prer14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Laidlaw International, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(1) |
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Title of each class of securities to which transaction applies: |
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Common stock, par value $0.01, of Laidlaw International, Inc.
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(2) |
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Aggregate number of securities to which transaction applies: |
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79,376,126 outstanding shares of Laidlaw International common stock (as of March 1, 2007),
713,630 outstanding deferred shares (as of March 1, 2007) and 1,598,836 shares of Laidlaw International
common stock underlying outstanding options to purchase Laidlaw International common stock (as of March 1, 2007).
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(3) |
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Per unit or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined): |
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The filing fee of $87,392.18 was calculated pursuant to Exchange Act Rule 0-11(c) and is
equal to $30.70 per million of the aggregate merger consideration of $2,846,650,800. The
aggregate merger consideration is calculated as the sum of (a) the product of 79,376,126
shares of Laidlaw International common stock and the merger consideration of $35.25 per
share plus (b) the product of 713,630 deferred shares and the merger consideration of $35.25 per
share plus (c) the product of the 1,598,836 options to purchase shares of Laidlaw International
common stock that have an exercise price of less than $35.25 per share and $14.69, which is
the difference between the merger consideration of $35.25 and the weighted average exercise price per share of $20.56.
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Proposed maximum aggregate value of transaction: |
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$2,846,650,800
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Total fee paid: |
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$87,392.18
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Filing Party: |
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Date Filed: |
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Laidlaw International,
Inc.
55 Shuman Blvd., Suite 400
Naperville, Illinois 60563
Telephone:
(630) 848-3000
March 20,
2007
Dear Stockholder:
You are cordially invited to attend a special meeting of
stockholders of Laidlaw International, Inc. to be held on
Friday, April 20, 2007 at 11:00 a.m., Chicago time, at
the Hilton Lisle/Naperville, 3003 Corporate West Drive, Lisle,
Illinois 60532. At the special meeting, you will be asked to
consider and vote upon a proposal to approve the Agreement and
Plan of Merger, dated as of February 8, 2007, by and among
FirstGroup plc, FirstGroup Acquisition Corporation, a wholly
owned subsidiary of FirstGroup, and Laidlaw International, Inc.
Pursuant to the merger agreement, FirstGroup Acquisition
Corporation will merge with and into Laidlaw and Laidlaw will
become a wholly owned subsidiary of FirstGroup.
If the merger is completed, Laidlaw stockholders will receive
$35.25 in cash, without interest and less any applicable
withholding tax, for each share of Laidlaw common stock owned by
them as of the date of the merger.
After careful consideration, our board of directors determined
that the merger agreement and the merger are in the best
interests of Laidlaw and its stockholders. Our board of
directors has approved the merger agreement. Our board of
directors unanimously recommends that you vote FOR
approval of the merger agreement at the special meeting.
Our board of directors considered a number of factors in
evaluating the transaction and consulted with its legal and
financial advisors in so doing. The enclosed proxy statement
also provides detailed information about the merger agreement
and the merger. We encourage you to read the proxy statement
carefully.
Your vote is very important, regardless of the number of
shares you own. The merger must be approved by the holders
of a majority of shares of our outstanding common stock entitled
to vote at the special meeting. Therefore, if you do not return
your proxy card, do not vote via the Internet or telephone or do
not attend the special meeting and vote in person, it will have
the same effect as if you voted AGAINST approval of
the merger agreement. Only stockholders who owned shares of
Laidlaw common stock at the close of business on March 19, 2007,
the record date for the special meeting, will be entitled to
vote at the special meeting. On behalf of the board of
directors, we urge you to sign, date and return the enclosed
proxy card, or vote via the Internet or telephone as soon as
possible, even if you currently plan to attend the special
meeting.
Thank you for your support of our company. We look forward to
seeing you at the special meeting.
Sincerely,
Kevin E. Benson
President and Chief Executive Officer
Peter E. Stangl
Chairman of the Board of Directors
This proxy statement is dated March 20, 2007 and is being mailed
to stockholders of
Laidlaw on or about March 21, 2007.
Laidlaw International,
Inc.
55 Shuman Blvd., Suite 400
Naperville, Illinois 60563
Telephone:
(630) 848-3000
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
Notice is hereby given that a special meeting of stockholders of
Laidlaw International, Inc., a Delaware corporation, will be
held on Friday, April 20, 2007, at 11:00 a.m., Chicago
time, at the Hilton Lisle/Naperville, 3003 Corporate West Drive,
Lisle, Illinois 60532, for the following purposes:
1. To consider and vote upon the approval of the Agreement
and Plan of Merger, dated as of February 8, 2007, by and
among FirstGroup plc, a public limited company incorporated
under the laws of Scotland, FirstGroup Acquisition Corporation
(formerly known as Fern Acquistion Vehicle Corporation), a
Delaware corporation and wholly owned subsidiary of FirstGroup,
and Laidlaw International, Inc., as more fully described in the
enclosed proxy statement;
2. To consider and vote on any proposal to adjourn or
postpone the special meeting, including, if necessary or
appropriate, to solicit additional proxies if there are not
sufficient votes in favor of the foregoing proposal; and
3. To transact such other business as may properly come
before the meeting or any adjournment or postponement of the
meeting.
You are entitled to vote at the special meeting if you were a
stockholder of record at the close of business on March
19, 2007. Your vote is important. The affirmative vote
of the holders of a majority of Laidlaws common stock
entitled to vote at the special meeting is required to approve
the merger agreement. Holders of Laidlaw common stock are
entitled to appraisal rights under Delaware law in connection
with the merger if they meet certain conditions. See The
Merger Appraisal Rights beginning on
page 32 of the proxy statement.
All stockholders are cordially invited to attend the special
meeting in person. Even if you plan to attend the special
meeting in person, we request that you complete, sign, date and
return the enclosed proxy or vote via the Internet or telephone
and thus ensure that your shares will be represented at the
special meeting if you are unable to attend. If you sign, date
and return your proxy card without indicating how you wish to
vote, your proxy will be counted as a vote in favor of approval
of the merger agreement and in favor of any proposed adjournment
or postponement of the special meeting, including, if necessary
or appropriate, to permit solicitations of additional proxies.
If you fail to return your proxy card and do not vote via the
Internet or by telephone, your shares will effectively be
counted as a vote against approval of the merger agreement and
will not be counted for purposes of determining whether a quorum
is present at the special meeting or for purposes of the vote to
adjourn or postpone the special meeting, including, if necessary
or appropriate, to permit solicitations of additional proxies.
If you do attend the special meeting and wish to vote in person,
you may withdraw your proxy and vote in person.
The board of directors unanimously recommends that you vote
FOR approval of the merger agreement at the special
meeting.
By Order of the Board of Directors,
Kevin E. Benson
President and Chief Executive Officer
LAIDLAW
INTERNATIONAL, INC.
SPECIAL MEETING OF STOCKHOLDERS
TABLE OF CONTENTS
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iii
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1
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1
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51
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51
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52
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52
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Annexes
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Annex A
Agreement and Plan of Merger
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A-1
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Annex B
Opinion of Morgan Stanley & Co. Incorporated
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B-1
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Annex C
Section 262 of the Delaware General Corporation
Law
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C-1
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ii
QUESTIONS
AND ANSWERS ABOUT THE MERGER
The following Q&A is intended to address some commonly asked
questions regarding the merger. These questions and answers may
not address all questions that may be important to you as a
Laidlaw stockholder. We urge you to read carefully the more
detailed information contained elsewhere in this proxy
statement, the annexes to this proxy statement, and the
documents we refer to in this proxy statement.
Except as otherwise specifically noted in this proxy statement,
the Company, we, our,
us and similar words in this proxy statement refer
to Laidlaw International, Inc. In addition, throughout this
proxy statement, we refer to Laidlaw International, Inc. as
Laidlaw and to FirstGroup plc as
FirstGroup.
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Why am I receiving this proxy statement? |
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Our board of directors is furnishing this proxy statement in
connection with the solicitation of proxies to be voted at a
special meeting of stockholders, or at any adjournments or
postponements of the special meeting. |
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What am I being asked to vote on? |
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You are being asked to vote to approve a merger agreement that
provides for the acquisition of Laidlaw by FirstGroup. The
proposed acquisition would be accomplished through a merger of
FirstGroup Acquisition Corporation, a wholly owned subsidiary of
FirstGroup (which we refer to in this proxy statement as
merger sub or FirstGroup Acquisition),
with and into Laidlaw. As a result of the merger, Laidlaw will
become a wholly-owned subsidiary of FirstGroup and Laidlaw
common stock will cease to be listed on the New York Stock
Exchange, will not be publicly traded and will be deregistered
under the Securities Exchange Act of 1934, as amended (which we
refer to in this proxy statement as the Exchange
Act). |
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In addition, you are being asked to grant Laidlaw management
discretionary authority to adjourn or postpone the special
meeting. If, for example, we do not receive proxies from
stockholders holding a sufficient number of shares to approve
the proposed transaction, we could use the additional time to
solicit additional proxies in favor of approval of the merger
agreement. |
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What will I receive in the merger? |
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As a result of the merger, our stockholders will receive $35.25
in cash, without interest and less any applicable withholding
tax, for each share of Laidlaw common stock they own at the
effective time of the merger. For example, if you own
100 shares of Laidlaw common stock, you will receive
$3,525.00 in cash, less any applicable withholding tax, in
exchange for your 100 shares. |
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What do I need to do now? |
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We urge you to read this proxy statement carefully and consider
how the merger affects you. Then mail your completed, dated and
signed proxy card in the enclosed return envelope as soon as
possible, or vote via the Internet or telephone, so that your
shares can be voted at the special meeting of our stockholders.
Please do not send your stock certificates with your proxy
card. |
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How does Laidlaws board recommend that I vote? |
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At a meeting held on February 8, 2007, Laidlaws board
of directors approved the merger agreement and determined that
the merger agreement and the merger are in the best interests of
Laidlaw and its stockholders. Our board of directors
unanimously recommends that you vote FOR approval of
the merger agreement and FOR the proposal to adjourn
or postpone the special meeting, including, if necessary or
appropriate, to solicit additional proxies in the event there
are not sufficient votes in favor of the approving the merger
agreement at the time of the special meeting. |
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Do any of Laidlaws directors or officers have interests
in the merger that may differ from those of Laidlaw
stockholders? |
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Yes. When considering the recommendation of Laidlaws board
of directors, you should be aware that members of Laidlaws
board of directors and Laidlaws executive officers have
interests in the merger other than their interests as Laidlaw
stockholders generally. These interests may be different from,
or in conflict with, your interests as Laidlaw stockholders. The
members of our board of directors were aware of these additional
interests, and considered them, when they approved the merger
agreement. See The Merger |
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Interests of Laidlaws Directors and Executive Officers in
the Merger beginning on page 27 for a description of
the rights of our directors and executive officers that come
into effect in connection with the merger. |
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What factors did the Laidlaw board of directors consider in
making its recommendation? |
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In making its recommendation, our board of directors took into
account, among other things, the $35.25 per share cash
consideration to be received by holders of our common stock in
the merger, not only in relation to the current market price of
our common stock but also in relation to the current value of
Laidlaw and our board of directors estimate of the future
value of Laidlaw as an independent entity, other strategic
alternatives for the Companys business, the business,
competitive position, strategy and prospects of Laidlaw, the
written opinion of our financial advisor, and the terms and
conditions of the merger agreement. |
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What vote is required to approve the merger agreement? |
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Approval of the merger agreement requires the affirmative vote
of the holders of a majority of the outstanding shares of our
common stock entitled to vote at the special meeting. |
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As of March 19, 2007, the record date for determining who
is entitled to vote at the special meeting, there were
79,376,199 shares of Laidlaw common stock issued and
outstanding. |
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Where and when is the special meeting of stockholders? |
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The Laidlaw special meeting will be held on Friday, April
20, 2007 at 11:00 a.m., Chicago time, at the Hilton
Lisle/Naperville, 3003 Corporate West Drive, Lisle, Illinois
60532. You may attend the special meeting and vote your shares
in person. |
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Who is entitled to vote at the special meeting? |
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Only stockholders of record as of the close of business on March
19, 2007 are entitled to receive notice of the special
meeting and to vote the shares of our common stock that they
held at that time at the special meeting, or at any adjournments
or postponements of the special meeting. |
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May I vote in person? |
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Yes. If your shares are not held in street name
through a broker or bank you may attend the special meeting and
vote your shares in person, rather than signing and returning
your proxy card or voting via the Internet or telephone. If your
shares are held in street name, you must get a proxy
from your broker or bank in order to attend the special meeting
and vote in person. Even if you plan to attend the special
meeting in person, we urge you to complete, sign, date and
return the enclosed proxy or vote via the Internet or telephone
to ensure that your shares will be represented at the special
meeting. |
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May I vote via the Internet or telephone? |
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If your shares are registered in your name, you may vote by
returning a signed proxy card or voting in person at the special
meeting. Additionally, you may submit a proxy authorizing the
voting of your shares over the Internet by accessing
www.proxyvote.com and following the on-screen
instructions or telephonically by calling
1-800-690-6903
and following the telephone voting instructions. Proxies
submitted over the Internet or by telephone must be received by
11:59 p.m., Eastern Time, on April 19, 2007. |
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You must have the enclosed proxy card available, and follow the
instructions on the proxy card, in order to submit a proxy over
the Internet or telephone. Based on your Internet and telephone
voting, the proxy holders will vote your shares according to
your directions. |
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If your shares are held in street name through a
broker or bank, you may vote by completing and returning the
voting form provided by your broker or bank, or by the Internet
or telephone through your broker or bank if such a service is
provided. To vote via the Internet or telephone through your
broker or bank, you should follow the instructions on the voting
form provided by your broker or bank. |
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What happens if I do not return my proxy card, do not vote
via the Internet or telephone or do not attend the special
meeting and vote in person? |
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The approval of the merger agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of
our common stock entitled to vote at the special meeting.
Therefore, if you do not return your proxy card, do not vote via
the Internet or telephone or do not attend the special meeting
and vote in |
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person, it will have the same effect as if you voted
AGAINST approval of the merger agreement. For the
proposal to adjourn or postpone the special meeting, including,
if necessary or appropriate, to solicit additional proxies,
abstentions will have no effect on the outcome, assuming a
quorum is present. |
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May I change my vote after I have mailed my signed proxy
card? |
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Yes. You may change your vote at any time before your proxy card
is voted at the special meeting. You can do this in one of three
ways. |
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First, you can deliver to the Corporate Secretary of
Laidlaw a written notice bearing a date later than the proxy you
delivered to Laidlaw stating that you would like to revoke your
proxy.
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Second, you can complete, execute and deliver to the
Corporate Secretary of Laidlaw a new, later-dated proxy card for
the same shares. If you submitted the proxy you are seeking to
revoke via the Internet or telephone, you may submit this
later-dated new proxy using the same method of transmission
(Internet or telephone) as the proxy being revoked, provided the
new proxy is received by 11:59 p.m., Eastern Time, on April
19, 2007.
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Third, you can attend the meeting and vote in
person. Your attendance at the special meeting alone will not
revoke your proxy.
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Any written notice of revocation or subsequent proxy should be
delivered to Laidlaw at 55 Shuman Blvd., Suite 400,
Naperville, Illinois 60563, Attention: Corporate Secretary, or
hand-delivered to our Corporate Secretary at or before the
taking of the vote at the special meeting. |
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If you have instructed a broker to vote your shares, you must
follow directions received from your broker to change those
instructions. |
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If my broker holds my shares in street name, will
my broker vote my shares for me? |
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Your broker will not be able to vote your shares without
instructions from you. You should instruct your broker to vote
your shares following the procedure provided by your broker.
Without instructions, your shares will not be voted, which will
have the same effect as if you voted against approval of the
merger agreement. |
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What should I do if I receive more than one set of voting
materials? |
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You may receive more than one set of voting materials, including
multiple copies of this proxy statement and multiple proxy cards
or voting instruction cards. For example, if you hold your
shares in more than one brokerage account, you will receive a
separate voting instruction card for each brokerage account in
which you hold shares. If you are a stockholder of record and
your shares are registered in more than one name, you will
receive more than one proxy card. Please complete, sign, date
and return (or vote via the Internet or telephone with respect
to) each proxy card and voting instruction card that you receive. |
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What happens if I sell my shares of Laidlaw common stock
before the special meeting? |
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The record date for the special meeting is earlier than the date
of the special meeting and the date the merger is expected to be
completed. If you transfer your shares of Laidlaw common stock
after the record date but before the special meeting, you will
retain your right to vote at the special meeting, but will
transfer the right to receive the merger consideration. Even if
you transfer your shares of Laidlaw common stock after the
record date, we urge you to complete, sign, date and return the
enclosed proxy or vote via the Internet or telephone. |
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Will the merger be taxable to me? |
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The receipt of cash in exchange for your shares of Laidlaw
common stock pursuant to 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 or
foreign income or other tax laws. Generally, for
U.S. federal income tax purposes, a U.S. stockholder
will recognize gain or loss equal to the difference between the
amount of cash received by that stockholder in the merger and
that stockholders adjusted tax basis in the shares of
Laidlaw common stock exchanged for cash in the merger. Because
individual circumstances may differ, we recommend that you
consult your own tax advisor to determine the particular tax
effects to you. See The Merger Material United
States Federal Income Tax Consequences of the Merger. |
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What will the holders of Laidlaw stock options receive in the
merger? |
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At the effective time of the merger, each outstanding option to
purchase shares of Laidlaw common stock, whether or not vested
or exercisable, will be canceled and converted into the right to
receive an amount in cash equal to the product of (i) the
excess, if any, of $35.25 over the applicable exercise price of
such option multiplied by (ii) the total number of shares
of Laidlaw common stock subject to such option. See The
Merger Effects on Awards Outstanding Under
Laidlaws Employee Plans beginning on page 35. |
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What regulatory approvals and filings are needed to complete
the merger? |
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The merger is subject to compliance with the applicable
requirements of the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or the HSR
Act, and the Competition Act (Canada), as amended, or the
Competition Act. In addition, the merger is subject to the
approval of certain other governmental and regulatory agencies.
See The Merger Regulatory Matters
beginning on page 38. |
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When do you expect the merger to be completed? |
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We are working toward completing the merger as quickly as
possible and currently expect to consummate the merger later
this year. In addition to obtaining stockholder approval, all
other closing conditions, including the receipt of regulatory
approvals, must be satisfied or, to the extent permitted, waived
prior to the consummation of the merger. |
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What rights do I have if I oppose the merger? |
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Laidlaws stockholders are entitled to exercise appraisal
rights in connection with the merger. If you do not vote in
favor of the merger and it is completed, you may seek payment of
the fair value of your shares under Delaware law. To do so,
however, you must strictly comply with all of the required
procedures under Delaware law. See The Merger
Appraisal Rights beginning on page 32. |
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Should I send in my stock certificates now? |
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No. After the merger is completed, you will receive written
instructions for exchanging your shares of our common stock for
the merger consideration of $35.25 in cash, without interest and
less any applicable withholding tax, for each share of our
common stock you hold. |
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Who can help answer my questions? |
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If you would like additional copies, without charge, of this
proxy statement or if you have questions about the merger,
including the procedures for voting your shares, you should
contact: |
Laidlaw International, Inc.
Attn: Investor Relations
55 Shuman Blvd., Suite 400
Naperville, Illinois 60563
Telephone:
(630) 848-3000
or
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Telephone:
(800) 290-6427
(Toll-Free)
Neither the Securities and Exchange Commission (which we
refer to in this proxy statement as the SEC), nor
any Canadian securities regulatory authority or state securities
regulatory agency has approved or disapproved the merger, passed
upon the merits or fairness of the merger or passed upon the
adequacy or accuracy of the disclosures in this proxy statement.
Any representation to the contrary is a criminal offense.
vi
SUMMARY
TERM SHEET
This summary highlights selected information from this proxy
statement and may not contain all of the information that is
important to you. To understand the merger fully and for a more
complete description of the legal terms of the merger, you
should read carefully this entire proxy statement, the annexes
to this proxy statement and the documents we refer to in this
proxy statement. See Where You Can Find More
Information on page 51. The merger agreement is attached
as Annex A to this proxy statement. We encourage you to
read the merger agreement, the legal document that governs the
merger.
The
Companies (page 14)
Laidlaw International, Inc.
55 Shuman Boulevard, Suite 400
Naperville, Illinois 60563
Telephone:
(630) 848-3000
Laidlaw International, Inc. is a holding company for North
Americas largest providers of school and inter-city bus
transport services and a leading supplier of public transit
services. The Companys businesses operate under the
brands: Laidlaw Education Services, Greyhound Lines, Greyhound
Canada and Laidlaw Transit Services. The Companys shares
trade on the New York Stock Exchange (NYSE: LI).
FirstGroup plc
395 King Street
Aberdeen, Scotland AB24 5RP
Telephone: 44 1224 650 100
FirstGroup is the UKs largest surface transportation
company with annual revenues of over £3 billion, an
operating profit of £229.7 million for the fiscal year
ended March 31, 2006 and approximately 74,000 employees
across the UK and North America. FirstGroup operates passenger
and freight rail services in the UK. Its passenger operations
include regional, intercity and commuter services. FirstGroup is
also the largest bus operator in the UK running more than 1 in 5
of all local bus services and carrying over 2.8 million
passengers per day. In North America, FirstGroup has three
operating divisions: yellow school buses (First Student),
transit contracting and management services (First Transit) and
vehicle maintenance and ancillary services (First Services).
FirstGroups shares trade on the London Stock Exchange
(LSE: FGP).
FirstGroup Acquisition Corporation
395 King Street
Aberdeen, Scotland AB24 5RP
Telephone: 44 1224 650 100
FirstGroup Acquisition, a Delaware corporation and a wholly
owned subsidiary of FirstGroup, was organized solely for the
purpose of entering into the merger agreement with Laidlaw and
completing the merger. FirstGroup Acquisition was incorporated
on February 7, 2007 as Fern Acquisition Vehicle Corporation
and changed its name to FirstGroup Acquisition Corporation on
March 15, 2007. FirstGroup Acquisition has not conducted any
business operations.
Merger
Consideration (page 35)
If the merger is completed, you will receive $35.25 in cash,
without interest and less any applicable withholding tax, in
exchange for each share of Laidlaw common stock that you own and
for which you have not properly exercised appraisal rights.
After the merger is completed, you will have the right to
receive the merger consideration, but you will no longer have
any rights as a Laidlaw stockholder and will have no rights as a
FirstGroup stockholder as a result of the merger. Laidlaw
stockholders will receive the merger consideration in exchange
for their Laidlaw stock certificates in accordance with the
instructions contained in the letter of transmittal to be sent
to our stockholders shortly after closing of the merger.
Treatment
of Options and Other Equity-Based Awards Outstanding Under Our
Employee Plans (page 35)
As of the record date, there were approximately
1,598,836 shares of our common stock subject to stock
options with an exercise price of less than $35.25 granted under
our equity incentive plans. At the effective time of the merger,
each outstanding option, whether or not vested or exercisable,
to acquire our common stock will be canceled, and the former
holder of each stock option will be entitled to receive an
amount in cash, without interest and less any applicable
withholding tax, equal to the product of:
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the excess of $35.25, if any, over the exercise price per share
of common stock subject to such option and
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the number of shares of common stock subject to such option.
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At the effective time of the merger, each outstanding restricted
stock award and deferred stock award granted under our Amended
and Restated Equity and Performance Incentive Plan will fully
vest and such awards will be canceled and converted into the
right to receive $35.25 in the same manner as shares of our
common stock.
Market
Prices and Dividend Data (page 11)
Our common stock is quoted on The New York Stock Exchange under
the symbol LI. On February 8, 2007, the last
full trading day before the public announcement of the merger,
the closing price for our common stock was $31.72 per share and
on March 19, 2007 the latest practicable trading day before
the printing of this proxy statement, the closing price for our
common stock was $34.14 per share.
Material
U.S. Federal Income Tax Consequences of the Merger
(page 37)
The exchange of shares of our common stock for the
$35.25 per share cash merger consideration will be a
taxable transaction to our stockholders for U.S. federal
income tax purposes.
Tax matters can be complicated, and the tax consequences of
the merger to you will depend on the facts of your own
situation. We strongly recommend that you consult your own tax
advisor to fully understand the tax consequences of the merger
to you.
Recommendation
of Laidlaws Board of Directors and Reasons for the Merger
(page 20)
Our board of directors unanimously recommends that you vote
FOR approval of the merger agreement and
FOR the proposal to adjourn the special meeting,
including, if necessary or appropriate, to solicit additional
proxies. At a special meeting of our board of directors on
February 8, 2007, after careful consideration, including
consultation with financial and legal advisors, our board of
directors determined that the merger agreement and the merger
are advisable and in the best interests of Laidlaw stockholders
and adopted the merger agreement. In the course of reaching its
decision over several board meetings, our board of directors
consulted with our senior management, financial advisor and
legal counsel, reviewed a significant amount of information and
considered a number of factors, including, among others, the
following:
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the business, competitive position, strategy and prospects of
Laidlaw, the position of current and likely competitors, and
current industry, economic and market conditions;
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the fact that we will no longer exist as an independent public
company and our stockholders will forgo any future increase in
our value that might result from our earnings or possible growth
as an independent company;
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the possible alternatives to the merger, the range of potential
benefits to our stockholders of the possible alternatives and
the timing and the likelihood of accomplishing the goals of such
alternatives;
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the likelihood that, in our board of directors view,
conducting an extensive public auction process before approving
the merger would be detrimental to Laidlaw by posing significant
risks to our existing operations, including risks relating to
our customer base and employee retention;
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the $35.25 per share in cash to be paid as merger
consideration in relation to the current market price of Laidlaw
shares and also in relation to the current value of Laidlaw and
our board of directors estimate of the future value of
Laidlaw as an independent entity and, specifically, the fact
that the $35.25 per share in cash to be paid as merger
consideration represents (1) a 20.3% premium over the
average closing price of our common stock in the 30 days
prior to February 2, 2007, the date the Teamsters union
issued a press release speculating on a potential sale of the
Company and (2) a 11.1% premium over the closing price of
our common stock on February 8, 2007, the last full trading
day before the public announcement of the merger;
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the opinion of Morgan Stanley & Co. Incorporated, or
Morgan Stanley, to the effect that, as of February 8, 2007,
and based upon and subject to the various factors, assumptions
and limitations set forth in the opinion, the $35.25 per
share in cash consideration to be received by the holders of
shares of Laidlaw common stock pursuant to the merger agreement
was fair, from a financial point of view, to such stockholders;
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the value of the consideration to be received by Laidlaw
stockholders and the fact that the consideration would be paid
in cash, which provides certainty and immediate value to our
stockholders;
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the terms of the financing arrangements entered into by
FirstGroup in connection with the merger and the fact that such
financing was committed prior to the execution of the merger
agreement;
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the fact that the merger is not subject to any financing
condition;
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the conditions to FirstGroups obligation to complete the
merger, FirstGroups right to terminate the merger
agreement in certain circumstances and the termination fee which
FirstGroup may be required to pay us if we or they terminate the
merger agreement in certain circumstances;
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the conditions to our obligation to complete the merger, our
right to terminate the merger agreement in certain circumstances
and the termination fee which we may be required to pay
FirstGroup if we or they terminate the merger agreement in
certain circumstances;
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the fact that under and subject to the terms of the merger
agreement, we cannot solicit a third party acquisition proposal,
but we can furnish information to and negotiate with a third
party in response to an unsolicited bona fide acquisition
proposal that our board of directors reasonably determines is or
will lead to a superior proposal;
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the likelihood that the proposed acquisition would be completed,
in light of the financial capabilities and reputation of
FirstGroup;
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the risk that we might not receive necessary regulatory
approvals and clearances, or do not receive such approvals and
clearances on terms that would require FirstGroup to complete
the merger; and
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the interests that our directors and executive officers may have
with respect to the merger, in addition to their interests as
stockholders of Laidlaw generally, as described in The
Merger Interests of Laidlaws Directors and
Executive Officers in the Merger.
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Our board of directors did not assign any particular weight or
rank to any of the positive or potentially negative factors or
risks discussed in this section, and our board of directors
carefully considered all of these factors as a whole in reaching
its determination and recommendation.
Opinion
of Our Financial Advisor (page 21)
In connection with the merger, Morgan Stanley delivered a
written opinion to Laidlaws board of directors to the
effect that, as of February 8, 2007, and based upon and
subject to the various factors, assumptions and limitations set
forth in the opinion, the consideration to be received by the
holders of shares of Laidlaw common stock pursuant to the merger
agreement was fair, from a financial point of view, to such
holders.
The full text of the written opinion of Morgan Stanley, dated
February 8, 2007, which sets forth the assumptions made,
procedures followed, matters considered, and limitations on the
review undertaken in connection with the opinion, is attached
hereto as Annex B. We encourage you to read this opinion
carefully in its entirety. Morgan Stanley provided its opinion
for the information and assistance of Laidlaws board of
directors in
3
connection with its consideration of the merger. Morgan
Stanleys opinion is directed to the Laidlaw board of
directors and does not constitute a recommendation as to how any
holder of Laidlaw common stock should vote with respect to the
merger.
The
Special Meeting of Laidlaws Stockholders
(page 12)
Date, Time and Place. A special meeting of our
stockholders will be held on Friday, April 20, 2007 at the
Hilton Lisle/Naperville, 3003 Corporate West Drive, Lisle,
Illinois 60532, at 11:00 a.m., Chicago time, to:
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consider and vote upon the approval of the merger agreement;
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adjourn or postpone the special meeting, including, if necessary
or appropriate, to solicit additional proxies in the event there
are not sufficient votes in favor of approval of the merger
agreement at the time of the special meeting; and
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transact such other business as may properly come before the
meeting or any adjournment or postponement of the meeting.
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Record Date and Voting Power. You are entitled
to vote at the special meeting if you owned shares of our common
stock at the close of business on March 19, 2007, the
record date for the special meeting. You will have one vote at
the special meeting for each share of our common stock you owned
at the close of business on the record date. There are
79,376,199 shares of our common stock entitled to be voted
at the special meeting.
Required Vote. The approval of the merger
agreement requires the affirmative vote of a majority of the
shares of our common stock outstanding at the close of business
on the record date. Approval of any proposal to adjourn or
postpone the special meeting, including, if necessary or
appropriate, to solicit additional proxies requires the
affirmative vote of at least a majority of the votes cast by
holders of our common stock present, in person or represented by
proxy, at the special meeting, provided a quorum is present in
person or represented by proxy at the special meeting.
Interests
of Laidlaws Directors and Executive Officers in the Merger
(page 27)
When considering the recommendation of Laidlaws board of
directors, you should be aware that members of Laidlaws
board of directors and Laidlaws executive officers have
interests in the merger other than their interests as Laidlaw
stockholders generally, including those described below. These
interests may be different from, or in conflict with, your
interests as Laidlaw stockholders. The members of our board of
directors were aware of these additional interests, and
considered them, when they approved the merger agreement.
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Our directors and executive officers will have their vested and
unvested stock options canceled and cashed out in connection
with the merger, meaning that they will receive cash payments,
without interest and less any applicable withholding tax, equal
to the product of the excess of $35.25, if any, over the
exercise price per share of common stock subject to such option
and the number of shares of our common stock subject to such
option. As of March 1, 2007, our directors and executive
officers held, in the aggregate, vested
in-the-money
stock options to acquire 696,250 shares of our common stock
and unvested
in-the-money
stock options to acquire 666,250 shares of our common stock.
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Our directors and executive officers will have their unvested
restricted shares and deferred shares canceled and converted
into the right to receive $35.25 in the same manner as shares of
our common stock in connection with the merger. As of
March 1, 2007, our directors and executive officers held,
in the aggregate, 75,939 unvested shares of restricted stock and
429,375 unvested deferred shares.
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Our current executive officers have entered into agreements with
us that provide certain severance payments and benefits in the
event of
his/her
termination of employment under certain circumstances. In
addition, the agreements provide that in the event any benefit
received by the executive officer gives rise to an excise tax
for the executive officer, the executive officer is also
entitled to a
gross-up
payment in an amount that would place the executive officer in
the same after-tax position that he would have been in if no
excise tax had applied.
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The merger agreement provides for indemnification arrangements
for each of our current and former directors and officers that
will continue for six years following the effective time of the
merger, as well as for insurance coverage covering his or her
service to Laidlaw as a director or officer.
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Conditions
to the Closing of the Merger (page 45)
Each partys obligation to effect the merger is subject to
the satisfaction or, to the extent permitted, waiver of various
conditions, which include the following:
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the merger agreement is approved by our stockholders at the
special meeting;
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at the extraordinary general meeting of FirstGroups
shareholders, FirstGroups shareholders approve ordinary
resolutions to (i) approve the merger, (ii) increase
FirstGroups authorized share capital, (iii) authorize
FirstGroups board of directors to allot share capital of
FirstGroup and (iv) authorize FirstGroups board of
directors to incur borrowings to effect the financing of the
merger;
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no applicable law is in effect which prohibits the consummation
of the merger;
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the waiting periods required under the HSR Act relating to the
merger have expired or been terminated or waived and we have
received approval under the Competition Act;
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the U.S. government has completed its national security
review under the Exon-Florio Statute of the Defense Production
Act of 1950, as amended, and concluded that no adverse action
with respect to the merger is necessary; and
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all actions by, or filings with, the U.S. Surface
Transportation Board necessary to permit the consummation of the
merger have been taken, made or obtained.
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FirstGroup and FirstGroup Acquisition will not be obligated to
effect the merger unless the following conditions are satisfied
or waived:
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we have performed in all material respects all of our
obligations required under the merger agreement at or prior to
the effective time;
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our representations and warranties in the merger agreement and
any writing delivered pursuant thereto (disregarding all
materiality and company material adverse effect, as defined in
the merger agreement, qualifications contained therein) are true
and correct at and as of the effective time (other than
representations and warranties that by their terms address
matters only as of another specified time, which shall be true
and correct only as of such time), with only exceptions as,
individually or in the aggregate, have not had and are not
reasonably expected to have a company material adverse effect;
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FirstGroup has received a certificate signed by an executive
officer of Laidlaw certifying that the conditions described in
the preceding two bullets have been satisfied by Laidlaw;
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there is no pending action or proceeding by any governmental
authority or any applicable law (i) seeking to restrain or
prohibit consummation of the merger or seeking material damages
in connection with the merger, (ii) seeking to restrain or
prohibit FirstGroups or FirstGroup Acquisitions
ownership or operation of any material portion of the business
or assets of Laidlaw and its subsidiaries, taken as a whole,
(iii) seeking to compel FirstGroup or its subsidiaries to
take certain actions which the merger agreement does not require
FirstGroup to take or (iv) that is otherwise reasonably
likely to have a company material adverse effect;
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there has not occurred and is not continuing any event or facts
that, individually or in the aggregate, have had or would
reasonably be expected to have a company material adverse
effect; and
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holders of fewer than 10% of the shares of our common stock have
demanded (and not withdrawn) appraisal of their shares in
accordance with Delaware law.
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We will not be obligated to effect the merger unless the
following conditions are satisfied or waived:
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each of FirstGroup and FirstGroup Acquisition has performed in
all material respects its obligations required under the merger
agreement at or prior to the effective time;
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the representations and warranties of FirstGroup and FirstGroup
Acquisition in the merger agreement and any writing delivered
pursuant thereto (disregarding all materiality and parent
material adverse effect, as defined in the merger agreement,
qualifications contained therein) are true and correct at and as
of the effective time (other than representations and warranties
that by their terms address matters only as of another specified
time, which shall be true and correct only as of such time),
with only exceptions as, individually or in the aggregate, have
not had and are not reasonably expected to have a parent
material adverse effect; and
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we have received a certificate signed by an executive officer of
FirstGroup certifying that the conditions described in the
preceding two bullets have been satisfied by FirstGroup.
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Limitation
on Considering Other Acquisition Proposals
(page 44)
Laidlaw and FirstGroup have agreed that neither they nor their
respective subsidiaries will, nor will they permit their
respective officers, directors, employees, investment bankers,
attorneys, accountants, consultants or other agents or advisors
to, directly or indirectly:
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solicit, initiate or take any action to knowingly facilitate or
encourage the submission of any acquisition proposal;
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enter into or participate in any discussions or negotiations
with, furnish any information relating to it or its respective
subsidiaries or afford access to its business, properties,
assets, books or records or otherwise cooperate in any way with
any third party that is seeking to make, or has made, an
acquisition proposal;
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grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities;
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fail to make, withdraw or modify in a manner adverse to the
other party the approval or recommendation of its board of
directors (or recommend an acquisition proposal or take any
action or make any statement inconsistent with the approval or
recommendation of the merger); or
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enter into any agreement in principle, letter of intent, term
sheet or other similar instrument relating to an acquisition
proposal.
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Nevertheless, the boards of directors of each of Laidlaw and
FirstGroup may engage in negotiations with any third party that,
subject to compliance with the foregoing, has made a bona fide
acquisition proposal that the applicable board of directors
reasonably determines is or will lead to a superior proposal and
may thereafter furnish to such third party nonpublic information
pursuant to a confidentiality agreement with terms not less
restrictive to such third party than those contained in the
confidentiality agreement between Laidlaw and FirstGroup.
Notwithstanding anything to the contrary in the merger
agreement, each of Laidlaws and FirstGroups board of
directors may make a change in its recommendation to
stockholders, if solely based on events or developments unknown
to such board of directors as of the date of the merger
agreement, that occur, or become known to such board after the
date of the merger agreement but prior to the stockholder
meeting of the applicable party, and it determines in good
faith, after consultation with outside legal counsel, that the
failure to take such action would reasonably be expected to
result in a breach of its fiduciary duties under applicable law.
Pursuant to the terms of the merger agreement, the board of
directors of each of Laidlaw and FirstGroup will not make a
change in recommendation in response to an acquisition proposal
unless:
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such acquisition proposal constitutes a superior proposal;
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the party in receipt of such superior proposal promptly notifies
the other party, in writing, at least three business days before
taking such action; and
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the other party, after receipt of notification, does not make an
offer within three business days that is at least as favorable
to the stockholders of the party in receipt of such superior
proposal as the superior proposal.
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6
Termination
of the Merger Agreement (page 46)
We and FirstGroup can terminate the merger agreement under
certain circumstances, including:
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by mutual written consent;
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by either us or FirstGroup if:
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the merger has not been consummated on or before August 8,
2007, provided that, in the event that as of such date all
applicable conditions to closing have been satisfied or waived
(other than the expiration of the waiting period under the HSR
Act and the receipt of Competition Act approval), such date may
be extended by us or FirstGroup up to an aggregate of three
months, subject to certain exceptions;
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applicable law makes consummation of the merger illegal or
prohibited; or
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if our stockholders or FirstGroups shareholders do not
approve the merger transaction at the applicable stockholder
meeting (including any adjournment or postponement thereof),
subject to certain exceptions.
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FirstGroup can terminate the merger agreement under certain
circumstances, including if:
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our board of directors modifies its recommendation to
stockholders to approve the merger agreement;
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a breach of any representation or warranty or failure to perform
any covenant or agreement on our part has occurred that would
cause us to fail to satisfy a condition to completion of the
merger agreement and such condition cannot be satisfied within
three months of August 8, 2007;
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we have willfully and materially breached our obligations in
connection with our stockholder meeting, the preparation and
filing of this proxy statement, the recommendation to our
stockholders to approve the merger transaction and related
matters or our obligations in connection with the provisions
governing non-solicitation described above; or
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prior to FirstGroups shareholder meeting, its board of
directors has made a change in its recommendation to
shareholders to approve the merger transaction in compliance
with the terms of the merger agreement in order to enter into a
definitive written agreement concerning a superior proposal.
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We can terminate the merger agreement under certain
circumstances, including if:
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FirstGroups board of directors modifies its recommendation
to FirstGroups shareholders to approve the merger
agreement;
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a breach of any representation or warranty or failure to perform
any covenant or agreement on the part of FirstGroup or
FirstGroup Acquisition has occurred that would cause them to
fail to satisfy a condition to completion of the merger
agreement and such condition cannot be satisfied within three
months of August 8, 2007;
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FirstGroup has willfully and materially breached its obligations
in connection with its shareholder meeting, the preparation and
filing of its shareholder circular, the recommendation to its
shareholders to approve the merger transaction and related
matters or its obligations in connection with the provisions
governing non-solicitation described above; and
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prior to our stockholder meeting, our board of directors has
made a change in its recommendation to stockholders to approve
the merger agreement in compliance with the terms thereof in
order to enter into a definitive written agreement concerning a
superior proposal.
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Termination
Fees and Expenses (page 47)
Except as otherwise provided for below, all fees and expenses
incurred by the parties in connection with the merger will be
borne by the party incurring such fees and expenses.
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The merger agreement requires, however, that we pay FirstGroup a
fee of $78 million if:
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FirstGroup terminates the merger agreement due to a change in
the recommendation by our board of directors that our
stockholders approve the merger agreement;
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FirstGroup terminates the merger agreement due to our willful
and material breach of our obligations in connection with our
stockholder meeting, the preparation and filing of this proxy
statement, or the recommendation to our stockholders to approve
the merger agreement or our obligations in connection with the
provisions governing non-solicitation; or
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we terminate the merger agreement in order to enter into a
definitive written agreement concerning a superior proposal.
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We must pay a termination fee of $43.35 million to
FirstGroup if the merger agreement is terminated by either party
as a result of our failure to obtain our stockholder approval at
the special meeting, and the Company must pay an additional
termination fee of $34.65 million to FirstGroup if,
(i) prior to the special meeting, an acquisition proposal
is made and (ii) within 12 months of termination, we
enter into or consummate certain alternative transactions
(provided, that, for the purposes of determining if this
termination fee must be paid, the definition of acquisition
proposal means an offer or proposal relating to an acquisition,
merger or similar transaction involving more than 50% of the
assets or voting securities of the Company, rather than the 25%
threshold that generally applies throughout the merger
agreement, and allows transactions relating to the Greyhound
business to be considered together with all other relevant
transactions in determining whether an acquisition proposal has
been made).
We also must pay a termination fee of $43.35 million to
FirstGroup if the merger agreement is terminated by either party
due to the passing of the termination date and an acquisition
proposal was made to us prior to such termination, and
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within 12 months of termination, we enter into or
consummate an alternative transaction with the party who made
the acquisition proposal prior to termination; or
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within 6 months of termination, we enter into or consummate
an alternative transaction with a party other than the party who
made the acquisition proposal prior to termination, pursuant to
which the total of (i) the net debt to be assumed by such
party and (ii) the aggregate consideration received by the
Company and our stockholders in connection with the acquisition
proposal exceeds $3.601 billion; provided, that, in this
case, the amount of the termination fee will be the lesser of
$43.35 million and the excess of the total consideration
paid over $3.601 billion;
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provided, that, for the purposes of determining if this
termination fee must be paid, the definition of acquisition
proposal means an offer or proposal relating to an acquisition,
merger or similar transaction involving more than 50% of the
assets or voting securities of the Company, rather than the 25%
threshold that generally applies throughout the merger
agreement, and allows transactions relating to the Greyhound
business to be considered together with all other relevant
transactions in determining whether an acquisition proposal has
been made.
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The merger agreement requires that FirstGroup pay us
£22 million if:
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either party terminates the merger agreement as a result of
FirstGroups failure to obtain its shareholder approval;
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we terminate the merger agreement due to a change in
recommendation by FirstGroups board of directors that its
shareholders approve the merger;
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we terminate the merger agreement due to FirstGroups
willful and material breach of its obligations in connection
with its shareholder meeting, the preparation and filing of its
shareholder circular, or the recommendation to its shareholders
to approve the merger or its obligations in connection with the
provisions governing non-solicitation; or
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FirstGroup terminates the merger agreement in order to enter
into a definitive written agreement concerning a superior
proposal.
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Regulatory
Matters (page 38)
The HSR Act prohibits us from completing the merger until we
have furnished certain information and materials to the
Antitrust Division of the Department of Justice and the Federal
Trade Commission and the required waiting period has expired or
been terminated. The merger is also subject to review by the
Commissioner of Competition in Canada pursuant to the
Competition Act. We have filed or will file the appropriate
notifications in each such jurisdiction and are pursuing the
approval of the transaction.
We are also subject to, and are seeking approvals in connection
with, various other federal, state and provincial regulatory
requirements as a result of the merger.
Appraisal
Rights (page 32)
Under Delaware law, you are entitled to exercise appraisal
rights in connection with the merger.
If you do not vote in favor of adoption of the merger agreement
and approval of the merger and perfect your appraisal rights
under Delaware law, you will have the right to a judicial
appraisal of the fair value of your shares in
connection with the merger. This value could be more than, less
than, or the same as the merger consideration for shares of our
common stock.
In order to preserve your appraisal rights, you must take all
the steps provided under Delaware law within the appropriate
time periods. Failure to follow exactly the procedures specified
under Delaware law will result in the loss of appraisal rights.
The relevant section of Delaware law regarding appraisal rights
is reproduced and attached as Annex C to this proxy
statement. We encourage you to read these provisions carefully
and in their entirety.
ANY LAIDLAW STOCKHOLDER WHO WISHES TO EXERCISE APPRAISAL
RIGHTS OR WHO WISHES TO PRESERVE HIS OR HER RIGHT TO DO SO
SHOULD REVIEW ANNEX C CAREFULLY AND SHOULD CONSULT HIS OR
HER LEGAL ADVISOR, SINCE FAILURE TO TIMELY COMPLY WITH THE
PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF SUCH
RIGHTS.
9
FORWARD-LOOKING
INFORMATION
Certain statements contained in this proxy statement, including
statements regarding the benefits of the transaction with
FirstGroup, that are not historical facts, are forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
can be identified by the use of terminology such as: believe,
hope, may, anticipate, should, intend, plan, will, expect,
estimate, continue, project, positioned, strategy and similar
expressions. Such statements involve certain risks,
uncertainties and assumptions that include, but are not limited
to,
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The ability to successfully integrate Laidlaw and FirstGroup
into a combined company and execute its business strategy;
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Economic and other market factors, including competitive
pressures in the transportation industry and changes in pricing
policies;
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The ability to implement initiatives designed to realize
synergies, increase operating efficiencies or improve results;
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Continued increases in prices of fuel and potential shortages;
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Control of costs related to accident and other risk management
claims;
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The potential for rising labor costs and actions taken by
organized labor unions;
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Terrorism and other acts of violence;
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Other risks and uncertainties related to the proposed
transaction, including but not limited to the satisfaction of
the conditions to closing; including receipt of stockholder,
regulatory, and other approvals; and
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Other risks and uncertainties described in Laidlaws
filings with the SEC.
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Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual
outcomes may vary materially from those indicated. In light of
these risks and uncertainties you are cautioned not to place
undue reliance on these forward-looking statements. Laidlaw
undertakes no obligation to publicly update forward-looking
statements, whether as a result of new information, future
events or otherwise. You are advised, however, to consult any
further disclosures Laidlaw makes on related subjects as may be
detailed in Laidlaws other filings made from time to time
with the SEC.
10
MARKET
PRICE AND DIVIDEND DATA
Our common stock is listed on the New York Stock Exchange under
the symbol LI. This table shows, for the periods
indicated, the range of intraday high and low per share sales
prices for our common stock as reported on the New York Stock
Exchange.
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Fiscal Quarters
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First
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Second
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Third
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Fourth
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Fiscal Year 2007
(through March 19,
2007)
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High
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$
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29.42
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$
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34.80
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$
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34.54
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Low
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$
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26.47
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$
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28.49
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$
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34.09
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Fiscal Year ended
August 31, 2006
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High
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$
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25.68
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$
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28.34
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$
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29.40
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$
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27.35
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Low
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$
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21.09
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$
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21.42
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$
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24.30
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$
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24.10
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Fiscal Year ended
August 31, 2005
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High
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$
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19.00
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$
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23.00
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$
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23.43
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$
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26.50
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Low
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$
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14.46
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$
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18.85
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$
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20.41
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$
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22.47
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The following table sets forth the closing price per share of
our common stock, as reported on the New York Stock Exchange on
February 8, 2007, the last full trading day before the
public announcement of the merger, and on March 19, 2007,
the latest practicable trading day before the printing of this
proxy statement:
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Common Stock
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Closing Price
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February 8, 2007
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$
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31.72
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March 19, 2007
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$
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34.14
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Following the merger, there will be no further market for our
common stock and our stock will be delisted from the New York
Stock Exchange and deregistered under the Exchange Act.
In 2005, Laidlaw commenced payment of quarterly cash dividends.
To date during fiscal year 2007, Laidlaw has paid a quarterly
dividend of $0.17 for each share of its common stock, and for
the five quarters preceding fiscal year 2007 paid a dividend of
$0.15 for each share of its common stock. We currently expect to
continue to pay regular quarterly dividends subject to approval
of our board of directors and the terms of the merger agreement.
11
THE
SPECIAL MEETING
The enclosed proxy is solicited on behalf of the board of
directors of Laidlaw for use at the special meeting of
stockholders or at any adjournment or postponement thereof.
Date,
Time and Place
We will hold the special meeting at The Hilton Lisle/Naperville,
3003 Corporate West Drive, Lisle, Illinois 60532 at
11:00 a.m., Chicago time, on Friday, April 20, 2007.
Purpose
of the Special Meeting
At the special meeting, we will ask the stockholders of our
common stock to approve the merger agreement, and, if there are
not sufficient votes in favor of the approval of the merger
agreement, to adjourn or postpone the special meeting to a later
date to solicit additional proxies.
Record
Date; Shares Entitled to Vote; Quorum
Only holders of record of our common stock at the close of
business on March 19, 2007, the record date, are entitled
to notice of, and to vote at, the special meeting. On the record
date, 79,376,199 shares of our common stock were issued and
outstanding and held by approximately 52 holders of record.
Holders of record of our common stock on the record date are
entitled to one vote per share at the special meeting on the
proposal to approve the merger agreement and the proposal to
adjourn or postpone the special meeting, including, if necessary
or appropriate, to solicit additional proxies.
A quorum of stockholders is necessary to hold a valid special
meeting. Under our by-laws, a quorum is present at the special
meeting if a majority of the shares of our common stock entitled
to vote on the record date are present, in person or represented
by proxy. In the event that a quorum is not present at the
special meeting, it is expected that the meeting will be
adjourned or postponed to solicit additional proxies. For
purposes of determining the presence or absence of a quorum,
votes withheld, abstentions and broker non-votes
(where a broker or nominee does not exercise discretionary
authority to vote on a matter) will be counted as present.
Vote
Required
The approval of the merger agreement requires the affirmative
vote of the holders of at least a majority of the shares of our
common stock entitled to vote at the special meeting. Approval
of the merger agreement is a condition to the closing of the
merger. If a Laidlaw stockholder abstains from voting or does
not vote, either in person or represented by proxy, it will
count as a vote against the approval of the merger agreement.
Each broker non-vote will also count as a vote
against the approval of the merger agreement.
Approval of any proposal to adjourn or postpone the special
meeting, including, if necessary or appropriate, to solicit
additional proxies requires the affirmative vote of at least a
majority of the votes cast by holders of our common stock
present, in person or by proxy, at the special meeting provided
a quorum is present in person or by proxy at the special meeting.
Shares Held
by Laidlaws Directors and Executive Officers
At the close of business on March 1, 2007, our directors
and executive officers and their affiliates beneficially owned
and were entitled to vote 406,245 shares of our common
stock, which represented approximately .5% of the shares of our
outstanding common stock on that date.
Voting of
Proxies
If your shares are registered in your name, you may vote by
returning a signed proxy card or voting in person at the
meeting. Additionally, you may submit a proxy authorizing the
voting of your shares via the Internet by accessing
www.proxyvote.com and following the on-screen
instructions or by telephone by calling
1-800-690-6903
and following the telephone voting instructions. Authorizations
for voting submitted via the Internet or telephone
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must be received by 11:59 p.m., Eastern Time, on
April 19, 2007. You must have the enclosed proxy card
available, and follow the instructions on the proxy card, in
order to submit a proxy via the Internet or telephone. Based on
your Internet and telephone voting, the proxy holders will vote
your shares according to your directions.
If you plan to attend the special meeting and wish to vote in
person, you will be given a ballot at the meeting. If your
shares are registered in your name, you are encouraged to vote
by proxy even if you plan to attend the special meeting in
person.
Voting instructions are included on your proxy card. All shares
represented by properly executed proxies received in time for
the special meeting will be voted at the special meeting in
accordance with the instructions of the stockholder. Properly
executed proxies that do not contain voting instructions will be
voted FOR the approval of the merger agreement and
FOR the proposal to adjourn or postpone the special
meeting, including, if necessary or appropriate, to solicit
additional proxies.
If your shares are held in street name through a
broker or bank, you may vote by completing and returning the
voting form provided by your broker or bank or via the Internet
or by telephone through your broker or bank if such a service is
provided. To vote via the Internet or telephone, you should
follow the instructions on the voting form provided by your
broker or bank. If you plan to attend the special meeting, you
will need a proxy from your broker or bank in order to be given
a ballot to vote the shares. If you do not return your
banks or brokers voting form, do not vote via the
Internet or telephone through your broker or bank, if possible,
or do not attend the special and vote in person with a proxy
from your broker or bank, it will have the same effect as if you
voted AGAINST approval of the merger agreement.
Revocability
of Proxies
Any proxy you give pursuant to this solicitation may be revoked
by you at any time before it is voted. Proxies may be revoked by
one of three ways:
First, you can deliver to the Corporate Secretary of Laidlaw a
written notice bearing a date later than the proxy stating that
you would like to revoke your proxy.
Second, you can complete, execute and deliver to the Corporate
Secretary of Laidlaw a new, later-dated proxy card for the same
shares. If you submitted the proxy you are seeking to revoke via
the Internet or telephone, you may submit this later-dated new
proxy using the same method of transmission (Internet or
telephone) as the proxy being revoked, provided the new proxy is
received by 11:59 p.m., Eastern Time, on April 19, 2007.
Third, you can attend the special meeting and vote in person.
Your attendance at the special meeting alone will not revoke
your proxy.
Any written notice of revocation or subsequent proxy should be
delivered to Laidlaw International, Inc., 55 Shuman Blvd.,
Suite 400, Naperville, Illinois 60563, Attention: Corporate
Secretary, or hand-delivered to our Corporate Secretary at or
before the taking of the vote at the special meeting.
If you have instructed a broker or bank to vote your shares, you
must follow directions received from your broker or bank to
change those instructions.
Board of
Directors Recommendation
After careful consideration, our board of directors has adopted
the merger agreement and determined that the merger agreement
and the merger are in the best interests of Laidlaw and its
stockholders. Our board of directors unanimously recommends
that Laidlaw stockholders vote FOR the proposal to
approve the merger agreement and also unanimously recommends
that stockholders vote FOR the proposal to adjourn
or postpone the special meeting, including, if necessary or
appropriate, to permit the solicitation of additional
proxies.
13
Abstentions
and Broker Non-Votes
Stockholders that abstain from voting on a particular matter and
shares held in street name by brokers or nominees
who indicate on their proxies that they do not have
discretionary authority to vote such shares as to a particular
matter will not be counted as votes in favor of such matter, but
will be counted to determine whether a quorum is present at the
special meeting and will be counted as voting power present at
the meeting. Abstentions and broker non-votes will have the
effect of a negative vote with respect to the proposal to adopt
the merger agreement because approval of this proposal requires
the affirmative vote of a majority of all outstanding shares of
our common stock. For the proposal to adjourn or postpone the
special meeting, including, if necessary or appropriate, to
solicit additional proxies, abstentions and broker non-votes
will have no effect on the outcome, assuming a quorum is present.
Solicitation
of Proxies
The expense of soliciting proxies in the enclosed form will be
borne by Laidlaw. We have retained D.F. King & Co.,
Inc., a proxy solicitation firm, to solicit proxies in
connection with the special meeting at a cost of approximately
$12,000 plus expenses. In addition, we may reimburse brokers,
banks and other custodians, nominees and fiduciaries
representing beneficial owners of shares for their expenses in
forwarding soliciting materials to such beneficial owners.
Proxies may also be solicited by certain of our directors,
officers and employees, personally or by telephone, facsimile or
other means of communication. No additional compensation will be
paid for such services.
Householding
of Special Meeting Materials
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
our proxy statement may have been sent to multiple stockholders
in each household. We will promptly deliver a separate copy of
either document to any stockholder upon written or oral request
to Investor Relations, Laidlaw International, Inc., 55 Shuman
Blvd., Suite 400, Naperville, Illinois 60563, Telephone:
630-848-3000.
Stockholder
List
A list of our stockholders entitled to vote at the special
meeting will be available for examination by any Laidlaw
stockholder at the special meeting. For ten days prior to the
special meeting, this stockholder list will be available for
inspection during ordinary business hours at our corporate
offices located at 55 Shuman Blvd., Suite 400, Naperville,
Illinois 60563.
THE
COMPANIES
Laidlaw
International, Inc.
Laidlaw International, Inc. is a holding company for North
Americas largest providers of school and inter-city bus
transport services and a leading supplier of public transit
services. Our businesses operate under the following brands:
Laidlaw Education Services, Greyhound Lines, Greyhound Canada
and Laidlaw Transit Services.
We are incorporated under the laws of the State of Delaware. Our
principal executive offices are located at 55 Shuman
Boulevard, Suite 400, Naperville, Illinois 60563. Our
telephone number is
(630) 848-3000.
Our website is located at www.laidlaw.com. Additional
information regarding Laidlaw is contained in our filings with
the SEC. See Where You Can Find More Information.
FirstGroup
plc
FirstGroup is the UKs largest surface transportation
company with annual revenues of over £3 billion, an
operating profit of £229.7 million for the fiscal year
ended March 31, 2006 and approximately 74,000 employees
across the UK and North America. FirstGroup operates passenger
and freight rail services in the UK. Its passenger operations
include regional, intercity and commuter services. FirstGroup is
also the largest bus operator in the UK
14
running more than 1 in 5 of all local bus services and carrying
over 2.8 million passengers per day. In North America,
FirstGroup has three operating divisions: yellow school buses
(First Student), transit contracting and management services
(First Transit) and vehicle maintenance and ancillary services
(First Services). FirstGroups shares trade on the London
Stock Exchange (LSE: FGP).
FirstGroup was incorporated in Scotland in 1995, and its
principal executive offices are located at 395 King Street,
Aberdeen, Scotland AB24 5RP. Its telephone number is 44 1224 650
100. FirstGroups website is located at www.firstgroup.com.
FirstGroup
Acquisition Corporation
FirstGroup Acquisition, a Delaware corporation and a wholly
owned subsidiary of FirstGroup, was organized solely for the
purpose of entering into the merger agreement with Laidlaw and
completing the merger. FirstGroup Acquisition was incorporated
on February 7, 2007 as Fern Acquisition Vehicle Corporation
and changed its name to FirstGroup Acquisition Corporation on
March 15, 2007. FirstGroup Acquisition has not conducted any
business operations.
THE
MERGER
The following discussion summarizes the material terms of the
merger. We urge you to read carefully the merger agreement,
which is attached as Annex A to this proxy statement.
Background
to the Merger
During 2005, following the sale of the Companys healthcare
businesses, the Companys board of directors, in
consultation with the Companys senior management and
Morgan Stanley, had discussions regarding a variety of strategic
alternatives for the Companys business, including:
continuing to focus on improving performance at the operating
companies; expanding into new, but related, areas of business;
leveraging the Companys balance sheet to increase
potential returns on equity; expanding existing areas of
business through acquisitions; realizing value with a sale of an
operating company in order to distribute proceeds to the
Companys stockholders; and taking the Company private.
During 2006, the board of directors, in consultation with the
Companys senior management and Morgan Stanley, continued
to discuss and analyze certain strategic alternatives for the
Company, including: maintenance of the status quo with an
ongoing return of capital to stockholders; divestiture of
certain assets; a transaction with another participant in the
Education Services business; a transaction with another
participant in the public transit business; and the sale of the
Company to a financial or strategic buyer. Within each
alternative, several approaches were examined. The specific
strengths, weaknesses, opportunities and risks for each
strategic alternative were discussed in detail by the board of
directors.
During February 2006, the Company was contacted by FirstGroup
regarding FirstGroups interest in acquiring part or all of
the Company. The Company then conducted several telephone
conversations between its management and management of
FirstGroup and FirstGroups financial and legal advisors
and executed a confidentiality agreement with FirstGroup on
March 15, 2006. The Company provided certain limited
confidential information to FirstGroup and its advisors so that
FirstGroup could evaluate potential deal structures. After
reviewing the information, FirstGroup indicated that it wanted
to discuss acquiring the Company in an all cash merger
transaction in the price range of $31 to $32 per share.
On April 26, 2006, the board of directors met to discuss
the contacts between the Company and FirstGroup. The board of
directors meeting was attended by representatives of
Latham & Watkins LLP, who advised the board of
directors with respect to its fiduciary duties in this context,
and representatives of Morgan Stanley, who reviewed the board of
directors prior analyses of the Companys strategic
alternatives. Following discussion, the board of directors
authorized management to have exploratory discussions with
FirstGroup regarding its proposal.
On May 3, 2006, representatives of the Companys
management and Morgan Stanley met with representatives of
FirstGroup and its financial advisor in London to have a
preliminary discussion concerning the price range, structure,
timetable and financing of a potential transaction, as well as
to share preliminary information on possible synergies and
Greyhound, in order to provide a basis for FirstGroup to
increase its indicated price range. In response
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to indications from the Companys representatives that
FirstGroup would need to increase its purchase price,
representatives of FirstGroup indicated that they did not
believe that FirstGroup would be able to increase its price
range. During the same time period, the Company sought to
negotiate a new confidentiality agreement with a standstill
restriction and FirstGroup indicated that it would be prepared
to agree to that restriction, but only in the context of the
Companys willingness to move forward exclusively with
FirstGroup.
On May 4, 2006, the board of directors met to receive a
report regarding the meeting with FirstGroup and, following
discussion among outside directors, determined to retain
Skadden, Arps, Slate, Meagher & Flom LLP, or Skadden,
Arps, to advise the directors with respect to their duties in
connection with a possible transaction.
On May 8, 9 and 10, Mr. Kevin Benson, Chief Executive
Officer of the Company, and Mr. Moir Lockhead, Chief
Executive of FirstGroup, had telephone conversations to discuss
the price range in connection with a possible transaction and
the prospect that FirstGroup might be interested in purchasing
only part of the Company.
On May 10, 2006, the board of directors, along with
representatives of the Companys management and its legal
and financial advisors, met to further discuss the ongoing
discussions with FirstGroup. Management of the Company reported
that while FirstGroup continued to be interested in a possible
transaction, FirstGroup had raised the prospect that FirstGroup
might be interested in purchasing only part of the Company. The
board of directors, management and the Companys legal and
financial advisors then discussed the financial consequences of
a sale of part of, but not the entire, Company; the status of
the negotiations with FirstGroup; the dynamics and tenor of the
negotiations with FirstGroup; and the next steps management and
the board of directors should take with respect to FirstGroup.
On May 16, 2006, the board of directors again reviewed
various strategic alternatives available for the Companys
businesses. These alternatives included: maintenance of the
status quo with an ongoing return of capital to stockholders;
maintenance of the status quo with increased leverage for an
initial accelerated return of capital; portfolio realignment and
further return of capital, with a separation of the
Companys business units through various means; the sale of
the Company to a financial or strategic buyer; and a significant
acquisition by the Company. The directors also discussed with
representatives of Morgan Stanley and management a variety of
other matters including the Companys stock performance,
the Companys current valuation, its stockholders
expectations, the forecast for both the Greyhound and the
Education Services business, and managements view of the
execution risk inherent in the forecasts. The specific
advantages, potential concerns and valuation considerations for
each strategic alternative were then discussed in detail. During
the meeting, the Company received a letter by email from
FirstGroup containing a preliminary indication of interest to
acquire the Company for $30 per share or to acquire only
the Education Services and public transit businesses for
$2 billion. Following further discussion, the board of
directors instructed management to respond in writing to
FirstGroup that the indication of interest was inadequate and to
terminate discussions with FirstGroup.
On June 7, 2006, the board of directors met and discussed
possible recapitalization opportunities that existed for the
Company. Representatives of Morgan Stanley advised the board of
directors that the investment community viewed the Company as
underleveraged and described the terms of a possible financing
and self-tender transaction.
On July 6, 2006, the board of directors met to receive
managements recommendation that the Company undertake a
$500 million recapitalization, whereby the Company would
use $500 million of debt to repurchase approximately
$400 million of the Companys common stock by way of a
modified dutch auction tender offer and to
repurchase approximately $100 million of the Companys
common stock by way of open market purchases. Following
discussion, the board of directors approved the recapitalization
transaction and approved the launch of the tender offer. On
July 31, 2006, the Company amended its existing credit
facility to add an additional $500 million credit facility.
In August 2006, the Company repurchased approximately
15.5 million shares of its common stock for $26.90 per
share through the tender offer. Following consummation of the
tender offer, the Company repurchased approximately
3 million additional shares of its common stock through
open market purchases.
On August 24, 2006, the board of directors met and
discussed the Companys strategic alternatives with respect
to its public transit business. Following discussion, the board
of directors authorized management to contact FirstGroup to
discuss their interest in (i) buying the Companys
public transit business; (ii) selling FirstGroups
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transit services business to the Company or (iii) a joint
venture transaction involving the Companys and
FirstGroups respective public transit operations.
On September 13, 2006, representatives of the Company met
with representatives of FirstGroup in Chicago, Illinois. The
meeting participants discussed possible transactions involving
their respective public transit operations. FirstGroup also
expressed a desire to again explore the possibility of acquiring
the entire Company. Representatives of the Company responded
that they were not authorized to discuss such a transaction, but
that they would discuss FirstGroups interest with the
Companys board of directors and respond to FirstGroup.
On September 14, 2006, the board of directors met to
discuss the meeting between the Company and FirstGroup.
Representatives of Morgan Stanley provided the board of
directors with various financial analyses. Following this
presentation and discussion, the board of directors authorized
management to continue exploring the potential for sale of the
entire Company to FirstGroup or a transaction involving the
public transit businesses.
On September 22 and 25, 2006, Mr. Benson and
Mr. Lockhead had telephone conversations to discuss
possible transactions between the Company and FirstGroup. In the
call on September 25, Mr. Lockhead indicated that
FirstGroup was prepared to offer $32 per share for the
Company. Mr. Benson indicated that the share repurchases
conducted by the Company had increased the value of the Company
over the levels applicable at the time of the earlier
discussions. The parties agreed to a call on September 26,
2006 with the principals and investment bankers to further
explore FirstGroups interest in the Company.
On September 26, 2006, a call took place between management
of the Company and representatives of Morgan Stanley, and
management of FirstGroup and representatives of Merrill
Lynch & Co., or Merrill Lynch, one of FirstGroups
financial advisors. During the call, representatives of Merrill
Lynch described FirstGroups proposal, stating that
FirstGroup was prepared to offer $33 per share in an all
cash merger transaction for the entire Company, subject to due
diligence. The representatives of Merrill Lynch further
explained that the proposal was conditioned on no material
contingent liabilities being discovered during due diligence,
that the transaction would require the approval of
FirstGroups shareholders and that FirstGroup anticipated
due diligence taking four to six weeks. The FirstGroup
representatives also described a financing structure that would
consist of bank and bond debt and a rights offering, and stated
that the transaction would be conditioned upon the rights
offering. Representatives of Morgan Stanley responded that
Merrill Lynch should be prepared to provide bridge financing,
and that no financing contingencies of any kind would be
acceptable in the transaction. FirstGroup requested a short
period of exclusivity and emphasized that FirstGroup would
terminate discussions if the Company undertook an auction
process. Mr. Benson indicated that he would discuss
exclusivity with the Companys board of directors.
On September 28, 2006, the board of directors discussed the
proposal from FirstGroup and, while the board of directors made
no decisions regarding the price or terms and conditions of the
proposal, agreed that there was enough interest in the
possibility of a transaction with FirstGroup that it directed
management to assemble a data room and provide access to
FirstGroup under an acceptable non-disclosure agreement.
Following direction from the board of directors at its meeting
on September 28, management of the Company and the
Companys advisors continued discussions with FirstGroup in
two meetings, as well as through a number of telephone calls, on
the terms of a confidentiality agreement, the general terms of
the transaction, the development of a data room and the
potential transaction timetable. During these discussions, the
Companys representatives emphasized to FirstGroup and its
representatives that the basis of the transaction that they were
prepared to recommend was a transaction with no significant
contingencies, including no financing contingency, and with a
short due diligence period. However, during these conversations
and meetings, it was disclosed to the Companys
representatives that FirstGroup wanted to explore the sale of
certain assets of the Company by providing access to relevant
parts of the data room, that the Company was in the process of
assembling, to additional parties, with a plan to execute
agreements and possibly announce simultaneously that FirstGroup
was acquiring the Company and that FirstGroup had entered into
an agreement to sell certain assets of the Company. The
representatives of the Company stated that this request was
unacceptable and that, if this was FirstGroups final
position, they would recommend to the Companys board of
directors that the Company discontinue all discussions regarding
any acquisition of the Company by FirstGroup.
17
On October 11, 2006, at a meeting attended by
representatives of the Companys management and
representatives of Morgan Stanley, and representatives of
FirstGroup and representatives of Merrill Lynch, FirstGroup
stated that they were unable to change the position they
previously communicated regarding a possible sale of certain
assets of the Company and proposed that potential third party
purchasers be allowed access to relevant parts of the data room,
that the Company was in the process of assembling, to fully
analyze and value certain assets of the Company, as a
pre-condition to executing a merger agreement. In response,
representatives of the Company reiterated their belief that a
simultaneous sale of certain assets to a third party was not
acceptable and stated that they would recommend to the
Companys board of directors that the Company discontinue
acquisition discussions with FirstGroup.
On October 12, 2006, the board of directors met and, after
receiving a full report on the discussions with FirstGroup from
management and Morgan Stanley and discussing the risks of the
transaction as now proposed, directed management to terminate
all discussions with respect to the transaction with FirstGroup
involving the sale of the entire Company. At this point, neither
FirstGroup nor any of its advisors had been given access to the
Companys data room.
On November 28, 2006, a representative of JPMorgan Cazenove
Ltd., or JPMorgan Cazenove, one of FirstGroups financial
advisors, contacted a representative of Morgan Stanley and
indicated that the Chairman of FirstGroup would like to meet
with the Chairman and the Chief Executive Officer of the
Company. After discussion with the Company, representatives of
Morgan Stanley confirmed that the Company would be willing to
meet with the representatives of FirstGroup, but that, given the
reduced capital structure and the passage of time, the Company
was not interested in any potential transaction to acquire the
Company at $33 per share, the price level previously
discussed.
On December 10, 2006, the Chairman and the Chief Executive
Officer of the Company and a representative of Morgan Stanley
met with the Chairman and the Chief Executive Officer of
FirstGroup and a representative of JPMorgan Cazenove, to discuss
FirstGroups continued interest in a possible transaction
with Laidlaw. FirstGroup indicated that it was now interested in
purchasing the entire Company.
At that meeting, FirstGroup presented a term sheet which
described a transaction with few conditions: approval of the
Companys and FirstGroups stockholders, approval of
the Companys board of directors and regulatory approvals.
FirstGroup stated that JPMorgan Cazenove would be prepared to
bridge the financing possibly with an equity rights issue
approximately six to nine months post-closing, and that there
would be no condition regarding maintenance of investment grade
ratings by the rating agencies. FirstGroup stated that it was
interested in moving quickly, with a view towards signing an
agreement and announcing a transaction in early February.
FirstGroup indicated that its board of directors had approved
approaching the Company with an indication of interest at
$34 per share, conditioned on the Companys
willingness to proceed exclusively with FirstGroup to the
announcement of a definitive agreement.
On December 12, 2006, the board of directors met to
consider the latest proposal from FirstGroup. After receiving a
report from management and Morgan Stanley on the discussions and
advice from Skadden, Arps concerning the board of
directors duties and obligations in light of this
indication of interest, the board of directors instructed
management to communicate to FirstGroup that the $34 per
share price was not acceptable, that the Company was very
cautious about continuing discussions based on the prior two
terminated discussions, and that exclusivity and the amount of
the termination fee proposed by FirstGroup in the term sheet
were unacceptable. However, the board of directors further
determined that, if the Companys management conveyed the
boards position on the foregoing and the parties could
reach agreement on an acceptable confidentiality agreement,
management could begin the process of non-binding discussions
and due diligence with FirstGroup.
On December 19, 2006, the board of directors received
telephonically a status report from management regarding the
discussions with FirstGroup.
On December 22, 2006, the Company and FirstGroup entered
into a new confidentiality agreement, effective
December 18, 2006, pursuant to which FirstGroup obtained
the right to be notified under certain circumstances if the
Company became aware of an acquisition proposal or indication of
interest from a third party or if the Company engages in
strategic discussions with any third party and both FirstGroup
and the Company agreed to a standstill provision which restricts
each party from acquiring a certain percentage of the other
partys stock for a defined period of time as well as
certain provisions restricting the solicitation of the other
partys employees. At the same
18
time, FirstGroup informed the Company that it wished to pursue a
transaction with the Company on an expedited basis and
emphasized that FirstGroup did not wish to participate in an
auction process for the Company.
On December 26, 2006, the Company informed FirstGroup that
it and its financial and legal advisors could have access to an
electronic datasite which the Company had prepared to facilitate
FirstGroups diligence. Also on December 26, the board
of directors received telephonically a status report from
management regarding the discussions with FirstGroup.
On December 30, 2006, the Company and Morgan Stanley
executed an engagement letter relating to Morgan Stanleys
role as the Companys financial advisor in connection with
the possible sale of the Company.
On January 2, 2007, the board of directors received
telephonically a status report from management regarding the due
diligence process undertaken by FirstGroup.
Throughout the month of January and continuing into February,
2007, numerous representatives of FirstGroup and their legal and
financial advisors conducted extensive due diligence on the
Companys business, legal and financial records and met, in
person and by telephone, with the Companys management to
discuss the Companys business.
On January 9, 2007, the board of directors received
telephonically a status report from management regarding the due
diligence process undertaken by FirstGroup and discussed the
protocol to be followed in the event of rumor, speculation or a
leak regarding the potential transaction.
On January 17, 2007, the board of directors met and
received a status report on the potential transaction with
FirstGroup. The board of directors also received advice from
Skadden, Arps regarding the various regulatory approvals
required for a transaction with FirstGroup, the U.K. regulatory
approval process for FirstGroup in connection with its
shareholder approval and the SEC regulatory approval process for
the Company.
On January 18 and 19, 2007, representatives of the
Companys management and its legal and financial advisors
met with representatives of FirstGroups management and its
legal and financial advisors in Chicago, Illinois, to discuss
the Companys business.
On January 22, 2007, Davis Polk & Wardwell, or
Davis Polk, U.S. counsel to FirstGroup, delivered an
initial draft of the merger agreement to Skadden, Arps.
On January 23, 2007, the board of directors received
telephonically a status report from management regarding the due
diligence meetings on January 18 and 19 and the initial
observations regarding the draft merger agreement from
FirstGroup.
On January 26, 2007, Skadden, Arps sent comments to the
initial draft of the merger agreement to Davis Polk.
On January 30, 2007, the board of directors received
telephonically a status report from management regarding the due
diligence process, the board process to be followed by
FirstGroup, the timing of a proposal regarding price,
FirstGroups financing structure and FirstGroups
shareholder approval process.
On January 31, 2007, Davis Polk delivered a revised draft
of the merger agreement to Skadden, Arps.
On February 2, 2007, representatives of the Company,
FirstGroup, Skadden, Arps and Davis Polk negotiated regarding
the terms of the merger agreement.
On February 5, 2007, a representative of JPMorgan Cazenove
called a representative of Morgan Stanley and conveyed that
FirstGroup was prepared to offer $35 per share for the
Companys common stock.
On February 6, 2007, the Companys board of directors
met to consider the proposed acquisition of Laidlaw by
FirstGroup. During the meeting, management updated the board of
directors on the status of the merger agreement negotiations
with FirstGroup, including the price per share of $35.
Representatives of Skadden, Arps outlined the key terms and
conditions of the merger agreement and the legal duties and
responsibilities of the board of directors in the context of a
sale of the Company. It was noted that certain issues, including
the amount of, and triggering events for, payment of a
termination fee by either the Company or FirstGroup were still
under negotiation. Representatives of Morgan Stanley reviewed
its financial analysis of the proposed transaction. A copy of
the draft merger agreement was
19
provided to each member of the board of directors. After
extensive discussion and deliberation on the proposed
transaction, the board of directors determined that negotiations
with FirstGroup should continue and set a meeting for
February 8, 2007 to receive a further update. The board of
directors instructed Mr. Benson to convey to
Mr. Lockhead that the price per share indication was not
adequate and that the board of directors would approve a
transaction at a price of $36 per share. Following the
meeting, a representative of Morgan Stanley called a
representative of JPMorgan Cazenove and indicated that the
Companys board of directors would approve a transaction at
a price of $36 per share. Mr. Lockhead then called
Mr. Benson and informed him that FirstGroup would not
accept a price of $36 per share and indicated that the two
parties should discontinue negotiations if the Company insisted
on a price of $36 per share.
On February 7, 2007, after discussions between
Mr. Benson and Mr. Lockhead and representatives of
Morgan Stanley and JPMorgan Cazenove, FirstGroup indicated
that it was prepared to increase its price to $35.25 per
share.
On February 6, 2007 and continuing through February 8,
2007, the parties and their respective legal advisors conducted
further negotiations with regards to the terms and conditions of
the merger agreement. These negotiations focused on the
representations, warranties, covenants and closing conditions to
be included in the merger agreement, as well as the limitations
to be included in the agreement on each partys ability to
contact or engage in discussions with other potential acquirors.
The negotiations also addressed the circumstances under which
the parties could terminate the merger agreement and the
circumstances under which a termination fee would be payable by
either the Company or FirstGroup.
On the morning of February 8, 2007, the board of directors
met telephonically and discussed the status of the negotiations
with FirstGroup. In the evening of February 8, 2007, the
board of directors met to receive a report from management and
the Companys legal and financial advisors on the proposed
transaction and the resolution of the issues discussed in the
meeting on February 6, 2007. Representatives of Morgan
Stanley delivered its oral opinion, later confirmed by its
written opinion, that, as of February 8, 2007 and subject
to the various factors, assumptions and limitations set forth in
its opinion, the $35.25 per share in cash consideration to
be received by the holders of shares of Laidlaw common stock
pursuant to the merger agreement was fair, from a financial
point of view, to such holders. See The Merger
Opinion of our Financial Advisor, beginning on
page 21. After further discussion, the Companys board
of directors determined that the merger agreement and the merger
are in the best interests of the Company and its stockholders,
adopted the merger agreement and approved its execution and
resolved to recommend that the Companys stockholders
approve the merger agreement. After the board meeting, the
Companys management and legal advisors finalized the
documentation of the transaction with FirstGroup and its legal
advisors.
On February 8, 2007, the Company and FirstGroup executed
the merger agreement. The Company and FirstGroup publicly
announced the transaction through the issuance by each party of
a press release prior to the opening of the London Stock
Exchange on February 9, 2007.
Reasons
for the Merger and Recommendation of the Laidlaw Board of
Directors
Our board of directors unanimously recommends that you vote
FOR approval of the merger agreement and
FOR the proposal to adjourn or postpone the special
meeting, including, if necessary or appropriate, to solicit
additional proxies. At a special meeting of our board of
directors on February 8, 2007, after careful consideration,
including consultation with financial and legal advisors, our
board of directors determined that the merger agreement and the
merger are advisable and in the best interests of Laidlaw
stockholders and adopted the merger agreement. In the course of
reaching its decision over several board meetings, our board of
directors consulted with our senior management, financial
advisor and legal counsel, reviewed a significant amount of
information and considered a number of factors, including, among
others, the following:
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the business, competitive position, strategy and prospects of
Laidlaw, the position of current and likely competitors, and
current industry, economic and market conditions;
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the fact that we will no longer exist as an independent public
company and our stockholders will forgo any future increase in
our value that might result from our earnings or possible growth
as an independent company;
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the possible alternatives to the merger, the range of potential
benefits to our stockholders of the possible alternatives and
the timing and the likelihood of accomplishing the goals of such
alternatives;
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20
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the likelihood that, in our board of directors view,
conducting an extensive public auction process before approving
the merger would be detrimental to Laidlaw by posing significant
risks to our existing operations, including risks relating to
our customer base and employee retention;
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the $35.25 per share in cash to be paid as merger
consideration in relation to the current market price of Laidlaw
shares and also in relation to the current value of Laidlaw and
our board of directors estimate of the future value of
Laidlaw as an independent entity and, specifically, the fact
that the $35.25 per share in cash to be paid as merger
consideration represents (1) a 20.3% premium over the
average closing price of our common stock in the 30 days
prior to February 2, 2007, the date the Teamsters union
issued a press release speculating on a potential sale of the
Company and (2) a 11.1% premium over the closing price of
our common stock on February 8, 2007, the last full trading
day before the public announcement of the merger;
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the opinion of Morgan Stanley to the effect that, as of
February 8, 2007, and based upon and subject to the various
factors, assumptions and limitations set forth in the opinion,
the $35.25 per share in cash consideration to be received
by the holders of our common stock pursuant to the merger
agreement was fair, from a financial point of view, to such
holders;
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the value of the consideration to be received by Laidlaw
stockholders and the fact that the consideration would be paid
in cash, which provides certainty and immediate value to our
stockholders;
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the terms of the financing arrangements entered into by
FirstGroup in connection with the merger and the fact that such
financing was committed prior to the execution of the merger
agreement;
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the fact that the merger is not subject to any financing
condition;
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the conditions to FirstGroups obligation to complete the
merger, FirstGroups right to terminate the merger
agreement in certain circumstances and the termination fee which
FirstGroup may be required to pay us if we or they terminate the
merger agreement in certain circumstances;
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the conditions to our obligation to complete the merger, our
right to terminate the merger agreement in certain circumstances
and the termination fee which we may be required to pay
FirstGroup if we or they terminate the merger agreement in
certain circumstances;
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the fact that under and subject to the terms of the merger
agreement, we cannot solicit a third party acquisition proposal,
but we can furnish information to and negotiate with a third
party in response to an unsolicited bona fide acquisition
proposal that our board of directors reasonably determines is or
will lead to a superior proposal;
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the likelihood that the proposed acquisition would be completed,
in light of the financial capabilities and reputation of
FirstGroup;
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the risk that we might not receive necessary regulatory
approvals and clearances, or do not receive such approvals and
clearances on terms that would require FirstGroup to complete
the merger; and
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the interests that our directors and executive officers may have
with respect to the merger, in addition to their interests as
stockholders of Laidlaw generally, as described in The
Merger Interests of Laidlaws Directors and
Executive Officers in the Merger.
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Our board of directors did not assign any particular weight or
rank to any of the positive or potentially negative factors or
risks discussed in this section, and our board of directors
carefully considered all of these factors as a whole in reaching
its determination and recommendation.
Opinion
of our Financial Advisor
The Company retained Morgan Stanley as financial advisor to the
board of directors of Laidlaw in connection with the merger. The
board of directors selected Morgan Stanley to act as its
financial advisor based on Morgan Stanleys qualifications,
expertise, reputation and its knowledge of the business of
Laidlaw. At the meeting of the board of directors on
February 8, 2007, Morgan Stanley rendered its oral opinion,
which was subsequently confirmed in writing that, as of such
date and based upon and subject to the various considerations
set forth in the
21
opinion, the consideration to be received by the holders of
shares of Laidlaw common stock pursuant to the merger agreement
was fair from a financial point of view to such holders.
The full text of Morgan Stanleys opinion, dated
February 8, 2007, which sets forth, among other things, the
assumptions made, procedures followed, matters considered and
qualifications and limitations of the reviews undertaken in
rendering its opinion, is attached as Annex B to this proxy
statement. The summary of Morgan Stanleys fairness opinion
set forth in this proxy statement is qualified in its entirety
by reference to the full text of the opinion. Shareholders
should read this opinion carefully and in its entirety. Morgan
Stanleys opinion is directed to the board of directors of
Laidlaw, addresses only the fairness from a financial point of
view of the consideration to be received by holders of Laidlaw
common stock pursuant to the merger agreement, and does not
address any other aspect of the merger. Morgan Stanleys
opinion does not constitute a recommendation to any shareholders
of Laidlaw as to how such shareholder should vote with respect
to the proposed transaction.
In connection with rendering its opinion, Morgan Stanley, among
other things:
i) reviewed certain publicly available financial statements
and other business and financial information of Laidlaw;
ii) reviewed certain internal financial statements and
other financial and operating data concerning Laidlaw prepared
by the management of Laidlaw and made available to Morgan
Stanley by Laidlaw;
iii) reviewed certain financial projections prepared by the
management of Laidlaw;
iv) discussed the past and current operations and financial
condition and the prospects of Laidlaw with senior executives of
Laidlaw;
v) reviewed the reported prices and trading activity for
Laidlaw common stock;
vi) compared the financial performance of Laidlaw and the
prices and trading activity of Laidlaw common stock with that of
certain other comparable publicly-traded companies and their
securities;
vii) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions;
viii) participated in discussions and negotiations among
representatives of Laidlaw, FirstGroup and their financial and
legal advisors;
ix) reviewed the merger agreement, the financing commitment
letters of FirstGroup, substantially in the form of the drafts
dated February 8, 2007 and certain related
documents; and
x) performed such other analyses and considered such other
factors as Morgan Stanley deemed appropriate.
Morgan Stanley assumed and relied upon without independent
verification the accuracy and completeness of the information
supplied or otherwise made available to Morgan Stanley by
Laidlaw for the purposes of its opinion. With respect to the
financial projections, Morgan Stanley assumed that they had been
reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial
performance of Laidlaw. Morgan Stanley assumed that the merger
will be consummated in accordance with the terms set forth in
the merger agreement without any modification, waiver or delay
to any terms and conditions. Morgan Stanley assumed that in
connection with the receipt of all necessary governmental,
regulatory or other approvals and consents required for the
proposed merger, no delays, limitations, conditions or
restrictions will be imposed that would have a material adverse
effect on the timing of or ability of Laidlaw or FirstGroup to
consummate the proposed merger. Morgan Stanleys opinion
was limited to the fairness from a financial point of view of
the consideration to be received by the holders of Laidlaw
common stock in the merger and Morgan Stanley expressed no
opinion as to the underlying decision by Laidlaw to engage in
the merger. Morgan Stanley did not make any independent
valuation or appraisal of the assets or liabilities (contingent
or otherwise) of Laidlaw, nor was Morgan Stanley furnished with
any such appraisals or made any physical inspection of the
properties or assets of Laidlaw. In addition, Morgan Stanley is
not a legal, regulatory or tax expert and has relied, without
independent verification, on the assessment of Laidlaw and
22
their advisors on such matters. Morgan Stanleys opinion
was necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available
to Morgan Stanley as of, February 8, 2007. Events occurring
after the date hereof may affect Morgan Stanleys opinion
and the assumptions used in preparing it, and Morgan Stanley did
not assume any obligation to update, revise or reaffirm its
opinion.
In arriving at its opinion, Morgan Stanley was not authorized to
solicit, and did not solicit, interest from any party with
respect to the acquisition of Laidlaw or any of its assets, nor
did Morgan Stanley negotiate with any of the parties, other than
FirstGroup, which expressed interest to Morgan Stanley in the
possible acquisition of Laidlaw or certain of its constituent
businesses.
The following is a summary of the material financial analyses
performed by Morgan Stanley in connection with its oral opinion
and the preparation of its written opinion. Some of these
summaries include information presented in tabular format. In
order to understand fully the financial analyses used by Morgan
Stanley, the tables must be read together with the text of each
summary. The tables alone do not constitute a complete
description of the analyses.
Historical
Share Price Analysis
Morgan Stanley performed a historical share price analysis to
obtain background information and perspective with respect to
the historical share prices of Laidlaw common stock. Morgan
Stanley reviewed the historical price performance and average
closing prices of Company common stock for various periods
ending on February 2, 2007 (the last trading day prior to a
press release on February 6, 2007 issued by the Teamsters
Union containing a rumor of a potential acquisition of Laidlaw
by FirstGroup and the resulting share price impact) and compared
them to the offer price of $35.25. Morgan Stanley observed the
following:
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Offer Price as
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Compared to
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Laidlaws Common
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Stock Price,
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Price
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Implied Premium to
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($)
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Previous Period
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Unaffected Price (February 2,
2007)
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29.83
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18.2
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30 day Trailing Average
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29.29
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20.3
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%
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60 day Trailing Average
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29.65
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18.9
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%
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52 Week High
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31.35
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12.4
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%
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52 Week Low
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24.10
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46.3
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%
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1 year Trailing Average
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27.20
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29.6
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%
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3 year Trailing Average
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22.12
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59.4
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%
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High Since June 23, 2003
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31.35
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12.4
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%
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Low Since June 23, 2003
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7.44
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373.8
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%
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Morgan Stanley noted that the consideration per share to be
received by holders of Laidlaw common stock pursuant to the
merger agreement was $35.25.
Discounted
Analyst Price Targets
Morgan Stanley reviewed estimates for Laidlaw published by Wall
Street equity research analysts from January 8, 2007 to
February 8, 2007. Morgan Stanley discounted the Wall Street
analyst price targets to June 30, 2007 at Laidlaws
estimated cost of equity capital of approximately 10%, which was
based on current and historical market data. Wall Street analyst
price targets yielded an implied valuation of Laidlaw common
stock of $30 to $34 per share of Laidlaw common stock.
Morgan Stanley noted that the consideration per share to be
received by holders of Laidlaw common stock pursuant to the
merger agreement was $35.25.
23
Comparable
Company Analysis
Morgan Stanley reviewed and analyzed certain public market
trading multiples for public companies similar to Laidlaw in
size and business mix. For purposes of its analysis, Morgan
Stanley reviewed the following publicly traded corporations:
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Arriva plc
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FirstGroup plc
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Go-Ahead Group plc
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Laidlaw International, Inc.
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National Express Group plc
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Stagecoach Group plc
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The multiples analyzed for these comparable companies included,
among others, the aggregate market value (defined as public
equity market value plus total book value of debt, total book
value of preferred stock and minority interest less cash and
other short term investments) divided by 2007 estimated earnings
before interest, taxes, depreciation and amortization
(EBITDA) and the market price divided by 2007
estimated earnings per share (EPS). The EBITDA and
EPS were based on I/B/E/S consensus estimates. Morgan Stanley
calculated these financial multiples and ratios based on
publicly available financial data as of February 7, 2007.
A summary of the reference range of market trading multiples of
the comparable companies and those multiples calculated for
Laidlaw are set forth below:
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Comparable
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Laidlaw as Implied
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Companies
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at Merger
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Metric
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Range of Multiples
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Consideration
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Aggregate Value / CY 2007E EBITDA
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6.4x 9.7x
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7.3x
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Price / CY 2007E Earnings
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15.2x 19.4x
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23.2x
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Taking into account the ranges expressed above, Morgan Stanley
selected for its comparable company analysis of Laidlaw a range
of aggregate value divided by calendar year 2007E EBITDA of 6.0x
to 7.0x and price divided by calendar year 2007E EPS of 16.0x to
19.0x. Based upon and subject to the foregoing, Morgan Stanley
calculated an implied valuation range for Laidlaw common stock
of $26.00 to $31.00 per share. In addition, Morgan Stanley
calculated the value of Laidlaws Net Operating Loss
(NOL) balance. To calculate the per share value of
Laidlaws NOL balance, Morgan Stanley computed the present
discounted value of future tax benefits derived from the NOL
balance. The inclusion of the value of Laidlaws NOL
balance implied a valuation range for Laidlaw common stock of
$29.00 to $34.00 per share.
Morgan Stanley noted that the consideration per share to be
received by holders of Laidlaw common stock pursuant to the
merger agreement was $35.25.
Although the foregoing companies were compared to Laidlaw for
purposes of this analysis, no company utilized in this analysis
is identical to Laidlaw because of differences between the
business mix, regulatory environment, operations and other
characteristics of Laidlaw and the comparable companies. In
evaluating the comparable companies, Morgan Stanley made
judgments and assumptions with regard to industry performance,
general business, economic, regulatory, market and financial
conditions and other matters, many of which are beyond the
control of Laidlaw, such as the impact of competition on Laidlaw
and on the industry generally, industry growth and the absence
of any adverse material change in the financial condition and
prospects of Laidlaw, the industry or in the markets generally.
Mathematical analysis (such as determining the average or
median) is not in itself a meaningful method of using comparable
company data.
Discounted Share Price Analysis. Morgan
Stanley performed a discounted share price analysis assuming
that Laidlaw continued to operate as a standalone entity. This
analysis was performed by adding (a) the present value of
the estimated future Laidlaw share price and (b) the
present value of estimated future dividends paid to Laidlaw
shareholders. The estimated future Laidlaw share price was
calculated using management estimates of
24
EBITDA and EPS and a range of Next Twelve Month
(NTM) multiples applied to these estimates. The
aggregate value to NTM EBITDA multiples used for this analysis
ranged from 6.00x to 6.25x and the price to NTM EPS multiples
ranged from 18.0x to 19.0x. Morgan Stanley discounted
Laidlaws estimated future share price using Laidlaws
estimated cost of equity, which was based on current and
historical market data. The present value of estimated future
dividends paid to Laidlaw shareholders was based on management
projections for dividends paid through the aforementioned dates
and was calculated using Laidlaws estimated cost of
equity. Based upon and subject to the foregoing, Morgan Stanley
estimated a valuation range per share of Laidlaw common stock of
$31.00 to $34.00.
Morgan Stanley noted that the consideration per share to be
received by holders of Laidlaw common stock pursuant to the
merger agreement was $35.25.
Discounted Cash Flow Method. Morgan Stanley
performed a discounted cash flow analysis assuming that Laidlaw
continued to operate as a standalone entity. This analysis was
performed by adding (a) the present value of the estimated
future unlevered free cash flows that Laidlaw could generate
over the period from June 30, 2007 to August 31, 2011,
and (b) the present value of Laidlaws terminal
value on August 31, 2011, and then adjusting these
aggregate values to equity values by subtracting net debt. To
determine the unlevered free cash flows and the terminal value
for Laidlaw, Morgan Stanley used financial projections provided
by Laidlaw management. The terminal value was
determined by applying a range of multiples of estimated
12-month
trailing EBITDA for fiscal year 2011. Morgan Stanley used a
multiple range of 5.5x to 6.5x and a discount rate range to
discount cash flows back to present value, reflecting
Laidlaws weighted average cost of capital, of 8.0% to
10.0%. Based on this analysis, Morgan Stanley estimated a
valuation range per share of Laidlaw common stock of $26.00 to
$33.00.
Morgan Stanley noted that the consideration per share to be
received by holders of Laidlaw common stock pursuant to the
merger agreement was $35.25.
Selected Precedent Transaction
Analysis. Morgan Stanley reviewed and compared
the proposed financial terms implied in the Laidlaw/FirstGroup
merger to corresponding publicly available financial terms of
selected transactions. For this analysis, Morgan Stanley
reviewed corporate transactions since 2000 to the present in the
global bus transportation industry and focused on information
relating to the following precedent transactions as of each
transactions respective announcement date:
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|
January 2000 ATC/Vancom, Inc. / National Express
Group plc
|
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|
|
May 2000 School Services & Leasing, Inc. /
National Express Group plc
|
|
|
|
June 2001 Vimeca Transport Group / Stagecoach
Portugal
|
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|
|
June 2002 Stock Transportation Group / National
Express Group plc
|
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|
|
September 2004 National Bus Company Pty, Ltd. and
National Bus Company Queensland / Ventura Motors Pty, Ltd. and
Connex Group
|
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|
|
June 2005 Tellings Golden Miller plc, London Bus
Division / National Express Group plc
|
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|
|
July 2005 ATC/Vancom, Inc / Connex North America,
Inc.
|
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|
|
October 2005 ALSA Grupo S.L.U. / National Express
Group plc
|
Morgan Stanley derived from the selected transactions listed
above a reference range of aggregate value divided by last
twelve months (LTM) EBITDA and LTM Earnings before
interest and taxes (EBIT) multiple range. The
aggregate value divided by LTM EBITDA multiple range ranged from
3.2x to 9.3x. The aggregate value divided by LTM EBIT multiple
range ranged from 7.2x to 16.0x. Morgan Stanley selected an
aggregate value divided by LTM EBITDA multiple range of 6.5x to
8.5x and an aggregate value divided by LTM EBIT multiple range
of 11.0x to 15.0x based on the precedent transactions listed
above and applied that range to LTM (the period denoted by LTM
for this analysis was taken to be January 1, 2006 to
December 31, 2006) EBITDA and EBIT, respectively,
which resulted in a valuation range of $26.00 to $37.00. In
addition, Morgan Stanley calculated the value of Laidlaws
NOL balance in the context of a change of control. To calculate
the per share value of Laidlaws NOL balance, Morgan
Stanley computed the present discounted value of future tax
benefits derived from the NOL
25
balance. The inclusion of the value of Laidlaws NOL
balance implied a valuation range for Laidlaw common stock of
$29.00 to $40.00 per share.
Morgan Stanley noted that the consideration per share to be
received by holders of Laidlaw common stock pursuant to the
merger agreement was $35.25.
No company or transaction utilized in the selected precedent
transactions analysis is identical to Laidlaw or the merger. In
evaluating the precedent transactions, Morgan Stanley made
judgments and assumptions with regard to industry performance,
general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Laidlaw,
such as the impact of competition on Laidlaw and the industry
generally, industry growth and the absence of any adverse
material change in the financial condition and prospects of
Laidlaw or in the financial markets in general. Mathematical
analysis, such as determining the average or median, or the high
or the low, is not in itself a meaningful method of using
comparable transaction data.
Leveraged Buyout Analysis. Morgan Stanley
analyzed Laidlaws value from the perspective of a
financial buyer that would effect a leveraged buyout of Laidlaw
using a capital structure that contained additional senior
secured, senior unsecured, and subordinated debt. Morgan Stanley
used estimates provided by Laidlaw, and based on its experience,
Morgan Stanley assumed that a financial buyer could monetize its
Laidlaw investment on August 31, 2011 at an aggregate value
range that represented a multiple of 5.5x 7.0x LTM
EBITDA (the period denoted by LTM for this analysis was taken to
be September 1, 2010 to August 31, 2011). Morgan
Stanley added Laidlaws forecasted 2011 cash balance and
subtracted Laidlaws forecasted 2011 debt outstanding to
calculate Laidlaws August 31, 2011 equity value
range. Based on Laidlaws calculated August 31, 2011
equity value range, Morgan Stanley derived a valuation range of
$31.00 to $34.00 per share, representing implied values per
share that a financial buyer might be willing to pay to acquire
Laidlaw.
Morgan Stanley noted that the consideration per share to be
received by holders of Laidlaw common stock pursuant to the
merger agreement was $35.25.
Morgan Stanley performed a variety of financial and comparative
analyses for purposes of rendering its opinion. The preparation
of a fairness opinion is a complex process and is not
susceptible to partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results
of all of its analyses as a whole and did not attribute any
particular weight to any analysis or factor considered.
Furthermore, Morgan Stanley believes that the summary provided
and the analyses described above must be considered as a whole
and that selecting any portion of the analyses, without
considering all of them, would create an incomplete view of the
process underlying Morgan Stanleys analyses and opinion.
In addition, Morgan Stanley may have given various analyses and
factors more or less weight than other analyses and factors and
may have deemed various assumptions more or less probable than
other assumptions. As a result, the ranges of valuations
resulting from any particular analysis or combination of
analyses described above should not be taken to be the view of
Morgan Stanley with respect to the actual value of Laidlaw or
its common stock.
In performing its analyses, Morgan Stanley made numerous
assumptions with respect to the industry performance, general
business, regulatory and economic conditions and other matters,
many of which are beyond the control of Laidlaw. Any estimates
contained in the analyses of Morgan Stanley are not necessarily
indicative of future results or actual values, which may be
significantly more or less favorable than those suggested by
such estimates. The analyses performed were prepared solely as
part of the analysis of Morgan Stanley of the fairness of the
consideration to be received by holders of shares of Laidlaw
common stock pursuant to the merger agreement from a financial
point of view, and were prepared in connection with the delivery
by Morgan Stanley of its oral opinion on February 8, 2007
to Laidlaws board of directors, subsequently confirmed in
writing.
These analyses do not purport to be appraisals or to reflect the
prices at which shares of common shares of Laidlaw might
actually trade. The foregoing summary does not purport to be a
complete description of the analyses performed by Morgan Stanley.
The merger consideration was determined through
arms-length negotiations between Laidlaw and FirstGroup
and was approved by Laidlaws board of directors. Morgan
Stanley provided advice to Laidlaw during these negotiations.
Morgan Stanley did not, however, recommend any specific merger
consideration to Laidlaw or that any specific merger
consideration constituted the only appropriate merger
consideration for the merger.
26
Morgan Stanleys opinion and its presentation to
Laidlaws board of directors was one of many factors taken
into consideration by Laidlaws board of directors in
deciding to approve, adopt and authorize the merger agreement.
Consequently, the analyses as described above should not be
viewed as determinative of the opinion of Laidlaws board
of directors with respect to the merger consideration or of
whether Laidlaws board of directors would have been
willing to agree to a different merger consideration.
Laidlaws board of directors retained Morgan Stanley based
upon Morgan Stanleys qualifications, experience and
expertise. Morgan Stanley is an internationally recognized
investment banking and advisory firm. Morgan Stanley, as part of
its investment banking business, is continuously engaged in the
valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted
securities, private placements and valuations for corporate,
estate and other purposes. In the past, Morgan Stanley and its
affiliates have provided financial advisory and financing
services for Laidlaw and have received fees for the rendering of
these services. In addition, Morgan Stanley is a full services
securities firm engaged in securities trading, investment
management and brokerage services. In the ordinary course of its
trading, brokerage, investment management and financing
activities, Morgan Stanley or its affiliates may actively trade
the debt and equity securities or senior loans of Laidlaw or
FirstGroup for its own accounts or for the accounts of its
customers or its managed investment accounts and, accordingly,
may at any time hold long or short positions in such securities
or senior loans or any currency or commodity.
Pursuant to its engagement letter, Morgan Stanley acted as
financial advisor to the Board of Directors of Laidlaw in
connection with this transaction, and Laidlaw has agreed to pay
Morgan Stanley customary fees in connection with the merger, a
significant portion of which is contingent upon the consummation
of the merger. Laidlaw has also agreed to reimburse Morgan
Stanley for its expenses incurred in performing its services. In
addition, Laidlaw has agreed to indemnify Morgan Stanley and its
affiliates, their respective directors, officers, agents and
employees and each person, if any, controlling Morgan Stanley or
any of its affiliates against certain liabilities and expenses,
including certain liabilities under the federal securities laws,
related to or arising out of Morgan Stanleys engagement
and any related transactions.
Interests
of Laidlaws Directors and Executive Officers in the
Merger
When considering the recommendation of Laidlaws board of
directors, you should be aware that the members of our board of
directors and our executive officers have interests in the
merger other than their interests as Laidlaw stockholders
generally, pursuant to certain agreements between such directors
and executive officers and us and under certain company benefits
plans. These interests may be different from, or in conflict
with, your interests as a Laidlaw stockholder. The members of
our board of directors were aware of these additional interests,
and considered them, when they approved the merger agreement.
Effect
of Awards Outstanding Under Laidlaws Stock
Plans
As of March 1, 2007, there were approximately
1,362,500 shares of our common stock subject to stock
options with an exercise price of less than $35.25 granted under
our equity incentive plans to our current directors and
executive officers. At the effective time of the merger, each
outstanding option, whether or not vested or exercisable, to
acquire our common stock will be canceled, and the former holder
of each stock option will be entitled to receive an amount in
cash, without interest and less any applicable withholding tax,
equal to the product of:
|
|
|
|
|
the excess of $35.25, if any, over the exercise price per share
of common stock subject to such option and
|
|
|
|
the number of shares of common stock subject to such option.
|
27
The following table summarizes the vested and unvested options
with exercise prices of less than $35.25 per share held by
our directors and executive officers as of March 1, 2007
and the consideration that each of them will receive pursuant to
the merger agreement in connection with the cancellation of
their options:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares
|
|
|
No. of Shares
|
|
|
|
|
|
|
|
|
Consideration
|
|
|
Consideration
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Weighted Average
|
|
|
Weighted Average
|
|
|
Resulting from
|
|
|
resulting from
|
|
|
|
|
|
|
Vested
|
|
|
Unvested
|
|
|
Exercise Price of
|
|
|
Exercise Price of
|
|
|
Vested Stock
|
|
|
Unvested
|
|
|
Total Resulting
|
|
|
|
Options
|
|
|
Options
|
|
|
Vested Options
|
|
|
Unvested Options
|
|
|
Options
|
|
|
Stock Options
|
|
|
Consideration
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Chlebowski
|
|
|
13,500
|
|
|
|
13,500
|
|
|
$
|
15.58
|
|
|
$
|
24.98
|
|
|
$
|
265,545
|
|
|
$
|
138,645
|
|
|
$
|
404,190
|
|
James H. Dickerson, Jr.
|
|
|
13,500
|
|
|
|
13,500
|
|
|
$
|
15.58
|
|
|
$
|
24.98
|
|
|
$
|
265,545
|
|
|
$
|
138,645
|
|
|
$
|
404,190
|
|
Lawrence M. Nagin
|
|
|
13,500
|
|
|
|
13,500
|
|
|
$
|
15.58
|
|
|
$
|
24.98
|
|
|
$
|
265,545
|
|
|
$
|
138,645
|
|
|
$
|
404,190
|
|
Richard P. Randazzo
|
|
|
13,500
|
|
|
|
13,500
|
|
|
$
|
15.58
|
|
|
$
|
24.98
|
|
|
$
|
265,545
|
|
|
$
|
138,645
|
|
|
$
|
404,190
|
|
Maria A. Sastre
|
|
|
13,500
|
|
|
|
13,500
|
|
|
$
|
15.58
|
|
|
$
|
24.98
|
|
|
$
|
265,545
|
|
|
$
|
138,645
|
|
|
$
|
404,190
|
|
Peter E. Stangl
|
|
|
20,250
|
|
|
|
20,250
|
|
|
$
|
15.58
|
|
|
$
|
24.98
|
|
|
$
|
398,318
|
|
|
$
|
207,968
|
|
|
$
|
606,285
|
|
Carroll R. Wetzel, Jr.
|
|
|
13,500
|
|
|
|
13,500
|
|
|
$
|
15.58
|
|
|
$
|
24.98
|
|
|
$
|
265,545
|
|
|
$
|
138,645
|
|
|
$
|
404,190
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin E. Benson
|
|
|
341,667
|
|
|
|
178,333
|
|
|
$
|
16.04
|
|
|
$
|
23.04
|
|
|
$
|
6,562,250
|
|
|
$
|
2,177,000
|
|
|
$
|
8,739,250
|
|
Beth B. Corvino
|
|
|
76,667
|
|
|
|
113,333
|
|
|
$
|
17.36
|
|
|
$
|
23.58
|
|
|
$
|
1,371,667
|
|
|
$
|
1,322,333
|
|
|
$
|
2,694,000
|
|
Mary B. Jordan
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
28.47
|
|
|
|
|
|
|
$
|
338,950
|
|
|
$
|
338,950
|
|
Jeffrey W. Sanders
|
|
|
35,000
|
|
|
|
90,000
|
|
|
$
|
17.05
|
|
|
$
|
26.64
|
|
|
$
|
637,083
|
|
|
$
|
775,067
|
|
|
$
|
1,412,150
|
|
Jeffery A. McDougle
|
|
|
31,667
|
|
|
|
83,333
|
|
|
$
|
17.62
|
|
|
$
|
26.66
|
|
|
$
|
558,417
|
|
|
$
|
715,833
|
|
|
$
|
1,274,250
|
|
Douglas A. Carty
|
|
|
110,000
|
|
|
|
50,000
|
|
|
$
|
16.22
|
|
|
$
|
21.32
|
|
|
$
|
2,093,333
|
|
|
$
|
696,667
|
|
|
$
|
2,790,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
696,250
|
|
|
|
666,250
|
|
|
|
|
|
|
|
|
|
|
$
|
13,214,338
|
|
|
$
|
7,065,688
|
|
|
$
|
20,280,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
At the effective time of the merger, each outstanding restricted
stock award and deferred stock award granted under our Amended
and Restated Equity and Performance Incentive Plan will fully
vest and such awards will be canceled and converted into the
right to receive $35.25 in the same manner as shares of our
common stock. The following table summarizes the unvested shares
of restricted stock and deferred shares held by our directors
and executive officers as of March 1, 2007 and the
consideration that each of them will receive pursuant to the
merger agreement in connection with such unvested restricted
shares and deferred shares.
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|
|
|
|
|
|
|
|
|
|
|
No. of Shares of
|
|
|
No. of Deferred
|
|
|
Resulting
|
|
|
|
Restricted Stock
|
|
|
Shares
|
|
|
Consideration
|
|
|
Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Chlebowski
|
|
|
10,125
|
|
|
|
|
|
|
$
|
356,906
|
|
James H. Dickerson, Jr.
|
|
|
10,125
|
|
|
|
|
|
|
$
|
356,906
|
|
Lawrence M. Nagin
|
|
|
10,125
|
|
|
|
|
|
|
$
|
356,906
|
|
Richard P. Randazzo
|
|
|
10,125
|
|
|
|
|
|
|
$
|
356,906
|
|
Maria A. Sastre
|
|
|
10,125
|
|
|
|
|
|
|
$
|
356,906
|
|
Peter E. Stangl
|
|
|
15,189
|
|
|
|
|
|
|
$
|
535,412
|
|
Carroll R. Wetzel, Jr.
|
|
|
10,125
|
|
|
|
|
|
|
$
|
356,906
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin E. Benson
|
|
|
|
|
|
|
167,500
|
|
|
$
|
5,904,375
|
|
Beth B. Corvino
|
|
|
|
|
|
|
71,250
|
|
|
$
|
2,511,563
|
|
Mary B. Jordan
|
|
|
|
|
|
|
20,000
|
|
|
$
|
705,000
|
|
Jeffrey W. Sanders
|
|
|
|
|
|
|
51,500
|
|
|
$
|
1,815,375
|
|
Jeffery A. McDougle
|
|
|
|
|
|
|
37,875
|
|
|
$
|
1,335,094
|
|
Douglas A. Carty
|
|
|
|
|
|
|
81,250
|
|
|
$
|
2,864,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
75,939
|
|
|
|
429,375
|
|
|
$
|
17,812,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28
At the effective time of the merger, each outstanding phantom
stock appreciation right will fully vest and be converted into
the right to receive an amount in cash, without interest and
less any applicable withholding tax, equal to the product of
(x) the excess of the phantom stock price at the effective
time of the merger, if any, over the exercise price per share of
the phantom stock appreciation rights and (y) the number of
phantom stock appreciation rights. The following table
summarizes the unvested phantom stock appreciation rights held
by Douglas A. Carty as of March 1, 2007 and the
estimated consideration that he may receive pursuant to the
merger agreement in connection with such phantom stock
appreciation rights. None of our other executive officers hold
any phantom stock appreciation rights.
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|
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|
|
|
|
|
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|
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|
No. of Shares
|
|
|
Weighted Average
|
|
|
|
|
|
|
|
|
|
Underlying Unvested
|
|
|
Exercise Price of
|
|
|
Estimated Phanton
|
|
|
|
|
|
|
Phantom Stock
|
|
|
Phantom Stock
|
|
|
Stock Price at
|
|
|
Estimated Resulting
|
|
|
|
Appreciation Rights
|
|
|
Appreciation Rights
|
|
|
Close
|
|
|
Consideration
|
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas A. Carty
|
|
|
150,000
|
|
|
$
|
13.14
|
|
|
$
|
14.10
|
|
|
$
|
144,000
|
|
Severance
and Change in Control Agreements
In late 2005, we initiated a review of certain employment
agreements in order to ensure our compliance with
Section 409A of the Internal Revenue Code (the
Code) and to verify that the terms contained in such
agreements with our officers were reasonable in light of the
general market for their services. On July 27, 2006, the
Human Resources and Compensation Committee of our board of
directors approved entering into amended and restated employment
agreements with Kevin E. Benson, Beth Byster Corvino, Jeffrey W.
Sanders, Jeffery A. McDougle, Douglas A. Carty and a new
employment agreement with Mary B. Jordan, who had recently
joined the Company. These officers entered into amended and
restated employment agreements on August 1, 2006, which
replaced each officers
then-existing
employment agreement and change in control agreement. The
substantive compensation provisions of each officers prior
agreements remained principally unchanged, such as salary,
bonus, perquisites and severance. Changes to the prior
agreements included:
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providing for a gross-up by the Company of any excise tax
imposed on the officer under Code Section 4999 if the total
payments that would be parachute payments (as
defined in the Code) exceed the applicable threshold by 10% or
more, or if such payments exceed the threshold by less than 10%,
providing for a reduction of such payments;
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continuing the effectiveness of restrictive covenants after a
change in control; and
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|
|
allowing for a pre-change in control termination by the officer
for good reason (as defined in the agreement).
|
We entered into further amendments to these agreements with each
of Mr. Benson, Ms. Corvino, Mr. Sanders,
Mr. McDougle and Ms. Jordan on January 24, 2007,
and with Mr. Carty on February 26, 2007. These amended
and restated employment agreements did not modify the salary,
bonus, severance, change in control payments or other benefits
previously provided to such officers, except to:
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change the manner in which each officers bonus portion of
the severance calculation is determined following a change of
control, which change would likely result in these officers
receiving less severance upon a change of control than under the
prior version of their employment agreements;
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eliminate the officers rights to an automobile allowance
and executive benefit stipend as additional perquisites and, in
exchange, to increase the officers base salary by the
value of such benefits; and
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|
provide the officer with the right of up to $25,000 in
outplacement services in the event the officers employment
is terminated without cause prior to a change in control.
|
Prior to such amendment, each officers severance amount
was determined based on the officers base salary and the
higher of (a) the highest annual bonus earned in any fiscal
year after the change in control or the three years prior to the
change in control, or (b) the officers target bonus
for the year in which the change in control occurs. After such
amendment, each officers severance amount is based on the
officers base salary and the higher of (a) the
29
average bonus earned by the officer in the three fiscal years
preceding the change in control, or such portion thereof in
which the executive was employed or (b) the target bonus
for the year in which the change in control occurs.
Under circumstances unrelated to a change in control
(as defined in the change in control agreement), if the
executive officer is terminated by Laidlaw without
cause or upon his or her disability (as
such terms are defined in the change in control agreement) or
such executive officer terminates his or her employment for
good reason (as defined in the change in control
agreement), for a period of 24 months (or 12 months in
the case of Mr. McDougle and Mr. Sanders) following
such termination, Laidlaw will continue each month to pay the
executive officers base salary plus one-twelfth of his or
her target bonus in effect at that time (provided, in the case
of Ms. Jordan, any such termination follows her second
anniversary) plus the monthly COBRA continuation cost for
medical and dental benefits for the executive officer and his or
her eligible dependents. In the event that such amounts as
payable would become subject to the application of Code
Section 409A, the total amount that would otherwise be
payable to the executive officer shall instead be payable in
equal monthly installments over a period not extending beyond
two and one-half months after the later to occur of the end of
the calendar year in which such termination occurs or the end of
Laidlaws fiscal year in which such termination occurs, if
such payment schedule would avoid the application of Code
Section 409A. If such payment schedule would not avoid the
application of Code Section 409A, then such payments will
be made over the original
24-month
period (or
12-month
period in the case of Mr. McDougle and Mr. Sanders),
but any payments that would otherwise be made during the first
six months following such termination will be withheld and paid
in the month following the end of such six-month period. In the
event of a termination giving rise to such payments, the
agreement also provides the executive officer with either term
life insurance for such
24-month
period (or
12-month
period in the case of Mr. McDougle and Mr. Sanders) or
a lump sum cash amount equal to the cost of term life insurance.
Also, the executive officer would be eligible to participate
during the
24-month
period (or
12-month
period in the case of Mr. McDougle and Mr. Sanders)
following his or her termination in Laidlaws medical and
dental plans at his or her sole expense.
If within a two-year period following a change in
control, Laidlaw terminates an executive officers
employment without cause or the executive officer
terminates his or her employment for good reason,
Laidlaw will provide the executive officer with a lump sum
payment consisting of two times the sum of his or her highest
previous base salary plus the higher of (a) the average bonus
earned by the executive in the three fiscal years preceding the
change in control, or such portion thereof in which the
executive was employed or (b) the target bonus for the year
in which the change in control occurs and the COBRA continuation
cost of 24 months of medical and dental insurance coverage
for the executive officer and his or her eligible dependents. In
the event that such amounts as payable would become subject to
the application of Code Section 409A then such payments
shall be withheld and paid in a lump sum after the end of such
six-month period. During the
24-month
period, the executive officer will be able to purchase continued
coverage at his or her full expense under Laidlaws medical
and dental plans. In addition, Laidlaw will provide the
executive officer with continued welfare benefit coverage (other
than medical and dental coverage) for a period of
24 months, which amount is subject to reduction to the
extent he or she receives any comparable benefits from another
employer within this period. The executive officer also will
receive a lump sum payment equal to the actuarial equivalent of
the additional retirement pension, medical, life and other
benefits that he or she would have received under Laidlaws
retirement and health and welfare benefits plans during the
24-month
period following his or her termination of employment (to the
extent not otherwise provided by the underlying plan) and the
executive officer will receive service credit for vesting and
benefit purposes under all retirement plans of Laidlaw in which
he or she participates to the extent such additional credit does
not jeopardize the retirement plans tax-favored status.
Further, all equity incentive awards the executive officer holds
will become fully vested and all his stock options will become
fully exercisable. The executive officer will also be entitled
to reimbursement of reasonable outplacement services.
To the extent the payments to the executive officer in
connection with a change in control exceed the Code
Section 280G threshold amount by 10% or more, Laidlaw will
gross-up the
payments to compensate for any excise tax imposed as a result
thereof. In the event that such payments exceed the Code
Section 280G threshold by less than 10%, such payments will
be reduced to avoid the application of Code Section 280G.
In addition, to the extent any payments made to the executive
officer (in connection with a change in control or otherwise)
violate Code Section 409A despite the protections against
such violation built into the agreement, Laidlaw will pay the
resulting excise tax under Code Section 409A on a fully
grossed-up
basis.
30
The following table shows the estimated amount of potential cash
severance payable to our current executive officers (including
reimbursement for outplacement expenses, if applicable) based on
an assumed termination date of May 31, 2007 (assuming the
termination date is after a change in control), and the
estimated present value of continuing coverage of medical,
dental and other benefits. The table also shows the potential
estimated
gross-up
payment to which certain of our executive officers are
entitled to in the event that any benefit gives rise to an
excise tax. Such
gross-up
payment is intended to place the executive officer in the same
after-tax position that the executive officer would have been in
if no excise tax had applied.
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Potential Amount
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|
|
Potential
|
|
|
Potential
|
|
|
Potential Total
|
|
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|
of Cash
|
|
|
Estimated Present
|
|
|
Estimated
|
|
|
Estimated
|
|
|
|
Severence Payment
|
|
|
Value of Benefits
|
|
|
Gross-up
Payment
|
|
|
Consideration
|
|
|
Executive officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin E. Benson
|
|
$
|
3,621,040
|
|
|
$
|
25,983
|
|
|
$
|
0
|
|
|
$
|
3,647,023
|
|
Beth Byster Corvino
|
|
$
|
1,496,872
|
|
|
$
|
33,545
|
|
|
$
|
0
|
|
|
$
|
1,530,417
|
|
Mary B. Jordan
|
|
$
|
1,035,707
|
|
|
$
|
13,356
|
|
|
$
|
0
|
|
|
$
|
1,049,063
|
|
Jeffrey W. Sanders
|
|
$
|
1,199,474
|
|
|
$
|
33,426
|
|
|
$
|
0
|
|
|
$
|
1,232,900
|
|
Jeffery A. McDougle
|
|
$
|
1,074,696
|
|
|
$
|
33,248
|
|
|
$
|
0
|
|
|
$
|
1,107,944
|
|
Douglas A. Carty
|
|
$
|
2,309,251
|
|
|
$
|
34,323
|
|
|
$
|
0
|
|
|
$
|
2,343,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
10,737,040
|
|
|
$
|
173,881
|
|
|
$
|
0
|
|
|
$
|
10,910,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Estimates are subject to change based on the date of completion
of the merger, date of termination of the executive officer,
interest rates then in effect and certain other assumptions used
in the calculation.
|
Payments
under the Non-Employee Director Compensation
Policy
Pursuant to a resolution of our board of directors on
November 10, 2004 with respect to the Companys
Non-Employee Director Compensation Policy, each member of our
board of directors would have automatically been granted
3,375 shares of restricted stock and 6,750 stock options on
September 1, 2007, except for Mr. Stangl, who would
have been granted 5,063 shares of restricted stock and
10,125 stock options. In connection with the merger
negotiations, each member of our board of directors agreed to
forfeit his or her right to receive such restricted stock and
stock options. In lieu of the restricted stock, the Company
agreed that if the effective time of the merger has not occurred
prior to September 1, 2007, each of the directors of the
Company would receive the following cash compensation:
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|
Each of the Companys directors (other than
Mr. Stangl) shall receive cash compensation of $29,742,
which amount represents 25% of the restricted stock grant that
would have been granted to such director on September 1,
2007 under the Director Compensation Policy multiplied by a
stock price of $35.25 per share.
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|
Mr. Stangl, the Chairman of the Companys board of
directors, shall receive cash compensation of $44,617, which
amount represents 25% of the restricted stock grant that would
have been granted to him on September 1, 2007 under the
Director Compensation Policy, multiplied by a stock price of
$35.25 per share.
|
For purpose of clarity, the payment of such cash compensation to
the Companys directors in accordance with the terms set
forth above shall be in lieu of any actual grant of restricted
shares, stock options or other equity as provided for under the
Director Compensation Policy and no grant of equity compensation
shall be made to any of the directors of the Company pursuant to
such policy or otherwise.
Indemnification
and Insurance
The merger agreement provides that FirstGroup will cause the
surviving corporation in the merger transaction, and the
surviving corporation agrees, to indemnify the present and
former directors and officers of Laidlaw for acts and omissions
occurring at or prior to the effective time to the fullest
extent permitted by Delaware law, other applicable law or as
provided under our certificate of incorporation and bylaws as in
effect on the date of the merger agreement, subject to any
limitation imposed by applicable law.
31
The merger agreement also provides that, for a period of six
years after the effective time, FirstGroup will maintain in
effect provisions in the surviving corporations
organizational documents related to indemnification and
liability of officers, directors and employees that are no less
advantageous to the intended beneficiaries than the
corresponding provisions in existence as of the date of the
merger agreement. Prior to the effective time, FirstGroup may
purchase a directors and officers liability
tail insurance policy covering a period of six years
following the effective time so long as it provides comparable
coverage as the policies in existence on the date of the merger
agreement. If FirstGroup does not purchase such a
tail policy prior to the effective time, then
FirstGroup will cause to be maintained by the surviving
corporation for a period of six years following the effective
time the current directors and officers liability
policies, or may substitute policies of at least the same
coverage and containing terms and conditions that are no less
advantageous to the insured. In satisfying its obligations, the
surviving corporation is not obligated to pay an annual amount
in the aggregate in excess of 200% of the amount per annum paid
by Laidlaw in the last full fiscal year, in which case the
surviving corporation agrees to obtain a policy offering the
greatest coverage available for a cost not to exceed such amount.
Appraisal
Rights
Holders of Laidlaw common stock who dissent and do not approve
the merger are entitled to certain appraisal rights under
Delaware law in connection with the merger, as described below
and in Annex C hereto. Such holders who perfect their
appraisal rights and strictly follow certain procedures in the
manner prescribed by Section 262 of the Delaware General
Corporation Law, or DGCL, will be entitled to receive payment of
the fair value of their shares in cash from Laidlaw, as the
surviving corporation in the merger.
ANY LAIDLAW STOCKHOLDER WHO WISHES TO EXERCISE APPRAISAL
RIGHTS OR WHO WISHES TO PRESERVE HIS OR HER RIGHT TO DO SO
SHOULD REVIEW ANNEX C CAREFULLY AND SHOULD CONSULT HIS OR
HER LEGAL ADVISOR, SINCE FAILURE TO TIMELY COMPLY WITH THE
PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF SUCH
RIGHTS.
The record holders of the shares of Laidlaw common stock that
elect to exercise their appraisal rights with respect to the
merger are referred to herein as Dissenting
Stockholders, and the shares of Laidlaw common stock with
respect to which they exercise appraisal rights are referred to
herein as Dissenting Shares. If a Laidlaw
stockholder has a beneficial interest in shares of Laidlaw
common stock that are held of record in the name of another
person, such as a broker or nominee, and such Laidlaw
stockholder desires to perfect whatever appraisal rights such
beneficial Laidlaw stockholder may have, such beneficial Laidlaw
stockholder must act promptly to cause the holder of record
timely and properly to follow the steps summarized below.
A VOTE IN FAVOR OF THE MERGER BY A LAIDLAW STOCKHOLDER WILL
RESULT IN A WAIVER OF SUCH HOLDERS RIGHT TO APPRAISAL
RIGHTS.
When the merger becomes effective, Laidlaw stockholders who
strictly comply with the procedures prescribed in
Section 262 of the DGCL will be entitled to a judicial
appraisal 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 the fair value of their
shares in cash from Laidlaw, as the surviving corporation in the
merger. The following is a brief summary of the statutory
procedures that must be followed by a common stockholder of
Laidlaw in order to perfect appraisal rights under the DGCL.
This summary is not intended to be complete and is qualified in
its entirety by reference to Section 262 of the DGCL, the
text of which is included as Annex C to this proxy
statement. We advise any Laidlaw stockholder considering
demanding appraisal to consult legal counsel.
In order to exercise appraisal rights under Delaware law, a
stockholder must be the stockholder of record of the shares of
Laidlaw common stock as to which Laidlaw appraisal rights are to
be exercised on the date that the written demand for appraisal
described below is made, and the stockholder must continuously
hold such shares through the effective date of the merger.
While Laidlaw stockholders electing to exercise their appraisal
rights under Section 262 of the DGCL are not required to
vote against the approval of the merger, a vote in favor of
approval of the merger will result in a waiver of the
holders right to appraisal rights. Laidlaw stockholders
electing to demand the appraisal of such stockholders
shares shall deliver to Laidlaw, before the taking of the vote
on the merger, a written demand for appraisal of such
32
stockholders shares. Such demand will be sufficient if it
reasonably informs Laidlaw of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal
of such stockholders shares. A proxy or vote against the
merger shall not constitute such a demand. Please see the
discussion below under the heading Written Demand
for additional information regarding written demand requirements.
Within ten (10) days after the effective time of the
merger, Laidlaw, as the surviving corporation, must provide
notice of the date of effectiveness of the merger to all Laidlaw
stockholders who have not voted for approval of the merger
agreement and who have otherwise complied with the requirements
of Section 262 of the DGCL.
A Laidlaw stockholder who elects to exercise appraisal rights
must mail or deliver the written demand for appraisal to:
Laidlaw
International, Inc.
55 Shuman Blvd., Suite 400
Naperville, Illinois 60563
Telephone:
(630) 848-3000
Attn: Investor Relations
Within 120 days after the effective date of the merger, any
Dissenting Stockholder that has strictly complied with the
procedures prescribed in Section 262 of the DGCL will be
entitled, upon written request, to receive from Laidlaw, as the
surviving corporation, a statement of the aggregate number of
shares not voted in favor of the merger and with respect to
which demands for appraisal have been received by Laidlaw, and
the aggregate number of holders of those shares. This statement
must be mailed to the Dissenting Stockholder within ten
(10) days after the Dissenting Stockholders written
request has been received by Laidlaw, as the surviving
corporation, or within ten (10) days after the date of the
effective date of the merger, whichever is later.
Within 120 days after the effective date of the merger,
either Laidlaw, as the surviving corporation, or any Dissenting
Stockholder that has strictly complied with the procedures
prescribed in Section 262 of the DGCL may file a petition
in the Delaware Court of Chancery demanding a determination of
the fair value of each share of Laidlaw stock of all Dissenting
Stockholders. If a petition for an appraisal is timely filed,
then after a hearing on the petition, the Delaware Court of
Chancery will determine which of the Laidlaw stockholders are
entitled to appraisal rights and then will appraise the shares
of Laidlaw common stock owned by those stockholders by
determining the fair value of the shares exclusive of any
element of value arising from the accomplishment or expectation
of the merger, together with the fair rate of interest to be
paid, if any, on the amount determined to be the fair value. If
no petition for appraisal is filed with the Delaware Court of
Chancery by Laidlaw, as the surviving corporation, or any
Dissenting Stockholder within 120 days after the effective
time of the merger, then the Dissenting Stockholders
rights to appraisal will cease and they will be entitled only to
receive merger consideration paid in the merger on the same
basis as other Laidlaw stockholders. Inasmuch as Laidlaw, as the
surviving corporation, has no obligation to file a petition, any
Laidlaw stockholder who desires a petition to be filed is
advised to file it on a timely basis. No petition timely filed
in the Delaware Court of Chancery demanding appraisal shall be
dismissed as to any Laidlaw stockholder, however, without the
approval of the Delaware Court of Chancery, which may be
conditioned on any terms the Delaware Court of Chancery deems
just.
The cost of the appraisal proceeding may be determined by the
Delaware Court of Chancery and taxed upon the parties as the
court deems equitable in the circumstances. Upon application of
a Dissenting Stockholder that has strictly complied with the
procedures prescribed in Section 262 of the DGCL, the court
may order that all or a portion of the expenses incurred by any
Dissenting Stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable
attorneys fees, and the fees and expenses of experts, be
charged pro rata against the value of all shares entitled to
appraisal. In the absence of this determination or assessment,
each party bears its own expenses. A Dissenting Stockholder who
has timely demanded appraisal in compliance with
Section 262 of the DGCL will not, after the effective time
of the merger, be entitled to vote the Laidlaw common stock
subject to such demand for any purpose or to receive payment of
dividends or other distributions on the Laidlaw common stock,
except for dividends or other distributions payable to
stockholders of record at a date prior to the effective time of
the merger.
33
At any time within sixty (60) days after the effective time
of the merger, any Dissenting Stockholder will have the right to
withdraw the stockholders demand for appraisal and to
accept the right to receive merger consideration in the merger
on the same basis on which Laidlaw common stock is converted in
the merger. After this sixty (60) day period, a Dissenting
Stockholder that has strictly complied with the procedures
prescribed in Section 262 of the DGCL may withdraw his or
her demand for appraisal only with the written consent of
Laidlaw or FirstGroup and the approval of the Delaware Court of
Chancery.
Written
Demands
When submitting a written demand for appraisal under Delaware
law, the written demand for appraisal must reasonably inform
Laidlaw of the identity of the stockholder of record making the
demand and indicate that the stockholder intends to demand
appraisal of the stockholders shares. A demand for
appraisal should be executed by or for the Laidlaw common
stockholder of record, fully and correctly, as that
stockholders name appears on the stockholders stock
certificate. If Laidlaw common stock is owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian,
the demand should be executed by the fiduciary. If Laidlaw
common stock is owned of record by more than one person, as in a
joint tenancy or tenancy in common, the demand should be
executed by or for all joint owners. An authorized agent,
including an agent for two or more joint owners, should execute
the demand for appraisal for a stockholder of record; however,
the agent must identify the record owner and expressly disclose
the fact that, in exercising the demand, he, she or it is acting
as agent for the record owner.
A record owner who holds Laidlaw common stock as a nominee for
other beneficial owners of the shares may exercise appraisal
rights with respect to the Laidlaw common stock held for all or
less than all beneficial owners of the Laidlaw stock for which
the holder is the record owner. In that case, the written demand
must state the number of shares of Laidlaw common stock covered
by the demand. Where the number of shares of Laidlaw common
stock is not expressly stated, the demand will be presumed to
cover all shares of Laidlaw common stock outstanding in the name
of that record owner. Beneficial owners who are not record
owners and who intend to exercise appraisal rights should
instruct the record owner to comply strictly with the statutory
requirements with respect to the delivery of written demand
prior to the taking of the vote on the merger.
Laidlaw stockholders considering whether to seek appraisal
should bear in mind that the fair value of their Laidlaw common
stock determined under Section 262 of the DGCL could be
more than, the same as or less than the value of the right to
receive merger consideration in the merger. Also, Laidlaw and
FirstGroup reserve the right to assert in any appraisal
proceeding that, for purposes thereof, the fair
value of the Laidlaw common stock is less than the value
of the merger consideration to be issued in the merger.
The process of dissenting and exercising appraisal rights
requires strict compliance with technical prerequisites. Laidlaw
stockholders wishing to dissent and to exercise their appraisal
rights should consult with their own legal counsel in connection
with compliance with Section 262 of the DGCL.
Any stockholder who fails to strictly comply with the
requirements of Section 262 of the DGCL, attached as
Annex C to this proxy statement will forfeit his, her or
its rights to dissent from the merger and to exercise appraisal
rights and will receive merger consideration on the same basis
as all other stockholders.
THE PROCESS OF DISSENTING REQUIRES STRICT COMPLIANCE WITH
TECHNICAL PREREQUISITES. THOSE INDIVIDUALS OR ENTITIES WISHING
TO DISSENT AND TO EXERCISE THEIR APPRAISAL RIGHTS SHOULD CONSULT
WITH THEIR OWN LEGAL COUNSEL IN CONNECTION WITH COMPLIANCE UNDER
SECTION 262 OF THE DGCL. TO THE EXTENT THERE ARE ANY
INCONSISTENCIES BETWEEN THE FOREGOING SUMMARY AND
SECTION 262 OF THE DGCL, THE DGCL SHALL CONTROL.
Form of
the Merger
Subject to the terms and conditions of the merger agreement and
in accordance with Delaware law, at the effective time of the
merger, FirstGroup Acquisition, a wholly owned subsidiary of
FirstGroup and a party to the merger agreement, will merge with
and into us. We will survive the merger as a wholly owned
subsidiary of FirstGroup.
34
Merger
Consideration
At the effective time of the merger, each outstanding share of
our common stock, other than treasury shares, shares held by
FirstGroup or any direct or indirect wholly owned subsidiary of
FirstGroup or us, and shares held by stockholders who perfect
their appraisal rights, will be converted into the right to
receive $35.25 in cash, without interest and less any applicable
withholding tax. Treasury shares and shares held by FirstGroup
or any direct or indirect wholly owned subsidiary of FirstGroup
or us will be canceled immediately prior to the effective time
of the merger.
As of the effective time of the merger, all shares of our common
stock will no longer be outstanding and will automatically be
canceled and will cease to exist, and each holder of a
certificate representing any shares of our common stock will
cease to have any rights as a stockholder, except the right to
receive $35.25 per share in cash, without interest and less
applicable withholding tax (other than stockholders who have
perfected their appraisal rights). The price of $35.25 per
share was determined through arms-length negotiations
between FirstGroup and us.
Effect on
Awards Outstanding Under Laidlaws Employee Plans
At the effective time, each outstanding option, whether or not
vested or exercisable, to acquire our common stock will be
canceled, and the former holder of each stock option will be
entitled to receive an amount in cash, without interest and less
any applicable withholding tax, equal to the product of:
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the excess of $35.25, if any, over the exercise price per share
of common stock subject to such option and
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the number of shares of common stock subject to such option.
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At the effective time, each outstanding restricted stock award
and each deferred stock award under our Amended and Restated
Equity and Performance Incentive Plan will fully vest and such
awards will be canceled and converted into the right to receive
$35.25 in the same manner as shares of our common stock.
Effective
Time of the Merger
The merger will become effective upon the filing of a
certificate of merger with the Secretary of State of the State
of Delaware or at such later time as is agreed upon by
FirstGroup and us and specified in such certificate of merger.
The filing of the certificate of merger will occur at the
closing, which will take place not later than the second
business day after satisfaction or waiver of the conditions to
the closing of the merger set forth in the merger agreement and
described in this proxy statement, or at such other time as is
agreed upon by FirstGroup and us. We currently anticipate the
merger to be completed later this year.
Delisting
and Deregistration of Laidlaw Common Stock
If the merger is completed, our common stock will be delisted
from and will no longer be traded on the New York Stock Exchange
and will be deregistered under the Exchange Act. Following the
completion of the merger Laidlaw will no longer be an
independent public company.
Certain
Projections
Laidlaw does not, as a matter of course, publicly disclose
multi-year projections of future revenues, earnings or other
results. However, in connection with FirstGroups due
diligence review of the Company and in the course of the
negotiations between the parties, the Company provided
FirstGroup with certain non-public business and financial
information about the Company. The information provided to
FirstGroup included projections for fiscal years 2007 through
2009 (collectively, the projections). The
projections, dated January 25, 2007, included estimates of
revenue, operating income before depreciation and amortization
(EBITDA) and capital expenditures. These projections were
prepared on a basis consistent with the accounting principles
used in our historical financial statements. We are including
these projections in this proxy statement to give our
stockholders access to certain nonpublic information considered
by FirstGroup and its advisors for purposes of considering and
evaluating the merger. The Company also provided its financial
advisor with these projections in connection with its financial
analysis of the merger consideration. These projections do not
give effect to the merger.
35
The projections are summarized below:
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Consolidated
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2007
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2008
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2009
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($ in millions)
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Revenue
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$
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3,207
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$
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3,303
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$
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3,402
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EBITDA(1)
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$
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477
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$
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519
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$
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551
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Capital Expenditures
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$
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247
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$
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298
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$
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284
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(1) |
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It should be noted that EBITDA is not a measure of performance
under generally accepted accounting principles, and should not
be considered as an alternative to operating income or net
income as a measure of operating performance or cash flows or as
a measure of liquidity. Further, managements calculation
of EBITDA may differ from that used by others. |
In preparing the above projections, the Company made the
following material assumptions:
Fiscal 2007 projection assumptions:
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Consolidated revenue grows approximately 2.4% due to a
successful fiscal 2006 bid season, acquisitions and charter
revenue growth at Laidlaw Education Services and generally flat
revenues at Greyhound and Laidlaw Transit.
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Consolidated EBITDA increases 2.3% due to:
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Greyhounds maturing network changes and a drop in lease
expense;
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EBITDA from revenue growth at Laidlaw Education Services is
offset by project spending and increased fuel costs; and
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declines at Laidlaw Transit due to a large gain on sale of
property in the prior year.
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Capital expenditures remain below replacement levels as there
are no significant new bus purchases at Greyhound.
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Fiscal 2008 and 2009 projection assumptions:
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Revenue growth forecast at approximately 3% per year, which
assumes inflationary price increases and no significant
incremental volume growth.
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EBITDA margins would expand approximately 80 basis points in
fiscal 2008 and approximately 50 basis points in fiscal
2009, with margin improvements at:
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Laidlaw Education driven by lower fuel costs, operational
efficiencies gained from projects started in 2007 and reduced
project spending;
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Greyhound due to the elimination of bus refurbishment costs as
the program is completed in 2007 and reduced bus lease
expenses; and
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Laidlaw Transit due to reduced overhead expenses.
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Capital expenditures in fiscal 2008 and 2009 are above
replacement levels as they include both new bus purchases at
Greyhound, and bus lease buyouts at lease expiration
($30 million in 2008 and $16 million in 2009).
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No assurances can be given that these assumptions will
accurately reflect future conditions. Although presented with
numerical specificity, projections of this type are based on
estimates and assumptions that are inherently subject to factors
such as industry performance, general business, economic,
regulatory, market and financial conditions, all of which are
difficult to predict and beyond the control of the
Companys management, as well as changes to the business,
financial condition or results of operations of the Company,
including the factors described under Forward-Looking
Information, beginning on page 10, which factors may
cause the financial projections or the underlying assumptions to
be inaccurate. Since the projections cover multiple years, such
information by its nature becomes less reliable with each
successive year. The financial projections do not take into
account any circumstances or events occurring after the date
they were prepared. Accordingly, there can be no
36
assurance that the projections will be realized, and actual
results may be materially greater or less than those reflected
in the projections. You should review our most recent SEC
filings for a description of risk factors with respect to our
business. See Where You Can Find More Information
beginning on page 51.
The projections were not prepared with a view toward public
disclosure or complying with generally accepted accounting
principles, or to compliance with published guidelines of the
SEC or the guidelines established by the American Institute of
Certified Public Accountants for preparation and presentation of
prospective financial information. The projections included in
this proxy statement have been prepared by, and are the
responsibility of, the Companys management.
PricewaterhouseCoopers LLP, the Companys independent
registered public accounting firm, has not examined or compiled
any of the projections, and accordingly, PricewaterhouseCoopers
LLP does not express an opinion or any form of assurance with
respect thereto. The PricewaterhouseCoopers LLP report
incorporated by reference in this proxy statement relates to the
Companys historical financial information. It does not
extend to the projections and should not be read to do so. The
inclusion of the projections in this proxy statement should not
be regarded as an indication that such projections will be
predictive of actual future results, and the projections should
not be relied upon as such. No representation is made by the
Company or FirstGroup or their respective affiliates or
representatives to any security holder of the Company regarding
the ultimate performance of the Company compared to the
information contained in the projections. The Company does not
intend to update or otherwise revise the projections to reflect
circumstances existing after the date when made or to reflect
the occurrence of future events even in the event that any or
all of the assumptions underlying the projections are shown to
be in error.
Material
U.S. Federal Income Tax Consequences of the
Merger
The following are the material U.S. federal income tax
consequences of the merger to U.S. stockholders of Laidlaw
whose shares of Laidlaw common stock are exchanged for cash in
the merger. The following summary is based on the Internal
Revenue Code of 1986, as amended (the Code),
Treasury regulations promulgated thereunder, judicial decisions
and administrative rulings as of the date of this proxy
statement, all of which are subject to change, possibly with
retroactive effect. The summary does not address all of the
U.S. federal income tax consequences that may be relevant
to particular stockholders in light of their individual
circumstances or to stockholders who do not hold their shares of
Laidlaw common stock as capital assets or who are subject to
special rules, including: U.S. expatriates, dealers or
brokers in securities or currencies, tax-exempt organizations,
financial institutions, mutual funds, insurance companies,
cooperatives, pass-through entities and investors in such
entities, stockholders who have a functional currency other than
the U.S. dollar, stockholders who hold their shares of
Laidlaw common stock as a hedge or as part of a hedging,
straddle, conversion, synthetic security, integrated investment
or other risk-reduction transaction or who are subject to
alternative minimum tax or stockholders who acquired their
shares of Laidlaw common stock upon the exercise of employee
stock options or otherwise as compensation. Further, this
discussion does not address any U.S. federal estate and
gift or alternative minimum tax consequences or any state, local
or foreign tax consequences relating to the merger.
The Merger. The receipt of cash in exchange
for Laidlaw common stock pursuant to 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 or foreign income or other tax laws. Generally, for
U.S. federal income tax purposes, a stockholder will
recognize capital gain or loss equal to the difference between
the amount of cash received by the stockholder in the merger and
the stockholders adjusted tax basis in the shares of
Laidlaw common stock exchanged for cash in the merger. Such gain
or loss will be long-term capital gain or loss if the
stockholders holding period for those shares of Laidlaw
common stock exceeds one year at the time of the merger. Capital
gains recognized by an individual upon a disposition of a share
of Laidlaw common stock that has been held for more than one
year generally will be subject to a maximum U.S. federal
income tax rate of 15% or, in the case of a share that has been
held for one year or less, will be subject to tax at ordinary
income tax rates. In addition, there are limits on the
deductibility of capital losses. The amount and character of
gain or loss must be determined separately for each block of
Laidlaw common stock (i.e., shares acquired at the same
cost in a single transaction) exchanged for cash in the merger.
Information Reporting and Backup
Withholding. Payments made to a stockholder whose
shares of Laidlaw common stock are exchanged for cash pursuant
to the merger are subject to information reporting and to backup
withholding unless: (i) the stockholder is a corporation or
other exempt recipient; or (ii) in the case of backup
37
withholding, the stockholder provides a correct taxpayer
identification number, and certifies that no loss of exemption
from backup withholding has occurred. The amount of any backup
withholding from a payment to a stockholder will be allowed as a
credit against the stockholders U.S. federal income
tax liability and may entitle the stockholder to a refund,
provided that the required information is furnished to the
Internal Revenue Service.
THE SUMMARY OF U.S. FEDERAL INCOME TAX CONSEQUENCES SET
FORTH ABOVE IS FOR GENERAL INFORMATION ONLY AND IS BASED ON THE
LAW IN EFFECT ON THE DATE HEREOF. STOCKHOLDERS ARE STRONGLY
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION
AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX
LAWS) OF THE MERGER.
Regulatory
Matters
HSR
Act
The completion of the merger is subject to expiration or
termination of the applicable waiting periods under the HSR Act
and the rules thereunder. Under the HSR Act and the rules
thereunder, the merger may not be completed unless certain
information has been furnished to the Antitrust Division of the
U.S. Department of Justice and to the Federal Trade
Commission and applicable waiting periods expire or are
terminated. Laidlaw and FirstGroup each filed on
February 27, 2007, a notification and report form pursuant
to the HSR Act with the Antitrust Division of the Department of
Justice and the Federal Trade Commission. Under the HSR Act, the
merger may not be consummated until 30 days after the
initial filing (unless early termination of this waiting period
is granted) or, if the Antitrust Division of the
U.S. Department of Justice or the Federal Trade Commission
issues a request for additional information, 30 days after
FirstGroup and Laidlaw have substantially complied with such
request for additional information (unless this period is
shortened pursuant to a grant of earlier termination). At any
time before the effective time of the merger, the Federal Trade
Commission, the Antitrust Division of the U.S. Department
of Justice or others could take action under the antitrust laws
with respect to the merger, including seeking to enjoin the
completion of the merger, to rescind the merger or to
conditionally approve the merger upon the divestiture of assets
of FirstGroup or Laidlaw or to impose restrictions on the
operations of the combined company post closing. There can be no
assurance that the merger will not be challenged on antitrust
grounds or, if such a challenge is made, that the challenge will
not be successful. In addition, state antitrust authorities and
private parties in certain circumstances may bring legal action
under the antitrust laws seeking to enjoin the merger or seeking
conditions to the completion of the merger. Under the merger
agreement, subject to certain conditions and limitations,
FirstGroup and Laidlaw have agreed to use their reasonable best
efforts to take all actions necessary to cause the expiration or
termination of the applicable waiting periods under the HSR Act.
Competition
Act
The merger exceeds the thresholds for mandatory pre-merger
notification under Part IX of the Competition Act. Such a
notification involves the provision of certain prescribed
information to the Commissioner of Competition appointed under
the Competition Act and the expiration, termination or waiver of
the applicable statutory waiting period. Completion of the
Commissioners review of a notifiable transaction may take
longer than the applicable statutory waiting period. Upon
completing her review, the Competition Act allows the
Commissioner to challenge a merger before the Competition
Tribunal if she believes that the merger will or will likely
substantially prevent or lessen competition. Where the
Commissioner is successful in satisfying the Tribunal that a
merger will or will likely have such an effect, the Tribunal may
make a variety of orders including an order prohibiting the
closing of a transaction or, if the merger is already completed,
an order requiring the disposal of assets or shares. The
Commissioner may also seek interlocutory injunctions to prevent
the closing of a transaction that the Commissioner is still
reviewing or has challenged. Where the Commissioner is satisfied
that she would not have sufficient grounds to apply to the
Tribunal in respect of a transaction under the merger provisions
of the Competition Act, the Commissioner may so advise the
purchaser in writing or issue an Advance Ruling Certificate, or
ARC, pursuant to section 102 of the Competition Act. If an
ARC is issued, the parties to the transaction are not required
to file a pre-merger notification. If a notification has already
been filed and the applicable statutory waiting period has not
expired, the issuance of an ARC has the effect of terminating
the statutory waiting period.
38
Laidlaw and FirstGroup each will file short-form pre-merger
notifications with the Commissioner shortly. Completion of the
merger is subject to (a) issuance by the Commissioner of an
ARC or (b) FirstGroup being advised, in writing, by the
Commissioner that she has no intention to file an application
under Part VIII of the Competition Act, collectively, the
Competition Act Approval. There can be no assurance that the
merger will not be challenged under the Competition Act or, if
such challenge is made, that the challenge will not be
successful. Under the merger agreement, subject to certain
conditions and limitations, FirstGroup and Laidlaw have agreed
to use their reasonable best efforts to take all actions
necessary to obtain Competition Act Approval.
U.S. Surface
Transportation Board
The completion of the merger is subject to the advance approval
of the Surface Transportation Board of the U.S. Department
of Transportation, which is vested with jurisdiction to
authorize the acquisition or merger of motor carriers of
passengers engaged in interstate or foreign commerce. On
March 8, 2007, FirstGroup filed an application seeking the
Surface Transportation Boards approval of the transaction.
Exon-Florio
As FirstGroup is not based in the U.S., the transaction is
subject to the Exon-Florio provision of the Defense Production
Act, which provides for voluntary filings in certain cases. The
parties have agreed to make such a filing and to make it a
condition of closing that the U.S. government has completed
its national security review and, if necessary, investigation
and determined that no adverse action would be taken with
respect to the merger. FirstGroup and Laidlaw will notify the
Committee on Foreign Investment in the United States of the
proposed transaction.
THE
MERGER AGREEMENT
The following summary describes certain material provisions of
the merger agreement. This summary is not complete and is
qualified in its entirety by reference to the complete text of
the merger agreement, which is attached to this proxy statement
as Annex A and incorporated into this proxy statement by
reference. Laidlaw urges you to read carefully the merger
agreement in its entirety because this summary may not contain
all the information about the merger agreement that is important
to you.
The representations and warranties described below and included
in the merger agreement were made as of specific dates and may
be subject to important qualifications, limitations and
supplemental information agreed to by Laidlaw and FirstGroup in
connection with negotiating the terms of the merger agreement.
In addition, the representations and warranties may have been
included in the merger agreement for the purpose of allocating
risk between Laidlaw and FirstGroup rather than to establish
matters as facts. The merger agreement is described in, and
included as Annex A hereto, only to provide you with
information regarding its terms and conditions, and not to
provide any other factual information regarding Laidlaw or its
business. Accordingly, the representations and warranties and
other provisions of the merger agreement should not be read
alone, and you should read the information provided elsewhere in
this document and in the documents incorporated by reference
into this document for information regarding Laidlaw and its
business. See Where You Can Find More Information
beginning on page 51.
Effective
Time
The merger will become effective upon the filing of a
certificate of merger with the Secretary of State of the State
of Delaware or at such later time as is agreed upon by
FirstGroup and us and specified in the certificate of merger.
The filing of the certificate of merger will occur on the date
of closing, which will take place not later than the second
business day after satisfaction or waiver of the conditions to
the closing of the merger set forth in the merger agreement and
described in this proxy statement (except those conditions which
by their nature are to be satisfied at the closing), or at such
other time as is agreed upon by FirstGroup and us.
39
Conversion
of Shares; Procedures for Exchange of Certificates
Except for shares held by us as treasury stock, shares owned by
FirstGroup or any of its subsidiaries and shares for which
appraisal rights have been duly exercised under Section 262
of the DGCL, shares of our common stock outstanding immediately
prior to the effective time of the merger shall be converted
into the right to receive $35.25 in cash, without interest.
Each share of common stock held by us as treasury stock, or any
such shares held by FirstGroup and its subsidiaries shall be
canceled and no payment will be made with respect to such
shares. Immediately prior to the effective time, each share of
FirstGroup Acquisition outstanding shall be converted into one
share of common stock of Laidlaw as the surviving corporation in
the merger.
FirstGroup will deposit, or cause the surviving corporation or
another affiliate of FirstGroup to deposit with Mellon Financial
Services, the exchange agent, cash sufficient to pay the
aggregate merger consideration for the benefit of holders of the
certificated and uncertificated shares of our common stock. At
such time, FirstGroup will, or will cause the exchange agent to,
send a letter of transmittal and instructions to each holder of
shares of our common stock for use in the exchange of such
shares for the merger consideration. Upon surrender to the
exchange agent of a certificate, together with a properly
completed letter of transmittal, or in the case of the
book-entry transfer of uncertificated shares, upon the exchange
agents receipt of an agents message (or
other evidence as the exchange agent may reasonably request)
each holder of shares of our common stock will be entitled to
receive the merger consideration.
Dissenting
Shares
Shares of our common stock which are issued and outstanding
prior to the effective time of the merger and held by a holder
who has not voted such shares in favor of the merger and who has
demanded appraisal for such shares in accordance with
Section 262 of the DGCL will not be converted into the
right to receive the merger consideration, unless such holder
fails to perfect, withdraws or loses the right to appraisal. If,
after the effective time, such holder fails to perfect,
withdraws or loses the right to appraisal, such shares of our
common stock will be treated as if they have been converted into
the right to receive the merger consideration as of the
effective time. We have agreed to give FirstGroup prompt notice
of any demands we receive for appraisal of shares of our common
stock, and FirstGroup has the right to participate in all
negotiations and proceedings in connection with such demands. We
have agreed not to make any payment with respect to, offer to
settle or settle any such demands without the prior written
consent of FirstGroup.
Treatment
of Stock Options and Other Equity-Based Awards
At the effective time, each option to purchase shares of common
stock outstanding under any employee plan, whether or not vested
or exercisable, will be canceled and converted into the right to
receive an amount in cash equal to the product of (i) the
excess, if any, of the merger consideration over the applicable
exercise price of such Company stock option multiplied by
(ii) the total number of shares of common stock subject to
such option. Laidlaw, as the surviving corporation in the
merger, will pay such amount promptly after the effective time
to the holder of each option to purchase shares of our common
stock.
Immediately prior to the effective time, we will take necessary
actions to cause each outstanding restricted stock award and
each deferred stock award under our Amended and Restated Equity
and Performance Incentive Plan to fully vest as of the effective
time and such awards will be canceled and converted into the
right to receive the merger consideration in the same manner as
shares of common stock.
Representations
and Warranties
Subject to certain exceptions, we made a number of
representations and warranties to FirstGroup, relating to, among
other things:
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our corporate organization, subsidiaries and similar corporate
matters;
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our and our subsidiaries capital structures;
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the authorization, execution, delivery and performance of the
merger agreement and the transactions contemplated thereby and
related matters with respect to Laidlaw;
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resolutions by our board of directors with respect to
(i) the determination of the advisability and fairness of
the merger to Laidlaw and its stockholders, (ii) the
approval of the merger agreement and the transactions
contemplated thereby and (iii) the recommendation to our
stockholders to adopt and approve the merger agreement;
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the required actions by or in respect of, or filing with any
governmental authority in connection with the execution,
delivery and performance of the merger agreement and the
consummation of the transactions contemplated thereby by Laidlaw;
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the absence of violations or breach of our organizational
documents or provisions of applicable law, or the default or
requirement of consent under any agreement or instrument legally
binding on Laidlaw or its subsidiaries as a result of the
execution, delivery and performance of the merger agreement and
the consummation of the transactions contemplated thereby by
Laidlaw;
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financial statements and documents that we have filed with or
furnished to the SEC or the applicable securities regulatory
authorities of the provinces and territories of Canada, as
applicable, since August 31, 2004, our internal controls
and procedures in connection therewith, our compliance with the
applicable listing and corporate governance rules of the NYSE
and other related matters;
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the accuracy of information supplied by Laidlaw in connection
with this proxy statement or supplied by Laidlaw in writing to
FirstGroup in connection with their stockholder circular or
financing documents;
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in each case since August 31, 2006, the absence of: a
material adverse effect on our business; amendments to our
governing documents; any splits or reclassifications of or
repurchases or redemptions of our capital stock; amendments to
the terms of our or our subsidiaries securities; the
incurrence of certain capital expenditures; mergers,
acquisitions or plans of complete or partial liquidation,
dissolution, recapitalization or restructuring; certain sales,
leases, or transfers of or the incurrence of liens on assets,
loans to or investments in other persons; the incurrence of
certain indebtedness; changes in employee compensation and
benefits; changes in methods of accounting or tax practices; or
any agreements to do any of the foregoing;
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the absence of undisclosed liabilities and the amount of net
debt owed by us and our subsidiaries;
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compliance with applicable laws;
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the absence of pending or threatened litigation, claim, action,
suit, investigation, audit or proceeding before any court,
arbitrator or governmental authority;
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licenses, franchises, permits, certificates, approvals,
consents, registrations and similar authorizations of or from
any governmental authority;
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fees or commissions owed by us in connection with the
transactions contemplated by the merger agreement;
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the receipt of an opinion from Morgan Stanley as financial
advisor to Laidlaw;
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tax matters;
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our employee benefit plans, agreements, collective bargaining
agreements and matters relating to the Employee Retirement
Income Security Act, the Worker Adjustment and Retraining
Notification Act and other related matters;
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environmental matters;
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intellectual property matters;
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the validity and enforceability of our material contracts, and
the absence of any breaches, violations or defaults under our
material contracts;
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title or valid leasehold interests in our properties; and
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the inapplicability of our rights plan or antitakeover statutes
enacted under U.S. state or federal law, including
Section 203 of the DGCL, to the merger.
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FirstGroup made a number of representations and warranties to us
in the merger agreement relating to, among other things:
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their and FirstGroup Acquisitions corporate organization
and similar corporate matters;
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the authorization, execution, delivery and performance of the
merger agreement and the transactions contemplated thereby and
related matters with respect to FirstGroup and FirstGroup
Acquisition;
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resolutions by FirstGroups board of directors with respect
to (i) the approval of the merger agreement and the
transactions contemplated thereby and (ii) the
recommendation to its shareholders to approve the merger;
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the required actions by or in respect of, or filing with any
governmental authority in connection with the execution,
delivery and performance of the merger agreement and the
consummation of the transactions contemplated thereby by
FirstGroup and FirstGroup Acquisition;
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the absence of violations or breach of FirstGroups or
FirstGroup Acquisitions organizational documents or
provisions of applicable law, or the default or requirement of
consent under any agreement or instrument legally binding on
FirstGroup or FirstGroup Acquisition as a result of the
execution, delivery and performance of the merger agreement and
the consummation of the transactions contemplated thereby by
FirstGroup or FirstGroup Acquisition;
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the accuracy of the information supplied by FirstGroup in
writing in connection with this proxy statement;
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fees or commissions owed by FirstGroup in connection with the
transactions contemplated by the merger agreement; and
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the execution by FirstGroup of facility agreements from
financial institutions to provide funds in connection with the
payment of the merger consideration.
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Our and FirstGroups representations, warranties and
agreements shall not survive the effective time of the merger,
except for covenants which by their terms are to be performed
after the effective time.
Conduct
of Business Pending the Merger
Under the merger agreement, prior to the effective time of the
merger, Laidlaw has agreed to and to cause each of its
subsidiaries to conduct its business in the ordinary course
consistent with past practice and use its reasonable best
efforts to:
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preserve intact its business organization consistent with
ongoing business needs;
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maintain in effect all of its material foreign, federal, state,
provincial and local permits;
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keep available the services of its executive officers and key
employees; and
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maintain satisfactory relationships with its customers, lenders,
suppliers and others having material business relationships with
it.
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In addition, we have also agreed that until the effective time
of the merger, subject to certain exceptions, without the prior
written consent of FirstGroup, Laidlaw will not and will cause
each of its subsidiaries to not:
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amend its articles of incorporation, bylaws or other similar
organizational documents (whether by merger, consolidation or
otherwise);
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split, combine or reclassify any shares of our or our
subsidiaries capital stock or declare, set aside or pay
any dividend or other distribution in respect of such capital
stock, or redeem, repurchase or otherwise acquire or offer to
redeem, repurchase, or otherwise acquire any of our or our
subsidiaries securities, except for (i) forfeitures
under restricted stock awards or share repurchases in connection
with the exercise of stock options or the vesting of restricted
stock awards consistent with past practice, (ii) dividends
by any of our
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wholly-owned subsidiaries and (iii) regular quarterly cash
dividends on the shares of our common stock not in excess of
$0.17 per quarter;
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issue, deliver or sell, or authorize the issuance, delivery or
sale of, any shares of our or our subsidiaries securities
other than the issuance of (i) any shares of common stock
granted pursuant to restricted stock awards or upon the exercise
of common stock options that, in each case, are outstanding as
of the date of the merger agreement in accordance with the terms
of those stock awards and options on the date of the merger
agreement and (ii) any of our subsidiaries securities
to us or any of our subsidiaries;
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amend any term of any of our or our subsidiaries
securities, in each case, whether by merger, consolidation or
otherwise;
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incur any capital expenditures or any obligations or liabilities
in respect thereof, except for: (i) those contemplated by
the capital expenditures set forth in forecasts made available
to FirstGroup prior to the date of the merger agreement,
(ii) those required by new revenue contracts entered into
after the date of the merger agreement or (iii) any
unforecasted capital expenditures not to exceed $10 million
in the aggregate during the first six months following the date
of the merger agreement or $15 million in the aggregate
during the first nine months following the date of the merger
agreement;
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merge or consolidate with any person other than a subsidiary of
Laidlaw;
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acquire (including by merger, consolidation, or acquisition of
stock or assets) any interest in any corporation, partnership,
other business organization or any division thereof or any
material amount of assets from any other person, other than
Laidlaw or any of its subsidiaries, with a purchase price in
excess of $10 million in the aggregate during the first six
months following the date of the merger agreement or
$15 million in the aggregate during the first nine months
following the date of this merger agreement, except as set forth
in forecasts made available to FirstGroup prior to the date of
the merger agreement;
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adopt a plan of complete or partial liquidation, dissolution,
recapitalization or restructuring;
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sell, lease or transfer, or create any lien on any of its assets
except for sales in the ordinary course of business consistent
with past practice;
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other than in certain circumstances specified in the merger
agreement, make any loans, advances or capital contributions to,
or investments in, any other person, except in the ordinary
course of business consistent with past practice;
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create, incur, assume, suffer to exist or otherwise be liable
with respect to any indebtedness for borrowed money or
guarantees, subject to certain exceptions;
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enter into any agreement or arrangement that limits or otherwise
restricts in any material respect Laidlaw, any of its
subsidiaries or any of their respective affiliates or any
successor thereto or that could, after the effective time, limit
or restrict in any material respect Laidlaw (also as the
surviving corporation in the merger), any of its subsidiaries,
FirstGroup or any of their respective affiliates, from engaging
or competing in any line of business;
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enter into any material contract, other than customer contracts
entered into by Laidlaws public transit business, or
amend, modify in any material respect or terminate any material
contract or otherwise waive, release or assign any material
rights, claims or benefits of Laidlaw or any of its subsidiaries;
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terminate, renew, suspend, abrogate, amend or modify in any
material respect any permit held by Laidlaw or any of its
subsidiaries, other than in the ordinary course of business;
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grant or increase any severance or termination pay to (or amend
any existing arrangement with) any director, officer or employee
of Laidlaw or any of its subsidiaries (in the case of employees,
other than in the ordinary course of business consistent with
past practice), or take certain other actions related to
employee compensation and benefits;
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change Laidlaws methods of accounting;
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settle or propose to settle, (i) any material litigation,
action, proceeding or other claim involving or against Laidlaw
or any of its subsidiaries, with certain limited exceptions,
(ii) any stockholder litigation or dispute against Laidlaw
or any of its officers or directors or (iii) any material
litigation, action, suit, action or proceeding or other claim
that relates to the transactions contemplated hereby;
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fail to use reasonable best efforts to maintain existing
material insurance policies or comparable replacement policies
where available for a similar reasonable cost;
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make or change any material election with respect to taxes or
filing any federal income tax return or take certain other
actions with respect to tax matters;
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take any action that would make any representation or warranty
of Laidlaw inaccurate in any respect at, or as of any time
before, the effective time;
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take any action reasonably expected to result in any of the
conditions to the merger not being satisfied or that would
materially delay the closing of the transaction; or
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agree, resolve or commit to do any of the foregoing.
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No
Solicitation of Third Parties by Laidlaw or FirstGroup
Laidlaw and FirstGroup have agreed that neither they nor their
respective subsidiaries shall, nor shall they permit their
respective officers, directors, employees, investment bankers,
attorneys, accountants, consultants or other agents or advisors
to, directly or indirectly:
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solicit, initiate or take any action to knowingly facilitate or
encourage the submission of any acquisition proposal;
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enter into or participate in any discussions or negotiations
with, furnish any information relating to it or its respective
subsidiaries or afford access to their business, properties,
assets, books or records or otherwise cooperate in any way with
any third party that is seeking to make, or has made, an
acquisition proposal;
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grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities;
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fail to make, withdraw or modify in a manner adverse to the
other party the approval or recommendation of its board of
directors (or recommend an acquisition proposal or take any
action or make any statement inconsistent with the approval or
recommendation of the merger); or
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enter into any agreement in principle, letter of intent, term
sheet or other similar instrument relating to an acquisition
proposal.
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An acquisition proposal means with respect to any
person, other than the transactions contemplated by the merger
agreement, any third party offer or proposal relating to
(i) any acquisition or purchase, direct or indirect, of 25%
or more of the consolidated assets of such person and its
subsidiaries or over 25% of any class of equity or voting
securities of such person or any of its subsidiaries whose
assets, individually or in the aggregate, constitute more than
25% of the consolidated assets of such person, (ii) any
tender offer (including a self-tender offer) or exchange offer
that, if consummated, would result in such third party
beneficially owning 25% or more of any class of equity or voting
securities of such person or any of its subsidiaries whose
assets, individually or in the aggregate, constitute more than
25% of the consolidated assets of such person, (iii) a
merger, consolidation, share exchange, business combination,
sale of substantially all the assets or other similar
transaction involving such person or any of its subsidiaries
whose assets, individually or in the aggregate, constitute more
than 25% of the consolidated assets of such person or
(iv) a reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving such person
or any of its subsidiaries. Any third party offer or proposal of
the nature described in any of the foregoing
clauses (i)-(iv) relating to the Greyhound business of
Laidlaw and its subsidiaries shall be deemed an acquisition
proposal without regard to the 25% thresholds referred to in
such clauses (i)-(iv).
Nevertheless, the boards of directors of Laidlaw and FirstGroup
may engage in negotiations with any third party that, subject to
compliance with the foregoing, has made a bona fide acquisition
proposal that the applicable
44
board of directors reasonably determines is or will lead to a
superior proposal and may thereafter furnish to such third party
nonpublic information pursuant to a confidentiality agreement
with terms not less restrictive to such third party than those
contained in the confidentiality agreement between Laidlaw and
FirstGroup.
A superior proposal means any bona fide, unsolicited
written acquisition proposal for at least a majority of the
outstanding shares of capital stock of Laidlaw or FirstGroup on
terms that such board determines in good faith by majority vote,
after considering the advice of a financial advisor of
nationally recognized reputation and taking into account all of
the terms and conditions of the acquisition proposal, would be:
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more favorable and provide greater value to its stockholders
than the merger transaction, and
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reasonably capable of being consummated on the proposed terms
and conditions, taking into account all aspects of the proposal,
and for which financing, if a cash transaction (whether in whole
or in part), is then fully committed or reasonably determined to
be available by the applicable board of directors.
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Notwithstanding anything to the contrary in the merger
agreement, each of Laidlaws and FirstGroups board of
directors may each make a change in its recommendation to
stockholders, if based solely on events or developments unknown
to such board of directors as of the date of the merger
agreement, that occur, or become known to such board after the
date of the merger agreement but prior to the stockholder
meeting of the applicable party, and if it determines in good
faith, after consultation with outside legal counsel, that the
failure to take such action would reasonably be expected to
result in a breach of its fiduciary duties under applicable law.
Each of the Company and FirstGroup confirmed that its board of
directors was not, as of the date of the merger agreement, aware
of any information or expected events or developments which
would cause the board of directors to make a change in
recommendation to its stockholders. In considering all factors
relevant to the board of directors of FirstGroup in making its
recommendation to its shareholders, FirstGroup confirmed that
its board of directors took into account all of the terms and
conditions of the merger agreement and all of the terms and
conditions of FirstGroups financing facilities entered
into in connection with the merger.
The board of directors of each of Laidlaw and FirstGroup will
not make a change in recommendation in response to an
acquisition proposal unless:
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such acquisition proposal constitutes a superior proposal;
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the party in receipt of such superior proposal promptly notifies
the other party, in writing, at least three business days before
taking such action; and
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the other party, after receipt of notification, does not make an
offer within three business days that is at least as favorable
to the stockholders of the party in receipt of such superior
proposal as the superior proposal.
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Conditions
to the Closing of the Merger
Each partys obligation to effect the merger is subject to
the satisfaction or, to the extent permitted, waiver of various
conditions, which include the following:
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the merger agreement is approved by our stockholders at the
special meeting;
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at the extraordinary general meeting of FirstGroups
shareholders, FirstGroups shareholders approve ordinary
resolutions to (i) approve the merger, (ii) increase
FirstGroups authorized share capital, (iii) authorize
FirstGroups board of directors to allot share capital of
FirstGroup and (iv) authorize FirstGroups board of
directors to incur borrowings to effect the financing of the
merger;
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no applicable law is in effect which prohibits the consummation
of the merger;
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the waiting periods required under the HSR Act relating to the
merger have expired or been terminated or waived and we have
received approval under the Competition Act;
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the U.S. government has completed its national security
review under the Exon-Florio Statute of the Defense Production
Act of 1950, as amended, and concluded that no adverse action
with respect to the merger is necessary; and
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45
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all actions by, or filings with, the U.S. Surface
Transportation Board necessary to permit the consummation of the
merger have been taken, made, or obtained.
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FirstGroup and FirstGroup Acquisition will not be obligated to
effect the merger unless the following conditions are satisfied
or waived:
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we have performed in all material respects all of our
obligations required under the merger agreement at or prior to
the effective time;
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our representations and warranties in the merger agreement and
any writing delivered pursuant thereto (disregarding all
materiality and company material adverse effect (as defined in
the merger agreement) qualifications contained therein) are true
and correct at and as of the effective time (other than
representations and warranties that by their terms address
matters only as of another specified time, which shall be true
and correct only as of such time), with only exceptions as,
individually or in the aggregate, have not had and are not
reasonably expected to have a company material adverse effect;
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FirstGroup has received a certificate signed by an executive
officer of Laidlaw certifying that the conditions described in
the preceding two bullets have been satisfied by Laidlaw;
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there is no pending action or proceeding by any governmental
authority or any applicable law (i) seeking to restrain or
prohibit consummation of the merger or seeking material damages
in connection with the merger, (ii) seeking to restrain or
prohibit FirstGroups or FirstGroup Acquisitions
ownership or operation of any material portion of the business
or assets of Laidlaw and its subsidiaries, taken as a whole,
(iii) seeking to compel FirstGroup or its subsidiaries to
take certain actions which the merger agreement does not require
FirstGroup to take or (iv) that is otherwise reasonably
likely to have a company material adverse effect;
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there has not occurred and is not continuing any event or facts
that, individually or in the aggregate, have had or would
reasonably be expected to have a company material adverse
effect; and
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holders of fewer than 10% of the shares of our common stock have
demanded (and not withdrawn) appraisal of their shares in
accordance with Delaware law.
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We will not be obligated to effect the merger unless the
following conditions are satisfied or waived:
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each of FirstGroup and FirstGroup Acquisition has performed in
all material respects its obligations required under the merger
agreement at or prior to the effective time;
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the representations and warranties of FirstGroup and FirstGroup
Acquisition in the merger agreement and any writing delivered
pursuant thereto (disregarding all materiality and parent
material adverse effect (as defined in the merger agreement)
qualifications contained therein) are true and correct at and as
of the effective time (other than representations and warranties
that by their terms address matters only as of another specified
time, which shall be true and correct only as of such time),
with only exceptions as, individually or in the aggregate, have
not had and are not reasonably expected to have a parent
material adverse effect; and
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we have received a certificate signed by an executive officer of
FirstGroup certifying that the conditions described in the
preceding two bullets have been satisfied by FirstGroup.
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Termination
of the Merger Agreement
We and FirstGroup can terminate the merger agreement under
certain circumstances, including:
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by mutual written consent;
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by either us or FirstGroup if:
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the merger has not been consummated on or before August 8,
2007, provided that, in the event that as of such date all
applicable conditions to closing have been satisfied or waived
(other than the expiration of the waiting period under the HSR
Act and the receipt of Competition Act approval), such date may
be extended by us or FirstGroup up to an aggregate of three
months, subject to certain exceptions;
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applicable law makes consummation of the merger illegal or
prohibited; or
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46
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if our stockholders or FirstGroups shareholders do not
approve the merger transaction at the applicable stockholder
meeting (including any adjournment or postponement thereof),
subject to certain exceptions.
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FirstGroup can terminate the merger agreement under certain
circumstances, including if:
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our board of directors modifies its recommendation to
stockholders to approve the merger agreement;
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a breach of any representation or warranty or failure to perform
any covenant or agreement on our part has occurred that would
cause us to fail to satisfy a condition to completion of the
merger agreement and such condition cannot be satisfied within
three months of August 8, 2007;
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we have willfully and materially breached our obligations in
connection with our stockholder meeting, the preparation and
filing of this proxy statement, or the recommendation to our
stockholders to approve the merger transaction or our
obligations in connection with the provisions governing
non-solicitation described above; or
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prior to FirstGroups shareholder meeting, its board of
directors has made a change in its recommendation to
shareholders to approve the merger transaction in compliance
with the terms of the merger agreement in order to enter into a
definitive written agreement concerning a superior proposal.
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We can terminate the merger agreement under certain
circumstances, including if:
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FirstGroups board of directors modifies its recommendation
to FirstGroups shareholders to approve the merger
agreement;
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a breach of any representation or warranty or failure to perform
any covenant or agreement on the part of FirstGroup or
FirstGroup Acquisition has occurred that would cause them to
fail to satisfy a condition to completion of the merger
agreement and such condition cannot be satisfied within three
months of August 8, 2007;
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FirstGroup has willfully and materially breached its obligations
in connection with its shareholder meeting, the preparation and
filing of its shareholder circular, or the recommendation to its
shareholders to approve the merger transaction or its
obligations in connection with the provisions governing
non-solicitation described above; and
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prior to our stockholder meeting, our board of directors has
made a change in its recommendation to stockholders to approve
the merger agreement in compliance with the terms thereof in
order to enter into a definitive written agreement concerning a
superior proposal.
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Termination
Fees and Expenses
Except as otherwise provided for below, all fees and expenses
incurred by the parties in connection with the merger will be
borne by the party incurring such fees and expenses.
The merger agreement requires, however, that we pay FirstGroup a
fee of $78 million if:
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FirstGroup terminates the merger agreement due to a change in
the recommendation by our board of directors that our
stockholders approve the merger agreement;
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FirstGroup terminates the merger agreement due to our willful
and material breach of our obligations in connection with our
stockholder meeting, the preparation and filing of this proxy
statement, the recommendation to our stockholders to approve the
merger agreement and related matters or our obligations in
connection with the provisions governing
non-solicitation; or
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we terminate the merger agreement in order to enter into a
definitive written agreement concerning a superior proposal.
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We must pay a termination fee of $43.35 million to
FirstGroup if the merger agreement is terminated by either party
as a result of our failure to obtain our stockholder approval at
the special meeting, and the Company must pay an additional
termination fee of $34.65 million to FirstGroup if,
(i) prior to the special meeting, an acquisition proposal
is made and (ii) within 12 months of termination, we
enter into or consummate certain alternative
47
transactions (provided, that, for the purposes of determining if
this termination fee must be paid, the definition of acquisition
proposal means an offer or proposal relating to an acquisition,
merger or similar transaction involving more than 50% of the
assets or voting securities of the Company, rather than the 25%
threshold that generally applies throughout the merger
agreement, and allows transactions relating to the Greyhound
business to be considered together with all other relevant
transactions in determining whether an acquisition proposal has
been made).
We also must pay a termination fee of $43.35 million to
FirstGroup if the merger agreement is terminated by either party
due to the passing of the termination date, an acquisition
proposal was made to us prior to such termination, and
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within 12 months of termination, we enter into or
consummate certain alternative transactions with a party who had
made an acquisition proposal prior to termination; or
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within 6 months of termination, we enter into or consummate
an alternative transaction with a party who had not made an
acquisition proposal prior to termination, pursuant to which the
total of (i) the net debt to be assumed by such party and
(ii) the aggregate consideration received by the Company
and our stockholders in connection with the acquisition proposal
exceeds $3.601 billion; provided, that, in this case, the
amount of the termination fee will be the lesser of
$43.35 million and the excess of the total consideration
paid over $3.601 billion;
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provided, that, for the purposes of determining if this
termination fee must be paid, the definition of acquisition
proposal means an offer or proposal relating to an acquisition,
merger or similar transaction involving more than 50% of the
assets or voting securities of the Company, rather than the 25%
threshold that generally applies throughout the merger
agreement, and allows transactions relating to the Greyhound
business to be considered together with all other relevant
transactions in determining whether an acquisition proposal has
been made.
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If the merger agreement is terminated by FirstGroup as a result
of our breach of any representation or warranty or failure to
perform any covenant or agreement on our part that would cause a
failure to satisfy a condition to completion of the merger
agreement and such condition cannot be satisfied within three
months of August 8, 2007, we have agreed to pay FirstGroup
100% of its incurred fees and expenses in connection with the
merger agreement and the transactions contemplated thereby,
provided that such amount shall not exceed $43.35 million.
The merger agreement requires that FirstGroup pay us
£22 million if:
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either party terminates the merger agreement as a result of
FirstGroups failure to obtain its shareholder approval;
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we terminate the merger agreement due to a change in
recommendation by FirstGroups board of directors that its
shareholders approve the merger;
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we terminate the merger agreement due to FirstGroups
willful and material breach of its obligations in connection
with its shareholder meeting, the preparation and filing of its
shareholder circular, or the recommendation to its shareholders
to approve the merger or its obligations in connection with the
provisions governing non-solicitation; or
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FirstGroup terminates the merger agreement in order to enter
into a definitive written agreement concerning a superior
proposal.
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If the merger agreement is terminated by us as a result of
FirstGroups breach of any representation or warranty or
failure to perform any covenant or agreement on the part of
FirstGroup or FirstGroup Acquisition which has occurred that
would cause a failure to satisfy a condition to completion of
the merger agreement and such condition cannot be satisfied by
the outside date for consummation of the merger, FirstGroup has
agreed to pay us 100% of our incurred fees and expenses in
connection with the merger agreement and the transactions
contemplated thereby, provided that such amount shall not exceed
£22 million.
48
Indemnification
and Insurance
The merger agreement provides that FirstGroup will cause the
surviving corporation in the merger transaction, and the
surviving corporation agrees, to indemnify the present and
former directors and officers of Laidlaw for acts and omissions
occurring at or prior to the effective time to the fullest
extent permitted by Delaware law, other applicable law or as
provided under our certificate of incorporation and bylaws as in
effect on the date of the merger agreement, subject to any
limitation imposed by applicable law.
The merger agreement also provides that, for a period of six
years after the effective time, FirstGroup will maintain in
effect provisions in the surviving corporations
organizational documents related to indemnification and
liability of officers, directors and employees that are no less
advantageous to the intended beneficiaries than the
corresponding provisions in existence as of the date of the
merger agreement. Prior to the effective time, FirstGroup may
purchase a directors and officers liability
tail insurance policy covering a period of six years
following the effective time so long as it provides comparable
coverage as the policies in existence on the date of the merger
agreement. If FirstGroup does not purchase such a
tail policy prior to the effective time, then
FirstGroup will cause to be maintained by the surviving
corporation for a period of six years following the effective
time the current directors and officers liability
policies, or may substitute policies of at least the same
coverage and containing terms and conditions that are no less
advantageous to the insured. In satisfying its obligations, the
surviving corporation is not obligated to pay an annual amount
in the aggregate in excess of 200% of the amount per annum paid
by Laidlaw in the last full fiscal year, in which case the
surviving corporation agrees to obtain a policy offering the
greatest coverage available for a cost not to exceed such amount.
Material
Adverse Effect
Several of our representations and warranties contained in the
merger agreement are qualified by reference to whether the
failure of such representation or warranty to be true would not
reasonably be expected to have a material adverse
effect on us. The merger agreement provides that
material adverse effect means, when used in
connection with us: (i) a material adverse effect on the
financial condition, business, assets or results of operations
of Laidlaw and its subsidiaries, taken as a whole, excluding any
such effect resulting from:
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changes or conditions generally affecting the industries in
which Laidlaw and its subsidiaries operate and not
disproportionately affecting Laidlaw and its subsidiaries;
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changes in general economic conditions;
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national or international political or social conditions,
including engagement by the United States in hostilities or
resulting from acts of terrorism or war that do not have a
disproportionate effect on Laidlaw and its subsidiaries; or
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the announcement of the execution of the merger agreement with
FirstGroup (as opposed to another third party);
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or (ii) a material adverse effect on Laidlaws ability
to consummate the transactions contemplated by the merger
agreement or to perform its obligations under the merger
agreement.
Waiver
and Amendment of the Merger Agreement
Laidlaw and FirstGroup may amend or waive any provision of the
merger agreement at any time prior to the effective time;
provided that after Laidlaw stockholder approval has been
obtained, no such amendment or waiver shall reduce the amount or
change the kind of consideration to be received in exchange for
shares of our common stock without the further approval of the
Laidlaw stockholders.
49
SECURITY
OWNERSHIP OF EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL
OWNERS
The following table sets forth certain information concerning
the beneficial ownership of the shares of our common stock as of
March 1, 2007 by: (i) those persons owning of record,
or known to us to be the beneficial owner of, more than five
percent of the voting securities of Laidlaw; (ii) each of
our directors; (iii) each of the executive officers named
in the Summary Compensation Table in our 2007 annual
meeting proxy statement filed on Schedule 14A; and
(iv) all directors and executive officers as a group.
Unless otherwise indicated, all information with respect to
beneficial ownership has been furnished by the respective
director, named executive officer or five percent beneficial
owner, as the case may be. Unless otherwise indicated, the
persons named below have sole voting and investment power with
respect to the number of shares set forth opposite their names.
Beneficial ownership of the common stock has been determined for
this purpose in accordance with the applicable rules and
regulations promulgated under the Exchange Act. The address of
each individual listed below is c/o Laidlaw International,
Inc., 55 Shuman Blvd., Suite 400, Naperville, Illinois
60563.
Percentage of beneficial ownership is based on
79,376,126 shares of our common stock outstanding as of
March 1, 2007.
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Percentage of Shares
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Number of Shares
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of Common Stock
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Name of Beneficial Owner:
|
|
Beneficially Owned
|
|
|
Beneficially Owned (%)
|
|
|
FMR Corp.(1)
|
|
|
13,053,126
|
|
|
|
16.4
|
%
|
Sasco Capital, Inc.(2)
|
|
|
5,932,250
|
|
|
|
7.5
|
%
|
John F. Chlebowski(3)
|
|
|
27,000
|
|
|
|
*
|
|
James H. Dickerson, Jr.(3)
|
|
|
25,650
|
|
|
|
*
|
|
Lawrence M. Nagin(3)
|
|
|
27,000
|
|
|
|
*
|
|
Richard P. Randazzo(3)
|
|
|
24,000
|
|
|
|
*
|
|
Maria A. Sastre(3)
|
|
|
27,000
|
|
|
|
*
|
|
Peter E. Stangl(4)
|
|
|
40,502
|
|
|
|
*
|
|
Carroll R. Wetzel, Jr.(3)
|
|
|
27,000
|
|
|
|
*
|
|
Kevin E. Benson(5)
|
|
|
527,306
|
|
|
|
*
|
|
Beth Byster Corvino(6)
|
|
|
129,046
|
|
|
|
*
|
|
Mary B. Jordan
|
|
|
|
|
|
|
*
|
|
Jeffrey W. Sanders(7)
|
|
|
56,169
|
|
|
|
*
|
|
Jeffery A. McDougle(8)
|
|
|
39,803
|
|
|
|
*
|
|
Douglas A. Carty(9)
|
|
|
182,020
|
|
|
|
*
|
|
All current directors and
executive officers as a group (13 persons)
|
|
|
1,132,496
|
|
|
|
1.4
|
%
|
|
|
|
* |
|
Less than 1% of outstanding shares |
|
(1) |
|
Based on information contained in the Form 13G filed with
the SEC by FMR Corp. on February 14, 2007. The address of
FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 02109. |
|
(2) |
|
Based on information contained in the Form 13G filed with
the SEC by Sasco Capital, Inc. on February 8, 2007. The
address of Sasco Capital, Inc. is 10 Sasco Hill Road, Fairfield,
Connecticut 06824. |
|
|
|
(3) |
|
Includes 10,125 restricted shares and 13,500 shares
issuable upon the exercise of outstanding options presently
exercisable or exercisable within 60 days after
March 1, 2007. |
|
|
|
(4) |
|
Includes 15,189 restricted shares and 20,250 shares
issuable upon the exercise of outstanding options presently
exercisable or exercisable within 60 days after
March 1, 2007. |
|
|
|
(5) |
|
Includes 341,667 shares issuable upon the exercise of
outstanding options presently exercisable or exercisable within
60 days after March 1, 2007. |
|
|
|
(6) |
|
Includes 10,000 deferred shares vesting within 60 days
after February 15, 2007 and 96,667 shares issuable
upon the exercise of outstanding options presently exercisable
or exercisable within 60 days after March 1, 2007. |
50
|
|
|
(7) |
|
Includes 35,000 shares issuable upon the exercise of
outstanding options presently exercisable or exercisable within
60 days after March 1, 2007. |
|
|
|
(8) |
|
Includes 31,667 shares issuable upon the exercise of
outstanding options presently exercisable or exercisable within
60 days after March 1, 2007. |
|
|
|
(9) |
|
Includes 110,000 shares issuable upon the exercise of
outstanding options presently exercisable or exercisable within
60 days after March 1, 2007. |
FUTURE
STOCKHOLDER PROPOSALS
If the merger is completed, we will not hold a 2008 annual
meeting of stockholders. If the merger is not completed, you
will continue to be entitled to attend and participate in our
stockholder meetings and we will hold a 2008 annual meeting of
stockholders. We must receive by August 23, 2007 any
proposal of a stockholder intended to be presented at the 2008
annual meeting of stockholders of Laidlaw (the 2008
Meeting) and to be included in our proxy, notice of
meeting and proxy statement related to the 2008 Meeting pursuant
to
Rule 14a-8
under the Exchange Act. Such proposals must be addressed to
Laidlaw International, Inc., 55 Shuman Blvd., Suite 400,
Naperville, Illinois 60563 and should be submitted to the
attention of the Corporate Secretary by certified mail, return
receipt requested. Proposals of stockholders submitted outside
the processes of
Rule 14a-8
under the Exchange Act, in connection with the 2008 Meeting
(Non-Rule 14a-8
Proposals), must be received by Laidlaw by
October 22, 2007 and no earlier than September 22,
2007 or such proposals will be considered untimely under our
By-laws. Our proxy related to the 2008 Meeting will give
discretionary authority to the proxy holders to vote with
respect to all
Non-Rule 14a-8
Proposals received by Laidlaw after November 6, 2007.
OTHER
MATTERS
At this time, we know of no other matters to be submitted at the
special meeting. If any other matters properly come before the
special meeting, it is the intention of the persons named in the
enclosed proxy card to vote the shares they represent as our
board of directors may recommend.
It is important that your shares be represented at the special
meeting, regardless of the number of shares which you hold.
Therefore, we urge you to mark, sign, date and return the
accompanying proxy card as promptly as possible in the
postage-prepaid envelope enclosed for that purpose or to vote
via the Internet or telephone.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any
reports, statements, or other information that we file with the
Securities and Exchange Commission at the SECs public
reference room at the following location: 100 F Street, N.E.,
Room 1580, Washington, D.C. 20549. You may also obtain
copies of those documents at prescribed rates by writing to the
Public Reference Section of the SEC at that address. Please call
the SEC at
1-800-SEC-0330
for further information on the public reference room. These SEC
filings are also available to the public from commercial
document retrieval services and at the Internet World Wide Web
site maintained by the SEC at http://www.sec.gov.
The SEC allows Laidlaw to incorporate by reference
information into this proxy statement, which means that we can
disclose important information to you by referring you to other
documents filed separately with the SEC. The information
incorporated by reference is deemed to be part of this proxy
statement, except for any information superseded by information
in this proxy statement or incorporated by reference subsequent
to the date of this proxy statement. This proxy statement
incorporates by reference the documents set forth below that
Laidlaw has previously filed with the SEC. These documents
contain important information about Laidlaw and its financial
condition and are incorporated by reference into this proxy
statement.
The following Laidlaw filings with the SEC (all filed under file
number
000-10657)
are incorporated by reference:
|
|
|
|
|
Annual Report on
Form 10-K
for the fiscal year ended August 31, 2006;
|
|
|
|
Quarterly Report on
Form 10-Q
for the first fiscal quarter ended November 30,
2006; and
|
51
|
|
|
|
|
Current Reports on
Form 8-K
with filing dates of January 24, 2007, January 31,
2007, February 9, 2007, February 12, 2007,
February 15, 2007, and February 16, 2007.
|
Laidlaw also incorporates by reference into this proxy statement
additional documents that it may file with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
between the date of this proxy statement and the earlier of the
date of the special meeting of Laidlaw stockholder or the
termination of the merger agreement.
These documents deemed incorporated by reference include
periodic reports, such as Annual Reports on
Form 10-K
and Quarterly Reports on
Form 10-K,
as well as Current Reports on
Form 8-K
and proxy and information statements. You may obtain any of the
documents we file with the SEC, without charge, by requesting
them in writing or by telephone from us at the following address:
Laidlaw International, Inc.
55 Shuman Blvd., Suite 400
Naperville, Illinois 60563
Attention: Investor Relations
Telephone:
630-848-3000
If you would like to request documents from us, please do so by
April 12, 2007, to receive them before the special meeting.
Please note that all of our documents that we file with the SEC
are also promptly available at the investor relations tab of our
website, http://www.laidlaw.com.
If you have any questions about this proxy statement, the
special meeting or the merger or need assistance with voting
procedures, you should contact:
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Telephone:
(800) 290-6427
(Toll-Free)
If you request any documents from us, we will mail them to you
by first class mail, or another equally prompt method, within
one business day after we receive your request.
MISCELLANEOUS
You should not send in your Laidlaw certificates until you
receive the transmittal materials from the exchange agent. Our
record stockholders who have further questions about their share
certificates or the exchange of our common stock for cash should
contact the exchange agent.
You should rely only on the information contained in this
proxy statement to vote on the merger proposal. We have not
authorized anyone to provide you with information that is
different from what is contained in this proxy statement. This
proxy statement is dated March 20, 2007. You should not
assume that the information contained in this proxy statement is
accurate as of any date other than that date (or as of an
earlier date if so indicated in this proxy statement). Neither
the mailing of this proxy statement to stockholders nor the
issuance of cash in the merger creates any implication to the
contrary. This proxy statement does not constitute a
solicitation of a proxy in any jurisdiction where, or to or from
any person to whom, it is unlawful to make a proxy
solicitation.
Your vote is important. To vote your shares, please complete,
date, sign and return the enclosed proxy card (if you are a
holder of record) or instruction card (if you were forwarded
these materials by your broker or nominee) as soon as possible
in the enclosed envelope. Please call our proxy solicitor, D.F.
King & Co., Inc., at
(800) 290-6427
if you have any questions about this proxy statement or the
merger, or need assistance with the voting procedures.
CERTAIN
INFORMATION REGARDING FIRSTGROUP AND LAIDLAW
Laidlaw has supplied all information relating to Laidlaw, and
FirstGroup has supplied all of the information relating to
FirstGroup and FirstGroup Acquisition contained in Summary
Term Sheet The Companies and The
Companies. Some of the important business and financial
information relating to Laidlaw that you may want to consider in
deciding how to vote is incorporated by reference into this
proxy statement.
52
Annex A
Agreement and Plan of Merger
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
dated as of
February 8, 2007
among
LAIDLAW INTERNATIONAL, INC.,
FIRSTGROUP PLC
and
FERN ACQUISITION VEHICLE CORPORATION
TABLE OF
CONTENTS(1)
|
|
|
|
|
|
|
Page
|
|
ARTICLE 1
Definitions
|
Section 1.01. Definitions
|
|
|
A-1
|
|
Section 1.02. Other
Definitional and Interpretative Provisions.
|
|
|
A-6
|
|
|
ARTICLE 2
The
Merger
|
Section 2.01. The
Merger
|
|
|
A-7
|
|
Section 2.02. Conversion
of Shares
|
|
|
A-7
|
|
Section 2.03. Surrender
And Payment
|
|
|
A-7
|
|
Section 2.04. Dissenting
Shares
|
|
|
A-8
|
|
Section 2.05. Stock
Options and Other Equity-Based Awards
|
|
|
A-8
|
|
Section 2.06. Adjustments
|
|
|
A-9
|
|
Section 2.07. Withholding
Rights
|
|
|
A-9
|
|
Section 2.08. Lost
Certificates
|
|
|
A-9
|
|
|
ARTICLE 3
The Surviving
Corporation
|
Section 3.01. Certificate
of Incorporation
|
|
|
A-9
|
|
Section 3.02. Bylaws
|
|
|
A-9
|
|
Section 3.03. Directors
and Officers
|
|
|
A-9
|
|
|
ARTICLE 4
Representations and
Warranties of the
Company
|
Section 4.01. Corporate
Existence and Power
|
|
|
A-10
|
|
Section 4.02. Corporate
Authorization
|
|
|
A-10
|
|
Section 4.03. Governmental
Authorization
|
|
|
A-10
|
|
Section 4.04. Non-contravention
|
|
|
A-10
|
|
Section 4.05. Capitalization.
|
|
|
A-11
|
|
Section 4.06. Subsidiaries
|
|
|
A-11
|
|
Section 4.07. Securities
Law Filings and the Sarbanes-Oxley Act
|
|
|
A-12
|
|
Section 4.08. Financial
Statements
|
|
|
A-12
|
|
Section 4.09. Disclosure
Documents
|
|
|
A-13
|
|
Section 4.10. Absence
of Certain Changes
|
|
|
A-13
|
|
Section 4.11. No
Undisclosed Material Liabilities
|
|
|
A-13
|
|
Section 4.12. Compliance
with Laws and Court Orders
|
|
|
A-13
|
|
Section 4.13. Litigation
|
|
|
A-14
|
|
Section 4.14. Permits
|
|
|
A-14
|
|
Section 4.15. Finders
Fees
|
|
|
A-14
|
|
Section 4.16. Opinion
of Financial Advisor
|
|
|
A-14
|
|
Section 4.17. Taxes
|
|
|
A-14
|
|
Section 4.18. Employee
Benefit Plans
|
|
|
A-15
|
|
Section 4.19. Environmental
Matters
|
|
|
A-18
|
|
Section 4.20. Intellectual
Property.
|
|
|
A-18
|
|
Section 4.21. Material
Contracts
|
|
|
A-19
|
|
A-i
|
|
|
|
|
|
|
Page
|
|
Section 4.22. Properties
|
|
|
A-19
|
|
Section 4.23. Antitakeover
Statutes and Rights Agreement
|
|
|
A-19
|
|
Section 4.24. No
Additional Representations
|
|
|
A-20
|
|
|
ARTICLE 5
Representations and
Warranties of Parent
|
Section 5.01.
Corporate Existence and Power
|
|
|
A-20
|
|
Section 5.02.
Corporate Authorization
|
|
|
A-20
|
|
Section 5.03.
Governmental Authorization
|
|
|
A-20
|
|
Section 5.04.
Non-contravention
|
|
|
A-20
|
|
Section 5.05.
Disclosure Documents
|
|
|
A-21
|
|
Section 5.06.
Finders Fees
|
|
|
A-21
|
|
Section 5.07. Financing
|
|
|
A-21
|
|
|
ARTICLE 6
Covenants of the
Company
|
Section 6.01.
Conduct of the Company
|
|
|
A-21
|
|
Section 6.02. Access
to Information; Confidentiality
|
|
|
A-23
|
|
Section 6.03.
Stockholder Litigation
|
|
|
A-24
|
|
Section 6.04.
Tax Matters
|
|
|
A-24
|
|
Section 6.05.
Connecticut Transfer Act
|
|
|
A-24
|
|
Section 6.06.
Industrial Site Recovery Act.
|
|
|
A-24
|
|
|
ARTICLE 7
Covenants of
Parent
|
Section 7.01.
Director and Officer Liability
|
|
|
A-25
|
|
Section 7.02.
Employee Matters
|
|
|
A-26
|
|
|
ARTICLE 8
Covenants of Parent and
the Company
|
Section 8.01.
Notices of Certain Events
|
|
|
A-27
|
|
Section 8.02.
Reasonable Best Efforts
|
|
|
A-27
|
|
Section 8.03.
Certain Filings
|
|
|
A-29
|
|
Section 8.04.
Company Stockholder Meeting; Proxy Material
|
|
|
A-29
|
|
Section 8.05.
Parent Shareholder Meeting
|
|
|
A-29
|
|
Section 8.06.
No Solicitation; Other Offers
|
|
|
A-30
|
|
Section 8.07.
Public Announcements
|
|
|
A-31
|
|
Section 8.08.
Further Assurances
|
|
|
A-31
|
|
Section 8.09. United
Kingdom
|
|
|
A-32
|
|
|
ARTICLE 9
Conditions to the
Merger
|
Section 9.01.
Conditions to the Obligations of Each Party
|
|
|
A-32
|
|
Section 9.02.
Conditions to the Obligations of Parent and Merger Subsidiary
|
|
|
A-32
|
|
A-ii
|
|
|
|
|
|
|
Page
|
|
Section 9.03.
Conditions to the Obligations of the Company
|
|
|
A-33
|
|
|
ARTICLE 10
Termination
|
Section 10.01.
Termination
|
|
|
A-33
|
|
Section 10.02.
Effect of Termination
|
|
|
A-34
|
|
|
ARTICLE 11
Miscellaneous
|
Section 11.01.
Notices
|
|
|
A-34
|
|
Section 11.02.
Survival of Representations and Warranties
|
|
|
A-35
|
|
Section 11.03.
Amendments and Waivers
|
|
|
A-35
|
|
Section 11.04.
Expenses
|
|
|
A-35
|
|
Section 11.05.
Disclosure Schedule and SEC Document References
|
|
|
A-37
|
|
Section 11.06.
Binding Effect; Benefit; Assignment
|
|
|
A-37
|
|
Section 11.07.
Governing Law
|
|
|
A-37
|
|
Section 11.08.
Jurisdiction
|
|
|
A-38
|
|
Section 11.09.
WAIVER OF JURY TRIAL
|
|
|
A-38
|
|
Section 11.10.
Counterparts; Effectiveness
|
|
|
A-38
|
|
Section 11.11.
Entire Agreement
|
|
|
A-38
|
|
Section 11.12.
Severability
|
|
|
A-38
|
|
Section 11.13.
Specific Performance
|
|
|
A-38
|
|
|
|
|
(1) |
|
The Table of Contents is not a part of this Agreement. |
A-iii
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this Agreement)
dated as of February 8, 2007 among Laidlaw International,
Inc., a Delaware corporation (the Company),
FirstGroup plc, a public limited company incorporated under the
laws of Scotland (Parent), and Fern
Acquisition Vehicle Corporation, a Delaware corporation and an
indirect wholly-owned subsidiary of Parent (Merger
Subsidiary).
W I T N E
S S E T H:
WHEREAS, the respective Boards of Directors of the Company,
Parent and Merger Subsidiary have approved and deemed it
advisable that the respective stockholders of the Company,
Parent and Merger Subsidiary approve and adopt this Agreement
pursuant to which, among other things, Parent would acquire the
Company by means of a merger of Merger Subsidiary with and into
the Company on the terms and subject to the conditions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.01.
Definitions. (a) As used herein, the
following terms have the following meanings:
Acquisition Proposal means, with respect to
any Person, other than the transactions contemplated by this
Agreement, any Third Party offer or proposal relating to
(i) any acquisition or purchase, direct or indirect, of 25%
or more of the consolidated assets of such Person and its
Subsidiaries or over 25% of any class of equity or voting
securities of such Person or any of its Subsidiaries whose
assets, individually or in the aggregate, constitute more than
25% of the consolidated assets of such Person, (ii) any
tender offer (including a self-tender offer) or exchange offer
that, if consummated, would result in such Third Party
beneficially owning 25% or more of any class of equity or voting
securities of such Person or any of its Subsidiaries whose
assets, individually or in the aggregate, constitute more than
25% of the consolidated assets of such Person, (iii) a
merger, consolidation, share exchange, business combination,
sale of substantially all the assets or other similar
transaction involving such Person or any of its Subsidiaries
whose assets, individually or in the aggregate, constitute more
than 25% of the consolidated assets of such Person or
(iv) a reorganization, recapitalization, liquidation,
dissolution or other similar transaction involving such Person
or any of its Subsidiaries. Any Third Party offer or proposal of
the nature described in any of the foregoing
clauses (i)-(iv) relating to the Greyhound business of the
Company and its Subsidiaries shall be deemed an Acquisition
Proposal without regard to the 25% thresholds referred to in
such clauses (i)-(iv).
Affiliate means, with respect to any Person,
any other Person directly or indirectly controlling, controlled
by, or under common control with such Person, where
control means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management policies of a Person, whether through the ownership
of voting securities, by contract, as trustee or executor or
otherwise.
Applicable Law means, with respect to any
Person, any foreign, federal, state, provincial or local law
(statutory, common or civil), constitution, treaty, convention,
ordinance, code, rule, regulation, protocol, guideline, by-law,
policy, notice, direction, order, injunction, judgment, decree,
ruling or other similar requirement enacted, adopted,
promulgated or applied by a Governmental Authority that is
legally binding upon such Person, as amended unless expressly
specified otherwise.
Business Day means a day, other than
Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by Applicable Law to
close.
Code means the Internal Revenue Code of 1986.
Company Balance Sheet means the consolidated
balance sheet of the Company as of August 31, 2006 and the
footnotes thereto set forth in the Company
10-K.
A-1
Company Balance Sheet Date means
August 31, 2006.
Company Disclosure Schedule means the
disclosure schedule dated the date of this Agreement that has
been provided by the Company to Parent and Merger Subsidiary.
Company Material Adverse Effect means a
material adverse effect on (i) the financial condition,
business, assets or results of operations of the Company and its
Subsidiaries, taken as a whole, excluding any such effect
resulting from (A) changes or conditions generally
affecting the industries in which the Company and its
Subsidiaries operate and not disproportionately affecting such
Person and its Subsidiaries, (B) changes in general
economic conditions, (C) national or international
political or social conditions, including the engagement by the
United States in hostilities or resulting from acts of terrorism
or war that do not have a disproportionate effect on the Company
and its Subsidiaries, or (D) the announcement of the
execution of this Agreement with Parent (as opposed to any other
Third Party); or (ii) the Companys ability to
consummate the transactions contemplated by this Agreement or to
perform its obligations under this Agreement.
Company Rights means the preferred stock
purchase rights issued pursuant to the Company Rights Agreement.
Company Rights Agreement means the Rights
Agreement dated as of June 23, 2003 by and between the
Company and Wells Fargo Bank Minnesota, National Association, as
rights agent.
Company Stock means the common stock,
$0.01 par value, of the Company, together with the
associated Company Rights.
Company
10-K
means the Companys annual report on
Form 10-K
for the fiscal year ended August 31, 2006.
Competition Act means the Competition Act
(Canada), as amended.
Competition Act Approval means the
Commissioner of Competition (the
Commissioner) appointed under the Competition
Act, in respect of the transactions contemplated hereby, shall
have (a) issued an advance ruling certificate under
section 102 of the Competition Act, or (b) advised
Parent
and/or
Merger Subsidiary in writing that the Commissioner has no
intention to file an application under Part VIII of the
Competition Act.
CSA means the applicable securities
regulatory authorities of all provinces and territories of
Canada.
Delaware Law means the General Corporation
Law of the State of Delaware.
EBITDA means (i) in the case of the
Company and its Subsidiaries, operating income before
depreciation and amortization, determined in accordance with the
policies and procedures utilized in calculating
EBITDA as reported in the Company
10-K, and
(ii) in the case of Parent and its Subsidiaries, adjusted
operating profit plus depreciation, determined in accordance
with the policies and procedures utilized in calculating
EBITDA as reported in Parents 2006 Annual
Report.
Environmental Laws means any Applicable Laws
or any agreement with any Governmental Authority relating to
pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise
hazardous substances, wastes or materials, or to the
environment, human health and safety (to the extent such safety
matters pertain to exposure to such substances, wastes or
materials).
Environmental Permits means all permits,
licenses, franchises, certificates, approvals, consents,
registrations and other similar authorizations of Governmental
Authorities relating to or required by Environmental Laws and
affecting, or relating to, the business of the Company or any
Subsidiary as currently conducted.
ERISA means the Employee Retirement Income
Security Act of 1974.
ERISA Affiliate of any entity means any other
entity that, together with such entity, would be treated as a
single employer under Section 414 of the Code.
Exon-Florio means the Exon-Florio Statute,
Sec. 721 of Title VII of the Defense Production Act of
1950, as amended (50 U.S.C. App. 2170).
A-2
FCC means the United States Federal
Communications Commission.
Financing means the financing by Parent of
the transactions contemplated by this Agreement, including the
refinancing
and/or
syndication of all or any part thereof.
Financing Documents means any prospectus or
public offering or related document necessary or desirable in
relation to any financing or refinancing arrangement entered
into by Parent or any of its Affiliates in connection with the
transactions contemplated by this Agreement.
GAAP means generally accepted accounting
principles in the United States or Canada, as applicable.
Governmental Authority means any
transnational, domestic or foreign federal, state, provincial or
local, governmental authority, governmental department,
regulatory authority, court, body, board, tribunal, dispute
settlement panel, agency, commission, bureau, minister, Crown
Corporation, official or other law, rule or regulation-making
organization or entity, including any political subdivision
thereof.
Hazardous Substance means any pollutant,
contaminant, waste or chemical or any toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substance,
waste or material, or any substance, waste or material
regulated, or defined as such, under any Environmental Law,
including petroleum, its derivatives, by-products and other
hydrocarbons, asbestos or asbestos containing materials.
HSR Act means the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976.
ICA means the Investment Canada Act (Canada).
ICA Approval means the determination or
deemed approval by the Minister responsible for the
administration of the ICA that the transactions contemplated
hereby are of net benefit to Canada pursuant to
Part IV of the ICA.
Intellectual Property means
(i) trademarks, service marks, brand names, certification
marks, trade dress, domain names and other indications of
origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or
application; (ii) patents, applications for patents
(including, without limitation, divisions, continuations,
continuations in part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction;
(iii) trade secrets and confidential information and rights
in any jurisdiction to limit the use or disclosure thereof by
any person (the Trade Secrets);
(iv) copyright rights, whether registered or not; and
registrations or applications for registration of copyrights in
any jurisdiction, and any renewals or extensions thereof;
(v) moral rights, database rights, design rights,
industrial property rights, publicity rights, and privacy
rights; and (vi) computer software (including all source
code, object code firmware, operating systems and
specifications).
International Plan means any employment,
severance or similar contract or arrangement (whether or not
written) or any plan, policy, fund, program, practice or
arrangement (whether or not written) or contract providing for
severance, insurance coverage (including any self-insured
arrangements), health or medical benefits, employee assistance
program, workers compensation, disability or sick leave
benefits, supplemental unemployment benefits, vacation benefits,
pension retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation
rights or other forms of incentive compensation or
post-employment or retirement benefits (including compensation,
health, medical or life insurance benefits) that (i) is not
an Employee Plan, (ii) is subject to a foreign
jurisdiction, (iii) is entered into, maintained,
administered or contributed to by the Company or any of its
Subsidiaries, (iv) covers any employee or former employee
of the Company or any of its Subsidiaries or with respect to
which the Company or any of its Subsidiaries has any liability
and (v) is not a Statutory Plan.
IT Assets means computers, computer software,
firmware, middleware, servers, workstations, routers, hubs,
switches, data communications lines, and all other information
technology equipment owned by the Company or its Subsidiaries or
licensed or leased by the Company or its Subsidiaries pursuant
to written agreement (excluding any public networks).
knowledge means, with respect to the Company,
the actual knowledge of any of the persons listed in
Section 1.01(a) of the Company Disclosure Schedule after
reasonable inquiry (taking into account the reasonable
A-3
confidentiality concerns of the Company with respect to the
transactions contemplated hereby prior to the date hereof and
the resulting limited availability of information to such
persons).
Lien means, with respect to any property or
asset, any mortgage, hypothec, lien, pledge, charge, security
interest, encumbrance, restriction, easement, right of way,
title defect or other adverse claim of any kind in respect of
such property or asset. For purposes of this Agreement, a Person
shall be deemed to own subject to a Lien any property or asset
that it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such
property or asset.
1933 Act means the Securities Act of
1933.
1934 Act means the Securities Exchange
Act of 1934.
Material Contracts means those contracts,
agreements or other instruments that are material to the
financial condition, business, assets or results of operations
of the Company and its Subsidiaries, taken as a whole.
NJDEP means the New Jersey Department of
Environmental Protection.
Parent Material Adverse Effect means a
material adverse effect on Parents ability to consummate
the transactions contemplated by this Agreement or to perform
its obligations under this Agreement.
Parent Shareholder Approval means the
affirmative vote of a simple majority of the members present and
voting in a general meeting of Parent in relation to ordinary
resolutions to (i) approve the Merger; (ii) increase
the authorized share capital of Parent; (iii) authorize the
Board of Directors of Parent to allot share capital of Parent
and (iv) to authorize the Board of Directors of Parent to
incur borrowings to effect the Financing notwithstanding the
limit in the articles of association of Parent.
Person means an individual, corporation,
partnership, limited liability company, association, trust, sole
proprietorship, firm, syndicate, Governmental Authority or other
entity or organization.
Relevant Period means (i) in the case of
the Company, the Surviving Corporation, Affiliates of the
foregoing and their respective businesses, assets or properties,
the twelve months ended August 31, 2006 and (ii) in
the case of Parent, its Affiliates and their respective
businesses, assets or properties, the twelve months ended
September 30, 2006.
Sarbanes-Oxley Act means the Sarbanes-Oxley
Act of 2002.
Securities Laws means, collectively, the
state or federal Applicable Laws of the United States, including
the 1933 Act and the 1934 Act, and the rules and
regulations of the SEC promulgated thereunder, and the
Applicable Laws of each province and territory of Canada dealing
with securities.
Statutory Plans means statutory benefit plans
which the Company or any of its Subsidiaries is required to
participate in or comply with, including the Canada and Quebec
Pension Plans and plans administered pursuant to applicable
health tax, workplace safety insurance and employment insurance
legislation.
SEC means the United States Securities and
Exchange Commission.
Subsidiary means, with respect to any Person,
any entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
any time directly or indirectly owned by such Person.
Third Party means any Person, including as
defined in Section 13(d) of the 1934 Act, other than
Parent, the Company or any of their respective Affiliates.
UKLA means the United Kingdom Listing
Authority.
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(b) Each of the following terms is defined in the Section
set forth opposite such term:
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Term
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Section
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Aggregate New Consideration
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11.04
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Agreement
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Preamble
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Certificate of Merger
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2.01
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Certificates
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2.03
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Change in Recommendation
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8.05
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Closing
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2.01
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Closing Date
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2.01
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Commissioner
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1.01
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Company
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Preamble
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Company Board Recommendation
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4.02
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Company Employees
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7.02
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Company Proxy Statement
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4.09
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Company Public Disclosure Documents
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4.07
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Company Current SEC Documents
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4.01
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Company Securities
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4.05
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Company Stockholder Approval
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4.02
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Company Stockholder Meeting
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8.03
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Company Stock Option
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2.05
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Company Subsidiary Securities
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4.06
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Confidentiality Agreement
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8.06
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Connecticut Transfer Act
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4.03
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D&O Carrier
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7.01
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Effective Time
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2.01
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Employee Plans
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4.18
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End Date
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10.01
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Exchange Agent
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2.03
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Indemnified Person
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7.01
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Industrial Site Recovery Act
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4.03
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Interested Person
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11.04
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Leased Real Property
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4.22
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Material Contracts
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4.21
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Material License
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4.20
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Measurement Date
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11.04
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Merger
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2.01
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Merger Consideration
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2.02
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Merger Subsidiary
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Preamble
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Multiemployer Plan
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4.18
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Net Debt
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4.11
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Outside Date
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10.01
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Owned Real Property
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4.22
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Parent
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Preamble
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Term
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Section
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Parent Board Recommendation
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5.02
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Parent Shareholder Circular
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4.09
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Parent Shareholder Meeting
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8.04
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Permits
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4.14
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Preferred Stock
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4.05
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Restricted Stock Awards
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2.05
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Section 8.06 Party
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8.05
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Successor Plan
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7.02
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Superior Proposal
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8.06
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Surviving Corporation
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2.01
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Tax
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4.17
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Taxing Authority
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4.17
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Tax Return
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4.17
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Tax Sharing Agreements
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4.17
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Title IV Plan
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4.18
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Trade Secrets
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1.01
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Total Consideration
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11.04
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Uncertificated Shares
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2.03
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Valuation Date
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4.18
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WARN Act
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4.18
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Section 1.02.
Other Definitional and Interpretative
Provisions. Unless specified otherwise, in this
Agreement the obligations of any party consisting of more than
one person are joint and several. The words hereof,
herein and hereunder and words of like
import used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. The
captions herein are included for convenience of reference only
and shall be ignored in the construction or interpretation
hereof. References to Articles, Sections, Exhibits and Schedules
are to Articles, Sections, Exhibits and Schedules of this
Agreement unless otherwise specified. Any capitalized terms used
in any Exhibit or Schedule but not otherwise defined therein,
shall have the meaning as defined in this Agreement. Any
singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words
include, includes or
including are used in this Agreement, they shall be
deemed to be followed by the words without
limitation, whether or not they are in fact followed by
those words or words of like import. Writing,
written and comparable terms refer to printing,
typing and other means of reproducing words (including
electronic media) in a visible form. References to any statute
are to that statute, as amended from time to time, and to the
rules and regulations promulgated thereunder, in effect as of
the date of this Agreement. References to any agreement or
contract are to that agreement or contract as amended, modified
or supplemented from time to time in accordance with the terms
hereof and thereof; provided that with respect to any
agreement or contract listed on the Company Disclosure hereto,
all such amendments, modifications or supplements must also be
listed. References to any Person include the successors and
permitted assigns of that Person. References from or through any
date mean, unless otherwise specified, from and including or
through and including, respectively. References to
law, laws or to a particular statute or
law shall be deemed also to include any and all related rules,
regulations, ordinances, directives, treaties and judicial or
administrative decisions, judgments, decrees or injunctions of
any U.S. or
non-U.S. federal,
state, provincial, local or foreign governmental authority.
References to any U.S. legal term shall, with respect to
any jurisdiction other than the United States or any state or
territory thereof, be construed as references to the term or
concept which most nearly corresponds to it in that jurisdiction.
A-6
ARTICLE 2
The Merger
Section 2.01.
The Merger. (a) Subject to the terms and
conditions of this Agreement, at the Effective Time, Merger
Subsidiary shall be merged (the Merger) with
and into the Company in accordance with Delaware Law, whereupon
the separate existence of Merger Subsidiary shall cease, and the
Company shall be the surviving corporation (with respect to all
post-Closing periods, the Surviving
Corporation).
(b) The closing of the transactions contemplated hereby
(the Closing) shall take place at a time and
date to be specified by the parties which will be no later than
the second Business Day after the satisfaction or, to the extent
permitted hereunder, waiver of each of the conditions set forth
in Article 9 (other than those conditions that by their
nature are to be satisfied at the Closing) or at such other time
as the parties hereto agree in writing. The Closing shall take
place at such location as the parties hereto agree in writing.
The date on which the Closing occurs is herein referred to as
the Closing Date.
(c) On the Closing Date, the Company and Merger Subsidiary
shall file a certificate of merger (the Certificate of
Merger) with the Delaware Secretary of State and make
all other filings or recordings required by Delaware Law in
connection with the Merger. The Merger shall become effective at
such time (the Effective Time) as the
certificate of merger is duly filed with the Delaware Secretary
of State (or at such later time as may be specified in the
certificate of merger).
(d) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, powers, privileges and
franchises and be subject to all of the obligations,
liabilities, restrictions and disabilities of the Company and
Merger Subsidiary, all as provided under Delaware Law.
Section 2.02. Conversion of Shares. At
the Effective Time,
(a) except as otherwise provided in Section 2.02(b) or
Section 2.04, each share of Company Stock outstanding
immediately prior to the Effective Time shall be converted into
the right to receive $35.25 in cash, without interest (the
Merger Consideration);
(b) each share of Company Stock held by the Company as
treasury stock or owned by Parent or any of its Subsidiaries
immediately prior to the Effective Time shall be canceled, and
no payment shall be made with respect thereto; and
(c) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the
Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the
only outstanding shares of capital stock of the Surviving
Corporation.
Section 2.03.
Surrender And Payment. (a) Prior to the
Effective Time, Parent shall appoint an agent reasonably
satisfactory to the Company (the Exchange
Agent) for the purpose of exchanging for the Merger
Consideration (i) certificates representing shares of
Company Stock (the Certificates) or
(ii) uncertificated shares of Company Stock (the
Uncertificated Shares). Parent shall deposit,
or cause the Surviving Corporation or another Affiliate of
Parent to deposit, with the Exchange Agent, for the benefit of
the holders of the Certificates and the Uncertificated Shares,
cash in an amount sufficient to pay the aggregate Merger
Consideration required to be paid pursuant to
Section 2.02(a). Promptly after the Effective Time, Parent
shall send, or shall cause the Exchange Agent to send, to each
holder of shares of Company Stock at the Effective Time a letter
of transmittal and instructions (which shall specify that the
delivery shall be effected, and risk of loss and title shall
pass, only upon proper delivery of the Certificates or transfer
of the Uncertificated Shares to the Exchange Agent and which
shall be in customary form and contain customary provisions) for
use in such exchange.
(b) Each holder of shares of Company Stock that have been
converted into the right to receive the Merger Consideration
shall be entitled to receive, upon (i) surrender to the
Exchange Agent of a Certificate, together with a properly
completed letter of transmittal or (ii) receipt of an
agents message by the Exchange Agent (or such
other evidence, if any, of transfer as the Exchange Agent may
reasonably request) in the case of a book-entry transfer of
Uncertificated Shares, the Merger Consideration in respect of
the Company Stock represented by a Certificate or
A-7
Uncertificated Share. Until so surrendered or transferred, as
the case may be, each such Certificate or Uncertificated Share
shall represent after the Effective Time for all purposes only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be
paid to a Person other than the Person in whose name the
surrendered Certificate or the transferred Uncertificated Share
is registered, it shall be a condition to such payment that such
Certificate shall be properly endorsed or shall otherwise be in
proper form for transfer or such Uncertificated Share shall be
properly transferred and the Person requesting such payment
shall either (i) pay to the Exchange Agent any transfer or
other taxes required as a result of such payment to a Person
other than the registered holder of such Certificate or
Uncertificated Share or (ii) establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not
payable.
(d) After the Effective Time, there shall be no further
registration of transfers of shares of Company Stock. If, after
the Effective Time, Certificates or Uncertificated Shares are
presented to the Surviving Corporation for transfer, they shall
be canceled and exchanged for the Merger Consideration provided
for, and in accordance with the procedures set forth, in this
Article 2.
(e) Any portion of the Merger Consideration deposited with
the Exchange Agent pursuant to Section 2.03(a) that remains
unclaimed by the holders of shares of Company Stock six months
after the Effective Time shall be returned to Parent, the
Surviving Corporation or another Affiliate of Parent, upon
demand, and any holder of shares of Company Stock who has not
exchanged shares of Company Stock for the Merger Consideration
in accordance with this Section 2.03 prior to that time
shall thereafter look only to Parent for payment of the Merger
Consideration in respect of such shares without any interest
thereon. Notwithstanding the foregoing, neither Parent nor any
Affiliate of Parent (including the Surviving Corporation) shall
be liable to any holder of shares of Company Stock for any
amounts paid to a public official pursuant to applicable
abandoned property, escheat or similar laws. Any amounts
remaining unclaimed by holders of shares of Company Stock two
years after the Effective Time (or such earlier date,
immediately prior to such time when the amounts would otherwise
escheat to or become property of any Governmental Authority)
shall become, to the extent permitted by Applicable Law, the
property of Parent (or the Surviving Corporation or another
Affiliate of Parent to whom the unclaimed Merger Consideration
is returned pursuant to this Section 2.03(e)) free and
clear of any claims or interest of any Person previously
entitled thereto.
(f) Prior to the Effective Time, the Company shall take all
steps reasonably necessary to cause the transactions
contemplated hereby and any other dispositions of equity
securities of the Company in connection with this Agreement by
each individual who is a director or officer of the Company, to
be exempt under
Rule 16b-3
promulgated under the 1934 Act.
Section 2.04.
Dissenting Shares. Notwithstanding
Section 2.02, shares of Company Stock which are issued and
outstanding immediately prior to the Effective Time and held by
a holder who has not voted such shares of Company Stock in favor
of the Merger and who has demanded appraisal for such shares of
Company Stock in accordance with Section 262 of Delaware
Law shall not be converted into the right to receive the Merger
Consideration, unless such holder fails to perfect, withdraws or
loses the right to appraisal. If, after the Effective Time, such
holder fails to perfect, withdraws or loses the right to
appraisal, such shares of Company Stock shall be treated as if
they had been converted as of the Effective Time into the right
to receive the Merger Consideration. The Company shall give
Parent prompt notice of any demands received by the Company for
appraisal of shares of Company Stock, and Parent shall have the
right to participate in all negotiations and proceedings with
respect to such demands. Except with the prior written consent
of Parent, the Company shall not make any payment with respect
to, or offer to settle or settle, any such demands.
Section 2.05.
Stock Options and Other Equity-Based
Awards. (a) At the Effective Time, each
option to purchase shares of Company Stock outstanding under any
Employee Plan (each, a Company Stock Option),
whether or not vested or exercisable, shall be canceled and
converted into the right to receive an amount in cash equal to
the product of (i) the excess, if any, of the Merger
Consideration over the applicable exercise price of such Company
Stock Option multiplied by (ii) the total number of shares
of Company Stock subject to such Company Stock Option (whether
or not vested or exercisable); and the Surviving Corporation
shall (and Parent shall cause the Surviving Corporation to) pay
such amount promptly after the Effective Time to the holder of
each such Company Stock Option.
A-8
(b) Not later than immediately prior to the Effective Time,
the Company shall take all such actions as may be required to
cause each restricted stock award and each deferred stock award
granted under the Companys 2003 Amended and Restated
Equity and Performance Incentive Plan and outstanding
immediately before the Effective Time (each, a
Restricted Stock Award) to fully vest as of
the Effective Time and such Restricted Stock Award shall be
canceled and converted into the right to receive the Merger
Consideration in the same manner as shares of Company Stock
under Section 2.02(a).
(c) Prior to the Effective Time, the Company shall
(i) use its reasonable best efforts to obtain any written
consents from holders of Company Stock Options and Restricted
Stock Awards, to the extent necessary pursuant to the terms of
any Employee Plan and (ii) make any amendments to the terms
of any Employee Plan that, in the case of either
clauses (i) or (ii), are necessary to give effect to the
transactions contemplated by Section 2.05.
Section 2.06.
Adjustments. If, during the period between the
date of this Agreement and the Effective Time, any change in the
outstanding shares of capital stock of the Company shall occur,
including by reason of any reclassification, recapitalization,
stock split or combination, exchange or readjustment of shares,
or any stock dividend thereon with a record date during such
period, but excluding any change that results from any exercise
of Company Stock Options or vesting of deferred stock awards
outstanding as of the date hereof, the Merger Consideration and
any other amounts payable pursuant to this Agreement shall be
appropriately adjusted.
Section 2.07.
Withholding Rights. Subject to
Section 6.04(c), each of the Surviving Corporation, Parent
and any other relevant Affiliate of Parent shall be entitled to
deduct and withhold from the consideration otherwise payable to
any Person pursuant to this Article 2 such amounts as it is
required to deduct and withhold with respect to the making of
such payment under any Applicable Law relating to the payment of
Taxes. To the extent the Surviving Corporation, Parent or an
Affiliate of Parent, as the case may be, so withholds amounts
and pays such amounts over to the applicable Taxing Authorities,
such amounts shall be treated for all purposes of this Agreement
as having been paid to the holder of the shares of Company Stock
in respect of which the Surviving Corporation, Parent or an
Affiliate of Parent, as the case may be, made such deduction and
withholding.
Section 2.08.
Lost Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Surviving
Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue, in
exchange for such lost, stolen or destroyed Certificate, the
Merger Consideration to be paid in respect of the shares of
Company Stock represented by such Certificate, as contemplated
by this Article 2.
ARTICLE 3
The Surviving
Corporation
Section 3.01.
Certificate of Incorporation. The certificate of
incorporation of the Company in effect at the Effective Time
shall be the certificate of incorporation of the Surviving
Corporation until amended in accordance with Applicable Law.
Section 3.02.
Bylaws. The bylaws of the Company in effect at
the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with Applicable Law.
Section 3.03.
Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed
and qualified in accordance with Applicable Law, (i) the
directors of Merger Subsidiary at the Effective Time shall be
the directors of the Surviving Corporation and (ii) the
officers of the Company at the Effective Time shall be the
officers of the Surviving Corporation.
ARTICLE 4
Representations and
Warranties of the Company
Subject to Section 11.05, except as disclosed or identified
in the Company
10-K or any
of the Companys quarterly reports on
Form 10-Q
or current reports on
Form 8-K
filed since August 31, 2006 (collectively, the
A-9
Company Current SEC Documents) or as set
forth in the Company Disclosure Schedule, the Company represents
and warrants to Parent that:
Section 4.01.
Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all
corporate powers, authority and capacity, and all governmental
licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for
those licenses, authorizations, permits, consents and approvals
the absence of which would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect. The Company is duly qualified to do business as a
foreign or extra-provincial corporation and is in good standing
in each jurisdiction where such qualification is necessary,
except for those jurisdictions where failure to be so qualified
would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. The Company has
heretofore made available to Parent true and complete copies of
the certificate of incorporation and bylaws of the Company as
currently in effect.
Section 4.02.
Corporate Authorization. (a) The execution,
delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions contemplated
hereby are within the Companys corporate powers and,
except for the required approval of the Companys
stockholders in connection with the consummation of the Merger,
have been duly authorized by all necessary corporate action on
the part of the Company. The affirmative vote of the holders of
a majority of the outstanding shares of Company Stock in favor
of the adoption of this Agreement is the only vote of the
holders of any class of the Companys capital stock
necessary to adopt this Agreement and approve the transactions
contemplated hereby (the Company Stockholder
Approval). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery of this Agreement by each
of Parent and Merger Subsidiary, constitutes a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
relating to creditors rights generally and to general
principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(b) At a meeting duly called and held, the Companys
Board of Directors adopted resolutions (i) determining that
this Agreement and the transactions contemplated hereby are
advisable, fair to and in the best interests of the Company and
its stockholders, (ii) approving this Agreement and the
transactions contemplated hereby and (iii) recommending
(subject to Section 8.06) the adoption of this Agreement by
the Companys stockholders (such recommendation, the
Company Board Recommendation).
Section 4.03.
Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions contemplated
hereby require no action by or in respect of, or filing with,
any Governmental Authority other than (i) the filing of the
Certificate of Merger, as provided in Section 2.01,
(ii) compliance with any applicable requirements of the HSR
Act and of the Competition Act, (iii) compliance with any
applicable requirements of the 1933 Act, the 1934 Act, and
any other applicable U.S. state or federal securities laws,
(iv) compliance with any applicable requirements of the
ICA, (v) compliance with the New Jersey Industrial Site
Recovery Act, N.J.S.A.
13:1k-6, et
seq. (Industrial Site Recovery Act), if
applicable, (vi) compliance with the Connecticut Transfer
Act, Conn. Gen. Stat.
§22a-134,
et seq. (Connecticut Transfer Act), if
applicable, (vii) any filings required by the United States
Surface Transportation Board or (viii) any actions or
filings the absence of which would not reasonably be expected to
have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 4.04.
Non-contravention. The execution, delivery and
performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby do not and
will not (i) contravene, conflict with, or result in any
violation or breach of any provision of the certificate of
incorporation or bylaws of the Company, (ii) assuming
compliance with the matters referred to in Section 4.03,
contravene, conflict with or result in a violation or breach of
any provision of any Applicable Law, (iii) require any
consent or other action by any person under, constitute a
default, or an event that, with or without notice or lapse of
time or both, would constitute a default, under, or cause or
permit the termination, cancellation or acceleration of any
obligation or the loss of any benefit to which the Company or
any of its Subsidiaries is entitled under any agreement or other
instrument legally binding upon the Company or any of its
Subsidiaries or any license, franchise, permit, certificate,
approval or other
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similar authorization applicable to the assets or business of
the Company and its Subsidiaries or (iv) result in the
creation or imposition of any Lien on any asset of the Company
or any of its Subsidiaries, with only such exceptions, in the
case of each of clauses (ii) through (iv), as would not
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 4.05.
Capitalization. (a) The authorized capital
stock of the Company consists of
(i) 500,000,000 shares designated as Company Stock and
(ii) 50,000,000 shares designated as Series A
Junior Participating Preferred Stock, par value $0.01 per
share (the Preferred Stock). As of
February 1, 2007, there were outstanding
79,373,714 shares of Company Stock and no shares of
Preferred Stock. As of February 1, 2007, there were
outstanding 75,939 restricted stock awards and 714,380 deferred
stock awards. As of February 1, 2007, there were
outstanding Company Stock Options to purchase an aggregate of
1,598,836 shares of Company Stock (of which options to
purchase an aggregate of 790,584 shares of Company Stock
were exercisable). All outstanding shares of capital stock of
the Company have been, and all shares that may be issued upon
exercise of Company Stock Options will be, when issued in
accordance with the respective terms thereof, duly authorized
and validly issued and are fully paid and nonassessable. No
Subsidiary or Affiliate of the Company owns any shares of
capital stock of the Company. Section 4.05 of the Company
Disclosure Schedule contains a complete and correct list of each
outstanding employee stock option to purchase shares of Company
Stock, including the holder, date of grant, exercise price,
vesting schedule and number of shares of Company Stock subject
thereto as of the date hereof.
(b) Except as set forth in this Section 4.05 and for
changes since February 1, 2007 resulting from the exercise
of Company Stock Options outstanding on such date, there are no
outstanding (i) shares of capital stock or voting
securities of the Company, (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or
voting securities of the Company or (iii) options or other
rights to acquire from the Company, or other obligation of the
Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of the Company (the items in clauses (i),
(ii), and (iii) being referred to collectively as the
Company Securities). There are no outstanding
obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company
Securities.
Section 4.06.
Subsidiaries. (a) Each Subsidiary of the
Company has been duly organized, and is validly existing and in
good standing (where applicable) under the laws of its
jurisdiction of incorporation or formation, as the case may be,
and has all requisite powers, authority and capacity, except
where the failure to be so organized, existing or in good
standing or to have such powers, authority and capacity would
not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and has all
governmental licenses, authorizations, permits, consents and
approvals required to carry on its business as now conducted,
except for those licenses, authorizations, permits, consents and
approvals the absence of which would not reasonably be expected
to have, individually and in the aggregate, a Company Material
Adverse Effect. Each such Subsidiary is duly qualified to do
business and is in good standing (where applicable) in each
jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified would not
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. All material
Subsidiaries of the Company and their respective jurisdictions
of organization are identified in Section 4.06(a) of the
Company Disclosure Schedule.
(b) All of the outstanding capital stock of, or other
voting securities or ownership interests in, each Subsidiary of
the Company, is owned by the Company, directly or indirectly,
free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other voting
securities or ownership interests). There are no outstanding
(i) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any Subsidiary
of the Company or (ii) options or other rights to acquire
from the Company or any of its Subsidiaries, or other obligation
of the Company or any of its Subsidiaries to issue, any capital
stock or other voting securities or ownership interests in, or
any securities convertible into or exchangeable for any capital
stock or other voting securities or ownership interests in, any
Subsidiary of the Company (the items in clauses (i) and
(ii) being referred to collectively as the Company
Subsidiary Securities). There are no outstanding
obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any of the Company
Subsidiary Securities.
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Section 4.07.
Securities Law Filings and the Sarbanes-Oxley
Act. (a) The Company has filed with or
furnished to the SEC or CSA, as applicable, (i) the
Companys annual reports on
Form 10-K
for its fiscal years ended August 31, 2006, 2005 and 2004,
(ii) the Companys quarterly report on
Form 10-Q
for its fiscal quarter ended November 30, 2006,
(iii) its proxy or information statements relating to
meetings of the stockholders of the Company held since
August 31, 2004 and (iv) all of its other material
forms, reports, statements, schedules, registration statements
and other documents required in accordance with applicable
Securities Laws since August 31, 2004 (the documents
referred to in this Section 4.07(a), collectively, the
Company Public Disclosure Documents). The
Company has made available to Parent true and complete copies of
all comment letters from the staff of the SEC and of any
securities regulatory authority of the CSA relating to the
Company Public Disclosure Documents and all written responses of
the Company thereto.
(b) As of its filing date, each Company Public Disclosure
Document complied, and each such Company Public Disclosure
Document filed subsequent to the date hereof will comply, as to
form in all material respects with the applicable requirements
of the Securities Laws.
(c) As of its filing date (or, if amended or superseded by
a filing prior to the date hereof, on the date of such filing),
each Company Public Disclosure Document did not, and each such
Company Public Disclosure Document filed subsequent to the date
hereof will not, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(d) Each Company Public Disclosure Document that is a
registration statement, as amended or supplemented, if
applicable, filed pursuant to the 1933 Act, as of the date
such registration statement or amendment became effective, did
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e) The Company has established and maintains disclosure
controls and procedures (as defined in
Rules 13a-15(e)
and
15d-15(e)
under the 1934 Act). Such disclosure controls and
procedures are reasonably designed to ensure that information
required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is recorded, processed,
summarized and reported within the time period specified in the
rules and forms of the SEC, and that all such information is
accumulated and communicated to the Companys management as
appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the chief executive
officer and chief financial officer of the Company required
under the 1934 Act with respect to such reports. Each
Company Public Disclosure Document that was required to be
accompanied by such certification was accompanied by such
certification and, at the time of filing or submission of each
such certification, such certification was true and accurate and
complied with the applicable Securities Laws in all material
respects.
(f) Since August 31, 2005, the Company and its
Subsidiaries have established and maintained a system of
internal control over financial reporting (as defined in
Rules 13a-15(f)
and
15d-15(e)
under the 1934 Act) sufficient to provide reasonable
assurance regarding the reliability of the Companys
financial reporting and the preparation of Company financial
statements for external purposes in accordance with GAAP. The
Company has disclosed, based on its most recent evaluation of
internal controls prior to the date hereof, to the
Companys auditors and audit committee any
significant deficiency or material
weakness in the Companys internal controls. For
purposes of this Agreement, the terms significant
deficiency and material weakness shall have
the meanings assigned to them in the Statements of Auditing
Standards No. 60, as in effect on the date hereof. The
Company has made available to Parent a summary of any such
disclosure made by management to the Companys auditors and
audit committee since August 31, 2005.
(g) There are no outstanding loans or other extensions of
credit made by the Company or any of its Subsidiaries to any
executive officer (as defined in
Rule 3b-7
under the 1934 Act) or director of the Company.
(i) Since February 10, 2004, the Company has complied
in all material respects with the applicable listing and
corporate governance rules and regulations of the New York Stock
Exchange.
Section 4.08.
Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim
financial statements (including, in each case, any related notes
thereto) of the Company included in the Company Public
Disclosure Documents fairly present in all material respects, in
conformity with GAAP applied
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on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in
the case of any unaudited interim financial statements).
Section 4.09.
Disclosure Documents. (a) The proxy
statement of the Company to be filed with the SEC and the CSA in
connection with the Merger (the Company Proxy
Statement) and any amendments or supplements thereto
will, when filed, comply as to form in all material respects
with the applicable requirements of the Securities Laws. At the
time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company, and at
the time such stockholders vote on adoption of this Agreement,
the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties contained in this
Section 4.09(a) will not apply to statements or omissions
included in the Company Proxy Statement based upon information
furnished to the Company in writing by Parent specifically for
use therein.
(b) All of the information provided or to be provided, or
confirmed or to be confirmed, in writing by the Company
(excluding any information provided that is predictive or
forward-looking in nature) specifically for inclusion in the
shareholder circular to be prepared by Parent and delivered to
its shareholders in connection with the Merger (the
Parent Shareholder Circular), the Financing
Documents (if any), any announcement to any regulatory
information service approved by the UKLA in connection with the
Parent Shareholder Circular or the Financing or any other
documents (presentation, offering memoranda or otherwise)
published by Parent in connection with the Financing, in the
case of the Parent Shareholder Circular, at the time the Parent
Shareholder Circular is first mailed to shareholders of Parent
and at the time such shareholders vote on the resolutions set
forth in the Parent Shareholder Circular, and in the case of any
other such document, at the time it is first published, will not
contain any untrue statement of material fact or omit to state
any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading.
Section 4.10.
Absence of Certain Changes. Since the Company
Balance Sheet Date, the business of the Company and its
Subsidiaries has been conducted in the ordinary course
consistent with past practices and there has not been
(i) any event, occurrence, development or state of
circumstances or facts that has had or would reasonably be
expected to have, individually or in the aggregate, a Company
Material Adverse Effect or (ii) any action taken by the
Company or any of its Subsidiaries that, if taken during the
period from the date of this Agreement through the Effective
Time without Parents consent, would constitute a breach of
paragraph (a), (b), (c)(ii), (d), (e), (f), (g), (h),
(k) (but only to the extent relating to any employee of the
Company or any of its Subsidiaries at a level of vice president
or higher or to any Employee Plan of general applicability to
the Company and its Subsidiaries), (l), (o) or, to the
extent relating to any of the foregoing paragraphs, (r) of
Section 6.01.
Section 4.11.
No Undisclosed Material
Liabilities. (a) There are no liabilities or
obligations of the Company or any of its Subsidiaries of any
kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances that could
reasonably be expected to result in such a liability or
obligation, other than (i) liabilities or obligations
disclosed and provided for in the Company Balance Sheet or in
the notes thereto, (ii) liabilities or obligations incurred
since the Company Balance Sheet Date in the ordinary course of
business consistent with past practices, and
(iii) liabilities or obligations that would not reasonably
be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(b) As of the date hereof, Net Debt of the Company and its
Subsidiaries does not exceed $755 million. Net
Debt means (i) the aggregate amount of current
and long-term debt of the Company and its Subsidiaries, minus
(ii) the aggregate amount of cash and cash equivalents
of the Company and its Subsidiaries (determined, in the case of
each of clauses (i) and (ii), using the same methods as
were used in the determination of the equivalent line items in
the Company Balance Sheet).
Section 4.12.
Compliance with Laws and Court Orders. The
Company and each of its Subsidiaries is and, since
August 31, 2003, has been, in compliance with, and to the
knowledge of the Company is not under investigation with respect
to, and has not been threatened in writing to be charged with,
or given notice of any
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violation of, any Applicable Law, except for failures to comply
or violations that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.13.
Litigation. There is no claim, action, suit,
investigation, audit or proceeding, including any appeal or
application for review, pending against, or, to the knowledge of
the Company, threatened against the Company or any of its
Subsidiaries or any of their respective properties or with
respect to which the Company or any of its Subsidiaries would
have financial liability before any court or arbitrator or
before or by any Governmental Authority, that, (a) if
determined or resolved adversely, would reasonably be expected
to have, individually, a Company Material Adverse Effect or
(b) would reasonably be expected to have, in the aggregate,
a Company Material Adverse Effect.
Section 4.14.
Permits. The Company and each of its Subsidiaries
own, possess or have obtained, and is in compliance with, all
licenses, franchises, permits, certificates, approvals,
consents, registrations and other similar authorizations
(Permits) of or from any Governmental
Authority, including all Environmental Permits, necessary to
conduct its business, except for such failures which would not
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. The Permits are in
full force and effect in accordance with their terms, and no
event has occurred or circumstance exists that (with or without
notice or lapse of time) may constitute or result in a violation
of any such Permit, or give rise to an obligation on the part of
the Company or any of its Subsidiaries to undertake or bear any
cost of remedial action, except for such events or circumstances
which would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect.
Section 4.15.
Finders Fees. Except for Morgan
Stanley & Co. Incorporated, a copy of whose engagement
agreement has been provided to Parent, there is no investment
banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of the Company or
any of its Subsidiaries who might be entitled to any fee or
commission from the Company or any of its Affiliates in
connection with the transactions contemplated by this Agreement.
Section 4.16.
Opinion of Financial Advisor. The Company has
received the opinion of Morgan Stanley & Co.
Incorporated, financial advisor to the Company, to the effect
that, as of the date of this Agreement, the Merger Consideration
is fair to the Companys stockholders from a financial
point of view.
Section 4.17.
Taxes. (a) All material Tax Returns required
by Applicable Law to be filed with any Taxing Authority by, or
on behalf of, the Company or any of its Subsidiaries have been
filed when due in accordance with all Applicable Law, and all
such material Tax Returns are, or shall be at the time of
filing, true and complete in all material respects.
(b) The Company and each of its Subsidiaries has paid (or
has had paid on its behalf) or has withheld and remitted to the
appropriate Taxing Authority all material Taxes due and payable,
including all estimated payments with respect to Taxes for the
current year, whether or not shown on any Tax Return, or, where
payment is not yet due, has established (or has had established
on its behalf and for its sole benefit and recourse) in
accordance with GAAP an adequate accrual for all material Taxes
through the end of the last period for which the Company and its
Subsidiaries ordinarily record items on their respective books.
(c) As of the date hereof, (i) the consolidated
federal income Tax Returns of the Company and its Subsidiaries
through the Tax year ended August 31, 2000 have been
examined and closed or are Tax Returns with respect to which the
applicable period for assessment under Applicable Law, after
giving effect to extensions or waivers, has expired,
(ii) none of the Company or any Subsidiary has requested
any extension of time within which to pay or remit any material
Taxes or file any material Tax Return and has not yet paid or
remitted such Taxes or filed such Tax Return, (iii) none of
the Company or any Subsidiary has granted any extension or
waiver of the statute of limitations period applicable to any
Tax Return, which period (after giving effect to such extension
or waiver) has not yet expired, (iv) there is no claim,
action, suit, investigation, audit or proceeding, including any
appeal or application for review, now pending or, to the
Companys knowledge, threatened in writing against or with
respect to the Company or any Subsidiary in respect of any
material Tax or material Tax asset of the Company or any
Subsidiary, and (v) no adjustment has been made, proposed
or, to the Companys knowledge, threatened in writing by a
Taxing Authority with respect to the Company or any Subsidiary.
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(d) During the two-year period ending on the date hereof,
neither the Company nor any of its Subsidiaries was a
distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the
Code.
(e) No unresolved written claim has been made by a Taxing
Authority that the Company or any of its Subsidiaries is or may
be subject to Taxes in a jurisdiction where the Company or its
Subsidiaries does not file Tax Returns.
(f) None of the Company or any Subsidiary is a party to any
understanding or arrangement described in
Section 6662(d)(2)(C)(ii) of the Code, or in a
reportable transaction within the meaning of
Treasury Regulations
Section 1.6011-4.
(g) Tax means (i) any tax,
governmental fee or other like assessment or charge of any kind
whatsoever (including withholding on amounts paid to or by any
Person), together with any interest, penalty, fine, addition to
tax or additional amount imposed by any Governmental Authority
(a Taxing Authority) responsible for the
imposition of any such tax (domestic or foreign), and any
liability for any of the foregoing as transferee, (ii) in
the case of the Company or any of its Subsidiaries, liability
for the payment of any amount of the type described in
clause (i) as a result of being or having been before the
Effective Time a member of an affiliated, consolidated, combined
or unitary group, or a party to any agreement or arrangement, as
a result of which liability of the Company or any of its
Subsidiaries to a Taxing Authority is determined or taken into
account with reference to the activities of any other Person,
and (iii) liability of the Company or any of its
Subsidiaries for the payment of any amount as a result of being
party to any Tax Sharing Agreement or with respect to the
payment of any amount imposed on any person of the type
described in (i) or (ii) as a result of any existing
express or implied agreement or arrangement (including an
indemnification agreement or arrangement). Tax
Return means any report, return, document,
declaration, election or other information or filing (whether in
tangible or electronic form) required to be supplied to any
Taxing Authority with respect to Taxes, including information
returns, any documents with respect to or accompanying payments
of estimated Taxes or any amendments, schedules, attachments,
supplements, appendices and exhibits thereto, or with respect to
or accompanying requests for the extension of time in which to
file any such report, return, document, declaration, election or
other information. Tax Sharing Agreements
means all existing agreements or arrangements (whether or not
written) binding the Company or any of its Subsidiaries that
provide for the allocation, apportionment, sharing or assignment
of any Tax liability or benefit, or the transfer or assignment
of income, revenues, receipts, or gains for the purpose of
determining any Persons Tax liability (excluding any
indemnification agreement or arrangement pertaining to the sale
or lease of assets or subsidiaries).
Section 4.18.
Employee Benefit
Plans. (a) Section 4.18(a) of the
Company Disclosure Schedule contains a correct and complete list
identifying each material employee benefit plan, as
defined in Section 3(3) of ERISA, each material employment,
severance or similar contract, plan, arrangement or policy and
each other material plan or arrangement (written or oral)
providing for compensation, bonuses, profit-sharing, stock
option or other stock related rights or other forms of incentive
or deferred compensation, vacation benefits, insurance
(including any self-insured arrangements), health or medical
benefits, employee assistance program, disability or sick leave
benefits, workers compensation, supplemental unemployment
benefits, severance benefits and post-employment or retirement
benefits (including compensation, pension, health, medical or
life insurance benefits) which is maintained, administered or
contributed to by the Company or any Subsidiary and covers any
current or former United States employee of the Company or any
of its Subsidiaries, or with respect to which the Company or any
of its Subsidiaries has any liability. Copies of such plans
(and, if applicable, related trust or funding agreements or
insurance policies) and all amendments thereto and written
interpretations thereof have been furnished to Parent together
with the most recent annual report (Form 5500 including, if
applicable, Schedule B thereto) and prepared in connection
with any such plan or trust. Such plans are referred to
collectively herein as the Employee Plans.
For greater certainty, an International Plan is not an Employee
Plan.
(b) (i) As of the most recent valuation date as set
forth in a written valuation report provided to Parent (each
such date, a Valuation Date), the fair market
value of the assets of each Employee Plan subject to
Title IV of ERISA (other than a multiemployer
plan, as defined below) (a Title IV
Plan) (excluding for these purposes any accrued but
unpaid contributions) was not less than the present value of all
benefits accrued under such Title IV Plan using the
assumptions set forth in Note 7 to the Companys
Consolidated Financial Statements contained in the
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Company
10-K,
(ii) as of the relevant Valuation Date, no
accumulated funding deficiency, as defined in
Section 412 of the Code, has been incurred with respect to
any Employee Plan subject to such Section 412, whether or
not waived, (iii) as of the date hereof, no
reportable event, within the meaning of
Section 4043 of ERISA, other than a reportable
event that will not have a Company Material Adverse
Effect, has occurred in connection with any Employee Plan and
(iv) as of the date hereof, no event described in
Section 4062 or 4063 of ERISA, has occurred in connection
with any Employee Plan. Neither the Company nor any ERISA
Affiliate of the Company has (x) engaged in, or is a
successor or parent corporation to an entity that has engaged
in, a transaction described in Sections 4069 or 4212(c) of
ERISA or (y) incurred, or reasonably expects to incur prior
to the Effective Time, (A) any liability under
Title IV of ERISA arising in connection with the
termination of, or a complete or partial withdrawal from, any
plan covered or previously covered by Title IV of ERISA or
(B) any liability under Section 4971 of the Code that
in either case could become a liability of the Company or any of
its Subsidiaries after the Effective Time.
(c) No transaction prohibited by Section 406 of ERISA
or Section 4975 of the Code has occurred with respect to
any Employee Plan which is covered by Title I of ERISA,
which transaction has or will cause the Company or any of its
Subsidiaries to incur any material liability under ERISA, the
Code or otherwise, excluding transactions effected pursuant to
and in compliance with a statutory or administrative exemption.
No condition exists as of the date hereof that (i) could
constitute grounds for termination by the PBGC of any employee
benefit plan that is subject to Title IV of ERISA that is
maintained by the Company or any of its ERISA Affiliates or
(ii) presents a material risk of complete or partial
withdrawal from any Multiemployer Plan, as
defined in Section 3(37) of ERISA, which could result in the
Company or any Subsidiary incurring a withdrawal liability
within the meaning of Section 4201 of ERISA. The assets of
the Company and all of its Subsidiaries are not now subject to
any lien imposed under Code Section 412(n) by reason of a
failure of any of the Company or any Subsidiary or Affiliate to
make timely installments or other payments required under Code
Section 412. If a complete withdrawal by the
Company and all of its ERISA Affiliates were to occur as of the
Closing Date with respect to all Multiemployer Plans, none of
the Company, any Subsidiary or any of their ERISA Affiliates
would incur any withdrawal liability under Title IV of
ERISA that would reasonably be expected to have a Company
Material Adverse Effect.
(d) Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable
determination letter, or has pending or has time remaining in
which to file, an application for such determination from the
Internal Revenue Service, and the Company is not aware of any
reason why any such determination letter should be revoked or
not be reissued. The Company has made available to Parent copies
of the most recent Internal Revenue Service determination
letters with respect to each such Employee Plan. Each Employee
Plan has been maintained in material compliance with its terms
and Applicable Law. No material events have occurred with
respect to any Employee Plan that could result in payment or
assessment by or against the Company of any material excise
taxes under the Code.
(e) The consummation of the transactions contemplated by
this Agreement will not (either alone or together with any other
event) entitle any employee or independent contractor of the
Company or any of its Subsidiaries to severance pay or
accelerate the time of payment or vesting or trigger any payment
of funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any Employee
Plan. There is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of the
Company or any of its Subsidiaries that, individually or
collectively, would entitle any employee or former employee to
any severance or other payment solely as a result of the
transactions contemplated hereby, or could give rise to the
payment of any amount that would not be deductible pursuant to
the terms of Section 280G or 162(m) of the Code. The
Company has provided or otherwise made available to Parent forms
of the material agreements, arrangements and other instruments
which give rise to an obligation to make or set aside amounts
payable to or on behalf of the officers of the Company and its
Subsidiaries (whether as termination pay, severance pay or
otherwise) as a result of the transactions contemplated by this
Agreement
and/or any
subsequent employment termination (whether by the Company or the
officer).
(f) Neither the Company nor any of its Subsidiaries has any
liability in respect of post-retirement health, medical or life
insurance benefits for retired, former or current employees of
the Company or its Subsidiaries except as required under
Section 4980B of the Code or pursuant to which premiums are
fully paid by such employee.
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(g) Section 4.18(g) of the Company Disclosure Schedule
sets forth a list of each material collective bargaining
agreement or other labor agreement with any union or labor
organization. Furthermore: (i) to the knowledge of the
Company, there are no material unfair labor practice charges or
complaints against the Company or any of its subsidiaries
pending before the National Labor Relations Board or any foreign
equivalent; (ii) there are no material labor strikes,
slowdowns or stoppages actually pending or threatened against or
affecting the Company or any of its Subsidiaries; (iii) to
the knowledge of the Company, there are no material
representation claims or petitions pending before the National
Labor Relations Board or any foreign equivalent and there are no
questions concerning representation with respect to the
employees of the Company or its Subsidiaries; and
(iv) there are no material grievance or pending arbitration
proceedings against the Company or any of its Subsidiaries that
arose out of or under any collective bargaining agreement.
(h) Section 4.18(h) of the Company Disclosure Schedule
contains a correct and complete list identifying each material
International Plan. The Company has provided Parent with current
and complete copies of each material International Plan (and, if
applicable, related trust or funding agreements or insurance
policies), all amendments thereto and written summaries or
interpretations thereof and the most recent plan financial
statements and actuarial reports, as applicable, for each
International Plan. Each International Plan has been
established, registered, maintained, amended, funded,
administered and invested in material compliance with its terms
(including the terms of any documents in respect of such
International Plan), all Applicable Laws and the collective
agreements, as applicable, and each International Plan has been
maintained in good standing with applicable Governmental
Authorities. Neither the Company nor any of its Subsidiaries has
a formal plan or has made an announcement, promise or commitment
(written or oral) to create any additional International Plan or
to improve, enhance or change the benefits provided under any
International Plan.
(i) Each International Plan that is a registered pension
plan has been funded in accordance with the most recently filed
actuarial valuation therefor.
(j) There is no material investigation by a Governmental
Authority or material action, suit, proceeding or claim (other
than routine claim claims for payment of benefits) pending
against or involving or, to the knowledge of the Company,
threatened against or involving, any International Plan.
(k) The consummation of the transactions contemplated by
this Agreement will not (either alone or together with any other
event) entitle any employee or independent contractor of the
Company or any of its Subsidiaries to severance pay or
accelerate the time of payment or vesting or trigger any payment
of funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or
trigger any other material obligation pursuant to, any
International Plan.
(l) All employer and employee payments, contributions and
premiums required to be remitted, paid to or in respect of each
International Plan have been paid or remitted in a timely
fashion in accordance with its terms and all Applicable Laws.
(m) To the knowledge of the Company, no event has occurred
respecting any registered International Plan which would entitle
any Person (without the consent of the Company) to
wind-up or
terminate any International Plan, in whole or in part. Where any
International Plan which is a registered pension plan has been
partially or fully
wound-up or
terminated, all assets, including any surplus, attributable to
such partial or full
wind-up or
termination have been fully distributed in accordance with all
Applicable Laws or where such distribution of assets is pending,
the amount of the surplus attributable to such partial or full
wind-up or
termination together with the date as of which such amount is
determined is disclosed in Section 4.18(m) of the Company
Disclosure Schedule.
(n) There is no entity other than the Company or any of its
Subsidiaries participating in any International Plan.
(o) All employee data necessary to administer each
International Plan is in the possession of the Company or its
agents and is in a form which is sufficient for the proper
administration of the International Plan in accordance with its
terms and all Applicable Laws and such data is complete and
correct in all material respects.
(p) None of the International Plans provide benefits beyond
retirement or other termination of service to employees or
former employees or to the beneficiaries or dependants of such
employees.
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(q) In the past two years (i) neither the Company nor
any of its Subsidiaries has effectuated a plant
closing (as defined in the Worker Adjustment and
Retraining Notification Act (the WARN Act)
affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of the
Company or any of its Subsidiaries or (ii) there has not
occurred a mass layoff (as defined in the WARN Act)
affecting any site of employment of the Company or any of its
Subsidiaries.
Section 4.19.
Environmental Matters. (a) Except as would
not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect:
(i) since August 31, 2003 (and prior to
August 31, 2003 if not fully resolved pursuant to all
Environmental Laws and all relevant Governmental Authorities
with no known outstanding commitment, liability or obligation),
no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has
been filed, no penalty has been assessed, and no claim, action,
suit, investigation, audit, review or proceeding (or any basis
therefor), including any appeal or application for review, is
pending or, to the knowledge of the Company, is threatened by
any Governmental Authority or other Person against or relating
to the Company or any Subsidiary and relating to or arising out
of any Environmental Law;
(ii) the Company and its Subsidiaries are and have been,
since August 31, 2003, (and prior to August 31, 2003
if such noncompliance is not fully resolved pursuant to all
Environmental Laws and all relevant Governmental Authorities
with no known outstanding commitment, liability or obligation)
in compliance with all Environmental Laws and all Environmental
Permits; and
(iii) the Company and its Subsidiaries have not used any
currently owned, operated or leased property that is located in
Canada as a landfill or for the disposal or deposit of waste in
violation of the Environmental Protection Act of Ontario or the
Environmental Quality Act of Quebec.
(b) For purposes of this Article 4 to the extent
relating to any matters arising under or relating to
Environmental Laws or Hazardous Substances, the terms
Company and Subsidiaries
shall include any entity that is a predecessor of the Company or
any of its Subsidiaries.
Section 4.20.
Intellectual Property. Section 4.20 of the
Company Disclosure Schedule contains a true and complete list of
(i) all material registrations and applications for
registration of the patents, trademarks, service marks, trade
dress, domain names, and copyrights owned by the Company or any
of its Subsidiaries and (ii) all material agreements
(excluding licenses for commercial off the shelf computer
software that are generally available on nondiscriminatory
pricing terms) to which the Company or any of its Subsidiaries
is a party or otherwise bound and pursuant to which the Company
or any of its Subsidiaries (x) obtains the right to use, or
a covenant not to be sued under, any Intellectual Property or
(y) grants the right to use, or a covenant not to be sued
under, any Intellectual Property (each a Material
License). Except as would not reasonably be expected
to have, individually or in the aggregate, a Company Material
Adverse Effect: (a) the Company and each of its
Subsidiaries exclusively owns, or is licensed to use (in each
case, free and clear of any Liens), all Intellectual Property
used in or necessary for the conduct of its business as
currently conducted; (b) neither the Company nor its
Subsidiaries has infringed, misappropriated or otherwise
violated the Intellectual Property rights of any Person within
the 3 years; (c) to the knowledge of the Company,
within the last 3 years, no Person has challenged,
infringed, misappropriated or otherwise violated any
Intellectual Property right owned by or exclusively licensed to
the Company or its Subsidiaries; (d) neither the Company
nor any of its Subsidiaries has received any written notice or
otherwise has any knowledge of any pending or threatened claim,
action, suit, order or proceeding with respect to any
Intellectual Property used by the Company and its Subsidiaries
or alleging that any services provided, processes used or
products used by the Company or any of its Subsidiaries
infringes, misappropriates or otherwise violates any
Intellectual Property rights of any Person; (e) the
consummation of the transactions contemplated by this Agreement
will not impair, extinguish or give rise to any breach or
default under any Material License; (f) the Company and its
Subsidiaries have taken reasonable steps in accordance with
normal industry practice to maintain the confidentiality of all
material Trade Secrets owned, used or held for use by the
Company or any of its Subsidiaries and, to the knowledge of the
Company, no such Trade Secrets have been disclosed other than to
employees, representatives and agents of the Company or any of
its Subsidiaries all of whom are bound by written
confidentiality agreements or otherwise subject to appropriate
confidentiality restrictions; (g) the IT Assets operate and
perform in all material respects in a manner that permits the
Company and its Subsidiaries, taken as a whole, to
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conduct its business as currently conducted and to the knowledge
of the Company, no person has gained unauthorized access to the
IT Assets and (h) the Company and its Subsidiaries have
implemented reasonable backup and disaster recovery technology
consistent with industry practice.
Section 4.21.
Material Contracts. All of the Material Contracts
of the Company and its Subsidiaries that are required to be
described in the Company Public Disclosure Documents (or to be
filed as exhibits thereto) are so described in the Company
Public Disclosure Documents (or filed as exhibits thereto) and
are in full force and effect except where such Material
Contracts have been superseded or amended or expired in
accordance with their terms. True and complete copies of all
such Material Contracts and all amendments to or waivers
thereunder have been made available by the Company to Parent.
Except for breaches, violations or defaults which would not
reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, (a) each of
the Material Contracts is valid and in full force and effect and
(b) neither the Company nor any of its Subsidiaries, nor to
the Companys knowledge any other party to a Material
Contract, has violated any provision of, or committed or failed
to perform any act which, with or without notice, lapse of time,
or both, would constitute a default under the provisions of such
Material Contract, and neither the Company nor any of its
Subsidiaries has received written notice (or, to the knowledge
of the Company, oral notice) that it has breached, violated or
defaulted under any Material Contract. Neither the Company nor
any of its Subsidiaries is party to any agreement containing any
provision or covenant limiting in any material respect the
ability of the Company or any of its Subsidiaries (or, after the
consummation of the Merger, Parent, the Surviving Corporation or
any of their respective Subsidiaries) to (i) sell any
products or services of or to any other Person, (ii) engage
in any line of business or (iii) compete with or to obtain
products or services from any Person or limiting the ability of
any Person to provide products or services to Parent or any of
its Subsidiaries (or, after the consummation of the Merger,
Parent, the Surviving Corporation or any of their respective
Subsidiaries).
Section 4.22.
Properties. (a) Section 4.22(a) of the
Company Disclosure Schedule sets forth the address of each
material parcel of real property owned by the Company or any of
its Subsidiaries.
(b) Section 4.22(b) of the Company Disclosure Schedule
sets forth the address of each parcel of all material leasehold
or subleasehold estates and other rights to use or occupy any
land or improvements held by or for the Company or its
Subsidiaries. True and complete copies of all leases and such
other documents relating to such estates or other rights
(including all extensions, supplements, amendments and other
modifications thereof, waivers thereunder, and nondisturbance
agreements, if any, relating thereto) have been made available
by the Company to Parent.
(c) The Company and its Subsidiaries have such good, valid
and marketable fee simple title to, or valid leasehold interests
in, as the case may be, all parcels of real property owned by
the Company or its Subsidiaries (collectively, the
Owned Real Property), all parcels of all
leasehold or subleasehold estates and other rights to use or
occupy any land or improvements held by or for the Company or
its Subsidiaries (collectively, the Leased Real
Property) and all other assets and properties
necessary to enable the Company and its Subsidiaries to conduct
its business, taken as a whole, as conducted as of the date of
this Agreement, free and clear of all Liens, except for
(i) Liens disclosed on the Company Balance Sheet or in the
notes thereto or securing liabilities reflected on the Company
Balance Sheet or in the notes thereto, (ii) in connection
with any Lien to be released at or prior to the Effective Time,
or (iii) any easement, right of way, covenant, restriction,
title defect, encroachment or other similar encumbrances that,
individually or in the aggregate, would not reasonably be
expected to materially interfere with the Companys and its
Subsidiaries ability to conduct its business, taken as a
whole, as conducted as of the date of this Agreement.
Section 4.23.
Antitakeover Statutes and Rights
Agreement. (a) The Company has taken all
action necessary to exempt the Merger, this Agreement and the
transactions contemplated hereby from Section 203 of
Delaware Law, and, accordingly, neither such Section nor any
other antitakeover or similar statute or regulation applies or
purports to apply to any such transactions. No other
control share acquisition, fair price,
moratorium or other antitakeover laws enacted under
U.S. state or federal laws apply to this Agreement or any
of the transactions contemplated hereby.
(b) The Company has taken all action necessary to render
the Company Rights inapplicable to the Merger, this Agreement
and the transactions contemplated hereby.
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Section 4.24.
No Additional Representations. Except as
otherwise expressly set forth in this Article 4, neither
the Company nor any of its Subsidiaries nor any other Person
makes any representations or warranties of any kind or nature,
express or implied. Neither the Company nor any of its
Subsidiaries has made or makes any representation or warranty
with respect to any projections, estimates or budgets made
available to Parent of future revenues, future results of
operations (or any component thereof), future cash flows or
future financial condition (or any component thereof) of the
Company and its Subsidiaries or the future business and
operations of the Company and its Subsidiaries.
ARTICLE 5
Representations
and Warranties of Parent
Parent represents and warrants to the Company that:
Section 5.01.
Corporate Existence and Power. Each of Parent and
Merger Subsidiary is duly incorporated, validly existing and, in
the case of Merger Subsidiary only, in good standing under the
laws of its jurisdiction of incorporation and has all corporate
powers, authority and capacity, and all governmental licenses,
authorizations, permits, consents and approvals required to
carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals the
absence of which would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse
Effect. Since the date of its incorporation, Merger Subsidiary
has not engaged in any activities other than in connection with
or as contemplated by this Agreement.
Section 5.02.
Corporate Authorization. (a) The execution,
delivery and performance by Parent and Merger Subsidiary of this
Agreement and, subject to the receipt of the Parent Shareholder
Approval, the consummation by Parent and Merger Subsidiary of
the transactions contemplated hereby are within the corporate
powers of Parent and Merger Subsidiary and, except for the
required approval of Parents shareholders and the adoption
of this Agreement by the sole stockholder of Merger Subsidiary,
have been duly authorized by all necessary company action on the
part of Parent and Merger Subsidiary. The Parent Shareholder
Approval is the only authorization required from the
shareholders of Parent to entitle Parent to approve the
acquisition of the Company, the Merger and the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Merger Subsidiary
and, assuming the due authorization, execution and delivery of
this Agreement by the Company, constitutes a valid and binding
agreement of each of Parent and Merger Subsidiary, enforceable
against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to creditors rights generally
and to general principles of equity.
(b) The Board of Directors of Parent has approved this
Agreement and the transactions contemplated hereby in accordance
with Applicable Law and has unanimously resolved (subject to
Section 8.06) to recommend approval of the Merger by its
shareholders (such recommendation, the Parent Board
Recommendation).
Section 5.03.
Governmental Authorization. The execution,
delivery and performance by Parent and Merger Subsidiary of this
Agreement and the consummation by Parent and Merger Subsidiary
of the transactions contemplated hereby require no action by or
in respect of, or filing with, any Governmental Authority, other
than (i) the filing of the Certificate of Merger as
provided in Section 2.01, (ii) compliance with any
applicable requirements of the HSR Act and of the Competition
Act, (iii) compliance with any applicable requirements of
the Securities Laws, (iv) compliance with any applicable
requirements of the ICA, (v) compliance with any applicable
requirements of Exon-Florio, (vi) approval of the Parent
Shareholder Circular by, and the filing of the Parent
Shareholder Circular with, the UKLA, (vii) any filings
required by the United States Surface Transportation Board,
(viii) any filings required by the FCC and (ix) any
actions or filings the absence of which would not reasonably be
expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
Section 5.04.
Non-contravention. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement
and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby do not and will not
(i) subject to the receipt of the Parent Shareholder
Approval, contravene, conflict with, or result in any violation
or breach of any provision of the organizational documents of
Parent or Merger Subsidiary, (ii) assuming compliance with
the matters referred to in Section 5.03, contravene,
conflict with or result in a violation or breach of any
provision of any Applicable Law, (iii) except as set forth
in Schedule 5.04, require any
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consent or other action by any Person under, constitute a
default, or an event that, with or without notice or lapse of
time or both, could become a default, under, or cause or permit
that termination, cancellation, acceleration or other change of
any right or obligation or the loss of any benefit to which
Parent or any of its Subsidiaries is entitled under any
agreement or other instrument legally binding upon Parent or any
of its Subsidiaries or any license, franchise, permit,
certificate, approval or other similar authorization applicable
to the assets or business of the Parent and its Subsidiaries or
(iv) result in the creation or imposition of any material
Lien on any asset of the Parent or any of its Subsidiaries, with
only such exceptions, in the case of each of clauses (ii)
through (iv), as would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse
Effect.
Section 5.05.
Disclosure Documents. None of the information
provided or to be provided, or confirmed or to be confirmed, in
writing by Parent (excluding any information provided that is
predictive or forward-looking in nature) specifically for
inclusion in the Company Proxy Statement or any amendment or
supplement thereto, at the time the Company Proxy Statement or
any amendment or supplement thereto is first mailed to
stockholders of the Company and at the time such stockholders
vote on adoption of this Agreement, will be in accordance with
the facts and will not omit anything likely to affect the import
of such information.
Section 5.06.
Finders Fees. There is no investment
banker, broker, finder or other intermediary that has been
retained by or is authorized to act on behalf of Parent who
might be entitled to any fee or commission from the Company or
any of its Affiliates upon consummation of the transactions
contemplated by this Agreement.
Section 5.07. Financing. As
of the date hereof, Parent has executed facility agreements from
financial institutions to provide funds, together with available
cash, sufficient to pay the aggregate Merger Consideration and
related fees and expenses at the Closing. Parent has provided to
the Company copies (with certain information redacted) of all
facility agreements and other material documentation provided by
financial institutions as of the date of this Agreement in
regard to the commitments to provide financing for the
transactions contemplated by this Agreement. For the avoidance
of doubt, the Company acknowledges that such financing
agreements are provided pursuant to the Confidentiality
Agreement and are Confidential Information for
purposes thereof. The facility agreements are not subject to any
conditions other than as set forth therein, are in full force
and effect and have not been withdrawn. To the knowledge of
Parent, there is no fact or occurrence existing that would
reasonably be expected to make any of the stated assumptions or
conditions or any of the other statements set forth in the
facility agreements materially inaccurate. As of the date of
this Agreement, Parent has no reason to believe that it will be
unable to satisfy any of the conditions to the facility
agreements or that the funds for the facility agreements will
not be available on a timely basis for the transactions
contemplated hereby. For the avoidance of doubt, the failure of
Parent to obtain the financing referenced above, including due
to the failure to satisfy any condition to funding, is not a
condition to this Agreement.
ARTICLE 6
Covenants
of the Company
The Company agrees that:
Section 6.01.
Conduct of the Company. From the date hereof
until the Effective Time, the Company shall, and shall cause
each of its Subsidiaries to, conduct its business in the
ordinary course consistent with past practice and use its
reasonable best efforts to (i) preserve intact its business
organization consistent with ongoing business needs,
(ii) maintain in effect all of its material foreign,
federal, state, provincial and local Permits, (iii) keep
available the services of its executive officers and key
employees and (iv) maintain satisfactory relationships with
its customers, lenders, suppliers and others having material
business relationships with it. Without limiting the generality
of the foregoing and to the fullest extent permitted by
Applicable Law, from the date of this Agreement until the
Effective Time, except as set forth in Section 6.01 of the
Company Disclosure Schedule, or with Parents prior written
consent, the Company shall not, and shall not permit any of its
Subsidiaries to:
(a) amend its articles of incorporation, bylaws or other
similar organizational documents (whether by merger,
consolidation or otherwise);
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(b) split, combine or reclassify any shares of capital
stock of the Company or any of its Subsidiaries or declare, set
aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect
of the capital stock of the Company or its Subsidiaries, or
redeem, repurchase or otherwise acquire or offer to redeem,
repurchase, or otherwise acquire any Company Securities or any
Company Subsidiary Securities, except for (i) forfeitures
under Restricted Stock Awards or share repurchases in connection
with the exercise of Company Stock Options or the vesting of
Restricted Stock Awards consistent with past practice,
(ii) dividends by any of its wholly-owned Subsidiaries, and
(iii) regular quarterly cash dividends on the shares of
Company Stock not in excess of $0.17 per quarter;
(c) (i) issue, deliver or sell, or authorize the
issuance, delivery or sale of, any shares of any Company
Securities or Company Subsidiary Securities, other than the
issuance of (A) any shares of Company Stock granted
pursuant to Restricted Stock Awards or upon the exercise of
Company Stock Options that, in each case, are outstanding on the
date of this Agreement in accordance with the terms of those
stock awards and options on the date of this Agreement and
(B) any Company Subsidiary Securities to the Company or any
other Subsidiary or (ii) amend any term of any Company
Security or any Subsidiary Security (in each case, whether by
merger, consolidation or otherwise);
(d) incur any capital expenditures or any obligations or
liabilities in respect thereof, except for (i) those
contemplated by the capital expenditures set forth in the
forecasts that have been made available to Parent prior to the
date of this Agreement, (ii) those required by new revenue
contracts entered into after the date of this Agreement or
(iii) any unforecasted capital expenditures not to exceed
$10 million in the aggregate during the first six months
following the date of this Agreement or $15 million in the
aggregate during the first nine months following the date of
this Agreement;
(e) (i) merge, amalgamate or consolidate with any
other Person other than a Subsidiary of the Company with another
Subsidiary of the Company, (ii) acquire (including by
merger, consolidation, or acquisition of stock or assets) any
interest in any corporation, partnership, other business
organization or any division thereof or any material amount of
assets from any other Person, other than the Company or any
Company Subsidiary, with a purchase price in excess of
$10 million in the aggregate during the first six months
following the date of this Agreement or $15 million in the
aggregate during the first nine months following the date of
this Agreement, except for those contemplated by the
acquisitions expenditures set forth in the forecasts that have
been made available to Parent prior to the date of this
Agreement, or (iii) adopt a plan of complete or partial
liquidation, dissolution, recapitalization or restructuring;
(f) sell, lease or otherwise transfer, or create or incur
any Lien on, any of its assets, securities, properties,
interests or businesses, other than sales of assets, securities,
properties, interests or businesses in the ordinary course of
business consistent with past practice;
(g) other than in connection with actions permitted by
Section 6.01(d) or Section 6.01(e), make any loans,
advances or capital contributions to, or investments in, any
other Person, other than (i) by the Company or any of its
Subsidiaries to or in the Company or any of its Subsidiaries or
(ii) in the ordinary course of business consistent with
past practice;
(h) create, incur, assume, suffer to exist or otherwise be
liable with respect to any indebtedness for borrowed money or
guarantees thereof other than (i) pursuant to existing
credit facilities in the ordinary course of business, including
letters of credit, (ii) guarantees in existence as of the
date of this Agreement or entered into in the ordinary course of
business with respect to hedging arrangements or
(iii) bonding arrangements entered into in the ordinary
course of business consistent with past practices;
(i) (i) enter into any agreement or arrangement that
limits or otherwise restricts in any material respect the
Company, any of its Subsidiaries or any of their respective
Affiliates or any successor thereto or that could, after the
Effective Time, limit or restrict in any material respect the
Company, any of its Subsidiaries, the Surviving Corporation,
Parent or any of their respective Affiliates, from engaging or
competing in any line of business, in any location or with any
Person or (ii) enter into any Material Contract (other than
any customer contract entered into by the public transit
business of the Company and its Subsidiaries), amend or modify
in
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any material respect or terminate any Material Contract or
otherwise waive, release or assign any material rights, claims
or benefits of the Company or any of its Subsidiaries;
(j) terminate, renew, suspend, abrogate, amend or modify in
any material respect any Permit held by the Company or any of
its Subsidiaries, other than in the ordinary course of business;
(k) (i) (A) grant or increase any severance or
termination pay to (or amend any existing arrangement with) any
director or officer of the Company or any of its Subsidiaries,
(B) grant or increase any severance or termination pay to
(or amend any existing arrangement with) any other employee of
the Company or any of its Subsidiaries other than in the
ordinary course of business consistent with past practices or
(C) adopt any severance or termination pay policies,
(ii) increase benefits payable under any existing severance
or termination pay policies or employment agreements,
(iii) enter into any employment, deferred compensation or
other similar agreement (or amend any such existing agreement)
with any director, officer or employee of the Company or any of
its Subsidiaries, other than employment, deferred compensation
or other similar agreements with new employees hired to fill
existing positions consistent with past practice,
(iv) establish, adopt or amend (except as required by
Applicable Law) (A) any collective bargaining agreement,
other than renewals or extensions on the terms in effect on the
date hereof or (B) any Employee Plan that (1) in the
case of any director or officer of the Company or any of its
Subsidiaries, provides any material new benefit or (2) will
impose any material cost on the Company and its Subsidiaries or
(v) increase compensation, bonus or other benefits payable
to any director, officer or employee of the Company or any of
its Subsidiaries, other than, in the case of this
clause (v) only and only with respect to any employee of
the Company or any of its Subsidiaries who is not at a level of
vice president or higher, in the ordinary course of business
consistent with past practice and, in the aggregate, consistent
with the Company business plans provided to Parent prior to the
date hereof;
(l) change the Companys methods of accounting, except
as required by concurrent changes in GAAP or in
Regulation S-X
of the 1934 Act, as agreed to by its independent public
accountants;
(m) settle, or offer or propose to settle, (i) any
material litigation, action, suit, audit, investigation,
arbitration, proceeding or other claim involving or against the
Company or any of its Subsidiaries, other than any settlement
that involves only a payment of monetary damages (and does not
involve behavioral restrictions or injunctive or other equitable
relief) that is fully covered (except for any immaterial
amounts) by an insurance policy the applicability of which is
not in doubt, (ii) any stockholder litigation or dispute
against the Company or any of its officers or directors or
(iii) any material litigation, action, suit, audit,
investigation, arbitration, proceeding or other claim that
relates to the transactions contemplated hereby;
(n) fail to use reasonable best efforts to maintain
existing material insurance policies or comparable replacement
policies, in each case, to the extent available for a similar
reasonable cost;
(o) make or change any material Tax election (other
than an election pursuant to Section 965 of the Code),
change any annual tax accounting period, adopt or change any
method of tax accounting, materially amend any Tax Returns or
file claims for Tax refunds, enter any material closing
agreement, settle any material Tax claim, audit or assessment,
or surrender any right to claim a material Tax refund, offset or
other reduction in Tax liability, consent to any extension or
waiver of the limitations period applicable to any Tax claim or
assessment or take or omit to take any other action, if any such
action or omission would have the effect of materially
increasing the Tax liability or materially reducing any Tax
asset of the Company or any of its Subsidiaries;
(p) take any action that would make any representation or
warranty of the Company hereunder inaccurate in any respect at,
or as of any time before, the Effective Time;
(q) take any action that is reasonably expected to result
in any of the conditions to the Merger set forth in
Article 9 not being satisfied or would materially delay the
Closing; or
(r) agree, resolve or commit to do any of the foregoing.
Section 6.02. Access
to Information; Confidentiality. From the date of
this Agreement until the Effective Time and subject to
Applicable Law, the Company shall, and shall cause its
Subsidiaries to, (i) give to Parent, its counsel, financial
advisors, auditors and other authorized representatives
reasonable access during normal business
A-23
hours to its offices, properties, books and records,
(ii) furnish to Parent, its counsel, financial advisors,
auditors and other authorized representatives such financial and
operating data and other information as such Persons may
reasonably request; provided, that the Company may
restrict the foregoing access to the extent believed in good
faith to be reasonable in light of requirements of Applicable
Law; and (iii) instruct its employees, counsel, financial
advisors, auditors and other authorized representatives to
cooperate with Parent in its investigation. Any investigation
pursuant to this Section 6.02 shall be conducted in such
manner as not to interfere unreasonably with the conduct of the
business of the Company. All information furnished pursuant to
this Section 6.02 shall be subject to the Confidentiality
Agreement. No information or knowledge obtained in any
investigation pursuant to this Section 6.02 shall affect or
be deemed to modify any representation or warranty made herein
or the conditions to the obligations of the parties hereto to
consummate the Merger.
Section 6.03.
Stockholder Litigation. The Company shall give
Parent the opportunity to participate in the defense or
settlement of any stockholder litigation (including derivative
claims) against the Company
and/or its
directors relating to the transactions contemplated by this
Agreement. The Company agrees that it shall not settle or offer
to settle any litigation commenced on or after the date of this
Agreement against it or any of its directors or executive
officers by any stockholder of the Company relating to this
Agreement, the Merger or any other transaction contemplated
hereby or otherwise, without the prior written consent of Parent.
Section 6.04.
Tax Matters. (a) All Tax Returns required to
be filed by the Company or any of its Subsidiaries will be filed
by, or on behalf of, the Company or any of its Subsidiaries when
due in accordance with past practice and applicable laws and as
of the time of filing, will be true and complete in all material
respects.
(b) The Company and each of its Subsidiaries shall
establish or cause to be established in accordance with GAAP on
or before the Effective Time an adequate accrual for all Taxes
due with respect to any period or portion thereof ending prior
to or as of the Effective Time.
(c) All transfer, documentary, sales, use, stamp,
registration, value added and other such Taxes and fees
(including any penalties and interest) incurred in connection
with the Merger (including any real property transfer Tax and
any similar Tax) shall be paid by the Company when due, and the
Company shall, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such Taxes
and fees, and, if required by Applicable Law, the Company shall,
and shall cause its Affiliates to, join in the execution of any
such Tax Returns and other documentation.
Section 6.05.
Connecticut Transfer Act. The Company and Parent
shall use their respective reasonable best efforts to make an
evaluation to determine whether the Connecticut Transfer Act
applies to any business operation, real property or facility
owned, leased or operated by the Company or any of its
Subsidiaries in Connecticut as a result of the transactions
contemplated by this Agreement. If the Company and Parent
determine that the Connecticut Transfer Act applies to this
transaction, the Company shall (a) determine at least
20 days prior to the Effective Time which business
operations, real property, and facilities each constitute an
establishment pursuant to the Connecticut Transfer
Act, (b) determine which form(s) must be prepared pursuant
to the Connecticut Transfer Act, (c) ensure that such
form(s) are prepared in compliance with the applicable
requirements of the Connecticut Transfer Act and delivered to
Parent 10 days prior to the Effective Time and
(d) sign such form(s) as the certifying party prior to the
Effective Time; provided that any such determination and
forms shall be subject to Parents reasonable right to
review and approve, which approval shall not be unreasonably
withheld or conditioned, and provided further that, with
respect to (a), if reasonably requested by Parent, Company shall
provide documentation (which shall not include a legal opinion)
supporting its determination that the business operations, real
property or facilities each do not constitute an
establishment pursuant to the Connecticut Transfer
Act.
Section 6.06.
Industrial Site Recovery Act. The Company shall
evaluate whether the Industrial Site Recovery Act applies to any
business operation, facility or real property which is owned,
leased or operated by the Company or any of its Subsidiaries and
which is located in the State of New Jersey. As necessary, the
Company shall seek a determination from the NJDEP that the
Industrial Site Recovery Act is not applicable to the
transactions contemplated by this Agreement. If reasonably
requested by Parent, Company shall provide a letter of
non-applicability from the NJDEP supporting its determination
that the Industrial Site Recovery Act does not apply to the
transactions contemplated by this Agreement or documentation
(which shall not include a legal opinion) supporting its
determination that the Industrial Site Recovery Act does not
apply to such business, operation, real
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property or facility. The Company shall prepare and make all
filings with the NJDEP and take any other action from the date
of this Agreement until the Effective Time necessary to comply
with the Industrial Site Recovery Act in connection with the
transactions contemplated by this Agreement. Prior to providing
any filings to the NJDEP or taking any necessary actions, Parent
shall have the reasonable right to review and approve, which
approval shall not be unreasonably withheld or conditioned, of
the form and substance of any such filings and of any other
necessary action, and the Company shall promptly provide Parent
with copies of all material correspondence and other
documentation received from NJDEP related to the Companys
Industrial Site Recovery Act compliance activities.
ARTICLE 7
Covenants
of Parent
Parent agrees that:
Section 7.01.
Director and Officer Liability. Following the
consummation of the Merger, Parent shall cause the Surviving
Corporation, and the Surviving Corporation hereby agrees, to do
the following:
(a) The Surviving Corporation shall indemnify and hold
harmless the present and former officers and directors of the
Company (each an Indemnified Person) in
respect of acts or omissions occurring at or prior to the
Effective Time to the fullest extent permitted by Delaware Law
or any other Applicable Law or provided under the Companys
certificate of incorporation and bylaws in effect on the date
hereof; provided that such indemnification shall be
subject to any limitation required to be imposed from time to
time by Applicable Law.
(b) For a period of six years after the Effective Time,
Parent shall cause to be maintained in effect provisions in the
Surviving Corporations certificate of incorporation and
bylaws (or in such documents of any successor to the business of
the Surviving Corporation) regarding elimination of liability of
directors, indemnification of officers, directors and employees
and advancement of expenses that are no less advantageous to the
intended beneficiaries than the corresponding provisions in
existence on the date of this Agreement.
(c) Prior to the Effective Time, Parent may purchase a
prepaid directors and officers liability
tail insurance policy covering a period of six years
following the Effective Time in respect of acts or omissions
occurring prior to the Effective Time and covering those persons
who are currently covered by (and providing coverage and amounts
and containing terms and conditions that are, in the aggregate,
no less advantageous to the insured than) the policies of
directors and officers liability insurance and
fiduciary liability insurance maintained by the Company and in
existence on the date of this Agreement and previously made
available to Parent. If Parent does not so purchase such a
tail policy prior to the Effective Time, then Parent
shall cause to be maintained by the Surviving Corporation (or
any successor to the business of the Surviving Corporation) for
a period of six years after the Effective Time the current
policies of directors and officers liability
insurance and fiduciary liability insurance maintained by the
Company and in existence on the date of this Agreement and made
available to Parent (provided that the Surviving
Corporation (or any such successor) may substitute therefor one
or more policies of at least the same coverage and amounts
containing terms and conditions that are, in the aggregate, no
less advantageous to the insured) with respect to claims arising
from facts or events that occurred on or before the Effective
Time; provided that, in satisfying its obligation under
this Section 7.01(c), the Surviving Corporation shall not
be obligated to pay annually in the aggregate in excess of 200%
of the amount per annum the Company paid in its last full fiscal
year, which amount is set forth in Section 7.01(c) of the
Company Disclosure Schedule; and provided further that if
the annual premiums of such insurance coverage exceed such
amount, the Surviving Corporation shall be obligated to obtain a
policy with the greatest coverage available, with respect to
matters occurring prior to the Effective Time, for a cost not
exceeding such amount. In order to facilitate the resolution of
any claim that may be made against an Indemnified Person, Parent
shall cause the Surviving Corporation to (i) give to such
Indemnified Person, its authorized representatives and the
representatives of the carrier of the directors and
officers liability insurance and fiduciary insurance (the
D&O Carrier) reasonable access during
normal business hours to its offices, properties, books and
records, (ii) furnish to such Indemnified Person, its
authorized representatives and the D&O Carrier such
information as such Persons may reasonably request, and
(iii) instruct its
A-25
employees, counsel, and other authorized representatives to
otherwise cooperate with such Indemnified Person and the D&O
Carrier to resolve such claim
(d) If Parent, the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or
(ii) transfers or conveys all or substantially all of its
properties and assets to any Person, then, and in each such
case, to the extent necessary, proper provision shall be made so
that the successors and assigns of Parent or the Surviving
Corporation, as the case may be, shall assume the obligations
set forth in this Section 7.01.
(e) The rights of each Indemnified Person under this
Section 7.01 shall be in addition to any rights such Person
may have under the certificate of incorporation or bylaws of the
Company or any of its Subsidiaries, or under Delaware Law or any
other Applicable Law or under any agreement of any Indemnified
Person with the Company or any of its Subsidiaries. These rights
shall survive consummation of the Merger and are intended to
benefit, and shall be enforceable by, each Indemnified Person.
Section 7.02.
Employee Matters. (a) Subject to Applicable
Law, until the first anniversary of the Effective Time, Parent
shall and shall cause its Subsidiaries (including the Surviving
Corporation) to provide to the employees of the Company and its
Subsidiaries who are employees thereof as of the Effective Time
(the Company Employees) compensation (other
than equity-based compensation) and benefit plans substantially
comparable in the aggregate to those provided to the Company
Employees immediately prior to the Effective Time; provided
that this sentence of Section 7.02(a) shall not apply
to any employees covered by the collective bargaining agreement
listed in Section 4.18(h) of the Company Disclosure
Schedule. Parent shall and shall cause its Subsidiaries
(including the Surviving Corporation) to comply with all of the
Companys obligations under all collective bargaining
agreement listed in Section 4.18(h) of the Company
Disclosure Schedule, and all employment, severance and other
similar individual agreements listed in Section 4.18(a) of
the Company Disclosure Schedule pursuant to the terms of such
agreements as of the date hereof.
(b) Each Company Employee will receive service credit for
all periods of employment with the Company or any of its
Subsidiaries or any predecessor thereof prior to the Effective
Time for purposes of vesting and eligibility under any employee
benefit plan in which such employee participates after the
Effective Time, to the extent that such service was recognized
under any analogous plan of such Company or Subsidiary in effect
immediately prior to the Effective Time; provided that no
such service credit shall be given for purposes of benefit
accruals under any defined benefit pension or retiree healthcare
plans where such credit would result in a duplication of
benefits.
(c) If on or after the Effective Time, any Company Employee
becomes covered under any benefit plan providing medical,
dental, health, pharmaceutical or vision benefits (a
Successor Plan), other than the Employee Plan
or International Plan in which he or she participated
immediately prior to the Effective Time, any such Successor Plan
shall not include any restrictions or limitations with respect
to any pre-existing condition exclusions and
actively-at-work
requirements (except to the extent such exclusions or
requirements were applicable under the corresponding Employee
Plan or International Plan), and any eligible expenses incurred
by such Company Employee and his or her covered dependents
during the calendar year in which the Company Employee becomes
covered under any Successor Plan shall be taken into account
under any such Successor Plan for purposes of satisfying all
deductible, coinsurance and maximum
out-of-pocket
requirements applicable to such employee
and/or his
or her covered dependents for that year, to the extent that such
expenses were incurred during a period in which the Company
Employee or covered dependent was covered under a corresponding
Employee Plan or International Plan.
(d) Nothing contained herein shall be construed as
requiring Parent, its Affiliates, the Company or its
Subsidiaries to continue the employment of any specific person
or, except as otherwise specifically set forth above, to
continue any specific Employee Plan. No Company Employee shall
have any third party beneficiary rights under, or rights to any
specific levels of compensation or benefits as a result of the
application of this Section 7.02.
A-26
ARTICLE 8
Covenants
of Parent and the Company
The parties hereto agree that:
Section 8.01.
Notices of Certain Events. Each of the Company
and Parent shall promptly notify the other party of:
(a) any written notice from any Person alleging that the
consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement;
(b) any material notice or other communication from any
Governmental Authority or agency in connection with the
transactions contemplated by this Agreement;
(c) any actions, suits, claims, investigations, audits or
proceedings commenced or, to its knowledge, threatened against,
relating to or involving or otherwise affecting the Company or
any of its Subsidiaries or Parent and any of its Subsidiaries,
as the case may be, that, if pending on the date of this
Agreement, would have been required to have been disclosed
pursuant to any Section of this Agreement or that relate to the
consummation of the transactions contemplated by this Agreement;
(d) any inaccuracy of any representation or warranty of
such party contained in this Agreement at any time during the
term of this Agreement that would reasonably be expected to
cause the conditions set forth in Article 9 not to be
satisfied; and
(e) any failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or
satisfied by it hereunder;
provided that the delivery of any notice pursuant to this
Section 8.01 shall not limit or otherwise affect the
remedies available hereunder to the party receiving the notice.
Section 8.02.
Reasonable Best Efforts. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each
of the Company and Parent shall use its reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the other party in
doing, all things necessary, proper or advisable to consummate
and make effective, as promptly as practicable, the Merger and
the other transactions to be performed or consummated by such
party in accordance with the terms of this Agreement, including
(i) the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as
practicable, (ii) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental
Authorities and the making of all necessary registrations and
filings and the taking of all steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Authority, (iii) the
avoidance of each and every impediment under any antitrust,
merger control, competition or trade regulation law that may be
asserted by any Governmental Authority with respect to the
Merger so as to enable the Closing to occur as soon as
reasonably possible, (iv) the obtaining of all necessary
consents, approvals or waivers from third parties, and
(v) the execution and delivery of any additional
instruments necessary to consummate the Merger and other
transactions contemplated hereby and to fully carry out the
purposes of this Agreement; provided that the parties
hereto understand and agree that the reasonable best efforts of
any party hereto shall not be deemed to include
(A) divesting or otherwise holding separate (including by
establishing a trust or otherwise), or taking any other action
(or otherwise agreeing to do any of the foregoing) with respect
to any of its, the Surviving Corporations or any of their
respective Affiliates businesses, assets or properties
that in the aggregate generated EBITDA in the Relevant Period
(determined on a pro forma basis with respect to any such
businesses, assets or properties acquired subsequent to the
commencement of the applicable Relevant Period), based on the
internal financial records of Parent or the Company, as
applicable, in excess of $20 million, (B) entering
into any settlement, undertaking, consent decree, stipulation or
agreement with any Governmental Authority that would require it,
the Surviving Corporation or any of their respective Affiliates
to take any action not required to be taken pursuant to the
preceding clause (A), or (C) taking any action to have
any preliminary or permanent injunction entered at the request
of any Governmental Authority by any court or other Governmental
Authority lifted, vacated or reversed. In addition, if requested
by the other party in writing in order to facilitate the
obtaining of all necessary actions or nonactions, waiver,
consents and approvals from Governmental Authorities,
(1) the Board of Directors of
A-27
the Company shall publicly confirm the Company Board
Recommendation within five Business Days of such written request
by Parent that it do so, and (2) the Board of Directors of
Parent shall publicly confirm the Parent Board Recommendation
within five Business Days of such written request by the Company
that it do so.
(b) In connection with and without limiting the foregoing,
each of Parent and the Company shall make an appropriate filing
of a Notification and Report Form pursuant to the HSR Act and
shall make such filings as may be required or desirable pursuant
to the Competition Act and any other applicable competition,
merger control, antitrust or similar law that the Company and
Parent deem advisable or appropriate, in each case with respect
to the transactions contemplated by this Agreement and as
promptly as practicable. All such antitrust or competition law
filings shall be in substantial compliance with the requirements
of the Applicable Laws. Each of Parent and the Company shall
supply as promptly as practicable any additional information and
documentary material that may be requested pursuant to the HSR
Act or the Competition Act and, subject to the proviso in
Section 8.02(a), shall take all other actions necessary to
cause the expiration or termination of the applicable waiting
periods under the HSR Act and to obtain Competition Act Approval
as soon as practicable.
(c) Each of Parent and the Company shall use its reasonable
best efforts to (i) cooperate in all respects with each
other in connection with any filing or submission and in
connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) promptly
inform the other party of any communication received by such
party from, or given by such party to, the Antitrust Division of
the Department of Justice, the Federal Trade Commission, the
Canadian Competition Bureau or any other Governmental Authority,
other than in connection with obtaining ICA Approval, if
required, and of any material communication received or given in
connection with any proceeding by a private party, in each case
regarding any of the transactions contemplated hereby, and
(iii) permit the other party to review any communication
given by it to, and consult with each other in advance of any
meeting or conference with, any such Governmental Authority or,
in connection with any proceeding by a private party, with any
other person, and to the extent permitted by such Governmental
Authority or other Person, give the other party the opportunity
to attend and participate in such meetings and conferences.
(d) Each of the Company and Parent shall use its reasonable
best efforts to provide the other party such assistance as the
other party may reasonably request in connection with the
preparation of the Company Proxy Statement or the Parent
Shareholder Circular, as the case may be, including the
provision of all necessary information and the verification
thereof. Further, each of the Company and Parent shall use its
reasonable best efforts to cause its independent accountants to
provide such information and assistance as the other party may
reasonable request in connection with the preparation of the
Company Proxy Statement or the Parent Shareholder Circular, as
the case may be, including the provision of such comfort letters
as are customary for the relevant document.
(e) The Company shall use its reasonable best efforts to
cooperate with Parent in its efforts to consummate the financing
of the transactions contemplated by this Agreement; provided
that as a condition to doing so the Company and its
directors, officers, employees and agents who are requested to
assist in providing such cooperation shall be provided by Parent
with full indemnification from Parent. Such reasonable best
efforts shall include, to the extent reasonably requested by
Parent, (i) providing direct contact between prospective
lenders and the officers and directors of the Company and its
Subsidiaries, (ii) providing assistance in preparation of
confidential information memoranda, preliminary offering
memoranda, financial information and other materials to be used
in connection with obtaining such financing,
(iii) cooperation with the marketing efforts of Parent and
its financing sources for such financing, including
participation in management presentation sessions, road
shows and sessions with rating agencies,
(iv) providing assistance in obtaining any consents of
third parties necessary in connection with such financing,
(v) providing assistance in extinguishing existing
indebtedness of the Company and its Subsidiaries and releasing
Liens securing such indebtedness, in each case to take effect at
the Effective Time, (vi) cooperation with respect to
matters relating to pledges of collateral to take effect at the
Effective Time in connection with such financing,
(vii) assisting Parent in obtaining legal opinions to be
delivered in connection with such financing,
(viii) assisting Parent in securing the reasonable
cooperation of the independent accountants of the Company and
its Subsidiaries, including with respect to the delivery of
accountants comfort letters, and (ix) providing the
financial information necessary for the satisfaction of the
obligations and conditions set forth in the facility agreements
or other agreements relating to the Financing within the time
periods required thereby. Further, the Company shall use its
reasonable best efforts to provide Parent such assistance as
Parent may reasonably request in connection with the
A-28
preparation of any prospectus, circular, notice of extraordinary
general meeting or any document ancillary to the aforementioned
as shall be required in connection with the financing,
syndication or refinancing of the transactions contemplated by
this Agreement.
Section 8.03.
Certain Filings. (a) The Company and Parent
shall cooperate with one another (i) in connection with the
preparation of the Company Proxy Statement, the Parent
Shareholder Circular, any Financing Documents and any other
document referred to in Section 4.09(b), (ii) in
determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions,
consents, approvals or waivers are required to be obtained from
parties to any Material Contracts, in connection with the
consummation of the transactions contemplated by this Agreement
and (iii) in taking such actions or making any such
filings, furnishing information required in connection therewith
or with the Company Proxy Statement, the Parent Shareholder
Circular, Financing Documents or any other document referred to
in Section 4.09(b) and seeking to obtain, in a timely
fashion, any such actions, consents, approvals or waivers. The
Company and Parent shall cooperate with one another in setting a
mutually acceptable date, which shall be as soon as reasonably
practicable, for the Company Stockholder Meeting and the Parent
Shareholder Meeting so as to enable them to occur, to the extent
practicable, on the same date.
(b) Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Company Proxy Statement
each time before such document (or any amendment thereto) is
filed with the SEC
and/or the
CSA, and reasonable and good faith consideration shall be given
to any comments made by Parent and its counsel. Each of Parent
and the Company shall provide the other party and its counsel
with (i) any written or material oral comments or other
communications, whether written or oral, that such party or its
counsel may receive from time to time from the SEC or its staff
with respect to the Company Proxy Statement promptly after
receipt of those comments or other communications and
(ii) a reasonable opportunity to participate in the
response to those comments and to provide comments on that
response (to which reasonable and good faith consideration shall
be given), including by participating in any discussions or
meetings with the SEC.
(c) The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Parent Shareholder
Circular and Financing Documents and reasonable and good faith
consideration shall be given to any comments made by the Company
and its counsel. Parent shall provide the Company and its
counsel with (i) any written or material oral comments that
such party or its counsel may receive from time to time from the
UKLA with respect to the Parent Shareholder Circular or
Financing Documents promptly after receipt of those comments or
other communications and (ii) a reasonable opportunity to
participate in the response to those comments and to provide
comments on that response (to which reasonable and good faith
consideration shall be given).
Section 8.04.
Company Stockholder Meeting; Proxy Material. The
Company shall cause a meeting of its stockholders (the
Company Stockholder Meeting) to be duly
called and held for the purpose of obtaining the Company
Stockholder Approval. Subject to Section 8.06(c), the Board
of Directors of the Company shall make the Company Board
Recommendation. In connection with the Company Stockholder
Meeting, the Company shall (a) prepare and file with the
SEC and the CSA the Company Proxy Statement as soon as
reasonably practicable and in any event within three weeks of
the date hereof, (b) use its reasonable best efforts to
have cleared by the SEC and thereafter mail to its stockholders
as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, in each case subject to
the cooperation of Parent in connection therewith in accordance
with Section 8.02(d), (b) use its reasonable best
efforts to obtain the Company Stockholder Approval and
(c) otherwise comply with all legal requirements applicable
to the Company Stockholder Meeting. Without limiting the
generality of the foregoing, this Agreement and the Merger shall
be submitted to the Companys stockholders at the Company
Stockholder Meeting whether or not (i) the Board of
Directors of the Company shall have effected a Change in
Recommendation or (ii) any Acquisition Proposal shall have
been publicly proposed or announced or otherwise submitted to
the Company or any of its advisors.
Section 8.05.
Parent Shareholder Meeting. Parent shall call and
give notice of an extraordinary general meeting of its
shareholders (the Parent Shareholder Meeting)
for the purpose of obtaining the Parent Shareholder Approval.
Subject to Section 8.06(c), the Board of Directors of
Parent shall make the Parent Board Recommendation. In connection
with the Parent Shareholder Meeting, Parent shall
(a) prepare and file with the UKLA a draft copy of the
Parent Shareholder Circular as soon as reasonably practicable
and in any event within
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three weeks hereof, and use its reasonable best efforts to have
approved by the UKLA and thereafter mail to its shareholders as
promptly as practicable the Parent Shareholder Circular, in each
case subject to the cooperation of the Company in connection
therewith in accordance with Section 8.02(d), (b) use
its reasonable best efforts to obtain the Parent Shareholder
Approval and (c) otherwise comply with all legal
requirements applicable to the Parent Shareholder Meeting.
Without limiting the generality of the foregoing, the Merger
shall be submitted to Parents shareholders at the Parent
Shareholder Meeting whether or not (i) the Board of
Directors of Parent shall have effected a Change in
Recommendation or (ii) any Acquisition Proposal shall have
been publicly proposed or announced or otherwise submitted to
Parent or any of its advisors.
Section 8.06.
No Solicitation; Other Offers. (a) Neither
the Company or Parent (each, a Section 8.06
Party) or any of their respective Subsidiaries shall,
nor shall a Section 8.06 Party or any of its Subsidiaries
authorize or permit any of its or their respective officers,
directors, employees, investment bankers, attorneys,
accountants, consultants or other agents or advisors to,
directly or indirectly, (i) solicit, initiate or take any
action to knowingly facilitate or encourage the submission of
any Acquisition Proposal, (ii) enter into or participate in
any discussions or negotiations with, furnish any information
relating to such Section 8.06 Party or any of its
Subsidiaries or afford access to the business, properties,
assets, books or records of such Section 8.06 Party or any
of its Subsidiaries to, or otherwise cooperate in any way with,
any Third Party that is seeking to make, or has made, an
Acquisition Proposal, (iii) grant any waiver or release
under any standstill or similar agreement with respect to any
class of equity securities of such Section 8.06 Party or
any of its Subsidiaries, (iv) fail to make, withdraw or
modify in a manner adverse to the other Section 8.06 Party
the approval or recommendation of such Section 8.06
Partys Board of Directors (or recommend an Acquisition
Proposal or take any action or make any statement inconsistent
with the approval or recommendation of the Merger) (any of the
foregoing in this clause (iv), a Change in
Recommendation) or (v) enter into any agreement
in principle, letter of intent, term sheet or other similar
instrument relating to an Acquisition Proposal.
(b) Notwithstanding the foregoing, the Board of Directors
of a Section 8.06 Party, directly or indirectly through
advisors, agents or other intermediaries, may (i) engage in
negotiations or discussions with any Third Party that, subject
to the Section 8.06 Partys compliance with
Section 8.06(a), has made a bona fide Acquisition
Proposal that the Board of Directors of such Section 8.06
Party reasonably determines is or will lead to a Superior
Proposal and (ii) thereafter furnish to such Third Party
nonpublic information relating to such Section 8.06 Party
or any of its Subsidiaries pursuant to a confidentiality
agreement with terms not less restrictive to such Third Party
than those contained in the Confidentiality Agreement dated
December 18, 2006 between the Company and Parent (the
Confidentiality Agreement) (a copy of which
shall be provided for informational purposes only to the other
Section 8.06 Party). Nothing contained herein shall prevent
the Board of Directors of a Section 8.06 Party from
(x) taking and disclosing to its stockholders a position
contemplated by
Rule 14e-2(a)
under the 1934 Act or (y) making any disclosure to its
stockholders
and/or the
public required by Applicable Law.
Superior Proposal means any bona fide,
unsolicited written Acquisition Proposal for at least a majority
of the outstanding shares of capital stock of a
Section 8.06 Party on terms that the Board of Directors of
such Section 8.06 Party determines in good faith by a
majority vote, after considering the advice of a financial
advisor of nationally recognized reputation and taking into
account all the terms and conditions of the Acquisition
Proposal, including any
break-up
fees, expense reimbursement provisions and conditions to
consummation, would be (i) more favorable and provide
greater value to the stockholders of such Section 8.06
Party than the Merger (as proposed to be amended by the other
Section 8.06 Party) and (ii) reasonably capable of
being consummated on the terms and conditions so proposed,
taking into account all financial, legal, regulatory and other
aspects of such proposal and for which financing, if a cash
transaction (whether in whole or in part), is then fully
committed or reasonably determined to be available by the Board
of Directors of such Section 8.06 Party.
(c) Notwithstanding anything to the contrary in this
Agreement, a Section 8.06 Partys Board of Directors
may make a Change in Recommendation, if based solely on events
or developments, unknown to such Board of Directors as of the
date hereof, which occur, or become known to such Board of
Directors, after the date hereof but prior to the Company
Stockholder Meeting (in the case of the Company) or the Parent
Shareholder Meeting (in the case of Parent) if it determines in
good faith, after consultation with outside legal counsel, that
the failure to take such action would be reasonably expected to
result in a breach of its fiduciary duties under Applicable Law.
Each Section 8.06 Party confirms that the Board of
Directors of that Section 8.06 Party is not, as of the date
of this
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Agreement, aware of any information or expected events or
developments which would cause the Board of Directors of that
Section 8.06 Party to make a Change in Recommendation. In
considering all factors relevant to the Board of Directors of
the Parent in making the Parent Board Recommendation, Parent
confirms that the Board of Directors of Parent has taken into
account all of the terms and conditions of this Agreement
(including Section 8.02) and all of the terms and
conditions of Parents financing facilities referred to in
Section 5.07. The parties further agree that irrespective
of whether a Section 8.06 Partys Board of Directors
has effected a Change in Recommendation, until the termination
of this Agreement in accordance with its terms (i) in no
event shall such Section 8.06 Party make any SEC, FCC,
United States Surface Transportation Board or other regulatory
filing (including any antitrust, competition, communications or
transportation law filing) in connection with an Acquisition
Proposal and (ii) such Section 8.06 Party shall
otherwise remain subject to all of its obligations under this
Agreement (including its obligations pursuant to
Section 8.02, Section 8.04, Section 8.05 and this
Section 8.06).
(d) The Board of Directors of a Section 8.06 Party
shall not take any of the actions referred to in
Section 8.06(b) or 8.06(c) unless such Section 8.06
Party shall have delivered to the other Section 8.06 Party
a prior written notice advising the other Section 8.06
Party that it intends to take such action. In addition, each
Section 8.06 Party shall notify the other Section 8.06
Party promptly (but in no event later than 24 hours) after
receipt by such Section 8.06 Party (or any of its advisors)
of any Acquisition Proposal, any indication that a Third Party
is considering making an Acquisition Proposal or of any request
for information relating to such Section 8.06 Party or any
of its Subsidiaries or for access to the business, properties,
assets, books or records of such Section 8.06 Party or any
of its Subsidiaries by any Third Party that may be considering
making, or has made, an Acquisition Proposal. Such
Section 8.06 Party shall provide such notice orally and in
writing and shall identify the Third Party making, and the terms
and conditions of, any such Acquisition Proposal, indication or
request. Such Section 8.06 Party shall promptly keep the
other Section 8.06 Party informed of the status and details
of any such Acquisition Proposal, indication or request.
Further, the Board of Directors of a Section 8.06 Party
shall not make a Change in Recommendation in response to an
Acquisition Proposal unless (i) such Acquisition Proposal
constitutes a Superior Proposal, (ii) such
Section 8.06 Party promptly notifies the other
Section 8.06 Party, in writing at least three Business Days
before taking that action, of its intention to do so, attaching
the most current version of any proposed agreement or a detailed
summary of all material terms of such Superior Proposal and the
identity of the offeror, and (iii) the other
Section 8.06 Party does not make, within three Business
Days after its receipt of that written notification, an offer
that is at least as favorable to the stockholders of such
Section 8.06 Party as such Superior Proposal.
(e) Each Section 8.06 Party shall, and shall cause its
Subsidiaries and the advisors, employees and other agents of
such Section 8.06 Party and any of its Subsidiaries to,
cease immediately and cause to be terminated any and all
existing activities, discussions or negotiations, if any, with
any Third Party conducted prior to the date hereof with respect
to any Acquisition Proposal and shall use its reasonable best
efforts to cause any such Third Party (or its agents or
advisors) in possession of confidential information about such
Section 8.06 Party that was furnished by or on behalf of
such Section 8.06 Party to return or destroy all such
information.
Section 8.07.
Public Announcements. To the extent reasonably
practicable, each of the Company and Parent shall consult with
the other party before, directly or through any representatives,
issuing any press release, having any communication with the
press (whether or not for attribution), making any other public
statement or scheduling any press conference or conference call
with investors or analysts with respect to this Agreement or the
transactions contemplated hereby and, except as may be required
by Applicable Law or any listing agreement with or rule of any
national securities exchange or association, shall not, to the
extent reasonably practicable, issue any such press release,
have any such communication, make any such other public
statement or schedule any such press conference or conference
call before such consultation.
Section 8.08.
Further Assurances. At and after the Effective
Time, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on
behalf of the Company or Merger Subsidiary, any deeds, bills of
sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title
and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the
Merger.
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Section 8.09. United
Kingdom. Parent and the Company shall each use
its reasonable best efforts to ensure that an original, executed
copy of this Agreement is not brought into the United Kingdom.
ARTICLE 9
Conditions
to the Merger
Section 9.01.
Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to
consummate the Merger are subject to the satisfaction of the
following conditions:
(a) the Company Stockholder Approval shall have been
obtained in accordance with Delaware Law;
(b) the Parent Shareholder Approval shall have been
obtained in accordance with the requirements of the Listing
Rules of the UKLA and all Applicable Law;
(c) no Applicable Law shall prohibit the consummation of
the Merger;
(d) any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated or
been waived and Competition Act Approval shall have been
obtained;
(e) the government of the United States shall have
completed its national security review and, if necessary,
investigation, under Exon-Florio, and shall have concluded that
no adverse action with respect to the Merger, including any
action to suspend or prohibit the Merger, is necessary; and
(f) all actions by or in respect of, or filings with, the
United Stated Surface Transportation Board necessary to permit
the consummation of the Merger shall have been taken, made or
obtained.
Section 9.02.
Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger
Subsidiary to consummate the Merger are subject to the
satisfaction of the following further conditions:
(a) (i) the Company shall have performed in all
material respects all of its obligations hereunder required to
be performed by it at or prior to the Effective Time,
(ii) the representations and warranties of the Company
contained in this Agreement and in any certificate or other
writing delivered by the Company pursuant hereto (disregarding
all materiality and Company Material Adverse Effect
qualifications contained therein) shall be true and correct at
and as of the Effective Time (other than representations and
warranties that by their terms address matters only as of
another specified time, which shall be true and correct only as
of such time), with only such exceptions as, individually or in
the aggregate, have not had and are not reasonably expected to
have a Company Material Adverse Effect and (iii) Parent
shall have received a certificate signed by an executive officer
of the Company to the foregoing effect;
(b) there shall be no pending action or proceeding by any
Governmental Authority or any Applicable Law enacted, enforced,
promulgated, issued or deemed applicable to the Merger by any
Governmental Authority (i) challenging or seeking to make
illegal, to delay materially or otherwise directly or indirectly
to restrain or prohibit the consummation of the Merger, seeking
to obtain material damages or otherwise directly or indirectly
relating to the transactions contemplated by the Merger,
(ii) seeking to restrain or prohibit Parents, Merger
Subsidiarys or any of Parents other Affiliates
ownership or operation (or that of its respective Subsidiaries
or Affiliates) of all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or
of Parent and its Subsidiaries, taken as a whole,
(iii) seeking to compel Parent or any of its Subsidiaries
or Affiliates to take any action that Parent and its Affiliates
would not be required to take pursuant to Section 8.02(a)
or (iv) that otherwise is reasonably likely to have a
Company Material Adverse Effect;
(c) there shall not have occurred and be continuing any
event, development, state of circumstances or facts which,
individually or in the aggregate, has had or would reasonably be
expected to have a Company Material Adverse Effect; and
(d) holders of not more than 10% of shares of Company Stock
shall have demanded (and not withdrawn) appraisal of their
shares in accordance with Delaware Law.
A-32
Section 9.03.
Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject
to the satisfaction of the following further conditions:
(a) (i) each of Parent and Merger Subsidiary shall
have performed in all material respects all of its obligations
hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of
Parent and Merger Subsidiary contained in this Agreement and in
any certificate or other writing delivered by Parent or Merger
Subsidiary pursuant hereto (disregarding all materiality and
Parent Material Adverse Effect qualifications contained therein)
shall be true and correct at and as of the Effective Time (other
than representations and warranties that by their terms address
matters only as of another specified time, which shall be true
and correct only as of such time), with only such exceptions as,
individually or in the aggregate, have not had and are not
reasonably be expected to have a Parent Material Adverse Effect
and (iii) the Company shall have received a certificate
signed by an executive officer of Parent to the foregoing effect.
ARTICLE 10
Termination
Section 10.01.
Termination. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective
Time (notwithstanding any approval of this Agreement by the
stockholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if:
(i) the Merger has not been consummated on or before
August 8, 2007 (the End Date);
provided that in the event that, as of the End Date, all
conditions to Closing set forth in Article 9 have been
satisfied or waived (other than such conditions that say their
terms are satisfied at the Closing) other than the condition set
forth in Section 9.01(d), the End Date may be extended from
time to time by either the Company or Parent by up to an
aggregate of three months (such date, including any such
permitted extensions thereof, the Outside
Date); and provided further that the right to
terminate this Agreement pursuant to this
Section 10.01(b)(i) shall not be available to any party
whose breach of any provision of this Agreement results in the
failure of the Merger to be consummated by such time;
(ii) there shall be any Applicable Law that (A) makes
consummation of the Merger illegal or otherwise prohibited or
(B) enjoins the Company or Parent from consummating the
Merger and such enjoinment shall have become final and
nonappealable;
(iii) at the Company Stockholder Meeting (including any
adjournment or postponement thereof), the Company Stockholder
Approval shall not have been obtained prior to the last Business
Day preceding the Outside Date; provided that the right
to terminate the Agreement pursuant to this
Section 10.01(b)(iii) shall not be available to the Company
or Parent if such party has not complied with its obligations
under Section 8.06 (other than in any immaterial
respect); or
(iv) at the Parent Shareholder Meeting (including any
adjournment or postponement thereof), the Parent Shareholder
Approval shall not have been obtained prior to the last Business
Day preceding the Outside Date; provided that the right
to terminate the Agreement pursuant to this
Section 10.01(b)(iv) shall not be available to the Company
or Parent if such party has not complied with its obligations
under Section 8.06 (other than in any immaterial
respect); or
(c) by Parent, if:
(i) the Board of Directors of the Company shall have made a
Change in Recommendation;
(ii) a breach of any representation or warranty or failure
to perform any covenant or agreement on the part of the Company
set forth in this Agreement shall have occurred that would cause
the condition set
A-33
forth in Section 9.02(a) not to be satisfied, and such
condition is incapable of being satisfied by the Outside Date;
(iii) the Company shall have willfully and materially
breached its obligations under Section 8.04 or 8.06; or
(iv) prior to the Parent Shareholder Meeting, the Board of
Directors of Parent shall have made a Change in Recommendation
in compliance with the terms of this Agreement in order to enter
into a definitive, written agreement concerning a Superior
Proposal; provided that Parent shall simultaneously with
any termination pursuant to this Section 10.01(c)(iv) pay
the amount due pursuant to Section 11.04(c)(i)(B) in
connection with such termination; or
(d) by the Company, if:
(i) the Board of Directors of Parent shall have made a
Change in Recommendation;
(ii) a breach of any representation or warranty or failure
to perform any covenant or agreement on the part of Parent or
Merger Subsidiary set forth in this Agreement shall have
occurred that would cause the condition set forth in
Section 9.03(a) not to be satisfied, and such condition is
incapable of being satisfied by the Outside Date;
(iii) Parent shall have willfully and materially breached
its obligations under Section 8.05 or 8.06; or
(iv) prior to the Company Stockholder Meeting, the Board of
Directors of the Company shall have made a Change in
Recommendation in compliance with the terms of this Agreement in
order to enter into a definitive, written agreement concerning a
Superior Proposal; provided that the Company shall
simultaneously with any termination pursuant to this
Section 10.01(d)(iv) pay the amount due pursuant to
Section 11.04(b)(i)(B) in connection with such termination.
The party desiring to terminate this Agreement pursuant to this
Section 10.01 (other than pursuant to
Section 10.01(a)) shall give notice of such termination to
the other party.
Section 10.02.
Effect of Termination. If this Agreement is
terminated pursuant to Section 10.01, this Agreement shall
become void and of no effect without liability of any party (or
any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other party hereto;
provided that, if such termination shall result from the
willful (i) failure of either party to fulfill a condition
to the performance of the obligations of the other party or
(ii) failure of either party to perform a covenant hereof,
such party shall be fully liable for any and all liabilities and
damages incurred or suffered by the other party as a result of
such failure. The provisions of this Section 10.02 and
Sections 11.04, 11.07, 11.08 and 11.09 shall survive any
termination hereof pursuant to Section 10.01.
ARTICLE 11
Miscellaneous
Section 11.01.
Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including facsimile transmission) and shall be given,
if to Parent or Merger Subsidiary, to:
FirstGroup plc
50 Eastbourne Terrace
London W2 6LX
United Kingdom
Attention: Louise Ruppel
Facsimile No.: +44 (0)20 7636 4399
A-34
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip R. Mills
Marc
O. Williams
Facsimile No.: +1
(212) 450-3800
if to the Company, to:
Laidlaw International, Inc.
55 Shuman Blvd.
Naperville, Illinois 60563
Attention: Beth Byster Corvino, General Counsel
Facsimile No.: +1
(630) 848-3167
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, New York 10036
Facsimile No.: +1
(212) 735-2000
Attention: Peter A. Atkins
William
R. Kunkel
or to such other address or facsimile number as such party may
hereafter specify for the purpose by notice to the other parties
hereto. All such notices, requests and other communications
shall be deemed received on the date of receipt by the recipient
thereof if received prior to 5:00 p.m. on a Business Day in
the place of receipt. Otherwise, any such notice, request or
communication shall be deemed to have been received on the next
succeeding Business Day in the place of receipt.
Section 11.02.
Survival of Representations and Warranties. The
representations, warranties and agreements contained herein and
in any certificate or other writing delivered pursuant hereto
shall not survive the Effective Time, except for those covenants
and agreements contained herein and therein (including the
agreements set forth in Section 7.01 and Section 7.02)
that by their terms apply or are to be performed in whole or in
part after the Effective Time.
Section 11.03.
Amendments and Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective
Time if, but only if, such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this
Agreement or, in the case of a waiver, by each party against
whom the waiver is to be effective; provided that, after
the Company Stockholder Approval has been obtained, no such
amendment or waiver shall reduce the amount or change the kind
of consideration to be received in exchange for the Company
Stock without the further approval of the stockholders of the
Company.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Applicable Law.
Section 11.04.
Expenses. (a) General. Except as
otherwise provided herein, all costs and expenses incurred in
connection with this Agreement shall be paid by the party
incurring such cost or expense.
(b) Company Payments.
(i) The Company shall pay to Parent $78 million in
immediately available funds (A) if this Agreement is
terminated by Parent pursuant to Section 10.01(c)(i) or
Section 10.01(c)(iii), within one Business Day after demand
therefor by Parent or (B) if this Agreement is terminated
by the Company pursuant to Section 10.01(d)(iv),
simultaneously with such termination.
A-35
(ii) (A) The Company shall pay to Parent in
immediately available funds, within one Business Day after
demand by Parent, $43.35 million if this Agreement is
terminated by either Parent or the Company pursuant to
Section 10.01(b)(iii) and (B) additionally, if
(x) prior to the Company Stockholder Meeting, an
Acquisition Proposal shall have been made or publicly announced
and (y) within 12 months following the date of such
termination, the Company shall have entered into a definitive
agreement with respect to, recommended to its stockholders or
consummated an Acquisition Proposal (provided that for
purposes of this clause (B), (1) each reference to
25% in the definition of Acquisition Proposal shall
be deemed to be a reference to 50% and (2) the
last sentence of the definition of Acquisition Proposal shall be
disregarded, but it being understood that any transaction of the
nature described in clause (i)-(iv) of the definition of
Acquisition Proposal with respect to the Greyhound business of
the Company and the Subsidiaries shall be considered together
with all other relevant transactions in determining whether the
condition set forth in the preceding clause (B) has
been satisfied), then the Company shall pay to Parent, within
one Business Day following the date the Company enters into a
definitive agreement or consummates such transaction,
$34.65 million.
(iii) The Company shall pay to Parent in immediately
available funds, within one Business Day after demand by Parent,
$43.35 million if (A) this Agreement is terminated by
either Parent or the Company pursuant to
Section 10.01(b)(i), (B) prior to such termination, an
Acquisition Proposal shall have been made or publicly announced
and (C) within 12 months following the date of such
termination, the Company shall have entered into a definitive
agreement with respect to, recommended to its stockholders or
consummated an Acquisition Proposal with any Person in respect
of whom the Company was obligated prior to such termination to
give notice to Parent pursuant to the second sentence of
Section 8.06(d) or any Affiliate of any such Person (any
such Person or Affiliate, an Interested
Person) (provided that for purposes of this
clause (iii), (1) each reference to 25% in
the definition of Acquisition Proposal shall be deemed to be a
reference to 50% and (2) the last sentence of
the definition of Acquisition Proposal shall be disregarded, but
it being understood that any transaction of the nature described
in clause (i)-(iv) of the definition of Acquisition
Proposal with respect to the Greyhound business of the Company
and the Subsidiaries shall be considered together with all other
relevant transactions in determining whether the condition set
forth in the preceding clause (C) has been satisfied).
(iv) If (A) this Agreement is terminated by either
Parent or the Company pursuant to Section 10.01(b)(i),
(B) prior to such termination, an Acquisition Proposal
shall have been made or publicly announced and (C) within
6 months following the date of such termination, the
Company shall have entered into a definitive agreement with
respect to, recommended to its stockholders or consummated an
Acquisition Proposal with any Person other than an Interested
Person pursuant to which the sum (the Total
Consideration) of (x) the Net Debt to be assumed
by such Person as of the date (the Measurement
Date) such definitive agreement is entered into or, if
earlier, the date such Acquisition Proposal is recommended by
the Company to its stockholders and (y) the aggregate
consideration (the Aggregate New
Consideration) received or expected to be received by
the Company and its stockholders in connection with the
Acquisition Proposal (calculated in the case of an Acquisition
Proposal that relates to less than all of the outstanding
Company Stock as if all of the outstanding Company Stock were
being acquired at the per share price implied by such
Acquisition Proposal and with any portion of the Aggregate New
Consideration that is not cash being deemed to have a value for
these purposes equal to its fair market value as of the
Measurement Date) exceeds $3.601 billion, then the Company
shall pay to Parent in immediately available funds, within one
Business Day after demand by Parent, the lesser of
(1) $43.35 million and (2) the excess of the
Total Consideration over $3.601 billion (provided
that for purposes of this clause (iv), (x) each
reference to 25% in the definition of Acquisition
Proposal shall be deemed to be a reference to 50%
and (y) the last sentence of the definition of Acquisition
Proposal shall be disregarded, but it being understood that any
transaction of the nature described in clause (i)-(iv) of
the definition of Acquisition Proposal with respect to the
Greyhound business of the Company and the Subsidiaries shall be
considered together with all other relevant transactions in
determining whether the condition set forth in the preceding
clause (C) has been satisfied).
(v) If this Agreement is terminated by Parent pursuant to
Section 10.01(c)(ii), the Company shall reimburse Parent
and its Affiliates in immediately available funds, within one
Business Day after demand by Parent, for 100% of their
reasonable and documented
out-of-pocket
fees and expenses (including the reasonable fees and expenses of
their counsel) actually incurred by any of them in connection
with this Agreement and the transactions contemplated hereby
including the arrangement of, obtaining the commitment to
provide or obtaining any debt or equity financing for such
transactions, provided that the amount of such
reimbursement shall not exceed $43.35 million.
A-36
(c) Parent Payments.
(i) Parent shall pay to the Company £22 million
in immediately available funds (A) if this Agreement is
terminated by either the Company or Parent pursuant to
Section 10.01(b)(iv) or by the Company pursuant to
Section 10.01(d)(i) or Section 10.01(d)(iii), within
one Business Day after demand therefor by the Company or
(B) if this Agreement is terminated by Parent pursuant to
Section 10.01(c)(iv), simultaneously with such termination.
(ii) If this Agreement is terminated by the Company
pursuant to Section 10.01(d)(ii), Parent shall reimburse
the Company and its Affiliates in immediately available funds,
within one Business Day after demand by the Company, for 100% of
their reasonable and documented
out-of-pocket
fees and expenses (including the reasonable fees and expenses of
their counsel) actually incurred by any of them in connection
with this Agreement and the transactions contemplated hereby
including the arrangement of, obtaining the commitment to
provide or obtaining any debt or equity financing for such
transactions, provided that the amount of such
reimbursement shall not exceed £22 million.
(iii) For the avoidance of doubt, in no event shall Parent
be required to make a payment pursuant to both
Section 11.04(c)(i) and Section 11.04(c)(ii).
Accordingly, the maximum amount payable by Parent pursuant to
this Section 11.04(c) shall not in any event exceed
£22 million.
(d) Other Costs and Expenses. The parties
hereto acknowledge that the agreements contained in this
Section 11.04 are an integral part of the transactions
contemplated by this Agreement and that, without these
agreements, no party hereto would enter into this Agreement.
Accordingly, if either Parent or the Company fails promptly to
pay any amount due to the other party pursuant to this
Section 11.04, such party shall also pay the costs and
expenses (including reasonable legal fees and expenses) incurred
by the other party in connection with a legal action to enforce
this Agreement that results in a judgment against such party for
such amount.
Section 11.05.
Disclosure Schedule and SEC Document
References. (a) The parties hereto agree
that any reference in a particular Section of the Company
Disclosure Schedule shall only be deemed to be an exception to
(or, as applicable, a disclosure for purposes of) (a) the
representations and warranties (or covenants, as applicable) of
the Company that are contained in the corresponding Section of
this Agreement and (b) any other representations and
warranties of the Company that are contained in this Agreement,
but only if the relevance of that reference as an exception to
(or a disclosure for purposes of) such representations and
warranties would be readily apparent to a reasonable person who
has read that reference and such representations and warranties.
(b) The parties hereto agree that any information contained
in any part of any Company SEC Current Document shall only be
deemed to be an exception to (or a disclosure for purposes of)
the Companys representations and warranties if the
relevance of that information as an exception to (or a
disclosure for purposes of) such representations and warranties
would be readily apparent to a reasonable person who has read
that information concurrently with such representations and
warranties, provided that in no event shall any
information contained in any part of any Company Current SEC
Document entitled Risk Factor or
Forward-Looking Statements be deemed to be an
exception to (or a disclosure for purposes of) any
representation(s) and warranty(ies) of the Company contained in
this Agreement.
Section 11.06.
Binding Effect; Benefit; Assignment. (a) The
provisions of this Agreement shall be binding upon and, except
as provided in Section 7.01, shall inure to the benefit of
the parties hereto and their respective successors and assigns.
Except as provided in Section 7.01, no provision of this
Agreement is intended to confer any rights, benefits, remedies,
obligations or liabilities hereunder upon any Person other than
the parties hereto and their respective successors and assigns.
(b) No party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the
prior written consent of each other party hereto, except that
Parent or Merger Subsidiary may transfer or assign its rights
and obligations under this Agreement, in whole or from time to
time in part, to (i) one or more of their Affiliates at any
time and (ii) after the Effective Time, to any Person;
provided that such transfer or assignment shall not
relieve Parent or Merger Subsidiary of its obligations hereunder
or enlarge, alter or change any obligation of any other party
hereto or due to Parent or Merger Subsidiary.
Section 11.07.
Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware, without regard to the conflicts of law rules of such
state.
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Section 11.08.
Jurisdiction. The parties hereto agree that any
suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby shall be
brought in any federal court located in the State of Delaware or
any Delaware state court, and each of the parties hereby
irrevocably consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit,
action or proceeding brought in any such court has been brought
in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service
of process on such party as provided in Section 11.01 shall
be deemed effective service of process on such party.
Section 11.09.
WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 11.10.
Counterparts; Effectiveness. This Agreement may
be signed in any number of counterparts, each of which shall be
an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement shall
become effective when each party hereto shall have received a
counterpart hereof signed by all of the other parties hereto.
Until and unless each party has received a counterpart hereof
signed by the other party hereto, this Agreement shall have no
effect and no party shall have any right or obligation hereunder
(whether by virtue of any other oral or written agreement or
other communication).
Section 11.11.
Entire Agreement. This Agreement, including the
Company Disclosure Schedule, and the Confidentiality Agreement
constitute the entire agreement between the parties with respect
to the subject matter of this Agreement and supersedes all prior
agreements and understandings, both oral and written, between
the parties with respect to the subject matter of this Agreement.
Section 11.12.
Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction or other Governmental Authority to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired
or invalidated 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 a determination, the
parties shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
Section 11.13.
Specific Performance. The parties hereto agree
that irreparable damage would occur if any provision of this
Agreement were not performed in accordance with the terms hereof
and that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or to enforce
specifically the performance of the terms and provisions hereof
in any federal court located in the State of Delaware or any
Delaware state court, in addition to any other remedy to which
they are entitled at law or in equity.
[The
remainder of this page has been intentionally left blank; the
next
page is the signature page.]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
LAIDLAW INTERNATIONAL, INC.
Name: Kevin E. Benson
Title: President and Chief Executive Officer
FIRSTGROUP PLC
Name: Dean Finch
Title: Group Finance Director
FERN ACQUISITION VEHICLE CORPORATION
Name: Dean Finch
Title: Vice President
Annex B
Opinion of Morgan Stanley & Co. Incorporated
One Financial Place
440 South LaSalle Street
Chicago, IL 60605
Morgan
Stanley
February 8,
2007
Board of Directors
Laidlaw International, Inc.
55 Shuman Boulevard
Naperville, IL 60563
Members of the Board:
We understand that Laidlaw International, Inc.
(Laidlaw or the Company), FirstGroup plc
(Parent or FirstGroup) and FirstGroup
Acquisition Corp., an indirect wholly owned subsidiary of Parent
(Merger Subsidiary) propose to enter into an
Agreement and Plan of Merger substantially in the form of the
draft dated February 8, 2007 (the Merger
Agreement), which provides, among other things, for the
merger (the Merger) of Merger Subsidiary with and
into the Company. Pursuant to the Merger, the Company will
become an indirect wholly owned subsidiary of Parent and each
outstanding share of common stock, par value $0.01 per
share (the Company Common Stock) of the Company,
other than shares held in treasury or held by Parent or any
subsidiary of Parent or as to which appraisal rights have been
perfected, will be converted into the right to receive
$35.25 per share in cash. The terms and conditions of the
Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the consideration
to be received by the holders of shares of the Company Common
Stock pursuant to the Merger Agreement is fair from a financial
point of view to such holders.
For purposes of the opinion set forth herein, we have:
i) reviewed certain publicly available financial statements
and other business and financial information of the Company;
ii) reviewed certain internal financial statements and
other financial and operating data concerning the Company
prepared by the management of the Company and made available to
us by the Company;
iii) reviewed certain financial projections prepared by the
management of the Company;
iv) discussed the past and current operations and financial
condition and the prospects of the Company with senior
executives of the Company;
v) reviewed the reported prices and trading activity for
the Company Common Stock;
vi) compared the financial performance of the Company and
the prices and trading activity of the Company Common Stock with
that of certain other comparable publicly-traded companies and
their securities;
vii) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions;
viii) participated in discussions and negotiations among
representatives of the Company, Parent and their financial and
legal advisors;
ix) reviewed the Merger Agreement, the financing commitment
letters of Parent, substantially in the form of the drafts dated
February 8, 2007 and certain related documents; and
x) performed such other analyses and considered such other
factors as we have deemed appropriate.
We have assumed and relied upon without independent verification
the accuracy and completeness of the information supplied or
otherwise made available to us by the Company for the purposes
of this opinion. With respect to the financial projections, we
have assumed that they have been reasonably prepared on bases
reflecting
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the best currently available estimates and judgments of the
future financial performance of the Company. We have assumed
that the Merger will be consummated in accordance with the terms
set forth in the Merger Agreement without any modification,
waiver or delay to any terms and conditions. Morgan
Stanley & Co. Incorporated (Morgan Stanley)
has assumed that in connection with the receipt of all necessary
governmental, regulatory or other approvals and consents
required for the proposed Merger, no delays, limitations,
conditions or restrictions will be imposed that would have a
material adverse effect on the timing of or ability of the
Company or Parent to consummate the proposed Merger. Our opinion
is limited to the fairness from a financial point of view of the
consideration to be received by the holders of Company Common
Stock in the Merger and we express no opinion as to the
underlying decision by the Company to engage in the Merger. We
have not made any independent valuation or appraisal of the
assets or liabilities (contingent or otherwise) of the Company,
nor have we been furnished with any such appraisals or made any
physical inspection of the properties or assets of the Company.
In addition, we are not legal, regulatory or tax experts and
have relied, without independent verification, on the assessment
of the Company and their advisors on such matters. Our opinion
is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available
to us as of, the date hereof. Events occurring after the date
hereof may affect this opinion and the assumptions used in
preparing it, and we do not assume any obligation to update,
revise or reaffirm this opinion.
In arriving at our opinion, we were not authorized to solicit,
and did not solicit, interest from any party with respect to the
acquisition of the Company or any of its assets, nor did we
negotiate with any of the parties, other than the Parent, which
expressed interest to us in the possible acquisition of the
Company or certain of its constituent businesses.
We have acted as financial advisor to the Board of Directors of
the Company in connection with this transaction and will receive
a fee for our services, a substantial portion of which is
contingent upon the closing of the merger. In the past, Morgan
Stanley and its affiliates have provided financial advisory and
financing services for the Company and have received fees for
the rendering of these services. In addition, Morgan Stanley is
a full services securities firm engaged in securities trading,
investment management and brokerage services. In the ordinary
course of its trading, brokerage, investment management and
financing activities, Morgan Stanley or its affiliates may
actively trade the debt and equity securities or senior loans of
the Company or Parent for its own accounts or for the accounts
of its customers or its managed investment accounts and,
accordingly, may at any time hold long or short positions in
such securities or senior loans or any currency or commodity.
It is understood that this letter is for the information of the
Board of Directors of the Company and may not be used for any
other purpose without our prior written consent, except that
this opinion may be included in its entirety in any
statement/prospectus to be distributed to holders of Company
Common Stock in connection with the Merger with the
U.S. Securities and Exchange Commission. In addition,
Morgan Stanley expresses no opinion as to how the shareholders
of Parent or Company should vote at the shareholder meetings
held in connection with the Merger.
Based on and subject to the foregoing, we are of the opinion on
the date hereof that the consideration to be received by the
holders of shares of the Company Common Stock pursuant to the
Merger Agreement is fair from a financial point of view to such
holders.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
Francis J. Oelerich III
Managing Director
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Annex C
Section 262 of the Delaware General Corporation
Law
ANNEX C
Section 262
of the General Corporation Law of the State of
Delaware
§ 262.
Appraisal Rights
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with
respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this
section and who has neither voted in favor of the merger or
consolidation nor consented thereto in writing pursuant to
§ 228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of the
stockholders shares of stock under the circumstances
described in subsections (b) and (c) of this section.
As used in this section, the word stockholder means
a holder of record of stock in a stock corporation and also a
member of record of a nonstock corporation; the words
stock and share mean and include what is
ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and
the words depository receipt mean a receipt or other
instrument issued by a depository representing an interest in
one or more shares, or fractions thereof, solely of stock of a
corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of
any class or series of stock of a constituent corporation in a
merger or consolidation to be effected pursuant to
§ 251 (other than a merger effected pursuant to
§ 251(g) of this title), § 252,
§ 254, § 257, § 258,
§ 263 or § 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of
the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of
§ 251 of this title.
(2) Notwithstanding paragraph (1) of this
subsection, appraisal rights under this section shall be
available for the shares of any class or series of stock of a
constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
§§ 251, 252, 254, 257, 258, 263 and 264 of this
title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository
receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or
depository receipts in respect thereof) or depository receipts
at the effective date of the merger or consolidation will be
either listed on a national securities exchange or designated as
a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.
or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.
and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a.,
b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under § 253 of
this title is not owned by the parent corporation immediately
prior to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as
a result of an amendment to its certificate of
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incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the
certificate of incorporation contains such a provision, the
procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which
appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record
date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or
(c) hereof that appraisal rights are available for any or
all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholders
shares shall deliver to the corporation, before the taking of
the vote on the merger or consolidation, a written demand for
appraisal of such stockholders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such stockholders
shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of
such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not
voted in favor of or consented to the merger or consolidation of
the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to
§ 228 or § 253 of this title, then either a
constituent corporation before the effective date of the merger
or consolidation or the surviving or resulting corporation
within 10 days thereafter shall notify each of the holders
of any class or series of stock of such constituent corporation
who are entitled to appraisal rights of the approval of the
merger or consolidation and that appraisal rights are available
for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy
of this section. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also
notify such stockholders of the effective date of the merger or
consolidation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of such notice,
demand in writing from the surviving or resulting corporation
the appraisal of such holders shares. Such demand will be
sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of such holders shares. If
such notice did not notify stockholders of the effective date of
the merger or consolidation, either (i) each such
constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of
the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the
surviving or resulting corporation shall send such a second
notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder
who is entitled to appraisal rights and who has demanded
appraisal of such holders shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary
or of the transfer agent of the corporation that is required to
give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix,
in advance, a record date that shall be not more than
10 days prior to the date the notice is given, provided,
that if the notice is given on or after the effective date of
the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is
given prior to the effective date, the record date shall be the
close of business on the day next preceding the day on which the
notice is given.
(e) Within 120 days after the effective date of the
merger or consolidation, the surviving or resulting corporation
or any stockholder who has complied with subsections
(a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within
60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw
such stockholders demand for appraisal
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and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied
with the requirements of subsections (a) and
(d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting
from the consolidation a statement setting forth the aggregate
number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the
stockholder within 10 days after such stockholders
written request for such a statement is received by the
surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal
under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder,
service of a copy thereof shall be made upon the surviving or
resulting corporation, which shall within 20 days after
such service file in the office of the Register in Chancery in
which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded
payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the
time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting
corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1
or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the
City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs
thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section
and who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for
their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an
appraisal, the Court shall appraise the shares, determining
their fair value exclusive of any element of value arising from
the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In
determining such fair value, the Court shall take into account
all relevant factors. In determining the fair rate of interest,
the Court may consider all relevant factors, including the rate
of interest which the surviving or resulting corporation would
have had to pay to borrow money during the pendency of the
proceeding. Upon application by the surviving or resulting
corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit
discovery or other pretrial proceedings and may proceed to trial
upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section
and who has submitted such stockholders certificates of
stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal
rights under this section.
(i) The Court shall direct the payment of the fair value of
the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case
of holders of uncertificated stock forthwith, and the case of
holders of shares represented by certificates upon the surrender
to the corporation of the certificates representing such stock.
The Courts decree may be enforced as other decrees in the
Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any
state.
(j) The costs of the proceeding may be determined by the
Court and taxed upon the parties as the Court deems equitable in
the circumstances. Upon application of a stockholder, the Court
may order all or a portion of the expenses incurred by any
stockholder in connection with the appraisal proceeding,
including, without limitation, reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all the shares entitled to an appraisal.
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(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded appraisal rights
as provided in subsection (d) of this section shall be
entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of
record at a date which is prior to the effective date of the
merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in
subsection (e) of this section, o