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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM __________ TO ____________
COMMISSION FILE NUMBER 1-10841
GREYHOUND LINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 86-0572343
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
15110 N. DALLAS PARKWAY, SUITE 600, DALLAS, TEXAS 75248
(Address of principal executive offices) (Zip code)
(214) 789-7000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common Stock, $.01 par value per share American Stock Exchange
10% Senior Notes, due July 31, 2001 American Stock Exchange
8.5% Convertible Subordinated Debentures, due March 31, 2007 American Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. / /
Aggregate market value of Common Stock held by non-affiliates of the
registrant based on the last reported sale price of the Common Stock on the
American Stock Exchange composite tape on March 1, 1995, was $100,292,000,
which value, solely for the purposes of this calculation, excludes shares held
by registrant's executive officers and directors. Such exclusion should not be
deemed a determination by the registrant that all such individuals are, in
fact, affiliates of the registrant.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES /X/ NO / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
CLASS OF COMMON STOCK OUTSTANDING AT MARCH 1, 1995
--------------------- ----------------------------
$.01 par value 53,743,682 shares
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the definitive proxy statement for the Registrant, to be
filed not later than 120 days after the end of the fiscal year covered by this
report, are incorporated into Part III by reference.
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GREYHOUND LINES, INC.
ANNUAL REPORT ON FORM 10-K/A
FOR THE YEAR ENDED DECEMBER 31, 1994
TABLE OF CONTENTS
PART IV
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Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . 3
</TABLE>
2
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) CERTAIN DOCUMENTS FILED AS PART OF THE FORM 10-K
1. AND 2. FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS SCHEDULES
The following financial statements and financial statements schedules
are set forth in Item 8 of the Form 10-K Annual Report. Financial Statement
Schedules not included in this Form 10-K Annual Report have been omitted
because they are not applicable or the required information is shown in the
financial statements or notes thereto. Fifty percent or less owned companies
accounted for by the equity method have been omitted because, considered in the
aggregate, they have not been considered to constitute a significant
subsidiary.
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Management Report on Responsibility for Financial Reporting . . . . . . . . . . . . . . . . . . . . 27
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consolidated Statements of Financial Position at December 31, 1994 and 1993 . . . . . . . . . . . . 29
Consolidated Statements of Operations for the Years Ended December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1994,
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994
1993 and 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Schedule II -- Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
3. EXHIBITS
3.1 -- Restated Certificate of Incorporation of Greyhound Lines, Inc.(3)
3.2 -- Restated Bylaws of Greyhound Lines, Inc.(3)
3.3 -- Article Fourth of the Restated Certificate of Incorporation of the
Registrant relating to its capital stock.(6)
3.4 -- Certificate of Amendment in the Restated Certificate of
Incorporation of the Registrant amending Article Fourth
thereof.(7)
3.5 -- Certificate of Amendment in the Restated Certificate of
Incorporation of the Registrant amending Article Eighth
thereof.(12)
3.6 -- Certificate of Designations of Series A Junior Preferred Stock of
the Registrant.(12)
3.7 -- Form of Certificate of Amendment to Certificate of
Incorporation.(14)
4.1 -- Indenture governing the 8 1/2% Convertible Subordinated Debentures
due March 31, 2007, including the form of 8 1/2% Convertible
Subordinated Debentures due March 31, 2007.(4)
4.2 -- Indenture, dated October 31, 1991, between the Registrant and
LaSalle National Bank, as Trustee, with respect to $165,000,000
principal amount of 10% Senior Notes due 2001, including form of
10% Senior Notes Due 2001.(1)
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4.3 -- First Supplemental Indenture to the Indenture between the
Registrant and LaSalle National Bank, as Trustee.(4)
4.4 -- Form of First Supplemental Indenture to the Indenture between the
Registrant and Shawmut Bank Connecticut, N.A., as Trustee.(15)
4.5 -- Rights Agreement, dated as of March 22, 1994, between the
Registrant and Mellon Securities Trust Company, as Rights
Agent.(10)
4.6 -- Form of Promissory Note issued to holders of priority tax claims
against the Registrant, including a schedule of holders of such
notes and principal amounts thereof.(3)
4.7 -- Amended and Restated Loan and Security Agreement dated as of
October 13, 1994 by and between Greyhound Lines, Inc. and Foothill
Capital Corporation.(14)
4.8 -- Amendment Number One to Amended and Restated Loan and Security
Agreement dated March 27, 1995 by and between Greyhound Lines,
Inc. and Foothill Capital Corporation.(16)
10.1 -- Acquisition Agreement dated December 22, 1986, among The Greyhound
Corporation, Greyhound Lines, Inc., the Registrant, GLI Holding
Company, GLI Bus Operations Holding Company and GLI Merger
Company.(18)
10.2 -- First Amendment to Acquisition Agreement dated January 31,
1987.(18)
10.3 -- Second Amendment to Acquisition Agreement dated March 18, 1987.(18)
10.4 -- Third Amendment to Acquisition Agreement dated March 18, 1987.(18)
10.5 -- Fourth Amendment to Acquisition Agreement dated September 18,
1987.(18)
10.6 -- Trademark License Agreement dated March 18, 1987, between The
Greyhound Corporation, GLI Holding Company and the Registrant.(18)
10.7 -- Assignment of Exhibit B Trademarks dated March 18, 1987, executed
by The Greyhound Corporation.(18)
10.8 -- Bus Purchase Requirements Agreement dated March 18, 1987, among
the Registrant, Greyhound Lines, Inc., Transportation
Manufacturing Corporation and Motor Coach Industries, Inc.(18)
10.9 -- Equipment Sublease dated March 18, 1987, between Greyhound Lines,
Inc. and the Registrant.(18)
10.10 -- Master Lease dated March 18, 1987, between Greyhound Lines, Inc.
and GLI Realty Company.(18)
10.11 -- Employee Stock Ownership Plan of the Registrant, effective as of
October 31, 1991.(3)
10.12 -- Trust Agreement dated as of October 31, 1991, between the
Registrant and Bank One, Texas, N.A., as trustee for Registrant's
Employee Stock Ownership Plan.(3)
10.13 -- Contested Claim Pool Trust Agreement to be entered into as of
October 31, 1991, by and between the Registrant and Smith Barney
Trust Company, as trustee.(3)
10.14 -- Claims Treatment Agreement dated August 23, 1991, by and among
Eagle Bus Manufacturing, Inc., the Registrant, Trailways Commuter
Transit, Inc., GLI Bus Operations Holding Company, GLI Food
Services, Inc., Southern Greyhound Lines Co., GLI Holding Company,
Central Greyhound
4
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Lines Co., Greyhound Travel Services, Inc., Eastern Greyhound
Lines, Co., and Western Greyhound Lines Co., on the one hand, and
The Dial Corp., on the other.(3)
10.15 -- Coach Purchase Agreement, dated February 14, 1992, between the
Registrant, Texas, New Mexico & Oklahoma Coaches, Inc., Vermont
Transit Co., Inc., Motor Coaches Industries, Inc., Hausman Bus
Sales, Inc. and MCI Acceptance Corp.(3)
10.16 -- Coach Purchase Agreement, dated December 23, 1992, between the
Registrant and Motor Coach Industries, Inc.(5)
10.17 -- Amendment No. 1 to the 1993 Coach Purchase Agreement, dated as of
February 4, 1993, by and among Greyhound Lines, Inc. and Motor
Coach Industries, Inc.(8)
10.18 -- Amendment No. 2 to the 1993 Coach Purchase Agreement, dated as of
June 25, 1993, by and among Greyhound Lines, Inc. and Motor Coach
Industries, Inc.(8)
10.19 -- Memorandum of Agreement, dated as of June 4, 1993, between
Greyhound Lines, Inc. and the International Association of
Machinists and Aerospace Workers.(8)
10.20 -- Agreement dated as of June 30, 1993, between the Registrant and
New York City Transit Authority.(8)
10.21 -- Interest Rate Swap Transaction Confirmations dated as of July 12,
1993, between the Registrant and Bankers Trust Company.(8)
10.22 -- Memorandum of Agreement, dated as of May 25, 1993, between the
Registrant and the Amalgamated Council of Greyhound Local
Unions.(9)
10.23 -- Lease Agreement No. 1, dated as of December 29, 1993, between
Wilmington Trust Company and the Registrant.(9)
10.24 -- Lease Agreement No. 2, dated as of December 29, 1993, between
Wilmington Trust Company and the Registrant.(9)
10.25 -- Lease Agreement No. 3, dated as of December 29, 1993, between
Wilmington Trust Company and the Registrant.(9)
10.26 -- Lease Supplement No. 1-1, dated as of December 30, 1993, between
Wilmington Trust Company and the Registrant.(9)
10.27 -- Lease Supplement No. 2-1, dated as of December 30, 1993, between
Wilmington Trust Company and the Registrant.(9)
10.28 -- Lease Supplement No. 3-1, dated as of December 30, 1993, between
Wilmington Trust Company and the Registrant.(9)
10.29 -- Tax Indemnification Agreement, dated as of December 29, 1993,
between Nationsbanc Lease Investments, Inc. and the
Registrant.(9)
10.30 -- Pledge Agreement, dated as of December 29, 1993, among the
Registrant, Wilmington Trust Company and Nationsbanc Lease
Investments, Inc.(9)
10.31 -- Participation Agreement, dated as of December 29, 1993, between
Nationsbanc Lease Investments, Inc. and the Registrant.(9)
5
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10.32 -- Greyhound Lines, Inc. 1991 Management Incentive Stock Option
Plan.(3)
10.33 -- Greyhound Lines, Inc. 1993 Management Incentive Stock Option
Plan.(7)
10.34 -- Greyhound Lines, Inc. 1993 Non-Employee Director Stock Option
Plan.(9)
10.35 -- Greyhound Lines, Inc. Supplemental Executive Retirement Plan.(9)
10.36 -- Coach Purchase Agreement, dated as of December 31, 1993, between
the Registrant and Motor Coach Industries, Inc.(11)
10.37 -- Conditional Sale Contract and Security Agreement, dated as of May
10, 1994, between the Registrant and Motor Coach Industries,
Inc.(12)
10.38 -- Lease Agreement, dated as of March 28, 1994, between Wilmington
Trust Company and the Registrant.(11)
10.39 -- Lease Supplement No. 1, dated as of March 28, 1994, between
Wilmington Trust Company and the Registrant.(11)
10.40 -- Pledge Agreement, dated as of March 28, 1994, among the
Registrant, Wilmington Trust Company and Cargill Leasing
Corporation.(11)
10.41 -- Participation Agreement, dated as of March 28, 1994, between
Cargill Leasing Corporation and the Registrant.(11)
10.42 -- Bill of Sale, dated as of March 28, 1994, between the Registrant
and Wilmington Trust Company.(11)
10.43 -- Tax Indemnification Agreement, dated as of March 28, 1994, between
Cargill Leasing Corporation and the Registrant.(11)
10.44 -- Lease Agreement, dated as of March 29, 1994, between Wilmington
Trust Company and the Registrant.(11)
10.45 -- Lease Supplement No. 1, dated as of March 29, 1994, between
Wilmington Trust Company and the Registrant.(11)
10.46 -- Pledge Agreement, dated as of March 29, 1994, among the
Registrant, Wilmington Trust Company and Cargill Leasing
Corporation.(11)
10.47 -- Participation Agreement, dated as of March 29, 1994, between
Cargill Leasing Corporation and the Registrant.(11)
10.48 -- Bill of Sale, dated as of March 29, 1994, between the Registrant
and Wilmington Trust Company.(11)
10.49 -- Tax Indemnification Agreement, dated as of March 29, 1994, between
Cargill Leasing Corporation and the Registrant.(11)
10.50 -- Conditional Sale Contract and Security Agreement, dated as of June
28, 1994, between the Registrant and Motor Coach Industries,
Inc.(13)
10.51 -- First Amendment to the Registrant 1993 Non-Employee Director Stock
Option Plan.(13)
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10.52 -- Amendments to Interest Rate Swap Agreement, dated as of October 6,
1994 between the Registrant and Bankers Trust Company.(13)
10.53 -- Form of Letter Agreements with various holders of Convertible
Debentures relating to, among other things, the Conversion.(15)
10.54 -- Employment Agreement, dated November 15, 1994, between Registrant
and Craig R. Lentzsch.(16)
10.55 -- Amendment Number Two to Bus Purchase Requirements Agreement dated
December 21, 1994 by and between Greyhound Lines, Inc. and Motor
Coach Industries.(16)
11 -- Computation of Registrant's earnings per share for the two months
ended December 31, 1991.(14)
11.1 -- Computation of Registrant's earnings per share for the year ended
December 31, 1992.(14)
11.2 -- Computation of Registrant's earnings per share for the year ended
December 31, 1993.(14)
11.3 -- Computation of Registrant's earnings per share for the year ended
December 31, 1994.(16)
22 -- Subsidiaries of the Registrant.(16)
23.1 -- Consent of Arthur Andersen LLP.(16)
27 -- Financial Data Schedule as of and for the year ended December 31,
1994.(17)
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(1) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1991.
(2) Incorporated by reference to the Company's Registration Statement on
Form 10 (File No. 1-10841) relating to the Common Stock and Senior
Notes.
(3) Incorporated by reference from the Registration Statement on Form S-1
(File Nos 33-45060-01 and 33-45060-02) regarding the Registrant's 8 1/2%
Convertible Subordinated Debentures Due 2007.
(4) Incorporated by reference from the Company's Registration Statement on
Form S-1 (File No. 33-47908) regarding the Registrant's Common Stock and
10% Senior Notes Due 2001 held by the Contested Claims Pool Trust.
(5) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992.
(6) Incorporated by reference from the Company's Registrant Statement on
Form S-3 (File No. 33-61044).
(7) Incorporated by reference from the Company's Registrant Statement on
Form S-8 (File No. 33-63506) regarding the Registrant's 1991 and 1993
Management Stock Option Plans.
(8) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1993.
(9) Incorporated by reference from the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993.
(10) Incorporated by reference from the Registrant's Quarterly Report on Form
8-K regarding the Rights Agreement dated March 22, 1994.
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(11) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994.
(12) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1994.
(13) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1994.
(14) Incorporated by reference from the Registration Statement on Form S-1
(File No. 33-56131) regarding the Registrant's Common Stock.
(15) Incorporated herein by reference from the Registrant's Issuer Tender
Offer Statement on Schedule 13E-4 (File No. 5-41800).
(16) Previously filed.
(17) Filed only in EDGAR format with the Registrant's Annual Report on Form
10-K for the year ended December 31, 1994.
(18) Filed herewith.
(B) REPORTS ON FORM 8-K
The Company filed no current reports on Form 8-K with the Securities
and Exchange Commission during the quarter ended December 31, 1994, nor was it
required to do so.
8
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SIGNATURES
Pursuant to the requirements of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on
August 11, 1995.
GREYHOUND LINES, INC.
(Registrant)
By: /s/ Steven L. Korby
------------------------------------------
Steven L. Korby
Executive Vice President and Chief
Financial Officer (Duly Authorized Officer
and Principal Financial and Accounting
Officer)
9
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INDEX TO EXHIBITS
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SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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10.1 Acquisition Agreement dated December 22, 1986, among The Greyhound
Corporation, Greyhound Lines, Inc., the Registrant, GLI Holding
Company, GLI Bus Operations Holding Company and GLI Merger Company.
10.2 First Amendment to Acquisition Agreement dated January 31, 1987.
10.3 Second Amendment to Acquisition Agreement dated March 18, 1987.
10.4 Third Amendment to Acquisition Agreement dated March 18, 1987.
10.5 Fourth Amendment to Acquisition Agreement dated September 18, 1987.
10.6 Trademark License Agreement dated March 18, 1987, between The Greyhound
Corporation, GLI Holding Company and the Registrant.
10.7 Assignment of Exhibit B Trademarks dated March 18, 1987, executed by
The Greyhound Corporation.
10.8 Bus Purchase Requirements Agreement dated March 18, 1987, among the
Registrant, Greyhound Lines, Inc., Transportation Manufacturing
Corporation and Motor Coach Industries, Inc.
10.9 Equipment Sublease dated March 18, 1987, between Greyhound Lines, Inc.
and the Registrant.
10.10 Master Lease dated March 18, 1987, between Greyhound Lines, Inc. and
GLI Realty Company.
</TABLE>
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EXHIBIT 10.1
ACQUISITION AGREEMENT
among
The Greyhound Corporation,
Greyhound Lines, Inc.
GLI Operating Company,
GLI Holding Company,
GLI Bus Operations Holding Company
and
GLI Merger Company
December 22, 1986
<PAGE> 2
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement") is made and entered into the
22nd day of December, 1986, by and among The Greyhound Corporation, an Arizona
corporation ("Greyhound"), Greyhound Lines, Inc., a California corporation
("Seller"), GLI Operating Company, a Delaware corporation ("GLI Operating"), GLI
Holding Company, a Delaware corporation ("GLI Holding"), GLI Bus Operations
Holding Company, a Delaware corporation ("GLI Bus"), and GLI Merger Company, a
Delaware corporation ("GLI Merger").
W I T N E S S E T H:
WHEREAS, Greyhound owns all of the issued and outstanding capital stock of
Seller, and Seller owns 1,000 shares (the "Shares") of the common stock, $.01
par value, of GLI Operating, which constitutes all of the issued and outstanding
capital stock of GLI Operating;
WHEREAS, GLI Holding owns all of the issued and outstanding capital stock
of GLI Bus, and GLI Bus owns all of the issued and outstanding capital stock of
GLI Merger;
WHEREAS, GLI Operating and GLI Merger propose to enter into an Agreement
and Plan of Merger in the form of Exhibit A hereto (the "Merger Agreement")
providing, among other things, for (a) the merger of GLI Merger into GLI
Operating (the "Merger"), (b) the cancellation of the Shares and the conversion
thereof into the right to receive: (i) $175,000,000 (the "Cash Payment"), (ii)
400,000 shares of Series A Preferred Stock of GLI Operating or, at the option of
GLI Holding, of GLI Holding or GLI Bus, with an aggregate liquidation preference
of $40,000,000 ("Preferred
1
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Stock") and (iii) $40,000,000 principal amount of 11% Junior Subordinated Notes
due 1999 of GLI Operating or, at the option of GLI Holding, of GLI Holding or
GLI Bus (the "Junior Notes"), and (c) the cancellation of the outstanding shares
of common stock of GLI Merger and the conversion thereof into an equal number of
shares of common stock of GLI Operating (the "New Shares") to be issued to GLI
Bus, as the holder of the outstanding common stock of GLI Merger, on a one for
one basis, which new Shares, effective as of the consummation of the Merger,
shall thereafter represent all of the issued and outstanding common stock of GLI
Operating;
WHEREAS, Greyhound proposes to (a) convey and assign to GLI Holding those
trademarks and other rights listed on Exhibit B, which the parties hereto
believe and acknowledge have a value of at least $6,000,000, in exchange for a
number of shares of common stock, $.01 par value, of GLI Holding, which will
represent, as of the Closing (hereinafter defined), 25% of the outstanding GLI
Holding Stock on a fully-diluted basis after the consummation of such exchange
and after the completion of all the transactions contemplated by this Agreement
(the "GLI Holding Stock") and (b) license those trademarks and other rights
listed on Exhibit C hereto, in exchange for the execution and delivery by GLI
Holding of that certain trademark license and contingent royalty agreement
hereinafter described (the "Trademark License Agreement"); all of such
trademarks and other rights assigned and licensed by Greyhound to GLI Holding
are hereinafter collectively referred to as the "Trademarks"; and
WHEREAS, the parties hereto desire to enter into this Agreement for the
purpose of setting forth certain representations, warranties, covenants,
agreements, and conditions relating to the Merger and the other transactions
contemplated hereby;
2
<PAGE> 4
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants, and agreements, and upon the terms, and subject to the conditions,
hereinafter set forth, the parties hereto do hereby agree as follows:
1. DELIVERY OF OUTSTANDING SHARES AND ISSUANCE OF NEW SHARES.
1.1 Delivery of and Distribution in Respect of Shares. At the Closing,
pursuant to the terms of the Merger Agreement, Seller shall deliver or cause to
be delivered to GLI Operating for cancellation the stock certificate or
certificates evidencing the Shares and GLI Bus shall cause GLI Operating to
delivery to Seller (a) the Cash Payment by wire transfer of funds to the bank
account designated in writing by Seller to GLI Holding at least three business
days prior to the Closing, (b) 400,000 shares of Preferred Stock, which shares
shall have substantially the powers, designations, preferences, and other rights
described in Exhibit D hereto, and (c) the Junior Notes, which shall be in
substantially the form of Exhibit E hereto. The Cash Payment, Preferred Stock,
and Junior Notes (collectively, the "Consideration") shall constitute the
consideration for the Shares and the Noncompetition Agreement (hereinafter
defined).
1.2 Issuance of New Shares to GLI Bus. At the Closing, pursuant to the
terms of the Merger Agreement, GLI Operating shall issue the New Shares to GLI
Bus, as the holder of the common stock of GLI Merger, on a one for one basis.
1.3 Assets of GLI Operating. Effective prior to and as of the Closing,
Seller shall cause GLI Operating to own all the outstanding capital stock of
Eastern Greyhound Lines Co., Central Greyhound Lines Co., Southern Greyhound
Lines Co., Western Greyhound Lines Co., and Greyhound Travel Services, Inc.,
Arizona corporations (collectively, the "Companies"), and to own directly,
3
<PAGE> 5
or through the Companies, all of the business and assets related to the business
of operating motor vehicles for the intercity and local transportation of
passengers, baggage and package express throughout the United States and the
business of providing charter bus services owned directly or indirectly by
Greyhound and operated directly or indirectly by Seller, including, without
limitation, cash on hand at Closing and all of the assets listed on a schedule
previously delivered to GLI Holding (collectively, the "Sale Assets"), other
than those assets which shall remain the assets of Greyhound or Seller
specifically listed and identified on Schedule 1.3 attached hereto (the
"Retained Assets") and the Trademarks (which shall be assigned to GLI Holding
pursuant to Section 1.4 below).
1.4 Deliveries in Respect of Trademarks. At the Closing: Greyhound shall,
pursuant to instruments of conveyance and assignment reasonably satisfactory to
GLI Holding, assign the Trademarks (other than the Trademarks described on
Exhibit C) to GLI Holding, and GLI Holding shall issue and deliver the GLI
Holding Stock to Greyhound.
1.5 Liabilities.
(a) Effective as of the Closing, GLI Operating and the Companies shall
be obligated to pay only the liabilities set forth on the Closing Statement
or on Schedule 1.5 hereto, which shall not include (i) any liabilities
related to any litigation existing as of the Closing, (ii) any liability
for any breach of any contract, agreement, lease or instrument that
occurred prior to, or as a result of the Closing, and (iii) any liability,
obligation, claim, action or proceeding with respect to which GLI Holding,
GLI Bus, GLI Operating or the Companies is entitled to indemnification
pursuant to Section 10.2 hereof (the "Continuing Liabilities"). If GLI
Operating is the issuer of the Preferred Stock or the maker of
4
<PAGE> 6
the Junior Note, GLI Operating shall also be obligated to fulfill the
obligations set forth in the Preferred Stock and Junior Note, respectively.
(b) Effective as of the Closing, Seller shall (i) assume and agree to
pay (in accordance with Section 1.5(c)) all debts, obligations, and
liabilities (the "Non-Assumed Liabilities") of GLI Operating and the
Companies (whether known or unknown, direct or indirect, absolute or
contingent, matured or unmatured, or otherwise) which currently exist, or
come to exist in the future, which arose, or arise, as the case may be, out
of events or transactions which occurred, or conditions existing, prior to
the Closing and which are not Continuing Liabilities and (ii) cause all
liens, pledges, mortgages, security interests, or other encumbrances on the
Sale Assets securing the Non-Assumed Liabilities to be released prior to or
contemporaneously with the Closing.
(c) Seller covenants and agrees to pay all Non-Assumed Liabilities
promptly when due, provided the Seller agrees to pay and discharge in full
at Closing, whether or not then due, all liabilities for borrowed money
(including principal, interest, and any fee or penalties) of GLI Operating
or the Companies, both short term and long-term. Should Seller fail to pay
any Non-Assumed Liabilities when due, GLI Operating or any Company may, at
its option and in its sole discretion, pay such overdue Non-Assumed
Liabilities for the account of Greyhound and Seller. In such event, GLI
Operating shall send a notice (the "Liabilities Notice") setting forth in
reasonable detail such Non-Assumed Liabilities paid by GLI Operating or any
Company for the account of Greyhound and Seller. Within seven days of the
receipt by Seller of the Liabilities Notice, Seller shall reimburse GLI
Operating or any Company in full for all Non-Assumed Liabilities paid by
it.
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<PAGE> 7
1.6 Closing Statement and Related Payment. (a) As soon as practicable
following the Closing Date, but in no event later than 90 days following the
Closing Date, Seller shall prepare and deliver to GLI Holding a consolidated
balance sheet, together with related footnotes (the "Closing Statement"), of GLI
Operating at and as of the Closing Date, but immediately prior to the Closing
and the consummation of the transactions thereat, which shall be audited by
Touche Ross & Co., independent public accountants ("TRC"). Such Closing
Statement shall be prepared in accordance with generally accepted accounting
principles on a basis consistent with those employed in the preparation of the
pro forma consolidated balance sheet of GLI Operating as of August 31, 1986 (the
"Pro Forma Balance Sheet"), a copy of which is attached hereto as Exhibit F, and
will present fairly the consolidated financial position of GLI Operating, as of
immediately prior to the Closing, subject to the following instructions. In no
event shall (i) any prepaid expenses, refund claims, or other assets be shown as
assets on such Closing Statement unless and to the extent such prepaid expenses,
refund claims, or other assets relate to items that are usable in the ordinary
course of business by GLI Operating or the Companies following the Closing Date,
(ii) any increase, except ordinary course of business additions, be made in the
value of any non-current asset from the amounts set forth on the Pro Forma
Balance Sheet, or (iii) any asset other than a Sale Asset be shown on the
Closing Statement. Generally accepted accounting principles shall be used in
preparing the Closing Statement, notwithstanding any conflict between generally
accepted accounting principles and the principles used in preparing the Pro
Forma Balance Sheet, except as specifically disclosed in the pro Forma Balance
Sheet and the notes thereto and except as otherwise necessary to comply with the
provisions of this Agreement. The Closing Statement shall also include a report
of TRC to the effect that TRC is not aware of any material modifications that
should be made to the Closing Statement in order for it to be in conformity with
generally accepted
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<PAGE> 8
accounting principles (other than as permitted by the provisions of the
immediately preceding sentence) and to the effect that the Closing Statement Net
Worth (hereinafter defined) was calculated in accordance with the provisions of
this Agreement. Each party to this Agreement agrees to cooperate fully with the
other parties hereto in performing or causing to be performed such actions and
in providing or causing to be provided such information as shall be necessary
and appropriate to permit prompt preparation and delivery of the Closing
Statement.
(b) Seller shall cause TRC to permit GLI Holding and its representatives to
review and inspect its workpapers used in connection with the audit of the
Closing Statement and any other financial statements of GLI Operating or the
Seller. As soon as practicable after receiving the Closing Statement, but in no
event more than 30 days following receipt thereof, GLI Holding shall notify
Seller as to whether GLI Holding disagrees with the amount of net worth (total
assets minus total liabilities) reflected on the Closing Statement and, in the
case of disagreement, the reason or reasons therefor. If any disagreement set
forth therein cannot be resolved between GLI Holding and Seller within 30 days
after delivery of such notification to Seller, such disagreement with respect to
the net worth of GLI Operating as of the Closing Date but immediately prior to
the Closing and the consummation of the transactions thereat shall be determined
by a "Big Eight" accounting firm (other than Touche Ross & Co. and Arthur
Andersen & Co.), jointly selected by the independent public accountants of
Greyhound and of GLI Holding. The determination of such "Big Eight" accounting
firm shall be binding on the parties hereto. The fees and disbursements of such
accounting firm shall be shared equally by GLI Operating and Greyhound.
(c) In the event that the net worth of GLI Operating as reflected in the
Closing Statement as finally determined in accor-
7
<PAGE> 9
dance with Section 1.6(b) (the "Closing Statement Net Worth") is less than
$122,000,000, Seller shall pay GLI Operating in cash an amount equal to the
difference between $122,000,000 and the Closing Statement Net Worth, within
five days of the determination of the Closing Statement Net Worth.
(d) In the event that the Closing Statement Net Worth (before
deducting the obligation provided for in this Section 1.6(d)) is more than
$122,000,000, GLI Operating shall execute a non-interest bearing promissory
note in the amount equal to the difference between the Closing Statement
Net Worth and $122,000,000, within five days after the determination of the
Closing Statement Net Worth. Such promissory note shall be due and payable
in four equal quarterly installments, the last of which shall be due one
year from the date such note is issued.
2. DELIVERY OF ADDITIONAL AGREEMENTS.
2.1 Master Lease. At the Closing, Seller and GLI Operating (or any of its
affiliates) shall enter into a lease agreement with respect to the 27 operating
bus terminals included in the Retained Assets (the "Master Lease"). The Master
Lease shall provide for a term of five years and, as to each leased terminal, a
rental equal to 7% of Seller's net book value of such leased terminal as of the
Closing Date or, if sold prior to the Closing Date, the net book value as of the
date of such sale. Seller shall have the right to terminate the Master Lease as
to a maximum of any eight leased terminals per year following the Closing on at
least six months' prior notice (provided, however, that the Master Lease may not
be terminated as to the San Diego Terminal prior to December 14, 1989). The
Master Lease shall be on a "triple net" basis and shall contain such additional
terms and provisions, and shall be in such form, as shall be mutually acceptable
to the parties.
8
<PAGE> 10
2.2 Standstill Agreement. At the Closing, Greyhound and GLI Holding shall
enter into an agreement (the "Standstill Agreement") pursuant to which Greyhound
will agree (a) to vote its GLI Holding Stock for directors and, with reasonable
exceptions, to vote such stock with respect to all other matters as directed by
a group consisting of Fred G. Currey, Craig Lentzsch, and P. Anthony Lannie (the
"Management Group"), (b) not to increase its ownership of GLI Holding beyond
25%, (c) to give GLI Holding a right of first refusal on any sale of Greyhound's
GLI Holding Stock, other than in a bona fide, widely distributed registered
public offering or pursuant to the provisions of Rule 144 (other than Rule
144(k)) promulgated under the Securities Act of 1933, and (d) not to take any
action which would cause GLI Holding to become a public company. The Standstill
Agreement will provide Greyhound with reasonable "piggy-back" registration
rights and one demand registration right after GLI Holding goes public.
Greyhound's piggy-back registration rights will be subject to cutback, pro rata
with all parties other than GLI Holding (shares sold by GLI Holding will be the
last cutback), if the managing underwriter requires. After Closing, Greyhound
will have the right to designate a number of directors as is equal to
Greyhound's ownership percentage of GLI Holding Stock on a fully-diluted basis
(so long as it owns at least 5% of GLI Holding's fully-diluted common stock)
times the total number of GLI Holding directors and the preemptive right to
purchase its pro rata share (based on its fully-diluted common stock ownership)
of any new shares of common stock offered by GLI Holding. Such preemptive rights
shall terminate if GLI Holding goes public. The Standstill Agreement shall
contain such additional terms and provisions, including the provision of
monthly, quarterly, and audited annual financial information to Greyhound, and
shall be in such form, as the parties may mutually agree.
2.3 Operations Agreement. At the Closing, Greyhound and Seller will cause
Greyhound Lines of Canada Ltd. to enter into a
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<PAGE> 11
10-year through service operations agreement ("Operations Agreement") with GLI
Operating on terms customary in the industry and consistent with past practices
of the Seller. The Operations Agreement shall contain such additional terms and
provisions, including operating standards, and shall be in such form, as the
parties may mutually agree.
2.4. Garage and Terminal Leases. At the Closing, Seller shall sublease to
GLI Operating (or any of its subsidiaries) the bus maintenance facilities at the
New York City location and bus maintenance facilities and terminal facilities at
the Philadelphia location on a triple net basis, subject to all the terms and
conditions of the prime lease and such other terms and conditions as Seller and
GLI Holding may agree, at a rent equal to that payable under the primary lease
plus an annual rental of 7% of Seller's net book value of leasehold improvements
on the Closing Date (the "Garage Leases"). Seller shall have the right to
relocate at its expense the maintenance and terminal facilities covered by the
Garage Leases, subject to GLI Holding's reasonable satisfaction that the
efficiency of operations will not be materially impaired and the GLI Holding's
cost of bus operations related to such facilities will not increase by more than
10%. Seller's Philadelphia relocation plan, as described to GLI Holding, meets
such criteria. Seller shall retain any amounts paid to Seller by the lessors of
the Garage Leases for cancellation of such Garage Leases. GLI Holding (or any of
its subsidiaries) shall retain the benefits of subleasing any or all of such
facilities to third parties, including without limitation all existing
subleases.
2.5 Services Agreements. If requested by Seller within one year from the
date hereof, GLI Holding (or any of its subsidiaries) shall (a) (i) enter into
an agreement with Greyhound Lines of Canada, Ltd. Texas, New Mexico & Oklahoma
Coaches, Inc., Vermont Transit Co., Inc., Southeastern Stages, Inc. and
Kerrville Bus
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<PAGE> 12
Company, Inc. (collectively, the "Retained Carriers") to perform computer
services for such Retained Carriers at a service fee intended to reimburse GLI
Holding (or any of its subsidiaries) for all its costs but at no profit thereon
and otherwise on terms mutually agreed on by GLI Holding and such Retained
Carriers, and/or (ii) grant to Greyhound Lines of Canada Ltd. a non-exclusive,
non-transferable, license to use the computer software currently used by Seller,
GLI Operating and the Companies, and to receive normal periodic updates thereto,
at no charge to Greyhound Lines of Canada Ltd. solely for the exclusive use of
Greyhound Lines of Canada Ltd. and (b) enter into an agreement with
Transportation Manufacturing Corporation, Motor Coach Industries, Inc. and Motor
Coach Industries, Ltd. (the "Manufacturers") to act as the warranty and
maintenance representative of the Manufacturers on terms consistent with past
practice and as otherwise mutually agreed by GLI Holding and the Manufacturers.
2.6 West Des Moines Lease. At the Closing, GLI Holding (or any of its
subsidiaries) shall lease Seller's West Des Moines, Iowa, accounting center for
three years on a triple net basis at an annual rental of 7% of Seller's net book
value of such center at Closing, which lease will be subject to the terms and
conditions of the industrial revenue bonds related to the center and will
include an option to the lessee to purchase such property at Seller's net book
value at the end of the lease term. Such lease shall contain such additional
terms and provisions, and shall be in such form, as the parties may mutually
agree. Greyhound and Seller agree that, so long as such purchase option is in
existence and so long as the interest income on such bonds remains exempt from
federal income tax, neither Greyhound nor Seller will prepay, call or amend the
terms of the industrial revenue bonds related to the center and that, upon
exercise of such option, Greyhound and Seller will use their commercially
reasonable efforts to transfer such bonds and
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<PAGE> 13
related obligations to GLI Holding (or its designated subsidiaries) at the same
interest rate and other principal terms as are in effect on the date of this
Agreement.
2.7 Retained Carrier Purchase Options. At the Closing, Greyhound shall
grant GLI Holding (or any of its subsidiaries) a one year option to purchase all
of Greyhound's (and its affiliates) interest in the Retained Carriers (other
than Greyhound Lines of Canada Ltd. and Southeastern Stages, Inc.) at a purchase
price for each such carrier equal to Greyhound's ownership percentage of the
equity of such carrier times the greater of (a) Adjusted Net Book Value
(hereinafter defined) of such carrier or (b) six times earnings before interest
income and expense and income taxes for such carrier (with Seller retaining all
intercompany balances) for fiscal 1985, if such option is exercised before the
end of fiscal 1987, or fiscal 1987, if such option is exercised after the end of
fiscal 1987. The agreement granting such options shall contain such other terms
and conditions, and shall be in such form, as may be mutually agreed on by
Greyhound and GLI Holding. As used in this Section 2.7, the term "Adjusted Net
Book Value" shall mean the total assets of such carrier minus the total
liabilities of such carrier, as reflected on a balance sheet of such carrier
prepared in accordance with generally accepted accounting principles applied on
a consistent basis (as of the most recent fiscal quarter prior to the exercise
of such option), plus an amount equal to the excess of the fair market value (as
of such balance sheet date) over book value of all buses and real estate owned
by such carrier. Greyhound shall pay the costs of any appraisals necessary to
determine Adjusted Net Book Value.
2.8 Bus Purchase Agreements. At the Closing, GLI Operating and the
Manufacturers shall enter into a 60 month bus purchase agreement under which GLI
Operating will agree to buy 75% of its requirements for motor coaches (not
including mini-vans and the
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<PAGE> 14
like made by major manufacturers) from the Manufacturers. GLI Operating will
cooperate with the Manufacturers to provide stable configurations, substantial
order lead times, and orderly delivery dates. The prices to GLI Operating will
be those already in effect for 1987 orders, and thereafter will be standard list
price less cost justified volume discounts based on annual volume of motor
coaches purchased for use by GLI Operating or the Companies. Such discount will
be at least as follows: 2.5% if annual volume is 51 to 100, 4.5% if annual
volume is 101 to 150, and 6.5% if annual volume exceeds 150. The appropriate
discount to be applicable to all buses purchased during any year shall be based
on GLI Operating's order for estimated bus requirements of the number of buses
to be purchased during each calendar year and shall be retroactively adjusted at
the end of each calendar year based on the actual number of buses purchased
during such calendar year. In addition, GLI Holding and Seller will enter into
an agreement at Closing providing that GLI Holding will assume Seller's existing
bus purchase agreement with the Manufacturers (which agreement shall not be
modified in any respect) or pay Seller a cancellation fee equal to 5% of the
purchase price of each bus which Seller is obligated to purchase under such
agreement which GLI Holding does not purchase, it being understood that GLI
Holding has no other right of cancellation and must cancel an order it desires
to cancel at least six months prior to the scheduled delivery date of the buses
subject to cancellation. Seller will assign to GLI Holding, as to each bus GLI
Holding elects to purchase, Seller's rights under its purchase agreements with
the Manufacturers. As to all buses purchased after 1987 by assumption of
Seller's obligation to the Manufacturers, Seller shall cause GLI Holding to
receive the amount of volume discount to which GLI Operating would have been
entitled if such buses had been purchased by GLI Operating directly from the
Manufacturers. The agreements described herein shall contain such additional
terms, and shall be in such form, as may be agreed on by Greyhound and GLI
Holding.
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<PAGE> 15
2.9 Trademark Agreements. At the Closing, Greyhound and GLI Holding shall
enter into the Trademark License Agreement pursuant to which Greyhound grants to
GLI Holding and its subsidiaries immediately after the Closing a perpetual
exclusive license to use, and will license, at GLI Holding's request, others to
use, the name and trademark "Greyhound" and the "image of the running dog"
trademark (as described on Exhibit C) in the United States and Mexico for, and
only for, travel and transportation uses (except water). Except as currently
used by Seller in the transportation business, in no event shall the licensee be
permitted to use the trademark "Greyhound" standing alone. The Trademark License
Agreement shall be royalty-free except as hereinafter expressly stated, and
shall provide that if Greyhound and all its active affiliated companies cease
use of the Term "Greyhound" in their corporate names, and the "image of the
running dog" as a corporate logo, Greyhound shall transfer all rights to such
trademarks to GLI Holding without additional payment. The Trademark License
Agreement shall provide for a contingent royalty payable for calendar years 1989
through 1993 based on the consolidated bus and travel revenues of GLI Holding
(appropriately adjusted for inflation) as follows:
Royalty Schedule
<TABLE>
<CAPTION>
CONSOLIDATED REVENUE ROYALTY RATE
------------------------ ------------
(In Millions of Dollars)
<S> <C>
Less than 600 0
From 600 to 650 .5%
From 650 to 700 1.0%
From 700 to 750 1.5%
From 750 to 800 2.0%
From 800 to 850 2.5%
From 850 to 900 2.0%
From 900 to 950 1.5%
From 950 to 1,000 1.0%
Above 1000 .5%
</TABLE>
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<PAGE> 16
Each royalty percentage shall apply only to the appropriate consolidated
revenue bracket (and shall not apply to any other bracket). The royalty payable
for each bracket shall be added to the royalty payable for each other bracket to
determine the total royalty payable for each year. The Trademark License
Agreement shall contain such additional terms, and shall be in such form, as
Greyhound and GLI Holding shall agree.
2.10 Sublease and Service Agreement. At the Closing GLI Operating and
Greyhound shall enter into a sublease and services agreement pursuant to which
(i) Greyhound shall sublease to GLI Operating the office facilities and, if also
leased, furnishings currently utilized by Seller, GLI Operating and the
Companies at Greyhound Tower, Phoenix, Arizona, and (ii) Greyhound shall provide
to GLI Operating and the Companies the office services currently provided by
Greyhound to Seller, GLI Operating and the Companies. Such sublease and services
agreement shall provide (a) for a firm term of one (1) year with two (2) six
month renewal options; (b) for rent and other charges or fees to be paid by GLI
Operating on a basis consistent with past practice (but in no event shall such
rents and other charges or fees be less favorable than the rents, charges or
fees paid by Greyhound's subsidiaries), and (c) such additional terms, and shall
be in such form, as Greyhound and GLI Holding shall agree.
2.11 Sublease of Buses. At the Closing, Seller and GLI Operating shall
enter into a sublease agreement, pursuant to which Seller will sublease to GLI
Operating and the Companies an aggregate of 2,109 buses on the same terms and
conditions as Seller's current bus leases, except that supplemental rental on
the buses leased from Security Pacific shall be calculated at 7% fixed interest
plus actual commitment fees on the underlying leveraged debt. During the first
three years of such sublease, the sublease agreement will provide that GLI
Operating and the Companies will be
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<PAGE> 17
entitled to work stoppage relief for their sublease payments for 1979 and 1980
buses under capital leases and for their sublease payments for 1981 and 1982
buses leased from Security Pacific by permitting GLI Operating and the Companies
to make such payments by the execution of a one year promissory note bearing
interest at the same rate as the Junior Notes. Such notes will be permitted for
up to a maximum of six months of sublease payments.
3. CLOSING.
3.1 Closing. The parties hereto shall consummate the transactions
contemplated hereby and by the Merger Agreement ("Closing") on a date and at a
time specified by GLI Holding by at least ten days prior written notice to
Seller or, if no notice is sent by GLI Holding, then at 1:00 p.m., Phoenix,
Arizona time, on March 18, 1987 or such later date to which the Termination Date
(as hereinafter defined) may be extended ("Closing Date") at the offices of
Seller at Greyhound Tower, 111 West Clarendon, Phoenix, Arizona. As a part of
the Closing, the parties shall cause a certificate of merger (including the
Merger Agreement) to be executed and delivered and filed in the office of the
Secretary of State of Delaware in accordance with the Delaware General
Corporation Law. The Closing shall not be deemed consummated unless and until
such certificate of merger has been duly filed.
3.2 Closing Deliveries. At Closing:
(a) Seller shall cause to be delivered or made available to GLI
Holding:
(i) The officer's certificate required by Section 8.3 hereof;
(ii) The legal opinion required by Section 8.4 hereof;
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<PAGE> 18
(iii) The approvals and consents required by Section 8.7 hereof;
(iv) All documents required to transfer control of all bank
accounts and bank deposit boxes of Seller, GLI Operating, and the
Companies (except those specified as Retained Assets);
(v) Fully executed originals of the Noncompetition Agreement
substantially in the form of Exhibit G hereto;
(vii) A certified copy of the resolutions of the Board of Directors
of Greyhound, Seller and GLI Operating authorizing the transactions
contemplated by this Agreement and the Merger Agreement;
(viii) Incumbency certificates certifying the authority and
signatures of all persons executing the Agreement and all documents
contemplated thereby on behalf of Seller;
(ix) such other agreements and documents as may be required by this
Agreement or reasonably requested by GLI Holding to evidence compliance
by Greyhound, Seller, or GLI Operating with the terms of this Agreement;
and
(x) the Merger Agreement executed by GLI Operating and the consent
of Seller, as the sole shareholder of GLI Operating, to the terms and
conditions contained in the Merger Agreement and to the consummation of
the transactions contemplated by the Merger Agreement.
(b) GLI Bus shall cause to be delivered to Seller:
17
<PAGE> 19
(i) The Consideration required to be paid pursuant to the Merger
Agreement;
(ii) The officer's certificate required by Section 9.3 hereof;
(iii) The legal opinion required by Section 9.4 hereof;
(iv) The approvals required by Section 9.6 hereof;
(v) A certified copy of the resolutions of the Boards of Directors
of GLI Holding, GLI Bus and GLI Merger authorizing the transactions
contemplated by this Agreement;
(vi) Incumbency certificates certifying the authority and
signatures of all persons executing the Agreement and all documents
contemplated thereby on behalf of GLI Holding, GLI Bus and GLI Merger;
(vii) Such other agreements and documents as may be required by
this Agreement or reasonably requested by Seller to evidence compliance
by GLI Holding, GLI Bus and GLI Merger with the terms of this Agreement;
and
(viii) The Merger Agreement executed by GLI Merger and the consent
of GLI Bus, as the sole shareholder of GLI Merger, to the terms and
conditions contained in the Merger Agreement and to the consummation of
the transactions contemplated by the Merger Agreement.
3.3 Further Instruments and Assistance. Without further consideration,
Greyhound or Seller at any time shall execute and deliver such further
instruments of transfer and assignment and
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<PAGE> 20
take such other action as GLI Holding may reasonably request to comply with the
terms of this Agreement and take such other actions as GLI Holding may
reasonably request to vest in the Companies or GLI Operating title to and
ownership of all of the Sale Assets.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND GREYHOUND.
Seller and Greyhound represent and warrant to GLI Holding, GLI Bus and GLI
Merger, subject to the exceptions listed on Exhibit H, that:
4.1 Merger Agreement. Except as described in Schedule 4.1, Greyhound,
Seller, and GLI Operating have the full power, authority, and right to enter
into this Agreement and to perform their respective obligations hereunder; and
this Agreement constitutes a valid and binding obligation upon Greyhound,
Seller, and GLI Operating, enforceable in accordance with its terms. The
execution, delivery, and performance of this Agreement and of all the documents
and instruments required hereby from Greyhound, Seller, or GLI Operating have
been duly authorized by all necessary corporate action of Greyhound, Seller, or
GLI Operating, as appropriate. The documents and instruments required hereby
when executed and delivered by Greyhound, Seller, or GLI Operating will be the
valid and binding obligations of Greyhound, Seller, or GLI Operating enforceable
against Greyhound, Seller, or GLI Operating, as appropriate, in accordance with
their respective terms.
4.2 Capitalization. The total authorized capital stock of GLI Operating
consists of 5,000,000 shares of common stock, $.01 par value, of which only the
Shares have been duly and validly issued to Seller and are presently
outstanding, and 10,000,000 shares of Preferred Stock, $.01 par value, none of
which are outstanding. The total authorized capital stock of each of the
Companies consists of 1,000 shares of common stock, $1.00 par
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<PAGE> 21
value, all of which have been duly and validly issued to GLI Operating and are
currently outstanding (collectively, the "Company Shares"). All the Shares and
Company Shares are fully paid for and non-assessable. On the Closing Date,
Seller will own good, valid and marketable title to the Shares, and GLI
Operating will own good, valid and marketable title to the Company Shares, free
and clear of any and all mortgages, liens, encumbrances, charges, claims,
restrictions, pledges, security interests or impositions. Upon consummation of
the Closing, GLI Bus will own all the outstanding capital stock of GLI
Operating, and GLI Operating will own all the outstanding capital stock of the
Companies, free and clear of all mortgages, liens, encumbrances, charges,
claims, restrictions, pledges, security interests or impositions. Except as
contemplated by this Agreement, no rights or agreements for the purchase or
acquisition from, or sale or issuance by, GLI Operating or any of the Companies
of any shares of their capital stock are outstanding and no authorization
therefor is in effect.
4.3 No Breach. Except as described on Schedule 4.3, Greyhound's, Seller's,
and GLI Operating's execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (a) result in the
breach of any of the terms or conditions of, or constitute a default under, the
charter documents or the Bylaws of Greyhound, Seller, GLI Operating, or the
Companies or any indenture or mortgage to which any of them is a party or any
material contract, commitment, pledge, note, bond or other instrument or
obligation to which any of them is now a party or by which any of them or any of
their properties or assets may be bound or affected, or (b) violate any material
law or any material rule or regulation of any administrative agency or
governmental body or any order, writ, injunction or decree of any court,
administrative agency or governmental body to which Greyhound, Seller, GLI
Operating or the Companies are subject.
20
<PAGE> 22
4.4 Corporate Status. GLI Operating is duly authorized, validly existing
and in good standing under the laws of Delaware. Each of the Companies and
Seller is duly organized, validly existing and in good standing under the
corporation laws of the States of Arizona and California, respectively. Each of
the Companies and Seller is, and at the Closing Date GLI Operating will be, duly
licensed, qualified or domesticated as a foreign corporation and in good
standing under the corporation laws of each jurisdiction specified in Schedule
4.4 with respect to each such company. Neither the character nor location of the
properties owned by any of GLI Operating or the Companies nor the nature of the
business of any of the Companies requires any of them to be licensed or
qualified under the laws of any other jurisdiction where the failure to be so
licensed or qualified would have a material adverse effect upon the business of
GLI Operating and the Companies taken as a whole. Except as described on
Schedule 4.4, GLI Operating and the Companies have full power and authority to
carry on their business and to own and operate their assets, properties, and
business.
4.5 Financial Statements; Changes. The Pro forma consolidated and
consolidating balance sheet and balance sheet detail of Seller and the Companies
contained in Schedule 4.5 are true and correct in all material respects and were
prepared in accordance with generally accepted accounting principles
consistently applied with the principles used in preparing the consolidated and
consolidating balance sheet and balance sheet detail of Seller as of December
31, 1985, except for normal year-end adjustments, and present fairly the
consolidated financial position of Seller and the Companies as of August 31,
1986. Except as set forth on Part II of Schedule 4.5 hereto, since August 31,
1986 there has not been: (a) any material adverse change in the Sale Assets or
the business, operations, financial condition or prospects of the Companies and
GLI Operating taken as a whole; (b) any borrowings by GLI Operating or the
Companies other than advances from Seller made in the normal
21
<PAGE> 23
course of business; (c) any mortgage, pledge, lien or encumbrance of or with
respect to any of the Sales Assets or assets of GLI Operating or the Companies,
except those incurred in the normal course of business; (d) any sale, transfer
or other disposition of the Sale Assets, except those incurred in the ordinary
course of business (e) any waiver, releases or termination of any material right
or claim of the Companies; (f) any capital expenditure not in the ordinary
course of business; or (g) any payment by GLI Operating or the Companies to any
of their affiliates (other than pursuant to a contract described in Schedule
4.8).
4.6 Owned and Leased Real Property. Schedule 4.6 contains a list of all
real estate included in the Sale Assets that is owned or leased or to be owned
or leased (including in each case of leased property, the name of the lessor,
termination date, annual rental, and whether or not there is a renewal option).
GLI Operating, the Companies and Seller, as the case may be, have good and
marketable title to all such owned real property free and clear of all third
party security interests, liens, encumbrances, restrictions and other burdens,
except (i) as described in Schedule 4.6, and (ii) except for the following:
(a) Any and all rights of the public and of the federal and any state,
county, and municipal governments and any other political subdivisions
acquired, assigned, condemned, dedicated, granted, leased, retained, taken
and/or used for any and all governmental, public or other purposes of any
nature, whatsoever;
(b) General taxes and special assessments for the year 1986 if not yet
delinquent, and all years subsequent thereto;
(c) Any and all recorded or unrecorded assignments, easements, grants,
leases, licenses, reservations, rights-of-
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way, and the rights and/or privileges, by prescription or otherwise, for
the construction, installation, maintenance, use, operations, repair,
extension, renewal and removal of public and private alleys, crossings,
highways, overhead runways, roadways, sidewalks, streets, tunnels,
railways, and viaducts and water, sewage, storm sewers, drains, gas,
electricity, steam and any and all other service and utility lines,
conduits, drains, pipes, wires, fixtures, poles and any and all other
services or utility facilities, and for the emission or passage of any
dust, odor, fumes, smoke or other solid, liquid or gaseous matter;
(d) Any and all laws, ordinances or governmental regulations now or
hereafter in force (including building and zoning ordinances) limiting or
regulating the use or enjoyment of the above-described premises or the
character, size, use or location of any improvement now or hereafter
erected thereon;
(e) Any and all encroachments, overlaps, boundary line disputes and
any matters which a correct survey and/or inspection of the above described
premises would disclose;
(f) Any and all rights of parties in possession, be it actual or
constructive;
(g) Any and all party wall agreements and rights accruing thereunder;
and
(h) Judgments, mechanics' liens and liens of a similar nature, which
Seller agrees to dispose of or indemnify each of GLI Operating and the
Companies against in a manner satisfactory to GLI Holding prior to the
Closing;
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provided items (a) through (h) do not materially impair the use of any one or
all of such real property or result in title no longer being good and
marketable.
Seller will make available to GLI Holding prior to Closing copies of all title
insurance policies, lawyers' abstract opinions and surveys held in Seller's
possession with respect to all such real property, together with copies of all
documents relating to any third party security interests, liens, encumbrances,
restrictions or other burdens disclosed on Schedule 4.6. (GLI Holding
acknowledges that (a) the policies, abstract opinions and surveys referred to
are not current, and (b) that GLI Holding and Seller shall agree to descriptions
of the real properties of Seller being transferred hereunder to the extent
necessary prior to Closing). Seller will make available to GLI Holding prior to
Closing true and correct copies of all leases listed on Schedule 4.6 hereto.
Except as described on Schedule 4.6 hereto, neither Seller, GLI Operating, nor
any of the Companies has received written notice of default under any such
leases; none of such leases are in default in any material respect or have been
assigned, mortgaged, or encumbered by seller, GLI Operating, or any of the
Companies; and all such leases constitute legal, valid, and binding obligations
of the respective parties thereto. All buildings, structures and other
improvements located on any owned parcel of real estate listed on Schedule 4.6
hereto are, in all material respects, being used and occupied in substantial
compliance with, and conform in all material respects to, all building, zoning,
use and occupancy laws, codes, ordinances, rules, regulations, and restrictions,
whether federal, state, or local (including all such laws that relate to
environmental or safety matters).
4.7 Owned and Leased Tangible Personal Property. Schedule 4.7 contains (a)
a list of fixed assets included in the Sale Assets; (b) a description of
tangible personal property
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included in the Sale Assets not owned by GLI Operating or the Companies but in
their possession or used in their business and having rental payments therefor
in excess of $50,000 per year; and (c) as to all such tangible personal property
not owned by GLI Operating or the Companies but listed on Schedule 4.7, the name
of the lessor or owner, termination date, monthly rental, and whether or not
there is a renewal option. Except as indicated in Schedule 4.7 or in Schedule
4.6, GLI Operating or one of the Companies has good and marketable title to the
personal property included in the Sale Assets free and clear of all material
third party security interests, liens, encumbrances, restrictions, and other
burdens, except:
(a) As may be imposed by governmental regulations relating to use;
(b) Liens in connection with workmen's compensation or in connection
with unemployment insurance and other social security taxes, and liens
which secure the performance of trade contracts, leases, statutory
obligations, and mechanics', carriers', workmen's, repairmen's and other
obligations of like nature made in the normal course of business;
(c) Liens for unpaid taxes which are not delinquent or which are being
contested in good faith; and
(d) Liens of vendors for any unpaid portion of the purchase price of
any equipment, other than buses, acquired by the Companies in the ordinary
course of business;
provided items (a) through (d) do not materially impair the use of any one or
more items of such personal property or result in title no longer being good and
marketable.
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Except as indicated in Schedule 4.7, the Companies, GLI Operating and Seller
hold and use all tangible personal property, if any, included in the Sale Assets
not owned by them but listed on such Schedule:
(a) Free and clear of all material third party security interests,
liens, encumbrances, restrictions and other burdens except lessor's
interests; claims under bailment and storage agreements; and liens, if any,
for personal property taxes which are not delinquent or which are being
contested in good faith;
(b) In substantial compliance with all material zoning and use laws,
codes, ordinances, rules, regulations, and restrictions, whether federal,
state, or local (including all such laws that relate to food and drug,
health, environmental or safety matters); and
(c) In accordance with a lease or other agreement which is in full
force and effect and constitutes a legal, valid, and binding obligation of
its respective parties, and neither GLI Operating, Seller nor any of the
Companies has received any notice of default under any such lease or
agreement and none of such leases or agreements are in default by any party
thereto.
Schedule 4.7 lists all buses included in the Sale Assets owned or leased by
Seller, GLI Operating or the Companies, and the make, model, year of
construction, and seating capacity of each such motor vehicle. Such buses have
been maintained in accordance with Seller's standard preventive maintenance
standards which are in conformance in all material respects with the regulations
of each governmental authority having jurisdiction with respect thereto.
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The Sale Assets, taken as a whole, are in such operating condition and
repair, subject to ordinary wear and tear, and consistent with industry
practices, as to be substantially fit for the purposes for which they are
currently being utilized. EXCEPT AS EXPRESSLY SET FORTH HEREIN, SELLER DOES NOT
MAKE ANY REPRESENTATIONS OR WARRANTIES TO GLI HOLDING, GLI BUS OR GLI MERGER,
EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, AND GLI HOLDING, GLI BUS AND GLI MERGER
ACKNOWLEDGE THAT THE SALE ASSETS SHALL BE IN AN AS IS WHERE IS CONDITION,
SUBJECT ONLY TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.
4.8 Certain Contracts. Schedule 4.8 is a list of (a) those contracts of
Seller, GLI Operating, and the Companies included in the Sale Assets or which
are Continuing Liabilities which are material to the business of GLI Operating
and the Companies and which have been entered into other than in the ordinary
course of business, (b) all contracts included in the Sale Assets or which are
Continuing Liabilities which are between Seller, GLI Operating and the
Companies, on the one hand, and Greyhound or any affiliate of Greyhound, on the
other hand, and (c) any guarantees or similar obligations of Greyhound, Seller,
GLI Operating, or any of the Companies which are Continuing Liabilities. All of
such contracts and other material contracts included in the Sale Assets or which
constitute Continuing Liabilities are legally binding and in effect and none of
the parties to such contracts has given written notice to terminate any of such
contracts. Except as described on Schedule 4.8, GLI Operating and the Companies
have substantially performed each material term, covenant, and condition of each
of such contracts and other material contracts included in the Sale Assets or
which constitute Continuing Liabilities to be performed by GLI Operating and the
Companies required to be performed as of the date hereof and will have
substantially performed as of the Closing Date such terms, covenants and
conditions required to be
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performed as of the Closing Date. No event has occurred under any of such
contracts and other material contracts included in the Sale Assets or which
constitute Continuing Liabilities which constitutes a default or would
constitute a default thereunder but for the requirement that notice be given or
time elapse or both and which would have a material adverse effect on GLI
Operating and the Companies taken as a whole. No contract, lease, or other
agreement included in the Sales Assets or Continuing Liabilities (collectively,
"Contracts") provides for any guaranteed or assured tax-benefit or after-tax
yield to any third party, except such as may arise from acts or omissions of
Seller or its affiliates (none of which acts or omissions has occurred). All
Contracts which are commission agent agreements with respect to bus terminals
may be cancelled by GLI Operating after the Closing on notice of six months or
less without penalty. No Contract, including interline and industry agreements,
is unduly burdensome or contains terms which are adversely unusual or otherwise
not customary in the industry in any material respect. None of the Contracts
between Seller, GLI Operating, and any of the Companies, on the one hand, and
Greyhound or any affiliate of Greyhound (other than among the Companies), on the
other hand, is less favorable to Seller, GLI Operating, or any of the Companies
in any material respect than could have been obtained in an arm's length
transaction with a non-affiliated party. GLI Holding acknowledges that the bus
purchase agreements referred to in Section 2.8 hereof meet such criteria.
4.9 Proprietary Marks.
(a) Schedule 4.9 sets forth a list of all material registered
trademarks, trade names, service marks, or logo types thereof of Greyhound
("Proprietary Marks") that GLI Operating and the Companies utilize in the
conduct of the business of GLI Operating and the Companies and an
indication of the nature of such right, license, or interest in each
instance;
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(b) Schedule 4.9 lists all current agreements which restrict or limit
GLI Operating or the Companies, Seller or Greyhound in any material way
from domestic use of any of the Proprietary Marks;
(c) Schedule 4.9 lists all controversies, with the specific exclusion
of official trademark office objections, pending or, to the knowledge of
Seller threatened, or which reasonably could rise out of facts and
circumstances now known to Seller, which involve the infringement,
validity, or ownership of the Proprietary Marks or in which the Proprietary
Marks are involved in questions of infringement, validity, or ownership of
third party-owned properties, and with respect to which an adverse result
would have a material adverse effect on GLI Operating and the Companies
taken as a whole; and
Except as set forth in Schedule 4.9:
(a) Certificates or instruments evidencing title of record in
Greyhound to the Proprietary Marks are in the possession of Greyhound;
(b) All registrations of the Proprietary Marks are subsisting on the
trademark registers set forth in Schedule 4.9 and are in full force and
effect and all applications listed in Schedule 4.9 are pending in the
trademark offices of such jurisdictions;
(c) Greyhound is the direct and unrestricted owner of all right,
title, and interest in and to the Proprietary Marks and in and to the
registrations thereof and applications therefor listed in Schedule 4.9, and
no such right, title and interest has been mortgaged, pledged, transferred,
assigned or, except as set forth in Schedule 4.9, licensed to any third
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<PAGE> 31
party or is held subject to any trust or similar right in favor of any
third party; and
(d) The Proprietary Marks comprise all the material trademarks and
trade names (including all applications, registrations, extensions, and
renewals thereof) which are necessary to permit the continuation of GLI
Operating's and the Companies' operations in the same manner as now
conducted.
4.10 Taxes. Except as set forth in Schedule 4.10 hereto:
(a) Seller has or will have, or has or will have caused GLI Operating
and the Companies to have, for all periods ending on or before the Closing
Date, duly and timely filed all tax returns required to be filed by them or
for which they may be held responsible and have paid or provided for all
taxes shown to be due and payable;
(b) All federal, state, and local income and franchise tax returns
(including without limitation any information returns) of the Companies and
GLI Operating have been audited by the taxing authorities and all taxes,
deficiencies, penalties, additions to tax, interest, and assessments
affecting each such entity for any year covered by any such return have
been finally determined and paid;
(c) There are no agreements, waivers, or other arrangements providing
for an extension of time with respect to the filing of any tax returns by
GLI Operating and the Companies or the payment by, or assessment against,
GLI Operating and the Companies of any tax, governmental charge, duty,
penalty, additions to tax, interest, or deficiency;
(d) There are no suits, actions, claims, investigations, inquiries, or
proceedings pending or threatened against
30
<PAGE> 32
GLI Operating and the Companies in respect of taxes, governmental charges,
duties, penalties, interest, deficiencies or assessments, or any material
matters under discussion between GLI Operating or the Companies and any
governmental authority relating to taxes, governmental charges, duties,
penalties, interest or assessments, or any claims for additions to tax,
governmental charges, duties, or assessments asserted by any such
authority; and
(e) No election under section 341(f) of the Internal Revenue Code of
1986 has been or will be filed by or on behalf of GLI Operating or any of
the Companies.
4.11 Benefit Plans.
None of GLI Operating or the Companies is a party to any "employee welfare
benefit plan" or "employee pension benefit plan" (as defined in Sections 3(1)
and 3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA"), or
any other plan, practice, or policy providing for fringe benefits to officers,
directors, or employees ("Benefit Plans") as of the date hereof. Seller shall be
responsible for and will indemnify GLI Operating and the Companies for all
liabilities arising with respect to any Benefit Plans of the Seller prior to the
Closing Date.
4.12 Suits, Claims. Except as disclosed in Schedule 4.10 or Schedule 4.12,
there is (a) no suit, action, or claim, (b) no investigation or inquiry by any
administrative agency or governmental body, (c) no state of facts known to
Greyhound, and (d) no legal, administrative or arbitration proceeding pending
or, to the knowledge of Greyhound, threatened against GLI Operating or any of
the Companies or any of the properties, assets, or business of GLI Operating or
any of the Companies, the outcome of which could reasonably be expected to have
a material adverse effect on the assets
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or business of GLI Operating and the Companies taken as a whole. Except as
disclosed in Schedule 4.12, there is no outstanding order, writ, injunction, or
decree of any court, administrative agency or governmental body or arbitration
tribunal against or affecting Seller, GLI Operating, and the Companies or any of
the properties, assets, or business of GLI Operating or the Companies which
could reasonably be expected to have a material adverse effect on the assets or
business of GLI Operating and the Companies taken as a whole.
4.13 Government Permits. Except as disclosed in Schedule 4.4 or Schedule
4.13, GLI Operating and the Companies have in the aggregate all material
governmental licenses, titles, certificates, franchises, and permits necessary
to conduct the business of GLI Operating and the Companies. Such licenses,
titles, certificates, franchises, and permits are in full force and effect, and
no material violations exist or have been recorded in respect of any of them.
4.14 Compliance with Law. Except as disclosed in any Schedule, GLI
Operating and the Companies are in substantial compliance with all applicable
laws, rules, regulations, ordinances, codes, orders, licenses, and permits
applicable to the conduct of their business or assets, the noncompliance with
which would affect materially and adversely business of GLI Operating and the
Companies as a whole.
4.15 No Broker. Except for the retention of Morgan Stanley & Co.
Incorporated, neither Greyhound, Seller nor GLI Operating has retained any
broker or other intermediary to act on its behalf in connection with the
transactions contemplated by this Agreement. Greyhound and Seller shall be
solely liable for any payment due to Morgan Stanley & Co. Incorporated by reason
of the consummation of the transactions contemplated hereby.
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4.16 Availability of Documents. Seller has prior to the actual date of
execution of this Agreement made available for inspection by GLI Holding and its
representatives true, correct, and complete copies of the charter documents and
By-laws of GLI Operating and the Companies and all written agreements,
arrangements, commitments, and documents referred to herein or in any Schedule
hereto, in each case, together with all amendments and supplements thereto.
Seller has heretofore made available for inspection by GLI Holding and its
representatives the corporate minute books of GLI Operating and the Companies.
Such corporate minute books contain, or at Closing will contain, the minutes of
all the meetings of stockholders, board of directors, and any committees which
have been held on or before the actual date of execution hereof and all written
consents to action executed in lieu thereof.
4.17 Investment Intent. Greyhound and Seller are acquiring all the
securities to be acquired pursuant to this Agreement and the Merger Agreement or
in connection with the purchase of certain of the trademarks for investment only
and with no present intention of distributing such securities.
4.18 Completeness and Accuracy of Information. Neither the representations
and warranties of Greyhound and Seller in this Agreement (including the
information contained in the schedules hereto) nor the Pro Forma Balance Sheet
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein not misleading under the
circumstances. In the case of the Pro Forma Balance Sheet, GLI Holding
recognizes that such statements were prepared from internal financial statements
which were unaudited and had been prepared on a different basis and for
different purposes. Accordingly, such financial statements reflect a number of
allocations, assumptions and estimates, all of which have been made in good
faith and on rea-
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sonable bases, consistent with generally accepted accounting principles.
5. REPRESENTATION AND WARRANTIES OF GLI HOLDING.
GLI Holding represents and warrants to Greyhound and Seller as follows:
5.1 Corporate Status. Each of GLI Holding, GLI Bus and GLI Merger is a
corporation duly authorized, validly existing and in good standing under the
laws of the State of Delaware. Each of GLI Holding, GLI Bus and GLI Merger has
full power and lawful authority to carry on its business as presently conducted
and to own and operate its assets, properties, and business.
5.2 Authorization. The execution, delivery and performance of this
Agreement and the Merger Agreement by GLI Holing, GLI Bus and GLI Merger, as the
case may be, and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action of GLI
Holding, GLI Bus and GLI Merger, and this Agreement and the Merger Agreement
constitutes a valid and binding obligation upon GLI Holding, GLI Bus and GLI
Merger enforceable in accordance with their respective terms.
5.3 No Litigation. As of the date hereof, there is (a) no suit, action, or
claim, (b) no investigation or inquiry by any administrative agency or
governmental body, and (c) no legal, administrative, or arbitration proceeding
pending or, to the knowledge of GLI Holding, threatened against GLI Holding, GLI
Bus or GLI Merger or any of their respective properties, assets, or business, in
each case which seeks to terminate, modify, or affect this Agreement or the
consummation of the transactions contemplated herein or therein.
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5.4 No Breach. GLI Holding's, GLI Bus' and GLI Merger's signing, delivery,
and execution of this Agreement, the Merger Agreement and the consummation of
the transactions contemplated hereby and thereby will not (a) result in the
breach of any of the terms or conditions of, or constitute a default under, the
charter documents or the Bylaws of GLI Holding, GLI Bus of GLI Merger, or any
material indenture or mortgage, to which GLI Holding, GLI Bus and GLI Merger is
a party or any material contract, commitment, pledge, note, lease, license or
other instrument or obligation to which GLI Holding, GLI Bus or GLI Merger now
is a party or by which GLI Holding, GLI Bus or GLI Merger or any of the
properties or assets of GLI Holding, GLI Bus or GLI Merger may be bound or
materially affected, or (b) violate any material law or any material regulation
of any administrative agency or governmental body, or any order, writ,
injunction, or decree of any court, administrative agency or governmental body
which is expressly applicable to GLI Holding, GLI Bus or GLI Merger.
5.5 Labor Contract. GLI Holding acknowledges that Seller's labor contract
with the Amalgamated Transit Union expired on October 31, 1986 (but has been
extended subject to the right to terminate such contract on 72 hours prior
written notice and further extended subject to ratification to March 19, 1987)
and that Seller has made no representations or warranties and has given no
opinion as to the effect of such expiration with respect thereto.
5.6 Investment Intent. GLI Bus is acquiring the shares of GLI Operating for
investment only and with no present intention of distributing such shares.
5.7 No Broker. Neither BusLease, Inc., GLI Holding, GLI Bus nor GLI Merger
has retained any broker or other intermediary to act on their behalf in
connection with the transactions contemplated by this Agreement.
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6. PRECLOSING EMPLOYEE MATTERS.
6.1 Employees. The Companies and GLI Operating presently have no employees
and, except for employees hired by or with the consent of GLI Holding, the
Companies and GLI Operating will not have any employees at Closing.
6.2 Employees and Benefits Generally.
(a) Following the Closing, Seller shall retain the obligation to
administer all pension benefits accrued through the Closing Date under The
Greyhound Employees' Retirement Income Plan ("GRIP") for each employee who
participates in GRIP. Each of GLI Holding and the Companies may establish
its own benefit plans.
(b) Following the Closing, Seller shall continue to administer all
benefits accrued under the Greyhound Employees' Capital Accumulation Plan
("TRIM") for each employee who participates in TRIM. Each of GLI Holding
and the Companies may establish its own employee capital accumulation plan.
(c) On and after the Closing Date, employees of GLI Operating and the
Companies, if any, shall cease to participate and accrue benefits in all
Benefit Plans. Any benefit entitlement under the Benefit Plans for service
prior to the Closing Date shall be provided by Seller pursuant to the terms
of the Benefit Plans.
6.3 Transferee Liability. GLI Operating, the Companies, GLI Holding, GLI
Bus and GLI Merger will have no transferee withdrawal liability with respect to
any multiemployer plan as defined in Section 4001(a)(3) of ERISA and no
transferee plan termination obligation under Title IV of ERISA as a result of
the inclusion of GLI
36
<PAGE> 38
Operating and the Companies in the consolidated group of which Seller is the
common parent. In the event that any such transferee liability becomes payable
by GLI Operating, the Companies, GLI Holding, GLI Bus and GLI Merger, such
liability shall be indemnified by Seller.
7. PRECLOSING AND OTHER COVENANTS AND CONDITIONS.
Except as contemplated and described in the schedules to this Agreement or
in this Agreement or otherwise consented to in writing by GLI Holding or Seller,
as appropriate, or as provided in this Agreement, from the date of this
Agreement until the Closing, the parties agree that:
7.1 Business in Ordinary Course. Seller and GLI Operating shall operate the
business of each of the Companies and GLI Operating in the ordinary course.
7.2 Change in Constituent Documents. No change will be made in the Articles
of Incorporation or the Bylaws or other constituent documents of the Companies
and GLI Operating.
7.3 Accounting Methods. Except as required by law, regulation, or generally
accepted accounting principles, no significant change will be made in the
accounting policies and practices followed by the Companies or GLI Operating or
in the depreciation or amortization or property valuation policies, rates, or
methods heretofore used or adopted.
7.4 Capital Changes. Neither Seller, GLI Operating nor the Companies shall
issue or sell rights to subscribe to, or enter into any arrangement or contract
with respect to, any shares of the Companies' or GLI Operating's capital stock
or other equity securities, or make any other changes in the Companies' or GLI
Operating's equity structure.
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7.5 Contracts. No Contracts, agreements, or commitments shall be entered
into by or on behalf of any of the Companies or GLI Operating except contracts,
agreements, or commitments made by any of the Companies or GLI Operating or by
Seller on behalf of any of the Companies or GLI Operating with unaffiliated
third-parties in the ordinary course of business.
7.6 Consultation with GLI Holding. To the fullest extent practicable,
Seller, GLI Operating, and the Companies will cause their senior executive
officers to consult with and consider the views of GLI Holding prior to entering
into, terminating, or substantially modifying any material commitments, pension
plans or contracts (other than with respect to collective bargaining agreements)
respecting any of the Companies' or GLI Operating's businesses or any of the
Sale Assets.
7.7 Default. Seller, GLI Operating, and each of the Companies will use all
reasonable effort so as not to default under or become in material breach of any
term or provision of, or suffer or permit to exist any condition or event which,
after notice or lapse of time or both, would constitute a breach of any material
contract respecting any of the Companies' or GLI Operating's business.
7.8 Employees and Compensation. Except as consented to by GLI Holding, none
of the Companies nor GLI Operating will hire any personnel for employment and
none of the Companies nor GLI Operating will adopt any benefit Plans.
7.9 Preserve Business and Assets. GLI Operating and Seller will or will
cause each of the Companies and GLI Operating to use reasonable efforts to
preserve the Sale Assets and business of each of the respective Companies and
GLI Operating, and to preserve the goodwill of agents, lessees, lenders, joint
venturers, licensees,
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and customers having business relations with each of the Companies and GLI
Operating.
7.10 Insurance. The Companies, Seller, or GLI Operating will cause to be
maintained in effect insurance consistent with industry practices with respect
to the business of the Companies and GLI Operating and the Sale Assets and cause
to be obtained renewals thereof or substitutions therefor for periods prior to
Closing, and will not default with respect to any provision of, and will give
all notices and present all claims under, all such insurance policies in due and
timely fashion. GLI Holding shall obtain and maintain insurance with respect to
the business of the Companies and GLI Operating and the Sale Assets after
Closing consistent with sound business practices.
7.11 Government Reports. The Companies and GLI Operating duly and timely
will file all reports required to be filed with governmental authorities and
others and duly and timely will observe and conform to all laws, rules,
regulations, ordinances, codes, orders, licenses, permits, approvals, and
certifications relating to any of their properties or applicable to the business
of the Companies and GLI Operating, the failure of which to so observe and
conform to would in the aggregate materially and adversely affect the business
of the Companies and GLI Operating taken as a whole.
7.12 Tax Returns. Each of the Companies and GLI Operating will duly and
timely file all tax returns required to be filed by it or for which it may be
held responsible and shall pay all taxes shown to be due and payable on such
returns, provided that the Companies may contest in appropriate proceedings any
tax, governmental charge, duty, or assessment; and each of the Companies, GLI
Operating and Seller will withhold from each payment made to each of its
employees, if any, the amount of all taxes (including, but not limited to,
Federal income taxes and Federal Insurance
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<PAGE> 41
Contribution Act taxes and state and local income, wage, disability,
unemployment, and similar taxes) required to be withheld therefrom and will pay
the same, before becoming delinquent, to the proper tax receiving officers.
7.13 Access. The Companies, Seller, and GLI Operating will permit GLI
Holding's representatives full access during normal business hours throughout
the period prior to the Closing to all of the Companies', Seller's and GLI
Operating's offices, records, and documents relating to the Sale Assets and the
business of the Companies and GLI Operating; and the Companies, Seller, and GLI
Operating promptly will furnish to GLI Holding copies of all documents and
information concerning them as GLI Holding reasonably may request.
7.14 Consents. GLI Holding and Seller, acting together, will use their
best efforts to obtain all consents, waivers, approvals, and agreements of other
parties or governmental authorities which are necessary to the consummation of
the transactions contemplated by this Agreement.
7.15 Releases. GLI Holding and Seller, acting together, will use their
best efforts to obtain or make arrangements to obtain releases of comfort
letters, letters of credit, guarantees, or similar facilities referred to in
Section 11.2 hereof.
7.16 Update Schedules. Prior to Closing, Seller shall disclose to GLI
Holding any information contained in Seller's representations and warranties or
the Schedules (other than Schedule 4.5) which, because of an inadvertent
omission or event occurring after the date hereof, is incomplete or is no longer
correct in some material respect as of the time of delivery of such information.
Except for purposes of Section 8.1, subsequent to the Closing the
representations and warranties of Greyhound and Seller herein shall
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be deemed modified by the information disclosed pursuant to this section.
7.17 Financing. Seller shall and shall cause GLI Operating and the
Companies to cooperate with GLI Holding in effecting the funding of GLI Holding
financing of this transaction, including without limitation approval and
execution of such documents, at the Closing, as GLI Holding may reasonably
request, but in no event shall Greyhound or Seller be required to incur any
obligation with respect to such financing. GLI Holding shall obtain Financing
for this transaction.
7.18 Exclusivity. GLI Holding shall have the exclusive right through the
close of business on the date this Agreement terminates to consummate the
transaction contemplated herein, and during such exclusive period, neither
Greyhound, Seller, the Companies, GLI Operating, nor any of their authorized
representatives will solicit, accept, or encourage any other offer to purchase
any capital stock of GLI Operating or any Company, any of the Sale Assets, or
all or any significant part of the business of the Companies or GLI Operating or
any similar transaction, except for sales in the ordinary course of business,
nor hold discussions or negotiations with, or provide any information to any
other individual or corporation, partnership, or other entity concerning any
such sales or transactions.
7.19 Acquisition of Buses. The Companies, in the aggregate, will have
received during the period from January 1, 1986 to the Closing Date, 275 new TMC
1986 Model MCI 102A3 buses (all of which buses will have available to the
Companies the full remaining warranties customarily provided by the bus
manufacturer to purchasers of new buses), and will have received prior to the
Closing Date from Seller all of the training buses owned by Seller, all historic
buses, and 16 capital lease buses subleased or previously subleased
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to Vermont Transit Co., Inc. all of which buses (except for the capital lease
buses) will be owned by the Companies at Closing free and clear of any debt,
liens, claims, encumbrances, or security interests, unless sold to and leased
back from BusLease, Inc. or any of its subsidiaries.
7.20 Change of Name of Seller. Promptly after the Closing, Seller will
change its name from Greyhound Lines, Inc. to "Transportation Leasing Co." or a
similar name and will give all consents and take all other action, at the
expense of GLI Holding, necessary to permit GLI Operating to change its name to
"Greyhound Lines, Inc." and to qualify GLI Operating to do business under such
name in the United States. From and after the Closing neither Seller nor
Greyhound nor any of their affiliates will use in the United States the name
"Greyhound Lines" or any deceptively similar name without the permission of GLI
Holding, except as provided in the Operations Agreement.
7.21 GLI Holding Financial Information. As long as Greyhound holds more
than 15% of the outstanding shares of GLI Holding Stock, the Junior Notes or the
Preferred Stock, GLI Holding will send within 60 days after the end of each
fiscal quarter consolidated financial information of GLI Holding relating to
such fiscal quarter and will send within 90 days after the end of each fiscal
year audited consolidated financial information of GLI Holding relating to such
fiscal year.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF GLI HOLDING.
Subject to waiver pursuant to Section 12.6 hereof, all obligations of GLI
Holding, GLI Bus and GLI Merger under this Agreement and the Merger Agreement
are subject to the fulfillment on the Closing Date of each of the following
conditions:
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8.1 Representations and Warranties. Each representation and warranty of
Greyhound and Seller hereunder shall be true and accurate in all material
respects on the Closing Date in the same manner as if it were made again at and
as of the Closing Date.
8.2 Performance by Seller. Greyhound, Seller and GLI Operating shall have
performed and complied in all material respects with each and every covenant,
agreement, and condition required by this Agreement to be performed and complied
with by it on or before the Closing Date.
8.3 Officer's Certificate. Seller shall have delivered to GLI Holding, GLI
Bus, and GLI Merger a certificate of an executive officer of Greyhound and
Seller, dated as of the Closing Date, certifying on behalf of Greyhound and
Seller that the conditions set forth in Sections 8.1 and 8.2 hereof have been
fulfilled.
8.4 Legal Opinion. Greyhound and Seller shall have delivered to GLI
Holding, GLI Bus, and GLI Merger an opinion of L. G. Lemon, Vice President and
General Counsel of Greyhound, dated as of the Closing Date, in form and
substance reasonably satisfactory to GLI Holding's counsel, to the effect that:
(a) The corporate existence and good standing in its jurisdiction of
incorporation and the corporate power and authority of GLI Operating and
each of the Companies is as represented and warranted in Section 4.4
hereof;
(b) To such counsel's knowledge, GLI Operating and the Companies have
complied with all material laws, rules, regulations, ordinances, codes,
orders, licenses, and permits applicable to the operation of the business
of GLI Operating and the Companies as represented and warranted in Section
4.14 hereof; and
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(c) This Agreement, the Merger Agreement, and the transactions
contemplated hereby and thereby have been duly and validly approved by
Seller, Greyhound, and GLI Operating, as appropriate, and this Agreement
has been executed, acknowledged and delivered by Seller, Greyhound, and GLI
Operating; the Merger Agreement has been executed, acknowledged and
delivered by GLI Operating; all legal and corporate proceedings necessary
to be taken by Seller, Greyhound, and GLI Operating in connection with the
approval of this Agreement and the Merger Agreement have been duly and
validly taken, and this Agreement and the Merger Agreement are valid and
binding upon Seller, Greyhound, and GLI Operating, as appropriate, and
enforceable against Seller in accordance with their respective terms,
except as the enforcement thereof may be modified or limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
the enforceability of creditors' rights generally and except as to rules
governing specific performance, injunctive relief and equitable remedies.
(d) The execution and delivery and the performance on the date hereof
(to the extent required by this Agreement) of this Agreement and all of the
documents and instruments required hereby by Seller, Greyhound, and GLI
Operating did not and will not conflict with or violate any judgment, order
or decree binding upon Seller, Greyhound, GLI Operating or the Companies,
the Certificate of Incorporation or By-laws of Seller, Greyhound, and GLI
Operating or the Companies, or, to such counsel's knowledge, any contract
or agreement to which Seller, Greyhound, GLI Operating, or the Companies
are a party or by which they are bound, except as disclosed in Schedule
4.3.
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(e) To such counsel's knowledge, GLI Operating is the owner of all the
outstanding capital stock of each of the Companies free and clear of all
mortgages, liens, encumbrances, charges, claims, restrictions, pledges,
security interests, or impositions attributable to Seller, Greyhound, or
GLI Operating.
8.6 Satisfaction of Legal Requirements. All statutory and other legal
requirements for the valid consummation of the transactions contemplated by this
Agreement shall have been fulfilled, including compliance with Hart-Scott-Rodino
Antitrust Improvement Act of 1976 (the "HSR Act"), but excluding the granting of
authority or temporary authority by any state regulatory agency having
jurisdiction over intrastate fares, routes, service or operations or the
Interstate Commerce Commission, which the parties hereto acknowledge is not
legally required to consummate such transactions.
8.7 Approvals; Consents. All material consents, waivers, approvals, and
agreements of and notices to other parties (other than with respect to leasehold
consents, and any financing to be obtained by GLI Holding) or governmental
authorities which are necessary to the effective consummation of the
transactions contemplated by this Agreement and the Merger Agreement shall have
been obtained or given.
8.8 No Restraint; No Litigation. Neither Greyhound, GLI Operating nor
Seller shall be restrained or prohibited by any law, rule or regulation or order
from consummating the transactions contemplated by this Agreement or the Merger
Agreement, and no material suit, action or other proceeding shall be threatened
by or pending before, any governmental agency that seeks restraint, prohibition,
material damages, or other material relief in connection with this Agreement or
the Merger Agreement or the consummation of the transactions contemplated hereby
and thereby.
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8.9 Deliveries. Seller shall have executed and delivered to GLI Holding
those documents required by Section 3.2(a) hereof.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.
Subject to waiver pursuant to Section 13.6 hereof, all obligations of
Seller, Greyhound and GLI Operating under this Agreement and the Merger
Agreement are subject to the fulfillment on the Closing Date of each of the
following conditions:
9.1 Representations and Warranties. Each representation and warranty of
GLI Holding hereunder shall be true and accurate in all material respects on the
Closing Date in the same manner as if it were made again at and as of the
Closing Date.
9.2 Performance by GLI Holding, GLI Bus, and GLI Merger. GLI Holding, GLI
Bus, and GLI Merger shall have performed and complied in all material respects
with each and every covenant, agreement, and condition required by this
Agreement to be performed and complied with by it on or before the Closing Date.
9.3 Officer's Certificate. GLI Holding shall have delivered to Seller a
certificate of an executive officer of GLI Holding, GLI Bus, and GLI Merger,
dated as of the Closing Date, certifying on behalf of GLI Holding, GLI Bus, and
GLI Merger that the conditions set forth in Sections 9.1 and 9.2 hereof have
been fulfilled.
9.4 Legal Opinion. GLI Holding shall have delivered to Seller the opinion
of Johnson & Swanson, counsel to GLI Holding, dated as of the Closing Date, in
form and substance reasonably satisfactory to Seller's counsel, to the effect
that:
(a) The corporate existence, good standing, power and authority of GLI
Holding, GLI Merger and GLI Bus are as represented and warranted in Section
5.1 hereof.
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(b) This Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby have been duly and validly approved by the
Boards of Directors of GLI Holding, GLI Bus and GLI Merger and this
Agreement and the Merger Agreement have been executed, acknowledged, and
delivered by GLI Holding, GLI Bus and GLI Merger, as the case may be; all
legal and corporate proceedings necessary to be taken by GLI Holding, GLI
Bus and GLI Merger in connection with the approval of this Agreement and
the Merger Agreement have been duly and validly taken, and this Agreement
and the Merger Agreement each is valid and binding upon GLI Holding, GLI
Bus and GLI Merger, as appropriate, and enforceable in accordance with
their respective terms, except as the enforcement thereof may be modified
or limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforceability of creditors' rights generally
and except as to rules governing specific performance, injunctive relief
and other equitable remedies.
(c) The execution and delivery and the performance on the date hereof
(to the extent required by this Agreement) of this Agreement and all of the
documents and instruments required hereby by GLI Holding, GLI Bus or GLI
Merger, did not and will not conflict with or violate any judgment, order
or decree binding upon GLI Holding, GLI Bus or GLI Merger, the Certificate
of Incorporation or Bylaws of GLI Holding, GLI Bus or GLI Merger, or to
such counsel's knowledge, any contract or agreement to which GLI Holding,
GLI Bus or GLI Merger are a party or by which they are bound.
9.5 Satisfaction of Legal Requirements. All statutory and other legal
requirements for the valid consummation of the transactions contemplated by this
Agreement shall have been fulfilled, including compliance with Hart-Scott-Rodino
Antitrust Improvement
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Act of 1976 (the "HSR Act"), but excluding the granting of authority or
temporary authority by any state regulatory agency having jurisdiction over
intrastate fares, routes, service or operations or the Interstate Commerce
Commission, which the parties hereto acknowledge is not legally required to
consummate such transactions.
9.6 Approvals; Consents. All material consents, waivers, approvals, and
agreements of and notices to the other parties or governmental authorities which
are necessary to the effective consummation of the transactions contemplated by
this Agreement and the Merger Agreement shall have been obtained or given,
including approval of this Agreement by the Board of Directors of GLI Holding,
GLI Bus and GLI Merger.
9.7 No Restraint; No Litigation. Neither GLI Holding, GLI Bus nor GLI
Merger shall be restrained or prohibited by any law, rule or regulation or order
from consummating the transactions contemplated by this Agreement or the Merger
Agreement, and no material suit, action or other proceeding shall be threatened
by or pending before, any governmental agency that seeks restraint, prohibition,
material damages, or other material relief in connection with this Agreement or
the Merger Agreement or the consummation of the transactions contemplated hereby
and thereby.
9.8 Deliveries. GLI Holding shall have executed and delivered to Seller
those documents and caused the delivery of the Consideration required by Section
3.2(b) hereof.
10. SURVIVAL; INDEMNIFICATION.
10.1 Survival of Representations and Warranties. All representations and
warranties of GLI Holding or Seller under this Agreement shall survive the
Closing and shall remain effective for
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a period of two years after the Closing (except for representations and
warranties with respect to the
capitalization of GLI Operating and the Companies, which shall survive the
Closing and remain effective indefinitely) regardless of any investigation or
inquiry by any party hereto at any time.
10.2 Indemnity. Subject to the limitations contained in Section 10.1 hereof
and to the limitations set forth below, Greyhound and Seller hereby indemnify
and agree to save GLI Holding, GLI Bus, GLI Operating and the Companies (each an
"Indemnitee") harmless against and from any claim, action, proceeding, damage,
liability, loss, cost, expenses, judgment, fine, penalty or deficiency,
including without limitation reasonable attorneys' fees and other costs and
expenses incident to proceedings or investigations or defenses of any claim, in
each case calculated on an after-tax basis ("Damages"), arising out of,
resulting from or related to, and to pay each Indemnitee on demand the full
amount of any Damages which such Indemnitee suffers or incurs as a result of:
(a) any breach of any representation or warranty or failure to perform
any obligation of Greyhound or Seller under this Agreement or any
certificate or agreement executed and delivered pursuant to this Agreement.
Greyhound's or Seller's obligation to indemnify the Indemnitees under this
subsection 10.2(a) with respect to the breach of representations or
warranties shall not extend to a claim for Damages until the aggregate
amount of Damages exceeds $9,500,000; and thereafter Greyhound and Seller
shall each be liable in full for Damages, but only to the extent the
aggregate of all Damages exceeds $9,500,000; provided, however, that for
purposes of this Section 10.2(a), any use of the word "material" (or any
variation thereof) in Seller's representations and warranties shall be
disregarded.
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(b) Any liability or obligation of the Seller, GLI Operating or the
Companies, except for Continuing Liabilities fully accrued in the Closing
Statement or set forth on Schedule 1.5.
(c) Any third party claim, action or proceeding arising out of any
product sold, manufactured, rebuilt, repaired or remanufactured prior to
Closing (except to the extent such claim, action or proceeding arises out
of any action with respect to the installation, maintenance or storage
taken by GLI Operating or the Companies after the Closing).
(d) Any third party claim, action or proceeding for property damage or
personal injury arising out of any event that occurred prior to the
Closing.
(e) Any third party claim, action or proceeding arising out of any
employee collective bargaining agreement of Greyhound, the Seller, GLI
Operating or the Companies, any unfair labor practice of Greyhound, Seller
or the companies, or any obligation of any character to employees or for
employee compensation relating to employees of Greyhound, Seller, GLI
Operating or employees of the Companies prior to the Closing, except to the
extent that any of the foregoing arises out of any action or omission of
GLI Holding, GLI Bus or GLI Merger.
(f) Any federal, state or local income tax arising out of transactions
prior to Closing or the consummation of the transactions contemplated by
this Agreement (including any tax resulting from the Section 338 Election
referred to in Section 11.3 hereof).
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(g) Any liability or obligation of the Companies or GLI Operating to
the Seller or any affiliate of the Seller arising prior to the Closing,
except for Continuing Liabilities fully accrued in the Closing Statement or
set forth on Schedule 1.5.
(h) Any loss, claim, liability or obligation resulting from any tax
indemnities, rental adjustments or similar tax benefit reimbursement or
yield preservation provisions in any lease, sublease or related contract to
which Seller, GLI Operating or the Companies is a party, except to the
extent arising as a result of acts or omissions of GLI Operating or the
Companies occurring subsequent to the Closing.
(i) Any loss, claim, liability or obligation resulting from the
failure of Greyhound or Seller to obtain any consent, waiver, approval or
agreement of any lessor regarding any of the transactions contemplated by
this Agreement or the Merger Agreement.
10.3 Notice. GLI Holding agrees to give Seller prompt and specific notice
of the facts and basis of any claim for Damages for which any Indemnitee seeks
indemnification under Section 10.2, unless the failure to provide prompt and
specific notice is not prejudicial to Seller. If any amount in respect of a
claim for Damages pursuant to Section 10.2(a) hereof has not been determined as
of the expiration of the period, if any, set forth in Section 10.1 hereof, each
Indemnitee's right to claim such amount shall continue after such period until
such amount has been determined.
10.4 Legal Counsel. In any litigation, administrative proceeding,
negotiation or arbitration pertaining to any claim made by a third party for
which an Indemnitee seeks indemnification under Section 10.2, Seller shall have
the right to select legal counsel to represent the Indemnitee and to otherwise
control such litiga-
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tion, proceeding, negotiation or arbitration. If Seller elects to control such
litigation, proceeding, negotiation or arbitration, the Indemnitee at all times
shall have the right to participate fully in the defense at its own expense. If
Seller, within a reasonable time after notice, shall fail to defend, each
Indemnitee shall have the right, but not the obligation, to undertake the
defense of and to compromise or settle (exercising reasonable business judgment)
the claim or other matter on behalf, for the account and at the risk of Seller.
11. TRANSACTIONS FOLLOWING CLOSING.
11.1. Assignment Rights. Should Seller be required to pay any amount as
Damages under the indemnity in Section 10 hereof, the Indemnitee shall assign to
Seller, as directed by Seller, any rights of such Indemnitee under contracts or
accounts or otherwise in any matter in respect of which Damages were paid.
11.2. Guarantees of Obligations. GLI Holding shall indemnify Seller and
Greyhound in respect of any claims arising from Continuing Liabilities that have
been supported or guaranteed by Seller or Greyhound under comfort letters,
letters of credit, guarantees or other facilities furnished by Seller or
Greyhound and disclosed on Schedule 11.2 hereto. GLI Holding shall cooperate
with Seller and Greyhound in obtaining releases of Seller and Greyhound from
such comfort letters, letters of credit, guarantees or other facilities to the
extent they have not been obtained pursuant to Section 7.15.
11.3. Taxes
(a) Mutual Assistance. The parties hereto will provide each other such
records and assistance as may reasonably be requested by any of them in
connection with the preparation of
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any return for taxes, any audit or other examination by any taxing
authority, and any judicial or administrative proceedings relating to
liability for taxes (including refunds) and will each provide each other
with any records or information relevant to such return, audit or
examination, proceedings or determination as are in its possession or
subject to its control. Such assistance shall include making employees
available on a mutually convenient basis to provide additional information
and explanation of any material provided pursuant hereto and shall include
providing copies of any relevant tax returns. All information provided
pursuant to this Section 11.3(a) shall be held in confidence, and not be
disclosed to others for any reason whatsoever, except to the extent that
such disclosure is required in order to effect the intent of this Section
11.3(a) or such disclosure is required by law.
(b) Income Taxes. GLI Operating and the Companies and their
subsidiaries are included in Greyhound's consolidated federal and certain
consolidated or combined state tax returns filed by Greyhound, Seller or
their subsidiaries and will be so included for 1986 and 1987 up to the
Closing Date. GLI Holding agrees that it will cause GLI Operating and the
Companies and their subsidiaries to prepare and submit to Seller
appropriate tax return information consistent with prior years for 1986 and
the period from January 1, 1987 to Closing Date, including all necessary
supporting data and work papers reasonably requested by Seller.
(c) Carrybacks. Seller intends that benefits of tax losses and credits
of GLI Operating and the Companies and their subsidiaries generated in
taxable periods subsequent to the Closing Date will be utilized in GLI
Holding's and GLI Operating's combined or consolidated income tax returns.
GLI Holding, GLI Operating and the Companies and their subsid-
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iaries will elect, where permitted, to carry forward, rather than carry
back any such unutilized losses or credit. If GLI Operating or the
Companies and their subsidiaries incur any such unutilized losses or
credits which must be carried back to combined or consolidated tax return
periods of Greyhound, including Seller or its subsidiaries, or if such
losses or credits are otherwise carried back with Seller's consent, Seller
at the request of GLI Holding and at GLI Holding's expense, shall file an
appropriate carryback (including any tentative carryback adjustment) claim
for refund of any taxes recoverable and shall promptly pay, upon receipt by
Seller, to GLI Holding or GLI Operating or the Companies the amount of such
refund (including interest) less any tax detriment (including interest) to
Greyhound or its subsidiaries resulting from such carryback claim,
including in all cases the carryback or carryover effects on tax year(s)
other than those to which directly carried back due to rearrangement of
carrybacks or carryovers caused by applicable tax rules governing the
ordering of tax items.
(d) Tax Audit Adjustments. With respect to the tax years of GLI
Operating and the Companies and their subsidiaries not yet audited by or
under protest or appeal with, the Internal Revenue Service or the years
involved in the current Internal Revenue Service examination, or with
respect to any open tax year under protest or appeal or not yet audited or
under current examination by any other taxing authority:
(i) Seller will be responsible for the representation of GLI
Operating and the Companies and their subsidiaries in regard to all
federal, state and local tax audits for all years open for the
assessment of deficiencies through and including the filing of final
1986 or 1987 returns for any period up to and including the
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Closing Date. Seller shall inform GLI Holding of (a) the commencement of
any audit or examination, (b) proposals of deficiencies or refunds, and
(c) the assessment of deficiencies or the agreement to refund an
overpayment of taxes, with respect to GLI Operating and the Companies
and their subsidiaries.
(ii) Subject to the provisions of this subsection, the parties
hereto acknowledge that any tax liability of any of GLI Operating, the
Companies, and subsidiaries, including any interest, penalties and
additions to tax for any period prior to the Closing Date resulting from
a Final Determination (as herein defined) is the liability of Seller.
With respect to any deductions allowable in future years as a result of
timing differences arising in connection with a Final Determination, GLI
Holding shall promptly pay Seller for the benefit of such deductions as
actually realized by GLI Holding, GLI Operating, or the Companies and
their subsidiaries after Closing. As used herein, "Final Determination"
shall mean a final determination of tax, interest and penalties by the
Internal Revenue Service or any state or local taxing authority or a
court of competent jurisdiction after timely appeals thereof, if any.
(iii) If an assessment is proposed and sustained with respect to
GLI Operating, the Companies and their subsidiaries by any taxing
authority and results in tax benefits realized by GLI Operating, the
Companies and their subsidiaries for a period prior to the Closing Date
and such benefits will not otherwise be allowable to GLI Operating, the
Companies, and their subsidiaries for any period after Closing, Seller
shall promptly pay such benefits (including interest) to GLI Operating,
the
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Companies and their subsidiaries.
(e) Section 338 Election.
(i) GLI Holding or GLI Operating shall have the right to make an
election under section 338(g) of the Internal Revenue Code of 1986, as
amended (the "Code"), and under any relevant state or local income,
excise, or franchise tax law (a "Section 338 Election"), with respect to
the purchase by GLI Bus of the outstanding common stock of GLI Operating
pursuant to the Merger Agreement. Neither Seller nor Greyhound will
cause GLI Operating or any of the Companies to elect out of the
Greyhound consolidated federal income tax return filed for the taxable
year in which the Closing occurs. Promptly after the Closing, Greyhound
shall, at GLI Holding's request, join in making an election under
section 338(h)(10) of the Code and under all such other laws where a
similar election is permissible (an "(h)(10) Election") with respect to
the sale of the GLI Operating common stock to GLI Bus pursuant to the
Merger Agreement.
(ii) Greyhound and GLI Holding each covenant that the purchase and
sale of the GLI Operating common stock to GLI Bus pursuant to the Merger
Agreement hereunder will be treated
by each of them for federal, state and local income, excise, and
franchise tax purposes in each jurisdiction in which an (h)(10) Election
has been made as a sale by GLI Operating and the Companies of all of
their assets in a single transaction in which gain or loss is recognized
to the same extent as would have been recognized from an actual sale of
such assets in exchange
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for cash equal to the fair market value thereof, and that GLI Operating
and the Companies will be members, for federal income tax purposes, of
the consolidated return group of Greyhound and will file with Greyhound
a consolidated federal income tax return and a combined consolidated
income, excise or franchise tax return for the taxable year in which the
Closing occurs in each jurisdiction where such filing is required.
(f) Purchase Price; Allocation. Greyhound and GLI Holding shall agree
prior to the due date for the Section 338 Election on an allocation of the
Consideration among the assets of GLI Holding using the method prescribed
by Temporary Treasury Regulation Section 1.338(b)-2T, and all tax returns
and reports filed by Greyhound and GLI Holding with respect to the
transactions contemplated by this Agreement shall be consistent with that
allocation. Greyhound and GLI Holding shall jointly select an independent
appraisal firm to determine the allocation of Consideration among the
assets of GLI Holding. If Greyhound and GLI Holding are unable to agree on
the selection of such appraisal firm, an appraiser shall be jointly
selected by the independent public accountants of Greyhound and of GLI
Holding. The determination of such independent appraisal firm shall be
binding on the parties hereto. The fees and disbursements of such
independent appraisal firm shall be shared equally by GLI Operating and
Greyhound.
(g) Cooperation and Access to Information. GLI Holding shall not
destroy any records of GLI Operating and the Companies and their
subsidiaries necessary for tax return preparation or support in audits or
other tax proceedings without the prior written consent of Seller.
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11.4 Operation of Businesses. Greyhound and Seller presently intend to
continue to operate any assets or business of Seller not sold hereunder, and
have no present plans to liquidate or terminate such business.
11.5 GLI Holding Indemnification. Subject to the provisions of Section 10,
from and after the Closing Date, GLI Bus, GLI Holding, GLI Operating and the
Companies will defend, hold harmless and indemnify Seller and its subsidiaries
from and against any and all Continuing Liabilities and any and all loss, cost
or expense resulting from any claim, contract or obligation arising from the
business or activities of GLI Holding, GLI Operating or the Companies or in
connection with the other Sale Assets after the Closing, (a) except as the
result of any breach of this Agreement by Seller, (b) except for claims,
contracts, liabilities, or obligations against which the Seller has agreed to
indemnify the Companies or GLI Holding pursuant to the terms of this Agreement,
and (c) except for any claim asserted against Greyhound or its affiliates as a
result of confusion of the identities of the parties due to similarity of
corporate names or otherwise. In the event any person is entitled to
indemnification hereunder based upon a claim asserted by a third party, the
indemnitor shall have the right to select counsel subject to the reasonable
approval of the indemnitee, to control and to approve any settlement thereof.
The indemnitee shall cooperate in furnishing evidence and testimony and in any
other manner which the indemnitor may reasonably request and shall have the
right, if it so elects, to retain counsel at its own expense to participate in
the defense of any claim.
12. TERMINATION.
12.1 Termination. This Agreement may be terminated and the transaction
contemplated hereby may be abandoned as follows: (a) at any time prior to the
Closing by mutual written agreement of the
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parties hereto; (b) by GLI Holding on the Closing Date if any of the conditions
set forth in Article 8 of this Agreement shall not have been fulfilled by the
Closing Date; (c) by Seller on the Closing date if any of the conditions set
forth in Article 9 of this Agreement shall not have been fulfilled by the
Closing Date; or (d) by GLI Holding or Seller after the Termination Date if the
Closing shall not have occurred. The "Termination Date" shall be March 18, 1987;
provided such date shall be extended by the number of days (whether before or
after March 18, 1987) during which GLI Holding is enjoined or restrained from
hiring and training temporary bus drivers, but in no event shall the Termination
Date by later than December 31, 1987.
12.2 Rights on Termination; Waiver. If this Agreement is terminated
pursuant to Section 12.1, all further obligations of the parties under or
pursuant to this Agreement (other than those for any breach which occurs prior
to such termination) shall terminate without further liability of either party
to the other, except as provided in Section 12.3.
12.3 Termination Payment. If this Agreement is terminated as a result of
the breach of this Agreement by GLI Holding, GLI Bus or GLI Merger, then Seller
and Greyhound shall have the rights set forth in the Pledge Agreement referred
to in Section 13.15 of this Agreement. From time to time after the termination
of this Agreement for any reason (other than the breach of this Agreement by GLI
Holding, GLI Bus or GLI Merger), the Seller and Greyhound will reimburse to GLI
Holding all documented out-of-pocket costs and expenses incurred by GLI Holding,
GLI Bus and GLI Merger in connection with this Agreement and the transactions
contemplated by this Agreement or the efforts to obtain financing therefor
(other than expenses incurred in connection with negotiation of a contract with
the Amalgamated Transit Union or the hiring and training of temporary drivers),
including without limitation, the fees and expenses of its agents,
representatives, consultants, legal coun-
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sel, accountants, and investment bankers, and financing commitment fees;
provided, however, that the aggregate amount of such reimbursement shall be
limited to $3,500,000 if neither Greyhound nor Seller has breached this
Agreement.
13. MISCELLANEOUS.
13.1 Remedies Cumulative. Except as herein expressly provided, the remedies
provided herein shall be cumulative and shall not preclude the assertion by any
party of any other rights or the seeking of any other remedies against any other
party, as the case may be.
13.2 Commissions. Each of the parties hereto will indemnify and hold
harmless the other party hereto from and against any and all claims or
liabilities for brokerage commissions, finder's fees or other similar
compensation incurred by reason of any action taken by the indemnifying party.
13.3 Notices. All notices, requests, demands, and other communications
required or permitted to be given hereunder shall be deemed to have been duly
given when received and shall be addressed as follows:
<TABLE>
<S> <C>
If to Greyhound, c/o The Greyhound Corporation
Seller or GLI Greyhound Tower
Operating: Phoenix, Arizona 85077
Attn: Chairman and Chief
Executive Officer
with a copy to: The Greyhound Corporation
1742 Greyhound Tower
Phoenix, Arizona 85077
Attn: General Counsel
If to GLI Holding, c/o BusLease, Inc.
GLI Bus or GLI Merger: 2400 InterFirst Plaza
901 Main Street
Dallas, Texas 75202
Attn: President
</TABLE>
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<PAGE> 62
<TABLE>
<S> <C>
with a copy to: Johnson & Swanson
Founders Square
900 Jackson Street
Dallas, Texas 75202-4499
Attn: Lawrence D. Stuart, Jr.
Phillip J. Kushner
</TABLE>
Each party may change the address to which such communications are to be
directed to it by giving written notice to the other party in the manner
provided in this Section 13.3 hereof.
13.4 Access to Information and Record Retention. In addition to Seller's
rights under Section 11.3 of this Agreement, GLI Operating shall permit Seller
and its representatives access at all reasonable times after Closing to the
offices, documents, books, records, and accounts of GLI Operating and the
Companies or related to the Sale Assets for review and copying any of them which
relate to the business of Seller or GLI Operating or the Companies prior to
Closing. Subject to Section 11.3(f) of this Agreement, for a period ending five
years after the Closing Date, neither GLI Operating nor the Companies may
destroy any documents, books, records, or account which related to the business
of Seller or the Companies prior to Closing without first receiving Seller's
written approval.
13.5 Expenses. Subject to Section 12.3, each party shall pay and discharge
all liabilities and expenses that it incurred or that were incurred on its
behalf in connection with Agreement and all related documents, including, but
not limited to, all fees and expenses of agents, representatives, counsel,
accountants, consultants and investment bankers, and all amounts payable with
respect to any claim for brokerage or finder's fees (if any) or any other
commissions with respect to the transactions contemplated by this Agreement.
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<PAGE> 63
13.6 Modifications. The parties hereto by mutual consent may amend, modify,
supplement and waive any right under this Agreement in any manner agreed to by
them in writing at any time.
13.7 Entire Agreement. This Agreement and the schedules and exhibits
referred to herein and all certificates and other instruments executed and
delivered pursuant hereto set forth the entire and the only agreement and
understandings of the parties with respect to the transactions contemplated
hereby and supersede all prior agreements, representations, arrangements and
understandings relating to the subject matter hereof which may have been
imparted to GLI Holding or its representatives prior to negotiations, in
negotiations or as a result of GLI Holding's investigation of Seller, GLI
Operating or the Companies prior to the signing hereof. reference to "Agreement"
herein includes all schedules and exhibits hereto and all certificates and other
instruments executed and delivered pursuant hereto.
13.8 Headings. The article and section headings contained in this Agreement
are for convenient reference only, and shall not in any way affect the meaning
or interpretation hereof.
13.9 Public Announcement. Prior to the Closing, no public announcement or
press releases concerning the transactions contemplated hereby shall be made or
released unless mutually consented to by each party hereto or as may be required
by law or a court of competent jurisdiction, in which case the parties agree to
consult with each other as to the content of such disclosure.
13.10 Attorney's Fees. The prevailing party in any litigation hereunder
shall be entitled to the recovery of its attorney's fees and court costs from
the other party, as such amounts are fixed by the court.
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<PAGE> 64
13.11 Binding Effect. This Agreement shall bind and inure to the benefit of
the parties and their respective successors and assigns.
13.12 Applicable Law. Interpretation and enforcement of this Agreement
shall be in accordance with the law of and in the courts of Arizona.
13.13 No Reliance. No third party (other than, after the Closing Date, the
Companies) is entitled to rely on any of the representations, warranties, and
agreements contained in this Agreement. No party hereto shall assume any
liability to any third party (other than, after the Closing Date, the Companies)
because of any reliance on the representations, warranties, and agreements of
any party contained in this Agreement.
13.14 Subsequent Changes. Various assets, rights and obligations associated
with the Sale Assets and the business related thereto have not been transferred
to GLI Holding or the Companies or out of Seller as of the date hereof. Such
transfers will be completed in all material respects prior to Closing and will
not have any adverse impact on the transactions contemplated by this Agreement.
13.15 Pledge Agreement. Concurrently with the execution of this Agreement,
Greyhound and the individuals named therein shall execute that certain Pledge
Agreement relating to the pledge to Greyhound of shares of common stock of
BusLease, Inc. and options related to such common stock owned by such
individuals.
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<PAGE> 65
IN WITNESS WHEREOF, the parties have executed this instrument on the date
first above written.
THE GREYHOUND CORPORATION
By: /s/ JOHN W. TEETS
John W. Teets, Chairman of the
Board and Chief Executive Officer
GREYHOUND LINES, INC.
By: /s/ FRANK L. NAGEOTTE
Frank L. Nageotte,
Chairman of the Board
GLI OPERATING COMPANY
By: /s/ JOHN W. TEETS
John W. Teets, Chairman of the
Board and Chief Executive Officer
GLI HOLDING COMPANY
By: /s/ FRED G. CURREY
Fred G. Currey, Chairman of the
Board and Chief Executive Officer
GLI BUS OPERATIONS HOLDING COMPANY
By: /s/ FRED G. CURREY
Fred G. Currey, Chairman of the
Board and Chief Executive Officer
GLI MERGER COMPANY
By: /s/ FRED G. CURREY
Fred G. Currey, Chairman of the
Board and Chief Executive Officer
64
<PAGE> 1
EXHIBIT 10.2
FIRST AMENDMENT TO ACQUISITION AGREEMENT
This First Amendment to the "Acquisition Agreement" (hereinafter defined)
is made and entered into, subject to the provisions of Section 6 hereof,
effective as of January 31, 1987, between The Greyhound Corporation, an Arizona
corporation, Greyhound lines, Inc., a California corporation (hereinafter
collectively referred to as "Seller"), and GLI Holding Company, a Delaware
corporation (hereinafter referred to as "GLI Holding").
W I T N E S S E T H:
WHEREAS, Seller and GLI Holding entered into an agreement dated December
22, 1986 (hereinafter referred to as the "Acquisition Agreement") under which
GLI Holding shall acquire certain assets of Seller as of a date determined under
Section 3.1 of the Acquisition Agreement (hereinafter referred to as "Closing");
WHEREAS, Seller and GLI Holding have agreed, subject to the terms and
conditions hereof, that Seller shall cause its trustees of the Greyhound
Retirement and Disability Fund and the Western Greyhound Pension Trust
(hereinafter collectively referred to as the "Trusts") to authorize the transfer
of all of the assets and liabilities of the Trusts and the Greyhound Retirement
and Disability Plan and the Western Greyhound Retirement Plan (hereinafter
collectively referred to as the "Plans") to a new retirement plan and trust
(hereinafter referred to as the "New Plan" and "New Trust," respectively) to be
established pursuant to a collective bargaining agreement (hereinafter referred
to as the "Collective Bargaining Agreement") between GLI Merger Company, a
Delaware corporation (hereinafter referred to as "GLI Merger") or its parent and
the Amalgamated Council of Greyhound Local Unions (hereinafter referred to as
"Amalgamated Council"); and
WHEREAS, Seller and GLI Holding have agreed that, subject to the terms and
conditions hereof, Seller shall cause its trustees of the Greyhound Lines Career
Average Pension Trust (hereinafter referred to as the "Career Trust") to
authorize the transfer of all the assets and liabilities of the Career Trust and
the Greyhound Lines Career Average Pension Plan (hereinafter referred to as the
"Career Plan") to a new career average retirement plan and trust (hereinafter
referred to as the "New Career Plan" and "New Career Trust," respectively) to be
established pursuant to the Collective Bargaining Agreement;
<PAGE> 2
NOW, THEREFORE, the parties agree as follows:
1. Establishment of the New Plans and Trusts.
As soon as practicable following the execution and ratification of the
Collective Bargaining Agreement, GLI Merger agrees that it or its parent
will establish in conjunction with the Amalgamated Council the New Plan,
the New Trust, the New Career Plan and the New Career Trust. GLI Merger
agrees that said plans and trusts will be intended to constitute qualified
plans and trusts under the Internal Revenue Code of 1986, as amended (the
"Code"), and that such trusts will be intended to constitute tax-exempt
trusts under the Code. In addition, GLI Merger agrees, in conjunction with
the Amalgamated Council to seek favorable determinations from the Internal
Revenue Service with regard to the qualified status of such plans and
trusts and the tax-exempt status of such trusts under the Code.
2. Transfer of Assets and Liabilities.
As soon as is practicable after the later of Closing or the
establishment of the New Plan and the New Trust, Seller agrees to cause its
trustees of the Trusts to take any and all action necessary to transfer all
of the assets and liabilities thereof to the New Trust. Likewise, as soon
as practicable after the later of Closing or the establishment of the New
Career Plan and the New Career Trust, Seller agrees to cause its trustees
of the Career Trust to take any and all action necessary to transfer all of
the assets and liabilities thereof to the New Career Trust. Seller and GLI
Merger agree that it shall not be necessary for the Internal Revenue
Service to have issued favorable determination letters with respect to the
qualified status of the new plans and trusts and the exempt status of the
new trusts prior to implementing the transfers of assets and liabilities
contemplated hereunder; provided, however, that Johnson & Swanson shall
have furnished Seller an opinion that the New Plan, New Trust, New Career
Plan and New Career Trust satisfy the requirements applicable to qualified
plans and trusts under the Code.
3. Investment of Trust Assets.
As soon as practicable following the execution and ratification of the
Collective Bargaining Agreement, Seller agrees to cause its trustees of the
Trusts and the Career Trust to authorize actions to liquidate in an orderly
and reasonable manner all of the equity investments held in such Trusts
and to reinvest the proceeds therefrom in cash
2
<PAGE> 3
equivalents pending the transfer of assets and liabilities contemplated
hereunder. Seller and GLI Merger agree that said liquidation and
reinvestment shall be undertaken in a manner that complies with the
applicable requirements of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
4. Cooperation of Actuarial Consultant Firms.
Seller and GLI Merger agree that their respective actuarial
consultant firms assisting in the implementation of the actions
contemplated by this agreement will be available for consulting with
each other and will assist each other in accomplishing the transfers of
assets and liabilities contemplated herein.
5. Representations and Warranties of Seller Concerning Plans.
With respect to the Plans and the Career Plan, the Seller hereby
represents and warrants the following:
a. Determination letters have been received to the effect that the
Plans and the Career Plan are qualified under section 401 of the Code
and the trusts maintained pursuant thereto are exempt from federal
income taxation under section 501 of the Code, and nothing has
occurred to cause the loss of such qualification or exemption.
b. No prohibited transactions (as defined in section 406 of ERISA or
in section 4975 of the Code) with respect to the Plans or the Career
Plan has occurred or will have occurred prior to Closing.
c. The aggregate value, as of the Closing Date, of the assets of the
Plans and the Career Plan, including any contributions receivable but
net of any current payables or accrued expenses (Net Assets Available
for Plan Benefits) shall not be less than the total of the actuarial
present value of accumulated plan benefits of the Plans and the
Career Plan. For purposes hereof, the determination of such actuarial
present value of accumulated plan benefits shall (i) be made as of
the Closing Date; (ii) be calculated by the actuarial firm of Tower,
Perrin, Forster & Crosby (TPF&C) in the same manner as reflected in
the 1985 Actuarial Report prepared as of January 1, 1985; (iii)
include both vested and non-vested benefits; and (iv) be subject to
verification by GLI Merger's actuaries. In no event shall
3
<PAGE> 4
the assets in the dedicated bond portfolios of the Plans be valued in
this determination at an amount greater than the actuarial present
value of the liabilities of the related covered retiree benefits
(which are calculated using an investment return assumption equal to
the effective yield on the respective dedicated bond portfolios at
the date dedicated). Assets of the Plans and the Career Plan other
than the dedicated bond portfolios shall be valued at fair market
value as of closing for purposes of this determination.
Indemnification under Section 10.2 of the Acquisition Agreement for
breach of this Section 5c shall not be subject to the limitation that
$9,500,000 of Damages have been incurred, and any indemnification
payments as a result of breach of the representation in this Section
5c shall not be included in determining whether the $9,500,000 has
been reached under Section 10.2(a) of the Acquisition Agreement.
6. Condition Precedent to this First Amendment to the Acquisition
Agreement Becoming Effective.
This First Amendment to the Acquisition Agreement shall not become
effective unless on or prior to Closing, both (i) GLI Holding, or a
subsidiary thereof, executes the Collective Bargaining Agreement
effective at Closing, and (ii) GLI Holding represents that the
Amalgamated Council has agreed to cause the transfers of all assets and
liabilities of the Trusts and Career Trust to the New Trust and the New
Career Trust, respectively, and to take the other actions envisioned for
the Plans and the Trusts by the First Amendment.
7. Effect on Agreement.
Except as expressly provided herein, no provision of the
Acquisition Agreement is affected by this First Amendment.
4
<PAGE> 5
IN WITNESS WHEREOF, this first amendment has been executed by the parties
on this 31st day of January, 1987.
<TABLE>
<S> <C>
THE GREYHOUND CORPORATION GLI HOLDING COMPANY
By: /s/ RICHARD C. STEPHAN By: /s/ FRED G. CURRY
Title: Vice President Title: President & Chairman
GREYHOUND LINES INC.
By: /s/ RICHARD C. STEPHAN
Title: Vice President
</TABLE>
5
<PAGE> 1
EXHIBIT 10.3
SECOND AMENDMENT TO ACQUISITION AGREEMENT
This Second Amendment to the Acquisition Agreement (the "Second Amendment")
is made and entered into by and among The Greyhound Corporation, an Arizona
corporation ("Greyhound"), Greyhound Lines, Inc., a California corporation
("Seller"), GLI Operating Company, a Delaware corporation ("GLI Operating"), GLI
Holding Company, a Delaware corporation ("GLI Holding"), GLI Bus Operations
Holding Company, a Delaware corporation ("GLI Bus"), and GLI Merger Company, a
Delaware corporation ("GLI Merger"). Greyhound, Seller, GLI Operating, GLI
Holding, GLI Bus and GLI Merger shall hereinafter collectively be referred to as
the "Parties". Each term used in this Second Amendment with its initial letter
capitalized shall have the meaning ascribed to such term in the Acquisition
Agreement (hereinafter defined), unless another meaning is prescribed herein.
WITNESSETH:
WHEREAS, the Parties entered into that certain Acquisition Agreement dated
December 22, 1986, which was amended on January 31, 1987 (the "Acquisition
Agreement").
WHEREAS, the Acquisition Agreement provides that at the Closing certain of
the Parties will enter into agreements pursuant to which (a) GLI Operating
Company will purchase buses from the Manufacturers (Section 2.8); and (b) GLI
Holding will assume Seller's existing bus purchase agreement with the
Manufacturers (Section 2.8);
WHEREAS, the United States Department of Justice has advised the Parties of
their position that the foregoing agreements to be entered into may conflict
with certain prohibitions contained in the Final Judgment entered in the matter
of United States of America v. The Greyhound Corporation (Civil Action No.
57C1107 (D.C. N.D. Illinois, 1957) (the "Judgment"); and
<PAGE> 2
WHEREAS, GLI Operating requires additional new buses to perform its
business and desires to make arrangements to lease buses from Seller or an
affiliate of Seller as long as the Judgment is effective.
NOW, THEREFORE, the Parties agree as follows:
1. Section 2.8 of the Acquisition Agreement shall be amended to read in its
entirety as follows:
"2.8. Bus Purchase and Lease Agreements. The parties thereto shall
enter into the agreements attached hereto as Exhibit I and Exhibit J."
2. Except as expressly provided herein, no provision of the Acquisition
Agreement is affected by this Second Amendment.
IN WITNESS WHEREOF, this Second Amendment has been executed by the Parties
on this 18th day of March, 1987.
<TABLE>
<S> <C>
THE GREYHOUND CORPORATION GLI HOLDING COMPANY
By /s/ RICHARD C. STEPHAN By /s/ CRAIG R. LENTZSCH
R. C. Stephan Craig R. Lentzsch
Vice President Vice President
GREYHOUND LINES INC. GLI BUS OPERATIONS HOLDING COMPANY
By /s/ RICHARD C. STEPHAN By /s/ CRAIG R. LENTZSCH
R. C. Stephan Craig R. Lentzsch
Vice President Vice President
GLI OPERATING COMPANY GLI MERGER COMPANY
By /s/ RICHARD C. STEPHAN By /s/ CRAIG R. LENTZSCH
R. C. Stephan Craig R. Lentzsch
Vice President Vice President
</TABLE>
<PAGE> 1
EXHIBIT 10.4
THIRD AMENDMENT TO ACQUISITION AGREEMENT
This Third Amendment to the Acquisition Agreement (the "Third Amendment")
is made and entered into as of March 18, 1987, between The Greyhound
Corporation, an Arizona corporation, ("Greyhound"), Greyhound Lines, Inc., a
California corporation ("Seller"), GLI Operating Company, a Delaware corporation
("GLI Operating"), GLI Holding Company, a Delaware corporation ("GLI Holding"),
GLI Bus Operations Holding Company, a Delaware corporation ("GLI Bus"), and GLI
Merger Company, a Delaware corporation ("GLI Merger"). Greyhound, Seller, GLI
Operating, GLI Holding, GLI Bus and GLI Merger shall hereinafter collectively be
referred to as the "Parties." Each term used in this Third Amendment with its
initial letter capitalized shall have the meaning ascribed to such term in the
Acquisition Agreement (hereinafter defined), unless another meaning is
prescribed herein.
W I T N E S S E T H:
WHEREAS, the Parties entered into that certain Acquisition Agreement dated
December 22, 1986, which was amended on January 31, 1987 and March 18, 1987 (the
"Acquisition Agreement").
WHEREAS, the Parties have agreed, subject to the terms and conditions
hereof, that Seller shall cause the trustee of the Greyhound Employees'
Retirement Income Trust (the "GRIP Trust") to duly transfer certain of the
assets and liabilities of the GRIP Trust and the Greyhound Employees Retirement
Income Plan ("GRIP") to a new retirement plan and trust (the 'New GRIP Plan" and
the "New Grip Trust," respectively) to be established pursuant to this
Amendment;
WHEREAS, the parties have agreed subject to the terms and conditions
hereof, that Seller shall cause the trustee of the Greyhound Employees' Capital
Accumulation Plan Trust (the "401(k) Trust") to duly transfer certain of the
assets and liabilities of the 401(k) Trust and the Greyhound Employees' Capital
Accumulation Plan (the "401(k) Plan") to a new 401(k) plan and trust (the 'New
401(k) Plan and the "New 401(k) Trust," respectively) to be established pursuant
to this Third Amendment;
WHEREAS, the Parties have agreed, subject to the terms and conditions
hereof, that Seller shall cause its trustees of the Greyhound Retirement and
Disability Fund and the Western Greyhound Pension Trust (the "Trusts") to
authorize the transfer
<PAGE> 2
of all of the assets and liabilities of the Trusts and the Greyhound Retirement
and Disability Plan and the Western Greyhound Retirement Plan (the "Plans") to a
new retirement plan and trust (the "New Plan" and the "New Trust," respectively)
to be established pursuant to a collective bargaining agreement (the "Collective
Bargaining Agreement") between GLI Merger or its parent and the Amalgamated
Council of Greyhound Local Unions (the "Amalgamated Council"); and
WHEREAS, the Parties have agreed, subject to the terms and conditions
hereof, to make certain other arrangements in connection with the Acquisition
Agreement.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I
RETIREMENT PLANS
1.1 GRIP. Following the Closing, Seller shall temporarily retain all
obligations and liabilities with respect to administration of all pension
benefits accrued through the Closing Dated under GRIP for each participant in
the GRIP who, as of such date, becomes a permanent, full-time employee of GLI
Holding or its affiliate (a "Transferred Employee"). Such accrued benefits shall
in accordance with Sections 1.2 and 1.3, hereof, be transferred to the New GRIP
Trust to be established, at GLI Holding's expense, by GLI Holding or its
affiliate with the assistance of Seller, which meets the requirements for
qualification pursuant to Section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and which is similar in all material respects to GRIP,
except that GLI Holding or its affiliate shall be the plan sponsor of such New
GRIP Plan and shall then assume and be responsible for all obligations and all
liabilities with respect to the pension benefits provided under the New GRIP
Plan for transferred Employees;
1.2 New GRIP Plan. As soon as practicable after the date hereof and
effective as of the Closing Date, GLI Holding or its affiliate shall, at GLI
Holding's expense, take all action necessary and appropriate to establish and
maintain a New GRIP Plan and New Grip Trust comparable to GRIP and the GRIP
Trust and reasonably acceptable to Seller. GLI Holding agrees that such new plan
and trust shall constitute a qualified plan and trust under the Code. GLI
Holding agrees that each Transferred Employee (i) immediately shall become
eligible to participate in the New GRIP Plan, (ii) shall be credited with the
years of service with Seller and any company affiliated with Seller as if
2
<PAGE> 3
such years of service had been rendered to GLI Holding or its affiliate under
the New GRIP Plan, and (iii) shall be fully vested in his or her accrued benefit
to the Closing Date in the New GRIP Plan as funded in accordance with Section
1.3, hereof. As soon as practicable after the date hereof, Seller shall deliver
to GLI Holding a list of the transferred Employees who deliver to GLI Holding a
list of the Transferred Employees who are participants in GRIP, together with a
listing of each such employee's years of service as defined in (ii) above, and
his or her accrued benefit to be transferred from GRIP to the New GRIP Plan as
of the Closing Date.
1.3 Transfer of GRIP Assets and Liabilities. Seller shall cause the GRIP
Trust to transfer to the New GRIP Trust an amount in cash or annuity contracts
equal to the actuarial accrued liability for all Transferred Employees, but in
no event an amount which is less than the amount required to be transferred for
such Transferred Employees pursuant to the requirements of Section 414(1) of the
Code. For purposes hereof, the determination of such actuarial accrued liability
shall (i) be made as of the Closing Date; (ii) be calculated by the actuarial
firm of Towers, Perrin, Forster & Crosby in the same manner as reflected in the
1986 Actuarial Report prepared as of January 1, 1986 except that the assumption
with respect to annual salary increases shall be seven percent (7%) per year;
(iii) include both vested and non-vested benefits; and (iv) be subject to
verification by GLI Holding's actuaries. This amount shall be increased by
interest at the rate earned by the trustee of GRIP for short-term interest funds
for the period from the Closing Date to the date the assets are actually
transferred. In connection with such transfer Seller shall make all appropriate
filings required under the Code or ERISA, and the regulations thereunder, and
such transfer shall take place as soon as practicable after Internal Revenue
Service approval. In the event of an adverse determination by the Internal
Revenue Service, GLI Holding and Seller agree to cooperate in the selection of
an appropriate method of treating Transferred Employees' benefits. Seller and
GLI Holding shall file a timely "Notice of the Occurrence of a Reportable Event"
with the Pension Benefit Guaranty Corporation, and file an actuarial statement
(together with supportive documents and/or schedules) as required pursuant to
Section 4043 of ERISA, and any regulations issued thereunder.
1.4 401(k) Plan. Following the Closing, Seller shall temporarily retain all
obligations and liabilities for administration of any benefits accrued under the
401(k) Plan for each Transferred Employee. Such accrued benefits shall be
transferred to the New 401(k) Trust to be promptly established by GLI Holding
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<PAGE> 4
or its affiliate at GLI Holding's expense with the assistance of Seller which
meets the requirements for qualification pursuant to Section 401(a) of the Code
and contains a cash or deferred feature within the meaning of Section 401(k) of
the Code. The New 401(k) Plan shall be similar in all material respects to the
401(k) Plan except for certain investment options and that GLI Holding or its
affiliate shall be the sponsor of such Plan. The amount of the accrued benefits
to be transferred shall be an amount equal to the sum of all account balances
(vested and nonvested) of all Transferred Employees as of the Closing Date as
determined by the 401(k) Plan administrator in its sole discretion, but in the
exercise of good faith. The cash amounts so transferred will be increased by
interest at the rate earned by the trustee of the 401(k) Trust for short-term
interest funds for the period from the Closing Date to the date the assets are
actually transferred. Upon such transfer GLI Holding or its affiliate shall
assume and be responsible for all obligations and liabilities with respect to
such transferred benefits. In connection with such transfer Seller shall make
all appropriate filings required under the Code or ERISA, and the regulations
thereunder, and such transfer shall take place as soon as practicable.
1.5 Best Efforts. GLI Holding shall use its best efforts expeditiously to
file all requests for determination letters and take all other acts necessary or
desirable to implement as soon as reasonably possible the provisions herein with
respect to pension and other benefit programs for the Transferred Employees and
other affected plan participants.
1.6 Cooperation of Actuarial Consultant Firms. Seller and GLI Holding
agree that their respective actuarial consultant firms assisting in the
implementation of the actions contemplated by this agreement will be available
for consulting with each other and will assist each other in accomplishing the
transfers of assets and liabilities contemplated herein.
1.7 Qualified Status of New Plans. Notwithstanding any provision to the
contrary in the Acquisition Agreement, as amended, with respect to all of the
new plans and trusts mentioned in this third Amendment, and all of the partial
and full transfers of assets between plan trusts contemplated hereby: (i) GLI
Holding shall obtain determinations for each such new plan and trust from the
Internal Revenue Service, that each such plan and trust is qualified under the
Code; and (ii) it shall not be necessary for the Internal Revenue Service to
have issued favorable determination letters with respect to the qualified status
of such plans and trusts prior to implementing the
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<PAGE> 5
transfers of assets and liabilities contemplated thereunder and hereunder
provided, however, that the law firm of Johnson & Swanson shall have first
furnished Seller an opinion, at GLI Holding's expense, that such new plans and
trusts satisfy the requirements applicable to qualified plans and trusts under
the Code. In addition, GLI Holding agrees to indemnify and hold Seller harmless
from any liability or expense (including reasonable attorneys' fees) relating to
or arising out of the transfer of any plan assets contemplated under the
Acquisition Agreement, as amended.
1.8 Welfare Benefits. Unless otherwise specifically agreed to in writing
by GLI Holding, GLI Holding shall not assume any liability for benefits under
any health and welfare plans or trusts currently maintained by Greyhound, Seller
or any affiliate thereof, or to which any such company makes or has made
contributions under or to.
1.9 Certain Health Benefits. To the extent that the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") may require continuation of certain
health benefits to employees after termination of employment, GLI Holding shall
be responsible for such continued coverage and compliance with the provisions of
COBRA with respect to qualifying events, as defined in section 162(k) of the
Code, accruing in connection with individuals, including Transferred Employees
or other employees of Seller hired after the Closing Date, after they become
employees of GLI Holding or its affiliate.
ARTICLE II
UNION RETIREMENT PLAN
2.1 Establishment of New Plan and Trust. As soon as practicable following
the execution and ratification of the Collective Bargaining Agreement, GLI
Merger agrees that it or its parent will establish in conjunction with the
Amalgamated Council the New Plan and the New Trust. GLI Merger agrees that said
plan and trust will be intended to constitute a qualified plan and trust under
the Code, and that such trust will be intended to constitute tax-exempt trust
under the Code. In addition, GLI Merger agrees, in conjunction with the
Amalgamated Council to seek favorable determination from the Internal Revenue
Service with regard to the qualified status of such plan and trust and the
tax-exempt status of such trust under the Code.
2.2 Transfer of Assets and Liabilities. As soon as is practicable after
the later of Closing or the establishment of
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<PAGE> 6
the New Plan and the New Trust, Seller agrees to cause its trustees of the
Trusts to take any and all action necessary to transfer all of the assets and
liabilities thereof to the New Trust. Seller and GLI Merger agree that it shall
not be necessary for the Internal Revenue Service to have issued a favorable
determination letter with respect to the qualified status of the new Plan and
Trust and the exempt status of the New Trust prior to implementing the transfers
of assets and liabilities contemplated hereunder; provided, however, that
Johnson & Swanson shall have furnished Seller an opinion, at GLI Operating's
expense, that the New Plan and New Trust satisfy the requirements applicable to
qualified plans and trusts under the Code.
2.3 Investment of Trust Assets. As soon as practicable following the
execution and ratification of the Collective Bargaining Agreement, Seller agrees
to cause its trustees of the Trusts to authorize actions to liquidate in an
orderly and reasonable manner all of the equity investments held in such Trusts
and to reinvest the proceeds therefrom in cash equivalents pending the transfer
of assets and liabilities contemplated hereunder. Seller and GLI Merger agree
that said liquidation and reinvestment shall be undertaken in a manner that
complies with the applicable requirements of Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
2.4 Cooperation of Actuarial Consultant Firms. Seller and GLI Merger agree
that their respective actuarial consultant firms assisting in the implementation
of the actions contemplated by this agreement will be available for consulting
with each other and will assist each other in accomplishing the transfers of
assets and liabilities contemplated herein.
2.5 Representations and Warranties of Seller Concerning Plans. With respect
to the Plans, Seller hereby represents and warrants the following:
a. Determination letters have been received to the effect that the
Plans are qualified under section 401 of the Code and the trusts maintained
pursuant thereto are exempt from federal income taxation under section 501
of the Code, and nothing has occurred to cause the loss of such
qualification or exemption.
b. No prohibited transactions (as defined in section 406 of ERISA or
in section 4975 of the Code) with respect to the Plans has occurred or will
have occurred prior to Closing.
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c. The aggregate value, as of the Closing Date, of the assets of the
Plans, including any contributions receivable but net of any current
payables or accrued expenses (Net Assets Available for Plan Benefits) shall
not be less than the total of the actuarial present value of accumulated
plan benefits of the Plans. For purposes hereof, the determination of such
actuarial present value of accumulated plan benefits shall (i) be made as
of the Closing Date; (ii) be calculated by the actuarial firm of Tower,
Perrin, Forster & Crosby (TPF&C) in the same manner as reflected in the
1985 Actuarial Report prepared as of January 1, 1985; (iii) include both
vested and non-vested benefits; and (iv) be subject to verification by GLI
Merger's actuaries. In no event shall the assets in the dedicated bond
portfolios of the Plans be valued in this determination at an amount
greater than the actuarial present value of the liabilities of the related
covered retiree benefits (which are calculated using an investment return
assumption equal to the effective yield on the respective dedicated bond
portfolios at the date dedicated). Assets of the Plans other than the
dedicated bond portfolios shall be valued at fair market value as of
Closing for purposes of this determination. Indemnification under Section
10.2 of the Acquisition Agreement for breach of this Section 2.5(c) shall
not be subject to the limitation that $9,500,000 of Damages have been
incurred, and any indemnification payments as a result of breach of the
representation in this Section 2.5(c) shall not be included in determining
whether the $9,500,000 has been reached under Section 10.2(a) of the
Acquisition Agreement.
2.6 Condition Precedent to this Article of the Third Amendment Becoming
Effective. This Article of the Third Amendment shall not become effective unless
on or prior to Closing, GLI Holding represents that the Amalgamated Council has
agreed to cause the transfers of all assets and liabilities of the Trusts to the
New Trust and to take the other actions envisioned for the Plan and the Trust by
this Article of the Third Amendment.
ARTICLE III
ENVIRONMENTAL MATTERS
3.1 Underground Storage Tank Status. The Parties desire to make certain
arrangements with respect to certain underground storage tanks on properties
owned by GLI Operating or the Companies as of March 18, 1987 or leased from
Seller by GLI
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Operating or the Companies (other than those properties leased under the Master
Lease), at the Closing (the "Tanks").
3.2 Testing and Repair or Replacement. GLI Operating shall be obligated to
bear the costs of testing, repairing or replacing any of the Tanks from and
after the Closing.
3.3 Environmental Remediation. Notwithstanding any provision of the
Acquisition Agreement to the contrary, the Seller shall be obligated to bear a
proportionate share of any costs, fees, expenses, fines, penalties and
governmental levies associated with remediation done in respect of leaks from
the Tanks, and the actual costs or expenses of remediation of the properties
where the Tanks are located (other than costs and expenses that were the direct
result of the operation or use of the Tanks after the Closing in a manner
materially inconsistent with the operation or use of the Tanks prior to the
Closing) (collectively, the "Remediation Expenses"). The Seller's proportionate
share shall be 100% of the Remediation Expenses for a period of one year after
the Closing Date, and shall decrease linearly 20% every year thereafter, such
that the Seller is not responsible for any Remediation Expenses from and after
five years after the Closing Date. GLI Operating shall be obligated to bear the
remaining share of the Remediation Expenses. Notwithstanding when any
Remediation Expenses are actually incurred or paid, the proportionate share of
Remediation Expenses to be paid by Seller and GLI Operating with respect to any
Tank location shall be determined upon the earlier of (a) such time as GLI
Operating undertakes, or requests Seller to undertake, such remediation in
accordance with the provisions of this Section or (b) upon notification of GLI
Operating by any governmental entity of the probable imposition of any fines,
penalties or governmental levies or the demand to remediate the property or
repair or replace the Tanks. GLI Operating shall give the Seller written notice:
(x) not less than ten days prior to entering into an agreement to undertake such
remediation, and (y) within five days after being notified of the probable
imposition of any fines, penalties or governmental levies or the demand to
remediate the property or repair or replace the Tanks. Seller shall have the
right at its election to control the remediation process, including selection
and hiring of any contractors (which shall be reasonably acceptable to GLI
Operating) and supervision of remediation, during the time that its
proportionate share of the Remediation Expenses equals or exceeds 50%.
3.4 Master Lease Tanks. With respect to underground storage tanks located
on properties leased under the Master Lease, GLI Operating shall not be
obligated to bear any costs,
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fees, expenses, fines, penalties or any governmental levies associated with
remediation done in respect of leaks from such tanks, or for the actual costs or
expenses of remediation of the properties where such tanks are located, unless
such costs and expenses are the direct result of the operation or use of such
tanks by GLI Operating or the Companies after the Closing in a manner materially
inconsistent with the operation or use of such tanks prior to the Closing.
3.5 Application. This Article supersedes in its entirety any other
representations, covenants or agreements (including without limitation
indemnification agreements) contained in the Acquisition Agreement only with
respect to the matters specifically described in this Article and does affect
any other representations, covenants or agreements (including without limitation
indemnification agreements) contained in the Acquisition Agreement with respect
to any other matter (including without limitation other environmental matters).
ARTICLE IV
TELEPHONE CHARGES
4.1 Seller Obligation. The Seller shall be obligated to reimburse GLI
Operating in full for any unbilled telephone access charges which may arise
after the Closing Date attributable to telephone calls made by or to the Seller,
GLI Operating or the Companies prior to the Closing Date to the extent not
included in the Closing Statement. The Parties hereby agree not to accrue any of
these charges on the Closing Statement.
4.2 Method of Reimbursement. GLI Operating shall provide Seller with
written notice of any such access charges, including a copy of the invoices
related thereto. Within 30 days after receipt of such notice, Seller shall be
obligated to make payment to GLI Operating for such access charges.
ARTICLE V
59 CENT TICKETS
In February 1987, Seller sold to its customers bus tickets for 59 cents per
ticket, certain of which may be used on or after the Closing Date.
Notwithstanding any provision in the Acquisition Agreement or instructions
related to the preparation of the Closing Statement to the contrary, for every
59 cent ticket used on or after the Closing Date, there shall be included in the
Closing Statement as a liability an amount equal to the
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payments to commission agents pertaining to such tickets plus 2.5 cents per mile
for each passenger mile traveled on such ticket less $300,000.
ARTICLE VI
EMPLOYEE INSURANCE PLANS
Greyhound and the Seller shall keep in full force and effect through March
31, 1987, all medical, dental, health and life insurance plans covering each
salaried employee of Seller who becomes an employee of GLI Operating. GLI
Operating shall reimburse Seller and hold Seller harmless from all cost, expense
and liability which may be incurred by Seller or to which Seller may become
subject as a result of providing such insurance from and after the Closing Date.
ARTICLE VII
ADMINISTRATION OF INSURANCE CLAIMS
From and after the Closing Date, GLI Operating shall administer insurance
claims on behalf of Seller with respect to certain occurrences prior to the
Closing Date. GLI Operating and Seller agree to each bear their proportionate
share of GLI Operating's insurance claims department administration expenses as
reflected on the accounting records of GLI Operating, except that one half of
the total compensation of the Vice President of Risk Management shall be
excluded from the insurance claims department expenses. Seller's proportionate
share of such expenses for any month shall be determined based on the number of
active insurance claims administered during such month on behalf of Seller
compared to the total number of active insurance claims administered during such
month by GLI Operating's insurance claims department. GLI Operating shall
forward all out-of-pocket expense invoices and claims settlement agreements to
Seller for payment or reimbursement. Settlement of claims by GLI Operating on
behalf of Seller will only be undertaken in accordance with procedures and
authorization provided by Seller. Seller shall pay GLI Operating monthly for its
proportionate share of GLI Operating's insurance claims department expenses. The
foregoing arrangement may be terminated after one year from the date hereof by
either party upon 90 days' prior written notice.
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ARTICLE VIII
CERTAIN REAL ESTATE MATTERS
8.1 Restructure of Transaction. To assist GLI Holding in connection with
the Closing and financing of the transaction, Seller has agreed to modify
somewhat the procedures utilized with respect to certain real estate assets from
that originally contemplated under the Acquisition Agreement. In particular, all
owned real property which was previously vested in the Companies (as indicated
in Schedule 4.6 to the Acquisition Agreement) has been conveyed by the Companies
to GLI Operating by Warranty Deed (the "Upstream Deeds") and certain (but not
all) leased real property which was previously vested in the Companies (as
indicated in Schedule 4.6 to the Acquisition Agreement) has been assigned by the
Companies to GLI Operating by Assignment and Assumption Agreement (the "Upstream
Assignments"). Further, all owned real property previously vested in Seller (as
indicated in Schedule 4.6 to the Acquisition Agreement) has been conveyed by
Seller to GLI Operating by Warranty Deed (the "Lines Deeds") and all leased real
property previously vested in Seller (as indicated in Schedule 4.6 to the
Acquisition Agreement) has been assigned to GLI Operating by Assignment and
Assumption Agreement (the "Lines Assignments"). The parties acknowledge that
under the original structure contemplated by the Acquisition Agreement the
Upstream Deeds and Upstream Assignments would not have been executed and the
Lines Deeds would, in lieu of being general warranty deeds, have been deeds in
the same form previously utilized by Seller in transferring owned properties to
the Companies. The Lines Assignments would have been required in any event, but
would have been made earlier but for GLI Holding's request. The modification of
the transaction in the manner contemplated above is herein referred to as the
"Restructure."
8.2 Effect of Restructure on Seller's Obligations. Seller and GLI Holding
acknowledge that GLI Holding's request for the Restructure did not occur far
enough in advance of the Closing to permit Seller and GLI Holding to examine
fully the descriptions of and title to the owned real properties as necessary
for Seller to make accurate the Upstream Deeds or the Lines Deeds, or to permit
Seller and GLI Holding to obtain the consents of landlords to the assignments of
real property leases to GLI Operating and/or any subsequent assignments or
subleases to GLI Realty and its affiliates which are contemplated to be made by
GLI Operating for operational and business reasons after the Closing. It is the
intention of the parties that Seller's and Greyhound's representations,
warranties and liabilities with respect to transfer of the owned and leased real
properties in connection
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with the transaction as actually closed shall not exceed, or be less than, the
representations and warranties made and the liabilities which would have been
assumed by Seller and Greyhound with respect to real property matters pursuant
to the Acquisition Agreement had the Restructure not occurred.
8.3 Indemnification of Seller. In consideration of Seller's consent to the
Restructure GLI Holding agrees to pay, and to indemnify Seller and Greyhound and
hold Seller and Greyhound harmless against and from any claim, action,
proceeding, damage, liability, loss, cost, expense, judgment, fine, penalty or
deficiency, including without limitation reasonable attorneys' fees and other
costs and expenses incident to proceedings or investigations or defenses of any
claim ("Damages"), arising out of, resulting from or related to, and to pay
Seller and Greyhound on demand the full amount of any Damages which either
Seller or Greyhound suffers or incurs as a result of:
(i) Liability pursuant to either the Upstream Deeds or the Lines
Deeds, asserted by or on behalf of any transferee of the property, which
exceeds the liability which Seller or Greyhound would have had with respect
to such property under the Acquisition Agreement had the Restructure not
occurred;
(ii) Transfer taxes, recording fees, service charges and other
expenses incurred due to (i) the Upstream Deeds and (ii) the Lines Deeds to
the extent such taxes and expenses with respect to the Lines Deeds exceed
amounts which Seller or Greyhound would have incurred in transferring the
assets covered by the Lines Deeds had the Restructure not occurred. Without
limitation, GLI Holding shall have the liability for all values declared in
conjunction with the Upstream Deeds and the Lines Deeds, any transfer taxes
or similar charges with respect to the Upstream Deeds, and any loss of
exemptions or increases in taxes or expenses incurred by Seller with
respect to the Lines Deeds other than those which would have been incurred
by Seller in the absence of the Restructure;
(iii) Liability for breach or default of the leases or subleases
covering any leased property covered by the Upstream Assignments, including
loss of use of such facility by eviction or otherwise, due to the failure
to obtain the landlord's consent to the assignment of any such lease or
sublease to GLI Operating or any
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subsequent assignment or sublease of those properties by GLI Operating; and
(iv) Any liability with respect to the transfer of or representations
or warranties of Seller or Greyhound with respect to owned or leased real
properties which exceeds the liability Seller or Greyhound would have had
in that regard under the Acquisition Agreement had the Restructure not
occurred.
8.4 Title Corrective Matters. After the Closing, GLI Holding shall provide
to Seller copies of all title reports or commitments which GLI Holding obtains
for the owned real properties, and Seller and GLI Holding shall cooperate in
preparing correction deeds and correcting the legal descriptions and title
exceptions to reflect the actual condition of Seller's (or its affiliates) title
to the owned real property on the closing date; provided no such correction
shall deprive GLI Holding of title to any real property described in Schedule
4.6, in the condition warranted in Section 4.6 of the Acquisition Agreement. GLI
Holding shall bear all expenses incurred in obtaining title reports or
commitments, and in recording any correction deeds, provided, however, that to
the extent that any such correction deed or other corrective title work is
required because of the title to any property being vested other than as
represented in Schedule 4.6 of the Acquisition Agreement, the costs of such
corrective work shall be borne by Seller.
8.5 Overlandlord's Consents -- Master Leased Properties. Anything to the
contrary, or apparently to the contrary, notwithstanding, in the Master Lease
(herein so-called) between the Seller and GLI Realty Company ("GLI Realty"),
covering certain fee and leasehold interests which has been executed pursuant to
Section 2.1 of the Acquisition Agreement, it is acknowledged that Section
10.2(i) of the Acquisition Agreement continues to apply to the facilities
covered by such Master Lease and Greyhound and Seller shall indemnify GLI
Realty, GLI Holding, GLI Bus, GLI Operating, and the Companies against any
failure by Greyhound and/or Seller to obtain any and all necessary consents,
waivers, approvals, or agreements of any underlying lessors in respect of such
agreements and Seller shall make available to GLI Operating or its subsidiaries
the use of the facilities covered thereby in accordance with the contemplation
of the Acquisition Agreement.
8.6 Lessor's Consents -- Previously Assigned Leased Properties. Further,
Section 10.2(i) is also acknowledged to be fully applicable in the case of any
leased properties which have
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been assigned to the Companies by Seller or its affiliates prior to March 17,
1987, where the consent of any lessor was required to such assignment but such
consent has not been received or obtained. Section 10.2(i) shall not apply to
the transfers of leased properties made pursuant to the Upstream Assignments or
to any subsequent transfers, assignments, or subleases of any of such leases
carried out by GLI Holding or its affiliates after the Closing.
8.7 Lessor's Consents -- Seller's Leased Properties. It is further agreed
that if (i) either Sublease between Seller, as sublessor, and GLI Operating, as
sublessee, covering the New York and/or Philadelphia facilities, respectively,
as contemplated in Section 2.4 of the Acquisition Agreement is terminated by
reason of the failure of the underlying lessor to give a required consent
thereto, or (ii) any of the leased facilities covered by Section 4.6 of the
Acquisition Agreement which are being assigned to GLI Operating pursuant to the
Lines Assignment require the consent of the lessor for assignment and are put
into default by reason of Seller's failure to obtain the required consent,
Seller will nevertheless make the facilities in question available to GLI
Operating or its subsidiaries in a manner equivalent in all material respects to
that contemplated by the Acquisition Agreement.
ARTICLE IX
JUNIOR NOTES
The Parties hereby agree that the Junior Notes to be delivered pursuant to
Section 1.1 of the Acquisition Agreement shall be substantially in the form
attached hereto as Exhibit A.
ARTICLE X
EFFECT OF THIRD AMENDMENT
The Parties hereby agree that this Third Amendment shall terminate the
First Amendment to Acquisition Agreement dated January 31, 1987, among
Greyhound, Seller and GLI Holding. Except as expressly provided herein, no
provision of the Acquisition Agreement is affected by this Third Amendment.
IN WITNESS WHEREOF, this Third Amendment has been executed by the parties
on this 18th day of March, 1987.
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<TABLE>
<S> <C>
THE GREYHOUND CORPORATION GLI HOLDING COMPANY
By: /s/ RICHARD STEPHAN By: /s/ CRAIG LENTZSCH
R. C. Stephan Craig R. Lentzsch
Vice President Vice President
GREYHOUND LINES, INC. GLI BUS OPERATIONS HOLDING COMPANY
By: /s/ RICHARD STEPHAN By: /s/ CRAIG LENTZSCH
R. C. Stephan Craig R. Lentzsch
Vice President Vice President
GLI OPERATING COMPANY GLI MERGER COMPANY
By: /s/ RICHARD STEPHAN By: /s/ CRAIG LENTZSCH
R. C. Stephan Craig R. Lentzsch
Vice President Vice President
</TABLE>
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EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL
THE HOLDER HEREOF PROVIDES INFORMATION
SATISFACTORY TO THE ISSUER (WHICH, IN THE
DISCRETION OF THE ISSUER, MAY INCLUDE AN
OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER) THAT SUCH PLEDGE, SALE, OFFER,
TRANSFER, OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
11% JUNIOR SUBORDINATED NOTE DUE 1999
$40,000,000.00 March 18, 1987
FOR VALUE RECEIVED, the undersigned, GLI Operating Company, a Delaware
corporation ("Maker"), promises to pay to Greyhound Lines, Inc., a California
corporation, or its registered assigns ("Payee"), the sum of FORTY MILLION
DOLLARS ($40,000,000.00), together with interest on the unpaid principal balance
from time to time remaining at the rate of eleven percent (11%) per annum. The
principal of and accrued interest on this note shall be due and payable in
lawful money of the United States of America, at the office of The Greyhound
Corporation, Greyhound Tower, Phoenix, Arizona 85077.
1. Payments. The interest on this note shall be compounded (but not paid)
on each January 15 and July 15 to and including July 15, 1989 (the "Conversion
Date"), at which time all such accrued and unpaid interest shall be added to and
become principal of this note. From and after the Conversion Date, accrued and
unpaid interest on the principal of this note (including principal created
pursuant to the immediately preceding sentence) shall be payable on January 15
and July 15 in each year and at the final maturity of this note.
The principal of this note (including principal created pursuant to the
preceding paragraph) shall be payable in four annual installments, each equal to
20% (rounded to the nearest $100) of the principal of this note that is
outstanding at the close of business in Phoenix, Arizona, on July 15, 1995, the
first such payment to be due on July 15, 1995, and one additional such payment
to be due on July 15, 1996, 1997, and 1998. The balance of the principal of this
note shall be due and payable on July 15, 1999.
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Overdue principal and, to the extent permitted by law, interest shall bear
interest at the rate of 13% per annum from the due date until paid.
2. Prepayments. Maker shall be entitled to prepay the unpaid principal
balance hereof, from time to time and at any time, in whole or in part, without
premium or penalty, but only in increments of $500,000 and only if all interest
accrued hereon is paid through the date of such payment. Any prepayment of
principal shall be applied to such installment or installments of principal as
Maker may select at the time of prepayment.
3. Events of Default and Remedies. The entire unpaid principal balance of,
and all unpaid accrued interest on, this note shall, subject to the provisions
of paragraph 12 below, immediately become due and payable at the option of the
holders of notes evidencing at least a majority of the aggregate outstanding
principal amount notes of this series upon the occurrence of one or more of the
following events of default (individually and collectively, hereinafter called a
"Default"):
(i) The failure or refusal of Maker to pay all or any part of the
principal or accrued interest on this note as and when the same becomes due
and payable in accordance with the terms hereof, and the continuation of
such failure or refusal for a period of one hundred eighty (180) days after
the due date prior to July 15, 1990, or for a period of thirty (30) days
thereafter;
(ii) The maturity of Senior Debt (as hereinafter defined) having an
aggregate principal amount of $5,000,000 or more shall be accelerated by
action of the holder or holders thereof, and such acceleration shall not
have been rescinded or such Senior Debt paid in full within one hundred and
eighty days (180) after the date of such acceleration (provided, however,
that if the Senior Debt that has been accelerated includes Senior Debt
under (x) the Credit Agreement among Maker, certain of Maker's affiliates
listed therein, the Banks listed therein and Irving Trust Company, as
Agent, dated as of March 18, 1987, or (y) the 12 1/2% Senior Subordinated
Notes due 1997, issued under the Indenture dated as of March 18, 1987
between GLI Merger Company and Connecticut National Bank, as Trustee, then
such acceleration shall constitute a Default immediately upon the
occurrence thereof);
(iii) Maker shall (a) voluntarily seek, consent to, or acquiesce in
the benefit or benefits of any Debtor Relief Law (hereinafter defined), or
(d) be made the subject of any proceeding provided for by any Debtor Relief
Law that could suspend or otherwise affect any of the rights of the
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<PAGE> 18
holder hereof, provided however, if such proceeding is withdrawn or
dismissed within one hundred and eighty (180) days from the date of the
institution of such proceeding, then such event shall no longer be deemed a
Default hereunder (as used herein, "Debtor Relief Laws" means the
Bankruptcy Code of the United States of America, and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement
receivership, insolvency, reorganization, suspension of payments, or
similar debtor relief laws from time to time in effect affecting the rights
of creditors generally).
Subject to the provisions of paragraph 12 below, in the event a Default
shall have occurred and shall be continuing, the holder of this note may proceed
to protect and enforce its rights either by suit in equity and/or by action at
law, or by other appropriate proceedings, whether for the specific performance
of any covenant or agreement contained in this note, or in aid of the exercise
of any power or right granted by this note or to enforce any other legal or
equitable right of the holder of this note.
4. Cumulative Rights. No delay on the part of the holder of this note in
the exercise of any power or right under this note shall operate as a waiver
thereof, nor shall a single or partial exercise of any such power or right.
5. Waiver. Except as expressly provided herein or in any document or
instrument executed in connection herewith, Maker, and each surety, endorser,
guarantor, and other party ever liable for the payment of any sum of money
payable on this note, jointly and severally waive demand, presentment, protest,
notice of nonpayment, notice of intention to accelerate, notice of protest,
notice of acceleration, all other notices of any kind, and any and all lack of
diligence or any delay in collection or the filing of suit hereon which may
occur, and agree that their liability on this note shall not be affected by any
renewal or extension in the time of payment hereof, by any indulgences, or by
any release or change in any security for the payment of this note, and hereby
consent to any and all renewals, extensions, indulgences, releases, or changes,
regardless of the number of such renewals, extensions, indulgences, releases, or
changes.
6. Attorneys' Fees and Costs. In the event a Default shall occur and be
continuing, and in the event that thereafter this note is placed in the hands of
an attorney for collection, or in the event this note is collected in whole or
in part through legal proceedings of any nature, then and in any such case,
Maker promises to pay all costs of collection, including but not limited to
reasonable attorneys' fees incurred by the holder hereof on account of such
collection, whether or not suit is filed.
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7. Notices. Any notice, demand, or other communication given pursuant to
or in connection with this note must be in writing to be effective and shall be
deemed to have been given and received (a) when actually delivered to the
address of the party to be notified if delivered in person, or (b) if mailed, on
the earlier of the date actually delivered to the address of the party to be
notified or (whether ever so delivered or not) on the third Business Day
(hereinafter defined) after it is enclosed in an envelope, addressed to the
party to be notified at such party's address as set forth in this note, properly
stamped, sealed, and deposited in the United States mail, certified mail, return
receipt requested. Until changed by notice pursuant hereto, for purposes hereof,
the address of Payee is Greyhound Tower, Phoenix, Arizona 85077, Attention:
General Counsel, and the address of Maker is 2400 InterFirst Plaza, 901 Main
Street, Dallas, Texas 75202.
8. Governing Law. This note is intended to be performed in the State of
New York, and the laws of such state shall govern the construction, validity,
enforcement, and interpretation hereof.
9. Heading Construction. The headings of the paragraphs of this note are
inserted for convenience only and shall not be deemed to constitute a part
hereof; words used herein of any gender shall be construed to included any other
gender where appropriate, and words used herein which are either singular or
plural shall be construed to included the other where appropriate.
10. Successors and Assigns. All of the covenants, stipulations, promises,
and agreements in this note contained by or on behalf of Maker shall bind its
successors and assigns, whether so expressed or not.
11. Business Day. In any case where a payment of principal or interest
hereon is due on a day which is not a Business Day, Maker shall be entitled to
delay such payment until the next succeeding Business Day, but interest shall
continue to accrue until the payment is, in fact, made. As used herein,
"Business Day" means every day other than a Saturday, Sunday or legal holiday in
the State of Texas.
12. Subordination. Each holder of this note hereby acknowledges and agrees
that the indebtedness evidenced by, and other obligations payable in respect of,
this note (including but not limited to principal, interest and amounts payable
under Section 6 hereof), and any renewals, rearrangements, or modifications
hereof (collectively, "Obligations"), are at all times and in all respects
subordinate and junior in right of
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payment to the payment of Senior Debt on the following terms and conditions:
(a) Such holder shall not demand, sue for, take, or receive any
payment or distribution (whether in cash, property or securities) (other
than regularly scheduled installments of interest and principal which are
not made in advance of the scheduled payment dates) upon or in respect of
all or any part of the Obligations or commence any action or proceeding
against Maker under any Debtor Relief Laws unless and until the Senor Debt
shall have been paid in full and in the event such holder receives any such
payment or distribution, the holder of this note shall hold such payment or
distribution in trust for the holders of Senor Debt and pay it over to such
holders, ratably, on demand;
(b) If a default in payment of any Senior Debt, or an event which
(with or without notice, lapse of time, or otherwise) would by its terms
permit any holder of Senior Debt to accelerate the maturity thereof, occurs
and is continuing, the holder of this note shall not accelerate, demand,
sue for, take or receive any payment or distribution (whether in cash,
property or securities) upon or in respect of all or any part of the
Obligations or commence any action or proceeding against Maker under any
Debtor Relief Laws unless and until the Senior Debt shall have been paid in
full and in the event such holder receives any such payment or
distribution, the holder of this note shall hold such payment or
distribution in trust for the holders of Senior Debt and pay it over to
such holders, ratably, on demand; and
(c) In the event of any proceedings relative to Maker or its property
under any Debtor Relief Laws, or in the event of any voluntary or
involuntary liquidation, winding up or dissolution of Maker, or assignee
for the benefit of creditors, the holders of Senior Debt shall be entitled
to receive payment in full of the Senior Debt (including, without
limitation, postpetition interest, regardless of whether such interest is
allowable under Section 506 of the United States Bankruptcy Code) before
the holder of this note is entitled to receive any payment or distribution
(whether in cash, property or securities) on account of the Obligations
and, in the event any such payment or distribution is made upon or in
respect of the Obligations, it shall be paid to the holders of Senior Debt,
ratably, until the Senior Debt shall have been paid and satisfied in full.
As used herein, "Senior Debt" means all obligations (whether now
outstanding or hereafter incurred) for the payment of which Maker is responsible
or liable as obligor, guarantor, or
5
<PAGE> 21
otherwise in respect of (i) for principal of (and premium, if any) and interest
on all indebtedness for money borrowed or evidenced by bonds, notes, debentures,
or similar instruments, and all fees, expenses, reimbursements, indemnities,
premiums and other amounts payable under any agreements or instruments relating
thereto, (ii) indebtedness under leases which are or may be capitalized under
generally accepted accounting principles, (iii) any indebtedness for money
borrowed in connection with an acquisition by Maker or a subsidiary of the stock
or substantially all of the assets of another person or in connection with a
merger or consolidation to which Maker or a subsidiary is a party, (iv) any
indebtedness representing the deferred and unpaid purchase price of any property
or business, and (v) all deferrals, renewals, amendments, modifications,
supplements, extensions and refundings of any such indebtedness or obligations
under clauses (i), (ii) or (iii); provided, that the following shall not
constitute Senior Debt: (a) indebtedness which is expressly made equal in right
of payment with this note or subordinate and subject in right of payment to this
note or (b) indebtedness for goods or materials purchased or services obtained
in the ordinary course of business or indebtedness consisting of trade payables.
Senior Debt shall continue to constitute Senior Debt for all purposes hereof,
and the provisions of Section 12 shall continue to apply to such Senior Debt,
notwithstanding the fact that such Senior Debt or any claim in respect thereof
shall be disallowed, avoided or subordinated pursuant to the provisions of any
Debtor Relief Law or other applicable law.
Each holder of this note by his acceptance hereof: (x) if and so long as
payment with respect to this note is prohibited under this Section 12,
irrevocably authorizes and empowers (but without imposing any obligation on or
any duty to such holder from) any representative of the holders of Senior Debt
designated by the holders of at least 66 2/3% of the outstanding Senior Debt, to
demand, sue for, collect, receive and receipt for such holder's ratable share of
payments and distributions in respect hereof (including without limitation all
payments and distributions which may be payable or deliverable pursuant to the
terms of any indebtedness subordinated to this note) which are required to be
paid or delivered to the holders of Senior Debt as provided in this Section 12
and to file and prove all claims therefor, and take all such other action
(including the right to vote such holder's ratable share of this note and the
right to vote, file and prove claims respecting any indebtedness subordinated to
this note) in the name of such holder, or otherwise, as the holders of at least
66 2/3% of the outstanding Senior Debt may determine to be necessary or
appropriate for the enforcement of the provisions of this Section 12; and (y)
agrees (I) to execute and deliver to such designated representative of Senior
Debt all such further instruments confirming the authorization hereinabove set
forth, and all such powers of
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<PAGE> 22
attorney, proofs of claim, assignments of claim and other instruments, and to
take all such other actions as may be requested by such representative upon
direction by the holders of at least 66 2/3% of the outstanding Senior Debt in
order to enable such representative to enforce all claims upon or in respect of
such holder's ratable share of payment and distributions in respect of this note
and (II) not to compromise, release, forgive or otherwise discharge the
obligations of the Maker with respect to this note without prior written consent
of the holders of at least 66 2/3% of the outstanding Senior Debt.
Each holder of Senior Debt may extent, renew, modify, supplement or amend
the terms of the Senior Debt or any security therefor or guaranty thereof and
release, sell, exchange or enforce such security or guaranty or elect any right
or remedy, or delay in enforcing or release any right or remedy and otherwise
deal freely with the Maker all without notice to the holder of this note and all
without affecting the liabilities and obligations of the Maker or the holder of
this note, even if any right of subrogation or similar rights of the holder of
this note is extinguished, affected or impaired thereby.
This Section 12 shall constitute a continuing offer and inducement to all
persons who become holders of, or continue to hold, Senior Debt. Notwithstanding
anything to the contrary contained herein, the provisions of this Section 12 are
made for the benefit of the holders of Senior Debt, each of whom is an obligee
hereunder and is entitled to enforce such holder's rights hereunder, without any
act or notice of acceptance hereof or reliance hereon. No amendment,
modification or discharge of any provision of this Section 12 shall be effective
against any holder of Senior Debt unless expressly consented to in writing by
such holder.
13. Offset of Payments. Any amount (including principal and interest)
payable on this note to any affiliate of The Greyhound Corporation shall, at the
option of Maker, be subject to offset for any liability of The Greyhound
Corporation or any of its affiliates to Maker or any Affiliate of Maker arising
under that certain Acquisition Agreement dated December 22, 1986, among Maker,
The Greyhound Corporation, and others. Failure to make any payment on this note
as a result of any such permitted offset shall not constitute a Default on this
note.
14. Series. This note is one of a series of notes of Maker knows as its
Junior Subordinated Notes due 1999, initially limited to $40,000,000. Additional
notes of this series may be issued in exchange for Maker's Series A Preferred
Stock from time to time. All notes of such series shall rank equal and pari
passu in all respects, and all payments and prepayments on such notes shall be
made ratably to all holders thereof.
7
<PAGE> 1
EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT
BE PLEDGED, SOLD, OFFERED FOR SALE,
TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL
THE HOLDER HEREOF PROVIDES INFORMATION
SATISFACTORY TO THE ISSUER (WHICH, IN THE
DISCRETION OF THE ISSUER, MAY INCLUDE AN
OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER) THAT SUCH PLEDGE, SALE, OFFER,
TRANSFER, OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
11% JUNIOR SUBORDINATED NOTE DUE 1999
$40,000,000.00 March 18, 1987
FOR VALUE RECEIVED, the undersigned, GLI Operating Company, a Delaware
corporation ("Maker"), promises to pay to Greyhound Lines, Inc., a California
corporation, or its registered assigns ("Payee"), the sum of FORTY MILLION
DOLLARS ($40,000,000.00), together with interest on the unpaid principal balance
from time to time remaining at the rate of eleven percent (11%) per annum. The
principal of and accrued interest on this note shall be due and payable in
lawful money of the United States of America, at the office of The Greyhound
Corporation, Greyhound Tower, Phoenix, Arizona 85077.
1. Payments. The interest on this note shall be compounded (but not paid)
on each January 15 and July 15 to and including July 15, 1989 (the "Conversion
Date"), at which time all such accrued and unpaid interest shall be added to and
become principal of this note. From and after the Conversion Date, accrued and
unpaid interest on the principal of this note (including principal created
pursuant to the immediately preceding sentence) shall be payable on January 15
and July 15 in each year and at the final maturity of this note.
The principal of this note (including principal created pursuant to the
preceding paragraph) shall be payable in four annual installments, each equal to
20% (rounded to the nearest $100) of the principal of this note that is
outstanding at the close of business in Phoenix, Arizona, on July 15, 1995, the
first such payment to be due on July 15, 1995, and one additional such payment
to be due on July 15, 1996, 1997, and 1998. The balance of the principal of this
note shall be due and payable on July 15, 1999.
1
<PAGE> 2
Overdue principal and, to the extent permitted by law, interest shall bear
interest at the rate of 13% per annum from the due date until paid.
2. Prepayments. Maker shall be entitled to prepay the unpaid principal
balance hereof, from time to time and at any time, in whole or in part, without
premium or penalty, but only in increments of $500,000 and only if all interest
accrued hereon is paid through the date of such payment. Any prepayment of
principal shall be applied to such installment or installments of principal as
Maker may select at the time of prepayment.
3. Events of Default and Remedies. The entire unpaid principal balance of,
and all unpaid accrued interest on, this note shall, subject to the provisions
of paragraph 12 below, immediately become due and payable at the option of the
holders of notes evidencing at least a majority of the aggregate outstanding
principal amount notes of this series upon the occurrence of one or more of the
following events of default (individually and collectively, hereinafter called a
"Default"):
(i) The failure or refusal of Maker to pay all or any part of the
principal or accrued interest on this note as and when the same becomes due
and payable in accordance with the terms hereof, and the continuation of
such failure or refusal for a period of one hundred eighty (180) days after
the due date prior to July 15, 1990, or for a period of thirty (30) days
thereafter;
(ii) The maturity of Senior Debt (as hereinafter defined) having an
aggregate principal amount of $5,000,000 or more shall be accelerated by
action of the holder or holders thereof, and such acceleration shall not
have been rescinded or such Senior Debt paid in full within one hundred and
eighty days (180) after the date of such acceleration (provided, however,
that if the Senior Debt that has been accelerated includes Senior Debt
under (x) the Credit Agreement among Maker, certain of Maker's affiliates
listed therein, the Banks listed therein and Irving Trust Company, as
Agent, dated as of March 18, 1987, or (y) the 12 1/2% Senior Subordinated
Notes due 1997, issued under the Indenture dated as of March 18, 1987
between GLI Merger Company and Connecticut National Bank, as Trustee, then
such acceleration shall constitute a Default immediately upon the
occurrence thereof);
(iii) Maker shall (a) voluntarily seek, consent to, or acquiesce in
the benefit or benefits of any Debtor Relief Law (hereinafter defined), or
(d) be made the subject of any proceeding provided for by any Debtor Relief
Law that could suspend or otherwise affect any of the rights of the
2
<PAGE> 1
EXHIBIT 10.6
TRADEMARK LICENSE AGREEMENT
Agreement made as of the 18th day of March, 1987 by and between The
Greyhound Corporation, an Arizona corporation (hereinafter referred to as
"Greyhound"), and GLI Holding Company, a Delaware corporation (hereinafter
referred to as "GLI Holding"), and GLI Operating Company, a Delaware corporation
(hereinafter referred to as "GLI Operating"), GLI Holding and GLI Operating
being hereinafter collectively referred to as "Licensee" unless the context
otherwise requires.
WITNESSETH THAT:
WHEREAS, Licensee and Greyhound are parties to an Acquisition Agreement
dated December 22, 1986, as amended (the "Acquisition Agreement"), whereby GLI
Holding acquired the stock in certain companies engaged or to be engaged in the
transportation business; and
WHEREAS, as provided in said Acquisition Agreement Greyhound has agreed to
grant to Licensee a license to use certain trademarks and service marks in the
United States and Mexico; and
WHEREAS, Greyhound and Licensee wish to memorialize the terms, covenants
and conditions of that license.
NOW, THEREFORE, in consideration of the above-stated premises, the mutual
promises herein contained and other good and valuable consideration, the receipt
and sufficiency of which the parties hereby acknowledge, the parties agree as
follows:
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<PAGE> 2
1. Definitions. For the purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Marks" shall mean the trademarks and service marks listed in
Schedules C-1 and C-2 attached hereto and by this reference incorporated
herein.
(b) "Business" shall mean the business of travel and transportation
(except by water) including without limitation the transportation by ground
and/or air of passengers (including by charter and tour), baggage, package
express or other property in or between the United States and Mexico.
(c) "Transportation Subsidiary" shall mean any corporation which is
engaged in the Business and over 50% of the voting capital stock of which
is owned or controlled directly or indirectly by Licensee.
(d) The "CPI CHANGE FACTOR" for any calender year shall be the figure
obtained by dividing the Consumer Price Index (all items) for the year 1986
(328.4) by the Consumer Price Index (all items) for such calendar year. The
Index utilized in said calculation shall be the Consumer Price Index
published at regular intervals by the Bureau of Labor Statistics of the
United States Department of Labor or any similar successor index.
(e) The term "ADJUSTED REVENUE" for any calendar year shall be the GLI
Holding's total audited consolidated bus and travel revenues for said
calendar year, multiplied by the CPI CHANGE FACTOR for that year
2. Grant.
(a) Subject to all of the Provisions of this Agreement, Greyhound
hereby grants to Licensee and its Transportation Subsidiaries the sole and
exclusive right to use the Marks listed on Schedule C-1, together with all
of the goodwill associated therewith, in the United States and Mexico in
connection with
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<PAGE> 3
the Business. (The exclusivity of such grant shall be subject to the
existing license agreements set forth in Schedule C-3.)
(b) During the term and subject to all of the provisions of this
Agreement, Greyhound hereby grants to Licensee and its Transportation
Subsidiaries the non-exclusive right to use the Marks listed on Schedule
C-2, related to prints and publications, together with all of the goodwill
associated therewith, in the United States and Mexico in connection with
the Business.
(c) It is understood and agreed that Licensee and its Transportation
Subsidiaries shall also have the sole and exclusive right to use the term
"Greyhound" as part of a trade name in connection with the Business;
provided, however, that Licensee shall obtain Greyhound's prior written
approval (which approval will not be unreasonably withheld with respect to
the Business) before adopting said term as part of a trade name; it being
further understood that such approval is not required where "Greyhound" is
used as part of a trade name for any type or aspect of the surface
transportation businesses as conducted by Greyhound Lines, Inc. and its
subsidiaries on the date hereof and "Greyhound" is combined with a word or
words descriptive of an aspect of such surface transportation businesses.
Approval is hereby given to use the trade names: Greyhound Lines, Inc.,
Eastern Greyhound Lines Co., Southern Greyhound Lines Co., Central
Greyhound Lines Co., Western Greyhound Lines Co., and Greyhound Travel
Services Inc.
(d) At Licensee's request, Greyhound will, in a separate agreement,
license others to use the Marks in connection with the Business in the
United States and Mexico.
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<PAGE> 4
3. Rights and Obligations of the Transportation Subsidiaries.
(a) It is agreed that the rights and obligations of Licensee in this
Agreement shall also be the rights and obligations (other than the
obligations set forth in Section 4) of its Transportation Subsidiaries
unless expressly stated to the contrary or as the context otherwise
requires.
(b) Licensee agrees that it will cause each of its Transportation
Subsidiaries to fulfill all of the obligations of this Agreement that are
applicable to such Transportation Subsidiaries.
(c) It is agreed that Licensee and Transportation Subsidiaries may
assign as collateral their rights under the Agreement.
4. Consideration.
(a) As consideration for the licenses granted herein GLI Holding shall
pay Greyhound certain royalties contingent upon GLI Holding's ADJUSTED
REVENUES. Said royalties shall be paid for the calendar years 1989 through
1993. Each calendar year's royalty payments shall be based on GLI Holdings
ADJUSTED REVENUE for said year and shall be calculated according to the
following schedule:
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<PAGE> 5
Royalty Schedule
(In Millions of Dollars)
<TABLE>
<CAPTION>
IF ADJUSTED REVENUE IS: ROYALTY AMOUNT
- -------------------------------------- -------------------------------------------
<S> <C> <C> <C>
Below $600 -0-
From 600 to 650 $ -0- plus .5% times the amount in excess of $600
From 650 to 700 .25 plus 1.0% times the amount in excess of 650
From 700 to 750 .75 plus 1.5% times the amount in excess of 700
From 750 to 800 1.50 plus 2.0% times the amount in excess of 750
From 800 to 850 2.50 plus 2.5% times the amount in excess of 800
From 850 to 900 3.75 plus 2.0% times the amount in excess of 850
From 900 to 950 4.75 plus 1.5% times the amount in excess of 900
From 950 to 1000 5.50 plus 1.0% times the amount in excess of 950
Above 1000 6.00 plus .5% times the amount in excess of 1000
</TABLE>
(b) The parties hereto agree that all payments made pursuant to this
Agreement shall be considered and treated consistently by each party as a
"Contingent Payment" as such term is used and defined in Sections 1253(c)
and (d)(1), respectively, of the Internal Revenue Code of 1986, as amended.
(c) Payment of royalties required to be paid by GLI Holding shall be
made within ninety (90) days following the end of each calendar year for
each of the years 1989 through 1993. Each such payment shall be on account
of the royalties which have accrued during the preceding calendar year and
shall be accompanied by a report giving such particulars of the business
hereunder during such calendar year as are pertinent to an accounting for
royalty under this Agreement.
(d) GLI Holding agrees to keep true, accurate and usual books of
account and records relating to operations under this Agreement, and such
books
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<PAGE> 6
and records shall be open at all reasonable times during the term of this
Agreement to inspection by a representative of Greyhound, who shall have
the right to examine such books and records in accordance with generally
accepted auditing standards, including such tests and such other auditing
procedures as they may consider necessary to verify the correctness and
accuracy of GLI Holding's reports.
5. Compliance with Laws. Licensee shall operate its Business using the
Marks in material compliance with all applicable laws, ordinances, regulations
and other requirements of any federal, state, county, municipal or other
government body.
6. Conduct. Licensee shall refrain from committing any act or pursing any
course of conduct which tends to bring the Marks into disrepute.
7. Ownership of Marks.
(a) Licensee hereby agrees that, as between Licensee and Greyhound,
Greyhound is the sole owner of the Marks and all the goodwill relating
thereto, that the same, at all times hereunder, shall be and remain the
sole and exclusive property of Greyhound and that Licensee, by reason of
this Agreement, has not acquired any right, title, interest or claim of
ownership in such Marks in the United States and Mexico, except for the
licenses granted herein. The use by Licensee of the Marks in the United
States and Mexico and any and all goodwill arising from such use shall
inure solely to the benefit of Greyhound and shall be deemed to be solely
the property of Greyhound.
(b) Licensee agrees that it will cause to appear on all vehicles,
buildings, signs, business materials and the like bearing the Marks, and on
all advertising, promotional or display materials used in connection with
the Marks, the appropriate statutory notice of trademark registration, all
in the form approved by Greyhound in writing.
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<PAGE> 7
8. Quality of Business.
(a) Licensee understands and hereby acknowledges that uniform and high
standards of quality with respect to the Business using the Marks are
necessary in order to maintain the public image and widespread consumer
recognition of such Marks, and that Greyhound has the right to establish
and enforce such quality standards with respect to such Marks. Such current
standards with respect to such Marks are set forth in the Quality Control
Manual set forth in Schedule C-4 attached hereto and made a part hereof.
Greyhound acknowledges that the present operation of the Business complies
with such standards.
(b) In the performance of Business under the Marks, Licensee shall
meet Greyhound's standards of quality set forth in Schedule C-4 applicable
to the Marks, which may be revised from time to time. Licensee shall not at
any time use the Marks in any manner except as permitted herein.
9. Display of Marks.
(a) Greyhound shall have the right to establish and enforce the
standards governing the manner in which Licensee may display the Marks. The
current standards are set forth in the manual entitled Graphic Standards
Guide for Trademarks of The Greyhound Corporation, a copy of which is
attached hereto as Schedule C-5. Greyhound acknowledges that the present
operation of the Business complies with such standards.
(b) All use of the Marks hereunder in connection with the Business
including premises, vehicles or business materials, or in advertising,
promotional or display materials, shall be in accordance with Schedule C-5,
as revised from time to time, unless otherwise approved by Greyhound in
writing.
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<PAGE> 8
(c) Upon selling or otherwise transferring use of ownership of any
vehicle, building, facility, or equipment bearing the Marks, Licensee shall
effectively obliterate the Marks therefrom.
10. Inspection. Greyhound shall have the right to have a qualified
representative inspect, upon reasonable notice during regular business hours,
facilities where Business under the Marks is conducted in order to determine
whether, in such representative's opinion, the applicable quality standards are
being complied with.
11. Indemnification.
(a) Licensee shall hold Greyhound harmless from and indemnify and
defend Greyhound and Greyhound's subsidiaries, affiliates, employees,
agents and assigns against any suits, actions, claims, losses, demands,
damages, liabilities, costs and expenses of every kind (including product
liabilities), including costs and attorneys' fees for defending same, which
may arise or result from Licensee's and its Transportation Subsidiaries'
conduct of Business using Marks.
(b) Greyhound shall hold Licensee and its Transportation Subsidiaries
harmless from and indemnify and defend Licensee and Licensee's
Transportation Subsidiaries and their directors, officers, employees,
agents and assigns against any trademark infringement suits, actions,
claims, losses, demands, damages, liabilities, costs and expenses,
including costs and attorneys' fees for defending same, which may arise or
result by reason of the use by Licensee and its Transportation Subsidiaries
of the Marks licensed herein and in accordance with the terms hereof.
(c) With respect to any claims falling within the scope of the
foregoing indemnifications,
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<PAGE> 9
(i) each party agrees to notify promptly the other in writing of,
and to keep the other fully advised with respect to, such claims, and
the progress of any legal actions relating thereto in which the other
party is not a participant;
(ii) the indemnifying party shall have the right and, if requested
to do so by the indemnified party, the obligation, to assume, at its
cost, the defense of such a claim instituted against the indemnified
party; if the indemnifying party does not undertake the defense of such
a claim, then the indemnified party shall be entitled to reimbursement
of its reasonable attorneys' fees in defending the claim;
(iii) each party shall have the right to participate at its expense
in the defense of any claim instituted against it, and if such party
does so participate, it shall not have the right to recover against the
other party the costs and expenses (including its attorneys' fees) of
its participation in such suit;
(iv) the foregoing indemnifications shall not be deemed to entitle
either party to recover against the other party for lost profits,
whether actual, anticipated or estimated;
(v) in the event that a party assumes the defense of a claim
against the other party, the party assuming the defense shall not enter
into any compromise or settlement of the claim without the prior written
consent of the other party, which consent shall not be unreasonably
withheld or delayed.
12. Insurance. Licensee shall maintain insurance with respect to its
business in such amounts and covering such risks as is customary for the
Business and similar businesses, from time to time, including appropriate self
insurance.
13. Maintenance of Marks. Greyhound shall, in a prompt and timely manner,
take all such actions as may be necessary to secure and maintain the
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<PAGE> 10
Marks in the United States and Mexico for which Licensee has a license
hereunder. It is understood that Greyhound's obligations hereunder shall include
the filing of applications to register Marks for goods and/or services
applicable to Licensee's Business and for which the Marks are not currently
registered.
14. Infringement. Each party shall give prompt notice to the other of any
uses of trademarks or service marks by third parties deemed similar to the
Marks, or the publication or registration of a trademark or service mark of
which it becomes aware and believes to be confusingly similar to one or more of
the Marks in the United States and Mexico. If requested by Licensee, Greyhound
will promptly decide and notify Licensee whether or not it will institute any
legal action in said cases. Licensee shall cooperate fully with Greyhound in any
such legal action taken by Greyhound. In the event Greyhound does not institute
action within thirty (30) days of receipt of notice from Licensee requesting
such action, Licensee may, at its sole cost and expense, and after obtaining
Greyhound's consent, which will not be unreasonably withheld, institute such
legal action, and Greyhound agrees to cooperate with the Licensee in the
prosecution of such action. Any amount awarded with respect to any such legal
action shall be first allocated between Greyhound and Licensee in reimbursement
of their respective expenses and the remainder shall be allocated to the party
controlling the action.
15. Independent Contractor. It is understood that Licensee is an
independent contractor and is not an agent, partner, joint venturer or employee
of Greyhound, and no fiduciary relationship between the parties exists. Licensee
shall have no right to bind or obligate Greyhound in any way, nor shall Licensee
represent that it has any right to do so. Greyhound shall have no control over
the terms and conditions of employment of Licensee's employees.
-10-
<PAGE> 11
16. Term. This Agreement shall commence as of the date hereof and shall
continue in perpetuity unless earlier terminated as hereafter provided.
17. Abandonment of Use by Licensee of Marks. In the event that Licensee and
its Transportation Subsidiaries abandon use of the Marks, Greyhound may, at its
option, terminate the license herein with respect to such Marks.
18. Cessation of Use by Greyhound.
(a) In the event Greyhound and all its active affiliated companies
have ceased use of the term "Greyhound" in their corporate names, and have
ceased use of the "Image of a Running Dog" as a corporate logo, then in
that event Greyhound shall give prompt notice thereof to Licensee and
shall, without additional payment, assign to Licensee or its designee all
right, title and interest in the United States and Mexico in and to the
trademarks and service marks "Greyhound" and the "Image of a Running Dog"
together with the goodwill associated therewith and together with
Greyhound's registrations and pending applications therefor in all classes
of goods and services. Such assignment shall include the right to receive
royalties for use of said trademarks and service marks by third parties. At
any time after December 31, 1993 Licensee may purchase the right to receive
royalties received from such third parties by payment to Greyhound of an
amount equal to three (3) times the then aggregate annual amount of such
royalties then being paid to Greyhound. Such annual royalties shall be
determined on the basis of the four (4) calendar quarters immediately
preceding.
(b) Upon the assignment, this Agreement shall terminate except for GLI
Holding's obligation to make contingent royalty payments to Greyhound as
provided for in Section 4 of this Agreement.
-11-
<PAGE> 12
19. Default.
(a) In the event that Licensee shall be in material breach of any
provision of this Agreement and such material breach shall continue for a
period of sixty (60) days after the later of (i) receipt of written notice
from Greyhound setting forth the nature of the breach and the manner in
which it may be remedied or (ii) determination by a tribunal of competent
jurisdiction, that Licensee is, in fact, in breach of its obligations
hereunder and/or that Licensee's attempted cure is inadequate to satisfy
its obligations hereunder, then Greyhound, at its option, may terminate
this Agreement with respect to the goods and/or services of the Business
involved in the breach; provided, however, that in the event of any breach
of the type which cannot be reasonably remedied within such sixty (60) day
period, it shall be sufficient that Licensee shall have commenced such
remedy within such sixty (60) day period and shall thereafter diligently
pursue such remedy to completion.
(b) In the event that Licensee shall be in non-material breach of this
Agreement and such breach shall continue for a period of thirty (30) days
after the later of (i) receipt of written notice from Greyhound setting
forth the nature of the breach or (ii) determination by a tribunal of
competent jurisdiction, that Licensee has, in fact, breached this Agreement
and/or that Licensee's attempted cure is inadequate to satisfy its
obligations hereunder, then Greyhound's remedy shall be limited to an award
of money damages as may be determined by a tribunal of competent
jurisdiction.
20. Obligations After Termination.
(a) Upon termination of this Agreement, all of Licensee's rights and
privileges hereunder shall cease, and Licensee shall cease using, or
permitting to be used, anywhere and in any manner, and whether directly or
indirectly: (a) the
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<PAGE> 13
Marks and (b) all advertising and promotional materials, labels and signs
bearing the Marks; provided, however, that Licensee shall have a reasonable
period of time following termination to wind up its use of the Marks. After
termination of this Agreement, Licensee will not adopt or use any
trademark, service mark or trade name or trade style confusingly similar to
Marks, no shall Licensee thereafter hold forth, declare or in any way
suggest that Licensee has any connection with Greyhound.
(b) Upon termination of this Agreement in accordance with Section
18(b), all of Greyhound's rights and privileges hereunder shall cease
except for Greyhound's right to receive contingent royalties through 1993
in accordance with Section 4 hereof. After such termination, Greyhound and
its affiliated companies shall cease using or granting licenses for the use
thereof, anywhere and in any manner, whether directly or indirectly, the
marks assigned to Licensee as provided for in Section 18(b) and all
advertising and promotional materials, labels, and signs bearing said
marks; provided, however, that Greyhound shall have a reasonable period of
time following termination to wind up its use of said marks. After
termination of this Agreement, Greyhound will not adopt or use any
trademark, service mark or trade name or trade style confusingly similar to
said marks, nor shall Greyhound thereafter hold forth, declare or in any
way suggest that Greyhound has any connection with the Licensee.
21. Assignment. It is agreed that this Agreement shall not be assignable by
Licensee, except in connection with the sale of the entire Business of Licensee
and its Transportation Subsidiaries.
22. Notice. All notices which are required or may be given pursuant to the
terms of this Agreement shall be in writing and shall be deemed given upon
-13-
<PAGE> 14
personal delivery or four business days after being sent by registered mail,
postage prepaid, addressed as follows:
<TABLE>
<S> <C>
If to Greyhound: The Greyhound Corporation
Greyhound Tower
Phoenix, Arizona 85077
Attention: Vice President and General Counsel
If to GLI Holding: GLI Holding Company
2400 InterFirst Plaza
901 Main Street
Dallas, Texas 75202
Attention: President
If to GLI Operating: GLI Operating Company
2400 InterFirst Plaza
901 Main Street
Dallas, Texas 75002
Attention: President
</TABLE>
or at such other address as any party hereto shall have designated by notice in
writing to the other party hereto.
23. Representations.
(a) Greyhound represents and warrants that all registrations of the
Marks are subsisting on the trademark registers set forth in Schedules C-1
and C-2 attached hereto and are in full force and effect and all
applications listed on Schedules C-1 and C-2 are pending in the trademark
offices of such jurisdictions. Greyhound will use commercially reasonable
efforts to keep such registrations of Marks subsisting on the trademark
registers in full force and effect.
(b) Greyhound represents and warrants that as of the date of this
Agreement, Greyhound is the direct and unrestricted owner of all right,
title and interest in and to the Marks and in and to the registrations
thereof and applications therefor listed on Schedules C-1 and C-2, and
will use commercially reasonable efforts to retain such direct and
unrestricted ownership in the Marks.
-14-
<PAGE> 15
No such right, title and interest has been mortgaged, pledged, transferred,
assigned or, except as set forth in Schedule C-3, licensed to any third
party or is held subject to any trust or similar right in favor of any
third party. During the term of this Agreement, Greyhound will not
mortgage, pledge, transfer or assign (except to a controlled subsidiary and
affiliate) the Marks to any third party or allow the Marks to be held
subject to any trust or similar right in favor of any third party. Any such
mortgage, pledge, transfer or assignment to a controlled subsidiary or
affiliate of Greyhound shall be subject to the terms of this Agreement.
(c) The Marks including the trademarks listed on Exhibit B of the
Acquisition Agreement comprise all the material trademarks and trade names
(including all applications, registrations, extensions, and renewals
thereof) which are necessary to permit the continuation of the Licensee's
or any of its subsidiaries' Business in the same manner as now conducted.
24. Miscellaneous.
(a) Nothing contained in this Agreement shall be construed so as to
require the commission of any act contrary to law, and wherever there is
any conflict between any provision of this Agreement and of any statute,
law, ordinance, order or regulation contrary to which the parties hereto
have no legal right to contract, the latter shall prevail; provided,
however, that in such event the provisions of this Agreement so affected
shall be curtailed and limited only to the extent necessary to permit
compliance with the minimum legal requirement and no other provisions of
this Agreement shall be affected thereby.
(b) This Agreement shall be governed and construed under and in
accordance with the laws of the State of Arizona.
-15-
<PAGE> 16
(c) No waiver of any term or condition of this Agreement shall be
construed as a waiver of any other term or condition; nor shall any waiver
of any default under this Agreement be construed as a waiver of any other
default.
(d) This Agreement may not be amended except by a writing executed by
the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first above written.
THE GREYHOUND CORPORATION
By /s/ RICHARD C. STEPHAN
R. C. Stephan, Vice President
GLI HOLDING COMPANY
By /s/ CRAIG R. LENTZSCH
Craig R. Lentzsch, Vice President
GLI OPERATING COMPANY
By /s/ RICHARD C. STEPHAN
R. C. Stephan, Vice President
-16-
<PAGE> 17
SCHEDULE C-1
UNITED STATES TRADEMARK REGISTRATIONS
<TABLE>
<CAPTION>
TRADEMARK CASE REG. NO. REG. DATE SERIAL NO. CLASSIFICATION
- ----------------------------------- ---------- -------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C>
DISCOVER GREYHOUND AMERICA 030380001 915812 06/29/71 279066 39
GO GREYHOUND 034030001 1164951 08/11/81 251440 39
GREYHOUND 028730001 541198 04/17/51 530197 39
GREYHOUND 028730003 805794 03/15/66 226051 39
GREYHOUND 028730034 887322 03/10/70 311032 16
GREYHOUND 028730038 886508 02/17/70 311134 39
GREYHOUND 028730039 888813 03/03/70 311868 42
GREYHOUND 028730043 888952 04/07/70 311131 12
GREYHOUND 028730066 989213 07/23/74 460954 39
GREYHOUND 028730174 1189538 02/09/82 282709 35
GREYHOUND PUTS IT ALL TOGETHER 034580001 1236736 05/03/83 368344 39
GREYHOUND -- IRD (OLD) 028740001 541197 04/17/51 530196 39
GREYHOUND -- IRD (OLD) 028740008 805796 03/15/66 226053 39
IRD 029090001 805795 03/15/66 226052 39
IRD 029090004 886509 02/17/70 311265 39
IRD 029090009 887695 03/17/70 311137 16
IRD 029090012 888954 04/07/70 311262 12
IRD 029090013 890634 05/05/70 312191 42
IRD (OLD) 023760001 541199 04/17/51 530198 39
STRIPE DESIGN (COMPAC 2) 034330001 1204367 08/10/82 293699 39
STRIPE DESIGN (COMPAC) 029140003 1195382 05/11/82 293676 39
STRIPE DESIGN (COMPACT) 029140002 1010865 05/13/75 461134 39
</TABLE>
MEXICAN TRADEMARK REGISTRATIONS AND APPLICATIONS
<TABLE>
<CAPTION>
TRADEMARK CASE REG. NO. REG. DATE SERIAL NO. CLASSIFICATION
- ----------------------------------- ---------- -------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C>
GREYHOUND 028730065 91427 10/28/57 62
GREYHOUND 028730035 16371 61
GREYHOUND 028730036 16449 61
GREYHOUND -- IRD 091000010 39060 06/09/48 62
IRD (OLD) 003760013 91768 10/28/57 62
IRD 003090095 16372 63
IRD 003090096 16450 63
</TABLE>
IRD means Image of the Running Dog
<PAGE> 18
SCHEDULE C-2
UNITED STATES TRADEMARK REGISTRATIONS
<TABLE>
<CAPTION>
TRADEMARK CASE REG. NO. REG. DATE SERIAL NO. CLASSIFICATION
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
GREYHOUND 338730037 886350 02/17/70 311133 16
IRD 329090013 888302 03/24/70 311264 16
<CAPTION>
MEXICAN TRADEMARK REGISTRATIONS AND APPLICATIONS
- --------------------------------------------------------------------------------------------------------
TRADEMARK CASE REG. NO. REG. DATE SERIAL NO. CLASSIFICATION
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
GREYHOUND 338730059 146188 07/18/68 23576 38
IRD 329090025 146193 11/23/68 23583 38
</TABLE>
IRD means Image of a Running Dog
<PAGE> 19
SCHEDULE C-3
<TABLE>
<CAPTION>
LICENSEE NAME DATE TERM MARKS LICENSED
- ---------------------------- ------- --------------- ----------------------------------------
<S> <C> <C> <C>
A. GENERAL
Texas, New Mexico & 1/10/78 perpetual AMERICRUISER, AMERIPASS, BUS DESIGN,
Oklahoma Coaches, Inc. GREYHOUND, IRD, SCENICRUISER, STRIPE
DESIGN (COMPACT), SUPER 7 & DESIGN
Greyhound Lines of Unwritten authorization to use the marks
Canada, Ltd. GREYHOUND, IRD and other
transportation-related marks in
connection with transportation
operations crossing the U.S.-Canada
border
</TABLE>
Greyhound Travel International Inc., Greyhound Holdings Ltd. and their
subsidiary companies use the name "Greyhound" and the "Image of a Running Dog"
logotype in the United States and Mexico as trade names (business names) in
connection with travel agency and tour services which are booked outside of the
United States and Mexico. Whenever such name and/or logotype is used as provided
herein the U.S. and Mexico, a disclaimer will be provided that the user is not
affiliated with Licensee.
<TABLE>
<S> <C> <C> <C>
B. TRANSPORTATION FRANCHISE LICENSES
Delta Bus Lines, Inc. 6/21/85 5 years GREYHOUND, IRD and other
transportation-related marks
Kerrville Tours, Inc. 6/7/85 10 years same
American Coach Lines, Inc. 4/30/86 5 years same
Northwestern Stage Lines, 7/8/85 5 years same
Inc.
Raz Transportation Company 8/5/85 5 years same
C. PICK-UP & DELIVERY LICENSES
Various Pick-up & various 60 days notice BUS DESIGN, GPX, GREYHOUND, GREYHOUND
Delivery Contractors PACKAGE EXPRESS, IRD, NBO, NEXT BUS OUT
</TABLE>
Greyhound Lines, Inc. ("GLI"), a subsidiary of Greyhound, has entered into
pick-up and delivery service agreements ("P&D Agreement") with various parties
("Contractors") whereby the Contractors pick up and deliver package express and
baggage between GLI bus terminal and the premises of various customers. In
connection with such P&D Agreements, Greyhound granted each Contractor a
non-exclusive non-transferable, royalty-free license ("License Agreement") to
use the marks identified above in a defined territory, typically defined by U.S.
Postal Service zip code areas. Any such License Agreement remains in effect for
the period of the companion P&D Agreement, which is terminable by either party
on ten days prior written notice, and in any event, such License Agreement is
terminable by Greyhound upon 60 days prior written notice.
<PAGE> 20
SCHEDULE C-4
QUALITY CONTROL MANUAL
<PAGE> 21
SCHEDULE C-5
GRAPHICS STANDARD GUIDE FOR TRADEMARKS OF
THE GREYHOUND CORPORATION
<PAGE> 1
EXHIBIT 10.7
RECORDABLE ASSIGNMENT OF EXHIBIT B TRADEMARKS
WHEREAS, The Greyhound Corporation, an Arizona corporation, located at
Greyhound Tower, Phoenix, Arizona 85077 ("Assignor") has adopted, used and is
using the marks identified on Exhibit B attached hereto and made a part hereof;
and
WHEREAS, GLI Holding Company, a Delaware corporation located at 2400
InterFirst Plaza, 901 Main Street, Dallas, Texas 75202 ("Assignee") is desirous
of acquiring said marks and registrations thereof.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Assignor does hereby assign unto the Assignee all its
rights, title and interest in and to said marks, together with the goodwill of
the business symbolized by the marks and the registrations thereof.
THE GREYHOUND CORPORATION
By /s/ RICHARD C. STEPHAN
R. C. Stephan, Vice President
STATE OF ARIZONA )
) ss
COUNTY OF MARICOPA )
The foregoing instrument was acknowledged before me this 18th day of March,
1987 by R. C. Stephan of The Greyhound Corporation, an Arizona corporation, on
behalf of the corporation.
SEAL /s/ STELLA MATIJEVICH
Notary Public
My Commission Expires Dec. 9, 1988
<PAGE> 2
EXHIBIT B
UNITED STATES TRADEMARK REGISTRATIONS
<TABLE>
<CAPTION>
REG. REG. SERIAL
TRADEMARK CASE NO. DATE NO. CLASSIFICATION
- ----------------------------------------------------------- --------- ------- -------- ------ --------------
<S> <C> <C> <C> <C> <C>
AMAZING AMERICA VACATION 029160001 914746 06/08/71 330278 39
AMERI-LODGING 033950001 1159523 06/30/81 225437 42
AMERICRUISER 028670002 987565 07/02/74 454620 39
AMERICRUISER 028670003 1056555 01/18/77 67599 12
AMERICRUISER 2 033880001 1154827 05/19/81 214642 12 39
AMERIPASS 028680001 975681 12/25/73 437771 39
AND LEAVE THE DRIVING TO US 029030001 766891 03/17/64 154241 39
AND LEAVE THE DRIVING TO US 029030002 888953 04/07/70 311140 12
AND LEAVE THE MOVING TO US 028690001 923363 11/02/71 339013 39
AUTOBUSES LATINOS 031000001 1056284 01/11/77 65406 39
BUS DESIGN 028700001 987562 07/02/74 447860 39
DISCOVER AMERICA 029150001 915813 06/29/71 279067 39
ELECTRONICRUISER 029040001 880663 11/11/69 310562 39
ELECTRONICRUISER 029040002 887032 03/03/70 274619 12
FAST 500 033920001 1153419 05/05/81 220815 39
GPX 029060001 849607 05/21/68 266327 39
HELPING HAND 031220001 1048297 09/14/76 70056 39
LEAVE THE REST TO US! 037860001 1398029 06/17/86 435760 42
LUCKY STREAK 034910001 1303149 10/30/84 452781 39
NEXT BUS OUT 028790001 988608 07/16/74 454545 39
OMNI-PAK 034550001 1280148 05/29/84 361439 39
SCENICRUISER 028820005 876380 09/09/69 311143 12
SCENICRUISER 028820008 676464 03/31/59 52488 39
STRIPE DESIGN(AIRPORT EXPRESS) 035060001 1359728 09/10/85 521865 39
SUPER 7 AND DESIGN 028810002 1161349 07/14/81 202491 39
SUPERCRUISER 028980002 873635 07/22/69 306482 39
SUPERCRUISER 028980003 391502 05/26/70 334481 12
SUPERCRUISER 028980004 910861 04/06/71 335569 28
TAKE THE BUS AND LEAVE EVERY 028990001 832024 07/11/67 239261 100
TAKE THE BUS AND LEAVE EVERY 033910001 1170583 09/22/81 219728 39
TOURMASTER 030000001 843018 01/23/68 247016 36
USABUS 033940001 1182456 12/15/81 225436 39
WE'VE GOT MORE DRIVE 034020001 1167704 09/01/81 250766 39
WHEELS TO WINGS 034420001 1209059 09/14/82 337158 39
XPRESSPAK 033660001 1127660 12/11/79 181083 39
UNREGISTERED TRADEMARKS
TRADEMARK
- -----------------------------------------------------------
BUS DESIGN II
PACKAGEXPRESS (DESIGN)
</TABLE>
<PAGE> 1
EXHIBIT 10.8
BUS PURCHASE REQUIREMENTS AGREEMENT
This Bus Purchase Requirements Agreement (the "Agreement") is entered into
as of March 18, 1987, by and among GLI Operating Company, a Delaware corporation
("GLI Operating"), Greyhound Lines, Inc. a California corporation ("Seller"),
Transportation Manufacturing Corporation, a Delaware Corporation ("TMC"), and
Motor Coach Industries, Inc., a Delaware corporation ("MCI"). As used herein,
the term "TMC or MCI" shall mean whichever or both of TMC or MCI as is
applicable in the context of the sentence in which it is contained.
WITNESSETH:
WHEREAS, GLI Operating requires additional new motor coaches to perform its
business and desires to make arrangements to obtain for use motor coaches
manufactured by TMC or MCI; and
WHEREAS, the United States Department of Justice has advised the parties of
its position that the purchase of buses from Seller, TMC or MCI may conflict
with certain prohibitions contained in the Final Judgment entered in the matter
of United States of America v. The Greyhound Corporation (Civil Action No.
57C1107) D.C. N.D. Illinois, 1957 (the "Judgment").
NOW, THEREFORE, the parties agree as follows:
1. Obligation to Purchase or Lease Buses. For calendar years 1987 through
1991, GLI Operating shall lease or purchase pursuant to the terms of this
Agreement not less than 75% of its motor coaches for each such year of the type
manufactured by TMC or MCI as of August 1 of the preceding year or planned to be
manufactured by TMC or MCI in such year (not including vans and the like made by
major manufacturers) which shall be manufactured by TMC or MCI (the "Buses").
For the purposes of determining compliance with the
<PAGE> 2
minimum purchase requirements of this Agreement, Buses ordered and purchased or
leased under the Bus Purchase Agreement by and between GLI Holding Company and
Seller of even date herewith (the "Bus Purchase Agreement") shall be included.
GLI Operating shall be obligated to lease from Seller or an affiliate of Seller,
and Seller or an affiliate of Seller shall be obligated to lease to GLI
Operating any bus delivered pursuant to this Agreement prior to the expiration
of 60 days after the vacation or termination of the Judgment, or until 60 days
after an amendment is entered into eliminating the applicable restrictions
contained in the Judgment. Any Buses delivered thereafter pursuant to this
Agreement shall be purchased by GLI Operating from TMC or MCI, and TMC or MCI
agrees to sell to GLI Operating any such Buses.
2. Lease Terms. Buses that GLI Operating shall lease in accordance with the
terms of this Agreement from Seller or an affiliate of Seller shall be leased
pursuant to operating leases from Seller or an affiliate of Seller at reasonable
commercial lease rates based upon the bus prices otherwise in effect for 1987
orders as described in Section 3 below and thereafter based upon the published
list prices as described in Section 3 below less cost justified volume discounts
as described in Section 4 below.
3. Purchase Price. During 1987, the purchase price to be paid by GLI
Operating to Seller, TMC or MCI for each Bus to be purchased in accordance with
the terms of this Agreement shall be TMC's or MCI's published list price in
effect. During the remainder of this agreement, the purchase price to be paid by
GLI Operating to TMC or MCI for each Bus to be purchased in accordance with the
terms of this Agreement shall be the published list price less cost justified
volume discounts based on annual volume of Buses purchased or leased pursuant to
the terms of this Agreement as described in Section 4 below and shall be payable
in accordance with TMC's or MCI's then published terms (which terms as of the
date hereof are "Net 30 days"). For purposes of this Agreement, the published
list price shall not be any greater than the lowest prices paid by any intercity
bus company customer of TMC or MCI for such Buses.
2
<PAGE> 3
4. Volume Discounts. The parties agree that the amount of the volume
discount (from the published list price) and from the amount used to ascertain
lease rental amounts on all Buses purchased or leased pursuant to the terms of
this Agreement during any calendar year shall be at least the amounts set forth
below:
<TABLE>
<CAPTION>
BUSES PURCHASED AND
LEASED
PER CALENDER YEAR DISCOUNT
- ------------------------- --------
<S> <C>
Less than 51 None
51 - 100 2.5%
101 - 150 4.5%
More than 150 6.5%
</TABLE>
The initial amount paid by GLI Operating or used to ascertain lease rental
amounts shall be based on its annual requirements estimate. For the purposes of
calculating the discount, such estimate shall include buses ordered under the
Bus Purchase Agreement. If at the end of any calendar year, GLI Operating has
purchased and leased in the aggregate more or less than the estimated number of
Buses, then the purchase price for all Buses purchased during such calendar year
shall be appropriately adjusted in accordance with the foregoing table, and TMC
or MCI, or GLI Operating, as the case may be, shall promptly pay any difference
to the other for Buses purchased, or, for Buses leased, Seller or an affiliate
of Seller shall make appropriate adjustment to the lease rental amounts,
retroactively to the inception of the lease.
5. Estimate and Firm Order. GLI Operating will provide TMC with its best
estimate of its minimum requirements for Buses during each calendar year. Its
estimate for 1987 shall be delivered within ten days after the execution of this
Agreement and for 1988, 1989, 1990 and 1991, shall be delivered no late than
June 1 of the year prior to each such year. GLI Operating will provide TMC with
a firm order no later than August 1 of the prior year which order shall include
the specifications (including options and accessories) of the Buses to be
purchased or leased. MCI and TMC shall build such Buses in accordance with
industry standards for quality and reliability.
3
<PAGE> 4
6. Buses. GLI Operating reserves the right to request that TMC incorporate
minor modifications in the options or accessories requested in the firm order
with respect to the Buses by written notice to TMC within a reasonable time for
implementing such modifications. GLI Operating will bear the cost of making such
modifications.
7. Cooperation; Consent. GLI Operating will cooperate with TMC and MCI to
provide stable configurations, substantial order lead times, and orderly
delivery dates. With respect to Buses purchased and sold under the Purchase
Agreement, TMC hereby (a) consents to the assignment by Seller, or its
assignees, or any and all manufacturers' warranties to GLI Operating or any of
its direct or indirect subsidiaries, and (b) agrees that GLI Operating or any of
its direct or indirect subsidiaries shall be entitled to enforce such warranties
directly in its own name, and for its own account.
8. Delivery. TMC or MCI shall tender delivery of the Buses to GLI Operating
F.O.B. at Roswell, New Mexico, or Pembina, North Dakota, as applicable.
9. Assignment. Neither TMC and MCI nor GLI Operating may assign their
rights and duties under this Agreement without the prior written consent of the
other parties hereto; provided, however, an assignment without such consent
shall be valid if made to an affiliate of such party and, if in the case of GLI
Operating, it remains subject to the obligations of this Agreement.
10. Governing Law. The parties agree that this Agreement and performance
hereunder shall be interpreted and enforced in accordance with the laws of the
State of Texas.
11. Entire Agreement. This Agreement encompasses the entire agreement and
understanding between the parties. No representations, agreements, arrangements,
or understandings, oral or written, between the parties and relating to the
subject matter of this Agreement shall survive its execution.
4
<PAGE> 5
12. Amendments. This Agreement may not be amended or modified except in
writing, signed by all parties hereto, and, subject to the restriction provided
in Section 9 hereof, this Agreement shall be binding upon and inure to the
benefit of the respective parties hereto, their successors, legal
representatives and assigns.
13. Captions. The underscored captions contained herein are inserted only
for the convenience of the parties and are not substantively part of this
Agreement.
14. Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws in effect during the term
of this Agreement, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable.
15. Notices. All notices required to be given hereunder shall be in writing
and be hand delivered, telexed or mailed via U.S. Certified Mail, return receipt
requested, or express mail (such as Federal Express), in either case with
postage prepaid, and addressed as follows:
<TABLE>
<S> <C>
If to GLI Operating: 2400 InterFirst Plaza
901 Main Street
Dallas, Texas 75202
Attention: President
If to Seller: Transportation Leasing Co.
Greyhound Tower
Phoenix, Arizona 85077
Attention: President
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C>
If to TMC or MCI, as applicable: Transportation Manufacturing Corporation
Earl Cummings Blvd., Bldg. 1083
P.O. Box 5760 (R.I.A.C.)
Roswell, New Mexico 88201
or
Motor Coach Industries, Inc.
1149 St. Matthew Avenue
Winnipeg, Manitoba R3G OJ8
</TABLE>
In Witness Whereof, the parties have executed this Agreement effective the
day and year first above written.
<TABLE>
<S> <C>
GLI OPERATING COMPANY GREYHOUND LINES, INC.
By /s/ CRAIG LENTZSCH By /s/ RICHARD STEPHAN
Craig R. Lentzsch R. C. Stephan
Vice President Vice President
TRANSPORTATION MANUFACTURING CORPORATION MOTOR COACH INDUSTRIES, INC.
By /s/ F. E. LAKE By /s/ F. E. LAKE
F. E. Lake F. E. Lake
Treasurer Treasurer
</TABLE>
6
<PAGE> 1
EXHIBIT 10.9
(LEASED BUSES)
EQUIPMENT SUBLEASE
This Equipment Sublease Agreement ("Sublease") is made as of March 18,
1987, between GREYHOUND LINES, INC., a California corporation ("Sublessor") and
GLI OPERATING COMPANY, a Delaware corporation ("Sublessee").
WHEREAS, Sublessor is the lessee of certain intercity buses (individually a
"Unit of Equipment," and collectively the "Equipment") described on Exhibit A
attached hereto, pursuant to one or more bus leases described on Exhibit B
attached hereto (such bus leases are individually or collectively referred to
herein as the "Master Leases") as such Master Leases may have been amended or
assigned from time to time; and
WHEREAS, Sublessee is desirous of subletting the Equipment and Sublessor is
agreeable to subletting the Equipment to Sublessee;
NOW, THEREFORE, in consideration of the foregoing, and the covenants and
conditions herein contained, Sublessor does hereby sublease the Equipment to
Sublessee, subject to the following terms and conditions;
1. The term of this Sublease with respect to each Unit of Equipment shall
be the corresponding term of the Master Lease applicable to such Unit of
Equipment.
2. This Sublease is subject to all of the terms, conditions and rentals of
each Master Lease (i) except those which are inconsistent with the express terms
and conditions of this Sublease, (ii) except that Sublessee agrees promptly to
reimburse Sublessor, upon being invoiced therefor, for the tire rental rates and
all other costs attributable to the Equipment that Sublessor is required to pay
and does pay to The Goodyear Tire & Rubber Company ("Goodyear") on behalf of
itself or Sublessee in accordance with the terms of the Agreement between
Sublessor and Goodyear dated August 9, 1983, for the lease of tires, as such
Agreement may be amended from time to time (the "Goodyear Agreement") and (iii)
except that the rent for Equipment leased by Sublessor under the Master Lease
shall be as set forth on Exhibit C attached hereto; and Sublessee agrees to
abide by the obligations of Sublessor under said Master Lease, a copy of which
has been provided to Sublessee and is made a part hereof by reference. For the
purposes of the incorporation of the Master Leases herein, the term "Lessor"
shall mean and refer to Sublessor, the term "Lessee" shall mean and refer to
Sublessee,
<PAGE> 2
and the term "Equipment" shall mean and refer to the Equipment under this
Sublease.
3. If, at any time on or before the third anniversary of this Sublease,
there shall occur a strike, lockout or labor controversy or the entry of any
injunction respecting a labor dispute which prevents Sublessee from operating a
material portion of its scheduled intercity transportation services (such events
being collectively referred to as a "Work Stoppage"), then Sublessee shall be
entitled to obtain relief from its obligation to make timely payment of certain
Equipment rentals (excluding tire rentals) due under this Sublease. The
Sublessee may, at its option, obtain such relief by executing a promissory note
substantially in the form attached hereto as Exhibit D, for up to six months of
payments with respect to (a) all Equipment of 1979 and 1980 model years, and (b)
all Equipment of 1981 and 1982 model years which are leased pursuant to the
Master Lease of Motor Vehicles dated December 15, 1982, between Sublessor and
Security Pacific Equipment Leasing, Inc.
4. Sublessee acknowledges that to the extent it desires, it has had full
opportunity to inspect or cause to be inspected the Equipment and agrees to
sublease the Equipment "AS IS -- WHERE IS"; however, Sublessee shall have no
obligation to repair, alter or restore the Equipment to a condition other than
that existing on the date hereof, ordinary wear and tear excepted.
5. Sublessee shall have the power, without obtaining the consent of
Sublessor, to make collateral assignments of its rights under this Sublease and
to sublease the Equipment. Sublessee shall, however, remain primarily liable for
the rental due Sublessor and all other terms and conditions of this Sublease.
Sublessor hereby acknowledges that Sublessee has assigned its rights hereunder
as collateral for its obligations under that certain Credit Agreement dated as
of March 18, 1987, among Sublessee, Irving Trust Company, as Agent, and others.
6. All notices or consents required hereunder to be given to Sublessor
shall be in writing and be hand delivered or Telexed to Sublessor, or mailed to
it via U.S. Certified Mail, postage prepaid, addressed to:
<TABLE>
<S> <C>
Sublessor at: Transportation Leasing Co.
Greyhound Tower
111 West Clarendon
Phoenix, Arizona 85077
Attention: President
</TABLE>
and all notices or consents required hereunder to be given to Sublessee shall be
in writing and be hand delivered or Telexed to
2
<PAGE> 3
Sublessee or mailed to it via U.S. Certified Mail, postage pre-paid, addressed
to:
<TABLE>
<S> <C>
Sublessee at: GLI Operating Company
2400 InterFirst Plaza
901 Main Street
Dallas, Texas 75202
Attention: President
</TABLE>
or to such other address as either party may designate in writing to the other
party.
7. Anything contained in any provisions of this Sublease to the contrary
notwithstanding, Sublessee agrees, with respect to the Equipment, to comply with
and remedy any default within the period allowed to Sublessor under the Master
Lease, even if such time period is shorter than the period otherwise allowed
therein due to the fact that notice of default from Sublessor to Sublessee is
given after the corresponding notice of default from lessor under the Master
Lease to Sublessor. Sublessor agrees to forward to Sublessee, upon receipt
thereof by Sublessor, a copy of each notice of default received by Sublessor in
its capacity as lessee under the Master Lease. Sublessee agrees to forward to
Sublessor, upon receipt thereof, copies of any notices received by Sublessee
relating to the Equipment, the Master Lease or this Sublease.
8. Sublessor hereby assigns to Sublessee any and all manufacturer's
warranties on the Equipment, until expiration or termination of this Sublease.
9. Anything contained in this Sublease or the Master Lease to the contrary
notwithstanding, Sublessor or Sublessee shall provide all tires for the
Equipment in accordance with the terms of the Goodyear Agreement.
10. Sublessee shall keep logs and records of mileage, maintenance and
service for each Unit of Equipment in such form as Sublessor may reasonably
request from time to time, and shall make such logs and records available to
Sublessor, or its agent, for inspection and copying at any reasonable time.
11. This Sublease is the entire agreement between the parties with respect
to the rental of the Equipment, and it shall not be modified or amended except
by a written agreement signed by the parties.
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<PAGE> 4
IN WITNESS WHEREOF, the parties have caused this Sublease to be executed by
their duly authorized officers as of the date first written above.
GREYHOUND LINES, INC.
/s/ RICHARD STEPHAN
By RICHARD STEPHAN
R. C. Stephan, Vice President
GLI OPERATING COMPANY
/s/ RICHARD STEPHAN
By RICHARD STEPHAN
R. C. Stephan, Vice President
4
<PAGE> 1
EXHIBIT 10.10
MASTER LEASE
This "LEASE," dated as of March 18, 1987, is made by and between GREYHOUND
LINES, INC., a California corporation ("Lessor") and GLI REALTY COMPANY, a
Delaware corporation ("Lessee").
1. RECITALS. Pursuant to Section 2.1 of that certain "Acquisition
Agreement" dated December 22, 1986, among The Greyhound Corporation, Lessor, GLI
Operating Company, GLI Holding Company, GLI Bus Operations Holding Company, and
GLI Merger Company, Lessor has agreed to lease certain facilities to Lessee and
Lessee has agreed to lease such facilities from Lessor on the terms and
conditions set forth herein.
It is contemplated pursuant to Section 7.02 of the Acquisition Agreement
that subsequent to the execution hereof Lessor will change its name to
"Transportation Leasing Co." and that Lessee's parent corporation, GLI Operating
Company, a Delaware corporation, will change its name to "Greyhound Lines, Inc."
Notwithstanding such similarity of names all references herein to Greyhound
Lines, Inc. are intended to refer to Lessor, a California corporation, as it
exists on the date hereof and shall hereafter apply to Lessor regardless of such
other names under which it may subsequently operate.
2. PREMISES. Lessor hereby leases to Lessee and Lessee leases from Lessor
for the term, at the rental, and upon all of the conditions set forth herein,
those parcels of real property situated at the locations described in Exhibits
"A" and "B" attached hereto ("Terminal(s)" or "Premises"), together with all
improvements thereon and appurtenances thereto, subject to any existing leases,
licenses or easements for portions of the Premises previously granted by Lessor.
The Terminals described in Exhibit "A" (the "Owned Terminals") are owned by
Lessor, and the
<PAGE> 2
Terminals described in Exhibit "B" (the "Subleased Terminals") are leased by
Lessor under written leases described in Exhibit "B". The written leases of the
Subleased Terminals described in Exhibit "B" are referred to herein as "Prime
Leases". In addition to the provisions of this Lease, the Subleased Terminals
are subject to the terms and conditions of the Prime Leases and to the
additional provisions set forth in Exhibit "C" attached hereto.
3. TERM.
3.1 Term. The "Term" of this Lease shall be five (5) years, beginning
March 19, 1987 and expiring March 18, 1992, or with respect to the
Subleased Terminals, any earlier expiration date provided for in any Prime
Lease, unless sooner terminated pursuant to any provision hereof.
3.2 Termination by Lessor. (a) During each "Lease Year" of this Lease
(the twelve month period beginning March 19 and ending March 18), Lessor
shall have the right to terminate this Lease with respect to any seven (7)
of the Owned Terminals at any time during the Lease Year, except that
during the fifth Lease Year, Lessor shall have the right to terminate this
Lease with respect to eight (8) of the Owned Terminals. Lessor shall give
Lessee at least six (6) months advance written notice of the termination
date of each such Terminal, except with respect to the Owned Terminals
located in Cleveland, Ohio, San Francisco, California, and St. Louis,
Missouri, as to which 3 Terminals Lessor shall give Lessee at least one (1)
year advance written notice of the termination date. Any termination
election by Lessor, once exercised, may not be revoked without Lessee's
approval. Effective upon the termination date for any Terminal, this Lease
shall terminate with respect to such Terminal,
2
<PAGE> 3
provided, however, that such termination shall not affect any of the rights
or obligations of the parties which may have accrued, or liabilities,
accrued or otherwise, which may have arisen prior to termination.
(b) In addition, it is hereby agreed that the termination date with
respect to the following Subleased Terminals shall be the dates set forth
below, unless Lessor provides written notice to Lessee, at least one (1)
year prior to the applicable date for a Subleased Terminal, that this lease
shall not terminate with respect to such Terminal on the specified date.
Lessor's notice shall also advise Lessee of the date when this Lease will
terminate or expire with respect to such Subleased Terminal:
<TABLE>
<CAPTION>
SUBLEASED TERMINAL TERMINATION DATE
-------------------------- --------------------------
<S> <C>
Chicago, Illinois December 31, 1989
San Jose, California December 30, 1987
Dallas, Texas December 31, 1989
San Diego, California December 14, 1989
Kansas City, Missouri June 29, 1987*
St. Petersburg, Florida September 30, 1987*
</TABLE>
* (Notwithstanding the stated termination date Lessee shall have the
benefit of any extended terms or earlier termination rights provided for in
the Kansas City, Missouri, and/or St. Petersburg, Florida, Prime Leases in
respect of delays in completion or rapid completion of alternate terminals
for Lessee's operations).
Any terminations of this Lease with respect to Subleased Terminals
shall be included in the terminations permitted in paragraph 3.2(a).
3
<PAGE> 4
3.3 Termination by Lessee. At any time after the expiration of the
second Lease Year, Lessee shall have the right to terminate this Lease with
respect to any of the Owned Terminals provided that in no event may Lessee
exercise such right with respect to more than five (5) of the Owned
Terminals during any Lease Year. Lessee shall give Lessor at lease one (1)
year advance written notice of the termination date of each such Terminal
(it is agreed that a termination notice may be given prior to the end of
the second Lease Year so long as it does not specify a termination date
prior to the end of the second Lease Year). Effective upon the termination
date for any Terminal, this Lease shall terminate with respect to such
Terminal, provided, however, that such termination shall not affect any of
the rights or obligations of the parties which may have accrued, or
liabilities, accrued or otherwise, which may have arisen prior to
termination.
4. RENT.
4.1 Base Rent. Lessee shall pay to Lessor as rent for the use of the
Premises base rent as set forth in Exhibit "D" attached hereto, payable in
advance on or before the first day of each calendar month of the Term. Rent
for any period less than one month shall be a pro rata portion of the
monthly installment. Rent shall be payable to Lessor at 1842 Greyhound
Tower, Phoenix, Arizona 85077 or to such other person or at such other
place as Lessor may designate by notice as provided herein. In the event
this Lease is terminated with respect to any Terminal, the base rent shall
be reduced, effective as of the date of termination, by the amount of base
rent attributable to the Terminal in question as specified on Exhibit "D".
4.2 Additional Rent. Lessee shall pay all taxes, insurance premiums,
operating expenses, and other expenses
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<PAGE> 5
associated with the Premises, including but not limited to those items
described in detail in this Lease, but excluding only the base rents
required to be paid under the Prime Leases, which shall remain Lessor's
obligation. The expenses and any other amounts payable by Lessee under this
Lease shall be additional rent, and Lessor shall have the same rights and
remedies for nonpayment of additional rent that Lessor has for nonpayment
of monthly base rent.
4.3 Interest. If any payment required to be made pursuant to this
Lease is not made within ten (10) days of the date on which it is due, then
it shall bear interest at the lesser of fifteen percent (15%) per annum or
the maximum rate permitted by law, from the date due until paid.
4.4 Net Lease. This Lease shall be deemed and construed to be a "net
lease" and Lessee shall pay to Lessor absolutely net throughout the Term of
this Lease the rent and other payments due hereunder, free of any charges,
assessments, impositions, expenses or deductions of any kind and without
abatement, deduction or set-off, and, except for the base rents required to
be paid under the Prime Leases, which shall remain Lessor's obligation,
under no circumstances or conditions, whether now existing or hereafter
arising, shall Lessor be expected or required to make any payment of any
kind whatsoever or be under any obligation or liability hereunder, and
Lessee agrees to pay all costs and expenses of every kind and nature
whatsoever arising out of or in connection with the Premises which may
arise during the Term of this Lease or be reasonably allocable to Lessee,
and which, except for the execution and delivery hereof, would otherwise
have been payable by Lessor.
5
<PAGE> 6
4.5 Rent Deferral During Work Stoppage. If, at any time during the
first three and one-half (3 1/2) Lease Years, there shall occur a strike,
lockout or labor controversy or the entry of any injunction respecting a
labor dispute affecting Lessee's operations (such events are referred to as
"Work Stoppage"), which materially impairs Lessee's operations at one or
more Terminals, then Lessee shall be entitled to defer the payment of the
Base Rent described in paragraph 4.1 with respect to the Terminals affected
by the Work Stoppage for the duration of the Work Stoppage but in no event
more than six (6) months. Upon cessation of the Work Stoppage or, if
earlier, upon the date six (6) months after commencement of the Work
Stoppage, Lessee shall deliver to Lessor its promissory note for the amount
of the deferred Base Rent, bearing interest at the rate of eleven percent
(11%) per annum, due and payable one (1) year from the date of such note.
Lessee shall only be entitled to defer the payment of Base Rent to Lessor
due to a Work Stoppage, and in no event may Lessee defer the payment of
Additional Rent as described in paragraph 4.2.
5. USE.
5.1 Use. The Premises shall be used by Lessee for the conduct of
Lessee's business operation of a bus terminal, for the loading and
unloading of passengers, baggage, mail, and package express, and for uses
incidental thereto.
5.2 Compliance with Law. Lessee, at Lessee's expense, shall at all
times comply with all applicable statutes, ordinances, rules, regulations,
orders and requirements in effect during the Term regulating the use by
Lessee of the Premises; provided, however, that all matters relating to
compliance with environmental laws and related matters shall be governed by
the
6
<PAGE> 7
Acquisition Agreement. Lessee shall not use the Premises in any manner
which tends to create waste or a nuisance.
5.3 Condition of Premises. Lessee hereby accepts the Premises in the
physical condition existing as of the date of this Lease, AS IS -- WHERE
IS, and acknowledges that the Premises are subject to all applicable
zoning, municipal, county and state laws, ordinances and regulations
governing and regulating the use of the Premises, and accepts the Lease
subject thereto and to all matters disclosed thereby and by any Exhibits
hereto. The foregoing, however, shall not be construed as a waiver by
Lessee of the benefit of any of the representations, warranties,
indemnities, covenants, or other rights set forth herein or in the
Acquisition Agreement and/or the exhibits hereto or thereto.
6. EXISTING LEASES. The existing leases entered into by Lessor for portions
of the Premises are described in Exhibit "E" attached hereto ("Existing
Leases"). Lessee acknowledges receipt of a copy of each Existing Lease. Lessor
hereby assigns to Lessee, its successors and assigns, all of Lessor's right,
title and interest in and to such Existing Leases, which shall be subleases
between Lessee and the tenants under such leases effective as of the date of
this Lease for the period of the Term of this Lease; provided, however, that
Lessor reserves the rights of termination contained in such Existing Leases.
Upon the giving of any notice of termination of this Lease with respect to any
or all Terminals, Lessor shall have the right either to request Lessee to
terminate the Existing Leases relating to the affected Terminals, or Lessor may
terminate such Existing Leases directly, but in either event Lessor shall be
liable for payment of any termination penalties or damages arising as a result
of such termination of Existing Leases. Lessee, for itself and its successors
and assigns, does hereby accept, assume, take over, and succeed to all
7
<PAGE> 8
Lessor's right, title and interest in and to such Existing Leases and all their
terms, conditions, provisions, covenants and obligations, and Lessee hereby
covenants to fully and faithfully make, keep and perform all such terms,
conditions, provisions, covenants and obligations effective upon the date of
this Lease for the period of the Term of this Lease. Lessor hereby indemnifies
and holds Lessee harmless from any and all claims arising from any breach or
default in the performance of any of Lessor's obligations under such Existing
Leases or from any other activity or matter related to or arising from any of
such Existing Leases and accrued prior to the commencement of the Term of this
Lease, including any and all costs, attorneys' fees, expenses and liabilities
incurred in the defense of any such claim or any action brought thereon.
Upon the expiration of the Term of this Lease or any earlier date upon
which this Lease shall terminate with respect to any or all Terminals, Lessee
hereby reassigns to Lessor all of Lessee's right, title and interest in and to
any of the Existing Leases which have not been terminated, and in and to any
other subleases of the affected Terminals or portions thereof which Lessee may
have granted during the Term hereof which have not been terminated. Lessee
hereby indemnifies and holds Lessor harmless from any and all claims arising
from any breach or default in the performance of any of Lessee's obligations
under such Existing Leases or subleases during the Term (or from any of Lessor's
obligations thereunder which were assumed by Lessee) or from any other activity
or matter related to or arising during the Term from any of such Existing
Leases or subleases, including any and all costs, attorney's fees, expenses and
liabilities incurred in the defense of any such claim or any action brought
thereon.
8
<PAGE> 9
7. QUIET ENJOYMENT. Lessor covenants and agrees that so long as Lessee
observes and performs all of the agreements and covenants required of it
hereunder, Lessee shall peaceably and quietly have, hold and enjoy the Premises
for the Term without any encumbrance or hindrance by Lessor. If Lessee's use of
any Terminal is limited or denied through rezoning, environmental impact edict,
or other action of any public or quasi-public agency, this Lease, at the sole
option of Lessee, shall terminate with respect to such Terminal as of the
effective date of such action and the rent applying to the unexpired portion of
the Term with respect to such Terminal will abate.
8. UTILITIES. Lessee shall pay for all utilities used by it, and shall be
responsible for repair and maintenance of all utility systems serving the
Premises.
9. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this lease or sublet
all or any part of any Terminal without Lessor's prior written consent, which
shall not be unreasonably withheld. If Lessee requests approval of any
assignment or sublease and Lessor fails to respond thereto within 5 business
days, Lessor shall be deemed to have approved such request. Any disapproval of
any such request by Lessor shall specify the reasons for such disapproval.
However, Lessee shall have the right to assign to its parent corporation or to a
wholly owned (directly or indirectly) subsidiary or its parent corporation
without Lessor's consent. Any sublease or assignment in violation of this
paragraph shall be voidable by Lessor. Any sublease submitted to Lessor for
consent shall be substantially in the form of the lease attached hereto as
Exhibit "F"; provided that Lessor shall not unreasonably withhold its consent to
changes in such form. If Lessee assigns this Lease or subleases all or a part of
any Terminal, Lessee agrees to remain primarily liable for the
9
<PAGE> 10
performance of all obligations under this Lease for the remaining Term. Upon the
expiration or earlier termination of this Lease, each Terminal shall be
surrendered to Lessor free of all subtenancies.
10. ALTERATIONS AND ADDITIONS.
10.1 Permitted Alterations; Removal. Lessee may make any alterations,
improvements, or additions in, on or about the Premises which Lessee, in
its sole discretion, deems necessary for the proper conduct of its business
so long as such alterations are nonstructural and the value and utility of
the Premises are not materially lessened thereby. Lessor, at its option,
may require Lessee to remove all or part of such alterations, improvements,
or additions upon expiration or termination of this Lease, and to restore
the Premises to its condition prior to installation of the alteration,
improvement or addition, all at Lessee's expense. Any personal property,
trade fixtures, alterations, improvements, or additions not removed by
Lessee within 90 days after the end of the Term shall automatically become
the property of Lessor.
10.2 Ownership of Alterations and Additions. Unless Lessor requires
their removal, as set forth in paragraph 10.1, all alterations,
improvements or additions which may be made to the Premises shall become
the property of Lessor and remain upon and be surrendered with the
Premises at the termination of this Lease.
11. MECHANICS' LIENS. Lessee shall pay, when due, all claims for labor or
materials furnished to Lessee at or for use in the Premises. Lessee shall not
permit any mechanics' or materialmen's liens to be levied against the Premises
for any labor
10
<PAGE> 11
or material furnished to Lessee or to Lessee's agents or contractors in
connection with work of any character performed on the Premises at the direction
of Lessee.
12. REPAIRS AND MAINTENANCE.
12.1 Lessor's Obligations. Lessor shall not be obligated to make any
repairs to the Premises, whether structural or nonstructural. Lessee
expressly waives the benefits of any statute or judicial decision now or
hereafter in effect which would otherwise afford Lessee the right to make
repairs at Lessor's expense or to terminate this Lease because of Lessor's
failure to keep the Premises in good condition and repair.
12.2 Lessee's Obligations. Subject to paragraphs 16 and 17 hereof and
reasonable wear and tear, Lessee, at Lessee's expense, shall keep the
Premises any every part thereof in good order, condition and repair
(regardless of whether the damaged portion of the Premises or the means of
repairing it are readily accessible to Lessee), including, but not limited
to, the foundations, exterior walls, roof, all plumbing, heating, air
conditioning, ventilating, electrical and lighting facilities and
equipment, fixtures, interior walls and store front, ceilings, windows,
doors, plate glass, and skylights, located on the Premises and all
sidewalks, landscaping, driveways, parking lots, fences and signs located
in the areas adjacent to the Premises.
12.3 Lessor's Rights. If Lessee fails to perform Lessee's obligations
under this Section 12, Lessor shall have the right, at its option, to enter
the Premises, after at least ten (10) days prior notice to Lessee, and
put the same in good order, condition and repair. The cost thereof together
with interest at the lesser of three (3) percentage points above the prime
or base
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<PAGE> 12
rate announced by Citibank, N.A., from time to time, or the maximum rate
permitted by law, shall become due and payable to Lessor as additional
rent, to be paid with Lessee's next rent installment.
12.4 Major Repairs. If Lessee is required by the terms of this Lease,
or otherwise desires, to make a repair to an Owned Terminal which (i) would
cost more than $200,000.00; and (ii) would constitute a capital expenditure
under generally accepted accounting principles; and (iii) is not a result
of Lessee's negligent or willful act or omission with respect to the
Terminal or of a policy or decision by Lessee to defer maintenance of the
item needing repair, and Lessee wishes to have the benefit or paragraphs
12.4, 12.5 and 12.6, then Lessee shall notify Lessor in writing prior to
making the repair, describing the nature of the repair, the reason why it
is necessary, and the estimated cost. Within thirty (30) days after receipt
of such notice, Lessor shall elect either to permit Lessee to terminate
this Lease with respect to such Owned terminal in accordance with paragraph
12.5 in lieu of making such repair, or to permit the repair, subject to the
penalty for early termination described in paragraph 12.6.
12.5 Termination by Lessee. If Lessor elects to permit Lessee to
terminate this Lease with respect to such Owned Terminal, Lessor shall so
notify Lessee within thirty (30) days after receipt of such notice from
Lessee. Within sixty (60) days after receipt of Lessor's notice permitting
termination, Lessee may, if it elects to so terminate the Lease as to the
Terminal in question, inform Lessor of the effective date of termination,
which shall be at least four (4) months, but no more than six (6) months
after the date of Lessor's notice permitting termination. Such termination
by Lessee shall not affect any of the rights or
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<PAGE> 13
obligations of the parties which may have accrued, or liabilities, accrued
or otherwise, which may have arisen prior to termination.
12.6 Penalty for Early Termination. If Lessor does not elect to
permit termination by Lessee, and Lessee desires to obtain the benefit of
this Section 12.6 with respect to the repair in question, then Lessee shall
make the repair substantially in accordance with Lessee's proposal, and
shall submit to Lessor reasonable documentation as to the cost of such
repair. If at any time thereafter Lessor elects to terminate this Lease
with respect to such Owned Terminal pursuant to paragraph 3.2, then Lessor
shall pay to Lessee a termination penalty upon the effective date of
termination in the amount of Lessee's then net book value of the capital
repair item as of the effective date of termination, provided such net book
value shall be based upon a straight-line amortization over a five (5) year
period.
13. TAXES.
13.1 Payment of Taxes. Lessee shall pay to Lessor additional rent the
amount of all real estate taxes applicable to the Premises during the Term,
within ten (10) days after Lessor notifies Lessee of the amount of taxes
due. Lessor shall pay such taxes and provide evidence of payment to Lessee
prior to the date upon which such taxes would become delinquent or subject
to penalty. Lessee shall pay all taxes assessed against and levied upon
Lessee's trade fixtures and all other personal property of Lessee contained
in the Premises.
13.2 Definition of "Real Estate Taxes". As used herein, the term
"real estate tax" includes any form of assessment, license fee, rent tax,
levy, penalty, or tax imposed by any
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<PAGE> 14
authority having the direct or indirect power to tax, including any city,
county, state or federal government, or any school, agricultural, lighting,
drainage or other improvement district thereof, upon any legal or equitable
interest of Lessor in the Premises, upon Lessor's right to rent or business
of leasing the Premises, or upon Lessee's use or occupancy of the Premises;
provided, however, that no tax upon Lessor's net income, or any
inheritance, capital levy, franchise, or similar tax imposed upon Lessor as
an entity, shall be treated as a "real estate tax" for purposes of this
lease.
14. INSURANCE.
14.1 Property and Public Liability. Lessee shall maintain throughout
the Term a policy or policies of:
(a) Insurance against loss or damage to the Premises from
time-to-time subject to this Lease in the amount of the full replacement
cost thereof, against all perils included within the classifications of
fire, extended coverage, vandalism, malicious mischief, and special
extended perils ("all risks"), but subject to a deductible amount of up
to $500,000.00, naming Lessor as loss payee as its interest may appear;
and
(b) Comprehensive general liability insurance, providing coverage
for liability with respect to the Premises, with a combined single limit
of liability of not less than Ten Million Dollars ($10,000,000.00) per
occurrence, naming Lessor as an additional insured; provided however
that such insurance shall contain provisions to the effect that the
naming of Lessor as an additional insured shall not affect any recovery
to which Lessor would be entitled under
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<PAGE> 15
the policy if it were not so named, and that the insurance is primary
and shall be without contribution from any similar insurance in effect
by Lessor.
14.2 Other Coverages. Lessee shall maintain throughout the Term, and
Lessee shall require its permitted contractors or subtenants to maintain
throughout the Term, at its or their sole cost and expense, in a form and
in a company satisfactory to Lessor, the following policies of insurance:
(a) Comprehensive Automobile Liability Insurance providing coverage
for owned, non-owned, hired and leased vehicles used in connection with
the Premises with limits of liability of not less than $5,000,000.00
combined single limit, per occurrence, naming Lessor as an additional
insured; provided however that such insurance shall contain provisions
to the effect that the naming of Lessor as an additional insured shall
not affect any recovery to which Lessor would be entitled under the
policy if it were not so named, and that the insurance is primary and
shall be without contribution from any similar insurance in effect by
Lessor; and
(b) Workers' Compensation fully insuring Lessee, or its contractors
or subtenants under the laws of the state in which the Premises is
located, and Employer's Liability Insurance providing a limit of
liability of at least $500,000.00.
14.3 Certificates. Lessee agrees to provide a certificate of insurance
evidencing the coverages specified in 14.1 and 14.2, providing for thirty
(30) days' prior written notice to Lessor of any cancellation or reduced
coverage, and Lessee shall
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<PAGE> 16
provide a renewal certificate at least thirty (30) days prior to the
expiration of any such coverages.
14.4 Waiver of Subrogation. Lessor and Lessee each hereby waive any
rights of subrogation against the other, and Lessee and Lessor shall each
require its respective permitted contractors or subtenants to waive any
rights of subrogation against the other party hereto, for any loss to
property insured under any policies of insurance, even if caused by the
fault or negligence of the other party hereto.
15. INDEMNITY.
15.1 Lessee's Indemnification of Lessor. Subject to Section 14.4
above, Lessee hereby indemnifies and holds Lessor harmless from any and all
claims arising from: (a) Lessee's use of the Premises, the conduct of its
business, or any activity, work or things which are done or permitted by
Lessee in or about the Premises; (b) any and all claims arising from any
breach or default in the performance of any of Lessee's obligations under
this Lease or arising from any act or omission of Lessee or any of its
agents, contractors or employees; and (c) any and all costs, attorney's
fees, expenses and liabilities incurred in the defense of any such claim or
any action brought thereon.
15.2 Lessor's Indemnification of Lessee. Subject to paragraph 14.4
above, Lessor hereby indemnified and holds Lessee harmless from any and all
claims arising from (a) Lessors (or its affiliates') use of the Premises,
the conduct of its business, or any activity, work, or things which were
done or permitted to be done in or about the Premises prior to the
commencement of the Term, (b) any and all claims arising from any breach or
default in the performance of any of Lessor's obligations under
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<PAGE> 17
this Lease or arising from any act or omission of Lessor or any of its agents,
contractors, or employees; and (c) any and all costs, attorneys' fees, expenses,
and liabilities incurred in the defense of any such claim or action brought
thereon.
15.3 Indemnification Consistent. The foregoing indemnity obligations
are intended to be supplementary to, and consistent with, the indemnities
provided in the Acquisition Agreement. In the event of any conflict between
the rights of the parties to indemnity hereunder and the rights thereto set
forth in the Acquisition Agreement, the terms of the Acquisition Agreement
shall control.
16. DAMAGE OR DESTRUCTION. If a Terminal is partially damaged by fire or
other casualty such that the cost to repair the damage is $100,000.00 or less,
Lessee shall repair and restore such Terminal to a good tenantable condition
with reasonable promptness and diligence. If a Terminal is damaged or destroyed
by fire or other casualty such that the cost to repair the damage is more than
$100,000.00, Lessee may at its option either terminate this Lease with respect
to such Terminal or repair the Premises within a reasonable time. If Lessee
elects to repair the Premises, it shall receive the proceeds of the "all risk"
insurance and shall apply such proceeds to the cost of repair or restoration. If
Lessee elects to terminate this Lease, it shall assign to Lessor the proceeds of
any "all risk" insurance applicable to such Terminal received as a result of the
damage or destruction, and shall pay to Lessor the deductible portion of such
casualty loss.
17. CONDEMNATION. If all of a Terminal or a substantial portion thereof is
taken under the power of eminent domain, or sold under the threat of the
exercise of said power (all of which)
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are herein called "condemnation"), this Lease shall automatically terminate with
respect to such Terminal as of the date the condemning authority takes title or
possession, whichever occurs first; however, if the condemning authority assumes
Lessor's obligations under this Lease with respect to such Terminal, then Lessee
shall have the right to elect, within thirty (30) days after the date of
assumption to be bound by this Lease or to terminate this Lease with respect to
such Terminal.
If any other taking adversely and substantially affects Lessee's use of a
Terminal then Lessee may elect to terminate this Lease with respect to such
Terminal as of the date the condemning authority takes possession. Lessee's
election to terminate shall be made in writing within thirty (30) days after
Lessor has given Lessee written notice of the taking (or in the absence of such
notice, within thirty (30) days after the condemning authority has taken
possession). If Lessee does not terminate this Lease with respect to such
Terminal in accordance with this paragraph 17, this Lease shall remain in full
force and effect as to the portion of the Terminal remaining, except that rent
shall be reduced in the proportion that the area taken diminishes the value and
use of the Terminal to Lessee. In addition, Lessee, at its expense, to the
extent condemnation awards are available to Lessee for such purposes, shall
promptly repair any damage to the Terminal caused by condemnation and restore
the remainder of the Terminal to the reasonable satisfaction of Lessor.
Any award or payment made upon condemnation of all or any part of a
Terminal shall be the property of Lessor, whether such award or payment is made
as compensation for the taking of the fee or as severance damages; provided
Lessee shall be entitled to any separate award or payment for loss of or damage
to
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Lessee's trade fixtures, removable personal property, and alterations, additions
and improvements made to the Terminal by Lessee after the commencement of this
Lease, and to a portion of Lessor's award or payment which does not exceed ten
percent (10%) of the value of the improvements at the Terminal in question for
repair or restoration of the Terminal pursuant to this paragraph 17.
Lessor shall give notice to Lessee within thirty (30) days after receipt of
notification from any condemning authority of its intention to take all or a
portion of a Terminal.
Notwithstanding anything, expressed or implied, to the contrary contained
in this Lease, Lessee, at its own expense, may in good faith contest any such
award for loss or damage to Lessee's trade fixtures, removable personal
property, and additions, alterations and improvements made to the Terminal by
Lessee, and for repair or restoration of the Terminal.
A termination of this Lease by lessor due to condemnation of a Terminal
shall not be counted as a termination pursuant to paragraph 3.2 of this Lease.
18. DEFAULTS; REMEDIES.
18.1 Defaults. The occurrence of any one or more of the following
events constitutes a material default and breach of this Lease by Lessee:
(a) The failure by Lessee to make any payment of rent or any other
payment required to be made by Lessee hereunder, as and when due, where
the failure continues for a period of ten (10) days after notice thereof
from Lessor to Lessee.
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(b) The failure by Lessee to observe or perform any of the
covenants, conditions, or provisions of this Lease to be observed or
performed by Lessee, other than those described in subparagraph (a)
above, where the failure continues for a period of thirty (30) days
after notice thereof from Lessor to Lessee; provided, however, that if
the nature of Lessee's default is such that more than thirty (30) days
are reasonably required for its cure, then Lessee shall not be deemed to
be in default if Lessee commences such cure within the thirty (30) day
period and thereafter diligently completes the cure.
18.2 Remedies upon Default. In the event of any such material default
or breach by Lessee, Lessor may, after giving notice as provided above,
pursue those remedies available to Lessor under the laws or judicial
decisions of the state(s) in which the Premises (or the applicable portions
thereof) are located. A breach or default by Lessee under Clause 18.1(a)
above with respect to one Terminal shall constitute a default with respect
to all Terminals. However, any breach or default by Lessee under Clause
18.1(b) above with respect to any one Terminal shall not constitute a
default with respect to other Terminals and Lessor's termination or other
rights in respect of such default shall be limited to the Terminal with
respect to which such default occurred.
18.3 Default by Lessor. Lessor shall not be in default unless Lessor fails
to perform obligations required of it within a reasonable time, but in no event
later than thirty (30) days after notice by Lessee to Lessor; provided that if
the nature of Lessor's obligation is such that more than thirty (30) days are
reasonably required for performance, then Lessor shall not be in default if
Lessor commences performances within the thirty (30) day period and thereafter
diligently completes performance.
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18.4 Lender Protective Provisions. Lessor, upon providing Lessee with
any notice of (i) a default by Lessee in the payment of rentals or other
monies, or (ii) any breach of any other covenants of this Lease, shall at
the same time provide a copy of such notice to every leasehold mortgagee of
Lessee who has provided Lessor with notice of its mortgage. No notice of
any default or breach of Lessee shall be deemed to have been duly given by
Lessor unless and until a copy thereof has been provided to every mortgagee
entitled thereto. From and after the date such notice has been given to
Lessee and such mortgagees, each of such mortgagees shall have the same
period for remedying such default or beach as is given to Lessee to remedy,
commence remedying or cause to be remedied the default or breach specified
in any such notice. Lessor shall accept such performance by or at the
instigation of any such mortgagee as if the same had been done by Lessee.
Lessee authorizes each mortgagee to take any such action at such
mortgagee's option and does hereby authorize entry upon the Premises by the
mortgagee(s) for such purposes.
Anything contained in this Lease to the contrary notwithstanding, if any
default shall occur which entitles Lessor to terminate this lease, Lessor shall
have no right to so terminate this Lease so long as any such mortgagee shall (i)
pay or cause to be paid the rent and other monetary obligations of Lessee under
this Lease as the same becomes due, and continue its good faith efforts to
perform all of Lessee's other obligations under the Lease, and (ii) if not
enjoined or stayed, take steps to acquire or sell Lessee's interest in this
Lease and the Premises by foreclosure of the mortgage or other appropriate means
and prosecute the same to completion with due diligence. The time for completion
by such mortgagee of its proceedings shall continue so long as such mortgagee is
enjoined or stayed and thereafter for
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so long as such mortgagee proceeds to complete steps to acquire and sell
Lessee's interest in the Lease and the Premises by foreclosure of the
mortgage or by other appropriate means, with reasonable diligence and
continuity. Nothing in this paragraph, however, shall be construed to
extend this Lease beyond the Term, nor to require a mortgagee to continue
such foreclosure proceedings after the default has been cured. If the
default shall be cured and the mortgagee shall discontinue such foreclosure
proceedings, this Lease shall continue in full force and effect as if
Lessee had not defaulted hereunder. Upon the acquisition of the leasehold
estate herein by such mortgagee or its designee or any other purchaser at a
foreclosure sale or otherwise, and with respect to the Subleased Terminals,
provided any required consents of Overlandlords are obtained, this Lease
shall continue in full force and effect as if Lessee had not defaulted
hereunder.
19. SUBORDINATION. Lessor shall have the right, at any time or times during
the Term of this Lease, to mortgage Lessor's interest in the Premises for any
purposes, and Lessee will, if requested by the lender, subordinate its interest
in the Premises to the lien of lender's mortgage or trust deed, provided the
lender agrees in writing, in recordable form, not to disturb Lessee's possession
of the Premises under this Lease, so long as Lessee is not in default of any of
the terms, conditions, and covenants of this Lease, and to accept the
performance by Lessee of its covenants and obligations hereunder if such
mortgage shall be foreclosed (hereinafter referred to as "non-disturbance
agreement").
Any mortgage or lien created against the Premises or any portion thereof
shall contain, and the mortgagee or lienholders shall execute, a non-disturbance
agreement in favor of Lessee and its successors and assigns.
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20. SURRENDER.
20.1 General. On the last day of the Term, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in broom clean
and good condition, subject to paragraphs 16 and 17 hereof, and ordinary
wear and tear excepted. Lessee shall repair any damage to the Premises
occasioned by Lessee's use thereof, or by Lessee's removal of items
pursuant to paragraph 10.1, which shall include the patching and filling of
holes and repair of structural damage.
20.2 Lessee's Obligations Upon Termination. Lessee expressly covenants
and agrees that upon termination of cancellation of this Lease with respect
to any or all Terminals, Lessee shall provide Lessor with a written
statement and/or such other reasonable evidence acceptable to Lessor,
representing and warranting that no impairment to the environment exists
from its operations or facilities on the Premises. Lessee further covenants
and agrees that it shall be held solely and fully liable for, and shall
indemnify and hold Lessor harmless from, any and all citations, fees,
penalties, fines, environmental control measures or other expenses which
may in any manner result from or be associated with Lessee's use of the
Premises, and which did not exist or accrue prior to the commencement date
of the Term. This clause shall survive termination of this Lease.
21. HOLDING OVER. If Lessee remains in possession of any Terminal after the
expiration of the Term, or after termination of this Lease, and without the
execution of a new Lease, Lessee shall be deemed to be occupying the Terminal in
question as a tenant from month-to-month, at a monthly rent of twice the rent
being paid by Lessee in respect of such Terminal in the last month of the Term,
plus all other charges payable with respect to
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such Terminal, and shall otherwise be subject to all of the conditions,
provisions and obligations of this Lease insofar as they are applicable to a
month-to-month tenancy.
22. SIGNS. Lessee may erect such signs on the exterior or interior of the
Premises as lessee may deem desirable if the signs do not violate the laws,
rules, or regulations of the municipality in which the premises is situated.
Lessee shall remove all signs, whether existing at the commencement of this
Lease or erected thereafter, from the interior and exterior of each Terminal at
the expiration or termination of this Lease with respect to such Terminal.
23. LESSOR'S ACCESS. Lessor and Lessor's agent shall have the right to
enter the Premises at reasonable times during normal business hours upon 24
hours advance notice to Lessee, for the purpose of inspecting, showing to
prospective purchasers or lenders, and making such alterations, repairs,
improvements or additions to the Premises or to the building of which it is a
part as Lessor deems necessary or desirable.
24. NOTICES. All acceptances, approvals, consents, notices, demands or
other communications required or permitted to be given or sent by either party
to the other, shall be deemed to have been fully given when made in writing and
delivered in person or deposited in the United States mail, certified and
postage prepaid, addressed to:
LESSOR: The Greyhound Corporation
Real Estate Department
Mail Station 502
Greyhound Tower
Phoenix, Arizona 85077
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<TABLE>
<S> <C>
LESSEE: GLI Realty Company
2400 InterFirst Plaza
Dallas, Texas 75202
</TABLE>
The address to which any such written communication may be given or sent to
either party may be changed by written notice given by such party as above
provided.
25. RULES OF CONSTRUCTION. The invalidity of any provision of this Lease,
as determined by a court of competent jurisdiction, shall in no way affect the
validity of any other provision hereof. The language in all parts of this Lease
shall be construed as a whole according to its fair meaning, and not strictly
for or against either Lessor or Lessee. "Premises" may mean one Terminal or all
Terminals as the context requires.
26. EFFECT OF WAIVERS. No waiver by Lessor or Lessee of any provision
hereof shall be deemed a waiver of any other provision or of any subsequent
breach by Lessee or Lessor of the same or any other provision. Lessor's consent
to or approval of any act by Lessee shall not be deemed to render unnecessary
the obtaining of Lessor's consent to or approval of any subsequent act by
Lessee.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.
28. BINDING EFFECT. This Lease shall bind the parties hereto and their
personal representatives, successors and assigns.
29. AMENDMENTS. This Lease may not be modified or amended in any manner
except by an instrument in writing executed by the parties hereto.
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30. TAXES, UTILITIES AND MECHANICS' LIENS. Notwithstanding anything
expressed or implied to the contrary contained in this Lease, Lessee, at its own
expense, may in good faith contest charges for taxes or utilities or mechanics'
lien claims and, in the event of such contest, may permit the items contested to
remain unpaid during the period of the contest and any appeal therefrom;
provided that such nonpayment shall not be permitted to cause a loss or
forfeiture of any part of the Premises. Lessor shall render to Lessee all
assistance reasonably possible in contesting such charges including joining in
and signing any protest or pleadings which Lessee deems advisable to file.
Should any refund be made of any charges paid by Lessee, the amount of such
refund shall belong to and be paid to Lessee.
31. MISCELLANEOUS.
31.1 Attachments, Headings, Terms. All attachments referred to herein
are hereby incorporated by reference into this Lease. The headings and
underscorings contained herein are for convenience purposes only and shall
not be used to interpret nor be deemed to extend or limit the specific
sections. The word or words enclosed in quotation marks shall be construed
as defined terms for purposes of this agreement. The terms "Lessor" and
"Lessee" shall be construed to mean, when required by the context, the
directors, officers, elected officials, employees, invitees, contractors,
materialmen, servants and agents of Lessor and Lessee.
31.2 Attorneys' Fees. If either party named herein brings an action to
enforce the terms of this Lease or to declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be entitled
to his reasonable attorneys' fees, together with all reasonable
investigation and similar
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costs and all actual court costs to be paid by the losing party as fixed by
the court.
31.3 Executive and Delivery. This Lease shall not be binding nor
confer any rights upon either party unless and until executed and mutually
delivered by and between both parties.
31.4 Relationship of Parties. This Lease does not create the
relationship of principal and agent or a partnership or joint venture or of
any association other than that of Lessor and Lessee.
31.5 Lessor's Interests. With respect to the Owned Terminals, the
liabilities of the "Lessor" hereunder shall be borne solely by the owner or
owners of the Terminal in question (whether Lessor or Lessor's successors
or assigns) at the time the liability in question arose; provided, however,
that no transfer or assignment of an Owned Terminal shall release or
relieve any owner thereof in respect of any liability or obligation which
has accrued hereunder as of the transfer. With respect to the Subleased
Terminals, no transfer or assignment by the original Lessor hereunder shall
release or relieve such original Lessor from its contractual liabilities
and obligations to Lessor under this Lease (accrued or yet to accrue), but
the provisions of the preceding sentence shall be applicable to any of the
original Lessor's successors or assigns.
31.6 Governing Law. With respect to each Terminal, this Lease shall be
governed by and construed in accordance with the laws of the State in which
such Terminal is located.
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
instrument to be executed as of the day and year first above written.
LESSOR:
GREYHOUND LINES, INC.,
a California corporation
By: /s/ RICHARD C. STEPHAN
----------------------------
Name:
--------------------------
Title: Vice President
LESSEE:
GLI REALTY COMPANY,
a Delaware corporation
By: /s/ CRAIG R. LENTZSCH
----------------------------
Name:
--------------------------
Title: Vice President
28
