing on the Trustee's transfer books, and deposited in
any post office or post office box. The addresses of the holders of Trust
Certificates, as shown on the Trustee's transfer books, shall in all cases be
deemed to be the addresses of Trust Certificate holders for all purposes under
this Trust Agreement, without regard
-9-
<PAGE> 66
to what other or different addresses the Trustee may have for any Trust
Certificate holder on any other books or records of the Trustee. Every notice so
given of mailing shall be the date such notice is deemed given for all purposes.
22. Each of the parties hereto acknowledges and agrees that in the event
of any breach of this Agreement, the non-breaching party would be irreparably
and immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (a) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (b) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, to compel specific performance of this Agreement in any action
instituted in any state or federal court sitting in Wilmington, Delaware. Each
party hereto consents to personal jurisdiction in any such action brought in any
state or federal court sitting in Wilmington, Delaware.
IN WITNESS WHEREOF, STAGECOACH HOLDINGS PLC and SCH HOLDINGS CORP.
have caused this Trust Agreement to be duly executed by their respective
authorized officers, and _________________ has caused this Trust Agreement to be
executed by one of its duly authorized corporate officers, all as of the day and
year first above written.
Attest: STAGECOACH HOLDINGS PLC
__________________________________ By:__________________________________
Attest: SCH HOLDINGS CORP.
By:
Attest: [TRUSTEE]
__________________________________ By:__________________________________
-10-
<PAGE> 67
ATTACHMENT A
TO VOTING TRUST AGREEMENT
No. Shares
VOTING TRUST CERTIFICATE
for
COMMON STOCK
$0.01 PER SHARE PAR VALUE
of
COACH USA, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS IS TO CERTIFY that will be
entitled, on the surrender of this Certificate, to receive on the termination of
the Voting Trust Agreement hereinafter referred to, or otherwise as provided in
Paragraph 8 of said Voting Trust Agreement, a certificate or certificates, as
the case may be, for [ ] shares of the Common Stock, $0.01 per share par value,
of Coach USA, Inc., a Delaware corporation (the "COMPANY"). This Certificate is
issued pursuant to, and the rights of the holder hereof are subject to and
limited by, the terms of a Voting Trust Agreement, dated as of June , 1999,
executed by STAGECOACH HOLDINGS PLC, a public limited company organized under
the laws of Scotland, SCH HOLDINGS CORP., a Delaware corporation ("Sub"),
and , as Voting Trustee, a copy of which Voting Trust Agreement is on file
in the office of the Voting Trustee at and open to inspection of the
holder hereof. The Voting Trust Agreement, unless earlier terminated (or
extended) pursuant to the terms thereof, will terminate on June 30, 2002, so
long as no violation of 49 U.S.C. Section 14303 will result from such
termination.
The holder of this Certificate shall be entitled to the benefits of
said Voting Trust Agreement, including the right to receive payment equal to the
cash dividends, if any, paid by the Company with respect to the number of shares
represented by this Certificate.
This Certificate shall be transferable only on the books of the
undersigned Voting Trustee or any successor, to be kept by it, on surrender
hereof by the registered holder in person or by attorney duly authorized in
accordance with the provisions of said Voting Trust Agreement, and until so
transferred, the Voting Trustee may treat the registered holder as the owner of
this Voting Trust Certificate for all purposes whatsoever, unaffected by any
notice to the contrary.
-11-
<PAGE> 68
By accepting this Certificate, the holder hereof assents to all the
provisions of, and becomes a party to, said Voting Trust Agreement.
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate
to be signed by its officer duly authorized.
Dated:
By:_____________________________________
Authorized Officer
-12-
<PAGE> 69
[FORM OF BACK OF VOTING TRUST CERTIFICATE]
FOR VALUE RECEIVED____________________________________ hereby sells,
assigns, and transfers unto______________________________________ the within
Voting Trust Certificate and all rights and interests represented thereby, and
does hereby irrevocably constitute and appoint__________________________________
________________ Attorney to transfer said Voting Trust Certificate on the books
of the within mentioned Voting Trust Certificate on the books of the within
mentioned Voting Trustee, with full power of substitution in the premises.
Dated:
In the Presence of:
-13-
<PAGE> 1
Exhibit 11(c)(3)
TENDER AGREEMENT
----------------
TENDER AGREEMENT, dated as of June 12, 1999 among Stagecoach Holdings
PLC, a public limited liability company organized under the laws of Scotland
(the "Parent"), SCH Holding Corp., a Delaware corporation and a wholly owned
subsidiary of the Parent (the "Sub"), and each of the other parties signatory
hereto (each, a "Stockholder" and, together, the "Stockholders").
RECITALS
--------
Concurrently herewith, the Parent, the Sub, SCH Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of the Parent and Coach USA,
Inc., a Delaware corporation (the "Company"), are entering into an Agreement and
Plan of Merger dated the date hereof (the "Merger Agreement"; capitalized terms
used but not defined herein shall have the meanings set forth in the Merger
Agreement), pursuant to which the Sub agrees to make a tender offer (the
"Offer") for all outstanding shares of common stock, $.01 par value per share
(collectively "Company Common Stock"), of the Company, at $42.00 per share, net
to the seller in cash, to be followed by a Merger of the Sub with and into the
Company (or another Merger of the Company and a subsidiary of the Parent).
As of the date hereof, each of the Stockholders owns the shares of
Company Common Stock as set forth in Schedule A attached hereto (the "Existing
Shares" and, together with any shares of Company Common Stock acquired after the
date hereof and prior to the termination hereof, whether upon the exercise of
options, conversion of convertible securities or otherwise, the "Shares").
As a condition to their willingness to enter into the Merger Agreement
and make the Offer, the Parent and the Sub have required that each of the
Stockholders agree, and each of the Stockholders has agreed, to tender the
Shares in the Offer and grant a proxy to vote all of the Shares owned by such
Stockholder on the terms and conditions provided for herein.
AGREEMENT
---------
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Agreement to Tender and Vote; Proxy. (a) Tender. Each of the
Stockholders hereby agrees to validly tender pursuant to the Offer and not
withdraw all Shares.
(b) Voting. Each of the Stockholders hereby agrees that, during the
time this Agreement is in effect, at any meeting of the stockholders of the
Company, however called, or in any written consent in lieu thereof, such
Stockholder shall (i) vote the Shares owned by him in favor of the Merger; and
(ii) vote the Shares owned by him against any action or agreement (other than
the Merger Agreement or the transactions contemplated thereby) that could
reasonably be expected to impede, interfere with, delay, postpone or attempt to
discourage the Merger or the Offer, including, but not limited to: (A) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company and its subsidiaries; (B) a sale or
transfer of a material amount of assets of the Company and its subsidiaries or a
reorganization, recapitalization or liquidation of the Company and its
<PAGE> 2
2
subsidiaries; (C) any change in the management or board of directors of the
Company, except as otherwise agreed to in writing by the Sub; (D) any material
change in the present capitalization or dividend policy of the Company; or (E)
any other material change in the Company's corporate structure or business.
(c) Proxy. Each of the Stockholders hereby grants to the Parent and the
Sub, and to each officer of the Parent and the Sub, a proxy to vote the Shares
as indicated in Section 1(b). Each of the Stockholders intends this proxy to be
irrevocable and coupled with an interest and will take such further action or
execute such other instruments as may be reasonably necessary to effectuate the
intent of this proxy and hereby revokes any proxy previously granted by such
Stockholder with respect to the Shares.
2. Expiration. This Agreement, the Parent's and the Sub's right to vote
the Shares covered hereby and each Stockholder's obligation to tender pursuant
hereto shall terminate on the Expiration Date. As used herein, the term
"Expiration Date" means the first to occur of (a) the Effective Time, (b) the
termination of the Merger Agreement and (c) written notice of termination of
this Agreement by the Parent to each of the Stockholders.
3. Representation.(a) Representations of the Parent and the Sub. The
Parent and the Sub, jointly and severally, hereby represent to each of the
Stockholders as follows:
(i) Authority. Each of the Parent and the Sub has the requisite
corporate and other power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Parent and the Sub and
constitutes a valid and binding obligation of each of the Parent and
the Sub, enforceable against each of the Parent and the Sub in
accordance with its terms.
(ii) Noncontravention. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by
this Agreement and compliance with the provisions hereof will not
result in any Violation under, (A) the Memorandum and Articles of
Association of the Parent or the comparable organizational documents
of any of its subsidiaries, (B) any Contract applicable to Parent or
any of its subsidiaries or their respective properties or assets or
(C) subject to the Filings and Approvals referred to in Section 4.2(e)
of the Merger Agreement, any Law applicable to the Parent or any of
its subsidiaries or their respective properties or assets, other than,
in the case of clauses (B) and (C), any such Violations that
individually or in the aggregate could not reasonably be expected to
prevent, hinder or materially delay the ability of the Parent or the
Sub to consummate the transactions contemplated by this Agreement.
(b) Representations of the Stockholders. Each of the Stockholders
hereby represents to the Parent and the Sub as follows:
(i) Authority. Each of the Stockholders has the requisite power and
authority to enter into this Agreement and to perform his obligations
hereunder and to
<PAGE> 3
3
consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of the Stockholders and constitutes a
valid and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms.
(ii) Ownership of Shares. On the date hereof, the Existing Shares are
owned of record or beneficially by such Stockholder and, on the date
hereof, each of the Stockholders has sole voting power and sole power of
disposition with respect to all of the Existing Shares, with no
restrictions, subject to applicable federal securities laws, on such
Stockholder's rights of disposition pertaining thereto.
(iii) Noncontravention. The execution and delivery of this Agreement
by such Stockholder do not, and the performance by such Stockholder of his
obligations hereunder and the consummation of the transactions contemplated
hereby will not result in a Violation of, or require any notification or
consent or approval under, or result in the creation of any Lien upon any
of the Shares under (A) subject to the Filings and Approvals referred to in
Section 3.4(e) of the Merger Agreement, any Laws applicable to such
Stockholder or any of his assets or properties, or (B) any Contracts to
which such Stockholder is a party or by which such Stockholder or any of
his assets or properties is bound, except those which, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect with respect to each of the Stockholders.
4. Certain Covenants of the Stockholders. Except in accordance with the
terms of this Agreement, each of the Stockholders hereby covenants and agrees as
follows:
(a) No Solicitation. From and after the date hereof, each of the
Stockholders shall not, and it shall cause his financial and other
advisors, agents, representatives, affiliates and others working on its
behalf or at its direction not to, initiate, solicit, encourage or
facilitate offers, inquiries or proposals with respect to, or furnish any
information relating to or participate in any negotiations or discussions
concerning, any merger, reorganization, share exchange, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of its subsidiaries, or any
purchase or sale of more than 10% of the assets (including stock of
subsidiaries) of the Company and its subsidiaries taken as a whole, or any
purchase or sale of, or tender or exchange offer for, 10% or more of the
equity securities of the Company or any of its subsidiaries other than as
contemplated or permitted by the Merger Agreement.
(b) Restriction on Transfer, Proxies and Non-Interference. Each of the
Stockholders hereby agrees, while this Agreement is in effect, and except
as contemplated hereby, not to (i) sell, transfer, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of the Shares or (ii)
grant any proxies, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares or (iii) take any action that
would make
<PAGE> 4
4
any representation or warranty of such Stockholder contained herein untrue
or incorrect or have the effect of preventing or disabling such Stockholder
from performing its obligations under this Agreement.
(c) Additional Shares. Each of the Stockholders hereby agrees, while
this Agreement is in effect, to promptly notify the Parent of the number of
any new shares of Company Common Stock acquired by such Stockholder, if
any, after the date hereof.
5. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be reasonably
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
6. Miscellaneous. (a) Entire Agreement; Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
Each of the Stockholders agrees not to assign this Agreement without the consent
of Parent (which consent shall not be unreasonably withheld).
(b) Amendments. This Agreement may be amended, supplemented or modified
by action taken by the respective Boards of the Parent and the Sub and by each
of the Stockholders at any time prior to the Effective Time. No such amendment,
supplement or modification shall be effective unless set forth in a written
instrument duly executed by each party hereto.
(c) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or sent by an overnight courier service to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If to a
Stockholder: c/o Coach USA, Inc.
One Riverway, Suite 500
Houston, TX 77056 - 1903
Telecopy No.: +1-713-888-0257
with copies
to: Coach USA, Inc.
One Riverway, Suite 500
Houston, TX 77056 - 1903
Attention: General Counsel
Telecopy No.: +1-713-888-0257
<PAGE> 5
5
and
Locke Liddell & Sapp LLP
3400 Chase Tower
600 Travis Street
Houston, Texas 77002-3095
Attention: Gene G. Lewis, Esq.
Telecopy No.: +1-713-223-3717
If to the
Parent or
the Sub: Stagecoach Holdings plc
Charlotte House
20 Charlotte Street
Perth PH1 5LL
Scotland
Attention: Keith Cochrane
Telecopy No.: +44-1738-643-648
with copies
to: SCH Acquisition Corp.
c/o Coach USA, Inc.
One Riverway, Suite 500
Houston, TX 77056 - 1903
Attention: General Counsel
Telecopy No.: +1-713-888-0257
and
Simpson Thacher & Bartlett
99 Bishopsgate
21st Floor
London, England EC2M 3YH
Attention: Michael O. Wolfson, Esq.
Telecopy No.: +44-207-422-4022
or such other address as shall be furnished in writing by any party.
(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of
<PAGE> 6
6
conflicts of laws thereof, except, in the case of Parent, to the extent that the
Companies Act or English or Scottish law are applicable to it.
(e) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(f) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
(g) Descriptive Headings. The descriptive headings used herein are
inserted for convenience only and do not constitute a part of this Agreement.
(h) Material Adverse Effect. The term "Material Adverse Effect" means,
when used with respect to Parent or any Stockholder, an effect or change that
either individually or in the aggregate with all other such effects or changes
is or would be materially adverse to the ability of such party to perform its
obligations hereunder or to consummate the transactions contemplated hereby.
(i) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
<PAGE> 7
7
IN WITNESS WHEREOF, the Parent, the Sub and each of the Stockholders
have caused this Agreement to be duly executed as of the day and year first
above written.
STAGECOACH HOLDINGS PLC
By: /s/ Keith Cochrane
------------------------------------
Name: Keith Cochrane
Title: Group Finance Director
SCH HOLDINGS CORP.
By: /s/ Keith Cochrane
------------------------------------
Name: Keith Cochrane
Title: President
/s/ Frank V. Atlee
-----------------------------
FRANK V. ATLEE III
/s/ Frank B. Gallagher
-----------------------------
FRANK B. GALLAGHER
/s/ Steven S. Harter
-----------------------------
STEVEN S. HARTER
/s/ Lawrence K. King
-----------------------------
LAWRENCE K. KING
/s/ William J. Lynch
-----------------------------
WILLIAM J. LYNCH
/s/ Gerald Mercadante
-----------------------------
GERALD MERCADANTE
/s/ John Mercadante
-----------------------------
JOHN MERCADANTE
<PAGE> 8
8
/s/ Barnett Rukin
-----------------------------
BARNETT RUKIN
/s/ Paul M. Verrochi
-----------------------------
PAUL M. VERROCHI
<PAGE> 9
EXHIBIT "A"
1. John Mercadante, Jr. 136,933
Spouse (Mr. Mercadante disclaims 137,774
beneficial ownership)
2. Frank P. Gallagher 55,370
Spouse 55,370
3. Gerald Mercadante 515,590
Spouse 103,210
4. Steven Harter (Hartner Investment Partners, Ltd.) 329,381
5. William J. Lynch 25,468
6. Paul M. Verrochi 40,000
7. Barnett Rukin 16,175
Spouse 150
8. Lawrence K. King 84,500
----------
1,499,921
<PAGE> 1
Exhibit 11(c)(4)
EMPLOYEE TERM SHEET
1. Each of Larry King, Frank Gallagher and Gerald Mercadante agrees to enter
into a new service agreement with Coach USA, Inc. ("Coach") or one of its
subsidiaries for a fixed term of 3 years from closing; thereafter the
notice periods in the existing contracts will apply subject to a maximum of
one year.
2. Larry King will, following closing, be appointed as a director of
Stagecoach Holdings plc ("Stagecoach") subject to the articles of
association of Stagecoach and the rules of London Stock Exchange.
3. The terms of the new service agreements will be on the same overall terms
as the existing service contracts of those individuals except where changes
are reasonably required to conform with the principles of corporate
governance to which Stagecoach is subject and to remove any provisions
which are, in the reasonable opinion of Stagecoach, inappropriate for a
London listed company of the size and nature of Stagecoach.
4. Larry King, Frank Gallagher, Gerald Mercadante and John Mercadante (the
"Investors") agree that as soon as reasonably practicable taking into
account the London Stock Exchange Code on directors dealings and insider
dealing legislation in the UK, they will invest between them in aggregate
US$9 million in the purchase of Stagecoach ordinary shares.
5. For a period of one year from purchase, the Investors will not be permitted
to dispose of the shares acquired by them. This will be subject to
customary exceptions to be negotiated. At the end of three years from
closing, each Investor will be entitled to receive one new ordinary
Stagecoach share for each 10 ordinary shares purchased under paragraph 4
above then held. This entitlement will be subject to the relevant Investor
continuing to be employed by Coach, except where prior termination by the
employer was without cause and subject to appropriate performance criteria
being achieved. These arrangements will be subject to the required approval
of Stagecoach shareholders being obtained.
6. Stagecoach intends that senior executives of Coach will be entitled to
participate in the existing Stagecoach executive share option scheme or an
appropriate equivalent phantom option scheme arrangement.
7. Existing underwater options will be cancelled.
8. For an executive who is entitled to terminate his contract on a change of
control and to receive a lump sum payment:
(i) if the executive terminates his employment within a period of three
years from the date of the change of control, he will be entitled to
receive the termination payment which would have been due had the
contract been terminated upon
<PAGE> 2
the change of control together with interest on that sum for the
period from the date of the change of control to the date of
termination at a rate equivalent to the retail bank rate.
(ii) if the executive terminates his employment at any time following the
3 year period above, the executive will be entitled to an amount
calculated on the basis of (i) above or to receive a cash payment
equal to the number of Stagecoach shares which, at the market price
prevailing on the date of the change of control, could have been
purchased with the relevant termination payment had the contract
been terminated upon the change of control, multiplied by the market
price of Stagecoach shares prevailing on the date of termination of
the employment, whichever of the two (2) amounts described above is
the greater amount.
Each of the signatories hereto and Stagecoach agree that this term sheet is a
statement of mutual intent for the purpose of aiding negotiation, and remains
subject to the negotiation of other material terms and the negotiation and
execution of definitive service agreements. The signatories hereto agree to
negotiate definitive service agreements on the basis of the terms herein in good
faith.
/s/ Larry King
- --------------------------
Larry King
/s/ Frank Gallagher
- --------------------------
Frank Gallagher
/s/ Gerald Mercadante
- --------------------------
Gerald Mercadante
/s/ John Mercadante
- --------------------------
John Mercadante
<PAGE> 1
UNDERTAKING TO VOTE
The Directors
Stagecoach Holdings PLC
Charlotte House
20 Charlotte Street
Perth PH1 5LL
Scotland
and
The Directors
Coach USA, Inc.
One Riverway, Suite 500
Houston, Texas 77056
June 12, 1999
Dear Sirs:
Stagecoach PLC (the "Company")
Proposed acquisition of Coach USA, Inc. ("Coach")
You have informed us in confidence of the Company's proposals to acquire the
whole of the issued share capital of Coach (the "Transaction").
In consideration of the payment to us of $1 (receipt of which we hereby
acknowledge), we confirm and undertake as follows:
1. We confirm that we are the beneficial and/or registered holder of
shares in the capital of the Company as shown in the schedule below
(the "Shares") and that we have all necessary authority to vote or
procure the voting of the Shares in accordance with this undertaking:
2. We irrevocably undertake that we shall vote or procure the voting of
the Shares in favor of the resolution[s] to implement the Transaction
to be proposed at the Parent Shareholders Meeting (as defined in the
Agreement and Plan of Merger, dated as of June 12, 1999, among the
Company, Coach, SCH Holdings Corp. and SCH Acquisition Corp. (the
"Merger Agreement"));
3. We authorize you to include a statement in the circular letter to be
sent to shareholders of the Company in connection with the
Extraordinary General Meeting that we have undertaken so to vote;
4. We irrevocably undertake and confirm that we shall not sell or
otherwise dispose of or permit the sale or other disposition of all or
any of the Shares or any interest in any of the Shares prior to the
close of the Extraordinary General meeting or any adjournment thereof;
and
5. We irrevocably undertake and confirm that we have not agreed,
conditionally or otherwise, to dispose of all or any of the Shares or
any interest in any of the Shares.
We acknowledge that you have informed us that the information you have provided
to us concerning the Transaction constitutes inside information for the purposes
of the "insider dealing" provisions of the Criminal Justice Act 1993 and confirm
that we are aware of our obligations as insiders for the purpose of that Act.
<PAGE> 2
We further acknowledge that it is the intention of the parties to this
undertaking that in the event of a breach by us of any of its terms then,
without prejudice to any other of your rights or remedies, the terms of this
undertaking be specifically performed.
This Undertaking shall terminate upon the termination of the Merger Agreement,
in accordance with its terms.
This Undertaking shall be governed by and construed in accordance with English
law.
<TABLE>
<CAPTION>
No and class of shares in the capital of
the Company Registered Holder Beneficial Owner
- ------------------------------------------ ----------------- ----------------
<S> <C> <C>
131,640,815 ordinary shares 1/2 pence each 131,640,815 131,640,815
</TABLE>
<PAGE> 3
IN WITNESS whereof this document has been executed and delivered as a deed on
the date first before written.
/s/ ANN GLOAG
------------------------------------
signature
Ann Gloag
------------------------------------
print name
<PAGE> 1
UNDERTAKING TO VOTE
The Directors
Stagecoach Holdings PLC
Charlotte House
20 Charlotte Street
Perth PH1 5LL
Scotland
and
The Directors
Coach USA, Inc.
One Riverway, Suite 500
Houston, Texas 77056
June 12, 1999
Dear Sirs:
Stagecoach PLC (the "Company")
Proposed acquisition of Coach USA, Inc. ("Coach")
You have informed us in confidence of the Company's proposals to acquire the
whole of the issued share capital of Coach (the "Transaction").
In consideration of the payment to us of $1 (receipt of which we hereby
acknowledge), we confirm and undertake as follows:
1. We confirm that we are the beneficial and/or registered holder of
shares in the capital of the Company as shown in the schedule below
(the "Shares") and that we have all necessary authority to vote or
procure the voting of the Shares in accordance with this undertaking:
2. We irrevocably undertake that we shall vote or procure the voting of
the Shares in favor of the resolution[s] to implement the Transaction
to be proposed at the Parent Shareholders Meeting (as defined in the
Agreement and Plan of Merger, dated as of June 12, 1999, among the
Company, Coach, SCH Holdings Corp. and SCH Acquisition Corp. (the
"Merger Agreement"));
3. We authorize you to include a statement in the circular letter to be
sent to shareholders of the Company in connection with the
Extraordinary General Meeting that we have undertaken so to vote;
4. We irrevocably undertake and confirm that we shall not sell or
otherwise dispose of or permit the sale or other disposition of all or
any of the Shares or any interest in any of the Shares prior to the
close of the Extraordinary General meeting or any adjournment thereof;
and
5. We irrevocably undertake and confirm that we have not agreed,
conditionally or otherwise, to dispose of all or any of the Shares or
any interest in any of the Shares.
We acknowledge that you have informed us that the information you have provided
to us concerning the Transaction constitutes inside information for the purposes
of the "insider dealing" provisions of the Criminal Justice Act 1993 and confirm
that we are aware of our obligations as insiders for the purpose of that Act.
<PAGE> 2
We further acknowledge that it is the intention of the parties to this
undertaking that in the event of a breach by us of any of its terms then,
without prejudice to any other of your rights or remedies, the terms of this
undertaking be specifically performed.
This Undertaking shall terminate upon the termination of the Merger Agreement,
in accordance with its terms.
This Undertaking shall be governed by and construed in accordance with English
law.
<TABLE>
<CAPTION>
No and class of shares in the capital of
the Company Registered Holder Beneficial Owner
- ---------------------------------------- ----------------- ----------------
<S> <C> <C>
163,341,225 ordinary shares 1/2 pence each 163,341,225 163,341,225
</TABLE>
<PAGE> 3
IN WITNESS whereof this document has been executed and delivered as a deed on
the date first before written.
/s/ BRIAN SOUTER
-----------------------------------
signature
Brian Souter
-----------------------------------
print name
