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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 27, 1997
REGISTRATION NO. 333-27367
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GREYHOUND LINES, INC.
(Exact Name of Registrant as Specified in Its Charter)
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DELAWARE 86-0572343
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
15110 N. DALLAS PARKWAY, SUITE 600 MARK E. SOUTHERST, VICE PRESIDENT
DALLAS, TEXAS 75248 AND GENERAL COUNSEL
(972) 789-7000 15110 NORTH DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(Address, Including Zip Code, and Telephone (972) 789-7000
Number, Including Area Code, of
Registrant's Principal Executive Offices) (Name, Address, Including Zip Code, and
Telephone Number, Including Area Code, of
Agent for Service)
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Copy to:
JEREMY W. DICKENS, ESQ.
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
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[Greyhound Logo] GREYHOUND LINES, INC.
2,400,000 SHARES OF 8 1/2% CONVERTIBLE EXCHANGEABLE STOCK
</TABLE>
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This Prospectus relates to the offering (the "Offering") by the Selling
Securityholders (as hereinafter defined) from time to time of (i) up to
2,400,000 shares (the "Shares") of 8 1/2% Convertible Exchangeable Preferred
Stock, liquidation preference $25.00 per share (the "Preferred Stock"), of
Greyhound Lines, Inc. (the "Company"), (ii) up to $60.0 million aggregate
principal amount of 8 1/2% Convertible Subordinated Notes due 2009 (the
"Exchange Debentures") of the Company, issuable upon exchange of the Preferred
Stock (as hereinafter described) and (iii) up to 12,307,692 shares (subject to
adjustment) of Common Stock, par value $.01 per share (the "Common Stock"), of
the Company, issuable upon conversion of the Preferred Stock or the Exchange
Debentures (as hereinafter described). See "Selling Securityholders." This
Prospectus also relates to the offer and sale by the Company of the shares of
Common Stock issuable upon conversion of the Preferred Stock and the Exchange
Debentures. The Preferred Stock, Exchange Debentures and Common Stock offered
hereby are referred to herein as the "Securities."
Dividends on the Preferred Stock will accrue at a rate per annum equal to
8 1/2% of the liquidation preference per share of Preferred Stock and will be
payable quarterly on February 1, May 1, August 1 and November 1 of each year,
commencing August 1, 1997. The Preferred Stock will be convertible, subject to
prior redemption, at any time on or after July 15, 1997 at the option of the
holder thereof into Common Stock at a conversion price of $4 7/8 per share,
subject to certain adjustments. The Common Stock is listed on the American Stock
Exchange ("AMEX") under the symbol "BUS." On June 25, 1997, the last reported
sale price of the Common Stock on the AMEX was $4 3/8 per share.
The Preferred Stock will be redeemable, in whole or in part, at any time on
or after May 3, 2000, at the redemption prices set forth herein, plus
accumulated and unpaid dividends, if any, thereon to the redemption date. Upon
the occurrence of a Change of Control (as defined herein), the Company will be
required to make an offer to repurchase all outstanding shares of Preferred
Stock at a price equal to 100% of the liquidation preference thereof, plus
accumulated and unpaid dividends, if any, thereon to the repurchase date. See
"Description of Securities -- Preferred Stock."
Subject to certain conditions, the Company at its option may exchange all,
but not less than all, of the then outstanding shares of Preferred Stock into
its 8 1/2% Convertible Subordinated Debentures due 2009 on any dividend payment
date on or after April 16, 1999. The Exchange Debentures, if issued, will bear
interest at 8 1/2% per annum and will be payable semi-annually in arrears on May
1 and November 1 of each year, commencing with the first such date following the
date on which the Exchange Debentures are issued. The Exchange Debentures will
be subordinated to all existing and future Senior Debt (as defined herein) of
the Company. The Exchange Debentures will be convertible, subject to prior
redemption, at any time after issuance thereof, at the option of the holder
thereof, into Common Stock at a conversion price of $4 7/8 per share, subject to
certain adjustments. The Exchange Debentures will be redeemable, at the option
of the Company, in whole or in part, at any time on or after May 3, 2000, at the
redemption prices set forth herein, plus accrued and unpaid interest thereon to
the redemption date. Upon the occurrence of a Change of Control, the Company
will be required to make an offer to repurchase all or any part of each holder's
Exchange Debentures at a price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest thereon to the repurchase date. See
"Description of Securities -- Exchange Debentures."
In the event a Selling Securityholder converts such holder's shares of
Preferred Stock into Common Stock or the Company exchanges the Preferred Stock
for Exchange Debentures and, in either case, such shares of Common Stock or such
Exchange Debentures are upon such conversion or exchange subject to restrictions
on transfer under the Securities Act of 1933, as amended (the "Securities Act"),
this Prospectus may be delivered by such Selling Securityholder in connection
with the offer and sale of such shares of Common Stock or such Exchange
Debentures.
The Selling Securityholders may sell the Securities to which this Prospectus
relates in whole or from time to time in part through underwriters or dealers,
through brokers or other agents, or directly to one or more purchasers, at
market prices prevailing at the time of sale or at prices otherwise negotiated.
The Company will not receive any of the proceeds from the sale of the Securities
by the Selling Securityholders. The Company has agreed to pay substantially all
the fees and expenses incurred in connection with the registration of the
Securities, other than any underwriting fees, discounts or commissions
attributable to the sale of the Securities by the Selling Securityholders. The
Selling Securityholders and any broker, dealer or underwriter that participates
with the Selling Securityholders in the distribution of the Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act, and any
commissions received by them and any profit on the resale of the Securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution."
The Preferred Stock currently trades in the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") Market. Shares of Preferred Stock
sold pursuant to this Prospectus thereafter will not be eligible for trading in
the PORTAL Market. The Company does not intend to list the Preferred Stock on
any securities exchange or to seek approval for quotation of the Preferred Stock
through any automated quotation system. Although Bear, Stearns & Co. Inc. has
advised the Company that it intends to make a market in the Preferred Stock, it
is not obligated to do so and may suspend any such market-making activities at
any time and without prior notice. Accordingly, there can be no assurance that
an active market for the Preferred Stock will develop or be maintained.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
RELEVANT TO AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is June 30, 1997.
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AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, and in accordance therewith files periodic reports,
proxy and information statements, and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy and information
statements, and other information filed by the Company with the Commission may
be inspected at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements regarding registrants, such as the
Company, that file electronically with the Commission. The Common Stock is
listed on the American Stock Exchange and all reports, proxy and information
statements, and other information filed by the Company with the Commission also
may be inspected at the offices of the American Stock Exchange, 86 Trinity
Place, New York, New York 10006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, with respect to the Securities offered
hereby. This Prospectus does not include all the information set forth in the
Registration Statement and the exhibits thereto, to which reference is made for
further information with respect to the Company. Copies of the Registration
Statement and the exhibits thereto are on file at the offices of the Commission
and may be obtained from the Commission upon payment of prescribed rates or may
be examined without charge at the public reference facilities of the Commission
as described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated into
this Prospectus by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, filed March 19, 1997;
(2) The Company's Current Report on Form 8-K filed March 19, 1997;
(3) The Company's Current Report on Form 8-K filed April 9, 1997;
(4) The Company's Proxy Statement for the year ended December 31,
1996, filed April 16, 1997;
(5) The Company's Current Report on Form 8-K filed April 28, 1997; and
(6) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997, filed May 13, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any and
all of the documents which have been or may be incorporated by reference in this
Prospectus, except that exhibits to such documents will not be provided unless
they are specifically incorporated by reference into such documents. Requests
for copies of any such document should be directed to Greyhound Lines, Inc.,
15110 N. Dallas Parkway, Suite 600, Dallas, Texas 75248, Attention: Investor
Relations, telephone: (972) 789-7577.
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PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and financial
data, contained in this Prospectus, including information and financial data
incorporated herein by reference. The terms "Greyhound" and "Company" refer to
Greyhound Lines, Inc. and its subsidiaries, unless otherwise stated or indicated
by the context.
THE COMPANY
The Company is the only nationwide provider of intercity bus transportation
services in the United States. The Company serves the value-oriented customer by
connecting rural and urban markets throughout the United States, offering
scheduled passenger service to more than 2,400 destinations with a fleet of
approximately 2,000 buses and approximately 1,600 sales locations. The Company
also provides package express service and, in many terminals, food service. The
Company's executive offices are located at 15110 N. Dallas Parkway, Suite 600,
Dallas, Texas 75248, and its telephone number is (972)789-7000.
THE OFFERING
THE PREFERRED STOCK
Securities Offered......... Up to 2,400,000 shares of 8 1/2% Convertible
Exchangeable Preferred Stock.
Liquidation Preference..... $25.00 per share.
Dividends.................. Cumulative dividends on the Preferred Stock will
accrue at a rate per annum equal to 8 1/2% of the
liquidation preference per share of Preferred Stock
and will be payable quarterly in arrears on
February 1, May 1, August 1, and November 1 of each
year, commencing August 1, 1997.
Conversion................. The Preferred Stock will be convertible, subject to
prior redemption, at any time on or after July 15,
1997, at the option of the holder thereof, into
Common Stock at a conversion price of $4 7/8 per
share, subject to certain adjustments.
Redemption................. The Preferred Stock will be redeemable, at the
option of the Company, in whole or in part, at any
time on or after May 3, 2000, at the redemption
prices set forth herein, plus accumulated and
unpaid dividends, if any, thereon to the redemption
date.
Change of Control.......... Upon the occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase all or any part of each holder's
Preferred Stock at a price equal to 100% of the
liquidation preference thereof, plus accumulated
and unpaid dividends, if any, thereon to the
repurchase date.
Exchange................... Subject to certain conditions, the Company at its
option may exchange all, but not less than all, of
the then outstanding shares of Preferred Stock into
Exchange Debentures on any dividend payment date on
or after April 16, 1999.
Voting Rights.............. The holders of the Preferred Stock are entitled to
vote with the holders of the Common Stock on all
matters submitted to a vote of stockholders of the
Company, each share of Preferred Stock entitling
the holder thereof to one vote. The Company,
however, may seek stockholder approval to amend the
Restated Certificate of Incorporation of the
Company to eliminate the provisions thereof
providing such voting rights to holders of
Preferred Stock. If such amendment is approved,
holders of the Preferred Stock will have no voting
rights except as provided by law
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or as set forth in the Certificate of Designations.
See "Description of Securities -- Preferred
Stock -- Voting Rights."
THE EXCHANGE DEBENTURES
Securities Offered......... 8 1/2% Convertible Subordinated Debentures due 2009
issuable at the Company's option on any dividend
payment date on or after April 16, 1999 in exchange
for all, but not less than all, the Preferred Stock
in an aggregate principal amount equal to the
liquidation preference of the then outstanding
shares of Preferred Stock.
Maturity................... May 1, 2009.
Interest Payment Dates..... Interest on the Exchange Debentures will be payable
semi-annually in arrears on May 1 and November 1 of
each year, commencing with the first such date
following the date on which the Exchange Debentures
are issued (the "Exchange Date").
Ranking.................... The Exchange Debentures will be subordinated to all
existing and future Senior Debt (as defined herein)
of the Company. As of March 31, 1997, after giving
pro forma effect to the Offerings (as hereinafter
defined) and the use of proceeds therefrom, the
principal amount of Senior Debt outstanding would
have been approximately $230.1 million.
Conversion................. The Exchange Debentures will be convertible,
subject to prior redemption, at any time after
issuance thereof, at the option of the holder
thereof, into Common Stock at a conversion price of
$4 7/8 per share, subject to certain adjustments.
Redemption................. The Exchange Debentures will be redeemable, at the
option of the Company, in whole or in part, at any
time on or after May 3, 2000, at the redemption
prices set forth herein, plus accrued and unpaid
interest, if any, thereon to the redemption date.
Change of Control.......... Upon the occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase all or any part of each holder's
Exchange Debentures at a price equal to 100% of the
principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the repurchase date.
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RISK FACTORS
Prospective purchasers of the Securities offered hereby should carefully
review the information set forth below, in addition to the other information
contained in this Prospectus (including information incorporated by reference
herein), in evaluating an investment in the Securities offered hereby.
SUBSTANTIAL LEVERAGE
The Company has, and will continue to have, consolidated indebtedness that
is substantial in relation to its stockholders' equity. As of March 31, 1997,
after giving pro forma effect to its offerings of the Preferred Stock and of
$150.0 million aggregate principal amount of its 11 1/2% Senior Notes due 2007
(the "Senior Notes"), completed April 16, 1997 (the "Offerings"), and the
application of the net proceeds therefrom, the Company would have had
outstanding consolidated long-term indebtedness (including current portions) of
approximately $242.6 million and total stockholders' equity of approximately
$158.8 million. In addition, for the quarter ended March 31, 1997, the Company's
earnings would have been insufficient to cover fixed charges and preferred stock
dividends by $17.1 million. The degree to which the Company is leveraged could
have important consequences to holders of the Securities, including: (i) an
impairment of the Company's ability to obtain additional financing in the
future; (ii) a reduction of funds available to the Company for its operations or
for capital expenditures as a result of the dedication of a substantial portion
of the Company's cash flow to the payment of principal of and interest on the
Company's indebtedness; (iii) the possibility of an event of default under
financial and operating covenants contained in the Company's debt instruments,
including the indenture in respect of the Senior Notes (the "Senior Note
Indenture"), which, if not cured or waived, could prevent the Company from
paying dividends on the Preferred Stock or interest on the Exchange Debentures
and could have a material adverse effect on the Company; (iv) a relative
competitive disadvantage if the Company is substantially more leveraged than its
competitors; and (v) an inability to adjust to rapidly changing market
conditions and consequent vulnerability in the event of a downturn in general
economic conditions or its business because of the Company's reduced financial
flexibility.
In addition to its debt service obligations, the Company's operations
require substantial investments on a continuing basis. The Company's ability to
make scheduled debt payments, to refinance its obligations with respect to its
indebtedness and to fund capital and non-capital expenditures necessary to
maintain the condition of the Company's operating assets, including its bus
fleet, properties and systems software, as well as to provide capacity for the
growth of its business, depends on its financial and operating performance and
obtaining additional sources of financing, which, in turn, is subject to
prevailing economic conditions and financial, business, competitive, legal and
other factors, many of which are beyond the Company's control. Moreover, the
Company is and will be subject to covenants contained in the Senior Note
Indenture, its revolving credit facility (the "Revolving Credit Facility") and
other present and future indebtedness of the Company. Such covenants include
without limitation, restrictions on certain payments, the granting of liens, the
incurrence of additional indebtedness, dividend restrictions affecting
subsidiaries, assets sales, transactions with affiliates, and mergers and
consolidations. There can be no assurance that the Company's operating results
will be sufficient for payment of the Company's indebtedness or to fund its
other expenditures or that the Company will be able to obtain financing to meet
such requirements. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and in
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997.
HISTORY OF LOSSES
The Company has had a net loss in each of its last three fiscal years.
Although the Company has implemented new strategic and operational initiatives
intended to enhance revenues and operating income, the Company's operations
generally are subject to economic, financial, competitive, legal and other
factors, many of which are beyond its control. Accordingly, there can be no
assurance that the Company will be able to implement these initiatives without
delay or that these initiatives will return the Company to profitability.
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ABSENCE OF DIVIDENDS ON COMMON STOCK; RESTRICTIONS ON DIVIDENDS
The Company has not paid any dividends on the Common Stock in the past and
does not anticipate paying dividends on the Common Stock in the foreseeable
future. See "Market Price of Common Stock and Dividend Policy" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. Moreover, the
Revolving Credit Facility and the Senior Note Indenture restrict the ability of
the Company to declare or pay cash dividends on any of its capital stock. In
general, the Revolving Credit Facility restricts the payment of dividends on the
Preferred Stock in an amount in excess of $10.0 million per year, and the Senior
Note Indenture limits the aggregate amount of Restricted Payments (as defined in
the Senior Note Indenture), including the payment of dividends on, and the
repurchase, redemption or other retirement of, shares of Preferred Stock and
Common Stock, to an amount equal to the sum of (a) 50% of the Consolidated Net
Income (as defined in the Senior Note Indenture to exclude certain non-recurring
and extraordinary gains) of the Company, plus (b) the net cash proceeds to the
Company from the sale of certain equity securities of the Company, plus (c) the
amount of proceeds to the Company from the sale of certain investments.
Notwithstanding the foregoing, however, the Senior Note Indenture will permit
the Company to pay regularly scheduled dividends on the Preferred Stock if (i)
the Company is not then in default under the Senior Note Indenture and (ii) with
respect to dividend payments on and after April 15, 2000, the Company's
Consolidated Interest Coverage Ratio (as defined in the Senior Note Indenture)
is at least 2.0 to 1. As a result of the foregoing provisions, there can be no
assurance that the Company will at all times be permitted to pay dividends on
the Preferred Stock. In addition, future agreements of the Company may restrict
the Company's ability to pay dividends on the Preferred Stock and Common Stock.
REPURCHASE OF PREFERRED STOCK UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
make an offer to repurchase all outstanding shares of Preferred Stock at a price
equal to 100% of the liquidation preference thereof, plus accumulated dividends,
if any, thereon to the date of repurchase. Certain events involving a Change of
Control may result in an event of default under the Revolving Credit Facility
and may result in an event of default under other indebtedness of the Company
that may be incurred in the future. An event of default under the Revolving
Credit Facility or other indebtedness could result in an acceleration of such
indebtedness. See "Description of Other Indebtedness." There can be no assurance
that the Company would have sufficient resources to repurchase the Preferred
Stock and pay its obligations under such indebtedness upon the occurrence of a
Change of Control. In addition, such indebtedness may prohibit the Company from
repurchasing Preferred Stock following a Change of Control. These Change of
Control provisions may be deemed to have anti-takeover effects and may delay,
defer or prevent a merger, tender offer or other takeover attempt.
COMPETITION
The transportation industry is highly competitive. The Company's primary
sources of competition for passengers are automobile travel, low cost air travel
from both regional and national airlines, and, in certain markets, regional bus
companies and trains. There can be no assurance that the Company will be able to
successfully compete against these sources of competition. See
"Business -- Competition" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
SEASONALITY
The Company's business is seasonal in nature and generally follows the
pattern of the travel industry as a whole, with peaks during the summer months
and the Thanksgiving and Christmas holiday periods. As a result, the Company's
cash flows are seasonal in nature with a disproportionate amount of the
Company's annual cash flows being generated during the peak travel periods.
Therefore, an event that adversely affects ridership during any of these peak
periods in any year could have a material adverse effect on the Company's
financial condition or results of operations for such year. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Seasonality" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
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IMPORTANCE OF SELF-INSURANCE AUTHORITY AND AVAILABILITY OF INSURANCE
The Surface Transportation Board (the "STB") of the United States
Department of Transportation ("DOT") has granted the Company authority to
self-insure its automobile liability exposure for interstate passenger service
up to a maximum level of $5.0 million per occurrence. To maintain self-insurance
authority, the STB requires the Company to maintain a tangible net worth of
$10.0 million (as of March 31, 1997, the Company's tangible net worth was $102.0
million) and to maintain a $15.0 million trust fund (currently fully funded) to
provide security for payment of claims. Subsequent to the self-insurance grant
by the STB, 38 states have granted the Company the authority to self-insure its
intrastate automobile liability exposure.
Insurance coverage and risk management expense are key components of the
Company's cost structure. The loss of self-insurance authority from the STB or a
decision by the Company's insurers to modify the Company's program
substantially, by either increasing cost, reducing availability or increasing
collateral, could have a material adverse effect on the Company's financial
condition or results of operations.
LITIGATION
The Company is a party to various lawsuits the outcome of which, if adverse
to the Company, could have a material adverse effect on the results of
operations and financial condition of the Company. See "Business -- Legal
Proceedings" in the Company's Annual Report on Form 10-K.
PENSION PLAN FUNDING
The Company maintains five defined benefit pension plans, the most
significant of which (the "ATU Plan") covers approximately 16,500 current and
former employees, fewer than 1,300 of which are active employees of the Company.
The ATU Plan was closed to new participants in 1983 and, as a result, over 80%
of its participants are over the age of 50. For financial reporting and
investment planning purposes, the Company currently uses an actuarial table that
closely matches the actual experience related to the existing participant
population. As a result of legislation enacted in 1994 by the United States
Congress, the Company may be required to begin measuring its funding obligation
under the ATU Plan utilizing an actuarial table prescribed by such legislation.
If so required, the Company currently estimates, based on assumed rates of
return on the ATU Plan's investments, that it would be required to begin making
contributions to the ATU Plan beginning no earlier than 1998 in an aggregate
amount over the next five years ranging from approximately $6.0 million to
approximately $30.0 million. If the ATU Plan is unable to attain such assumed
rates of return, such contributions could be higher. Although the Company is
exploring whether it may be able to obtain relief from this requirement, there
is no assurance that the Company will be able to obtain such relief, that the
ATU Plan will be able to obtain the assumed rates of return or that
contributions to the ATU Plan will not be significant.
LACK OF PUBLIC MARKET
The Preferred Stock will not be listed on any securities exchange. The
Company has been advised by Bear, Stearns & Co. Inc. that Bear, Stearns & Co.
Inc. intends to make a market in the Preferred Stock after the consummation of
the Offering, as permitted by applicable laws and regulations; however, Bear,
Stearns & Co. Inc. is not obligated to do so, and any such market making
activities may be discontinued at any time without notice. In addition, such
market making activity may be limited during the pendency of the Registration
Statement. Future trading prices may depend on a number of factors including
among other things, the performance of the Company, the market for similar
securities, prevailing interest rates and other factors. Therefore, there can be
no assurance that an active market for the Preferred Stock will develop.
ANTI-TAKEOVER EFFECTS OF CERTAIN INSTRUMENTS AND AGREEMENTS OF THE COMPANY
The Company's certificate of incorporation and bylaws, the Revolving Credit
Facility, the Senior Note Indenture, the Stockholders Rights Plan of the Company
and certain other contracts to which the Company is a party, and the Delaware
General Corporation Law contain provisions that could have the effect of
delaying or preventing a transaction that results in a change of control of the
Company.
7
<PAGE> 9
USE OF PROCEEDS
The Company will not receive any portion of the net proceeds from the sale
of the Securities by the Selling Securityholders. See "Plan of Distribution."
CAPITALIZATION
The following table sets forth the capitalization of the Company at March
31, 1997 (i) on an actual basis and (ii) as adjusted to give effect to the
Offerings and the application of the net proceeds therefrom. The information
presented below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and notes thereto appearing in the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997.
<TABLE>
<CAPTION>
MARCH 31, 1997
---------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Revolving bank loans(1)................................... $ 42,490 $ 37,500
10% Senior Notes due 2001 (net of discount)............... 139,526 --
11 1/2% Senior Notes due 2007............................. -- 150,000
Other long-term debt, including capital leases
obligations............................................ 53,871 55,078
-------- ---------
Total long-term debt.............................. 235,887 242,578
Less current maturities................................... (11,839) (9,199)
-------- ---------
Long-term debt, net....................................... 224,048 233,379
-------- ---------
Stockholders' equity:
Preferred stock -- 10,000,000 shares authorized; par value
$.01 per share; no shares issued, actual, and 2,400,000
shares of 8 1/2% Convertible Exchangeable Preferred
Stock issued, as adjusted ($60.0 million liquidation
preference)............................................ -- 57,750
Common stock -- 100,000,000 shares authorized; par value
$.01 per share; 58,469,469 shares issued(2)............ 588 588
Capital in excess of par value............................ 229,414 229,414
Retained deficit.......................................... (98,405) (122,768)(3)
Less: Unfunded accumulated pension obligation............. (6,533) (6,533)
Less: Treasury stock, at cost (109,192 shares)............ (1,038) (1,038)
-------- ---------
Total stockholders' equity........................ 124,026 157,413
-------- ---------
Total capitalization.............................. $348,074 $ 390,792
======== =========
</TABLE>
- ---------------
(1) The Revolving Credit Facility currently provides for $105.0 million of
availability, subject to satisfaction of certain borrowing base and other
collateralization requirements. As of March 31, 1997, the Company had $19.2
million in issued and undrawn standby letters of credit outstanding and
total unused availability of $16.4 million under the Revolving Credit
Facility.
(2) Does not include an additional 5,944,937 shares of Common Stock reserved for
issuance pursuant to options outstanding at March 31, 1997 under the
Company's stock option plans, 792,242 shares reserved for issuance upon
conversion of the Company's Convertible Debentures, and up to 12,307,692
shares reserved for issuance upon conversion of the Preferred Stock.
(3) Reflects an extraordinary loss on the redemption of the 10% Senior Notes and
the retirement of certain interest rate swap agreements as follows:
<TABLE>
<S> <C>
Acceleration of discount related to the 10% Senior Notes.... $13,143
Redemption premium for the 10% Senior Notes................. 7,634
Termination of interest rate swap agreements................ 2,620
Interest paid on 11 1/2% Senior Notes between receipt of
funds and redemption of 10% Senior Notes.................. 898
Write-off of debt issuance costs............................ 67
-------
$24,362
=======
</TABLE>
8
<PAGE> 10
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the Company's ratio of earnings to fixed
charges (or deficiency of earnings available to cover) fixed charges and ratio
of earnings to (or deficiency of earnings available to cover) fixed charges and
preferred stock dividend requirements. For purposes of these computations, (i)
"earnings" consist of pre-tax earnings plus fixed charges (adjusted to exclude
the amount of capitalized interest) and (ii) "fixed charges" consist of
interest, whether expensed or capitalized, amortization of debt issuance costs
and discount relating to any indebtedness, whether expensed of capitalized and
the portion of rental expense estimated to be representative of an interest
factor.
<TABLE>
<CAPTION>
THREE MONTHS
FOR YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- -------- -------- ------- -------- --------
(IN THOUSANDS, EXCEPT RATIOS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Net Income (Loss) Before Taxes,
Discontinued Operation, Extraordinary
Items and Cumulative Effect of a
Change in Accounting Principle........ 20,091 14,847 (98,932) (17,444) (6,542) (21,482) (17,089)
Interest Expense........................ 35,297 30,832 33,456 26,807 27,346 6,626 7,586
Portion of Rents Representative of the
Interest Factor....................... 15,980 13,598 14,491 17,344 19,556 4,265 5,030
Income (Loss) Before Taxes as
Adjusted.............................. 71,368 59,277 (50,985) 26,707 40,360 (10,591) (4,473)
Fixed Charges:
Interest Expense...................... 35,297 30,832 33,456 26,807 27,346 6,626 7,586
Interest Capitalized.................. -- -- -- -- -- --
Portion of Rents Representative of the
Interest Factor..................... 15,980 13,598 14,491 17,344 19,556 4,265 5,030
Total Fixed Charges................... 51,277 44,430 47,947 44,151 46,902 10,891 12,616
Preferred Stock Dividends............... -- -- -- -- -- -- --
Total Fixed Charges and Preferred Stock
Dividends............................. 51,277 44,430 47,947 44,151 46,902 10,891 12,616
Ratios of Earnings to Fixed Charges..... 1.4x 1.3x -- -- -- -- --
Deficiency of Earnings to Fixed
Charges............................... -- -- (98,932) (17,444) (6,542) (21,482) (17,089)
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends............. 1.4x 1.3x -- -- -- -- --
Deficiency of Earnings to Fixed Charges
and Preferred Stock Dividends......... -- -- (98,932) (17,444) (6,542) (21,482) (17,089)
</TABLE>
9
<PAGE> 11
SELLING SECURITYHOLDERS
The following table sets forth the name of each Selling Securityholder and
the relationship, if any, of each Selling Securityholder with the Company and
(i) the number of shares of Preferred Stock owned by each Selling Securityholder
(assuming no shares have been sold since the date on which such securityholder
provided such information to the Company) and (ii) the number of shares of
Preferred Stock which may be offered for the account of such Selling
Securityholder under this Prospectus.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES OF SHARES OF
PREFERRED STOCK PREFERRED STOCK
NAME OF SELLING SECURITYHOLDER OWNED OFFERED HEREBY
------------------------------ --------------- ---------------
<S> <C> <C>
Snyder Capital Management(1)............ 606,500 606,500
Shepherd Investments International
Ltd................................... 212,500 212,500
Stark International..................... 212,500 212,500
Camden Asset Management LP.............. 80,000 80,000
Bear Stearns Security Corp.(2).......... 55,300 55,300
Millennium Trading Co. L.P.............. 45,000 45,000
JMG Capital Partners L.P................ 40,000 40,000
BTR Capital Management, Inc............. 30,000 30,000
KA Trading L.P.......................... 26,400 26,400
GP2 Trading............................. 25,000 25,000
Triton Capital Investments.............. 15,000 15,000
KA Management Limited................... 13,600 13,600
Mega Life & Health Insurance............ 10,000 10,000
Palladin Partners, L.P.................. 8,000 8,000
Colonial Penn Life Insurance Co......... 8,000 8,000
Colonial Penn Insurance Co.............. 8,000 8,000
Glen Eagles Fund Ltd.................... 8,000 8,000
Ramius Fund, Ltd........................ 8,000 8,000
Maxwell Gluck Foundation................ 8,000 8,000
South Ferry #2, L.P..................... 6,200 6,200
Chesed Congregation..................... 2,000 2,000
Strategic Restructuring Fund............ 1,000 1,000
Mirala Investments...................... 1,000 1,000
Hempshire Associates.................... 1,000 1,000
Andy Warhol Foundation.................. 800 800
RBC Dominion Securities Inc.(3)......... 350 350
--------- ---------
Subtotal...................... 1,432,150 1,432,150
Unnamed holders of Preferred Stock or
any future transferees, pledgees,
donees or successors of or from such
unnamed holders(4).................... 967,850 967,850
--------- ---------
Total......................... 2,400,000 2,400,000
========= =========
</TABLE>
- ---------------
(1) Represents shares beneficially owned by the following accounts for which
Snyder Capital Management acts as investment advisor: CBBB Cotenancy (6,200
shares); East Bay Community Foundation (6,200 shares); East Oakland Youth
Development Foundation (3,800 shares); Horowitz Limited Partnership I (3,600
shares); Donald G. Linker, M.D. (700 shares); Albert L. Luce, Jr. (3,400
shares); Melinda E. Maxfield Trust (900 shares); John Robert Maytag (3,300
shares); Radiology Group of New Brunswick Pension Plan (1,700 shares);
Radiology Group of New Brunswick Profit Sharing Plan (1,800 shares); OS
Ventures (2,900 shares); Radiology Associates Employee Benefit Plan, Little
Rock (5,700 shares); Ridgeway/Floum Profit Sharing Plans (3,000 shares);
Christine Russell Revocable Trust (11,500 shares); Jeffrey Rymer (800
shares); Milton J. Schwartz Revocable Family Trust (2,700 shares); Stirling
Partners (30,100 shares); Stoel Rives Boley Jones & Grey (9,000 shares);
Clorox Co. Foundation (3,300 shares); Corlon Associates, I (8,900 shares);
S&J Partners (2,900 shares); American Stores Retirement Portfolio (29,600
shares); Associated Jewish Charities of Baltimore (8,600 shares); Barbara K.
Brown, Trustee of Trust A (3,500 shares); Clorox Co. Employee Benefits
(10,000 shares); Cowles Investment Partnership (4,400 shares); Southwest
Franciscan Missions, Inc. (3,600 shares); Guide Dogs for the Blind (12,300
shares); N.B. Giustina Trust (4,100 shares); The Trustees of Hamilton
College (20,600 shares); Jicarilla Apache Tribe (41,800 shares); Peyton
Anderson Foundation (6,200 shares); Radiology Medical Group Profit
Sharing -- San Diego (1,100 shares); Western Cancer Center Medical Group P/S
(1,500 shares); Riverside Church (16,200 shares); Ronald Family Trust A
(22,200 shares); Zellerbach Family Fund (5,700 shares); University of Oregon
Foundation (5,900 shares); Michigan State University (9,500 shares);
Metropolitan Museum of Art (19,200 shares); Cheyne Walk Trust (17,400
shares); James Irvine Foundation (22,600 shares); The Henry J. Kaiser Family
Foundation (13,800 shares); Citibank, et al. Employees Retirement Plan
(74,600 shares); Duke University Employees R.P. (5,000 shares); Duke
University Long Term Pool (24,700 shares); Alsam Foundation (3,700 shares);
JMB Children's Holding Co. (14,700 shares); S.C. Johnson Retirement Plan
(6,100 shares); Southern Methodist University (6,100 shares); University of
North Carolina at Chapel Hill Investment Fund (12,800 shares); University of
Washington Endowment Fund (9,500 shares); Discovery Group of Funds (6,700
shares); Skaggs
10
<PAGE> 12
Family Foundation (2,800 shares); Glaxo Welcome Benefits Plan (16,500 shares);
Cogen Technologies Financial Partnership (8,600 shares); Indiana University
Foundation (13,000 shares); Beth Israel Deaconess Medical Center R.P. (1,900
shares); BTC Partners, LLP (7,600 shares).
(2) Bear, Stearns & Co. Inc., an affiliate of Bear Stearns Securities Corp.,
acted as initial purchaser for the Offerings and has performed other
investment services for the Company for which it has received customary
fees.
(3) Represents shares held for the account of Mrs. Rhoda Lindzon.
(4) No such holder may offer Preferred Stock pursuant to this Prospectus until
such holder is included as a Selling Securityholder in a supplement to this
Prospectus.
In addition to the shares of Preferred Stock set forth in the foregoing
table, the holders of such Preferred Stock may offer from time to time the
shares of Common Stock into which their shares of Preferred Stock (or the
Exchange Debentures) are convertible (or exchangeable) and/or the Exchange
Debentures for which the Preferred Stock is exchangeable.
Because the Selling Securityholders may, pursuant to this Prospectus, offer
all or some portion of the Preferred Stock they presently hold or, with respect
to the Common Stock and Exchange Debentures, have the right to acquire from time
to time and may also acquire such Securities from time to time, no estimate can
be given as to the amount of the Securities that will be held by the Selling
Securityholders upon termination of any sales of Securities. In addition, the
Selling Securityholders identified above may have sold, transferred or otherwise
disposed of all or a portion of their Preferred Stock since the date on which
they provided the information regarding their Preferred Stock, in transactions
exempt from the registration requirements of the Securities Act.
Only Selling Securityholders identified above who beneficially own
Preferred Stock set forth opposite each such Selling Securityholder's name in
the foregoing table on the effective date of the Registration Statement may sell
such Securities pursuant to this Prospectus. The Company may from time to time
include additional Selling Securityholders in supplements to this Prospectus.
11
<PAGE> 13
PLAN OF DISTRIBUTION
The Selling Securityholders may sell the Securities to which this
Prospectus relates in whole or from time to time in part through underwriters or
dealers, through brokers or other agents, or directly to one or more purchasers,
at market prices prevailing at the time of sale or at prices otherwise
negotiated. The Company will not receive any of the proceeds from the sale of
the Securities by the Selling Securityholders. The Company has agreed to pay
substantially all the fees and expenses incurred in connection with the
registration of the Securities, other than any underwriting fees, discounts or
commissions of underwriters, brokers, dealers and agents attributable to the
sale of the Securities by the Selling Securityholders.
The Preferred Stock currently trades in the PORTAL Market. However, shares
of Preferred Stock sold pursuant to this Prospectus will not thereafter be
eligible for trading in the PORTAL Market. The Company does not intend to list
the Preferred Stock or the Exchange Debentures on any securities exchange or to
seek approval for quotation of the Preferred Stock through any automated
quotation system. Although Bear, Stearns & Co. Inc. has advised the Company that
it intends to make a market in the Preferred Stock, it is not obligated to do so
and may suspend any such market-making activities at any time and without prior
notice. Accordingly, there can be no assurance that an active market for the
Preferred Stock will develop or be maintained.
The Common Stock issuable upon conversion of the Preferred Stock has been
approved for listing on the American Stock Exchange, subject to official notice
of issuance. The Common Stock trades under the symbol "BUS."
In order to comply with the securities laws of certain states, if
applicable, the Securities will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The Selling Securityholders and any broker, dealer or underwriter that
participates with the Selling Securityholders in the distribution of the
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any commissions received by them and any profit on the
resale of such Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A under the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this Prospectus. There is no
assurance that any Selling Securityholder will sell any or all of the Preferred
Stock, the Exchange Debentures or Common Stock described herein, and any Selling
Securityholder may transfer, devise or make a gift of such securities by other
means not described herein.
The Company and the Selling Securityholders are obligated to indemnify each
other against certain liabilities arising under the Securities Act.
12
<PAGE> 14
DESCRIPTION OF SECURITIES
PREFERRED STOCK
The following summary of certain provisions of the Preferred Stock and the
Certificate of Designations pursuant to which the Preferred Stock is issued does
not purport to be complete. The Certificate of Designations and the Exchange
Debenture Indenture are available from the Company upon request. See "Additional
Information."
General
The Company is authorized to issue 10,000,000 shares of preferred stock,
$.01 par value per share, of which only the 2,400,000 shares of the Preferred
Stock offered hereby are outstanding on the date of this Prospectus. The
Restated Certificate of Incorporation of the Company authorizes the Board of
Directors, without stockholder approval, to issue classes of preferred stock
from time to time in one or more series, with such designations, preferences and
relative, participating, optional or other special rights, qualifications,
limitations or restrictions as may be determined by the Board of Directors. The
purchase price payable upon the original issuance of Preferred Stock has been
fully paid, and such shares are non-assessable, and the holders thereof do not
have any subscription or preemptive rights related thereto. Mellon Securities
Trust Company is the transfer agent and registrar (the "Transfer Agent") for the
Preferred Stock.
Ranking
The Preferred Stock, with respect to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the Company,
ranks (i) senior to all classes of common stock of the Company and to each other
class of capital stock or series of preferred stock established after the date
of this Prospectus by the Board of Directors the terms of which do not expressly
provide that it ranks senior to or on a parity with the Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to with the common stock of
the Company as "Junior Securities"); (ii) subject to certain conditions, on a
parity with any class of capital stock or series of preferred stock issued by
the Company established after the date of the issuance of the Preferred Stock by
the Board of Directors, the terms of which expressly provide that such class or
series will rank on a parity with the Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and dissolution
of the Company (collectively referred to as "Parity Securities"); and (iii)
subject to certain conditions, junior to each class of capital stock or series
of preferred stock issued by the Company established after the date of the
issuance of the Preferred Stock by the Board of Directors the terms of which
expressly provide that such class or series will rank senior to the Preferred
Stock as to dividend distributions and distributions upon liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Securities"). The Preferred Stock is subject to the issuance of series of Junior
Securities, Parity Securities and Senior Securities, provided that the Company
may not issue any new class of Senior Securities without the approval of the
holders of at least 66 2/3% of the shares of Preferred Stock then outstanding,
voting or consenting, as the case may be, together as one class.
In addition, the Preferred Stock ranks junior in right of payment to all
indebtedness and other obligations of the Company. As of March 31, 1997, after
giving pro forma effect to the Offerings and the use of proceeds therefrom, the
Preferred Stock would have been junior in right of payment to approximately
$242.6 million of total indebtedness of the Company.
Dividends
Holders of the Preferred Stock are entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on the Preferred Stock at a rate per annum equal to 8 1/2% of the
liquidation preference per share of Preferred Stock, payable quarterly. All
dividends are cumulative whether or not earned or declared on a daily basis from
the date of issuance of the Preferred Stock and will be payable quarterly in
arrears on February 1, May 1, August 1, and November 1 of each year, commencing
on
13
<PAGE> 15
August 1, 1997. The Revolving Credit Facility and Senior Note Indenture
restrict, and future agreements of the Company may restrict, the payment of cash
dividends on the Preferred Stock.
Dividends are payable to holders of record of the Preferred Stock on the
stock register of the Company on the record date for such purpose fixed by the
Board of Directors of the Company, which shall not be less than 10 nor more than
60 days preceding the dividend payment date. Dividends are computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in any period of less than one month.
No dividends may be declared or paid or funds set apart for the payment of
dividends on any Parity Securities for any period unless full cumulative
dividends shall have been or contemporaneously are declared and paid in cash or
declared and a sum in cash set apart for such payment on the Preferred Stock. If
full dividends in cash are not so paid, the Preferred Stock will share dividends
pro rata with the Parity Securities. No dividends may be paid or set apart for
such payment on Junior Securities (except dividends on Junior Securities in
additional shares of Junior Securities) and no Junior Securities or Parity
Securities may be repurchased, redeemed or otherwise retired, nor may funds be
set apart for payment with respect thereto, if full cumulative dividends for all
past dividend periods have not been paid in cash on the Preferred Stock.
Optional Redemption
The Preferred Stock is redeemable for cash on or after May 3, 2000, at the
option of the Company, in whole or from time to time in part, at the redemption
prices set forth herein, together with all accumulated and unpaid dividends and
Liquidated Damages, if any, to the redemption date (the "redemption price"). The
redemption prices (expressed as percentages of liquidation preference) are as
follows, plus all accumulated and unpaid dividends and Liquidated Damages, if
any, to the redemption date, for shares of Preferred Stock redeemed during the
twelve-month period beginning on May 3 of the years indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C> <C>
2000............................................................. 104.86%
2001............................................................. 103.64
2002............................................................. 102.43
2003............................................................. 101.21
2004 and thereafter.............................................. 100.00
</TABLE>
No optional redemption may be authorized or made unless, prior to giving
the applicable redemption notice, all accumulated and unpaid dividends for
dividend periods ended prior to the date of such redemption notice shall have
been paid in cash. In the event of partial redemptions of Preferred Stock, the
shares to be redeemed will be determined pro rata or by lot, as determined by
the Company; provided that the Company may redeem all shares held by holders of
fewer than 100 shares of Preferred Stock (or by holders that would hold fewer
than 100 shares of Preferred Stock following such redemption) prior to its
redemption of other shares of Preferred Stock.
Procedure for Redemption
On and after a redemption date, unless the Company defaults in the payment
of the applicable redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the redemption price, without
interest; provided, however, that if a notice of redemption has been given and
an amount in cash equal to the full redemption price shall have been segregated
and irrevocably set apart by the Company in trust for the benefit of holders of
the Preferred Stock called for redemption, then at the close of business on the
day on which such funds are so segregated and set apart, the holders of the
shares to be redeemed shall cease to be stockholders of the Company and shall be
entitled, subject to their rights of conversion, to receive only the redemption
price for their shares on the redemption date. The Company will make a public
announcement of the redemption and send a written notice of redemption by first
class mail to each holder of record of shares of Preferred Stock not fewer than
30 days nor more than 60 days prior to the date fixed for such redemption.
Shares of Preferred Stock issued and reacquired will, upon compliance with the
applicable requirements of Delaware law, have the status of authorized but
unissued shares of preferred stock of the Company
14
<PAGE> 16
undesignated as to series and may with any and all other authorized but unissued
shares of preferred stock of the Company be designated or redesignated and
issued or reissued, as the case may be, as part of any series of preferred stock
of the Company, except that any issuance or reissuance of shares of Preferred
Stock must be in compliance with the Certificate of Designations.
Conversion Rights
Each share of Preferred Stock will be convertible at any time on or after
July 15, 1997 at the option of the holder thereof into Common Stock of the
Company, at a conversion rate equal to $25.00 (the liquidation preference per
share of Preferred Stock) divided by the conversion price then applicable,
except that the right to convert shares of Preferred Stock called for redemption
will terminate at the close of business on the business day preceding the
redemption date and will be lost if not exercised prior to that time, unless the
Company defaults in making the payment due upon redemption.
The conversion price is $4 7/8 per share. The conversion price is subject
to adjustment in certain events, including: (i) the payment of dividends (and
other distributions) in Common Stock on any class of capital stock of the
Company; (ii) the issuance to all holders of Common Stock of rights, warrants or
options entitling them to subscribe for or purchase Common Stock at less than
the current market price (as defined in the Certificate of Designations); (iii)
subdivisions, combinations and reclassifications of Common Stock; (iv)
distributions to all holders of Common Stock of evidences of indebtedness of the
Company, shares of any class of capital stock, cash or other assets (including
securities, but excluding those dividends, rights, warrants, options and
distributions referred to above and dividends and distributions paid in cash out
of the retained earnings of the Company, unless the sum of all such cash
dividends and distributions made and the amount of cash and the fair market
value of other consideration paid in respect of any repurchases of Common Stock
by the Company or any of its subsidiaries, in each case within the preceding 12
months in respect of which no adjustment has been made, exceeds 20% of the
product of the then current market price of the Common Stock times the aggregate
number of shares of Common Stock outstanding on the record date for such
dividend or distribution).
No adjustment of the conversion price will be required to be made until
cumulative adjustments amount to 1% or more of the conversion price as last
adjusted. Notwithstanding the foregoing, no adjustment to the conversion price
shall reduce the conversion price below the then par value per share of the
Common Stock. In addition to the foregoing adjustments, the Company will be
permitted to make such reductions in the conversion price as it considers to be
advisable in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the holders of the
Common Stock.
In the case of certain consolidations or mergers to which the Company is a
party or the transfer of substantially all of the assets of the Company, each
share of Preferred Stock then outstanding will become convertible only into the
kind and amount of securities, cash and other property receivable upon the
consolidation, merger or transfer by a holder of the number of shares of Common
Stock into which such share of Preferred Stock might have been converted
immediately prior to such consolidation, merger or transfer (assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount receivable per share by a plurality of
non-electing shares).
No fractional shares of Common Stock will be issued upon conversion; in
lieu thereof, the Company will pay a cash adjustment based upon the closing
price of the Common Stock on the business day prior to the conversion date.
The holder of record of a share of Preferred Stock at the close of business
on a record date with respect to the payment of dividends on the Preferred Stock
is entitled to receive such dividends with respect to such share of Preferred
Stock on the corresponding dividend payment date, notwithstanding the conversion
of such share after such record date and prior to such dividend payment date. A
share of Preferred Stock surrendered for conversion during the period from the
close of business on any record date for the payment of dividends to the opening
of business of the corresponding dividend payment date must be accompanied by a
payment in cash in an amount equal to the dividend payable on such dividend
payment date, unless such share of Preferred Stock has been called for
redemption on a redemption date occurring during the period from the
15
<PAGE> 17
close of business on any record date for the payment of dividends to the close
of business on the business day immediately following the corresponding dividend
payment date. The dividend payment with respect to a share of Preferred Stock
called for redemption on a date during the period from the close of business on
any record date for the payment of dividends to the close of business on the
business day immediately following the corresponding dividend payment date will
be payable on such dividend payment date to the record holder of such share on
such record date, notwithstanding the conversion of such share after such record
date and prior to such dividend payment date. No payment or adjustment will be
made upon conversion of shares of Preferred Stock for accumulated and unpaid
dividends or for dividends with respect to the Common Stock issued upon such
conversion.
Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
make an offer (a "Preferred Stock Change of Control Offer") to repurchase all or
any part of each holder's Preferred Stock at an offer price in cash equal to
100% of the aggregate liquidation preference thereof, plus accumulated and
unpaid dividends and Liquidated Damages, if any, thereon to the date of
repurchase. Within 30 days following a Change of Control, the Company will mail
a notice to each holder of Preferred Stock describing the transaction that
constitutes the Change of Control and offering to repurchase the Preferred Stock
pursuant to the procedures required by the Certificate of Designations and
described in such notice; provided that, prior to complying with the provisions
of this covenant, but in any event within 90 days following a Change of Control,
the Company will either repay all outstanding Indebtedness or obtain the
requisite consents, if any, under all agreements governing outstanding
Indebtedness to permit the repurchase of the Preferred Stock required by this
covenant. The Company will comply with the requirements of the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Preferred
Stock as a result of a Change of Control.
A "Change of Control" will be deemed to have occurred upon the occurrence
of any of the following: (a) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the assets of the
Company and its subsidiaries, taken as a whole, (b) the adoption of a plan
relating to the liquidation or dissolution of the Company, (c) the consummation
of any transaction (including, without limitation, any merger or consolidation)
the result of which is that any "person" or "group" (as such terms are used in
Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly through one or more intermediaries, of more than 50% of the voting
power of the outstanding voting stock of the Company, unless (i) the closing
price per share of Common Stock for any five trading days within the period of
ten consecutive trading days ending immediately after the announcement of such
Change of Control equals or exceeds 105% of the conversion price of the
Preferred Stock or the Exchange Debentures, as the case may be, in effect on
each such trading day or (ii) at least 90% of the consideration in the
transaction or transactions constituting a Change of Control pursuant to clause
(c) consists of shares of common stock traded or to be traded immediately
following such Change of Control on a national securities exchange or the Nasdaq
national market and, as a result of such transaction or transactions, the
Preferred Stock or the Exchange Debentures, as the case may be, become
convertible solely into such common stock (and any rights attached thereto), or
(d) the first day on which more than a majority of the Board of Directors are
not Continuing Directors; provided, however, that a transaction in which the
Company becomes a subsidiary of another entity shall not constitute a Change of
Control if (i) the stockholders of the Company immediately prior to such
transaction "beneficially own" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly through one or more
intermediaries, at least a majority of the voting power of the outstanding
voting stock of the Company immediately following the consummation of such
transaction and (ii) immediately following the consummation of such transaction,
no "person" or "group" (as such terms are defined above), other than such other
entity (but including holders of equity interests of such other entity),
"beneficially owns" (as such term is defined above), directly or indirectly
through one or more intermediaries, more than 50% of the voting power of the
outstanding voting stock of the Company.
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<PAGE> 18
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (a) was a member of the Board of
Directors on the date of original issuance of the Preferred Stock or (b) was
nominated for election to the Board of Directors with the approval of, or whose
election to the Board of Directors was ratified by, at least two-thirds of the
Continuing Directors who were members of the Board of Directors at the time of
such nomination or election.
Except as described above with respect to a Change of Control, the
Certificate of Designations does not contain provisions that permit the holders
of the Preferred Stock to require that the Company repurchase or redeem the
Preferred Stock in the event of a takeover, recapitalization or similar
transaction. In addition, the Company could enter into certain transactions,
including acquisitions, refinancings or other recapitalizations, that could
affect the Company's capital structure or the value of the Preferred Stock or
the Common Stock, but that would not constitute a Change of Control.
The occurrence of a Change of Control could result in a default under the
Revolving Credit Facility or other indebtedness of the Company. In addition, the
Revolving Credit Facility or other indebtedness could restrict the Company's
ability to repurchase the Preferred Stock upon a Change of Control. In the event
a Change of Control occurs at a time when the Company is prohibited from
repurchasing the Preferred Stock, the Company could seek the consent of its
lenders to the repurchase of the Preferred Stock or could attempt to refinance
the borrowings that contain such prohibition. If the Company does not obtain
such a consent or repay such borrowings, the Company will remain prohibited from
repurchasing the Preferred Stock. The Company's failure to make a Preferred
Stock Change of Control Offer or to repurchase the Preferred Stock tendered in a
Preferred Stock Change of Control Offer would constitute a Voting Rights
Triggering Event (as defined herein). Finally, the Company's ability to
repurchase the Preferred Stock following a Change of Control may be limited by
the Company's then existing financial resources.
The Company will not be required to make a Preferred Stock Change of
Control Offer following a Change of Control if a third party makes the Preferred
Stock Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Certificate of Designations
applicable to a Preferred Stock Change of Control Offer made by the Company and
purchases all of the Preferred Stock validly tendered and not withdrawn under
such Preferred Stock Change of Control Offer.
Exchange
The Company at its option may exchange all, but not less than all, of the
then outstanding shares of Preferred Stock into its 8 1/2% Convertible
Subordinated Debentures due 2009 (the "Exchange Debentures") on any dividend
payment date on or after April 16, 1999, provided that on the date of such
exchange: (a) there are no accumulated and unpaid dividends or Liquidated
Damages on the Preferred Stock (including the dividends payable and Liquidated
Damages on such date) or other contractual impediment to such exchange; (b)
there shall be legally available funds sufficient therefor; (c) a registration
statement relating to the Exchange Debentures shall have been declared effective
under the Securities Act prior to such exchange and shall continue to be in
effect on the date of such exchange or the Company shall have obtained a written
opinion of counsel that an exemption from the registration requirements of the
Securities Act is available for such exchange, and that upon receipt of such
Exchange Debentures pursuant to such exchange made in accordance with such
exemption, the holders (assuming such holder is not an Affiliate of the Company)
thereof will not be subject to any restrictions imposed by the Securities Act
upon the resale thereof, other than any such restriction to which the holder
thereof already is subject on the Exchange Date, and such exemption is relied
upon by the Company for such exchange; (d) the indenture in respect of the
Exchange Debentures (the "Exchange Debenture Indenture") and the trustee
thereunder shall have been qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"); (e) immediately after giving effect to such
exchange, no Default or Event of Default (each as defined in the Exchange
Debenture Indenture) would exist under the Exchange Debenture Indenture; and (f)
the Company shall have delivered to the Trustee under the Exchange Debenture
Indenture a written opinion of counsel, dated the date of exchange, regarding
the satisfaction of the conditions set forth in clauses (a), (b), (c) and (d).
The Company shall send a written notice of exchange by mail to each holder of
record of shares of Preferred Stock, which notice shall state, among other
things, (i) that the Company is exercising its option to exchange the Preferred
Stock for
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<PAGE> 19
Exchange Debentures pursuant to the Certificate of Designations and (ii) the
date of exchange (the "Exchange Date"), which date shall not be less than 30
days nor more than 60 days following the date on which such notice is mailed. On
the Exchange Date, the Company shall issue Exchange Debentures in exchange for
the Preferred Stock as provided below.
The holders of outstanding shares of Preferred Stock will be entitled to
receive $1,000 principal amount of Exchange Debentures for each 40 shares of
Preferred Stock (the liquidation preference of which equals $1,000). The
Exchange Debentures will be issued in registered form, without coupons. Exchange
Debentures issued in exchange for Preferred Stock will be issued in principal
amounts of $1,000 and integral multiples thereof. The Company will pay cash in
lieu of issuing an Exchange Debenture in a principal amount less than $1,000. On
and after the Exchange Date, dividends will cease to accrue on the outstanding
shares of Preferred Stock, and all rights of the holders of Preferred Stock
(except the right to receive the Exchange Debentures, an amount in cash equal to
the accrued and unpaid dividends and Liquidated Damages, if any, to the Exchange
Date and, if the Company so elects, cash in lieu of any Exchange Debenture which
is in an amount that is not an integral multiple of $1,000) will terminate. The
person entitled to receive the Exchange Debentures issuable upon such exchange
will be treated for all purposes as the registered holder of such Exchange
Debentures.
The Company intends to comply with the provisions of the Exchange Act in
connection with any exchange, to the extent applicable.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, holders of Preferred Stock will be entitled to be paid, out of the
assets of the Company available for distribution, $25.00 per share, plus an
amount in cash equal to accumulated and unpaid dividends and Liquidated Damages,
if any, thereon to the date fixed for liquidation, dissolution or winding-up
(including an amount equal to a prorated dividend for the period from the last
dividend payment date to the date fixed for liquidation, dissolution or
winding-up), before any distribution is made on any Junior Securities,
including, without limitation, common stock of the Company. If, upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the amounts payable with respect to the Preferred Stock and all other Parity
Securities are not paid in full, the holders of the Preferred Stock and the
Parity Securities will share equally and ratably in any distribution of assets
of the Company in proportion to the full liquidation preference and accumulated
and unpaid dividends and Liquidated Damages, if any, to which each is entitled.
After payment of the full amount of the liquidation preferences and accumulated
and unpaid dividends and Liquidated Damages, if any, to which they are entitled,
the holders of shares of Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company. However, neither the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with or into one or
more entities shall be deemed to be a liquidation, dissolution or winding-up of
the Company.
The Certificate of Designations for the Preferred Stock does not contain
any provision requiring funds to be set aside to protect the liquidation
preference of the Preferred Stock, although such liquidation preference will be
substantially in excess of the par value of such shares of Preferred Stock. In
addition, the Company is not aware of any provision of Delaware law or any
controlling decision of the courts of the State of Delaware (the state of
incorporation of the Company) that requires a restriction upon the surplus of
the Company solely because the liquidation preference of the Preferred Stock
will exceed its par value. Consequently, there will be no restriction upon the
surplus of the Company solely because the liquidation preference of the
Preferred Stock will exceed the par value thereof and there will be no remedies
available to holders of the Preferred Stock before or after the payment of any
dividend, other than in connection with the liquidation of the Company, solely
by reason of the fact that such dividend would reduce the surplus of the Company
to an amount less than the difference between the liquidation preference of the
Preferred Stock and its par value.
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<PAGE> 20
Voting Rights
Pursuant to the Company's Restated Certificate of Incorporation, holders of
all classes of preferred stock of the Company, including the Preferred Stock,
are entitled to vote with the holders of the Common Stock on all matters
submitted to the stockholders of the Company, with each share of preferred stock
entitling the holder thereof to one vote on such matters. The Company, however,
may seek stockholder approval to amend its Restated Certificate of Incorporation
to eliminate the provisions thereof providing for such preferred stockholder
voting rights. If such amendment is approved by the stockholders of the Company,
holders of the Preferred Stock will have no voting rights except as provided by
law or as set forth in the Certificate of Designations. The Certificate of
Designations will provide, however, that (a) if dividends on the Preferred Stock
are in arrears and unpaid for six quarterly dividend periods (whether or not
consecutive), or (b) the Company fails to make a Preferred Stock Change of
Control Offer or to repurchase all of the Preferred Stock tendered in a
Preferred Stock Change of Control Offer pursuant to the provisions of the
Certificate of Designations described above under "-- Change of Control" (in
each case, a "Voting Rights Triggering Event"), then the number of directors
constituting the Board of Directors of the Company will be adjusted to permit
the holders of the majority of the then outstanding shares of Preferred Stock,
voting separately as a class, to elect two directors. Such voting rights will
continue until such time as all dividends and Liquidated Damages, if any, in
arrears on the Preferred Stock are paid in full or until such failure to make,
and to purchase all shares of Preferred Stock tendered in, a Preferred Stock
Change of Control Offer is cured, as the case may be.
In addition, the Certificate of Designations will provide that the Company
will not authorize any class of Senior Securities without the approval of
holders of at least 66 2/3% of the share of Preferred Stock then outstanding,
voting or consenting, as the case may be, as one class. The Certificate of
Designations also provides that the Company may not amend the Certificate of
Designations so as to affect adversely the specified rights, preferences,
privileges or voting rights of the Preferred Stock, or authorize the issuance of
any additional shares of Preferred Stock, without the approval of the holders of
at least 66 2/3% of the then outstanding shares of Preferred Stock, voting or
consenting, as the case may be, as one class. The Certificate of Designations
also provides that, except as set forth above, (a) the creation, authorization
or issuance of any shares of Junior Securities, Parity Securities or Senior
Securities or (b) the increase or decrease in the amount of authorized capital
stock of any class, including any preferred stock, shall not require the consent
of the holders of Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of the Preferred Stock.
Merger, Consolidation and Sale of Assets
Without the vote or consent of the holders of a majority of the then
outstanding shares of Preferred Stock, the Company may not consolidate or merge
with or into, or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its assets to, any person unless (a) the entity
formed by such consolidation or merger (if other than the Company) or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made (in any such case, the "resulting entity") is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia; (b) if the Company is not the resulting entity, the
Preferred Stock is converted into or exchanged for and becomes shares of such
resulting entity, having in respect of such resulting entity the same (or more
favorable) powers, preferences and relative, participating, optional or other
special rights thereof that the Preferred Stock had immediately prior to such
transaction; and (c) immediately after giving effect to such transaction, no
Voting Rights Triggering Event has occurred and is continuing. The resulting
entity of such transaction shall thereafter be deemed to be the "Company" for
all purposes of the Certificate of Designations.
Covenant to Report
Whether or not the Company is required to do so by the rules and
regulations of the Commission, the Company will file with the Commission (unless
the Commission will not accept such a filing) and, within 15 days of filing, or
attempting to file, the same with the Commission, furnish to the holders of the
Preferred Stock (a) all quarterly and annual financial and other information
that would be required to be contained in a
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<PAGE> 21
filing with the Commission on Forms 10-Q and 10-K if the Company were required
to file such forms, including a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants, and (b) all current reports that would be required to be filed with
the Commission on Form 8-K if the Company were required to file such reports. In
addition, the Company will furnish to the holders of the Preferred Stock,
prospective purchasers of shares of Preferred Stock and securities analysts,
upon their request, the information, if any, required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
The Transfer Agent
Mellon Securities Trust Company is the transfer agent and registrar for the
Preferred Stock.
THE EXCHANGE DEBENTURES
The Exchange Debentures, if issued, will be issued pursuant to the Exchange
Debenture Indenture between the Company and U.S. Trust Company of Texas, N.A.
The terms of the Exchange Debentures include those stated in the Exchange
Debenture Indenture and those made part of the Exchange Debenture Indenture by
reference to the Trust Indenture Act. The Exchange Debentures are subject to all
such terms, and prospective investors are referred to the Exchange Debenture
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of certain provisions of the Exchange Debenture Indenture does not
purport to be complete.
General
The Exchange Debenture Indenture authorizes the issuance of an aggregate
principal amount of Exchange Debentures equal to the aggregate liquidation
preference of the then outstanding shares of Preferred Stock at the time such
shares are exchanged for Exchange Debentures as described under "-- Preferred
Stock -- Exchange." The Exchange Debentures will mature on May 1, 2009. The
Exchange Debentures will bear interest at the rate of 8 1/2% per annum, payable
semi-annually in arrears on May 1 and November 1 of each year, commencing on the
first such date following the date on which the Exchange Debentures are issued
(the "Exchange Date"), to the holders of record at the close of business on the
April 15 and October 15 next preceding such interest payment date. Interest will
initially accrue from the Exchange Date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. The Exchange Debentures will be
issued in fully registered form only in denominations of $1,000 and integral
multiples thereof, other than as described under "-- Preferred
Stock -- Exchange."
The Exchange Debentures will be general unsecured obligations of the
Company, subordinated in right of payment to all Senior Debt (as defined below).
See "-- Subordination."
Principal, premium and, interest, if any, will be payable, and the Exchange
Debentures may be presented for redemption, repurchase, exchange or transfer, at
the office of the paying agent and registrar and at any other office or agency
maintained by the Company for such purpose. The Trustee will initially act as
registrar and paying agent. The Company may change the registrar or paying agent
without prior notice to holders and the Company or any subsidiary of the Company
may act in such capacity.
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<PAGE> 22
Optional Redemption
The Exchange Debentures will be redeemable for cash on or after May 3,
2000, at the option of the Company, in whole or from time to time in part, at
the redemption prices set forth herein, together with all accrued and unpaid
interest, if any, to the redemption date. The redemption prices (expressed as
percentages of principal amount) are as follows for Exchange Debentures redeemed
during the twelve-month period beginning on May 3 of the years indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000.............................................. 104.86%
2001.............................................. 103.64
2002.............................................. 102.43
2003.............................................. 101.21
2004 and thereafter............................... 100.00
</TABLE>
Selection and Notice
If less than all of the Exchange Debentures are to be redeemed at any time,
selection of Exchange Debentures for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Exchange Debentures are listed, or, if the Exchange
Debentures are not so listed, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided that no Exchange
Debentures of $1,000 or less shall be redeemed in part. At least 30 but not more
than 60 days before the redemption date, a public notice of the redemption shall
be made and notice of redemption shall be mailed by first class mail to each
holder of Exchange Debentures to be redeemed at its registered address. If any
Exchange Debenture is to be redeemed in part only, the notice of redemption that
relates to such Exchange Debenture shall state the portion of the principal
amount thereof to be redeemed. A new Exchange Debenture in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Exchange Debenture. On and after the
redemption date, interest will cease to accrue on Exchange Debentures or
portions thereof called for redemption.
Mandatory Redemption
Except as set forth under "-- Change of Control," the Company is not
required to make mandatory redemption or sinking fund payments with respect to
the Exchange Debentures.
Subordination
The payment of principal of and premium and interest, on the Exchange
Debentures will be subordinated in right of payment to the prior payment in full
of all Senior Debt, whether outstanding on the Exchange Date or thereafter
incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full of all monetary obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at the rate
specified in the applicable Senior Debt) before the holders of Exchange
Debentures will be entitled to receive any payment with respect to the Exchange
Debentures, and until all monetary obligations with respect to Senior Debt are
paid in full, any distribution to which the holders of Exchange Debentures would
be entitled shall be made to the holders of such Senior Debt (except that
holders of Exchange Debentures may receive securities, including capital stock,
that are subordinated at least to the same extent as the Exchange Debentures to
Senior Debt and any securities issued in exchange for Senior Debt).
The Company also may not make any payment upon or in respect of the
Exchange Debentures (except in such capital stock or subordinated securities) if
(a) a default in the payment of the principal of or premium or
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<PAGE> 23
interest on any Senior Debt occurs and is continuing beyond any applicable
period of grace or (b) any other default occurs and is continuing with respect
to any Designated Senior Debt that permits holders of such Designated Senior
Debt to accelerate its maturity and the Trustee receives a notice of such
default (a "Payment Blockage Notice") from the Company or the representative of
holders of such Designated Senior Debt. Payments on the Exchange Debentures may
and shall be resumed (i) in the case of a payment default, upon the date on
which such default is cured or waived and (ii) in case of a non-payment default,
the earlier of the date on which such non-payment default is cured or waived or
179 days after the date on which the applicable Payment Blockage Notice is
received, unless the maturity of any Designated Senior Debt has been accelerated
and remains unpaid. No new period of payment blockage may be commenced unless
and until 360 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice. No non-payment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice.
"Senior Debt" means (a) all obligations of the Company under the Revolving
Credit Facility, as it may be amended, modified, restated, supplemented,
deferred, extended, renewed, replaced, refunded or refinanced from time to time,
and (b) any other Indebtedness of the Company, whether outstanding on the date
of issuance of the Exchange Debentures or thereafter incurred, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is subordinated in right of payment to any Senior Debt; provided, however, that
Senior Debt will not include (i) any liability for federal, state, local or
other taxes owed or owing by the Company, (ii) any Indebtedness of the Company
to any of its subsidiaries or (iii) any trade payables.
"Indebtedness" means any indebtedness, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing capital lease obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any hedging obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and hedging obligations) would appear
as a liability upon a balance sheet prepared in accordance with generally
accepted accounting principles.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Revolving Credit Facility and (ii) any other Senior Debt permitted under the
Indenture the principal amount of which is $5.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of Exchange Debentures may recover less
ratably than creditors of the Company who are holders of Senior Debt. As of
March 31, 1997, after giving pro forma effect to the Offerings and the use of
proceeds therefrom, the principal amount of outstanding Senior Debt would have
been approximately $230.1 million. In addition, neither the Certificate of
Designations nor the Exchange Debenture Indenture will limit the amount of
Senior Debt that the Company may incur in the future.
Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
make an offer (an "Exchange Debenture Change of Control Offer") to repurchase
all or any part of each holder's Exchange Debentures at an offer price in cash
equal to 100% of the aggregate principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of repurchase. Within 30 days following a
Change of Control, the Company will mail a notice to each holder of Exchange
Debentures describing the transaction that constitutes the Change of Control and
offering to repurchase the Exchange Debentures pursuant to the procedures
required by the Exchange Debenture Indenture and described in such notice;
provided that, prior to complying with the provisions of this covenant, but in
any event within 90 days following a Change of Control, the Company will either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of the Exchange Debentures required by this covenant. The Company will comply
with the requirements of the Exchange Act and any other
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<PAGE> 24
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Exchange
Debentures as a result of a Change of Control.
Except as described above with respect to a Change of Control, the Exchange
Debenture Indenture does not contain provisions that permit the holders of the
Exchange Debentures to require that the Company repurchase or redeem the
Exchange Debentures in the event of a takeover, recapitalization or similar
transaction. In addition, the Company could enter into certain transactions,
including acquisitions, refinancings or other recapitalizations, that could
affect the Company's capital structure or the value of the Exchange Debentures
or the Common Stock, but that would not constitute a Change of Control.
The occurrence of a Change of Control could result in a default under the
Revolving Credit Facility or other Senior Debt. In addition, the Revolving
Credit Facility or other Senior Debt could restrict the Company's ability to
repurchase Exchange Debentures upon a Change of Control. In the event a Change
of Control occurs at a time when the Company is prohibited from repurchasing
Exchange Debentures, the Company could seek the consent of its lenders to the
repurchase of Exchange Debentures or could attempt to refinance the borrowings
that contain such prohibition. If the Company does not obtain such a consent or
repay such borrowings, the Company will remain prohibited from repurchasing
Exchange Debentures. The Company's failure to make an Exchange Debenture Change
of Control Offer or to repurchase Exchange Debentures tendered in an Exchange
Debenture Change of Control Offer would constitute an event of default under the
Exchange Debenture Indenture, which could, in turn, constitute a default under
the Revolving Credit Facility or other Senior Debt. In such circumstances, the
subordination provisions in the Exchange Debenture Indenture would likely
restrict payments to the holders of Exchange Debentures. See "-- Subordination."
Finally, the Company's ability to repurchase Exchange Debentures following a
Change of Control may be limited by the Company's then existing financial
resources.
The Company will not be required to make an Exchange Debenture Change of
Control Offer following a Change of Control if a third party makes the Exchange
Debenture Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Exchange Debenture Indenture
applicable to an Exchange Debenture Change of Control Offer made by the Company
and purchases all Exchange Debentures validly tendered and not withdrawn under
such Exchange Debenture Change of Control Offer.
Conversion Rights
Each Exchange Debenture will be convertible at any time at the option of
the holder thereof into Common Stock of the Company, at a conversion rate equal
to the principal amount of such Exchange Debenture divided by the conversion
price then applicable, except that the right to convert Exchange Debentures
called for redemption will terminate at the close of business on the business
day preceding the redemption date and will be lost if not exercised prior to
that time, unless the Company defaults in making the payment due upon
redemption, or if not exercised prior to the maturity of the Exchange
Debentures.
The conversion price initially will be the conversion price with respect to
the Preferred Stock on the Exchange Date and will be subject to adjustment as
set forth under "-- Preferred Stock -- Conversion Rights."
In the case of certain consolidations or mergers to which the Company is a
party or the transfer of substantially all of the assets of the Company, the
Exchange Debentures then outstanding would become convertible only into the kind
and amount of securities, cash and other property receivable upon the
consolidation, merger or transfer by a holder of the number of shares of Common
Stock into which such Exchange Debentures might have been converted immediately
prior to such consolidation, merger or transfer (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount receivable per share by a plurality of non-electing shares).
No fractional shares of Common Stock will be issued upon conversion; in
lieu thereof, the Company will pay a cash adjustment based upon the closing
price of the Common Stock on the business day prior to the conversion date.
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<PAGE> 25
The holder of record of an Exchange Debenture at the close of business on a
record date with respect to the payment of interest on the Exchange Debentures
will be entitled to receive such interest with respect to such Exchange
Debentures on the corresponding interest payment date, notwithstanding the
conversion of such Exchange Debentures after such record date and prior to such
interest payment date. Exchange Debentures surrendered for conversion during the
period from the close of business on any record date for the payment of interest
to the opening of business of the corresponding interest payment date must be
accompanied by a payment in cash in an amount equal to the interest payable on
such interest payment date, unless such Exchange Debentures have been called for
redemption on a redemption date occurring during the period from the close of
business on any record date for the payment of interest to the close of business
on the business day immediately following the corresponding interest payment
date. The interest payment with respect to an Exchange Debenture called for
redemption on a date during the period from the close of business on any record
date for the payment of interest to the close of business on the business day
immediately following the corresponding interest payment date will be payable on
such interest payment date to the record holder of such Exchange Debenture on
such record date, notwithstanding the conversion of such Exchange Debenture
after such record date and prior to such interest payment date. No payment or
adjustment will be made upon conversion of Exchange Debentures for accrued and
unpaid interest or for dividends with respect to the Common Stock issued upon
such conversion.
Events of Default and Remedies
The Exchange Debenture provides that each of the following constitutes an
Event of Default: (a) default for 30 days in the payment when due of interest on
the Exchange Debentures; (b) default in payment when due of the principal of or
premium, if any, on the Exchange Debentures; (c) failure by the Company to
comply with the provisions described under the caption "-- Change of Control";
(d) failure by the Company for 60 days after notice to comply with any of its
covenants, representations, warranties or other agreements in the Indenture or
the Exchange Debentures; (e) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company (or the payment of which is
guaranteed by the Company), whether such Indebtedness or guarantee now exists or
is created after the date of the Indenture, which default (i) is caused by a
failure to pay principal of or premium or interest on such Indebtedness prior to
the expiration of any grace period provided in such Indebtedness (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $10.0 million or more; (f) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess
of $10.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; and (g) certain events of bankruptcy or insolvency with
respect to the Company.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Exchange
Debentures may declare all the Exchange Debentures to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company or, all outstanding Exchange Debentures will become due and payable
without further action or notice. The Holders of a majority in aggregate
principal amount of the then outstanding Exchange Debentures by written notice
to the Trustee may on behalf of all of the Holders rescind an acceleration and
its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default (except nonpayment of principal,
interest and premium that has become due solely because of the acceleration)
have been cured or waived. Holders of the Exchange Debentures may not enforce
the Indenture or the Exchange Debentures except as provided in the Indenture.
Subject to certain limitations, holders of a majority in principal amount of the
then outstanding Exchange Debentures may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from holders of the Exchange
Debentures notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest) if
it determines that withholding notice is in their interest.
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The holders of a majority in aggregate principal amount of the Exchange
Debentures then outstanding by notice to the Trustee may on behalf of the
holders of all of the Exchange Debentures waive any existing Default or Event of
Default and its consequences under the Exchange Debenture Indenture except a
continuing Default or Event of Default in the payment of the principal of or
interest on the Exchange Debentures.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
Amendment, Supplement and Waiver
Except as provided below, the Exchange Debenture Indenture or the Exchange
Debentures may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the Exchange Debentures then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Exchange Debentures), and any
existing default or compliance with any provision of the Exchange Debenture
Indenture or the Exchange Debentures may be waived with the consent of the
holders of a majority in principal amount of the then outstanding Exchange
Debentures (including consents obtained in connection with a tender offer or
exchange offer for Exchange Debentures).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Exchange Debentures held by a non-consenting Holder): (a)
reduce the principal amount of Exchange Debentures whose holders must consent to
an amendment, supplement or waiver, (b) reduce the principal of or change the
fixed maturity of any Exchange Debenture or alter the provisions with respect to
the redemption of the Exchange Debentures (other than provisions relating to the
covenants described above under the caption "-- Change of Control"), (c) reduce
the rate of or change the time for payment of interest on any Exchange
Debenture, (d) waive a Default or Event of Default in the payment of principal
of or premium, interest or Liquidated Damages on the Exchange Debentures (except
a rescission of acceleration of the Exchange Debentures by the holders of at
least a majority in aggregate principal amount of the Exchange Debentures and a
waiver of the payment default that resulted from such acceleration), (e) make
any Exchange Debenture payable in money other than that stated in the Exchange
Debentures, (f) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Exchange Debentures to
receive payments of principal of or premium or interest on the Exchange
Debentures (except as permitted in clause (g) hereof), (g) waive a redemption
payment with respect to any Note (other than a payment required by one of the
covenants described above under the caption "-- Change of Control") or (h) make
any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Exchange Debentures, the Company and the Trustee may amend or supplement the
Exchange Debenture Indenture or the Exchange Debentures to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Exchange Debentures in
addition to or in place of certificated Exchange Debentures, to provide for the
assumption of the Company's obligations to holders of Exchange Debentures in the
case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the holders of Exchange Debentures or that does
not adversely affect the legal rights under the Exchange Debenture Indenture of
any such holder, or to comply with requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act.
Concerning the Trustee
The Exchange Debenture Indenture contains certain limitations on the rights
of the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
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The holders of a majority in principal amount of the then outstanding
Exchange Debentures will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any holder of Notes, unless such holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
COMMON STOCK
The Company is authorized to issue 100,000,000 shares of Common Stock, par
value $0.01 per share.
Dividends
The holders of Common Stock are entitled to receive dividends, when and as
declared by the Board of Directors of the Company, provided that the Company has
funds legally available for the payment of dividends and is not otherwise
contractually restricted from the payment of dividends, and subject to the prior
rights and preferences, if any, of holders of preferred stock of the Company.
Dissolution, Liquidation or Winding Up
In the event of a dissolution, liquidation or winding up of the Company,
the holders of Common Stock are entitled to receive, after distribution of
preferential amounts, if any, to creditors of the Company and holders of
preferred stock of the Company, if any, all assets of the Company available
under law for distribution to stockholders.
Voting
Each holder of Common Stock of the Company is entitled to one vote, in
person or by proxy, for each share owned. For a discussion of the effect on
holders of Common Stock of the voting rights of holders of the Company's
preferred stock, if issued, see "-- Preferred Stock."
Preemptive Rights
The Common Stock does not carry with it any preemptive or preferential
rights to purchase or subscribe to any additional shares of capital stock of the
Company issued in the future, whether of a presently existing class of stock or
one that may later be authorized by the Company.
Preferred Stock Purchase Rights
Each share of Common Stock also evidences a right to purchase one
one-thousandth (1/1000) of a share of Series A Junior Preferred Stock of the
Company. Those rights will become separately transferable only under certain
circumstances. See "-- Stockholder Rights Plan."
Listing on the American Stock Exchange
The Common Stock is listed for trading on the American Stock Exchange under
the symbol "BUS".
Transfer Agent
The transfer agent and registrar for the Common Stock is Mellon Securities
Trust Company.
STOCKHOLDER RIGHTS PLAN
On March 22, 1994, the Board of Directors of the Company declared a
dividend of one Preferred Stock Purchase Right (each a "Preferred Right") for
each outstanding share of Common Stock. The dividend was
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payable as of April 4, 1994 to stockholders of record on that date. Each
Preferred Right entitles the registered holder to purchase from the Company one
one-thousandth (1/1000) of a share of a new series of preferred stock of the
Company, designated as Series A Junior Preferred Stock ("Series A Preferred
Stock"), at a price of $35.00 per one one-thousandth (1/1000) of a share (the
"Preferred Exercise Price"), subject to certain adjustments. The description and
terms of the Preferred Rights are set forth in a Rights Agreement (the
"Preferred Rights Agreement") between the Company and Mellon Securities Trust
Company, as Rights Agent (the "Preferred Rights Agent"), dated as of March 22,
1994, as amended as of April 8, 1997. The following summary of the Rights and
the Preferred Rights Agreement is qualified in its entirety by reference to the
Rights Agreement, a copy of which is available from the Company.
The Preferred Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following a public announcement
that a person or group of affiliated or associated persons, with certain
exceptions set forth below, has acquired beneficial ownership of 20% or more of
the outstanding voting stock of the Company (an "Acquiring Person") and (ii) the
tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or exchange
offer the consummation of which would result in the ownership of 30% or more of
the Company's outstanding voting stock (even if no shares are actually purchased
pursuant to such offer). Prior to the Distribution Date, the Preferred Rights
are not exercisable, are not represented by a separate certificate, and are not
transferable apart from the Company's Common Stock, and instead are evidenced by
the Common Stock certificates. An Acquiring Person does not include (A) the
Company, (B) any subsidiary of the Company, (C) any employee benefit plan or
employee stock plan of the Company or of any subsidiary of the Company, or any
trust or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan (each of the persons listed in
clauses (A) through (C) above being an "Exempt Person," or (D) any person or
group whose ownership of 20% or more of the shares of voting stock of the
Company then outstanding results solely from (i) any action or transaction or
transactions approved by the Board of Directors before such person or group
became an Acquiring Person or (ii) a reduction in the number of issued and
outstanding shares of Common Stock of the Company pursuant to a transaction or
transactions approved by the Board of Directors (provided that any person or
group that does not become an Acquiring Person by reason of clause (i) or (ii)
above shall become an Acquiring Person upon acquisition of an additional 1% of
the Company's Common Stock unless such acquisition of additional Common Stock
will not result in such person or group becoming an Acquiring Person by reason
of such clause (i) or (ii)).
The Preferred Rights are not exercisable until the Distribution Date. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Preferred Rights ("Preferred Right Certificates") will be mailed
to holders of record of the Company's Common Stock as of the close of business
on the Distribution Date and such separate certificates alone will evidence the
Preferred Rights from and after the Distribution Date. The Preferred Rights will
expire at the close of business on March 22, 2004, unless earlier redeemed by
the Company as described below.
The Series A Preferred Stock is non-redeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock, subordinate to any other series of the Company's preferred stock. The
Series A Preferred Stock may not be issued except upon exercise of Preferred
Rights. Each share of Series A Preferred Stock is entitled to receive when, as
and if declared, a quarterly dividend in an amount equal to the greater of
$100.00 per share and 1,000 times the cash dividends declared on the Company's
Common Stock. In addition, each share of Series A Preferred Stock is entitled to
100 times any non-cash dividends (other than dividends payable in equity
securities) declared on the Common Stock, in like kind. In the event of
liquidation, the holders of Series A Preferred Stock will be entitled to receive
a liquidation payment in an amount equal to the greater of $100.00 per share or
1,000 times the payment made per share of Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of Series A Preferred Stock will be entitled to receive 1,000 times
the amount received
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per share of Common Stock. The rights of Series A Preferred Stock as to
dividends and liquidation are protected by anti-dilution provisions.
Each share of Series A Preferred Stock will have one vote, voting together
with the Common Stock.
The number of shares of Series A Preferred Stock issuable upon exercise of
the Preferred Rights is subject to certain adjustments from time to time in the
event of a stock dividend on, or a subdivision or combination of, the Common
Stock. The Preferred Exercise Price for the Preferred Rights is subject to
adjustment in the event of extraordinary distributions of cash or other property
to holders of Common Stock.
Unless the Preferred Rights are earlier redeemed, in the event that, after
the time that the Preferred Rights become exercisable, the Company were to be
acquired by any Person (other than an Exempt Person) in a merger or other
business combination (in which any shares of the Company's Common Stock are
changed into or exchanged for other securities or assets) or more than 50% of
the assets or earning power of the Company and its subsidiaries (taken as a
whole) were to be sold or transferred to any Person (other than an Exempt
Person) in one or a series of related transactions, the Preferred Rights
Agreement provides that proper provision will be made so that each holder of
record of a Preferred Right will from and after such date have the right to
receive, upon payment of the Preferred Exercise Price, that number of shares of
common stock of the acquiring company having a market value at the time of such
transaction equal to two times the Preferred Exercise Price. In addition, unless
the Preferred Rights are earlier redeemed, if a person or group becomes the
beneficial owner of 20% or more of the Company's voting stock (other than
pursuant to a tender or exchange offer (a "Qualifying Tender Offer") for all
outstanding shares of Common Stock that is approved by the Board of Directors,
after taking into account the long-term value of the Company and all other
factors they consider relevant in the circumstances), the Preferred Rights
Agreement provides that proper provision will be made so that each holder of
record of a Preferred Right, other than the Acquiring Person (whose Preferred
Rights will thereupon become null and void), will thereafter have the right to
receive, upon payment of the Preferred Exercise Price, that number of shares of
the Company's Series A Preferred Stock having a market value at the time of the
transaction equal to two times the Preferred Exercise Price (such market value
to be determined with reference to the market value of the Company's Common
Stock as provided in the Preferred Rights Agreement).
Fractional shares of Series A Preferred Stock (other than fractions that
are integral multiples of one one-thousandth (1/1,000) of a share) may, at the
election of the Company, be evidenced by depositary receipts. The Company may
also issue cash in lieu of fractional shares which are not integral multiples of
one one-thousandth (1/1,000) of a share.
At any time on or prior to the close of business on the tenth day after the
time that a Person or group has become an Acquiring Person (or such later date
as a majority of the Board of Directors may determine), the Company may redeem
the Preferred Rights in whole, but not in part, at a price of $.01 per Preferred
Right ("Redemption Price"). Immediately upon the effective time of the action of
the Board of Directors of the Company authorizing redemption of the Preferred
Rights, the right to exercise the Preferred Rights will terminate and the only
right of the holders of the Preferred Rights will be to receive the Redemption
Price.
For as long as the Preferred Rights are then redeemable, the Company may,
except with respect to the redemption price or date of expiration of the
Preferred Rights, amend the Preferred Rights in any manner, including an
amendment to extend the time period in which the Preferred Rights may be
redeemed. At any time when the Preferred Rights are not then redeemable, the
Company may amend the Preferred Rights in any manner that does not materially
adversely affect the interests of holders of the Preferred Rights as such.
Amendments to the Preferred Rights Agreement from and after the time that any
Person becomes an Acquiring Person requires the approval of a majority of the
Board of Directors.
Until a Preferred Right is exercised, the holder, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
As of April 8, 1997, 1,500,000 shares of Series A Preferred Stock have been
reserved for issuance upon exercise of the Preferred Rights.
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The Preferred Rights have certain anti-takeover effects. The Preferred
Rights will cause substantial dilution to a person or group who attempts to
acquire the Company on terms not approved by the Company's Board of Directors.
The Preferred Rights should not interfere with any merger or other business
combination approved by the Board since they may be redeemed by the Company at
$.01 per Preferred Right at any time until the close of business on the tenth
day (or such later date as described above) after a person or group has obtained
beneficial ownership of 20% or more of the Common Stock.
POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE
OF INCORPORATION AND BYLAWS OF THE COMPANY
The Restated Certificate of Incorporation and Bylaws of the Company contain
provisions that could have an anti-takeover effect. The provisions are intended
to enhance the likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of Directors.
These provisions of the Restated Certificate of Incorporation and the Bylaws
also are intended to help ensure that the Board of Directors, if confronted by a
unsolicited proposal from a third party which has acquired a block of stock of
the Company, will have sufficient time to review the proposal and appropriate
alternatives to the proposal and to act in what it believes to be the best
interests of the stockholders.
The following is a summary of such provisions included in the Restated
Certificate of Incorporation and Bylaws of the Company.
Classified Board of Directors. The Restated Certificate of Incorporation
provides for a Board of Directors divided into three classes of directors
serving staggered three-year terms.
The classification of directors has the effect of making it more difficult
for stockholders to change the composition of the Board of Directors in a
relatively short period of time. At least two annual meetings of stockholders,
instead of one, generally will be required to effect a change in a majority of
the Board of Directors. Such a delay may help ensure that the Board of Directors
and the stockholders, if confronted by a stockholder attempting to force a stock
repurchase at a premium above market, a proxy contest or an extraordinary
corporate transaction, will have sufficient time to review the proposal and
appropriate alternatives to the proposal and to act in what is believed to be
the best interests of the stockholders.
The classified board provision could have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain control
of the Company, even though such an attempt might be beneficial to the Company
and its stockholders. The classified board provision could thus increase the
likelihood that incumbent directors will retain their positions. In addition,
since the classified board provision is designed to discourage accumulations of
large blocks of Common Stock of the Company by purchasers whose objective is to
have such stock repurchased by the Company at a premium, the classified board
provision could tend to reduce the temporary fluctuations in the market price of
the Common Stock that could be caused by accumulations of large blocks of Common
Stock associated with such purchases. Accordingly, stockholders could be
deprived of certain opportunities to sell their Common Stock at a temporarily
higher market price.
The Board of Directors believes that a classified board of directors will
help to assure the continuity and stability of the Board of Directors and the
business strategies and policies of the Company as determined by the Board of
Directors, because a majority of the directors at any given time will have prior
experience as directors of the Company.
Number of Directors; Filling Vacancies; Removal. The Restated Certificate
of Incorporation provides that the Board of Directors will consist of nine
members. The number of directors constituting the entire Board of Directors may
be changed only by an amendment to the Restated Certificate of Incorporation.
The Board of Directors, acting by majority vote of the directors then in office,
may fill any newly created directorships or vacancies on the Board of Directors.
Moreover, under Delaware law, in the case of a corporation having a classified
board, stockholders may remove a director only for cause. This provision, when
coupled with the provision of the Bylaws authorizing the Board of Directors to
fill vacant directorships, will preclude a stockholder from removing incumbent
directors without cause and simultaneously gaining control of the Board
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of Directors by filling the vacancies created by such removal with its own
nominees. Moreover, this provision also will make it more difficult for
stockholders to remove a director when the only reason for such removal may be
the performance of such director.
No Stockholder Action by Written Consent; Special Meetings. The Restated
Certificate of Incorporation provides that any action required or permitted to
be taken by the stockholders of the Company may be effected only at an annual or
special meeting of stockholders, and prohibits stockholder action by written
consent in lieu of a meeting. The Bylaws provide that special meetings of
stockholders may be called by a majority of the Board of Directors, the Chairman
of the Board of Directors or by any holder or holders of at least 25% of the
outstanding shares of the capital stock of the Company.
The provisions of the Restated Certificate of Incorporation prohibiting
stockholder action by written consent may have the effect of delaying
consideration of a stockholder proposal until the next annual meeting unless a
special meeting is called as provided in the Bylaws. These provisions would also
prevent the holders of a majority of the outstanding shares of Common Stock from
using the written consent procedure to take stockholder action without giving
all the stockholders of the Company entitled to vote on a proposed action the
opportunity to participate in determining the outcome of such proposed action.
Advance Notice Requirements for Stockholder Proposals and Director
Nominees. The Bylaws establish an advance notice procedure with regard to
business proposed to be submitted by a stockholder at any annual or special
meeting of stockholders of the Company, including the nomination of candidates
for election as directors. The procedure provides that a notice of proposed
stockholder business must be timely given in writing to the Secretary of the
Company prior to the meeting. In all cases, to be timely, notice relating to an
annual meeting must be received at the principal executive office of the Company
not less than 60 days nor more than 90 days before the first anniversary of the
prior year's annual meeting.
Notice to the Company from a stockholder who proposes to nominate a person
at a meeting for election as a director must contain all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act, including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected, and certain information about the stockholder proposing to nominate
that person.
The chairman of a meeting of stockholders may determine that a person is
not nominated in accordance with the nomination procedure, in which case such
person's nomination will be disregarded. If the chairman of a meeting of
stockholders determines that other business was not properly brought before such
meeting in accordance with the Bylaw procedures, such business will not be
conducted at the meeting. Nothing in the nomination procedure or the business
procedure will preclude discussion by any stockholder of any nomination or
business properly made or brought before the annual or any other meeting in
accordance with the above-mentioned procedures.
The purpose of the nomination procedure, by requiring advance notice of
nominations by stockholders, is to afford the Board of Directors a meaningful
opportunity to consider the qualifications of the proposed nominees and, to the
extent deemed necessary or desirable by the Board of Directors, to inform
stockholders about such qualifications. The purpose of the business procedure,
by requiring advance notice of proposed business, is to provide a more orderly
procedure for conducting annual and special meetings of stockholders and, to the
extent deemed necessary or desirable by the Board of Directors, to provide the
Board of Directors with a meaningful opportunity to inform stockholders, prior
to the meeting, of any business proposed to be conducted at such meeting,
together with any recommendation as to the Board of Directors' position or
belief as to action to be taken with respect to such business, so as to enable
stockholders better to determine whether they desire to attend such meeting or
grant a proxy to the Board of Directors as to the disposition of any such
business.
Although the Bylaws do not give the Board of Directors any power to approve
or disapprove stockholder nominations for the election of directors or any other
business desired by stockholders to be conducted at an annual or special
meeting, the Bylaws may have the effect of precluding a nomination for the
election of
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directors or precluding the conducting of business at a particular meeting if
the proper procedures are not followed, and may discourage or deter a third
party from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempting to obtain control of the Company, even if the
conduct of such solicitation or such attempt might be beneficial to the Company
and its stockholders.
Amendment of Certain Provisions of the Restated Certificate of
Incorporation and the Bylaws. The Restated Certificate of Incorporation requires
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of capital stock of the Company, voting together as a single class, for
any amendments of the Restated Certificate of Incorporation and provides that
Bylaw provisions may be adopted, altered, amended or repealed only by the
affirmative vote of two-thirds of the members of the Board of Directors or
holders of at least two-thirds of the outstanding shares of capital stock of the
Company, voting together as a single class, entitled to vote thereon. These
provisions will make it more difficult for stockholders to make changes in the
Restated Certificate of Incorporation or Bylaws, including changes designed to
facilitate the exercise of control over the Company. In addition, the
requirement for approval by holders of at least two-thirds of the outstanding
shares of voting capital stock will enable the holders of a minority of the
voting stock of Greyhound to prevent the holders of a majority of such stock
from amending such provisions of the Restated Certificate of Incorporation and
the Bylaws.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Generally, section 203 of the Delaware General Corporation Law prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless (i)
prior to the date of the business combination, the transaction is approved by
the board of directors of the corporation, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock or (iii) on or after such date the business combination is approved
by the board and by the affirmative vote of at least two-thirds of the
outstanding voting stock which is not owned by the interested stockholder. A
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the stockholder. An "interested stockholder"
is a person who, together with affiliates and associates, owns (or within three
years, did own) 5% or more of the corporation's voting stock.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States Federal
income tax considerations generally applicable to holders acquiring the
Preferred Stock, but does not purport to be a complete analysis of all potential
consequences. The discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations, Internal Revenue Service ("IRS")
rulings and judicial decisions now in effect, all of which are subject to change
at any time by legislative, judicial or administrative action. Any such changes
may be applied retroactively in a manner that could adversely affect a holder of
the Preferred Stock, the Common Stock and the Exchange Debentures (collectively,
the "Securities").
The discussion assumes that the holders of the Securities will hold them as
"capital assets" within the meaning of Section 1221 of the Code. Although the
matter is not entirely free from doubt, the Company intends to treat the
Preferred Stock as equity and the Exchange Debentures as indebtedness for
federal income tax purposes, and the balance of the discussion is based on the
assumption that such treatment will be respected. The discussion is not binding
on the IRS or the courts. The Company has not sought and will not seek any
rulings from the IRS with respect to the positions of the Company discussed
herein, and there can be no assurance that the IRS will not take a different
position concerning the tax consequences of the purchase, ownership or
disposition of the Securities or that any such position would not be sustained.
The tax treatment of a holder of the Securities may vary depending on such
holder's particular situation or status. Certain holders (including S
corporations, insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, taxpayers subject to alternative minimum tax and
persons holding the Securities as part of a hedging or conversion transaction or
a straddle) may be subject to special rules not discussed below. The following
discussion is limited to the United States Federal income tax consequences
relevant to a holder of the Securities who or which is (i) an individual who is
a citizen or resident of the United States, (ii) a corporation or partnership
created or organized under the laws of the United States, or any political
subdivision thereof, or (iii) an estate or trust subject to the U.S. federal
income taxation of its worldwide income. The following discussion does not
consider all aspects of United States Federal income tax that may be relevant to
the purchase, ownership and disposition of the Securities by a holder in light
of such holder's personal circumstances. In addition, the discussion does not
consider the effect of any applicable foreign, state, local or other tax laws,
or estate or gift tax considerations.
DIVIDENDS ON PREFERRED STOCK AND COMMON STOCK
Dividends paid on the Preferred Stock or on Common Stock will be taxable to
a holder as ordinary dividend income to the extent of the Company's allocable
current or accumulated earnings and profits (as determined for United States
Federal income tax purposes).
To the extent that the amount of any distribution on the Preferred Stock or
on Common Stock exceeds the Company's current or accumulated earnings and
profits allocable to such distribution (as determined for Federal income tax
purposes), such distribution will be treated as a return of capital that will
reduce the holder's adjusted tax basis in the Preferred Stock or Common Stock in
respect of which such distribution is made. Any such excess distribution that is
greater than the holder's adjusted tax basis in such Preferred Stock or Common
Stock will be taxed as a capital gain and will be long-term capital gain if the
holder's holding period for such Preferred Stock or Common Stock is more than
one year. For purposes of the remainder of the discussion, the term "dividend"
refers to a distribution paid out of allocable earnings and profits, unless the
context indicates otherwise.
Pursuant to certain amendments to section 305(c) of the Code, the IRS has
the authority to promulgate regulations which may treat unpaid cumulative
dividends on preferred stock as being constructively paid to the holder in
certain circumstances, such as when there is no intention for dividends to be
paid currently at the time of issuance of the preferred stock. The IRS has not
yet proposed any such regulations.
Dividends received by corporate holders generally will be eligible for the
70% dividends-received deduction under section 243 of the Code. There are,
however, a number of exceptions and restrictions relating to the availability of
such dividends-received deduction, such as restrictions relating to (i) the
holding period
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<PAGE> 34
of the stock on which the dividends are sought to be deducted, (ii)
debt-financed portfolio stock, (iii) dividends treated as "extraordinary
dividends" for purposes of section 1059 of the Code, and (iv) taxpayers who pay
alternative minimum tax. Corporate stockholders should consult their own tax
advisors regarding the extent, if any, to which such exceptions and restrictions
may apply to their particular factual situations. In addition, tax legislative
proposals recently made by the Clinton Administration would (i) reduce the 70%
dividends-received deductions to 50%, (ii) eliminate the dividends-received
deduction in the case of certain limited term preferred stock which does not
participate in corporate growth (through a conversion privilege or otherwise) to
any significant extent, and (iii) require a corporate holder to satisfy a
separate forty-six day holding period requirement with respect to each dividend
in order to be eligible for such dividends-received deduction. Bills recently
approved by the U.S. House of Representatives Ways and Means Committee and the
U.S. Senate Finance Committee (the "Tax Bills") include only the third of such
proposed changes. It is not possible to predict whether such legislative
proposals will ultimately be enacted into law, and if so, the form or effective
date of any such legislation.
CONVERSION OF PREFERRED STOCK
No gain or loss will generally be recognized for United States Federal
income tax purposes on conversion of the Preferred Stock solely into Common
Stock. However, if the conversion takes place when there is a dividend arrearage
on the Preferred Stock, a portion of the Common Stock received may be treated as
a taxable dividend to the extent of such dividend arrearage. Except for any
Common Stock treated as payment of a dividend, the tax basis for the Common
Stock received upon conversion (including any fractional share deemed received)
will be the tax basis of the Preferred Stock converted, and the holding period
of the Common Stock received upon conversion (including any fractional share
deemed received) will include the holding period of the Preferred Stock
converted into such Common Stock. The receipt of cash in lieu of a fractional
share upon conversion of Preferred Stock to Common Stock will generally be
treated as a sale of such fractional share of Common Stock in which the holder
will recognize taxable gain or loss equal to the difference between the amount
of cash received and the holder's tax basis in the fractional share redeemed.
Such gain or loss will be capital gain or loss and will be long-term or
short-term depending on the holder's holding period for the fractional share
redeemed.
ADJUSTMENTS TO CONVERSION PROVISIONS
Treasury regulations issued under section 305 of the Code treat certain
adjustments to conversion provisions of stock such as the Preferred Stock and
securities such as the Exchange Debentures, as constructive distributions of
stock with respect to preferred stock or convertible securities (which are
treated as stock for this purpose). Such constructive distributions of stock
would be taxable to holders of Preferred Stock or Exchange Debentures as
described above under the caption "Dividends on Preferred Stock." In general,
any adjustment increasing the number of shares of Common Stock into which the
Preferred Stock or Exchange Debentures can be converted could constitute a
constructive distribution of stock to holders of Preferred Stock or Exchange
Debentures unless made pursuant to a bona fide, reasonable adjustment formula
that has the effect of preventing dilution of the interest of the holders of
Preferred Stock or Exchange Debentures. Any adjustment in the conversion price
to compensate the holders of Preferred Stock or Exchange Debentures for taxable
distributions of cash or property on any of the outstanding Common Stock of the
Company may be treated as a constructive distribution of stock to holders of
Preferred Stock or Exchange Debentures. The Company is unable to predict whether
any such adjustment will be made.
SALE, REDEMPTION OR EXCHANGE OF PREFERRED STOCK AND SALE OR EXCHANGE OF COMMON
STOCK
A redemption of shares of Preferred Stock for cash would be a taxable
event.
A redemption of shares of Preferred Stock for cash will generally be
treated as a sale or exchange if the holder does not own, actually or
constructively within the meaning of Section 318 of the Code, any stock of the
Company other than the Preferred Stock redeemed. Stock is considered to be
constructively owned by a holder pursuant to Section 318 if, among other
circumstances, the holder has an option to acquire such stock (such as pursuant
to the Exchange Debentures). If a holder does own, actually or constructively,
other stock
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<PAGE> 35
of the Company, a redemption of Preferred Stock may be treated as a dividend to
the extent of the Company's allocable current or accumulated earnings and
profits (as determined for United States Federal income tax purposes). Such
dividend treatment would not be applied if the redemption (i) results in a
"complete termination" of the holder's actual and constructive stock interest in
the Company under section 302(b)(3) of the Code, or (ii) is "not essentially
equivalent to a dividend" with respect to the holder under section 302(b)(1) of
the Code. A distribution to a holder will be "not essentially equivalent to a
dividend" if it results in a "meaningful reduction" in the holder's stock
interest in the Company. For this purpose, a redemption of Preferred Stock that
results in a reduction in the proportionate interest in the Company (taking into
account any actual ownership of common stock of the Company and any stock
constructively owned, including pursuant to the Exchange Debentures) of a holder
whose relative stock interest in the Company is minimal and who exercises no
control over corporate affairs should be regarded as a meaningful reduction in
the holders's stock interest in the Company.
If a redemption of the Preferred Stock for cash is treated as a sale or
exchange, the redemption would result in capital gain or loss equal to the
difference between the amount of cash received and the holder's adjusted tax
basis in the Preferred Stock redeemed, except to the extent that the redemption
price includes dividends which have been declared by the Board of Directors of
the Company prior to the redemption. Similarly, upon the sale or exchange of the
Preferred Stock or the Common Stock (other than in a redemption, on conversion
or pursuant to a tax-free exchange), the difference between the sum of the
amount of cash and the fair market value of other property received and the
holder's adjusted basis in the Preferred Stock or the Common Stock would result
in capital gain or loss. This gain or loss would be long-term capital gain or
loss if the holder's holding period for the Preferred Stock or the Common Stock
exceeds one year. Under current law, capital gains recognized by corporations
are taxed at a maximum rate of 35% and the maximum rate on net capital gains in
the case of individuals is 28%. The Tax Bills propose the reduction of the
maximum rate on net capital gain in the case of individuals to 20%.
A redemption of Preferred Stock in exchange for Exchange Debentures will be
subject to the same general rules as a redemption for cash, except that any gain
or loss generally will be determined based upon the "issue price" of the
Exchange Debentures. See the discussion below under "Original Issue Discount."
Additionally, such gain may be eligible for deferral under the installment sale
method as long as neither the Exchange Debentures nor the Preferred Stock is
readily tradable on an established securities market and the redemption
qualifies for sale or exchange treatment.
If a redemption of Preferred Stock is treated as a distribution that is
taxable as a dividend, the amount of the distribution will be measured by the
amount of cash or the issue price of the Exchange Debentures, as the case may
be, received by the holder. It is possible, however, that the fair market value
of the Exchange Debentures (if different from their issue price) may constitute
the amount of the distribution. The holder's adjusted tax basis in the redeemed
Preferred Stock will be transferred to any remaining stock holdings in the
Company, subject to reduction or possible gain recognition under Section 1059 of
the Code with respect to the nontaxed portion of such dividend. If the holder
does not retain any actual stock ownership in the Company (only constructively
having a stock interest by attribution ), the holder may lose the benefit of the
basis in the Preferred Stock.
ORIGINAL ISSUE DISCOUNT
In the event that the Preferred Stock is exchanged for Exchange Debentures
and the "stated redemption price at maturity" of the Exchange Debentures exceeds
their "issue price" by more than a de minimis amount, the Exchange Debentures
will be treated as having original issue discount ("OID") equal to the entire
amount of such excess.
If the Exchange Debentures are traded on an established securities market
within the sixty-day period ending thirty days after the exchange date, the
issue price of the Exchange Debentures will be their fair market value as of
their issue date. Subject to certain limitations described in the Treasury
Regulations, the Exchange Debentures will be deemed to be traded on an
established securities market if, among other things, price quotations will be
readily available from dealers, brokers, or traders. If the Preferred Stock, but
not the
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<PAGE> 36
Exchange Debentures issued and exchanged therefor, is traded on an established
securities market within the sixty-day period ending thirty days after the
exchange, then the issue price of each Exchange Debenture should be the fair
market value of the Preferred Stock exchanged therefor at the time of the
exchange. The Preferred Stock generally will be deemed to be traded on an
established securities market if it appears on a system of general circulation
that provides a reasonable basis to determine fair market value based either on
recent price quotations or recent sales transactions. In the event that neither
the Preferred Stock nor the Exchange Debentures are traded on an established
securities market within the applicable period, the issue price of the Exchange
Debentures will be their stated principal amount -- namely, their face
value -- unless either (i) the Exchange Debentures do not bear "adequate stated
interest" within the meaning of section 1274 of the Code, which is unlikely, or
(ii) the Exchange Debentures are issued in a so-called "potentially abusive
situation" as defined in the Treasury Regulations under section 1274 of the Code
(including a situation involving a recent sales transaction), in either of which
cases the issue price of such Exchange Debentures generally will be the fair
market value of the Preferred Stock surrendered in exchange therefor.
The "stated redemption price at maturity" of the Exchange Debentures should
equal the total of all payments under the Exchange Debentures, other than
payments of "qualified stated interest." "Qualified stated interest" generally
is stated interest that is unconditionally payable in cash or other property at
least annually at a single fixed rate. Stated interest payable under the
Exchange Debentures would appear to qualify as qualified stated interest.
Accordingly, for purposes of this calculation none of such stated interest would
be included in the stated redemption price at maturity of the Exchange
Debentures.
TAXATION OF STATED INTEREST AND ORIGINAL ISSUE DISCOUNT ON EXCHANGE DEBENTURES
Stated interest on the Exchange Debentures would be included in income by a
holder in accordance with such holder's usual method of accounting.
Each holder of an Exchange Debenture with OID will be required to include
in gross income an amount equal to the sum of the "daily portions" of the OID
for all days during the taxable year in which such holder holds the Exchange
Debenture. The daily portions of OID required to be included in a holder's gross
income in a taxable year will be determined under a constant yield method by
allocating to each day during the taxable year in which the holder holds the
Exchange Debenture a pro rata portion of OID thereon which is attributable to
the "accrual period" in which such day is included. The amount of the OID
attributable to each accrual period will be the product of the "adjusted issue
price" of the Exchange Debenture at the beginning of such accrual period
multiplied by the "yield to maturity" of the Exchange Debenture (properly
adjusted for the length of the accrual period). The adjusted issue price of an
Exchange Debenture at the beginning of an accrual period is the original issue
price of the Exchange Debenture plus the aggregate amount of OID that accrued in
all prior accrual periods, and less any cash payments -- other than qualified
stated interest payments (i.e., payments of stated interest) on the Exchange
Debenture. The "yield to maturity" is the discount rate that, when used in
computing the present value of all principal and interest payments to be made
under the Exchange Debenture, produces an amount equal to the issue price of the
Exchange Debenture. An "accrual period" may be of any length and may vary in
length over the term of the debt instrument, provided that each accrual period
is no longer than one year and each scheduled payment of principal or interest
occurs either on the final day or the first day of an accrual period.
BOND PREMIUM ON EXCHANGE DEBENTURES
For holders who purchase after original issuance, if the holder's basis in
the Exchange Debentures exceeds the amount payable at the maturity date (or
earlier call date, if appropriate), such excess will be deductible by the holder
of the Exchange Debentures as amortizable bond premium over the term of the
Exchange Debentures (taking into account earlier call dates, as appropriate),
under a yield-to-maturity formula, if an election by the holder under section
171 of the Code is made or is already in effect. An election under section 171
of the Code is available only if the Exchange Debentures are held as capital
assets. This election is revocable only with the consent of the IRS and applies
to all obligations owned or acquired by the holder on or after the first day of
the taxable year to which the election applies. To the extent the excess is
deducted as amortizable bond premium, the holder's adjusted tax basis in the
Exchange Debentures will be
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<PAGE> 37
reduced. Except as may otherwise be provided in future Treasury Regulations, the
amortizable bond premium will be treated as an offset to interest income on the
Exchange Debentures rather than as a separate deduction item. Recently proposed
Treasury Regulations, which are not yet effective, would modify the described
rules under Section 171 in order to coordinate such rules with the rules
relating to OID.
ACQUISITION PREMIUM ON EXCHANGE DEBENTURES
A holder of an Exchange Debenture issued with OID who purchases such
Exchange Debenture for an amount that is greater than its then adjusted issue
price but equal to or less than the sum of all amounts payable on the Exchange
Debenture after the purchase date (other than payments of qualified stated
interest) will be considered to have purchased such Exchange Debenture at an
"acquisition premium." Under the acquisition premium rules, the amount of OID
which such holder must include in income with respect to such Exchange Debenture
for any taxable year will be reduced by the portion of such acquisition premium
properly allocable to such year.
MARKET DISCOUNT ON EXCHANGE DEBENTURES
Generally, the market discount rules discussed below will not apply to a
holder who acquired the debt instrument on original issue. The market discount
rules generally provide, if a holder of a debt instrument purchases it as a
"market discount" and thereafter realizes gain upon a disposition or a
retirement of the debt instrument, the lesser of such gain or the portion of the
market discount that has accrued on a straight-line basis (or on a constant
interest rate basis, if such alternative rate of accrual has been elected by the
holder under 1276(b) of the Code) while the debt instrument was held by such
holder will be taxed as ordinary income at the time of such disposition. "Market
discount" with respect to the Exchange Debentures will be the amount, if any, by
which the "revised issue price" of an Exchange Debenture (or its stated
redemption price at maturity if the Exchange Debenture has no OID) exceeds the
holder's basis in the Exchange Debenture immediately after such holder's
acquisition, subject to a de minimis exception. The "revised issue price" of an
Exchange Debenture is its issue price increased by the portion of OID previously
includible in the gross income of prior holders for periods prior to the
acquisition of the Exchange Debenture by the holder (without regard to any
acquisition premium exclusion) and reduced by prior payments other than payments
of qualified stated interest.
A holder who acquires an Exchange Debenture at a market discount also may
be required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry such
Exchange Debenture until the holder disposes of the Exchange Debenture in a
taxable transaction. Moreover, to the extent of any accrued market discount on
such Exchange Debentures, any partial principal payment with respect to Exchange
Debentures will be includible as ordinary income upon receipt, as will the
Exchange Debenture's fair market value on certain otherwise non-taxable
transfers (such as gifts).
A holder of Exchange Debentures acquired at a market discount may elect for
Federal income tax purposes to include market discount in gross income as the
discount accrues, either on a straight-line basis or on a constant interest rate
basis. This current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may not be revoked without the consent
of the IRS. If a holder of Exchange Debentures makes such an election, the
foregoing rules with respect to the recognition of ordinary income on sales and
other dispositions of such debt instruments, and with respect to the deferral of
interest deductions on indebtedness incurred or maintained to purchase or carry
such debt instruments, would not apply.
CONVERSION OF EXCHANGE DEBENTURES
A holder of Exchange Debentures that converts such Exchange Debentures into
Common Stock generally will not recognize gain or loss upon such conversion. A
holder's tax basis in such Common Stock will equal such holder's tax basis in
the Exchange Debentures, and such holder's holding period with respect to such
Common Stock will include such holder's holding period with respect to the
Exchange Debentures.
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REDEMPTION, SALE OR EXCHANGE OF EXCHANGE DEBENTURES
Generally, unless a non-recognition provision applies, any redemption, sale
or exchange of Exchange Debentures by a holder would result in taxable gain or
loss equal to the difference between the sum of the amount of cash and the fair
market value of other property received (except to the extent that cash received
is attributable to accrued interest, which portion of the consideration would be
taxed as a payment of such accrued interest) and the holder's adjusted tax basis
in the Exchange Debentures. The adjusted tax basis of a holder who receives an
Exchange Debenture in exchange for Preferred Stock will generally be equal to
the issue price of the Exchange Debenture (or, possibly in certain circumstances
described above, the fair market value of the Exchange Debenture at the time of
issuance) increased by any OID with respect to the Exchange Debenture included
in the holder's income prior to the sale or redemption of the Exchange
Debenture, reduced by any amortizable bond premium applied against the holder's
income prior to the sale or redemption of the Exchange Debenture and by payments
other than payments of qualified stated interest. Except to the extent that an
intention to call the Exchange Debentures prior to their maturity existed at the
time of their original issue as an agreement or understanding between the
Company and the original holders of a substantial amount of the Exchange
Debentures (which is unlikely), and subject to the above discussion of market
discount, such gain or loss would be capital gain or loss, and would be
long-term if the holder's holding period for the Exchange Debentures exceeded
one year.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND TO CORPORATE HOLDERS
Pursuant to section 163 of the Code and in the event that the Exchange
Debentures are "applicable high yield discount obligations" ("AHYDOs"), a
portion of the OID (if any) accruing on the Exchange Debentures may be treated
as a dividend generally eligible for the dividends-received deduction in the
case of corporate holders (and subject to the limitations described above), and
the Company would not be entitled to deduct the "disqualified portion" of the
OID accruing on the Exchange Debentures and would be allowed to deduct the
remainder of the OID only when paid in cash.
The Exchange Debentures will constitute AHYDOs if they (i) have a term of
more than five years, (ii) have a yield to maturity equal to or greater than the
sum of the applicable federal rate at the time of issuance of the Exchange
Debentures (the "AFR") plus five percentage points, and (iii) have "significant"
OID. A debt instrument is treated as having "significant" OID if the aggregate
amount that would be includible in gross income with respect to such debt
instrument for periods before the close of any accrual period ending after the
date five years after the date of issue exceeds the sum of (i) the aggregate
amount of interest to be paid in cash under the debt instrument before the close
of such accrual period and (ii) the product of the initial issue price of such
debt instrument and its yield to maturity. Because the amount of OID, if any,
attributable to the Exchange Debentures will be determined at the time such
Exchange Debentures are issued and the AFR at that point in time is not
predictable, it is impossible currently to determine whether Exchange Debentures
will be treated as AHYDOs.
If an Exchange Debenture is treated as an AHYDO, a corporate holder would
be treated as receiving dividend income to the extent of the lesser of (i) the
Company's current and accumulated earnings and profits, and (ii) the
"disqualified portion" of the OID of such AHYDO. The "disqualified portion" of
the OID is equal to the lesser of (i) the amount of OID or (ii) the portion of
the "total return" (i.e., the excess of all payments to be made with respect to
the Exchange Debenture over its issue price) in excess of the AFR plus six
percentage points.
The U.S. House of Representatives Ways and Means Committee has recently
approved a tax bill which would, if enacted, deny the deduction of interest with
respect to indebtedness convertible into common stock at the option of the
holder if there is a substantial certainty such option will be exercised. It is
not possible to predict whether such legislative proposals will ultimately be
enacted into law, and if so, the form or effective date of any such legislation.
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BACKUP WITHHOLDING AND INFORMATION REPORTING
A holder of Securities may be subject to backup withholding at the rate of
31% with respect to dividends paid on, interest, or the proceeds of a sale or
exchange of, the Securities, unless such holder (a) is a corporation or comes
within certain other exempt categories and, when required, demonstrates its
exemption or (b) provides a correct taxpayer identification number, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A holder of Securities
who does not provide the Company with the holder's correct taxpayer
identification number may be subject to penalties imposed by the IRS. Any amount
paid as backup withholding would be creditable against the holder's federal
income tax liability.
The Company or its agent will furnish annually to the IRS and to record
holders of the Securities (other than with respect to certain exempt holders)
information relating to the dividends, stated interest and the OID, if any,
accruing during the calendar year. In the case of the Exchange Debentures, such
information will be based on the amount of OID that would have accrued to a
holder who acquired the Exchange Debenture on original issue. Accordingly, other
holders will be required to determine for themselves whether they are eligible
to report a reduced amount of OID with respect to the Exchange Debentures for
federal income tax purposes.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS DOES
NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR PROSPECTIVE
PURCHASER'S SITUATION OR STATUS. ACCORDINGLY, EACH PURCHASER OF PREFERRED STOCK
SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO IT,
INCLUDING THOSE UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company by Weil, Gotshal & Manges LLP, Dallas, Texas and
New York, New York.
EXPERTS
The audited consolidated financial statements and schedules of Greyhound
Lines, Inc., incorporated by reference into this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen LLP, independent public
accountants, and are included herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.
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================================================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN, OR INCORPORATED BY
REFERENCE IN, THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SECURITYHOLDERS OR THE SELLING AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Risk Factors.......................... 5
Use of Proceeds....................... 8
Capitalization........................ 8
Ratio of Earnings to Fixed Charges.... 9
Selling Securityholders............... 10
Plan of Distribution.................. 12
Description of Securities............. 13
Certain United States Federal Income
Tax Considerations.................. 32
Legal Matters......................... 38
Experts............................... 38
</TABLE>
======================================================
======================================================
[GREYHOUND LOGO]
GREYHOUND LINES, INC.
2,400,000 SHARES
8 1/2% CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
--------------------
PROSPECTUS
--------------------
JUNE 30, 1997
======================================================
<PAGE> 41
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable in connection with the
offering of the Shares to be registered and offered hereby, all of which will be
paid by the Company. All of such expenses are estimates, other than the
registration fee payable to the Securities and Exchange Commission.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $18,045.45
Legal Fees and Expenses..................................... 25,000.00
Accounting Fees and Expenses................................ 7,500.00
Miscellaneous............................................... 9,454.55
----------
TOTAL............................................. $60,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation of the Company provides for
mandatory indemnification of directors and officers to the fullest extent
permitted by the General Corporation Law of the State of Delaware. Under Section
145 of the General Corporation Law of the State of Delaware, the Company, as a
Delaware corporation, has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding (other than an action by or in the right
of the Company) by reason of the fact that such person is or was a director,
officer, employee, or agent of the Company (an "Indemnitee"), against any and
all expenses, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or proceeding.
The Company's power to indemnify such a person applies only if such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests, of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Pursuant to Section 145, the Company also has the power to indemnify an
Indemnitee with respect to actions or suits brought by or in the right of the
Company, against expenses actually and reasonably incurred by him in connection
with the defense and settlement of suit or action (and not in satisfaction of a
judgment or settlement of the claim itself), if the Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests, of the Company and with the further limitation that in such actions
no indemnification shall be made in the event of any adjudication of negligence
or misconduct unless a Delaware Court of Chancery, in its discretion, believes
that in light of all the circumstances indemnification should apply.
The General Corporation Law of the State of Delaware further specifically
provides that the indemnification authorized thereby shall not be deemed
exclusive of any other rights to which any such officer or director may be
entitled under any bylaws, agreements, vote of stockholders or disinterested
directors, or otherwise.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock), or (iv) for any transaction from which the director derived an
improper personal benefit. Article Seventh of the Restated Certificate of
Incorporation of the Company provides that, to the fullest extent permitted by
the General Corporation Law of the State of Delaware, a director of the Company
shall not be liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director.
II-1
<PAGE> 42
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person thereof in the
successful defense of any action, suit or proceeding) is asserted by a director,
officer or controlling person in connection with the securities being registered
pursuant to this Registration Statement, the Company will, unless in the opinion
of counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
ITEM 16. EXHIBITS.
The following is a list of all exhibits filed as a part of this
Registration Statement.
<TABLE>
<C> <S>
4.1 -- Certificate of Designations for the 8 1/2% Convertible
Exchangeable Preferred Stock+
4.2 -- Indenture dated April 16, 1997 by and between the Company
and U.S. Trust of Texas, N.A., as trustee*
4.3 -- Registration Rights Agreement dated April 16, 1997 by and
between the Company and Bear, Stearns & Co. Inc.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP.+
12.1 -- Computation of Ratios of Earnings to Fixed Charges+
12.2 -- Computation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock+
23.1 -- Consent of Weil, Gotshal & Manges LLP (Included in
Exhibit 5.1)+
23.2 -- Consent of Arthur Andersen LLP.+
24.1 -- Power of Attorney (Included on the signature page in Part
II of this Registration Statement)
25.1 -- Statement of Eligibility of Trustee under the Indenture
filed as Exhibit 4.2+
</TABLE>
- ---------------
* Previously filed.
+ Filed herewith.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes the following:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those
II-2
<PAGE> 43
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
Offering.
(b) For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) See Item 15.
II-3
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on the 27th day of June,
1997.
GREYHOUND LINES, INC.
By: /s/ STEVEN L. KORBY
----------------------------------
Steven L. Korby
Executive Vice President and Chief
Financial Officer
Each person whose signature to this Registration Statement appears below
appoints Craig R. Lentzsch and Steven L. Korby, and each of them, any one of
whom may act without the joinder of the other, as his agent and attorney-in-fact
to sign on his behalf individually and in the capacity stated below and to file
all pre-and post-effective amendments to this Registration Statement (and, in
addition, any registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, for the offering to which this Registration
Statement relates), which amendments may make such changes in and additions to
this Registration Statement as such agent and attorney-in-fact may deem
necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board of Directors June 27, 1997
- -----------------------------------------------------
Thomas G. Plaskett
* Director, President and Chief June 27, 1997
- ----------------------------------------------------- Executive Officer (Principal
Craig R. Lentzsch Executive Officer)
/s/ STEVEN L. KORBY Executive Vice President and Chief June 27, 1997
- ----------------------------------------------------- Financial Officer (Principal
Steven L. Korby Financial and Accounting
Officer)
* Director June 27, 1997
- -----------------------------------------------------
Richard J. Caley
* Director June 27, 1997
- -----------------------------------------------------
Linda Chavez
* Director June 27, 1997
- -----------------------------------------------------
A. A. Meitz
* Director June 27, 1997
- -----------------------------------------------------
Frank L. Nageotte
* Director June 27, 1997
- -----------------------------------------------------
Alfred E. Osborne, Jr.
* Director June 27, 1997
- -----------------------------------------------------
Stephen M. Peck
* Director June 27, 1997
- -----------------------------------------------------
Ernest P. Werlin
*By: /s/ STEVEN L. KORBY
------------------------------------------------
Steven L. Korby,
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 45
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ------------
<C> <S> <C>
4.1 -- Certificate of Designations for the 8 1/2% Convertible
Exchangeable Preferred Stock+
4.2 -- Indenture dated April 16, 1997 by and between the Company
and U.S. Trust of Texas, N.A., as trustee*
4.3 -- Registration Rights Agreement dated April 16, 1997 by and
between the Company and Bear, Stearns & Co. Inc.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP.+
12.1 -- Computation of Ratios of Earnings to Fixed Charges+
12.2 -- Computation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock+
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in
Exhibit 5.1)
23.2 -- Consent of Arthur Andersen LLP+
24.1 -- Power of Attorney (Included on the signature page in Part
II of this Registration Statement)
25.1 -- Statement of Eligibility of Trustee under the Indenture
filed as Exhibit 4.2+
</TABLE>
- ---------------
* Previously filed.
+ Filed herewith.
<PAGE> 1
EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS OF THE POWERS
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF
PREFERRED STOCK AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
OF
8 1/2% CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
GREYHOUND LINES, INC.
------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------------------------------
Greyhound Lines, Inc. (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the board of
directors of the Company (the "Board of Directors") by its Restated Certificate
of Incorporation (hereinafter referred to as the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors, by a meeting
duly called and held on March 11, 1997, duly approved and adopted the following
resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors does
hereby create, authorize and provide for the issue of 8 1/2% Convertible
Exchangeable Preferred Stock, par value $0.01 per share, with a
liquidation preference of $25.00 per share, consisting initially of
2,760,000 shares, having the designations, preferences, relative,
participating, optional and other special rights and the qualifications,
limitations and restrictions thereof that are set forth in the Certificate
of Incorporation and in this Resolution as follows:
(a) Designation. There is hereby created out of the authorized and
unissued shares of preferred stock of the Company a series of preferred stock
designated as the "8 1/2% Convertible Exchangeable Preferred Stock" (the
"Preferred Stock"). The number of shares constituting such series shall be
2,760,000. The liquidation preference of the Preferred Stock (the "Liquidation
Preference") shall be $25.00 per share.
(b) Rank. The Preferred Stock shall, with respect to dividend
distributions and distributions upon the liquidation, winding-up and
dissolution of the Company, rank (i) senior to all classes of common stock of
the Company and to each other class of capital stock or series of preferred
stock established after April 11, 1997 by the Board of Directors, the terms of
which do not expressly provide that it ranks senior to or on a parity with the
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred
to with the common stock of the Company as "Junior Securities"); (ii) on a
parity with any class of capital
<PAGE> 2
stock or series of preferred stock established after the Preferred Stock Issue
Date by the Board of Directors, the terms of which expressly provide that such
class or series will rank on a parity with the Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as "Parity Securities");
and (iii) junior to each class of capital stock or series of preferred stock
established after the Preferred Stock Issue Date by the Board of Directors, the
terms of which expressly provide that such class or series will rank senior to
the Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up and dissolution of the Company (collectively referred
to as "Senior Securities"). The Preferred Stock shall be subject to the
issuance of series of Junior Securities, Parity Securities and Senior
Securities, provided that the Company may not issue any new class of Senior
Securities without the approval of the Holders of at least 66 2/3% of the
shares of Preferred Stock then outstanding, voting or consenting, as the case
may be, together as one class. The Preferred Stock shall rank junior in right
of payment to all indebtedness and other obligations of the Company.
(c) Dividends,
(i) Beginning on the Preferred Stock Issue Date, the Holders of the
outstanding shares of Preferred Stock shall be entitled to receive, when,
as and if declared by the Board of Directors, out of funds legally
available therefor, distributions in the form of cash dividends an each
share of Preferred Stock, at a rate per annum equal to 8 1/2% of the
Liquidation Preference per share of the Preferred Stock, payable
quarterly. All dividends shall be cumulative, whether or not earned or
declared, on a daily basis from the Preferred Stock Issue Date and shall
be payable quarterly in arrears on each Dividend Payment Date, commencing
on August 1, 1997, 1997. Each distribution in the form of a dividend shall
be payable to the Holders of record as they appear on the stock register
of the Company on the record date for such purpose fixed by the Board of
Directors, which shall not be less than 10 nor more than 60 days preceding
the related Dividend Payment Date. Dividends shall cease to accumulate in
respect of shares of the Preferred Stock on the Exchange Date or on the
date of their earlier redemption unless the Company shall have failed to
issue the appropriate aggregate principal amount of Exchange Debentures in
respect of the Preferred Stock on the Exchange Date or shall have failed
to pay the relevant redemption price on the date fixed for redemption.
(ii) All dividends paid with respect to shares of the Preferred Stock
pursuant to paragraph (c)(i) shall be paid pro rata to the Holders
entitled thereto.
(iii) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Company to pay or set apart for payment, any cash
dividends on shares of the Preferred Stock at any time.
(iv) Dividends on account of arrears for any past Dividend Period and
dividends in connection with any optional redemption pursuant to paragraph
(f)(i) may be declared and paid at any time, without reference to any
regular Dividend Payment Date, to Holders of record on such date, not more
than 45 days prior to the payment thereof, as may be fixed by the Board of
Directors.
(v) Except as set forth in the following sentence, no dividends
shall be declared by the Board of Directors or paid or funds set apart
for the payment of dividends by the Company on any Parity Securities for
any period unless full cumulative dividends shall have been or
2
<PAGE> 3
contemporaneously are declared and paid in cash or declared and a sum in
cash set apart sufficient for such payment on the Preferred Stock for all
Dividend Periods terminating on or prior to the date of payment of such
dividends on such Parity Securities. If full dividends in cash are not so
paid upon the shares of the Preferred Stock and any other Parity
Securities, all dividends declared upon the Preferred Stock and any other
Parity Securities shall be declared pro rata so that the amount of
dividends declared on each class or series of the Preferred Stock and such
Parity Securities shall in all cases bear to each other the same ratio
that the aggregate accrued dividends on the Preferred Stock and such
Parity Securities bear to each other.
(vi) (A) Holders of shares of the Preferred Stock shall be entitled
to receive the dividends provided for in paragraph (c)(i) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities.
(B) So long as any shares of Preferred Stock are outstanding, the
Company shall not declare, pay or set apart for payment any dividend on
any Junior Securities or make any payment on account of, or set apart for
payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any Junior Securities or any warrants,
rights, calls or options exercisable for or convertible into any Junior
Securities, or make any distribution in respect thereof, either directly
or indirectly, and whether in cash, obligations or shares of the Company
or other property (other than distributions or dividends in Junior
Securities to the holders of Junior Securities), and shall not permit any
corporation or other entity directly or indirectly controlled by the
Company to purchase or redeem any Junior Securities or any such warrants,
rights, calls or options unless full cumulative dividends determined in
accordance herewith have been paid or deemed paid in full on the Preferred
Stock for all past Dividend Periods.
(C) So long as any shares of the Preferred Stock are outstanding, the
Company shall not make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the purchase, redemption or
other retirement of, any Parity Securities or any warrants, rights, calls
or options exercisable for or convertible into any Parity Securities, and
shall not permit any corporation or other entity directly or indirectly
controlled by the Company to purchase or redeem any Parity Securities or
any such warrants, rights, calls or options unless the dividends
determined in accordance herewith on the Preferred Stock have been paid or
deemed paid in full for all past Dividend Periods.
(vii) Dividends payable on shares of the Preferred Stock for any
period of less than a year shall be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed in any
period of less than one month. If any Dividend Payment Date occurs on a
day that is not a Business Day, any accrued dividends otherwise payable on
such Dividend Payment Date shall be paid on the next succeeding Business
Day.
(d) Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Company, the Holders of shares of Preferred Stock then
outstanding shall be entitled to be paid, out of the assets of the Company
available for distribution, the Liquidation Preference, plus an amount in
cash equal to accumulated and unpaid dividends and Liquidated Damages, if
any, thereon to the date fixed for liquidation, dissolution or winding-up
(including an amount equal
3
<PAGE> 4
to a prorated dividend for the period from the last Dividend Payment Date
to the date fixed for liquidation, dissolution or winding-up), before any
payment shall be made or any assets distributed to the holders of any
Junior Securities. If, upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, the amounts payable with respect
to the Preferred Stock and all other Parity Securities are not paid in
fall, then the holders of the Preferred Stock and the Parity Securities
shall share equally and ratably in any distribution of assets of the
Company in proportion to the full liquidation preference and accumulated
and unpaid dividends and Liquidated Damages, if any, determined as of the
date of such voluntary or involuntary liquidation, dissolution or
winding-up, to which each is entitled. After payment of the full amount of
the liquidation preferences and accumulated and unpaid dividends and
Liquidated Damages, if any, to which they are entitled, the Holders of
shares of Preferred Stock shall not be entitled to any further
participation in any distribution of assets of the Company.
(ii) For the purposes of this paragraph (d) only, neither the sale,
lease, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Company nor the consolidation or merger of the
Company with or into one or more entities shall be deemed to be a
liquidation, dissolution or winding-up of the Company.
(e) Conversion.
(i) A Holder of shares of Preferred Stock may convert such shares
into Common Stock at any time on or after July 15, 1997. For the purposes
of conversion, each share of Preferred Stock shall be valued at the
Liquidation Preference, which shall be divided by the Conversion Price in
effect on the Conversion Date to determine the number of shares issuable
upon conversion, except that the right to convert shares of Preferred
Stock called for redemption shall terminate at the close of business on
the Business Day preceding the Redemption Date and shall be lost if not
exercised prior to that time (unless the Company shall default in payment
of the Optional Redemption Price). Immediately following such conversion,
the rights of the Holders of converted Preferred Stock shall cease and the
persons entitled to receive the Common Stock upon the conversion of
Preferred Stock shall be treated for all purposes as having become the
owners of such Common Stock.
(ii) To convert Preferred Stock, a Holder must (A) surrender the
certificate or certificates evidencing the shares of Preferred Stock to be
converted, duly endorsed in a form satisfactory to the Company, at the
office of the Company or transfer agent for the Preferred Stock, (B)
notify the Company at such office that he elects to convert Preferred
Stock and the number of shares he wishes to convert, (C) state in writing
the name or names in which he wishes the certificate or certificates for
shares of Common Stock to be issued, and (D) pay any transfer or similar
tax if required. In the event that a Holder fails to notify the Company of
the number of shares of Preferred Stock which he wishes to convert, he
shall be deemed to have elected to convert all shares represented by the
certificate or certificates surrendered for conversion. The date on which
the Holder satisfies all those requirements is the "Conversion Date." As
soon as practical,the Company shall deliver a certificate for the number
of full shares of Common Stock issuable upon the conversion, a payment in
cash for any fractional share and a new certificate representing the
unconverted portion, if any, of the shares of Preferred Stock represented
by the certificate or certificates surrendered for conversion. The person
in whose name the Common Stock certificate is registered shall be treated
as the stockholder of record on
4
<PAGE> 5
and after the Conversion Date. No payment or adjustment will be made for
accrued and unpaid dividends on converted shares of Preferred Stock or for
dividends on any Common Stock issued upon such conversion. A share of
Preferred Stock surrendered for conversion during the period from the
close of business on any record date for the payment of dividends to the
opening of business of the corresponding Dividend Payment Date must be
accompanied by a payment in cash in an amount equal to the dividend
payable on such Dividend Payment Date, unless such share of Preferred Stock
has been called for redemption on a redemption date occurring during the
period from the close of business on any record date for the payment of
dividends to the close of business on the business day immediately
following the corresponding Dividend Payment Date. The dividend payment
with respect to a share of Preferred Stock called for redemption on a date
during the period from the close of business on any record date for the
payment of dividends to the close of business on the business day
immediately following the corresponding Dividend Payment Date will be
payable on such Dividend Payment Date to the record Holder of such share
on such record date, notwithstanding the conversion of such share after
such record date and prior to such Dividend Payment Date, and the Holder
converting such share of Preferred Stock need not include a payment of
such dividend amount upon surrender of such share of Preferred Stock for
conversion. If a Holder of Preferred Stock converts more than one share at
a time, the number of full shares of Common Stock issuable upon conversion
shall be based on the total value of all shares of Preferred Stock
converted. If the last day on which Preferred Stock may be converted is
not a Business Day, Preferred Stock may be surrendered for conversion on
the next succeeding Business Day.
(iii) The Company shall not issue a fractional share of Common Stock
upon conversion of Preferred Stock. Instead the Company shall pay a cash
adjustment for the current market value of the fractional share. The
current market value of a fraction of a share shall be determined as
follows: Multiply the current market price of a full share by the
fraction. Round the result to the nearest cent. The current market price
of a share of Common Stock is Ile Quoted Price of the Common Stock on the
last Trading Day prior to the Conversion Date.
(iv) If a Holder converts shares of Preferred Stock, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on
the issue of shares of Common Stock upon the conversion. However, the
Holder shall pay any such tax that is due because the shares are issued in
a name other than the Holder's name.
(v) The Company has reserved and shall continue to reserve out of its
authorized but unissued Common Stock or its Common Stock held in treasury
enough shares of Common Stock to permit the conversion of the Preferred
Stock in full. All shares of Common Stock that may be issued upon
conversion of Preferred Stock shall be fully paid and nonassessable. The
Company shall endeavor to comply with all securities laws regulating the
offer and delivery of shares of Common Stock upon conversion of Preferred
Stock and shall endeavor to list such shares on each national securities
exchange on which the Common Stock is listed.
(vi) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock,
the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the
5
<PAGE> 6
denominator of which shall be the sum of such number of shares and the
total number shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business on
the day following the date fixed for such determination of the holders
entitled to such dividends and distributions. For the purposes of this
paragraph (e)(vi), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company.
The Company will not pay any dividend of make any distribution on shares
of Common Stock held in the treasury of the Company.
(vii) In case the Company shall issue rights, options or warrants to
all holders of its Common Stock entitling them to subscribe for, purchase
or acquire shares of Common Stock at a price per share less than the
current market price per share (determined as provided in paragraph
(e)(xi) below) of the Common Stock on the date fixed for the determination
of stockholders entitled to receive such rights, options or warrants, the
Conversion Price in effect at the opening of business on the day following
the date fixed for such determination shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the number
of shares of Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription, purchase or acquisition would
purchase at such current market price and the denominator of which shall
be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription, purchase or
acquisition, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination of the holders entitled to such rights, options or warrants.
However, upon the expiration of any right, option or warrant to purchase
Common Stock, the issuance of which resulted in an adjustment in the
Conversion Price pursuant to this paragraph (e)(vii), if any such right,
option or warrant shall expire and shall not have been exercised, the
Conversion Price shall be recomputed immediately upon such expiration and
effectively immediately upon such expiration shall be increased to the
price it would have been (but reflecting any other adjustments to the
Conversion Price made pursuant to the provisions of this paragraph (e)
after the issuance of such rights, options or warrants) had the adjustment
of the Conversion Price made upon the issuance of such rights, options or
warrants been made on the basis of offering for subscription or purchase
only that number of shares of Common Stock actually purchased upon the
exercise of such rights, options or warrants. No further adjustment shall
be made upon exercise of any right, option or warrant if any adjustment
shall have been made upon the issuance of such security. For the purposes
of this paragraph (e)(vii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company. The Company will not issue any rights, options or warrants in
respect of shares of Common Stock held in the treasury of the Company.
(viii) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be reduced, and,
conversely, in case the outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be increased to equal
the product of the Conversion Price in effect on such date and a fraction
the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such subdivision or combination, as the
case may be, and the denominator of which shall
6
<PAGE> 7
be the number of shares of Common Stock outstanding immediately after such
subdivision or combination, as the case may be. Such reduction or
increase, as the case may be, shall become effective immediately after the
opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(ix) In case the Company shall, by dividend or otherwise, distribute
to all holders of its Common Stock (A) evidences of its indebtedness or
(B) shares of any class of capital stock, cash or other assets (including
securities, but excluding (x) any rights, options or warrants referred to
in paragraph (e)(vii) above, (y) any dividend or distribution referred to
in paragraph (e)(vi) above, and (z) cash dividends paid from the Company's
retained earnings, unless the sum of (1) all such cash dividends and
distributions made within the preceding 12 months in respect of which no
adjustment has been made and (2) any cash and the fair market value of
other consideration paid in respect of any repurchases of Common Stock by
the Company or any of its subsidiaries within the preceding 12 months in
respect of which no adjustment has been made, exceeds 20% of the Company's
market capitalization (being the product of the then current market price
per share (determined as provided in paragraph (e)(xi) below) of the
Common Stock times the aggregate number of shares of Common Stock then
outstanding) on the record date for such distribution), then in each case,
the Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of holders of Common Stock
entitled to receive such distribution shall be adjusted by multiplying
such Conversion Price by a fraction of which the numerator shall be the
current market price per share (determined as provided in paragraph
(e)(xi) below) of the Common Stock on such date of determination (or, if
earlier, on the date on which the Common Stock goes "ex-dividend" in
respect of such distribution) less the then fair market value as
determined by the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed with any Conversion
Agent) of the portion of the capital stock, cash or other assets or
evidences of indebtedness so distributed (and for which an adjustment to
the Conversion Price has not previously been made pursuant to the terms of
this paragraph (e)) applicable to one share of Common Stock, and the
denominator shall be such current market price per share of the Common
Stock, such adjustment to become effective immediately after the opening
of business on the day following such date of determination of the holders
entitled to such distribution. The following transactions shall be
excluded from the foregoing clauses (1) and (2): (I) repurchases of Common
Stock issued under the Company's stock incentive programs; (II) dividends
or distributions payable-in-kind in additional shares of, or warrants,
rights, calls or options exercisable for or convertible into additional
shares of Junior Securities; and (III) the redemption of shares of capital
stock pursuant to the Company's Shareholder Rights Plan.
(x) The reclassification or change of Common Stock into securities,
including securities other than Common Stock, (other than any
reclassification upon a consolidation or merger to which paragraph
(e)(xviii) below shall apply) shall be deemed to involve (A) a
distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of holders of Common
Stock entitled to receive such distribution" within the meaning of
paragraph (e)(ix) above), and (B) a subdivision or combination, as the
case may be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective," as the case may be, and
7
<PAGE> 8
"the day upon which such subdivision or combination becomes effective"
within the meaning of paragraph (e)(viii) above).
(xi) For the purpose of any computation under paragraph (e)(vii) or
(e)(ix) above, the current market price per share of Common Stock on any
day shall be deemed to be the average of the Closing Prices of the Common
Stock for the 20 consecutive Trading Days selected by the Board of
Directors commencing no more than 30 Trading Days before and ending no
later than the day before the day in question; provided that, in the case
of paragraph (e)(ix), if the period between the date of the public
announcement of the dividend or distribution and the date for the
determination of holders of Common Stock entitled to receive such dividend
or distribution (or, if earlier, the date on which the Common Stock goes
"ex-dividend" in respect of such dividend or distribution) shall be less
than 20 Trading Days, the period shall be such lesser number of Trading
Days but, in any event, not less than five Trading Days.
(xii) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to 1% or more of the Conversion Price as
last adjusted. Any adjustments that are not made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this paragraph (e) shall be made to the nearest cent or to the
nearest 1/100th of a share, as the case may be.
(xiii) For purposes of this paragraph (e), "Common Stock" includes
any stock of any class of the Company which has no preference in respect
of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and
which is not subject to redemption by the Company. However, subject to the
provisions of paragraph (e)(xviii) below, shares issuable on conversion of
shares of Preferred Stock shall include only shares of the class
designated as Common Stock of the Company on the Preferred Stock Issue
Date or shares of any class or classes resulting from any reclassification
thereof and which have no preferences in respect of dividends or amounts
payable in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company and which are not subject to
redemption by the Company; provided that, if at any time there shall be
more than one such resulting class, the shares of each such class then so
issuable shall be substantially in the proportion which the total number
of shares of such class resulting from all such reclassifications bears to
the total number of shares of all such classes resulting from all such
reclassifications.
(xiv) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock. No
adjustment in the Conversion Price need be made under paragraphs (e)(vi),
(e)(vii) and (e)(ix) above if the Company issues or distributes to each
Holder of Preferred Stock the shares of Common Stock, evidences of
indebtedness, assets, rights, options or warrants referred to in those
paragraphs which each Holder would have been entitled to receive had
Preferred Stock been converted into Common Stock prior to the happening of
such event or the record date with respect thereto.
(xv) Whenever the Conversion Price is adjusted, the Company shall
promptly mail to Holders of Preferred Stock, first class, postage prepaid,
a notice of the adjustment. The Company shall file with the transfer agent
for the Preferred Stock, if any, a certificate from the Company's
independent public accountants briefly stating the facts requiring the
adjustment and
8
<PAGE> 9
the manner of computing it. Subject to paragraph (e)(xvi) below, the
certificate shall be conclusive evidence that the adjustment is correct.
(xvi) The Company from time to time may reduce the Conversion Price
if it considers such reductions to be advisable in order that any event
treated for federal income tax purposes as a dividend of stock rights will
not be taxable to the holders of Common Stock by any amount, but in no
event may the Conversion Price be less than the par value of a share of
Common Stock. Whenever the Conversion Price is reduced, the Company shall
mail to Holders of Preferred Stock a notice of the reduction. The Company
shall mail, first class, postage prepaid, the notice at least 15 days
before the date the reduced Conversion Price takes effect. The notice
shall state the reduced Conversion Price and the period it will be in
effect. A reduction of the Conversion Price does not change or adjust the
Conversion Price otherwise in effect for purposes of paragraphs (e)(vi),
(e)(vii), (e)(viii) and (e)(ix) above.
(xvii) If:
(A) the Company takes any action which would require an
adjustment in the Conversion Price pursuant to paragraph
(e)(vii), (e)(ix) or (e)(x) above;
(B) the Company consolidates or merges with, or transfers all
or substantially all of its assets to, another corporation,
and stockholders of the Company must approve the
transaction; or
(C) there is a dissolution or liquidation of the Company;
the Company shall mail to Holders of the Preferred Stock, first class,
postage prepaid, a notice stating the proposed record or effective date,
as the case may be. The Company shall mail the notice at least 10 days
before such date. However, failure to mail the notice or any defect in it
shall not affect the validity of any transaction referred to in clause
(A), (B) or (C) of this paragraph (e)(xvii).
(xviii) In the case of any consolidation of the Company or the merger
of the Company with or into any other entity or the sale or transfer of
all or substantially all the assets of the Company pursuant to which the
Company's Common Stock is converted into other securities, cash or assets,
upon consummation of such transaction, each share of Preferred Stock shall
automatically become convertible into the kind and amount of securities,
cash or other assets receivable upon the consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock into which
such share of Preferred Stock might have been converted immediately prior
to such consolidation, merger, transfer or sale (assuming such holder of
Common Stock failed to exercise any rights of election and received per
share the kind and amount receivable per share by a plurality of
non-electing shares). Appropriate adjustment (as determined by the Board
of Directors of the Company) shall be made in the application of the
provisions herein set forth with respect to the rights and interests
thereafter of the Holders of Preferred Stock, to the end that the
provisions set forth herein (including provisions with respect to changes
in and other adjustment of the Conversion Price) shall thereafter be
applicable, as nearly as reasonably may be, in relation to any shares of
stock or other securities or property thereafter deliverable upon the
conversion of Preferred Stock. If this paragraph (e)(xviii) applies,
paragraphs (e)(vi), (e)(vii), (e)(viii), (e)(ix) and (e)(x) do not apply.
9
<PAGE> 10
(xix) In any case in which this paragraph (e) shall require that an
adjustment as a result of any event become effective from and after a
record date, the Company may elect to defer until after the occurrence of
such event (A) the issuance to the Holder of any shares of Preferred Stock
converted after such record date and before the occurrence of such event
of the additional shares of Common Stock issuable upon such conversion
over and above the shares issuable on the basis of the Conversion Price in
effect immediately prior to adjustment and (B) a cash payment for any
remaining fractional shares of Common Stock as provided in paragraph
(e)(iii) above; provided, however, that if such event shall not have
occurred and authorization of such event shall be rescinded by the
Company, the Conversion Price shall be recomputed immediately upon such
recision to the price that would have been in effect had such event not
been authorized, provided that such recision is permitted by and effective
under applicable laws.
(xx) All shares of Preferred Stock converted pursuant to this
paragraph (e) shall be restored to the status of authorized and unissued
shares of preferred stock, without designation as to series and may
thereafter be reissued as shares of any series of preferred stock.
(f) Redemption.
(i) Qptional Redemption. (A) The Company may, at the option of the
Board of Directors, redeem at any time on or after May 3, 2000, from any
source of funds legally available therefor, in whole or in part, in the
manner provided in paragraph (e)(iii) hereof, any or all of the shares of
the Preferred Stock, at the redemption prices (expressed as a percentage
of the Liquidation Preference) set forth below if redeemed during the
12-month period beginning on May 3 of each of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<C> <C>
2000......................... 104.86%
2001......................... 103.64%
2002......................... 102.43%
2003......................... 101.21%
2004 and thereafter.......... 100.000%
</TABLE>
plus, in each case, an amount in cash equal to all accumulated and unpaid
dividends per share, (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior
to the date fixed for redemption (the "Redemption Date") and Liquidated
Damages, if any (the "Optional Redemption Price"), provided, that no
optional redemption pursuant to this paragraph (f)(i)(A) shall be
authorized or made unless prior to the applicable Redemption Notice all
accumulated and unpaid dividends for Dividend Periods ended prior to the
date of such Redemption Notice shall have been paid in cash.
(B) In the event of a redemption pursuant to paragraph (f)(i)(A)
hereof of only a portion of the then outstanding shares of the Preferred
Stock, the Company shall effect such redemption pro rata according to the
number of shares held by each Holder of the Preferred Stock or by lot, as
may be determined by the Company in its sole discretion; provided that the
Company may redeem all shares held by Holders of fewer then 100 shares of
Preferred Stock (or by Holders that would hold fewer than 100 shares of
Preferred Stock following such redemption) prior to its redemption of
other shares of Preferred Stock.
10
<PAGE> 11
(ii) Procedures for Redemption. (A) At least 30 days and not more
than 60 days prior to the Redemption Date of the Preferred Stock, the
Company shall make a public announcement of the redemption, and shall mail
written notice (the "Redemption Notice") by first class mail, postage
prepaid, to each Holder of record on the record date fixed for such
redemption of the Preferred Stock at such Holder's address as the same
appears on the stock register of the Company, provided that no failure to
give such notice nor any deficiency therein shall affect the validity of
the procedure for the redemption of any shares of Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Company has failed
to give said notice or except as to the Holder or Holders whose notice was
defective. The Redemption Notice shall state:
(1) that the redemption is pursuant to paragraph (f)(i)(A) hereof,
(2) the Optional Redemption Price;
(3) whether all or less than all the outstanding shares of the
Preferred Stock are to be redeemed and the total number of
shares of the Preferred Stock being redeemed;
(4) the number of shares of Preferred Stock held, as of the
appropriate record date, by the Holder that the Company intends
to redeem;
(5) the Redemption Date;
(6) that the Holder is to surrender to the Company, at the place or
places where certificates for shares of Preferred Stock are to
be surrendered for redemption, in the manner and at the price
designated, his certificate or certificates representing the
shares of Preferred Stock to be redeemed;
(7) the name of any bank or trust company performing the duties
referred to in paragraph (f)(ii)(D) hereof; and
(8) that dividends on the shares of the Preferred Stock to be
redeemed shall cease to accrue on such Redemption Date unless
the Company defaults in the payment of the Optional Redemption
Price.
(B) Each Holder of Preferred Stock shall surrender the certificate or
certificates representing such shares of Preferred Stock to the Company,
duly endorsed, in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full Optional Redemption Price for
such shares shall be payable in cash to the Person whose name appears on
such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares.
(C) Unless the Company defaults in the payment in full of the
applicable redemption price, dividends on the Preferred Stock called for
redemption shall cease to accumulate on the Redemption Date, and the
Holders of such redemption shares shall cease to have any further
11
<PAGE> 12
rights with respect thereto on the Redemption Date, other than the right
to receive the Optional Redemption Price without interest.
(D) If a Redemption Notice shall have been duly given or if the
Company shall have given to the bank or trust company hereinafter
referred to irrevocable authorization promptly to give such notice, and if
on or before the Redemption Date specified therein the, funds necessary
for such redemption shall have been deposited by the Company with such
bank or trust company in trust for the pro rata benefit of the Holders of
the Preferred Stock called for redemption, then, notwithstanding that any
certificate for shares so called for redemption shall not have been
surrendered for cancellation, from and after the close of business on the
day on which such funds are so deposited, all shares so called, or to be
so called pursuant to such irrevocable authorization, for redemption shall
no longer be deemed to be outstanding and all rights with respect of such
shares shall forthwith cease and terminate and, for the purposes of
paragraphs (f)(ii)(A)(8) and (f)(ii)(C) above, the Company will be deemed
to have paid the Optional Redemption Price on the Redemption Date, except
only the right of Holders thereof to receive from such bank or trust
company at any time after the time of such deposit the funds so deposited,
without interest, and the right of the Holders thereof to convert such
shares as provided in paragraph (f) hereof to the Business Day preceding
the Redemption Date. The aforesaid bank or trust company shall be
organized and in good standing under the laws of the United States of
America or any state thereof, shall have capital, surplus and undivided
profits aggregating at least $ 100,000,000 according to its last published
statement of condition, and shall be identified in the Redemption Notice.
Any interest accrued on such funds shall be paid to the Company from time
to time. Any funds so set aside or deposited, as the case may be, in
respect of shares of the Preferred Stock that are subsequently converted
shall be promptly returned to the Company. Any funds so set aside or
deposited, as the case may be, and unclaimed at the end of three years
from such redemption shall, to the extent permitted by law, be released or
repaid to the Company, after which repayment the Holders of the shares so
called for redemption shall look only to the Company for payment thereof.
(g) Voting Rights.
(i) The Holders of shares of Preferred Stock, except as otherwise
required under Delaware law, the Certificate of Incorporation or as set
forth in paragraphs (g)(ii), (g)(iii) and (g)(iv) below, shall not be
entitled or permitted to vote on any matter required or permitted to be
voted upon by the stockholders of the Company.
(ii) (A) So long as any shares of the Preferred Stock are
outstanding, the Company shall not authorize any class of Senior
Securities without the affirmative vote or consent of Holders of at least
66 2/3% of the outstanding shares of Preferred Stock, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special
meeting.
(B) So long as any shares of the Preferred Stock are outstanding, the
Company shall not amend this Certificate of Designations so as to affect
adversely the specified rights, preferences, privileges or voting rights
of Holders of shares of Preferred Stock or to authorize the issuance of
any additional shares of Preferred Stock without the affirmative vote or
consent of Holders of at least 66 2/3% of the issued and outstanding
shares of Preferred Stock, voting or
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<PAGE> 13
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special
meeting.
(C) Except as set forth in paragraph (g)(ii)(A) above, (1) the
creation, authorization or issuance of any shares of any Junior
Securities, Parity Securities or Senior Securities or (2) the increase or
decrease in the amount of authorized capital stock of any class, including
any preferred stock, shall not require the consent of the Holders of
Preferred Stock and shall not be deemed to affect adversely the rights,
preferences, privileges or voting rights of the Preferred Stock.
(iii) (A) If (1) dividends on the Preferred Stock are in arrears and
unpaid for six quarterly dividend periods (whether or not consecutive) (a
"Dividend Default"); or (2) the Company fails to make a Preferred Stock
Change of Control Offer or to repurchase all of the Preferred Stock
validly tendered in a Preferred Stock Change of Control Offer pursuant to
the provisions of paragraph (i) hereof (a "Change of Control Default") (in
each case, a "Voting Rights Triggering Event"), then the number of
directors constituting the Board of Directors shall be adjusted to permit
the Holders of the majority of the then outstanding Preferred Stock,
voting separately as one class, to elect two directors. Holders of a
majority of the issued and outstanding shares of the Preferred Stock,
voting separately as one class, shall have the exclusive right to elect
such members of the Board of Directors at a meeting therefor called upon
occurrence of such Dividend Default or Change of Control Default, as the
case may be, and at every subsequent meeting at which the terms of office
of the directors so elected by the Holders of the Preferred Stock expire
(other than as described in (g)(iii)(B) below).
(B) The right of the Holders of Preferred Stock voting separately as
one class to elect members of the Board of Directors as set forth in
paragraph (g)(iii)(A) above shall continue until such time as (1) in the
event such right arises due to a Dividend Default, all accumulated
dividends and Liquidated Damages, if any, that are in arrears on the
Preferred Stock are paid in full; and (2) in the event such right arises
because a Change of Control Default, the Company remedies any such
failure, breach or default, at which time the term of any directors
elected pursuant to paragraph (g)(iii)(A) shall terminate, subject always
to the same provisions for the renewal and divestment of such special
voting rights in the case of any future Voting Rights Triggering Event. At
any time after voting power to elect directors shall have become vested
and be continuing in the Holders of shares of the Preferred Stock pursuant
to paragraph (g)(iii)(A) hereof if vacancies shall exist in the offices of
directors elected by the Holders of shares of the Preferred Stock, a
proper officer of the Company may, and upon the written request of the
Holders of record of at least 10% of the shares of Preferred Stock then
outstanding addressed to the Secretary of the Company shall, call a
special meeting of the Holders of Preferred Stock, for the purpose of
electing the directors that such Holders are entitled to elect. If such
meeting shall not be called by the proper officer of the Company within 20
days after personal service of said written request upon the Secretary of
the Company, or within 20 days after mailing the same within the United
States by certified mail, addressed to the Secretary of the Company at its
principal executive offices, then the Holders of record of at least 20% of
the outstanding shares of the Preferred Stock may designate in writing one
of their number to call such meeting at the expense of the Company, and
such meeting may be called by the Person so designated upon the notice
required for the annual meetings of stockholders of the Company and shall
be held at the place for holding the annual meetings of stockholders or
such other place in the United States as shall be designated in such
notice. Notwithstanding the provisions of this paragraph (g)(iii)(B),
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<PAGE> 14
no such special meeting shall be called if any such request is received
less than 30 days before the date fixed for the next ensuing annual or
special meeting of stockholders of the Company. Any Holder of shares of
the Preferred Stock so designated shall have, and the Company shall
provide, access to the lists of Holders of shares of the Preferred Stock
for purposes of calling a meeting pursuant to the provisions of this
paragraph (g)(iii)(B).
(C) At any meeting held for the purpose of electing directors at
which the Holders of Preferred Stock shall have the right, voting
separately as one class, to elect directors as aforesaid, the presence in
person or by proxy of the Holders of at least a majority of the
outstanding Preferred Stock shall be required to constitute a quorum of
such Preferred Stock.
(D) Directors elected pursuant to this paragraph (g) shall serve
until the earlier of (1) the next annual meeting of the stockholders and
until their successors are qualified or (2) the time specified in
paragraph (g)(iii)(B) above. Any vacancy occurring in the office of a
director elected by the Holders of shares of the Preferred Stock may be
filled by the remaining director elected by the Holders of shares of the
Preferred Stock unless and until such vacancy shall be filled by the
Holders of shares of the Preferred Stock.
(iv) In any case in which the Holders of shares of the Preferred
Stock shall be entitled to vote pursuant to this paragraph (g) or pursuant
to Delaware law, each Holder of shares of the Preferred Stock shall be
entitled to one vote for each share of Preferred Stock held.
(h) Exchange.
(i) Requirements. (A) The Company at its option may exchange all, but
not less than all, of the then outstanding shares of Preferred Stock into
the Company's 8 1/2% Convertible Subordinated Debentures due 2009 (the
"Exchange Debentures") on any Dividend Payment Date on or after April 16,
1999, provided that within 30 days of the Exchange Date, the Company shall
send a written notice (the "Exchange Notice") of exchange by mail to each
Holder, which notice shall state: (1) that the Company is exercising its
option to exchange the Preferred Stock into Exchange Debentures pursuant
to this Certificate of Designations; (2) the date of the exchange (the
"Exchange Date"), which date shall not be less than 30 days nor more than
60 days following the date on which the Exchange Notice is mailed; (3)
that the Holder is to surrender to the Company, at the place or places
where certificates for shares of Preferred Stock are to be surrendered for
exchange, in the manner designated in the Exchange Notice, his certificate
or certificates representing the shares of Preferred Stock to be
exchanged; (4) that dividends on the shares of Preferred Stock to be
exchanged shall cease to accrue on the Exchange Date whether or not
certificates for shares of Preferred Stock are surrendered for exchange on
the Exchange Date unless the Company shall default in the delivery of
Exchange Debentures; and (5) that interest on the Exchange Debentures
shall accrue from the Exchange Date whether or not certificates for shares
of Preferred Stock are surrendered for exchange on the Exchange Date. On
the Exchange Date, if the conditions set forth in clauses (u) through (z)
below are satisfied, the Company shall issue Exchange Debentures in
exchange for the Preferred Stock as provided in the clause (B) of this
paragraph (h)(i), provided that on the Exchange Date: (u) there are no
accumulated and unpaid dividends or Liquidated Damages on the Preferred
Stock (including the dividends payable and Liquidated Damages on such
date) or other contractual impediment to such exchange; (v) there shall be
legally available funds sufficient therefor; (w) a registration statement
relating to the Exchange Debentures shall have been declared effective
under the Securities Act
14
<PAGE> 15
prior to such exchange and shall continue to be in effect on the date of
such exchange, or the Company shall have obtained a written opinion of
counsel that an exemption from the registration requirements of the
Securities Act is available for such exchange, and that upon receipt of
such Exchange Debentures pursuant to such exchange made in accordance with
such exemption, the holders (assuming such holder is not an Affiliate of
the Company) thereof will not be subject to any restrictions imposed by
the Securities Act upon the resale thereof, other than any such
restriction to which the holder thereof already is subject on the Exchange
Date, and such exemption is relied upon by the Company for such exchange,
(x) the Exchange Debenture Indenture and the trustee thereunder shall have
been qualified under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"); (y) immediately after giving effect to such
exchange, no Default or Event of Default (each as defined in the Exchange
Debenture Indenture) would exist under the Exchange Debenture Indenture;
and (z) the Company shall have delivered to the trustee under the Exchange
Debenture Indenture a written opinion of counsel, dated the Exchange
Date, regarding the satisfaction of the conditions set forth in clauses
(u), (v), (w) and (x). In the event that the issuance of the Exchange
Debentures is not permitted on the Exchange Date or any of the conditions
set forth in clause (u) through (z) of the preceding sentence are not
satisfied on the Exchange Date, the Company shall use its best efforts to
satisfy such conditions and effect such exchange as soon as practicable.
(B) Upon any exchange pursuant to paragraph (g)(i)(A), Holders of
outstanding shares of Preferred Stock shall be entitled to receive $1,000
principal amount of Exchange Debentures for each 40 shares of Preferred
Stock, plus an amount in cash equal to accumulated and unpaid dividends
(including a prorated dividend for the period from the immediately
preceding Dividend Payment Date to the date of exchange) and Liquidated
Damages, if any; provided, that the Company shall pay cash in lieu of
issuing an Exchange Debenture in a principal amount of less than $1,000.
On and after the Exchange Date, unless the Company defaults in the
issuance of Exchange Debentures in exchange for the Preferred Stock,
dividends will cease to accrue on the outstanding shares of Preferred
Stock, and all rights of the Holders of Preferred Stock (except the right
to receive the Exchange Debentures, an amount in cash equal to the accrued
and unpaid dividends and Liquidated Damages, if any, to the Exchange Date
and cash in lieu of any Exchange Debenture that is in an amount that is
not an integral multiple of $1,000) will terminate, and the Person
entitled to receive the Exchange Debentures issuable upon such exchange
will be treated for all purposes as the registered holder of such Exchange
Debentures.
(ii) Procedure for Exchange. (A) On or before the Exchange Date,
each Holder of Preferred Stock shall surrender the certificate or
certificates representing such shares of Preferred Stock, in the manner
and at the place designated in the Exchange Notice. The Company shall
cause the Exchange Debentures to be executed on the Exchange Date and,
upon surrender in accordance with the Exchange Notice of the certificates
for any shares of Preferred Stock so exchanged (properly endorsed or
assigned for transfer, if the notice shall so state), such shares shall be
exchanged by the Company into Exchange Debentures. The Company shall pay
interest on the Exchange Debentures at the rate and on the dates specified
therein from the Exchange Date.
(B) If notice has been mailed as aforesaid, and if before the
Exchange Date specified in such notice (1) the Exchange Debenture
Indenture shall have been duly executed and delivered by the Company and
the trustee and (2) all Exchange Debentures necessary for such exchange
shall have been duly executed by the Company and delivered to the trustee
with irrevocable
15
<PAGE> 16
instructions to authenticate the Exchange Debentures necessary for such
exchange, then dividends shall cease to accrue on the outstanding shares
of Preferred Stock, and all rights of the Holders of Preferred Stock
(except the right to receive the Exchange Debentures, an amount in cash
equal to the accrued and unpaid dividends and Liquidated Damages, if any,
to the Exchange Date and cash in lieu of any Exchange Debenture that is in
an amount that is not an integral multiple of $1,000) will terminate. The
Person entitled to receive the Exchange Debentures issuable upon such
exchange will be treated for all purposes as the holder of such Exchange
Debentures.
(i) Change of Control.
(i) Subject to paragraph (i)(v) hereof, upon the occurrence of a
Change of Control, the Company shall be required to make an offer (a
"Preferred Stock Change of Control Offer") to each Holder of shares of
Preferred Stock to repurchase all or any part of such Holder's shares of
Preferred Stock at an offer price in cash equal to 100% of the aggregate
Liquidation Preference thereof plus an amount in cash equal to all
accumulated and unpaid dividends (including an amount in cash equal to a
prorated dividend for the period from the Dividend Payment Date
immediately prior to the Change of Control Payment Date) and Liquidated
Damages, if any, thereon to the date of repurchase (the "Change of Control
Payment").
(ii) Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder describing the transaction that
constitutes the Change of Control, together with such other information as
may be required pursuant to the securities laws, and stating: (A) that the
Change of Control Offer is being made pursuant to this Certificate of
Designations and that, to the extent, lawful, all shares of Preferred
Stock validly tendered will be accepted for payment; (B) the purchase
price and the purchase date, which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"); (C) that any shares of Preferred Stock not
tendered will continue to accrue dividends in accordance with the terms of
this Certificate of Designations; (D) that, unless the Company defaults in
the payment of the Change of Control Payment, all shares of Preferred
Stock accepted for payment pursuant to the Change of Control Offer shall
cease to accrue dividends on the Change of Control Payment Date; and (E) a
description of the procedures to be followed by such Holder in order to
have its shares of Preferred Stock repurchased.
(iii) On the Change of Control Payment Date, (A) the Company shall,
to the extent lawful, (A) accept for payment shares of Preferred Stock
validly tendered pursuant to the Change of Control Offer and (B) promptly
mail to each Holder of shares of Preferred Stock so accepted payment in an
amount equal to the purchase price for such shares and (B) unless the
Company defaults in the payment for the shares of Preferred Stock tendered
pursuant to the Preferred Stock Change of Control Offer, dividends will
cease to accrue with respect to the shares of Preferred Stock tendered and
all rights of Holders of such tendered shares will terminate, except for
the right to receive payment therefor, on the Change of Control Payment
Date. The Company shall publicly announce the results of the Preferred
Stock Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
(iv) The Company shall comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of shares of the Preferred Stock in connection with a Change of
Control.
16
<PAGE> 17
(v) Notwithstanding the foregoing, prior to complying with this
paragraph (i), but in any event within 90 days following a Change of
Control, the Company shall either repay all outstanding indebtedness or
obtain the requisite consents, if any, under all agreements governing
outstanding indebtedness necessary to permit the repurchase of the
Preferred Stock required by this paragraph (i).
(vi) Notwithstanding the foregoing, the Company will not be required
to make a Change of Control Offer following a Change of Control if a third
party makes the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in this
Certificate of Designations applicable to a Change of Control Offer made
by the Company and purchases all of the Preferred Stock validly tendered
and not withdrawn under such Change of Control Offer.
(j) Preemptive Rights. No shares of Preferred Stock shall have any
rights of preemption whatsoever as to any securities of the Company, or any
warrants, rights or options issued or granted with respect thereto, regardless
of how such securities or such warrants, rights or options may be designated,
issued or granted.
(k) Reissuance of Preferred Stock. Shares of Preferred Stock that
have been issued and reacquired in any manner, including shares purchased or
redeemed or exchanged, shall (upon compliance with any applicable provisions of
the laws of Delaware) have the status of authorized but unissued shares of
preferred stock of the Company undesignated as to series and may be designated
or redesignated and issued or reissued, as the case may be, as part of any
series of preferred stock of the Company, provided that any issuance of such
shares as Preferred Stock must be in compliance with the terms hereof.
(l) Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
(m) Merger, Consolidation and Sale of Assets. Without the vote or
consent of the Holders of a majority of the then outstanding shares of
Preferred Stock, the Company may not consolidate or merge with or into, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets to, any person unless (i) the entity formed by
such consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (in any such case, the "resulting entity") is a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia; (ii) if the Company is not the resulting entity, the
Preferred Stock is converted into or exchanged for and becomes shares of such
resulting entity, having in respect of such resulting entity the same (or more
favorable) powers, preferences and relative, participating, optional or other
special rights thereof that the Preferred Stock had immediately prior to such
transaction; and (iii) immediately after giving effect to such transaction, no
Voting Rights Triggering Event has occurred and is continuing. The resulting
entity of such transaction shall thereafter be deemed to be the "Company" for
all purposes of this Certificate of Designations.
(n) Reports. Whether or not the Company is required to do so by the
rules and regulations of the Commission, the Company shall file with the
Commission (unless the Commission will not accept such a filing) and, within 15
days of filing, or attempting to file, the same with the
17
<PAGE> 18
Commission, furnish to the Holders of the Preferred Stock (i) all quarterly and
annual financial and other information that would be required to be contained
in a filing with the Commission on Forms 10-Q and 10-K if the Company were
required to file such forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report thereon by the Company's certified
independent accountants, and (ii) all current reports that would be required to
be filed with the Commission on Form 8-K if the Company were required to file
such reports. In addition, the Company shall furnish to the Holders of the
Preferred Stock, prospective purchasers of shares of Preferred Stock and
securities analysts, upon their request, the information, if any, required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(o) Mutilated or Missing Preferred Stock Certificates. If any of the
Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and in substitution for and upon cancellation
of the mutilated Preferred Stock certificate, or in lieu of and substitution
for the Preferred Stock certificate lost, stolen or destroyed, a new Preferred
Stock certificate of like tenor and representing an equivalent amount of shares
of Preferred Stock, but only upon receipt of evidence of such loss, theft or
destruction of such Preferred Stock certificate and indemnity, if requested,
satisfactory to the Company and the transfer agent (if other than the Company).
(p) Headings of Subdivisions. The headings of various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
(q) Severability of Provisions. If any right, preference or
limitation of the Preferred Stock set forth in this Certificate of Designations
filed pursuant hereto (as this Certificate of Designations may be amended from
time to time) is invalid, unlawful or incapable of being enforced by reason of
any rule or law or public policy, all other rights, preferences and limitations
set forth in this Certificate of Designations, as amended, which can be given
effect without the invalid, unlawful or unenforceable right, preference or
limitation shall, nevertheless remain in full force and effect, and no right,
preference or limitation herein set forth shall be deemed dependent upon any
other such right, preference or limitation unless so expressed herein.
(r) Notice of the Company. All notices other communications required
or permitted to be given to the Company hereunder shall be made by first-class
mail, postage prepaid, to the Company at its principal executive offices
(currently located on the date of the adoption of these Resolutions at the
following address: Greyhound Lines, Inc., 15110 North Dallas Parkway, Suite
600, Dallas, Texas 75248, Attention: General Counsel). Minor imperfections in
any such notice shall not affect the validity thereof.
(s) Limitations. Except as may otherwise be required by law, the
shares of Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth in this Certificate of Designations (as may be amended from time to
time) or otherwise in the Certificate of Incorporation of the Company.
(t) Definitions. As used in this Certificate of Designations, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Affiliate" of any specified Person means an "affiliate" of such
Person, as such term is defined for purposes of Rule 144 under the
Securities Act.
18
<PAGE> 19
"Board of Directors" has the meaning set forth in the first paragraph
of this Certificate of Designations.
"Business Day" means any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or
authorized by law or other governmental action to be closed.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock or
partnership interests, whether common or preferred.
"Certificate of Incorporation" has the meaning set forth in the first
paragraph of this Certificate of Designations.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its subsidiaries, taken as a whole, (ii) the adoption of a plan relating
to the liquidation or dissolution of the Company, (iii) the consummation
of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" or "group" (as
such terms are used in Section 13(d)(3) of the Exchange Act) becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act), directly or indirectly through one or more
intermediaries, of more than 50% of the voting power of the outstanding
voting stock of the Company, unless (A) the Closing Price per share of
Common Stock for any five Trading Days within the period of ten
consecutive Trading Days ending immediately after the announcement of such
Change of Control equals or exceeds 105% of the Conversion Price then in
effect or (B) at least 90% of the consideration in the transaction or
transactions constituting a Change of Control pursuant to clause (iii)
consists of shares of common stock traded or to be traded immediately
following such Change of Control on a national securities exchange or the
Nasdaq National Market and, as a result of such transaction or
transactions, the Preferred Stock become, convertible solely into such
common stock (and any rights attached thereto), or (iv) the first day on
which more than a majority of the Board of Directors are not Continuing
Directors; provided, however, that a transaction in which the Company
becomes a subsidiary of another entity shall not constitute a Change of
Control if (A) the stockholders of the Company immediately prior to such
transaction "beneficially own" (as such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act), directly or indirectly through one or
more intermediaries, at least a majority of the voting power of the
outstanding voting stock of the Company immediately following the
consummation of such transaction and (B) immediately following the
consummation of such transaction, no "person" or "group" (as such terms
are defined above), other than such other entity (but including holders of
equity interests of such other entity), "beneficially owns" (as such term
is defined above), directly or indirectly through one or more
intermediaries, more than 50% of the voting power of the outstanding
voting stock of the Company.
"Change of Control Default" has the meaning set forth in paragraph
(g)(iii) hereof.
"Change of Control Payment" has the meaning set forth in paragraph
(i)(i) hereof.
19
<PAGE> 20
"Change of Control Payment Date" has the meaning set forth in
paragraph (i)(ii) hereof.
"Closing Price" means for each Trading Day, the last reported sale
price regular way on the American Stock Exchange (or if the American Stock
Exchange is not the principal national securities exchange on which the
Common Stock is listed or admitted for trading, on such other national
securities exchange or, if the Common Stock is not so listed or admitted
for trading on the American Stock Exchange or any other national
securities exchange, on the Nasdaq National Market or, if the Common Stock
is not quoted on the Nasdaq National Market, the average of the closing
bid and asked prices in the over-the-counter market as furnished by any
New York Stock Exchange member firm selected from time to time by the
corporation for that purpose).
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $0.01 per share, of
the Company.
"Company" has the meaning set forth in the first paragraph of this
Certificate of Designations.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of
the Board of Directors on the date of original issuance of the Preferred
Stock or (ii) was nominated for election to the Board of Directors with
the approval of, or whose election to the Board of Directors was ratified
by, at least two-thirds of the Continuing Directors who were members of
the Board of Directors at the time of such nomination or election.
"Conversion Date" has the meaning set forth in paragraph (e)(ii)
hereof.
"Conversion" shall initially mean $4.875 and thereafter shall be
subject to adjustment from time to time pursuant to the terms of paragraph
(e) hereof.
"Dividend Default" has the meaning set forth in paragraph (g)(iii)
hereof.
"Dividend Payment Date" means February 1, May 1, August 1 and
November 1 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Date" means a date on which shares of Preferred Stock are
exchanged by the Company for Exchange Debentures.
"Exchange Debentures" has the meaning set forth in paragraph (h)(i)
hereof.
"Exchange Debenture Indenture" means that certain indenture under
which the Exchange Debentures will be issued.
20
<PAGE> 21
"Exchange Notice" has the meaning set forth in paragraph (h)(i)
hereof.
"Holder" means a holder of shares of Preferred Stock as reflected in
the stock records of the Company or the transfer agent for the Preferred
Stock.
"Initial Dividend Period" means the dividend period commencing on the
Preferred Stock Issue Date and ending on the day before the first Dividend
Payment Date to occur thereafter.
"Junior Securities" has the meaning set forth in paragraph (b)
hereof.
"Liquidated Damages" means all liquidated damages then owing under
the Registration Rights Agreement.
"Liquidation Preference" has the meaning set forth in paragraph (a)
hereof.
"Optional Redemption Price" has the meaning set forth in paragraph
(f)(i) of this Certificate of Designations.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust or unincorporated
organization (including any subdivision or ongoing business of any such
entity or substantially all of the assets of any such entity, subdivision
or business).
"Preferred Stock" has the meaning set forth in paragraph (a) hereof.
"Preferred Stock Change of Control Offer" has the meaning set forth
in paragraph (i)(i) hereof.
"Preferred Stock Issue Date" means the date on which the Preferred
Stock is originally issued by the Company under this Certificate of
Designation.
"Quoted Price" means the last reported sales price of the applicable
security on the principle exchange (including, if applicable, the Nasdaq
National Market) on which the applicable security is listed or admitted
for trading (which shall be for consolidated trading if applicable to such
exchange), or if neither so reported or listed or admitted for trading,
the last reported bid price of the applicable security in the
over-the-counter market. In the event that the Quoted Price cannot be
determined as aforesaid, the Board of Directors of the Company shall
determine the Quoted Price on the basis of such quotations as it in good
faith considers appropriate.
"Quarterly Dividend Period" shall mean the quarterly period
commencing on each February 1, May 1, August 1 and November 1 and ending
on the day before the following Dividend Payment Date.
"Redemption Date" with respect to any shares of Preferred Stock,
means the date on which such shares of Preferred Stock are redeemed by the
Company.
"Redemption Notice" has the meaning set forth in paragraph (f)(ii)
hereof.
21
<PAGE> 22
"Registration Rights Agreement" means the Registration Rights
Agreement with respect to the Preferred Stock, dated as of April 16, 1997,
by and between the Company and Bear, Stearns & Co. Inc., as such agreement
may be amended, modified or supplemented from time to time.
"Resolution" has the meaning set forth in the first paragraph of this
Certificate of Designations.
"Senior Securities" has the meaning set forth in paragraph (b)
hereof.
"Shareholder Rights Plan" means the Amended and Restated Rights
Agreement dated as of April 8, 1997 by and between the Company and Mellon
Securities Trust Company, as Rights Agent.
"Trading Day" means any day on which the American Stock Exchange or
other applicable stock exchange or market is open for business.
"Trust Indenture Act" has the meaning set forth in paragraph (h)(i)
hereof.
"Voting Rights Triggering Event" has the meaning set forth in
paragraph (g)(iii) hereof.
[Signatures on Next Page]
22
<PAGE> 23
IN WITNESS WHEREOF, Greyhound Lines, Inc. has caused this Certificate to
be signed by Steven L. Korby, Executive Vice President and Chief Financial
Officer, and attested by Mark E. Southerst, its Secretary, this 15th day of
April, 1997.
GREYHOUND LINES, INC.
By: /s/ STEVEN L. KORBY
-----------------------------------
Steven L. Korby
Executive Vice President and Chief
Financial Officer
Attest:
By: /s/ MARK E. SOUTHERST
-------------------------
Mark E. Southerst
Secretary
[SEAL]
23
<PAGE> 1
EXHIBIT 5.1
June 27, 1997
Greyhound Lines, Inc.
15110 North Dallas Parkway
Suite 600
Dallas, Texas 75248
Ladies and Gentlemen:
We have acted as counsel to Greyhound Lines, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company with the Securities and Exchange Commission of a Registration
Statement on Form S-3 (No. 333-27367) (as amended, the "Registration
Statement") under the Securities Act of 1933, as amended, relating to the
proposed offering of up to 2,400,000 shares (the "Stockholder Shares") of the
8-1/2% Convertible Exchangeable Preferred Stock, par value $.01 per share of
the Company (the "Preferred Stock"), by certain holders of the Preferred Stock
named in the Prospectus contained in the Registration Statement.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Certificate of Incorporation
of the Company, the Certificate of Designations for the Preferred Stock and
such corporate records, agreements, documents and other instruments, and such
certificates or comparable documents of public officials and of officers and
representatives of the Company, and have made such inquiries of such officers
and representatives as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to
<PAGE> 2
June 27, 1997
Page 2
all questions of fact material to this opinion that have not been independently
established, we have relied upon certificates or comparable documents of
officers and representatives of the Company.
Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that the Stockholder Shares, when originally issued by the
Company, were duly authorized and validly issued and are fully paid and
nonassessable and have not been issued in violation of any preemptive rights.
The opinions expressed herein are limited to the corporate laws of the
State of Delaware and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to this firm under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
<PAGE> 1
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS EXCEPT RATIO)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1992
-----------------
<S> <C>
Interest Income (Loss) Before Taxes, Discontinued Operations
and Extraordinary Item.................................... $20,091
Interest Expense............................................ 35,297
Portion of Rents Representative of the Interest Factor...... 15,980
-------
Income (Loss) Before Taxes as Adjusted...................... 71,368
-------
Fixed Charges:
Interest Expense.......................................... 35,297
Interest Capitalized...................................... 0
Portion of Rents Representative of the Interest Factor.... 15,980
-------
Fixed Charges............................................. $51,277
-------
Coverage Deficiency......................................... N/A
=======
Ratio of Earnings to Fixed Charges.......................... 1.39
=======
</TABLE>
1
<PAGE> 2
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
-----------------
<S> <C>
Income before income taxes, discontinued operations,
extraordinary items and cumulative effect of a change in
accounting principle...................................... $14,847
Interest expense............................................ 30,832
Portion of rents representative of the interest factor...... 13,598
-------
Income before taxes as adjusted............................. 59,277
-------
Fixed charges:
Interest expense.......................................... 30,832
Interest capitalized...................................... 0
Portion of rents representative of the interest factor.... 13,598
-------
Fixed charges............................................. $44,430
-------
Coverage deficiency......................................... N/A
=======
Ratio of earnings to fixed charges.......................... 1.33
=======
</TABLE>
2
<PAGE> 3
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31, 1994
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operation,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(98,932)
Interest Expense............................................ 33,456
Portion of Rents Representative of the Interest Factor...... 14,491
--------
Income (Loss) Before Taxes as Adjusted...................... (50,985)
Fixed Charges:
Interest Expense.......................................... 33,456
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 14,491
--------
Fixed Charges............................................. 47,947
--------
Coverage Deficiency......................................... $(98,932)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
3
<PAGE> 4
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(17,444)
Interest Expense............................................ 26,807
Portion of Rents Representative of the Interest Factor...... 17,344
--------
Income (Loss) Before Taxes as Adjusted...................... 26,707
Fixed Charges:
Interest Expense.......................................... 26,807
Interest Capitalized...................................... --
Portion of Rents Represented of the Interest Factor....... 17,344
--------
Fixed Charges............................................. 44,151
--------
Coverage Deficiency......................................... $(17,444)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
4
<PAGE> 5
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(6,542)
Interest Expense............................................ 27,346
Portion of Rents Representative of the Interest Factor...... 19,556
-------
Income (Loss) Before Taxes as Adjusted...................... 40,360
Fixed Charges:
Interest Expense.......................................... 27,346
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 19,556
-------
Fixed Charges............................................. 46,902
-------
Coverage Deficiency......................................... $(6,542)
=======
Ratio of Earnings to Fixed Charges.......................... N/A
=======
</TABLE>
5
<PAGE> 6
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, 1996
--------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(21,482)
Interest Expense............................................ 6,626
Portion of Rents Representative of the Interest Factor...... 4,265
--------
Income (Loss) Before Taxes as Adjusted...................... (10,591)
Fixed Charges:
Interest Expense.......................................... 6,626
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 4,265
--------
Fixed Charges............................................. 10,891
--------
Coverage Deficiency......................................... $(21,482)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
6
<PAGE> 7
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
1997
-------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(17,089)
Interest Expense............................................ 7,586
Portion of Rents Representative of the Interest Factor...... 5,030
--------
Income (Loss) Before Taxes as Adjusted...................... (4,473)
Fixed Charges:
Interest Expense.......................................... 7,586
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 5,030
--------
Fixed Charges............................................. 12,616
--------
Coverage Deficiency......................................... (17,089)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
7
<PAGE> 1
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(IN THOUSANDS EXCEPT RATIO)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1992
-----------------
<S> <C>
Interest Income (Loss) Before Taxes, Discontinued Operations
and Extraordinary Item.................................... $20,091
Interest Expense............................................ 35,297
Portion of Rents Representative of the Interest Factor...... 15,980
-------
Income (Loss) Before Taxes as Adjusted...................... 71,368
-------
Fixed Charges:
Interest Expense.......................................... 35,296
Interest Capitalized...................................... 0
Portion of Rents Representative of the Interest Factor.... 15,980
-------
Fixed Charges............................................. $51,277
-------
Preferred Stock Dividends................................... --
-------
Total Fixed Charges and Preferred Stock
Dividends....................................... 51,277
-------
Coverage Deficiency......................................... N/A
=======
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends................................................. 1.39
=======
</TABLE>
1
<PAGE> 2
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
-----------------
<S> <C>
Income before income taxes, discontinued operations,
extraordinary items and cumulative effect of a change in
accounting principle...................................... $14,847
Interest expense............................................ 30,832
Portion of rents representative of the interest factor...... 13,598
-------
Income before taxes as adjusted............................. 59,277
-------
Fixed charges:
Interest expense.......................................... 30,832
Interest capitalized...................................... 0
Portion of rents representative of the interest factor.... 13,598
-------
Fixed charges............................................. $44,430
-------
Preferred Stock Dividends................................... --
-------
Total Fixed Charges and Preferred Stock
Dividends....................................... 44,430
-------
Coverage deficiency......................................... N/A
=======
Ratio of earnings to fixed charges and Preferred Stock
Dividends................................................. 1.33
=======
</TABLE>
2
<PAGE> 3
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31, 1994
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operation,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(98,932)
Interest Expense............................................ 33,456
Portion of Rents Representative of the Interest Factor...... 14,491
--------
Income (Loss) Before Taxes as Adjusted...................... (50,985)
Fixed Charges:
Interest Expense.......................................... 33,456
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 14,491
--------
Fixed Charges............................................. 47,947
--------
Preferred Stock Dividends................................... --
--------
Total Fixed Charges and Preferred Stock
Dividends....................................... 47,947
--------
Coverage Deficiency......................................... $(98,932)
========
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends................................................. N/A
========
</TABLE>
3
<PAGE> 4
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(17,444)
Interest Expense............................................ 26,807
Portion of Rents Representative of the Interest Factor...... 17,344
--------
Income (Loss) Before Taxes as Adjusted...................... 26,707
Fixed Charges:
Interest Expense.......................................... 26,807
Interest Capitalized...................................... --
Portion of Rents Represented of the Interest Factor....... 17,344
--------
Fixed Charges............................................. 44,151
--------
Preferred Stock Dividends................................... --
--------
Total Fixed Charges and Preferred Stock
Dividends....................................... 44,151
--------
Coverage Deficiency......................................... $(17,444)
========
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends................................................. N/A
========
</TABLE>
4
<PAGE> 5
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(6,542)
Interest Expense............................................ 27,346
Portion of Rents Representative of the Interest Factor...... 19,556
-------
Income (Loss) Before Taxes as Adjusted...................... 40,360
Fixed Charges:
Interest Expense.......................................... 27,346
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 19,556
-------
Fixed Charges............................................. 46,902
-------
Preferred Stock Dividends................................... --
-------
Total Fixed Charges and Preferred Stock
Dividends....................................... 46,902
-------
Coverage Deficiency......................................... $(6,542)
=======
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends................................................. N/A
=======
</TABLE>
5
<PAGE> 6
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 31, 1996
--------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(21,482)
Interest Expense............................................ 6,626
Portion of Rents Representative of the Interest Factor...... 4,265
--------
Income (Loss) Before Taxes as Adjusted...................... (10,591)
Fixed Charges:
Interest Expense.......................................... 6,626
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 4,265
--------
Fixed Charges............................................. $ 10,891
--------
Preferred Stock Dividends................................... --
--------
Total Fixed Charges and Preferred Stock
Dividends....................................... 10,891
--------
Coverage Deficiency......................................... $(21,482)
========
Ratio of Earnings to Fixed Charges and Preferred Stock...... N/A
========
</TABLE>
6
<PAGE> 7
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
1997
-------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(17,089)
Interest Expense............................................ 7,586
Portion of Rents Representative of the Interest Factor...... 5,030
--------
Income (Loss) Before Taxes as Adjusted...................... (4,473)
Fixed Charges:
Interest Expense.......................................... 7,586
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 5,030
--------
Fixed Charges............................................. 12,616
--------
Preferred Stock Dividends................................... --
--------
Total Fixed Charges and Preferred Stock
Dividends....................................... 12,616
--------
Coverage Deficiency......................................... (17,089)
========
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends................................................. N/A
========
</TABLE>
7
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 12,
1997, included in Greyhound Lines, Inc.'s Form 10-K for the year ended December
31, 1996, and to all references to our Firm included in this registration
statement.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Dallas, Texas
June 20, 1997
<PAGE> 1
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)X
U.S. TRUST COMPANY OF TEXAS, N.A.
(Exact name of trustee as specified in its charter)
75-2353745
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
2001 Ross Avenue, Suite 2700 75201-2936
Dallas, Texas (Zip Code)
(Address of trustee's
principal executive offices)
Compliance Officer
U.S. Trust Company of Texas, N.A.
2001 Ross Avenue, Suite 2700
Dallas, Texas 75201-2936
(214) 754-1200
(Name, address and telephone number of agent for service)
-----------------
Greyhound Lines, Inc.
(Exact name of obligor as specified in its charter)
Delaware 86-0572343
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
15110 North Dallas Parkway
Dallas 75248
(Address of principal executive offices) (Zip Code)
-------------------
8 1/2% Converible Subordinated Debentures due 2009
(Title of the indenture securities)
================================================================================
<PAGE> 2
GENERAL
1. General Information.
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of Dallas (11th District),
Dallas, Texas (Board of Governors of the Federal
Reserve System) Federal Deposit Insurance
Corporation, Dallas, Texas The Office of the
Comptroller of the Currency, Dallas, Texas
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with Obligor and Underwriters.
If the obligor or any underwriter for the obligor is an affiliate of
the Trustee, describe each such affiliation.
None.
3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting
securities of the Trustee:
As of June 26, 1997
- --------------------------------------------------------------------------------
Col A. Col B.
- --------------------------------------------------------------------------------
Title of Class Amount Outstanding
- --------------------------------------------------------------------------------
Capital Stock - par value $100 per share 5,000 shares
4. Trusteeships under Other Indentures.
Not Applicable
5. Interlocking Directorates and Similar Relationships with the Obligor
or Underwriters.
Not Applicable
<PAGE> 3
6. Voting Securities of the Trustee Owned by the Obligor or its
Officials.
Not Applicable
7. Voting Securities of the Trustee Owned by Underwriters or their
Officials.
Not Applicable
8. Securities of the Obligor Owned or Held by the Trustee.
Not Applicable
9. Securities of Underwriters Owned or Held by the Trustee.
Not Applicable
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
Affiliates or Security Holders of the Obligor.
Not Applicable
11. Ownership or Holdings by the Trustee of any Securities of a Person
Owning 50 Percent or More of the Voting Securities of the Obligor.
Not Applicable
12. Indebtedness of the Obligor to the Trustee.
Not Applicable
13. Defaults by the Obligor.
Not Applicable
14. Affiliations with the Underwriters.
Not Applicable
15. Foreign Trustee.
Not Applicable
16. List of Exhibits.
T-1.1 - A copy of the Articles of Association of U.S. Trust Company
of Texas, N.A.; incorporated herein by reference to Exhibit
T-1.1 filed with Form T-1 Statement, Registration No.
22-21897.
<PAGE> 4
16. (con't.)
T-1.2 - A copy of the certificate of authority of the Trustee to
commence business; incorporated herein by reference to
Exhibit T-1.2 filed with Form T-1 Statement, Registration
No. 22-21897.
T-1.3 - A copy of the authorization of the Trustee to exercise
corporate trust powers; incorporated herein by reference to
Exhibit T-1.3 filed with Form T-1 Statement, Registration
No. 22-21897.
T-1.4 - A copy of the By-laws of the U.S. Trust Company of Texas,
N.A., as amended to date; incorporated herein by reference
to Exhibit T-1.4 filed with Form T-1 Statement,
Registration No. 22-21897.
T-1.5 - The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939.
T-1.6 - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
NOTE
As of June 26, 1997, the Trustee had 5,000 shares of Capital Stock outstanding,
all of which are owned by U.S. T.L.P.O. Corp. As of June 26, 1997, U.S.
T.L.P.O. Corp. had 35 shares of Capital Stock outstanding, all of which are
owned by U.S. Trust Corporation. U.S. Trust Corporation had outstanding
19,591,502 shares of $5 par value Common Stock as of June 26, 1997.
The term "Trustee" in Items 2, 5, 6, 7, 8, 9, 10 and 11 refers to each of U.S
Trust Company of Texas, N.A., U.S. T.L.P.O. Corp. and U.S. Trust Corporation.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the Trustee of
all the facts on which to base responsive answers to Items 2, 5, 6, 7, 9, 10
and 11, the answers to said Items are based upon incomplete information. Items
2, 5, 6, 7, 9, 10 and 11 may, however, be considered correct unless amended by
an amendment to this Form T-1.
In answering any items in this Statement of Eligibility and Qualification which
relates to matters peculiarly within the knowledge of the obligors or their
directors or officers, or an underwriter for the obligors, the Trustee has
relied upon information furnished to it by the obligors and will rely on
information to be furnished by the obligors or such underwriter, and the
Trustee disclaims responsibility for the accuracy or completeness of such
information.
----------------
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee,
U.S Trust Company of Texas, N.A., a national banking association organized
under the laws of the United States of America, has duly caused this statement
of eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of Dallas, and State of Texas on the
26th day of June, 1997.
U.S. Trust Company of Texas, N.A.,
Trustee
By: /s/ BILL BARBER
------------------------------
Bill Barber
Vice President
<PAGE> 6
EXHIBIT 7.1.1
Articles of Association
of
U.S. Trust Company of Texas, National Association
For the purpose of organizing an association to perform any lawful activities
of national banks, the undersigned to enter into the following articles of
association:
FIRST: The title of this association shall be U.S. Trust Company of
Texas, National Association.
SECOND: The main office of the association shall be in Dallas County
of Dallas, State of Texas. The general business of the
association shall be conducted at its main office and its
branches.
THIRD: The board of directors of this association shall consist of
not less than five nor more than twenty- five persons, the
exact number to be fixed and determined from time to time by
resolution of a majority of the full board of directors or by
resolution of a majority of the shareholders at any annual or
special meeting thereof. Each director shall own common or
preferred stock of the association with an aggregate par value
of not less than $1,000, or common or preferred stock of a
bank holding company owning the association with an aggregate
par, fair market or equity value of not less than $1,000, as
of either (i) the date of purchase, (ii) the date the person
became a director or (iii) the date of that person's most
recent election to the board of directors, whichever is
greater. Any combination of common or preferred stock of the
association or such holding company may be used.
Any vacancy in the board of directors may be filled by action
of a majority of the remaining directors may not increase the
number of directors between meetings of shareholders to a
number which: (1) exceeds by more than two the number of
directors last elected by shareholders where the number was 15
or less; and (2) exceeds by more than four the number of
directors last elected by shareholders where the number was 16
or more, but in no event shall the number of directors exceed
25.
Terms of directors, including directors selected to fill
vacancies, shall expire at the next regular meeting of
shareholders at which directors are elected, unless the
directors resign or are removed from office.
<PAGE> 7
Despite the expiration of a director's term, the director
shall continue to serve until his or her successor is elected
and qualifies or until there is a decrease in the number of
directors and his or her position is eliminated.
Honorary or advisory members of the board of directors,
without voting power or power of final decision in matters
concerning the business of the association, may be appointed
by resolution of a majority of the full board of directors or
by resolution of shareholders at any annual or special
meeting. Honorary or advisory directors shall not be counted
for purposes of determining the number of directors of the
association or the presence of a quorum in connection with any
board action, and shall not be required to own qualifying
shares.
FOURTH: There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought
before the meeting. It shall be held at the main office or
any other convenient place the board of directors may
designate, on the day of each year specified therefore in the
bylaws, or if that day falls on a legal holiday in the State
in which the association is located, on the next following
banking day. If no election is held on the day fixed, or in
event of a legal holiday, an election may be held on any
subsequent day within 60 days of the day fixed, to be
designated by the board of directors, or, if the directors
fail to fix the day, by shareholders representing two-thirds
of the shares issued and outstanding. In all cases at least
10 days advance notice of the meeting shall be given to the
shareholders by first class mail.
In all elections of directors, the number of votes each common
shareholder may cast will be determined by multiplying the
number of shares he or she owns by the number of directors to
be elected. Those votes may be cumulated and cast for a
single candidate or may be distributed among two or more
candidates in the manner selected by the shareholder. On all
other requisitions, each common shareholder shall be entitled
to one vote for each share of stock held by him or her.
Nominations for election to the board of directors may be made
by the board of directors or by any stockholder of any
outstanding class of capital stock of the association entitled
to vote for election of directors. Nominations other than
those made by or on behalf of the existing management shall be
made in writing and be delivered or
<PAGE> 8
mailed to the president of the association and to the
Comptroller of the Currency, Washington, D.C., not less than
14 days nor more than 50 days prior to any meeting of
shareholders called for the election of directors; provided,
however, that if less than 21 days notice of the meeting is
given to shareholders, such nominations shall be mailed or
delivered to the president of the association and to the
Comptroller of the Currency not later than the close of
business on the seventh day following the day on which the
notice of meeting was mailed. Such notification shall contain
the following information to the extent known to the notifying
shareholder.
(1) The name and address of each proposed nominee.
(2) The principal occupation of each proposed nominee.
(3) The total number of shares of capital stock of the
association that will be voted for each proposed
nominee.
(4) The name and residence address of the notifying
shareholder.
(5) The number of shares of capital stock of the
association owned by the notifying shareholder.
Nominations not made in accordance herewith may, in his/her
decision, be disregarded by the chairperson of the meeting,
and the vote tellers may disregard all votes cast for each
such nominee. No bylaw may unreasonably restrict the
nomination of directors by shareholders.
A director may resign at any time by delivering written notice
to the board of directors, its chairperson, or to the
association, which resignation shall be effective when the
notice is delivered unless the notice specifies a later
effective date.
A director may be removed by shareholders at a meeting called
to remove him or her, when notice of the meeting stating that
the purpose or one of the purposes is to remove him or her is
provided, if there is a failure to fulfill one of the
affirmative requirements for qualification, or for case,
provided, however, that a director may not be removed if the
number of votes sufficient to elect him or her under
cumulative voting is voted against his or her removal.
<PAGE> 9
FIFTH: The authorized amount of capital stock of this association
shall be 5,000 shares of common stock of the par value of One
Hundred Dollars ($100) each; but said capital stock may be
increased or decreased from time to time, according to the
provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the
association shall have any preemptive or preferential right of
subscription to any shares of any class of stock of the
association, whether nor or hereafter authorized, or to any
obligations convertible into stock of the association, issued,
or sold, nor any right of subscription to any thereof other
than such, if any, as the board of directors, in its
discretion may from time to time determine and at such price
as the board of directors may from time to time fix.
Unless otherwise specified in the articles of association or
required by law, (1) all matters requiring shareholder action,
including amendments to the articles of association must be
approved by shareholders owning a majority voting interest in
the outstanding voting stock, and (2) each shareholder shall
be entitled to one vote per share.
Unless otherwise specified in the articles of association or
required by law, all shares of voting stock shall be voted
together as a class, on any matters requiring shareholder
approval. If a proposed amendment would affect two or more
classes or series in the same or a substantially similar way,
all the classes or series so affected, must vote together as a
single voting group on the proposed amendment.
Shares of the same class or series may be issued as a dividend
on a pro rata basis and without consideration. Shares of
another class or series may be issued as a share dividend in
respect of a class or series of stock if approved by a
majority of the votes entitled to the cast by the class or
series to be issued unless there are no outstanding shares of
the class or series to be issued. Unless otherwise provided
by the board of directors, the record date for determining
shareholders entitled to a share dividend shall be the date
the board of directors authorizes the share dividend.
Unless otherwise provided in the bylaws, the record date for
determining shareholders entitled to notice of and to vote at
any meeting is the close of business on the day before the
first notice is
<PAGE> 10
mailed or otherwise sent to the shareholders, provided that in
no event may a record date be more than 70 days before the
meeting.
If a shareholder is entitled to fractional shares pursuant to
preemptive rights, a stock dividend, consolidation or merger,
reverse stock split or otherwise, the association may (a)
issue fractional shares, or (b) in lieu of the issuance of
fractional shares, issue script or warrants entitling the
holder to receive a full share upon surrendering enough script
or warrants to equal a full share, (c) if there is an
established and active market in the association's stock, make
reasonable arrangements to provide the shareholder with an
opportunity to realize a fair price throughout sale of the
fraction, or purchase of the additional fraction required for
a full share, (d) remit the cash equivalent of the fraction to
the shareholder, or (e) sell full shares representing all the
fractions at public auction or to the highest bidder after
having solicited and received sealed bids from at least three
licensed stock brokers, and distribute the proceeds pro rata
to shareholders who otherwise would be entitled to the
fractional shares. The holder of a fractional share is
entitled to exercise the rights from shareholder, including
the right to vote, to receive dividends, and to participate in
the assets of the association upon liquidation, in proportion
to the fractional interest. The holder of script or warrants
is not entitled to any of these rights unless the script or
warrants explicitly provide for such rights. The script or
warrants may be subject to such additional conditions as (1)
that the script or warrants will become void if not exchanged
for full shares before a specified date, and (2) that the
shares for which the script or warrants are exchangeable may
be sold at the option of the association, at any time and from
time to time, may authorize and issue debt obligations,
whether or not subordinated, without the approval of the
shareholders. Obligations classified as debt, whether or not
subordinated, which may be issued by the association without
the approval of shareholders, do not carry voting rights on
any issue, including an increase or decrease in the aggregate
number of the securities, or the exchange or reclassification
of all or part of securities into securities of another class
or series.
SIXTH: The board of directors shall appoint one of its members
president of this association, and one of its members
chairperson of the board and shall have the power to appoint
one or more vice presidents, a secretary who shall keep
minutes of the directors' and shareholders' meetings and be
responsible for authenticating the records of the association,
and such other officers and employees as may be
<PAGE> 11
required to transact the business of this association. A duly appointed
officer may appoint one or more officers or assistant officers if authorized by
the board of directors in accordance with the bylaws.
The board of directors shall have the power to:
(1) Define the duties of the officers, employees
and agents of the association.
(2) Delegate the performance of its duties, but
not the responsibility for its duties, to the
officers, employees, and agents of the
association.
(3) Fix the compensation and enter into
employment contracts with its officers and
employees upon reasonable terms and
conditions consistent with applicable law.
(4) Dismiss officers and employees.
(5) Require bonds from officers and employees and
to fix the penalty thereof.
(6) Ratify written policies authorized by the
association's management or committees of the
board.
(7) Regulate the manner in which any increase or
decrease of the capital of the association
shall be made, provided that nothing herein
shall restrict the power of shareholders to
increase or decrease the capital of the
association in accordance with law, and
nothing shall raise or lower from two-thirds
the percentage required for shareholder
approval to increase or reduce the capital.
(8) Manage and administer the business and
affairs of the association.
(9) Adopt initial bylaws, not inconsistent with
law or the articles of association, for
managing the business and regulating the
affairs of the association.
<PAGE> 12
(10) Amend or repeal bylaws, except to the extent
that the articles of association reserve this
power in whole or in part to shareholders.
(11) Make contracts.
(12) Generally to perform all acts that are legal
for a board of directors to perform.
SEVENTH: The board of directors shall have the power to change
the location of the main office to any other place
within the limits of Dallas, Texas, without the
approval of the shareholders, and shall have the
power to establish or change the location of any
branch or branches of the association to any other
location permitted under applicable law, without the
approval of the shareholders, subject to approval by
the Office of the Comptroller of the Currency.
EIGHTH: The corporate existence of this association shall
continue until terminated according to the laws of
the United States.
NINTH: The board of directors of this association, or any
one or more shareholders owning, in the aggregate,
not less than five percent of the stock of this
association, may call a special meeting of
shareholders at any time. Unless otherwise provided
by the bylaws or the laws of the United States, or
waived by shareholders, a notice of the time, place,
and purpose of every annual and special meeting of
the shareholders shall be given by first-class mail,
postage prepaid, mailed at least 10, and no more than
60, days prior to the date of the meeting to each
shareholder of record at his/he address as shown upon
the boods of this association. Unless otherwise
provided by the bylaws, any action requiring approval
of shareholders must be effected at duly called
annual or specila meeting.
TENTH: An director of the association or such director's
heirs, executors, or: administrators may be
indemnified or reimbursed by the association for
reasonable expenses actually incurred in connection
with claims made against such director to the extent
allowed by applicable law, including 12 CFR 7.5217,
and regulatory and public policy.
ELEVENTH: These articles of association may be amended at any
regular or special meeting of the shareholders by the
affirmative vote of the holders of a majority of the
stock of this association, unless the vote of the
holders of a greater amount of stock is required by
law, and in
<PAGE> 13
that case by the vote of the holders of such greater
amount. The association's board of directors may
propose one or more amendments to the articles of
association for submission to the shareholders.
<PAGE> 14
EXHIBIT T.1.2
COMPTROLLER OF THE CURRENCY
- ------------------- --------------------
TREASURY DEPARTMENT [TREASURY DEPARTMENT LOGO] OF THE UNITED STATES
- ------------------- --------------------
WASHINGTON, D.C.
Whereas, satisfactory evidence has been presented to the Comptroller of
the Currency that U.S. Trust Company of Texas, National Association, located in
Rowlett, State of Texas, has complied with all provisions of the statutes of
the United States required to be complied with before being authorized to
commence the business of banking as a National Banking Association.
Now, therefore, I hereby certify that the above-named association is
authorized to commence business of banking as a National Banking Association.
In testimony whereof, witness my signature and seal of
office this 7th day of December, 1990
/s/ PETER C. KEAFT
Charter No. 18782
Comptoller of the Currency
<PAGE> 15
EXHIBIT T-1.3
TRUST PERMIT
- -------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- -------------------------------------------------------------------------------
Southwestern District
1600 Lincoln Plaza
500 N. Akard
Dallas, Texas 75201-3394
WHEREAS, - U. S. Trust Company of Texas, National Association, located in
Dallas, Texas, being a national banking association, organized under the
statutes of the United States, has made application for authority to act as
fiduciary;
AND WHEREAS, applicable provisions of the statutes of the United States
authorize the grant of such authority;
NOW THEREFORE, I certify that the said association is authorized to act in all
fiduciary capabilities permitted by such statutes.
IN TESTIMONY WHEREOF, witness my
signature and seal of the Office
this Sixth day of August, 1991.
/s/ EDWARD M. GRAVES
[SEAL] Edward M. Graves
Director for Analysis
CHARTER NUMBER 18782
<PAGE> 16
EXHIBIT T.1.4
BY-LAWS
U.S. TRUST COMPANY OF TEXAS. N. A.
ARTICLE I
MEETING OF SHAREHOLDERS
Section 1.1 Annual Meeting. The regular annual meeting of the
shareholders for the election of directors and the transaction of whatever
business may properly come before the meeting, shall be held at such time,
within six months after the close of the Corporation's fiscal year, and place
as the Board of Directors may designate. Notice of such meeting shall be
mailed, postage prepaid, at least ten days prior to the date thereof, addressed
to each shareholder at his address appearing on the books of the Corporation.
If, from any cause, an election of directors is not made on the said day, the
Board of Directors shall order the election to be held on some subsequent day,
as soon thereafter as practicable, according to the provisions of law; and
notice thereof shall be given in the manner herein provided for the annual
meeting.
Section 1.2. Special Meetings. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for any
purpose at any time by the Board of Directors or by any one or more
shareholders owning, in the aggregate, not less than ten (10) percent of the
stock of the Corporation. Every such special meeting, unless otherwise provided
by law, shall be called by mailing, postage prepaid, not less than ten days
prior to the date fixed for such meeting, to each stockholder at his address
appearing on the books of the Corporation, a notice stating the purpose of the
meeting.
Section 1.3. Nominations for Director. Nominations for election to
the Board of Directors may be made by the Board of Directors or by any
stockholder of any outstanding class of capital stock of the Corporation
entitled to vote for the election of directors.
-1-
<PAGE> 17
Section 1.4. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this Corporation shall act as proxy. Proxies shall be valid only for one
meeting, to be specified therein, and any adjournments of such meeting. Proxies
shall be dated and shall be filed with the records of the meeting.
Section 1.5. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law. Shareholders may participate in said meeting by
means of a conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence at a meeting.
Section 1.6. Action Without a Meeting. Any action required by law,
these By-laws, or the Articles of Incorporation of the Corporation to be taken
at any annual or special meeting of shareholders of the Corporation, or any
action which may be taken at any annual or special meeting of such
shareholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of all outstanding stock entitled to vote thereon.
ARTICLE II
Directors
Section 2.1. Board of Directors. The Board of Directors shall have
the power to manage and administer the business and affairs of the Corporation.
Except as expressly limited by law, all corporate powers of the Corporation
shall be vested in and may be exercised by said Board of Directors.
-2-
<PAGE> 18
Section 2.2. Numbers. The Board of Directors shall consist of not
less than five nor more than twenty-five persons, the exact number within such
minimum and maximum limits to be fixed and determined from time to time by
resolution of a majority of the full Board of Directors or by resolution of the
shareholders at any meeting thereof; provided however, that a majority of the
full Board of Directors may not increase the number of directors to a number
which exceeds by more than two the number of directors last elected by
shareholders.
Section 2.3. Organization Meeting. The Secretary, upon receiving the
result of any election, shall notify the directors-elect of their election and
of the time at which they are required to meet at the Main Office of the
corporation for the purpose of filing their affidavits accepting such
directorship, as required by law, organizing the new Board of Directors and
electing and appointing officers of the Corporation for the succeeding year.
Such meeting shall be held on the day of the election or as soon thereafter as
practicable, and, in any event, within thirty days thereof. If, at the time
fixed for such meeting, there shall not be a quorum present, the directors
present may adjourn the meeting, from time to time, until a quorum is obtained.
Section 2.4. Regular meetings. At least one regular meeting of the
Board of Directors shall be held in the months of January, February, March,
April, May, June, July, September, October and November upon notice. Written
notice of the time and place of such regular meetings of the Board of Directors
shall be given to each Director by either personal delivery, telegram,
facsimile transmission, or any other form of electronic communication, unless
prohibited by law, at least two (2) days before the meeting or by notice mailed
to the Director at least five (5) days before each meeting. One or more
representatives designated by the sole shareholder shall receive prior notice
of, and an invitation to attend, any meeting of the Board of Direction
Section 2.5. Special Meetings. Special meetings of the Board of
Directors may be called by the President of the Corporation, or at the request
of two or more directors. Each member of the Board of Directors shall be given
notice stating the time and place, by telegram, letter, facsimile transmission
or other electronic communication, or in person, of each such special meeting
-3-
<PAGE> 19
Section 2.6. Quorum. A majority of the directors shall constitute a
quorum at any meeting, except when otherwise provided by law; but a lesser
number may adjourn any meeting from time to time, and the meeting may be held,
as adjourned, without further notice. Members of the Board of Directors or any
committee thereof may participate in a meeting of such Board or committee by
means of a conference telephone or similar communications equipment allowing
all persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
Section 2.7. Vacancies. When any vacancy occurs among the directors,
the remaining members of the Board of Directors, in accordance with the laws of
the State of Texas, may appoint a director to fill such vacancy at any regular
meeting of the Board of Directors, or at a special meeting for that purpose.
Section 2.8. Action Without a Meeting. Any action required to be
taken at a meeting of the Board of Directors of the Corporation, or any action
which may be taken at a meeting of the Board of Directors or a committee
thereof, may be taken without a meeting if a consent in writing, setting forth
the action so to be taken, signed by all of the directors, or all the members
of the committee, as the case may be, is filed in the minutes of the
proceedings of the Board of Directors or of the committee. Such consent shall
have the same effect as a unanimous vote.
ARTICLE III
Committees of the Board
Section 3.1. Examining Committee. The Board of Directors shall
annually appoint a committee of two or more directors, which shall, at least
once during each calendar year and within fifteen months of the last such
examination make suitable examinations of the affairs of the Corporation, or
cause suitable examinations to be made by examiners responsible only to the
Board of Directors, to ascertain whether the Corporation is in sound financial
condition, whether internal controls and procedures are being maintained, and
shall recommend to the Board of Directors such changes in the manner of
conducting the affairs of the Corporation as shall be deemed advisable. Such
reports shall state the results of such examinations in writing to the Board of
Directors at the next regular meeting thereafter.
-4-
<PAGE> 20
Section 3.2. Executive Committee. There shall be an Executive
Committee composed of two or more directors which shall have and may exercise
all the authority of the Board of Directors when the Board of directors is not
in session, except that such committee shall not have the authority to:
(a) approve or recommend to shareholders actions or proposals
required by law to be approved by shareholders,
(b) designate candidates for the office of director, for purposes of
proxy solicitation or otherwise,
(c) fill vacancies on the Board of Directors or any committee thereof,
(d) amend the By-Laws, or
(e) authorize or approve the issuance or sale of, or any contract to
issue or sell, shares, except that the Board of Directors, having
provided general authorization for the issuance or sale of shares,
or any contract therefore, may, pursuant to a general formula or
method specified by the Board of Directors, by resolution or by
adoption of a stock option or other plan, authorize the Executive
Committee to fix the terms of any contract for the sale of the shares
and to fix the terms upon which such share may be issued or sold
provided however that the Executive Committee shall secure the consent
or approval of U.S. Trust Corporation on behalf of the sole
shareholder of the Corporation evidenced by (i) a resolution of its
Board of Directors or (ii) written approval of its Chairman or
President to such action.
The Executive Committee shall keep minutes of its meetings, and such
minutes shall be submitted at the next regular meeting of the Board of
Directors at which a quorum is present, and any action taken by the Board of
Directors which respect thereto shall be entered in the minutes of the Board of
Directors.
The Executive Committee shall meet at least once in each calendar month in
which a regular meeting of the Board of Directors is not scheduled.
ARTICLE V
Officers and Employees
Section 4.1. Chairman of the Board. The Board of Directors shall
appoint one of its members to be Chairman of the Board of Directors to serve at
the pleasure of the Board of Directors. Such person shall preside at all
meetings of the Board of directors. The Chairman of the Board of Directors
shall supervise the carrying out of the policies adopted or approved by the
Board of Directors; shall have general executive powers, as well as the
specific powers conferred by these By-Laws; shall also have and may exercise
such further powers and duties as from time to time may be conferred upon or
assigned by the Board of Directors.
-5-
<PAGE> 21
Section 4.2. President. The Board of Directors shall appoint one of
its members to be President of the Corporation. In the absence of the Chairman,
the President shall preside at any meeting of the Board of Directors. The
President shall have general executive powers, and shall have and may exercise
any and all other powers and duties pertaining by law, regulation or practice
to the Office of President, or imposed by these By-Laws. The President shall
also have and may exercise such further powers and duties as from time to time
may be conferred or assigned by the Board of Directors.
Section 4.3. Vice President. The Board of Directors may appoint one
or more Vice Presidents. Each Vice President shall have such powers and duties
as may be assigned by the Board of Directors. One Vice President shall be
designated by the Board of Directors, in the absence of the President, to
perform all the duties of the President.
Section 4.4. Secretary. The Board of Directors shall appoint a
Secretary, Cashier, or other designated officer who shall be Secretary of the
Board of Directors and of the Corporation, and shall keep accurate minutes of
all meetings. The Secretary shall attend to the giving of all notices required
by these By-Laws to be given; shall be custodian of the corporate seal,
records, documents and papers of the Corporation; shall provide for the keeping
of proper records of all transactions of the Corporation; shall have and may
exercise any and all other powers and duties pertaining by law, regulation or
practice, to the Offices of Secretary or Cashier, or imposed by these By-Laws;
and shall also perform such other duties as may be assigned from time to time
by the Board of Directors.
Section 4.5. Other Officers. The Board of Directors may appoint one
or more Assistant Vice Presidents, one or more Trust Officers, one or more
Assistant Secretaries, one or more Assistant Cashiers, one or more Managers and
Assistant Managers of Branches and such other officers and attorneys which from
time to time may appear to the Board of Directors to be required or desirable
to transact the business of the Corporation. Such officers shall respectively
exercise such powers and perform such duties as pertain to their several
offices, or as may be conferred upon, or assigned to them by the Board of
Directors, the Chairman of the Board of Directors, or the President.
Section 4.6. Tenure of Office. The President and all other officers
shall hold office for the current year for which the Board of Directors was
elected, unless they shall resign, become disqualified, or be removed; and any
vacancy occurring in the Office of the President shall be filled promptly by
the Board of Directors.
-6-
<PAGE> 22
ARTICLE V
Trust Department
Section 5.1. Trust Department. There shall be a department of the
Corporation known as the Trust Department which shall perform the fiduciary
responsibilities of the Corporation.
Section 5.2. Trust Officer. There shall be a Trust Officer of this
Corporation whose duties shall be to manage, supervise and direct all the
activities of the Trust Department. Such person shall do or cause to be done
all things necessary or proper in carrying on the business of the Trust
Department in accordance with provisions of law and applicable regulations; and
shall act pursuant to opinions of counsel where such opinion is deemed
necessary. Opinions of counsel shall be retained on file in connection with all
important matters pertaining to fiduciary activities. The Trust Officer shall
be responsible for all assets and documents held by the Corporation in
connection with fiduciary matters.
The Board of Directors may appoint such other officers of the Trust
Department as it may deem necessary, with such duties as may be assigned.
Section 5.3. Trust Investment Committee. There shall be a Trust
Investment Committee of this Corporation composed of two or more members, who
shall be capable and experienced officers or directors of the Corporation. All
investments of funds held in a fiduciary capacity shall be made, retained or
disposed of only with the approval of the Trust Investment Committee, and the
Committee shall keep minutes of all its meetings, showing the disposition of
all matters it considers and passes upon. The Committee shall, promptly after
the acceptance of an account for which the Corporation has investment
responsibilities, review the assets thereof, to determine the advisability of
retaining or disposing of such assets. The Committee shall conduct a similar
review at least once during each calendar year thereafter.
The Trust Investment Committee or any sub-committee thereof shall additionally
exercise the Department's fiduciary authority over matters such as
discretionary distributions, account overdrafts, acceptance of new accounts,
closing of accounts, exceptions or changes to the published fee schedules, and
all other matters which require a high degree of corporate discretion.
A report of all investment reviews and other Committee actions shall
be noted in the minutes of the Committee.
-7-
<PAGE> 23
Section 5.4. Trust Department Files. There shall be maintained in the
Trust Department files containing all fiduciary records necessary to assure
that its fiduciary responsibilities have been properly undertaken and
discharged.
Section 5.5. Trust Investments. Funds held in a fiduciary capacity
shall be invested in accordance with the instrument establishing the fiduciary
relationship and permissible by law.
ARTICLE VI
Stock and Stock Certificates
Section 6.1. Transfers. Shares of stock shall be transferable on the
books of the Corporation, and a transfer book shall be kept in which all
transfers of stock shall be recorded. Every person becoming a shareholder by
such transfer shall, in proportion to his shares, succeed to all rights of the
prior holder of such shares.
Section 6.2. Stock Certificates. Certificates of stock shall bear the
signature of the Chairman (which may be engraved, printed, or impressed), and
shall be signed manually or by facsimile process by the Secretary, Assistant
Secretary, Cashier, Assistant Cashier, or any other officer appointed by the
Board of Directors for that purpose, to be known as an Authorized Officer, and
the seal of the Corporation shall be engraven thereon. Each certificate shall
recite on its face that the stock represented thereby is transferable only upon
the books of the Corporation properly endorsed.
ARTICLE VII
Corporate Seal
Section 7.1 The President, the Cashier, the Secretary or any
Assistant Cashier or Assistant Secretary, or other officer thereunto designated
by the Board of Directors, shall have the authority to affix the corporate seal
to any document requiring such seal, and to attest the same. Such seal shall be
substantially in the following form:
[SEAL]
-8-
<PAGE> 24
ARTICLE VIII
Miscellaneous Provisions
Section 8.1. Fiscal Year. The Fiscal Year of the Corporation shall
be the calendar year.
Section 8.2. Execution of Instruments. All agreements, indentures,
mortgages, deeds, conveyances, transfers, certificates, declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies and other instruments or
documents may be signed, executed, acknowledged, verified, delivered or
accepted on behalf of the Corporation by the Chairman of the Board, or the
President, or any Vice President, or the Secretary, or the Cashier, or, if in
connection with exercise of fiduciary powers of the Corporation, by any of said
officers or by any Trust Officer. Any such instruments may also be executed,
acknowledged, verified, delivered or accepted on behalf of the Corporation in
such other manner and by such other officers or agents as the Board of
Directors may from time to time direct. The provisions of this Section 8.2 are
supplementary to any other provision of these By-laws.
Section 8.3. Records. The Articles of Incorporation, the By-laws and
the proceedings of all meetings of the shareholders, the Board of Directors,
and standing committees of the Board shall be recorded in appropriate minute
books provided for the purpose. The minutes of each meeting shall be signed by
the Secretary, Cashier or other Officer appointed to act as Secretary of the
meeting.
ARTICLE IX
By-laws
Section 9.1. Inspection. A copy of the By-laws, with all amendments
thereto, shall at all times be kept in a convenient place at the Main Office of
the Corporation, and shall be open for inspection to all shareholders, during
business hours.
Section 9.2. Amendments. The By-laws may be amended, altered, or
repealed, at any regular or special meeting of the Board of Directors, by a
vote of a majority of the total number of the Directors.
-9-
<PAGE> 25
ARTICLE X
Idemnification
Section 10.1. Idemnified Person. To the extent permitted and in the
manner prescribed by law, the Corporation shall indemnify any person
("indemnified person") made or threatened to be made a party to any action,
suit or proceeding, whether civil or criminal, by reason of the fact that he,
his testator or intestate, is or was a director, advisory board member or
officer of the Corporation or served any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise in any capacity at the request of the Corporation,
against judgements, fines, amounts paid in settlement and reasonable expenses
(which the Corporation may advance), including attorney's fees, actually and
necessarily incurred as a result of such action, suit or proceeding, or any
appeal therein. The foregoing right of indemnification shall not be exclusive
of any other right to which any such person may be entitled but shall not apply
in the event of misconduct or gross negligence of the proposed indemnified
person.
-10-
<PAGE> 26
EXHIBIT T-1.5
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939 as amended in connection with the proposed issue of Greyhoud Lines, Inc. 8
1/2% Convertible Subordinated Debentures due 2009, we hereby consent that
reports of examination by Federal, State, Territorial or District authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
U.S. Trust Company of Texas, N.A.,
By: /s/ BILL BARBER
------------------------------
Bill Barber
Vice President
<PAGE> 27
EXHIBIT T.1.6
<TABLE>
<S> <C>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
Federal Financial Institutions Examination Council OMB Number: 1557-0081
Expires March 31,1999
- ------------------------------------------------------------------------------------------------------------------------------------
Please Refer to Page i, (1)
(LOGO) Table of Contents, for
the required disclosure
of estimated burden
- ------------------------------------------------------------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH
DOMESTIC OFFICES ONLY AND TOTAL ASSETS OF LESS THAN $100
MILLION - - FFIEC 034
(970331)
----------
REPORT AT THE CLOSE OF BUSINESS March 31,1997 (RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 This report form is to be filed by banks with domestic
(State member banks); 12 U.S. c. Section 1817 (State offices only. Banks with branches and consolidated
nonmember banks); and 12 U.S. C. Section 161 (National subsidiaries in U.S. territories and possessions, Edge or
banks). Agreement subsidiaries, foreign branches, consolidated
foreign subsidiaries, or International Banking Facilities
must file FFIEC 031.
- ------------------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by The Reports of Condition and Income are to be prepared in
an authorized officer and the Report of Condition must be accordance with Federal regulatory authority
attested to by not less than two directors (trustees) for instructions. NOTE: these instructions may in some
State nonmember banks and three directors for State member cases differ from generally accepted accounting
and National Banks. principles.
I, Alfred B. Childs, SVP & Cashier We, the undersigned directors (trustees), attest to the
-----------------------------------
Name and Title of Officer Authorized to Sign Report correctness of this Report of Condition (including the
supporting schedules) and declare that it has been
of the named bank do hereby declare that these Reports of examined by us and to the best of our knowledge and
Condition and Income (including the supporting schedules) belief has been prepared in conformance with the
have been prepared in conformance with the instructions instructions issued by the appropriate Federal regulatory
issued by the appropriate Federal regulatory authority and authority and is true and correct.
are true to the best of my knowledge and belief.
/s/ Stuart M. Pearman
-------------------------
/s/ Alfred B. Childs Director (Trustee)
----------------------------
Signature of Officer Authorized to Sign Report
/s/ J. T. Moore Jr.
------------------------
April 17,1997 Director (Trustee)
---------------
Date of Signature
/s/ Peter J. Denker
-------------------------
Director (Trustee)
- ------------------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANKS: Return the original and one copy to NATIONAL BANKS: Return the original only in the special
the appropriate Federal Reserve District Bank. return address envelope provided. If express mail is used
in lieu of the special return address envelope, return the
STATE NONMEMBER BANKS: Return the original only in the original only to the FDIC, c/o Quality Data Systems, 2127
special return address envelope provided. If express mail Espey Court, Suite 204, Crofton, MD 21114.
is used in lieu of the special return address envelope,
return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
- ------------------------------------------------------------------------------------------------------------------------------------
FDIC Certificate Number ____________ 12-31-96
(RCRI 9050) Banks should affix the address label in this space.
U. S. Trust Company of Texas, National Association
--------------------------------------------------
Legal Title of Bank (TEXT 9010)
2001 Ross Avenue, Suite 2700
----------------------------
City (TEXT 9130)
Dallas, TX 75201
-----------------------------------------------------------
State Abbrev. (TEXT 9200)
ZIP Code (TEXT 9220)
Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of
the Currency
</TABLE>
<PAGE> 28
<TABLE>
<S> <C> <C> <C>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 03/31/97 State #: 6797 FFIEC 034
2100 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: Page RC-2
DALLAS, TX 75201 Transit #: 11101765 33217
9
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31,1997
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
SCHEDULE RC - BALANCE SHEET
C100
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
1. Cash and balances due from depository institutions: RCON
----
a. Noninterest-bearing balances and currency and coin
(1,2) 0081 1,255 1.a
------------------------- ----- ------
b. Interest bearing balances (3) 0071 629 1.b
-------------------- ----- ------
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column
A) 1754 0 2.a
---------------------- ----- ------
b. Available-for-sale securities (from Schedule RC-B, column
D) 1773 105,764 2.b
---------------------- ----- ------
3. Federal funds sold and securities purchased under agreements
to resell:
a. Federal funds sold (4) 0276 0 3.a
------------------ ----- ------
b. Securities purchased under agreements to resell
(5) 0277 0 3.b
------------------------- ----- ------
4. Loans and lease financing receivables:
RCON
a. Loans and leases, net of unearned income (from Schedule ----
RC-C) 2122 43,079 4.a
--------------------
b. LESS: Allowance for loan and lease losses 3123 511 4.b
-----------
c. LESS: Allocated transfer risk reserve 3128 0 4.c
--------- RCON
d. Loans and leases, net of unearned income, allowance, and ----
reserve (item 4.a minus 4.b and 4.c) 2125 42,568 4.d
----------------- ----- ------
5. Trading assets 3545 0 5.
--------------------------- ----- ------
6. Premises and fixed assets (including capitalized
leases) 2145 752 6.
---------------------- ----- ------
7. Other real estate owned (from Schedule RC-M) 2150 0 7.
--------------- ----- ------
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M 2130 0 8.
----------------------------- ----- ------
9. Customers' liability to this bank on acceptances
outstanding 2155 0 9.
------------------------ ----- ------
10. Intangible assets (from Schedule RC-M) 2143 0 10.
--------------- ----- ------
11. Other assets (from Schedule RC-F) 2160 1,933 11.
-------------------------- ----- ------
12. a. Total assets (sum of items 1 through
11) 2170 152,901 12.a
----------------------------------------- ----- ------
b. Losses deferred pursuant to U.S.C. 1823(j) 0306 0 12.b
----------- ----- ------
c. Total assets and losses deferred pursuant to 12 U.S.C.
1823(j) (sum of items 12.a and 12.b) 0307 152,901 12.c
-------------- ------ -------
(1) Includes cash items in process of collection and unposed debits.
(2) The amount reported in this item must be greater than or equal to the sum of Schedule RC-M, items 3.a and 3.b.
(3) Includes time certificates of deposit not held for trading.
(4) Report 'term federal funds sold' in Schedule RC, item 4.a, 'Loans and leases, net of unearned income,' and in
Schedule RC-C, part 1.
(5) Report securities purchased under agreements to resell that involve the receipt of immediately available funds
and mature in one business day or roll over under a continuing contract in Schedule RC, item 3.a, 'Federal
funds sold.'
</TABLE>
<PAGE> 29
<TABLE>
<S> <C> <C>
U.S. TRUST COMPANY OF TEXAS, N.A. Call Date: 3/31/97 State #: 6797 FFIEC 034
2100 ROSS AVENUE, SUITE 2700 Vendor ID: D Cert #: 33217 Page RC-2
DALLAS, TX 75201 Transit #: 11101765
10
SCHEDULE RC - CONTINUED
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of RCON
----
columns A and C from Schedule RC-E) RCON 2200 124,978 13.a
------------- ----
(1) Noninterest-bearing (1) 6631 19,997 13.a.1
-------------------
(2) Interest-bearing 6636 104,981
--------------------
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs
(1) Noninterest-bearing
----------------
(2) Interest-bearing
------------------
14. Federal funds purchased and securities sold under agreements RCON
to repurchase: ----
a. Federal funds purchased (2) 0278 0 14.a
-------------------- ----- ------
b. Securities sold under agreements to repurchase (3) 0279 0 14.b
-------------- ----- ------
15. a. Demand notes issued to the U.S.
Treasury 2840 0 15.a
----------------- ----- ------
b. Trading liabilities 3548 0 15.b
-------------------- ----- ------
16. Other borrowed money:
A. WITH A REMAINING MATURITY OF ONE YEAR OR
LESS 2332 1,000 16.a
---------------- ----- ------
B. WITH A REMAINING MATURITY OF MORE THAN ONE
YEAR 2333 5,000 16.b
----------- ----- ------
17. Mortgage indebtedness and obligations under capitalized
leases 2910 0 17.
--------------- ----- ------
18. Bank's liability on acceptances executed and
outstanding 29200 0 18.
--------------------- ----- ------
19. Subordinated notes and debentures 3200 0 19.
------------------ ----- ------
20. Other liabilities (from Schedule RC-G) 2930 1,468 20.
------------- ----- ------
21. Total liabilities (sum of items 13 through 20) 2948 132,446 21.
------------ ----- ------
22. Limited-life preferred stock and related surplus 3282 0 22.
----------- ----- ------
EQUITY CAPITAL
23. Perpetual preferred stock and related
surplus 3838 7,000 23.
-------------------------------- ------ ------
24. Common stock 3230 500 24.
----------------------------- ------ ------
25. Surplus (exclude all surplus related to preferred
stock) 2829 8,384 25.
------------------------ ------ ------
26. a. Undivided profits and capital reserves 3632 4,711 26.a
----------------- ------ ------
b. Net unrealized holding gains (losses) on available-for-
sale securities 8434 (140) 26.b
------------------- ------ ------
27. Cumulative foreign currency translation
adjustments 3210
---------------------- ------ ------
28. a. Total equity capital (sum of items 23 through
27) 3210 20,455 28.a
------------------------- ------ ------
b. Losses deferred pursuant to 12 U.S.C.
1823(j) 0306 0 28.b
-------------------------- ------ ------
c. Total equity capital and losses deferred pursuant to 12
U.S.C. 1823(j) (sum of items 28.a and
28.b) 3559 20,455 28.c
------------------------ ------ ------
29. Total liabilities, limited-life preferred stock, equity
capital, and losses deferred pursuant to 12 U.S.C. 1823(j)
(sum of items 21, 22, and 28.c) 2257 152,901 29.
------------------------ ------ ------
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. Indicate in the box at the right the number of the statement below that best
describes the most comprehensive level of auditing work performed for the bank by RCON
independent external auditors as of any date during ----
1995 6724 1 M.1
------------------------------------------------------------------------
</TABLE>
<PAGE> 30
<TABLE>
<S> <C> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by
with generally accepted auditing standards by other external auditors (may be required by state
certified public accounting firm which submits a chartering authority)
report on the bank
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by
conducted in accordance with generally accepted external auditors
auditing standards by a certified public accounting 6 = Compilation of the bank's financial statements by
firm which submits a report on the consolidated external auditors
holding company (but not on the bank separately) 7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in work)
accordance with generally accepted auditing standards 8 = No external audit work
by a certified public accounting firm (may be required
by state chartering authority)
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
(2) Report "term federal funds purchased" in Schedule RC, item 16, 'Other borrowed money.'
(3) Report securities sold under agreements to repurchase that involve the receipt of immediately available funds
and mature in one business day or roll over under a continuing contract in Schedule RC, item 14.a, 'Federal
funds purchased.'
</TABLE>
