<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-10841
GREYHOUND LINES, INC.
AND ITS SUBSIDIARIES IDENTIFIED IN FOOTNOTE (1) BELOW
(Exact name of registrant as specified in its charter)
DELAWARE 86-0572343
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
15110 N. DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(Address of principal executive offices) (Zip code)
(972) 789-7000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OF COMMON STOCK OUTSTANDING AT JULY 31, 1997
- --------------------- ----------------------------
$.01 PAR VALUE 59,286,135 SHARES
(1) This Form 10-Q is also being filed by the co-registrants specified under
the caption "Co-Registrants", each of which is a wholly-owned subsidiary
of Greyhound Lines, Inc. and each of which has met the conditions for
filing Form 10-Q in a reduced disclosure format.
<PAGE> 2
CO-REGISTRANTS
This Form 10-Q is also being filed by the following entities. Except as set
forth below, each entity has the same principal executive offices, zip code
and telephone number as that set forth for Greyhound Lines, Inc. on the cover
of this report:
<TABLE>
<CAPTION>
NAME COMMISSION I.R.S. EMPLOYER STATE
FILE NO. IDENTIFICATION OF
NO. INCORP
<S> <C> <C> <C>
Atlantic Greyhound Lines of Virginia, Inc. 333-27267-01 58-0869571 Virginia
Eagle Bus Manufacturing, Inc. 333-27267-02 74-2472777 Delaware
FCA Insurance Limited 333-27267-03 None Bermuda
GLI Holding Company 333-27267-04 75-2146309 Delaware
Greyhound De Mexico S.A. De C.V. 333-27267-05 None Republic of
Mexico
Grupo Centro, Inc. 333-27267-06 75-2692522 Delaware
Los Buenos Leasing Co., Inc. 333-27267-07 85-0434715 New Mexico
Sistema Internacional De Transporte 333-27267-08 75-2548617 Delaware
De Autobuses, Inc.
T & V Holding Company 333-27267-09 75-2238995 Delaware
Texas, New Mexico & Oklahoma Coaches, Inc. 333-27267-10 75-0605295 Texas
1313 13th St.
Lubbock, Texas 79401
(806) 763-5389
T.N.M. & O. Tours, Inc. 333-27267-11 75-1188694 Texas
Vermont Transit Co., Inc. 333-27267-12 03-0164980 Vermont
106 Main Street
Burlington, Vermont 05401
(802) 862-9671
</TABLE>
As of July 31, 1997, Atlantic Greyhound Lines of Virginia, Inc. had 150 shares
of common stock outstanding; Eagle Bus Manufacturing, Inc. had 1,000 shares of
common stock outstanding; FCA Insurance Limited had 120,000 shares of common
stock outstanding; GLI Holding Company had 1,000 shares of common stock
outstanding; Greyhound De Mexico S.A. De C.V. had 10,000 shares of common stock
outstanding; Grupo Centro, Inc. had 1,000 shares of common stock outstanding;
Los Buenos Leasing Co., Inc. had 1,000 shares of common stock outstanding;
Sistema Internacional De Transporte De Autobuses, Inc. had 1,000 shares of
common stock outstanding; T & V Holding Company had 3,000 shares of common stock
outstanding; Texas, New Mexico & Oklahoma Coaches, Inc. had 1,000 shares of
common stock outstanding; T.N.M. & O. Tours, Inc. had 1,000 shares of common
stock outstanding; and Vermont Transit Co. Inc. had 505 shares of common stock
outstanding. None of the above named co-registrants have been subject to the
filing requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, for ninety days or more.
2
<PAGE> 3
GREYHOUND LINES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Interim Consolidated Statements of Financial Position as of
December 31, 1996 and June 30, 1997 (Unaudited) ................. 5
Interim Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 1996 and 1997 (Unaudited) ... 6
Condensed Interim Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1996 and 1997 (Unaudited) ............. 7
Notes to Interim Consolidated Financial Statements (Unaudited) .... 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ......................................... 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .................................................... 21
Item 2. Changes in Securities ................................................ 22
Item 4. Submission of Matters to a Vote of Security Holders .................. 23
Item 6. Exhibits and Reports on Form 8-K ..................................... 24
SIGNATURES ..................................................................... 25
</TABLE>
3
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
4
<PAGE> 5
GREYHOUND LINES, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
Current Assets
Cash and cash equivalents ..................................................... $ 898 $ 1,312
Accounts receivable, less allowance for doubtful accounts
of $241 and $234 ........................................................... 32,844 37,926
Inventories ................................................................... 3,840 3,798
Prepaid expenses .............................................................. 8,179 5,896
Assets held for sale .......................................................... 4,224 3,668
Other current assets .......................................................... 11,329 11,681
--------- ---------
Total current assets ....................................................... 61,314 64,281
Prepaid Pension Plans ............................................................. 24,927 24,927
Property, Plant and Equipment, net of accumulated depreciation
of $101,901 and $112,036 ...................................................... 314,454 314,343
Investments in Unconsolidated Affiliates .......................................... 2,437 5,076
Insurance and Security Deposits ................................................... 76,180 76,083
Goodwill, net ..................................................................... --- 725
Intangible Assets, net of accumulated amortization of $19,105 and $19,337 ......... 20,970 27,844
--------- ---------
Total assets ............................................................... $ 500,282 $ 513,279
========= =========
Current Liabilities
Accounts payable .............................................................. $ 23,900 $ 19,450
Accrued liabilities ........................................................... 53,500 43,980
Unredeemed tickets ............................................................ 9,523 10,321
Current portion of reserve for injuries and damages ........................... 19,864 19,864
Current maturities of long-term debt .......................................... 11,662 4,460
--------- ---------
Total current liabilities .................................................. 118,449 98,075
Reserve for Injuries and Damages .................................................. 40,099 37,665
Long-Term Debt .................................................................... 192,581 215,756
Deferred Gains .................................................................... 562 383
Other Liabilities ................................................................. 7,710 7,991
--------- ---------
Total liabilities .......................................................... 359,401 359,870
--------- ---------
Commitments and Contingencies (Note 3)
Stockholders' Equity
Preferred stock (10,000,000 shares authorized; par value $.01) 8 1/2%
Convertible Exchangeable Preferred Stock (2,400,000 shares issued
as of June 30, 1997; aggregate liquidation preference $60,000) ......... --- 60,000
Series A junior preferred stock (500,000 and 1,500,000 shares authorized
as of December 31, 1996 and June 30, 1997, respectively;
par value $.01; none issued)............................................ --- ---
Common stock (100,000,000 shares authorized; 58,469,469 and 59,220,280
shares issued as of December 31, 1996 and June 30, 1997 respectively;
par value $.01) ............................................................ 585 592
Capital in excess of par value ................................................ 229,104 227,964
Retained deficit .............................................................. (81,237) (127,576)
Less: Unfunded accumulated pension obligation ................................ (6,533) (6,533)
Less: Treasury stock, at cost (109,192 shares) ................................ (1,038) (1,038)
--------- ---------
Total stockholders' equity ................................................. 140,881 153,409
--------- ---------
Total liabilities and stockholders' equity ............................. $ 500,282 $ 513,279
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
GREYHOUND LINES, INC. AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1996 1997 1996 1997
--------- --------- --------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING REVENUES
Transportation Services
Passenger services ....................... $ 146,157 $ 154,068 $ 264,900 $ 291,401
Package express .......................... 8,479 8,146 16,661 15,483
Food services ................................ 5,334 5,305 9,985 10,311
Other operating revenues ..................... 12,286 14,011 22,353 25,483
--------- --------- --------- ---------
Total operating revenues ............. 172,256 181,530 313,899 342,678
--------- --------- --------- ---------
OPERATING EXPENSES
Maintenance .................................. 18,212 18,919 36,314 37,819
Transportation ............................... 43,298 47,316 80,719 89,482
Agents' commissions and station costs ........ 32,674 34,160 61,685 65,840
Marketing, advertising and traffic ........... 6,641 6,483 11,828 13,518
Insurance and safety ......................... 11,041 10,478 21,951 20,239
General and administrative ................... 21,556 21,624 41,422 43,475
Depreciation and amortization ................ 7,386 7,425 14,928 14,967
Operating taxes and licenses ................. 12,286 12,792 24,026 25,251
Operating rents .............................. 12,763 13,899 24,537 27,785
Cost of goods sold - food services ........... 3,391 3,282 6,487 6,486
Other operating expenses ..................... 1,856 2,388 3,706 4,555
--------- --------- --------- ---------
Total operating expense .............. 171,104 178,766 327,603 349,417
--------- --------- --------- ---------
OPERATING INCOME (LOSS) ......................... 1,152 2,764 (13,704) (6,739)
Interest Expense ................................ 6,637 6,526 13,263 14,112
--------- --------- --------- ---------
LOSS BEFORE INCOME TAXES ........................ (5,485) (3,762) (26,967) (20,851)
Income Tax Provision ............................ 48 86 111 165
--------- --------- --------- ---------
NET LOSS BEFORE EXTRAORDINARY ITEM .............. (5,533) (3,848) (27,078) (21,016)
Extraordinary Item .............................. --- 25,323 --- 25,323
--------- --------- --------- ---------
NET LOSS ........................................ (5,533) (29,171) (27,078) (46,339)
Preferred Dividends ............................. --- 1,063 --- 1,063
--------- --------- --------- ---------
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS .... $ (5,533) $ (30,234) $ (27,078) $ (47,402)
========= ========= ========= =========
Loss Per Share of Common Stock:
Primary
Net Loss Attributable to Common Stock-
holders Before Extraordinary Item .... $ (0.10) $ (0.08) $ (0.47) $ (0.38)
Extraordinary Item ....................... -- (0.43) -- (.043)
--------- --------- --------- ---------
Net Loss Attributable to Common
Stockholders ......................... $ (0.10) $ (0.51) $ (0.47) $ (0.81)
========= ========= ========= =========
Fully Diluted
Net Loss Attributable to Common Stock-
holders Before Extraordinary Item .... $ (0.10) $ (0.08) $ (0.47) $ (0.38)
Extraordinary Item ....................... -- (0.43) -- (.043)
--------- --------- --------- ---------
Net Loss Attributable to Common
Stockholders ......................... $ (0.10) $ (0.51) $ (0.47) $ (0.81)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
GREYHOUND LINES, INC. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1997
--------- ---------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ................................................. (27,078) (46,339)
Extraordinary Items ...................................... --- 25,323
Non-cash expenses and gains included in net loss ......... 15,888 16,374
Net change in certain operating assets and liabilities ... (10,170) (25,158)
--------- ---------
Net cash used for operating activities ............... (21,360) (29,800)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures ..................................... (11,434) (13,879)
Proceeds from assets sold ................................ 12,765 1,414
Other investing activities ............................... (1,850) (2,283)
--------- ---------
Net cash used for investing activities ............... (519) (14,748)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on debt and capital lease obligations ........... (2,164) (15,402)
Proceeds from 11.5% Senior Notes and Convertible
Exchangeable Preferred Stock Issuance .................... --- 203,399
Redemption of 10% Senior Notes ........................... --- (161,022)
Retirement of Interest Rate Swap ......................... --- (3,010)
Proceeds from issuance of Common Stock ................... 113 1,067
Net change in revolving credit facility .................. 21,327 19,930
--------- ---------
Net cash provided by financing activities ............ 19,276 44,962
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ........ (2,603) 414
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD .............. 3,494 898
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD .................... $ 891 $ 1,312
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
GREYHOUND LINES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of management, the unaudited Interim Consolidated Financial
Statements of Greyhound Lines, Inc. and Subsidiaries (the "Company") include
all adjustments, consisting of only normal recurring adjustments, necessary to
present fairly the Company's financial position as of June 30, 1997, and the
results of its operations for the three and six months ended June 30, 1996 and
1997 and cash flows for the six months ended June 30, 1996 and 1997. Due to the
seasonality of the Company's operations, the results of its operations for the
interim period ended June 30, 1997 may not be indicative of total results for
the full year. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations promulgated by the Securities and Exchange Commission. The
unaudited Interim Consolidated Financial Statements should be read in
conjunction with the audited Consolidated Financial Statements of Greyhound
Lines, Inc. and Subsidiaries and accompanying notes for the year ended December
31, 1996.
2. SIGNIFICANT ACCOUNTING POLICIES
LOSS PER SHARE OF COMMON STOCK
Primary loss per common share is calculated by dividing net loss attributable
to common stockholders by the weighted average shares of common stock of the
Company ("Common Stock") and Common Stock equivalents outstanding during the
period. Common Stock equivalents represent the dilutive effect of the assumed
exercise of certain outstanding stock options. The calculation of fully diluted
loss per share of Common Stock considers the effect of conversion of the
Company's 8.5% Convertible Subordinated Debentures due 2007 (the "Convertible
Debentures") and 8.5% Convertible Exchangeable Preferred Stock (the "Preferred
Stock"). For the three and six months ended June 30, 1996 and 1997, however,
the assumed exercise of outstanding in-the-money stock options and conversion
of Convertible Debentures and Preferred Stock have an antidilutive effect. As a
result, these shares are excluded from the final determination of the weighted
average shares outstanding at June 30, 1996 and 1997. The weighted average
shares outstanding used in the calculation of primary and fully diluted loss
per share of Common Stock for the three and six months ended June 30, 1996 and
1997 are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1996 1997 1996 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Primary ............ 58,234,926 58,815,097 58,204,186 58,629,786
Fully diluted ...... 58,234,926 58,815,097 58,204,186 58,629,786
</TABLE>
The Company intends to adopt SFAS No. 128 "Earnings Per Share" (SFAS No. 128)
effective December 15, 1997. This statement requires the replacement of primary
earnings per share with basic earnings per share and fully diluted earnings per
share with diluted earnings per share. The pro forma effect of this adoption
will be disclosed in the next applicable quarter in which the Company reports a
net income for the period. The calculation of earnings per share under SFAS 128
will have a favorable impact on earnings per share as it excludes potentially
dilutive options from the calculation of basic earnings per share.
Additionally, the calculation of diluted earnings per share uses the average
share price for the period rather than the more dilutive greater of average
share price or end of the period price required by Opinion 15. During the
second quarter, the earnings per share calculation reflects the pro rata impact
of dividends which will accrue to the holders of the Preferred Stock over the
period outstanding.
8
<PAGE> 9
3. SECURITIES OFFERINGS
On April 16, 1997, the Company completed the sale of two private offerings of
its securities. The Company issued $150.0 million aggregate principal amount of
11.5% Senior Notes due 2007 (Senior Notes) and 8.5% Convertible Exchangeable
Preferred Stock (Preferred Stock ) with a liquidation preference of $60.0
million. The net proceeds to the Company from the aforementioned Senior Note
and Preferred Stock offerings were approximately $203.4 million. In connection
with the offerings, the Company retired the 10% Senior Notes due 2001 (the "Old
Senior Notes"). As a result of the retirement of the Old Senior Notes and
renegotiation of the Revolving Credit Facility (defined herein), the Company
recorded an extraordinary loss of $25.3 million. The loss includes $21.3 million
to reflect the acceleration of the discount and prepayment premiums on the Old
Senior Notes, the acceleration of payments, net of amounts accrued, under the
interest rate swap agreements of $2.5 million and the write off of $1.5 million
of debt issuance costs related to the prior revolving credit facility.
Senior Notes
The Company's Senior Notes bear interest at the rate of 11.5% per annum,
payable each April 15 and October 15 commencing on October 15, 1997. The Senior
Notes are redeemable at the option of the Company in whole or in part, at any
time on or after April 15, 2002, at redemption prices of 105.750% in 2002,
103.834% in 2003, 101.917% in 2004 and 100% in 2005 and thereafter plus
interest. Not withstanding the foregoing, on or prior to April 15, 2000, the
Company may redeem up to 35% of the aggregate principal amount of Senior Notes
originally issued at a redemption price of 111.5% plus interest with the net
cash proceeds of certain equity offerings, provided that at least $97.5 million
aggregate principal amount of Senior Notes remains outstanding following each
redemption. Upon the change of control of the Company, as defined in the
indenture, the Company will be required to make an offer to repurchase all or
any part of each holder's Senior Notes at a price equal to 101% of the principal
amount thereof plus interest. The Senior Note indenture contains certain
covenants that, among other things, will limit the ability of the Company to
incur additional indebtedness, pay dividends or make other distributions,
repurchase equity interests or subordinated indebtedness, create certain liens,
sell assets or enter into certain mergers or consolidations.
Preferred Stock
The Preferred Stock carries a liquidation preference of $25.00 per share plus
accumulated and unpaid dividends. Dividends accrue at a rate per annum equal to
8.5% of the liquidation preference per share of Preferred Stock and are payable
quarterly in arrears on February 1, May 1, August 1 and November 1 of each year
commencing August 1, 1997. The Preferred Stock is convertible at any time after
July 15, 1997, at the option of the holder thereof, into common stock of the
Company at a conversion price of $4.875 per share. 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 redemption prices of 104.86% in 2000, 103.64% in 2001,
102.43% in 2002, 101.21% in 2003 and 100% in 2004 and thereafter plus
accumulated and unpaid dividends. Upon the change of control of the Company,
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 plus accumulated and unpaid dividends. Subject to certain
conditions, the Company may at its option exchange all, but not less than all,
of the then outstanding shares of Preferred Stock into 8.5% Convertible
Subordinated Debentures due 2009 (the "Exchange Debentures") on any dividend
payment date on or after April 16, 1999. Interest on the Exchange Debentures
will be payable semi-annually in arrears on May 1 and November 1. The
conversion and redemption terms of the Exchange Debentures are similar to the
Preferred Stock.
9
<PAGE> 10
4. LONG TERM DEBT
During the quarter, the Company renegotiated the terms of its Revolving Credit
Facility. The amended facility increased the borrowing availability to $125.0
million and provided a LIBOR-based interest rate option. The Revolving Credit
Facility permits the Company to borrow (i) up to $2.5 million based on a formula
of eligible accounts receivable, plus (ii) up to $92.5 million based on the
value of bus collateral plus (iii) up to $30.0 million (subject to reduction)
based on the value of real estate collateral. Borrowings under the Revolving
Credit Facility bear interest at a rate equal to the prime rate (8.50% as of
July 31) plus .5%, or LIBOR plus 2%. The Credit Facility limits letters of
credit and letters of credit guarantees to $35.0 million. Borrowings under the
Revolving Credit Facility mature on May 21, 2002. The Revolving Credit Facility
is secured by liens on substantially all of the assets of the Company. The
Revolving Credit Facility is subject to certain operating and financial
covenants, including maintenance of a minimum net worth and ratios of cash flow
to interest expense and Debt to EBITDA. In addition, non-bus capital
expenditures are limited to $30.0 million annually with no spending limitations
on bus purchases. As of June 30, 1997, the Company was in compliance with all
such covenants.
5. COMMITMENTS AND CONTINGENCIES
SECURITIES AND DERIVATIVE LITIGATION; SEC INVESTIGATION.
Between August and December 1994, seven purported class action lawsuits were
filed by purported owners of the Company's Common Stock, Convertible Debentures
and Old Senior Notes against the Company and certain of its former officers and
directors. The suits sought unspecified damages for securities laws violations
as a result of statements made in public reports and press releases and to
securities analysts during 1993 and 1994 that were alleged to have been false
and misleading.
All the purported class action cases referred to above (with the exception of
one suit that was dismissed before being served on any defendants) were
transferred to the United States District Court for the Northern District of
Texas, the Court in which the first purported class action suit was filed, and
were pending under a case styled In re Greyhound Securities Litigation, Civil
Action 3-94-CV-1793-G. A joint pretrial order was entered in the litigation
which consolidated for pretrial and discovery purposes all of the stockholder
actions and, separately, all of the debtholder actions. The joint pretrial
order required plaintiffs to file consolidated amended complaints and excused
answers to the original complaints. In July 1995, the plaintiffs filed their
consolidated amended complaints, naming the Company, Frank J. Schmieder, J.
Michael Doyle, Phillip W. Taff, Robert R. Duty, Don T. Seaquist, Charles J.
Lee, Charles A. Lynch and Smith Barney Incorporated as defendants. Messrs. Lee,
Lynch and Taff were subsequently dismissed from the case by the plaintiffs. In
September 1995, the various defendants filed motions to dismiss plaintiffs'
complaints. In October 1995, plaintiffs filed a motion seeking to certify the
class of plaintiffs.
On October 3, 1996, the Court ruled in favor of the Company and all other
defendants, granting defendants' motions to dismiss. Pursuant to the Court's
order, the complaints were dismissed, with leave granted to the plaintiffs to
refile amended complaints within 20 days thereafter. On October 23, 1996, an
amended complaint was tendered to the Court. All seven class representatives
involved in the prior complaints were dropped from the case. A new purported
class plaintiff, John Clarkson, was named and a motion was filed seeking leave
to permit Mr. Clarkson to intervene as the new class representative. The
amended complaint alleges a class period of May 4, 1993 to October 26, 1993 and
has been brought only on behalf of holders of Common Stock. The amended
complaint names the same defendants involved in the dismissed cases (the
Company, Messrs. Schmieder, Doyle, Duty and Seaquist and Smith Barney
Incorporated); no new defendants were added and none were dropped. In December
1996, the defendants filed responses to plaintiff's motion for intervention. In
January 1997, the plaintiff filed a reply brief. Therefore, all briefing
regarding the intervention has been completed and the matter is awaiting a
ruling by the Court. The Court has advised the parties that no responsive
pleading need be filed to the amended complaint until such time as the Court
rules on the motion for intervention filed by Mr. Clarkson.
In November 1994, a shareholder derivative lawsuit was filed by Harvey R. Rice,
a purported owner of the Company's Common Stock, against present directors and
former officers and directors of the Company and the Company as a nominal
defendant. The suit seeks to recover monies obtained by certain defendants by
allegedly
10
<PAGE> 11
trading in the Company's securities on the basis of nonpublic information and
to recover monies for certain defendants' alleged fraudulent dissemination of
false and misleading information concerning the Company's financial condition
and future business prospects. The suit, filed in the Delaware Court of
Chancery, New Castle County, is styled Harvey R. Rice v. Frank J. Schmieder, J.
Michael Doyle, Charles A. Lynch, Richard J. Caley, Thomas F. Meagher, Thomas G.
Plaskett, Kenneth R. Norton, Robert B. Gill, Alfred E. Osborne, Jr., J. Patrick
Foley, Charles J. Lee and Greyhound Lines, Inc., Civil Action No. 13854.
Pursuant to a stipulation, the time for all defendants to answer, move or
otherwise plead with respect to the derivative complaint is not yet due.
In May 1995, a lawsuit was filed on behalf of two individuals, purported owners
of the Company's Common Stock, against the Company and certain of its former
officers and directors. The suit sought unspecified damages for securities laws
violations as a result of statements made in public reports and press releases
and to securities analysts during 1993 and 1994 that are alleged to have been
misleading. The suit, filed in the United States District Court for the
Northern District of Ohio, was styled James Illius and Theodore J. Krawec v.
Greyhound Bus Lines, Inc., Frank J. Schmieder and J. Michael Doyle, Civil
Action No. 1-95-CV-1140. The defendants filed a motion to transfer venue
seeking to have the case transferred to the United States District Court for
the Northern District of Texas where the class action litigation described
above was pending. In September 1995, the defendants' motion was granted, and
the matter was transferred and was consolidated into the class action
litigation described above.
On October 29, 1996, a purported class action lawsuit was brought by a
purported holder of Common Stock against the Company, certain of its former
officers and directors and Smith Barney and Morgan Stanley & Company, Inc. The
suit seeks unspecified damages for alleged federal and Texas state securities
laws violations in connection with a Common Stock offering made by the Company
in May 1993. The suit, filed in the 44th Judicial District Court of Dallas
County, Texas, is styled John Clarkson v. Greyhound Lines, Inc., Frank
Schmieder, J. Michael Doyle, Robert R. Duty, Don T. Seaquist, Smith Barney,
Inc. and Morgan Stanley & Company, Inc., Case No. 96-11329-B. Plaintiff, John
Clarkson, is the same individual who seeks to intervene in the Federal Court
class action litigation described above, and the same law firms have appeared
for the plaintiff in both cases. On December 20, 1996, the defendants filed
their answers to the lawsuit and pleas in abatement asking the Court to stay
all proceedings pending resolution of the intervention motion and Federal Court
class action lawsuit. On February 28, 1997, the suit was transferred to a
different judge in the 68th Judicial District Court in Dallas. On March 28,
1997, the Court denied the defendants' pleas in abatement requesting the stay.
The parties are currently engaged in the discovery process. The court has made
an initial trial setting for this case of October 14, 1997. It is unlikely that
the parties will complete the pre-trial process by this date and thus the trial
date is expected to be continued.
Based on a review of the litigation, a limited investigation of the underlying
facts and discussions with legal and outside counsel, the Company does not
believe that the outcome of this litigation would have a material adverse
effect on its business, financial condition, results of operations and
liquidity. The Company intends to defend against the actions vigorously. To the
extent permitted by Delaware law, the Company is obligated to indemnify and
bear the cost of defense with respect to lawsuits brought against its officers
and directors. The Company maintains directors' and officers' liability
insurance that provides certain coverage for itself and its officers and
directors against claims of the type asserted in the subject litigation. The
Company has notified its insurance carriers of the asserted claims.
In January 1995, the Company received notice that the Securities and Exchange
Commission is conducting a formal, non-public investigation into possible
securities laws violations allegedly involving the Company and certain of its
former officers, directors and employees and other persons. The Commission's
Order of Investigation (the "Order of Investigation") states that the
Commission is exploring possible insider trading activities, as well as
possible violations of the federal securities laws relating to the adequacy of
the Company's public disclosures with respect to problems with its passenger
reservation system implemented in 1993 and lower-than-expected earnings for
1993. In addition, the Commission has stated that it will investigate the
adequacy of the Company's record keeping with respect to the passenger
reservation system and its internal auditing controls. Although the Commission
has not announced the targets of the investigation, it does not appear from the
Order of Investigation that the Company is a target of the insider trading
portion of the investigation. In September 1995, the Commission served a
document subpoena on the Company requiring the production of documents, most of
which the Company voluntarily produced to the Commission in late 1994. The
Company has fully cooperated with the Commission's investigation of these
matters. The Company has had no contact with the Commission in connection with
the investigation since January 1996. The probable outcome of this
investigation cannot be predicted at this stage in the proceeding.
11
<PAGE> 12
ENVIRONMENTAL MATTERS
The Company may be liable for certain environmental liabilities and clean-up
costs relating to underground fuel storage tanks and systems in the various
facilities presently or formerly owned or leased by the Company. Based upon
surveys conducted solely by Company personnel or its experts, 48 locations have
been identified as sites requiring potential clean-up and/or remediation as of
June 30, 1997. The Company has estimated the clean-up and/or remediation costs
of these sites to be $3.7 million, of which approximately $0.7 million is
indemnifiable by the predecessor owner of Greyhound's domestic bus operations
now known as Viad Corp. The Company has no reason to believe that Viad Corp
will not fulfill its indemnification obligations to the Company. However, if
Viad Corp does not fulfill such obligations, the Company could have liability
with respect to those matters. Additionally, the Company has a potential
liability with respect to two locations which the EPA has designated Superfund
sites. The Company as well as other parties designated by the EPA as
potentially responsible parties face exposure for costs related to the clean-up
of those sites. Based on the EPA's enforcement activities to date, the Company
believes its liability at these sites will not be material because its
involvement was as a de minimis generator of wastes disposed of at the sites.
In light of its minimal involvement, the Company has been negotiating to be
released from liability in return for the payment of immaterial settlement
amounts. The Company has recorded a total environmental reserve of $3.0 million
at June 30, 1997, a portion of which has also been recorded as a receivable
from Viad Corp for indemnification. The environmental reserve relates to sites
identified for potential clean-up and/or remediation and represents the present
value of estimated cash flows discounted at 8.0%. As of the date of this
filing, the Company is not aware of any additional sites to be identified, and
management believes that adequate accruals have been made related to all known
environmental matters.
OTHER LEGAL PROCEEDINGS
In addition to the litigation discussed above, the Company is a defendant in
various lawsuits arising in the ordinary course of business, primarily cases
involving personal injury and property damage claims and employment-related
claims. Although these lawsuits involve a variety of different facts and
theories of recovery, the majority arise from traffic accidents involving buses
operated by the Company. The vast majority of these claims are covered by
insurance for amounts in excess of the self-retention or deductible portion of
the policies. Therefore, based on the Company's assessment of known claims and
its historical claims payout pattern and discussion with legal and outside
counsel and risk management personnel, management believes that there is no
proceeding either threatened or pending against the Company relating to such
personal injury and/or property damage claims arising out of the ordinary
course of business that, if resolved against the Company, would materially
exceed the amounts recorded.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Greyhound is the only nationwide provider of intercity bus transportation
services in the United States. The Company's primary business consists of
scheduled passenger service, package express service and food services at
certain terminals, which accounted for 84.9%, 4.5% and 2.9%, respectively, of
the Company's total operating revenues for the three months ended June 30, 1997
and 85.1%, 4.5% and 3.0%, respectively for the six months ended June 30, 1997.
The Company's operations include a nationwide network of terminal and
maintenance facilities, a fleet of approximately 2,100 buses and approximately
1,500 sales outlets.
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations as a
percentage of total operating revenues for the three and six months ended June
30, 1996 and 1997:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1996 1997 1996 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Operating Revenues
Transportation services
Passenger services ...................... 84.9% 84.9% 84.4% 85.1%
Package express ......................... 4.9 4.5 5.3 4.5
Food services ................................ 3.1 2.9 3.2 3.0
Other operating revenues ..................... 7.1 7.7 7.1 7.4
------ ------ ------ ------
Total operating revenues ............ 100.0 100.0 100.0 100.0
Operating Expenses
Maintenance .................................. 10.6 10.4 11.5 11.1
Transportation ............................... 25.1 26.1 25.7 26.1
Agents' commissions and station costs ........ 18.9 18.8 19.6 19.2
Marketing, advertising and traffic ........... 3.9 3.6 3.8 3.9
Insurance and safety ......................... 6.4 5.8 7.0 5.9
General and administrative ................... 12.5 11.9 13.2 12.7
Depreciation and amortization ................ 4.3 4.1 4.8 4.4
Operating taxes and licenses ................. 7.1 7.0 7.7 7.4
Operating rents .............................. 7.4 7.7 7.8 8.1
Cost of good sold - food services ............ 2.0 1.8 2.1 1.9
Other operating expenses ..................... 1.1 1.3 1.2 1.3
------ ------ ------ ------
Total operating expenses ............ 99.3 98.5 104.4 102.0
------ ------ ------ ------
Operating Income (Loss) ........................ 0.7 1.5 (4.4) (2.0)
Interest Expense ............................... 3.9 3.6 4.2 4.1
------ ------ ------ ------
Net Loss Before Extraordinary Item ............. (3.2) (2.1) (8.6) (6.1)
Extraordinary Item ............................. 0.0 14.0 0.0 7.4
------ ------ ------ ------
Net Loss........................................ (3.2) (16.1) (8.6) (13.5)
Preferred Dividends ............................ 0.0 0.6 0.0 0.3
------ ------ ------ ------
Net Loss Attributable to Common Stockholders ... (3.2) (16.7) (8.6) (13.8)
====== ====== ====== ======
</TABLE>
13
<PAGE> 14
The following table sets forth certain operating data for the Company for the
three and six months ended June 30, 1996 and 1997. Certain statistics have been
adjusted and restated from that previously published to provide consistent
comparisons.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, PERCENTAGE JUNE 30, PERCENTAGE
1996 1997 CHANGE 1996 1997 CHANGE
---------- ---------- --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Regular Service Miles (000's) 63,413 68,076 7.4 120,958 130,799 8.1
Total Bus Miles (000's) 65,521 70,179 7.1 123,989 134,159 8.2
Passenger Miles (000's) 1,504,231 1,643,309 9.2 2,756,228 3,134,274 13.7
Passengers Carried (000's) 4,407 4,720 7.1 8,310 9,183 10.5
Average Trip Length (passenger 341 348 2.1 332 341 2.7
miles/ passengers carried)
Load (avg. number of passengers per 23.7 24.1 1.7 22.8 24.0 5.3
regular service mile)
Load Factor (% of available seats 51.6 52.5 1.7 49.5 52.1 5.3
filled)
Yield (regular route $ 0.0972 $ 0.0938 (3.5) $ 0.0961 $ 0.0930 (3.2)
revenue/passenger miles)
Total Revenue Per Total Bus Mile 2.63 2.59 (1.5) 2.53 2.55 0.8
Operating Income (Loss) Per Total 0.02 0.04 100.0 (0.11) (0.05) 54.5
Bus Mile
Cost Per Total Bus Mile:
Maintenance $ 0.278 $ 0.270 (2.9) $ 0.293 $ 0.282 (3.8)
Transportation 0.661 0.674 2.0 0.651 0.667 2.5
</TABLE>
SECOND QUARTER 1997 AND 1996 RESULTS OF OPERATIONS
Operating Revenues. Total operating revenues increased $9.3 million (or 5.4%)
and $28.8 million (or 9.2%) for the three and six months ended June 30, 1997,
compared to the same periods in 1996. Transportation service revenues
increased $7.6 million (or 4.9%) and $25.3 million (or 9.0%) for the second
quarter and first half of 1997 compared to the same periods in 1996. The
increased revenues are primarily due to a $7.9 million (or 5.4%) and $26.5
million (or 10.0%) increase in regular route revenues for the three and six
months ended June 30, 1997. This increase is offset in part by a $0.3 million
(or 3.9%) and $1.2 million (or 7.1%) decrease in package express revenues for
the three and six months ended June 30, 1997, compared to the same periods in
1996. The 5.4% and 10.0% increases in regular route revenues for the three and
six months ended June 30, 1997, compared to the same periods in 1996 reflect a
7.1% and 10.5% increase in the number of passengers carried for the second
quarter and first half of 1997 compared to the same periods in 1996. The growth
in passengers is driven by core growth in all trip lengths as well as
incremental growth from promotional fares and increased advertising. Passengers
carried increased despite readily available discount airfares through the
summer and the inclusion of most of the Fourth of July holiday travel in the
second quarter of 1996. The 3.5% and 3.2% decrease in yield for the three and
six months ended June 30, 1997, compared to the same periods in 1996 reflects
the impact of both the longer average trip lengths and more extensive
promotional fare offerings in 1997.
Package express revenues have been declining, most recently due to the effects
of decreases in regular service miles operated during 1992 and 1993, a
reduction in the number of pickup and delivery agents and the reduction in 1994
of the number of hours that the Company's terminals were open. The impact of
these reductions was a substantial reduction in convenience for many customers
who used the Company's package express service which resulted in a loss of
customers that have not been regained. In 1996, the Company increased its focus
on the package express business in an effort to reverse the decline in package
express service revenues. In addition to the increased schedule offerings added
in 1995 and 1996, the Company has implemented increased hours of service,
improved billing and added more convenient schedules. In addition, in select
markets, the Company has implemented a centralized telephone customer service
department dedicated to package express service. The Company is also pursuing
alliances with courier service networks which would enhance its existing pickup
and delivery relationships and leverage the Company's low incremental costs of
providing point to point service with the customer convenience of increased
pickup and delivery service. As a result, the year over year decline reflected
in the three months ended June 30, 1997 is substantially reduced from declines
experienced during the previous four years.
14
<PAGE> 15
Food Service revenues remained relatively flat at $5.3 million during the
second quarter of 1997 versus 1996, despite increased passenger counts, due to
the conversion of many locations to a convenience store concept which resulted
in increases in sales of retail products (including food products that replaced
the source of food service revenues) which is reported as other operating
revenues. For the six months ended June 30, 1997, Food Service revenues
increased $0.3 million (or 3.3%) due primarily to the general increase in
passenger activity.
Other operating revenues, consisting primarily of revenue from charter and
in-terminal sales and services, increased $1.7 million (or 14.0%) and $3.1
million (or 14.0%) for the three and six months ended June 30, 1997, compared
to the same periods in 1996 due primarily to an increase in charter service
revenues as well as an increase in revenues from other in-terminal services,
such as calling card sales, prepaid ticket orders and increased sales of other
retail products (including "convenience store" type food products mentioned
above).
Operating Expenses. Total operating expenses increased $7.7 million (or 4.5%)
and $21.8 million (or 6.7%) for the three and six months ended June 30, 1997,
compared to the same periods in 1996. The increase is due primarily to an
increase in bus miles operated (7.1% and 8.2%, respectively), an increase in
driver related expenditures primarily due to higher driver wages and training,
an increase in station expenses primarily due to higher terminal salaries and
ticket commissions paid and increased operating and casual bus rentals. Despite
these increases, total operating expenses as a percent of total operating
revenues declined by approximately 1.0% and 2.0% for the second quarter and
first half of 1997 compared to the same periods in 1996.
Maintenance costs increased $0.7 million (or 3.9%) and $1.5 million (or 4.1%)
for the three and six months ended June 30, 1997, compared to the same periods
in 1996 due to an increase in bus miles (7.1% and 8.2%, respectively) which was
partially offset by a (2.9% and 3.8%, respectively) decrease in maintenance
costs per bus mile. As a percentage of total operating revenues, maintenance
costs decreased to 10.4% and 11.1%, respectively for the second quarter and
first half of 1997 from 10.6% and 11.5% for the same periods in 1996. The
Company intends to continue to manage the average age of its fleet in order to
increase the reliability of its service while reducing overall costs.
Transportation expenses, which consist primarily of driver wages and fuel
costs, increased $4.0 million (or 9.3%) and $8.8 million (or 10.9%) for the
three months and six months ended June 30, 1997, compared to the same periods
in 1996 due to the increase in bus miles (7.1% and 8.2 %, respectively) and an
increase in transportation expenses per bus mile (2.0% and 2.5%, respectively).
Transportation expenses per mile increased primarily due to an annual
contractual pay increase for drivers and an increase in other driver related
expenses related to increased miles. As a percentage of total operating
revenue, transportation expenses increased to 26.1% for the three and six
months ended June 30, 1997 from 25.1% and 25.7% for the same periods in 1996
primarily due to reflecting the impact of contractual wage increases which were
only partially offset by lower fuel prices.
Agents' commissions and station costs increased $1.5 million (or 4.5%) and $4.2
million (or 6.7%) for the three and six months ended June 30, 1997, compared to
the same periods in 1996 primarily due to commissions associated with increased
ticket sales and the addition of and pay increases for terminal staff since the
first quarter of 1996. Increased costs associated with higher customer fare and
schedule call volumes (up 23.0% and 27.2%, respectively) were entirely offset
by lower long distance telephone rates and cost savings from the conversion of
calls handled by a third-party provider of telephone customer services into
company operated facilities. As a percentage of total operating revenue,
agents' commissions and station costs decreased to 18.8% and 19.2% for the
three and six months ended June 30, 1997 from 18.9% and 19.6% for the same
periods in 1996.
Marketing, advertising and traffic expenses decreased $0.2 million (or 2.4%)
and increased $1.7 million (or 14.3%) for the three and six months ended June
30, 1997, compared to the same periods in 1996. As part of the Company's growth
strategy, the Company expects to maintain its advertising campaign throughout
the year, thereby resulting in increased advertising expenditures in 1997 when
compared to the prior year. As a percentage of total operating revenue,
marketing, advertising and traffic costs increased to 3.6% and 3.9% for the
three and six months ended June 30, 1997 from 3.9% and 3.8% for the same
periods in 1996.
Insurance and safety costs decreased $0.6 million (or 5.1%) and $1.7 million
(or 7.8%) for the three and six months ended June 30, 1997, compared to the
same periods in 1996 due to the continued favorable claims experience as a
result of the Company's increased focus on claims management and risk reduction
programs which was partially
15
<PAGE> 16
offset by increased exposure relating to the increase in bus miles (7.1% and
8.2%, respectively). As a percentage of total operating revenue, insurance and
safety costs decreased to 5.8% and 5.9% for the three and six months ended June
30, 1997 from 6.4% and 7.0% for the same periods in 1996.
General and administrative expenses remained relatively flat during the second
quarter and increased $2.1 million (or 5.0%) for the six months ended June 30,
1997 compared to the same periods in 1996 due to additions to administrative
personnel during late 1996 and increased benefit costs Company-wide. These
increases were partially offset by a decrease in legal expenses because of a
reduction in pending lawsuits when compared to the prior year. As a percentage
of total operating revenues, general and administrative expenses decreased to
11.9% and 12.7% for the three and six months ended June 30, 1997 from 12.5% and
13.2% for the same periods in 1996.
Operating taxes and license costs increased $0.5 million, (or 4.1%) and $1.2
million (or 5.1%) for the three and six months ended June 30, 1997, compared to
the same periods in 1996 primarily due to increased fuel and oil taxes
resulting from an increase in total bus miles (7.1% and 8.2%, respectively) and
an increase in payroll taxes related to increased business volume. As a
percentage of total operating revenue, operating taxes and license costs
decreased to 7.0% and 7.4% for the three and six months ended June 30, 1997
from 7.1% and 7.7% for the same periods in 1996.
Operating rents increased $1.1 million (or 8.9%) and $3.2 million (or 13.2%)
for the three and six months ended June 30, 1997, compared to the same periods
in 1996 primarily due to an increase in the number of buses leased under
operating leases in 1997 and an increase in casual bus rentals related to the
strong 1996 Christmas travel which caused increased rentals in early 1997
compared to 1996. A portion of the increase in bus operating lease expense is
due to the sale-leaseback of 51 buses under operating leases in April 1996. The
increase is primarily offset by a reduction in depreciation and interest
expense. As a percentage of total operating revenue, operating rents increased
to 7.7% and 8.1% for the three and six months ended June 30, 1997 from 7.4% and
7.8% for the same periods in 1996.
Other operating expenses increased $0.5 million (or 28.7%) and $0.8 million (or
22.9%) for the three and six months ended June 30, 1997, compared to the same
periods in 1996 due, in part, to an increase in food service costs related to
higher retail sales (reflected in other operating revenues). As a percentage
of total operating revenue, other operating expenses increased to 1.3% for the
three and six months ended June 30, 1997 from 1.1% and 1.2% for the same
periods in 1996.
Interest expense decreased $0.1 million (or 1.7%) and increased $0.8 million
(or 6.4%) for the three and six months ended June 30, 1997, compared to the
same periods in 1996 as a result of the renegotiation of lower interest rates
under the Revolving Credit Facility, termination of the interest rate swap
agreements and payment of bus obligations partially offset by increased
interest resulting from three capital leases for 77 buses initiated in December
1996. Year to date, however, increased borrowings on the revolver more than
offset the reduced interest expense resulting from the second quarter
refinancing transactions described above. As a percentage of total operating
revenue, interest expense decreased to 3.6% and 4.1% for the three and six
months ended June 30, 1997 from 3.9% and 4.2% for the same periods in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal liquidity requirements are to provide working capital,
to finance capital expenditures, including bus acquisitions, to meet debt
service requirements, including the payment of principal and interest on
borrowings under the Revolving Credit Facility and interest on the Senior Notes
and to pay quarterly dividends on the Preferred Stock. The Company's principal
sources of liquidity are expected to be cash flow from operations and borrowings
under the Revolving Credit Facility. The Company believes that its cash flow
from operations, together with borrowings under the Revolving Credit Facility,
will be sufficient to meet its liquidity needs for the foreseeable future.
Net cash used for operating activities increased $8.4 million, or 39.5% to
$29.8 million in 1997 from $21.4 million in 1996. The increase in cash used for
operating activities is primarily due to a reduction of payments in process and
the payment of accrued interest related to the Old Senior Notes. Net cash used
for investing activities increased $14.2 million, or 2741.6% to $14.7 million
in 1997 from
16
<PAGE> 17
$0.5 million in 1996, principally due to a $2.4 million increase in capital
expenditures and $11.8 million in other transactions including additional
proceeds from assets sold in 1996 offset by investments in 1997 related to a
less than wholly owned subsidiary. Net cash provided by financing activities
increased $25.7 million, or 133.3% to $45.0 million in 1997 from $19.3 million
in 1996. This increase can be attributed to proceeds from the securities
offerings, offset by the redemption of the Old Senior Notes and the payment of
bus financing obligations.
As part of its operating strategy, the Company anticipates that it will
continue to make significant capital investments in order to maintain and,
where appropriate, make improvements and upgrades to its infrastructure,
including its bus fleet, terminals and computer systems. The Company's
experience indicates that as the age of its bus fleet increases (at June 30,
1997, the average age of the Company's bus fleet was 6.3 years), the
dependability and quality of service declines, which may make the Company less
competitive. In addition, the Company believes that acquiring new buses and
improving the Company's terminals and computer systems will permit the Company
to continue to improve customer service, which the Company believes has
contributed significantly to its improved operating results in 1995, 1996 and
the first six months of 1997. The Company estimates that capital expenditures
for 1997 will total approximately $21.6 million, excluding the acquisitions of
five bus terminals the Company intends to purchase (see further discussion in
the Securities Offerings section), and excluding bus acquisitions. The Company
currently maintains a fleet of approximately 2,100 buses comprised of
approximately 1300 leased and 800 owned buses. The Company has placed an order
for 147 new buses having an estimated aggregate purchase price of $38.2 million
during the remainder of 1997, a majority of which are expected to be financed
through capital or operating leases.
The Company generally uses lease financing with purchase options as the
principal source of bus financing in order to achieve the lowest net cost of
bus financing. Depending on the specific terms of a lease, such a lease may be
accounted for as either an operating or capital lease. The Company also
acquires buses outright and at times purchases buses and subsequently engages
in sale-leaseback transactions with respect to such buses.
The Company requires significant cash flows to meet its debt service and other
continuing obligations. As of June 30, 1997, the Company had $215.8 million of
long-term indebtedness outstanding, including $30.6 million of borrowings under
the Revolving Credit Facility (but excluding $21.1 million of issued and
undrawn standby letters of credit). In addition, as of June 30, 1997, the
Company had total availability of $59.1 million under the Revolving Credit
Facility.
During the quarter, the Company renegotiated the terms of its Revolving Credit
Facility. The amended facility increased the borrowing availability to $125.0
million and provided a LIBOR-based interest rate option which is expected to
reduce annual interest expense by approximately $.5 million. The Revolving
Credit Facility permits the Company to borrow (i) up to $2.5 million based on a
formula of eligible accounts receivable, plus (ii) up to $92.5 million based on
the value of bus collateral plus (iii) up to $30.0 million (subject to
reduction) based on the value of real estate collateral. Borrowings under the
Revolving Credit Facility bear interest at a rate equal to the prime rate (8.50%
as of July 31) plus .5%, or LIBOR plus 2%. The Credit Facility limits letters of
credit and letters of credit guarantees to $35.0 million. Borrowings under the
Revolving Credit Facility mature on May 21, 2002. The Revolving Credit Facility
is secured by liens on substantially all of the assets of the Company. The
Revolving Credit Facility is subject to certain operating and financial
covenants, including maintenance of a minimum net worth and ratios of cash flow
to interest expense and Debt to EBITDA. In addition, non-bus capital
expenditures are limited to $30.0 million annually with no spending limitations
on bus purchases. As of June 30, 1997, the Company was in compliance with all
such covenants.
As of June 30, 1997, the Company had not entered into any new hedging
agreements regarding interest rate risk. From the proceeds of the Securities
Offerings detailed in the next paragraph, the Company has retired its two
existing interest rate swap agreements effective April 30, 1997, for $3.0
million. Management does not presently plan to enter into any additional
interest rate hedging instruments in the future.
The Company has entered into two advance purchase commitments for fuel. Under
these agreements the Company agrees to take delivery of fuel at a specific
location at a fixed price at a specific date in the future. The agreements have
been entered into with two suppliers for approximately 35% of 1997 projected
bulk fuel needs at an average price per gallon of $0.6523. Management believes
that this strategy is a conservative method to hedge against fuel price
fluctuations.
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<PAGE> 18
SECURITIES OFFERINGS
On April 16, 1997, the Company completed the sale of two private offerings of
its securities. The Company issued $150.0 million aggregate principal amount of
Senior Notes and a new class of Preferred Stock with a $60.0 million liquidation
preference. On May 16, 1997, the Company filed with the SEC a registration
statement on Form S-3, subsequently declared effective June 30, 1997, relating
to resale by certain purchasers of the Preferred Stock of their shares of
Preferred Stock acquired in the private offering. Further, on June 30, 1997, the
Company offered to exchange the series of Senior Notes issued in the private
offering (the "Series A Senior Notes") for an identical series of Senior Notes
registered with the SEC on Form S-4, (the "Series B Senior Notes"). On August 7,
1997, the Company accepted all $150 million aggregate principal amount of the
Series A Senior Notes outstanding in exchange for the issuance of a like
principal amount of the Series B Senior Notes.
The net proceeds to the Company from the aforementioned Senior Note and
Preferred Stock Offerings were approximately $203.4 million (after deducting
discounts, commissions and offering expenses). The net proceeds of both
offerings were used to (i) retire the Company's 10% Senior Notes due 2001, (ii)
fund the acquisition of Carolina Trailways for $24.5 million (including the
repayment of debt of Carolina Trailways); and (iii) retire certain interest
rate swap agreements entered into by the Company for $3.0 million. The
remaining net proceeds were used to repay borrowings under the Revolving Credit
Facility and other bus obligations. The original "use of proceeds" from these
offerings intended $6.7 million to be used to acquire four bus terminals. The
terms of the purchase have since been modified, and the Company is currently in
negotiations with Viad Corp to purchase five terminals (the aforementioned
terminals plus an additional terminal). The final agreement may result in the
purchase of all, some, or none of the terminals with renewal of lease terms as
a possible option (if the terminals are not purchased).
During the quarter, the company recorded an extraordinary loss of $25.3 million
primarily related to the redemption of the 10% Senior Notes. The loss includes
$21.3 million to reflect the acceleration of the discount for the 10% Senior
Notes and prepayment premiums related to the redemption of the 10% Senior
Notes. Another component reflects the acceleration of payments less amounts
accrued under the interest rate swap agreements for $2.5 million. Lastly, as
part of the renegotiation of the Credit Facility, the Company wrote-off $1.5
million in debt issuance costs related to the prior revolving credit facility.
On July 9, 1997, the Company completed its acquisition of Carolina Trailways, a
Mid-Atlantic bus carrier, for the purchase price of $24.5 million comprised of
$20.4 million in cash and the payment of $4.1 million of indebtedness and the
issuance of $0.75 million in Common Stock of the Company.
On May 27, 1997, the Company agreed to acquire Valley Transit, a South Texas
bus carrier, for a purchase price of $19.0 million. The Surface Transportation
Board (STB) tentatively approved this transaction on July 3, 1997. Subject to
final STB approval, this purchase is expected to be completed by the end of
August.
SUBSTANTIAL LEVERAGE
The Company has consolidated indebtedness that is substantial in relation to
its stockholders' equity. As of June 30, 1997, the Company had outstanding
consolidated long-term indebtedness (including current portions) of
approximately $220.2 million and total stockholders' equity of approximately
$153.4 million.
HISTORY OF LOSSES
The Company has had a net loss in each of its last three fiscal years. Although
the Company has implemented strategic and operational initiatives intended to
enhance revenues and operating income, the Company's operations generally are
subject to economic, financial, competitive, seasonal and other factors, many
of which are beyond its control.
COMPETITION
The transportation industry is highly competitive. The Company's primary
sources of competition for passengers
18
<PAGE> 19
are automobile travel, low cost air travel from both regional and national
airlines, and in certain markets, regional bus companies and trains.
SELF INSURANCE
The Company maintains cash deposits held for insurance claims and bus lease
collateral, which as of June 30, 1997 aggregated approximately $82.5 million,
including the following deposits. The Company maintains $15.0 million on
deposit in a trust fund to support its self-insurance program pursuant to the
Surface Transportation Board's approval of such program. Due to a decrease in
pending claims and the Company's recent claims history, the Company's carriers
reduced the level of cash required to be pledged by $8.5 million in April 1995,
$14.0 million in December 1995, and $3.8 million in December 1996. As of June
30, 1997, the Company had pledged $32.9 million in cash to secure its liability
insurance obligations. Depending on the Company's future claims history and the
policies of its insurance carriers, such carriers could increase or decrease
the amount of collateral that the Company is obligated to pledge to secure its
liability insurance obligations. The Company also has deposits of $32.9 million
pledged as collateral in connection with the sale and leaseback of 490 buses in
1993 and the first quarter of 1994.
As of June 30, 1997, the Company had not experienced any adverse trends
involving differences in claims experience when compared to claims estimates
for self-insured risk and had adequate self-insurance accruals for claim
amounts. These accruals are based upon actuarial estimates which are reflected
on the Company's balance sheet. Depending on the Company's future claims
history, 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
materially adverse effect on the Company's financial condition.
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
investment 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 rate of return or
that contributions to the ATU Plan will not be significant.
19
<PAGE> 20
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 could
have a material adverse effect on the Company's financial condition and results
of operations for that year. The day of the week on which certain holidays
occur, the length of certain holiday periods, and the date on which certain
holidays occur within a fiscal quarter, may also affect the Company's quarterly
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 its business, financial
condition, results of operations and liquidity.
20
<PAGE> 21
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
SECURITIES AND DERIVATIVE LITIGATION; SEC INVESTIGATION
Between August 1994 to December 1994, seven purported class action lawsuits were
filed by purported owners of the Company's Common Stock, Convertible Debentures
and Old Senior Notes against the Company and certain of its former officers and
directors. The suits seek unspecified damages for securities laws violations. In
November 1994, a shareholder derivative lawsuit was filed against present
directors and former officers and directors of the Company and the Company as a
nominal defendant. In October 1996, a purported class action lawsuit was filed
by a purported owner of the Company's Common Stock in the State Court of Texas.
In addition, in January 1995 the Company received notice that the Securities and
Exchange Commission is conducting a formal, non-public investigation into
possible securities laws violations allegedly involving the Company and certain
other parties. See Note 3 to the Interim Consolidated Financial Statements for
the three and six months ended June 30, 1997, included elsewhere in this filing.
OTHER LEGAL PROCEEDINGS
In addition to the litigation discussed above, the Company is a defendant in
various lawsuits arising in the ordinary course of business, primarily cases
involving personal injury and property damage claims and employment-related
claims. Although these lawsuits involve a variety of different facts and
theories of recovery, the majority arise from traffic accidents involving buses
operated by the Company. The vast majority of these claims are covered by
insurance for amounts in excess of the self-retention or deductible portion of
the policies. Therefore, based on the Company's assessment of known claims and
its historical claims payout pattern and discussion with legal and outside
counsel and risk management personnel, management believes that there is no
proceeding either threatened or pending against the Company relating to such
personal injury and/or property damage claims arising out of the ordinary
course of business that, if resolved against the Company, would materially
exceed the amounts recorded.
21
<PAGE> 22
ITEM 2. CHANGES IN SECURITIES
On April 16, 1997, the Company completed the sale pursuant to a private offering
of $60 million aggregate liquidation value of its Preferred Stock. Such
securities were sold initially to Bear, Stearns & Co. Inc. and were subsequently
sold by Bear Stearns to persons believed by it to be qualified institutional
buyers and to a limited number of accredited investors who made certain
representations and agreed to certain restrictions on the transfer of the
securities purchased by them detailed in the Offering Memorandum for the
Preferred Stock. Bear Stearns received discounts and commissions in an amount of
$1,950,000 in connection with the offering of the Preferred Stock. The Preferred
Stock which has a liquidation preference of $25.00 per share is convertible into
common stock, par value $.01 per share, of the Company at a conversion price,
subject to adjustment, of $4.875 per share of common stock.
22
<PAGE> 23
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ELECTIONS OF DIRECTORS
On May 20, 1997, at the Company's annual stockholders' meeting, Mr. Richard J.
Caley, Ms. Linda Chavez and Mr. A.A. Meitz were each elected to serve a Class
III directors for three-year terms. In each case, the election was determined
by a plurality vote. Total stockholder votes for and withheld on the elections
of Mr. Caley were 49,952,115 and 1,118,123, respectively. Total stockholder
votes for and withheld on the election of Ms. Chavez were 49,927,425 and
1,142,813, respectively. Total stockholder votes for and withheld on the
election of Mr. Meitz were 49,954,819 and 1,115,419, respectively. Mr. Thomas
G. Plaskett, Mr. Craig R. Lentzsch and Mr. Frank L. Nageotte continue to serve
as Class I directors until their terms expire in 1998. Dr. Alfred E. Osborne,
Jr., Mr. Stephen M. Peck and Mr. Ernest P. Werlin continue to serve as Class II
directors until their terms expire in 1999.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors appointed Arthur Anderson LLP as independent public
accountants to examine the Company's financial statements for the fiscal year
ending December 31, 1997, effective upon ratification by the shareholders of
such appointment. Although shareholder ratification is not required for the
selection of Arthur Andersen LLP, since the Board of Directors has the
responsibility for the selection of the Company's independent auditors and such
ratification will not obligate the Company to continue the services of such
firm, the Board of Directors submitted the selection for ratification by Company
shareholders. On May 20, 1997, at the Company's annual stockholders' meeting,
the appointment of Arthur Andersen LLP to serve as independent public
accountants was ratified by a majority vote of the stockholders present or
represented at the meeting and entitled to vote. Total votes for, against and
abstentions were 50,740,136, 95,627 and 234,375, respectively.
23
<PAGE> 24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
4.1 - Amended and Restated Rights Agreement, dated as of April 8, 1997,
between the Registrant and Mellon Securities Trust Company, as Rights
Agent. (1)
4.2 - Indenture, dated April 16, 1997, by and among the Company, the
Guarantors and PNC Bank, N.A., as Trustee. (2)
4.3 - First Supplemental Indenture dated as of July 9,1997, between the
Registrant and PNC Bank, N.A., as Trustee. (7)
4.4 - Form of 11 1/2% Series A Senior Note due 2007. (2)
4.5 - Form of 11 1/2% Series B Senior Note due 2007. (4)
4.6 - Form of Guarantee of 11 1/2% Series A and Series B Senior Notes. (4)
4.7 - Indenture dated April 16, 1997 by and between the Company and U.S. Trust
of Texas, N.A., as Trustee. (3)
4.8 - Certificates of Designation for the 8 1/2% Convertible Exchangeable
Preferred Stock. (5)
10.1 - Third Amended and Restated Loan and Security Agreement dated as of May
21, 1997 by and between Greyhound Lines, Inc. and Foothill Capital
Corporation and BankBoston. (7)
11.1 - Computation of Registrant's earnings per share for the three and six
months ended June 30, 1996. (6)
11.2 - Computation of Registrant's earnings per share for the three and six
months ended June 30, 1997. (7)
27 - Financial Data Schedule as of and for the six months ended June 30,
1997. (7)
- -------------------------------------------------------------------------------
(1) Incorporated by reference from the Registrant's Report on Form 8-K
regarding the Rights Agreement dated April 8, 1997.
(2) Incorporated by reference from the Company's Registration Statement on
Form S-4 regarding the Company's 11 1/2% Series B Senior Notes due 2007
(3) Incorporated by reference from the Company's Registration Statement on
Form S-3 regarding the Company's 8 1/2% Convertible Exchangeable Preferred
Stock, Common Stock and 8 1/2% Convertible Subordinated Debentures due
2009.
(4) Incorporated by reference from Amendment 1 to Form S-4 filed on June 27,
1997.
(5) Incorporated by reference from Amendment 1 to Form S-3 filed on June 27,
1997.
(6) Incorporated by reference from the Registrant's Quarterly Report on Form
10-Q for the quarter ended June 30, 1996.
(7) Filed herewith.
(b) REPORTS ON FORM 8-K
During the quarter ended June 30, 1997, the Company filed current reports
on Form 8-K with the Securities and Exchange Commission. The Company filed
a Form 8-K on April 8, 1997, in order to report the amendment of the
Rights Agreement, dated as of March 22, 1994 between the Company and
Mellon Securities Trust Company. The Company also filed a Form 8-K on
April 28, 1997 containing final pro forma financial statements giving
effect to the Company's concurrent offerings of $150 million aggregate
principal amount of its Senior Notes and of its Preferred Stock with a
$60 million liquidation preference.
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 13, 1997
GREYHOUND LINES, INC.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial
and Accounting Officer)
ATLANTIC GREYHOUND LINES OF
VIRGINIA, INC.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer
EAGLE BUS MANUFACTURING, INC.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer and Treasurer
FCA INSURANCE LIMITED
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Treasurer
GLI HOLDING COMPANY
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer and Treasurer
GREYHOUND DE MEXICO S.A. DE C.V.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Treasurer
25
<PAGE> 26
GRUPO CENTRO, INC.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer and Treasurer
LOS BUENOS LEASING CO., INC.
By: /s/ RALPH J. BORLAND
------------------------------------
Ralph J. Borland
President and
Chief Executive Officer and
General Manager
SISTEMA INTERNACIONAL DE
TRANSPORTE DE AUTOBUSES, INC.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer and Treasurer
T & V HOLDING COMPANY
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer and Treasurer
TEXAS, NEW MEXICO & OKLAHOMA
COACHES, INC.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer
T.N.M. & O. TOURS, INC.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer
VERMONT TRANSIT CO., INC.
By: /s/ STEVEN L. KORBY
------------------------------------
Steven L. Korby
Executive Vice President and
Chief Financial Officer
26
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
4.3 - First Supplemental Indenture dated as of July 9,1997, between the
Registrant and PNC Bank, N.A., as Trustee.
10.1 - Third Amended and Restated Loan and Security Agreement dated as of May
21, 1997 by and between Greyhound Lines, Inc. and Foothill Capital
Corporation and BankBoston.
11.2 - Computation of Registrant's earnings per share for the three and six
months ended June 30, 1997.
27 - Financial Data Schedule as of and for the six months ended June 30,
1997.
</TABLE>
<PAGE> 1
EXHIBIT 4.3
================================================================================
GREYHOUND LINES, INC.
and
THE GUARANTORS NAMED HEREIN
________________________________________
SERIES A AND SERIES B
11 1/2% SENIOR NOTES DUE 2007
________________________________________
___________________
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF JULY 9, 1997
___________________
PNC BANK, NATIONAL ASSOCIATION
Trustee
================================================================================
<PAGE> 2
This FIRST SUPPLEMENTAL INDENTURE, dated as of July 9, 1997, among
Greyhound Lines, Inc., a Delaware corporation (the "Company"), each of the
parties identified under the caption "Guarantors" on the signature pages hereto
(the "Guarantors") and PNC Bank, National Association, as Trustee.
RECITALS
WHEREAS, the Company and the Trustee entered into an Indenture, dated
as of April 16, 1997 (the "Indenture"), pursuant to which the Company issued
$150,000,000 in principal amount of 11 1/2% Senior Notes due 2007 (the
"Notes"); and
WHEREAS, Section 9.01(e) of the Indenture provides that the Company
and the Trustee may amend or supplement the Indenture in order to execute a
guarantee (a "Subsidiary Guarantee") to comply with Section 10.02 thereof
without the consent of the Holders of the Notes; and
WHEREAS, all acts and things prescribed by the Indenture, by law and
by the Certificate of Incorporation and the Bylaws of the Company, of the
Guarantors and of the Trustee necessary to make this First Supplemental
Indenture a valid instrument legally binding on the Company, the Guarantors and
the Trustee, in accordance with its terms, have been duly done and performed;
NOW, THEREFORE, to comply with the provisions of the Indenture and in
consideration of the above premises, the Company, the Guarantors and the
Trustee covenant and agree for the equal and proportionate benefit of the
respective Holders of the Notes as follows:
ARTICLE 1
SECTION 1.01. This First Supplemental Indenture is supplemental to
the Indenture and does and shall be deemed to form a part of, and shall be
construed in connection with and as part of, the Indenture for any and all
purposes.
SECTION 1.02. This First Supplemental Indenture shall become
effective immediately upon its execution and delivery by each of the Company,
the Guarantors and the Trustee.
2
<PAGE> 3
ARTICLE 2
From this date, in accordance with Section 10.02 and by executing this
First Supplemental Indenture and the accompanying Subsidiary Guarantee (a copy
of which is attached hereto), the Guarantors whose signatures appear below are
subject to the provisions of the Indenture to the extent provided for in
Article 10 thereunder.
ARTICLE 3
SECTION 3.01. Except as specifically modified herein, the Indenture
and the Notes are in all respects ratified and confirmed (mutatis mutandis) and
shall remain in full force and effect in accordance with their terms with all
capitalized terms used herein without definition having the same respective
meanings ascribed to them as in the Indenture.
SECTION 3.02. Except as otherwise expressly provided herein, no
duties, responsibilities or liabilities are assumed, or shall be construed to
be assumed, by the Trustee by reason of this First Supplemental Indenture.
This First Supplemental Indenture is executed and accepted by the Trustee
subject to all the terms and conditions set forth in the Indenture with the
same force and effect as if those terms and conditions were repeated at length
herein and made applicable to the Trustee with respect hereto.
SECTION 3.03. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE, THE NOTES AND
THE SUBSIDIARY GUARANTEES.
SECTION 3.04. The parties may sign any number of copies of this
First Supplemental Indenture. Each signed copy shall be an original, but all
of such executed copies together shall represent the same agreement.
[NEXT PAGE IS SIGNATURE PAGE]
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first written
above.
GREYHOUND LINES, INC.
By: /s/ Steven L. Korby
----------------------------------------
Name: Steven L. Korby
Title: Executive Vice President and
Chief Financial Officer
GUARANTORS:
ASI ASSOCIATES, INC.
By: /s/ Steven L. Korby
----------------------------------------
Name: Steven L. Korby
Title: Executive Vice President and
Chief Financial Officer
CAROLINA ASSOCIATES, INC.
By: /s/ Steven L. Korby
----------------------------------------
Name: Steven L. Korby
Title: Executive Vice President and
Chief Financial Officer
4
<PAGE> 5
CAROLINA COACH COMPANY
By: /s/ Steven L. Korby
----------------------------------------
Name: Steven L. Korby
Title: Executive Vice President and
Chief Financial Officer
SEASHORE TRANSPORTATION COMPANY
By: /s/ Steven L. Korby
----------------------------------------
Name: Steven L. Korby
Title: Executive Vice President and
Chief Financial Officer
RED BUS SYSTEMS, INC.
By: /s/ Steven L. Korby
----------------------------------------
Name: Steven L. Korby
Title: Executive Vice President and
Chief Financial Officer
PNC BANK, NATIONAL ASSOCIATION,
as trustee
By: /s/ Sheila Wallbridge
----------------------------------------
Name: Sheila Wallbridge
Title: Assistant Vice President
5
<PAGE> 1
EXHIBIT 10.1
===============================================================================
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
AMONG
GREYHOUND LINES, INC.,
AS BORROWER,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
AS LENDERS,
AND
FOOTHILL CAPITAL CORPORATION
AND
BANKBOSTON, N.A.,
AS AGENTS
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
1. DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1.3 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1.5 Schedules and Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2. LOAN AND TERMS OF PAYMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.1 Revolving Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.2 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.3 Intentionally Deleted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.4 Intentionally Deleted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.5 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.6 Overadvances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.7 Interest and Letter of Credit Fees: Rates, Payments, and Calculations. . . . . . . . . . . . . . . . . . 45
2.8 Collection of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.9 Crediting Payments; Application of Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.10 Designated Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.11 Maintenance of Loan Account; Statements of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.12 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.13 Eurodollar Rate Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
2.14 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.15 Requirements of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
2.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.17 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.18 Replacement of Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3. CONDITIONS; TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3.1 Conditions Precedent to the Initial Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3.2 Conditions Precedent to all Advances and all Letters of Credit . . . . . . . . . . . . . . . . . . . . . 59
3.3 Condition Subsequent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3.4 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3.5 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
3.6 Early Termination by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.1 Grant of Security Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.2 Negotiable Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
i
Foothill/Agent Greyhound
F6384-0813
<PAGE> 3
<TABLE>
<S> <C>
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral . . . . . . . . . . . . . . . . . 61
4.4 Delivery of Additional Documentation Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.5 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.6 Right to Inspect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
5.1 No Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.2 Eligible Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.3 Location of Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.4 [Intentionally Deleted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.5 Location of Inventory and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.6 Inventory Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.7 Location of Chief Executive Office; FEIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.8 Due Organization and Qualification; Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.9 Due Authorization; No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.10 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.11 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.12 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.13 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.14 Environmental Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
5.15 Compliance With The ADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.1 Accounting System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.2 Collateral Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.3 Schedules of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.4 Financial Statements, Reports, Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.5 Registration, Use, Maintenance, Identification of Vehicles. . . . . . . . . . . . . . . . . . . . . . . . 69
6.6 Additional Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.7 Title to Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.8 Maintenance of Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.11 [Intentionally Deleted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.12 Location of Borrower's Books, Inventory, and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.13 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.14 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.15 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.16 Environmental Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.17 Compliance With The ADA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
6.18 Updated Current Appraisals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
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7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.3 Restrictions on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.4 Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
7.5 Change Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
7.6 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
7.7 Restructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.8 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.9 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.10 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.11 Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.12 Advances, Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.14 Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.15 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.16 Change in Location of Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.17 Restrictions Affecting Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
7.18 No Prohibited Transactions Under ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
7.19 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
7.20 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
9. THE LENDER GROUP'S RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.1 Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
9.2 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.3 Foreclosure Not A Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
9.4 Release of Trust Monies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
10. TAXES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
11. WAIVERS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
11.1 Demand; Protest; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
11.2 The Lender Group's Liability for Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
11.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
12. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
14. DESTRUCTION OF BORROWER'S DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
</TABLE>
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15. ASSIGNMENTS AND PARTICIPATION; SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.1 Assignments and Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.2 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
15.3 Registry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16. AMENDMENTS; WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
16.1 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
16.2 No Waivers; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
17. AGENTS; THE LENDER GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
17.1 Appointment and Authorization of Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
17.2 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
17.3 Liability of Agent-Related Persons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
17.4 Reliance by Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
17.5 Notice of Default or Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
17.6 Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
17.7 Costs and Expenses; Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
17.8 Agents in Individual Capacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
17.9 Successor Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
17.10 Withholding Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
17.11 Collateral Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
17.12 Restrictions on Actions by Lenders; Sharing of Payments. . . . . . . . . . . . . . . . . . . . . . . . . 108
17.13 Agency for Perfection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
17.14 Payments by Facility Agent to the Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
17.15 Concerning the Collateral and Related Loan Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . 109
17.16 Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and
Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
17.17 Several Obligations; No Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
18. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
18.1 Effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
18.2 Section Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
18.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
18.4 Severability of Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
18.5 Counterparts; Telefacsimile Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
18.6 Revival and Reinstatement of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
18.7 Integration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
18.8 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
18.9 Survival of Indemnification Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
18.10 Conflicting Terms; Mortgage Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
18.11 Amendment and Restatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
</TABLE>
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SCHEDULES AND EXHIBITS
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Schedule C-1 Commitment Amounts; Wire Transfer Payment Instructions
Schedule E-1 Existing Indebtedness
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral/Current
Appraisals/Etc.
Schedule 2.2(d) Letter of Credit Fees and Costs
Schedule 5.3 Vehicles/Core Vehicles
Schedule 5.8 Subsidiaries
Schedule 5.13 ERISA Benefit Plans
Schedule 5.14 Environmental
Schedule 6.10 Current Insurance
Schedule 6.10(a) SFHAs
Schedule 6.12 Location of Books and Records, Inventory
and Equipment
Schedule 7.6(h) Existing Guarantees
Schedule 7.10(i) Existing Investments
Schedule 18.10 Mortgage Terms
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit F-1 Form of Financial Covenant Compliance Certificate
Exhibit 2.1(n) Form of Note
Exhibit 6.4(e) Form of Borrowing Base Certificate
Exhibit 18.8 Form of Confidentiality Agreement
</TABLE>
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THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (THIS
"AGREEMENT"), is entered into as of May 21, 1997, among GREYHOUND LINES, INC.,
a Delaware corporation ("Borrower"), with its chief executive office located at
15110 N. Dallas Parkway, Dallas, Texas 75248, on the one hand, and the
financial institutions listed on the signature pages hereof (such financial
institutions, together with their respective successors and assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"Lenders"), and FOOTHILL CAPITAL CORPORATION and BANKBOSTON, N.A., as Agents,
on the other hand.
RECITALS
A. Borrower and Foothill Capital Corporation ("Existing Lender")
entered into that certain Second Amended and Restated Loan and Security
Agreement, dated as of June 5, 1995 (as amended, the "Existing Agreement"),
pursuant to which Existing Lender extended to Borrower a secured, revolving
credit facility (the "Existing Facility") as evidenced by the Existing
Agreement and the Loan Documents referenced therein (collectively the "Existing
Loan Documents").
B. Concurrently herewith Existing Lender has assigned all of its
right, title, and interest in the Existing Facility and under the Existing Loan
Documents to the Lender Group, as that term is defined below, and the Lender
Group and Borrower desire to amend and restate the Existing Agreement in its
entirety in accordance with the terms and provisions of this Agreement.
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account.
"Accounts" means all currently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods or the rendition of services
by Borrower, irrespective of whether earned by performance, and any and all
credit insurance, guaranties, or security therefor.
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"Act" means all applicable present and future laws,
regulations, statutes, common law, rules, ordinances, codes, licenses, permits,
orders, approvals, authorizations, concessions, franchises, and legally binding
similar items of any federal, state, or local government, instrumentality, or
body having jurisdiction over the Real Property and related to Hazardous
Materials, as the same may be amended, modified, or supplemented from time to
time.
"ADA" means the Americans with Disabilities Act, 42 U.S.C.
Sections 12101, et. seq., and all applicable rules and regulations promulgated
thereunder.
"Additional Vehicles" means those 87 Vehicles designated as
such on Schedule 5.3.
"Adjusted Eurodollar Rate" means, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next 1/16%) determined by dividing (a) the
Eurodollar Rate for such Interest Period by (b) a percentage equal to (i) 100%
minus (ii) the Reserve Percentage. "Reserve Percentage" means the then stated
rate of all reserve requirements (including, without limitation, any marginal,
emergency, supplemental, special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System in respect of
eurocurrency funding or liabilities as defined in Regulation D of the Board of
Governors of the Federal Reserve System (or any successor category of
liabilities under Regulation D). The Adjusted Eurodollar Rate shall be
adjusted on and as of the effective day of any change in the Reserve
Percentage.
"Advances" has the meaning set forth in Section 2.1(a).
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise.
"Agent's Account" has the meaning set forth in Section 2.8.
"Agent Advance" has the meaning set forth in Section 2.1(h).
"Agent Loan" has the meaning set forth in Section 2.1(g).
"Agent Loan Availability" means, as of the date of
determination, the result (so long as such result is a positive number) of (a)
$10,000,000, less (b) the then outstanding balance of Agent Loans.
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"Agent-Related Persons" means Agents, together with their
Affiliates, and the officers, directors, employees, counsel, agents, and
attorneys-in-fact of Agents and such Affiliates.
"Agents" means, collectively, Facility Agent and Facility
Co-Agent.
"Agents' Fee Letter" means that certain letter addressed to
Agents by Borrower, of even date herewith.
"Agreement" has the meaning set forth in the preamble hereto.
"Asset Sale" means (a) the sale, lease, conveyance or other
disposition (a "disposition") of any assets or rights (including, without
limitation, by way of a sale and leaseback), excluding sales of passenger
tickets and inventory in the ordinary course of business (provided that the
disposition of all or substantially all of the assets of Borrower and its
Restricted Subsidiaries taken as a whole will be governed by Section 7.3 and
not by the provisions of Section 7.4) and (b) the issue or sale by Borrower or
any of its Restricted Subsidiaries of Equity Interests of any of Borrower's
Subsidiaries, in the case of either clause (a) or (b), whether in a single
transaction or a series of related transactions (i) that have a fair market
value in excess of $1,000,000 or (ii) for net proceeds in excess of $1,000,000.
Notwithstanding the foregoing, (i) Borrower shall not dispose of more than 33
1/3% of its interest in any Wholly Owned Restricted Subsidiary and (ii) the
following transactions will be deemed not to be Asset Sales, if conducted prior
to the occurrence and continuation of an Event of Default: (A) a sale for fair
market value of Real Property not constituting Core Real Property Collateral
and obsolete or excess buses and motor vehicles that are not Vehicles; (B) a
disposition of assets by Borrower to a Wholly Owned Restricted Subsidiary or by
a Wholly Owned Restricted Subsidiary to Borrower or to another Wholly Owned
Restricted Subsidiary; (C) a disposition of Equity Interests by a Wholly Owned
Restricted Subsidiary to Borrower or to another Wholly Owned Restricted
Subsidiary, (D) a sale-leaseback transaction, where the sale is for fair
market value, involving buses and motor vehicles that are not Vehicles or Real
Property not constituting Core Real Property Collateral within 365 days of the
acquisition of such buses or Real Property by Borrower or any of its Restricted
Subsidiaries; (E) a disposition of assets for fair market value by Borrower or
any of its Restricted Subsidiaries to a Person that is an Affiliate of Borrower
or such Restricted Subsidiary and is engaged in the passenger transportation
business (or a business that is reasonably complementary or related thereto as
determined in good faith by the Board of Directors), which Person is an
Affiliate solely because Borrower or such Restricted Subsidiary has an
Investment in such Person, provided, that such transaction complies with
Section 7.13; and (F) any customary pooling, interline, intermodal or other
similar arrangement with another Person engaged in the passenger transportation
business (including, without limitation, related dispositions of buses,
terminal space and other assets).
"Assignee" has the meaning set forth in Section 15.1.
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"Assignment and Acceptance" has the meaning set forth in
Section 15.1 (a) and shall be in the form of Exhibit A-1.
"Authorized Person" means any officer or other employee of
Borrower.
"Availability" means, as of the date of determination, the
result (so long as such result is a positive number) of (a) the lesser of the
Borrowing Base or the Maximum Revolving Amount, less (b) the Revolving Facility
Usage.
"Average Unused Portion of Maximum Revolving Amount" means,
as of any date of determination, (a) the Maximum Revolving Amount, less (b) the
sum of (i) the average Daily Balance of Advances that were outstanding during
the immediately preceding month, plus (ii) the average Daily Balance of the
undrawn Letters of Credit that were outstanding during the immediately
preceding month.
"BankBoston" means BankBoston, N.A. a national banking
association.
"Bankruptcy Code" means the United States Bankruptcy Code
(11 U.S.C. Section 101 et seq.), as amended, and any successor statute.
"Benefit Plan" means a "defined benefit plan" (as defined
in Section 3(35) of ERISA) for which Borrower, any Subsidiary of Borrower, or
any ERISA Affiliate has been an "employer" (as defined in Section 3(5) of
ERISA) within the past six years.
"Board of Directors" means the Board of Directors of
Borrower or any authorized committee of such Board of Directors.
"Borrower" has the meaning set forth in the preamble to
this Agreement.
"Borrower's Books" means all of Borrower's presently
existing and hereafter existing books and records including: ledgers; records
indicating, summarizing, or evidencing Borrower's properties or assets
(including the Collateral) or liabilities; all information relating to
Borrower's business operations or financial condition; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared
information.
"Borrowing" means a borrowing hereunder consisting of
Advances made on the same day by the Lenders, or by Facility Agent in the case
of an Agent Loan or an Agent Advance.
"Borrowing Base" has the meaning set forth in
Section 2.1(a).
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<PAGE> 11
"Business Day" means any day that is not a Saturday,
Sunday, or other day on which national banks are authorized or required to
close, and, if the applicable Business Day relates to any Eurodollar Rate Loan,
means such a day on which dealings are carried on in the London interbank
market.
"Capital Expenditure" means, without duplication,
expenditures (including, without limitation, Capital Lease Obligations and
purchase money Indebtedness in the year in which created but excluding payments
made thereon) of Borrower and its Restricted Subsidiaries in respect of the
purchase or other acquisition of fixed or capital assets (excluding capital
expenditures for buses and other motor vehicles).
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease that would at such time be required to be capitalized on a
balance sheet in accordance with GAAP; provided, however capital leases of
buses and other motor vehicles shall be excluded from this definition.
"Capital Stock" means (a) in the case of a corporation,
corporate stock, (b) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock (c) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (d) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (a) United States dollars, (b)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than six months from the date of acquisition, (c) certificates of
deposit and eurodollar time deposits with maturities of six months or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500,000,000, (d) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (b) and (c) above entered into with any
financial institution meeting the qualifications specified in clause (c) above,
(d) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Service and in each case
maturing within six months after the date of acquisition and (e) money market
mutual funds substantially all of the assets of which are of the type described
in the foregoing clauses (a) through (d).
"Change of Control" shall be deemed to have occurred at
such time as a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly
or indirectly, of more than 50% of the total voting power of all classes of
stock then outstanding of Borrower entitled to vote in the election of
directors.
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<PAGE> 12
"Closing Date" means the date of the making of the initial
Advance hereunder.
"Code" means the California Uniform Commercial Code.
"Collateral" means each of the following:
(a) the Accounts,
(b) Borrower's Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) the Negotiable Collateral,
(g) the Real Property Collateral,
(h) the Vehicles and any parts therefor;
(i) any money, or other assets of Borrower that now or
hereafter come into the possession, custody, or control of the Lender Group,
and
(j) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the Collateral, and any and all Accounts, Borrower's Books,
Equipment, General Intangibles, Inventory, Negotiable Collateral, Real Property
Collateral, Vehicles, money, deposit accounts, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof. Collateral does not include buses or motor vehicles that are
not Vehicles or Real Property which is not Real Property Collateral.
"Collateral Access Agreement" means a landlord waiver,
mortgagee waiver, bailee letter, or acknowledgement agreement of any
warehouseman, processor, lessor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the Collateral, in each
case, in form and substance satisfactory to Agents.
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<PAGE> 13
"Collections" means all cash, checks, notes, instruments,
and other items of payment (including, insurance proceeds, proceeds of sales,
rental proceeds, and tax refunds).
"Commitment" means, at any time with respect to a Lender,
the principal amount set forth beside such Lender's name under the heading
"Commitment" on Schedule C-1 or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder in
accordance with the provisions of Section 15.1, as such Commitment may be
adjusted from time to time in accordance with the provisions of Section 15.1
and "Commitments" means, collectively, the aggregate amount of the commitments
of all of the Lenders.
"Common Stock" means the common stock of Borrower, par value
$0.01 per share.
"Compliance Certificate" means a certificate substantially
in the form of Exhibit C-1 and delivered by the Chief Financial Officer of
Borrower to Facility Agent.
"Consolidated Cash Flow" means, with respect to any Person
for any period, the Consolidated Net Income of such Person for such period
plus, to the extent deducted or excluded in calculating Consolidated Net Income
for such period, (a) an amount equal to any extraordinary loss plus any net
loss realized in connection with an Asset Sale, (b) provision for taxes based
on income or profits of such Person and its Restricted Subsidiaries, (c)
Consolidated Interest Expense and (d) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of such Person and its
Restricted Subsidiaries, in each case, on a consolidated basis and determined
in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means with respect
to any Person for any period, the ratio of the Consolidated Cash Flow of such
Person for such period to the Consolidated Interest Expense of such Person for
such period; provided, however, that the Consolidated Interest Coverage Ratio
shall be calculated giving pro forma effect to each of the following
transactions as if each such transaction had occurred at the beginning of the
applicable four-quarter reference period: (a) any incurrence, assumption,
guarantee, or redemption by Borrower or any of its Restricted Subsidiaries of
any Indebtedness (other than the Obligations) subsequent to the commencement of
the four quarter period for which the Consolidated Interest Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Consolidated Interest Coverage Ratio is made (the
"Calculation Date"); (b) any Permitted Investment, or any Restricted Payment
permitted to be made under Section 7.10, that has been made by Borrower or any
of its Restricted Subsidiaries, or approved and expected to be consummated
within 30 days of the Calculation Date, including, in each case, through a
merger or consolidation, and including any related financing transactions,
during the four-quarter
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<PAGE> 14
reference period or subsequent to such reference period and on or prior to the
Calculation Date (in which case, for purposes of this definition, Consolidated
Cash Flow for such reference period shall be calculated without giving effect
to clause (c) of the proviso set forth in the definition of Consolidated Net
Income); and (c) any other transaction that may be given pro forma effect in
accordance with Article 11 of Regulation S-X as in effect from time to time;
provided further, however, that (i) the Consolidated Cash Flow attributable to
operations or businesses disposed of prior to the Calculation Date shall be
excluded and (ii) the Consolidated Interest Expense attributable to operations
or businesses disposed of prior to the Calculation Date shall be excluded, but
only to the extent that the obligations giving rise to such Consolidated
Interest Expense will not be obligations of the referent Person or any of its
Restricted Subsidiaries following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the sum, without duplication, of (a) the consolidated
interest expense of such Person and its Restricted Subsidiaries for such
period, whether paid or accrued (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financing, and net payments (if any) pursuant
to Hedging Obligations) and (b) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, however, that (a) the Net Income (but not loss)
of any Person that is not a Restricted Subsidiary or that is accounted for by
the equity method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the referent Person or a
Wholly Owned Restricted Subsidiary thereof, (b) the Net Income of any
Restricted Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders, (c) the Net Income of any Person acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded and (d) the cumulative effect of a change in
accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person
as of any date, the sum of (a) the consolidated equity of the common
stockholders of such Person and its consolidated Restricted Subsidiaries as of
such date; plus (b) the respective amounts reported on such Person's balance
sheet as of such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment
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<PAGE> 15
of dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to
the extent of any cash received by such Person upon issuance of such preferred
stock; plus (c) the amount (but in no event more than $30,000,000) by which the
consolidated equity described in clause (a) above would be reduced in the event
the liability of Borrower to make Plan contributions is increased as a result
of a change in a prescribed mortality table pursuant to the provisions of the
Retirement Protection Act of 1994.
"Core Real Property Collateral" means each parcel of the
Real Property Collateral that is so designated on Schedule R-1, and for which
each of the following exists: (a) a Fair Market Value on a Current Appraisal;
(b) a policy of title insurance or marked commitments to issue the same; (c) a
Phase-I (and, where reasonably required by Agents, a Phase-II) environmental
report; and (d) a duly executed Mortgage, each of the foregoing of which shall
be reasonably satisfactory to Agents.
"Core Vehicles" means Vehicles for which each of the
following exists: (a) an Orderly Liquidation Value on a Current Appraisal; and
(b) a certificate of title (or the relevant applications therefor, duly
completed and executed by Borrower), in the possession of Facility Agent,
properly reflecting Facility Agent's first priority Lien on behalf of the
Lender Group, each of the foregoing of which shall be reasonably satisfactory
to Agents.
"Current Appraisal" means: (a) with respect to Vehicles, an
appraisal by Accuval Associates, Inc. or another appraisal firm reasonably
acceptable to the Agents and Borrower, which appraisal shall be in form and
substance reasonably satisfactory to the Agents. As of the Closing Date the
Current Appraisal for Vehicles, including the Additional Vehicles, is the
updated desk top appraisal dated April 16, 1997, by Accuval Associates,
Incorporated. Upon completion of any new appraisal of Vehicles pursuant to the
terms of Section 6.18, such new appraisal shall be deemed the Current Appraisal
hereunder; and (b) with respect to any parcel of Core Real Property Collateral,
a FIRREA appraisal by an appraisal firm reasonably acceptable to the Agents, in
form and substance reasonably satisfactory to the Agents. As of the Closing
Date the Current Appraisals for Core Real Property Collateral are the
appraisals indicated opposite such parcels on Schedule R-1. Upon completion of
any new appraisal of any Core Real Property Collateral pursuant to the terms of
Section 6.18, such new appraisal shall be deemed the Current Appraisal for the
subject parcel of Core Real Property Collateral.
"Daily Balance" means the amount of an Obligation owed at
the end of a given day.
"Default" means an event, condition, or default that, with
the giving of notice, the passage of time, or both, would be an Event of
Default.
"Defaulting Lender" has the meaning set forth in
Section 2.1 (f)(ii).
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<PAGE> 16
"Defaulting Lenders Rate" means the Reference Rate for the
first three days from and after the date the relevant payment is due and
thereafter at the interest rate then applicable to Reference Rate Loans.
"Designated Account" means account number 58 0000 7683 of
Borrower maintained with the Designated Account Bank, or such other deposit
account of Borrower (located within the United States) which has been
designated, in writing and from time to time, by Borrower to Facility Agent.
"Designated Account Bank" means LaSalle National Bank,
whose office is located at 120 South LaSalle, Chicago, Illinois, 60603 and
whose ABA number is 071 000505, or such other bank as Borrower shall designate
from time to time and which is reasonably acceptable to the Facility Agent.
"Designated Payables" has the meaning set forth in
Section 6.2.
"Disbursement Letter" means an instructional letter
executed and delivered by Borrower to Agents regarding the extensions of credit
to be made on the Closing Date, the form and substance of which shall be
reasonably satisfactory to Agents.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
(excluding any maturity as a result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or redeemable at the option of the holder thereof, in whole or in
part, on or prior to the date that is 91 days after the date on which the
Senior Notes mature or are redeemed or retired in full; provided, however, that
any Capital Stock that would constitute Disqualified Stock solely because the
holders thereof (or of any security into which it is convertible or for which
it is exchangeable) have the right to require the issuer to repurchase such
Capital Stock (or such security into which it is convertible or for which it is
exchangeable) upon the occurrence of an Asset Sale or a Change of Control shall
not constitute Disqualified Stock if such Capital Stock (and all such
securities into which it is convertible or for which it is exchangeable)
provides that the issuer thereof will not repurchase or redeem any such Capital
Stock (or any such security into which it is convertible or for which it is
exchangeable) pursuant to such provisions prior to compliance by Borrower with
the provisions of Section 7.4.
"Dollars or $" means United States dollars.
"Eligible Accounts" means those Accounts created by
Borrower in the ordinary course of its bus transportation business or its
"package express" business (i.e. freight forwarding), that arise out of
Borrower's rendition of transportation services or of its "package express"
services, or that otherwise arise from the rendition of services by
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<PAGE> 17
Borrower (in each such case net of any sales taxes comprising a part thereof),
but at all times excluding any of the following:
(a) Accounts that the Account Debtor has failed to pay
within 90 days of invoice date and all Accounts owed by an Account Debtor that
has failed to pay 50% or more of its Accounts owed to Borrower within 90 days
of invoice date;
(b) Accounts with respect to which the Account Debtor
is an officer, employee, Affiliate, or agent of Borrower;
(c) Accounts with respect to which the payment by the
Account Debtor may be conditional;
(d) Accounts with respect to which the Account Debtor
is not a resident of the United States unless supported by a letter of credit
issued by a financial institution acceptable to Facility Agent in its
reasonable discretion, or covered by credit insurance acceptable to Facility
Agent in its reasonable discretion;
(e) Accounts with respect to which the Account Debtor
is the United States or any department, agency, or instrumentality of the
United States;
(f) Accounts with respect to which Borrower is or may
become liable to the Account Debtor for goods sold or services rendered by the
Account Debtor to Borrower;
(g) Accounts with respect to an Account Debtor whose
total obligations owing to Borrower exceed 10% of all Eligible Accounts, but
only to the extent of the obligations owing by such Account Debtor in excess of
such percentage;
(h) Accounts with respect to which the Account Debtor
disputes liability or makes any claim with respect thereto, or is subject to
any Insolvency Proceeding, or becomes insolvent, or goes out of business;
(i) Accounts the collection of which Facility Agent,
in its reasonable credit judgment, believes to be doubtful by reason of the
Account Debtor's financial condition;
(j) Accounts that are payable in other than United
States Dollars;
(k) Accounts that represent progress payments or other
advance billings that are due prior to the completion of performance by
Borrower of the subject contract for services; and
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<PAGE> 18
(l) Unbilled accruals, Accounts respecting interline
receivables, Accounts classified by Borrower as "other receivables" and
Accounts arising out of agency stations cash receipts.
Notwithstanding anything to the contrary contained
in this definition, Facility Agent may revise the standards of eligibility from
time to time in the exercise of its reasonable credit judgment in accordance
with its customary business practices, but no such revision shall render an
otherwise Eligible Account ineligible without at least ten days advance notice
of such revision to Borrower.
"Eligible Transferee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $5,000,000,000, or the asset based lending Affiliate of
such bank, (b) a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
or a political subdivision of any such country, and having total assets in
excess of $5,000,000,000, or the asset based lending Affiliate of such bank;
provided that such bank is acting through a branch or agency located in the
United States, (c) a finance company, insurance or other financial institution,
or fund that is engaged in making, purchasing, or otherwise investing in
commercial loans in the ordinary course of its business and having total assets
in excess of $500,000,000, (d) any Affiliate (other than individuals) of an
existing Lender, and (e) any other Person approved by Agents and Borrower.
"Equipment" means all of Borrower's present and hereafter
acquired machinery, machine tools, motors, equipment, furniture, furnishings,
fixtures, tools, parts, dies, jigs, goods (other than Vehicles, buses, motor
vehicles, consumer goods, farm products, or Inventory), wherever located, and
any interest of Borrower in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located; provided, however,
"Equipment" shall not include any fixture located on any real estate other than
the Real Property Collateral, or any parts of buses, Vehicles or motor
vehicles.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act
of 1974, 29 U.S.C. Sections 1000 et seq., amendments thereto, successor
statutes, and regulations or guidance promulgated thereunder.
"ERISA Affiliate" means (a) any corporation subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower under IRC Section 414(b), (b) any trade or business
subject to ERISA whose employees are treated as employed by the same employer
as the employees of Borrower under IRC
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<PAGE> 19
Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412
of the IRC, any organization subject to ERISA that is a member of an affiliated
service group of which Borrower is a member under IRC Section 414(m), or (d)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
party subject to ERISA that is a party to an arrangement with Borrower and
whose employees are aggregated with the employees of Borrower under IRC Section
414(o).
"ERISA Event" means (a) for the six year period immediately
preceding the Closing Date, a Reportable Event with respect to any Benefit Plan
or Multiemployer Plan, (b) the withdrawal of Borrower, any of its Subsidiaries
or ERISA Affiliates from a Benefit Plan during a plan year in which it was a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA), (c) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan, (e)
any event or condition (i) that provides a basis under Section 4042(a)(1), (2),
or (3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a
Multiemployer Plan, or (g) providing any security to any Plan under Section
401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their ERISA
Affiliates.
"Eurodollar Rate" means, with respect to the Interest
Period for a Eurodollar Rate Loan, the interest rate per annum (rounded
upwards, if necessary, to the next 1/16%) notified to Facility Agent by
Reference Bank as the rate of interest at which United States dollar deposits
would be offered to Reference Bank by major banks in the London interbank
market (or other Eurodollar Rate market selected by Borrower and approved by
Facility Agent) on or about 11:00 a.m. (Los Angeles time) two Business Days
prior to the commencement of such Interest Period in amounts substantially
equal to the principal amount of the Eurodollar Rate Loans requested by and
available to Borrower in accordance with this Agreement, with a maturity of
comparable duration to the Interest Period selected by Borrower.
"Eurodollar Rate Loans" means any loan or Advance (or any
portion thereof) made pursuant to Section 2.1 during any period when interest
on such loan or Advance (or portion thereof) is payable based on the Adjusted
Eurodollar Rate.
"Eurodollar Rate Margin" means:
(a) 2.0% per annum from and including the Closing Date
to and including July 31, 1997; and
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<PAGE> 20
(b) from and including August 1, 1997, the percentage
per annum set forth in the table below opposite the applicable Total
Indebtedness to Consolidated Cash Flow Ratio for the latest four fiscal
quarters (beginning with the four fiscal quarters ended June 30, 1997):
<TABLE>
<CAPTION>
Total Indebtedness(1) to
Consolidated Cash Flow Ratio Eurodollar Rate Margin
- ---------------------------- ----------------------
<S> <C>
4.5:1.0 or greater 2.50%
less than 4.5:1.0, but 2.25%
greater than or equal to
4.0:1.0
less than 4.0:1.0, but 2.00%
greater than or equal to
3.5:1.0
less than 3.5:1.0, but 1.75%
greater than or equal to
3.0:1.0
less than 3.0:1.0 1.50%
</TABLE>
After August 1, 1997, changes in the Eurodollar Rate Margin resulting from a
change in the Total Indebtedness to Consolidated Cash Flow Ratio shall become
effective on the first day of the second month of each fiscal quarter of
Borrower, beginning November 1, 1997, and continuing on the first day of each
February, May, August, and November thereafter and shall be based on the Total
Indebtedness to Consolidated Cash Flow Ratio for the prior four fiscal quarters
as set forth in the certificate of Borrower's Chief Financial Officer delivered
pursuant to Section 6.4(e).
"Event of Default" has the meaning set forth in Section 8.
"Exchange Debentures" means the 8 1/2% Convertible
Subordinated Debentures due 2009 as provided for in the Indenture dated April
16, 1997 between Borrower and U.S. Trust of Texas, N.A.
__________________________________
(1) Solely for purposes of this definition, Total Indebtedness shall be
reduced by the amount of the aggregate liability of Borrower and its
Restricted Subsidiaries for letters of credit but not to exceed: (a)
$13,000,000 for any of Borrower's fiscal quarters before 12/31/97, and (b)
$10,000,000 for any of Borrower's subsequent fiscal quarters.
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<PAGE> 21
"Existing Agreement" has the meaning set forth in the
recitals hereto.
"Existing Facility" has the meaning set forth in the
recitals hereto.
"Existing Indebtedness" means Indebtedness of Borrower and
its Restricted Subsidiaries (other than Indebtedness hereunder) in existence on
the date hereof, as set forth on Schedule E-1, until such amounts are repaid.
"Existing Lender" means has the meaning set forth in the
recitals hereto.
"Existing Loan Documents" has the meaning set forth in the
recitals hereto.
"Existing Unrestricted Subsidiaries" means Amarillo
Trailways Bus Company Center, Inc., Los Rapidos, Inc., Los Buenos Leasing Co.,
Inc., and Wilmington Union Bus Station Corporation.
"Facility Agent" means Foothill, solely in its capacity as
facility agent or collateral agent for the Lenders, and shall include any
successor agent in such capacity.
"Facility Co-Agent" means BankBoston, solely in its
capacity as facility co-agent for the Lenders, and shall include any successor
facility co-agent.
"Fair Market Value" means, (i) with respect to a parcel of
Core Real Property Collateral, the fair market value thereof as set forth in
the Current Appraisal thereof, and (ii) with respect to each share of Common
Stock, the closing price of a share of Common Stock on the principal securities
exchange on which the Common Stock is traded on the first trading day preceding
the announcement of the transaction pursuant to which such shares of Common
Stock were issued, or, if the Common Stock is not then traded on a securities
exchange, the fair market value of each share of Common Stock.
"Financial Covenant Compliance Certificate" means a
certificate substantially in the form of Exhibit F-1, and delivered by the
Chief Financial Officer of Borrower to Facility Agent.
"FEIN" means Federal Employer Identification Number.
"Foothill" means Foothill Capital Corporation, a California
corporation.
"Funding Date" means the date on which a Borrowing occurs.
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<PAGE> 22
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board and the rules and
regulations of the Securities and Exchange Commission or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"General Intangibles" means all of Borrower's present and
future general intangibles (including contract rights, rights arising under
common law, statutes, or regulations, choses or things in action, goodwill,
patents, trade names, trademarks, servicemarks, copyrights, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, rights to payment and other rights under any
royalty or licensing agreements, infringement claims, computer programs,
information contained on computer disks or tapes, literature, reports,
catalogs, deposit accounts, insurance premium rebates, tax refunds, and tax
refund claims), other than goods, Accounts, and Negotiable Collateral;
provided, however, that "General Intangibles" shall not include any property
(including any self-insurance reserve or deposit of Borrower or any of its
Affiliates) or contract right the granting of a security interest in which
would be prohibited by law or contract or any leases of buses or motor vehicles
which are not Vehicles.
"Governing Documents" means the certificate or articles of
incorporation, by-laws, or other organizational or governing documents of any
Person.
"Governmental Authority" means any federal, state, local or
other governmental department, commission, board, bureau, agency, central bank,
court, tribunal or other instrumentality or authority or subdivision thereof,
domestic or foreign, exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantor" means any of the Persons who now or in the
future enter into a continuing guaranty of the Obligations in favor of the
Lender Group.
"Guaranty" means any continuing guaranty of the Obligations
entered into now or in the future in favor of the Lender Group.
"Hazardous Materials" means (a) substances that are defined
or listed in, or otherwise classified by any Governmental Authority having
jurisdiction over environmental protection and the Real Property as "hazardous
substances," "hazardous materials," "hazardous wastes," "toxic substances," or
any other formulation intended to define, list, or classify substances by
reason of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or "EP toxicity", (b) oil, petroleum,
or petroleum derived substances, natural gas, natural gas liquids, synthetic
gas, drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or
geothermal resources, (c) any
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<PAGE> 23
flammable substances or explosives or any radioactive materials, and (d)
asbestos in any form or electrical equipment that contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of 50
parts per million.
"Hedging Obligations" means, with respect to any Person,
the obligations of such Person under (a) interest rate swap agreements,
interest rate cap agreements, and interest rate collar agreements, (b) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates and (c) any commodity futures contract, commodity option or
similar agreement or arrangement designed to protect such Person against
fluctuations in the price of commodities used in the ordinary course of
business of such Person.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, 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 of such Person prepared in accordance with GAAP. The
amount of any Indebtedness outstanding as of any date shall be (a) the accreted
value thereof, in the case of any Indebtedness that does not require current
payments of interest, and (b) the principal amount thereof, in the case of any
other Indebtedness. Whenever the term "Indebtedness" is used with respect to
Borrower and its Subsidiaries, it shall mean without duplication.
"Indemnified Liabilities" has the meaning set forth in
Section 11.3.
"Indemnified Person" has the meaning set forth in
Section 11.3.
"Indenture" means that certain Indenture, dated as of April
16, 1997, among Borrower and certain guarantors, on the one hand and PNC Bank,
National Association, as trustee, on the other hand.
"Insolvency Proceeding" means any proceeding commenced by
or against any Person under any provision of the Bankruptcy Code or under any
other bankruptcy or insolvency law, assignments for the benefit of creditors,
formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that
portion of the book value of all of such Person's assets that would be treated
as intangibles under GAAP.
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"Intellectual Property Security Agreement" means that
certain Intellectual Property Security Agreement of even date herewith between
Borrower and Facility Agent.
"Interest Period" means, for any Eurodollar Rate Loan, the
period commencing on the Business Day such Eurodollar Rate Loan is disbursed or
continued, or on the Business Day on which a Reference Rate Loan is converted
to such Eurodollar Rate Loan, and ending on the date one, two, three, or six
months thereafter, as selected by Borrower and notified to the Facility Agent
pursuant to Section 2.1(d), and as further provided in Section 2.13(a).
"Inventory" means all present and future inventory in which
Borrower has any interest, including goods held for sale or lease or to be
furnished under a contract of service and all of Borrower's present and future
raw materials, work in process, finished goods, and packing and shipping
materials, wherever located.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees by the referent Person of and
Liens on any assets of the referent Person securing, Indebtedness or other
obligations of other Persons), advances or capital contributions (excluding
commission, travel, and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for consideration
of Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If Borrower or any Restricted Subsidiary of Borrower
sells or otherwise disposes of any Equity Interests of any direct or indirect
Restricted Subsidiary of Borrower such that, after giving effect to any such
sale or disposition, such Person is no longer a Restricted Subsidiary of
Borrower, Borrower shall be deemed to have made an Investment on the date of
any such sale or disposition equal to the fair market value of the Equity
Interests of such Restricted Subsidiary sold or disposed of in an amount
determined as provided in Section 7.12.
"IRC" means the Internal Revenue Code of 1986, as amended,
and the regulations thereunder.
"Issuer" means Norwest Bank Minnesota, National Association
or such other financial institution that is a member of the Lender Group as
Facility Agent shall designate, with the consent of the Borrower, as issuer of
letters of credit as contemplated under Section 2.2.
"L/C" has the meaning set forth in Section 2.2(a).
"L/C Guaranty" has the meaning set forth in Section 2.2(a).
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"Lender" and "Lenders" have the respective meanings set
forth in the preamble to this Agreement, and shall include any other Person
made a party to this Agreement in accordance with the provisions of Section
15.1.
"Lender Group" means, individually and collectively, each
of the individual Lenders, the Agents, the Syndication Agent, and the
Syndication Co-Agent.
"Lender Group Expenses" means all: reasonable costs or
expenses (including stamp and other similar taxes, and insurance premiums)
required to be paid by Borrower under any of the Loan Documents that are paid
or incurred by the Lender Group; reasonable fees or charges paid or incurred by
the Agents in connection with the Agents' transactions with Borrower,
including, fees or charges for public record searches (including tax lien,
litigation, and UCC searches and including searches with the patent and
trademark office, the copyright office, or the department of motor vehicles),
filing, recording, publication, appraisal (including the Current Appraisals and
any other periodic Personal Property Collateral or Real Property Collateral
appraisals permitted hereunder), real estate surveys, real estate title
policies and endorsements, and environmental audits; costs and expenses
incurred by Agents in the disbursement of funds to Borrower (by wire transfer
or otherwise); charges paid or incurred by Agents resulting from the dishonor
of checks; reasonable costs and expenses paid or incurred by Agents to correct
any default or enforce any provision of the Loan Documents, or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
preparing for sale, or advertising to sell the Personal Property Collateral or
the Real Property Collateral, or any portion thereof, irrespective of whether a
sale is consummated; reasonable costs and expenses paid or incurred by the
Agents in examining Borrower's Books (subject to any limitations set forth in
Section 2.12(d)); costs and expenses of third party claims or any other suit
paid or incurred by the Agents in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents; and the
Lender Group's reasonable attorneys fees and expenses incurred in advising,
structuring, drafting, reviewing, administering, amending, terminating,
enforcing (including attorneys fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding concerning Borrower
or any Guarantor, defending, or concerning the Loan Documents, irrespective of
whether suit is brought; provided, however, that such attorneys fees and
expenses shall be limited to reasonable attorneys fees and expenses of one lead
law firm for each of the Agents and one local counsel in each jurisdiction in
which any tangible Collateral may be located, or where Borrower may be
incorporated or have its chief executive office located (each such local
counsel to be selected by Facility Agent) and, in addition, one counsel to the
Lender Group in connection with any such workout, restructuring, or Insolvency
Proceeding; provided further, however that where the rights of an individual
member of the Lender Group would be materially prejudiced by such
representation in connection with any indemnification sought hereunder,
Borrower shall also be liable for the attorneys' fees for each member so
prejudiced due to a unique position or defense not available to other members
of the Lender Group.
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<PAGE> 26
"Letter of Credit" means an L/C or an L/C Guaranty, as the
context requires.
"Lien" means with respect to any asset of Borrower or its
Restricted Subsidiaries, any mortgage, deed in trust, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to give a security interest in
and any filing of or agreement to give any financing statement to perfect a
security interest granted in any such asset under the Uniform Commercial Code
(or equivalent statute of any jurisdiction)).
"Limited Recourse Debt" means Indebtedness of a Subsidiary
(a) as to which neither the Borrower nor any of its Restricted Subsidiaries (i)
provides credit support of any kind (including any undertaking, agreement or
instrument that would constitute Indebtedness) or is otherwise directly or
indirectly liable (as a guarantor or otherwise) or (ii) constitutes the lender,
except, in the case of clauses (i) and (ii), to the extent permitted by
Sections 7.1 and 7.10, (b) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) the
holders of Indebtedness of the Borrower or any of its Restricted Subsidiaries
having an aggregate principal amount of $10,000,000 or more to declare a
default on such indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity and (c) as to which the lenders have been
notified in writing that they will not have any recourse to the stock of assets
of the Borrower or any of its Restricted Subsidiaries, except to the extent of
any Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries
in accordance with clause (a)(i) above.
"Loan Account" has the meaning set forth in Section 2.11.
"Loan Documents" means this Agreement, the Notes, the
Disbursement Letter, the Letters of Credit, the Lockbox Agreements, the
Mortgages, the Stock Pledge, the Intellectual Property Security Agreement, the
Subsidiary Guaranties, the Subsidiary Security Agreements, the Agents' Fee
Letter, any other note or notes executed by Borrower and payable to the Lender
Group, and any other agreement entered into, now or in the future, in
connection with this Agreement.
"Lockbox Account" shall mean a depositary account
established pursuant to one of the Lockbox Agreements.
"Lockbox Agreements" means those certain lockbox operating
procedural agreements and those certain depository account agreements, in form
and substance satisfactory to Facility Agent, each of which is among Borrower,
Facility Agent, and one of the Lockbox Banks.
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<PAGE> 27
"Lockbox Banks" means PNC Bank, Kentucky, Inc., LaSalle
National Bank, Texas Commerce Bank National Association, or any other financial
institution mutually acceptable to Borrower and Facility Agent.
"Lockboxes" has the meaning set forth in Section 2.8.
"Losses" shall mean any and all losses, liabilities,
contingent liabilities, damages, obligations, claims, contingent claims,
actions, suits, proceedings, disbursements, penalties, costs, and expenses
(including, without limitation, Lender Group Expenses), whether or not an
action or proceeding is commenced or threatened.
"Material Adverse Change" means (a) a material adverse
change in, or an event having a material adverse effect on, the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrower, (b) the material impairment of Borrower's
ability to perform its obligations under the Loan Documents to which it is a
party or of the Lender Group to enforce the Obligations or realize upon the
Collateral or the Subsidiary Collateral, (c) a material adverse effect on the
value of the Collateral or the Subsidiary Collateral or the amount that the
Lender Group would be likely to receive (after giving consideration to delays
in payment and costs of enforcement) in the liquidation of such Collateral or
Subsidiary Collateral as determined by the Current Appraisals or by material
variations in the subsequent sales price of Vehicles (other than material
variations of the sales price resulting from a casualty) from the values
therefor set forth in the Current Appraisal, or (d) a material impairment of
the priority of the Lender Group's Liens with respect to the Collateral or the
Subsidiary Collateral. Notwithstanding the foregoing, no Material Adverse
Change shall be deemed to occur solely as a result of any event arising out of
the liability of Borrower to make increased Plan contributions (not to exceed
$30,000,000) as a result of a change in a prescribed mortality table pursuant
to the provisions of the Retirement Protection Act of 1994.
"Maturity Date" has the meaning set forth in Section 3.4.
"Maximum Real Estate Amount" means, from the Closing Date
through and including November 15, 1999--$30,000,000; from November 16, 1999
through and including November 15, 2000--$27,000,000; from November 16, 2000
through and including November 15, 2001--$24,000,000; and from November 16,
2001 and thereafter--$21,000,000.
"Maximum Revolving Amount" means the lesser of (a)
$150,000,000; and (b) the aggregate of all Commitments at such time; but in no
event shall such amount be less than $125,000,000, less any reductions pursuant
to Sections 2.1(o)(ii) and (iii).
"Maximum Vehicle Amount" means, as of the Closing Date,
$92,500,000, and shall be increased thereafter at the same time, and by the
same amount, as increases in the Commitments pursuant to Section 2.1(o)(i).
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"Mortgages" means one or more mortgages, deeds of trust, or
deeds to secure debt, or (at the Agents' option) amendments to existing
mortgages, deeds of trust, or deeds to secure debt, executed by Borrower in
favor of Facility Agent for the benefit of the Lender Group, the form and
substance of which shall be reasonably satisfactory to Agents, that encumber
the Real Property Collateral and the related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) to which Borrower, any of its
Subsidiaries, or any ERISA Affiliate has contributed, or was obligated to
contribute, within the past six years.
"Negotiable Collateral" means all of Borrower's present and
future letters of credit, notes, drafts, instruments, investment property,
security entitlements, securities (including the shares of stock of
Subsidiaries of Borrower), documents, personal property leases (wherein
Borrower is the lessor), and chattel paper.
"Net Income" means, with respect to any Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (a) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (i) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions)
or (ii) the disposition of any securities by such Person or any of its
Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries and (b) any extraordinary or
nonrecurring gain (but not loss), together with any related provision for taxes
on such extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received
by Borrower or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
(without duplication) (a) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
sales commissions, recording fees, title transfer fees, title insurance
premiums, appraiser fees and costs incurred in connection with preparing such
asset for sale) and any relocation expenses incurred as a result thereof, (b)
taxes paid or estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements), (c) amounts required to be applied to the repayment of
Indebtedness (other than under this Agreement) secured by a Lien on the asset
or assets that were the subject of such Asset Sale and (d) any reserve
established in accordance with GAAP or any amount placed in escrow, in either
case for adjustment in respect of the sale price of such asset or assets, until
such time as such reserve is reversed or such escrow arrangement is terminated,
in which case Net Proceeds shall include only the amount of the reserve so
reserved or the amount returned to Borrower or its Restricted Subsidiaries from
such escrow arrangement, as the case may be.
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<PAGE> 29
"Nominee" has the meaning set forth in Section 17.11(c).
"Non-Excluded Taxes" has the meaning set forth in
Section 2.16.
"Notes" has the meaning set forth in Section 2.1(n).
"Obligations" means all loans, Advances, debts, principal,
interest (including any interest that, but for the provisions of the Bankruptcy
Code, would have accrued), contingent reimbursement obligations under any
outstanding Letters of Credit (including amounts reimbursed to Issuer as
referenced in Section 2.2(a)(iii)(y)), premiums, liabilities (including all
amounts charged to Borrower's Loan Account pursuant hereto), obligations, fees,
charges, costs, or Lender Group Expenses (including any fees or expenses that,
but for the provisions of the Bankruptcy Code, would have accrued), lease
payments, guaranties, covenants, and duties owing by Borrower to the Lender
Group of any kind and description pursuant to or evidenced by the Loan
Documents, due or to become due, absolute or contingent, and further including
all interest not paid when due and all Lender Group Expenses that Borrower is
required to pay or reimburse by the Loan Documents, by law, or otherwise.
"Orderly Liquidation Value" means, with respect to any
Vehicle, the orderly liquidation value thereof as set forth in the Current
Appraisal thereof.
"Originating Lender" has the meaning set forth in Section
15.1(e).
"Overadvance" has the meaning set forth in Section 2.6.
"Participant" has the meaning set forth in Section 15.1(e).
"PBGC" means the Pension Benefit Guaranty Corporation as
defined in Title IV of ERISA, or any successor thereto.
"Permitted Investment" means any Investment permitted under
Section 7.12.
"Permitted Liens" means: (a) Liens held by the Lender
Group; (b) Liens for taxes that are either (i) not yet due and payable or (ii)
subject to a Permitted Protest; (c) Liens set forth on Schedule P-1; (d) the
interests of lessors under operating leases, and purchase money security
interests and Liens of lessors under capitalized leases to the extent that the
acquisition or lease of the underlying asset was permitted under Section 7.20,
and so long as the Lien only attaches to the asset being purchased or acquired
and only secures the purchase price of such asset; (e) easements, rights of way,
reservations, covenants, conditions, restrictions, zoning variances, and other
similar encumbrances or title defects that do not materially interfere with the
use or value of the property subject thereto; (f) exceptions listed in the title
insurance or commitment therefor to be delivered by Borrower hereunder in
respect of the Real Property Collateral, as acceptable to Agents;
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<PAGE> 30
(g) Liens (other than any Lien imposed by ERISA) in respect of property or
assets of Borrower imposed by law which were incurred in the ordinary course of
business and which do not secure Indebtedness, such as carriers',
warehousemen's, materialmen's and mechanics' Liens, statutory landlord's Liens,
and other similar Liens arising in the ordinary course of business, and (x)
which do not in the aggregate materially detract from the value of such
property or assets or materially impair the use thereof in the operation of the
business of Borrower or (y) which are subject to a Permitted Protest; (h) Liens
(other than any Lien imposed by ERISA) incurred or deposits made in the
ordinary course of business of Borrower or a Restricted Subsidiary in
connection with (x) workers' compensation, unemployment insurance and other
types of social security, (y) to secure the performance of tenders, insurance
policies, statutory obligations, customs bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business (exclusive of
obligations in respect of borrowed money) or (z) surety, stay, appeal or
judgments bonds, provided that the aggregate amount of cash and the fair market
value of the property encumbered by Liens described in this clause (z) shall
not exceed $7,000,000 (exclusive of any Liens that are secured by a Letter of
Credit); (i) licenses, leases or subleases granted to third Persons not
materially interfering with the ordinary course of business of Borrower or a
Restricted Subsidiary; (j) Liens arising from precautionary UCC (or other
similar recording or notice statutes) financing statement filings regarding
operating leases or consignment arrangements permitted pursuant to this
Agreement; (k) deposits made in the ordinary course of business to secure
liability for premiums to insurance carriers; (l) any interest or title of a
lessor, sublessor, or licensor under any lease or license agreement permitted
by this Agreement; (m) Liens on the assets or property of Borrower or a
Restricted Subsidiary existing prior to the time such assets were acquired by
Borrower or a Restricted Subsidiary and not incurred as a result of (or in
connection with or in anticipation of) such acquisition; provided that such
Liens do not extend to or cover any property or assets of Borrower other than
the property or assets so acquired; (n) Liens of a banking institution
encumbering deposits (including the right of set-off) held by such banking
institutions incurred in the ordinary course of business and which are within
general parameters customary within the banking industry; (o) Liens in favor of
Borrower and its Restricted Subsidiaries; (p) Liens on property of a Person
existing at the time such Person is merged into or consolidated with Borrower
or any Restricted Subsidiary of Borrower; and (p) Liens not otherwise permitted
hereunder which secure obligations not exceeding $3,000,000 in the aggregate at
any one time outstanding.
"Permitted Protest" means the right of Borrower to contest
or protest any Lien (other than any such Lien that secures the Obligations),
tax, or rental payment, provided that (a) a reserve with respect to such
obligation is established on the books of Borrower in accordance with GAAP, (b)
any such contest or protest is instituted and diligently prosecuted by Borrower
in good faith, and (c) Facility Agent is reasonably satisfied that, while any
such contest or protest is pending, there will not be any material impairment
of the enforceability, validity, or priority of any of the Liens of the
Facility Agent for the benefit of the Lender Group in and to the Collateral, or
a material adverse
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<PAGE> 31
change in the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of Borrower.
"Permitted Refinancing Indebtedness" means any Indebtedness
of Borrower or any of its Restricted Subsidiaries issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness permitted hereunder (other than the
Obligations) of Borrower and its Restricted Subsidiaries, provided that (a) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount of (or accreted
value, if applicable), plus premium, if any, and accrued interest on, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith), (b)
such Permitted Refinancing Indebtedness has a final maturity date no earlier
than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded, (c) such Permitted Refinancing Indebtedness is otherwise on terms and
conditions, taken as a whole, no less favorable to Borrower or such Restricted
Subsidiary, as the case may be, as reasonably determined by Agents, than the
terms and conditions of the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded (d) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Obligations, such Permitted Refinancing Indebtedness is
subordinated in right of payment to the Obligations on terms at least as
favorable, taken as a whole, to the Lender Group as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded and (e) such Indebtedness is incurred either by
Borrower or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; provided,
however, that a Restricted Subsidiary may guarantee Permitted Refinancing
Indebtedness incurred by Borrower, whether or not such Restricted Subsidiary
was an obligor or guarantor of the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; provided further, however, that if
such Permitted Refinancing Indebtedness is subordinated in right of payment to
the Obligations, such guarantee shall be subordinated to such Restricted
Subsidiary's Guaranty to at least the same extent.
"Person" means and includes natural persons, corporations,
limited liability companies, limited partnerships, general partnerships,
limited liability partnerships, joint ventures, trusts, land trusts, business
trusts, or other organizations, irrespective of whether they are legal
entities, and governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other
than the Real Property Collateral.
"Plan" means any employee benefit plan, program, or
arrangement maintained or contributed to by Borrower or with respect to which
it may incur liability.
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"Post Foreclosure Property" has the meaning set forth in
Section 17.11(c).
"Preferred Stock" means the Borrower's 8 1/2% Convertible
Exchangeable Preferred Stock and such other preferred stock as Borrower shall
issue and which is not classified as Indebtedness in accordance with GAAP.
"Preferred Stock Offering" means the offering (i) by
Borrower, concurrent with the offering of the Senior Notes, of $60,000,000
aggregate liquidation preference of its Preferred Stock, plus up to an
additional $9,000,000 aggregate liquidation preference of Preferred Stock to
cover over allotments, if any and (ii) in connection with any subsequently
issued Preferred Stock.
"Productive Assets" means assets (other than assets that
would be classified as current assets in accordance with GAAP) of the kind used
or usable by Borrower or its Restricted Subsidiaries in the passenger
transportation business (or any business that is reasonably complementary or
related thereto as determined in good faith by the Board of Directors).
"Program" has the meaning set forth in Section 6.10.
"Pro-Rata Share" means, with respect to a Lender, a
fraction (expressed as a percentage), the numerator of which is the amount of
such Lender's Commitment and the denominator of which is the aggregate amount
of the Commitments.
"Real Property" means any estates or interests in real
property now owned or hereafter acquired by Borrower.
"Real Property Collateral" means the parcel or parcels of
real property and the related improvements thereto identified on Schedule R-1,
and any Real Property owned by Carolina Trailways in the event that Borrower
acquires all or substantially all of the stock or assets of such corporation.
"Recipient" has the meaning set forth in Section 18.8.
"Reference Bank" means Norwest Bank Minnesota, National
Association, or any successor thereto, and, solely to the extent that such
institution is unable to determine a Eurodollar Rate upon request of the
Facility Agent, means BankBoston.
"Reference Rate" means the variable rate of interest, per
annum, most recently announced by Reference Bank as its "base rate,"
irrespective of whether such announced rate is the best rate available from
such financial institution.
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"Reference Rate Loans" means any loan or Advance (or any
portion thereof) made pursuant to Section 2.1 during any period when interest
on such loan or Advance (or portion thereof) is payable based on the Reference
Rate.
"Reference Rate Margin" means:
(a) 0.50% per annum from and including the Closing
Date to and including July 31, 1997; and
(b) from and including August 1, 1997, the percentage
per annum set forth in the table below opposite the applicable Total
Indebtedness to Consolidated Cash Flow Ratio for the latest four fiscal
quarters (beginning with the four fiscal quarters ended June 30, 1997):
<TABLE>
<CAPTION>
Total Indebtedness(2) to
Consolidated Cash Flow Ratio Reference Rate Margin
- ---------------------------- ---------------------
<S> <C>
4.5:1.0 or greater 1.00%
less than 4.5:1.0, but 0.75%
greater than or equal to
4.0:1.0
less than 4.0:1.0, but 0.50%
greater than or equal to
3.5:1.0
less than 3.5:1.0, but 0.25%
greater than or equal to
3.0:1.0
less than 3.0:1.0 0.00%
</TABLE>
After August 1, 1997, changes in the Reference Rate Margin resulting from a
change in the Total Indebtedness to Consolidated Cash Flow Ratio shall become
effective on the first day of the second month of each fiscal quarter of
Borrower, beginning November 1, 1997, and continuing on the first day of each
February, May, August, and November thereafter and shall be based on the Total
Indebtedness to Consolidated Cash Flow Ratio for the prior four
__________________________________
(2) Solely for purposes of this definition, Total Indebtedness shall be
reduced by the amount of the aggregate liability of Borrower and its
Restricted Subsidiaries for letters of credit but not to exceed: (a)
$13,000,000 for any of Borrower's fiscal quarters before 12/31/97, and (b)
$10,000,000 for any of Borrower's subsequent fiscal quarters.
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fiscal quarters as set forth in the certificate of Borrower's Chief Financial
Officer delivered pursuant to Section 6.4(e).
"Register" has the meaning set forth in Section 15.3.
"Remediate" and "Remediation" includes but is not limited
to the investigation of the environmental condition of the Real Property, the
preparation of any feasibility studies, reports or remedial plans, and the
performance of any cleanup, abatement, removal, remediation, containment,
operation and maintenance, monitoring or restoration work, whether on or off of
the Real Property, which is required by applicable laws or regulations
establishing legally binding standards or obligations with respect to the
environment.
"Reportable Event" means any of the events described in
Section 4043(c) of ERISA or the regulations thereunder other than a Reportable
Event as to which the provision of 30 days notice to the PBGC is waived under
applicable regulations.
"Reports" has the meaning set forth in Section 17.16 (a).
"Required Lenders" means, at any time, Lenders whose
Pro-Rata Shares aggregate 51% or more of the Commitments, or if the Commitments
have been terminated, Lenders who have at least 51% of the aggregate unpaid
principal amount of the Obligations outstanding.
"Requirement of Law" means, as to any Person: all (a) (i)
statutes and regulations and (ii) court orders and injunctions, arbitrators's
decisions, and/or similar rulings, in each instance by any Governmental
Authority, or other body which has jurisdiction over such Person, or any
property of such Person, or of any other Person whose conduct such Person would
be responsible; and (b) that Person's organizational documents, by-laws and/or
other instruments which deal with corporate or similar governance, as
applicable.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Payment" has the meaning set forth in Section
7.10.
"Restricted Subsidiary" of a Person means any Subsidiary of
such Person that is not an Unrestricted Subsidiary. The Board of Directors
may, with the consent of Agents (which shall not be unreasonably withheld),
designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such
designation would not cause a Default or an Event of Default. For purposes of
making such designation, all outstanding Investments by Borrower and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated shall be deemed to be Restricted Payments at the time of such
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designation. All such outstanding Investments will be deemed to constitute
Investments in an amount equal to the greater of (a) the net book value of such
Investments at the time of such designation and (b) the fair market value of
such Investments at the time of such designation. Such designation shall only
be permitted if such Restricted Payment would be permitted at such time and
such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
"Retiree Health Plan" means an "employee welfare benefit
plan" within the meaning of Section 3(1) of ERISA that provides benefits to
individuals after termination of their employment, other than as required by
Section 601 of ERISA.
"Revolving Facility Usage" means, as of any date of
determination, the aggregate amount of Advances (including Agent Advances and
Agent Loans) and undrawn or unreimbursed (by Borrower) Letters of Credit
outstanding.
"Senior Notes" means any of the Series A and Series B
11-1/2% Senior Notes Due 2007 issued by Borrower pursuant to the Indenture.
"Settlement" has the meaning set forth in Section 2.1(i)(i).
"Settlement Date" has the meaning set forth in Section
2.1(i)(i).
"SFHA" has the meaning set forth in Section 6.10.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) at fair valuations, all of the properties and
assets of such Person are greater than the sum of the debts, including
contingent liabilities, of such Person, (b) the present fair salable value of
the properties and assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize upon its
properties and assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (d) such Person does not intend to, and does not believe that it
will, incur debts beyond such Person's ability to pay as such debts mature, and
(e) such Person is not engaged in business or a transaction, and is not about
to engage in business or a transaction, for which such Person's properties and
assets would constitute unreasonably small capital after giving due
consideration to the prevailing practices in the industry in which such Person
is engaged. In computing the amount of contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount that, in light
of all the facts and circumstances existing at such time, represents the amount
that reasonably can be expected to become an actual or matured liability.
"Stock Pledge" means that certain Security Agreement-Stock
Pledge, of even date herewith, between Borrower and Facility Agent.
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<PAGE> 36
"Subsidiary" means, with respect to any Person, (a) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (b) any partnership (i) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (ii) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"Subsidiary Collateral" means the real or personal property
assets of a domestic Restricted Subsidiary subject to the Lien of Facility
Agent on behalf of the Lender Group pursuant to a Subsidiary Security
Agreement.
"Subsidiary Guaranty" means a Guaranty executed by a
domestic Restricted Subsidiary of Borrower.
"Subsidiary Security Agreement" means those certain
security agreements, stock pledges, intellectual property security agreements,
mortgages or deeds of trust (or similar documents) pursuant to which Facility
Agent, on behalf of the Lender Group, obtains a Lien on Subsidiary Collateral.
"Syndication Agent" means BancBoston Securities, Inc.,
solely in its capacity as syndication agent for the Lenders, and shall include
any successor as syndication agent.
"Syndication Co-Agent" means Foothill, solely in its
capacity as syndication co-agent for the Lenders, and shall include any
successor as syndication co-agent.
"Total Indebtedness" means, with respect to any Person, the
Indebtedness of such Person and its Restricted Subsidiaries.
"Unrestricted Subsidiary" means on the Closing Date the
Existing Unrestricted Subsidiaries, and thereafter shall also include any
Subsidiary that is designated by the Board of Directors as an Unrestricted
Subsidiary pursuant to a resolution of the board of directors, but only to the
extent that the Agents approve such designation (which shall not be
unreasonably withheld) and such Subsidiary (a) has no Indebtedness other than
Limited-Recourse Debt, (b) is not party to any agreement, contract,
arrangement, or understanding with Borrower or any Restricted Subsidiary of
Borrower unless the terms of any such agreement, contract, arrangement or
understanding does not violate Section 7.13, (c) is a Person with respect to
which neither Borrower nor any of its Restricted Subsidiaries has any direct or
indirect obligation (i) to subscribe for additional Equity Interests or (ii) to
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maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results, and (d) has at least one
director on its board of directors that is not a director or executive officer
of Borrower or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of Borrower or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to Facility Agent by filing with Facility Agent a
certified copy of the Board Resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail
to meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this
Agreement and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of Borrower as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date under Section 7.1,
Borrower shall be in default of such covenant). The Board of Directors of
Borrower may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of Borrower of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (A) such Indebtedness is permitted under Section
7.1, calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, (B) no Default or Event of
Default would be in existence following such designation, and (C) such
Restricted Subsidiary, if domestic, executes a Guaranty and any Subsidiary
Security Agreements reasonably required by Agents, in substantially the same
form as those executed on the Closing Date.
"Vehicles" means all of the presently existing buses and
motor vehicles of Borrower or its domestic Restricted Subsidiaries set forth on
Schedule 5.3, and, solely to the extent that Borrower agrees to add them to
Schedule 5.3, any buses and motor vehicles that are acquired after the Closing
Date by Borrower or any of its domestic Restricted Subsidiaries, or that are
leased as of the Closing Date and subsequently purchased by Borrower or any of
its Subsidiary Guarantors.
"VIAD Properties" means those certain parcels of Real
Property Collateral so designated on Schedule R-1.
"Voidable Transfer" has the meaning set forth in
Section 18.6.
"Weighted Average Life to Maturity" means, when applied to
any Indebtedness at any date, the number of years obtained by dividing (a) the
sum of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
principal amount of such Indebtedness.
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"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. When used herein,
the term "financial statements" shall include the notes and schedules thereto.
Whenever the term "Borrower" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrower on a consolidated
basis (but excluding any Unrestricted Subsidiaries) unless the context clearly
requires otherwise.
1.3 CODE. Any terms used in this Agreement that are defined in
the Code shall be construed and defined as set forth in the Code unless
otherwise defined herein.
1.4 CONSTRUCTION. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references
to the singular include the plural, the term "including" is not limiting, and
the term "or" has, except where otherwise indicated, the inclusive meaning
represented by the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. An Event of
Default shall "continue" or be "continuing" until such Event of Default has
been waived in writing by the requisite members of the Lender Group. Section,
subsection, clause, schedule, and exhibit references are to this Agreement
unless otherwise specified. Any reference in this Agreement or in the Loan
Documents to this Agreement or any of the Loan Documents shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, restatements, substitutions, and supplements, thereto and
thereof, as applicable.
1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits
attached to this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 REVOLVING ADVANCES.
(a) Subject to the terms and conditions of this
Agreement, each Lender agrees to make advances ("Advances") to Borrower in an
amount at any one time outstanding not to exceed such Lender's Pro-Rata Share
of an amount equal to the lesser of (i) the Maximum Revolving Amount less the
outstanding balance of all undrawn or unreimbursed Letters of Credit, or (ii)
the Borrowing Base less the aggregate amount of all undrawn or unreimbursed
Letters of Credit. For purposes of this Agreement, "Borrowing Base," as of any
date of determination, shall mean the result of:
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(w) the least of (1) 85% of Eligible Accounts,
(2) an amount equal to Borrower's Collections with respect to
Accounts for the immediately preceding 30 day period; and (3)
$2,500,000; plus
(x) the least of (1) 90% of the Orderly
Liquidation Value of Core Vehicles with respect to Core Vehicles
appraised on the Current Appraisal (irrespective of whether such
Vehicles have been sold or disposed of since completion of such
Current Appraisal), (2) 93% of the Orderly Liquidation Value of
Core Vehicles appraised on the Current Appraisal, excluding any
such Vehicles sold or disposed of since completion of such Current
Appraisal, and (3) the Maximum Vehicle Amount; plus
(y) the least of (1) 50% of the Fair Market
Value of Core Real Property Collateral, (2) 30% of the total
Borrowing Base, and (3) the Maximum Real Estate Amount; minus
(z) the aggregate amount of reserves, if any,
established by Facility Agent under Sections 2.1 (b) or 10.
(b) Anything to the contrary in Section 2.1(a) above
notwithstanding, Facility Agent may create reserves against the Borrowing Base
without declaring an Event of Default: (i) if it determines that there has
occurred a material uninsured loss or condemnation respecting Core Real
Property Collateral (which loss or condemnation is not reflected in the Current
Appraisal); (ii) if it determines that there has occurred a breach of
Borrower's obligations under Section 6.18; or (iii) respecting tires and
potential remediation or other environmental issues concerning Core Real
Property Collateral.
(c) Amounts borrowed pursuant to this Section 2.1 may
be repaid and, subject to the terms and conditions of this Agreement,
reborrowed at any time during the term of this Agreement.
(d) Procedure for Borrowing. Each Borrowing shall be
made upon Borrower's request (pursuant to the terms of Section 2.10), which
request shall be irrevocable except as set forth in Section 2.13, specifying
(i) the amount of the Borrowing; (ii) the requested Funding Date; (iii) whether
the Borrowing is to consist of Eurodollar Rate Loans or Reference Rate Loans;
and (iv) if such Borrowing is to consist of Eurodollar Rate Loans, the
requested Interest Period. If the Borrowing is to consist of Eurodollar Rate
Loans, such request must be delivered to Facility Agent no later than 11:00
a.m. (California time) two Business Days prior to the requested Funding Date.
If the Borrowing is to consist of Reference Rate Loans, such request must be
delivered to Facility Agent no later than 11:00 a.m. (California time) one
Business Day prior to the requested Funding Date; provided, however, that if
the amount of such requested Borrowing consisting of Reference Rate Loans is
not greater than the Agent Loan Availability at such time, then such request
may be made no later than 11:00 a.m. (California time) on the requested Funding
Date.
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(e) Facility Agent's Election. Promptly after receipt
of a request for a Borrowing that is to consist of Reference Rate Loans in an
aggregate amount that is less than the Agent Loan Availability at such time,
and if such notice is received at least one Business Day before the requested
Funding Date, then the Facility Agent shall elect, in its discretion, (i) to
have the terms of Section 2.1(f) apply to such requested Borrowing, or (ii) to
make an Agent Loan pursuant to the terms of Section 2.1(g) in the amount of the
requested Borrowing. Any requested Borrowing consisting of Reference Rate
Loans where the notice is received on the same day as the proposed Funding Date
and the requested amount thereof is not greater than the Agent Loan
Availability shall be made as an Agent Loan pursuant to the terms of Section
2.1(g). In any other case, upon the receipt of a timely request for a
Borrowing as set forth in Section 2.1 (d), Facility Agent shall have the terms
of Section 2.1 (f) apply to such requested Borrowing.
(f) Making of Advances.
(i) In the event that the Facility Agent shall
elect (or pursuant to Section 2.1(e) shall be compelled) to have the terms of
this Section 2.1(f) apply to a requested Borrowing as described in Section
2.1(e), then promptly after receipt of a request for a Borrowing pursuant to
Section 2.1(d), the Facility Agent shall notify the Lenders, not later than
1:00 p.m. (California time) on the Business Day immediately preceding the
Funding Date applicable thereto, by telephone and promptly followed by
telecopy, or other similar form of transmission, of the requested Borrowing.
Each Lender shall make the amount of such Lender's Pro-Rata Share of the
requested Borrowing available to the Facility Agent in same day funds, to such
account of the Facility Agent as the Facility Agent may designate, not later
than 10:00 a.m. (California time) on the Funding Date applicable thereto.
After the Facility Agent's receipt of the proceeds of such Advances, upon
satisfaction of the applicable conditions precedent set forth in Sections 3.1
and 3.2, the Facility Agent shall make the proceeds of such Advances available
to Borrower not later than 11:00 a.m. (California time) on the applicable
Funding Date by transferring same day funds equal to the proceeds of such
Advances received by the Facility Agent to the Designated Account; provided,
however, that, subject to the provisions of Section 2.1(l), the Facility Agent
shall not request any Lender to make, and no Lender shall have the obligation
to make, any Advance if the Facility Agent shall have received written notice
from any Lender, or otherwise has actual knowledge, that (A) one or more of the
applicable conditions precedent set forth in Sections 3.1 or 3.2 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or (B)
the requested Borrowing would exceed the Availability on such Funding Date.
(ii) Unless Facility Agent receives notice from
a Lender on or prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least one Business Day prior to the date of such
Borrowing, that such Lender will not make available as and when required
hereunder to Facility Agent for the account of Borrower the amount of that
Lender's Pro-Rata Share of the Borrowing, Facility Agent may assume that each
Lender has made or will make such amount available to Facility Agent in
immediately
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available funds on the Funding Date and Facility Agent may (but shall not be so
required), in reliance upon such assumption, make available to Borrower on such
date a corresponding amount. If and to the extent any Lender shall not have
made its full amount available to Facility Agent in immediately available funds
and Facility Agent in such circumstances has made available to Borrower such
amount, that Lender shall on the Business Day following such Funding Date make
such amount available to Facility Agent, together with interest at the
Defaulting Lenders Rate for each day during such period. A notice from
Facility Agent submitted to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount is paid
to Facility Agent such payment to Facility Agent shall constitute such Lender's
Advance on the date of Borrowing for all purposes of this Agreement. If such
amount is not paid to Facility Agent on the Business Day following the Funding
Date, Facility Agent will notify Borrower of such failure to fund and, upon
demand by Facility Agent, Borrower shall pay such amount to Facility Agent for
Facility Agent's account, together with interest thereon for each day elapsed
since the date of such Borrowing, at a rate per annum equal to the interest
rate applicable at the time to the Advances composing such Borrowing. Any
Lender that fails to make any Advance that it is required to make hereunder on
any Funding Date and that has not cured such failure by making such Advance
within one Business Day after written demand upon it by Facility Agent to do
so, shall constitute a "Defaulting Lender" for purposes of this Agreement and
shall continue to be a Defaulting Lender until such Advance is made.
(iii) Facility Agent shall not be obligated to
transfer to a Defaulting Lender any payments made by Borrower to Facility Agent
for the Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled
to the sharing of any payments hereunder. Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Facility Agent to be applied
first to any amounts owing to Facility Agent by such Defaulting Lender
(including interest thereon as provided in this Agreement) and thereafter as
provided under Sections 2.1 (i)(iii) or 2.5 (b). Solely for the purposes of
voting or consenting to matters with respect to the Loan Documents (other than
matters described in Section 16.1, for which the consent of all Lenders
including such Defaulting Lender must still be obtained) and determining
Pro-Rata Shares, such Defaulting Lender shall be deemed not to be a "Lender"
and such Defaulting Lender's Commitment shall be deemed to be zero. This
section shall remain effective with respect to such Defaulting Lender until (A)
the Obligations under this Agreement shall have been declared or shall have
become immediately due and payable or (B) the requisite non-Defaulting Lenders,
Agents, and Borrower shall have waived such Defaulting Lender's default in
writing. The operation of this section shall not be construed to increase or
otherwise affect the Commitment of any non-Defaulting Lender, or relieve or
excuse the performance by Borrower of its duties and obligations hereunder.
(g) Making of Agent Loans.
(i) In the event that the Facility Agent shall
elect (pursuant to the terms of Section 2.1(e)) or shall be compelled to have
the terms of this Section 2.1(g)
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apply to a requested Borrowing, Facility Agent shall make an Advance in the
amount of such Borrowing (any such Advance made solely by Facility Agent
pursuant to this Section 2.1(g) being referred to as an "Agent Loan" and such
Advances being referred to collectively as "Agent Loans") available to Borrower
not later than 11:00 a.m. (California time) on the Funding Date applicable
thereto by transferring same day funds to the Designated Account. Each Agent
Loan is an Advance hereunder, shall be a Reference Rate Loan, and shall be
subject to all the terms and conditions applicable to other Advances, except
that all payments thereon shall be payable to Facility Agent solely for its own
account (and for the account of the holder of any participation interest with
respect to such Advance). Subject to the provisions of Section 2.1(l), the
Facility Agent shall not make any Agent Loan if the Facility Agent shall have
received written notice from any Lender, or otherwise has actual knowledge,
that (i) one or more of the applicable conditions precedent set forth in
Sections 3.1 or 3.2 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Facility Agent shall not otherwise be
required to determine whether the applicable conditions precedent set forth in
Sections 3.1 or 3.2 have been satisfied on the Funding Date applicable thereto
prior to making, in its sole discretion, any Agent Loan.
(ii) The Agent Loans shall be secured by the
Collateral and shall constitute Reference Rate Loans and Obligations hereunder,
and shall bear interest at the rate applicable from time to time to Obligations
pursuant to Section 2.7(a).
(h) Agent Advances.
(i) Facility Agent hereby is authorized by
Borrower and the Lenders, from time to time in Agents' sole discretion, (1)
after the occurrence of a Default or an Event of Default (but without
constituting a waiver of such Default or Event of Default), or (2) at any time
that any of the other applicable conditions precedent set forth in Section 3.1
or 3.2 have not been satisfied, to make Advances (which shall be Reference Rate
Loans) to Borrower on behalf of the Lenders which Agents, in their reasonable
business judgment, deem necessary or desirable (A) to preserve or protect the
Collateral, or any portion thereof, (B) to enhance the likelihood of, or
maximize the amount of, repayment of the Obligations, or (C) to pay any other
amount chargeable to Borrower pursuant to the terms of this Agreement,
including Lender Group Expenses and the costs, fees, and expenses described in
Section 10 (any of the Advances described in this Section 2.1(h) being
hereinafter referred to as "Agent Advances"); provided, that Facility Agent
shall not make any Agent Advances to Borrower without the consent of the
Required Lenders if the amount thereof would exceed $5,000,000 in the aggregate
at any one time.
(ii) Agent Advances shall be repayable on
demand and secured by the Collateral, shall constitute Reference Rate Loans
and Obligations hereunder, and shall bear interest at the rate applicable from
time to time to the Obligations pursuant to Section 2.7(a).
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(i) Settlement. It is agreed that each Lender's
funded portion of the Advances is intended by the Lenders to be equal at all
times to such Lender's Pro-Rata Share of the outstanding Advances. Such
agreement notwithstanding, the Facility Agent and the Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrower) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances, the Agent Loans, and the
Agent Advances shall take place on a periodic basis in accordance with the
following provisions:
(i) The Facility Agent shall request
settlement ("Settlement") with the Lenders on a weekly basis, or on a more
frequent basis if so determined by the Facility Agent, (1) for itself, with
respect to each Agent Loan and Agent Advance, and (2) with respect to
Collections received, as to each by notifying the Lenders by telephone and
promptly followed by telecopy, or other similar form of transmission, of such
requested Settlement, no later than 1:00 p.m. (California time) on the Business
Day immediately preceding the date of such requested Settlement (the
"Settlement Date"). Such notice of a Settlement Date shall include a summary
statement of the amount of outstanding Advances, Agent Loans, and Agent
Advances for the period since the prior Settlement Date, the amount of
repayments received in such period, and the amounts allocated to each Lender of
the principal, interest, fees, and other charges for such period. Subject to
the terms and conditions contained herein (including Section 2.1(i)(ii)): (y)
if a Lender's balance of the Advances, Agent Loans, and Agent Advances exceeds
such Lender's Pro-Rata Share of the Advances, Agent Loans, and Agent Advances
as of a Settlement Date, then Facility Agent shall by no later than 1:00 p.m
(California time) on the Settlement Date transfer in same day funds to the
account of such Lender as Lender may designate, an amount such that each such
Lender shall, upon receipt of such amount, have as of the Settlement Date, its
Pro-Rata Share of the Advances, Agent Loans, and Agent Advances; and (z) if a
Lender's balance of the Advances, Agent Loans, and Agent Advances is less than
such Lender's Pro-Rata Share of the Advances, Agent Loans, and Agent Advances
as of a Settlement Date, such Lender shall no later than 1:00 p.m. (California
time) on the Settlement Date transfer in same day funds to such account of the
Facility Agent as the Facility Agent may designate, an amount such that each
such Lender shall, upon transfer of such amount, have as of the Settlement
Date, its Pro-Rata Share of the Advances, Agent Loans, and Agent Advances.
Such amounts made available to the Facility Agent under clause (z) of the
immediately preceding sentence shall be applied against the amounts of the
applicable Agent Loan or Agent Advance and, together with the portion of such
Agent Loan or Agent Advance representing Foothill's Pro-Rata Share thereof,
shall constitute Advances of such Lenders (which advances shall be Reference
Rate Loans). If any such amount is not made available to the Facility Agent by
any Lender on the Settlement Date applicable thereto to the extent required by
the terms hereof, the Facility Agent shall be entitled to recover for its
account such amount on demand from such Lender together with interest thereon
at the Defaulting Lenders Rate.
(ii) In determining whether a Lender's balance
of the Advances, Agent Loans, and Agent Advances is less than, equal to, or
greater than such Lender's Pro-Rata Share of the Advances, Agent Loans, and
Agent Advances as of a
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Settlement Date, Facility Agent shall, as part of the relevant Settlement,
apply to such balance the portion of payments actually received by Facility
Agent with respect to principal, interest, fees payable by Borrower and
allocable to the Lenders hereunder, and proceeds of Collateral. To the extent
that a net amount is owed to any such Lender after such application, such net
amount shall be distributed by Facility Agent to that Lender as part of such
Settlement.
(iii) Between Settlement Dates, the Facility
Agent, to the extent no Agent Advances or Agent Loans are outstanding, may pay
over to Foothill any payments received by the Facility Agent, which in
accordance with the terms of the Agreement would be applied to the reduction of
the Advances, for application to Foothill's Pro-Rata Share of the Advances,
and, upon the repayment in full of Foothill's Pro-Rata Share of the Advances,
then to the other Lenders as provided under Section 2.5(b). If, as of any
Settlement Date, Collections received since the then immediately preceding
Settlement Date have been applied to Foothill's Pro-Rata Share of the Advances
other than to Agent Loans or Agent Advances, as provided for in the previous
sentence, Foothill shall pay to the Facility Agent for the accounts of the
Lenders, and Facility Agent shall pay to the Lenders, to be applied to the
outstanding Advances of such Lenders, an amount such that each Lender shall,
upon receipt of such amount, have, as of such Settlement Date, its Pro-Rata
Share of the Advances. During the period between Settlement Dates, the
Facility Agent with respect to Agent Loans and Agent Advances, and each Lender
with respect to the Advances other than Agent Loans and Agent Advances, shall
be entitled to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by the Facility Agent or the
Lenders, as applicable.
(j) Notation. Each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances on the grid attached to its Note or in its
books and records, including computer records, such grid or such books and
records constituting rebuttably presumptive evidence, absent manifest error, of
the accuracy of the information contained therein.
(k) Lenders' Failure to Perform. All Advances (other
than Agent Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro-Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advances hereunder, nor shall any Commitment
of any Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Advances hereunder, and (ii) no
failure by any Lender to perform its obligation to make any Advances hereunder
shall excuse any other Lender from its obligation to make any Advances
hereunder.
(l) Overadvances. Facility Agent may make voluntary
Overadvances, which shall be Reference Rate Loans, without the written consent
of the Facility Co-Agent or Required Lenders for amounts charged to the Loan
Account for interest, fees, or Lender Group Expenses pursuant to Section
2.1(h)(i)(2)(C). If the
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conditions for borrowing under Section 3.2(d) cannot be fulfilled, the Facility
Agent may, with the consent of the Facility Co-Agent and the Required Lenders,
knowingly and intentionally continue to make Advances (including Agent Loans to
the extent permitted under Section 2.1(g)(i)), which shall be Reference Rate
Loans, to Borrower such failure of condition notwithstanding or modify the
definition of "Borrowing Base," so long as: (i) such Overadvance or
modification would not exist for more than 120 days and (ii) the amount by
which Revolving Facility Usage exceeds the Borrowing Base (as defined prior to
any modification of such definition under this Section 2.1 (l)) would not
exceed the lesser of: (y) $12,500,000 or (z) 10% of the Borrowing Base (as
defined prior to any modification of such definition under this Section 2.1
(l)). The foregoing provisions are for the sole and exclusive benefit of the
Agents and the Lenders and are not intended to benefit Borrower in any way.
The Advances and Agent Loans, as applicable, that are made pursuant to this
Section 2.1(l) shall be subject to the same terms and conditions as any other
Agent Advance or Agent Loan, as applicable, except that the rate of interest
applicable thereto shall be the rates set forth in Section 2.7(c)(i) without
regard to the presence or absence of a Default or Event of Default; provided,
that the Required Lenders may, at any time, revoke Facility Agent's
authorization contained in this Section 2.1(l) to make Overadvances (except for
and excluding amounts charged to the applicable Loan Account for interest,
fees, or Lender Group Expenses), any such revocation to be in writing and to
become effective upon Facility Agent's receipt thereof; provided further,
however, that the making of such Overadvances shall not constitute a waiver of
such Event of Default arising therefrom. Each Lender shall be obligated to
settle with Facility Agent as provided in Section 2.1(i) for the amount of such
Lender's Pro-Rata Share of any unintentional Overadvances by Facility Agent
reported to such Lender and any intentional Overadvances made as permitted
under this Section 2.1(l).
(m) Effect of Bankruptcy. If a case is commenced by
or against any Borrower under the Bankruptcy Code, or other statute providing
for debtor relief, then, without the approval of Required Lenders the Lender
Group shall not make additional loans or provide additional financial
accommodations under the Loan Documents to such Borrower as debtor or
debtor-in-possession, or to any trustee for such Borrower, nor consent to the
use of cash collateral (provided that the applicable Loan Account shall
continue to be charged, to the fullest extent permitted by law, for accruing
interest, fees, and Lender Group Expenses).
(n) Note(s). On the Closing Date, the Borrower shall
execute and deliver to the Facility Agent on behalf of each Lender so
requesting, a promissory note, substantially in the form of Exhibit 2.1(n)
hereto (such promissory notes, together with any new notes issued pursuant to
Section 15.1 upon the assignment of any portion of any Lender's Obligations and
Commitments, being hereinafter referred to collectively as the "Notes" and each
of such promissory notes being hereinafter referred to individually as a
"Note"), to evidence such requesting Lender's Pro-Rata Share of the
Obligations, in an original face amount equal to the amount of such requesting
Lender's Pro-Rata Share of the Commitments and with other appropriate
insertions.
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(o) Increases and Reductions of Commitments.
(i) Borrower may request, at any time and from
time to time before the earlier to occur of (y) December 31, 1998 and (z) a
voluntary reduction of the Commitments pursuant to Section 2.1(o)(ii), that the
aggregate Commitments be increased in $5,000,000 increments up to the Maximum
Revolving Amount, which increases the Agents will use their best efforts to
arrange either by the addition of additional members of the Lender Group (which
shall be Eligible Transferees) or increases in one or more Commitments of
then-existing members of the Lender Group. Facility Agent shall notify
Borrower and the Lender Group in writing promptly upon completion of each such
increase in the Commitments and such increase, including any related increase
in the unused line fee provided for in Section 2.12 (b), will take effect upon
Facility Agent's giving of such notice, and shall be subject to receipt by the
Facility Agent of such certificates, opinions, and other documents as shall be
reasonably necessary to evidence Borrower's authority to enter into such an
increase.
(ii) Borrower may permanently reduce the
unfunded portion of the Commitments in amounts equal to $5,000,000 and
increments of $1,000,000 in excess thereof, at any time and from time to time
without penalty. Such voluntary reductions of the Commitments shall be
applied so as to maintain each Lenders's Pro-Rata Share of the remaining
Commitments and shall be conditioned upon payment to the Facility Agent for the
ratable benefit of the Lenders, of the accrued and unpaid unused line fee
provided for in Section 2.12 (b), and upon at least two Business Days prior
written notice to the Agents and the Lenders.
(iii) Borrower shall be obligated to reduce the
Commitments by the amount of any unused proceeds of Asset Sales pursuant to
Section 7.4. Such mandatory reductions of the Commitments shall be applied so
as to maintain each Lender's Pro-Rata Share of the remaining Commitments and
shall be accompanied by payment to the Facility Agent for the ratable benefit
of the Lenders, of the accrued and unpaid unused line fee provided for in
Section 2.12 (b), repayment of any Overadvances which would otherwise occur as
a result of such reduction, and, if such repayments cannot be made solely from
Reference Rate Loans, any amounts payable pursuant to Section 2.17 (d).
2.2 LETTERS OF CREDIT.
(a) Agreement to Cause Issuance; Amounts; Outside Expiration Date.
(i) Subject to the terms and conditions of this Agreement,
Facility Agent agrees to issue letters of credit for the account of Borrower
(each, an "L/C") or to issue guarantees of payment (each such guaranty, an "L/C
Guaranty") with respect to letters of credit issued by Issuer for the account
of Borrower, in an aggregate undrawn and unreimbursed amount not to exceed the
least of (x) the Borrowing Base less the Revolving
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Facility Usage, (y) the Maximum Revolving Amount less the Revolving Facility
Usage, and (z) $35,000,000. At no time during the term of this Agreement shall
the outstanding face amount of Letters of Credit be less than $6,597,000.
(ii) Borrower expressly understands and agrees
that Facility Agent shall have no obligation to arrange for the issuance by
Issuer of the letters of credit that are to be the subject of L/C Guarantees.
Borrower and the Lender Group acknowledge and agree that certain of the letters
of credit that are to be the subject of L/C Guarantees may be outstanding on
the Closing Date, were issued by Issuer pursuant to the Existing Loan
Documents, and shall be treated as if issued hereunder on the Closing Date.
Each Letter of Credit shall have an expiry date no later than 5 days prior to
the Maturity Date and all such Letters of Credit shall be in form and substance
acceptable to Facility Agent in its reasonable discretion.
(iii) If the Lender Group is obligated to
advance funds under a Letter of Credit, Borrower immediately shall reimburse
such amount to Facility Agent and, in the absence of such reimbursement, the
amount so advanced shall, at Agent's discretion, either (x) immediately and
automatically be deemed to be an Advance hereunder and, thereafter, shall bear
interest at the rate then applicable to Advances under Section 2.7 or (y) be
paid directly by the Lender Group to the Issuer, not by way of an Advance, and,
thereafter such amounts paid shall bear interest at the rate then applicable to
non-contingent Obligations under Section 2.7.
(b) Indemnification. Borrower hereby agrees to
indemnify, save, defend, and hold the Lender Group harmless from any loss,
cost, expense, or liability, including payments made by the Lender Group,
expenses, and reasonable attorneys fees incurred by the Lender Group arising
out of or in connection with any Letter of Credit; provided, however, that
Borrower shall not be required to indemnify the Lender Group if such loss,
cost, expense, or liability was the result of the gross negligence or wilful
misconduct by (i) a member thereof (including a member acting as Issuer), in
which case such member shall indemnify each other member of the Lender Group
for any such loss, cost, or expense, or (ii) by Reference Bank acting as
Issuer, in which case Foothill will indemnify each other member of the Lender
Group for any such loss, cost, or expense. Borrower agrees to be bound by the
Issuer's regulations and interpretations of any letters of credit guarantied by
the Lender Group and opened to or for Borrower's account as set forth in the
applications therefor entered into by Borrower in favor of Issuer, even though
this interpretation may be different from Borrower's own, and Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrower's instructions. Borrower understands that the L/C Guarantees may
require the Lender Group to indemnify the Issuer for certain costs or
liabilities arising out of claims by Borrower against such Issuer. Borrower
hereby agrees to indemnify, save, defend, and hold the Lender Group harmless
with respect to any loss, cost, expense (including reasonable attorneys fees),
or liability incurred by the Lender Group under any L/C Guaranty as a result of
the Lender Group's indemnification of Issuer;
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provided, however, that Foothill shall be solely responsible for indemnifying
the Lender Group for any such loss, cost, expense or liability arising out of
the gross negligence or wilful misconduct of Reference Bank as Issuer.
(c) Supporting Materials. Borrower hereby authorizes
and directs the Issuer to deliver to Facility Agent all instruments, documents,
and other writings and property received by the Issuer pursuant to such letter
of credit, and to accept and rely upon Facility Agent's instructions and
agreements with respect to all matters arising in connection with such letter
of credit and the related application. Borrower may or may not be the
"applicant" or "account party" with respect to such letter of credit.
(d) Costs of Letters of Credit. Any and all customary
fees of the Issuer for issuance, negotiation, settlement, amendments, and
processing, and costs incurred by Facility Agent relating to the letters of
credit guaranteed by an L/C Guaranty (all as set forth in Schedule 2.2(d)),
shall be considered Lender Group Expenses for purposes of this Agreement and
immediately shall be reimbursable by Borrower to Facility Agent.
(e) Termination. Immediately upon the termination of
this Agreement pursuant to Section 3.4, Borrower agrees to either (i) provide
cash collateral to be held by Facility Agent, or a "back up" letter of credit
satisfactory to Agents, in either case in an amount equal to 102% of the
maximum amount of the Lender Group's obligations under Letters of Credit, or
(ii) cause to be delivered to Facility Agent releases of all of the Lender
Group's obligations under outstanding Letters of Credit. At Facility Agent's
discretion, any proceeds of Collateral received by Facility Agent after the
occurrence and during the continuation of an Event of Default may be held as
the cash collateral required by this Section 2.2(e).
(f) Participation.
(i) Purchase of Participation. Immediately
upon issuance of any Letter of Credit in accordance with this Section 2.2, each
Lender shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and participation
in the credit support or enhancement provided through the Facility Agent to the
Issuer in connection with the issuance of such Letter of Credit, equal to such
Lender's Pro-Rata Share of the face amount of such Letter of Credit (including,
without limitation, all obligations of Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(ii) Documentation. Upon the request of any
Lender, the Facility Agent shall furnish to such Lender copies of any Letter of
Credit, reimbursement agreements executed in connection therewith, application
for any Letter of Credit and credit support or enhancement provided through the
Facility Agent in connection with the issuance of any Letter of Credit, and
such other documentation as may reasonably by requested by such Lender.
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(iii) Obligations Irrevocable. The obligations
of each Lender to make payments to the Facility Agent with respect to any
Letter of Credit or with respect to any credit support or enhancement provided
through the Facility Agent with respect to a Letter of Credit, and the
obligations of Borrower to make payments to the Facility Agent, for the account
of the Lenders, shall be irrevocable, not subject to any qualification or
exception whatsoever, including, without limitation, any of the following
circumstances:
(A) any lack of validity or enforceability
of this Agreement or any of the other Loan Documents;
(B) the existence of any claim, setoff,
defense, or other right which any Borrower may have at any time against
a beneficiary named in a Letter of Credit or any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), any Lender,
the Agents, the Issuer, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying transactions between such
Borrower or any other Person and the beneficiary named in any Letter of
Credit);
(C) any draft, certificate, or any
other document presented under the Letter of Credit proving to be forged,
fraudulent, invalid, or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;
(D) the surrender or impairment of
any security for the performance or observance of any of the terms of any of
the Loan Documents; or
(E) the occurrence of any Default or
Event of Default.
2.3 INTENTIONALLY DELETED.
2.4 INTENTIONALLY DELETED
2.5 PAYMENTS.
(a) Payments by Borrower.
(i) All payments to be made by Borrower shall
be made without set-off, recoupment, deduction, or counterclaim, except as
otherwise required by law. Except as otherwise expressly provided herein, all
payments by Borrower shall be made to Facility Agent for the account of the
Lenders or Agents, as the case may be, at Facility Agent's address set forth in
Section 12, and shall be made in immediately available funds, no later than
11:00 a.m. (California time) on the date specified herein. Any payment
received by Facility Agent later than 11:00 a.m. (California time), at the
option of Facility
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Agent, shall be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue until such following
Business Day.
(ii) Except as provided in Section 2.13(b) with
respect to calculating the last day of an Interest Period, whenever any payment
is due on a day other than a Business Day, such payment shall be made on the
following Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
(iii) Unless Facility Agent receives notice from
Borrower prior to the date on which any payment is due to the Lenders that
Borrower will not make such payment in full as and when required, Facility
Agent may assume that Borrower has made such payment in full to Facility Agent
on such date in immediately available funds and Facility Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent Borrower has not made such payment in full to Facility Agent,
each Lender shall repay to Facility Agent on demand such amount distributed to
such Lender, together with interest thereon at the Reference Rate for each day
from the date such amount is distributed to such Lender until the date repaid.
(b) Apportionment and Application of Payments. Except
as otherwise provided with respect to Defaulting Lenders, aggregate principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Advances to which such payments relate
held by each Lender) and payments of the fees (other than fees designated for
Facility Agent's or Facility Co-Agent's separate account) shall, as applicable,
be apportioned ratably among the Lenders. All payments shall be remitted to
Facility Agent and all such payments not relating to specific Advances, or not
constituting payment of specific fees and all proceeds of Collateral received
by Facility Agent, shall be applied, first, to pay any fees or expense
reimbursements then due to Facility Agent or Facility Co-Agent from Borrower;
second, to pay any fees or Lender Group Expenses then due to the Lenders from
Borrower; third, to pay interest due in respect of all Advances, including
Agent Loans and Agent Advances; fourth, to pay or prepay principal of Agent
Loans and Agent Advances; fifth, ratably to pay principal of the Advances
(other than Agent Loans and Agent Advances) and unreimbursed obligations in
respect of Letters of Credit; and sixth, ratably to pay any other Obligations
due to Agents or any Lender by Borrower. Facility Agent shall promptly
distribute to each Lender, pursuant to the applicable wire transfer
instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided for in Section
2.1(i).
2.6 OVERADVANCES. If, at any time or for any reason, the
amount of Obligations owed by Borrower to the Lender Group pursuant to Sections
2.1 and 2.2 is greater than either the Dollar or percentage limitations set
forth in Sections 2.1 or 2.2 (an "Overadvance"), Borrower immediately shall pay
to Facility Agent, in cash, the amount of
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such excess to be used by Facility Agent to reduce the Obligations pursuant to
the terms of Section 2.5(b).
2.7 INTEREST AND LETTER OF CREDIT FEES: RATES, PAYMENTS, AND
CALCULATIONS.
(a) Interest Rate. Except as provided in Section
2.7(c) or elsewhere in the Agreement, below, all non-contingent Obligations
shall bear interest as follows:
(i) All non-contingent Obligations (including
Reference Rate Loans) other than Eurodollar Rate Loans shall bear interest, on
the actual Daily Balance, at a per annum rate equal to the Reference Rate plus
the Reference Rate Margin.
(ii) Each Eurodollar Rate Loan shall bear
interest, on the actual Daily Balance, at a per annum rate equal to the
Adjusted Eurodollar Rate plus the Eurodollar Rate Margin.
(b) Letter of Credit Fee. Borrower shall pay Facility
Agent, for the benefit of the Lender Group, a fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.2(d)) equal to (i) from and
including the Closing Date to and including July 31, 1997, 2.00% per annum
times the average aggregate undrawn amount of all Letters of Credit outstanding
during the prior month; and (ii) for any date of measurement on and after
August 1, 1997, the Eurodollar Rate Margin in effect on such date times the
average aggregate undrawn amount of all Letters of Credit outstanding during
the prior month.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default, (i) all non-contingent Obligations shall
bear interest at a per annum rate equal to the Reference Rate plus 2.00%; and
(ii) the Letter of Credit fee provided in Section 2.7(b) shall be increased to
3.50% per annum times the amount of the aggregate undrawn amount of all
outstanding Letters of Credit.
(d) [Intentionally Deleted]
(e) Payments. Letter of Credit fees payable hereunder
shall be due and payable, in arrears, on the first day of each month during the
term hereof. Interest in respect of Reference Rate Loans shall be due and
payable, in arrears, on the first day of each month during the term hereof and
interest in respect of each Eurodollar Rate Loan shall be due and payable, in
arrears, for any Interest Period of three months or less, on the last day of
the Interest Period applicable thereto and, for any Eurodollar Rate Loans
having an Interest Period of six months, on the three month anniversary of the
Funding Date thereof and on the last day of such Interest Period. Borrower
hereby authorizes Facility Agent, at its option, without prior notice to
Borrower (except as provided below), to charge such
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interest and Letter of Credit fees, all Lender Group Expenses (as and when
incurred), the charges, commissions, fees, and costs provided for in Section
2.2(d) (as and when accrued or incurred), the fees and charges provided for in
Section 2.12 (as and when accrued or incurred), and other payments due under
any Loan Document to the Loan Account, which amounts thereafter shall accrue
interest at the rate then applicable to Advances hereunder. To the extent it
is practicable to do so, Facility Agent shall provide notice to Borrower of the
nature and amount of any such Lender Group Expenses or any of the other
foregoing fees, costs, or charges prior to same being charged to the Loan
Account; provided, however, that any failure by Facility Agent to provide such
notice to Borrower shall not in any way diminish Borrower's obligation to
reimburse the Lender Group for such Lender Group Expenses or such fees, costs,
or charges or impair the Lender Group's right to receive the same, or give rise
to any liability on the part of the Lender Group; provided, further that if
Facility Agent is unable to give prior notice to Borrower of the Lender Group
Expenses or any of the other fees, costs or charges due (other than interest
and regularly scheduled fees), Facility Agent will, in all events, give
subsequent detailed notice to Borrower of such Lender Expenses or fees, costs,
or charges and the constituent amounts. Any such Lender Group Expenses or
other fees, costs, or charges (other than interest and regularly scheduled
fees) which are charged to Borrower's account at or prior to 9:00 a.m.
(California time) shall be credited that same day, and if after such time, then
credited on the next Business Day. Any interest not paid when due shall be
compounded and shall thereafter accrue interest at the rate then applicable to
Advances hereunder.
(f) Computation. The Reference Rate as of the date of
this Agreement is 8.5% per annum. In the event the Reference Rate is changed
from time to time hereafter, the applicable rate of interest hereunder
automatically and immediately as of the opening of business on the effective
date of such change shall be increased or decreased by an amount equal to such
change in the Reference Rate. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual
number of days elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate.
In no event shall the interest rate or rates payable under this Agreement, plus
any other amounts paid in connection herewith, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable. Borrower and the Lender Group, in
executing and delivering this Agreement, intend legally to agree upon the rate
or rates of interest and manner of payment stated within it; provided, however,
that, anything contained herein to the contrary notwithstanding, if said rate
or rates of interest or manner of payment exceeds the maximum allowable under
applicable law, then, ipso facto as of the date of this Agreement, Borrower is
and shall be liable only for the payment of such maximum as allowed by law, and
payment received from Borrower in excess of such legal maximum, whenever
received, shall be applied to reduce the principal balance of the Obligations
to the extent of such excess.
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2.8 COLLECTION OF ACCOUNTS. Borrower shall at all times
maintain lockboxes (the "Lockboxes") and, immediately after the Closing Date,
to the extent that it has not already done so, shall instruct all Account
Debtors with respect to the Accounts, General Intangibles, and Negotiable
Collateral of Borrower to remit all Collections in respect thereof to such
Lockboxes. Borrower, Facility Agent, and the Lockbox Banks shall enter into
the Lockbox Agreements, which among other things shall provide for the opening
of a Lockbox Account for the deposit of Collections at a Lockbox Bank.
Borrower agrees that all Collections and other amounts received by Borrower
from any Account Debtor or any other source immediately upon receipt shall be
deposited into a Lockbox Account. No Lockbox Agreement or arrangement
contemplated thereby shall be modified by Borrower without the prior written
consent of Facility Agent. Upon the terms and subject to the conditions set
forth in the Lockbox Agreements, all amounts received in each Lockbox Account
shall be wired each Business Day into an account (the "Agent's Account")
maintained by Facility Agent at a depositary selected by Facility Agent.
2.9 CREDITING PAYMENTS; APPLICATION OF COLLECTIONS. The
receipt of any Collections by Facility Agent (whether from transfers to
Facility Agent by the Lockbox Banks pursuant to the Lockbox Agreements or
otherwise) immediately shall be applied provisionally to reduce the Obligations
outstanding under Section 2.1, but shall not be considered a payment on account
unless such Collection item is a wire transfer of immediately available federal
funds and is made to the Agent's Account or unless and until such Collection
item is honored when presented for payment. Should any Collection item not be
honored when presented for payment, then Borrower shall be deemed not to have
made such payment, and interest shall be recalculated accordingly. Anything to
the contrary contained herein notwithstanding:
(i) any Collection item shall be deemed received by
Facility Agent only if it is received into the Agent's Account on a Business
Day on or before 11:00 a.m. California time. If any Collection item is
received into the Agent's Account on a non-Business Day or after 11:00 a.m.
California time on a Business Day, it shall be deemed to have been received by
Facility Agent as of the opening of business on the immediately following
Business Day; and
(ii) at any time that an Event of Default has not
occurred and is not continuing, Collections will only be applied to Obligations
that are not Eurodollar Rate Loans, and to the extent that all such Obligations
other than Eurodollar Rate Loans have been repaid, additional Collections will
be, at the Borrower's direction, returned to Borrower or applied to such
Eurodollar Rate Loans subject to any required payments under Section 2.17(d).
2.10 DESIGNATED ACCOUNT. Facility Agent and the Lender Group is
authorized to make the Advances and arrange for the issuance of the Letters of
Credit under this Agreement based upon telephonic or other instructions
received from anyone purporting to be an Authorized Person, or without
instructions if pursuant to Section 2.7(e). Borrower
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agrees to establish and maintain the Designated Account with the Designated
Account Bank for the purpose of receiving the proceeds of the Advances
requested by Borrower and made by the Lender Group hereunder. Unless otherwise
agreed by Facility Agent and Borrower, any Advance requested by Borrower and
made by the Lender Group hereunder shall be made to the Designated Account.
2.11 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS.
Facility Agent shall maintain an account on its books in the name of Borrower
(the "Loan Account") on which Borrower will be charged with all Advances made
by the Lender Group to Borrower or for Borrower's account, including, accrued
interest, Lender Group Expenses, and any other payment Obligations of Borrower.
In accordance with Section 2.9, the Loan Account will be credited with all
payments received by Facility Agent from Borrower or for Borrower's account,
including all amounts received in the Facility Agent's Account from any Lockbox
Bank. Facility Agent shall render statements regarding the Loan Account to
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting the Lender Group Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and the Lender Group unless,
within 60 days after receipt thereof by Borrower, Borrower shall deliver to
Facility Agent written objection thereto describing the error or errors
contained in any such statements.
2.12 FEES. Borrower shall pay to Facility Agent for the ratable
benefit of the Lender Group (except where otherwise indicated) the following
fees, each of which shall be fully earned and nonrefundable on the date when
due:
(a) Underwriting and Syndication Fee. On the Closing
Date and upon increases in the aggregate Commitments pursuant to Section
2.1(o)(i), an underwriting and syndication fee for Agents as provided in the
Agents' Fee Letter;
(b) Unused Line Fee. On the first day of each month
during the term of this Agreement, an unused line fee in an amount equal to
0.375% per annum times the Average Unused Portion of the Maximum Revolving
Amount;
(c) Agency Fee. On the Closing Date, and on each
anniversary of the Closing Date, an annual agency fee in the amount set forth
in the Agents' Fee Letter;
(d) Financial Examination, Documentation, and
Appraisal Fees. For the sole account of Facility Agent a fee of $650 per day
per examiner, plus out-of-pocket expenses for each financial analysis and
examination (i.e., audits) of Borrower performed by personnel employed by
Facility Agent; provided, however, that, such audits will not be conducted more
often than twice per calendar year and at any other time reasonably determined
by Facility Agent if an Event of Default has occurred and is continuing.
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2.13 EURODOLLAR RATE LOANS. Notwithstanding any other
provisions to the contrary contained in this Agreement, the following
provisions shall govern with respect to Eurodollar Rate Loans as to the matters
covered:
(a) Borrowing; Conversion; Continuation. Borrower may
from time to time, on or after the Closing Date, request in a written or
telephonic communication with the Facility Agent: (i) a Borrowing consisting of
Eurodollar Rate Loans (pursuant to Section 2.1 (d)); (ii) that Reference Rate
Loans be converted into Eurodollar Rate Loans; or (iii) that existing
Eurodollar Rate Loans continue for an additional Interest Period. Any such
request shall specify the aggregate amount of the requested Eurodollar Rate
Loans, the proposed Funding Date (which shall be a Business Day, and with
respect to continued Eurodollar Rate Loans shall be the last day of the
Interest Period of the existing Eurodollar Rate Loans being continued), and the
proposed Interest Period, in each case subject to the limitations set forth
below). Eurodollar Rate Loans may only be made, continued, or extended if, as
of the proposed Funding Date each of the following conditions is satisfied:
(i) no Event of Default exists;
(ii) no more than five Interest Periods may be
in effect at any one time;
(iii) the amount of each Eurodollar Rate Loan
borrowed, converted, or continued must be in an amount not less
than $1,000,000 and integral multiples of $500,000 in excess
thereof;
(iv) the Facility Agent shall have determined
that the Interest Period or Adjusted Eurodollar Rate is available
to Facility Agent through the Reference Bank and can be readily
determined as of the date of the request for such Eurodollar Rate
Loan by Borrower; and
(v) the Facility Agent shall have received
such request at least two Business Days prior to the proposed
Funding Date.
Any request by Borrower to borrow Eurodollar Rate Loans, to convert
Reference Rate Loans to Eurodollar Rate Loans or to continue any existing
Eurodollar Rate Loans shall be irrevocable, except to the extent that the
Facility Agent or a Lender shall determine under Sections 2.13(a), 2.14 or 2.15
that such Eurodollar Rate Loans cannot be made or continued.
(b) Determination of Interest Period. By giving
notice as set forth in Section 2.13 (a), the Borrower shall have the option of
selecting a one, two, three or six month Interest Period for such Eurodollar
Rate Loan. The determination of Interest Periods shall be subject to the
following provisions:
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(i) in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise
expire on a day which is not a Business Day, the Interest Period
shall be extended to expire on the next succeeding Business Day;
provided, however, that if the next succeeding Business Day occurs
in the following calendar month, then such Interest Period shall
expire on the immediately preceding Business Day;
(iii) if any Interest Period begins on the last
Business Day of a month, or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period, then the Interest Period shall end on the
last Business Day of the calendar month at the end of such Interest
Period; and
(iv) the Borrower may not select an Interest
Period which expires later than the Maturity Date.
(c) Automatic Conversion; Optional Conversion by
Facility Agent. Any Eurodollar Rate Loan shall automatically convert to a
Reference Rate Loan upon the last day of the applicable Interest Period, unless
Facility Agent has received a request to continue such Eurodollar Rate Loan at
least two Business Days prior to the end of such Interest Period in accordance
with the terms of Section 2.13(a). Any Eurodollar Rate Loan shall, at Facility
Agent's option, upon notice to Borrower, convert to a Reference Rate Loan in
the event that (A) an Event of Default shall have occurred and be continuing as
of the last day of the Interest Period for such Eurodollar Rate Loan, or (B)
this Agreement shall terminate, and Borrower shall pay to Facility Agent (for
the benefit of the Lender Group), any amounts required by Section 2.17 as a
result thereof.
2.14 ILLEGALITY. Notwithstanding any other provision herein, if
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (a)
the Commitment of such Lender hereunder to make Eurodollar Rate Loans, continue
Eurodollar Rate Loans as such, and convert Reference Rate Loans to Eurodollar
Rate Loans shall forth with be cancelled and (b) such Lender's then outstanding
Eurodollar Rate Loans, if any, shall be converted automatically to Reference
Rate Loans on the respective last days of the then current Interest Periods
with respect thereto or within such earlier period as required by law;
provided, however, that before making any such demand, each Lender agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be
disadvantageous to it, in its reasonable discretion, in any legal, economic, or
regulatory manner) to designate a different lending office if the making of
such a designation would allow the Lender or its lending office to continue to
perform its obligations to make
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Eurodollar Rate Loans. If any such conversion of a Eurodollar Rate Loan occurs
on a day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to such Lender such amounts, if any, as
may be required pursuant to Section 2.17. If circumstances subsequently change
so that any affected Lender shall determine that it is no longer so affected,
such Lender will promptly notify the Borrower and the Facility Agent, and upon
receipt of such notice, the obligations of such Lender to make or continue
Eurodollar Rate Loans or to convert Reference Rate Loans into Eurodollar Rate
Loans shall be reinstated.
2.15 REQUIREMENTS OF LAW. (a) If the adoption of or any change
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof
(i) shall subject any Lender to any tax, levy,
charge, fee, reduction, or withholding of any kind whatsoever with
respect to this Agreement, any Advance, any Note, or any Letter of
Credit or change the basis of taxation of payments to such Lender
in respect thereof (except for taxes covered by Section 2.16 and
the establishment of a tax based on the net income of such Lender
or changes in the rate of tax on the net income of such Lender);
(ii) shall impose, modify or hold applicable
any reserve, special deposit, compulsory loan, or similar
requirement against assets held by, deposits or other liabilities
in or for the account of, Advances, loans, or other extensions of
credit (including, without limitation, Letters of Credit) by, or
any other acquisition of funds by, any office of such Lender; or
(iii) shall impose on such Lender any other
condition with respect to this Agreement, any Advance, any Note or
any Letter of Credit;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting
into, continuing, or maintaining Advances or to increase the cost to such
Lender, by an amount which such Lender deems to be material, of issuing or
maintaining any Letter of Credit or participation therein or to reduce any
amount receivable hereunder in respect of Advances and Letters of Credit or to
forego any other sum payable thereunder or make any payment on account thereof,
then, in any such case, the Borrower shall promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable; provided, however, that before
making any such demand, each Lender agrees to use reasonable efforts
(consistent with its internal policy and legal and regulatory restrictions and
so long as such efforts would not be disadvantageous to it, in its reasonable
discretion, in any legal, economic, or regulatory manner) to designate a
different Eurodollar lending office if the making of such designation would
allow the Lender or its
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Eurodollar lending office to continue to perform its obligations to make
Eurodollar Rate Loans or to continue to fund or maintain Eurodollar Rate Loans
and avoid the need for, or materially reduce the amount of, such increased
cost. If any Lender becomes entitled to claim any additional amounts pursuant
to this Section 2.15, it shall promptly notify the Borrower, through the
Facility Agent, of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this Section 2.15
submitted by such Lender, through the Facility Agent, to the Borrower shall be
conclusive in the absence of manifest error. If the Borrower so notifies the
Facility Agent within five Business Days after any Lender notifies the Borrower
of any increased cost pursuant to the foregoing provisions of this Section
2.15, the Borrower may convert all Eurodollar Rate Loans of such Lender then
outstanding into Reference Rate Loans in accordance with Section 2.13 and,
additionally, reimburse such Lender for any cost in accordance with Section
2.17. This covenant shall survive the termination of this Agreement and the
payment of the Advances and all other amounts payable hereunder for nine months
following such termination and repayment.
(b) If any Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof does or shall have the effect of
increasing the amount of capital required to be maintained or reducing the rate
of return on such Lender's or such corporation's capital as a consequence of
its obligations hereunder or under any Letter of Credit to a level below that
which such Lender or such corporation could have achieved but for such change
or compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, after submission by such Lender to the
Borrower (with a copy to the Facility Agent) of a prompt written request
therefor, the Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. This covenant shall
survive the termination of this Agreement and the payment of the Advances and
all other amount payable hereunder for nine months following such termination
and repayment.
2.16 TAXES. (a) Except as provided below in this Section 2.16,
all payments made by the Borrower under this Agreement and any Notes or other
Loan Documents shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions, or withholdings, now
or hereafter imposed, levied, collected, withheld, or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes imposed
in lieu of net income taxes. If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are
required to be withheld from any amounts payable to the Facility Agent, the
Facility Co-Agent, or any Lender hereunder or under any Notes or other Loan
Documents, the amounts so payable to the Facility Agent, the Facility Co-Agent,
or such Lender shall be increased
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to the extent necessary to yield to the Facility Agent, the Facility Co-Agent,
or such Lender (after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement and any Notes or other Loan Documents, provided, however, that
the Borrower shall be entitled to deduct and withhold any Non-Excluded Taxes
and shall not be required to increase any such amounts payable to any Lender if
such Lender fails or is unable to comply with the requirements of paragraph (b)
of this Section 2.16. Whenever any Non-Excluded Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Facility Agent for its own account or for the account of such other member of
the Lender Group, as the case may be, a certified copy of an original official
receipt received by the Borrower showing payment thereof. If the Borrower
fails to pay any Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Facility Agent the required receipts or
other required documentary evidence, the Borrower shall indemnify the Facility
Agent and each other member of the Lender Group for any incremental taxes,
interest or penalties that may become payable by the Facility Agent or any such
member of the Lender Group as a result of any such failure. The agreements in
this Section 2.16 shall survive the termination of this Agreement and the
payment of the Advances and all other amounts payable hereunder.
(b) Each member of the Lender Group that is not incorporated
under the laws of the United States of America or a state thereof shall:
(i) (x) on or before the date of any payment by the
Borrower under this Agreement or any Notes to such Lender, deliver
to the Borrower and the Facility Agent (A) two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224,
or successor applicable form, as the case may be, certifying that
it is entitled to receive payments under this Agreement and any
Notes without any deduction or withholding of any United States
federal income taxes and (B) a duly completed Internal Revenue
Service Form W-8 or W-9, or successor applicable form, as the case
may be, certifying that it is entitled to an exemption from United
States backup withholding tax;
(y) deliver to the Borrower and the Facility Agent
two further copies of any such form or certification on or before
the date that any such form or certification expires or becomes
obsolete and after the occurrence of any event requiring a change
in the most recent form previously delivered by it to the Borrower,
and
(z) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be
requested by the Borrower or the Facility Agent;
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or (ii) in the case of any such Lender that is not a
"bank" within the meaning of Section 881(c)(3)(A) of the IRC and
that does not comply with sub-paragraph (i) of this paragraph (b),
(x) represent to the Borrower (for the benefit of
the Borrower and the Facility Agent) that it is not a bank within
the meaning of Section 881(c)(3)(A) of the IRC,
(y) deliver to the Borrower on or before the date
of any payment by the Borrower, with a copy to the Facility Agent,
(A) a certificate stating that such Lender (1) is not a "bank"
under Section 881(c)(3)(A) of the IRC, is not subject to regulatory
or other legal requirements as a bank in any jurisdiction, and has
not been treated as a bank for purposes of any tax, securities law,
or other filing or submission made to any Governmental Authority,
any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements, (2)
is not a 10-percent shareholder within the meaning of Section
881(c)(3)(B) of the IRC and (3) is not a controlled foreign
corporation receiving interest from a related person within the
meaning of Section 881(c)(3)(C) of the IRC (any such certificate a
"U.S. Tax Compliance Certificate") and (b) two duly completed
copies of Internal Revenue Service Form W-8, or successor
applicable form, certifying to such Lender's legal entitlement at
the date of such certificate to an exemption from U.S. withholding
tax under the provisions of Section 881(c) of the IRC with respect
to payments to be made under this Agreement and any Notes (and to
deliver to the Borrower and the Facility Agent two further copies
of Form W-8 on or before the date it expires or becomes obsolete
and after the occurrence of any event requiring a change in the
most recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Borrower or the
Facility Agent for filing and completing such forms), and
(z) agree, to the extent legally entitled to do
so, upon reasonable request by the Borrower, to provide to the
Borrower (for the benefit of the Borrower and the Facility Agent)
such other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an exemption from
withholding with respect to payments under this Agreement and any
Notes;
(c) Each Lender shall, upon the reasonable request by the
Borrower, deliver to the Borrower or the applicable Governmental Authority, as
the case may be, any form or certificate required in order that any payment by
the Borrower under this Agreement or any Notes may be made free and clear of,
and without deduction or withholding for or on Excluded Taxes (or to allow any
such deduction or withholding to be at a reduced rate) imposed on such payment
under the laws of any jurisdiction, provided that such Lender is
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legally entitled to complete, execute and deliver such form or certificate and
such completion, execution or submission would not materially prejudice the
legal position of such Lender.
unless in any such case any change in treaty, law, or regulation has occurred
after the date such Person becomes a Lender hereunder which renders all such
forms and certificates inapplicable or which would prevent such Lender from
duly completing and delivering any such form or certificate with respect to it
and such Lender so advises the Borrower and the Administrative Agent. Each
Person that shall become a Lender or a Participant pursuant to Section 15.1
shall, upon the effectiveness of the related transfer, be required to provide
all of the forms, certifications, and statements required pursuant to this
Section 2.16; provided, however, that in the case of a Participant the
obligations of such Participant pursuant to this paragraph (b) shall be
determined as if such Participant were a Lender except that such Participant
shall furnish all such required forms, certifications, and statements to the
Lender from which the related participation shall have been purchased.
2.17 INDEMNITY. The Borrower agrees to indemnify each Lender
and to hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Borrower in payment
when due of the principal amount of or interest on any Eurodollar Rate Loan,
(b) default by the Borrower in making a borrowing of, conversion into, or
continuation of Eurodollar Rate Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (c)
default by the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (d) the
making of a prepayment of Eurodollar Rate Loans on a day which is not the last
day of an Interest Period with respect thereto (whether due to the termination
of this Agreement upon an Event of Default or otherwise), including, without
limitation, in each case, any such loss or expense (but excluding loss of
margin) arising from the reemployment of funds obtained by it or from fees
payable to terminate the deposits from which such funds were obtained.
Calculation of all amounts payable to a Lender under this Section 2.17 shall be
made as though such Lender had actually funded its relevant Eurodollar Rate
Loan through the purchase of a deposit bearing interest at the Eurodollar Rate
in an amount equal to the amount of such Eurodollar Rate Loan and having a
maturity comparable to the relevant Interest Period; provided, however, that
each Lender may fund each of its Eurodollar Rate Loans in any manner it sees
fit, and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section 2.17. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder for a period of nine months thereafter.
2.18 REPLACEMENT OF LENDER. If at any time (a) the Borrower
becomes obligated to pay additional amounts described in Sections 2.14, 2.15 or
2.16 as a result of any condition described in such Sections or any Lender
ceases to make Eurodollar Rate Loans pursuant to Section 2.14, any Lender
becomes insolvent and its assets become subject to a receiver, liquidator,
trustee, custodian, or other Person having similar powers, (b) any
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Lender becomes a "Nonconsenting Lender" (as defined below in this Section 2.18)
or (c) any Lender becomes a "Defaulting Lender", then the Borrower may, on ten
Business Days' prior written notice to the Agents and such Lender, replace such
Lender by causing such Lender to (and such Lender shall) assign pursuant to
Section 15.1 all of its rights and obligations under this Agreement to a Lender
or other Eligible Assignee selected by the Borrower and acceptable to the
Agents for a purchase price equal to the outstanding principal amount of such
Lender's Advances and all accrued interest and fees and other amounts payable
hereunder; provided that (i) the Borrower shall have no right to replace the
Agents, (ii) neither the Agents nor any Lender shall have any obligation to the
Borrower to find a replacement Lender or other such entity, (iii) in the event
of a replacement of a Nonconsenting Lender or a Lender to which the Borrower
becomes obligated to pay additional amounts pursuant to clause (a) of this
Section 2.18, in order for the Borrower to be entitled to replace such a
Lender, such replacement must take place no later than 180 days after (A) the
date the Nonconsenting Lender shall have notified the Borrower and the Facility
Agent of its failure to agree to any requested consent, waiver, or amendment or
(B) the Lender shall have demanded payment of additional amounts under one of
the Sections described in clause (a) of this Section 2.18, as the case may be,
and (iv) in no event shall the Lender hereby replaced be required to pay or
surrender to such replacement Lender or other entity any of the fees received
by such Lender hereby replaced pursuant to this Agreement. In the case of a
replacement of a Lender to which the Borrower becomes obligated to pay
additional amounts pursuant to clause (a) of this Section 2.18, the Borrower
shall pay such additional amounts to such Lender prior to such Lender being
replaced and the payment of such additional amounts shall be a condition to the
replacement of such Lender. In the event that (x) the Borrower or the Facility
Agent has requested the Lenders to consent to a departure or waiver of any
provisions of the Loan Documents or to agree to any amendment thereto, (y) the
consent, waiver, or amendment in question requires the agreement of all Lenders
in accordance with the terms of Section 16.1 and (z) Lenders whose Pro-Rata
Shares aggregate 66 2/3% or more of the Commitments have agreed to such
consent, waiver or amendment, then any Lender who does not agree to such
consent, waiver or amendment shall be deemed a "Nonconsenting Lender." The
Borrower's right to replace a Defaulting Lender pursuant to this Section 2.18
is, and shall be, in addition to, and not in lieu of, all other rights and
remedies available to the Borrower against such Defaulting Lender under this
Agreement, at law, in equity, or by statute.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. The
obligation of the Lender Group to make the initial Advance is subject to the
fulfillment, to the satisfaction of Agents and their counsel, of each of the
following conditions on or before the Closing Date:
(a) the Closing Date shall occur on or before May 31,
1997;
(b) Facility Agent shall have received UCC searches
against the Borrower and any of the Restricted Subsidiaries executing
Subsidiary Security Agreements
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reflecting no Liens other than Permitted Liens, and fully executed financing
statements and fixture filings from Borrower and each of such Restricted
Subsidiaries in favor of the Facility Agent for all relevant jurisdictions;
(c) Facility Agent shall have received each of the
following documents, duly executed, and each such document shall be in full
force and effect:
a. the Lockbox Agreements;
b. the Disbursement Letter;
c. an assignment of liens and loan documents,
together with UCC assignment and other
documentation evidencing the assignment by
Existing Lender of the Existing Loan Documents and
its Liens in and to the properties and assets of
Borrower, and, to the extent it has them, Liens in
and to the properties and assets of domestic
Restricted Subsidiaries of Borrower;
d. the Mortgages for Real Property Collateral
owned by Borrower on the Closing Date;
e. the Stock Pledge, the Subsidiary
Guaranties, and the Subsidiary Security
Agreements; and
f. all other Loan Documents;
(d) Facility Agent shall have received a certificate
from the Secretary of Borrower and each Restricted Subsidiary of Borrower
executing a Subsidiary Guaranty or Subsidiary Security Agreement attesting to
the resolutions of such Person's Board of Directors authorizing its execution,
delivery, and performance of this Agreement and the other Loan Documents to
which such Person is a party and authorizing specific officers of such Person
to execute the same;
(e) Facility Agent shall have received copies of the
Governing Documents of Borrower and each Restricted Subsidiary of Borrower
executing a Subsidiary Security Agreement, as amended, modified, or
supplemented to the Closing Date, certified by the Secretary of such Person;
(f) Facility Agent shall have received a certificate
of status with respect to Borrower and each Restricted Subsidiary of Borrower
executing a Subsidiary Security Agreement, dated or updated within 10 days of
the Closing Date, such certificate to be issued by the appropriate officer of
the jurisdiction of organization of such Person, which certificate shall
indicate that such Person is in good standing in such jurisdiction;
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(g) Facility Agent shall have received certificates of
status with respect to Borrower and each Subsidiary of Borrower executing a
Subsidiary Security Agreement, each dated or updated within 15 days of the
Closing Date, such certificates to be issued by the appropriate officer of the
jurisdictions in which its failure to be duly qualified or licensed would
constitute a Material Adverse Change, which certificates shall indicate that
such Person is in good standing in such jurisdictions;
(h) Facility Agent shall have received a certificate
of insurance, together with the endorsements thereto, as are required by
Section 6.10, the form and substance of which shall be satisfactory to Agents
and their counsel;
(i) Facility Agent shall have received duly executed
certificates of title with respect to the Vehicles together with such releases
of liens and applications therefor, as Facility Agent shall reasonably require
to enable the prompt processing of each such title by the appropriate
governmental agency in order to properly reflect Facility Agent's Lien (for the
benefit of the Lender Group) thereon;
(j) Facility Agent shall have received an opinion of
Borrower's and its domestic Restricted Subsidiaries' counsel in form and
substance satisfactory to Agents in their sole discretion;
(k) Agents shall have received (i) Current Appraisals
of the Core Real Property Collateral owned by the Borrower on the Closing Date
and the Vehicles, and (ii) mortgagee title insurance policies or endorsements
(or marked commitments to issue the same) for the Core Real Property Collateral
owned by the Borrower on the Closing Date issued by a Chicago Title (each a
"Mortgage Policy" and, collectively, the "Mortgage Policies") in amounts
reasonably satisfactory to Agents (but not to exceed the Fair Market Value of
such Core Real Property Collateral) assuring Agents that the Mortgages on such
Core Real Property Collateral are valid and enforceable first priority mortgage
Liens on such Core Real Property Collateral free and clear of all defects and
encumbrances except Permitted Liens, and the Mortgage Policies shall otherwise
be in form and substance reasonably satisfactory to Agents; provided, however,
that the failure of Borrower to provide any of the foregoing for any such
parcel of Core Real Property Collateral shall not prevent the funding of the
initial Advances hereunder, but until such failure is corrected such parcel
shall not be included in calculating the Borrowing Base;
(l) Agents shall have received a phase-I environmental
report with respect to each parcel of Core Real Property Collateral owned by
the Borrower on the Closing Date; the environmental consultants retained for
such reports, the scope of the reports, and the results thereof shall be
reasonably acceptable to Agents; provided, however, that the failure of
Borrower to provide any of the foregoing for any such parcel of Core Real
Property Collateral shall not prevent the funding of the initial Advances
hereunder, but until such failure is corrected such parcel shall not be
included in calculating the Borrowing Base;
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(m) Facility Agent shall have received a calculation
of the Borrowing Base prepared by Borrower and certified by the Chief Financial
Officer of Borrower as of the Closing Date;
(n) Agents shall have received all revisions, if any,
of the Borrower's financial forecast and business assumptions for 1997 and
1998, together with such other information (financial or otherwise) as may be
reasonably requested by Agents, all of which shall be in form and substance
reasonably satisfactory to Agents;
(o) Borrower shall have on the Closing Date (after
taking into account the repayment of the existing indebtedness to Existing
Lender, and with Borrower's accounts payable being no less current than
reflected in Facility Agent's most recent field survey) at least $25,000,000 of
unrestricted cash on hand and excess Availability under Section 2.1 (a) of this
Agreement;
(p) there shall not have occurred any Material Adverse
Change since April 7, 1997; and
(q) all other documents and legal matters in
connection with the transactions contemplated by this Agreement shall have been
delivered, executed, or recorded and shall be in form and substance
satisfactory to Agents and their counsel.
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES AND ALL LETTERS OF
CREDIT. The following shall be conditions precedent to all Advances and all
Letters of Credit hereunder:
(a) the representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects on and as of the date of such extension of credit, as though
made on and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred
and be continuing on the date of such extension of credit, nor shall either
result from the making thereof;
(c) no injunction, writ, restraining order, or other
order of any nature prohibiting, directly or indirectly, the extending of such
credit shall have been issued and remain in force by any Governmental Authority
against Borrower, the Lender Group or any of their Affiliates; and
(d) the amount of any requested Advance or Letter of
Credit shall not exceed the Availability at such time.
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3.3 CONDITION SUBSEQUENT. As a condition subsequent to initial
closing hereunder, Borrower shall perform or cause to be performed the
following (the failure by Borrower to so perform or cause to be performed
constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver to
Facility Agent the certified copies of the policies of insurance, together with
the endorsements thereto, as are required by Section 6.10, the form and
substance of which shall be satisfactory to Facility Agent and its counsel;
(b) within 60 days of the acquisition of the VIAD
Properties, or such longer period as Agents shall determine is acceptable,
deliver to Facility Agent the duly executed Mortgages respecting the VIAD
Properties, and, if such properties are to be considered Core Real Property
Collateral, meet such other conditions as are set forth in the definition
thereof; and
(c) within 90 days of the Closing Date Borrower shall
have used its commercially reasonable efforts to obtain Collateral Access
Agreements from the lessors of Borrower's downtown Dallas and North Dallas
locations, as Agents may require.
3.4 TERM. This Agreement shall become effective upon the
execution and delivery hereof by Borrower and the Lender Group and shall
continue in full force and effect for a term ending on the earlier of (a) May
21, 2002 (the "Maturity Date"), or (b) termination hereof by the Lender Group
pursuant to Section 9.1(b) following an Event of Default.
3.5 EFFECT OF TERMINATION. On the date of termination of this
Agreement, all non-contingent Obligations (including any accrued and unpaid
fees (including unused line fees)) immediately shall become due and payable
without notice or demand, and all Obligations with respect to outstanding
Letters of Credit immediately shall be terminated, backed up, or collateralized
pursuant to Section 2.2(e). No termination of this Agreement, however, shall
relieve or discharge Borrower of Borrower's duties, Obligations, or covenants
hereunder, and the continuing Lien of the Facility Agent, for the benefit of
the Lender Group, the Collateral shall remain in effect until all
non-contingent Obligations have been fully and finally discharged, the
outstanding Letters of Credit terminated, backed up, or collateralized, and the
Lender Group's obligation to provide additional credit hereunder is terminated.
3.6 EARLY TERMINATION BY BORROWER. The provisions of Section
3.4 notwithstanding, Borrower has the option, at any time upon 90 days prior
written notice to Facility Agent, to terminate this Agreement by paying to
Facility Agent (for the ratable benefit of the Lender Group), in cash, all
non-contingent Obligations (including any accrued and unpaid fees (including
unused line fees)), in full without penalty or premium (other than as set forth
in Section 2.17(d)), and terminating, backing up, or collateralizing all
outstanding Letters of Credit pursuant to Section 2.2(e).
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4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to
Facility Agent for the benefit of the Lender Group a continuing security
interest in all currently existing and hereafter acquired or arising Personal
Property Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. The security interests of
Facility Agent for the benefit of the Lender Group in the Personal Property
Collateral shall attach to all Personal Property Collateral without further act
on the part of the Lender Group or Borrower. Except as specifically provided
in this Agreement (including Section 7.4), Borrower has no authority, express
or implied, to dispose of any item or portion of the Personal Property
Collateral or the Real Property Collateral. The Real Property Collateral,
which also serves as security for the Obligations, is being granted, or the
grants reaffirmed, by the Mortgages. The foregoing notwithstanding, Borrower
and Lenders agree that the Mortgages encumbering property located in the states
of Florida and New York are limited in the amounts of $1,587,000 and $5,010,000
respectively and that the financial obligations secured are those arising under
Sections 2.2(a)(iii)(x) and 2.2(a)(iii)(y) hereof only.
4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral,
including proceeds, is evidenced by or consists of Negotiable Collateral with a
value in excess of $5,000 per item, Borrower, immediately upon the request of
Facility Agent, shall endorse and deliver physical possession of such item of
Negotiable Collateral to Facility Agent.
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND NEGOTIABLE
COLLATERAL. Facility Agent, Borrower, and the Lockbox Banks have entered into
the Lockbox Agreements, pursuant to which all of Borrower's Collections
(excluding receipts generated from Mexico and Canada and proceeds of
Investments) will be forwarded to Facility Agent on a daily basis. At any time
that an Event of Default has occurred and is continuing, Facility Agent or
Facility Agent's designee may, and shall if directed by Required Lenders: (a)
notify customers or Account Debtors of Borrower that the Accounts, General
Intangibles, or Negotiable Collateral have been assigned to Facility Agent (on
behalf of the Lender Group) or that Facility Agent has a security interest
therein; and (b) collect the Accounts, General Intangibles, and Negotiable
Collateral directly and charge the collection costs and expenses to the Loan
Account. Irrespective of whether an Event of Default has occurred and is
continuing, Borrower agrees that it will hold in trust for the Lender Group, as
the Lender Group's trustee, any Collections that it receives and immediately
will deliver said Collections to Facility Agent in their original form as
received by Borrower.
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time
upon the request of Facility Agent, Borrower shall execute and deliver to
Facility Agent all financing statements, continuation financing statements,
fixture filings, security agreements, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits,
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reports, notices, schedules of accounts, letters of authority, and all other
documents that Facility Agent reasonably may request, in form reasonably
satisfactory to Facility Agent, to perfect and continue perfected the Liens of
the Lender Group in the Collateral, and in order to fully consummate all of the
transactions contemplated hereby and under the other the Loan Documents.
4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes,
constitutes, and appoints Facility Agent (and any of Facility Agent's officers,
employees, or agents designated by Facility Agent) as Borrower's true and
lawful attorney, with power to (a) if Borrower refuses to, or fails timely to
execute and deliver any of the documents described in Section 4.4, sign the
name of Borrower on any of the documents described in Section 4.4, (b) at any
time that an Event of Default has occurred and is continuing, sign Borrower's
name on any invoice or bill of lading relating to any Account, drafts against
Account Debtors, schedules and assignments of Accounts, verifications of
Accounts, and notices to Account Debtors, (c) send requests for verification of
Accounts, (d) endorse Borrower's name on any Collection item that may come into
the Lender Group's possession, (e) at any time that an Event of Default has
occurred and is continuing, notify the post office authorities to change the
address for delivery of Borrower's mail to an address designated by Facility
Agent, to receive and open all mail addressed to Borrower, and to retain all
mail relating to the Collateral and forward all other mail to Borrower, (f) at
any time that an Event of Default has occurred and is continuing, make, settle,
and adjust all claims under Borrower's policies of insurance and make all
determinations and decisions with respect to such policies of insurance, and
(g) at any time that an Event of Default has occurred and is continuing, settle
and adjust disputes and claims respecting the Accounts directly with Account
Debtors, for amounts and upon terms that Facility Agent determines to be
reasonable, and Facility Agent may cause to be executed and delivered any
documents and releases that Facility Agent determines to be necessary. The
appointment of Facility Agent as Borrower's attorney, and each and every one of
Facility Agent's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and the Lender Group's obligation to extend credit hereunder is
terminated. Notwithstanding the foregoing, Facility Agent shall not be
obligated to act as authorized in this Section 4.5, but if Facility Agent does
so, it shall not be accountable for more than it actually receives and shall
not be responsible to Borrower except for any act or omission that constitutes
the gross negligence or wilful misconduct of Facility Agent.
4.6 RIGHT TO INSPECT. Agents (through any of their officers,
employees, or agents) shall have the right, from time to time hereafter to
inspect Borrower's Books and to check or test the Collateral in order to verify
Borrower's financial condition or the amount, quality, value, condition of, or
any other matter relating to, the Collateral.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this Agreement,
Borrower makes the following representations and warranties which shall be
true, correct, and
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complete in all material respects as of the date hereof, and shall be true,
correct, and complete in all material respects as of the Closing Date, and at
and as of the date of the making of each Advance or Letter of Credit made
thereafter, as though made on and as of the date of such Advance or Letter of
Credit (except to the extent that such representations and warranties relate
solely to an earlier date) and such representations and warranties shall
survive the execution and delivery of this Agreement:
5.1 NO ENCUMBRANCES. Borrower has good and indefeasible title
to the Collateral, free and clear of Liens except for Permitted Liens.
5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are, at the time
of the creation thereof and as of each date on which Borrower includes them in
a calculation or certification, bona fide existing obligations arising from the
Borrower's rendition of transportation services and other receivables arising
from the rendition of services by Borrower, and are not subject to any of the
exceptions set forth in the definition of "Eligible Accounts." At the time of
the creation of an Eligible Account and as of each date on which Borrower
includes an Eligible Account in a calculation or certification, Borrower has
not received notice of actual or imminent bankruptcy, insolvency, or material
impairment of the financial condition of any applicable Account Debtor
regarding such Eligible Account.
5.3 LOCATION OF VEHICLES. All Vehicles included in the
Collateral on the date hereof are of the type and quantity, bear the vehicle
identification numbers, and are titled in the jurisdictions listed on Schedule
5.3 hereto. All certificates of title evidencing Borrower's ownership of the
Vehicles have been duly endorsed in favor of, and delivered to, Facility Agent
and all other filings, registrations, releases, assignments, or recordings
necessary or appropriate, to create, preserve, protect, and perfect the Lien
granted herein by Borrower to Facility Agent on behalf of the Lender Group in
respect of the Vehicles have been accomplished, except to the extent
arrangements have been made to make such endorsements and deliveries, filings,
registrations, releases, assignments, and recordings which arrangements are
reasonably satisfactory to Facility Agent in its sole discretion and, upon the
completion of such endorsements and deliveries, filings, registrations,
releases, assignments, and recordings, the Lien granted to Facility Agent
pursuant to this Agreement in and to the Vehicles will constitute a first
priority perfected Lien therein superior and prior to the rights of all other
Persons therein subject to no other Liens and is entitled to all the rights,
priorities and benefits afforded by the Code or other relevant law as enacted
in any relevant jurisdiction to perfected security interests.
5.4 [INTENTIONALLY DELETED]
5.5 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and
Equipment (other than non-material amounts of Equipment located at ticket
agents in the ordinary course of Borrower's business) are not stored with a
bailee, warehouseman, or similar party (without Facility Agent's prior written
consent) and, except for vehicles, are
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located only at the locations identified on Schedule 6.12 (as the same may be
updated from time to time) or otherwise permitted by Section 6.12.
5.6 INVENTORY RECORDS. Borrower keeps correct and accurate
records itemizing and describing the kind, type, quality, and quantity of the
Inventory, and Borrower's cost therefor.
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief
executive office of Borrower is located at the address indicated in the
preamble to this Agreement and Borrower's FEIN is 86-0572343.
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Borrower is duly organized and existing and in
good standing under the laws of the jurisdiction of its incorporation and
qualified and licensed to do business in, and in good standing in, any state
where the failure to be so licensed or qualified reasonably could be expected
to cause a Material Adverse Change.
(b) Set forth on Schedule 5.8 (as the same may be
updated from time to time), is a complete and accurate list of Borrower's
direct and indirect Restricted Subsidiaries, showing: (i) the jurisdiction of
their incorporation; (ii) the number of shares of each class of common and
preferred stock authorized for each of such Restricted Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Borrower. All of the outstanding capital stock
of each such Restricted Subsidiary has been validly issued and is fully paid
and non-assessable.
(c) Except as set forth on Schedule 5.8 (as the same
may be updated from time to time), no Capital Stock (or any securities,
instruments, warrants, options, purchase rights, conversion or exchange rights,
calls, commitments or claims of any character convertible into or exercisable
for Capital Stock) of any direct or indirect Restricted Subsidiary of Borrower
is subject to the issuance of any security, instrument, warrant, option,
purchase right, conversion or exchange right, call, commitment or claim of any
right, title, or interest therein or thereto.
5.9 DUE AUTHORIZATION; NO CONFLICT.
(a) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is a party have
been duly authorized by all necessary corporate action.
(b) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is a party do not
and will not (i) violate any provision of federal, state, or local law or
regulation (including Regulations G, T, U, and X of the Federal Reserve Board)
applicable to Borrower, the Governing Documents of
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Borrower, or any order, judgment, or decree of any court or other Governmental
Authority binding on Borrower, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation or material lease of Borrower, (iii) result in
or require the creation or imposition of any Lien of any nature whatsoever upon
any properties or assets of Borrower, other than Permitted Liens, or (iv)
require any approval of stockholders or any approval or consent of any Person
under any material contractual obligation of Borrower other than those already
obtained.
(c) Other than the filing of appropriate financing
statements, fixture filings, and Mortgages, the execution, delivery, and
performance by Borrower of this Agreement and the Loan Documents to which
Borrower is a party do not and will not require any registration with, consent,
or approval of, or notice to, or other action with or by, any federal, state,
foreign, or other Governmental Authority or other Person.
(d) This Agreement and the Loan Documents to which
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by Borrower will be the legally valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
(e) The Liens granted by Borrower to Facility Agent
(for the benefit of the Lender Group) in and to its properties and assets
pursuant to this Agreement and the other Loan Documents are validly created,
perfected, and first priority Liens, subject only to Permitted Liens.
5.10 LITIGATION. Except as disclosed on the most recent of
Borrower's Form 10-Q Quarterly Reports or Form 10-K Annual Report delivered to
Agents prior to the Closing Date, there are no actions or proceedings pending
by or against Borrower before any court or administrative agency and Borrower
does not have knowledge of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower or any Subsidiary Guarantor, except for matters arising
after the date hereof that could not reasonably be expected to cause a Material
Adverse Change.
5.11 NO MATERIAL ADVERSE CHANGE. All financial statements
relating to Borrower or any Guarantor that have been delivered by Borrower to
the Lender Group have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes and being
subject to year-end audit adjustments) and fairly present Borrower's (or such
Guarantor's, as applicable) financial condition as of the date thereof and
Borrower's results of operations for the period then ended. There has not been
a Material Adverse Change with respect to Borrower (or such Guarantor, as
applicable) since the date of the latest financial statements submitted to the
Lender Group on or before the Closing Date.
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5.12 SOLVENCY. Borrower is Solvent. No transfer of property is
being made by Borrower and no obligation is being incurred by Borrower in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Borrower.
5.13 EMPLOYEE BENEFITS. As of the Closing Date, none of
Borrower, any of its Subsidiaries, or any of their ERISA Affiliates maintains
or contributes to any Benefit Plan, other than those listed on Schedule 5.13.
Borrower, each of its Subsidiaries and each ERISA Affiliate have satisfied the
minimum funding standards of ERISA and the IRC with respect to each Benefit
Plan to which it is obligated to contribute, except as disclosed on Schedule
5.13. Except as set forth on Schedule 5.13, no ERISA Event has occurred nor
has any other event occurred that may result in an ERISA Event that reasonably
could be expected to result in a Material Adverse Change. None of Borrower or
its Subsidiaries, any ERISA Affiliate, or any fiduciary of any Plan is subject
to any direct or indirect liability with respect to any Plan (except to make
required contributions and to pay Plan benefits) under any applicable law,
treaty, rule, regulation, or agreement. None of Borrower or its Subsidiaries
or any ERISA Affiliate is required to provide security to any Plan under
Section 401(a)(29) of the IRC.
5.14 ENVIRONMENTAL CONDITION.
(a) Except as may be set forth in Schedule 5.14,
Borrower has not used Hazardous Materials at or affecting the Real Property in
any manner which violates any Act governing the use, storage, treatment,
transportation, manufacturing, refinement, handling, production, or disposal of
Hazardous Materials, or that may make the owner of the premises liable in tort
under a common law public or private nuisance action, except for such uses that
either individually or, in the aggregate, could not reasonably be expected to
cause a Material Adverse Change.
(b) Except as may be set forth in Schedule 5.14, to
the best knowledge of Borrower after due inquiry, no prior or current owner,
occupant or operator of the Real Property has used Hazardous Materials at or
affecting the Real Property in any manner which violates any Act governing the
use, storage, treatment, transportation, manufacturing, refinement, handling,
production, or disposal of Hazardous Materials, or that may make the owner of
the premises liable in tort under a common law public or private nuisance
action, except for such uses that either individually or in the aggregate could
not reasonably be expected to cause a Material Adverse Change.
5.15 COMPLIANCE WITH THE ADA.
(a) To the best of Borrower's knowledge, Borrower has
made all modifications or provided all accommodations which may be required to
be made or provided by Borrower to the Real Property pursuant to the ADA,
except where noncompliance with such requirements would not cause a Material
Adverse Change.
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(b) To the best of Borrower's knowledge, Borrower has
received no notice or complaint regarding any material noncompliance with the
ADA of any of the Real Property or of Borrower's business operations and, to
the best of Borrower's knowledge, there has been no threatened litigation
alleging any such material noncompliance by Borrower or the Real Property,
except where noncompliance with such requirements would not cause a Material
Adverse Change.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrower shall do all of the following:
6.1 ACCOUNTING SYSTEM. Maintain a standard system of
accounting that enables Borrower to produce financial statements in accordance
with GAAP, and maintain records pertaining to the Collateral that contain
information as from time to time may be requested by Facility Agent.
6.2 COLLATERAL REPORTING. Borrower shall deliver to Facility
Agent, no later than the tenth day of each month during the term of this
Agreement, a detailed aging, by total, of the Accounts, a reconciliation
statement, and a summary aging, by vendor, of all accounts payable and any book
overdraft. Borrower shall also deliver to Facility Agent, no later than the
tenth day of each month during the term of this Agreement, a Borrower prepared
report setting forth payables owing to American Express with respect to
Moneygrams, Western Union (or any other similar programs), and sales taxes due
and payable on sales receipts and similar proceeds being held by Borrower for
the benefit of a third party (collectively, the "Designated Payables"). At
Facility Agent's request at any time that an Event of Default has occurred and
is continuing, the Borrower shall deliver to Facility Agent copies of sales
invoices that shall indicate on their face that the Accounts have been assigned
to Facility Agent and that all payments are to be made directly to Facility
Agent. Borrower shall deliver to Facility Agent, as Facility Agent may from
time to time reasonably require, collection reports, sales journals, invoices,
original delivery receipts, customer's purchase orders, shipping instructions,
bills of lading, and other documentation respecting shipment arrangements.
Absent such a request by Facility Agent, copies of all such documentation shall
be held by Borrower as custodian for Facility Agent.
6.3 SCHEDULES OF ACCOUNTS. With such regularity as Facility
Agent shall require, Borrower shall provide Facility Agent with schedules
describing all Accounts. Facility Agent's failure to request such schedules or
Borrower's failure to execute and deliver such schedules shall not affect or
limit the Lender Group's Lien on or other rights in and to the Accounts.
6.4 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. (a) Borrower
agrees to deliver to Agents: (i) as soon as available, but in any event within
45 days after the end
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of each of the first eleven (11) months during each of Borrower's fiscal years,
a company prepared balance sheet, income statement, and cash flow statement
covering Borrower's operations during such period; and (ii) as soon as
available, but in any event within 90 days after the end of each of Borrower's
fiscal years, financial statements of Borrower for each such fiscal year,
audited by independent certified public accountants of national recognition or
otherwise reasonably acceptable to Agents and certified, without any
qualifications, by such accountants to have been prepared in accordance with
GAAP. Such audited financial statements shall include a balance sheet, profit
and loss statement, and cash flow statement, and, if prepared, such
accountants' letter to management. If Borrower is a parent company of one or
more subsidiaries, or Affiliates, or is a subsidiary or Affiliate of another
company, then, in addition to the financial statements referred to above that
are delivered for a month ending a fiscal quarter, Borrower agrees to deliver
financial statements prepared on a consolidating basis so as to present
Borrower and each such related entity separately, and on a consolidated basis.
(b) Borrower also shall deliver to Agents Borrower's
Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K Current
Reports, and any other filings made by Borrower with the Securities and
Exchange Commission, if any, within one week of such filing, or any other
information that is provided by Borrower to its shareholders, and any other
report or information reasonably requested by Agents relating to the Collateral
and financial condition of Borrower.
(c) Each month, together with the financial statements
provided pursuant to Section 6.4(a), Borrower shall deliver to Facility Agent a
Compliance Certificate signed by its Chief Financial Officer to the effect
that: (i) all reports, statements, or computer prepared information of any
kind or nature delivered or caused to be delivered to Facility Agent hereunder
have been prepared in accordance with GAAP (except to the extent noted thereon)
and fairly present in all material respects the financial condition of
Borrower; (ii) Borrower is in timely compliance with all of its covenants and
agreements hereunder (or, to the extent of any non-compliance, describing such
non-compliance and what action Borrower has taken, is taking, or proposes to
take with respect thereto); (iii) the representations and warranties of
Borrower contained in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of such certificate, as
though made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date) (or, to the
extent of any non-compliance, describing such non-compliance and what action
Borrower has taken, is taking, or proposes to take with respect thereto); (iv)
on the date of the certificate to Facility Agent there does not exist any
condition or event that constitutes an Event of Default (or, to the extent of
any non-compliance, describing such non-compliance and what action Borrower has
taken, is taking, or proposes to take with respect thereto); and (v) Borrower
is keeping current on all Designated Payables.
(d) Within 45 days after the end of each of Borrower's
fiscal quarters, commencing with the fiscal quarter ending June 30, 1997,
Borrower shall deliver
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to Agents a Financial Covenant Compliance Certificate signed by its Chief
Financial Officer, indicating the financial ratios set forth in Section 7.19,
as of the end of such quarter, and containing such supporting data and
calculations, in reasonable detail, as Agents shall require.
(e) (i) On the first Business Day of each month (or,
when Availability is less than $10,000,000, each week) during the term of this
Agreement, Borrower shall deliver to Facility Agent a borrowing base
calculation setting forth the Eligible Accounts Receivable and changes (if any)
in Core Vehicles and Core Real Property Collateral since the prior calculation
and the outstanding Obligations then in effect; and (ii) promptly upon any
sales, dispositions, or losses of Core Vehicles, or with respect to the parcels
of Core Real Property Collateral, a calculation setting forth such change and
the outstanding Obligations then in effect, all of which shall be certified by
the Chief Financial Officer of Borrower in substantially the form of Exhibit
6.4(e).
(f) Borrower shall have issued written instructions to
its independent certified public accountants authorizing them to communicate
with Agents and to release to Agents whatever financial information concerning
Borrower that Agents may request. Borrower hereby irrevocably authorizes and
directs all auditors and accountants to deliver to Agents, at Borrower's
expense, copies of Borrower's financial statements, papers related thereto, and
other accounting records of any nature in their possession, and to disclose to
Agents any information they may have regarding Borrower's business affairs and
financial conditions (other than such information which the accountants have
obtained solely in their capacity as advisors to Borrower or any of its
Subsidiaries in any litigation between Borrower or any of its Subsidiaries and
Agents). Notwithstanding the foregoing, Agents shall endeavor to give
reasonable notice to Borrower, on behalf of itself and any such Subsidiary of,
and afford Borrower a reasonable opportunity to participate in, any such
communication between Agents and such accountants or auditors or any requested
delivery or provision of materials; provided, however, that neither the Agents
nor the Lender Group shall have any liability for Agents' failure to so notify
Borrower.
6.5 REGISTRATION, USE, MAINTENANCE, IDENTIFICATION OF VEHICLES.
Borrower shall, at its own cost and expense, at all times cause its Vehicles to
be and to remain duly titled and registered (as may be required by the
jurisdiction in which each such title or registration is required by law) in
the name of Borrower as owner.
(a) Borrower shall, and shall cause any of its
Subsidiaries that owns or operates Vehicles to, use and operate its Vehicles in
a manner and in such locations as is in compliance with Borrower's established
policies as of the Closing Date, with such subsequent changes thereto as would
not result in a material adverse change in the value, or enforceability of, or
any change in the priority of, Facility Agent's Lien on the Vehicles.
(b) Borrower shall, and shall cause any of its
Subsidiaries that owns or operates Vehicles to, at its own expense, keep,
maintain, service, repair, overhaul, and
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furnish all parts, replacements, mechanisms, devices and servicing required for
each of its Vehicles, (or cause the same to be done), in compliance with
Borrower's established policies as of the Closing Date, with such subsequent
changes thereto as would not result in a material adverse change in the value
or enforceability of, or any change in the priority of, Facility Agent's Lien
on the Vehicles. All such repairs, parts, mechanisms and devices shall
immediately, without further act, become part of the Vehicles and subject to
the security interests created herein. Any part added to a Vehicle in
connection with any improvement, change, addition, or alteration shall
immediately, without further act, become part of the Vehicle and subject to the
security interest created herein.
(c) Upon the "total loss" of any Vehicle, as
reasonably determined by Borrower, Borrower shall promptly notify the Facility
Agent and such Vehicle shall no longer constitute a Core Vehicle.
6.6 ADDITIONAL VEHICLES. If Borrower desires to add buses and
motor vehicles to the Vehicles, it shall (i) give Facility Agent written notice
of the type(s), quantity, vehicle identification numbers, certificate of title
number(s), and jurisdiction(s) of registration of each such bus or motor
vehicle and provide such other information in connection therewith as Facility
Agent may reasonably request and (ii) take such action reasonably satisfactory
to Facility Agent as is necessary or appropriate to create, preserve, protect,
and perfect the first priority Lien of the Facility Agent for the benefit of
the Lender Group in such Vehicle intended to be granted hereby.
6.7 TITLE TO EQUIPMENT. Upon Facility Agent's request,
Borrower immediately shall deliver to Facility Agent, properly endorsed, any
and all evidences of ownership of, certificates of title, or applications for
title to any items of Equipment.
6.8 MAINTENANCE OF EQUIPMENT. Maintain the Equipment in such
operating condition as exists on the date hereof (ordinary wear and tear
excepted), and make all necessary replacements thereto so that the value
(excluding ordinary depreciation thereof) and operating efficiency thereof
shall at all times be maintained and preserved. Except as required by law,
Borrower shall not permit any item of Equipment to become a fixture to real
estate (other than Real Property subject to a Mortgage) or an accession to
other property, and such Equipment shall at all times remain personal property.
6.9 TAXES. Cause all material assessments and taxes, whether
real, personal, or otherwise, due or payable by, or imposed, levied, or
assessed against Borrower or any of its property to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax shall be the subject of a
Permitted Protest. Borrower shall make due and timely payment or deposit of
all material federal, state, and local taxes, assessments, or contributions
required of it by law, and will execute and deliver to Facility Agent, on
demand, appropriate certificates attesting to the payment thereof or deposit
with respect thereto. Borrower will make timely payment or deposit of all
material tax payments and withholding taxes required of it by
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applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Facility Agent with proof satisfactory to Facility Agent indicating
that Borrower has made such payments or deposits.
6.10 INSURANCE.
(a) Borrower will, at all times maintain (at its
expense) in full force and effect insurance on all of the Collateral in such
amounts, covering such risks and liabilities and with such deductibles or
self-insured retentions as are commercially reasonable and in accordance with
its established practice and all applicable laws, rules and regulations,
provided that in no event will any such deductible or self-insured retention in
respect of liability claims or in respect of casualty damage exceed, in each
such case, $5,000,000 per occurrence (or such lower amounts as required by the
any applicable Governmental Authority). A schedule of all such insurance
presently maintained by Borrower is attached hereto as Schedule 6.10. If any
of the Real Property Collateral with a book value of more than $250,000 is
located in an area that has been identified by the Secretary of Housing and
Urban Development as an area having special flood hazards (an "SFHA"), the
improvements thereon shall be insured by flood insurance that is provided under
the National Flood Insurance Program (the "Program") in an amount not less than
the outstanding principal amount of the Obligations secured by a Mortgage which
is reasonably allocable to such Real Property Collateral (less the value of the
land) or the maximum amount of coverage under the Program that is available,
whichever is less, and Borrower shall comply with the additional requirements
of such Program. Such flood insurance shall be maintained during such time
that the Program is available. Borrower, at its own expense, shall determine
whether any of the Real Property Collateral is located in an SFHA. As of the
Closing Date, the only Real Property Collateral located in an SFHA is set forth
on Schedule 6.10(a). At any time that insurance at the levels described as
"Required Levels" in Schedule 6.10 is not being maintained by Borrower,
Borrower will notify Facility Agent in writing thereof and, if thereafter
notified by Facility Agent to do so, Borrower will obtain insurance at such
levels at least equal to those set forth as "Required Levels" in Schedule 6.10.
Borrower will furnish on the Closing Date and annually thereafter to Facility
Agent a summary of the insurance carried in respect of Borrower and its assets
together with certificates of insurance and other evidence of such insurance,
if any, naming Facility Agent as an additional insured with respect to any
liability policy and naming Facility Agent as a co-loss payee on any policy of
casualty insurance and stating that such insurance shall not be cancelled or
materially revised without 30 days' prior written notice by the insurer to
Facility Agent, and that any loss payable thereunder shall be payable
notwithstanding any act or negligence of Borrower.
(b) Original policies or certificates thereof
satisfactory to Facility Agent evidencing such insurance shall be delivered to
Facility Agent at least 30 days prior to the expiration of the existing or
preceding policies. Borrower shall give Facility Agent prompt notice of any
loss greater than $500,000 per incident covered by such insurance and,
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following an Event of Default, Facility Agent shall have the right to adjust
any loss. Any monies received as payment for any loss under any insurance
policy shall be paid over to Facility Agent to be applied to the Obligations;
provided, however, that prior to an Event of Default, payments with respect to
such losses of up to the book value of such Vehicle and $500,000 per terminal,
but in no event more than $2,000,000 per year for all Vehicles and $2,000,000
per year for all terminals, may be retained by Borrower to rebuild, repair, or
replace such property.
(c) Notwithstanding anything to the contrary contained
in this Agreement, so long as no Event of Default shall have occurred and be
continuing, Borrower may negotiate reductions of insurance deposits, and
transfer such deposits from one carrier to another, and the amount of any
reductions in such deposits may be used in Borrower's business without being
applied to the Obligations.
6.11 [INTENTIONALLY DELETED]
6.12 LOCATION OF BORROWER'S BOOKS, INVENTORY, AND EQUIPMENT.
Keep Borrower's Books, Inventory, and Equipment only at the locations
identified on Schedule 6.12; provided, however, that Borrower may amend
Schedule 6.12 so long as such amendment occurs by written notice provided
quarterly to Facility Agent and so long as not more than $5,000,000, in the
aggregate, of Inventory or Equipment is located outside the continental United
States, and so long as, at the time of such written notification, Borrower
provides any financing statements or fixture filings necessary to perfect and
continue perfected the Lien of the Facility Agent for the benefit of the Lender
Group in such assets.
6.13 COMPLIANCE WITH LAWS. Comply with the requirements of all
applicable laws, rules, regulations, and orders of any governmental authority,
including any federal, state and local laws respecting common carriers, other
than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, would not have and could not reasonably be
expected to cause a Material Adverse Change.
6.14 EMPLOYEE BENEFITS.
(a) Deliver to Facility Agent: (i) Promptly, and in
any event within 10 Business Days after Borrower or any of its Subsidiaries
knows or has reason to know that an ERISA Event has occurred that reasonably
could be expected to result in a Material Adverse Change, a written statement
of the Chief Financial Officer of Borrower describing such ERISA Event and any
action that is being taking with respect thereto by Borrower, any such
Subsidiary or ERISA Affiliate, and any action taken or threatened by the IRS,
Department of Labor, or PBGC. Borrower or such Subsidiary, as applicable,
shall be deemed to know all facts known by the administrator of any Benefit
Plan of which it is the plan sponsor, (ii) promptly, and in any event within 3
Business Days after the filing thereof with the IRS, a copy of each funding
waiver request filed with respect to any Benefit Plan and all communications
received by Borrower, any of its Subsidiaries or, to the
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knowledge of Borrower, any ERISA Affiliate with respect to such request, and
(iii) promptly, and in any event within 3 Business Days after receipt by
Borrower, any of its Subsidiaries or, to the knowledge of Borrower, any ERISA
Affiliate, of the PBGC's intention to terminate a Benefit Plan or to have a
trustee appointed to administer a Benefit Plan, copies of each such notice.
(b) Cause to be delivered to Facility Agent, upon
Facility Agent's request, each of the following: (i) a copy of each Plan (or,
where any such Plan is not in writing, complete description thereof) (and if
applicable, related trust agreements or other funding instruments) and all
amendments thereto, all non-privileged written interpretations thereof and
written descriptions thereof that have been distributed to employees or former
employees of Borrower or its Subsidiaries; (ii) the most recent determination
letter issued by the IRS with respect to each Benefit Plan; (iii) for the three
most recent plan years, annual reports on Form 5500 Series required to be filed
with any governmental agency for each Benefit Plan; (iv) all actuarial reports
prepared for the last three plan years for each Benefit Plan; (v) a listing of
all Multiemployer Plans, with the aggregate amount of the most recent annual
contributions required to be made by Borrower or any ERISA Affiliate to each
such plan and copies of the collective bargaining agreements requiring such
contributions; (vi) any information that has been provided to Borrower or any
ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan;
and (vii) the aggregate amount of the most recent annual payments made to
former employees of Borrower or its Subsidiaries under any Retiree Health Plan.
6.15 LEASES. Pay when due all rents and other amounts payable
under any material leases to which Borrower is a party or by which Borrower's
properties and assets are bound, unless such payments are the subject of a
Permitted Protest.
6.16 ENVIRONMENTAL CONDITION.
(a) Borrower will not generate, use, treat, store,
release or dispose, or permit the generation, use, treatment, storage, release,
or disposal of Hazardous Materials on the Real Property, except for such
Hazardous Materials generated, used, treated, stored, released or disposed of
in material compliance with all applicable Acts and required in connection with
the normal operation, use and maintenance of such Real Property in conduct of
the business undertaken on such Real Property, unless such noncompliance either
individually, or in the aggregate, could reasonably be expected to cause a
Material Adverse Change.
(b) Borrower will and will use its commercially
reasonable efforts to cause all operators, occupants and other third parties to
comply with all applicable Acts, except where noncompliance would not
reasonably be expected to cause a Material Adverse Change.
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(c) At any time following an Event of Default, or if
the Lender Group reasonably believes that a material environmental problem
exists with respect to one or more parcels of the Real Property, and upon the
reasonable request of Agents: (i) Borrower shall conduct and complete all
investigations, studies, samplings, and testings in scope reasonably necessary
to address the perceived environmental problem relative to Hazardous Materials
at or affecting the Real Property; (ii) Borrower shall provide Agents at
Borrower's sole cost and expense and without any liability to the Lender Group,
with an environmental site assessment or an environmental audit report, or an
update of such assessment or report, by an environmental engineering firm
acceptable to Agents, which acceptance shall not be unreasonably withheld, all
in scope, form, and content reasonably satisfactory to Agents, to assess with a
reasonable degree of certainty the presence or absence of Hazardous Materials
and the potential cost in connection with the Remediation of any Hazardous
Materials at or related to the Real Property; and (iii) at Borrower's sole cost
and expense, Borrower shall promptly take all actions required by applicable
Acts to Remediate the Real Property prior to the undertaking of any enforcement
action by the applicable Governmental Authority. All such work shall be
performed by one or more contractors selected by Borrower and approved in
advance by Agents, which approval shall not be unreasonably withheld. Borrower
shall proceed continuously and diligently with such investigatory and remedial
actions, provided that in all cases, such actions shall be conducted in
material compliance with all applicable requirements of all Acts. Any such
actions shall be performed in a good, safe, and workmanlike manner and shall
minimize any material adverse impact to the Real Property or operations
conducted thereon. Borrower shall pay all costs in connection with such
investigatory and remedial activities, including but not limited to, all power
and utility costs, any and all taxes or fees that may be applicable to such
activities. Borrower shall provide Agents with copies of all material reports
generated in compliance with the above activities; provided Borrower shall have
no such obligation unless the problem giving rise to the investigation or
Remediation could reasonably be expected to materially or adversely affect the
Real Property. This notwithstanding, upon reasonable request, Borrower will
provide Agents with copies of any and all such reports. Within ten days of
demand therefor, Borrower shall provide Agents with a bond, letter of credit,
or similar financial insurance evidencing that the necessary funds are
available for the obligations established by this subparagraph; provided,
however, that Agents may only make such a request if (a) Borrower has not
previously posted a bond, letter of credit, or similar financial insurance with
a Governmental Authority and (b) Borrower does not have Availability under this
Agreement to complete such work.
(d) The obligations of Borrower and the rights of the
Lender Group with respect to Hazardous Materials are in addition to and not in
substitution of the obligations of Borrower and the rights of the Lender Group
under all applicable, federal, state, and local laws, regulations, and
ordinances relating to health and safety, and protection of the environment.
The obligations of Borrower and the rights of the Lender Group, notwithstanding
anything contained herein or in any other document or agreement which may be
construed to the contrary, (i) shall not be subject to any antideficiency laws
or protections, if any, (ii) shall survive (y) a non-judicial sale, judicial
sale or deed or other
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transaction in lieu of such sale hereunder, and (z) the repayment of the
Obligations. In the event Borrower does not timely perform any of its
obligations with respect to Hazardous Materials, Facility Agent may perform
such obligations, but is not obligated to, at the expense of Borrower and such
expense shall be added to the obligations and shall not cure Borrower's breach
under this Agreement; provided, however, that the Facility Agent may not
exercise its rights to perform such obligations without providing Borrower with
written notice of any material failure on Borrower's part to undertake work
required by this Section and, after 30 days, Borrower fails to undertake steps
to address such obligations.
(e) The Borrower agrees to promptly notify Agents of
any notice or complaint regarding any material noncompliance with any Act
governing the use, storage, treatment, transportation, manufacturing,
refinement, handling, production, or disposal of Hazardous Materials with
respect to any of the Core Real Property Collateral; or any notices or
complaints with respect to the other Real Property if such notices or
complaints either individually or in the aggregate reflect noncompliance that
could reasonably be expected to cause a Material Adverse Change.
6.17 COMPLIANCE WITH THE ADA.
(a) Borrower shall promptly provide Facility Agent
with copies of all material claims which may be received by Borrower made by
any individual, entity, or governmental agency as to any alleged noncompliance
of the Real Property with the requirements of the ADA.
(b) Borrower shall observe and comply in all material
respects with all obligations and requirements of the ADA as it applies to the
Real Property or future additional building improvements, which shall include
(to the extent required by the ADA), without limitation, installing or
constructing all improvements or alterations which may be necessary to cause
the Real Property to be accessible to all persons if the use of any of the Real
Property or any part thereof becomes a "public accommodation," as defined in
the ADA, and making any reasonable accommodations which may be necessary to
accommodate the needs or requirements of any existing or future employee of
Borrower.
6.18 UPDATED CURRENT APPRAISALS. After the Closing Date, new
appraisals on the Vehicles will be completed on the second, third, and fourth
anniversaries of the Closing Date. After the Closing Date, new appraisals on
the Core Real Property Collateral will be completed on the second and fourth
anniversaries of the Closing Date. In addition to the foregoing, at any time
after the first anniversary of the Closing Date the Agents, in their reasonable
discretion, may require new appraisals on the Vehicles or the Core Real
Property Collateral if there have occurred any of the events described in
clauses (a) or (b) of the definition of "Material Adverse Change." Borrower
will cooperate with all reasonable requests and do all acts reasonably required
by Agents and any Persons employed by them as appraisers in order to assure the
timely completion of such new appraisals.
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7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations,
Borrower will not, and will not permit any of its Restricted Subsidiaries to,
do any of the following:
7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness pursuant to this Agreement and the
other Loan Documents together with Indebtedness to issuers of letters of credit
that are the subject of L/C Guarantees;
(b) Capital Lease Obligations to the extent permitted
under Section 7.20;
(c) purchase money financing in respect of buses and
other motor vehicles that are not Vehicles;
(d) Existing Indebtedness;
(e) Indebtedness incurred in respect of Hedging
Obligations;
(f) Indebtedness evidenced by the Indenture (including
the Senior Notes and the Subsidiary Guarantees (as defined in the Indenture))
and Preferred Stock (including the Exchange Debentures);
(g) intercompany Indebtedness between or among
Borrower and any of its Wholly Owned Restricted Subsidiaries; provided that any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than Borrower or a Wholly Owned
Restricted Subsidiary of Borrower, or any sale or other transfer of any such
Indebtedness to a Person that is neither Borrower nor a Wholly Owned Restricted
Subsidiary of Borrower, shall be deemed to constitute an incurrence of such
Indebtedness by Borrower or such Restricted Subsidiary, as the case may be;
(h) the incurrence by Borrower or any of its
Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for,
or the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund Indebtedness that was permitted by this Agreement to be
incurred; and
(i) Indebtedness as a result of guarantee obligations
permitted under Section 7.6.
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(j) additional Indebtedness of Borrower and its
Restricted Subsidiaries so long as (i) in the case of additional Indebtedness
incurred by Borrower, the Consolidated Interest Coverage Ratio for Borrower's
most recently ended four fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred would have been at least 2.0 to 1,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred at the
beginning of such four-quarter period and (ii) in the case of additional
Indebtedness incurred by any Restricted Subsidiary, the Consolidated Interest
Coverage Ratio for Borrower's and such Restricted Subsidiary's (on a
consolidated basis with its Subsidiaries which are Restricted Subsidiaries)
most recently ended four fiscal quarters for which internal financial
statements are available immediately preceding the date or which such
additional Indebtedness is incurred would have been at least 2.0 to 1,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as of the additional Indebtedness has been incurred at the
beginning of such four-quarter period.
7.2 LIENS. Create, incur, assume, or permit to exist, directly
or indirectly, any Lien on or with respect to any of its property or assets, of
any kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced
under Section 7.1(h) and so long as the replacement Liens only encumber those
assets or property that secured the original Indebtedness (other than proceeds
of the existing collateral in accordance with the instrument creating such
Lien)).
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES. Enter into any
consolidation or merger with or into or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another Person except, so long as no Event
of Default has occurred and is continuing, or would arise as a result thereof:
(a) any Restricted Subsidiary may be merged or
consolidated with or into Borrower (provided that Borrower shall be the
continuing or surviving corporation) or with or into any one or more Restricted
Subsidiaries or any Unrestricted Subsidiary (provided that the continuing or
surviving corporation shall become a Restricted Subsidiary);
(b) any Restricted Subsidiary may liquidate or
dissolve if, in connection therewith, all of its assets are transferred to
Borrower or a Restricted Subsidiary thereof) or any Unrestricted Subsidiary
provided that such Unrestricted Subsidiary shall become a Restricted
Subsidiary;
(c) the sale of a Restricted Subsidiary in accordance
with Section 7.4; and
(d) the sale of Unrestricted Subsidiaries.
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7.4 DISPOSAL OF ASSETS. Consummate any Asset Sale unless:
(a) No Default of Event of Default shall have occurred
and be continuing, or would occur as a consequence thereof, and Borrower or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value of the assets
or Equity Interests issued or sold or otherwise disposed of; and
(b) Within 360 days after the receipt of any Net
Proceeds from an Asset Sale, Borrower or any such Restricted Subsidiary may
apply such Net Proceeds to (i) permanently repay the principal of any secured
indebtedness other than the Obligations (to the extent of the fair value of the
assets securing such indebtedness), (ii) permanently repay the Obligations and
make a permanent and corresponding reduction in the Commitments, (iii) acquire
(including by way of a purchase of assets or stock, merger, consolidation or
otherwise) Productive Assets or (iv) make any Investment permitted by this
Agreement. Pending the final application of any such Net Proceeds, Borrower or
any such Restricted Subsidiary shall temporarily reduce outstanding revolving
credit borrowings, including Advances under this Agreement. If at any time
Borrower has received $2,000,000 or more of Net Proceeds from Asset Sales that
it has not applied pursuant to clauses (i), (ii), (iii), or (iv) of this
paragraph within the 360 day time frame, then such amount shall be immediately
turned over to the Facility Agent to be applied to the Obligations and the
Commitments shall be permanently and correspondingly reduced. If,
notwithstanding the provisions of this Section 7.4, Borrower conducts an Asset
Sale following, or resulting in, an Event of Default, then the Net Proceeds
thereof shall immediately turned over to the Facility Agent to be applied to
the Obligations.
7.5 CHANGE NAME. Change Borrower's name, FEIN, corporate
structure (within the meaning of Section 9402(7) of the Code).
7.6 GUARANTEE. Guarantee or otherwise become in any way liable
with respect to the obligations of any third Person except:
(a) Intentionally Deleted;
(b) Indemnities in favor of title insurers;
(c) Reimbursement obligations for Letters of Credit;
(d) Endorsement of instruments or items of payment for
deposit to the account of Borrower or any Restricted Subsidiary or which are
transmitted or turned over to Facility Agent;
(e) Guarantees under the Loan Documents;
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(f) guarantees of Borrower or any Restricted
Subsidiary as a guarantor of the lessee under any lease pursuant to which
Borrower or a Restricted Subsidiary is the lessee so long as such lease is
otherwise permitted hereunder;
(g) surety bonds of the type permitted by clause
(i)(z) of the definition of Permitted Liens;
(h) guarantees of Existing Indebtedness (as disclosed
on Schedule 7.6(h)), and guarantees pursuant to Permitted Refinancing
Indebtedness;
(i) guarantees of Indebtedness permitted hereunder; and
(j) indemnifications and guarantees (other than
guarantees of Indebtedness) made in the ordinary course of business provided
that such indemnities and guarantees could not individually or in the aggregate
cause a Material Adverse Change.
7.7 RESTRUCTURE.
(a) Make any change in the nature of its business
operations other than reasonable extensions thereof.
(b) Make any change in the ending date of its fiscal
year; provided that Borrower or such Restricted Subsidiary may change its
fiscal year with the approval of the Agents, which approval shall not be
unreasonably withheld.
7.8 PREPAYMENTS. Make any optional payment or prepayment on or
redemption of (a) the Senior Notes (other than (i) the issuance of Permitted
Refinancing Indebtedness in connection therewith, or (ii) pursuant to Section
3.07(b) of the Indenture); (b) any Indebtedness which is expressly subordinated
in right of payment to the Obligations (other than the Obligations and
Permitted Refinancing Indebtedness provided for in Section 7.1(h)); or (c) any
Indebtedness during the existence of an Event of Default.
7.9 CHANGE OF CONTROL. Cause, permit, or suffer, directly or
indirectly, any Change of Control.
7.10 RESTRICTED PAYMENTS. Borrower shall not, and shall not
permit any of its Restricted Subsidiaries to, directly or indirectly, (i)
declare or pay any dividend or make any other payment or distribution on
account of Borrower's or any of its Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving Borrower) or to the direct or indirect holders of
Borrower's Equity Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
Borrower); (ii) purchase, redeem or otherwise acquire or retire for value
(including without limitation, in connection with any merger or consolidation
involving Borrower) any Equity Interests of Borrower
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(other than any such Equity Interests owned by Borrower or any Wholly Owned
Restricted Subsidiary of Borrower); or (iii) make any Restricted Investment
(all such actions set forth in clauses (i) through (iii) above being
collectively referred to as "Restricted Payments"), except:
(a) Restricted Payments consisting of Restricted
Investments to the extent that:
(i) no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof;
(ii) Borrower would, at the time of such
Restricted Investment and after giving pro forma effect thereto as if such
Restricted Investment had been made at the beginning of the applicable four
quarter period, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set
forth in Section 7.1(j) hereof; and
(iii) such Restricted Investment, together with
the aggregate amount of all other Restricted Payments made by Borrower and
its Restricted Subsidiaries after the date of this Agreement (excluding
Restricted Payments permitted by clause (f), but including, without
duplication, Restricted Payments permitted by clauses (b), (c), (d),and (e)
of this Section 7.10), is less than the sum of (A) 50% of the Consolidated
Net Income of Borrower for the period (taken as one accounting period) from
July 1, 1997 to the end of Borrower's most recently ended fiscal quarter for
which internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (B) 100% of the aggregate net cash
proceeds received by Borrower from the issue or sale since the date of this
Agreement of Equity Interests of Borrower (other than Disqualified Stock) or
of Disqualified Stock of debt securities of Borrower that have been
converted into such Equity Interests (other than any such Equity Interests,
Disqualified Stock or convertible debt securities sold to a Restricted
Subsidiary of Borrower and other than Disqualified Stock or convertible debt
securities that have been converted into Disqualified Stock), plus (C) to
the extent that any Restricted Investment that was made after the date of
this Agreement is sold for cash or otherwise liquidated or repaid for cash,
the lesser of (1) the cash return of capital with respect to such Restricted
Investment (less the cost disposition, if any) and (2) the initial amount of
such Restricted Investment, plus (D) in the event that any Unrestricted
Subsidiary is redesignated as a Restricted Subsidiary, the lesser of (1) an
amount equal to the fair value of Borrower's Investments in such Restricted
Subsidiary and (2) the amount of Restricted Investments previously made by
Borrower and its Restricted Subsidiaries in such Unrestricted Subsidiary,
plus (E) the Net Proceeds of Asset Dispositions permitted under Section 7.4
and the net proceeds of any asset sale that is not an Asset Disposition to
the extent not used under Section 7.12(n).
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(b) so long as no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence thereof, the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of Borrower held by any member of Borrower's or any of its
Restricted Subsidiaries' management (or the estate or a trust for the benefit
of any such member of management); provided that the aggregate price paid for
all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $500,000 in any calendar year;
(c) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof, the
payment of regularly scheduled dividends on the Preferred Stock in an amount
not to exceed $10,000,000 in any fiscal year;
(d) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof,
payments to enable Borrower to redeem or repurchase stock purchase rights or
similar rights in an aggregate amount not to exceed $1,000,000;
(e) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof, the
acquisition of Common Stock to be contributed to an employee stock ownership
plan or savings plan of Borrower in an aggregate amount not to exceed $200,000
in any calendar year;
(f) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof, the
acquisition of Equity Interests of Borrower in connection with the exercise of
stock options, warrants or stock appreciation or similar rights by way of
cashless exercise or in connection with the satisfaction of withholding tax
obligations; and
(g) the Restricted Subsidiaries may make Restricted
Payments to Borrower or any Restricted Subsidiary of Borrower.
The amount of all Restricted Payments (other than cash)
shall be the fair market value on the date of the Restricted Payment of the
asset(s) or securities proposed to be transferred or issued by Borrower or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
7.11 ACCOUNTING METHODS. Modify or change its method of
accounting (expect in conformity with changes in GAAP).
7.12 ADVANCES, INVESTMENTS AND LOANS. Make any Investment
except:
(a) Investments in cash and Cash Equivalents;
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(b) Borrower and its Restricted Subsidiaries may
acquire and hold Accounts, if created or acquired in its ordinary course of
business and payable or dischargeable in accordance with its customary trade
terms of Borrower or such Restricted Subsidiary;
(c) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof,
Borrower and its Restricted Subsidiaries may make loans and advances to
employees for moving and travel expenses and other similar expenses and bridge
loans for the purchase of homes, in each case incurred in the ordinary course
of business, and may make loans and advances to directors, officers and
employees, in an aggregate principal amount not to exceed $1,000,000 at any
time outstanding (determined without respect to any write-down or write-off of
any such loans or advances);
(d) Investments (including debt obligations and
Capital Stock) received in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent obligations of, and
other disputes with, customers and suppliers arising in the ordinary course of
business;
(e) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof,
Borrower and its Restricted Subsidiaries may make Investments in any domestic
Wholly Owned Restricted Subsidiary and up to $20,000,000 outstanding at any one
time in any foreign Wholly Owned Restricted Subsidiary;
(f) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof,
Borrower may invest the deposits held pursuant to the cash collateral
arrangements entered into in connection with its leveraged bus leases in the
investments permitted pursuant to the documents thereof;
(g) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof,
Investments made as a result of their receipt of non-cash consideration of an
Asset Sale that was made pursuant to and in compliance with Section 7.4 or a
disposition of assets that does not constitute an Asset Sale;
(h) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof,
Investments in Hedging Obligations reasonably acceptable to the Agents;
(i) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof,
Investments permitted by Sections 7.1, 7.6 and 7.20;
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(j) Investments in existence on the date hereof (as
disclosed on Schedule 7.10(i)) and so long as no Default or Event of Default
shall have occurred and be continuing, or would occur as a consequence thereof,
extensions, renewals, modifications, restatements or replacements thereof so
long as the aggregate dollar amount of all such extensions, renewals,
modifications, restatements, or replacements does not exceed the amount of such
Investments in existence on the date hereof;
(k) Investments in a Person engaged principally in the
business of providing passenger bus service or businesses reasonably
complementary or related thereto having an aggregate fair market value
(measured on the date such Investment is made and without giving effect to
subsequent changes in value), when taken together with all other Investments
made pursuant to this clause (k), that does not exceed the sum of (i)
$39,025,000 plus (ii) an amount equal to the Fair Market Value of any Common
Stock issued to acquire Productive Assets or a Person that becomes a Wholly
Owned Restricted Subsidiary of Borrower, provided that the aggregate amount of
such Investments pursuant to this clause (k) in Persons that are not
Subsidiaries of Borrower shall not exceed (A) $24,512,500, plus (B) an amount
equal to the Fair Market Value of any Common Stock issued to acquire Productive
Assets or a Person that becomes a Wholly Owned Restricted Subsidiary of
Borrower.
(l) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof, any
Investment by Borrower or any Restricted Subsidiary in a Person if as a result
of such Investment such Person becomes a Wholly Owned Restricted Subsidiary
(and, if a domestic Wholly Owned Restricted Subsidiary, becomes a Guarantor of
the Obligations and executes a Subsidiary Security Agreement) or such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, transfer of a Wholly
Owned Restricted Subsidiary of Borrower;
(m) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof, any
Investment acquired solely in exchange for Equity Interests (other than
Disqualified Stock) of Borrower;
(n) so long as no Default or Event of Default shall
have occurred and be continuing, or would occur as a consequence thereof,
Investments made with the Net Proceeds of Asset Dispositions permitted under
Section 7.4 or with the proceeds of any asset sale that is not an Asset
Disposition to the extent not used under Section 7.10(a); and
(o) Investments permitted under clause (a) of
Section 7.10.
7.13 TRANSACTIONS WITH AFFILIATES. Enter into any transaction
or series of transactions, whether or not in the ordinary course of business,
with any Affiliate other than on terms and conditions substantially as
favorable (or more favorable) to Borrower as would be obtainable by Borrower at
the time in a comparable arm's-length transaction with a
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Person other than an Affiliate. In addition, notwithstanding the foregoing,
Borrower and the Restricted Subsidiaries shall be entitled to make the
following payments or enter into the following transactions:
(a) intercompany loans in compliance with
Section 7.12;
(b) cash contributions made to Subsidiaries pursuant
to Section 7.12;
(c) the payment of reasonable and customary fees and
reimbursement of expenses payable to directors;
(d) employment arrangements with respect to the
performance of services of directors, officers and employees in the ordinary
course of business and the payment of reasonable fees in connection therewith;
and
(e) intercompany transfers among Borrower and its
Restricted Subsidiaries in the ordinary course of business.
7.14 SUSPENSION. Suspend or go out of a substantial portion of
its business.
7.15 USE OF PROCEEDS. Use the proceeds of the Advances for any
purpose other than (a) on the Closing Date, (i) to refinance the outstanding
principal, accrued interest, and accrued fees and expenses owing under the
Existing Loan Documents, and (ii) to pay transactional costs and expenses
incurred in connection with this Agreement, and (b) thereafter, consistent with
the terms and conditions hereof, for its lawful and permitted corporate
purposes.
7.16 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE. Relocate its
chief executive office to a location requiring the filing of new UCC-1
financing statements or UCC-2 or UCC-3 financing statement amendments (as the
case may be), without providing 30 days prior written notification thereof to
Facility Agent and so long as, at the time of such written notification,
Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected the Lien of Facility Agent (for the benefit of
the Lender Group), and Borrower shall use its best efforts to obtain a
Collateral Access Agreement (in form reasonably satisfactory to Agents) from
any lessor of such new location.
7.17 RESTRICTIONS AFFECTING SUBSIDIARIES. Borrower shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Restricted Subsidiary to
(a)(i) pay dividends or make any other distributions to Borrower or any of its
Restricted Subsidiaries on its Capital Stock or with respect to any other
interest or participation in, or measured by, its profits, or (ii) pay any
indebtedness owed to Borrower or any of its Restricted Subsidiaries; (b) make
loans or advances to Borrower or
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any of its Restricted Subsidiaries; or (c) transfer any of its properties or
assets to Borrower or any of its Restricted Subsidiaries, except for such
encumbrances or restriction existing under or by reason of (1) Existing
Indebtedness, (2) this Agreement or the other Loan Documents, (3) the Senior
Notes, (4) applicable law, (5) any instrument governing Indebtedness or Capital
Stock of a Person acquired by Borrower or any of its Restricted Subsidiaries as
in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Agreement to
be incurred, (6) by reason of customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (7) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(c) above on the property or assets, (8) customary provisions in bona fide
contracts for the sale of property or assets, or (8) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are not materially more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced.
7.18 NO PROHIBITED TRANSACTIONS UNDER ERISA. Directly or
indirectly:
(a) engage, or permit any Subsidiary of Borrower to
engage, in any prohibited transaction which is reasonably likely to result in a
civil penalty or excise tax described in Sections 406 of ERISA or 4975 of the
IRC for which a statutory or class exemption is not available or a private
exemption has not been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan
any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412
of the IRC), whether or not waived;
(c) fail, or permit any Subsidiary of Borrower to
fail, to pay timely required contributions or annual installments due with
respect to any waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any Subsidiary of Borrower to
terminate, any Benefit Plan where such event would result in any liability of
Borrower, any of its Subsidiaries or any ERISA Affiliate under Title IV of
ERISA other than liability voluntarily assumed through a commitment to make a
Plan sufficient for benefit liabilities entered into pursuant to 29 C.F.R.
Section 2617.7 undertaken in the normal business course of a voluntary Plan
termination;
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(e) fail, or permit any Subsidiary of Borrower to
fail, to make any required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary of Borrower to
fail, to pay any required installment or any other payment required under
Section 412 of the IRC on or before the due date for such installment or other
payment;
(g) amend, or permit any Subsidiary of Borrower to
amend, a Plan resulting in an increase in current liability for the plan year
such that either of Borrower, any Subsidiary of Borrower or any ERISA Affiliate
is required to provide security to such Plan under Section 401(a)(29) of the
IRC; or
(h) withdraw, or permit any Subsidiary of Borrower to
withdraw, from any Multiemployer Plan where such withdrawal is reasonably
likely to result in any liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $10,000,000.
7.19 FINANCIAL COVENANTS. Fail to maintain:
(a) Maximum Total Indebtedness to Consolidated Cash
Flow Ratio. A ratio of Total Indebtedness to Consolidated Cash Flow that is
not greater than the following, as of the corresponding dates of measurement,
calculated on a trailing four fiscal quarter basis:
<TABLE>
<CAPTION>
Maximum Total Indebtedness
Measurement Date to Consolidated Cash Flow Ratio
---------------- -------------------------------
<S> <C>
6/30/97 5.50:1.0
9/30/97 5.25:1.0
12/31/97 5.25:1.0
3/31/98 6.00:1.0
6/30/98 6.50:1.0
9/30/98 5.50:1.0
12/31/98 5.50:1.0
3/31/99 5.50:1.0
6/30/99 5.50:1.0
9/30/99 and the last day 5.00:1.0
of each quarter thereafter
</TABLE>
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(b) Minimum Consolidated Interest Coverage Ratio. A
Consolidated Interest Coverage Ratio of at least the following, as of the
corresponding dates of measurement, calculated on a trailing four fiscal
quarter basis:
<TABLE>
<CAPTION>
Minimum Consolidated
--------------------
Measurement Date Interest Coverage Ratio
---------------- -----------------------
<S> <C> <C>
6/30/97 1.50:1.0
9/30/97 1.50:1.0
12/31/97 1.50:1.0
3/31/98 1.50:1.0
6/30/98 1.50:1.0
9/30/98 1.60:1.0
12/31/98 1.60:1.0
3/31/99 1.60:1.0
6/30/99 1.60:1.0
9/30/99 and the last day 1.75:1.0
of each quarter thereafter
</TABLE>
(c) Minimum Consolidated Net Worth. Consolidated Net
Worth of at least the following amounts as of the corresponding dates:
<TABLE>
<CAPTION>
Measurement Date Minimum Consolidated Net Worth
---------------- ------------------------------
<S> <C>
6/30/97 $140,000,000
9/30/97 $140,000,000
12/31/97 $140,000,000
3/31/98 and the last day $135,000,000
of each quarter thereafter $135,000,000
</TABLE>
7.20 CAPITAL EXPENDITURES. Make or commit to make any Capital
Expenditure exceeding, in the aggregate for Borrower and its Restricted
Subsidiaries during any fiscal year, the sum of (a) $30,000,000; plus (b) the
amount of any casualty insurance or condemnation proceeds received by Borrower
or its Restricted Subsidiaries in the same fiscal year and applied by such
Person towards the replacement of such assets or the purchase of similar
assets; plus (c) the amount of cash proceeds received by Borrower or its
Restricted Subsidiaries from Asset Sales permitted under Section 7.4 to the
extent such proceeds are reinvested in accordance with the terms of such
Section 7.4.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event
of default (each, an "Event of Default") under this Agreement:
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8.1 If Borrower fails to pay any principal amount of the
Advances when due or shall fail to pay any portion of the Obligations (whether
of interest (including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and charges due the
Lender Group, reimbursement of Lender Group Expenses, or other amounts
constituting Obligations) other than principal within 5 days after such amount
becomes due and payable;
8.2 If (a) Borrower fails or neglects to perform, keep, or
observe any term, provision, condition, covenant, or agreement contained in
Sections 6.4, 6.10 or 6.18 of this Agreement and such failure continues for a
period of 15 days from the date of such failure or neglect; (b) Borrower fails
or neglects to perform, keep, or observe any other term, provision, condition,
covenant, or agreement contained in Article 6 of this Agreement and such
failure continues for a period of 30 days from the date of such failure or
neglect; or (c) Borrower fails or neglects to perform, keep, or observe any
other term, provision, condition, covenant, or agreement contained in this
Agreement, in any of the Loan Documents, or in any other present or future
agreement between Borrower and the Lender Group (other than any such term,
provision, condition, covenant, or agreement that is the subject of another
provision of this Article 8);
8.3 If there is a Material Adverse Change;
8.4 If any material portion of Borrower's properties or assets
is attached, seized, subjected to a writ or distress warrant, or is levied
upon, or comes into the possession of any third Person;
8.5 If an Insolvency Proceeding is commenced by Borrower;
8.6 If an Insolvency Proceeding is commenced against Borrower
and any of the following events occur: (a) Borrower consents to the institution
of the Insolvency Proceeding against it; (b) the petition commencing the
Insolvency Proceeding is not timely controverted; (c) the petition commencing
the Insolvency Proceeding is not dismissed within 60 calendar days of the date
of the filing thereof; provided, however, that, during the pendency of such
period, the Lender Group shall be relieved of its obligation to extend credit
hereunder; (d) an interim trustee is appointed to take possession of all or a
substantial portion of the properties or assets of, or to operate all or any
substantial portion of the business of, Borrower; or (e) an order for relief
shall have been issued or entered therein;
8.7 If one or more judgments or decrees shall be entered
against Borrower for the payment of money in excess of $5,000,000 in the
aggregate at any time outstanding (which amount is not covered by insurance
with customary deductibles where the insurer has not denied coverage), and the
same shall remain unpaid, unvacated, unbonded, or unstayed pending appeal for a
period of 30 days from the date of entry;
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8.8 If a judgment or other claim becomes a Lien or encumbrance
upon any material portion of Borrower's properties or assets;
8.9 If there is a default in any material agreement (including
the Indenture) to which Borrower is a party with one or more third Persons and
such default (a) occurs at the final maturity of the obligations thereunder, or
(b) results in a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of Borrower's obligations thereunder or
any such Person has accelerated any such obligations (including any
acceleration of the Senior Notes or the Preferred Stock);
8.10 If any warranty or representation made or deemed made by
Borrower or any officer, employee, agent, or director of Borrower in any Loan
Document or which is contained in any certificate, document, or financial, or
other statement furnished at any time under or in connection with any Loan
Document shall prove to be incorrect in any material respect when made or
deemed made;
8.11 If the obligation of any Guarantor under its Guaranty is
limited or terminated by operation of law or by the Guarantor thereunder, or
any such Guarantor becomes the subject of an Insolvency Proceeding;
8.12 If there shall occur a default under any other Loan
Document;
8.13 If there shall occur a Change in Control; or
8.14 If the holder of any Lien (other than the Lien of Facility
Agent on behalf of the Lender Group or a Lien subject to a Permitted Protest)
affecting Collateral commences to exercise its legal remedies pursuant to such
Lien.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES.
(a) Acceleration. If any Event of Default described
in Sections 8.5 or 8.6 shall occur, then immediately and without demand all
non-contingent Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, shall be due and payable, and Borrower
shall satisfy all obligations of the Lender Group under outstanding Letters of
Credit pursuant to Section 2.2 (e). If any other Event of Default shall occur,
then Facility Agent may, or at the direction of the Required Lenders shall,
declare all non-contingent Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, to be due and payable, and
require Borrower to satisfy all obligations of the Lender Group under
outstanding Letters of Credit pursuant to Section 2.2 (e).
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(b) Other Remedies. In addition to the remedies set
forth in Section 9.1 (a), if an Event of Default shall occur Facility Agent
may, and at the direction of the Required Lenders shall, without notice of any
such election exercise any one or more of the following rights and remedies,
all of which are authorized by Borrower:
(i) Cease advancing money or extending credit
to or for the benefit of Borrower under this Agreement, under any of the Loan
Documents, or under any other agreement between Borrower and the Lender Group;
(ii) Terminate the Lender's Commitments, or
terminate this Agreement and any of the other Loan Documents as to any future
liability or obligation of the Lender Group, but without affecting the Lender
Group's rights and security interests in the Collateral and without affecting
the Obligations;
(iii) Settle or adjust disputes and claims
directly with Account Debtors for amounts and upon terms which Facility Agent
considers advisable, and in such cases, Facility Agent will credit Borrower's
Loan Account with only the net amounts received by Facility Agent in payment of
such disputed Accounts after deducting all Lender Group Expenses incurred or
expended in connection therewith;
(iv) Without notice to or demand upon Borrower
or any Guarantor, make such payments and do such acts as Facility Agent
considers necessary or reasonable to protect its Lien on the Collateral.
Borrower agrees to assemble the Personal Property Collateral if Facility Agent
so requires, and to make the Personal Property Collateral available to Facility
Agent as Facility Agent may designate. Borrower authorizes Facility Agent to
enter the premises where the Personal Property Collateral is located, to take
and maintain possession of the Personal Property Collateral, or any part of it,
and to pay, purchase, contest, or compromise any encumbrance, charge, or Lien
that in Facility Agent's determination appears to conflict with the Liens of
Facility Agent (for the benefit of the Lender Group) in the Collateral and to
pay all expenses incurred in connection therewith. With respect to any of
Borrower's owned or leased premises, Borrower hereby grants Facility Agent a
license to enter into possession of such premises and to occupy the same,
without charge, for up to 120 days in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or otherwise;
(v) Without notice to Borrower (such notice
being expressly waived), and without constituting a retention of any Collateral
in satisfaction of an obligation (within the meaning of Section 9505 of the
Code), set off and apply to the Obligations any and all (y) balances and
deposits of Borrower held by the Lender Group, or (z) indebtedness at any time
owing to or for the credit or the account of Borrower held by the Lender Group;
(vi) Hold, as cash collateral, any and all
balances and deposits of Borrower held by the Lender Group, and any
Collections, to secure the full and final repayment of all of the Obligations;
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(vii) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Personal Property Collateral. Facility Agent is
hereby granted a license or other right to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any property of a
similar nature, as it pertains to the Personal Property Collateral, in
completing production of, advertising for sale, and selling any Personal
Property Collateral and Borrower's rights under all licenses and all franchise
agreements shall inure to the Lender Group's benefit. In connection with any
contemplated sale of the Personal Property Collateral, or any contemplated sale
of the Real Property Collateral as provided under the Mortgages, Facility Agent
may in its discretion order such updated appraisals on the Collateral and the
Subsidiary Collateral as it determines are necessary and the costs of the same
shall be Lender Group Expenses;
(viii) Sell the Personal Property Collateral at
either a public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places
(including Borrower's premises) as Agents determine is commercially reasonable.
It is not necessary that the Personal Property Collateral be present at any
such sale;
(ix) Facility Agent shall give notice of the
disposition of the Personal Property Collateral as follows:
(1) Facility Agent shall give
Borrower and each holder of a security interest in the Personal Property
Collateral who has filed with Facility Agent a written request for notice, a
notice in writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public sale is to be made
of the Personal Property Collateral, then the time on or after which the
private sale or other disposition is to be made;
(2) The notice shall be personally
delivered or mailed, postage prepaid, to Borrower as provided in Section 12, at
least 10 days before the date fixed for the sale, or at least 10 days before
the date on or after which the private sale or other disposition is to be made;
no notice needs to be given prior to the disposition of any portion of the
Personal Property Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a recognized market.
Notice to Persons other than Borrower claiming an interest in the Personal
Property Collateral shall be sent to such addresses as they have furnished to
Facility Agent;
(3) If the sale is to be a public
sale, Facility Agent also shall give notice of the time and place by publishing
a notice one time at least 10 days before the date of the sale in a newspaper
of general circulation in the county in which the sale is to be held;
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(x) Facility Agent may credit bid and purchase
at any public sale; and
(xi) Any deficiency that exists after
disposition of the Personal Property Collateral as provided above will be paid
immediately by Borrower. Any excess will be returned, without interest and
subject to the rights of third Persons, by Facility Agent to Borrower.
9.2 REMEDIES CUMULATIVE. The Lender Group's rights and
remedies under this Agreement, the Loan Documents (including the Mortgages),
and all other agreements shall be cumulative. The Lender Group shall have all
other rights and remedies not inconsistent herewith as provided under the Code,
by law, or in equity. No exercise by the Lender Group of one right or remedy
shall be deemed an election, and no waiver by the Lender Group of any Event of
Default shall be deemed a continuing waiver. No delay by the Lender Group
shall constitute a waiver, election, or acquiescence by it.
9.3 FORECLOSURE NOT A DISCHARGE. Foreclosure shall not operate
as a discharge to Borrower's Obligations to the Lender Group as to Hazardous
Materials and the indemnity provisions in Section 11.3; and in the event
Borrower tenders a deed in lieu of foreclosure for all or part of the Real
Property Collateral, Borrower shall deliver such property to Facility Agent (or
its designee) free of any and all Hazardous Materials.
9.4 RELEASE OF TRUST MONIES. To the extent that any monies
retained by Agents or the Lender Group from Collections or otherwise in respect
of Designated Payables do not constitute property of Borrower, the Lender Group
agrees and Borrower authorizes Facility Agent from and after an Event of
Default, or at any time that there is a delinquency in paying the Designated
Payables, to segregate and deliver such monies into a separate deposit account
controlled by Borrower. Any such repayment shall constitute an advance under
Section 2.1 to the extent such repayment was previously applied against the
Obligations. Borrower agrees to provide Facility Agent with accurate and
complete reporting as frequently as required by Facility Agent in order to
correctly track the amount of such monies.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (including taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement (subject to Permitted Protests),
then, to the extent that Facility Agent determines that such failure by
Borrower could result in a Material Adverse Change, in its discretion and
without prior notice to Borrower, Facility Agent may do any or all of the
following: (a) make payment of the same or any part thereof (but only to the
extent that such payment does not prejudice Borrower's rights to conduct a
Permitted Protest); (b) set up such reserves in Borrower's
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Loan Account as Facility Agent deems necessary to protect the Lender Group from
any taxes and Liens that would take priority over the Lien of Facility Agent
for the benefit of the Lender Group, and, for purposes of this clause (b),
irrespective of whether a Permitted Protest is contemplated or has been
undertaken; or (c) obtain and maintain insurance policies of the type described
in Section 6.10, and take any action with respect to such policies as Facility
Agent deems prudent. Any such amounts paid by Facility Agent shall constitute
Lender Group Expenses. Any such payments made by Facility Agent shall not
constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Facility Agent need not inquire as to, or contest the validity of,
any such expense, tax, or Lien and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same was validly due
and owing, unless Borrower has notified Facility Agent of a Permitted Protest.
11. WAIVERS; INDEMNIFICATION.
11.1 DEMAND; PROTEST; ETC. Except as otherwise provided in this
Agreement, Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which Borrower may in any way be liable.
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL. So long as
the Lender Group complies with its obligations, if any, under Section 9207 of
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person. All risk of loss,
damage, or destruction of the Collateral shall be borne by Borrower.
11.3 INDEMNIFICATION. Borrower agrees to defend, indemnify,
save, and hold each Agent-Related Person, each Lender, each Participant, and
each of their respective officers, directors, employees, counsel, agents, and
attorneys-in-fact (each an "Indemnified Person") harmless against from any of
the following (collectively, the "Indemnified Liabilities"): (a) all
obligations, demands, claims, and liabilities (but as to taxes, only taxes that
are payable by Borrower under Sections 2.15 or 2.16) claimed or asserted by any
other Person arising out of or relating to the transactions contemplated by
this Agreement or any other Loan Document, and (b) all Losses in any way
suffered, incurred, or paid by such Indemnified Person as a result of or in any
way arising out of, following, or consequential to the transactions
contemplated by this Agreement or any other Loan Document (including the
assignment to the Lender Group of the Existing Facility and the Existing Loan
Documents); and (c) all Losses suffered or incurred by any Indemnified Person,
regardless of negligence, whether as a holder of security interests in Real
Property, as mortgagee in possession, or as successor in interest to Borrower
as owner of the Real Property by virtue
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of foreclosure or acceptance of a deed or other transaction in lieu of
foreclosure, or after partial or total reconveyance of the mortgage, arising
from, in respect of, as a consequence of (whether foreseeable or unforeseeable)
or in connection with the use, storage, disposal, generation, transportation,
spill, or treatment of any Hazardous Materials at or related to the Real
Property whether or not originating or emanating from the Real Property.
Notwithstanding the foregoing, Borrower shall not be required to indemnify any
Indemnified Person for such Person's gross negligence or wilful misconduct or
any action by Facility Agent occurring after foreclosure, acceptance of a deed
in lieu of foreclosure, or similar transfer to any Indemnified Party or its
successor, including any losses arising from or related to any Hazardous
Materials that are first used, stored, disposed, generated, transported,
spilled or treated at any Real Property after such transfer, unless such use,
storage, disposal, generation, transportation, spill or treatment is caused by
Borrower or a Subsidiary. The provisions of this Section 11.3 shall survive
the termination of this Agreement.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands
by any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, or telefacsimile to Borrower or to
Agents, as the case may be, at its address set forth below:
IF TO BORROWER: GREYHOUND LINES, INC.
15110 North Dallas Parkway
Dallas, Texas 75248
Chief Financial Officer
Fax No. 972.387.1874
WITH A COPY TO: Contracts Administration
Fax No. 214.846.6221
and General Counsel
Fax No. 972.789.7403
AND WITH ADDITIONAL WEIL, GOTSHAL & MANGES LLP
COPIES TO: 100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Glenn D. West, Esq.
Fax No. 214.746.7777
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IF TO FACILITY AGENT FOOTHILL CAPITAL CORPORATION
OR THE LENDER GROUP 11111 Santa Monica Boulevard
IN CARE OF FACILITY Suite 1500
AGENT: Los Angeles, California 90025-3333
Attn: Business Finance Division Manager
Fax No. 310.478.9788
WITH COPIES TO: BUCHALTER, NEMER, FIELDS & YOUNGER
601 South Figueroa Street, Suite 2400
Los Angeles, California 90017
Attn: Robert C. Colton, Esq.
Fax No. 213.896.0400
IF TO FACILITY BANKBOSTON, N.A.
CO-AGENT: 100 Federal Street
Mail Stop: 01-09-06
Boston, MA 02110
Attn: Howard C. Bailey
Fax No. 617.434.2309
WITH COPIES TO: RIEMER & BRAUNSTEIN
Three Center Plaza
Boston, MA 02108
Attn: David S. Berman, Esq.
Fax No. 617.723.6831
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given
to the other. All notices or demands sent in accordance with this Section 12,
other than notices by Facility Agent in connection with Sections 9504 or 9505
of the Code, shall be deemed received on the earlier of the date of actual
receipt or 3 days after the deposit thereof in the mail. Borrower acknowledges
and agrees that notices sent by Facility Agent in connection with Sections 9504
or 9505 of the Code shall be deemed given when deposited in the mail or
personally delivered, or, where permitted by law, transmitted by telefacsimile
or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
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ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE
DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT NOTHING IN THIS AGREEMENT
OR THE LOAN DOCUMENTS SHALL BE DEEMED OR OPERATE TO PRECLUDE FACILITY AGENT
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
PROTECT OR REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER. BORROWER AND EACH MEMBER OF THE
LENDER GROUP WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
13. BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVES THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND EACH MEMBER
OF THE LENDER GROUP REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND EACH
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other papers
delivered to Facility Agent may be destroyed or otherwise disposed of by
Facility Agent 4 months after they are delivered to or received by Facility
Agent, unless Borrower requests, in writing, the return of said documents,
schedules, or other papers and makes arrangements, at Borrower's expense, for
their return.
15. ASSIGNMENTS AND PARTICIPATION; SUCCESSORS.
15.1 ASSIGNMENTS AND PARTICIPATION.
(a) Any Lender may, with the written consent of the
Agents, assign and delegate to one or more Eligible Transferees (each an
"Assignee") all, or any ratable
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part, of the Obligations, the Commitments, and the other rights and obligations
of such Lender hereunder and under the other Loan Documents, in a minimum
amount of $10,000,000; provided, however, that each of Foothill and BankBoston
shall hold Commitments of at least $20,000,000 so long as no Event of Default
has occurred; and provided further, however, that Borrower and Agents may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, shall have been given to Borrower and
Agents by such Lender and the Assignee; (ii) such Lender and its Assignee shall
have delivered to Borrower and Agents a fully executed Assignment and
Acceptance ("Assignment and Acceptance") in the form of Exhibit 15.1 together
with the Note (if any) subject to such assignment; (iii) all formalities
required by Section 15.3 have been met; and (iv) the assignor Lender or
Assignee has paid to Facility Agent for Facility Agent's sole and separate
account a processing fee in the amount of $5,000; provided, however that no
such fee shall be required where such assignment is required pursuant to the
provisions of Section 2.18. Anything contained herein to the contrary
notwithstanding, the consent of Agents shall not be required (and payment of
any fees shall not be required) if such assignment is in connection with any
merger, consolidation, sale, transfer, or other disposition of all or any
substantial portion of the business or loan portfolio of such Lender.
(b) From and after the date that Facility Agent
notifies the assignor Lender that it has received a fully executed Assignment
and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation between Borrower and the Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm
to and agree with each other and the other parties hereto as follows: (1)
other than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties, or representations made in or in connection with
this Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency, or value of this Agreement or any other Loan Document
furnished pursuant hereto; (2) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of Borrower or any guarantor or the performance or observance by Borrower or
any guarantor of any of its obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (3) such Assignee
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confirms that it has received a copy of this Agreement, together with such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (4)
such Assignee will, independently and without reliance upon Agents, such
assigning Lender, or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (5) such
Assignee appoints and authorizes Agents to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
Agents by the terms hereof, together with such powers as are reasonably
incidental thereto; and (6) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(d) Within five Business Days after its receipt of
notice by the Facility Agent that it has received an executed Assignment and
Acceptance, payment of any processing fee required by Section 15.1(a), and
surrender of the assignor Lender's Note, if any, the Borrower shall execute and
deliver to the Facility Agent, if requested by the Assignee, a new Note
evidencing such Assignee's Pro-Rata Share of the assigned Obligations and
Commitments and, if the assignor Lender has retained a portion of the
Obligations and its Commitment, a replacement Note in the amount of its
retained Pro-Rata Share of the Obligation and the Commitment (such Notes, if
any, to be in exchange for, but not in payment of, any Note held by such
assigning Lender). Immediately upon the Assignor's or the Assignee's making
its processing fee payment under the Assignment and Acceptance, this Agreement
shall be deemed to be amended to the extent, but only to the extent, necessary
to reflect the addition of the Assignee and the resulting adjustment of the
Commitments of the Assignor and Assignee arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitment of the assigning Lender
pro tanto.
(e) Any Lender may at any time, with the written
consent of the Agents, which consent shall not be unreasonably withheld, sell
to one or more Persons (a "Participant") participating interests in the
Obligations, the Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan Documents;
provided, however, that (i) the Originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers and
Agents shall continue to deal solely and directly with the Originating Lender
in connection with the Originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Originating Lender shall
transfer or grant any participating interest under which the Participant has
the sole and exclusive right to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to
the extent such amendment to, or consent or waiver with respect to this
Agreement or of any other Loan Document would (A) extend the final maturity
date of the Obligations hereunder in which such participant is participating;
(B) reduce the interest rate applicable to the Obligations hereunder in which
such Participant is participating; (C) release all or a material portion of the
Collateral (except to the extent expressly provided herein or in any of the
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Loan Documents) supporting the Obligations hereunder in which such Participant
is participating; (D) postpone the payment of, or reduce the amount of, the
interest or fees hereunder in which such Participant is participating; or (E)
reduce the amount or extend the due dates of scheduled principal repayments or
prepayments in respect of the Obligations hereunder in which such Participant
is participating; and (v) all amounts payable by Borrower hereunder shall be
determined as if such Originating Lender had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement; provided,
however, that no Participant may exercise any such right of setoff without the
notice to and consent of Agents. The rights of any Participant shall only be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any direct rights as to the other
Lenders, Agents, Borrower, the Collections, the Collateral, or otherwise in
respect of the Advances or the Letters of Credit. No Participant shall have
the right to participate directly in the making of decisions by the Lenders
among themselves. The provisions of this Section 15.1(e) are solely for the
benefit of the Lender Group, and Borrower shall have no rights as a third party
beneficiary of any of such provisions.
(f) Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement and its
Note (if any) in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
15.2 SUCCESSORS. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights or
duties hereunder without the Lenders' prior written consent and any prohibited
assignment shall be absolutely void. No consent to assignment by the Lenders
shall release Borrower from its Obligations. A Lender may assign this
Agreement and its rights and duties hereunder pursuant to Section 15.1 and no
consent or approval by Borrower is required in connection with any such
assignment.
15.3 REGISTRY. Borrower hereby designates the Facility Agent to
serve as Borrower's agent, solely for purposes of this Section 15.3, to
maintain a register (the "Register") on which it will record the Commitments
from time to time of each of the Lenders, the Advances made by each of the
Lenders and each repayment in respect of the principal amount of the
Obligations owing to each Lender, including the Agent Advances and Agent Loans
owing to Facility Agent. Failure to make any such recordation, or any error in
such recordation shall not affect Borrower's obligations in respect of the
Advances. With respect to any Lender, the transfer of the Commitment of such
Lender and the rights
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to the principal of, and interest on, any Advances made pursuant to such
Commitment as contemplated by Section 15.1(a) shall not be effective until such
transfer is recorded on the Register maintained by the Facility Agent with
respect to ownership of such Commitment and Advances and prior to such
recordation all amounts owing to the transferor with respect to such Commitment
and Advances shall remain owing to the transferor.
16. AMENDMENTS; WAIVERS.
16.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by Borrower therefrom, shall be effective unless the
same shall be in writing and signed by the Required Lenders (or by Facility
Agent at the written request of the Required Lenders) and Borrower and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Lenders
and Borrower and acknowledged by Agents, do any of the following:
(a) increase or extend the Commitment of any Lender,
except as contemplated by Section 2.1 (o)(i);
(b) postpone or delay any date fixed by this Agreement
or any other Loan Document for any payment of principal, interest, fees, or
other amounts due to the Lenders (or any of them) hereunder or under any other
Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on, any Loan, or any fees or other amounts payable hereunder
or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Advances which is required for the
Lenders or any of them to take any action hereunder;
(e) increase the advance rate with respect to Advances
(except for the restoration of an advance rate after the prior reduction
thereof), change Section 2.1(b), or amend the definition of Borrowing Base (or
the component definitions thereof) in any way that would increase Availability
(except as provided in Section 2.1(l));
(f) amend this Section or any provision of the
Agreement providing for consent or other action by all Lenders;
(g) release Collateral or any Subsidiary Collateral
other than as permitted by Section 17.11;
(h) change the definition of "Required Lenders"; or
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(i) release Borrower from any Obligation for the
payment of money or release any Guarantor from its Guaranty or from any
obligation for the payment of money.
and, provided further, that no amendment, waiver or consent shall, unless in
writing and signed by Agents, affect the rights or duties of Agents under this
Agreement or any other Loan Document; and, provided further, that the
limitation contained in clause (e) above shall not be deemed to limit the
ability of Facility Agent to make Advances or Agent Loans, as applicable, in
accordance with the provisions of Sections 2.1(g), (h), or (l). The foregoing
notwithstanding, any amendment, modification, waiver, consent, termination, or
release of or with respect to any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender Group among
themselves, and that does not affect the rights or obligations of Borrower,
shall not require consent by or the agreement of Borrower.
16.2 NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agents or
any Lender to exercise any right, remedy, or option under this Agreement, any
other Loan Document, or any present or future supplement hereto or thereto, or
in any other agreement between or among Borrower and Agents and/or any Lender,
or delay by Agents or any Lender in exercising the same, will operate as a
waiver thereof. No waiver by Agents or any Lender will be effective unless it
is in writing, and then only to the extent specifically stated. No waiver by
Agents or the Lenders on any occasion shall affect or diminish Agents' and each
Lender's rights thereafter to require strict performance by Borrower of any
provision of this Agreement. Agents' and each Lender's rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy which Agents or any Lender may have.
17. AGENTS; THE LENDER GROUP.
17.1 APPOINTMENT AND AUTHORIZATION OF AGENTS. Each Lender
hereby designates and appoints Foothill as its Facility Agent and BankBoston as
its Facility Co-Agent under this Agreement and the other Loan Documents and
each Lender hereby irrevocably authorizes Agents to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Agents agree to act as such
on the express conditions contained in this Article 17. The provisions of this
Article 17 are solely for the benefit of Agents and the Lenders, and Borrower
shall not have any rights as a third party beneficiary of any of the provisions
contained herein; provided, however, that the provisions of Sections 17.9,
17.10, 17.11, and 17.16(d) also shall be for the benefit of Borrowers. Any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document notwithstanding, Agents shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall Agents
have or be deemed to have any fiduciary relationship with any Lender, and no
implied covenants,
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functions, responsibilities, duties, obligations, or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against
Agents. Except as expressly otherwise provided in this Agreement, Agents shall
have and may use their sole discretion with respect to exercising or refraining
from exercising any discretionary rights or taking or refraining from taking
any actions which Agents are expressly entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agents, Lenders agree that Facility Agent
shall have the right to exercise the following powers as long as this Agreement
remains in effect: (a) maintain, in accordance with its customary business
practices, ledgers and records reflecting the status of the Advances, the
Collateral, the Collections, and related matters; (b) execute and/or file any
and all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim for Lenders, notices and
other written agreements with respect to the Loan Documents; (c) make Advances
for itself or on behalf of Lenders as provided in the Loan Documents; (d)
exclusively receive, apply, and distribute the Collections as provided in the
Loan Documents; (e) open and maintain such bank accounts and lock boxes as
Facility Agent deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to the Collateral and the
Collections; (f) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to Borrower, the Advances, the
Collateral, the Collections, or otherwise related to any of same as provided in
the Loan Documents; and (g) incur and pay such Lender Group Expenses as
Facility Agent may deem necessary or appropriate for the performance and
fulfillment of its functions and powers pursuant to the Loan Documents.
17.2 DELEGATION OF DUTIES. Except as otherwise provided in this
Section, Agents may execute any of their duties under this Agreement or any
other Loan Document by or through agents, employees, or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to
such duties. Agents shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that they selects as long as such selection
was made in compliance with this Section and without gross negligence or
willful misconduct. The foregoing notwithstanding, Agents shall not make any
material delegation of duties to subagents or non-employee delegees without the
prior written consent of Required Lenders (it being understood that routine
delegation of such administrative matters as filing financing statements, or
conducting appraisals or audits, is not viewed as a material delegation that
requires prior Required Lender approval).
17.3 LIABILITY OF AGENT-RELATED PERSONS. None of the
Agent-Related Persons shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or, (ii) be responsible in any manner to any
of the Lenders for any recital, statement, representation or warranty made by
Borrower, or any Subsidiary or Affiliate of Borrower, or any officer or
director thereof, contained in this Agreement or in any other Loan Document, or
in any certificate, report, statement, or other document referred to or
provided for in, or received
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by Agents under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
Borrower or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books, or records of
Borrower, or any of Borrower's Subsidiaries or Affiliates.
17.4 RELIANCE BY AGENTS. Agents shall be entitled to rely, and
shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex, or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to Borrower or counsel to any Lender), independent accountants, and
other experts selected by Agents. Agents shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan Document
unless they shall first receive such advice or concurrence of the Required
Lenders or all Lenders, as applicable, and until such instructions are
received, Agents shall act, or refrain from acting, as they deem advisable so
long as they are not grossly negligent or guilty of wilful misconduct. If
Agents so request, they shall first be indemnified to their reasonable
satisfaction by Lenders against any and all liability and expense which may be
incurred by them by reason of taking or continuing to take any such action.
Agents shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Required Lenders or all Lenders, as applicable, and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
17.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agents shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except that Facility Agent shall be deemed to have knowledge with
respect to defaults in the payment of principal, interest, fees, and expenses
required to be paid to Facility Agent for the account of the Lender Group,
except with respect to actual knowledge of the existence of an Overadvance, and
except with respect to Defaults and Events of Default of which Facility Agent
has actual knowledge, unless Facility Agent shall have received written notice
from a Lender or Borrower referring to this Agreement, describing such Default
or Event of Default, and stating that such notice is a "notice of default."
Facility Agent promptly will notify the Lenders of its receipt of any such
notice or of any Event of Default of which Facility Agent has, or is deemed to
have, actual knowledge. If any Lender obtains actual knowledge of any Event of
Default, such Lender promptly shall notify the other Lenders and Facility Agent
of such Event of Default. Each Lender shall be solely responsible for giving
any notices to its Participants, if any. Subject to Section 17.4, Facility
Agent shall take such action with respect to such Default or Event of Default
as may be requested by the Required Lenders; provided, however, that:
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(a) At all times, Facility Agent may propose and, with
the consent of Required Lenders (which shall be deemed to have been given by a
Lender unless such Lender has notified Facility Agent to the contrary in
writing within three days of notification of such proposed actions by Facility
Agent) exercise, any remedies on behalf of the Lender Group; and
(b) At all times, once Required Lenders or all
Lenders, as the case may be, have approved the exercise of a particular remedy
or pursuit of a course of action, Facility Agent may, but shall not be
obligated to, make all administrative decisions in connection therewith or take
all other actions reasonably incidental thereto (for example, if the Required
Lenders approve the foreclosure of certain Collateral, Facility Agent shall not
be required to seek consent for the administrative aspects of conducting such
sale or handling of such Collateral).
17.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by Agents hereinafter taken, including any review of the affairs of
Borrower and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agents that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition, and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals, and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, property, financial and other condition,
and creditworthiness of Borrower, and any other Person (other than the Lender
Group) party to a Loan Document. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by Agents,
Agents shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition, or creditworthiness of Borrower, and
any other Person party to a Loan Document that may come into the possession of
any of the Agent-Related Persons.
17.7 COSTS AND EXPENSES; INDEMNIFICATION. Agents may incur and
pay Lender Group Expenses to the extent Agents deem reasonably necessary or
appropriate for the performance and fulfillment of their functions, powers, and
obligations pursuant to the Loan Documents, including without limiting the
generality of the foregoing, but subject to any requirements of the Loan
Documents that it obtain any applicable consents or engage
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in any required consultation, court costs, reasonable attorneys fees and
expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, including costs of Facility Agent or any Nominee arising out of the
actions contemplated in Section 17.11(c) respecting Post-Foreclosure
Collateral, whether or not Borrower is obligated to reimburse Agents or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agents are
authorized and directed to deduct and retain sufficient amounts from
Collections to reimburse Agents for such out-of-pocket costs and expenses prior
to the distribution of any amounts to Lenders. In the event Agents are not
reimbursed for such costs and expenses from Collections, each Lender hereby
agrees that it is and shall be obligated to pay to or reimburse Agents for the
amount of such Lender's Pro-Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrower and without limiting the obligation of Borrower to do so),
according to their Pro-Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
to the Agent-Related Persons of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence, bad faith, or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse
Agents upon demand for its ratable share of any costs or out-of-pocket expenses
(including attorney fees and expenses) incurred by Agents in connection with
the preparation, execution, delivery, administration, modification, amendment,
or enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement, any other Loan Document, or any document contemplated by or referred
to herein, to the extent that Agents are not reimbursed for such expenses by or
on behalf of Borrower. The undertaking in this Section 17.7 shall survive the
payment of all Obligations hereunder and the resignation or replacement of
Agents.
17.8 AGENTS IN INDIVIDUAL CAPACITY. Foothill and its
Affiliates, and BankBoston and its Affiliates, may make loans to, issue letters
of credit for the account of, accept deposits from, acquire equity interests,
in and generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with Borrower and its Subsidiaries and
Affiliates and any other Person party to any Loan Documents as though Foothill
and BankBoston were not Agents hereunder without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Foothill
and its Affiliates, and BankBoston and its Affiliates, may receive information
regarding Borrower or their Affiliates and any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrower
or such other Person and that prohibit the disclosure of such information to
the Lenders, and the Lenders acknowledge that, in such circumstances (and in
the absence of a waiver of such confidentiality obligations, which waiver
Agents will use their reasonable best efforts to obtain), Agents shall be under
no obligation to provide such information to them. With respect to the Agent
Loans and Agent Advances, Foothill shall have the same rights and powers under
this Agreement as any other Lender and may exercise the same as though it were
not Facility Agent, and the terms "Lender" and "Lenders" include Foothill in
its individual capacity.
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17.9 SUCCESSOR AGENTS. Facility Agent may resign as Facility
Agent following notice of such resignation ("Notice") to Facility Co-Agent, the
Lenders and Borrower, and effective upon the appointment of and acceptance of
such appointment by, a successor Facility Agent. If Facility Agent resigns
under this Agreement, the Required Lenders shall appoint Facility Co-Agent or
with the consent of Borrower (not to be unreasonably delayed or withheld) any
Lender or Eligible Transferee as successor Facility Agent for the Lenders. If
no successor Facility Agent is appointed within 30 days of such retiring
Facility Agent's Notice, Facility Co-Agent may appoint itself Facility Agent,
or may appoint another Person as successor Facility Agent, after consulting
with the Lenders and Borrower. In any such event, upon the acceptance of its
appointment as successor Facility Agent hereunder, such successor Facility
Agent shall succeed to all the rights, powers and duties of the retiring
Facility Agent and the term "Facility Agent" shall mean such successor Facility
Agent and the retiring Facility Agent's appointment, powers, and duties as
Facility Agent shall be terminated. Facility Co-Agent may resign as Facility
Co-Agent following notice of such resignation to the Facility Agent, Lenders,
and Borrower, effective upon such notice. After any retiring Agent's
resignation hereunder as one of the Agents, the provisions of this Section 17
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was one of the Agents under this Agreement.
17.10 WITHHOLDING TAX. If the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a claim that
Facility Agent or Borrower did not properly withhold tax from amounts paid to
or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Facility Agent and Borrower of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify Facility Agent and Borrower fully for all
amounts paid, directly or indirectly, by Facility Agent or Borrower as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to Facility Agent or Borrower under
this Section, together with all costs and expenses (including attorneys fees
and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation of Facility Agent.
17.11 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize Facility
Agent, to release any Lien on any Collateral (i) upon the termination of the
Commitments, the payment and satisfaction in full by Borrower of all non-
contingent Obligations, and the satisfaction of all obligations of the Lender
Group under outstanding Letters of Credit pursuant to Section 2.2(e) and upon
such termination and payment Facility Agent shall deliver to Borrower, at
Borrower's sole cost and expense, all UCC termination statements and any other
documents necessary to terminate the Loan Documents and release the Liens with
respect to the Collateral; (ii) which is the subject of an Asset Sale permitted
by Section 7.4 or is a disposition of an asset which does not constitute an
Asset Sale and if Borrower so certifies such facts to Facility Agent (and
Facility Agent may rely conclusively on any such
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certificate, without further inquiry); (iii) constituting property in which
Borrower owned no interest at the time the Lien was granted or at any time
thereafter; (iv) constituting property leased to Borrower under a lease that
has expired or been terminated in a transaction permitted under this Agreement;
(v) constituting a parcel of non-Core Real Property Collateral, with a book
value of less than $250,000, if such parcel is located in an SFHA, upon the
exercise of the Facility Agent's discretion, or at the request of any Lender to
comply with applicable regulatory requirements; or (vi) upon the exercise of
the Facility Agent's discretion, but the aggregate book value of all such
Collateral released under this clause (v) shall not exceed $5,000,000. Except
as provided above, Facility Agent will not release any Lien on any Collateral
without the prior written authorization of the Lenders. Upon request by
Facility Agent or Borrower at any time, the Lenders will confirm in writing
Facility Agent's authority to release any such Liens on particular types or
items of Collateral pursuant to this Section 17.11; provided, however, that (y)
Facility Agent shall not be required to execute any document necessary to
evidence such release on terms that, in Facility Agent's opinion, would expose
Facility Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (z) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens (other than those expressly being released)
upon, or obligations of Borrower in respect of, all interests retained by
Borrower, including the proceeds of any sale, all of which shall continue to
constitute part of the Collateral.
(b) Facility Agent shall have no obligation whatsoever
to any of the Lenders to assure that the Collateral exists or is owned by
Borrower, is cared for, protected, or insured or has been encumbered, or that
the Liens of the Facility Agent (for the benefit of the Lender Group) have been
properly or sufficiently or lawfully created, perfected, protected, or enforced
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure, or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Facility Agent pursuant to any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission
or event related thereto, subject to the terms and conditions contained herein,
Facility Agent may act in any manner it may deem commercially reasonable, in
its sole discretion given Facility Agent's own interest in the Collateral in
its capacity as one of the Lenders and that Facility Agent shall have no other
duty or liability whatsoever to any Lender as to any of the foregoing, except
as otherwise provided herein.
(c) Facility Agent shall exercise all rights and
remedies afforded the Lender Group hereunder with respect to the Collateral,
with the advice and assistance of the Facility Co-Agent and the Lenders.
Facility Agent may in its own name or through the formation of one or more
business entities ("Nominee"), own or manage any Collateral acquired as a
result of "bidding in" at a foreclosure sale or similar disposition or obtained
through a deed in lieu or the like ("Post-Foreclosure Property"). Facility
Agent shall manage any such Nominee, and manage and dispose of any such
Post-Foreclosure Property with a view towards the realization of the economic
benefits of the ownership of the same,
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and in such regard the Facility Agent or such Nominee may operate, repair,
manage, maintain, develop, and dispose of any such Post-Foreclosure Collateral
as the Agents determine is appropriate under the circumstances. Facility
Agent, and any such Nominee, with respect to the conduct of such liquidation
and management of such Post-Foreclosure Collateral shall have all of the
rights, powers, privileges, discretions, and immunities granted to the Facility
Agent hereunder. Facility Co-Agent and each Lender shall execute all such
instruments and documents as the Facility Agent or such Nominee may request
with respect to the creation and governance of any Nominee, the exercise of the
Lender Group's rights and remedies, and the disposition of any Post-Foreclosure
Collateral.
17.12 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.
(a) Each of the Lenders agrees that it shall not,
without the express consent of Facility Agent, and that it shall, to the extent
it is lawfully entitled to do so, upon the request of Facility Agent, set off
against the Obligations any amounts owing by such Lender to Borrower or any
accounts of Borrower now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically requested to do
so by Facility Agent, take or cause to be taken any action, including the
commencement of any legal or equitable proceedings, to foreclose any Lien on,
or otherwise enforce any security interest in, any of the Collateral the
purpose of which is, or could be, to give such Lender any preference or
priority against the other Lenders with respect to the Collateral.
(b) Subject to Section 17.8, if, at any time or times
any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any
proceeds of Collateral or any payments with respect to the Obligations of
Borrower to such Lender arising under, or relating to, this Agreement or the
other Loan Documents, except for any such proceeds or payments received by such
Lender from Facility Agent pursuant to the terms of this Agreement, or (ii)
payments from Facility Agent in excess of such Lender's Pro-Rata Share of all
such distributions by Facility Agent, such Lender shall promptly (1) turn the
same over to Facility Agent, in kind, and with such endorsements as may be
required to negotiate the same to Facility Agent, or in same day funds, as
applicable, for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this Agreement, or
(2) purchase, without recourse or warranty, an undivided interest and
participation in the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in accordance
with their Pro-Rata Shares; provided, however, that if all or part of such
excess payment received by the purchasing party is thereafter recovered from
it, those purchases of participation shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor
shall be returned to such purchasing party, but without interest except to the
extent that such purchasing party is required to pay interest in connection
with the recovery of the excess payment.
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17.13 AGENCY FOR PERFECTION. Facility Agent and each Lender
hereby appoints each other Lender as agent for the purpose of perfecting the
Liens of the Lender Group in assets which, in accordance with Division 9 of the
UCC can be perfected only by possession. Should any Lender obtain possession
of any such Collateral, such Lender shall notify Facility Agent thereof, and,
promptly upon Facility Agent's request therefor shall deliver such Collateral
to Facility Agent or in accordance with Facility Agent's instructions.
17.14 PAYMENTS BY FACILITY AGENT TO THE LENDERS. All payments to
be made by Facility Agent to the Lenders shall be made by bank wire transfer or
internal transfer of immediately available funds pursuant to the instructions
set forth on Schedule C-1, or pursuant to such other wire transfer instructions
as each party may designate for itself by written notice to Facility Agent.
Concurrently with each such payment, Facility Agent shall identify whether such
payment (or any portion thereof) represents principal, premium or interest on
revolving advances or otherwise.
17.15 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
member of the Lender Group authorizes and directs Facility Agent to enter into
this Agreement and the other Loan Documents relating to the Collateral, for the
ratable benefit (subject to Section 4.1) of the Lender Group. Each member of
the Lender Group agrees that any action taken by Agents, Required Lenders, or
all Lenders, as applicable, in accordance with the terms of this Agreement or
the other Loan Documents relating to the Collateral and the exercise by Agents,
Required Lenders, or all Lenders, as applicable, of their respective powers set
forth therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.
17.16 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By signing this
Agreement, each Lender;
(a) is deemed to have requested that Facility Agent
furnish such Lender, promptly after it becomes available, a copy of each field
audit or examination report (each a "Report" and collectively, "Reports")
prepared by Facility Agent, and Facility Agent shall so furnish each Lender
with such Reports;
(b) expressly agrees and acknowledges that Facility
Agent (i) does not make any representation or warranty as to the accuracy of
any Report, and (ii) shall not be liable for any information contained in any
Report;
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that Facility Agent or other
party performing any audit or examination will inspect only specific
information regarding Borrower and will rely significantly upon Borrower's
books and records, as well as on representations of Borrower's personnel;
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(d) agrees to keep all Reports and other material
information obtained by it pursuant to the requirements of this Agreement in
accordance with its reasonable customary procedures for handling confidential
information and in accordance with Section 18.8; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold
Facility Agent, Facility Co-Agent, and any such other Lender preparing a Report
harmless from any action the indemnifying Lender may take or conclusion the
indemnifying Lender may reach or draw from any Report in connection with any
loans or other credit accommodations that the indemnifying Lender has made or
may make to Borrower, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, a loan or loans of Borrower; and (ii) to pay
and protect, and indemnify, defend, and hold Facility Agent, Facility Co-Agent
and any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses and other amounts
(including, attorney costs) incurred by Facility Agent, Facility Co-Agent, and
any such other Lender preparing a Report as the direct or indirect result of
any third parties who might obtain all or part of any Report through the
indemnifying Lender. The obligations of the Lenders in this Section shall
survive the payment of all Obligations hereunder, the resignation of the
Facility Agent or the Facility Co-Agent, and the termination of this Agreement.
In addition to the foregoing: (x) any Lender may from time to time request of
Agents in writing that Agents provide to such Lender a copy of any report or
document provided by Borrower to Agents, and, upon receipt of such request,
Agents shall provide a copy of same to such Lender promptly upon receipt
thereof; (y) to the extent that Agents are entitled, under any provision of the
Loan Documents, to request additional reports or information from Borrower, any
Lender may, from time to time, reasonably request Agents to exercise such right
as specified in such Lender's notice to Agents, whereupon Agents promptly shall
request of Borrower the additional reports or information specified by such
Lender, and, upon receipt thereof, Agents promptly shall provide a copy of same
to such Lender; and (z) any time that Agents render to Borrower a statement
regarding the Loan Account, Agents shall send a copy of such statement to each
Lender.
17.17 SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that
certain of the Loan Documents now or hereafter may have been or will be
executed only by or in favor of Facility Agent in its capacity as such, and not
by or in favor of the Lenders, any and all obligations on the part of Facility
Agent (if any) to make any Advances or issue such Letters of Credit shall
constitute the several (and not joint) obligations of the respective Lenders on
a ratable basis, according to their respective Commitments, to make an amount
of such Advances or to participate in the issuance of such Letters of Credit
not to exceed, in principal amount, at any one time outstanding, the amount of
their respective Commitments. Nothing contained herein shall confer upon any
Lender any interest in, or subject any Lender to any liability for, or in
respect of, the business, assets, profits, losses, or liabilities of any other
Lender. Each Lender shall be solely responsible for notifying its Participants
of any
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matters relating to the Loan Documents to the extent any such notice may be
required, and no Lender shall have any obligation, duty, or liability to any
Participant of any other Lender. Except as provided in Section 17.7, no member
of the Lender Group shall have any liability for the acts of any other member
of the Lender Group. No Lender shall be responsible to Borrower or any other
Person for any failure by any other Lender to fulfill its obligations to make
Advances, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
18. GENERAL PROVISIONS.
18.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and the Lender Group.
18.2 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.
18.3 INTERPRETATION. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against the Lender Group or
Borrower, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties and shall be
construed and interpreted according to the ordinary meaning of the words used
so as to fairly accomplish the purposes and intentions of all parties hereto.
18.4 SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
18.5 COUNTERPARTS; TELEFACSIMILE EXECUTION. Any of the Loan
Documents may be executed in any number of counterparts and by different
parties on separate counterparts, each of which, when executed and delivered,
shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same respective agreement. Delivery of an executed
counterpart of such Agreements by telefacsimile shall be equally as effective
as delivery of an original executed counterpart of such Agreements. Any party
delivering an executed counterpart of such Agreements by telefacsimile also
shall deliver an original executed counterpart of such Agreements but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of such Agreements.
18.6 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the
incurrence or payment of the Obligations by Borrower or any Guarantor of the
Obligations or the transfer by any or all of such parties to the Agents or the
other members of the Lender Group of any property of either or both of such
parties should for any reason subsequently be declared to
111
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<PAGE> 118
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, and other voidable or recoverable payments of money
or transfers of property (collectively, a "Voidable Transfer"), and if the
Agents or the other members of the Lender Group are required to repay or
restore, in whole or in part, any such Voidable Transfer, or elect to do so
upon the reasonable advice of their counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Agents or the other members of the
Lender Group are required or elect to repay or restore, and as to all
reasonable costs, expenses, and attorneys fees of the Lender Group related
thereto, the liability of Borrower or such Guarantor automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
18.7 INTEGRATION. This Agreement, together with the other Loan
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
18.8 CONFIDENTIALITY.
(a) Subject to the provisions of clause (b) of this
Section 18.8, each member of the Lender Group (a "Recipient") agrees that it
will use its best efforts not to disclose without the prior consent of Borrower
(other than to its employees, authorities, advisors or counsel, provided,
however, that such Persons shall be subject to the provisions of this Section
18.8 to the same extent as such Recipient) any information with respect to
Borrower or any of its Subsidiaries which is now or in the future furnished
pursuant to this Agreement or any other Loan Document and which is designated
by Borrower to such Recipient in writing as confidential, provided, however,
that such Recipient may disclose any such information (i) as has become
generally available to the public, (ii) as may be required or appropriate in
any report, statement or testimony submitted to any municipal, state, or
Federal regulatory body having or claiming to have jurisdiction over such
Recipient, (iii) as may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation, (iv) in order to comply with any
law, order, regulation or ruling applicable to such Recipient, (v) to any
prospective or actual transferee or Participant in connection with any
contemplated transfer or participation of this Agreement, the Obligations, or
any interest therein by such Recipient, provided, however, that such
prospective transferee or Participant executes an agreement with such Recipient
substantially the same as to Exhibit 18.8, and (vi) as may be reasonably
required in connection with the Lender Group's enforcement of this Agreement or
the other Loan Documents against Borrower or any Guarantor.
(b) Borrower hereby acknowledges and agrees that each
Recipient may share with any of its affiliates any information related to
Borrower or any of its subsidiaries (including, without limitation, any
nonpublic customer information regarding the
112
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<PAGE> 119
creditworthiness of Borrower and its subsidiaries), provided such Persons shall
be subject to the provisions of this Section 18.8 to the same extent as such
Recipient.
18.9 SURVIVAL OF INDEMNIFICATION OBLIGATIONS. All of the
indemnification Obligations of Borrower under this Agreement or any of the
other Loan Documents, including, but not limited to, Sections 2.2(b), 2.17, and
11.3, shall survive the payment of all other Obligations hereunder and the
termination of this Agreement; provided, however, that where so specified
herein such indemnification may be limited to a period of nine months after
termination of this Agreement.
18.10 CONFLICTING TERMS; MORTGAGE PROVISIONS. Notwithstanding
anything to the contrary provided herein, in the Mortgages or in any other Loan
Document, if any provision of the Mortgages or any other Loan Document
contradicts a provision in this Agreement, the provisions of this Agreement
shall control. In addition (without limiting the foregoing), to the extent any
Mortgage contains the provisions set forth on Schedule 18.10, such provisions
are hereby amended or deleted from the Mortgages as set forth on Schedule
18.10. In addition, in the event that Borrower or any Restricted Subsidiary
fails to comply with any covenant contained in the Mortgages, Facility Agent
shall provide thirty days prior written notice and opportunity to cure to
Borrower (on behalf of itself or such Restricted Subsidiary) before same shall
constitute a Default or Event of Default.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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<PAGE> 120
18.11 AMENDMENT AND RESTATEMENT. Borrower acknowledges and
agrees that the security interest granted by it pursuant to the Existing Loan
Documents and in the Existing Agreement (and maintained pursuant to this
Agreement) continues (without interruption) in full force and effect in favor
of Facility Agent. Upon the effectiveness of this Agreement, (a) the
outstanding Obligations owing under the Existing Facility shall have been
acquired by and continue in favor of the Lender Group, (b) the terms and
conditions of the Existing Agreement are hereby amended and restated in their
entirety by this Agreement, and (c) Borrower forever releases, discharges, and
acquits Existing Lender, any Participant (as defined in the Existing Loan
Agreement), and each member of the Lender Group, and each of their officers,
directors, agents and employees, and any of their successors and assigns, from
all obligations, indebtedness, and liabilities to Borrower of every kind,
nature or description, direct or indirect, absolute or contingent, whether
arising under contract or tort, arising under or in connection with the
Existing Agreement and the Existing Loan Documents arising prior to the date
hereof.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
114
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<PAGE> 121
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in Los Angeles, California.
GREYHOUND LINES, INC.,
a Delaware corporation
By /s/ STEVEN L. KORBY
----------------------------------------
Title: Executive Vice President
------------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Facility
Agent, and as a Lender
By /s/ THOMAS SIGURDSON
----------------------------------------
Title: Vice President
------------------------------------
BANKBOSTON, N.A.,
a national banking organization, as
Facility Co-Agent, and as a Lender
By /s/ HOWARD BAILEY
----------------------------------------
Title: Vice President
------------------------------------
FREMONT FINANCIAL CORPORATION
By
----------------------------------------
Title:
------------------------------------
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F6384-0813
<PAGE> 122
CORESTATES BANK, N.A.
By
----------------------------------------
Title:
------------------------------------
LASALLE NATIONAL BANK
By
----------------------------------------
Title:
------------------------------------
CONGRESS FINANCIAL CORPORATION
By
----------------------------------------
Title:
------------------------------------
FLEET CAPITAL CORPORATION
By
----------------------------------------
Title:
------------------------------------
Foothill/Agent Greyhound
F6384-0813
<PAGE> 1
EXIHIBIT 11.2
Page 1 of 2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 1997
------------------
<S> <C>
PRIMARY LOSS PER SHARE
Net loss ............................................................................. $(30,234,000)
============
Shares
Weighted average number of common shares issued .................................. 58,924,289
Less weighted average treasury stock ............................................. (109,192)
Assuming exercise of options reduced by the number of common shares which
could have been purchased with the proceeds from exercise of such options ... ---*
------------
Weighted average number of common shares outstanding, as adjusted ................ 58,815,097
------------
Net loss per share ................................................................... $ (0.51)
============
FULLY DILUTED LOSS PER SHARE
Net loss ............................................................................. $(30,234,000)
Plus interest expense on Convertible Debentures ...................................... ---**
Plus dividends on the Convertible Exchangeable Preferred Stock ....................... ---**
------------
Adjusted net loss .................................................................... $(30,234,000)
============
Shares
Weighted average number of common shares issued .................................. 58,924,289
Less weighted average treasury stock ............................................. (109,192)
Assuming exercise of options reduced by the number of common shares which
could have been purchased with the proceeds from exercise of such options ... ---*
Assuming conversion of Convertible Debentures into shares of Common Stock ........ ---**
Assuming conversion of the Convertible Exchangeable Preferred Stock .............. ---**
------------
Weighted average number of common shares outstanding, as adjusted ................ 58,815,097
------------
Net loss per share ................................................................... $ (0.51)
============
</TABLE>
* Option exercises not considered in calculation as exercise would not have
a dilutive effect.
** Not used in calculation of weighted average number of common shares due to
the antidilutive effect of the assumed conversion of the Convertible
Debentures and the Convertible Exchangeable Preferred Stock.
<PAGE> 2
EXIHIBIT 11.2
Page 2 of 2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1997
----------------
<S> <C>
PRIMARY LOSS PER SHARE
Net loss ............................................................................. $(47,402,000)
============
Shares
Weighted average number of common shares issued .................................. 58,738,978
Less weighted average treasury stock ............................................. (109,192)
Assuming exercise of options reduced by the number of common shares which
could have been purchased with the proceeds from exercise of such options ... ---*
------------
Weighted average number of common shares outstanding, as adjusted ................ 58,629,786
------------
Net loss per share ................................................................... $ (0.81)
============
FULLY DILUTED LOSS PER SHARE
Net loss ............................................................................. $(47,402,000)
Plus interest expense on Convertible Debentures ...................................... ---**
Plus dividends on the Convertible Exchangeable Preferred Stock ....................... ---**
------------
Adjusted net loss .................................................................... $(47,402,000)
============
Shares
Weighted average number of common shares issued .................................. 58,738,978
Less weighted average treasury stock ............................................. (109,192)
Assuming exercise of options reduced by the number of common shares which
could have been purchased with the proceeds from exercise of such options ... ---*
Assuming conversion of Convertible Debentures into shares of Common Stock ........ ---**
Assuming conversion of the Convertible Exchangeable Preferred Stock .............. ---**
------------
Weighted average number of common shares outstanding, as adjusted ................ 58,629,786
------------
Net loss per share ................................................................... $ (0.81)
============
</TABLE>
* Option exercises not considered in calculation as exercise would not have
a dilutive effect.
** Not used in calculation of weighted average number of common shares due to
the antidilutive effect of the assumed conversion of the Convertible
Debentures and the Convertible Exchangeable Preferred Stock.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FDS FOR QUARTER 10-Q
</LEGEND>
<CIK> 0000813040
<NAME> Greyhound Lines Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,312
<SECURITIES> 0
<RECEIVABLES> 38,160
<ALLOWANCES> 234
<INVENTORY> 3,798
<CURRENT-ASSETS> 64,281
<PP&E> 426,379
<DEPRECIATION> 112,036
<TOTAL-ASSETS> 513,279
<CURRENT-LIABILITIES> 98,075
<BONDS> 215,756
0
60,000
<COMMON> 592
<OTHER-SE> 92,817
<TOTAL-LIABILITY-AND-EQUITY> 513,279
<SALES> 0
<TOTAL-REVENUES> 342,678
<CGS> 0
<TOTAL-COSTS> 252,663
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,112
<INCOME-PRETAX> (20,851)
<INCOME-TAX> 165
<INCOME-CONTINUING> (21,016)
<DISCONTINUED> 0
<EXTRAORDINARY> 25,323
<CHANGES> 0
<NET-INCOME> (47,402)
<EPS-PRIMARY> (0.81)
<EPS-DILUTED> (0.81)
</TABLE>
