SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended SEPTEMBER 30, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from __________ to
__________
Commission File Number: 0-28056
COACH USA, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0496471
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE RIVERWAY, SUITE 500
HOUSTON, TEXAS 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 888-0104
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares of Common Stock of the Registrant, par value $.01
per share, outstanding at November 6, 1998 was 25,398,570.
<PAGE>
COACH USA, INC.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1998
INDEX
PAGE
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
COACH USA, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets.......................... 3
Condensed Consolidated Statements of Income.................... 4
Condensed Consolidated Statements of Stockholders' Equity...... 5
Condensed Consolidated Statements of Cash Flows................ 6
Notes to Condensed Consolidated Financial Statements........... 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 16
PART II - OTHER INFORMATION
Item 2 - Changes in Securities.......................................... 19
(c) Recent Issuance of Unregistered Securities.
Item 5 - Other Information.............................................. 19
Changes in Board of Directors.
Item 6 - Exhibits and Reports on Form 8-K............................... 19
(a) Exhibits.
10 - Material Contracts.
27 - Financial Data Schedule.
(b) Reports on Form 8-K.
Signature.................................................................... 21
2
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................................................$ 3,648 $ 11,506
Accounts receivable, net of allowance of $3,663 and $5,083 ................... 43,346 78,199
Inventories .................................................................. 22,490 29,640
Notes receivable, current portion ............................................ 4,138 4,933
Prepaid expenses and other current assets .................................... 24,219 35,371
----------- -----------
Total current assets ................................................... 97,841 159,649
PROPERTY AND EQUIPMENT, net .......................................................... 395,800 582,246
NOTES RECEIVABLE, net of allowance of $500 and $500 .................................. 8,906 21,645
GOODWILL, net ........................................................................ 145,576 405,834
OTHER ASSETS, net .................................................................... 17,747 25,010
----------- -----------
Total assets...........................................................$ 665,870 $ 1,194,384
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations..................................$ 12,012 $ 11,933
Current maturities of convertible subordinated notes ......................... -- 12,415
Accounts payable and accrued liabilities ..................................... 91,140 159,843
----------- -----------
Total current liabilities .............................................. 103,152 184,191
LONG-TERM OBLIGATIONS, net of current maturities ..................................... 158,752 375,694
SENIOR SUBORDINATED NOTES ............................................................ 150,000 150,000
CONVERTIBLE SUBORDINATED NOTES, net of current maturities ............................ 52,300 84,100
DEFERRED INCOME TAXES ................................................................ 41,111 64,167
----------- -----------
Total liabilities ...................................................... 505,315 858,152
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock $.01 par, 500,000 shares authorized, 1 share issued
and outstanding ........................................................... -- --
Common stock $.01 par, 100,000,000 shares authorized, 21,817,918 and
25,398,070 shares issued and outstanding, respectively .................... 218 254
Additional paid-in capital ................................................... 121,534 258,413
Cumulative translation adjustment ............................................ (479) (831)
Retained earnings ............................................................ 39,282 78,396
----------- -----------
Total stockholders' equity ............................................. 160,555 336,232
----------- -----------
Total liabilities and stockholders' equity.............................$ 665,870 $ 1,194,384
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES ............................................... $ 157,109 $ 232,916 $ 392,353 $ 579,552
OPERATING EXPENSES ..................................... 111,547 161,777 288,565 419,388
--------- --------- --------- ---------
Gross profit .................................. 45,562 71,139 103,788 160,164
GENERAL AND ADMINISTRATIVE EXPENSES .................... 16,592 22,929 44,457 63,426
AMORTIZATION EXPENSE ................................... 1,037 2,513 2,380 5,586
ACQUISITION RELATED COSTS .............................. 524 -- 918 --
--------- --------- --------- ---------
Operating income .............................. 27,409 45,697 56,033 91,152
INTEREST EXPENSE ....................................... 6,861 9,979 15,544 26,149
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS ................................. 20,548 35,718 40,489 65,003
PROVISION FOR INCOME TAXES ............................. 7,929 13,930 16,275 25,352
--------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY ITEMS ...................... 12,619 21,788 24,214 39,651
EXTRAORDINARY ITEMS, net of income taxes ............... (203) (111) (602) (537)
--------- --------- --------- ---------
NET INCOME ............................................. $ 12,416 $ 21,677 $ 23,612 $ 39,114
========= ========= ========= =========
BASIC EARNINGS PER COMMON SHARE:
INCOME BEFORE EXTRAORDINARY ITEMS ................. $ .59 $ .86 $ 1.14 $ 1.67
EXTRAORDINARY ITEMS ............................... (.01) -- (.03) (.02)
--------- --------- --------- ---------
NET INCOME ........................................ $ .58 $ .86 $ 1.11 $ 1.65
========= ========= ========= =========
DILUTED EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE:
INCOME BEFORE EXTRAORDINARY ITEMS ................. $ .56 $ .81 $ 1.10 $ 1.58
EXTRAORDINARY ITEMS ............................... (.01) -- (.03) (.02)
--------- --------- --------- ---------
NET INCOME ........................................ $ .55 $ .81 $ 1.07 $ 1.56
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE TOTAL
-------------------- PAID-IN TRANSLATION RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL ADJUSTMENT EARNINGS EQUITY
-------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 ............................ 20,901 $ 209 $ 105,576 $ (209) $ 8,694 $ 114,270
Issuance of Common Stock:
Acquisition of Purchased Companies ............... 596 6 12,385 -- -- 12,391
Exercise of stock options ........................ 119 1 2,509 -- -- 2,510
Equity of acquired companies treated as Immaterial
Poolings-of-Interest ............................. 197 2 378 -- 396 776
S Corporation dividends paid by certain Pooled
Companies ........................................ -- -- -- -- (1,216) (1,216)
Other ............................................... 5 -- 686 (270) -- 416
Net income .......................................... -- -- -- -- 31,408 31,408
--------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1997 ............................ 21,818 218 121,534 (479) 39,282 160,555
Issuance of Common Stock:
Acquisition of Purchased Companies ............... 331 3 7,906 -- -- 7,909
Exercise of stock options and warrants ........... 266 3 7,392 -- -- 7,395
Conversion of convertible subordinated notes ..... 683 7 23,158 -- -- 23,165
Proceeds from sale of Common Stock ............... 2,300 23 98,423 -- -- 98,446
Other ............................................... -- -- -- (352) -- (352)
Net income .......................................... -- -- -- -- 39,114 39,114
--------- --------- --------- --------- --------- ---------
BALANCE AT SEPTEMBER 30, 1998 (unaudited) ............... 25,398 $ 254 $ 258,413 $ (831) $ 78,396 $ 336,232
========= ========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
1997 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................................. $ 23,612 $ 39,114
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization .................................................. 24,799 39,026
Gain on sale of assets ......................................................... (2,041) (1,816)
Deferred income tax provision .................................................. 7,002 9,267
Changes in operating assets and liabilities, net of effect of
Purchased Companies -
Accounts receivable, net ................................................... (11,118) (24,263)
Inventories ................................................................ (5,261) (8,257)
Prepaid expenses and other current assets .................................. (10,315) (6,305)
Accounts payable and accrued liabilities ................................... 9,211 (5,162)
Other ...................................................................... (6,437) (470)
--------- ---------
Net cash provided by operating activities .............................. 29,452 41,134
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ..................................................... (83,687) (107,529)
Proceeds from sales of property and equipment ........................................... 30,799 21,642
Cash consideration paid for Purchased Companies, net of cash acquired ................... (47,879) (186,711)
Increase in notes receivable ............................................................ (22,482) (13,587)
--------- ---------
Net cash used in investing activities .................................. (123,249) (286,185)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term obligations ............................................. (69,714) (119,770)
Proceeds from issuance of long-term obligations ......................................... 164,993 267,190
Proceeds from issuance of Common Stock .................................................. 1,224 105,841
Other ................................................................................... (551) --
--------- ---------
Net cash provided by financing activities .............................. 95,952 253,261
EFFECT OF EXCHANGE RATE CHANGES .............................................................. (220) (352)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS .................................................... 1,935 7,858
CASH AND CASH EQUIVALENTS, beginning of period ............................................... 3,570 3,648
--------- ---------
CASH AND CASH EQUIVALENTS, end of period..................................................... $ 5,505 $ 11,506
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest.............................................................. $ 13,215 $ 29,478
Cash paid for income taxes .......................................................... 829 13,199
Assets acquired under capital leases ................................................ 6,921 --
Convertible subordinated notes and other notes issued for Purchased Companies ....... 26,205 68,068
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION:
In September 1995, Coach USA, Inc. ("Coach USA" or the "Company") was
founded to create a national company providing motorcoach transportation
services, including charter and tour services, and related passenger ground
transportation services.
In May 1996, Coach USA acquired, simultaneously with the closing of its
initial public offering, six established businesses. Through September 30, 1998,
the Company has acquired additional passenger ground transportation businesses.
Of these additional businesses acquired, 22 were accounted for as
poolings-of-interests and are referred to herein as the "Pooled Companies." The
remaining businesses acquired were accounted for as purchases and are referred
to herein as the "Purchased Companies" (see Note 5).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements include the
accounts of Coach USA, the Purchased Companies since their respective dates of
acquisition and give retroactive effect to the acquisitions of the Pooled
Companies.
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Certain information and footnote disclosures, normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles, have been condensed or omitted pursuant to those
rules and regulations, although the Company believes that the disclosures made
are adequate to make the information presented not misleading. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the interim consolidated financial statements, have
been included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
It is suggested that these condensed consolidated financial statements be
read in conjunction with the audited consolidated financial statements and notes
thereto included in Coach USA's Annual Report on Form 10-K for the year ended
December 31, 1997, as filed with the SEC.
SEASONALITY
The timing of certain holidays, weather conditions and seasonal vacation
patterns may cause the Company's quarterly results of operations to fluctuate
significantly. The Company expects to realize higher revenues, operating income
and net income during the second and third quarters and lower revenues and net
income during the first and fourth quarters.
7
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(CONTINUED)
RECLASSIFICATIONS
Certain reclassifications have been made in prior periods to conform with
the current presentation. All significant intercompany transactions have been
eliminated in consolidation.
FOREIGN CURRENCY TRANSLATION
The Company's Canadian subsidiaries maintain their books and records in
Canadian dollars. Assets and liabilities of these operations are translated into
U.S. dollars at the exchange rate in effect at the end of each accounting
period, and income statement accounts are translated at the average exchange
rate prevailing during the period. Gains and losses resulting from such
translation are reported as an element of comprehensive income and as a separate
component of stockholders' equity. Gains and losses from transactions in foreign
currencies are reported in other income and are not significant.
NEW ACCOUNTING PRONOUNCEMENTs
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive
Income." SFAS No. 130 requires the reporting of comprehensive income in addition
to net income from operations. Comprehensive income is a more inclusive
financial reporting methodology that includes disclosure of certain financial
information that historically has not been recognized in the calculation of net
income from operations. The Company has adopted SFAS No. 130 effective January
1, 1998. For the nine months ended September 30, 1997 and 1998, the only
component of other comprehensive income was unrealized gains (losses) on foreign
currency translation. Comprehensive income for the nine months ended September
30, 1997 and 1998 was $23.4 million and $38.8 million, respectively.
3. NET INCOME PER COMMON SHARE
Earnings per share amounts are based on the weighted average number of
shares of common stock and common stock equivalents outstanding during the
period. The weighted average number of shares used to compute basic and diluted
earnings per share for the three and nine months ended September 30, 1997 and
1998 are illustrated below (in thousands):
8
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1997 1998 1997 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income:
Net income for basic earnings per share -
income available to common stockholders ......... $12,416 $21,677 $23,612 $39,114
Effect of convertible subordinated notes under the
"if converted" method - interest expense addback,
net of taxes .................................... 331 489 813 1,295
------- ------- ------- -------
Net income for diluted earnings per share - income
available to common stockholders ................ $12,747 $22,166 $24,425 $40,409
======= ======= ======= =======
Weighted average shares:
Weighted average shares outstanding for
basic earnings per share ........................ 21,555 25,288 21,312 23,684
Effect of dilutive stock options and warrants ....... 376 525 401 669
Effect of convertible subordinated notes under
the "if converted" method - weighted average
convertible shares issuable ..................... 1,256 1,621 1,060 1,515
------- ------- ------- -------
Weighted average shares outstanding for diluted
earnings per share .............................. 23,187 27,434 22,773 25,868
======= ======= ======= =======
</TABLE>
4. LONG TERM OBLIGATIONS
In August 1998, the Company amended and restated its credit agreement. The
credit agreement provides for revolving credit facilities totaling $425 million
through a bank syndicate and allows for an additional $80 million of debt
outside the credit facilities, in addition to fully subordinated debt. The
revolving credit facilities consist of two tranches. Tranche "A" is a $300
million credit facility that matures in August 2001, at which time all amounts
then outstanding become due. Tranche"B" is a $125 million credit facility that
provides for a 364 day term which may be renewed or converted to a two-year term
loan. The proceeds of the facilities are to be used for working capital, capital
expenditures and acquisitions, including refinancing of indebtedness related to
acquisitions. The facilities are secured by substantially all of the assets of
the Company. Interest on outstanding borrowings is charged, at the Company's
option, at the bank's prime rate, or the London Interbank Offered Rate ("LIBOR")
plus 0.50% to 1.25%, as determined by the ratio of the Company's funded debt to
cash flow, as defined. A commitment fee is payable on the unused portion of the
facilities. Under the terms of the credit agreement, the Company must maintain
certain minimum financial ratios. The credit agreement prohibits the payment of
cash dividends. As of September 30, 1998, the Company had a total of $387.6
million outstanding under the revolving and other outside credit facilities and
had utilized $16.8 million of the facilities for letters of credit securing
certain insurance obligations and performance bonds, resulting in a borrowing
availability of $100.6 million under the revolving and other outside credit
facilities.
CONVERTIBLE SUBORDINATED NOTES
As of September 30, 1998, the Company had outstanding $96.5 million of
convertible subordinated and other subordinated notes issued to certain former
owners of the Purchased Companies as partial consideration of the acquisition
purchase price. The notes bear interest at a weighted average interest rate of
4.76% and are convertible by the holder into shares of Common Stock at any time
after one year of
9
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(CONTINUED)
issuance. In conjunction with an offering of the Company's Common Stock
completed in May 1998, certain noteholders converted approximately $21.2 million
of convertible subordinated notes into approximately 612,000 shares of Common
Stock.
SECONDARY OFFERING OF COMMON STOCK
During the second quarter of 1998, the Company completed the sale of
2,300,000 shares of Common Stock in a secondary public offering. The proceeds
from the offering of $98.4 million, net of underwriters' commissions and other
expenses, were used to repay amounts owed under the credit facility.
5. BUSINESS COMBINATIONS
POOLINGS
During 1997, the Company acquired all of the outstanding stock of sixteen
companies in exchange for approximately 3,900,000 shares of Common Stock. These
acquisitions have been accounted for as poolings- of-interests and the results
of operations of these companies are included for all periods presented herein.
The prior periods presented have not been restated for three of these companies,
the Immaterial Pooled Companies. There were no acquisitions completed during the
nine months ended September 30, 1998 which were accounted for as
poolings-of-interests.
PURCHASES
During 1997, the Company acquired twenty businesses in transactions
accounted for as purchases. The aggregate consideration paid in these
transactions was $64.6 million in cash, net of cash acquired, approximately
596,000 shares of the Company's Common Stock and $33.8 million in subordinated
notes convertible into approximately 905,000 shares of Common Stock. The
accompanying condensed consolidated balance sheet as of September 30, 1998,
includes certain preliminary allocations of the respective purchase prices and
is subject to final adjustment. The preliminary allocations resulted in goodwill
recognized of $109.4 million, representing the excess of the purchase price over
the fair value of the net assets acquired.
During the nine months ended September 30, 1998, the Company acquired
additional businesses in transactions accounted for as purchases. The aggregate
consideration paid in these transactions was $186.7 million in cash, net of cash
acquired, approximately 331,000 shares of the Company's Common Stock, $49.6
million in subordinated notes convertible into approximately 985,000 shares of
Common Stock, and $18.4 million of other subordinated notes payable. The
accompanying condensed consolidated balance sheet as of September 30, 1998,
includes certain preliminary allocations of the respective purchase prices and
is subject to final adjustment. The preliminary allocations resulted in goodwill
recognized of $234.3 million, representing the excess of the purchase price over
the fair value of the net assets acquired.
The PRO FORMA STATEMENT OF INCOME DATA INCLUDING COMPENSATION
DIFFERENTIAL AND OTHER ADJUSTMENTS below includes the historical financial
statement data of the Company (including the Pooled Companies) for all periods
presented, the Immaterial Pooled Companies from the beginning of the fiscal
quarter in which they were acquired, and the Purchased Companies since the date
of their respective acquisition. In addition, the data below gives pro forma
effect to (i) certain reductions in salaries and benefits to the former owners
of the Pooled Companies which were agreed to in connection with the acquisition
of the Pooled Companies, (the
10
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(CONTINUED)
"Compensation Differential"); (ii) certain tax adjustments related to the
taxation of certain Pooled Companies as S Corporations prior to the consummation
of the acquisitions; (iii) the tax impact of the Compensation Differential in
each period; and (iv) the elimination of non-recurring costs associated with
certain acquisitions accounted for as poolings-of-interests. The PRO FORMA FOR
PURCHASED COMPANIES data below gives effect to all items above and also gives
effect to the acquisition of the Purchased Companies as if those acquisitions
occurred on January 1, 1997, and gives further pro forma effect to (i) the
Compensation Differential of the Purchased Companies, (ii) the amortization of
goodwill, (iii) interest expense attributable to cash expended and convertible
subordinated notes issued in connection with the acquisition of the Purchased
Companies, (iv) an adjustment to record interest expense and debt issuance costs
related to the Senior Subordinated Notes issued in June 1997, as if the notes
had been outstanding for all periods presented, (v) an adjustment to record the
interest savings related to the repayment of debt from proceeds of the secondary
offering of Common Stock completed in May 1998, as if the offering had been
completed at the beginning of all periods presented, and (vi) income tax
adjustments attributable to the above adjustments (in thousands, except per
share data).
PRO FORMA STATEMENT OF INCOME DATA INCLUDING COMPENSATION DIFFERENTIAL AND OTHER
ADJUSTMENTS:
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1997 1998
--------- ----------
(unaudited)
Revenue ................................................ $392,353 $579,552
Income before extraordinary items ...................... 26,018 39,651
Diluted earnings per share before extraordinary items .. 1.18 1.58
PRO FORMA FOR PURCHASED COMPANIES:
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1997 1998
--------- ----------
(unaudited)
Revenue ................................................ $634,118 $683,059
Income before extraordinary items ...................... 27,857 41,808
Diluted earnings per share before extraordinary items .. 1.09 1.57
The pro forma results presented above are not necessarily indicative of
actual results which might have occurred had the operations and management teams
of the Company, the Pooled Companies and the Purchased Companies been combined
at the beginning of the periods presented.
11
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(CONTINUED)
6. COMMITMENTS AND CONTINGENCIES
CLAIMS AND LAWSUITS
The Company is subject to certain claims and lawsuits arising in the
normal course of business, most of which involve claims for personal injury and
property damage incurred in connection with its operations. The Company
maintains various insurance coverages in order to minimize financial risk
associated with the claims. The Company has provided for certain of these
actions in the accompanying interim condensed consolidated financial statements.
In the opinion of management, uninsured losses, if any, resulting from the
ultimate resolution of these matters will not be material to the Company's
financial position or results of operations.
REGULATORY MATTERS
The Surface Transportation Board (STB) must approve or exempt any
consolidation or merger of two or more regulated interstate motorcoach operators
or the acquisition of one such operator by another. As of November 6, 1998, the
STB had approved or exempted from regulatory approval requirements each of the
acquisition transactions involving federally-regulated interstate motorcoach
operators entered into by the Company through July 1998. There can be no
assurance that the Company will be able to obtain such approval or exemption
with respect to the acquisitions completed after July 1998 or future
acquisitions.
ESTIMATED INSURANCE CLAIMS PAYABLE
The primary casualty risks in the Company's operations are bodily injury
and property damage to third parties and workers' compensation. The Company has
commercial liability insurance policies that provide coverage by the insurance
company, subject to deductibles ranging from $5,000 to $250,000. The Company is
consolidating its insurance coverages under a program which provides for
deductibles ranging from $100,000 to $250,000. As such, any claim within the
deductible per incident would be the financial obligation of the Company.
The accrued insurance claims payable represents management's estimate of
the Company's potential claims costs in satisfying the deductible provisions of
the insurance policies for claims occurring through September 30, 1998. The
accrual is based on known facts and historical trends. Management believes such
accrual to be adequate.
7. SUPPLEMENTAL GUARANTOR INFORMATION
The Company's payment obligations under the Senior Subordinated Notes are
jointly and severally guaranteed by all domestic subsidiaries (the Guarantors)
of the Company. The following unaudited condensed consolidating balance sheet,
statement of income and statement of cash flows presents the combined financial
statements of the Guarantors and non-guarantor subsidiaries. Separate financial
statements and other disclosures concerning the Guarantors are not deemed
material to investors.
12
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COACH GUARANTOR NONGUARANTOR
USA, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ........................... $ -- $ 11,568 $ (62) $ -- $ 11,506
Accounts receivable, net of allowance ............... -- 72,414 5,785 -- 78,199
Inventories ......................................... -- 28,316 1,324 -- 29,640
Notes receivable, current portion ................... -- 4,933 -- -- 4,933
Prepaid expenses and other current assets ........... -- 33,101 2,270 -- 35,371
----------- ----------- ----------- ----------- -----------
Total current assets ............................ -- 150,332 9,317 -- 159,649
PROPERTY & EQUIPMENT, net ........................... -- 564,933 17,313 -- 582,246
NOTES RECEIVABLE, net of allowance .................. -- 21,645 -- -- 21,645
GOODWILL, net ....................................... -- 397,048 8,786 -- 405,834
INTERCOMPANY & INVESTMENTS
IN SUBSIDIARIES ................................. 800,927 -- -- (800,927) --
OTHER ASSETS, net ................................... 6,968 17,483 559 -- 25,010
----------- ----------- ----------- ----------- -----------
Total assets .................................... $ 807,895 $ 1,151,441 $ 35,975 $ (800,927) $ 1,194,384
=========== =========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term obligations ......... $ -- $ 1,648 $ 10,285 $ -- $ 11,933
Current maturities of convertible
subordinated notes .............................. -- 12,415 -- -- 12,415
Accounts payable and accrued liabilities ............ 6,263 148,229 5,351 -- 159,843
----------- ----------- ----------- ----------- -----------
Total current liabilities ....................... 6,263 162,292 15,636 -- 184,191
LONG-TERM OBLIGATIONS, net of current
maturities .......................................... 315,400 716,619 11,245 (667,570) 375,694
SENIOR SUBORDINATED NOTES ................................ 150,000 -- -- -- 150,000
CONVERTIBLE SUBORDINATED NOTES,
net of current maturities ........................... -- 84,100 -- -- 84,100
DEFERRED INCOME TAXES .................................... -- 60,456 3,711 -- 64,167
----------- ----------- ----------- ----------- -----------
Total liabilities ............................... 471,663 1,023,467 30,592 (667,570) 858,152
STOCKHOLDERS' EQUITY:
Preferred stock ..................................... -- -- -- -- --
Common stock ........................................ 254 86 5 (91) 254
Additional paid-in capital .......................... 258,413 78,917 1,668 (80,585) 258,413
Cumulative translation adjustment ................... (831) -- (831) 831 (831)
Retained earnings ................................... 78,396 48,971 4,541 (53,512) 78,396
----------- ----------- ----------- ----------- -----------
Total stockholders' equity ...................... 336,232 127,974 5,383 (133,357) 336,232
----------- ----------- ----------- ----------- -----------
Total liabilities and stockholders' equity ...... $ 807,895 $ 1,151,441 $ 35,975 $ (800,927) $ 1,194,384
=========== =========== =========== =========== ===========
</TABLE>
13
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COACH GUARANTOR NONGUARANTOR
USA, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES ............................................. $ -- $ 547,565 $ 31,987 $ -- $ 579,552
OPERATING EXPENSES ................................... -- 393,460 25,928 -- 419,388
--------- --------- --------- --------- ---------
Gross profit .................................... -- 154,105 6,059 -- 160,164
GENERAL AND ADMINISTRATIVE EXPENSES .................. 36 61,093 2,297 -- 63,426
AMORTIZATION EXPENSE ................................. 1,111 4,273 202 -- 5,586
ACQUISITION RELATED COSTS ............................ -- -- -- -- --
--------- --------- --------- --------- ---------
Operating income ................................ (1,147) 88,739 3,560 -- 91,152
INTEREST EXPENSE ..................................... -- 24,933 1,216 -- 26,149
EQUITY IN INCOME OF SUBSIDIARIES ..................... 40,261 -- -- (40,261) --
--------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEMS ............................. 39,114 63,806 2,344 (40,261) 65,003
PROVISION FOR INCOME TAXES ........................... -- 24,414 938 -- 25,352
--------- --------- --------- --------- ---------
INCOME BEFORE EXTRAORDINARY ITEMS .................... 39,114 39,392 1,406 (40,261) 39,651
EXTRAORDINARY ITEMS, net of income taxes ............. -- (537) -- -- (537)
--------- --------- --------- --------- ---------
NET INCOME ........................................... $ 39,114 $ 38,855 $ 1,406 $ (40,261) $ 39,114
========= ========= ========= ========= =========
</TABLE>
14
<PAGE>
COACH USA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -
(CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
COACH GUARANTOR NONGUARANTOR
USA, INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................... $ 39,114 $ 38,855 $ 1,406 $ (40,261) $ 39,114
Adjustments to reconcile net income -
Depreciation and amortization .............................. 1,111 36,406 1,509 -- 39,026
Equity in income of subsidiaries ........................... (40,261) -- -- 40,261 --
Gain on sale of assets ..................................... -- (1,603) (213) -- (1,816)
Deferred income tax provision .............................. -- 8,582 685 -- 9,267
Changes in operating assets and liabilities, net of
effect of Purchased Companies -
Accounts receivable, net ................................ -- (22,033) (2,230) -- (24,263)
Inventories ............................................. -- (8,476) 219 -- (8,257)
Prepaid expenses and other current assets .................. -- (5,676) (629) -- (6,305)
Accounts payable and accrued liabilities ................ (1,301) (3,251) (610) -- (5,162)
Other ................................................... 194 (920) 256 -- (470)
--------- --------- --------- --------- ---------
Net cash provided by operating activities ............ (1,143) 41,884 393 -- 41,134
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment ........................... -- (102,932) (4,597) -- (107,529)
Proceeds from sales of property and equipment ................. -- 17,624 4,018 -- 21,642
Cash consideration paid for Purchased Companies, net .......... (186,506) -- -- -- (186,711)
Increase in notes receivable .................................. -- (13,587) -- -- (13,587)
--------- --------- --------- --------- ---------
Net cash used in investing activities ................ (186,711) (98,895) (579) -- (286,185)
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity ......................................... (164,506) 164,506 -- -- --
Principal payments on long-term obligations ................... -- (108,973) (10,797) -- (119,770)
Proceeds from issuance of long-term obligations ............... 256,139 -- 11,051 -- 267,190
Proceeds from issuance of Common Stock ........................ 105,841 -- -- -- 105,841
--------- --------- --------- --------- ---------
Net cash provided by financing activities ............. 197,474 55,533 254 -- 253,261
EFFECT OF EXCHANGE RATE CHANGES .................................. -- -- (352) -- (352)
--------- --------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH .................................. 9,620 (1,478) (284) -- 7,858
CASH AND CASH EQUIVALENTS,
beginning of period ........................................... (9,620) 13,046 222 -- 3,648
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period ......................... $ -- $ 11,568 $ (62) $ -- $ 11,506
========= ========= ========= ========= =========
</TABLE>
15
<PAGE>
PART I, ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
This filing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based on
current plans and expectations of the Company and involve risks and
uncertainties that could cause actual future activities and results of
operations to be materially different from those set forth in the
forward-looking statements. Important factors that could cause actual results to
differ include, among others, risks associated with acquisitions, fluctuations
in operating results because of acquisitions and variations in stock prices,
changes in government regulations, competition, and risks of operations and
growth of the newly acquired businesses.
In May 1996, Coach USA acquired, simultaneously with the closing of its
initial public offering, six established businesses. Through September 30, 1998,
the Company has acquired additional businesses. Of these additional businesses
acquired, 22 were accounted for as poolings-of-interests and are referred to
herein as the "Pooled Companies." The remaining businesses acquired were
accounted for as purchases and are referred to herein as the "Purchased
Companies"
The Company continues to realize savings by consolidating certain
general, administrative and purchasing functions and reducing insurance
expenses. These savings are being partially offset by the costs of being a
public company and the incremental increase in costs related to the Company's
corporate management. Neither these savings nor the costs associated therewith
for the periods prior to the date of the respective acquisitions have been
included in the financial information discussed below. As such, historical
results may not be comparable to, or indicative of, future performance.
The Company's motorcoach revenues are derived from fares charged to
individual passengers and fees charged under contracts and other agreements to
provide motorcoach services. Taxicab operation revenues are derived from fees
and other services charged to independent taxicab operators. Operating expenses
consist primarily of salaries and benefits for motorcoach drivers and mechanics,
depreciation, maintenance, fuel, oil, insurance and direct tour expenses.
General and administrative expenses consist primarily of management and
administrative salaries and benefits, marketing, communications and professional
fees.
RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
1997 1998 1997 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues ............................................... $157,109 $232,916 $392,353 $579,552
Operating Expenses ..................................... 111,547 161,777 288,565 419,388
-------- -------- -------- --------
Gross Profit ........................................... 45,562 71,139 103,788 160,164
General and Administrative Expenses .................... 16,592 22,929 44,457 63,426
Amortization Expense ................................... 1,037 2,513 2,380 5,586
Acquisition Related Costs .............................. 524 -- 918 --
Interest Expense ....................................... 6,861 9,979 15,544 26,149
-------- -------- -------- --------
Income Before Income Taxes and Extraordinary Items ..... 20,548 35,718 40,489 65,003
Provision for Income Taxes ............................. 7,929 13,930 16,275 25,352
-------- -------- -------- --------
Income Before Extraordinary Items ...................... $ 12,619 $ 21,788 $ 24,214 $ 39,651
======== ======== ======== ========
</TABLE>
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
The historical results above include the results of the Pooled Companies,
in all periods presented, and the Purchased Companies from their respective
dates of acquisition.
HISTORICAL RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997
COMPARED TO 1998
Revenues increased by 48.3% and 47.7% to $232.9 million and $579.6
million for the three and nine months ended September 30, 1998. The increase in
revenues was largely due to the incremental revenues of certain Purchased
Companies acquired in 1997 and 1998 of $63.0 million and $147.8 million,
respectively, and additional revenues of approximately $5.0 million and $15.2
million, respectively, related to the expansion of transit services with the
remaining increase attributable to continued internal growth in the charter,
tour and taxicab operations.
Operating expenses increased 45.0% and 45.3% to $161.8 million and $419.4
million for the three and nine months ended September 30, 1998, as compared to
the three and nine months ended September 30, 1997. The increase in operating
expenses was primarily due to the acquisition of the Purchased Companies in 1997
and 1998 and the overall increase in operations throughout the Company,
partially offset by savings in the Company's insurance and parts buying programs
and lower fuel prices.
General and administrative expenses increased 38.2% and 42.7% to $22.9
million and $63.4 million for the three and nine months ended September 30,
1998, as compared to the three and nine months ended September 30, 1997. The
increase in general and administrative expenses was primarily due to the
acquisition of the Purchased Companies in 1997 and 1998 and the additional costs
of the corporate management group required to execute the acquisition program
and to manage the consolidated group of companies.
Interest expense increased $3.1 million and $10.6 million for the three
and nine months ended September 30, 1998, as compared to the three and nine
months ended September 30, 1997, due to higher levels of debt resulting from
cash paid, debt assumed and convertible subordinated notes issued in connection
with the acquisition of certain Purchased Companies in 1997 and 1998, and the
incremental effect of the higher interest rate on the Company's senior
subordinated notes issued in June 1997.
Net income before extraordinary items increased during the three and nine
months ended September 30, 1998 as compared to the three and nine months ended
September 30, 1997, primarily due to the acquisitions of the Purchased Companies
and the effects of increased purchasing power on lowering certain operating
costs.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $41.1 million for the nine
months ended September 30, 1998. Capital expenditures during the period, net of
trade-ins and proceeds from sales of property and equipment, totaled $85.9
million. The majority of the capital expenditures were for the purchase of
motorcoach equipment for fleet additions.
In August 1998, the Company amended and restated its credit agreement.
The credit agreement provides for revolving credit facilities totaling $425
million through a bank syndicate and allows for an additional $80 million of
debt outside the credit facilities, in addition to fully subordinated debt. The
revolving credit facilities consist of two tranches. Tranche "A" is a $300
million credit facility that matures in August
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
2001, at which time all amounts then outstanding become due. Tranche "B" is a
$125 million credit facility that provides for a 364 day term which may be
renewed or converted to a two-year term loan. The proceeds of the facilities are
to be used for working capital, capital expenditures and acquisitions, including
refinancing of indebtedness related to acquisitions. The facilities are secured
by substantially all of the assets of the Company. Interest on outstanding
borrowings is charged, at the Company's option, at the bank's prime rate, or the
London Interbank Offered Rate ("LIBOR") plus 0.50% to 1.25%, as determined by
the ratio of the Company's funded debt to cash flow, as defined. A commitment
fee is payable on the unused portion of the facilities. Under the terms of the
credit agreement, the Company must maintain certain minimum financial ratios.
The credit agreement prohibits the payment of cash dividends. As of November 6,
1998, the Company had a total of $367.5 million outstanding under the revolving
and other outside credit facilities and had utilized $16.8 million of the
facilities for letters of credit securing certain insurance obligations and
performance bonds, resulting in a borrowing availability of $120.7 million under
the revolving and other outside credit facilities.
During the second quarter of 1998, the Company completed the sale of
2,300,000 shares of Common Stock in a secondary public offering. The proceeds
from the offering of $98.4 million, net of underwriters' commissions and other
expenses, were used to repay amounts owed under the credit facility. In
addition, certain noteholders converted approximately $21.2 million of
convertible subordinated notes previously issued in connection with certain
acquisitions, resulting in the issuance of approximately 612,000 additional
shares of Common Stock.
Management believes that the Company's revolving credit facility, its
cash flows from operations, and shares of Common Stock available under its shelf
registration statement will provide sufficient liquidity or acquisition currency
to execute the Company's acquisition and internal growth plans for the next
twelve months. Should the Company accelerate its acquisition program, the
Company may need to seek additional financing through the public or private sale
of equity or debt securities. There can be no assurance that the Company could
secure such financing if and when it is needed or on terms the Company deems
acceptable.
YEAR 2000 ISSUES
Some of the existing operating and financial computer systems utilized by
the Company at its operating subsidiaries will need to be modified or replaced
by the Company or its vendors to increase the date field or make other
modifications to reflect the upcoming change in the century. If such
replacements and modifications are not made, the currently identified operating
subsidiaries may experience temporary problems with certain date critical
functions. Management believes that any temporary disruptions would not be
material to the Company's overall business or results of operations. The Company
is developing a plan to address these issues and, at this time, does not believe
the cost of remediation will have a material impact on the Company's overall
business or results of operations. However, as a result of the Company's ongoing
acquisition program, the Company's assessment of potential Year 2000 issues is
not complete. As such, there can be no assurance that the systems of newly
acquired companies, vendors and other third party relationships on which the
Company may rely will be made Year 2000 compliant in a timely manner or that any
such failure to be Year 2000 compliant by another company would not have a
material adverse effect on the Company's business or results of operations.
18
<PAGE>
COACH USA, INC.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 2. CHANGES IN SECURITIES.
The following information relates to securities of the Company
issued or sold by the Company during the three months ended
September 30, 1998.
In connection with the acquisition of certain Purchased Companies
completed during the three months ended September 30, 1998, the
Company issued subordinated notes convertible into approximately
338,000 shares of Common Stock to certain former owners of these
businesses.
The foregoing transactions were effected without registration of
the relevant security under the Securities Act of 1933 in
reliance upon the exemption provided by Section 4(2) of the
Securities Act of 1933 for transactions not involving a public
offering.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Item 5. OTHER INFORMATION.
Following the 1998 Annual Meeting of Stockholders held on June 4,
1998, the Board of Directors of the Company elected Frank V.
Atlee as a Class II director, with his term expiring at the 2001
annual stockholders meeting. Mr. Atlee is a non-employee
director.
Effective October 13, 1998, the Board of Directors of the Company
elected Barnett Rukin as a Class II director, with his term
expiring at the 2001 annual stockholders meeting. Mr. Rukin is an
employee of the Company. Mr. Rukin was previously a principal
stockholder in the Short Line Group of Companies, which were
approved for acquisition by the Company on October 13, 1998.
Effective November 2, 1998, the Board of Directors of the Company
accepted the resignation of Richard H. Kristinik as Chairman of
the Board and Chief Executive Officer and elected Lawrence K.
King, formerly Senior Vice President and Chief Financial Officer,
to such positions. Mr. Kristinik will remain a member of the
Board of Directors.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
19
<PAGE>
COACH USA, INC.
PART II - OTHER INFORMATION - (CONTINUED)
10 - Material Contracts - August 1998 Amended and Restated
Credit Agreement.
27 - Financial Data Schedule.
(b) Reports on Form 8-K.
None.
20
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Coach USA, Inc., has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
COACH USA, INC.
Dated: November 12, 1998
By: LAWRENCE K. KING
--------------------------
Name: Lawrence K. King
Title: Chief Executive Officer
21
ACCESSION AND AMENDMENT AGREEMENT
This Accession and Amendment Agreement dated as of October 1, 1998 (this
"Agreement") is executed and delivered in connection with the Amended and
Restated Credit Agreement dated as of August 14, 1998, among Coach USA, Inc., a
Delaware corporation, the financial institutions parties thereto, as Banks, and
NationsBank, N.A., as the Agent (as modified from time to time, the "Credit
Agreement," the capitalized terms of which are used herein unless otherwise
defined herein).
Whereas, as contemplated by Section 2.1A(f) of the Credit Agreement, the
Borrower has requested that the Revolving B Loan Commitments be increased to
$125,000,000; and
Whereas, Credit Lyonnais New York Branch and SouthTrust Bank, N.A. (each
herein referred to as a "New Facility B Bank" and collectively, the "New
Facility B Banks") have each agreed to become a Facility B Bank under the Credit
Agreement with a Revolving B Loan Commitment of $15,000,000;
Now therefore the parties hereto agree as follows:
1. Each of the New Facility B Banks shall, on and as of the Effective Date
(as herein defined) become a Facility B Bank under the Credit Agreement with a
Revolving B Loan Commitment of $15,000,000.
2. Each of the New Facility B Banks hereby (i) confirms that it has
received a copy of the Credit Agreement, together with copies of the financial
statements referred to in Section 4.7 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Agreement; (ii) agrees that it will, independently
and without reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement or any other Credit Document; (iii) appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement and any other Credit Document as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (iv) agrees that it will perform all of the obligations which by the
terms of the Credit Agreement or any other Credit Document are required to be
performed by it as a Facility B Bank; (v) specifies as its Applicable Lending
Office the office set forth on Annex A of this Agreement.
3. Credit Lyonnais New York Branch hereby confirms that it will deliver to
the Agent the forms prescribed by the Internal Revenue Service of the United
States certifying as to its status
<PAGE>
for purposes of determining exemption from United States withholding taxes with
respect to all payments to be made it under the Credit Agreement and its
Facility B Note or such other documents as are necessary to indicate that all
such payments are subject to such rates at a rate reduced by an applicable tax
treaty.
4. For purposes of notices under the Credit Agreement, the Applicable
Lending Offices and addresses for notices to the New Facility B Banks are set
forth on Annex A to this Agreement.
5. On the Effective Date, notwithstanding anything to the contrary in the
Credit Agreement, each of the New Facility Banks shall be a "Facility B Bank"
for all purposes under the Credit Agreement, and the definition of "Facility B
Banks" set forth in the Credit Agreement is hereby amended to read in its
entirety as follows:
"FACILITY B BANKS" means the lenders listed on the signature pages
of this Agreement, each Eligible Assignee that shall become a Facility B
Bank party to this Agreement, and the lenders which became Facility B
Banks pursuant to the Accession and Amendment Agreement dated as of
October 1, 1998 among the parties hereto and such lenders.
6. On the Effective Date, Annex B to the Credit Agreement is hereby
replaced in its entirety with Annex B attached hereto.
7. On the Effective Date, the Borrower shall execute and deliver to each
New Facility B Bank a Revolving B Note in the form of Exhibit D-2 attached to
the Credit Agreement, which Revolving B Note shall be dated as of the Effective
Date, shall be payable to the order of such New Facility B Bank, and shall be in
the amount of such New Facility B Bank's Revolving B Loan Commitment.
8. The date this Agreement becomes effective (the "Effective Date") shall
be October 2, 1998, provided that on such date (i) no Default shall have
occurred and be continuing and (ii) the Borrower shall prepay any outstanding
Revolving B Loan Advances which were made by the Facility B Banks prior to such
date.
9. In connection with this Agreement, the Borrower hereby represents and
warrants that all of the representations and warranties set forth in the Credit
Documents are true and correct in all material respects on and as of the date of
this Agreement, and no Default has occurred.
10. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Texas.
-2-
<PAGE>
IN WITNESS WHEREOF this Agreement is executed and delivered as of the date
first mentioned above.
BORROWER:
COACH USA, INC.
By:___________________
Raymond K. Turner
Treasurer
AGENT:
NATIONSBANK, N.A., as Agent
By:___________________
John J. O'Neill
Senior Vice President
NEW FACILITY B BANK:
CREDIT LYONNAIS
NEW YORK BRANCH
By: ____________________
Name:__________________
Title:___________________
NEW FACILITY B BANK:
SOUTHTRUST BANK, N.A.
By: ____________________
Name:__________________
Title:___________________
-3-
<PAGE>
NATIONSBANK, N.A.,
as a Facility A Bank and as a Facility B Bank
By: ____________________
John J. O'Neill
Senior Vice President
BANK ONE, TEXAS, N.A.,
as a Facility A Bank
By: ____________________
Name:__________________
Title:___________________
FIRST UNION NATIONAL BANK,
as a Facility A Bank and as a Facility B Bank
By: _____________________
Name: __________________
Title:____________________
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as a Facility A Bank
By: ______________________
Name:____________________
Title:_____________________
FLEET BANK, N.A.,
as a Facility A Bank
By: _____________________
Name:___________________
Title:____________________
-4-
<PAGE>
SUMMIT BANK,
as a Facility A Bank and as a Facility B Bank
By: _____________________
Name:___________________
Title:____________________
GUARANTY FEDERAL BANK, F.S.B.,
as a Facility A Bank and as a Facility B Bank
By: _____________________
Name:___________________
Title:____________________
COMERICA BANK,
as a Facility A Bank and as a Facility B Bank
By: _____________________
Name:___________________
Title:____________________
NATIONAL CITY BANK OF KENTUCKY,
as a Facility A Bank and as a Facility B Bank
By:_____________________
Name:___________________
Title:____________________
-5-
<PAGE>
PARIBAS,
as a Facility A Bank
By: ______________________
Name: ___________________
Title:_____________________
By: ______________________
Name:____________________
Title:_____________________
HIBERNIA NATIONAL BANK,
as a Facility A Bank
By: ______________________
Name:____________________
Title:_____________________
NATEXIS BANQUE BFCE,
as a Facility A Bank
By:_______________________
Name:_____________________
Title:______________________
By: _______________________
Name:_____________________
Title:______________________
THE BANK OF NEW YORK,
as a Facility A Bank and as a Facility B Bank
By: _______________________
Name: _____________________
Title:______________________
-6-
<PAGE>
THE BANK OF NOVA SCOTIA,
as a Facility A Bank and as a Facility B Bank
By: _______________________
Name: ____________________
Title:______________________
THE FUJI BANK, LIMITED,
as a Facility A Bank and as a Facility B Bank
By: _______________________
Name:_____________________
Title:______________________
THE BANK OF TOKYO-MITSUBISHI, LTD.,
as a Facility A Bank and as a Facility B Bank
By: _______________________
Name:_____________________
Title:______________________
UNION BANK OF CALIFORNIA, N.A.,
as a Facility A Bank
By: _______________________
Name:_____________________
Title:______________________
CHASE BANK OF TEXAS, N.A.,
as a Facility B Bank
By: _______________________
Name:_____________________
Title:______________________
-7-
<PAGE>
ANNEX A TO ACCESSION AGREEMENT
APPLICABLE LENDING OFFICES AND
ADDRESSES FOR NOTICE FOR NEW FACILITY B BANKS
With respect to Credit Lyonnais:
APPLICABLE LENDING OFFICE: ADDRESS FOR NOTICES:
Credit Lyonnais New York Branch Credit Lyonnais
1301 Avenue of the Americas 2200 Ross Avenue, Suite 4400W
New York, New York 10019 Dallas, Texas 75201
Attention: Loan Servicing Dept. Attention: Blake Wright
Telephone: (212) 261-7635 Telephone: (214) 220-2300
Telecopy: (212) 459-3180 Telecopy: ( 214) 220-2323
With respect to SouthTrust Bank, N.A.:
APPLICABLE LENDING OFFICE: ADDRESS FOR NOTICES:
SouthTrust Bank, N.A. SouthTrust Bank, N.A.
420 North 20th Street 420 North 20th Street
Birmingham, Alabama 35203 Birmingham, Alabama 35203
Attention: David Merideth Attention: David Merideth
Telephone: (205)254-5761 Telephone: (205) 254-5761
Telecopy: (205)254-5022 Telecopy: (205) 254-5022
With a copy to:
SouthTrust Bank, N.A.
One Georgia Center
600 West Peachtree Street, 27th/PT007
Atlanta, Georgia 30308
Attention: Juliette Stapf
Telephone: (404) 532-5102
Telecopy: (404) 853-5466
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ANNEX B
REVOLVING B LOAN COMMITMENTS
FACILITY B BANK REVOLVING B LOAN COMMITMENT
The Bank of Nova Scotia $ 15,000,000
Credit Lyonnais New York Branch $ 15,000,000
NationsBank, N.A. $ 15,000,000
SouthTrust Bank, N.A. $ 15,000,000
Chase Bank of Texas, N.A. $ 10,000,000
Comerica Bank $ 10,000,000
The Fuji Bank, Limited $ 10,000,000
National City Bank of Kentucky $ 10,000,000
The Bank of New York $ 5,000,000
The Bank of Tokyo-Mitsubishi, Ltd. $ 5,000,000
First Union National Bank $ 5,000,000
Guaranty Federal Bank F.S.B. $ 5,000,000
Summit Bank $ 5,000,000
------------
Total Revolving B Loan Commitments $125,000,000
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AMENDED AND RESTATED CREDIT AGREEMENT
Among
COACH USA, INC.
as Borrower,
THE FINANCIAL INSTITUTIONS
NAMED IN THIS CREDIT AGREEMENT
as Banks,
and
NATIONSBANK, N.A.
(successor in interest by merger to NationsBank of Texas, N.A.),
as Agent for the Banks
August 14, 1998
NATIONSBANC MONTGOMERY SECURITIES LLC
as Lead Arranger
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.................................1
1.1 Certain Defined Terms............................................1
1.2 Computation of Time Periods.....................................18
1.3 Accounting Terms; Preparation of Financials.....................18
1.4 Types...........................................................18
1.5 Interpretation..................................................18
ARTICLE 2. CREDIT FACILITIES...............................................19
2.1 Revolving A Loan Facility.......................................19
2.1A Revolving B Loan Facility.......................................21
2.1B Conversion to Term B Loan.......................................24
2.2 Letter of Credit Facility.......................................25
2.3 Swing Line Facility.............................................28
2.4 Fees............................................................29
2.5 Interest........................................................30
2.6 Breakage Costs..................................................32
2.7 Increased Costs.................................................33
2.8 Illegality......................................................33
2.9 Market Failure..................................................34
2.10 Payment Procedures and Computations.............................34
2.11 Taxes...........................................................36
ARTICLE 3. CONDITIONS PRECEDENT............................................37
3.1 Conditions Precedent to Effectiveness of this Agreement.........37
3.2 Conditions Precedent to Each Extension of Credit................37
3.3 Conditions Precedent to Conversion to Term B Loan...............38
ARTICLE 4. REPRESENTATIONS AND WARRANTIES..................................38
4.1 Organization....................................................38
4.2 Authorization...................................................39
4.3 Enforceability..................................................39
4.4 Absence of Conflicts and Approvals..............................39
4.5 Investment Companies............................................39
4.6 Public Utilities................................................39
4.7 Financial Condition.............................................39
4.8 Condition of Assets.............................................40
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4.9 Litigation......................................................40
4.10 Subsidiaries....................................................40
4.11 Laws and Regulations............................................40
4.12 Environmental Compliance........................................40
4.13 ERISA...........................................................41
4.14 Taxes...........................................................41
4.15 True and Complete Disclosure....................................41
4.16 Year 2000.......................................................41
ARTICLE 5. COVENANTS.......................................................42
5.1 Organization....................................................42
5.2 Reporting.......................................................42
5.3 Inspection......................................................44
5.4 Use of Proceeds.................................................44
5.5 Financial Covenants.............................................44
5.6 Debt............................................................45
5.7 Liens...........................................................46
5.8 Other Obligations...............................................46
5.9 Corporate Transactions..........................................46
5.10 Distributions...................................................47
5.11 Transactions with Affiliates....................................47
5.12 Insurance.......................................................47
5.13 Investments.....................................................48
5.14 Lines of Business...............................................48
5.15 Compliance with Laws............................................48
5.16 Environmental Compliance........................................48
5.17 ERISA Compliance................................................49
5.18 Payment of Certain Claims.......................................49
5.19 New Subsidiaries................................................49
5.20 Post-Closing Collateral Perfection..............................50
ARTICLE 6. DEFAULT AND REMEDIES............................................51
6.1 Events of Default...............................................51
6.2 Termination of Commitments......................................52
6.3 Acceleration of Credit Obligations..............................52
6.4 Cash Collateralization of Letters of Credit.....................52
6.5 Default Interest................................................53
6.6 Right of Setoff.................................................53
6.7 Actions Under Credit Documents..................................53
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6.8 Remedies Cumulative.............................................53
6.9 Application of Payments.........................................53
ARTICLE 7. THE AGENT AND THE ISSUING BANK..................................54
7.1 Authorization and Action........................................54
7.2 Reliance, Etc...................................................54
7.3 Affiliates......................................................55
7.4 Bank Credit Decision............................................55
7.5 Expenses........................................................55
7.6 Indemnification.................................................56
7.7 Successor Agent and Issuing Bank................................56
ARTICLE 8. MISCELLANEOUS...................................................57
8.1 Expenses........................................................57
8.2 Indemnification.................................................57
8.3 Modifications, Waivers, and Consents............................57
8.4 Survival of Agreements..........................................58
8.5 Assignment and Participation....................................58
8.6 Notice..........................................................60
8.7 Choice of Law...................................................60
8.8 Forum Selection.................................................60
8.9 Service of Process..............................................61
8.10 Waiver of Jury Trial............................................61
8.11 Existing Security...............................................61
8.12 Counterparts....................................................61
8.13 No Further Agreements...........................................62
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ANNEXES
Annex A - Revolving A Loan Commitments of the Facility A Banks
Annex B - Revolving B Loan Commitments of the Facility B Banks
EXHIBITS
Exhibit A - Form of Compliance Certificate
Exhibit B-1 - Form of Revolving A Loan Borrowing Request
Exhibit B-2 - Form of Revolving B Loan Borrowing Request
Exhibit C-1 - Form of Revolving A Loan Continuation/Conversion Request
Exhibit C-2 - Form of Revolving B Loan Continuation/Conversion Request
Exhibit C-3 - Form of Term B Loan Continuation/Conversion Request
Exhibit D-1 - Form of Revolving A Loan Note
Exhibit D-2 - Form of Revolving B Loan Note
Exhibit D-3 - Form of Term B Loan Note
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Closing Documents List
Exhibit G - Form of Joinder Agreement
Exhibit H - Form of Acquisition Certificate
Exhibit I - Form of Seller Subordinated Note
Exhibit J - Form of Quarterly Perfection Certificate
SCHEDULES
Schedule I - Administrative Information (Borrower; Agent; Banks)
Schedule II - Disclosures (Existing Other Debt; Existing Seller
Subordinated Notes; Existing Subsidiaries)
Schedule III- Recently Acquired Subsidiaries
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CREDIT AGREEMENT
This Amended and Restated Credit Agreement dated as of August 14, 1998, is
among Coach USA, Inc., a Delaware corporation, as Borrower, the financial
institutions named herein, as Banks, and NationsBank, N.A. (successor in
interest by merger to NationsBank of Texas, N.A.), as Agent for the Banks.
PRELIMINARY STATEMENTS
The Borrower, the Agent and certain of the Banks previously entered into a
Credit Agreement dated as of August 13, 1997 (the "Original Credit Agreement")
pursuant to which the Banks committed to make certain Advances to, and to issue
Letters of Credit for the account of, the Borrower on the terms and conditions
set forth therein.
The Borrower has requested the Banks to establish a new 364-day revolving
credit facility in addition to the revolving facility originally provided under
the Original Credit Agreement and to revise certain other terms of the Original
Credit Agreement, and the Banks have agreed to do so on the terms and conditions
set forth herein.
The parties hereto have agreed to restate the Original Credit Agreement as
amended in its entirety for clarity only, and this Amended and Restated Credit
Agreement constitutes for all purposes an amendment to the Original Credit
Agreement and not a new or substitute agreement. The parties further agree that
(a) each reference to a "Revolving A Loan Advance" herein shall include each
"Advance" or "Revolving Loan Advance" (as such terms were defined in the
Original Credit Agreement) made prior to the date hereof under the Original
Credit Agreement as well as each Revolving A Loan Advance made hereafter under
this Amended and Restated Credit Agreement, and (b) each reference to a "Letter
of Credit" herein shall include each Letter of Credit issued heretofore under
the Original Credit Agreement as well as each Letter of Credit issued hereafter
under this Amended and Restated Credit Agreement.
The parties hereto agree as follows:
ARTICLE 1. DEFINITIONS AND ACCOUNTING TERMS.
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings (unless otherwise indicated, such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
"ACQUISITION" means the direct or indirect purchase or acquisition,
whether in one or more related transactions, of any Person or group of Persons
or any related group of assets, liabilities, or securities of any Person or
group of Persons.
<PAGE>
"ACQUISITION CERTIFICATE" means an acquisition certificate executed by a
Responsible Officer of the Borrower in substantially the form of EXHIBIT H.
"ADJUSTED PRIME RATE" means, for any day, the fluctuating rate per annum
of interest equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Rate in effect on such day plus 0.50%.
"ADVANCE" means any Revolving A Loan Advance, Revolving B Loan Advance, or
Term B Loan Advance.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person or any Subsidiary of such Person. The
term "control" (including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership, by contract, or otherwise.
"AGENT" means NationsBank in its capacity as an agent pursuant to Article
7 and any successor agent pursuant to Section 7.7.
"AGENT FEE LETTER" means the confidential letter agreement dated as of
July 29, 1998, among the Borrower, NationsBank, and NationsBanc Montgomery
Securities LLC (formerly known as NationsBanc Capital Markets, Inc.), regarding
certain fees owed by the Borrower to NationsBank and NationsBanc Montgomery
Securities LLC in connection with this Agreement.
"AGREEMENT" means this Amended and Restated Credit Agreement.
"APPLICABLE MARGIN" means, with respect to interest rates, unused
commitment fees, and letter of credit fees and as of any date of its
determination, an amount equal to the percentage amount set forth in the table
below opposite the applicable ratio of (a) the consolidated Funded Debt of the
Borrower as of the end of the fiscal quarter then most recently ended to (b) the
consolidated EBITDA of the Borrower for the four fiscal quarters then most
recently ended (provided that in calculating the foregoing, the financial
results and balance sheet effects of any Acquisitions shall be included in such
calculations on a proforma basis for the full period and on the relevant dates):
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<TABLE>
<CAPTION>
APPLICABLE APPLICABLE APPLICABLE MARGIN APPLICABLE MARGIN APPLICABLE
FUNDED MARGIN LIBOR MARGIN PRIME REVOLVING A LOAN REVOLVING B LOAN MARGIN LETTER
DEBT/EBITDA TRANCHES RATE TRANCHES COMMITMENT FEE COMMITMENT FEE OF CREDIT FEE
- -------------- ------------- ------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
< 1.00 0.500% 0.000% .150% 0.125% 0.500%
>= 1.00 < 2.00 0.625% 0.000% .200% 0.175% 0.625%
>= 2.00 < 2.75 0.750% 0.000% .225% 0.200% 0.750%
>= 2.75 < 3.50 1.000% 0.000% .250% 0.225% 1.000%
>= 3.50 1.250% 0.000% .300% 0.275% 1.250%
</TABLE>
The Agent shall periodically determine the Applicable Margin based upon the most
recent financial statements dated as of the end of a fiscal quarter delivered to
the Agent pursuant to Section 5.2(b) (subject to revisions in subsequent periods
based upon audited financial statements delivered pursuant to Section 5.2(a))
or, if any Acquisitions have occurred that are not reflected in such financial
statements, based upon historical proforma financial statements for the Borrower
and its Subsidiaries as of such date and for the appropriate period prepared in
accordance with Section 1.3(c) reflecting the financial status and results of
the Borrower and its Subsidiaries as if such Acquisitions had occurred prior to
the period. Any such adjustments to the Applicable Margin shall become effective
on the 45th day following the last day of each fiscal quarter; provided,
however, that if such financial statements or historical proforma financial
statements are not delivered when required hereunder, the Applicable Margin
shall increase to the maximum percentage amount set forth in the table above
from such 45th day following the last day of the applicable quarter until such
financial statements or historical financial statements are received by the
Agent.
In the event there shall occur any Acquisition since the date the Applicable
Margin was last redetermined as set forth above, the Agent shall make an interim
redetermination of the Applicable Margin using the method described above but
with the historical proforma financial statements revised to reflect the
Acquisition. Any such adjustment to the Applicable Margin shall become effective
on the effective date of the Acquisition.
Upon any change in the Applicable Margin, the Agent shall promptly notify the
Borrower and the Banks of the new Applicable Margin.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank and for any
particular type of transaction, the office of such Bank set forth in SCHEDULE I
to this Agreement (or in the applicable Assignment and Acceptance by which such
Bank joined this Agreement) as its applicable lending office for such type of
transaction or such other office of such Bank as such Bank may from time to time
specify in writing to the Borrower and the Agent for such particular type of
transaction.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in
substantially the form of EXHIBIT E executed by an assignor Bank, an assignee
Bank, and the Agent, in accordance with Section 8.5.
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"BANKS" means the Facility A Banks and the Facility B Banks.
"BORROWER" means Coach USA, Inc., a Delaware corporation.
"BORROWER ACCOUNT" means the principal operating account of Borrower with
the Agent or any other account of Borrower with the Agent which is designated as
Borrower's "Borrower Account" in writing by the Borrower to the Agent.
"BORROWING" means any Revolving A Loan Borrowing, Revolving B Loan
Borrowing, or Term B Loan Borrowing.
"BORROWING REQUEST" means (i) in the case of a requested Revolving A Loan
Borrowing, a Borrowing Request in substantially the form of EXHIBIT B-1, and
(ii) in the case of a requested Revolving B Loan Borrowing, a Borrowing Request
in substantially the form of EXHIBIT B-2, in each case which is executed by a
Responsible Officer of the Borrower and delivered to the Agent.
"BUSINESS DAY" means any Monday through Friday during which commercial
banks are open for business in Houston, Texas, Dallas, Texas, and, if the
applicable Business Day relates to any LIBOR Tranche, on which dealings are
carried on in the London interbank market.
"CANADIAN PLEDGE AGREEMENTS" means the Pledge Agreements made by the
Borrower and each Subsidiary of the Borrower holding equity interests in an
Exempt Canadian Subsidiary in favor of the Agent granting the Agent a first
priority security interest in the 65% of the stock of each Exempt Canadian
Subsidiary.
"CAPITAL EXPENDITURES" means, with respect to any Person and with respect
to any period of its determination, the consolidated expenditures of such Person
during such period that are required to be included in or are reflected by the
consolidated property, plant, or equipment accounts of such Person, or any
similar fixed asset or long term capitalized asset accounts of such Person, on
the consolidated balance sheet of such Person in conformity with generally
accepted accounting principles.
"CAPITAL LEASES" means, with respect to any Person, any lease of any
property by such Person which would, in accordance with generally accepted
accounting principles, be required to be classified and accounted for as a
capital lease on the balance sheet of such Person.
"CHANGE OF CONTROL" means, with respect to the Borrower, the direct or
indirect acquisition after the date hereof by any Person or related Persons
constituting a group of (a) beneficial ownership of issued and outstanding
shares of Voting Securities of the Borrower, the result of which acquisition is
that such Person or such group possesses 30% or more of the combined voting
power of all then-issued and outstanding Voting Securities of the Borrower, or
(b) the power to elect, appoint, or cause the election or appointment of at
least a majority of the members of the board of directors of the Borrower.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
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"COMMITMENT" means, (i) with respect to any Bank which is a Facility A
Bank and a Facility B Bank, the sum of its Revolving A Loan Commitment and its
Revolving B Loan Commitment, (ii) with respect to any Bank which is only a
Facility A Bank, its Revolving A Loan Commitment, and (iii) with respect to any
Bank which is only a Facility B Bank, its Revolving B Loan Commitment.
"COMMONLY CONTROLLED ENTITY" means, with respect to any Person, any other
Person which is under common control with such Person within the meaning of
Section 414 of the Code.
"COMPLIANCE CERTIFICATE" means a compliance certificate executed by a
Responsible Officer of the Borrower in substantially the form of EXHIBIT A.
"CONTINUATION/CONVERSION REQUEST" means (i) in the case of a requested
conversion/continuation of a Revolving A Loan Borrowing, a
Continuation/Conversion Request in substantially the form of EXHIBIT C-1, (ii)
in the case of a requested conversion/continuation of a Revolving B Loan
Borrowing prior to the Conversion Date, a Continuation/Conversion Request in
substantially the form of EXHIBIT C-2, and (iii) in the case of a requested
conversion/continuation of a Revolving B Loan Borrowing on the Conversion Date
or of a requested conversion/continuation of a Term B Loan Borrowing, a
Continuation/Conversion Request in substantially the form of EXHIBIT C-3, in
each case which is executed by a Responsible Officer of the Borrower and
delivered to the Agent.
"CONVERSION DATE" means the Revolving B Loan Maturity Date on which the
outstanding Revolving B Loan is converted to an outstanding Term B Loan in
accordance with Section 2.1C.
"CREDIT DOCUMENTS" means this Agreement, the Notes, the Swing Line Note,
the Agent Fee Letter, the Letter of Credit Documents, the Guaranty, the Security
Documents, the Interest Hedge Agreements, and each other agreement, instrument,
or document executed at any time in connection with this Agreement.
"CREDIT OBLIGATIONS" means all principal, interest, fees, reimbursements,
indemnifications, and other amounts now or hereafter owed by the Borrower to the
Agent and the Banks (or with respect to the Interest Hedge Agreements, any
Affiliates of the Banks) under this Agreement, the Notes, the Letter of Credit
Documents, and the other Credit Documents and any increases, extensions, and
rearrangements of those obligations under any amendments, supplements, and other
modifications of the documents and agreements creating those obligations.
"CREDIT PARTIES" means the Borrower and the Guarantors.
"DEBT" means, with respect to any Person, without duplication, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
evidenced by bonds, debentures, notes, or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of property or
services (other than trade debt and normal operating liabilities incurred in the
ordinary course of business), (d) obligations of such Person as lessee under
Capital Leases, (e) obligations of such Person under or relating to letters of
credit, guaranties, purchase agreements, or other creditor assurances assuring a
creditor against loss in respect of indebtedness or obligations of others of the
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kinds referred to in clauses (a) through (d) of this definition, and (f)
nonrecourse indebtedness or obligations of others of the kinds referred to in
clauses (a) through (e) of this definition secured by any Lien on or in respect
of any property of such Person. For the purposes of determining the amount of
any Debt, the amount of any Debt described in clause (e) of the definition of
Debt shall be valued at the maximum amount of the contingent liability
thereunder and the amount of any Debt described in clause (f) that is not
covered by clause (e) shall be valued at the lesser of the amount of the Debt
secured or the book value of the property securing such Debt.
"DEFAULT" means (a) an Event of Default or (b) any event or condition
which with notice or lapse of time or both would, unless cured or waived, become
an Event of Default.
"DEFAULT RATE" means, with respect to any amount due hereunder, a per
annum interest rate equal to (a) if such amount is either outstanding principal
accruing interest based upon a rate established elsewhere in this Agreement or
accrued but unpaid interest thereon, the sum of (i) the interest rate
established elsewhere in this Agreement from time to time for such principal
amount, including any applicable margin, plus (ii) 2.00% per annum or (b) in all
other cases, the Adjusted Prime Rate in effect from time to time plus the
Applicable Margin for Prime Rate Tranches in effect from time to time plus 2.00%
per annum.
"DERIVATIVES" means any swap, hedge, cap, collar, or similar arrangement
providing for the exchange of risks related to price changes in any commodity,
including money.
"DOLLARS OR $" means lawful money of the United States of America.
"EBIT" means, with respect to any Person and for any period of its
determination, the consolidated net income of such Person for such period, plus
the consolidated interest expense and income taxes of such Person for such
period.
"EBITDA" means, with respect to any Person and for any period of its
determination, the EBIT of such Person for such period, plus the consolidated
depreciation and amortization of such Person for such period.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ELIGIBLE ASSIGNEE" means, with respect to any assignment hereunder at the
time of such assignment, any commercial bank organized under the laws of the
United States or any of the countries parties to the Organization for Economic
Cooperation and Development or any political subdivision of any thereof which
has primary capital (or its equivalent) of not less than $250,000,000, is
approved by the Agent, and, so long as no Event of Default exists, is approved
by the Borrower, in either case, such approval not to be unreasonably withheld.
"ENVIRONMENTAL LAW" means all federal, state, and local laws, rules,
regulations, ordinances, orders, decisions, agreements, and other requirements
now or hereafter in effect relating to the pollution, destruction, loss, or
injury of the environment, the presence of any contaminant in the environment,
the protection, cleanup, remediation, or restoration of the environment, the
creation,
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handling, transportation, use, or disposal of any waste product in the
environment, exposure of persons to any contaminant, waste, or hazardous
substance in the environment, and the health and safety of employees in relation
to their environment.
"EVENT OF DEFAULT" has the meaning specified in Section 6.1.
"EXEMPT CANADIAN SUBSIDIARIES" has the meaning specified in Section
5.19(b).
"FACILITY A BANKS" means the lenders listed as Facility A Banks on the
signature pages of this Agreement and each Eligible Assignee that shall become a
Facility A Bank party to this Agreement pursuant to Section 8.5(b).
"FACILITY B BANKS" means the lenders listed as Facility B Banks on the
signature pages of this Agreement and each Eligible Assignee that shall become a
Facility B Bank party to this Agreement pursuant to Section 8.5(b).
"FEDERAL FUNDS RATE" means, for any period, a fluctuating per annum
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for any such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any of its successors.
"FINANCIAL STATEMENTS" means the audited consolidated financial statements
of the Borrower dated as of December 31, 1997, including the consolidated
balance sheets of the Borrower as of the end of such fiscal year and the
consolidated statements of income and cash flows for such fiscal year.
"FUNDED DEBT" means, with respect to any Person, without duplication, (a)
indebtedness of such Person for borrowed money, (b) obligations of such Person
evidenced by bonds, debentures, notes, or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of property or
services (other than accounts payable to trade creditors and current operating
liabilities incurred in the ordinary course of business), and (d) obligations of
such Person as lessee under Capital Leases.
"GUARANTY" means the Amended and Restated Guaranty dated as of August 14,
1998, made by the Subsidiaries of the Borrower (other than Insurance
Subsidiaries and Exempt Canadian Subsidiaries) in favor of the Agent
guaranteeing the Credit Obligations.
"GUARANTORS" means (a) the Subsidiaries of the Borrower that have executed
the Guaranty and (b) any future Subsidiaries of the Borrower that execute the
Guaranty pursuant to Section 5.19.
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"HAZARDOUS MATERIALS" means any substance or material identified as a
hazardous substance pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended and as now or hereafter in
effect; any substance or material regulated as a hazardous waste pursuant to the
Resource Conservation and Recovery Act of 1976, as amended and as now or
hereafter in effect; and any substance or material designated as a hazardous
substance or hazardous waste pursuant to any other Environmental Law.
"HIGHEST LAWFUL RATE" means the maximum lawful interest rate, if any, that
at any time or from time to time may be contracted for, charged, or received
under the laws applicable to the relevant Bank which are presently in effect or,
to the extent allowed by law, under such applicable laws which may hereafter be
in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow. The maximum lawful rate under this Agreement shall be
determined by the indicated (weekly) rate ceiling under Texas law, subject to
the right of any Bank to subsequently change such method of determination in
accordance with applicable law.
"INSURANCE SUBSIDIARY" means a Subsidiary of the Borrower solely in the
business of providing insurance for the Borrower and its Subsidiaries.
"INTEREST HEDGE AGREEMENTS" means any swap, hedge, cap, collar, or similar
arrangement between the Borrower and any Bank (or any Affiliate of any Bank)
providing for the exchange of risks related to price changes in the interest
rate on the Advances under this Agreement.
"INTEREST PERIOD" means, with respect to each LIBOR Tranche, the period
commencing on the date of such LIBOR Tranche and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The duration
of each such Interest Period shall be one, two, three, or six months, in each
case as the Borrower may select in the applicable Borrowing Request or
Continuation/Conversion Request (unless there shall exist any Default or Event
of Default, in which case the Borrower may only select one month Interest
Periods); provided, however, that:
(a) whenever the last day of any Interest Period would otherwise occur on
a day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day; provided that if such
extension would cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period shall occur on
the next preceding Business Day;
(b) any Interest Period which begins on the last Business Day of the
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month; and
(c) the Borrower may not select an Interest Period for any LIBOR Tranche
under any Loan which ends after any date when outstanding principal amounts of
such Loan must be repaid unless, after giving effect to such selection, the
aggregate outstanding principal amount of Prime Rate Tranches under such Loan
and LIBOR Tranches under such Loan having Interest Periods which end on or
before such repayment date shall be at least equal to or greater than the
principal amount
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of such Loan due and payable on or before such date (and therefore in no event
shall any Interest Period for any LIBOR Tranche extend beyond the applicable
Maturity Date).
"INTERIM FINANCIAL STATEMENTS" means the consolidated financial statements
of the Borrower dated as of March 31, 1998, including the consolidated balance
sheets of the Borrower as of the end of such fiscal quarter and the consolidated
statements of income and cash flows for such fiscal quarter and for the fiscal
year to date period ending on last day of such fiscal quarter.
"ISSUING BANK" means NationsBank and any successor issuing bank pursuant
to Section 7.7.
"LETTER OF CREDIT" means any commercial or standby letter of credit issued
by the Issuing Bank for the account of the Borrower pursuant to the terms of
this Agreement, including the Letters of Credit issued prior to the date of this
Agreement pursuant to the Original Credit Agreement described in the Preliminary
Statements of this Agreement.
"LETTER OF CREDIT APPLICATION" means the Issuing Bank's standard form
letter of credit application for either a commercial or standby letter of
credit, as the case may be, which has been executed by a Borrower and accepted
by the Issuing Bank in connection with the issuance of a Letter of Credit.
"LETTER OF CREDIT APPLICATION AMENDMENT" means the Issuing Bank's standard
form application to amend a letter of credit for either a commercial or standby
letter of credit, as the case may be, which has been executed by a Borrower and
accepted by the Issuing Bank in connection with the increase or extension of a
Letter of Credit.
"LETTER OF CREDIT COLLATERAL ACCOUNT" means a special cash collateral
account pledged to the Agent containing cash deposited pursuant to Section 6.4
to be maintained with the Agent in accordance with Section 2.2(g).
"LETTER OF CREDIT DOCUMENTS" means all Letters of Credit, Letter of Credit
Applications, Letter of Credit Application Amendments, and agreements,
documents, and instruments entered into in connection with or relating thereto.
"LETTER OF CREDIT EXPOSURE" means, as of any date of its determination,
the aggregate outstanding undrawn amount of Letters of Credit plus the aggregate
of the reimbursement obligations of the Borrower under the Letter of Credit
Applications and this Agreement.
"LETTER OF CREDIT SUBLIMIT" means $30,000,000.
"LIBOR" means, for any LIBOR Tranche for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "LIBOR"
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shall mean, for any LIBOR Tranche for any Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen LIBO
Page, the applicable rate shall be the arithmetic mean of all such rates.
"LIBOR TRANCHE" shall mean any Tranche which bears interest based upon the
LIBOR, as determined in accordance with Section 2.5.
"LIEN" means any mortgage, lien, pledge, charge, deed of trust, security
interest, encumbrance, or other type of preferential arrangement to secure or
provide for the payment of any obligation of any Person, whether arising by
contract, operation of law, or otherwise (including any title retention for such
purposes under any conditional sale agreement, any Capital Lease, or any other
title transfer or retention agreement).
"LOAN" means the Revolving A Loan, the Revolving B Loan, or the Term B
Loan.
"MAINTENANCE CAPITAL EXPENDITURES" means, with respect to any Person and
with respect to any period of its determination, the consolidated Capital
Expenditures of such Person resulting from the scheduled or routine maintenance
of the assets of such Person.
"MAJORITY BANKS" means, (a) at any time prior to the Conversion Date,
Banks holding more than 51% of the aggregate Commitments, or if the Commitments
have been terminated, Banks holding more than 51% of then aggregate unpaid
principal amount of the Notes held by the Banks and the Letter of Credit
Exposure of the Banks at such time; and (b) at any time after the Conversion
Date, Banks holding more than 51% of the sum of the Revolving A Loan Commitments
and outstanding Term B Loan at such time, or if the Revolving A Loan Commitments
have terminated, Banks holding more than 51% of then aggregate unpaid principal
amount of the Notes held by the Banks and the Letter of Credit Exposure of the
Banks at such time.
"MATERIAL ADVERSE CHANGE" means any material adverse change in the
business, operations, or financial condition of the Borrower and its
Subsidiaries on a consolidated basis.
"MATURITY DATE" means the Revolving A Loan Maturity Date, the Revolving B
Loan Maturity Date, or the Term B Loan Maturity Date.
"MINIMUM BORROWING AMOUNT" means, with respect to any Revolving Loan
Borrowing, $1,000,000.
"MINIMUM BORROWING MULTIPLE" means $500,000.
"MINIMUM TRANCHE AMOUNT" means, with respect to any Tranche, $1,000,000.
"MINIMUM TRANCHE MULTIPLE" means $500,000.
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"NATIONSBANK" means NationsBank, N.A., successor in interest by merger to
NationsBank of Texas, N.A., in its individual capacity.
"NET WORTH" means, with respect to any Person and as of any date of its
determination, the excess of (a) the assets of such Person over (b) the
liabilities of such Person.
"NOTE" means any Revolving A Loan Note, Revolving B Loan Note, or Term B
Loan Note.
"PBGC" means Pension Benefit Guaranty Corporation or its successor.
"PERCENTAGE" means, with respect to any Bank and as of any date of its
determination, (a) prior to the Conversion Date, either (i) the ratio of such
Bank's Commitment at such time to the aggregate Commitments at such time or (ii)
if the Commitments have been terminated, the ratio of such Bank's aggregate
outstanding Advances and share of the Letter of Credit Exposure at such time to
the aggregate outstanding Advances and Letter of Credit Exposure at such time,
and (b) after the Conversion Date, either (i) the ratio of such Bank's Revolving
A Loan Commitment plus outstanding Term B Loan Advances at such time to the
aggregate Revolving A Loan Commitments plus the aggregate outstanding Term B
Loan Advances at such time, or (ii) if the Revolving A Loan Commitments have
been terminated, the ratio of such Bank's aggregate outstanding Revolving A Loan
Advances, its share of the Letter of Credit Exposure and its aggregate
outstanding Term B Loan Advances at such time to the sum of the aggregate
outstanding Revolving A Loan Advances, the Letter of Credit Exposure, and
aggregate outstanding Term B Loan Advances at such time.
"PERMITTED DEBT" means all of the following Debt:
(a) Debt in the form of the Credit Obligations;
(b) Debt in an aggregate outstanding amount not to exceed
$80,000,000, including the Debt listed in SCHEDULE II as Existing Other
Debt;
(c) Debt in the form of intercompany Debt among the Borrower and its
Subsidiaries provided that in each case the Debt is subordinated upon
terms satisfactory to the Agent to the obligations of the Borrower and its
Subsidiaries with respect to the Credit Obligations;
(d) Debt in the form of Subordinated Debt;
(e) Debt in the form of obligations to insurance providers for the
Borrower and its Subsidiaries for financing insurance premiums in an
aggregate outstanding amount not to exceed $1,000,000; and
(f) Debt in the form of indebtedness for borrowed money and letters
of credit owed by any Subsidiary of the Borrower prior to the acquisition
of such Subsidiary by the Borrower in an Acquisition transaction, or owed
by any Person that is the subject of any Acquisition assumed by the
Borrower or any Subsidiary of the
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Borrower in connection with such Acquisition, provided that (i) with
respect to any such indebtedness for borrowed money, arrangements
satisfactory to the Agent for the repayment of such indebtedness within 60
days following the closing of the Acquisition are made prior to the
closing of the Acquisition and such arrangements are executed, (ii) with
respect to such Debt in the form of letters of credit, arrangements
satisfactory to the Agent for the repayment of such indebtedness within 60
days following the closing of the Acquisition are made prior to the
closing of the Acquisition and such arrangements are executed, and (iii)
with respect to all such Debt, the Borrower could obtain Advances or
Letters of Credit, respectively, under this Agreement in the aggregate
outstanding amount of such corresponding Debt.
"PERMITTED INVESTMENTS" means all of the following investments:
(a) investments in (i) wholly-owned Subsidiaries of the Borrower
other than Insurance Subsidiaries, (ii) Persons other than wholly-owned
Subsidiaries of the Borrower made in connection with Acquisitions that
have been approved by the Majority Banks, but no further investments
therein unless such further investments have been approved by the Majority
Banks, and (iii) Insurance Subsidiaries in an aggregate outstanding amount
not to exceed 5% of the Borrower's consolidated assets;
(b) investments in the form of loans, guaranties, open accounts, and
other extensions of trade credit in the ordinary course of business;
(c) investments in commercial paper and bankers' acceptances
maturing in twelve months or less from the date of issuance and which, at
the time of acquisition are rated A-2 or better by Standard & Poor's
Ratings Services and P-2 or better by Moody's Investors Services, Inc;
(d) investments in direct obligations of the United States, or
investments in any Person which investments are guaranteed by the full
faith and credit of the United States, in either case maturing in twelve
months or less from the date of acquisition thereof and repurchase
agreements having a term of less than one year and fully collateralized by
such obligations which are entered into with banks or trust companies
described in clause (e) below or brokerage companies having net worth in
excess of $250,000,000;
(e) investments in time deposits or certificates of deposit maturing
within one year from the date such investment is made, issued by a bank or
trust company organized under the laws of the United States or any state
thereof having capital, surplus, and undivided profits aggregating at
least $250,000,000 or a foreign branch thereof and whose long-term
certificates of deposit are, at the time of acquisition thereof, rated A-2
by Standard & Poor's Ratings Services or Prime-2 by Moody's Investors
Services, Inc.; and
(f) investments in money market funds which invest solely in the
types of investments described in paragraphs (c) through (e) above.
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In valuing any investments for the purpose of applying the limitations set forth
in this Agreement, such investments shall be taken at the original cost thereof
(but without reduction for any subsequent appreciation or depreciation thereof)
less any amount actually repaid or recovered on account of capital or principal
(but without reduction for any offsetting investments made by the investee in
the investor). For purposes of this Agreement, at any time when a corporation
becomes a Subsidiary of the Borrower, all investments of such corporation at
such time shall be deemed to have been made by such corporation at such time.
"PERMITTED LIENS" means all of the following Liens:
(a) Liens securing the Credit Obligations;
(b) Liens securing purchase money debt or Capital Leases permitted
under clause (b) of the definition of Permitted Debt provided that no such
Lien is spread to cover any property not purchased or leased in connection
with the incurrence of such Debt;
(c) Liens on the assets of and Liens on up to 35% of the stock of
Exempt Canadian Subsidiaries securing the Debt of such Exempt Canadian
Subsidiaries to the extent permitted under clause (b) of the definition of
Permitted Debt and the requirements for Exempt Canadian Subsidiaries set
forth in Section 5.19(b);
(d) Liens on assets acquired in Acquisitions securing Debt described
under clause (f) of the definition of Permitted Debt provided that all
such Liens and the notations, filings, and recordings reflecting such
Liens are released within 90 days following the closing of the
Acquisition; and
(e) Liens arising in the ordinary course of business which are not
incurred in connection with the borrowing of money or the obtaining of
advances or credit and which do not materially detract from the value of
any Restricted Entity's assets or materially interfere with any Restricted
Entity's business, including such (i) Liens for taxes, assessments, or
other governmental charges or levies; (ii) Liens in connection with
worker's compensation, unemployment insurance, or other social security,
old age pension, or public liability obligations; (iii) Liens in the form
of legal or equitable encumbrances deemed to exist by reason of negative
pledge covenants and other covenants or undertakings of like nature; (iv)
Liens in the form of vendors', carriers', warehousemen's, repairmen's,
mechanics', workmen's, materialmen's, construction, or other like Liens
arising by operation of law in the ordinary course of business or incident
to the construction or improvement of any property; (v) Liens in the form
of zoning restrictions, easements, licenses, and other restrictions on the
use of real property or minor irregularities in title thereto which do not
materially impair the use of such property in the operation of the
business of the applicable Restricted Entity or the value of such
property; and (vi) Liens in the form of precautionary financing statements
that have been filed to reflect operating leases of tires (to the extent
such filings could be considered Liens hereunder).
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"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, or other entity, or a government or any political subdivision or agency
thereof, or any trustee, receiver, custodian, or similar official.
"PLAN" means any (a) employee medical benefit plan under Section 3(1) of
ERISA, (b) employee pension benefit plan under Section 3(2) of ERISA, (c)
multiemployer plan under Section 4001(a)(3) of ERISA, and (d) employee account
benefit plan under Section 3(2) of ERISA.
"PRIME RATE" means, for any day, the fluctuating per annum interest rate
in effect on such day equal to the rate of interest publicly announced by the
Agent as its prime rate, whether or not the Borrower has notice thereof.
"PRIME RATE TRANCHE" shall mean any Tranche which bears interest based
upon the Adjusted Prime Rate, as determined in accordance with Section 2.5.
"PROHIBITED TRANSACTION" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Code.
"QUARTERLY PERFECTION CERTIFICATE" means a perfection certificate executed
by a Responsible Officer of the Borrower in substantially the form of EXHIBIT J.
"RATABLE SHARE" means, (a) with respect to any Facility A Bank and as of
any date of its determination, either (i) the ratio of such Facility A Bank's
Revolving A Loan Commitment at such time to the aggregate Revolving A Loan
Commitments at such time or (ii) if the Revolving A Loan Commitments have been
terminated, the ratio of such Facility A Bank's aggregate outstanding Revolving
A Loan Advances and its share of the Letter of Credit Exposure at such time to
the aggregate outstanding Revolving A Loan Advances and Letter of Credit
Exposure at such time; (b) with respect to any Facility B Bank prior to the
Conversion Date and as of any date of its determination, either (i) the ratio of
such Facility B Bank's Revolving B Loan Commitment at such time to the aggregate
Revolving B Loan Commitments at such time or (ii) if the Revolving B Loan
Commitments have been terminated, the ratio of such Facility B Bank's aggregate
outstanding Revolving B Loan Advances to the aggregate outstanding Revolving B
Loan Advances at such time; and (c) with respect to any Facility B Bank after
the Conversion Date and as of any date of its determination, the ratio of such
Facility B Bank's aggregate outstanding Term B Loan Advances to the aggregate
outstanding Term B Loan Advances at such time.
"RELATED PARTIES" means, with respect to any Person, such Person's
stockholders, directors, officers, employees, agents, Affiliates, successors,
and assigns, and their respective stockholders, directors, officers, employees,
and agents, and, with respect to any Person that is an individual, such Person's
family relations and heirs.
"REPORTABLE EVENT" means any of the events set forth in Section 4043 of
ERISA.
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"RESPONSIBLE OFFICER" means, with respect to any Person, such Person's
Chief Executive Officer, President, Chief Financial Officer, Secretary,
Treasurer, or any other officer of such Person designated by any of the
foregoing in writing from time to time.
"RESTRICTED CAPITAL EXPENDITURES" means the Capital Expenditures other
than Capital Expenditures that are deemed to occur because of the making of an
Acquisition and Maintenance Capital Expenditures.
"RESTRICTED ENTITIES" means the Borrower and each Subsidiary of the
Borrower.
"REVOLVING A LOAN" means the aggregate outstanding principal amount of the
Revolving A Loan Borrowings.
"REVOLVING A LOAN ADVANCE" means the outstanding principal from a Facility
A Bank which represents such Facility A Bank's ratable share of a Revolving A
Loan Borrowing.
"REVOLVING A LOAN BORROWING" means any aggregate amount of principal
advanced on the same day and pursuant to the same Borrowing Request under the
revolving loan facility created in Section 2.1.
"REVOLVING A LOAN COMMITMENT" means, for any Facility A Bank, the amount
set forth beside such Bank's name on ANNEX A as its Revolving A Loan Commitment,
or if such Bank has entered into any Assignment and Acceptance since the date of
this Agreement, as set forth for such Bank as its Revolving Loan A Commitment in
the Register maintained by the Agent pursuant to Section 8.5(c), in each case as
such amount may be terminated pursuant to Section 6.2.
"REVOLVING A LOAN MATURITY DATE" means August 13, 2001.
"REVOLVING A LOAN NOTE" means a promissory note of the Borrower payable to
the order of a Facility A Bank, in substantially the form of EXHIBIT D-1,
evidencing the indebtedness of the Borrower to such Bank resulting from
Revolving A Loan Advances made by such Bank to the Borrower.
"REVOLVING B LOAN" means the aggregate outstanding principal amount of the
Revolving B Loan Borrowings.
"REVOLVING B LOAN ADVANCE" means the outstanding principal from a Facility
B Bank which represents such Facility B Bank's ratable share of a Revolving B
Loan Borrowing.
"REVOLVING B LOAN BORROWING" means any aggregate amount of principal
advanced on the same day and pursuant to the same Borrowing Request under the
revolving loan facility created in Section 2.1A.
"REVOLVING B LOAN COMMITMENT" means, for any Facility B Bank, the amount
set forth beside such Bank's name on ANNEX B as its Revolving B Loan Commitment,
or if such Facility B
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Bank has entered into any Assignment and Acceptance since the date of this
Agreement, as set forth for such Facility B Bank as its Revolving B Loan
Commitment in the Register maintained by the Agent pursuant to Section 8.5(c),
in each case as such amount may be terminated pursuant to Section 6.2.
"REVOLVING B LOAN MATURITY DATE" means August 13, 1999.
"REVOLVING B LOAN NOTE" means a promissory note of the Borrower payable to
the order of a Facility B Bank, in substantially the form of EXHIBIT D-2,
evidencing the indebtedness of the Borrower to such Facility B Bank resulting
from Revolving B Loan Advances made by such Facility B Bank to the Borrower.
"SECURITY AGREEMENT" means the Amended and Restated Security Agreement
dated as of August 14, 1998, made by the Borrower and the Subsidiaries of the
Borrower in favor of the Agent granting the Agent a security interest in the
accounts receivable, equipment, and inventory of each such Credit Party to
secure the Credit Obligations.
"SECURITY DOCUMENTS" means the Security Agreement, the Canadian Pledge
Agreements, and any other document creating or consenting to Liens in favor of
the Agent securing Credit Obligations.
"SELLER SUBORDINATED NOTES" means (a) the Subordinated Debt of the
Borrower outstanding on the date of this Agreement and reflected in SCHEDULE II
that was issued to sellers for payment of an amount of the purchase price of an
Acquisition prior to such date and (b) any other Subordinated Debt of the
Borrower issued after the date of this Agreement to sellers for payment of an
amount of the purchase price of an Acquisition that is issued on terms at least
as favorable to the Banks as those set forth in EXHIBIT I.
"SENIOR SUBORDINATED NOTES" means the $150,000,000 9-3/8 % Senior
Subordinated Notes Due 2007 issued by the Borrower under the Indenture dated as
of June 24, 1997, made by the Borrower in favor of The Bank of New York, as
Trustee.
"SUBORDINATED DEBT" means, with respect to the Borrower and as of any date
of its determination, (a) the Seller Subordinated Notes, (b) the Senior
Subordinated Notes, and (c) any other unsecured indebtedness for borrowed money
not included in clause (a) or (b) for which the Borrower is directly and
primarily obligated that (i) arises after the date of this Agreement, (ii) does
not have any stated maturity before the latest maturity of any of the Credit
Obligations, (iii) has terms that are no more restrictive than the terms of the
Credit Documents, and (iv) is subordinated and has payment terms satisfactory to
the Agent and the Majority Banks, to the payment and collection of the Credit
Obligations.
"SUBSIDIARY" means, with respect to any Person, any other Person, a
majority of whose outstanding Voting Securities (other than directors'
qualifying shares) shall at any time be owned by such Person or one or more
Subsidiaries of such person.
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"SWING LINE LENDER" means NationsBank.
"SWING LINE LOAN" means the aggregate outstanding principal amount of the
advances made under the Swing Line Note.
"SWING LINE NOTE" means the promissory note of the Borrower in the
principal amount of $10,000,000 payable to the order of the Swing Line Lender
evidencing the indebtedness of the Borrower to the Swing Line Lender resulting
from advances to the Borrower under the line of credit created thereunder.
"TERM B LOAN" means the aggregate outstanding principal amount of the Term
B Loan Borrowings.
"TERM B LOAN ADVANCE" means the outstanding principal from a Facility B
Bank which represents such Facility B Bank's ratable share of a Term B Loan
Borrowing.
"TERM B LOAN BORROWING" means any aggregate amount of principal advanced
on the same day and pursuant to the same Borrowing Request under the term loan
facility created in Section 2.1B.
"TERM B LOAN MATURITY DATE" means the date which is the earlier of (i) the
Revolving A Loan Maturity Date, or (ii) the second anniversary date of the
Conversion Date.
"TERM B LOAN NOTE" means a promissory note of the Borrower payable to the
order of a Facility B Bank, in substantially the form of EXHIBIT D-3, evidencing
the indebtedness of the Borrower to such Facility B Bank resulting from Term B
Loan Advances made by such Facility B Bank to the Borrower.
"TERM B LOAN PAYMENT DATE" means each of (i) the last Business Day of each
March, June, September and December after the Conversion Date, and (ii) the Term
B Loan Maturity Date.
"TRANCHE" means any tranche of principal outstanding under the same Loan
accruing interest on the same basis whether created in connection with new
advances of principal under such Loan pursuant to Section 2.5(a)(i) or by the
continuation or conversion of existing tranches of principal under such Loan
pursuant to Section 2.5(a)(ii) and shall include any Prime Rate Tranche or LIBOR
Tranche.
"TYPE" has the meaning set forth in Section 1.4.
"VOTING SECURITIES" means (a) with respect to any corporation, any capital
stock of the corporation having general voting power under ordinary
circumstances to elect directors of such corporation, (b) with respect to any
partnership, any partnership interest having general voting power under ordinary
circumstances to elect the general partner or other management of the
partnership, and (c) with respect to any other Person, such ownership interests
in such Person having general voting power under ordinary circumstances to elect
the management of such Person, in each case
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irrespective of whether at the time any other class of stock, partnership
interests, or other ownership interest might have special voting power or rights
by reason of the happening of any contingency.
1.2 COMPUTATION OF TIME PERIODS. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" each means "to but
excluding."
1.3 ACCOUNTING TERMS; PREPARATION OF FINANCIALS.
(a) All accounting terms, definitions, ratios, and other tests
described herein shall be construed in accordance with United States generally
accepted accounting principles applied on a consistent basis with those applied
in the preparation of the Financial Statements, except as expressly set forth in
this Agreement.
(b) The Restricted Entities shall prepare their financial statements
in accordance with United States generally accepted accounting principles
applied on a consistent basis with those applied in the preparation of the
Financial Statements, unless otherwise approved in writing by the Agent.
(c) The Restricted Entities shall prepare all proforma financial
statements reflecting Acquisitions in accordance with the requirements
established by the Securities and Exchange Commission for acquisition accounting
for reported acquisitions by public companies, whether or not the applicable
Acquisitions are required to be publicly reported, and applying such
requirements to make such proforma financial statements reflect the accounting
procedures used in the preparation of the regular financial statements of the
Restricted Entities unless otherwise approved in writing by the Agent. All
applications of the foregoing requirements regarding proforma financial
statements must be approved by the Agent prior to the consummation of any
Acquisition.
1.4 TYPES. The "Type" of a Tranche refers to the determination whether
such tranche is a LIBOR Tranche or a Prime Rate Tranche.
1.5 INTERPRETATION. Article, Section, Annex, Schedule, and Exhibit
references are to this Agreement, unless otherwise specified. All references to
instruments, documents, contracts, and agreements are references to such
instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise
specified. The word "including" shall mean "including but not limited to." The
word "or" shall mean "and/or" wherever necessary to prevent interpretation of
any provision against the Agent or the Banks. Whenever the Borrower has an
obligation under this Agreement and the Credit Documents the expense of
complying with that obligation shall be an expense of the Borrower unless
otherwise specified. Whenever any determination is to be made by the Agent or
any Bank, such determination shall be in such Person's sole discretion unless
otherwise specified in this Agreement. If any provision in this Agreement and
the Credit Documents is held to be illegal, invalid, not binding, or
unenforceable, such provision shall be fully severable and this Agreement and
the Credit Documents shall be construed and enforced as if such illegal,
invalid, not binding, or
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unenforceable provision had never comprised a part of this Agreement and the
Credit Documents, and the remaining provisions shall remain in full force and
effect. This Agreement and the Credit Documents have been reviewed and
negotiated by sophisticated parties with access to legal counsel and shall not
be construed against the drafter. In the event of a conflict between this
Agreement and the Credit Documents, this Agreement shall control.
ARTICLE 2. CREDIT FACILITIES.
2.1 REVOLVING A LOAN FACILITY.
(a) REVOLVING A LOAN COMMITMENTS. Each Facility A Bank severally
agrees, on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 5.4, to make Revolving A Loan Advances to the
Borrower as such Facility A Bank's ratable share of Revolving A Loan Borrowings
requested by the Borrower from time to time on any Business Day during the
period from the date of this Agreement until the Revolving A Loan Maturity Date
provided that the aggregate outstanding principal amount of Revolving A Loan
Advances made by such Facility A Bank plus such Facility A Bank's ratable share
of the Letter of Credit Exposure plus such Facility A Bank's ratable share of
the Swing Line Loan shall not exceed such Facility A Bank's Revolving A Loan
Commitment. Revolving A Loan Borrowings must be made in an amount equal to or
greater than the Minimum Borrowing Amount and be made in multiples of the
Minimum Borrowing Multiple. Within the limits expressed in this Agreement, the
Borrower may from time to time borrow, prepay, and reborrow Revolving A Loan
Borrowings. The indebtedness of the Borrower to the Banks resulting from the
Revolving A Loan Advances made by the Banks shall be evidenced by Revolving A
Loan Notes made by the Borrower.
(b) METHOD OF ADVANCING
(i) Each Revolving A Loan Borrowing shall be made pursuant to
a Borrowing Request given by the Borrower to the Agent in writing or by telecopy
not later than the time required pursuant to Section 2.5(a)(i) to select the
interest rate basis for the Revolving A Loan Borrowing. Each Borrowing Request
shall be fully completed and shall specify the information required therein, and
shall be irrevocable and binding on the Borrower unless such Borrowing Request
is rejected by the Agent as incomplete or improper. If the Borrowing Request is
accepted by the Agent, the Agent shall promptly forward notice of the Revolving
A Loan Borrowing to the Facility A Banks. Each Facility A Bank shall, before
2:00 p.m. (local time at the Applicable Lending Office of the Agent) on the date
of the requested Revolving A Loan Borrowing, make available from its Applicable
Lending Office to the Agent at the Agent's Applicable Lending Office, in
immediately available funds, such Facility A Bank's ratable share of such
Revolving A Loan Borrowing. Subject to the satisfaction of all applicable
conditions precedent, after receipt by the Agent of such funds, the Agent shall
before close of business on the date requested for such Revolving A Loan
Borrowing make such Revolving A Loan Borrowing available to the Borrower in
immediately available funds at the Borrower Account.
(ii) Unless the Agent shall have received notice from a
Facility A Bank before the date of any Revolving A Loan Borrowing that such Bank
shall not make available to the Agent
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such Facility A Bank's ratable share of such Revolving A Loan Borrowing, the
Agent may assume that such Facility A Bank has made its ratable share of such
Revolving A Loan Borrowing available to the Agent on the date of such Revolving
A Loan Borrowing in accordance with paragraph (i) above and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Facility A Bank shall not
have so made its ratable share of such Revolving A Loan Borrowing available to
the Agent, such Facility A Bank agrees that it shall pay interest on such amount
for each day from the date such amount is made available to the Borrower by the
Agent until the date such amount is paid to the Agent by such Facility A Bank at
the Federal Funds Rate in effect from time to time, provided that with respect
to such Facility A Bank if such amount is not paid by such Facility A Bank by
the end of the second day after the Agent makes such amount available to the
Borrower, the interest rates specified above shall be increased by a per annum
amount equal to 2.00% on the third day and shall remain at such increased rate
thereafter. Interest on such amount shall be due and payable by such Facility A
Bank upon demand by the Agent. If such Facility A Bank shall pay to the Agent
such amount and interest as provided above, such amount so paid shall constitute
such Facility A Bank's Revolving A Loan Advance as part of such Revolving A Loan
Borrowing for all purposes of this Agreement even though not made on the same
day as the other Advances comprising such Revolving A Loan Borrowing. In the
event that such Facility A Bank has not repaid such amount by the end of the
fifth day after such amount was made available to the Borrower, the Borrower
agrees to repay to the Agent on demand such amount, together with interest on
such amount for each day from the date such amount was made available to the
Borrower until the date such amount is repaid to the Agent at the interest rate
charged to the Borrower for such Revolving A Loan Borrowing under the terms of
this Agreement.
(iii) The failure of any Facility A Bank to make available its
ratable share of any Revolving A Loan Borrowing shall not relieve any other
Facility A Bank of its obligation, if any, to make available its ratable share
of such Revolving A Loan Borrowing. No Facility A Bank shall be responsible for
the failure of any other Facility A Bank to honor such other Facility A Bank's
obligations hereunder, including any failure to make available any funds as part
of any Revolving A Loan Borrowing.
(c) PREPAYMENT.
(i)The Borrower may prepay the outstanding principal amount of
the Revolving A Loan pursuant to written notice given by the Borrower to the
Agent in writing or by telecopy not later than (A) 2:00 p.m. (local time at the
Applicable Lending Office of the Agent) on the third Business Day before the
date of the proposed prepayment, in the case of the prepayment of any portion of
the Revolving A Loan which is comprised of LIBOR Tranches, or (B) 12:00 noon
(local time at the Applicable Lending Office of the Agent) on the same Business
Day of the proposed prepayment, in the case of the prepayment of any portion of
the Revolving A Loan comprised solely of Prime Rate Tranches. Each such notice
shall specify the principal amount and the Tranches of the Revolving A Loan
which shall be prepaid, the date of the prepayment, and shall be irrevocable and
binding on the Borrower. Prepayments of the Revolving A Loan shall be made in
integral multiples of the Minimum Borrowing Multiple. If the prepayment would
cause the aggregate outstanding principal amount of any LIBOR Tranche comprising
the Revolving A Loan or the
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aggregate outstanding principal amount of all Prime Rate Tranches comprising the
Revolving A Loan, to be less than the Minimum Tranche Amount, the prepayment
must be in an amount equal to the entire outstanding principal amount of such
LIBOR Tranche under the Revolving A Loan or the entire outstanding principal
amount of all such Prime Rate Tranches under the Revolving A Loan, as the case
may be. Upon receipt of any notice of prepayment, the Agent shall give prompt
notice of the intended prepayment to the Facility A Banks. For each such notice
given by the Borrower, the Borrower shall prepay the Revolving A Loan in the
specified amount on the specified date as set forth in such notice. The Borrower
shall have no right to prepay any principal amount of the Revolving A Loan
except as provided in this Section 2.1(c)(i).
(ii) Each prepayment of principal of any LIBOR Tranche under
the Revolving A Loan pursuant to this Section 2.1(c) shall be accompanied by
payment of all accrued but unpaid interest on the principal amount prepaid and
any amounts required to be paid pursuant to Section 2.5 as a result of such
prepayment.
(d) REPAYMENT. The Borrower shall pay to the Agent for the ratable
benefit of the Banks the aggregate outstanding principal amount of the Revolving
A Loan on the Revolving A Loan Maturity Date.
2.1A REVOLVING B LOAN FACILITY.
(a) REVOLVING B LOAN COMMITMENTS. Each Facility B Bank severally
agrees, on the terms and conditions set forth in this Agreement and for the
purposes set forth in Section 5.4, to make Revolving B Loan Advances to the
Borrower as such Facility B Bank's ratable share of Revolving B Loan Borrowings
requested by the Borrower from time to time on any Business Day during the
period from the date of this Agreement until the Revolving B Loan Maturity Date
provided that the aggregate outstanding principal amount of Revolving B Loan
Advances made by such Facility B Bank shall not exceed such Facility B Bank's
Revolving B Loan Commitment. Revolving B Loan Borrowings must be made in an
amount equal to or greater than the Minimum Borrowing Amount and be made in
multiples of the Minimum Borrowing Multiple. Within the limits expressed in this
Agreement, the Borrower may from time to time borrow, prepay, and reborrow
Revolving B Loan Borrowings. The indebtedness of the Borrower to the Facility B
Banks resulting from the Revolving B Loan Advances made by the Banks shall be
evidenced by Revolving B Loan Notes made by the Borrower.
(b) METHOD OF ADVANCING
(i) Each Revolving B Loan Borrowing shall be made pursuant to
a Borrowing Request given by the Borrower to the Agent in writing or by telecopy
not later than the time required pursuant to Section 2.5(a)(i) to select the
interest rate basis for the Revolving B Loan Borrowing. Each Borrowing Request
shall be fully completed and shall specify the information required therein, and
shall be irrevocable and binding on the Borrower unless such Borrowing Request
is rejected by the Agent as incomplete or improper. If the Borrowing Request is
accepted by the Agent, the Agent shall promptly forward notice of the Revolving
B Loan Borrowing to the Facility B Banks. Each Facility B Bank shall, before
2:00 p.m. (local time at the Applicable Lending Office of the Agent)
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on the date of the requested Revolving B Loan Borrowing, make available from its
Applicable Lending Office to the Agent at the Agent's Applicable Lending Office,
in immediately available funds, such Facility B Bank's ratable share of such
Revolving B Loan Borrowing. Subject to the satisfaction of all applicable
conditions precedent, after receipt by the Agent of such funds, the Agent shall
before close of business on the date requested for such Revolving B Loan
Borrowing make such Revolving B Loan Borrowing available to the Borrower in
immediately available funds at the Borrower Account.
(ii) Unless the Agent shall have received notice from a
Facility B Bank before the date of any Revolving B Loan Borrowing that such
Facility B Bank shall not make available to the Agent such Facility B Bank's
ratable share of such Revolving B Loan Borrowing, the Agent may assume that such
Facility B Bank has made its ratable share of such Revolving B Loan Borrowing
available to the Agent on the date of such Revolving B Loan Borrowing in
accordance with paragraph (i) above and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount.
If and to the extent that such Facility B Bank shall not have so made its
ratable share of such Revolving B Loan Borrowing available to the Agent, such
Facility B Bank agrees that it shall pay interest on such amount for each day
from the date such amount is made available to the Borrower by the Agent until
the date such amount is paid to the Agent by such Facility B Bank at the Federal
Funds Rate in effect from time to time, provided that with respect to such
Facility B Bank if such amount is not paid by such Facility B Bank by the end of
the second day after the Agent makes such amount available to the Borrower, the
interest rates specified above shall be increased by a per annum amount equal to
2.00% on the third day and shall remain at such increased rate thereafter.
Interest on such amount shall be due and payable by such Facility B Bank upon
demand by the Agent. If such Facility B Bank shall pay to the Agent such amount
and interest as provided above, such amount so paid shall constitute such
Facility B Bank's Revolving B Loan Advance as part of such Revolving B Loan
Borrowing for all purposes of this Agreement even though not made on the same
day as the other Advances comprising such Revolving B Loan Borrowing. In the
event that such Facility B Bank has not repaid such amount by the end of the
fifth day after such amount was made available to the Borrower, the Borrower
agrees to repay to the Agent on demand such amount, together with interest on
such amount for each day from the date such amount was made available to the
Borrower until the date such amount is repaid to the Agent at the interest rate
charged to the Borrower for such Revolving B Loan Borrowing under the terms of
this Agreement.
(iii) The failure of any Facility B Bank to make available its
ratable share of any Revolving B Loan Borrowing shall not relieve any other
Facility B Bank of its obligation, if any, to make available its ratable share
of such Revolving B Loan Borrowing. No Facility B Bank shall be responsible for
the failure of any other Facility B Bank to honor such other Facility B Bank's
obligations hereunder, including any failure to make available any funds as part
of any Revolving B Loan Borrowing.
(c) PREPAYMENT.
(i)The Borrower may prepay the outstanding principal amount of
the Revolving B Loan pursuant to written notice given by the Borrower to the
Agent in writing or by
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telecopy not later than (A) 2:00 p.m. (local time at the Applicable Lending
Office of the Agent) on the third Business Day before the date of the proposed
prepayment, in the case of the prepayment of any portion of the Revolving B Loan
which is comprised of LIBOR Tranches, or (B) 12:00 noon (local time at the
Applicable Lending Office of the Agent) on the same Business Day of the proposed
prepayment, in the case of the prepayment of any portion of the Revolving B Loan
comprised solely of Prime Rate Tranches. Each such notice shall specify the
principal amount and the Tranches of the Revolving B Loan which shall be
prepaid, the date of the prepayment, and shall be irrevocable and binding on the
Borrower. Prepayments of the Revolving B Loan shall be made in integral
multiples of the Minimum Borrowing Multiple. If the prepayment would cause the
aggregate outstanding principal amount of any LIBOR Tranche comprising the
Revolving B Loan or the aggregate outstanding principal amount of all Prime Rate
Tranches comprising the Revolving B Loan, to be less than the Minimum Tranche
Amount, the prepayment must be in an amount equal to the entire outstanding
principal amount of such LIBOR Tranche under the Revolving B Loan or the entire
outstanding principal amount of all such Prime Rate Tranches under the Revolving
B Loan, as the case may be. Upon receipt of any notice of prepayment, the Agent
shall give prompt notice of the intended prepayment to the Facility B Banks. For
each such notice given by the Borrower, the Borrower shall prepay the Revolving
B Loan in the specified amount on the specified date as set forth in such
notice. The Borrower shall have no right to prepay any principal amount of the
Revolving B Loan except as provided in this Section 2.1A(c)(i).
(ii) Each prepayment of principal of any LIBOR Tranche under
the Revolving B Loan pursuant to this Section 2.1A(c) shall be accompanied by
payment of all accrued but unpaid interest on the principal amount prepaid and
any amounts required to be paid pursuant to Section 2.5 as a result of such
prepayment.
(d) REPAYMENT. Unless the Borrower has been deemed to have requested
a conversion of the Revolving B Loan into the Term B Loan in accordance with
Section 2.1A(e) and the conditions precedent to such conversion have been
satisfied pursuant to Section 3.3, the Borrower shall pay to the Agent for the
ratable benefit of the Facility B Banks the aggregate outstanding principal
amount of the Revolving B Loan on the Revolving B Loan Maturity Date.
(e) OPTIONAL EXTENSION OF REVOLVING B LOAN MATURITY DATE. At any
time after the sixty-first (61st) day prior to the Revolving B Loan Maturity
Date, the Borrower may request that the Revolving B Loan Maturity Date be
extended, effective on the then current Revolving B Loan Maturity Date, to the
date which is the 364th day after the then current Revolving B Loan Maturity
Date and the Facility B Banks may, at their option, accept or reject such
request. To request an extension, the Borrower shall notify the Agent of the
Borrower's request to extend the Revolving B Loan Maturity Date, and the Agent
shall promptly notify all of the Banks of such request. Each Facility B Bank
shall notify the Agent in writing within thirty (30) days after such request,
provided, that no Facility B Bank shall be required to give notice of consent
prior to thirty (30) days prior to the then current Revolving B Loan Maturity
Date (the later of such days shall be referred to as the "Facility B Extension
Response Date") whether it consents to such extension. If any Bank shall fail to
give such notice to the Agent by the Facility B Extension Response Date, such
Bank shall be deemed to have rejected the requested extension. If all of the
Facility B Banks accept such extension by the Facility B Extension Response
Date, the Revolving B Loan Maturity Date shall be
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automatically extended to the date which is the 364th day after the then current
Revolving B Loan Maturity Date, such extension to be effective on the then
effective Revolving B Loan Maturity Date. If Facility B Lenders holding at least
85% of the aggregate Revolving B Loan Commitments accept such extension by the
Facility B Extension Response Date, then, on the date selected by the Borrower
and the Agent, provided no Default shall have occurred and be continuing at such
time, either (i) the rejecting Facility B Banks shall be replaced by Facility B
Banks acceptable to the Borrower and the Agent or (ii) the Revolving B Loan
Commitments of such rejecting Facility B Banks shall be terminated and the
outstanding Revolving B Loan Advances of such Facility B Banks prepaid in full,
together with all accrued interest thereon and accrued unused commitment fees
owing at such time to such Facility B Bank and any amounts payable pursuant to
Section 2.6 (it being agreed that if any Facility B Bank is replaced and is
required to assign its outstanding Revolving B Loan Advances in connection
therewith on any date other than the then effective Revolving B Loan Maturity
Date, such replacement and assignment shall be deemed to be a prepayment of the
affected Revolving B Loan Advances for purposes of Section 2.6). If Facility B
Banks holding less than 85% of the aggregate Revolving B Loan Commitments accept
such extension by the Facility B Extension Response Date, then (i) the extension
of the Revolving B Loan Maturity Date requested by the Borrower shall be denied,
and (ii) effective on the date five Business Days after the Facility B Extension
Response Date, the Borrower shall be deemed to have requested that the Revolving
B Loan outstanding on the then effective Revolving B Loan Maturity Date be
converted to the Term B Loan pursuant to Section 2.1B, subject to the conditions
precedent to such conversion set forth in Section 3.3, unless the Borrower has
otherwise notified the Agent in writing that such Revolving B Loan will be paid
in full on the Revolving B Loan Maturity Date.
(f) OPTIONAL INCREASE OF AGGREGATE REVOLVING B LOAN COMMITMENTS. At
any time prior to the date 90 days prior to the Revolving B Loan Maturity Date,
provided that no Default has occurred and is continuing, the Borrower may
request that the aggregate amount of the Revolving B Loan Commitments be
increased to an amount not to exceed $125,000,000. No Facility B Bank shall have
any obligation to increase its then effective Revolving B Loan Commitment, any
such increase to be in such Facility B Bank's sole discretion. In the event the
existing Facility B Banks do not agree to increase their respective Revolving B
Loan Commitments in an amount sufficient to result in the Borrower's requested
increase of the aggregate Revolving B Loan Commitments, the Borrower may request
additional financial institutions to become Facility B Banks hereunder with
Revolving B Loan Commitments in an aggregate amount sufficient to result in the
increased amount of Revolving B Loan Commitments requested by the Borrower, not
to exceed $125,000,000. The increase in the aggregate Revolving B Loan
Commitments shall be effective on the date designated by the Borrower and the
Agent provided that on such date, (i) in the event there is any Revolving B Loan
then outstanding, the Borrower shall request a ratable Revolving B Loan
Borrowing from all of the Facility B Banks (including any new Facility B Banks)
in accordance with the increased Facility B Loan Commitments and the proceeds
thereof shall be used to prepay the Revolving B Loan outstanding on such date
(and the Borrower shall pay any costs arising pursuant to Section 2.6 in
connection therewith), and (ii) no Default shall have occurred and be
continuing.
2.1B CONVERSION TO TERM B LOAN. In the event the Borrower is deemed to
have requested a conversion of Revolving B Loan into a Term B Loan pursuant to
Section 2.1A(e), the Borrower
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will provide the Agent, on a date not less than three Business Days prior to the
Revolving B Loan Maturity Date, a Continuation/Conversion Request in
substantially the form of Exhibit C-3 specifying the interest to be applicable
to the converted Term B Loan in accordance with Section 2.5. Thereafter, on the
Revolving B Loan Maturity Date, subject to satisfaction of the conditions
precedent to conversion set forth in Section 3.3 on such date, the outstanding
Revolving B Loan shall be converted to a Term B Loan in an initial principal
amount equal to the outstanding principal amount of the Revolving B Loan on such
date (and on such date each Facility B Bank's outstanding Revolving B Loan
Advances to the Borrower shall be converted to outstanding Term B Loan Advances
on such date). The Term B Loan shall be repaid in equal quarterly installments
on each Term B Loan Payment Date. Any prepayment of the Term B Loan may not be
reborrowed. Interest on the Term B Loan shall accrue and be paid in accordance
with Section 2.5.
2.2 LETTER OF CREDIT FACILITY.
(a) COMMITMENT FOR LETTERS OF CREDIT. The Issuing Bank shall, on the
terms and conditions set forth in this Agreement and for the purposes set forth
in Section 5.4, issue, increase, and extend Letters of Credit at the request of
the Borrower from time to time on any Business Day during the period from the
date of this Agreement until the Revolving A Loan Maturity Date provided that
(i) the Letter of Credit Exposure shall not exceed the Letter of Credit Sublimit
and (ii) the aggregate outstanding principal amount of Revolving Loan Borrowings
plus the Letter of Credit Exposure plus the Swing Line Loan shall not exceed the
aggregate amount of the Revolving Loan Commitments. No Letter of Credit may have
an expiration date later than 12 months after its issuance date, and each Letter
of Credit which is self-extending beyond its expiration date must be cancelable
upon at least 30 days notice given by the Issuing Bank to the beneficiary of
such Letter of Credit. No Letter of Credit may have an expiration date later
than 12 months after the Revolving A Loan Maturity Date unless approved by the
Issuing Bank, the Agent, and the Banks. Each Letter of Credit must be in form
and substance acceptable to the Issuing Bank. The indebtedness of the Borrower
to the Issuing Bank resulting from Letters of Credit requested by the Borrower
shall be evidenced by the Letter of Credit Applications made by the Borrower.
(b) REQUESTING LETTERS OF CREDIT. Each Letter of Credit shall be
issued, increased, or extended pursuant to a Letter of Credit Application or
Letter of Credit Application Amendment, as applicable, given by the Borrower to
the Issuing Bank in writing or by telecopy promptly confirmed in writing, such
Letter of Credit Application or Letter of Credit Application Amendment being
given not later than 2:00 p.m. (local time at the Applicable Lending Office of
the Agent) on the third Business Day before the date of the proposed issuance,
increase, or extension of the Letter of Credit. Each Letter of Credit
Application or Letter of Credit Application Amendment shall be fully completed
and shall specify the information required therein (including the proposed form
of the Letter of Credit or change thereto), and shall be irrevocable and binding
on the Borrower unless such Letter of Credit Application or Letter of Credit
Application Amendment is rejected by the Issuing Bank as incomplete or improper.
If the Issuing Bank accepts the Letter of Credit Application or Letter of Credit
Application Amendment, the Issuing Bank shall give prompt notice thereof to the
Agent, and the Agent shall promptly inform the Banks of the proposed Letter of
Credit or change thereto. Subject to the satisfaction of all applicable
conditions precedent, the Issuing Bank shall before close of business on the
date requested by the Borrower for the issuance, increase, or
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extension of such Letter of Credit issue, increase, or extend such Letter of
Credit to the specified beneficiary. Upon the date of the issuance, increase, or
extension of a Letter of Credit, the Issuing Bank shall be deemed to have sold
to each other Bank and each other Bank shall be deemed to have purchased from
the Issuing Bank a ratable participation in the related Letter of Credit. The
Issuing Bank shall notify the Agent of each Letter of Credit issued, increased,
or extended and the date and amount of each Bank's participation in such Letter
of Credit, and the Agent shall in turn notify the Banks.
(c) REIMBURSEMENTS FOR LETTERS OF CREDIT. With respect to any Letter
of Credit and in accordance with the related Letter of Credit Application, the
Borrower agrees to pay to the Issuing Bank on demand of the Issuing Bank any
amount due to the Issuing Bank under such Letter of Credit Application (provided
that fees due with respect to such Letter of Credit shall be payable as
specified in Section 2.4(c)). If the Borrower does not pay upon demand of the
Issuing Bank any amount due to the Issuing Bank under any Letter of Credit
Application, in addition to any rights the Issuing Bank may have under such
Letter of Credit Application, the Issuing Bank may upon written notice to the
Agent request the satisfaction of such obligation by the making of a Revolving A
Loan Borrowing. Upon such request, the Borrower shall be deemed to have
requested the making of a Revolving A Loan Borrowing in the amount of such
obligation and the transfer of the proceeds thereof to the Issuing Bank. Such
Revolving A Loan Borrowing shall be comprised of a Prime Rate Tranche. The Agent
shall promptly forward notice of such Revolving A Loan Borrowing to the Borrower
and the Facility A Banks, and each Facility A Bank shall, in accordance with the
procedures of Section 2.1(b), other than limitations on the size of Revolving A
Loan Borrowings, and notwithstanding the failure of any conditions precedent,
make available such Facility A Bank's ratable share of such Revolving A Loan
Borrowing to the Agent, and the Agent shall promptly deliver the proceeds
thereof to the Issuing Bank for application to such Facility A Bank's share of
the obligations under such Letter of Credit. The Borrower hereby unconditionally
and irrevocably authorizes, empowers, and directs the Issuing Bank to make such
requests for Revolving A Loan Borrowings on behalf of the Borrower, and the
Facility A Banks to make Revolving A Loan Advances to the Agent for the benefit
of the Issuing Bank in satisfaction of such obligations. The Agent and each
Facility A Bank may record and otherwise treat the making of such Revolving A
Loan Borrowings as the making of a Revolving A Loan Borrowing to the Borrower
under this Agreement as if requested by the Borrower. Nothing herein is intended
to release the Borrower's obligations under any Letter of Credit Application,
but only to provide an additional method of payment therefor. The making of any
Borrowing under this Section 2.2(c) shall not constitute a cure or waiver of any
Default or Event of Default caused by the Borrower's failure to comply with the
provisions of this Agreement or any Letter of Credit Application.
(d) PREPAYMENTS OF LETTERS OF CREDIT. In the event that any Letters
of Credit shall be outstanding according to their terms after the Revolving A
Loan Maturity Date, the Borrower shall pay to the Agent an amount equal to the
Letter of Credit Exposure allocable to such Letters of Credit to be held in the
Letter of Credit Collateral Account and applied in accordance with paragraph (g)
below.
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(e) OBLIGATIONS UNCONDITIONAL. The obligations of the Borrower and
each Facility A Bank under this Agreement and the Letter of Credit Applications
to reimburse the Issuing Bank for draws under Letters of Credit and to make
other payments due in respect of Letters of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and the Letter of Credit Applications under all circumstances,
including: (i) any lack of validity or enforceability of any Letter of Credit
Document; (ii) any amendment, waiver, or consent to departure from any Letter of
Credit Document; (iii) the existence of any claim, set-off, defense, or other
right which the Borrower or any Bank may have at any time against any
beneficiary or transferee of any Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing Bank, or any
other person or entity, whether in connection with the transactions contemplated
in this Agreement or any unrelated transaction; (iv) any statement or any other
document presented under such Letter of Credit proving to be forged, fraudulent,
invalid, or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or (v) payment by the Issuing Bank under any Letter
of Credit against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit; provided, however, that nothing
contained in this paragraph (e) shall be deemed to constitute a waiver of any
remedies of the Borrower or any Facility A Bank in connection with the Letters
of Credit or the Borrower's or such Facility A Bank's rights under paragraph (f)
below.
(f) LIABILITY OF ISSUING BANK. The Issuing Bank shall not be liable
or responsible for: (i) the use which may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (ii)
the validity, sufficiency, or genuineness of documents related to Letters of
Credit, or of any endorsement thereon, even if such documents should prove to be
in any or all respects invalid, insufficient, fraudulent, or forged; (iii)
payment by the Issuing Bank against presentation of documents which do not
strictly comply with the terms of a Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the relevant Letter of
Credit; or (iv) any other circumstances whatsoever in making or failing to make
payment under any Letter of Credit (INCLUDING THE ISSUING BANK'S OWN
NEGLIGENCE); except that the Issuing Bank shall be liable to the Borrower or any
Facility A Bank to the extent of any direct, as opposed to consequential,
damages suffered by the Borrower or such Facility A Bank which the Borrower or
such Facility A Bank proves were caused by (A) the Issuing Bank's gross
negligence or willful misconduct in determining whether documents presented
under a Letter of Credit comply with the terms of such Letter of Credit or (B)
the Issuing Bank's willful failure to make or delay in making lawful payment
under any Letter of Credit after the presentation to it of documentation
strictly complying with the terms and conditions of such Letter of Credit.
(g) LETTER OF CREDIT COLLATERAL ACCOUNT.
(i) If the Borrower is required to deposit funds in the Letter
of Credit Collateral Account pursuant to Sections 2.2(d) or 6.4, then the
Borrower and the Agent shall establish the Letter of Credit Collateral Account
and the Borrower shall execute any documents and agreements, including the
Agent's standard form assignment of deposit accounts, that the Agent requests in
connection therewith to establish the Letter of Credit Collateral Account and
grant the Agent a first priority security interest in such account and the funds
therein. The Borrower hereby
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pledges to the Agent and grants the Agent a security interest in the Letter of
Credit Collateral Account, whenever established, all funds held in the Letter of
Credit Collateral Account from time to time, and all proceeds thereof as
security for the payment of the Obligations.
(ii) Funds held in the Letter of Credit Collateral Account
shall be held as cash collateral for obligations with respect to Letters of
Credit and promptly applied by the Agent to any reimbursement or other
obligations under Letters of Credit that exist or occur. To the extent that any
surplus funds are held in the Letter of Credit Collateral Account above the
Letter of Credit Exposure, during the existence of an Event of Default the Agent
may (A) hold such surplus funds in the Letter of Credit Collateral Account as
cash collateral for the Credit Obligations or (B) apply such surplus funds to
any Credit Obligations in accordance with Section 6.9. If no Default exists, the
Agent shall release to the Borrower at the Borrower's written request any funds
held in the Letter of Credit Collateral Account above the amounts required by
Section 2.2(d).
(iii) Funds held in the Letter of Credit Collateral Account
shall be invested in money market funds of the Agent or in another investment if
mutually agreed upon by the Borrower and the Agent, but the Agent shall have no
other obligation to make any other investment of the funds therein. The Agent
shall exercise reasonable care in the custody and preservation of any funds held
in the Letter of Credit Collateral Account and shall be deemed to have exercised
such care if such funds are accorded treatment substantially equivalent to that
which the Agent accords its own property, it being understood that the Agent
shall not have any responsibility for taking any necessary steps to preserve
rights against any parties with respect to any such funds.
2.3 SWING LINE FACILITY.
(a) COMMITMENT. The Swing Line Lender agrees, on the terms and
conditions set forth in the Swing Line Note, to make advances to the Borrower
under the Swing Line Note. No Bank shall have any rights thereunder (but each
Facility A Bank shall have the obligation to reimburse the Swing Line Lender in
accordance with paragraph (b) below). The indebtedness of the Borrower to the
Swing Line Lender resulting from the advances under the Swing Line Note made by
the Swing Line Lender shall be evidenced by the Swing Line Note made by the
Borrower.
(b) REIMBURSEMENTS FOR SWING LINE LOAN OBLIGATIONS. With respect to
the Swing Line Loan and the interest, premium, fees, and other amounts owed by
the Borrower to the Swing Line Lender in connection with the Swing Line Note,
and in accordance with the terms of the Swing Line Note, the Borrower agrees to
pay to the Swing Line Lender such amounts when due and payable to the Swing Line
Lender under the Swing Line Note. If the Borrower does not pay to the Swing Line
Lender any such amounts when due and payable to the Swing Line Lender under the
Swing Line Note, in addition to any rights the Swing Line Lender may have under
such Swing Line Note, the Swing Line Lender may upon written notice to the Agent
request the satisfaction of such obligation by the making of a Revolving A Loan
Borrowing in the amount of any such amounts not paid when due and payable. Upon
such request, the Borrower shall be deemed to have requested the making of a
Revolving A Loan Borrowing in the amount of such obligation and the transfer of
the proceeds thereof to the Swing Line Lender. Such Revolving A Loan Borrowing
shall be comprised of a Prime Rate Tranche. The Agent shall promptly forward
notice of such Revolving A Loan
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Borrowing to the Borrower and the Facility A Banks, and each Facility A Bank
shall, in accordance with the procedures of Section 2.1(b), other than
limitations on the size of Revolving A Loan Borrowings, and notwithstanding the
failure of any conditions precedent, make available such Facility A Bank's
ratable share of such Revolving A Loan Borrowing to the Agent, and the Agent
shall promptly deliver the proceeds thereof to the Swing Line Lender for
application to such amounts owed to the Swing Line Lender. The Borrower hereby
unconditionally and irrevocably authorizes, empowers, and directs the Swing Line
Lender to make such requests for Revolving A Loan Borrowings on behalf of the
Borrower, and the Facility A Banks to make Revolving A Loan Advances to the
Agent for the benefit of the Swing Line Lender in satisfaction of such
obligations. The Agent and each Facility A Bank may record and otherwise treat
the making of such Revolving A Loan Borrowings as the making of a Revolving A
Loan Borrowing to the Borrower under this Agreement as if requested by the
Borrower. Nothing herein is intended to release the Borrower's obligations under
the Swing Line Note, but only to provide an additional method of payment
therefor. The making of any Borrowing under this Section 2.4(b) shall not
constitute a cure or waiver of any Default or Event of Default caused by the
Borrower's failure to comply with the provisions of this Agreement or the Swing
Line Note.
2.4 FEES.
(a) UNUSED REVOLVING A COMMITMENT FEES. The Borrower shall pay to
the Agent for the ratable benefit of the Facility A Banks an unused commitment
fee in an amount equal to the product of the Applicable Margin for unused
commitment fees in effect from time to time multiplied by the average daily
amount by which (i) the aggregate amount of the Revolving A Loan Commitments
exceeds (ii) the aggregate outstanding principal amount of the Revolving A Loan
plus the Letter of Credit Exposure. Such unused commitment fee shall be due and
payable in arrears on the last day of each calendar quarter and the Revolving A
Loan Maturity Date.
(b) UNUSED REVOLVING B COMMITMENT FEES. The Borrower shall pay to
the Agent for the ratable benefit of the Facility B Banks an unused commitment
fee in an amount equal to the product of the Applicable Margin for unused
commitment fees in effect from time to time multiplied by the average daily
amount by which (i) the aggregate amount of the Revolving B Loan Commitments
exceeds (ii) the aggregate outstanding principal amount of the Revolving B Loan.
Such unused commitment fee shall be due and payable in arrears on the last day
of each calendar quarter and the Revolving B Loan Maturity Date.
(c) FEES FOR LETTERS OF CREDIT. For each Letter of Credit issued by
the Issuing Bank, the Borrower shall pay to the Agent for the ratable benefit of
the Facility A Banks a letter of credit fee equal to the Applicable Margin for
letter of credit fees per annum on the face amount of such Letter of Credit for
the stated term of such Letter of Credit, with a minimum fee of $500. In
addition, for each Letter of Credit issued by the Issuing Bank, the Borrower
shall pay to the Agent for the benefit of the Issuing Bank a fronting fee of
0.125% per annum on the face amount of such Letter of Credit for the stated term
of such Letter of Credit, with a minimum fee of $500. The Borrower shall pay
such letter of credit fees for each Letter of Credit quarterly in arrears within
ten days after when billed therefor by the Issuing Bank.
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(d) AGENT FEE LETTER. The Borrower shall pay to the parties
specified therein the fees and other amounts payable under the Agent Fee Letter.
(f) AMENDMENT FEE. The Borrower shall pay to the Agent for the
ratable benefit of the Facility A Banks a fee of .05% of $300,000,000 in
consideration of the agreement of the Facility A Banks to enter into this
Amended and Restated Credit Agreement, such fee to be paid in full on the date
this Agreement becomes effective in accordance with its terms.
2.5 INTEREST.
(a) ELECTION OF INTEREST RATE BASIS. The Borrower may select the
interest rate basis for each Loan to the Borrower in accordance with the terms
of this Section 2.5(a):
(i) Under the Borrowing Request provided to the Agent in
connection with the making of each Borrowing under any Loan, the Borrower shall
select the amount and the Type of the Tranches, and for each LIBOR Tranche
selected, any permitted Interest Period for each such LIBOR Tranche, which will
comprise such Borrowing, provided that (A) at no time shall there be more than
ten separate LIBOR Tranches outstanding under this Agreement and (B) each
Tranche must be in a principal amount equal to or greater than the Minimum
Tranche Amount and be made in multiples of the Minimum Tranche Multiple. Such
interest rate elections must be provided to the Agent in writing or by telecopy
not later than 1:00 p.m. (local time at the Applicable Lending Office of the
Agent) on the third Business Day before the date of any proposed Borrowing
comprised of a LIBOR Tranche or 11:00 a.m. (local time at the Applicable Lending
Office of the Agent) on the same day of any proposed Borrowing comprised solely
of a Prime Rate Tranche. The Agent shall promptly forward copies of such
interest rate elections to the Banks. In the case of any Borrowing comprised of
a LIBOR Tranche, upon determination by the Agent, the Agent shall promptly
notify the Borrower and the Banks of the applicable interest rate to such
Tranche.
(ii) With respect to any Tranche under any Loan, the Borrower
may continue or convert any portion of any LIBOR Tranche or Prime Rate Tranche
to form new LIBOR Tranches or Prime Rate Tranches under the same Loan in
accordance with this paragraph. Each such continuation or conversion shall be
deemed to create a new Tranche for all purposes of this Agreement. Each such
continuation or conversion shall be made pursuant to a Continuation/Conversion
Request given by the Borrower to the Agent in writing or by telecopy not later
than 2:00 p.m. (local time at the Applicable Lending Office of the Agent) on the
third Business Day before the date of the proposed continuation or conversion.
Each Continuation/Conversion Request shall be fully completed and shall specify
the information required therein, and shall be irrevocable and binding on the
Borrower. If the Continuation/Conversion Request is accepted by the Agent, the
Agent shall promptly forward notice of the continuation or conversion to the
Banks. In the case of any continuation or conversion into LIBOR Tranches, upon
determination by the Agent, the Agent shall notify the Borrower and the Banks of
the applicable interest rate. Continuations and conversions of Tranches shall be
made in integral multiples of the Minimum Tranche Multiple. No continuation or
conversion shall be permitted if such continuation or conversion would cause the
aggregate outstanding principal amount of any LIBOR Tranche which would remain
outstanding or the aggregate outstanding principal amount of all Prime Rate
Tranches
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which would remain outstanding to be less than the Minimum Tranche Amount. At no
time shall there be more than eight separate LIBOR Tranches outstanding under
any Loan. Any conversion of an existing LIBOR Tranche is subject to Section 2.6.
Subject to the satisfaction of all applicable conditions precedent, the Agent
and the Banks shall before close of business on the date requested by the
Borrower for the continuation or conversion, make such continuation or
conversion.
(iii) At the end of the Interest Period for any LIBOR Tranche
if the Borrower has not continued or converted such LIBOR Tranche into new
Tranches as provided for in paragraph (ii) above, the Borrower shall be deemed
to have continued such LIBOR Tranche as a new LIBOR Tranche under the same Loan
with an Interest Period of one month. Each Prime Rate Tranche shall continue as
a Prime Rate Tranche under the same Loan unless the Borrower converts such Prime
Rate Tranche as provided for in paragraph (ii) above.
(b) LIBOR TRANCHES. Each LIBOR Tranche shall bear interest during
its Interest Period at a per annum interest rate equal to the sum of the LIBOR
for such Tranche plus the Applicable Margin for LIBOR Tranches in effect from
time to time. The Borrower shall pay to the Agent for the ratable benefit of the
Banks all accrued but unpaid interest on each LIBOR Tranche on the last day of
the applicable Interest Period for such LIBOR Tranche (and with respect to LIBOR
Tranches with Interest Periods of greater than three months, on the date which
is three months after the first date of the Interest Period for such LIBOR
Tranche), when required upon prepayment as specified elsewhere in this
Agreement, on any date when any portion of any LIBOR Tranche is prepaid in full
(but only to the extent of the portion of any such LIBOR Tranche is prepaid),
and on the applicable Maturity Date for each such LIBOR Tranche.
(c) PRIME RATE TRANCHES. Each Prime Rate Tranche shall bear interest
at a per annum interest rate equal to the Adjusted Prime Rate in effect from
time to time plus the Applicable Margin for Prime Rate Tranches in effect from
time to time. The Borrower shall pay to the Agent for the ratable benefit of the
Banks all accrued but unpaid interest on outstanding Prime Rate Tranches on the
last day of each calendar quarter, when required upon prepayment as specified
elsewhere in this Agreement, on any date all Prime Rate Tranches are prepaid in
full, and on the applicable Maturity Date for each such Prime Rate Tranche.
(d) USURY PROTECTION.
(i) If, with respect to any Bank and the Borrower, the
effective rate of interest contracted for by such Bank with the Borrower under
the Credit Documents, including the stated rates of interest contracted for
hereunder and any other amounts contracted for under the Credit Documents which
are deemed to be interest, at any time exceeds the Highest Lawful Rate, then the
outstanding principal amount of the loans made by such Bank to the Borrower
hereunder shall bear interest at a rate which would make the effective rate of
interest on the loans made by such Bank to the Borrower under the Credit
Documents equal the Highest Lawful Rate until the difference between the amounts
which would have been due by the Borrower to such Bank at the stated rates and
the amounts which were due by the Borrower to such Bank at the Highest Lawful
Rate (the "Lost Interest") has been recaptured by such Bank. If, when the loans
made hereunder are repaid in full, the Lost Interest has not been fully
recaptured by such Bank pursuant to the preceding
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paragraph, then, to the extent permitted by law, the interest rates charged by
such Bank to the Borrower hereunder shall be retroactively increased such that
the effective rate of interest on the loans made by such Bank to the Borrower
under the Credit Documents was at the Highest Lawful Rate since the
effectiveness of this Agreement to the extent necessary to recapture the Lost
Interest not recaptured pursuant to the preceding sentence and, to the extent
allowed by law, the Borrower shall pay to such Bank the amount of the Lost
Interest remaining to be recaptured by such Bank.
(ii) In calculating all sums paid or agreed to be paid to any
Bank by the Borrower for the use, forbearance, or detention of money under the
Credit Documents, such amounts shall, to the extent permitted by applicable law,
be amortized, prorated, allocated, and spread in equal parts throughout the term
of the Credit Documents.
(iii) NOTWITHSTANDING THE FOREGOING OR ANY OTHER
TERM IN THIS AGREEMENT AND THE CREDIT DOCUMENTS TO THE CONTRARY, it is
the intention of each Bank and the Borrower to conform strictly to any
applicable usury laws. Accordingly, if any Bank contracts for, charges, or
receives any consideration from the Borrower which constitutes interest in
excess of the Highest Lawful Rate, then any such excess shall be canceled
automatically and, if previously paid, shall at such Bank's option be applied to
the outstanding amount of the loans made hereunder by such Bank to the Borrower
or be refunded to the Borrower.
2.6 BREAKAGE COSTS. If (i) any payment of principal on or any conversion
of any LIBOR Tranche is made on any date other than the last day of the Interest
Period for such LIBOR Tranche, whether as a result of any voluntary or mandatory
prepayment, any acceleration of maturity, or any other cause, (ii) any payment
of principal on any LIBOR Tranche is not made when due, or (iii) any LIBOR
Tranche is not borrowed, converted, or prepaid in accordance with the respective
notice thereof provided by the Borrower to the Agent, whether as a result of any
failure to meet any applicable conditions precedent for borrowing, conversion,
or prepayment, the permitted cancellation of any request for borrowing,
conversion, or prepayment, the failure of the Borrower to provide the respective
notice of borrowing, conversion, or prepayment, or any other cause not specified
above which is created by the Borrower, then the Borrower shall pay to each Bank
upon demand any amounts required to compensate such Bank for any losses, costs,
or expenses, including lost profits and administrative expenses, which are
reasonably allocable to such action, including losses, costs, and expenses
related to the liquidation or redeployment of funds acquired or designated by
such Bank to fund or maintain such Bank's share of such LIBOR Tranche or related
to the reacquisition or redesignation of funds by such Bank to fund or maintain
such Bank's share of such LIBOR Tranche following any liquidation or
redeployment of such funds caused by such action. Such Bank need not prove
matched funding of any particular funds, and a certificate as to the amount of
such loss, cost, or expense detailing the calculation thereof and certifying
that such Bank customarily charges such amounts to its other customers in
similar circumstances submitted by such Bank to the Borrower shall be conclusive
and binding for all purposes, absent manifest error.
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2.7 INCREASED COSTS.
(a) COST OF FUNDS. If due to either (i) any introduction of, change
in, or change in the interpretation of any law or regulation after the date of
this Agreement or (ii) compliance with any guideline or request from any central
bank or other governmental authority having appropriate jurisdiction (whether or
not having the force of law) given after the date of this Agreement, there shall
be any increase in the costs of any Bank allocable to (x) committing to make any
Advance or obtaining funds for the making, funding, or maintaining of such
Bank's share of any LIBOR Tranche in the relevant interbank market or (y)
committing to make Letters of Credit or issuing, funding, or maintaining Letters
of Credit (including any increase in any applicable reserve requirement
specified by the Federal Reserve Board, including those for emergency, marginal,
supplemental, or other reserves), then the Borrower shall pay to such Bank upon
demand any amounts required to compensate such Bank for such increased costs,
such amounts being due and payable upon demand by such Bank. A certificate as to
the cause and amount of such increased cost detailing the calculation of such
cost and certifying that such Bank customarily charges such amounts to its other
customers in similar circumstances submitted by such Bank to the Borrower shall
be conclusive and binding for all purposes, absent manifest error. No Bank may
make any claim for compensation under this Section 2.7(a) for increased costs
incurred before 90 days prior to the delivery of any such certificate.
(b) CAPITAL ADEQUACY. If, due to either (i) any introduction of,
change in, or change in the interpretation of any law or regulation after the
date of this Agreement or (ii) compliance with any guideline or request from any
central bank or other governmental authority having appropriate jurisdiction
(whether or not having the force of law) given after the date of this Agreement,
there shall be any increase in the capital requirements of any Bank or its
parent or holding company allocable to (x) committing to make Advances or
making, funding, or maintaining Advances or (y) committing to make Letters of
Credit or issuing, funding, or maintaining Letters of Credit, as such capital
requirements are allocated by such Bank, then the Borrower shall pay to such
Bank upon demand any amounts required to compensate such Bank or its parent or
holding company for such increase in costs (including an amount equal to any
reduction in the rate of return on assets or equity of such Bank or its parent
or holding company), such amounts being due and payable upon demand by such
Bank. In addition, if for any reason any Facility B Bank or its parent or
holding company is required to hold capital against such Facility B Bank's
unfunded Revolving B Loan Commitment, then the Borrower shall pay to such Bank
upon demand any amounts required to compensate such Bank or its parent or
holding company for such increase in costs (including an amount equal to any
reduction in the rate of return on assets or equity of such Bank or its parent
or holding company), such amounts being due and payable upon demand by such
Bank. A certificate as to the cause and amounts detailing the calculation of
such amounts and certifying that such Bank customarily charges such amounts to
its other customers in similar circumstances submitted by such Bank to the
Borrower shall be conclusive and binding for all purposes, absent manifest
error. No Bank may make any claim for compensation under this Section 2.7(b) for
increased costs incurred before 90 days prior to the delivery of any such
certificate.
2.8 ILLEGALITY. Notwithstanding any other provision in this Agreement, if
it becomes unlawful for any Bank to obtain deposits or other funds for making or
funding such Bank's share of
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any LIBOR Tranche in the relevant interbank market, such Bank shall so notify
the Borrower and the Agent and such Bank's commitment to create LIBOR Tranches
shall be suspended until such condition has passed, all LIBOR Tranches
applicable to such Bank shall be converted to Prime Rate Tranches as of the end
of each applicable Interest Period or earlier if necessary, and all subsequent
requests for LIBOR Tranches shall be deemed to be requests for Prime Rate
Tranches with respect to such Bank.
2.9 MARKET FAILURE. Notwithstanding any other provision in this Agreement,
if the Agent determines that: (a) quotations of interest rates for the relevant
deposits referred to in the definition of "LIBOR" are not being provided in the
relevant amounts, or maturities for purposes of determining the rate of interest
referred to in the definition of "LIBOR" or (b) the relevant rates of interest
referred to in the definition of "LIBOR" which are used as the basis to
determine the rate of interest for LIBOR Tranches are not likely to adequately
cover the cost to any Bank of making or maintaining such Bank's share of any
LIBOR Tranche, then if the Agent so notifies the Borrower, the Agent and the
Banks' commitment to create LIBOR Tranches shall be suspended until such
condition has passed, all LIBOR Tranches shall be converted to Prime Rate
Tranches as of the end of each applicable Interest Period or earlier if
necessary, and all subsequent requests for LIBOR Tranches shall be deemed to be
requests for Prime Rate Tranches.
2.10 PAYMENT PROCEDURES AND COMPUTATIONS.
(a) PAYMENT PROCEDURES. Time is of the essence in this Agreement and
the Credit Documents. All payment hereunder shall be made in Dollars. The
Borrower shall make each payment under this Agreement and under the Notes not
later than 12:00 noon (local time at the Applicable Lending Office of the Agent)
on the day when due to the Agent at the Agent's Applicable Lending Office in
immediately available funds. All payments by the Borrower hereunder shall be
made without any offset, abatement, withholding, or reduction. Upon receipt of
payment from the Borrower of any principal, interest, or fees due to the
Facility A Banks, the Agent shall promptly after receipt thereof distribute to
the Facility A Banks their ratable share of such payments for the account of
their respective Applicable Lending Offices. Upon receipt of payment from the
Borrower of any principal, interest, or fees due to the Facility B Banks, the
Agent shall promptly after receipt thereof distribute to the Facility B Banks
their ratable share of such payments for the account of their respective
Applicable Lending Offices. If and to the extent that the Agent shall not have
so distributed to any Bank its ratable share of such payments, the Agent agrees
that it shall pay interest on such amount for each day after the day when such
amount is made available to the Agent by the Borrower until the date such amount
is paid to such Bank by the Agent at the Federal Funds Rate in effect from time
to time, provided that if such amount is not paid by the Agent by the end of the
third day after the Borrower makes such amount available to the Agent, the
interest rates specified above shall be increased by a per annum amount equal to
2.00% on the fourth day and shall remain at such increased rate thereafter.
Interest on such amount shall be due and payable by the Agent upon demand by
such Bank. Upon receipt of other amounts due solely to the Agent, the Issuing
Bank, the Swing Line Lender, or a specific Bank, the Agent shall distribute such
amounts to the appropriate party to be applied in accordance with the terms of
this Agreement.
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(b) AGENT RELIANCE. Unless the Agent shall have received written
notice from the Borrower prior to any date on which any payment is due to the
Banks that the Borrower shall not make such payment in full, the Agent may
assume that the Borrower has made such payment in full to the Agent on such date
and the Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such date an amount equal to the amount then due such Bank. If and
to the extent the Borrower shall not have so made such payment in full to the
Agent, each Bank shall repay to the Agent forthwith on demand such amount
distributed to such Bank, together with interest thereon from the date such
amount is distributed to such Bank until the date such Bank repays such amount
to the Agent, at an interest rate equal to, the Federal Funds Rate in effect
from time to time, provided that with respect to such Bank, if such amount is
not repaid by such Bank by the end of the second day after the date of the
Agent's demand, the interest rates specified above shall be increased by a per
annum amount equal to 2.00% on the third day after the date of the Agent's
demand and shall remain at such increased rate thereafter.
(c) SHARING OF PAYMENTS. Each Bank agrees that if it should receive
any payment (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) in respect of any obligation of the Borrower to pay principal,
interest, fees, or any other obligation incurred under the Credit Documents in a
proportion greater than the total amount of such principal, interest, fees, or
other obligation then owed and due by the Borrower to such Bank bears to the
total amount of principal, interest, fees, or other obligation then owed and due
by the Borrower to all of the Banks immediately prior to such receipt, then such
Bank receiving such excess payment shall purchase for cash without recourse from
the other Banks an interest in the obligations of the Borrower to such Banks in
such amount as shall result in a participation by all of the Banks, in
proportion with the Banks' respective Percentages, in the aggregate unpaid
amount of principal, interest, fees, or any such other obligation, as the case
may be, owed by the Borrower to all of the Banks; provided that if all or any
portion of such excess payment is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, in proportion with the Banks' respective Percentages, but without
interest.
(d) AUTHORITY TO CHARGE ACCOUNTS. The Agent, if and to the extent
payment owed to the Agent or any Bank is not made when due, may charge from time
to time against any account of the Borrower with the Agent any amount so due.
The Agent agrees promptly to notify the Borrower after any such charge and
application made by the Agent provided that the failure to give such notice
shall not affect the validity of such charge and application.
(e) INTEREST AND FEES. Unless expressly provided for in this
Agreement, (i) all computations of interest based on the Prime Rate (including
the Adjusted Prime Rate, when applicable) shall be made on the basis of a
365/366 day year, as the case may be, (ii) all computations of interest based on
the Federal Funds Rate (including the Adjusted Prime Rate, when applicable)
shall be made on the basis of a 360 day year, (iii) all computations of interest
based upon the LIBOR shall be made on the basis of a 360 day year, and (iv) all
computations of fees shall be made on the basis of a 360 day year, in each case
for the actual number of days (including the first day, but excluding the last
day) occurring in the period for which such interest or fees are payable.
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Each determination by the Agent of an interest rate or fee shall be conclusive
and binding for all purposes, absent manifest error.
(f) PAYMENT DATES. Whenever any payment shall be stated to be due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.
If the time for payment for an amount payable is not specified in this Agreement
or in any other Credit Document, the payment shall be due and payable on demand
by the Agent or the applicable Bank.
2.11 TAXES.
(a) NO DEDUCTION FOR CERTAIN TAXES. Any and all payments by the
Borrower shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges, or withholdings,
and all liabilities with respect thereto, other than taxes imposed on the income
and franchise taxes imposed on the Agent, any Bank, or the Applicable Lending
Office thereof by any jurisdiction in which any such entity is a citizen or
resident or any political subdivision of such jurisdiction (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable to the Agent, any Bank,
or the Applicable Lending Office thereof, (i) the sum payable shall be increased
as may be necessary so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.11), such
Person receives an amount equal to the sum it would have received had no such
deductions been made; (ii) the Borrower shall make such deductions; and (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) OTHER TAXES. The Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges, or
similar levies which arise from any payment made or from the execution,
delivery, or registration of, or otherwise with respect to, this Agreement or
the other Credit Documents (other than those which become due as a result of any
Bank joining this Agreement as a result of any Assignment and Acceptance, which
shall be paid by the Bank which becomes a Bank hereunder as a result of such
Assignment and Acceptance).
(c) FOREIGN BANK WITHHOLDING EXEMPTION. Each Bank and Issuing Bank
that is not incorporated under the laws of the United States of America or a
state thereof agrees that it shall deliver to the Borrower and the Agent (i) two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such Bank is entitled to receive payments under this Agreement and the
Notes payable to it, without deduction or withholding of any United States
federal income taxes, (ii) if applicable, an Internal Revenue Service Form W-8
or W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax, and (iii) any other
governmental forms which are necessary or required under an applicable tax
treaty or otherwise by law to reduce or eliminate any withholding tax, which
have been reasonably requested by the Borrower. Each Bank which delivers to the
Borrower and the Agent a Form 1001 or 4224 and Form W-8 or W-9
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pursuant to the next preceding sentence further undertakes to deliver to the
Borrower and the Agent two further copies of the said letter and Form 1001 or
4224 and Form W-8 or W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such letter or
form expires or becomes obsolete or after the occurrence of any event requiring
a change in the most recent letter and form previously delivered by it to the
Borrower and the Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrower and the Agent certifying in the case of
a Form 1001 or 4224 that such Bank is entitled to receive payments under this
Agreement without deduction or withholding of any United States federal income
taxes. If an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any delivery required by the
preceding sentence would otherwise be required which renders all such forms
inapplicable or which would prevent any Bank from duly completing and delivering
any such letter or form with respect to it and such Bank advises the Borrower
and the Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax, and in the case of a Form
W-8 or W-9, establishing an exemption from United States backup withholding tax,
such Bank shall not be required to deliver such letter or forms. The Borrower
shall withhold tax at the rate and in the manner required by the laws of the
United States with respect to payments made to a Bank failing to provide the
requisite Internal Revenue Service forms in a timely manner. Each Bank which
fails to provide to the Borrower in a timely manner such forms shall reimburse
the Borrower upon demand for any penalties paid by the Borrower as a result of
any failure of the Borrower to withhold the required amounts that are caused by
such Bank's failure to provide the required forms in a timely manner.
ARTICLE 3. CONDITIONS PRECEDENT.
3.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT. This
Agreement shall become effective subject to satisfaction of the condition
precedent that the Borrower shall have delivered or shall have caused to be
delivered the documents and other items listed on EXHIBIT F, together with any
other documents requested by the Agent to document the agreements and intent of
the Credit Documents, each in form and with substance satisfactory to the Agent,
and shall have paid to the Agent for the ratable benefit of the Facility B Banks
the upfront fees required to be paid in connection with the Revolving B Loan
Commitments as agreed between the Agent and the Borrower.
3.2 CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. The obligation of
each Bank to make any extension of credit under this Agreement, including the
making of any Advances, and the issuance, increase, or extension of any Letters
of Credit, shall be subject to the further conditions precedent that on the date
of such extension of credit:
(a) REPRESENTATIONS AND WARRANTIES. As of the date of the making of
any extension of credit hereunder, the representations and warranties contained
in each Credit Document shall be true and correct in all material respects as of
such date (and the Borrower's request for the making of any extension of credit
hereunder shall be deemed to be a restatement, representation, and additional
warranty of the representations and warranties contained in each Credit Document
as of such date);
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(b) DEFAULT. As of the date of the making of any extension of credit
hereunder, there shall exist no Default or Event of Default, and the making of
the extension of credit would not cause or be reasonably expected to cause a
Default or Event of Default; and
(c) MATERIAL ADVERSE CHANGE. There shall not have occurred any
Material Adverse Change since the date of the Interim Financial Statements.
3.3 CONDITIONS PRECEDENT TO CONVERSION TO TERM B LOAN. The obligation of
the Facility B Banks to convert the outstanding Revolving B Loan to a Term B
Loan on the Conversion Date, shall be subject to the further conditions
precedent that on the date of such conversion:
(a) REPRESENTATIONS AND WARRANTIES. As of the date of such
conversion, the representations and warranties contained in each Credit Document
(other than the representation and warranty concerning no Material Adverse
Change in Section 4.7(b)) shall be true and correct in all material respects as
of such date (and the Borrower's request for such conversion shall be deemed to
be a restatement, representation, and additional warranty of the representations
and warranties contained in each Credit Document as of the Conversion Date);
(b) DEFAULT. As of the date of such conversion, there shall exist no
Default or Event of Default, and such conversion would not cause or be
reasonably expected to cause a Default or Event of Default; and
(c) TERM B LOAN NOTES. The Agent shall have received for each
Facility B Bank, a Term B Loan Note payable to the order of such Facility B Bank
in the original principal amount of the Revolving B Loan Advances of such
Facility B Bank outstanding on the Conversion Date (after giving effect to any
prepayments of the Revolving B Loan to scheduled be made on the Conversion
Date). Upon each such Facility B Bank's receipt of such new Term B Loan Note,
such Facility B Bank shall return to the Borrower as promptly as possible the
Revolving B Loan Note payable to such Facility B Bank marked cancelled.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants
to the Agent and each Bank, and with each request for any extension of credit
hereunder, including the making of any Advances, and the issuance, increase, or
extension of any Letters of Credit, again represents and warrants to the Agent
and each Bank, as follows:
4.1 ORGANIZATION. As of the date of this Agreement, each Restricted Entity
(a) is duly organized, validly existing, and in good standing under the laws of
such Person's respective jurisdiction of organization and (b) is duly licensed,
qualified to do business, and in good standing in each jurisdiction in which
such Person is organized, owns property, or conducts operations to the extent
that any failure to be so licensed, qualified, or in good standing could
reasonably be expected to cause a Material Adverse Change.
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4.2 AUTHORIZATION. The execution, delivery, and performance by each Credit
Party of the Credit Documents to which such Credit Party is a party and the
consummation of the transactions contemplated thereby (a) do not contravene the
organizational documents of such Credit Party, (b) have been duly authorized by
all necessary corporate action of each Credit Party, and (c) are within each
Credit Party's corporate powers.
4.3 ENFORCEABILITY. Each Credit Document to which any Credit Party is a
party has been duly executed and delivered by each Credit Party which is a party
to such Credit Document and constitutes the legal, valid, and binding obligation
of each such Credit Party, enforceable against each such Credit Party in
accordance with such Credit Document's terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time
in effect affecting the rights of creditors generally and subject to the
availability of equitable remedies.
4.4 ABSENCE OF CONFLICTS AND APPROVALS. The execution, delivery, and
performance by each Credit Party of the Credit Documents to which such Credit
Party is a party and the consummation of the transactions contemplated thereby,
(a) do not result in any violation or breach of any provisions of, or constitute
a default under, any note, indenture, credit agreement, security agreement,
credit support agreement, or other similar agreement to which such Credit Party
is a party or any other material contract or agreement to which such Credit
Party is a party, (b) do not violate any law or regulation binding on or
affecting such Credit Party, (c) do not require any authorization, approval, or
other action by, or any notice to or filing with, any governmental authority,
and (d) do not result in or require the creation or imposition of any Lien
prohibited by this Agreement.
4.5 INVESTMENT COMPANIES. No Restricted Entity or Affiliate thereof is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
4.6 PUBLIC UTILITIES. No Restricted Entity or Affiliate thereof is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended. No Restricted Entity or Affiliate thereof is a regulated public
utility.
4.7 FINANCIAL CONDITION.
(a) The Borrower has delivered to the Agent the Financial
Statements, and the Financial Statements are accurate and complete in all
material respects and present fairly the financial condition of Borrower as of
their date and for their period in accordance with generally accepted accounting
principles. The Borrower has delivered to the Agent the Interim Financial
Statements, and the Interim Financial Statements are accurate and complete in
all material respects and present fairly the financial condition of Borrower as
of their date and for their period in accordance with generally accepted
accounting principles, as applicable to interim financial reports.
(b) As of the date of the Financial Statements and Interim Financial
Statements, there were no material contingent obligations, liabilities for
taxes, unusual forward or long-term
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commitments, or unrealized or anticipated losses of the Borrower or any of the
Borrower's Subsidiaries, except as disclosed therein and adequate reserves for
such items have been made in accordance with generally accepted accounting
principles. No Material Adverse Change has occurred since the date of the
Interim Financial Statements. No Default exists.
4.8 CONDITION OF ASSETS. Each Restricted Entity has good and indefeasible
title to substantially all of its owned property and valid leasehold rights in
all of its leased property, as reflected in the financial statements most
recently provided to the Agent free and clear of all Liens except Permitted
Liens. Each Restricted Entity possesses and has properly approved, recorded, and
filed, where applicable, all permits, licenses, patents, patent rights or
licenses, trademarks, trademark rights, trade names rights, and copyrights which
are useful in the conduct of its business and which the failure to possess could
reasonably be expected to cause a Material Adverse Change. The material
properties used or to be used in the continuing operations of each Restricted
Entity are in good repair, working order, and condition, normal wear and tear
excepted. The properties of each Restricted Entity have not been adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of property or cancellation of contracts, permits, or concessions by a
governmental authority, riot, activities of armed forces, or acts of God or of
any public enemy in any manner which (after giving effect to any insurance
proceeds) could reasonably be expected to cause a Material Adverse Change.
4.9 LITIGATION. There are no actions, suits, or proceedings pending or, to
the knowledge of any Restricted Entity, threatened against any Restricted Entity
at law, in equity, or in admiralty, or by or before any governmental department,
commission, board, bureau, agency, or instrumentality, domestic or foreign, or
any arbitrator which could reasonably be expected to cause a Material Adverse
Change.
4.10 SUBSIDIARIES. As of the date of this Agreement, the Borrower has no
Subsidiaries except as disclosed in SCHEDULE II. The Borrower has no
Subsidiaries which have not been disclosed in writing to the Agent.
4.11 LAWS AND REGULATIONS. Each Restricted Entity has been and is in
compliance with all federal, state, and local laws and regulations which are
applicable to the operations and property of such Person and which the failure
to comply with could reasonably be expected to cause a Material Adverse Change.
4.12 ENVIRONMENTAL COMPLIANCE. Each Restricted Entity has been and is in
compliance with all Environmental Laws and has obtained and is in compliance
with all related permits necessary for the ownership and operation of any such
Person's properties which the failure to be in compliance with could reasonably
be expected to cause a Material Adverse Change. Each Restricted Entity has not
received notice of and has not been investigated for any violation or alleged
violation of any Environmental Law in connection with any such Person's
presently or previously owned properties which currently threaten action or
suggest liabilities which could reasonably be expected to cause a Material
Adverse Change. Each Restricted Entity does not and has not created, handled,
transported, used, or disposed of any Hazardous Materials on or about any such
Person's properties (nor has any such Person's properties been used for those
purposes); has never been responsible for
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the release of any Hazardous Materials into the environment in connection with
any such Person's operations and have not contaminated any properties with
Hazardous Materials; and does not and has not owned any properties contaminated
by any Hazardous Materials, in each case in violation of Environmental Laws and
related permits in any manner which could reasonably be expected to cause a
Material Adverse Change. For the purposes of this Section 4.12, any losses
covered by the Borrower's accrual for liabilities included on its most recent
consolidated balance sheet that the Borrower has designated for environmental
liabilities shall be excluded in determining whether any Material Adverse Change
has occurred.
4.13 ERISA. Each Restricted Entity and each of their respective Commonly
Controlled Entities are in compliance with all provisions of ERISA to the extent
that the failure to be in compliance could reasonably be expected to cause a
Material Adverse Change. No Restricted Entity nor any of their respective
Commonly Controlled Entities participates in or during the past five years has
participated in any employee pension benefit plan covered by Title IV of ERISA
or any multiemployer plan under Section 4001(a)(3) of ERISA. With respect to the
Plans of the Restricted Entities, no Material Reportable Event or Prohibited
Transaction has occurred and exists that could reasonably be expected to cause a
Material Adverse Change.
4.14 TAXES. Each Restricted Entity has filed all United States federal,
state, and local income tax returns and all other domestic and foreign tax
returns which are required to be filed by such Person and has paid, or provided
for the payment before the same became delinquent of, all taxes due pursuant to
such returns or pursuant to any assessment received by the such Person except
for tax payments being contested in good faith for which adequate reserves have
been made and reported in accordance with general accepted accounting principals
and which could not reasonably be expected to cause a Material Adverse Change.
The charges, accruals, and reserves on the books of the Restricted Entities in
respect of taxes are adequate in accordance with generally accepted accounting
principles.
4.15 TRUE AND COMPLETE DISCLOSURE. All factual information furnished by or
on behalf of any Credit Party in writing to the Agent or any Bank in connection
with the Credit Documents and the transactions contemplated thereby is true and
accurate in all material respects on the date as of which such information was
dated or certified and does not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements contained
therein not misleading. All projections, estimates, and pro forma financial
information furnished by any Credit Party were prepared on the basis of
assumptions, data, information, tests, or conditions believed to be reasonable
at the time such projections, estimates, and pro forma financial information
were furnished.
4.16 YEAR 2000.
(a) Except to the extent that a failure to do so could not
reasonably be expected to cause a Material Adverse Change, the Borrower (i) has
begun analyzing the operations of the Restricted Entities that could be
adversely affected by failure to become Year 2000 compliant (that is, that
computer applications, imbedded microchips, and other systems will be able to
perform date-sensitive functions prior to and after December 31, 1999) and (ii)
is developing a plan for becoming
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Year 2000 compliant in a timely manner. The Borrower reasonably believes that
the Restricted Entities and their Affiliates will become Year 2000 compliant on
a timely basis except to the extent that a failure to do so could not reasonably
be expected to cause a Material Adverse Change.
(b) The Borrower will promptly notify the Agent in the event the
Borrower determines that any computer application which is material to the
operations of the Restricted Entities or its Affiliates or any of its material
vendors or suppliers will not be fully Year 2000 compliant on a timely basis,
except to the extent that such failure could not reasonably be expected to cause
a Material Adverse Change.
ARTICLE 5. COVENANTS. Until the Agent and the Banks receive irrevocable payment
of the Credit Obligations and have terminated this Agreement and each other
Credit Document, the Borrower shall comply with and cause compliance with the
following covenants:
5.1 ORGANIZATION. The Borrower shall cause each Restricted Entity to (a)
maintain itself as an entity duly organized, validly existing, and in good
standing under the laws of each such Person's respective jurisdiction of
organization and (b) duly licensed, qualified to do business, and in good
standing in each jurisdiction in which such Person is organized, owns property,
or conducts operations and which requires such licensing or qualification and
where failure to be so licensed, qualified, or in good standing could reasonably
be expected to cause a Material Adverse Change.
5.2 REPORTING. The Borrower shall furnish to the Agent all of the
following:
(a) ANNUAL FINANCIAL REPORTS. As soon as available and in any event
not later than 90 days after the end of each fiscal year of the Borrower, (i) a
copy of the annual audit report for such fiscal year for the Borrower, including
therein the consolidated balance sheets of the Borrower as of the end of such
fiscal year and the consolidated statements of income, stockholders' equity, and
cash flows for the Borrower for such fiscal year, setting forth the consolidated
financial position and results of the Borrower for such fiscal year and
certified, without any qualification or limit of the scope of the examination of
matters relevant to the financial statements, by a nationally recognized
certified public accounting firm and (ii) a completed Compliance Certificate
duly certified by a Responsible Officer of the Borrower;
(b) QUARTERLY FINANCIAL REPORTS. As soon as available and in any
event not later than 45 days after the end of each fiscal quarter, (i) a copy of
the internally prepared consolidated financial statements of the Borrower for
such fiscal quarter and for the fiscal year to date period ending on the last
day of such fiscal quarter, including therein the consolidated balance sheets of
the Borrower as of the end of such fiscal quarter and the consolidated
statements of income, and cash flows for such fiscal quarter and for such fiscal
year to date period, setting forth the consolidated financial position and
results of the Borrower for such fiscal quarter and fiscal year to date period,
all in reasonable detail and duly certified by a Responsible Officer of the
Borrower as having been prepared in accordance with generally accepted
accounting principles, including those applicable to interim financial reports
which permit normal year end adjustments and do not require complete financial
notes and (ii) a completed Compliance Certificate duly certified by a
Responsible Officer of the Borrower;
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(c) ACQUISITION INFORMATION. As soon as available prior to the
closing of any Acquisition but in any event 10 Business Days prior to the
closing of the Acquisition, a completed Acquisition Certificate duly certified
by a Responsible Officer of the Borrower (with a copy of such Acquisiton
Certificate sent also to legal counsel for the Borrower and legal counsel for
the Agent), which the Agent shall forward to the Banks for any Acquisition in
which the consideration paid or incurred by the Restricted Entities exceeds
$7,500,000 or if the Borrower discloses that there are any material litigation,
environmental, or other liabilities associated therewith (and prior to the
consummation of the Acquisition, the Borrower shall make available at its
offices in Houston, Texas, the acquisition documents regarding the acquired
assets, including schedules reflecting litigation liabilities, environmental
liabilities, and other assumed liabilities, and any other information regarding
the acquired assets as the Agent may reasonably request);
(d) SEC FILINGS. As soon as available and in any event not later
than thirty days after the filing or delivery thereof, copies of all financial
statements, reports, and proxy statements which the Borrower shall have sent to
its stockholders generally and copies of all regular and periodic reports, if
any, which any Restricted Entity shall have filed with the Securities and
Exchange Commission;
(e) DEFAULTS. Promptly, but in any event within five Business Days
after the discovery thereof, a notice of any facts known to any Restricted
Entity which constitute a Default, together with a statement of a Responsible
Officer of the Borrower setting forth the details of such facts and the actions
which the Borrower has taken and proposes to take with respect thereto (and the
Agent shall, promptly upon receipt from the Borrower of a notice pursuant to
this Section 5.2(e), forward a copy of such notice to each Bank);
(f) LITIGATION; MATERIAL CONTINGENT LIABILITIES; MATERIAL AGREEMENT
DEFAULT. The Borrower shall provide to the Agent:
(i) promptly, but in any event within ten Business Days after
the commencement thereof, notice of all actions, suits, and proceedings before
any court or governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, affecting any Restricted Entity which, if
determined adversely, could reasonably be expected to cause a Material Adverse
Change;
(ii) promptly, but in any event within ten Business Days
after acquiring knowledge thereof, notice of any material contingent
liabilities; and
(iii) promptly, but in any event within ten Business Days
after obtaining knowledge thereof, notice of any breach by any Restricted Entity
of any contract or agreement which breach could reasonably be expected to cause
a Material Adverse Change;
(g) MATERIAL CHANGES. Prompt written notice of any condition or
event of which any Restricted Entity has knowledge, which condition or event has
resulted or could reasonably be expected to cause a Material Adverse Change;
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(h) QUARTERLY PERFECTION CERTIFICATE. On the last Business Day of
each calendar quarter (commencing with the quarter ending December 31, 1998), a
completed Quarterly Perfection Certificate duly certified by a Responsible
Officer of the Borrower; and
(i) OTHER INFORMATION. Such other information respecting the
business operations or property of any Restricted Entity, financial or
otherwise, as the Agent or the Majority Banks may from time to time reasonably
request.
5.3 INSPECTION. The Borrower shall cause each Restricted Entity to permit
the Agent and the Banks to visit and inspect any of the properties of such
Restricted Entity, to examine all of such Person's books of account, records,
reports, and other papers, to make copies and extracts therefrom, and to discuss
their respective affairs, finances, and accounts with their respective officers,
employees, and independent public accountants all at such reasonable times and
as often as may be reasonably requested provided that the Borrower is given at
least one Business Day advance notice thereof and reasonable opportunity to be
present when independent public accountants or other third parties are
contacted.
5.4 USE OF PROCEEDS. The proceeds of the Revolving Loan Borrowings shall
be used by the Borrower for Acquisitions, working capital needs, refinancing
existing indebtedness, Capital Expenditures, and for other lawful corporate
purposes. The Borrower shall not, directly or indirectly, use any part of such
proceeds for any purpose which violates, or is inconsistent with, Regulations G,
T, U, or X of the Board of Governors of the Federal Reserve System.
5.5 FINANCIAL COVENANTS. The Agent shall determine compliance with the
following financial covenants based upon the most recent financial statements
dated as of the end of a fiscal quarter delivered to the Agent pursuant to
Section 5.2(b) (subject to revisions on subsequent testing dates based upon
audited financial statements delivered pursuant to Section 5.2(a)) or, if any
Acquisitions have occurred that are not reflected in such financial statements
and the inclusion of the financial effects of such Acquisitions are expressly
stated to be included in the financial covenants below, based upon historical
proforma financial statements for the Borrower and its Subsidiaries as of such
date and for the appropriate period that are prepared by the Borrower in
accordance with Section 1.3(c) and presented to the Agent in accordance with
Section 5.2(c).
(a) NET WORTH. The Borrower shall not permit the consolidated Net
Worth of the Borrower as of the last day of each fiscal quarter to be less than
the sum of (i) 85% of the consolidated Net Worth of the Borrower as reflected in
the audited financial statements for December 31, 1997, plus (ii) 50% of the
cumulative quarterly consolidated net earnings for each fiscal quarter since
such date during which the Borrower has positive consolidated net earnings
(provided that in calculating the foregoing, the financial results and balance
sheet effects of any Acquisition shall be included in such calculations on a pro
forma basis for the full period), plus (iii) 75% of the net proceeds resulting
from any sale or issuance of any stock of the Borrower or its Subsidiaries since
such date.
(b) SENIOR FUNDED DEBT TO EBITDA RATIO. As of the last day of each
fiscal quarter of the Borrower, the Borrower shall not permit the ratio of (i)
the consolidated Funded Debt
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of the Borrower less the consolidated Subordinated Debt of the Borrower as of
the end of the fiscal quarter then ended to (ii) the consolidated EBITDA of the
Borrower for the preceding four fiscal quarters then ended, to be greater than
3.00 to 1.00 (provided that in calculating the foregoing, the financial results
and balance sheet effects of any Acquisition shall be included in such
calculations on a pro forma basis for the full period and on the relevant
dates).
(c) FUNDED DEBT TO EBITDA RATIO. As of the last day of each fiscal
quarter of the Borrower, the Borrower shall not permit the ratio of (i) the
consolidated Funded Debt of the Borrower as of the end of the fiscal quarter
then ended to (ii) the consolidated EBITDA of the Borrower for the preceding
four fiscal quarters then ended, to be greater than 4.00 to 1.00 (provided that
in calculating the foregoing, the financial results and balance sheet effects of
any Acquisitions shall be included in such calculations on a pro forma basis for
the full period and on the relevant dates).
(d) FIXED CHARGE COVERAGE RATIO. As of the last day of each fiscal
quarter, the Borrower shall not permit the ratio of (i) the consolidated EBIT of
the Borrower for the preceding four fiscal quarters then ended less consolidated
cash taxes paid by the Borrower during the preceding four fiscal quarters then
ended to (ii) the consolidated interest expense of the Borrower for the
preceding four fiscal quarters then ended plus the consolidated scheduled
principal payments on long-term debt of the Borrower during such period, to be
less than 1.25 to 1.00 (provided that in calculating the foregoing, the
financial results and balance sheet effects of any Acquisitions shall be
included in such calculations on a proforma basis for the full period and on the
relevant dates).
(e) CAPITAL EXPENDITURES. The Borrower shall not permit the
consolidated Restricted Capital Expenditures of the Borrower during any four
quarter period, net of the trade-in value of any motorcoaches disposed of by
trade-in during such period, to exceed the greater of $30,000,000 or 30% of the
Consolidated Net Worth of the Borrower as of the end of such period.
5.6 DEBT.
(a) The Borrower shall not permit any Restricted Entity to create,
assume, incur, suffer to exist, or in any manner become liable, directly,
indirectly, or contingently in respect of, any Debt other than Permitted Debt.
(b) The Borrower shall not permit any Restricted Entity to make any
payment on or with respect to, or purchase, redeem, defease, or otherwise
acquire or retire for value any amount of any Subordinated Debt prior to the
stated due dates or maturities thereof. This prohibition specifically prohibits
optional redemptions, change of control redemptions, and asset sale redemptions
under the Senior Subordinated Notes. The Borrower shall not amend, supplement,
or otherwise modify any of the terms or conditions of any Subordinated Debt
(other than any such amendment, supplement, or modification which would extend
the maturities of or reduce the amounts of any payments of principal, interest,
fees, or other amounts, any modification which would render the terms of such
Subordinated Debt less restrictive, or any non-material administrative amendment
which imposes no new restrictions, but in no event any modification in the
subordination provisions thereof).
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5.7 LIENS. The Borrower shall not permit any Restricted Entity to create,
assume, incur, or suffer to exist any Lien on any of its real or personal
property whether now owned or hereafter acquired, or assign any right to receive
its income, except for Permitted Liens.
5.8 OTHER OBLIGATIONS.
(a) The Borrower shall not permit any Restricted Entity to create,
incur, assume, or suffer to exist any obligations in respect of unfunded vested
benefits under any pension Plan or deferred compensation agreement.
(b) The Borrower shall not permit any Restricted Entity to create,
incur, assume, or suffer to exist any obligations in respect of Derivatives,
other than Derivatives used by any Restricted Entity in such Restricted Entity's
respective business operations in aggregate notional quantities not to exceed
the reasonably anticipated consumption of such Restricted Entity of the
underlying commodity for the relevant period, but no Derivatives which are
speculative in nature.
5.9 CORPORATE TRANSACTIONS. The Borrower shall not permit any Restricted
Entity to (a) merge, consolidate, or amalgamate with another Person, or
liquidate, wind up, or dissolve itself (or take any action towards any of the
foregoing), (b) make any Acquisition, or (c) convey, sell, lease, assign,
transfer, or otherwise dispose of any of its property, businesses, or other
assets outside of the ordinary course of business except that:
(i) Any Subsidiary of the Borrower may merge, consolidate, or
amalgamate into any wholly owned Subsidiary of the Borrower or convey,
sell, lease, assign, transfer, or otherwise dispose of any of its assets
to any wholly-owned Subsidiary of the Borrower (and if such disposition
transfers all or substantially all of the assets of transferring
Subsidiary, such subsidiary may then liquidate, wind up, or dissolve
itself); provided that the wholly-owned Subsidiary is the surviving or
acquiring Subsidiary;
(ii) Any Subsidiary of the Borrower may make any Acquisition (by
purchase or merger) provided that (A) the Subsidiary of the Borrower is
the acquiring or surviving entity, (B) the aggregate consideration paid or
incurred by the Restricted Entities (in either case including cash,
indebtedness, assumed indebtedness, transaction related contractual
payments, including amounts payable under noncompete, consulting, and
similar agreements, preferred stock, and stock of Subsidiaries, but
excluding common stock of the Borrower and excluding Subordinated Debt of
the Borrower) in connection with any Acquisition does not exceed
$35,000,000, (C) no Default or Event of Default exists and the Acquisition
would not reasonably be expected to cause a Default or Event of Default
(including any default under Section 5.5 with respect to historical and
future proforma financial status and results), (D) the acquired assets are
in substantially the same business as the Borrower or any of its
Subsidiaries, and (E) the transaction is not hostile, as reasonably
determined by the Agent; and
(iii) Any Subsidiary of the Borrower may merge, consolidate, or
amalgamate with another Person with the other Person as the surviving
entity or convey, sell, lease, assign,
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transfer, or otherwise dispose of any of its assets to another Person (and
if such disposition transfers all or substantially all of the assets of
transferring Subsidiary, such Subsidiary may then liquidate, wind up, or
dissolve itself) provided that the result of such transaction would not
cause the net book value of the assets of the Restricted Entities so
merged out of the Subsidiaries of the Borrower or disposed of during any
fiscal year of the Borrower to exceed 10% of the consolidated book value,
net of depreciation, of the transportation equipment of the Borrower as of
the end of the prior fiscal year of the Borrower.
In connection with any mergers or dispositions described in paragraph (iii)
above, and provided that no Default or Event of Default exists or would be
caused thereby, upon reasonable advance written notice from the Borrower of the
intent to so merge or dispose of assets, the Agent shall release at the
Borrower's expense any obligations under the Guaranty of any Subsidiary so
merged and the Lien of the Agent in any assets so disposed of and shall execute
and deliver in favor of such Subsidiary any releases reasonably requested by the
Borrower to evidence such release.
5.10 DISTRIBUTIONS. The Borrower shall not (a) declare or pay any
dividends; (b) purchase, redeem, retire, or otherwise acquire for value any of
its capital stock now or hereafter outstanding; or make any distribution of
assets to its stockholders as such, whether in cash, assets, or in obligations
of it; (c) allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption, or retirement of,
any shares of its capital stock; or (d) make any other distribution by reduction
of capital or otherwise in respect of any shares of its capital stock.
5.11 TRANSACTIONS WITH AFFILIATES. The Borrower shall not permit any
Restricted Entity to enter into any transaction directly or indirectly with or
for the benefit of an Affiliate except transactions with an Affiliate for the
leasing of property, the rendering or receipt of services, or the purchase or
sale of inventory or other assets in the ordinary course of business if the
monetary or business consideration arising from such a transaction would be
substantially as advantageous to such Restricted Entity as the monetary or
business consideration which such Restricted Entity would obtain in a comparable
arm's length transaction.
5.12 INSURANCE.
(a) The Borrower shall cause each Restricted Entity to maintain
insurance with responsible and reputable insurance companies or associations
reasonably acceptable to the Agent in such amounts and covering such risks as
are usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which such Persons operate.
Without limiting the foregoing, the Borrower shall maintain insurance coverage
for the Restricted Entities equal to or better than, on an item by item basis
for each item, the coverage for the Restricted Entities existing on the date of
this Agreement. The Borrower shall deliver to the Agent certificates evidencing
such policies or copies of such policies at the Agent's request following a
reasonable period to obtain such certificates taking into account the
jurisdiction where the insurance is maintained.
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(b) All policies of the Restricted Entities representing property
insurance shall name the Agent as mortgagee or loss payee and have standard
lender rights in a form satisfactory to the Agent. All policies representing
liability insurance of the Restricted Entities shall name the Agent and the
Banks as additional named insureds in a form satisfactory to the Agent. All
proceeds of any such property insurance shall be paid directly to the Agent. If
no Event of Default exists, the Agent shall dispose of such proceeds in
accordance with the instructions of the Borrower, otherwise such proceeds shall
be applied to the Credit Obligations in accordance with Section 6.9. All
proceeds of such liability insurance coverage for the Agent and the Banks shall
be paid as directed by the Agent to indemnify the Agent or the applicable Bank
for the liability covered. In the event that the proceeds are paid to any
Restricted Entity in violation of the foregoing, the Restricted Entity shall
hold the proceeds in trust for the Agent, segregate the proceeds from the other
funds of such Restricted Entity, and promptly pay the proceeds to the Agent with
any necessary endorsement. The Agent shall have the right, but not the
obligation, during the existence of an Event of Default, to make proof of loss
under, settle and adjust any claim under, and receive the proceeds under the
insurance, and the reasonable expenses incurred by the Agent in the adjustment
and collection of such proceeds shall be paid by the Borrower. The Borrower
irrevocably appoints the Agent as its attorney in fact to take such actions in
its name. If the Agent does not take such actions, the Borrower may take such
actions subject to the approval of any final action by the Agent. The Agent
shall not be liable or responsible for failure to collect or exercise diligence
in the collection of any proceeds.
5.13 INVESTMENTS. The Borrower shall not permit any Restricted Entity to
make or hold any direct or indirect investment in any Person, including capital
contributions to the Person, investments in the debt or equity securities of the
Person, and loans, guaranties, trade credit, or other extensions of credit to
the Person, except for Permitted Investments and normal and reasonable advances
in the ordinary course of business to officers and employees.
5.14 LINES OF BUSINESS. The Borrower shall not permit the Restricted
Entities to change the character of their business as conducted on the date of
this Agreement, or engage in any type of business not reasonably related to such
business as presently and normally conducted; provided that nothing contained in
the foregoing shall prohibit any Restricted Entity from (a) expanding its
business into any of the other types of businesses of any of the other
Restricted Entities as of the date of this Agreement or (b) entering into and
expanding into business in the taxicab industry.
5.15 COMPLIANCE WITH LAWS. The Borrower shall cause each Restricted Entity
to comply with all federal, state, and local laws and regulations which are
applicable to the operations and property of such Persons and which the failure
to comply with could reasonably be expected to cause a Material Adverse Change.
5.16 ENVIRONMENTAL COMPLIANCE. The Borrower shall cause each Restricted
Entity to comply with all Environmental Laws and obtain and comply with all
related permits necessary for the ownership and operation of any such Person's
properties which the failure to comply with could reasonably be expected to
cause a Material Adverse Change. The Borrower shall cause each Restricted Entity
to promptly disclose to the Agent any notice to or investigation of such Persons
for any violation or alleged violation of any Environmental Law in connection
with any such
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Person's presently or previously owned properties which represent liabilities
which could reasonably be expected to cause a Material Adverse Change. The
Borrower shall not permit any Restricted Entity to create, handle, transport,
use, or dispose of any Hazardous Materials on or about any such Person's
properties; release any Hazardous Materials into the environment in connection
with any such Person's operations or contaminate any properties with Hazardous
Materials; or own properties contaminated by any Hazardous Materials, in each
case except in compliance with all Environmental Laws and related permits such
that such actions could not reasonably be expected to cause a Material Adverse
Change. For the purposes of this Section 5.16, any losses covered by the
Borrower's reserve for environmental losses set forth on its most recent
consolidated balance sheet shall be excluded in determining whether any Material
Adverse Change has occurred.
5.17 ERISA COMPLIANCE. The Borrower shall cause each Restricted Entity to
(i) comply in all material respects with all applicable provisions of ERISA and
prevent the occurrence of any Reportable Event or Prohibited Transaction with
respect to, or the termination of, any of their respective Plans where the
failure to do so could reasonably be expected to cause a Material Adverse Change
and (ii) not create or participate in any employee pension benefit plan covered
by Title IV of ERISA or any multiemployer plan under Section 4001(a)(3) of
ERISA.
5.18 PAYMENT OF CERTAIN CLAIMS. The Borrower shall cause each Restricted
Entity to pay and discharge, before the same shall become delinquent, (a) all
taxes, assessments, levies, and like charges imposed upon any such Person or
upon any such Person's income, profits, or property by authorities having
competent jurisdiction prior to the date on which penalties attach thereto
except for tax payments being contested in good faith for which adequate
reserves have been made and reported in accordance with generally accepted
accounting principals and which could not reasonably be expected to cause a
Material Adverse Change, (b) all lawful claims which are secured by or which, if
unpaid, would by law become secured by a Lien upon any such Person's property,
and (c) all trade payables and current operating liabilities, unless the same
are less than 90 days past due or are being contested in good faith, have
adequate reserves established and reported in accordance with general accepted
accounting principals, and could not reasonably be expected to cause a Material
Adverse Change.
5.19 NEW SUBSIDIARIES. (a) Upon the formation or acquisition of any new
Subsidiary or when required under paragraph (b) below with respect to any
Subsidiary after the date of this Agreement, the Borrower shall and shall cause
such Subsidiary to (i) promptly, but in any event within 10 days after the
formation or acquisition of such Subsidiary, execute and deliver to the Agent
such guaranties, security agreements, amendment agreements, and other documents
and agreements as the Agent requests so that such Subsidiary guarantees and
secures the Credit Obligations on the same terms as the existing Subsidiaries of
the Borrower (including the execution and delivery of a Joinder Agreement in
substantially the form of EXHIBIT G for the purpose of joining such Subsidiary
as a party to the Guaranty and the Security Agreement or the execution of such
new guaranties and security agreements as the Agent determines are necessary to
have the same effect in different jurisdictions), (ii) as promptly as
practicable after the formation or acquisition of such new Subsidiary, arrange
for and obtain the repayment of any indebtedness necessary for the Restricted
Entities' continued compliance with the restrictions on Debt described in clause
(f) of the definition of Permitted Debt, and (iii) as promptly as practicable
after the formation or acquisition of such new
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Subsidiary, arrange for and obtain the release of any Liens necessary for the
Restricted Entities' continued compliance with the restrictions on Liens
described in clause (c) of the definition of Permitted Liens. In connection
therewith, if requested by the Agent, the Borrower shall provide corporate
documentation and opinion letters reasonably satisfactory to the Agent
reflecting the corporate status of such new Subsidiary of the Borrower and the
enforceability of such agreements.
(b) The Borrower may exempt from the requirements of paragraph (a)
above any Insurance Subsidiaries and any Subsidiaries of the Borrower that are
business entities formed and existing under the laws of Canada provided that
such exempt Subsidiaries of the Borrower (the "Exempt Canadian Subsidiaries")
meet the following requirements: (i) the Exempt Canadian Subsidiaries own and
operate only assets domiciled in Canada, (ii) the aggregate outstanding amount
of cash investments and loans made by the Borrower and its Subsidiaries that are
not Exempt Canadian Subsidiaries to the Exempt Canadian Subsidiaries does not
exceed $3,500,000 until the stock pledges related to the Exempt Canadian
Subsidiaries existing on the date of this Agreement have been completed as
contemplated in clause (vi) below and $10,000,000 thereafter, (iii) the
consolidated assets of the Exempt Canadian Subsidiaries do not exceed 20% of the
consolidated assets of the Borrower, (iv) the consolidated revenues of the
Exempt Canadian Subsidiaries for any fiscal quarter of the Borrower do not
exceed 20% of the consolidated revenues of the Borrower for such fiscal quarter
(provided that for both (iii) and (iv) above, the financial results and balance
sheet effects of any Acquisitions shall be included in such calculations for the
full period and on the relevant dates), (v) no Exempt Canadian Subsidiary shall
have executed any guaranty of, or shall otherwise have any repayment obligations
with respect to, any other Debt of the Borrower or any other Credit Party, and
(vi) 65% of the stock of each Exempt Canadian Subsidiary has been pledged to the
Agent under a Canadian Pledge Agreement within 90 days after the date of this
Agreement, with respect to Exempt Canadian Subsidiaries existing on the date of
this Agreement, and within 45 days after formation or acquisition, with respect
to Exempt Canadian Subsidiaries formed or acquired after the date of this
Agreement (and in connection therewith the Borrower shall provide corporate
documentation and opinion letters reasonably satisfactory to the Agent
reflecting the corporate status of such new Subsidiary of the Borrower and the
enforceability of such agreements). The Agent shall have no obligation to
release any stock pledged under this paragraph (b) once pledged, whether or not
any Subsidiary remains an Exempt Canadian Subsidiary. At any time any of the
foregoing requirements set forth in clauses (i), (ii), (iii), (iv), (v), or (vi)
above are no longer satisfied, then the Borrower shall cause some or all of the
Exempt Canadian Subsidiaries to promptly comply with the requirements of
paragraph (a) to the extent necessary to maintain the requirements for exemption
for the remaining Exempt Canadian Subsidiaries.
5.20 POST-CLOSING COLLATERAL PERFECTION. Within 120 days after the date of
this Agreement, the Borrower shall have (i) arranged for and obtained the
repayment of any indebtedness of the Subsidiaries identified on Schedule III
hereof (hereinafter referred to as the "Recently Acquired Subsidiaries")
necessary for the Restricted Entities' continued compliance with the
restrictions on Debt described in clause (f) of the definition of Permitted
Debt, (ii) arranged for and obtained the release of any Liens on property of the
Recently Acquired Subsidiaries necessary for the Restricted Entities' continued
compliance with the restrictions on Liens described in clause (c) of the
definition of Permitted Liens, and (iii) perfected the Lien of the Agent on all
property constituting Collateral
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(as defined in the Security Agreement) of the Recently Acquired Subsidiaries,
except as otherwise contemplated by the Security Agreement.
ARTICLE 6. DEFAULT AND REMEDIES.
6.1 EVENTS OF DEFAULT. Each of the following shall be an "Event of
Default" for the purposes of this Agreement and for each of the Credit
Documents:
(a) PAYMENT FAILURE. The Borrower (i) fails to pay when due any
principal amounts due under this Agreement or any other Credit Document or (ii)
fails to pay when due any interest, fees, reimbursements, indemnifications, or
other amounts due under this Agreement or any other Credit Document and such
failure has not been cured within five Business Days;
(b) FALSE REPRESENTATION. Any written representation or warranty
made by any Credit Party or any Responsible Officer thereof in this Agreement or
in any other Credit Document proves to have been false or erroneous in any
material respect at the time it was made or deemed made;
(c) BREACH OF COVENANT. (i) Any breach by the Borrower of any of the
covenants contained in Sections 5.1(a) (with respect to the Borrower), 5.2, 5.3,
5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.13, or 5.19 or (ii) any breach by the
Borrower of any other covenants contained in this Agreement, or any other Credit
Document and such breach is not cured within 30 days following the earlier of
knowledge of such breach by the Borrower or the receipt of written notice
thereof from the Agent;
(d) SECURITY DOCUMENTS. Any Security Document shall at any time and
for any reason cease to create the Lien on the property purported to be subject
to such agreement in accordance with the terms of such agreement, or cease to be
in full force and effect, or shall be contested by any party thereto;
(e) GUARANTY. (i) the Guaranty shall at any time and for any reason
cease to be in full force and effect with respect to any Guarantor (except as
permitted under Section 5.9 hereof) or shall be contested by any Guarantor, or
any Guarantor shall deny it has any further liability or obligation thereunder,
(ii) any breach by any Guarantor of any of the covenants contained in Sections
1.1 or 1.2 of the Guaranty, or (iii) or any breach by any Guarantor of any other
covenants contained in the Guaranty or any other Credit Document and such breach
is not cured within 10 days following the earlier of knowledge of such breach by
such Guarantor or the receipt of written notice thereof from the Agent;
(f) MATERIAL DEBT DEFAULT. (i) Any principal, interest, fees, or
other amounts due on any Debt of any Restricted Entity (other than the Credit
Obligations) is not paid when due, whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise, and such failure is not cured
within the applicable grace period, if any, and the aggregate amount of all Debt
of such Persons so in default exceeds $1,000,000; (ii) any other event shall
occur or condition shall exist under any agreement or instrument relating to any
Debt of any such Person (other than the Credit Obligations) the effect of which
is to accelerate or to permit the acceleration of the maturity
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of any such Debt, whether or not any such Debt is actually accelerated, and such
event or condition shall not be cured within the applicable grace period, if
any, and the aggregate amount of all Debt of such Persons so in default exceeds
$1,000,000; (iii) any Debt of any such Person shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
prepayment) prior to the stated maturity thereof, and the aggregate amount of
all Debt of such Persons so accelerated exceeds $1,000,000; or (iv) any default
or event of default, however denominated, occurs under the Swing Line Note;
(g) BANKRUPTCY AND INSOLVENCY. (i) there shall have been filed
against any Restricted Entity or any such Person's properties, without such
Person's consent, any petition or other request for relief seeking an
arrangement, receivership, reorganization, liquidation, or similar relief under
bankruptcy or other laws for the relief of debtors and such request for relief
(A) remains in effect for 60 or more days, whether or not consecutive, or (B) is
approved by a final nonappealable order, or (ii) any such Person consents to or
files any petition or other request for relief of the type described in clause
(i) above seeking relief from creditors, makes any assignment for the benefit of
creditors or other arrangement with creditors, or admits in writing such
Person's inability to pay such Person's debts as they become due;
(h) ADVERSE JUDGMENT. The aggregate outstanding amount of judgments
against the Restricted Parties not discharged or stayed pending appeal or other
court action within 30 days following entry is greater than $1,000,000; or
(i) CHANGE OF CONTROL. There shall occur any Change of Control.
6.2 TERMINATION OF COMMITMENTS. Upon the occurrence of any Event of
Default under Section 6.1(g), all of the commitments of the Agent and the Banks
hereunder shall terminate. During the existence of any Event of Default other
than an Event of Default under Section 6.1(g), the Agent shall at the request of
the Majority Banks declare by written notice to the Borrower all of the
commitments of the Agent and the Banks hereunder terminated, whereupon the same
shall immediately terminate.
6.3 ACCELERATION OF CREDIT OBLIGATIONS. Upon the occurrence of any Event
of Default under Section 6.1(g), the aggregate outstanding principal amount of
all loans made hereunder, all accrued interest thereon, and all other Credit
Obligations shall immediately and automatically become due and payable. During
the existence of any Event of Default other than an Event of Default under
Section 6.1(g), the Agent shall at the request of the Majority Banks declare by
written notice to the Borrower the aggregate outstanding principal amount of all
loans made hereunder, all accrued interest thereon, and all other Credit
Obligations to be immediately due and payable, whereupon the same shall
immediately become due and payable. In connection with the foregoing, except for
the notice provided for above, the Borrower waives notice of intent to demand,
demand, presentment for payment, notice of nonpayment, protest, notice of
protest, grace, notice of dishonor, notice of intent to accelerate, notice of
acceleration, and all other notices.
6.4 CASH COLLATERALIZATION OF LETTERS OF CREDIT. Upon the occurrence of
any Event of Default under Section 6.1(g), the Borrower shall pay to the Agent
an amount equal to the Letter of
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Credit Exposure allocable to the Letters of Credit requested by the Borrower to
be held in the Letter of Credit Collateral Account for disposition in accordance
with Section 2.2(g). During the existence of any Event of Default other than an
Event of Default under Section 6.1(g), the Agent shall at the request of the
Majority Banks require by written notice to the Borrower that the Borrower pay
to the Agent an amount equal to the Letter of Credit Exposure allocable to the
Letters of Credit requested by the Borrower to be held in the Letter of Credit
Collateral Account for disposition in accordance with Section 2.2(g), whereupon
the Borrower shall pay to the Agent such amount for such purpose.
6.5 DEFAULT INTEREST. If any Event of Default exists, the Agent shall at
the request of the Majority Banks declare by written notice to the Borrower that
the Credit Obligations specified in such notice shall bear interest beginning on
the date specified in such notice until paid in full at the applicable Default
Rate for such Credit Obligations, whereupon the Borrower shall pay such interest
to the Agent for the benefit of the Agent and the Banks, as applicable, upon
demand by the Agent.
6.6 RIGHT OF SETOFF. During the existence of an Event of Default, the
Agent and each Bank is hereby authorized at any time, to the fullest extent
permitted by law, to set off and apply any indebtedness owed by the Agent or
such Bank to the Borrower against any and all of the obligations of the Borrower
under this Agreement and the Credit Documents, irrespective of whether or not
the Agent or such Bank shall have made any demand under this Agreement or the
Credit Documents and although such obligations may be contingent and unmatured.
The Agent and each Bank, as the case may be, agrees promptly to notify the
Borrower after any such setoff and application made by such party provided that
the failure to give such notice shall not affect the validity of such setoff and
application.
6.7 ACTIONS UNDER CREDIT DOCUMENTS. Following an Event of Default, the
Agent shall at the request of the Majority Banks take any and all actions
permitted under the other Credit Documents, including the Guaranty and the
Security Documents.
6.8 REMEDIES CUMULATIVE. No right, power, or remedy conferred to the Agent
or the Banks in this Agreement and the Credit Documents, or now or hereafter
existing at law, in equity, by statute, or otherwise, shall be exclusive, and
each such right, power, or remedy shall to the full extent permitted by law be
cumulative and in addition to every other such right, power, or remedy. No
course of dealing and no delay in exercising any right, power, or remedy
conferred to the Agent or the Banks in this Agreement and the Credit Documents,
or now or hereafter existing at law, in equity, by statute, or otherwise, shall
operate as a waiver of or otherwise prejudice any such right, power, or remedy.
6.9 APPLICATION OF PAYMENTS. Prior to an Event of Default, all payments
made hereunder shall be applied to the Credit Obligations as directed by the
Borrower, subject to the rules regarding the application of payments to certain
Credit Obligations provided for hereunder and in the Credit Documents. During
the existence of an Event of Default, all payments and collections shall be
applied to the Credit Obligations in the following order:
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First, to the payment of the costs, expenses, reimbursements (other
than reimbursement obligations with respect to draws under Letters
of Credit), and indemnifications of the Agent that are due and
payable under the Credit Documents;
Then, ratably to the payment of the costs, expenses, reimbursements
(other than reimbursement obligations with respect to draws under
Letters of Credit), and indemnifications of the Banks that are due
and payable under the Credit Documents;
Then, ratably to the payment of all accrued but unpaid interest and
fees and obligations under Interest Hedge Agreements due and payable
under the Credit Documents;
Then, ratably to the payment of all outstanding principal and
reimbursement obligations for draws under Letters of Credit due and
payable under the Credit Documents;
Then, ratably to the payment of any other amounts due and owing with
respect to the Credit Obligations; and
Finally, any surplus held by the Agent and remaining after payment
in full of all the Credit Obligations and reserve for Credit
Obligations not yet due and payable shall be promptly paid over to
the Borrower or to whomever may be lawfully entitled to receive such
surplus. All applications shall be distributed in accordance with
Section 2.10(a).
ARTICLE 7. THE AGENT AND THE ISSUING BANK
7.1 AUTHORIZATION AND ACTION. Each Bank hereby appoints and authorizes the
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement as are delegated to the Agent by the terms hereof and of
the other Credit Documents, together with such powers as are reasonably
incidental thereto. Statements under the Credit Documents that the Agent may
take certain actions, without further qualification, means that the Agent may
take such actions with or without the consent of the Banks or the Majority
Banks, but where the Credit Documents expressly require the determination of the
Banks or the Majority Banks, the Agent shall not take any such action without
the prior written consent thereof. As to any matters not expressly provided for
by this Agreement or any other Credit Document (including, without limitation,
enforcement or collection of the Notes), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the written instructions of the Majority Banks, and such
instructions shall be binding upon all Banks and all holders of Notes; provided,
however, that the Agent shall not be required to take any action which exposes
the Agent to personal liability or which is contrary to this Agreement, any
other Credit Document, or applicable law.
7.2 RELIANCE, ETC. Neither the Agent, the Issuing Bank, nor any of their
respective Related Parties (for the purposes of this Section 7.2, collectively,
the "Indemnified Parties") shall
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be liable for any action taken or omitted to be taken by any Indemnified Party
under or in connection with this Agreement or the other Credit Documents,
INCLUDING ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, except for any Indemnified
Party's gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Agent and the Issuing Bank: (a) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (b) may consult with legal counsel (including counsel
for the Borrower), independent public accountants, and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants, or
experts; (c) makes no warranty or representation to any Bank and shall not be
responsible to any Bank for any statements, warranties, or representations made
in or in connection with this Agreement or the other Credit Documents; (d) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants, or conditions of this Agreement or any other
Credit Document on the part of the Credit Parties or to inspect the property
(including the books and records) of the Credit Parties; (e) shall not be
responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency, or value of this Agreement or any
other Credit Document; and (f) shall incur no liability under or in respect of
this Agreement or any other Credit Document by acting upon any notice, consent,
certificate, or other instrument or writing (which may be by telecopier or
telex) reasonably believed by it to be genuine and signed or sent by the proper
party or parties.
7.3 AFFILIATES. With respect to its Commitments, the Advances made by it,
its interests in the Letters of Credit, and the Notes issued to it, the Agent
and the Issuing Bank shall have the same rights and powers under this Agreement
as any other Bank and may exercise the same as though it were not the Agent. The
term "Bank" or "Banks" shall, unless otherwise expressly indicated, include the
Agent and the Issuing Bank in their individual capacity. The Agent, the Issuing
Bank, and their respective Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business
with, any Credit Party, and any Person who may do business with or own
securities of any Credit Party, all as if the Agent were not an agent hereunder
and the Issuing Bank were not the issuer of Letters of Credit hereunder and
without any duty to account therefor to the Banks.
7.4 BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the Financial Statements and the Interim Financial Statements and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it shall, independently and without reliance upon the Agent or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
7.5 EXPENSES. To the extent not paid by the Borrower, each Bank severally
agrees to pay to the Agent and the Issuing Bank on demand such Bank's Percentage
of the following: (a) all reasonable out-of-pocket costs and expenses of the
Agent and the Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, and amendment of this Agreement and the
other Credit Documents, including the reasonable fees and expenses of outside
counsel for
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the Agent and the Issuing Bank with respect to advising the Agent and the
Issuing Bank as to their respective rights and responsibilities under this
Agreement and the Credit Documents, and (b) all out-of-pocket costs and expenses
of the Agent and the Issuing Bank in connection with the preservation or
enforcement of the rights of the Agent, the Issuing Bank, and the Banks under
this Agreement and the other Credit Documents, whether through negotiations,
legal proceedings, or otherwise, including fees and expenses of counsel for the
Agent and the Issuing Bank. The provisions of this paragraph shall survive the
repayment and termination of the credit provided for under this Agreement and
any purported termination of this Agreement which does not expressly refer to
this paragraph.
7.6 INDEMNIFICATION. To the extent not reimbursed by the Borrower, each
Bank severally agrees to protect, defend, indemnify, and hold harmless the
Agent, the Issuing Bank, and each of their respective Related Parties (for the
purposes of this Section 7.6, collectively, the "Indemnified Parties"), from and
against all demands, claims, actions, suits, damages, judgments, fines,
penalties, liabilities, and out-of-pocket costs and expenses, including
reasonable costs of attorneys and related costs of experts such as accountants
(collectively, the "Indemnified Liabilities"), actually incurred by any
Indemnified Party which are related to any litigation or proceeding relating to
this Agreement, the Credit Documents, or the transactions contemplated
thereunder, INCLUDING ANY INDEMNIFIED LIABILITIES CAUSED BY ANY INDEMNIFIED
PARTY'S OWN NEGLIGENCE, but not Indemnified Liabilities which are a result of
any Indemnified Party's gross negligence or willful misconduct. The provisions
of this paragraph shall survive the repayment and termination of the credit
provided for under this Agreement and any purported termination of this
Agreement which does not expressly refer to this paragraph.
7.7 SUCCESSOR AGENT AND ISSUING BANK. The Agent or the Issuing Bank may
resign at any time by giving written notice thereof to the Banks and the
Borrower and may be removed at any time with or without cause by the Majority
Banks upon receipt of written notice from the Majority Banks to such effect.
Upon receipt of notice of any such resignation or removal, the Majority Banks
shall have the right to appoint a successor Agent or Issuing Bank with the
consent of the Borrower, which consent shall not be unreasonably withheld. If no
successor Agent or Issuing Bank shall have been so appointed by the Majority
Banks with the consent of the Borrower, and shall have accepted such
appointment, within 30 days after the retiring Agent's or Issuing Bank's giving
of notice of resignation or the Majority Banks' removal of the retiring Agent or
Issuing Bank, then the retiring Agent or Issuing Bank may, on behalf of the
Banks and the Borrower, appoint a successor Agent or Issuing Bank, which shall
be, in the case of a successor agent, a commercial bank organized under the laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000 and, in the case of the Issuing
Bank, Facility A Bank. Upon the acceptance of any appointment as Agent or
Issuing Bank by a successor Agent or Issuing Bank, such successor Agent or
Issuing Bank shall thereupon succeed to and become vested with all the rights,
powers, privileges, and duties of the retiring Agent or Issuing Bank, and the
retiring Agent or Issuing Bank shall be discharged from any duties and
obligations under this Agreement and the other Credit Documents after such
acceptance, except that the retiring Issuing Bank shall remain the Issuing Bank
with respect to any Letters of Credit outstanding on the effective date of its
resignation or removal and the provisions affecting the Issuing Bank with
respect to such Letters of Credit shall inure to the benefit of the retiring
Issuing Bank until the termination of all such Letters of Credit. After any
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Agent's or Issuing Bank's resignation or removal hereunder as Agent or Issuing
Bank, the provisions of this Article 7 shall inure to such Person's benefit as
to any actions taken or omitted to be taken by such Person while such Person was
Agent or Issuing Bank under this Agreement and the other Credit Documents.
ARTICLE 8. MISCELLANEOUS.
8.1 EXPENSES. The Borrower shall pay on demand of the applicable party
specified herein (a) all reasonable out-of-pocket costs and expenses of the
Agent and the Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, and amendment of this Agreement and the
other Credit Documents, including the reasonable fees and expenses of outside
counsel for the Agent and the Issuing Bank, and (b) all out-of-pocket costs and
expenses of the Agent, the Issuing Bank, and each Bank in connection with the
preservation or enforcement of their respective rights under this Agreement and
the other Credit Documents, whether through negotiations, legal proceedings, or
otherwise, including fees and expenses of counsel for the Agent, the Issuing
Bank, and each Bank. The provisions of this paragraph shall survive the
repayment and termination of the credit provided for under this Agreement and
any purported termination of this Agreement which does not expressly refer to
this paragraph.
8.2 INDEMNIFICATION. The Borrower agrees to protect, defend, indemnify,
and hold harmless the Agent, the Issuing Bank, each Bank, and each of their
respective Related Parties (for the purposes of this Section 8.2, collectively,
the "Indemnified Parties"), from and against all demands, claims, actions,
suits, damages, judgments, fines, penalties, liabilities, and out-of-pocket
costs and expenses, including reasonable costs of attorneys and related costs of
experts such as accountants (collectively, the "Indemnified Liabilities"),
actually incurred by any Indemnified Party which are related to any litigation
or proceeding relating to this Agreement, the Credit Documents, or the
transactions contemplated thereunder, INCLUDING ANY INDEMNIFIED LIABILITIES
CAUSED BY ANY INDEMNIFIED PARTY'S OWN NEGLIGENCE, but not Indemnified
Liabilities which are a result of any Indemnified Party's gross negligence or
willful misconduct. The provisions of this paragraph shall survive the repayment
and termination of the credit provided for under this Agreement and any
purported termination of this Agreement which does not expressly refer to this
paragraph.
8.3 MODIFICATIONS, WAIVERS, AND CONSENTS. No modification or waiver of any
provision of this Agreement or the Notes, nor any consent required under this
Agreement or the Notes, shall be effective unless the same shall be in writing
and signed by the Agent and Majority Banks and the Borrower, and then such
modification, waiver, or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no modification, waiver, or consent shall, unless in writing and signed by the
Agent, all the Banks, and the Borrower do any of the following: (a) waive any of
the conditions specified in Section 3.1 or 3.2, (b) increase the Commitments of
the Banks, (c) forgive or reduce the amount or rate of any principal, interest,
or fees payable under the Credit Documents, or postpone or extend the time for
payment thereof, (d) release any Guaranty or any material collateral securing
the Credit Obligations (except as otherwise permitted or required herein), or
(e) change the percentage of Banks required to take any action under this
Agreement, the Notes, or the Security Agreement, including any amendment of the
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definition of "Majority Banks" or this Section 8.3. No modification, waiver, or
consent shall, unless in writing and signed by the Agent or the Issuing Bank
affect the rights or obligations of the Agent or the Issuing Bank, as the case
may be, under the Credit Documents. The Agent shall not modify or waive or grant
any consent under any other Credit Document of such action would be prohibited
under this Section 8.3 with respect to the Credit Agreement or the Notes.
8.4 SURVIVAL OF AGREEMENTS. All representations, warranties, and covenants
of the Borrower in this Agreement and the Credit Documents shall survive the
execution of this Agreement and the Credit Documents and any other document or
agreement.
8.5 ASSIGNMENT AND PARTICIPATION. This Agreement and the Credit Documents
shall bind and inure to the benefit of the Borrower and their respective
successors and assigns and the Agent and the Banks and their respective
successors and assigns. The Borrower may not assign its rights or delegate its
duties under this Agreement or any Credit Document.
(a) ASSIGNMENTS. Any Bank may assign to one or more banks or other
entities all or any portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Revolving A Loan
Commitment, its Revolving B Loan Commitment, the Advances owing to it, the Notes
held by it, and the participation interest in the Letters of Credit owned by
it); provided, however, that (i) each such assignment affecting such Bank's
Revolving A Loan Commitment shall be of a constant, and not a varying,
percentage of all of such Bank's rights and obligations under this Agreement in
respect of such Revolving A Loan Commitment, (ii) each such assignment affecting
such Bank's Revolving B Loan Commitment shall be of a constant, and not a
varying, percentage of all of such Bank's rights and obligations under this
Agreement in respect of such Revolving B Loan Commitment, (iii) assignments of
any Revolving A Loan Commitment shall be made in minimum amounts of $5,000,000
and be made in integral multiples of $1,000,000 and the assigning Bank, if it
retains any Revolving A Loan Commitment, shall maintain at least $5,000,000 of
such Revolving A Loan Commitment, (iv) assignments of any Revolving B Loan
Commitment shall be made in minimum amounts of $5,000,000 and be made in
integral multiples of $1,000,000 and the assigning Bank, if it retains any
Revolving B Loan Commitment, shall maintain at least $5,000,000 of such
Revolving B Loan Commitment, (v) each such assignment shall be to an Eligible
Assignee, (vi) the parties to each such assignment shall execute and deliver to
the Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance, together with the Note or Notes subject to such assignment, and
(vii) each Eligible Assignee (other than the Eligible Assignee of the Agent)
shall pay to the Agent a $3,000 administrative fee. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof, (A) the assignee thereunder shall be
a party hereto for all purposes and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Bank hereunder and (B) such Bank thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of such Bank's
rights and obligations under this Agreement, such Bank shall cease to be a party
hereto).
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(b) TERM OF ASSIGNMENTS. By executing and delivering an Assignment
and Acceptance, the Bank thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Bank makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency of
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its obligations
under this Agreement or any other instrument or document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the Financial Statements and Interim
Financial Statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee shall, independently and without
reliance upon the Agent, such Bank or any other Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (v)
such assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (vi) such assignee agrees that it shall perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Bank.
(c) THE REGISTER. The Agent shall maintain at its address referred
to in Section 8.6 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Banks and the Commitments of each Bank from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agent, the Issuing Bank, and the
Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Bank at any reasonable time and from time
to time upon reasonable prior notice.
(d) PROCEDURES. Upon its receipt of an Assignment and Acceptance
executed by a Bank and an Eligible Assignee, together with the Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed in the appropriate form, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register, and (iii) give
prompt notice thereof to the Borrower. Within five Business Days after its
receipt of such notice, the Borrower shall execute and deliver to the Agent in
exchange for the surrendered Notes a new Note to the order of such Eligible
Assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and, if such Bank has retained any Commitment
hereunder, a new Note to the order of such Bank in an amount equal to the
Commitment retained by it hereunder. Such new Notes shall be dated the effective
date of such Assignment and Acceptance and shall be in the appropriate form.
(e) PARTICIPATION. Each Bank may sell participation to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement (including, without
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limitation, all or a portion of its Commitments, the Advances owing to it, its
participation interest in the Letters of Credit, and the Notes held by it);
provided, however, that (i) such Bank's obligations under this Agreement
(including, without limitation, its Commitments to the Borrower hereunder) shall
remain unchanged, (ii) such Bank shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Bank shall
remain the holder of any such Notes for all purposes of this Agreement, (iv) the
Borrower, the Agent, and the Issuing Bank and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement, and (v) such Bank shall not require the
participant's consent to any matter under this Agreement, except for change in
the principal amount of the Notes, reductions in fees or interest, extending the
applicable Maturity Date, or releasing any collateral or guarantor (except to
the extent otherwise permitted herein or in any of the other Credit Documents).
The Borrower hereby agrees that participants shall have the same rights under
Sections 2.5, 2.6, 2.7, 2.8, 2.10, and 8.2 as a Bank to the extent of their
respective participation.
(f) ASSIGNMENTS OR PLEDGES TO FEDERAL RESERVE BANKS. In addition to the
foregoing rights of assignment and participation, any Bank may assign or pledge
any portion of its rights under this Agreement (including the Revolving Loan
Advances owed to such Bank) to any Federal Reserve Bank in accordance with
applicable law without notice to or the consent of the Borrower or the Agent,
provided that (i) such Bank shall not be relieved of its obligations under this
Agreement as a result thereof and (ii) in no event shall the Federal Reserve
Bank be entitled to direct the actions of the pledging or assigning Bank under
this Agreement.
8.6 NOTICE. All notices and other communications under this Agreement and
the Notes shall be in writing and mailed by certified mail (return receipt
requested), telecopied, telexed, hand delivered, or delivered by a nationally
recognized overnight courier, to the address for the appropriate party specified
in SCHEDULE I or at such other address as shall be designated by such party in a
written notice to the other parties. Mailed notices shall be effective when
received. Telecopied or telexed notices shall be effective when transmission is
completed or confirmed by telex answerback. Delivered notices shall be effective
when delivered by messenger or courier. Notwithstanding the foregoing, notices
and communications to the Agent pursuant to Article 2 or 7 shall not be
effective until received by the Agent.
8.7 CHOICE OF LAW. This Agreement and the Notes have been prepared, are
being executed and delivered, and are intended to be performed in the State of
Texas, and the substantive laws of the State of Texas and the applicable federal
laws of the United States shall govern the validity, construction, enforcement,
and interpretation of this Agreement and the Notes; provided however, Chapter
346 of the Texas Finance Code does not apply to this Agreement or the Notes.
Each Letter of Credit shall be governed by the Uniform Customs and Practice for
Documentary Credits, International Chamber of Commerce Publication No. 500 (1993
version).
8.8 FORUM SELECTION. THE BORROWER IRREVOCABLY CONSENTS TO THE JURISDICTION
OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT LOCATED IN SUCH
STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATED THERETO. THE BORROWER AGREES
AND SHALL NOT
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CONTEST THAT PROPER FORUM AND VENUE FOR ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO ARE IN
THE COURTS OF THE STATE OF TEXAS IN HARRIS COUNTY, TEXAS, AND THE FEDERAL COURTS
LOCATED IN HARRIS COUNTY, TEXAS. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE FOREGOING BASED UPON CLAIMS THAT THE
FOREGOING COURTS ARE AN INCONVENIENT FORUM.
8.9 SERVICE OF PROCESS. IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE CREDIT DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO, THE
BORROWER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR OTHER PROCESS OR
NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT REQUESTED, TO
THE BORROWER AT ITS ADDRESS FOR NOTICES HEREUNDER, OR ANY OTHER FORM OF SERVICE
PROVIDED FOR IN THE TEXAS CIVIL PRACTICE LAW AND RULES THEN IN EFFECT SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON THE BORROWER.
8.10 WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE CREDIT
DOCUMENTS OR ANY TRANSACTIONS RELATING THERETO.
8.11 EXISTING SECURITY. This Agreement represents a full and complete
amendment and restatement of the Credit Agreement dated as of August 13, 1997,
among the Borrower, the Agent, and the Banks named therein, and that prior
version is deemed replaced hereby as of the effectiveness of this Agreement. The
indebtedness under such prior version of this Agreement continues under this
Agreement and the execution of this Agreement does not indicate a payment,
satisfaction, novation, or discharge thereof. All security and support for the
indebtedness under the prior version of this Agreement continues to secure and
support the indebtedness hereunder.
8.12 COUNTERPARTS. This Agreement may be executed in multiple counterparts
which together shall constitute one and the same instrument.
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8.13 NO FURTHER AGREEMENTS. THIS WRITTEN AGREEMENT AND THE CREDIT
DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
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EXECUTED as of the date first above written.
BORROWER:
COACH USA, INC.
By: _____________________________
Raymond K. Turner
Treasurer
AGENT:
NATIONSBANK, N.A., as Agent
By: _____________________________
John J. O'Neill
Senior Vice President
FACILITY A BANK:
NATIONSBANK, N.A.
By: _____________________________
John J. O'Neill
Senior Vice President
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FACILITY A BANK:
BANK ONE, TEXAS, N.A.
By: ______________________________
Name: ____________________________
Title: ___________________________
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FACILITY A BANK:
FIRST UNION NATIONAL BANK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
WELLS FARGO BANK, NATIONAL
ASSOCIATION
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
FLEET BANK, N.A.
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
SUMMIT BANK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
GUARANTY FEDERAL BANK, F.S.B.
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
COMERICA BANK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
NATIONAL CITY BANK OF KENTUCKY
By: ______________________________
Name: ____________________________
Title: ___________________________
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FACILITY A BANK:
PARIBAS
By: ______________________________
Name: ____________________________
Title: ___________________________
By: ______________________________
Name: ____________________________
Title: ___________________________
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FACILITY A BANK:
HIBERNIA NATIONAL BANK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
NATEXIS BANQUE BFCE
By: ______________________________
Name: ____________________________
Title: ___________________________
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
THE BANK OF NEW YORK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
THE BANK OF NOVA SCOTIA
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
THE FUJI BANK, LIMITED
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY A BANK:
UNION BANK OF CALIFORNIA, N.A.
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
THE BANK OF NOVA SCOTIA
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
NATIONSBANK, N.A.
By: ______________________________
John J. O'Neill
Senior Vice President
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<PAGE>
FACILITY B BANK:
CHASE BANK OF TEXAS, N.A.
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
COMERICA BANK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
THE FUJI BANK, LIMITED
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
NATIONAL CITY BANK OF KENTUCKY
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
THE BANK OF NEW YORK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
FIRST UNION NATIONAL BANK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
GUARANTY FEDERAL BANK, F.S.B.
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
FACILITY B BANK:
SUMMIT BANK
By: ______________________________
Name: ____________________________
Title: ___________________________
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<PAGE>
ANNEX A
REVOLVING A LOAN COMMITMENTS
FACILITY A BANK REVOLVING A LOAN COMMITMENT
NationsBank, N.A. $ 37,500,000
Bank One, Texas, N.A. $ 30,000,000
First Union National Bank $ 30,000,000
Wells Fargo Bank, National Association $ 30,000,000
Fleet Bank, N.A. $ 22,500,000
Summit Bank $ 22,500,000
Guaranty Federal Bank F.S.B. $ 20,000,000
Comerica Bank $ 15,000,000
National City Bank of Kentucky $ 15,000,000
Paribas $ 12,500,000
Hibernia National Bank $ 10,000,000
Natexis Banque BFCE $ 10,000,000
The Bank of New York $ 10,000,000
The Bank of Nova Scotia $ 10,000,000
The Fuji Bank, Limited, Houston Agency $ 10,000,000
The Bank of Tokyo-Mitsubishi Ltd. $ 7,500,000
Union Bank of California, N.A. $ 7,500,000
-----------
Total Revolving A Loan Commitments $300,000,000
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 11,506
<SECURITIES> 0
<RECEIVABLES> 83,282
<ALLOWANCES> (5,083)
<INVENTORY> 29,640
<CURRENT-ASSETS> 159,649
<PP&E> 696,925
<DEPRECIATION> 114,679
<TOTAL-ASSETS> 1,194,384
<CURRENT-LIABILITIES> 184,191
<BONDS> 150,000
0
0
<COMMON> 254
<OTHER-SE> 335,978
<TOTAL-LIABILITY-AND-EQUITY> 1,194,384
<SALES> 579,552
<TOTAL-REVENUES> 579,552
<CGS> 419,388
<TOTAL-COSTS> 488,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,149
<INCOME-PRETAX> 65,003
<INCOME-TAX> 25,352
<INCOME-CONTINUING> 39,651
<DISCONTINUED> 0
<EXTRAORDINARY> (537)
<CHANGES> 0
<NET-INCOME> 39,114
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.56
</TABLE>
