<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 16, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
GREYHOUND LINES, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<C> <C>
DELAWARE 86-0572343
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
15110 N. DALLAS PARKWAY, SUITE 600 MARK E. SOUTHERST, VICE PRESIDENT
DALLAS, TEXAS 75248 AND GENERAL COUNSEL
(972) 789-7000 15110 NORTH DALLAS PARKWAY, SUITE 600
DALLAS, TEXAS 75248
(Address, Including Zip Code, and Telephone (972) 789-7000
Number, Including Area Code, of
Registrant's Principal Executive Offices) (Name, Address, Including Zip Code, and
Telephone Number, Including Area Code, of
Agent for Service)
</TABLE>
Copy to:
JEREMY W. DICKENS, ESQ.
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
============================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE PRICE PER OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED NOTE(1) PRICE(1) FEE
- ----------------------------------------------------------------------------------------------------------------------------
8 1/2% Convertible Exchangeable Preferred
Stock, par value $0.01 per share....... 2,400,000 shares $24.8125 $59,550,000 $18,045.45
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 per
share.................................. 12,307,692 shares(2) -- -- None(3)
- ----------------------------------------------------------------------------------------------------------------------------
8 1/2% Convertible Subordinated
Debentures due 2009.................... $60,000,000 -- -- None(3)
- ----------------------------------------------------------------------------------------------------------------------------
Total.......................... $24.8125 $59,550,000 $18,045.45
============================================================================================================================
</TABLE>
(1) Calculated in accordance with Rule 457(c) under the Securities Act of 1933,
as amended, based on the average of the bid and asked price as of May 8,
1997 as reported to Registrant by Bear, Stearns & Co., Inc.
(2) The amount to be registered shall also be deemed to include such greater
number of shares of Common Stock as are issuable as a result of the
adjustment to the conversion price pursuant to the Certificate of
Designations for the Preferred Stock or pursuant to the indenture governing
the Convertible Subordinated Debentures.
(3) No separate consideration will be received for the Common Stock or the
Convertible Subordinated Debentures issuable upon conversion or exchange,
respectively, of the Convertible Exchangeable Preferred Stock.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 16, 1997
PROSPECTUS
<TABLE>
<C> <C> <C>
[Greyhound Logo] GREYHOUND LINES, INC.
2,400,000 SHARES OF 8 1/2% CONVERTIBLE EXCHANGEABLE STOCK
</TABLE>
------------------------------
This Prospectus relates to the offering (the "Offering") by the Selling
Securityholders (as hereinafter defined) from time to time of (i) up to
2,400,000 shares (the "Shares") of 8 1/2% Convertible Exchangeable Preferred
Stock, liquidation preference $25.00 per share (the "Preferred Stock"), of
Greyhound Lines, Inc. (the "Company"), (ii) up to $60.0 million aggregate
principal amount of 8 1/2% Convertible Subordinated Notes due 2009 (the
"Exchange Debentures") of the Company, issuable upon exchange of the Preferred
Stock (as hereinafter described) and (iii) up to 12,307,692 shares of Common
Stock, par value $.01 per share (the "Common Stock"), of the Company, issuable
upon conversion of the Preferred Stock or the Exchange Debenture, (as
hereinafter described). See "Selling Securityholders." The Preferred Stock,
Exchange Debentures and Common Stock offered hereby are referred to herein as
the "Securities."
Dividends on the Preferred Stock will accrue at a rate per annum equal to
8 1/2% of the liquidation preference per share of Preferred Stock and will be
payable quarterly on February 1, May 1, August 1 and November 1 of each year,
commencing August 1, 1997. The Preferred Stock will be convertible, subject to
prior redemption, at any time on or after July 15, 1997 at the option of the
holder thereof into Common Stock at a conversion price of $4 7/8 per share,
subject to certain adjustments. The Common Stock is listed on the American Stock
Exchange ("AMEX") under the symbol "BUS." On May 15, 1997, the last reported
sale price of the Common Stock on the AMEX was $3 7/8 per share.
The Preferred Stock will be redeemable, in whole or in part, at any time on
or after May 3, 2000, at the redemption prices set forth herein, plus
accumulated and unpaid dividends and Liquidated Damages, if any, thereon to the
redemption date. Upon the occurrence of a Change of Control (as defined herein),
the Company will be required to make an offer to repurchase all outstanding
shares of Preferred Stock at a price equal to 100% of the liquidation preference
thereof, plus accumulated and unpaid dividends and Liquidated Damages, if any,
thereon to the repurchase date. See "Description of Securities -- Preferred
Stock."
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
its 8 1/2% Convertible Subordinated Debentures due 2009 on any dividend payment
date on or after April 16, 1999. The Exchange Debentures, if issued, will bear
interest at 8 1/2 per annum and will be payable semi-annually in arrears on May
1 and November 1 of each year, commencing with the first such date following the
date on which the Exchange Debentures are issued. The Exchange Debentures will
be subordinated to all existing and future Senior Debt (as defined herein) of
the Company. The Exchange Debentures will be convertible, subject to prior
redemption, at any time after issuance thereof, at the option of the holder
thereof, into Common Stock at a conversion price of $4 7/8 per share, subject to
certain adjustments. The Exchange Debentures will be redeemable, at the option
of the Company, in whole or in part, at any time on or after May 3, 2000, at the
redemption prices set forth herein, plus accrued and unpaid interest thereon to
the redemption date. Upon the occurrence of a Change of Control, the Company
will be required to make an offer to repurchase all or any part of each holder's
Exchange Debentures at a price equal to 100% of the principal amount thereof,
plus accrued and unpaid interest thereon to the repurchase date. See
"Description of Securities -- Exchange Debentures."
The Selling Securityholders may sell the Securities to which this Prospectus
relates in whole or from time to time in part through underwriters or dealers,
through brokers or other agents, or directly to one or more purchasers, at
market prices prevailing at the time of sale or at prices otherwise negotiated.
The Company will not receive any of the proceeds from the sale of the Securities
by the Selling Securityholders. The Company has agreed to pay substantially all
the fees and expenses incurred in connection with the registration of the
Securities, other than any underwriting fees, discounts or commissions
attributable to the sale of the Securities. The Selling Securityholders and any
broker, dealer or underwriter that participates with the Selling Securityholders
in the distribution of the Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act, and any commissions received by them
and any profit on the resale of such Preferred or the other Securities Stock
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution."
The Preferred Stock currently trades in the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") Market. Shares of Preferred Stock
sold pursuant to this Prospectus thereafter will not be eligible for trading in
the PORTAL Market. The Company does not intend to list the Preferred Stock on
any securities exchange or to seek approval for quotation of the Preferred Stock
through any automated quotation system. Although Bear, Stearns & Co. Inc. has
advised the Company that it intends to make a market in the Preferred Stock, it
is not obligated to do so and may suspend any such market-making activities at
any time and without prior notice. Accordingly, there can be no assurance that
an active market for the Preferred Stock will develop or be maintained.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
RELEVANT TO AN INVESTMENT IN THE SECURITIES OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, and in accordance therewith files periodic reports,
proxy and information statements, and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy and information
statements, and other information filed by the Company with the Commission may
be inspected at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of
the Commission located at 7 World Trade Center, 13th Floor, New York, New York
10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements regarding registrants, such as the
Company, that file electronically with the Commission. The Common Stock is
listed on the American Stock Exchange and all reports, proxy and information
statements, and other information filed by the Company with the Commission also
may be inspected at the offices of the American Stock Exchange, 86 Trinity
Place, New York, New York 10006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act, as amended, with respect to the Securities
offered hereby. This prospectus does not include all the information set forth
in the Registration Statement and the exhibits thereto, to which reference is
made for further information with respect to the Company. Copies of the
Registration Statement and the exhibits thereto are on file at the offices of
the Commission and may be obtained from the Commission upon payment of
prescribed rates or may be examined without charge at the public reference
facilities of the Commission as described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated into
this Prospectus by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1996 filed March 19, 1997;
(2) The Company's Current Report on Form 8-K filed March 19, 1997;
(3) The Company's Current Report on Form 8-K filed April 9, 1997;
(4) The Company's Proxy Statement for the year ended December 31, 1996
filed April 16, 1997;
(5) The Company's Current Report on Form 8-K filed April 28, 1997; and
(6) the Company's Quarterly Report on Form 10-Q filed May 13, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any and
all of the documents which have been or may be incorporated by reference in this
Prospectus, except that exhibits to such documents will not be provided unless
they are specifically incorporated by reference into such documents. Requests
for copies of any such document should be directed to Greyhound Lines, Inc.,
15110 N. Dallas Parkway, Suite 600, Dallas, Texas 75248, Attention: Investor
Relations, telephone: (972) 789-7577.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by, and
should be read in conjunction with, the more detailed information and financial
data, contained in this Prospectus, including information and financial data
incorporated herein by reference. The terms "Greyhound" and "Company" refer to
Greyhound Lines, Inc. and its subsidiaries, unless otherwise stated or indicated
by the context.
THE COMPANY
The Company is the only nationwide provider of intercity bus transportation
services in the United States. The Company serves the value-oriented customer by
connecting rural and urban markets throughout the United States, offering
scheduled passenger service to more than 2,400 destinations with a fleet of
approximately 2,000 buses and approximately 1,600 sales locations. The Company
also provides package express service and, in many terminals, food service.
THE OFFERING
THE PREFERRED STOCK
Securities Offered......... Up to 2,400,000 shares of 8 1/2% Cumulative
Exchangeable Preferred Stock.
Liquidation Preference..... $25.00 per share.
Dividends.................. Cumulative dividends on the Preferred Stock will
accrue at a rate per annum equal to 8 1/2% of the
liquidation preference per share of Preferred Stock
and will be payable quarterly in arrears on
February 1, May 1, August 1, and November 1 of each
year, commencing August 1, 1997.
Conversion................. The Preferred Stock will be convertible, subject to
prior redemption, at any time on or after July 15,
1997, at the option of the holder thereof, into
Common Stock at a conversion price of $4 7/8 per
share, subject to certain adjustments.
Redemption................. The Preferred Stock will be redeemable, at the
option of the Company, in whole or in part, at any
time on or after May 3, 2000, at the redemption
prices set forth herein, plus accumulated and
unpaid dividends and Liquidated Damages, if any,
thereon to the redemption date.
Change of Control.......... Upon the occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase all or any part of each holder's
Preferred Stock at a price equal to 100% of the
liquidation preference thereof, plus accumulated
and unpaid dividends and Liquidation Damages, if
any, thereon to the repurchase date.
Exchange................... 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
Exchange Debentures on any dividend payment date on
or after April 16, 1999.
Voting Rights.............. The holders of the Preferred Stock are entitled to
vote with the holders of the Common Stock on all
matters submitted to a vote of stockholders of the
Company, each share of Preferred Stock entitling
the holder thereof to one vote. The Company,
however, may seek stockholder approval to amend the
Restated Certificate of Incorporation of the
Company to eliminate the provisions thereof
providing such voting rights to holders of
Preferred Stock. If such amendment is approved,
holders of the Preferred Stock will have no voting
rights except as provided by law
3
<PAGE> 5
or set forth in the Certificate of Designations.
See "Description of Securities -- Preferred
Stock -- Voting Rights."
THE EXCHANGE DEBENTURES
Securities Offered......... 8 1/2% Convertible Subordinated Debentures due 2009
issuable at the Company's option in exchange for
the Preferred Stock in an aggregate principal
amount equal to the liquidation preference of the
then outstanding shares of Preferred Stock.
Maturity................... May 1, 2009.
Interest Payment Dates..... Interest on the Exchange Debentures will be payable
semi-annually in arrears on May 1 and November 1 of
each year, commencing with the first such date
following the date on which the Exchange Debentures
are issued (the "Exchange Date").
Ranking.................... The Exchange Debentures will be subordinated to all
existing and future Senior Debt (as defined herein)
of the Company. As of December 31, 1996, after
giving pro forma effect to the Offerings and the
use of proceeds therefrom, the principal amount of
Senior Debt would have been approximately $207.5
million.
Conversion................. The Exchange Debentures will be convertible,
subject to prior redemption, at any time after
issuance thereof, at the option of the holder
thereof, into Common Stock at a conversion price of
$4 7/8 per share, subject to certain adjustments.
Redemption................. The Exchange Debentures will be redeemable, at the
option of the Company, in whole or in part, at any
time on or after May 3, 2000, at the redemption
prices set forth herein, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to
the redemption date.
Change of Control.......... Upon the occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase all or any part of each holder's
Exchange Debentures at a price equal to 100% of the
principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to
the repurchase date.
4
<PAGE> 6
RISK FACTORS
Prospective purchasers of the Securities offered hereby should carefully
review the information set forth below, in addition to the other information
contained in this Prospectus (including information incorporated by reference
herein), in evaluating an investment in the Securities offered hereby.
SUBSTANTIAL LEVERAGE
The Company has, and will continue to have, consolidated indebtedness that
is substantial in relation to its stockholders' equity. As of December 31, 1996,
after giving pro forma effect to the offerings of the Preferred Stock and the
Senior Notes (as hereinafter defined), completed April 16, 1997 (the
"Offerings"), and the application of the net proceeds therefrom, the Company
would have had outstanding consolidated long-term indebtedness (including
current portions) of approximately $217.3 million and total stockholders' equity
of approximately $173.7 million. In addition, for the year ended December 31,
1996, after giving pro forma effect to the Offerings and the application of the
net proceeds therefrom, the Company's earnings would have been insufficient to
cover fixed charges and preferred stock dividends by $6.5 million. The degree to
which the Company is leveraged could have important consequences to holders of
the Securities, including: (i) an impairment of the Company's ability to obtain
additional financing in the future; (ii) a reduction of funds available to the
Company for its operations or for capital expenditures as a result of the
dedication of a substantial portion of the Company's cash flow to the payment of
principal of and interest on the Company's indebtedness; (iii) the possibility
of an event of default under financial and operating covenants contained in the
Company's debt instruments, including the indenture in respect of the Senior
Notes (the "Senior Note Indenture"), which, if not cured or waived, could
prevent the Company from paying dividends on the Preferred Stock or interest on
the Exchange Debentures and could have a material adverse effect on the Company;
(iv) a relative competitive disadvantage if the Company is substantially more
leveraged than its competitors; and (v) an inability to adjust to rapidly
changing market conditions and consequent vulnerability in the event of a
downturn in general economic conditions or its business because of the Company's
reduced financial flexibility. The Company's Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends were each
1.4 and 1.3 for the fiscal years ended December 31, 1992 and 1993, respectively.
The coverage deficiency for Earnings to Fixed Charges and Earnings to Fixed
Charges and Preferred Stock Dividends were each $98.9 million, $17.4 million,
$6.5 million and $17.1 million for the fiscal years ended December 31, 1994,
1995 and 1996 and the three-month period ended March 31, 1997, respectively.
In addition to its debt service obligations, the Company's operations
require substantial investments on a continuing basis. The Company's ability to
make scheduled debt payments, to refinance its obligations with respect to its
indebtedness and to fund capital and non-capital expenditures necessary to
maintain the condition of the Company's operating assets, including its bus
fleet, properties and systems software, as well as to provide capacity for the
growth of its business, depends on its financial and operating performance and
obtaining additional sources of financing, which, in turn, is subject to
prevailing economic conditions and financial, business, competitive, legal and
other factors, many of which are beyond the Company's control. Moreover, the
Company is and will be subject to covenants contained in the Senior Note
Indenture, the Revolving Credit Facility and other present and future
indebtedness of the Company. Such covenants include without limitation,
restrictions on certain payments, the granting of liens, the incurrence of
additional indebtedness, dividend restrictions affecting subsidiaries, assets
sales, transactions with affiliates, and mergers and consolidations. There can
be no assurance that the Company's operating results will be sufficient for
payment of the Company's indebtedness or to fund its other expenditures or that
the Company will be able to obtain financing to meet such requirements. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
HISTORY OF LOSSES
The Company has had a net loss in each of its last three fiscal years.
Although the Company has implemented new strategic and operational initiatives
intended to enhance revenues and operating income, the
5
<PAGE> 7
Company's operations generally are subject to economic, financial, competitive,
legal and other factors, many of which are beyond its control. Accordingly,
there can be no assurance that the Company will be able to implement these
initiatives without delay or that these initiatives will return the Company to
profitability.
ABSENCE OF DIVIDENDS ON COMMON STOCK; RESTRICTIONS ON DIVIDENDS
The Company has not paid any dividends on the Common Stock in the past and
does not anticipate paying dividends on the Common Stock in the foreseeable
future. See "Market Price of Common Stock and Dividend Policy" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. Moreover, the
Revolving Credit Facility and the Senior Note Indenture restrict the ability of
the Company to declare or pay cash dividends on any of its capital stock. In
general, the Revolving Credit Facility restricts the payment of dividends on the
Preferred Stock in an amount in excess of $10.0 million per year, and the Senior
Note Indenture limits the aggregate amount of Restricted Payments (as defined in
the Senior Note Indenture), including the payment of dividends on, and the
repurchase, redemption or other retirement of, shares of Preferred Stock and
Common Stock, to an amount equal to the sum of (a) 50% of the Consolidated Net
Income (as defined in the Senior Note Indenture to exclude certain non-recurring
and extraordinary gains) of the Company, plus (b) the net cash proceeds to the
Company from the sale of certain equity securities of the Company, plus (c) the
amount of proceeds to the Company from the sale of certain investments.
Notwithstanding the foregoing, however, the Senior Note Indenture will permit
the Company to pay regularly scheduled dividends on the Preferred Stock if (i)
the Company is not then in default under the Senior Note Indenture and (ii) with
respect to dividend payments on and after April 15, 2000, the Company's
Consolidated Interest Coverage Ratio (as defined in the Senior Note Indenture)
is at least 2.0 to 1. As a result of the foregoing provisions, there can be no
assurance that the Company will at all times be permitted to pay dividends on
the Preferred Stock. In addition, future agreements of the Company may restrict
the Company's ability to pay dividends on the Preferred Stock and Common Stock.
REPURCHASE OF PREFERRED STOCK UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
make an offer to repurchase all outstanding shares of Preferred Stock at a price
equal to 100% of the liquidation preference thereof, plus accumulated dividends
and Liquidated Damages, if any, thereon to the date of repurchase. Certain
events involving a Change of Control may result in an event of default under the
Revolving Credit Facility and may result in an event of default under other
indebtedness of the Company that may be incurred in the future. An event of
default under the Revolving Credit Facility or other indebtedness could result
in an acceleration of such indebtedness. See "Description of Other
Indebtedness." There can be no assurance that the Company would have sufficient
resources to repurchase the Preferred Stock and pay its obligations under such
indebtedness upon the occurrence of a Change of Control. In addition, such
indebtedness may prohibit the Company from repurchasing Preferred Stock
following a Change of Control. These Change of Control provisions may be deemed
to have anti-takeover effects and may delay, defer or prevent a merger, tender
offer or other takeover attempt.
COMPETITION
The transportation industry is highly competitive. The Company's primary
sources of competition for passengers are automobile travel, low cost air travel
from both regional and national airlines, and, in certain markets, regional bus
companies and trains. There can be no assurance that the Company will be able to
successfully compete against these sources of competition. See
"Business -- Competition" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
SEASONALITY
The Company's business is seasonal in nature and generally follows the
pattern of the travel industry as a whole, with peaks during the summer months
and the Thanksgiving and Christmas holiday periods. As a result, the Company's
cash flows are seasonal in nature with a disproportionate amount of the
Company's annual cash flows being generated during the peak travel periods.
Therefore, an event that adversely affects
6
<PAGE> 8
ridership during any of these peak periods in any year could have a material
adverse effect on the Company's financial condition or results of operations for
such year. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Seasonality" in the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
IMPORTANCE OF SELF-INSURANCE AUTHORITY AND AVAILABILITY OF INSURANCE
The Surface Transportation Board (the "STB") of the United States
Department of Transportation ("DOT") has granted the Company authority to
self-insure its automobile liability exposure for interstate passenger service
up to a maximum level of $5.0 million per occurrence. To maintain self-insurance
authority, the STB requires the Company to maintain a tangible net worth of
$10.0 million (as of December 31, 1996, the Company's tangible net worth was
$119.9 million) and to maintain a $15.0 million trust fund (currently fully
funded) to provide security for payment of claims. Subsequent to the
self-insurance grant by the STB, 38 states have granted the Company the
authority to self-insure its intrastate automobile liability exposure.
Insurance coverage and risk management expense are key components of the
Company's cost structure. The loss of self-insurance authority from the STB or a
decision by the Company's insurers to modify the Company's program
substantially, by either increasing cost, reducing availability or increasing
collateral, could have a material adverse effect on the Company's financial
condition or results of operations.
LITIGATION
The Company is a party to various lawsuits the outcome of which, if adverse
to the Company, could have a material adverse effect on the results of
operations and financial condition of the Company. See "Business -- Legal
Proceedings" in the Company's Annual Report on Form 10-K.
PENSION PLAN FUNDING
The Company maintains five defined benefit pension plans, the most
significant of which (the "ATU Plan") covers approximately 16,500 current and
former employees, fewer than 1,300 of which are active employees of the Company.
The ATU Plan was closed to new participants in 1983 and, as a result, over 80%
of its participants are over the age of 50. For financial reporting and
investment planning purposes, the Company currently uses an actuarial table that
closely matches the actual experience related to the existing participant
population. As a result of legislation enacted in 1994 by the United States
Congress, the Company may be required to begin measuring its funding obligation
under the ATU Plan utilizing an actuarial table prescribed by such legislation.
If so required, the Company currently estimates, based on assumed rates of
return on the ATU Plan's investments, that it would be required to begin making
contributions to the ATU Plan beginning no earlier than 1998 in an aggregate
amount over the next five years ranging from approximately $6.0 million to
approximately $30.0 million. If the ATU Plan is unable to attain such assumed
rates of return, such contributions could be higher. Although the Company is
exploring whether it may be able to obtain relief from this requirement, there
is no assurance that the Company will be able to obtain such relief, that the
ATU Plan will be able to obtain the assumed rates of return or that
contributions to the ATU Plan will not be significant.
LACK OF PUBLIC MARKET
The Preferred Stock will not be listed on any securities exchange. The
Company has been advised by Bear Stearns & Co. Inc. that Bear Stearns & Co. Inc.
intends to make a market in the Preferred Stock after the consummation of the
Offering, as permitted by applicable laws and regulations; however, Bear Stearns
& Co. Inc. is not obligated to do so, and any such market making activities may
be discontinued at any time without notice. In addition, such market making
activity may be limited during the pendency of the Registration Statement.
Future trading prices may depend on a number of factors including among other
things, the performance of the Company, the market for similar securities,
prevailing interest rates and other factors. Therefore, there can be no
assurance that an active market for the Preferred Stock will develop.
7
<PAGE> 9
ANTI-TAKEOVER EFFECTS OF CERTAIN INSTRUMENTS AND AGREEMENTS OF THE COMPANY
The Company's certificate of incorporation and bylaws, the Revolving Credit
Facility, the Senior Note Indenture, the Stockholders Rights Plan of the Company
and certain other contracts to which the Company is a party, and the Delaware
General Corporation Law contain provisions that could have the effect of
delaying or preventing a transaction that results in a change of control of the
Company.
THE COMPANY
The Company is the only nationwide provider of intercity bus transportation
services in the United States. The Company serves the value-oriented customer by
connecting rural and urban markets throughout the United States, offering
scheduled passenger service to more than 2,400 destinations with a fleet of
approximately 2,000 buses and approximately 1,600 sales locations. The Company
also provides package express service and, in many terminals, food service. The
Company's executive offices are located at 15110 N. Dallas Parkway, Suite 600,
Dallas, Texas 75248, and its telephone number is (972) 789-7000.
USE OF PROCEEDS
The Company will not receive any portion of the net proceeds from the sale
of the shares of the Securities by the Selling Securityholders. See "Plan of
Distribution."
SELLING SECURITYHOLDERS
The Registration Statement of which the Prospectus is a part has been filed
pursuant to Rule 415 under the Securities Act to afford the holders of the
Securities the opportunity to sell their Securities in public transactions
rather than pursuant to an exemption from the registration and prospectus
delivery requirements of the Securities Act. In order to avail itself of that
opportunity, a holder must notify the Company in writing of its intention to
sell Securities and request the Company to file a supplement to this Prospectus
or an amendment to the Registration Statement identifying such holder as a
Selling Securityholder and disclosing such other information concerning the
Selling Securityholder and the Securities to be sold as may then be required by
the Securities Act and the rules and regulations thereunder, as applicable. No
offer or sale pursuant to this Prospectus may be made by any holder until such a
request has been made and until any such supplement has been filed or any such
amendment has become effective. The holders of Securities who have made such a
request and as to which any such required supplement or amendment has been filed
or become effective are referred to herein as the "Selling Securityholders."
As of the date of this Prospectus, no holder of Securities has made such a
request and, accordingly, no Selling Securityholders are named herein. The
Company will from time to time supplement or amend this Prospectus to reflect
the required information concerning any Stock Securityholders.
PLAN OF DISTRIBUTION
The Selling Securityholders may sell the Securities to which this
Prospectus relates in whole or from time to time in part through underwriters or
dealers, through brokers or other agents, or directly to one or more purchasers,
at market prices prevailing at the time of sale or at prices otherwise
negotiated. The Company will not receive any of the proceeds from the sale of
the Securities by the Selling Securityholders. The Company has agreed to pay
substantially all the fees and expenses incurred in connection with the
registration of the Securities, other than any underwriting fees, discounts or
commissions of underwriters, brokers, dealers and agents attributable to the
sale of the Securities.
The Preferred Stock currently trades in the PORTAL Market. However, shares
of Preferred Stock sold pursuant to this Prospectus will not thereafter be
eligible for trading in the PORTAL Market. The Company does not intend to list
the Preferred Stock or the Exchange Debentures on any securities exchange or to
seek approval for quotation of the Preferred Stock through any automated
quotation system. Although Bear,
8
<PAGE> 10
Stearns & Co. Inc. has advised the Company that they intend to make a market in
the Preferred Stock, they are not obligated to do so and may suspend any such
market-making activities at any time and without prior notice. Accordingly,
there can be no assurance that an active market for the Preferred Stock will
develop or be maintained.
The Company will issue the shares of Common Stock issuable upon conversion
of the Preferred Stock to registered holders of the Preferred Stock upon the
conversion thereof. The Common Stock is listed on the American Stock Exchange
and trades under the symbol "BUS."
In order to comply with the securities laws of certain states, if
applicable, the Securities will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Securities may not be sold unless they have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The Selling Securityholders and any broker, dealer or underwriter that
participates with the Selling Securityholders in the distribution of the
Securities may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any commissions received by them and any profit on the
resale of such Securities purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A under the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this Prospectus. There is no
assurance that any Selling Securityholder will sell any or all of the Preferred
Stock, the Exchange Debentures or Common Stock described herein, and any Selling
Securityholder may transfer, devise or make a gift of such securities by other
means not described herein.
The Company and the Selling Securityholders are obligated to indemnify each
other against certain liabilities arising under the Securities Act.
9
<PAGE> 11
DESCRIPTION OF SECURITIES
PREFERRED STOCK
The following summary of certain provisions of the Preferred Stock and the
Certificate of Designations pursuant to which the Preferred Stock is issued does
not purport to be complete. The Certificate of Designations and the Exchange
Debenture Indenture are available from the Company upon request. See "Additional
Information."
Ranking
The Preferred Stock, with respect to dividend distributions and
distributions upon the liquidation, winding-up and dissolution of the Company,
ranks (i) senior to all classes of common stock of the Company and to each other
class of capital stock or series of preferred stock established after the date
of this Offering Memorandum by the Board of Directors the terms of which do not
expressly provide that it ranks senior to or on a parity with the Preferred
Stock as to dividend distributions and distributions upon the liquidation,
winding-up and dissolution of the Company (collectively referred to with the
common stock of the Company as "Junior Securities"); (ii) subject to certain
conditions, on a parity with any class of capital stock or series of preferred
stock issued by the Company established after the date of the issuance of the
Preferred Stock by the Board of Directors, the terms of which expressly provide
that such class or series will rank on a parity with the Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to as "Parity Securities");
and (iii) subject to certain conditions, junior to each class of capital stock
or series of preferred stock issued by the Company established after the date of
the issuance of the Preferred Stock by the Board of Directors the terms of which
expressly provide that such class or series will rank senior to the Preferred
Stock as to dividend distributions and distributions upon liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Securities"). The Preferred Stock is subject to the issuance of series of Junior
Securities, Parity Securities and Senior Securities, provided that the Company
may not issue any new class of Senior Securities without the approval of the
holders of at least 66 2/3% of the shares of Preferred Stock then outstanding,
voting or consenting, as the case may be, together as one class.
In addition, the Preferred Stock ranks junior in right of payment to all
indebtedness and other obligations of the Company. As of December 31, 1996,
after giving pro forma effect to the Offerings and the use of proceeds
therefrom, the Preferred Stock would have been junior in right of payment to
approximately $207.5 million of total indebtedness of the Company.
Dividends
Holders of the Preferred Stock are entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally available therefor,
dividends on the Preferred Stock at a rate per annum equal to 8 1/2% of the
liquidation preference per share of Preferred Stock, payable quarterly. All
dividends are cumulative whether or not earned or declared on a daily basis from
the date of issuance of the Preferred Stock and will be payable quarterly in
arrears on February 1, May 1, August 1, and November 1 of each year, commencing
on August 1, 1997. The Revolving Credit Facility and Senior Note Indenture
restrict, and future agreements of the Company may restrict, the payment of cash
dividends on the Preferred Stock.
Dividends are payable to holders of record of the Preferred Stock on the
stock register of the Company on the record date for such purpose fixed by the
Board of Directors of the Company, which shall not be less than 10 nor more than
60 days preceding the dividend payment date. Dividends are computed on the basis
of a 360-day year of twelve 30-day months and the actual number of days elapsed
in any period of less than one month.
No dividends may be declared or paid or funds set apart for the payment of
dividends on any Parity Securities for any period unless full cumulative
dividends shall have been or contemporaneously are declared and paid in cash or
declared and a sum in cash set apart for such payment on the Preferred Stock. If
full dividends in cash are not so paid, the Preferred Stock will share dividends
pro rata with the Parity Securities.
10
<PAGE> 12
No dividends may be paid or set apart for such payment on Junior Securities
(except dividends on Junior Securities in additional shares of Junior
Securities) and no Junior Securities or Parity Securities may be repurchased,
redeemed or otherwise retired, nor may funds be set apart for payment with
respect thereto, if full cumulative dividends for all past dividend periods have
not been paid in cash on the Preferred Stock.
Optional Redemption
The Preferred Stock is redeemable for cash on or after May 3, 2000, at the
option of the Company, in whole or from time to time in part, at the redemption
prices set forth herein, together with all accumulated and unpaid dividends and
Liquidated Damages, if any, to the redemption date (the "redemption price"). The
redemption prices (expressed as percentages of liquidation preference) are as
follows, plus all accumulated and unpaid dividends and Liquidated Damages, if
any, to the redemption date, for shares of Preferred Stock redeemed during the
twelve-month period beginning on May 3 of the years indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C> <C>
2000............................................................. 104.86%
2001............................................................. 103.64
2002............................................................. 102.43
2003............................................................. 101.21
2004 and thereafter.............................................. 100.00
</TABLE>
No optional redemption may be authorized or made unless, prior to giving
the applicable redemption notice, all accumulated and unpaid dividends for
dividend periods ended prior to the date of such redemption notice shall have
been paid in cash. In the event of partial redemptions of Preferred Stock, the
shares to be redeemed will be determined pro rata or by lot, as determined by
the Company; provided that the Company may redeem all shares held by holders of
fewer than 100 shares of Preferred Stock (or by holders that would hold fewer
than 100 shares of Preferred Stock following such redemption) prior to its
redemption of other shares of Preferred Stock.
Procedure for Redemption
On and after a redemption date, unless the Company defaults in the payment
of the applicable redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the redemption price, without
interest; provided, however, that if a notice of redemption has been given and
an amount in cash equal to the full redemption price shall have been segregated
and irrevocably set apart by the Company in trust for the benefit of holders of
the Preferred Stock called for redemption, then at the close of business on the
day on which such funds are so segregated and set apart, the holders of the
shares to be redeemed shall cease to be stockholders of the Company and shall be
entitled, subject to their rights of conversion, to receive only the redemption
price for their shares on the redemption date. The Company will make a public
announcement of the redemption and send a written notice of redemption by first
class mail to each holder of record of shares of Preferred Stock not fewer than
30 days nor more than 60 days prior to the date fixed for such redemption.
Shares of Preferred Stock issued and reacquired will, upon compliance with the
applicable requirements of Delaware law, have the status of authorized but
unissued shares of preferred stock of the Company undesignated as to series and
may with any and all other authorized but unissued shares of preferred stock of
the Company be designated or redesignated and issued or reissued, as the case
may be, as part of any series of preferred stock of the Company, except that any
issuance or reissuance of shares of Preferred Stock must be in compliance with
the Certificate of Designations.
Conversion Rights
Each share of Preferred Stock will be convertible at any time on or after
July 15, 1997 at the option of the holder thereof into Common Stock of the
Company, at a conversion rate equal to $25.00 (the liquidation preference per
share of Preferred Stock) divided by the conversion price then applicable,
except that the right to convert shares of Preferred Stock called for redemption
will terminate at the close of business on the business day preceding the
redemption date and will be lost if not exercised prior to that time, unless the
Company defaults in making the payment due upon redemption.
11
<PAGE> 13
The conversion price is $4 7/8 per share. The conversion price is subject
to adjustment in certain events, including: (i) the payment of dividends (and
other distributions) in Common Stock on any class of capital stock of the
Company; (ii) the issuance to all holders of Common Stock of rights, warrants or
options entitling them to subscribe for or purchase Common Stock at less than
the current market price (as defined in the Certificate of Designations); (iii)
subdivisions, combinations and reclassifications of Common Stock; (iv)
distributions to all holders of Common Stock of evidences of indebtedness of the
Company, shares of any class of capital stock, cash or other assets (including
securities, but excluding those dividends, rights, warrants, options and
distributions referred to above and dividends and distributions paid in cash out
of the retained earnings of the Company, unless the sum of all such cash
dividends and distributions made and the amount of cash and the fair market
value of other consideration paid in respect of any repurchases of Common Stock
by the Company or any of its subsidiaries, in each case within the preceding 12
months in respect of which no adjustment has been made, exceeds 20% of the
product of the then current market price of the Common Stock times the aggregate
number of shares of Common Stock outstanding on the record date for such
dividend or distribution).
No adjustment of the conversion price will be required to be made until
cumulative adjustments amount to 1% or more of the conversion price as last
adjusted. Notwithstanding the foregoing, no adjustment to the conversion price
shall reduce the conversion price below the then par value per share of the
Common Stock. In addition to the foregoing adjustments, the Company will be
permitted to make such reductions in the conversion price as it considers to be
advisable in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights will not be taxable to the holders of the
Common Stock.
In the case of certain consolidations or mergers to which the Company is a
party or the transfer of substantially all of the assets of the Company, each
share of Preferred Stock then outstanding will become convertible only into the
kind and amount of securities, cash and other property receivable upon the
consolidation, merger or transfer by a holder of the number of shares of Common
Stock into which such share of Preferred Stock might have been converted
immediately prior to such consolidation, merger or transfer (assuming such
holder of Common Stock failed to exercise any rights of election and received
per share the kind and amount receivable per share by a plurality of
non-electing shares).
No fractional shares of Common Stock will be issued upon conversion; in
lieu thereof, the Company will pay a cash adjustment based upon the closing
price of the Common Stock on the business day prior to the conversion date.
The holder of record of a share of Preferred Stock at the close of business
on a record date with respect to the payment of dividends on the Preferred Stock
is entitled to receive such dividends with respect to such share of Preferred
Stock on the corresponding dividend payment date, notwithstanding the conversion
of such share after such record date and prior to such dividend payment date. A
share of Preferred Stock surrendered for conversion during the period from the
close of business on any record date for the payment of dividends to the opening
of business of the corresponding dividend payment date must be accompanied by a
payment in cash in an amount equal to the dividend payable on such dividend
payment date, unless such share of Preferred Stock has been called for
redemption on a redemption date occurring during the period from the close of
business on any record date for the payment of dividends to the close of
business on the business day immediately following the corresponding dividend
payment date. The dividend payment with respect to a share of Preferred Stock
called for redemption on a date during the period from the close of business on
any record date for the payment of dividends to the close of business on the
business day immediately following the corresponding dividend payment date will
be payable on such dividend payment date to the record holder of such share on
such record date, notwithstanding the conversion of such share after such record
date and prior to such dividend payment date. No payment or adjustment will be
made upon conversion of shares of Preferred Stock for accumulated and unpaid
dividends or for dividends with respect to the Common Stock issued upon such
conversion.
12
<PAGE> 14
Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
make an offer (a "Preferred Stock Change of Control Offer") to repurchase all or
any part of each holder's Preferred Stock at an offer price in cash equal to
100% of the aggregate liquidation preference thereof, plus accumulated and
unpaid dividends and Liquidated Damages, if any, thereon to the date of
repurchase. Within 30 days following a Change of Control, the Company will mail
a notice to each holder of Preferred Stock describing the transaction that
constitutes the Change of Control and offering to repurchase the Preferred Stock
pursuant to the procedures required by the Certificate of Designations and
described in such notice; provided that, prior to complying with the provisions
of this covenant, but in any event within 90 days following a Change of Control,
the Company will either repay all outstanding Indebtedness or obtain the
requisite consents, if any, under all agreements governing outstanding
Indebtedness to permit the repurchase of the Preferred Stock required by this
covenant. The Company will comply with the requirements of the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Preferred
Stock as a result of a Change of Control.
A "Change of Control" will be deemed to have occurred upon the occurrence
of any of the following: (a) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the assets of the
Company and its subsidiaries, taken as a whole, (b) the adoption of a plan
relating to the liquidation or dissolution of the Company, (c) the consummation
of any transaction (including, without limitation, any merger or consolidation)
the result of which is that any "person" or "group" (as such terms are used in
Section 13(d)(3) of the Exchange Act) becomes the "beneficial owner" (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly through one or more intermediaries, of more than 50% of the voting
power of the outstanding voting stock of the Company, unless (i) the closing
price per share of Common Stock for any five trading days within the period of
ten consecutive trading days ending immediately after the announcement of such
Change of Control equals or exceeds 105% of the conversion price of the
Preferred Stock or the Exchange Debentures, as the case may be, in effect on
each such trading day or (ii) at least 90% of the consideration in the
transaction or transactions constituting a Change of Control pursuant to clause
(c) consists of shares of common stock traded or to be traded immediately
following such Change of Control on a national securities exchange or the Nasdaq
national market and, as a result of such transaction or transactions, the
Preferred Stock or the Exchange Debentures, as the case may be, become
convertible solely into such common stock (and any rights attached thereto), or
(d) the first day on which more than a majority of the Board of Directors are
not Continuing Directors; provided, however, that a transaction in which the
Company becomes a subsidiary of another entity shall not constitute a Change of
Control if (i) the stockholders of the Company immediately prior to such
transaction "beneficially own" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly through one or more
intermediaries, at least a majority of the voting power of the outstanding
voting stock of the Company immediately following the consummation of such
transaction and (ii) immediately following the consummation of such transaction,
no "person" or "group" (as such terms are defined above), other than such other
entity (but including holders of equity interests of such other entity),
"beneficially owns" (as such term is defined above), directly or indirectly
through one or more intermediaries, more than 50% of the voting power of the
outstanding voting stock of the Company.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (a) was a member of the Board of
Directors on the date of original issuance of the Preferred Stock or (b) was
nominated for election to the Board of Directors with the approval of, or whose
election to the Board of Directors was ratified by, at least two-thirds of the
Continuing Directors who were members of the Board of Directors at the time of
such nomination or election.
Except as described above with respect to a Change of Control, the
Certificate of Designations does not contain provisions that permit the holders
of the Preferred Stock to require that the Company repurchase or redeem the
Preferred Stock in the event of a takeover, recapitalization or similar
transaction. In addition, the Company could enter into certain transactions,
including acquisitions, refinancings or other recapitalizations,
13
<PAGE> 15
that could affect the Company's capital structure or the value of the Preferred
Stock or the Common Stock, but that would not constitute a Change of Control.
The occurrence of a Change of Control could result in a default under the
Revolving Credit Facility or other indebtedness of the Company. In addition, the
Revolving Credit Facility or other indebtedness could restrict the Company's
ability to repurchase the Preferred Stock upon a Change of Control. In the event
a Change of Control occurs at a time when the Company is prohibited from
repurchasing the Preferred Stock, the Company could seek the consent of its
lenders to the repurchase of the Preferred Stock or could attempt to refinance
the borrowings that contain such prohibition. If the Company does not obtain
such a consent or repay such borrowings, the Company will remain prohibited from
repurchasing the Preferred Stock. The Company's failure to make a Preferred
Stock Change of Control Offer or to repurchase the Preferred Stock tendered in a
Preferred Stock Change of Control Offer would constitute a Voting Rights
Triggering Event (as defined herein). Finally, the Company's ability to
repurchase the Preferred Stock following a Change of Control may be limited by
the Company's then existing financial resources.
The Company will not be required to make a Preferred Stock Change of
Control Offer following a Change of Control if a third party makes the Preferred
Stock Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Certificate of Designations
applicable to a Preferred Stock Change of Control Offer made by the Company and
purchases all of the Preferred Stock validly tendered and not withdrawn under
such Preferred Stock Change of Control Offer.
Exchange
The Company at its option may exchange all, but not less than all, of the
then outstanding shares of Preferred Stock into its 8 1/2% Convertible
Subordinated Debentures due 2009 (the "Exchange Debentures") on any dividend
payment date on or after April 16, 1999, provided that on the date of such
exchange: (a) there are no accumulated and unpaid dividends or Liquidated
Damages on the Preferred Stock (including the dividends payable and Liquidated
Damages on such date) or other contractual impediment to such exchange; (b)
there shall be legally available funds sufficient therefor; (c) a registration
statement relating to the Exchange Debentures shall have been declared effective
under the Securities Act prior to such exchange and shall continue to be in
effect on the date of such exchange or the Company shall have obtained a written
opinion of counsel that an exemption from the registration requirements of the
Securities Act is available for such exchange, and that upon receipt of such
Exchange Debentures pursuant to such exchange made in accordance with such
exemption, the holders (assuming such holder is not an Affiliate of the Company)
thereof will not be subject to any restrictions imposed by the Securities Act
upon the resale thereof, other than any such restriction to which the holder
thereof already is subject on the Exchange Date, and such exemption is relied
upon by the Company for such exchange; (d) the indenture in respect of the
Exchange Debentures (the "Exchange Debenture Indenture") and the trustee
thereunder shall have been qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"); (e) immediately after giving effect to such
exchange, no Default or Event of Default (each as defined in the Exchange
Debenture Indenture) would exist under the Exchange Debenture Indenture; and (f)
the Company shall have delivered to the Trustee under the Exchange Debenture
Indenture a written opinion of counsel, dated the date of exchange, regarding
the satisfaction of the conditions set forth in clauses (a), (b), (c) and (d).
The Company shall send a written notice of exchange by mail to each holder of
record of shares of Preferred Stock, which notice shall state, among other
things, (i) that the Company is exercising its option to exchange the Preferred
Stock for Exchange Debentures pursuant to the Certificate of Designations and
(ii) the date of exchange (the "Exchange Date"), which date shall not be less
than 30 days nor more than 60 days following the date on which such notice is
mailed. On the Exchange Date, the Company shall issue Exchange Debentures in
exchange for the Preferred Stock as provided below.
The holders of outstanding shares of Preferred Stock will be entitled to
receive $1,000 principal amount of Exchange Debentures for each 40 shares of
Preferred Stock (the liquidation preference of which equals $1,000). The
Exchange Debentures will be issued in registered form, without coupons. Exchange
Debentures issued in exchange for Preferred Stock will be issued in principal
amounts of $1,000 and integral multiples thereof. The Company will pay cash in
lieu of issuing an Exchange Debenture in a principal amount less than
14
<PAGE> 16
$1,000. On and after the Exchange Date, dividends will cease to accrue on the
outstanding shares of Preferred Stock, and all rights of the holders of
Preferred Stock (except the right to receive the Exchange Debentures, an amount
in cash equal to the accrued and unpaid dividends and Liquidated Damages, if
any, to the Exchange Date and, if the Company so elects, cash in lieu of any
Exchange Debenture which is in an amount that is not an integral multiple of
$1,000) will terminate. The person entitled to receive the Exchange Debentures
issuable upon such exchange will be treated for all purposes as the registered
holder of such Exchange Debentures.
The Company intends to comply with the provisions of the Exchange Act in
connection with any exchange, to the extent applicable.
Liquidation Preference
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, holders of Preferred Stock will be entitled to be paid, out of the
assets of the Company available for distribution, $25.00 per share, plus an
amount in cash equal to accumulated and unpaid dividends and Liquidated Damages,
if any, thereon to the date fixed for liquidation, dissolution or winding-up
(including an amount equal to a prorated dividend for the period from the last
dividend payment date to the date fixed for liquidation, dissolution or
winding-up), before any distribution is made on any Junior Securities,
including, without limitation, common stock of the Company. If, upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the amounts payable with respect to the Preferred Stock and all other Parity
Securities are not paid in full, the holders of the Preferred Stock and the
Parity Securities will share equally and ratably in any distribution of assets
of the Company in proportion to the full liquidation preference and accumulated
and unpaid dividends and Liquidated Damages, if any, to which each is entitled.
After payment of the full amount of the liquidation preferences and accumulated
and unpaid dividends and Liquidated Damages, if any, to which they are entitled,
the holders of shares of Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company. However, neither the
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with or into one or
more entities shall be deemed to be a liquidation, dissolution or winding-up of
the Company.
The Certificate of Designations for the Preferred Stock does not contain
any provision requiring funds to be set aside to protect the liquidation
preference of the Preferred Stock, although such liquidation preference will be
substantially in excess of the par value of such shares of Preferred Stock. In
addition, the Company is not aware of any provision of Delaware law or any
controlling decision of the courts of the State of Delaware (the state of
incorporation of the Company) that requires a restriction upon the surplus of
the Company solely because the liquidation preference of the Preferred Stock
will exceed its par value. Consequently, there will be no restriction upon the
surplus of the Company solely because the liquidation preference of the
Preferred Stock will exceed the par value thereof and there will be no remedies
available to holders of the Preferred Stock before or after the payment of any
dividend, other than in connection with the liquidation of the Company, solely
by reason of the fact that such dividend would reduce the surplus of the Company
to an amount less than the difference between the liquidation preference of the
Preferred Stock and its par value.
Voting Rights
Pursuant to the Company's Restated Certificate of Incorporation, holders of
all classes of preferred stock of the Company, including the Preferred Stock,
are entitled to vote with the holders of the Common Stock on all matters
submitted to the stockholders of the Company, with each share of preferred stock
entitling the holder thereof to one vote on such matters. The Company, however,
may seek stockholder approval to amend its Restated Certificate of Incorporation
to eliminate the provisions thereof providing for such preferred stockholder
voting rights. If such amendment is approved by the stockholders of the Company,
holders of the Preferred Stock will have no voting rights except as provided by
law or as set forth in the Certificate of Designations. The Certificate of
Designations will provide, however, that (a) if dividends on the Preferred Stock
are in arrears and unpaid for six quarterly dividend periods (whether or not
consecutive), or (b) the Company fails to make a Preferred Stock Change of
Control Offer or to repurchase all of the Preferred Stock
15
<PAGE> 17
tendered in a Preferred Stock Change of Control Offer pursuant to the provisions
of the Certificate of Designations described above under "-- Change of Control"
(in each case, a "Voting Rights Triggering Event"), then the number of directors
constituting the Board of Directors of the Company will be adjusted to permit
the holders of the majority of the then outstanding shares of Preferred Stock,
voting separately as a class, to elect two directors. Such voting rights will
continue until such time as all dividends and Liquidated Damages, if any, in
arrears on the Preferred Stock are paid in full or until such failure to make,
and to purchase all shares of Preferred Stock tendered in, a Preferred Stock
Change of Control Offer is cured, as the case may be.
In addition, the Certificate of Designations will provide that the Company
will not authorize any class of Senior Securities without the approval of
holders of at least 66 2/3% of the share of Preferred Stock then outstanding,
voting or consenting, as the case may be, as one class. The Certificate of
Designations also provides that the Company may not amend the Certificate of
Designations so as to affect adversely the specified rights, preferences,
privileges or voting rights of the Preferred Stock, or authorize the issuance of
any additional shares of Preferred Stock, without the approval of the holders of
at least 66 2/3% of the then outstanding shares of Preferred Stock, voting or
consenting, as the case may be, as one class. The Certificate of Designations
also provides that, except as set forth above, (a) the creation, authorization
or issuance of any shares of Junior Securities, Parity Securities or Senior
Securities or (b) the increase or decrease in the amount of authorized capital
stock of any class, including any preferred stock, shall not require the consent
of the holders of Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of the Preferred Stock.
Merger, Consolidation and Sale of Assets
Without the vote or consent of the holders of a majority of the then
outstanding shares of Preferred Stock, the Company may not consolidate or merge
with or into, or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its assets to, any person unless (a) the entity
formed by such consolidation or merger (if other than the Company) or to which
such sale, assignment, transfer, lease, conveyance or other disposition shall
have been made (in any such case, the "resulting entity") is a corporation
organized and existing under the laws of the United States or any State thereof
or the District of Columbia; (b) if the Company is not the resulting entity, the
Preferred Stock is converted into or exchanged for and becomes shares of such
resulting entity, having in respect of such resulting entity the same (or more
favorable) powers, preferences and relative, participating, optional or other
special rights thereof that the Preferred Stock had immediately prior to such
transaction; and (c) immediately after giving effect to such transaction, no
Voting Rights Triggering Event has occurred and is continuing. The resulting
entity of such transaction shall thereafter be deemed to be the "Company" for
all purposes of the Certificate of Designations.
Covenant to Report
Whether or not the Company is required to do so by the rules and
regulations of the Commission, the Company will file with the Commission (unless
the Commission will not accept such a filing) and, within 15 days of filing, or
attempting to file, the same with the Commission, furnish to the holders of the
Preferred Stock (a) all quarterly and annual financial and other information
that would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants, and (b) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports. In addition, the Company will
furnish to the holders of the Preferred Stock, prospective purchasers of shares
of Preferred Stock and securities analysts, upon their request, the information,
if any, required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
16
<PAGE> 18
Form, Denomination and Registration
Global Shares; Book Entry Form. Shares of Preferred Stock will be evidenced
initially by one or more global certificates (the "Global Certificate") which
will be deposited with or on behalf of The Depository Trust Company ("DTC") and
registered in the name of Cede & Co., as DTC's nominee. Except as set forth
below, record ownership of the Global Certificate may be transferred, in whole
or in part, only to another nominee of DTC or to a successor of DTC or its
nominee.
Owners of beneficial interest in the Global Certificate may hold their
interest in the Global Certificate directly through DTC if such holder is a
participant in DTC or indirectly through organizations that are participants in
DTC (the "Participants"). Persons who are not Participants may beneficially own
interests in the Global Certificate held by DTC only through Participants or
certain banks, brokers, dealers, trust companies and other parties that clear
though or maintain a custodial relationship with a Participant, either directly
or indirectly ("Indirect Participants"). So long as Cede & Co., as the nominee
of DTC, is the registered owner of the Global Certificate, Cede & Co. for all
purposes will be considered the sole holder of the Global Certificate. Owners of
beneficial interest in the Global Certificate will be entitled to have
certificates registered in their names and to receive physical delivery of
certificates in definitive form ("Definitive Securities").
Payment of dividends on and any redemption price with respect to the Global
Certificate will be made to Cede & Co., the nominee for DTC, as registered owner
of the Global Certificate, by wire transfer of immediately available funds on
each dividend payment date or redemption date, as applicable. Neither of the
Company nor the Transfer Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Certificate or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
The Company has been informed by DTC that, with respect to any payment of
dividends on, or the redemption price with respect to, the Global Certificate,
DTC's practice is to credit Participants' accounts on the payment date therefor,
with payments in amounts proportionate to their respective beneficial interests
in the Preferred Stock represented by the Global Certificate as shown on the
records of DTC, unless DTC has reason to believe that it will not receive
payment on such payment date. Payments by Participants to owners of beneficial
interests in the Preferred Stock represented by the Global Certificate held
through such Participants will be the responsibility of such Participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
Transfers between Participants will be effected in the ordinary way in
accordance with DTC's rules and will be settled in immediately available funds.
The laws of some states require that certain persons take physical delivery of
securities in definitive form. Consequently, the ability to transfer beneficial
interests in the Global Certificate to such persons may be limited. Because DTC
can only act on behalf of Participants, who in turn act on behalf of Indirect
Participants and certain banks, the ability of a person having a beneficial
interest in the Preferred Stock represented by the Global Certificate to pledge
such interest to persons or entities that do not participate in the DTC system,
or otherwise take actions in respect of such interest, may be affected by the
lack of a physical certificate evidencing such interest.
Neither the Company nor the Transfer Agent will have responsibility for the
performance of DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Preferred Stock (including, without limitation, the
presentation of Preferred Stock for exchange as described below) only at the
direction of one or more Participants to whose account with DTC interests in the
Global Certificate are credited, and only in respect of the Preferred Stock
represented by the Global Certificate as to which such Participant or
Participants has of have given such direction.
DTC has also advised the Company that DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the
17
<PAGE> 19
clearance and settlement of securities transactions between Participants through
electronic book-entry changes to accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations such as the Initial Purchaser.
Certain of such Participants (or their representatives), together with other
entities, own DTC. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through, or maintain a
custodial relationship with, a Participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificate among Participants, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days, the Company will cause the Preferred Stock to be
issued in definitive form in exchange for the Global Certificates.
Certificated Preferred Stock. Investors in the Preferred Stock may request
that Definitive Securities be issued in exchange for Preferred Stock represented
by the Global Certificate. Furthermore, Definitive Securities may be issued in
exchange for Preferred Stock represented by the Global Certificate if no
successor depositary is appointed by the Company as set forth above.
Unless determined otherwise by the Company in accordance with applicable
law, Definitive Securities issued upon transfer or exchange of beneficial
interests in Preferred Stock represented by the Global Certificate will bear a
legend setting forth transfer restrictions under the Securities Act as set forth
under "Notice to Investors." Any request for the transfer of Definitive
Securities bearing the legend, or for removal of the legend from Definitive
Securities, must be accompanied by satisfactory evidence, in the form of an
opinion of counsel, that such transfer complies with the Securities Act or that
neither the legend nor the restrictions on transfer set forth therein are
required to ensure compliance with the provisions of the Securities Act, as the
case may be.
The Transfer Agent
Mellon Securities Trust Company is the transfer agent and registrar for the
Preferred Stock.
THE EXCHANGE DEBENTURES
The Exchange Debentures, if issued, will be issued pursuant to the Exchange
Debenture Indenture between the Company and U.S. Trust Company of Texas, N.A.
The terms of the Exchange Debentures include those stated in the Exchange
Debenture Indenture and those made part of the Exchange Debenture Indenture by
reference to the Trust Indenture Act. The Exchange Debentures are subject to all
such terms, and prospective investors are referred to the Exchange Debenture
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of certain provisions of the Exchange Debenture Indenture does not
purport to be complete. Copies of the proposed form of Exchange Debenture
Indenture are available upon request from the Company or the Initial Purchaser.
General
The Exchange Debenture Indenture authorizes the issuance of an aggregate
principal amount of Exchange Debentures equal to the aggregate liquidation
preference of the then outstanding shares of Preferred Stock at the time such
shares are exchanged for Exchange Debentures as described under "-- Preferred
Stock -- Exchange." The Exchange Debentures will mature on May 1, 2009. The
Exchange Debentures will bear interest at the rate of 8 1/2% per annum, payable
semi-annually in arrears on May 1 and November 1 of each year, commencing on the
first such date following the date on which the Exchange Debentures are issued
(the "Exchange Date"), to the holders of record at the close of business on the
April 15 and October 15 next preceding such interest payment date. Interest will
initially accrue from the Exchange Date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. The Exchange Debentures will be
issued in
18
<PAGE> 20
fully registered form only in denominations of $1,000 and integral multiples
thereof, other than as described under "-- Preferred Stock -- Exchange."
The Exchange Debentures will be general unsecured obligations of the
Company, subordinated in right of payment to all Senior Debt (as defined below).
See "-- Subordination."
Principal, premium, interest and Liquidated Damages, if any, will be
payable, and the Exchange Debentures may be presented for redemption,
repurchase, exchange or transfer, at the office of the paying agent and
registrar and at any other office or agency maintained by the Company for such
purpose. The Trustee will initially act as registrar and paying agent. The
Company may change the registrar or paying agent without prior notice to holders
and the Company or any subsidiary of the Company may act in such capacity.
Optional Redemption
The Exchange Debentures will be redeemable for cash on or after May 3,
2000, at the option of the Company, in whole or from time to time in part, at
the redemption prices set forth herein, together with all accrued and unpaid
interest and Liquidated Damages, if any, to the redemption date. The redemption
prices (expressed as percentages of principal amount) are as follows for
Exchange Debentures redeemed during the twelve-month period beginning on May 3
of the years indicated:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000.............................................. 104.86%
2001.............................................. 103.64
2002.............................................. 102.43
2003.............................................. 101.21
2004 and thereafter............................... 100.00
</TABLE>
Selection and Notice
If less than all of the Exchange Debentures are to be redeemed at any time,
selection of Exchange Debentures for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Exchange Debentures are listed, or, if the Exchange
Debentures are not so listed, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided that no Exchange
Debentures of $1,000 or less shall be redeemed in part. At least 30 but not more
than 60 days before the redemption date, a public notice of the redemption shall
be made and notice of redemption shall be mailed by first class mail to each
holder of Exchange Debentures to be redeemed at its registered address. If any
Exchange Debenture is to be redeemed in part only, the notice of redemption that
relates to such Exchange Debenture shall state the portion of the principal
amount thereof to be redeemed. A new Exchange Debenture in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Exchange Debenture. On and after the
redemption date, interest will cease to accrue on Exchange Debentures or
portions thereof called for redemption.
Mandatory Redemption
Except as set forth under "-- Change of Control," the Company is not
required to make mandatory redemption or sinking fund payments with respect to
the Exchange Debentures.
Subordination
The payment of principal of and premium, interest and Liquidated Damages,
if any, on the Exchange Debentures will be subordinated in right of payment to
the prior payment in full of all Senior Debt, whether outstanding on the
Exchange Date or thereafter incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities,
19
<PAGE> 21
the holders of Senior Debt will be entitled to receive payment in full of all
monetary obligations due in respect of such Senior Debt (including interest
after the commencement of any such proceeding at the rate specified in the
applicable Senior Debt) before the holders of Exchange Debentures will be
entitled to receive any payment with respect to the Exchange Debentures, and
until all monetary obligations with respect to Senior Debt are paid in full, any
distribution to which the holders of Exchange Debentures would be entitled shall
be made to the holders of such Senior Debt (except that holders of Exchange
Debentures may receive securities, including capital stock, that are
subordinated at least to the same extent as the Exchange Debentures to Senior
Debt and any securities issued in exchange for Senior Debt).
The Company also may not make any payment upon or in respect of the
Exchange Debentures (except in such capital stock or subordinated securities) if
(a) a default in the payment of the principal of or premium or interest on any
Senior Debt occurs and is continuing beyond any applicable period of grace or
(b) any other default occurs and is continuing with respect to any Designated
Senior Debt that permits holders of such Designated Senior Debt to accelerate
its maturity and the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Company or the representative of holders of such
Designated Senior Debt. Payments on the Exchange Debentures may and shall be
resumed (i) in the case of a payment default, upon the date on which such
default is cured or waived and (ii) in case of a non-payment default, the
earlier of the date on which such non-payment default is cured or waived or 179
days after the date on which the applicable Payment Blockage Notice is received,
unless the maturity of any Designated Senior Debt has been accelerated and
remains unpaid. No new period of payment blockage may be commenced unless and
until 360 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice. No non-payment default that existed or was continuing
on the date of delivery of any Payment Blockage Notice to the Trustee shall be,
or be made, the basis for a subsequent Payment Blockage Notice.
"Senior Debt" means (a) all obligations of the Company under the Revolving
Credit Facility, as it may be amended, modified, restated, supplemented,
deferred, extended, renewed, replaced, refunded or refinanced from time to time,
and (b) any other Indebtedness of the Company, whether outstanding on the date
of issuance of the Exchange Debentures or thereafter incurred, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is subordinated in right of payment to any Senior Debt; provided, however, that
Senior Debt will not include (i) any liability for federal, state, local or
other taxes owed or owing by the Company, (ii) any Indebtedness of the Company
to any of its subsidiaries or (iii) any trade payables.
"Indebtedness" means any indebtedness, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing capital lease obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any hedging obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and hedging obligations) would appear
as a liability upon a balance sheet prepared in accordance with generally
accepted accounting principles.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Revolving Credit Facility and (ii) any other Senior Debt permitted under the
Indenture the principal amount of which is $5.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of Exchange Debentures may recover less
ratably than creditors of the Company who are holders of Senior Debt. As of
December 31, 1996, after giving pro forma effect to the Offerings and the use of
proceeds therefrom, the principal amount of outstanding Senior Debt would have
been approximately $207.5 million. In addition, neither the Certificate of
Designations nor the Exchange Debenture Indenture will limit the amount of
Senior Debt that the Company may incur in the future.
Change of Control
Upon the occurrence of a Change of Control, the Company will be required to
make an offer (an "Exchange Debenture Change of Control Offer") to repurchase
all or any part of each holder's Exchange
20
<PAGE> 22
Debentures at an offer price in cash equal to 100% of the aggregate principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of repurchase. Within 30 days following a Change of Control,
the Company will mail a notice to each holder of Exchange Debentures describing
the transaction that constitutes the Change of Control and offering to
repurchase the Exchange Debentures pursuant to the procedures required by the
Exchange Debenture Indenture and described in such notice; provided that, prior
to complying with the provisions of this covenant, but in any event within 90
days following a Change of Control, the Company will either repay all
outstanding Senior Debt or obtain the requisite consents, if any, under all
agreements governing outstanding Senior Debt to permit the repurchase of the
Exchange Debentures required by this covenant. The Company will comply with the
requirements of the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Exchange Debentures as a result of a Change of
Control.
Except as described above with respect to a Change of Control, the Exchange
Debenture Indenture does not contain provisions that permit the holders of the
Exchange Debentures to require that the Company repurchase or redeem the
Exchange Debentures in the event of a takeover, recapitalization or similar
transaction. In addition, the Company could enter into certain transactions,
including acquisitions, refinancings or other recapitalizations, that could
affect the Company's capital structure or the value of the Exchange Debentures
or the Common Stock, but that would not constitute a Change of Control.
The occurrence of a Change of Control could result in a default under the
Revolving Credit Facility or other Senior Debt. In addition, the Revolving
Credit Facility or other Senior Debt could restrict the Company's ability to
repurchase Exchange Debentures upon a Change of Control. In the event a Change
of Control occurs at a time when the Company is prohibited from repurchasing
Exchange Debentures, the Company could seek the consent of its lenders to the
repurchase of Exchange Debentures or could attempt to refinance the borrowings
that contain such prohibition. If the Company does not obtain such a consent or
repay such borrowings, the Company will remain prohibited from repurchasing
Exchange Debentures. The Company's failure to make an Exchange Debenture Change
of Control Offer or to repurchase Exchange Debentures tendered in an Exchange
Debenture Change of Control Offer would constitute an event of default under the
Exchange Debenture Indenture, which could, in turn, constitute a default under
the Revolving Credit Facility or other Senior Debt. In such circumstances, the
subordination provisions in the Exchange Debenture Indenture would likely
restrict payments to the holders of Exchange Debentures. See "-- Subordination."
Finally, the Company's ability to repurchase Exchange Debentures following a
Change of Control may be limited by the Company's then existing financial
resources.
The Company will not be required to make an Exchange Debenture Change of
Control Offer following a Change of Control if a third party makes the Exchange
Debenture Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Exchange Debenture Indenture
applicable to an Exchange Debenture Change of Control Offer made by the Company
and purchases all Exchange Debentures validly tendered and not withdrawn under
such Exchange Debenture Change of Control Offer.
Conversion Rights
Each Exchange Debenture will be convertible at any time at the option of
the holder thereof into Common Stock of the Company, at a conversion rate equal
to the principal amount of such Exchange Debenture divided by the conversion
price then applicable, except that the right to convert Exchange Debentures
called for redemption will terminate at the close of business on the business
day preceding the redemption date and will be lost if not exercised prior to
that time, unless the Company defaults in making the payment due upon
redemption, or if not exercised prior to the maturity of the Exchange
Debentures.
The conversion price initially will be the conversion price with respect to
the Preferred Stock on the Exchange Date and will be subject to adjustment as
set forth under "-- Preferred Stock -- Conversion Rights."
21
<PAGE> 23
In the case of certain consolidations or mergers to which the Company is a
party or the transfer of substantially all of the assets of the Company, the
Exchange Debentures then outstanding would become convertible only into the kind
and amount of securities, cash and other property receivable upon the
consolidation, merger or transfer by a holder of the number of shares of Common
Stock into which such Exchange Debentures might have been converted immediately
prior to such consolidation, merger or transfer (assuming such holder of Common
Stock failed to exercise any rights of election and received per share the kind
and amount receivable per share by a plurality of non-electing shares).
No fractional shares of Common Stock will be issued upon conversion; in
lieu thereof, the Company will pay a cash adjustment based upon the closing
price of the Common Stock on the business day prior to the conversion date.
The holder of record of an Exchange Debenture at the close of business on a
record date with respect to the payment of interest on the Exchange Debentures
will be entitled to receive such interest with respect to such Exchange
Debentures on the corresponding interest payment date, notwithstanding the
conversion of such Exchange Debentures after such record date and prior to such
interest payment date. Exchange Debentures surrendered for conversion during the
period from the close of business on any record date for the payment of interest
to the opening of business of the corresponding interest payment date must be
accompanied by a payment in cash in an amount equal to the interest payable on
such interest payment date, unless such Exchange Debentures have been called for
redemption on a redemption date occurring during the period from the close of
business on any record date for the payment of interest to the close of business
on the business day immediately following the corresponding interest payment
date. The interest payment with respect to an Exchange Debenture called for
redemption on a date during the period from the close of business on any record
date for the payment of interest to the close of business on the business day
immediately following the corresponding interest payment date will be payable on
such interest payment date to the record holder of such Exchange Debenture on
such record date, notwithstanding the conversion of such Exchange Debenture
after such record date and prior to such interest payment date. No payment or
adjustment will be made upon conversion of Exchange Debentures for accrued and
unpaid interest or for dividends with respect to the Common Stock issued upon
such conversion.
Events of Default and Remedies
The Exchange Debenture provides that each of the following constitutes an
Event of Default: (a) default for 30 days in the payment when due of interest or
Liquidated Damages on the Exchange Debentures; (b) default in payment when due
of the principal of or premium, if any, on the Exchange Debentures; (c) failure
by the Company to comply with the provisions described under the caption
"-- Change of Control"; (d) failure by the Company for 60 days after notice to
comply with any of its covenants, representations, warranties or other
agreements in the Indenture or the Exchange Debentures; (e) default under any
mortgage, indenture or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness for money borrowed by the
Company (or the payment of which is guaranteed by the Company), whether such
Indebtedness or guarantee now exists or is created after the date of the
Indenture, which default (i) is caused by a failure to pay principal of or
premium or interest on such Indebtedness prior to the expiration of any grace
period provided in such Indebtedness (a "Payment Default") or (ii) results in
the acceleration of such Indebtedness prior to its express maturity and, in each
case, the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $10.0
million or more; (f) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $10.0 million,
which judgments are not paid, discharged or stayed for a period of 60 days; and
(g) certain events of bankruptcy or insolvency with respect to the Company.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding Exchange
Debentures may declare all the Exchange Debentures to be due and payable
immediately. Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency with respect to the
Company or, all outstanding Exchange Debentures will become due and payable
without further action or notice. The Holders of a majority in aggregate
principal
22
<PAGE> 24
amount of the then outstanding Exchange Debentures by written notice to the
Trustee may on behalf of all of the Holders rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest,
premium or Liquidated Damages that has become due solely because of the
acceleration) have been cured or waived. Holders of the Exchange Debentures may
not enforce the Indenture or the Exchange Debentures except as provided in the
Indenture. Subject to certain limitations, holders of a majority in principal
amount of the then outstanding Exchange Debentures may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
Exchange Debentures notice of any continuing Default or Event of Default (except
a Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the Exchange
Debentures then outstanding by notice to the Trustee may on behalf of the
holders of all of the Exchange Debentures waive any existing Default or Event of
Default and its consequences under the Exchange Debenture Indenture except a
continuing Default or Event of Default in the payment of the principal of or
interest or Liquidated Damages on the Exchange Debentures.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
Amendment, Supplement and Waiver
Except as provided below, the Exchange Debenture Indenture or the Exchange
Debentures may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the Exchange Debentures then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Exchange Debentures), and any
existing default or compliance with any provision of the Exchange Debenture
Indenture or the Exchange Debentures may be waived with the consent of the
holders of a majority in principal amount of the then outstanding Exchange
Debentures (including consents obtained in connection with a tender offer or
exchange offer for Exchange Debentures).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any Exchange Debentures held by a non-consenting Holder): (a)
reduce the principal amount of Exchange Debentures whose holders must consent to
an amendment, supplement or waiver, (b) reduce the principal of or change the
fixed maturity of any Exchange Debenture or alter the provisions with respect to
the redemption of the Exchange Debentures (other than provisions relating to the
covenants described above under the caption "-- Change of Control"), (c) reduce
the rate of or change the time for payment of interest on any Exchange
Debenture, (d) waive a Default or Event of Default in the payment of principal
of or premium, interest or Liquidated Damages on the Exchange Debentures (except
a rescission of acceleration of the Exchange Debentures by the holders of at
least a majority in aggregate principal amount of the Exchange Debentures and a
waiver of the payment default that resulted from such acceleration), (e) make
any Exchange Debenture payable in money other than that stated in the Exchange
Debentures, (f) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of Exchange Debentures to
receive payments of principal of or premium, interest or Liquidated Damages on
the Exchange Debentures (except as permitted in clause (g) hereof), (g) waive a
redemption payment with respect to any Note (other than a payment required by
one of the covenants described above under the caption "-- Change of Control")
or (h) make any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any holder of
Exchange Debentures, the Company and the Trustee may amend or supplement the
Exchange Debenture Indenture or the Exchange Debentures to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Exchange Debentures in
addition to or in place of certificated Exchange Debentures, to provide for the
assumption of the Company's obligations to holders of Exchange Debentures in the
case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the holders of Exchange Debentures or that does
not adversely
23
<PAGE> 25
affect the legal rights under the Exchange Debenture Indenture of any such
holder, or to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
Concerning the Trustee
The Exchange Debenture Indenture contains certain limitations on the rights
of the Trustee, should it become a creditor of the Company, to obtain payment of
claims in certain cases, or to realize on certain property received in respect
of any such claim as security or otherwise. The Trustee will be permitted to
engage in other transactions; however, if it acquires any conflicting interest
it must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding
Exchange Debentures will have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain exceptions. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured), the Trustee will be required, in
the exercise of its power, to use the degree of care of a prudent man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the Indenture
at the request of any holder of Notes, unless such holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
COMMON STOCK
The Company is authorized to issue 100,000,000 shares of Common Stock, par
value $0.01 per share.
Dividends
The holders of Common Stock are entitled to receive dividends, when and as
declared by the Board of Directors of the Company, provided that the Company has
funds legally available for the payment of dividends and is not otherwise
contractually restricted from the payment of dividends, and subject to the prior
rights and preferences, if any, of holders of preferred stock of the Company.
Dissolution, Liquidation or Winding Up
In the event of a dissolution, liquidation or winding up of the Company,
the holders of Common Stock are entitled to receive, after distribution of
preferential amounts, if any, to creditors of the Company and holders of
preferred stock of the Company, if any, all assets of the Company available
under law for distribution to stockholders.
Voting
Each holder of Common Stock of the Company is entitled to one vote, in
person or by proxy, for each share owned. For a discussion of the effect on
holders of Common Stock of the voting rights of holders of the Company's
preferred stock, if issued, see "-- Preferred Stock."
Preemptive Rights
The Common Stock does not carry with it any preemptive or preferential
rights to purchase or subscribe to any additional shares of capital stock of the
Company issued in the future, whether of a presently existing class of stock or
one that may later be authorized by the Company.
Preferred Stock Purchase Rights
Each share of Common Stock also evidences a right to purchase one
one-thousandth (1/1000) of a share of Series A Junior Preferred Stock of the
Company. Those rights will become separately transferable only under certain
circumstances. See "-- Stockholder Rights Plan."
24
<PAGE> 26
Listing on the American Stock Exchange
The Common Stock is listed for trading on the American Stock Exchange under
the symbol "BUS".
Transfer Agent
The transfer agent and registrar for the Common Stock is Mellon Securities
Trust Company.
STOCKHOLDER RIGHTS PLAN
On March 22, 1994, the Board of Directors of the Company declared a
dividend of one Preferred Stock Purchase Right (each a "Preferred Right") for
each outstanding share of Common Stock. The dividend was payable as of April 4,
1994 to stockholders of record on that date. Each Preferred Right entitles the
registered holder to purchase from the Company one one-thousandth (1/1000) of a
share of a new series of preferred stock of the Company, designated as Series A
Junior Preferred Stock ("Series A Preferred Stock"), at a price of $35.00 per
one one-thousandth (1/1000) of a share (the "Preferred Exercise Price"), subject
to certain adjustments. The description and terms of the Preferred Rights are
set forth in a Rights Agreement (the "Preferred Rights Agreement") between the
Company and Mellon Securities Trust Company, as Rights Agent (the "Preferred
Rights Agent"), dated as of March 22, 1994, as amended as of April 8, 1997. The
following summary of the Rights and the Preferred Rights Agreement is qualified
in its entirety by reference to the Rights Agreement, a copy of which is
available from the Company.
The Preferred Rights, unless earlier redeemed by the Board of Directors,
become exercisable upon the close of business on the day (the "Distribution
Date") which is the earlier of (i) the tenth day following a public announcement
that a person or group of affiliated or associated persons, with certain
exceptions set forth below, has acquired beneficial ownership of 20% or more of
the outstanding voting stock of the Company (an "Acquiring Person") and (ii) the
tenth business day (or such later date as may be determined by the Board of
Directors prior to such time as any person or group of affiliated or associated
persons becomes an Acquiring Person) after the date of the commencement or
announcement of a person's or group's intention to commence a tender or exchange
offer the consummation of which would result in the ownership of 30% or more of
the Company's outstanding voting stock (even if no shares are actually purchased
pursuant to such offer). Prior to the Distribution Date, the Preferred Rights
are not exercisable, are not represented by a separate certificate, and are not
transferable apart from the Company's Common Stock, and instead are evidenced by
the Common Stock certificates. An Acquiring Person does not include (A) the
Company, (B) any subsidiary of the Company, (C) any employee benefit plan or
employee stock plan of the Company or of any subsidiary of the Company, or any
trust or other entity organized, appointed, established or holding Common Stock
for or pursuant to the terms of any such plan (each of the persons listed in
clauses (A) through (C) above being an "Exempt Person," or (D) any person or
group whose ownership of 20% or more of the shares of voting stock of the
Company then outstanding results solely from (i) any action or transaction or
transactions approved by the Board of Directors before such person or group
became an Acquiring Person or (ii) a reduction in the number of issued and
outstanding shares of Common Stock of the Company pursuant to a transaction or
transactions approved by the Board of Directors (provided that any person or
group that does not become an Acquiring Person by reason of clause (i) or (ii)
above shall become an Acquiring Person upon acquisition of an additional 1% of
the Company's Common Stock unless such acquisition of additional Common Stock
will not result in such person or group becoming an Acquiring Person by reason
of such clause (i) or (ii)).
The Preferred Rights are not exercisable until the Distribution Date. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Preferred Rights ("Preferred Right Certificates") will be mailed
to holders of record of the Company's Common Stock as of the close of business
on the Distribution Date and such separate certificates alone will evidence the
Preferred Rights from and after the Distribution Date. The Preferred Rights will
expire at the close of business on March 22, 2004, unless earlier redeemed by
the Company as described below.
25
<PAGE> 27
The Series A Preferred Stock is non-redeemable and, unless otherwise
provided in connection with the creation of a subsequent series of preferred
stock, subordinate to any other series of the Company's preferred stock. The
Series A Preferred Stock may not be issued except upon exercise of Preferred
Rights. Each share of Series A Preferred Stock is entitled to receive when, as
and if declared, a quarterly dividend in an amount equal to the greater of
$100.00 per share and 1,000 times the cash dividends declared on the Company's
Common Stock. In addition, each share of Series A Preferred Stock is entitled to
100 times any non-cash dividends (other than dividends payable in equity
securities) declared on the Common Stock, in like kind. In the event of
liquidation, the holders of Series A Preferred Stock will be entitled to receive
a liquidation payment in an amount equal to the greater of $100.00 per share or
1,000 times the payment made per share of Common Stock. In the event of any
merger, consolidation or other transaction in which Common Stock is exchanged,
each share of Series A Preferred Stock will be entitled to receive 1,000 times
the amount received per share of Common Stock. The rights of Series A Preferred
Stock as to dividends and liquidation are protected by anti-dilution provisions.
Each share of Series A Preferred Stock will have one vote, voting together
with the Common Stock.
The number of shares of Series A Preferred Stock issuable upon exercise of
the Preferred Rights is subject to certain adjustments from time to time in the
event of a stock dividend on, or a subdivision or combination of, the Common
Stock. The Preferred Exercise Price for the Preferred Rights is subject to
adjustment in the event of extraordinary distributions of cash or other property
to holders of Common Stock.
Unless the Preferred Rights are earlier redeemed, in the event that, after
the time that the Preferred Rights become exercisable, the Company were to be
acquired by any Person (other than an Exempt Person) in a merger or other
business combination (in which any shares of the Company's Common Stock are
changed into or exchanged for other securities or assets) or more than 50% of
the assets or earning power of the Company and its subsidiaries (taken as a
whole) were to be sold or transferred to any Person (other than an Exempt
Person) in one or a series of related transactions, the Preferred Rights
Agreement provides that proper provision will be made so that each holder of
record of a Preferred Right will from and after such date have the right to
receive, upon payment of the Preferred Exercise Price, that number of shares of
common stock of the acquiring company having a market value at the time of such
transaction equal to two times the Preferred Exercise Price. In addition, unless
the Preferred Rights are earlier redeemed, if a person or group becomes the
beneficial owner of 20% or more of the Company's voting stock (other than
pursuant to a tender or exchange offer (a "Qualifying Tender Offer") for all
outstanding shares of Common Stock that is approved by the Board of Directors,
after taking into account the long-term value of the Company and all other
factors they consider relevant in the circumstances), the Preferred Rights
Agreement provides that proper provision will be made so that each holder of
record of a Preferred Right, other than the Acquiring Person (whose Preferred
Rights will thereupon become null and void), will thereafter have the right to
receive, upon payment of the Preferred Exercise Price, that number of shares of
the Company's Series A Preferred Stock having a market value at the time of the
transaction equal to two times the Preferred Exercise Price (such market value
to be determined with reference to the market value of the Company's Common
Stock as provided in the Preferred Rights Agreement).
Fractional shares of Series A Preferred Stock (other than fractions that
are integral multiples of one one-thousandth (1/1,000) of a share) may, at the
election of the Company, be evidenced by depositary receipts. The Company may
also issue cash in lieu of fractional shares which are not integral multiples of
one one-thousandth (1/1,000) of a share.
At any time on or prior to the close of business on the tenth day after the
time that a Person or group has become an Acquiring Person (or such later date
as a majority of the Board of Directors may determine), the Company may redeem
the Preferred Rights in whole, but not in part, at a price of $.01 per Preferred
Right ("Redemption Price"). Immediately upon the effective time of the action of
the Board of Directors of the Company authorizing redemption of the Preferred
Rights, the right to exercise the Preferred Rights will terminate and the only
right of the holders of the Preferred Rights will be to receive the Redemption
Price.
For as long as the Preferred Rights are then redeemable, the Company may,
except with respect to the redemption price or date of expiration of the
Preferred Rights, amend the Preferred Rights in any manner,
26
<PAGE> 28
including an amendment to extend the time period in which the Preferred Rights
may be redeemed. At any time when the Preferred Rights are not then redeemable,
the Company may amend the Preferred Rights in any manner that does not
materially adversely affect the interests of holders of the Preferred Rights as
such. Amendments to the Preferred Rights Agreement from and after the time that
any Person becomes an Acquiring Person requires the approval of a majority of
the Board of Directors.
Until a Preferred Right is exercised, the holder, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
As of April 8, 1997, 1,500,000 shares of Series A Preferred Stock have been
reserved for issuance upon exercise of the Preferred Rights.
The Preferred Rights have certain anti-takeover effects. The Preferred
Rights will cause substantial dilution to a person or group who attempts to
acquire the Company on terms not approved by the Company's Board of Directors.
The Preferred Rights should not interfere with any merger or other business
combination approved by the Board since they may be redeemed by the Company at
$.01 per Preferred Right at any time until the close of business on the tenth
day (or such later date as described above) after a person or group has obtained
beneficial ownership of 20% or more of the Common Stock.
POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF THE RESTATED CERTIFICATE
OF INCORPORATION AND
BYLAWS OF THE COMPANY
The Restated Certificate of Incorporation and Bylaws of the Company contain
provisions that could have an anti-takeover effect. The provisions are intended
to enhance the likelihood of continuity and stability in the composition of the
Board of Directors and in the policies formulated by the Board of Directors.
These provisions of the Restated Certificate of Incorporation and the Bylaws
also are intended to help ensure that the Board of Directors, if confronted by a
unsolicited proposal from a third party which has acquired a block of stock of
the Company, will have sufficient time to review the proposal and appropriate
alternatives to the proposal and to act in what it believes to be the best
interests of the stockholders.
The following is a summary of such provisions included in the Restated
Certificate of Incorporation and Bylaws of the Company.
Classified Board of Directors. The Restated Certificate of Incorporation
provides for a Board of Directors divided into three classes of directors
serving staggered three-year terms.
The classification of directors has the effect of making it more difficult
for stockholders to change the composition of the Board of Directors in a
relatively short period of time. At least two annual meetings of stockholders,
instead of one, generally will be required to effect a change in a majority of
the Board of Directors. Such a delay may help ensure that the Board of Directors
and the stockholders, if confronted by a stockholder attempting to force a stock
repurchase at a premium above market, a proxy contest or an extraordinary
corporate transaction, will have sufficient time to review the proposal and
appropriate alternatives to the proposal and to act in what is believed to be
the best interests of the stockholders.
The classified board provision could have the effect of discouraging a
third party from making a tender offer or otherwise attempting to obtain control
of the Company, even though such an attempt might be beneficial to the Company
and its stockholders. The classified board provision could thus increase the
likelihood that incumbent directors will retain their positions. In addition,
since the classified board provision is designed to discourage accumulations of
large blocks of Common Stock of the Company by purchasers whose objective is to
have such stock repurchased by the Company at a premium, the classified board
provision could tend to reduce the temporary fluctuations in the market price of
the Common Stock that could be caused by accumulations of large blocks of Common
Stock associated with such purchases. Accordingly, stockholders could be
deprived of certain opportunities to sell their Common Stock at a temporarily
higher market price.
The Board of Directors believes that a classified board of directors will
help to assure the continuity and stability of the Board of Directors and the
business strategies and policies of the Company as determined by
27
<PAGE> 29
the Board of Directors, because a majority of the directors at any given time
will have prior experience as directors of the Company.
Number of Directors; Filling Vacancies; Removal. The Restated Certificate
of Incorporation provides that the Board of Directors will consist of nine
members. The number of directors constituting the entire Board of Directors may
be changed only by an amendment to the Restated Certificate of Incorporation.
The Board of Directors, acting by majority vote of the directors then in office,
may fill any newly created directorships or vacancies on the Board of Directors.
Moreover, under Delaware law, in the case of a corporation having a classified
board, stockholders may remove a director only for cause. This provision, when
coupled with the provision of the Bylaws authorizing the Board of Directors to
fill vacant directorships, will preclude a stockholder from removing incumbent
directors without cause and simultaneously gaining control of the Board of
Directors by filling the vacancies created by such removal with its own
nominees. Moreover, this provision also will make it more difficult for
stockholders to remove a director when the only reason for such removal may be
the performance of such director.
No Stockholder Action by Written Consent; Special Meetings. The Restated
Certificate of Incorporation provides that any action required or permitted to
be taken by the stockholders of the Company may be effected only at an annual or
special meeting of stockholders, and prohibits stockholder action by written
consent in lieu of a meeting. The Bylaws provide that special meetings of
stockholders may be called by a majority of the Board of Directors, the Chairman
of the Board of Directors or by any holder or holders of at least 25% of the
outstanding shares of the capital stock of the Company.
The provisions of the Restated Certificate of Incorporation prohibiting
stockholder action by written consent may have the effect of delaying
consideration of a stockholder proposal until the next annual meeting unless a
special meeting is called as provided in the Bylaws. These provisions would also
prevent the holders of a majority of the outstanding shares of Common Stock from
using the written consent procedure to take stockholder action without giving
all the stockholders of the Company entitled to vote on a proposed action the
opportunity to participate in determining the outcome of such proposed action.
Advance Notice Requirements for Stockholder Proposals and Director
Nominees. The Bylaws establish an advance notice procedure with regard to
business proposed to be submitted by a stockholder at any annual or special
meeting of stockholders of the Company, including the nomination of candidates
for election as directors. The procedure provides that a notice of proposed
stockholder business must be timely given in writing to the Secretary of the
Company prior to the meeting. In all cases, to be timely, notice relating to an
annual meeting must be received at the principal executive office of the Company
not less than 60 days nor more than 90 days before the first anniversary of the
prior year's annual meeting.
Notice to the Company from a stockholder who proposes to nominate a person
at a meeting for election as a director must contain all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act, including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected, and certain information about the stockholder proposing to nominate
that person.
The chairman of a meeting of stockholders may determine that a person is
not nominated in accordance with the nomination procedure, in which case such
person's nomination will be disregarded. If the chairman of a meeting of
stockholders determines that other business was not properly brought before such
meeting in accordance with the Bylaw procedures, such business will not be
conducted at the meeting. Nothing in the nomination procedure or the business
procedure will preclude discussion by any stockholder of any nomination or
business properly made or brought before the annual or any other meeting in
accordance with the above-mentioned procedures.
The purpose of the nomination procedure, by requiring advance notice of
nominations by stockholders, is to afford the Board of Directors a meaningful
opportunity to consider the qualifications of the proposed nominees and, to the
extent deemed necessary or desirable by the Board of Directors, to inform
stockholders about such qualifications. The purpose of the business procedure,
by requiring advance notice of proposed
28
<PAGE> 30
business, is to provide a more orderly procedure for conducting annual and
special meetings of stockholders and, to the extent deemed necessary or
desirable by the Board of Directors, to provide the Board of Directors with a
meaningful opportunity to inform stockholders, prior to the meeting, of any
business proposed to be conducted at such meeting, together with any
recommendation as to the Board of Directors' position or belief as to action to
be taken with respect to such business, so as to enable stockholders better to
determine whether they desire to attend such meeting or grant a proxy to the
Board of Directors as to the disposition of any such business.
Although the Bylaws do not give the Board of Directors any power to approve
or disapprove stockholder nominations for the election of directors or any other
business desired by stockholders to be conducted at an annual or special
meeting, the Bylaws may have the effect of precluding a nomination for the
election of directors or precluding the conducting of business at a particular
meeting if the proper procedures are not followed, and may discourage or deter a
third party from conducting a solicitation of proxies to elect its own slate of
directors or otherwise attempting to obtain control of the Company, even if the
conduct of such solicitation or such attempt might be beneficial to the Company
and its stockholders.
Amendment of Certain Provisions of the Restated Certificate of
Incorporation and the Bylaws. The Restated Certificate of Incorporation requires
the affirmative vote of the holders of at least two-thirds of the outstanding
shares of capital stock of the Company, voting together as a single class, for
any amendments of the Restated Certificate of Incorporation and provides that
Bylaw provisions may be adopted, altered, amended or repealed only by the
affirmative vote of two-thirds of the members of the Board of Directors or
holders of at least two-thirds of the outstanding shares of capital stock of the
Company, voting together as a single class, entitled to vote thereon. These
provisions will make it more difficult for stockholders to make changes in the
Restated Certificate of Incorporation or Bylaws, including changes designed to
facilitate the exercise of control over the Company. In addition, the
requirement for approval by holders of at least two-thirds of the outstanding
shares of voting capital stock will enable the holders of a minority of the
voting stock of Greyhound to prevent the holders of a majority of such stock
from amending such provisions of the Restated Certificate of Incorporation and
the Bylaws.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Generally, section 203 of the Delaware General Corporation Law prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless (i)
prior to the date of the business combination, the transaction is approved by
the board of directors of the corporation, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock or (iii) on or after such date the business combination is approved
by the board and by the affirmative vote of at least two-thirds of the
outstanding voting stock which is not owned by the interested stockholder. A
"business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the stockholder. An "interested stockholder"
is a person who, together with affiliates and associates, owns (or within three
years, did own) 5% or more of the corporation's voting stock.
29
<PAGE> 31
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States Federal
income tax considerations generally applicable to holders acquiring the
Preferred Stock, but does not purport to be a complete analysis of all potential
consequences. The discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations, Internal Revenue Service ("IRS")
rulings and judicial decisions now in effect, all of which are subject to change
at any time by legislative, judicial or administrative action. Any such changes
may be applied retroactively in a manner that could adversely affect a holder of
the Preferred Stock, the Common Stock and the Exchange Debentures (collectively,
the "Securities").
The discussion assumes that the holders of the Securities will hold them as
"capital assets" within the meaning of Section 1221 of the Code. Although the
matter is not entirely free from doubt, the Company intends to treat the
Preferred Stock as equity and the Exchange Debentures as indebtedness for
federal income tax purposes, and the balance of the discussion is based on the
assumption that such treatment will be respected. The discussion is not binding
on the IRS or the courts. The Company has not sought and will not seek any
rulings from the IRS with respect to the positions of the Company discussed
herein, and there can be no assurance that the IRS will not take a different
position concerning the tax consequences of the purchase, ownership or
disposition of the Securities or that any such position would not be sustained.
The tax treatment of a holder of the Securities may vary depending on such
holder's particular situation or status. Certain holders (including S
corporations, insurance companies, tax-exempt organizations, financial
institutions, broker-dealers, taxpayers subject to alternative minimum tax and
persons holding the Securities as part of a hedging or conversion transaction or
a straddle) may be subject to special rules not discussed below. The following
discussion is limited to the United States Federal income tax consequences
relevant to a holder of the Securities that is a citizen or resident of the
United States, or any state thereof, or a corporation or other entity created or
organized under the laws of the United States, or any political subdivision
thereof, or an estate or trust the income of which is subject to United States
Federal income tax regardless of source or that is otherwise subject to United
States federal income tax on a net income basis in respect of the Securities.
The following discussion does not consider all aspects of United States Federal
income tax that may be relevant to the purchase, ownership and disposition of
the Securities by a holder in light of such holder's personal circumstances. In
addition, the discussion does not consider the effect of any applicable foreign,
state, local or other tax laws, or estate or gift tax considerations.
DIVIDENDS ON PREFERRED STOCK AND COMMON STOCK
Dividends paid on the Preferred Stock or on Common Stock will be taxable to
a holder as ordinary dividend income to the extent of the Company's allocable
current or accumulated earnings and profits (as determined for United States
Federal income tax purposes).
To the extent that the amount of any distribution on the Preferred Stock or
on Common Stock exceeds the Company's current or accumulated earnings and
profits allocable to such distribution (as determined for Federal income tax
purposes), such distribution will be treated as a return of capital that will
reduce the holder's adjusted tax basis in the Preferred Stock or Common Stock in
respect of which such distribution is made. Any such excess distribution that is
greater than the holder's adjusted tax basis in such Preferred Stock or Common
Stock will be taxed as a capital gain and will be long-term capital gain if the
holder's holding period for such Preferred Stock or Common Stock is more than
one year. For purposes of the remainder of the discussion, the term "dividend"
refers to a distribution paid out of allocable earnings and profits, unless the
context indicates otherwise. Liquidated Damages should be taxed in the same
manner as dividend distributions, except that it is possible that Liquidated
Damages might be treated as payment of a fee and hence as ordinary income with
respect to which no dividends received deduction is available.
Pursuant to certain amendments to section 305(c) of the Code, the IRS has
the authority to promulgate regulations which may treat unpaid cumulative
dividends on preferred stock as being constructively paid to the holder in
certain circumstances, such as when there is no intention for dividends to be
paid currently at the time of issuance of the preferred stock. The IRS has not
yet proposed any such regulations.
30
<PAGE> 32
Dividends received by corporate holders generally will be eligible for the
70% dividends-received deduction under section 243 of the Code. There are,
however, a number of exceptions and restrictions relating to the availability of
such dividends-received deduction, such as restrictions relating to (i) the
holding period of the stock on which the dividends are sought to be deducted,
(ii) debt-financed portfolio stock, (iii) dividends treated as "extraordinary
dividends" for purposes of section 1059 of the Code, and (iv) taxpayers who pay
alternative minimum tax. Corporate stockholders should consult their own tax
advisors regarding the extent, if any, to which such exceptions and restrictions
may apply to their particular factual situations. In addition, tax legislative
proposals recently made by the Clinton Administration would (i) reduce the 70%
dividends-received deductions to 50%, (ii) eliminate the dividends-received
deduction in the case of certain limited term preferred stock which does not
participate in corporate growth (through a conversion privilege or otherwise) to
any significant extent, and (iii) require a corporate holder to satisfy a
separate forty-six day holding period requirement with respect to each dividend
in order to be eligible for such dividends-received deduction. It is not
possible to predict whether such legislative proposals will ultimately be
enacted into law, and if so, the form or effective date of any such legislation.
CONVERSION OF PREFERRED STOCK
No gain or loss will generally be recognized for United States Federal
income tax purposes on conversion of the Preferred Stock solely into Common
Stock. However, if the conversion takes place when there is a dividend arrearage
on the Preferred Stock, a portion of the Common Stock received may be treated as
a taxable dividend to the extent of such dividend arrearage. Except for any
Common Stock treated as payment of a dividend, the tax basis for the Common
Stock received upon conversion (including any fractional share deemed received)
will be the tax basis of the Preferred Stock converted, and the holding period
of the Common Stock received upon conversion (including any fractional share
deemed received) will include the holding period of the Preferred Stock
converted into such Common Stock. The receipt of cash in lieu of a fractional
share upon conversion of Preferred Stock to Common Stock will generally be
treated as a sale of such fractional share of Common Stock in which the holder
will recognize taxable gain or loss equal to the difference between the amount
of cash received and the holder's tax basis in the fractional share redeemed.
Such gain or loss will be capital gain or loss and will be long-term or
short-term depending on the holder's holding period for the fractional share
redeemed.
ADJUSTMENTS TO CONVERSION PROVISIONS
Treasury regulations issued under section 305 of the Code treat certain
adjustments to conversion provisions of stock such as the Preferred Stock and
securities such as the Exchange Debentures, as constructive distributions of
stock with respect to preferred stock or convertible securities (which are
treated as stock for this purpose). Such constructive distributions of stock
would be taxable to holders of Preferred Stock or Exchange Debentures as
described above under the caption "Dividends on Preferred Stock." In general,
any adjustment increasing the number of shares of Common Stock into which the
Preferred Stock or Exchange Debentures can be converted could constitute a
constructive distribution of stock to holders of Preferred Stock or Exchange
Debentures unless made pursuant to a bona fide, reasonable adjustment formula
that has the effect of preventing dilution of the interest of the holders of
Preferred Stock or Exchange Debentures. Any adjustment in the conversion price
to compensate the holders of Preferred Stock or Exchange Debentures for taxable
distributions of cash or property on any of the outstanding Common Stock of the
Company may be treated as a constructive distribution of stock to holders of
Preferred Stock or Exchange Debentures. The Company is unable to predict whether
any such adjustment will be made.
SALE, REDEMPTION OR EXCHANGE OF PREFERRED STOCK AND SALE OR EXCHANGE OF COMMON
STOCK
A redemption of shares of Preferred Stock for cash would be a taxable
event.
A redemption of shares of Preferred Stock for cash will generally be
treated as a sale or exchange if the holder does not own, actually or
constructively within the meaning of Section 318 of the Code, any stock of the
Company other than the Preferred Stock redeemed. Stock is considered to be
constructively owned by a holder pursuant to Section 318 if, among other
circumstances, the holder has an option to acquire such stock
31
<PAGE> 33
(such as pursuant to the Exchange Debentures). If a holder does own, actually or
constructively, other stock of the Company, a redemption of Preferred Stock may
be treated as a dividend to the extent of the Company's allocable current or
accumulated earnings and profits (as determined for United States Federal income
tax purposes). Such dividend treatment would not be applied if the redemption
(i) results in a "complete termination" of the holder's actual and constructive
stock interest in the Company under section 302(b)(3) of the Code, or (ii) is
"not essentially equivalent to a dividend" with respect to the holder under
section 302(b)(1) of the Code. A distribution to a holder will be "not
essentially equivalent to a dividend" if it results in a "meaningful reduction"
in the holder's stock interest in the Company. For this purpose, a redemption of
Preferred Stock that results in a reduction in the proportionate interest in the
Company (taking into account any actual ownership of common stock of the Company
and any stock constructively owned) of a holder whose relative stock interest in
the Company is minimal and who exercises no control over corporate affairs
should be regarded as a meaningful reduction in the holders's stock interest in
the Company.
If a redemption of the Preferred Stock for cash is treated as a sale or
exchange, the redemption would result in capital gain or loss equal to the
difference between the amount of cash received and the holder's adjusted tax
basis in the Preferred Stock redeemed, except to the extent that the redemption
price includes dividends which have been declared by the Board of Directors of
the Company prior to the redemption. Similarly, upon the sale or exchange of the
Preferred Stock or the Common Stock (other than in a redemption, on conversion
or pursuant to a tax-free exchange), the difference between the sum of the
amount of cash and the fair market value of other property received and the
holder's adjusted basis in the Preferred Stock or the Common Stock would result
in capital gain or loss. This gain or loss would be long-term capital gain or
loss if the holder's holding period for the Preferred Stock or the Common Stock
exceeds one year. Under current law, capital gains recognized by corporations
are taxed at a maximum rate of 35% and the maximum rate on net capital gains in
the case of individuals is 28%.
A redemption of Preferred Stock in exchange for Exchange Debentures will be
subject to the same general rules as a redemption for cash, except that any gain
or loss generally will be determined based upon the "issue price" of the
Exchange Debentures. See the discussion below under "Original Issue Discount."
Additionally, such gain may be eligible for deferral under the installment sale
method as long as neither the Exchange Debentures nor the Preferred Stock is
readily tradable on an established securities market and the redemption
qualifies for sale or exchange treatment.
If a redemption of Preferred Stock is treated as a distribution that is
taxable as a dividend, the amount of the distribution will be measured by the
amount of cash or the issue price of the Exchange Debentures, as the case may
be, received by the holder. It is possible, however, that the fair market value
of the Exchange Debentures (if different from their issue price) may constitute
the amount of the distribution. The holder's adjusted tax basis in the redeemed
Preferred Stock will be transferred to any remaining stock holdings in the
Company, subject to reduction or possible gain recognition under Section 1059 of
the Code with respect to the nontaxed portion of such dividend. If the holder
does not retain any actual stock ownership in the Company (only constructively
having a stock interest by attribution ), the holder may lose the benefit of the
basis in the Preferred Stock.
ORIGINAL ISSUE DISCOUNT
In the event that the Preferred Stock is exchanged for Exchange Debentures
and the "stated redemption price at maturity" of the Exchange Debentures exceeds
their "issue price" by more than a de minimis amount, the Exchange Debentures
will be treated as having original issue discount ("OID") equal to the entire
amount of such excess.
If the Exchange Debentures are traded on an established securities market
within the sixty-day period ending thirty days after the exchange date, the
issue price of the Exchange Debentures will be their fair market value as of
their issue date. Subject to certain limitations described in the Treasury
Regulations, the Exchange Debentures will be deemed to be traded on an
established securities market if, among other things, price quotations will be
readily available from dealers, brokers, or traders. If the Preferred Stock, but
not the Exchange Debentures issued and exchanged therefor, is traded on an
established securities market within the
32
<PAGE> 34
sixty-day period ending thirty days after the exchange, then the issue price of
each Exchange Debenture should be the fair market value of the Preferred Stock
exchanged therefor at the time of the exchange. The Preferred Stock generally
will be deemed to be traded on an established securities market if it appears on
a system of general circulation that provides a reasonable basis to determine
fair market value based either on recent price quotations or recent sales
transactions. In the event that neither the Preferred Stock nor the Exchange
Debentures are traded on an established securities market within the applicable
period, the issue price of the Exchange Debentures will be their stated
principal amount -- namely, their face value -- unless either (i) the Exchange
Debentures do not bear "adequate stated interest" within the meaning of section
1274 of the Code, which is unlikely, or (ii) the Exchange Debentures are issued
in a so-called "potentially abusive situation" as defined in the Treasury
Regulations under section 1274 of the Code (including a situation involving a
recent sales transaction), in either of which cases the issue price of such
Exchange Debentures generally will be the fair market value of the Preferred
Stock surrendered in exchange therefor.
The "stated redemption price at maturity" of the Exchange Debentures should
equal the total of all payments under the Exchange Debentures, other than
payments of "qualified stated interest." "Qualified stated interest" generally
is stated interest that is unconditionally payable in cash or other property at
least annually at a single fixed rate. Stated interest payable under the
Exchange Debentures would appear to qualify as qualified stated interest.
Accordingly, for purposes of this calculation none of such stated interest would
be included in the stated redemption price at maturity of the Exchange
Debentures. For purposes of determining the stated redemption price at maturity
of the Exchange Debentures, Liquidated Damages will be ignored unless and until
Liquidated Damages become payable.
TAXATION OF STATED INTEREST AND ORIGINAL ISSUE DISCOUNT ON EXCHANGE DEBENTURES
Stated interest on the Exchange Debentures would be included in income by a
holder in accordance with such holder's usual method of accounting. Liquidated
Damages, if any, generally should be includible in income by a holder as such
Liquidated Damages accrue.
Each holder of an Exchange Debenture with OID will be required to include
in gross income an amount equal to the sum of the "daily portions" of the OID
for all days during the taxable year in which such holder holds the Exchange
Debenture. The daily portions of OID required to be included in a holder's gross
income in a taxable year will be determined under a constant yield method by
allocating to each day during the taxable year in which the holder holds the
Exchange Debenture a pro rata portion of OID thereon which is attributable to
the "accrual period" in which such day is included. The amount of the OID
attributable to each accrual period will be the product of the "adjusted issue
price" of the Exchange Debenture at the beginning of such accrual period
multiplied by the "yield to maturity" of the Exchange Debenture (properly
adjusted for the length of the accrual period). The adjusted issue price of an
Exchange Debenture at the beginning of an accrual period is the original issue
price of the Exchange Debenture plus the aggregate amount of OID that accrued in
all prior accrual periods, and less any cash payments -- other than qualified
stated interest payments (i.e., payments of stated interest) on the Exchange
Debenture. The "yield to maturity" is the discount rate that, when used in
computing the present value of all principal and interest payments to be made
under the Exchange Debenture, produces an amount equal to the issue price of the
Exchange Debenture. An "accrual period" may be of any length and may vary in
length over the term of the debt instrument, provided that each accrual period
is no longer than one year and each scheduled payment of principal or interest
occurs either on the final day or the first day of an accrual period.
BOND PREMIUM ON EXCHANGE DEBENTURES
For holders who purchase after original issuance, if the holder's basis in
the Exchange Debentures exceeds the amount payable at the maturity date (or
earlier call date, if appropriate), such excess will be deductible by the holder
of the Exchange Debentures as amortizable bond premium over the term of the
Exchange Debentures (taking into account earlier call dates, as appropriate),
under a yield-to-maturity formula, if an election by the holder under section
171 of the Code is made or is already in effect. An election under section 171
of the Code is available only if the Exchange Debentures are held as capital
assets. This election is revocable only with the consent of the IRS and applies
to all obligations owned or acquired by the
33
<PAGE> 35
holder on or after the first day of the taxable year to which the election
applies. To the extent the excess is deducted as amortizable bond premium, the
holder's adjusted tax basis in the Exchange Debentures will be reduced. Except
as may otherwise be provided in future Treasury Regulations, the amortizable
bond premium will be treated as an offset to interest income on the Exchange
Debentures rather than as a separate deduction item. Recently proposed Treasury
Regulations, which are not yet effective, would modify the described rules under
Section 171 in order to coordinate such rules with the rules relating to OID.
ACQUISITION PREMIUM ON EXCHANGE DEBENTURES
A holder of an Exchange Debenture issued with OID who purchases such
Exchange Debenture for an amount that is greater than its then adjusted issue
price but equal to or less than the sum of all amounts payable on the Exchange
Debenture after the purchase date (other than payments of qualified stated
interest) will be considered to have purchased such Exchange Debenture at an
"acquisition premium." Under the acquisition premium rules, the amount of OID
which such holder must include in income with respect to such Exchange Debenture
for any taxable year will be reduced by the portion of such acquisition premium
properly allocable to such year.
MARKET DISCOUNT ON EXCHANGE DEBENTURES
Purchasers of Preferred Stock should be aware that the disposition of
Exchange Debentures may be affected by the market discount provisions of the
Code. The market discount rules generally provide, if a holder of a debt
instrument purchases it as a "market discount" and thereafter realizes gain upon
a disposition or a retirement of the debt instrument, the lesser of such gain or
the portion of the market discount that has accrued on a straight-line basis (or
on a constant interest rate basis, if such alternative rate of accrual has been
elected by the holder under 1276(b) of the Code) while the debt instrument was
held by such holder will be taxed as ordinary income at the time of such
disposition. "Market discount" with respect to the Exchange Debentures will be
the amount, if any, by which the "revised issue price" of an Exchange Debenture
(or its stated redemption price at maturity if the Exchange Debenture has no
OID) exceeds the holder's basis in the Exchange Debenture immediately after such
holder's acquisition, subject to a de minimis exception. The "revised issue
price" of an Exchange Debenture is its issue price increased by the portion of
OID previously includible in the gross income of prior holders for periods prior
to the acquisition of the Exchange Debenture by the holder (without regard to
any acquisition premium exclusion ) and reduced by prior payments other than
payments of qualified stated interest.
A holder who acquires an Exchange Debenture at a market discount also may
be required to defer a portion of any interest expense that otherwise may be
deductible on any indebtedness incurred or maintained to purchase or carry such
Exchange Debenture until the holder disposes of the Exchange Debenture in a
taxable transaction. Moreover, to the extent of any accrued market discount on
such Exchange Debentures, any partial principal payment with respect to Exchange
Debentures will be includible as ordinary income upon receipt, as will the
Exchange Debenture's fair market value on certain otherwise non-taxable
transfers (such as gifts).
A holder of Exchange Debentures acquired at a market discount may elect for
Federal income tax purposes to include market discount in gross income as the
discount accrues, either on a straight-line basis or on a constant interest rate
basis. This current inclusion election, once made, applies to all market
discount obligations acquired on or after the first day of the first taxable
year to which the election applies, and may not be revoked without the consent
of the IRS. If a holder of Exchange Debentures makes such an election, the
foregoing rules with respect to the recognition of ordinary income on sales and
other dispositions of such debt instruments, and with respect to the deferral of
interest deductions on indebtedness incurred or maintained to purchase or carry
such debt instruments, would not apply.
CONVERSION OF EXCHANGE DEBENTURES
A holder of Exchange Debentures that converts such Exchange Debentures into
Common Stock generally will not recognize gain or loss upon such conversion. A
holder's tax basis in such Common Stock will
34
<PAGE> 36
equal such holder's tax basis in the Exchange Debentures, and such holder's
holding period with respect to such Common Stock will include such holder's
holding period with respect to the Exchange Debentures.
REDEMPTION, SALE OR EXCHANGE OF EXCHANGE DEBENTURES
Generally, any redemption, sale or exchange of Exchange Debentures by a
holder would result in taxable gain or loss equal to the difference between the
sum of the amount of cash and the fair market value of other property received
(except to the extent that cash received is attributable to accrued interest,
which portion of the consideration would be taxed as a payment of such accrued
interest) and the holder's adjusted tax basis in the Exchange Debentures. The
adjusted tax basis of a holder who receives an Exchange Debenture in exchange
for Preferred Stock will generally be equal to the issue price of the Exchange
Debenture (or, possibly in certain circumstances described above, the fair
market value of the Exchange Debenture at the time of issuance) increased by any
OID with respect to the Exchange Debenture included in the holder's income prior
to the sale or redemption of the Exchange Debenture, reduced by any amortizable
bond premium applied against the holder's income prior to the sale or redemption
of the Exchange Debenture and by payments other than payments of qualified
stated interest. Except to the extent that an intention to call the Exchange
Debentures prior to their maturity existed at the time of their original issue
as an agreement or understanding between the Company and the original holders of
a substantial amount of the Exchange Debentures (which is unlikely), and subject
to the above discussion of market discount, such gain or loss would be capital
gain or loss, and would be long-term if the holder's holding period for the
Exchange Debentures exceeded one year.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES TO THE COMPANY AND TO CORPORATE HOLDERS
Pursuant to section 163 of the Code and in the event that the Exchange
Debentures are "applicable high yield discount obligations" ("AHYDOs"), a
portion of the OID (if any) accruing on the Exchange Debentures may be treated
as a dividend generally eligible for the dividends-received deduction in the
case of corporate holders (and subject to the limitations described above), and
the Company would not be entitled to deduct the "disqualified portion" of the
OID accruing on the Exchange Debentures and would be allowed to deduct the
remainder of the OID only when paid in cash.
The Exchange Debentures will constitute AHYDOs if they (i) have a term of
more than five years, (ii) have a yield to maturity equal to or greater than the
sum of the applicable federal rate at the time of issuance of the Exchange
Debentures (the "AFR") plus five percentage points, and (iii) have "significant"
OID. A debt instrument is treated as having "significant" OID if the aggregate
amount that would be includible in gross income with respect to such debt
instrument for periods before the close of any accrual period ending after the
date five years after the date of issue exceeds the sum of (i) the aggregate
amount of interest to be paid in cash under the debt instrument before the close
of such accrual period and (ii) the product of the initial issue price of such
debt instrument and its yield to maturity. Because the amount of OID, if any,
attributable to the Exchange Debentures will be determined at the time such
Exchange Debentures are issued and the AFR at that point in time is not
predictable, it is impossible currently to determine whether Exchange Debentures
will be treated as AHYDOs.
If an Exchange Debenture is treated as an AHYDO, a corporate holder would
be treated as receiving dividend income to the extent of the lesser of (i) the
Company's current and accumulated earnings and profits, and (ii) the
"disqualified portion" of the OID of such AHYDO. The "disqualified portion" of
the OID is equal to the lesser of (i) the amount of OID or (ii) the portion of
the "total return" (i.e., the excess of all payments to be made with respect to
the Exchange Debenture over its issue price) in excess of the AFR plus six
percentage points.
President Clinton has recently proposed tax legislation that would require
the deferral until payment of interest deductions with respect to certain
indebtedness which is convertible into equity of the issuer. It is not possible
to predict whether such legislative proposals will ultimately be enacted into
law, and if so, the form or effective date of any such legislation.
35
<PAGE> 37
BACKUP WITHHOLDING AND INFORMATION REPORTING
A holder of Securities may be subject to backup withholding at the rate of
31% with respect to dividends paid on, interest, or the proceeds of a sale or
exchange of, the Securities, unless such holder (a) is a corporation or comes
within certain other exempt categories and, when required, demonstrates its
exemption or (b) provides a correct taxpayer identification number, certifies as
to no loss of exemption from backup withholding and otherwise complies with
applicable requirements of the backup withholding rules. A holder of Securities
who does not provide the Company with the holder's correct taxpayer
identification number may be subject to penalties imposed by the IRS. Any amount
paid as backup withholding would be creditable against the holder's federal
income tax liability.
The Company or its agent will furnish annually to the IRS and to record
holders of the Exchange Debentures (other than with respect to certain exempt
holders) information relating to the stated interest and the OID, if any,
accruing during the calendar year. Such information will be based on the amount
of OID that would have accrued to a holder who acquired the Exchange Debenture
on original issue. Accordingly, other holders will be required to determine for
themselves whether they are eligible to report a reduced amount of OID for
federal income tax purposes.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS DOES
NOT CONSIDER THE FACTS AND CIRCUMSTANCES OF ANY PARTICULAR PROSPECTIVE
PURCHASER'S SITUATION OR STATUS. ACCORDINGLY, EACH PURCHASER OF PREFERRED STOCK
SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES TO IT,
INCLUDING THOSE UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock offered hereby will
be passed upon for the Company by Weil, Gotshal & Manges LLP, Dallas, Texas.
EXPERTS
The audited consolidated financial statements and schedules of Greyhound
Lines, Inc., incorporated by reference into this Prospectus and elsewhere in the
Registration Statement, to the extent and for the periods indicated in their
reports, have been audited by Arthur Andersen LLP, independent public
accountants, and are included herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.
36
<PAGE> 38
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN, OR INCORPORATED BY
REFERENCE IN, THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING COVERED BY THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SECURITYHOLDERS OR THE SELLING AGENT. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE HEREIN OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................
Incorporation of Certain Documents by
Reference...........................
Risk Factors..........................
The Company...........................
Use of Proceeds.......................
Selling Securityholders...............
Plan of Distribution..................
Description of Securities.............
Certain Federal Income Tax
Consequences........................
Legal Matters.........................
Experts...............................
</TABLE>
[GREYHOUND LOGO]
GREYHOUND LINES, INC.
2,400,000 SHARES 8 1/2% CONVERTIBLE
EXCHANGEABLE PREFERRED STOCK
$69,000,000 OF 8 1/2 CONVERTIBLE SUBORDINATED
NOTES DUE 2009
12,307,692 SHARES OF COMMON STOCK
--------------------
PROSPECTUS
--------------------
, 1997
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
<PAGE> 39
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable in connection with the
offering of the Shares to be registered and offered hereby, all of which will be
paid by the Company. All of such expenses are estimates, other than the
registration fee payable to the Securities and Exchange Commission.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $18,045.45
Legal Fees and Expenses.....................................
Accounting Fees and Expenses................................
Miscellaneous...............................................
----------
TOTAL............................................. $
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Certificate of Incorporation of the Company provides for
mandatory indemnification of directors and officers to the fullest extent
permitted by the General Corporation Law of the State of Delaware. Under Section
145 of the General Corporation Law of the State of Delaware, the Company, as a
Delaware corporation, has the power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending, or
completed action, suit, or proceeding (other than an action by or in the right
of the Company) by reason of the fact that such person is or was a director,
officer, employee, or agent of the Company (an "Indemnitee"), against any and
all expenses, judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit, or proceeding.
The Company's power to indemnify such a person applies only if such person acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests, of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Pursuant to Section 145, the Company also has the power to indemnify an
Indemnitee with respect to actions or suits brought by or in the right of the
Company, against expenses actually and reasonably incurred by him in connection
with the defense and settlement of suit or action (and not in satisfaction of a
judgment or settlement of the claim itself), if the Indemnitee acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests, of the Company and with the further limitation that in such actions
no indemnification shall be made in the event of any adjudication of negligence
or misconduct unless a Delaware Court of Chancery, in its discretion, believes
that in light of all the circumstances indemnification should apply.
The General Corporation Law of the State of Delaware further specifically
provides that the indemnification authorized thereby shall not be deemed
exclusive of any other rights to which any such officer or director may be
entitled under any bylaws, agreements, vote of stockholders or disinterested
directors, or otherwise.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock), or (iv) for any transaction from which the director derived an
improper personal benefit. Article Seventh of the Restated Certificate of
Incorporation of the Company provides that, to the fullest extent permitted by
the General Corporation Law of the State of Delaware, a director of the Company
shall not be liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director.
II-1
<PAGE> 40
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person thereof in the
successful defense of any action, suit or proceeding) is asserted by a director,
officer or controlling person in connection with the securities being registered
pursuant to this Registration Statement, the Company will, unless in the opinion
of counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
ITEM 16. EXHIBITS.
The following is a list of all exhibits filed as a part of this
Registration Statement.
<TABLE>
<C> <S>
4.1 -- Certificate of Designations for the 8 1/2% Convertible
Exchangeable Preferred Stock+
4.2 -- Indenture dated April 16, 1997 by and between the Company
and U.S. Trust of Texas, N.A., as trustee*
4.3 -- Registration Rights Agreement dated April 16, 1997 by and
between the Company and Bear, Stearns & Co. Inc.*
5.1 -- Opinion of Weil, Gotshal & Manges.+
12.1 -- Computation of Ratios of Earnings to Fixed Charges*
12.2 -- Computation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock*
23.1 -- Consent of Weil, Gotshal & Manges+
23.2 -- Consent of Arthur Andersen LLP.*
24.1 -- Power of Attorney.(Included on the signature page in Part
II of this Registration Statement)
25.1 -- Statement of Eligibility of Trustee under the Indenture
filed as Exhibit 4.2+
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by Amendment.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes the following:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those
II-2
<PAGE> 41
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
Offering.
(b) For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) See Item 15.
II-3
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on the 16th day of May, 1997.
GREYHOUND LINES, INC.
By: /s/ STEVEN L. KORBY
----------------------------------
Steven L. Korby
Executive Vice President and Chief
Financial Officer
Each person whose signature to this Registration Statement appears below
appoints Craig R. Lentzsch and Steven L. Korby, and each of them, any one of
whom may act without the joinder of the other, as his agent and attorney-in-fact
to sign on his behalf individually and in the capacity stated below and to file
all pre-and post-effective amendments to this Registration Statement (and, in
addition, any registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended, for the offering to which this Registration
Statement relates), which amendments may make such changes in and additions to
this Registration Statement as such agent and attorney-in-fact may deem
necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ THOMAS G. PLASKETT Chairman of the Board of Directors May 16, 1997
- -----------------------------------------------------
Thomas G. Plaskett
/s/ CRAIG R. LENTZSCH Director, President and Chief May 16, 1997
- ----------------------------------------------------- Executive Officer (Principal
Craig R. Lentzsch Executive Officer)
/s/ STEVEN L. KORBY Executive Vice President and Chief May 16, 1997
- ----------------------------------------------------- Financial Officer (Principal
Steven L. Korby Financial and Accounting
Officer)
/s/ RICHARD J. CALEY Director May 16, 1997
- -----------------------------------------------------
Richard J. Caley
/s/ LINDA CHAVEZ Director May 16, 1997
- -----------------------------------------------------
Linda Chavez
/s/ A. A. MEITZ Director May 16, 1997
- -----------------------------------------------------
A. A. Meitz
/s/ FRANK L. NAGEOTTE Director May 16, 1997
- -----------------------------------------------------
Frank L. Nageotte
/s/ ALFRED E. OSBORNE, JR. Director May 16, 1997
- -----------------------------------------------------
Alfred E. Osborne, Jr.
/s/ STEPHEN M. PECK Director May 16, 1997
- -----------------------------------------------------
Stephen M. Peck
/s/ ERNEST P. WERLIN Director May 16, 1997
- -----------------------------------------------------
Ernest P. Werlin
</TABLE>
II-4
<PAGE> 43
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ------------
<C> <S> <C>
4.1 -- Certificate of Designations for the 8 1/2% Convertible
Exchangeable Preferred Stock+
4.2 -- Indenture dated April 16, 1997 by and between the Company
and U.S. Trust of Texas, N.A., as trustee*
4.3 -- Registration Rights Agreement dated April 16, 1997 by and
between the Company and Bear, Stearns & Co. Inc.*
5.1 -- Opinion of Weil, Gotshal & Manges.+
12.1 -- Computation of Ratios of Earnings to Fixed Charges*
12.2 -- Computation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock*
23.1 -- Consent of Weil, Gotshal & Manges+
23.2 -- Consent of Arthur Andersen LLP.*
24.1 -- Power of Attorney.(Included on the signature page in Part
II of this Registration Statement)
25.1 -- Statement of Eligibility of Trustee under the Indenture
filed as Exhibit 4.2+
</TABLE>
- ---------------
* Filed herewith.
+ To be filed by Amendment.
<PAGE> 1
EXHIBIT 4.2
================================================================================
GREYHOUND LINES, INC.
-----------------
INDENTURE
8 1/2% CONVERTIBLE SUBORDINATED DEBENTURES due 2009
Dated as of April 16, 1997
-----------------
-----------------
U.S. TRUST COMPANY OF TEXAS, N.A.
-----------------
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . 11.03
(c) . . . . . . . . . . . . . . . . . . . . . . 11.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . 10.03
(b)(2) . . . . . . . . . . . . . . . . . . . . . 7.07
(c) . . . . . . . . . . . . . . . . . . . . . . 7.06;11.02
(d) . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . 4.03;11.02
(b) . . . . . . . . . . . . . . . . . . . . . . 10.02
(c)(1) . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . N.A.
(d) 10.03, 10.04, 10.05
(e) . . . . . . . . . . . . . . . . . . . . . . 11.05
(f) . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . 7.05,11.02
(c) . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . 2.12
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
(b) . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . 11.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . 6
Section 1.03. Incorporation by Reference of Trust Indenture
Act . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . 7
ARTICLE 2
THE DEBENTURES
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . 7
Section 2.02. Execution and Authentication . . . . . . . . . . . 8
Section 2.03. Registrar and Paying Agent . . . . . . . . . . . . 9
Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . 9
Section 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . 9
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . 10
Section 2.07. Replacement Debentures . . . . . . . . . . . . . . 15
Section 2.08. Outstanding Debentures . . . . . . . . . . . . . . 15
Section 2.09. Treasury Debentures . . . . . . . . . . . . . . . . 16
Section 2.10. Temporary Debentures . . . . . . . . . . . . . . . 16
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . 16
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . 17
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee . . . . . . . . . . . . . . . . 17
Section 3.02. Selection of Debentures to Be Redeemed . . . . . . 17
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . 18
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . 18
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . 18
Section 3.06. Debentures Redeemed in Part . . . . . . . . . . . . 19
Section 3.07. Optional Redemption . . . . . . . . . . . . . . . . 19
Section 3.08. Mandatory Redemption . . . . . . . . . . . . . . . 19
ARTICLE 4
COVENANTS
Section 4.01. Payment of Debentures . . . . . . . . . . . . . . . 20
Section 4.02. Maintenance of Office or Agency . . . . . . . . . . 20
Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . 21
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.06. Stay, Extension and Usury Laws . . . . . . . . . . 22
Section 4.07. Corporate Existence . . . . . . . . . . . . . . . . 22
Section 4.08. Offer to Repurchase Upon Change of Control . . . . 22
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets . . . . . 23
Section 5.02. Successor Corporation Substituted . . . . . . . . . 23
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . 24
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . 25
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . 25
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . 26
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . 26
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . 26
Section 6.07. Rights of Holders of Debentures to Receive
Payment . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . 27
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . 27
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . 27
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . 28
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . 28
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . 29
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . 30
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . 30
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . 30
Section 7.06. Reports by Trustee to Holders of the Debentures . . 30
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . 31
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . 31
Section 7.09. Successor Trustee by Merger, etc . . . . . . . . . 32
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . 32
Section 7.11. Preferential Collection of Claims Against
Company . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . 33
Section 8.02. Legal Defeasance and Discharge . . . . . . . . . . 33
Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . 33
Section 8.04. Conditions to Legal or Covenant Defeasance . . . . 34
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions. . . 35
Section 8.06. Repayment to Company . . . . . . . . . . . . . . . 36
Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . 36
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Debentures . . . . . 36
Section 9.02. With Consent of Holders of Debentures . . . . . . . 37
Section 9.03. Compliance with Trust Indenture Act . . . . . . . . 38
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 9.04. Revocation and Effect of Consents . . . . . . . . . 38
Section 9.05. Notation on or Exchange of Debentures . . . . . . . 39
Section 9.06. Trustee to Sign Amendments, etc . . . . . . . . . . 39
Section 9.07. Amendments Prior to Issuance of Debentures . . . . 39
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate. . . . . . . . . . . . . . 39
Section 10.02. Liquidation; Dissolution; Bankruptcy . . . . . . . 39
Section 10.03. Default on Senior Debt . . . . . . . . . . . . . . 40
Section 10.04. Acceleration of Debentures . . . . . . . . . . . . 40
Section 10.05. When Distribution Must Be Paid Over . . . . . . . . 41
Section 10.06. Notice by Company . . . . . . . . . . . . . . . . . 41
Section 10.07. Subrogation . . . . . . . . . . . . . . . . . . . . 41
Section 10.08. Relative Rights . . . . . . . . . . . . . . . . . . 41
Section 10.09. Subordination May Not Be Impaired by Company . . . 42
Section 10.10. Distribution or Notice to Representative . . . . . 42
Section 10.11. Rights of Trustee and Paying Agent . . . . . . . . 42
Section 10.12. Authorization to Effect Subordination . . . . . . . 42
Section 10.13. Amendments . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 11
CONVERSION OF DEBENTURES
Section 11.01. Right to Convert. . . . . . . . . . . . . . . . . . 43
Section 11.02. Exercise of Conversion Privilege; Issuance of Common
Stock on Conversion; No Adjustment for Interst or
Dividends . . . . . . . . . . . . . . . . . . . . . 43
Section 11.03. Cash Payments in Lieu of Fractional Shares . . . . 44
Section 11.04. Conversion Price . . . . . . . . . . . . . . . . . 45
Section 11.05. Adjustment of Conversion Price . . . . . . . . . . 45
Section 11.06. Effect of Reclassification, Consolidation, Merger or
Sale . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.07. Taxes on Shares Issued . . . . . . . . . . . . . . 49
Section 11.08. Reservation of Shares; Shares to be Fully Paid;
Listing of Common Stock . . . . . . . . . . . . . . 49
Section 11.09. Common Stock Issuable upon Conversion . . . . . . . 49
Section 11.10. Responsibility of Trustee . . . . . . . . . . . . . 49
Section 11.11. Notice to Holders Prior to Certain Actions . . . . 50
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls . . . . . . . . . . . 50
Section 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.03. Communication by Holders of Debentures with Other
Holders of Debentures . . . . . . . . . . . . . . . 52
Section 12.04. Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
iii
<PAGE> 6
<TABLE>
<S> <C> <C>
Section 12.05. Statements Required in Certificate or Opinion . . . 52
Section 12.06. Rules by Trustee and Agents . . . . . . . . . . . . 53
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders . . . . . . . . . . . . 53
Section 12.08. Governing Law . . . . . . . . . . . . . . . . . . . 53
Section 12.09. No Adverse Interpretation of Other Agreements . . . 53
Section 12.10. Successors . . . . . . . . . . . . . . . . . . . . 53
Section 12.11. Severability . . . . . . . . . . . . . . . . . . . 53
Section 12.12. Counterpart Originals . . . . . . . . . . . . . . . 53
Section 12.13. Table of Contents, Headings, etc . . . . . . . . . 54
EXHIBITS
Exhibit A Form of Debenture . . . . . . . . . . . . . . . . . A-1
Exhibit B-1 Certificate of Transferor of Definitive
Debentures . . . . . . . . . . . . . . . . . . . .B-1-1
Exhibit B-2 Certificate of Transferor from Global Debenture to
Definitive Debenture . . . . . . . . . . . . . . .B-2-1
Exhibit C Certificate of Institutional Accredited Investor . . C-1
</TABLE>
iv
<PAGE> 7
This Indenture, dated as of April 16, 1997, is between Greyhound
Lines, Inc., a Delaware corporation (the "Company"), and U.S. Trust Company of
Texas, N.A., as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the 8 1/2%
Convertible Subordinated Debentures due 2009 (the "Debentures"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Affiliate" of any specified Person means an "affiliate" of such
Person, as such term is defined for purposes of Rule 144 under the Securities
Act.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial interests in a Global Debenture, the rules and
procedures of the Depository that apply to such transfer and exchange.
"Bankruptcy Law" means Title 11, United States Code, or any
similar federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company,
or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"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.
"Certificate of Designations" means the certificate of
designations duly filed with the Secretary of State of the State of Delaware on
April 15, 1997 with respect to the Preferred Stock.
"Change of Control" means the occurrence of any of the following:
(a) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole, (b) the adoption of a plan relating to the liquidation or
dissolution of the Company, (c) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that
any "person" or "group" (as such terms are used in Section 13(d)(3) of the
Exchange Act) becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through
one or more intermediaries, of more than 50% of the voting power of the
outstanding voting stock of the Company, unless (i) the closing price per share
of Common Stock for any five trading days within the period of ten consecutive
trading days ending immediately after the announcement of such Change of
Control equals or exceeds 105% of the conversion price of the
<PAGE> 8
Debentures in effect on each such trading day or (ii) at least 90% of the
consideration in the transaction or transactions constituting a Change of
Control pursuant to clause (c) consists of shares of common stock traded or to
be traded immediately following such Change of Control on a national securities
exchange or the Nasdaq national market and, as a result of such transaction or
transactions, the Debentures become convertible solely into such Common Stock
(and any rights attached thereto), or (d) the first day on which more than a
majority of the Board of Directors are not Continuing Directors; provided,
however, that a transaction in which the Company becomes a subsidiary of
another entity shall not constitute a Change of Control if (i) the stockholders
of the Company immediately prior to such transaction "beneficially own" (as
such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act),
directly or indirectly through one or more intermediaries, at least a majority
of the voting power of the outstanding voting stock of the Company immediately
following the consummation of such transaction and (ii) immediately following
the consummation of such transaction, no "person" or "group" (as such terms are
defined above), other than such other entity (but including holders of equity
interests of such other entity), "beneficially owns" (as such term is defined
above), directly or indirectly through one or more intermediaries, more than
50% of the voting power of the outstanding voting stock of the Company.
"Closing Price" means, for each Trading Day, the last reported
sale price regular way on the American Stock Exchange (or if the American Stock
Exchange is not the principal national securities exchange on which the Common
Stock is listed or admitted for trading, on such other national securities
exchange or, if the Common Stock is not so listed or admitted for trading on
the American Stock Exchange or any other national securities exchange, on the
NASDAQ National Market System or, if the Common Stock is not quoted on the
NASDAQ National Market System, the average of the closing bid and asked prices
in the over-the-counter market as furnished by any New York Stock Exchange
member firm selected from time to time by the corporation for that purpose).
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (a) was a member of the
Board of Directors on the date of original issuance of the Preferred Stock or
(b) was nominated for election to the Board of Directors with the approval of,
or whose election to the Board of Directors was ratified by, at least two-
thirds of the Continuing Directors who were members of the Board of Directors
at the time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address
of the Trustee specified in Section 12.02 hereof or such other address as to
which the Trustee may give notice to the Company.
"Debenture Custodian" means the Trustee, as custodian with
respect to the Debentures in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time or
the giving of notice or both would be an Event of Default.
"Definitive Debentures" means Debentures that are in the form of
Exhibit A attached hereto (but without including the text referred to in
footnotes 1 and 3 thereto).
"Depository" means, with respect to the Debentures issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depository with respect to the Debentures,
2
<PAGE> 9
until a successor shall have been appointed and become such pursuant to the
applicable provision of this Indenture, and, thereafter, "Depository" shall
mean or include such successor.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"fair market value" means the amount that a willing buyer would
pay a willing seller in an arm's-length transaction.
"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 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 on the date of this
Indenture.
"Global Debenture" means a permanent global debenture that
contains the paragraph referred to in footnote 1 and the additional schedule
referred to in footnote 3 to the form of the Debenture attached hereto as
Exhibit A, and that is deposited with the Debenture Custodian and registered in
the name of the Depository, representing a series of Debentures sold in
reliance on Rule 144A or another exemption from the registration requirements
of the Securities Act.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of the United States
is pledged.
"Holder" means a Person in whose name a Debenture is registered.
"Indebtedness" means any indebtedness, whether or not contingent,
in respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreements in
respect thereof) or banker's acceptances or representing capital lease
obligations or the balance deferred and unpaid of the purchase price of any
property or representing any hedging obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of
the foregoing indebtedness (other than letters of credit and hedging
obligations) would appear as a liability upon a balance sheet prepared in
accordance with GAAP.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means a Person who holds an interest
through a Participant.
"Initial Purchaser" means Bear, Stearns & Co. Inc.
"Institutional Accredited Investor" means an "accredited
investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act.
"Junior Securities" means all classes of Common Stock of the
Company and each other class of capital stock or series of preferred stock
established after April 16, 1997 by the Board of Directors the terms of which
do not expressly provide that it ranks senior to or on a parity with the
Preferred Stock
3
<PAGE> 10
as to dividend distributions and distributions upon the liquidation, winding-up
and dissolution of the Company.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 4 of the Registration Rights Agreement.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Preferred Stock by the
Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of
the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means with respect to the Depository, a Person who
has an account with the Depository.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Preferred Stock" means the 8 1/2% Convertible Exchangeable
Preferred Stock, which may be exchanged by the Company for the Debentures.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A under the Securities Act.
"Quoted Price" means the last reported sales price of the
applicable security on the principle exchange (including, if applicable, the
Nasdaq National Market) on which the applicable security is listed or admitted
for trading (which shall be for consolidated trading if applicable to such
exchange), or if neither so reported or listed or admitted for trading, the
last reported bid price of the applicable security
4
<PAGE> 11
in the over-the-counter market. In the event that the Quoted Price cannot be
determined as aforesaid, the Board of Directors of the Company shall determine
the Quoted Price on the basis of such quotations as it in good faith considers
appropriate.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of April 16, 1997, by and between the Company and the
Initial Purchaser, as such agreement may be amended, modified or supplemented
from time to time.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Revolving Credit Facility" means that certain Second Amended and
Restated Loan and Security Agreement, dated as of June 5, 1995, as amended, by
and between the Company and Foothill Capital Corporation, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, in each case as amended, restated, modified,
supplemented, extended, renewed, replaced, refinanced or restructured from time
to time, whether by the same or any other agent or agents, lender or group of
lenders, whether represented by one or more agreements and whether one or more
Subsidiary are added or removed as borrowers or guarantors thereunder or as
parties thereto.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (a) all obligations of the Company under the
Revolving Credit Facility, as it may be amended, modified, restated,
supplemented, deferred, extended, renewed, replaced, refunded or refinanced
from time to time, and (b) any other Indebtedness of the Company, whether
outstanding on the date of issuance of the Debentures or thereafter incurred,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is subordinated in right of payment to any Senior Debt;
provided, however, that Senior Debt will not include (i) any liability for
federal, state, local or other taxes owed or owing by the Company, (ii) any
Indebtedness of the Company to any of its Subsidiaries or (iii) any trade
payables.
"Shareholder Rights Plan" means the Amended and Restated Rights
Agreement dated as of April 8, 1997 by and between the Company and Mellon
Securities Trust Company, as rights agent.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date hereof.
"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
5
<PAGE> 12
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).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA.
"Trading Day" means any day on which the American Stock Exchange
or other applicable stock exchange or market is open for business.
"Transfer Restricted Securities" means securities that bear or
are required to bear the legend set forth in Section 2.06 hereof.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Debentures" means one or more Global
Debentures that do not and are not required to bear the legend set forth in
Section 2.06(f) hereof.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Change of Control Offer"..................... 4.15
"Change of Control Payment"................... 4.15
"Change of Control Payment Date".............. 4.15
"Conversion Date"............................. 11.02
"Conversion Price"............................ 11.04
"Covenant Defeasance"......................... 8.03
"DTC.......................................... 2.03
"Event of Default"............................ 6.01
"Legal Defeasance"............................ 8.02
"Offer Amount"................................ 3.09
"Offer Period"................................ 3.09
"Paying Agent"................................ 2.03
"Payment Default"............................. 6.01
"Payment Blockage Notice"..................... 10.03
"Purchase Date"............................... 3.09
"Registrar" .................................. 2.03
"Representative" ............................. 10.05
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
Any terms incorporated in this Indenture that are defined
6
<PAGE> 13
by the TIA, defined by TIA reference to another statute or defined by SEC rule
under the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and transactions;
and
(6) references to sections of or rules under the Securities
Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE DEBENTURES
SECTION 2.01. FORM AND DATING.
The Debentures and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Debentures may
have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Debenture shall be dated the date of its authentication. The
Debentures shall be issued in denominations of $1,000 and integral multiples
thereof.
The terms and provisions contained in the Debentures shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
(a) Global Debentures. Debentures issued in exchange for the
Preferred Stock may be issued initially in the form of one or more Global
Debentures, which shall be deposited on behalf of the holders of the Debentures
represented thereby with a custodian of the Depository, and registered in the
name of the Depository or a nominee of the Depository, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Debentures may from time to time be
increased or decreased by adjustments made on the records of the Trustee and
the Depository or its nominee as hereinafter provided.
Each Global Debenture shall represent such of the outstanding
Debentures as shall be specified therein and each shall provide that it shall
represent the aggregate amount of outstanding Debentures from time to time
endorsed thereon and that the aggregate amount of outstanding Debentures
represented
7
<PAGE> 14
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges, redemptions and transfers of interests. Any endorsement of
a Global Debenture to reflect the amount of any increase or decrease in the
amount of outstanding Debentures represented thereby shall be made by the
Trustee or the Debenture Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.06 hereof.
Except as set forth in Section 2.06 hereof, the Global Debentures
may be transferred, in whole and not in part, only to another nominee of the
Depository or to a successor of the Depository or its nominee.
(b) Book-Entry Provisions. The Company shall execute and the
Trustee shall, in accordance with this Section 2.01(b), authenticate and
deliver the Global Debentures, if any, that (i) shall be registered in the name
of the Depository or the nominee of the Depository and (ii) shall be delivered
by the Trustee to the Depository or pursuant to the Depository's instructions
or held by the Trustee as custodian for the Depository.
Participants shall have no rights either under this Indenture
with respect to any Global Debenture held on their behalf by the Depository or
by the Debenture Custodian as custodian for the Depository or under such Global
Debenture, and the Depository may be treated by the Company, the Trustee and
any Agent of the Company or the Trustee as the absolute owner of such Global
Debenture for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any Agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Participants, the operation of customary practices of such Depository
governing the exercise of the rights of an owner of a beneficial interest in
any Global Debenture.
(c) Definitive Debentures. Debentures issued in certificated
form shall be substantially in the form of Exhibit A attached hereto (but
without including the text referred to in footnotes 1 and 3 thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Debentures for the Company by manual
or facsimile signature. The Company's seal shall be reproduced on the
Debentures and may be in facsimile form.
If an Officer whose signature is on a Debenture no longer holds
that office at the time a Debenture is authenticated, the Debenture shall
nevertheless be valid.
A Debenture shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Debenture has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Debentures shall be
substantially as set forth in Exhibit A hereto.
The Trustee shall, upon a written order of the Company signed by
two Officers, authenticate Debentures for original issue up to $60,000,000
aggregate principal amount of the Debentures. The aggregate principal amount
of Debentures outstanding at any time may not exceed such amount except as
provided in Section 2.07 hereof.
8
<PAGE> 15
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Debentures. An authenticating agent may authenticate
Debentures whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company
or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Debentures
may be presented for registration of transfer or for exchange ("Registrar") and
an office or agency where Debentures may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Debentures and of their
transfer and exchange. The Company may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Company may change any Paying Agent or Registrar without notice to any
Holder. The Company shall notify the Trustee in writing of the name and
address of any Agent not a party to this Indenture. If the Company fails to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such. The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, and such agreement
shall incorporate the TIA's provisions of this Indenture that relate to such
Agent. The Company or any of its Subsidiary may act as Paying Agent or
Registrar.
The Company initially appoints The Depository Trust Company to
act as Depository with respect to the Global Debentures.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Debenture Custodian with respect to
the Global Debentures.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal of or premium, interest or Liquidated Damages, if any, on
the Debentures, and will notify the Trustee of any default by the Company in
making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money. If the
Company or a Significant Subsidiary acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent. Upon any bankruptcy or reorganization proceedings
relating to the Company, the Trustee shall serve as Paying Agent for the
Debentures.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times
as the Trustee may request in writing, a list in
9
<PAGE> 16
such form and as of such date as the Trustee may reasonably require of the
names and addresses of the Holders of Debentures and the Company shall
otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Debentures. The transfer
and exchange of Global Debentures or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture and the
procedures of the Depository therefor, which shall include restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Beneficial interests in a Global Debenture may be transferred
to Persons who take delivery thereof in the form of a beneficial interest in
the same Global Debenture in accordance with the transfer restrictions set
forth in the legend in subsection (f) of this Section 2.06.
(b) Transfer and Exchange of Definitive Debentures. When
Definitive Debentures are presented by a Holder to the Registrar with a request
to register the transfer of the Definitive Debentures or to exchange such
Definitive Debentures for an equal principal amount of Definitive Debentures of
other authorized denominations, the Registrar shall register the transfer or
make the exchange as requested only if the Definitive Debentures are presented
or surrendered for registration of transfer or exchange, are endorsed and
contain a signature guarantee or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by his attorney and contains a signature guarantee, duly authorized in writing
and the Registrar received the following documentation (all of which may be
submitted by facsimile):
(i) in the case of Definitive Debentures that are
Transfer Restricted Securities, such request shall
be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Security is
being delivered to the Registrar by a Holder
for registration in the name of such Holder,
without transfer, or such Transfer
Restricted Security is being transferred to
the Company or any of its Subsidiaries, a
certification to that effect from such
Holder (in substantially the form of Exhibit
B-1 hereto);
(B) if such Transfer Restricted Security is
being transferred to a QIB in accordance
with Rule 144A under the Securities Act or
pursuant to an exemption from registration
in accordance with Rule 144 under the
Securities Act or pursuant to an effective
registration statement under the Securities
Act, a certification to that effect from
such Holder (in substantially the form of
Exhibit B-1 hereto);
(C) if such Transfer Restricted Security is
being transferred to a Non-U.S. Person in an
offshore transaction in accordance with Rule
904 under the Securities Act, a
certification to that effect from such
Holder (in substantially the form of Exhibit
B-1 hereto) and any applicable blue sky laws
of any state of the United States;
(D) if such Transfer Restricted Security is
being transferred to an Institutional
Accredited Investor in reliance on an
exemption from the registration requirements
of the Securities Act other than those
listed in subparagraphs (B)
10
<PAGE> 17
or (C) above, a certification to that effect
from such Holder (in substantially the form
of Exhibit B-1 hereto), a certification
substantially in the form of Exhibit C
hereto from the transferee, and, if such
transfer is in respect of an aggregate
principal amount of Debentures of less than
$100,000, an Opinion of Counsel acceptable
to the Company that such transfer is in
compliance with the Securities Act and any
applicable blue sky laws of any state of the
United States; or
(E) if such Transfer Restricted Security is
being transferred in reliance on any other
exemption from the registration requirements
of the Securities Act, a certification to
that effect from such Holder (in
substantially the form of Exhibit B-1
hereto) and an Opinion of Counsel from such
Holder or the transferee reasonably
acceptable to the Company and to the
Registrar to the effect that such transfer
is in compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Global Debenture
for a Definitive Debenture.
(i) Any Person having a beneficial interest in a Global
Debenture may upon request, subject to the
Applicable Procedures, exchange such beneficial
interest for a Definitive Debenture, upon receipt
by the Trustee of written instructions or such
other form of instructions as is customary for the
Depository, from the Depository or its nominee on
behalf of any Person having a beneficial interest
in a Global Debenture, and, in the case of a
Transfer Restricted Security, the following
additional information and documents (all of which
may be submitted by facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the
Depository as being the beneficial owner or
to the Company or any of its Subsidiaries, a
certification to that effect from such
Person (in substantially the form of Exhibit
B-2 hereto);
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule
144A under the Securities Act or pursuant to
an exemption from registration in accordance
with Rule 144 under the Securities Act or
pursuant to an effective registration
statement under the Securities Act, a
certification to that effect from the
transferor (in substantially the form of
Exhibit B-2 hereto);
(C) if such beneficial interest is being
transferred to an Institutional Accredited
Investor, pursuant to a private placement
exemption from the registration requirements
of the Securities Act (and based on an
opinion of counsel if the Company so
requests) other than those listed in
subparagraph (B) above, a certification to
that effect from such Holder (in
substantially the form of Exhibit B-2
hereto) and a certification from the
applicable transferee (in substantially the
form of Exhibit C hereto); or
(D) if such beneficial interest is being
transferred in reliance on any other
exemption from the registration requirements
of the Securities Act, a certification to
that effect from the transferor (in
substantially the form of Exhibit B-2
hereto) and an Opinion of Counsel from the
transferee or the transferor reasonably
acceptable
11
<PAGE> 18
to the Company and to the Registrar to the
effect that such transfer is in compliance
with the Securities Act and any applicable
blue sky laws of any state of the United
States, in which case the Trustee or the
Debenture Custodian, at the direction of the
Trustee, shall, in accordance with the
standing instructions and procedures
existing between the Depository and the
Debenture Custodian, cause the aggregate
principal amount of Global Debentures, as
applicable, to be reduced accordingly and,
following such reduction, the Company shall
execute and, the Trustee shall authenticate
and deliver to the transferee a Definitive
Debenture in the appropriate principal
amount.
(ii) Definitive Debentures issued in exchange for a
beneficial interest in a Global Debenture, pursuant
to this Section 2.06(c) shall be registered in such
names and in such authorized denominations as the
Depository, pursuant to instructions from its
direct or Indirect Participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver
such Definitive Debentures to the Persons in whose
names such Debentures are so registered. Following
any such issuance of Definitive Debentures, the
Trustee, as Registrar, shall instruct the
Depository to reduce or cause to be reduced the
aggregate principal amount at maturity of the
applicable Global Debenture to reflect the
transfer.
(d) Restrictions on Transfer and Exchange of Global
Debentures. Notwithstanding any other provision of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.06), a Global
Debenture may not be transferred as a whole except by the Depository to a
nominee of the Depository or by a nominee of the Depository to the Depository
or another nominee of the Depository or by the Depository or any such nominee
to a successor Depository or a nominee of such successor Depository.
(e) Authentication of Definitive Debentures in Absence of
Depository. If at any time:
(i) the Depository for the Debentures notifies the
Company that the Depository is unwilling or unable
to continue as Depository for the Global Debentures
and a successor Depository for the Global
Debentures is not appointed by the Company within
90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the
issuance of Definitive Debentures under this
Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Debentures in an aggregate principal amount equal to the
principal amount of the Global Debentures in exchange for such Global
Debentures.
(f) Legends.
(i) Except as permitted by the following paragraphs
(ii), (iii) and (iv), each Debenture certificate
evidencing a Global Debenture and a Definitive
Debenture (and all
12
<PAGE> 19
Debentures issued in exchange therefor or
substitution thereof) shall bear a legend in
substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, OR IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON
AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted
Security represented by a Global Debenture)
pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement
under the Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Debenture, the
Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security
for a Definitive Debenture that does not
bear the first legend set forth in (i) above
and rescind any restriction on the transfer
of such Transfer Restricted Security upon
certification from the transferring holder
substantially in the form of Exhibit B-2
hereto; and
(B) in the case of any Transfer Restricted
Security represented by a Global Debenture,
such Transfer Restricted Security shall not
be required to bear the first legend set
forth in (i) above, but shall continue to be
subject to the provisions of Section 2.06(a)
and (c) hereof; provided, however, that with
respect to any request for an exchange of a
Transfer Restricted Security that is
represented by a Global Debenture for a
Definitive Debenture that does not bear the
first legend set forth in (i) above, which
request is made in reliance upon Rule 144,
the Holder thereof shall certify in writing
to the Registrar that such request is being
made pursuant to Rule 144 (such
certification to be substantially in the
form of Exhibit B-2 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted
Security represented by a Global Debenture) in
reliance on any exemption from the registration
requirements of the Securities Act (other than
exemptions
13
<PAGE> 20
pursuant to Rule 144 under the Securities Act) in
which the Holder or the transferee provides an
Opinion of Counsel to the Company and the Registrar
in form and substance reasonably acceptable to the
Company and the Registrar (which Opinion of Counsel
shall also state that the transfer restrictions
contained in the legend are no longer applicable):
(A) in the case of any Transfer Restricted
Security that is a Definitive Debenture, the
Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security
for a Definitive Debenture that does not
bear the legend set forth in (i) above and
rescind any restriction on the transfer of
such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a Global Debenture,
such Transfer Restricted Security shall not
be required to bear the legend set forth in
(i) above, but shall continue to be subject
to the provisions of Section 2.06(a) and (c)
hereof.
(g) Cancellation and/or Adjustment of Global Debentures. At
such time as all beneficial interests in Global Debentures have been exchanged
for Definitive Debentures, redeemed, repurchased or cancelled, all Global
Debentures shall be returned to or retained and cancelled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation,
if any beneficial interest in a Global Debenture is exchanged for Definitive
Debentures, redeemed, repurchased or cancelled, the principal amount of
Debentures represented by such Global Debenture shall be reduced accordingly
and an endorsement shall be made on such Global Debenture, by the Trustee or
the Debentures Custodian, at the direction of the Trustee, to reflect such
reduction.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
subject to this Section 2.06 the Company shall
execute and the Trustee shall authenticate
Definitive Debentures and Global Debentures at the
Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the
Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental
charge payable in connection therewith (other than
any such transfer taxes or similar governmental
charge payable upon exchange or transfer pursuant
to Sections 3.07, 4.08 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Debenture selected for
redemption in whole or in part, except the
unredeemed portion of any Debenture being redeemed
in part.
(iv) All Definitive Debentures and Global Debentures
issued upon any registration of transfer or
exchange of Definitive Debentures or Global
Debentures shall be the valid obligations of the
Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the
Definitive Debentures or Global Debentures
surrendered upon such registration of transfer or
exchange.
14
<PAGE> 21
(v) The Company shall not be required:
(A) to issue, to register the transfer of or to
exchange Debentures during a period
beginning at the opening of business 15 days
before the day of any selection of
Debentures for redemption under Section 3.02
hereof and ending at the close of business
on the day of selection;
(B) to register the transfer of or to exchange
any Debenture so selected for redemption in
whole or in part, except the unredeemed
portion of any Debenture being redeemed in
part;
(C) to register the transfer of or to exchange a
Debenture between a record date and the next
succeeding interest payment date; or
(D) to register the transfer of a Debenture
other than in amounts of $1,000 or multiple
integrals thereof.
(vi) Prior to due presentment for the registration of a
transfer of any Debenture, the Trustee, any Agent
and the Company may deem and treat the Person in
whose name any Debenture is registered as the
absolute owner of such Debenture for the purpose of
receiving payment of principal of and interest on
such Debentures, and neither the Trustee, any Agent
nor the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Definitive Debentures
and Global Debentures in accordance with the
provisions of Section 2.02 hereof.
SECTION 2.07. REPLACEMENT DEBENTURES.
If any mutilated Debenture is surrendered to the Trustee or the
Company or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Debenture, the Company shall issue and the
Trustee, upon the written order of the Company signed by two Officers of the
Company, shall authenticate a replacement Debenture if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Debenture
is replaced. The Company may charge for its expenses in replacing a Debenture.
Every replacement Debenture is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Debentures duly issued hereunder.
SECTION 2.08. OUTSTANDING DEBENTURES.
The Debentures outstanding at any time are all the Debentures
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Debenture
effected by the Trustee in accordance with the provisions hereof, and those
described
15
<PAGE> 22
in this Section as not outstanding. Except as set forth in Section 2.09
hereof, a Debenture does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Debenture.
If a Debenture is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Debenture is held by a bona fide purchaser.
If the entire principal of and premium, interest and Liquidated
Damages, if any, on any Debenture is considered paid under Section 4.01 hereof,
it ceases to be outstanding and interest and Liquidated Damages on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary of the
Company or an Affiliate) holds, on a redemption date or maturity date, money
sufficient to pay Debentures payable on that date, then on and after that date
such Debentures shall be deemed to be no longer outstanding and shall cease to
accrue interest and Liquidated Damages.
SECTION 2.09. TREASURY DEBENTURES.
In determining whether the Holders of the required principal
amount of Debentures have concurred in any direction, waiver or consent,
Debentures owned by the Company, a Subsidiary of the Company or an Affiliate,
shall be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Debentures that a Trustee knows are so owned
shall be so disregarded. Notwithstanding the foregoing, Debentures that the
Company, a Subsidiary of the Company or an Affiliate offers to purchase or
acquires pursuant to an offer, exchange offer, tender offer or otherwise shall
not be deemed to be owned by the Company, a Subsidiary of the Company or an
Affiliate until legal title to such Debentures passes to the Company, such
Subsidiary or such Affiliate as the case may be.
SECTION 2.10. TEMPORARY DEBENTURES.
Until definitive Debentures are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Debentures upon a
written order of the Company signed by two Officers of the Company. Temporary
Debentures shall be substantially in the form of definitive Debentures but may
have variations that the Company considers appropriate for temporary Debentures
and as shall be reasonably acceptable to the Trustee. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Debentures in exchange for temporary Debentures. Until such exchange, Holders
of temporary Debentures shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Debentures to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Debentures surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel all Debentures surrendered
for registration of transfer, exchange, payment, replacement or cancellation
and shall destroy cancelled Debentures (subject to the record retention
requirement of the Exchange Act). Certification of the destruction of all
cancelled Debentures shall be delivered to the Company. The Company may not
issue new Debentures to replace Debentures that it has paid or that have been
delivered to the Trustee for cancellation.
16
<PAGE> 23
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the
Debentures, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, in each case at the rate
provided in the Debentures and in Section 4.01 hereof. The Company shall
notify the Trustee in writing of the amount of defaulted interest proposed to
be paid on each Debenture and the date of the proposed payment. The Company
shall fix or cause to be fixed each such special record date and payment date,
provided that no such special record date shall be less than 10 days prior to
the related payment date for such defaulted interest. At least 15 days before
the special record date, the Company (or, upon the written request of the
Company, the Trustee in the name and at the expense of the Company) shall mail
or cause to be mailed to Holders a notice that states the special record date,
the related payment date and the amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Debentures pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date,
an Officers' Certificate setting forth (i) the clause of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Debentures to be redeemed and (iv) the redemption
price.
SECTION 3.02. SELECTION OF DEBENTURES TO BE REDEEMED.
If less than all of the Debentures are to be redeemed at any
time, the Trustee shall select the Debentures to be redeemed among the Holders
of the Debentures in compliance with the requirements of the principal national
securities exchange, if any, on which the Debentures are listed or, if the
Debentures are not so listed, on a pro rata basis, by lot or in accordance with
any other method the Trustee considers fair and appropriate. In the event of
partial redemption by lot, the particular Debentures to be redeemed shall be
selected, unless otherwise provided herein, not less than 30 nor more than 60
days prior to the redemption date by the Trustee from the outstanding
Debentures not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the
Debentures selected for redemption and, in the case of any Debenture selected
for partial redemption, the principal amount thereof to be redeemed.
Debentures and portions of Debentures selected shall be in amounts of $1,000 or
whole multiples of $1,000. Provisions of this Indenture that apply to
Debentures called for redemption also apply to portions of Debentures called
for redemption.
17
<PAGE> 24
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail or cause to be mailed, by first class mail, a
notice of redemption to each Holder whose Debentures are to be redeemed at its
registered address.
The notice shall identify the Debentures to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Debenture is being redeemed in part, the portion of
the principal amount of such Debenture to be redeemed and that, after
the redemption date upon surrender of such Debenture, a new Debenture or
Debentures in a principal amount equal to the unredeemed portion shall
be issued upon cancellation of the original Debenture;
(d) the name and address of the Paying Agent;
(e) that Debentures called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Debentures called for redemption ceases
to accrue on and after the redemption date;
(g) the paragraph of the Debentures and/or Section of this
Indenture pursuant to which the Debentures called for redemption are
being redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Debentures.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that
the Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Debentures called for redemption become irrevocably due and
payable on the redemption date at the redemption price. A notice of redemption
may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Paying Agent money sufficient to pay the redemption price of
and accrued interest and Liquidated Damages on all Debentures to be redeemed on
that date. The Paying Agent shall promptly return to the Company any
18
<PAGE> 25
money deposited with the Paying Agent by the Company in excess of the amounts
necessary to pay the redemption price of and accrued interest and Liquidated
Damages on all Debentures to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest and Liquidated Damages
shall cease to accrue on the Debentures or the portions of Debentures called
for redemption. If a Debenture is redeemed on or after an interest record date
but on or prior to the related interest payment date, then any accrued and
unpaid interest and Liquidated Damages shall be paid to the Person in whose
name such Debenture was registered at the close of business on such record
date. If any Debenture called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest and Liquidated Damages not paid on such unpaid principal, in each
case at the rate provided in the Debentures and in Section 4.01 hereof.
SECTION 3.06. DEBENTURES REDEEMED IN PART.
Upon surrender of a Debenture that is redeemed in part, the
Company shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Debenture equal
in principal amount to the unredeemed portion of the Debenture surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) The Company shall have the option to redeem the Debentures
pursuant to this Section 3.07 on or after May 3, 2000. The Company shall have
the option to redeem the Debentures, in whole or from time to time in part, at
the redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest and Liquidated Damages thereon, to the
applicable redemption date, if redeemed during the twelve-month period
beginning on May 3 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000 ............................ 104.86%
2001 ............................ 103.64%
2002 ............................ 102.43%
2003 ............................ 101.21%
2004 and thereafter ............. 100.000%
</TABLE>
(b) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Section 4.08 hereof, the Company shall
not be required to make mandatory redemption payments with respect to the
Debentures.
19
<PAGE> 26
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF DEBENTURES.
The Company shall pay or cause to be paid the principal of and
premium, interest and Liquidated Damages on the Debentures on the dates and in
the manner provided in the Debentures. Principal, premium, interest and
Liquidated Damages shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00
a.m. New York time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, interest and Liquidated Damages then due.
The Company shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue principal at the rate
equal to the interest rate on the Debentures to the extent lawful; it shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Liquidated Damages
(without regard to any applicable grace period) at the same rate to the extent
lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain an office or agency (which may be an
office of the Trustee or an affiliate of the Trustee, Registrar or
co-registrar) where Debentures may be surrendered for registration of transfer
or for exchange and where notices and demands to or upon the Company in respect
of the Debentures and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Debentures may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency for such purposes. The Company shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not the Company is required to do so by the rules
and regulations of the SEC, the Company will file with the SEC (unless the SEC
will not accept such a filing) and, within 15 days of filing, or attempting to
file, the same with the SEC, furnish to the holders of the Debentures (i) all
quarterly and annual financial and other information with respect to the
Company that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K if the Company were required to file such forms, including
a "Management's Discussion and Analysis of Financial Condition and Results of
20
<PAGE> 27
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants, and (ii) all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports. The Company shall at all times
comply with TIA Section 314(a).
(b) The Company shall furnish to the holders of the Debentures,
prospective purchasers of the Debentures and securities analysts, upon their
request, the information, if any, required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Significant Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in
the performance or observance of any of the terms, provisions and conditions of
this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Company is taking or proposes to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Debentures is prohibited or if such
event has occurred, a description of the event and what action the Company is
taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article 4 or Article 5 hereof
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation.
(c) The Company shall, so long as any of the Debentures are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries
to pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings or where the failure to effect such payment is not adverse in any
material respect to the Holders of the Debentures.
21
<PAGE> 28
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted. SECTION 4.07. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence, and the corporate, partnership or other existence of each
of its Significant Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Significant Subsidiary provided, however, that the Company
shall not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Significant
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Significant Subsidiaries, taken as a whole.
SECTION 4.08. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Subject to subparagraph (c) below, upon the occurrence of a
Change of Control, the Company shall make an offer (a "Change of Control
Offer") to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of each Holder's Debentures at an offer price in cash equal to 100% of
the aggregate principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of repurchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder stating: (i) that the Change of Control
Offer is being made pursuant to this Section 4.08 and that all Debentures
validly tendered and not withdrawn will be accepted for payment; (ii) the
purchase price and the purchase date, which shall be no earlier than 30 days
but no later than 60 days from the date such notice is mailed (the "Change of
Control Payment Date"); (iii) that any Debenture not tendered will continue to
accrue interest; (iv) that, unless the Company defaults in the payment of the
Change of Control Payment, all Debentures accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date; (v) that Holders electing to have any Debentures
purchased pursuant to a Change of Control Offer will be required to surrender
the Debentures, properly endorsed for transfer together with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Debentures completed
and such customary documents as the Company may reasonably request, to the
Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date; (vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Debentures delivered for purchase, and a statement that
such Holder is withdrawing his election to have the Debentures purchased; and
(vii) that Holders whose Debentures are being purchased only in part will be
issued new Debentures equal in principal amount to the unpurchased portion of
the Debentures surrendered, which unpurchased portion must be
22
<PAGE> 29
equal to $1,000 in principal amount or an integral multiple thereof. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of
Debentures as a result of a Change of Control.
(b) On or before the Change of Control Payment Date, the Company
shall, to the extent lawful, (i) accept for payment all Debentures or portions
thereof properly tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Debentures or portions thereof so tendered and (iii) deliver or
cause to be delivered to the Trustee the Debentures so accepted together with
an Officers' Certificate stating the aggregate principal amount of Debentures
or portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to each holder of Debentures so tendered the Change of Control
Payment for such Debentures, and the Trustee shall promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Debenture
equal in principal amount to any unpurchased portion of the Debentures
surrendered, if any; provided, that each such new Debenture will be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) Notwithstanding the foregoing, prior to complying with the
provisions of this Section 4.08, but in any event within 90 days following a
Change of Control, the Company shall either repay all outstanding Senior Debt
or obtain the requisite consents, if any, under all agreements governing
outstanding Senior Debt to permit the repurchase of the Debentures required by
this Section 4.08.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into (whether
or not the Company is the surviving corporation), 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
corporation, Person or entity unless (a) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia, (b) the entity or Person
formed by or surviving any such consolidation or merger (if other than the
Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Debentures and this Indenture pursuant to
a supplemental indenture in a form reasonably satisfactory to the Trustee and
(c) immediately after such transaction no Default or Event of Default exists.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged
23
<PAGE> 30
or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein
when a successor corporation assumes all of the obligations of the Company
hereunder and under the Debentures and agrees to be abound hereby and thereby,
the predecessor Company shall be relieved from such obligations.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of
interest on, or Liquidated Damages with respect to, the
Debentures, and such default continues for a period of 30 days;
(b) the Company defaults in the payment when due of
principal of or premium, if any, on the Debentures when the same
becomes due and payable at maturity, upon redemption (including
in connection with an offer to purchase) or otherwise;
(c) the Company fails to comply with any of the provisions
of Section 4.08 hereof;
(d) the Company fails to observe or perform any other
covenant, representation, warranty or other agreement in this
Indenture or the Debentures for 60 days after notice to the
Company by the Trustee or the Holders of at least 25% in
principal amount of the Debentures then outstanding of such
failure;
(e) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness for money borrowed by
the Company (or the payment of which is guaranteed by the
Company), whether such Indebtedness or guarantee now exists, or
is created after the date of this Indenture, which default (i) is
caused by a failure to pay principal of or premium or interest on
such Indebtedness prior to the expiration of any grace period
provided in such Indebtedness (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment
Default the maturity of which has been so accelerated, aggregates
$10.0 million or more;
(f) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against the Company and such judgment or judgments are not paid
or discharged for a period (during which execution shall not be
effectively stayed) of 60 days, provided that the aggregate of
all such undischarged judgments exceeds $10.0 million;
24
<PAGE> 31
(g) the Company pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian of
it or for all or substantially all of its property,
(iv) makes a general assignment for the benefit
of its creditors, or
(v) generally is not paying its debts as they
become due; or
(h) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company in an
involuntary case;
(ii) appoints a custodian of the Company for all
or substantially all of the property of the Company; or
(iii) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 60
consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding
Debentures may declare all the Debentures to be due and payable immediately.
Upon any such declaration, the Debentures shall become due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified
in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company,
any of its Significant Subsidiaries, all outstanding Debentures shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the then outstanding Debentures by
written notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest, premium or Liquidated Damages that has become due solely
because of the acceleration) have been cured or waived.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of and premium,
interest and Liquidated Damages on the Debentures or to enforce the performance
of any provision of the Debentures or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Debentures or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of
25
<PAGE> 32
a Debenture in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. All remedies are cumulative to the extent permitted
by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of a majority in aggregate principal amount of the then
outstanding Debentures by notice to the Trustee may on behalf of the Holders of
all of the Debentures waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of or premium, interest or Liquidated Damages on the
Debentures (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Debentures may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration) in
accordance with Section 6.02 hereof. Upon any such waiver, such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Debentures may direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Debentures or that may
involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Debenture may pursue a remedy with respect to this
Indenture or the Debentures only if:
(a) the Holder of a Debenture gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Debentures make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Debenture or Holders of Debentures offer
and, if requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Debentures do not give the
Trustee a direction inconsistent with the request.
A Holder of a Debenture may not use this Indenture to prejudice the rights of
another Holder of a Debenture or to obtain a preference or priority over
another Holder of a Debenture.
26
<PAGE> 33
SECTION 6.07. RIGHTS OF HOLDERS OF DEBENTURES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right
of any Holder of a Debenture to receive payment of principal of and premium,
interest and Liquidated Damages, if any, on the Debenture, on or after the
respective due dates expressed in the Debenture (including in connection with
an offer to purchase), or to bring suit for the enforcement of any such payment
on or after such respective dates, shall not be impaired or affected without
the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own
name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, interest and Liquidated Damages, if any,
remaining unpaid on the Debentures and interest on overdue principal and, to
the extent lawful, interest and Liquidated Damages and such further amount as
shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Debentures allowed in any judicial proceedings relative
to the Company (or any other obligor upon the Debentures), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof. To the extent that
the payment of any such compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 7.07 hereof out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Debentures or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it
shall pay out the money in the following order:
27
<PAGE> 34
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the Trustee's
costs and expenses of collection;
Second: to Holders of Debentures for amounts due and unpaid on
the Debentures for principal, premium, interest and Liquidated Damages, if any,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Debentures for principal, premium, interest and
Liquidated Damages, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Debentures pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Debenture pursuant to Section 6.07 hereof, or a suit by Holders of more than
10% in principal amount of the then outstanding Debentures.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by
the express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture and
no others, and no implied covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee
28
<PAGE> 35
shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject
to paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
29
<PAGE> 36
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Debentures and may otherwise deal with the Company or
any Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Debentures, it shall not be accountable for the Company's use of the proceeds
from the Debentures or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, it shall not be responsible
for the use or application of any money received by any Paying Agent other than
the Trustee, and it shall not be responsible for any statement or recital
herein or any statement in the Debentures or any other document in connection
with the sale of the Debentures or pursuant to this Indenture other than its
certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to Holders of Debentures a
notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Debenture, the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of
the Debentures.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE DEBENTURES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Debentures remain
outstanding, the Trustee shall mail to the Holders of the Debentures a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted).
The Trustee also shall comply with TIA Section 313(b)(2) to the extent
applicable. The Trustee shall also transmit by mail all reports as required by
TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders
of Debentures shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Debentures are listed in
30
<PAGE> 37
accordance with TIA Section 313(d). The Company shall promptly notify the
Trustee when the Debentures are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred
or made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the
Company (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence, bad faith or willful misconduct. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Debentures on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Debentures. Such Lien shall survive the satisfaction
and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged
from the trust hereby created by so notifying the Company. The Holders of
Debentures of a majority in principal amount of the then outstanding Debentures
may remove the Trustee by so notifying the Trustee and the Company in writing.
The Company may remove the Trustee if:
31
<PAGE> 38
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding
Debentures may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company,
or the Holders of Debentures of at least 10% in principal amount of the then
outstanding Debentures may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a
Debenture who has been a Holder of a Debenture for at least six months, fails
to comply with Section 7.10 hereof, such Holder of a Debenture may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Debentures. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has (or part of a bank holding company
that has) a combined capital and surplus of at least $100 million as set forth
in its most recent published annual report of condition.
32
<PAGE> 39
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
exercise its rights under either Section 8.02 or 8.03 hereof with respect to
all outstanding Debentures upon compliance with the conditions set forth below
in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have discharged its obligations with respect to all outstanding Debentures on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Debentures (which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below) and to have
satisfied all its other obligations under such Debentures and this Indenture
(and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging the same), except for the following provisions
which shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of outstanding Debentures to receive solely from the trust
fund described in Section 8.04 hereof, and as more fully set forth in such
Section, payments in respect of the principal of and premium, if any, interest
and Liquidated Damages on such Debentures when such payments are due, (b) the
Company's obligations with respect to such Debentures under Sections 2.03,
2.04, 2.07, 2.10 and 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8,
the Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Article 4 (other than
those in Sections 4.01, 4.02, 4.06 and 4.07) and Section 5.01 hereof with
respect to the outstanding Debentures on and after the
33
<PAGE> 40
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Debentures shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with the covenant,
but shall continue to be deemed "outstanding" for all other purposes hereunder
(it being understood that such Debentures shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Debentures, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in the covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to the covenant or by reason of any reference in the
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Debentures shall be unaffected thereby. In addition, upon
the Company's exercise under Section 8.01 hereof of the option applicable to
this Section 8.03 hereof, subject to the satisfaction of the conditions set
forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(f) hereof shall not
constitute an Event of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders, cash in United States
dollars, non-callable Government Securities, or a combination
thereof, in such amounts as will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants,
to pay the principal of and premium, interest and Liquidated
Damages, if any, on the outstanding Debentures on the stated
maturity thereof or on the applicable redemption date, as the
case may be, and the Company must specify whether the Debentures
are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof,
the Company shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B)
since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm
that, the Holders of the outstanding Debentures will not
recognize income, gain or loss for federal income tax purposes as
a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 8.03 hereof,
the Company shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Debentures will
not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default
or Event of Default resulting from the incurrence of
34
<PAGE> 41
Indebtedness, all or a portion of the proceeds of which will be
used to defease the Debentures pursuant to this Article 8
concurrently with such incurrence);
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under, any material agreement or instrument (other than this
Indenture) to which the Company is a party or by which the
Company is bound;
(f) the Company shall have delivered to the Trustee an
Opinion of Counsel (which maybe based on such solvency
certificates or solvency opinions as counsel deems necessary or
appropriate) to the effect that the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders over any
other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or
others; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance have been complied
with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Debentures shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Debentures and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Debentures of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the Holders of the
outstanding Debentures.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
35
<PAGE> 42
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Debenture and remaining unclaimed for two years after
such principal, and premium, if any, or interest has become due and payable
shall be paid to the Company on its request or (if then held by the Company)
shall be discharged from such trust; and the Holder of such Debenture shall
thereafter, as a secured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Debentures shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.02 or 8.03 hereof, as the case may be; provided, however, that,
if the Company makes any payment of principal of, premium, if any, or interest
on any Debenture following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Debentures to receive
such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF DEBENTURES.
Notwithstanding Section 9.02 of this Indenture, the Company and
the Trustee may amend or supplement this Indenture or the Debentures without
the consent of any Holder of a Debenture:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Debentures in addition to or
in place of certificated Debentures;
(c) to provide for the assumption of the Company's obligations
to the Holders of the Debentures in the case of a merger or
consolidation pursuant to Article 5 hereof;
36
<PAGE> 43
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Debentures or that does not
adversely affect the legal rights hereunder of any Holder of the
Debenture; or
(e) to comply with requirements of the SEC in order to effect
or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company in
the execution of any amended or supplemental indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF DEBENTURES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture and the Debentures may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the Debentures then outstanding (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for the Debentures), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or compliance with any provision of this Indenture
or the Debentures may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Debentures (including consents
obtained in connection with a tender offer or exchange offer for the
Debentures).
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Debentures as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental indenture unless such amended or supplemental
indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of
Debentures under this Section 9.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Debentures affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the Debentures then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Debentures. However, without the
consent of each
37
<PAGE> 44
Holder affected, an amendment or waiver may not (with respect to any Debentures
held by a non-consenting Holder):
(a) reduce the principal amount of Debentures whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity
of any Debenture or alter any of the provisions with respect to
the redemption of the Debentures (except as provided in Section
4.08 hereof);
(c) reduce the rate of or change the time for payment of
interest on any Debenture;
(d) waive a Default or Event of Default in the payment of
principal of or premium, interest or Liquidated Damages, if any,
on the Debentures (except a rescission of acceleration of the
Debentures by the Holders of at least a majority in aggregate
principal amount of the Debentures and a waiver of the payment
default that resulted from such acceleration);
(e) make any Debenture payable in money other than that
stated in the Debentures;
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of
Debentures to receive payments of principal of or premium,
interest or Liquidated Damages on the Debentures (except as
provided in clause (g) below);
(g) waive a redemption payment with respect to any
Debenture (other than a payment required by Section 4.08 hereof);
or
(h) make any change in the foregoing amendment and waiver
provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Debentures
shall be set forth in a amended or supplemental Indenture that complies with
the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Debenture is a continuing consent by the Holder
of a Debenture and every subsequent Holder of a Debenture or portion of a
Debenture that evidences the same debt as the consenting Holder's Debenture,
even if notation of the consent is not made on any Debenture. However, any
such Holder of a Debenture or subsequent Holder of a Debenture may revoke the
consent as to its Debenture if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
38
<PAGE> 45
SECTION 9.05. NOTATION ON OR EXCHANGE OF DEBENTURES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Debenture thereafter authenticated. The Company in
exchange for all Debentures may issue and the Trustee shall authenticate new
Debentures that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Debenture
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officer's Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
SECTION 9.07. AMENDMENTS PRIOR TO ISSUANCE OF DEBENTURES.
Notwithstanding anything in this Article 9 to the contrary, prior to the
issuance of any Debentures under this Indenture, the Company and the Trustee
may amend or supplement this Indenture and the Debentures with the consent of
the holders of the Preferred Stock to the same extent as the consent of the
Holders of the Debentures would have been required (if at all) if the
Debentures had been issued.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Debenture agrees,
that the Indebtedness evidenced by the Debenture is subordinated in right of
payment, to the extent and in the manner provided in this Article 10, to the
prior payment in full of all Senior Debt (whether outstanding on the date
hereof or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(a) holders of Senior Debt shall be entitled to receive payment in
full of all Obligations due in respect of such Senior Debt (including interest
after the commencement of any such proceeding at the rate
39
<PAGE> 46
specified in the applicable Senior Debt) before Holders shall be entitled to
receive any payment with respect to the Debentures; and
(b) until all Obligations with respect to Senior Debt are paid in
full, any distribution to which Holders would be entitled but for this Article
10 shall be made to holders of Senior Debt (except that Holders may receive
securities, including capital stock, that are subordinated at least to the same
extent as the Debentures to Senior Debt and any securities issued in exchange
for Senior Debt).
SECTION 10.03. DEFAULT ON SENIOR DEBT.
(a) The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Obligations with respect to the Debentures
and may not acquire from the Trustee or any Holder any Debentures for cash or
property (other than securities, including capital stock, that are subordinated
at least to the same extent as the Debentures to Senior Debt and any securities
issued in exchange for Senior Debt) until all principal and other Obligations
with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal or other Obligations
with respect to any Senior Debt occurs and is continuing beyond
any applicable grace period in the agreement, indenture or other
document governing such Senior Debt; or
(ii) a default, other than a payment default, on Senior Debt occurs
and is continuing that then permits holders of the Senior Debt to
accelerate its maturity and the Trustee receives a notice of the
default (a "Payment Blockage Notice") from a Person who may give
it pursuant to Section 10.12 hereof. If the Trustee receives any
such Payment Blockage Notice, no subsequent Payment Blockage
Notice shall be effective for purposes of this Section unless and
until at least 360 days shall have elapsed since the date of
receipt by the Trustee of the immediately prior Payment Blockage
Notice. No nonpayment default that existed or was continuing on
the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment
Blockage Notice (it being understood that any subsequent action,
or any breach of any covenant for a period commencing after the
date of receipt by the Trustee of such Payment Blockage Notice,
that, in either case, would give rise to such a default pursuant
to any provision under which a default previously existed or was
continuing shall constitute a new default for this purpose).
(b) The Company may and shall resume payments on and distributions in
respect of the Debentures and may acquire them upon the earlier of: (i) in the
case of a default referred to in Section 10.03(a)(i) hereof, the date upon
which the default is cured or waived, or (ii) in the case of a default referred
to in Section 10.03(a)(ii) hereof, the earlier of (1) the date on which such
default is cured or waived or (2) 179 days after the applicable Payment
Blockage Notice is received by the Company if the maturity of such Senior Debt
has not been accelerated (or, if such Senior Debt has been accelerated, such
Senior Debt has not been paid in full) and if this Article 10 otherwise permits
the payment, distribution or acquisition at the time of such payment or
acquisition.
SECTION 10.04. ACCELERATION OF DEBENTURES.
If payment of the Debentures is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration.
40
<PAGE> 47
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
(a) In the event that the Trustee or any Holder receives any payment
of any Obligations with respect to the Debentures at a time when the Trustee or
such Holder, as applicable, has actual knowledge that such payment is
prohibited by Section 10.03 hereof, such payment shall be held by the Trustee
or such Holder in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their representative (the "Representative") under the
indenture or other agreement (if any) pursuant to which Senior Debt may have
been issued, as their respective interests may appear, for application to the
payment of all Obligations with respect to Senior Debt remaining unpaid to the
extent necessary to pay such Obligations in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
(b) With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt, and shall not be liable to any
such holders if the Trustee shall pay over or distribute to or on behalf of
Holders or the Company or any other Person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of
the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any Obligations
with respect to the Debentures to violate this Article 10, but failure to give
such notice shall not affect the subordination of the Debentures to the Senior
Debt as provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Debt is paid in full and until the Debentures are paid
in full, Holders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Debentures) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article 10 to holders of Senior
Debt that otherwise would have been made to Holders is not, as between the
Company and Holders, a payment by the Company on the Debentures.
SECTION 10.08. RELATIVE RIGHTS.
(a) This Article 10 defines the relative rights of Holders and
holders of Senior Debt. Nothing in this Indenture shall: (i) impair, as
between the Company and Holders, the obligation of the Company, which is
absolute and unconditional, to pay principal of and interest on the Debt in
accordance with their terms; (ii) affect the relative rights of Holders and
creditors of the Company other than their rights in relation to holders of
Senior Debt; or (iii) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders.
41
<PAGE> 48
(b) If the Company fails because of this Article 10 to pay principal
of or interest on a Debenture on the due date, the failure is still a Default
or Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Debentures shall be impaired by any act or
failure to act by the Company or any Holder or by the failure of the Company or
any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Debentures, unless the Trustee shall have received at
its Corporate Trust Office at least five Business Days prior to the date of
such payment written notice of facts that would cause the payment of any
Obligations with respect to the Debentures to violate this Article 10. Only
the Company or a Representative may give the notice. Nothing in this Article
10 shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Debenture by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 6.09 hereof at least 30 days before the expiration of the time to file
such claim, the Holders are hereby authorized to file an appropriate claim.
42
<PAGE> 49
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt (in accordance
with the provisions thereof).
ARTICLE 11
CONVERSION OF DEBENTURES
SECTION 11.01. RIGHT TO CONVERT.
Subject to and upon compliance with the provisions of this
Indenture, the Holder of any Debenture shall have the right, at the option of
such Holder, at any time prior to the close of business on May 3, 2009 (except
that, with respect to any Debenture or portion of a Debenture that shall be
called for redemption or delivered for repurchase, such right shall terminate
immediately prior to close of business on the date fixed for redemption of such
Debenture or portion of such Debenture unless the Company shall default in
payment due upon redemption thereof) to convert the principal amount of any
such Debenture, or any portion thereof, into that number of fully paid and
nonassessable shares of Common Stock (as such shares shall then be constituted)
obtained by dividing the aggregate principal amount of the Debentures or
portion thereof surrendered for conversion by the Conversion Price in effect at
such time, by surrender of the Debenture so to be converted in whole or in part
in the manner provided in Section 11.02 hereof. Immediately following such
conversion, the rights of the Holders of converted Debentures shall cease and
the Persons entitled to receive the Common Stock upon the conversion of
Debentures shall be treated for all purposes as having become the owners of
such Common Stock.
SECTION 11.02. EXERCISE OF CONVERSION PRIVILEGE; ISSUANCE OF COMMON STOCK
ON CONVERSION; NO ADJUSTMENT FOR INTEREST OR DIVIDENDS.
In order to exercise the conversion privilege with respect to any
Debenture in definitive form, a Holder must (a) surrender such Debenture to be
converted, duly endorsed and in a form satisfactory to the Company, at an
office or agency maintained by the Company pursuant to Section 4.02 hereof,
accompanied by the funds, if any, required by the last paragraph of this
Section 11.02, (b) notify the Company at such office that he elects to convert
such Debenture or a portion thereof, specifying the principal amount he wishes
to convert, (c) state in writing the name or names (with address) in which he
wishes the certificate or certificates for shares of Common Stock to be issued
and (d) pay any transfer taxes, if required pursuant to Section 11.07 hereof.
The date on which the Holder satisfies all those requirements is the
"Conversion Date." Each such Debenture surrendered for conversion shall,
unless the shares issuable on conversion are to be issued in the name of the
Holder of such Debenture as it appears on the Debenture register, be
accompanied by instruments of transfer in form satisfactory to the Company duly
executed by the Holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a Global Debenture, the beneficial Holder must complete the
appropriate instruction form for conversion pursuant to the Depositary's book-
entry conversion program and follow the other procedures set forth in such
program.
As promptly as practicable after the Conversion Date, subject to
compliance with any restrictions on transfer if shares issuable on conversion
are to be issued in a name other than that of the Holder (as if such transfer
were a transfer of the Debenture or Debentures (or portion thereof) so
43
<PAGE> 50
converted), the Company shall issue and shall deliver to such Holder at the
office or agency maintained by the Company for such purpose pursuant to Section
4.02 hereof, a certificate or certificates for the number of full shares
issuable upon the conversion of such Debenture or portion thereof in accordance
with the provisions of this Article 11 and a payment in cash in respect of any
fractional interest in respect of a share of Common Stock arising upon such
conversion, as provided in Section 11.03 hereof. In case any Debenture shall
be surrendered for partial conversion, and subject to Section 2.03 hereof, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the Holder of the Debenture so surrendered, without charge to him,
a new Debenture or Debentures in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Debenture.
Each conversion shall be deemed to have been effected as to any
Debenture (or portion thereof) on the Conversion Date, and the Person in whose
name any certificate or certificates for shares of Common Stock shall be
issuable upon such conversion shall be deemed to have become on such date the
Holder of record of the shares represented thereby; provided that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall constitute the Person in whose name the certificates are to be
issued as the record holder thereof for all purposes on the next succeeding day
on which such stock transfer books are open, but such conversion shall be at
the Conversion Price in effect on the date upon which such Debenture shall have
been surrendered.
The Holder of record of a Debenture at the close of business on a
record date with respect to the payment of interest on the Debentures will be
entitled to receive such interest with respect to such Debentures on the
corresponding interest payment date, notwithstanding the conversion of such
Debentures after such record date and prior to such interest payment date.
Debentures surrendered for conversion during the period from the close of
business on any record date for the payment of interest to the opening of
business of the corresponding interest payment date must be accompanied by a
payment in cash in an amount equal to the interest payable on such interest
payment date, unless such Debentures have been called for redemption on a
redemption date occurring during the period from the close of business on any
record date for the payment of interest to the close of business on the
business day immediately following the corresponding interest payment date. The
interest payment with respect to an Debenture called for redemption on a date
during the period from the close of business on any record date for the payment
of interest to the close of business on the business day immediately following
the corresponding interest payment date will be payable on such interest
payment date to the record Holder of such Debenture on such record date,
notwithstanding the conversion of such Debenture after such record date and
prior to such interest payment date. Except as provided in this Section 11.02,
no payment or adjustment will be made upon conversion of Debentures for accrued
and unpaid interest or for dividends with respect to the Common Stock issued
upon such conversion of Debentures as provided in this Article 11.
Upon the conversion of any interest in a Global Debenture, the
Trustee, or the Debenture Custodian at the direction of the Trustee, shall make
a notation on such Global Debenture as to the reduction in the principal amount
represented thereby.
SECTION 11.03. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES.
The Company shall not issue a fractional share of Common Stock
upon conversion of the Debentures. Instead the Company shall pay a cash
adjustment for the current market value of the
44
<PAGE> 51
fractional share. The current market value of a fraction of a share shall be
determined as follows: Multiply the current market price of a full share by
the fraction. Round the result to the nearest cent. The current market price
of a share of Common Stock is the Quoted Price of the Common Stock on the last
Trading Day prior to the Conversion Date.
SECTION 11.04. CONVERSION PRICE.
The "Conversion Price" shall be that amount as determined
pursuant to the Certificate of Designations on the date of exchange of the
Preferred Stock for the Debentures, subject to adjustment as provided in this
Article 11.
SECTION 11.05. ADJUSTMENT OF CONVERSION PRICE.
The Conversion Price shall be adjusted from time to time by the
Company as follows:
(a) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common
Stock, the Conversion Price in effect at the opening of business on the
day following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution shall be reduced
by multiplying such Conversion Price by a fraction the numerator of
which shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination and the
denominator of which shall be the sum of such number of shares and the
total number shares constituting such dividend or other distribution,
such reduction to become effective immediately after the opening of
business on the day following the date fixed for such determination of
the holders entitled to such dividends and distributions. For the
purposes of this Section 11.05(a), the number of shares of Common Stock
at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the
Company.
(b) In case the Company shall issue rights, options or warrants
to all holders of its Common Stock entitling them to subscribe for,
purchase or acquire shares of Common Stock at a price per share less
than the current market price per share of the Common Stock on the date
fixed for the determination of stockholders entitled to receive such
rights, options or warrants, the Conversion Price in effect at the
opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion Price by a
fraction the numerator of which shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription, purchase or acquisition would
purchase at such current market price and the denominator of which shall
be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription, purchase or
acquisition, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination of the holders entitled to such rights, options or
warrants. However, upon the expiration of any right, option or warrant
to purchase Common Stock, the issuance of which resulted in an
adjustment in the Conversion Price pursuant to this Section 11.05(b), if
any such right, option or warrant shall expire and shall not have been
exercised, the
45
<PAGE> 52
Conversion Price shall be recomputed immediately upon such expiration
and effectively immediately upon such expiration shall be increased to
the price it would have been (but reflecting any other adjustments to
the Conversion Price made pursuant to the provisions of Section 11.05
hereof after the issuance of such rights, options or warrants) had the
adjustment of the Conversion Price made upon the issuance of such
rights, options or warrants been made on the basis of offering for
subscription or purchase only that number of shares of Common Stock
actually purchased upon the exercise of such rights, options or
warrants. No further adjustment shall be made upon exercise of any
right, option or warrant if any adjustment shall have been made upon the
issuance of such security. For the purposes of this Section 11.05(b),
the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company. The Company shall
not issue any rights, options or warrants in respect of shares of Common
Stock held in the treasury of the Company.
(c) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall be
reduced, and, conversely, in case the outstanding shares of Common Stock
shall each be combined into a smaller number of shares of Common Stock,
the Conversion Price in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
increased to equal the product of the Conversion Price in effect on such
date and a fraction the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such subdivision or
combination, as the case may be, and the denominator of which shall be
the number of shares of Common Stock outstanding immediately after such
subdivision or combination, as the case may be. Such reduction or
increase, as the case may be, shall become effective immediately after
the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock (i) evidences of its
indebtedness or (ii) shares of any class of capital stock, cash or other
assets (including securities, but excluding (1) any rights, options or
warrants referred to in Section 11.05(b) hereof, (2) any dividend or
distribution referred to in Section 11.05(a) hereof, and (3) cash
dividends paid from the Company's retained earnings unless the sum of
(A) all such cash dividends and distributions made within the preceding
12 months in respect of which no adjustment has been made and (B) any
cash and the fair market value of other consideration paid in respect of
any repurchases of Common Stock by the Company or any of its
subsidiaries within the preceding 12 months in respect of which no
adjustment has been made, exceeds 20% of the Company's market
capitalization (being the product of the then current market price per
share of the Common Stock times the aggregate number of shares of Common
Stock then outstanding) on the record date for such distribution), then
in each case, the Conversion Price in effect at the opening of business
on the day following the date fixed for the determination of holders of
Common Stock entitled to receive such distribution shall be adjusted by
multiplying such Conversion Price by a fraction of which the numerator
shall be the current market price per share of the Common Stock on such
date of determination (or, if earlier, on the date on which the Common
Stock goes "ex-dividend" in respect of such distribution) less the then
fair market value as determined by the Board of Directors (whose
determination shall be conclusive and shall be described in a statement
filed with any Conversion Agent) of the portion of the capital stock,
cash or other assets or evidences of indebtedness so distributed (and
for which an adjustment to the Conversion Price has not previously
46
<PAGE> 53
been made pursuant to the terms of this Section 11.05) applicable to one
share of Common Stock, and the denominator shall be such current market
price per share of the Common Stock, such adjustment to become effective
immediately after the opening of business on the day following such date
of determination of the holders entitled to such distribution. The
following transactions shall be excluded from the foregoing clauses (A)
and (B): (x) repurchases of Common Stock issued under the Company's
stock incentive programs; (y) dividends or distributions payable-in-kind
in additional shares of, or warrants, rights, calls or options
exercisable for or convertible into additional shares of, Junior
Securities; and (z) the redemption of shares of capital stock pursuant
to the Company's Shareholder Rights Plan.
(e) The reclassification or change of Common Stock into
securities including securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which Section 11.06
shall apply) shall be deemed to involve (i) a distribution of such
securities other than Common Stock to all holders of Common Stock (and
the effective date of such reclassification shall be deemed to be "the
date fixed for the determination of holders of Common Stock entitled to
receive such distribution" within the meaning of Section 11.05(d)
hereof), and (ii) a subdivision or combination, as the case may be, of
the number of shares of Common Stock outstanding immediately prior to
such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" or "the day upon which such combination
becomes effective," as the case may be, and "the day upon which such
subdivision or combination becomes effective" within the meaning of
Section 11.05(c) hereof).
(f) The Company from time to time may reduce the Conversion
Price if it considers such reductions to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock
rights will not be taxable to the holders of Common Stock by any amount,
but in no event may the Conversion Price be less than the par value of a
share of Common Stock. Whenever the Conversion Price is reduced, the
Company shall mail to Holders of record of Debentures a notice of the
reduction. The Company shall mail the notice at least 15 days before
the date the reduced Conversion Price takes effect. The notice shall
state the reduced Conversion Price and the period it will be in effect.
A reduction of the Conversion Price does not change or adjust the
Conversion Price otherwise in effect for purposes of Sections 11.05(a),
(b), (c), (d) and (e) hereof.
(g) No adjustment in the Conversion Price need be made until all
cumulative adjustments amount to at least 1% in the Conversion Price, as
last adjusted; provided that any adjustments that by reason of this
Section 11.05(g) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations
under this Article 11 shall be made by the Company and shall be made to
the nearest cent.
(h) For the purpose of any computation under Section 11.05, the
current market price per share of Common Stock on any day shall be
deemed to be the average of the Closing Prices of the Common Stock for
the 20 consecutive Trading Days selected by the Board of Directors
commencing no more than 30 Trading Days before and ending no later than
the day before the day in question; provided that, in the case of
Section 11.05(d) hereof, if the period between the date of the public
announcement of the dividend or distribution and the date for the
determination of holders of Common Stock entitled to receive such
dividend or distribution (or, if earlier, the date on which the
47
<PAGE> 54
Common Stock goes "ex-dividend" in respect of such dividend or
distribution) shall be less than 20 Trading Days, the period shall be
such lesser number of Trading Days but, in any event, not less than five
Trading Days.
(i) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock. No
adjustment in the Conversion Price need be made under Section 11.05(a),
(b) or (d) hereof if the Company issues or distributes to each Holder of
Debentures the shares of Common Stock, evidences of indebtedness,
assets, rights, options or warrants referred to in those paragraphs
which each Holder would have been entitled to receive had Debentures
been converted into Common Stock prior to the happening of such event or
the record date with respect thereto.
(j) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Trustee and any
conversion agent other than the Trustee an Officers' Certificate setting
forth the Conversion Price after such adjustment and setting forth a
brief statement of the fact requiring such adjustment. Promptly after
delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Price setting forth the adjusted Conversion
Price and the date on which each adjustment became effective and shall
mail such notice of such adjustment of the Conversion Price to each
Holder of Debentures at his last address appearing on the Debenture
register provided for in Section 2.05 hereof, within 20 days after
execution thereof. Failure to deliver such notice shall not effect the
legality or validity of any such adjustment.
(k) In any case in which this Section 11.05 shall require that
an adjustment as a result of any event become effective from and after a
record date, the Company may elect to defer until after the occurrence
of such event (i) the issuance to the Holder of and Debentures converted
after such record date and before the occurrence of such event of the
additional shares of Common Stock issuable upon such conversion over and
above the shares issuable on the basis of the Conversion Price in effect
immediately prior to adjustment and (ii) a cash payment for any
remaining fractional shares of Common Stock as provided in Section 11.03
hereof; provided, however, that is such event shall not have occurred
and authorization of such event shall be rescinded by the Company, the
Conversion Price shall be recomputed immediately upon such recision to
the price that would have been in effect had such event not been
authorized, provided that such recision is permitted by and effective
under applicable laws.
SECTION 11.06. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE.
In the case of any consolidation of the Company or the merger of
the Company with or into any other entity or the sale or transfer of all or
substantially all the assets of the Company pursuant to which the Company's
Common Stock is converted into other securities, cash or assets, the Company or
the successor or purchasing corporation, as the case may be, shall execute with
the Trustee a supplemental indenture providing that the Debentures shall be
convertible into the kind and amount of securities, cash or other assets
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock into which such Debentures might have been
converted immediately prior to such consolidation, merger, transfer or sale
(assuming such holder of Common Stock failed to exercise any rights of election
and received per share the kind and amount receivable per share by a plurality
of non-electing shares). Such supplemental indenture shall provide for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article 11.
48
<PAGE> 55
The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each Holder of Debentures within
20 days after execution thereof. Failure to deliver such notice shall
not affect the legality or validity of such supplemental indenture.
The above provisions of this Section 11.06 shall similarly apply
to successive reclassifications, changes, consolidations, mergers,
combinations, sales and conveyances.
SECTION 11.07. TAXES ON SHARES ISSUED.
If a Holder converts Debentures, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon the conversion. However, the Holder shall pay any such
tax that is due because the shares are issued in a name other than the Holder's
name.
SECTION 11.08. RESERVATION OF SHARES; SHARES TO BE FULLY PAID; LISTING OF
COMMON STOCK.
The Company has reserved and shall continue to reserve out of its
authorized but unissued Common Stock or its Common Stock held in treasury
enough shares of Common Stock to permit the conversion of the Debentures in
full. All shares of Common Stock that may be issued upon conversion of
Debentures shall be fully paid and nonassessable. The Company shall endeavor
to comply with all securities laws regulating the offer and delivery of shares
of Common Stock upon conversion of Debentures and shall endeavor to list such
shares on each national securities exchange on which the Common Stock is
listed.
SECTION 11.09. COMMON STOCK ISSUABLE UPON CONVERSION.
For purposes of this Article 11, "Common Stock" includes any
stock of any class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which is not subject
to redemption by the Company. However, subject to the provisions of Section
11.06(b) hereof, shares issuable on conversion of Debentures shall include only
shares of the class designated as Common Stock of the Company on the date of
issuance of the Preferred Stock pursuant to the Offering or shares of any class
or classes resulting from any reclassification thereof and which have no
preferences in respect of dividends or amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company; provided that, if at
any time there shall be more than one such resulting class, the shares of each
such class then so issuable shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.
SECTION 11.10. RESPONSIBILITY OF TRUSTEE.
The Trustee and any other conversion agent shall not at any time
be under any duty or responsibility to any Holder of Debentures to make a
determination whether any facts exist that may require any adjustment of the
Conversion Price, or with respect to the nature or extent or calculation of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same. The
Trustee and any other
49
<PAGE> 56
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, that may at any time be issued or delivered upon the conversion of
any Debenture; and the Trustee and any other conversion agent make no
representations with respect thereto. Subject to the provisions of Section
7.01 hereof, neither the Trustee nor any conversion agent shall be responsible
for any failure of the Company to issue, transfer or deliver any shares of
Common Stock or stock certificates or other securities or property or cash upon
the surrender of any Debenture for the purpose of conversion or to comply with
any of the duties, responsibilities or covenants of the Company contained in
this Article 11. Without limiting the generality of the foregoing, neither the
Trustee nor any conversion agent shall be under any responsibility to determine
whether a supplemental indenture under Section 11.06 hereof is required to be
entered into or the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 11.06 relating either to the amount
of shares receivable by Holders upon the conversion of their Debentures after
any event referred to in Section 11.06 hereof or to any adjustment to be made
with respect thereto, but, subject to the provisions of Section 7.01 hereof,
may accept as conclusive evidence of the correctness of any such provisions,
and shall be protected in relying upon, the Officers' Certificate (which the
Company shall be obligated to file with the Trustee prior to the execution of
any such supplemental indenture) with respect thereto.
SECTION 11.11. NOTICE TO HOLDERS PRIOR TO CERTAIN ACTIONS.
In case (a) the Company makes any distribution or dividend that
would require an adjustment in the Conversion Price pursuant to Section 11.05
hereof, (b) the Company takes any action that would require a supplemental
indenture pursuant to Section 11.06 hereof or (c) of the voluntary or
involuntary dissolution, liquidation or winding-up of the Company, the Company
shall cause to be filed with the Trustee and to be mailed to each Holder of
Debentures as promptly as possible but in any event at least 15 days prior to
the applicable date hereinafter specified, a notice stating (i) the date on
which a record date is to be taken for the purpose of such dividend,
distribution, rights, options or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, options or warrants are to be determined
or (ii) the date on which such reclassification, change, consolidation, merger,
sale, conveyance, transfer, dissolution, liquidation or winding-up is expected
to become effective or occur and the date as of which it is expected that
holders of record of Common Stock shall be entitled to exchange their Common
Stock for securities or other property deliverable upon such reclassification,
change, consolidation, merger, sale, conveyance, transfer, dissolution,
liquidation or winding-up. Neither the failure to give such notice nor any
defect therein shall affect the legality or validity of the proceedings
referenced in clauses (a) through (c) of this Section 11.11.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA constituting such dividend or other
distribution, such reduction to become effective immediately Section 318(c),
the imposed duties shall control after the opening of business on the day
following the date fixed for such determination.
50
<PAGE> 57
SECTION 12.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in the Company. writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address:
If to the Company:
Greyhound Lines, Inc.
15110 North Dallas Parkway
Dallas, Texas 75248
Telecopier No.: (972) 789-7403
Attention: General Counsel
With a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Telecopier No.: (214) 746-7777
Attention: Jeremy W. Dickens
If to the Trustee:
U.S. Trust Company of Texas, N.A.
2001 Ross Avenue, Suite 2700
Dallas, Texas 75201
Telecopier No.: (214) 754-1303
Attention: Bill Barber
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by overnight
air courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so mailed to
any Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or
51
<PAGE> 58
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF DEBENTURES WITH OTHER HOLDERS
OF DEBENTURES.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Debentures. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for in
this Indenture relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
52
<PAGE> 59
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Debentures, this Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Debenture waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Debentures.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE AND THE DEBENTURES.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Significant Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the
Debentures shall bind their successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Debentures
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
53
<PAGE> 60
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
54
<PAGE> 61
SIGNATURES
Dated as of April 16, 1997 GREYHOUND LINES, INC.
By:
---------------------------------
Name: Steven L. Korby
Title: Executive Vice President
and Chief Financial
Officer
Dated as of April 16, 1997 U.S. TRUST COMPANY OF TEXAS,
as Trustee
By:
---------------------------------
Name:
Title:
<PAGE> 62
EXHIBIT A
(Face of Debenture)
8 1/2% Convertible Subordinated Debentures due 2009
No. $_______________
CUSIP NO.
GREYHOUND LINES, INC.
promises to pay to Cede & Co. or registered assigns, the principal sum of
___________ Dollars on May 3, 2009.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Dated: _______, ____
GREYHOUND LINES, INC.
By:
--------------------------
Name:
Title:
(SEAL)
This is one of the [Global]
Debentures referred to in the
within-mentioned Indenture:
Dated: April __, 1997
[TRUSTEE]
as Trustee
By:
----------------------------------
A-1
<PAGE> 63
(Back of Debenture)
8 1/2% Convertible Subordinated Debentures due 2009
[Unless and until it is exchanged in whole or in part for
Debentures in definitive form, this Debenture may not be transferred except as
a whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor Depository or a nominee of such
successor Depository. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL in as much as the registered owner hereof, Cede & Co., has an
interest herein.](1/)
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON
WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE
UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 OF THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO REQUESTS),
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.](2/)
- ----------------------------------
(1.) This paragraph should be included only if the Debenture is issued in
global form.
(2.) This paragraph should be removed upon the transfer of the Debentures
that have been sold pursuant to the terms of the Shelf Registration
contemplated by the Registration Rights Agreement.
A-2
<PAGE> 64
1. INTEREST. Greyhound Lines, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Debenture
at 8 1/2% per annum from ________________, 199_ until maturity and shall pay
the Liquidated Damages payable pursuant to Section 5 of the Registration Rights
Agreement referred to below. The Company will pay interest and Liquidated
Damages semi-annually on May 1 and November 1 of each year, or if any such day
is not a Business Day, on the next succeeding Business Day (each an "Interest
Payment Date"). Interest on the Debentures will accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from the
date of original issuance. The Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is
the rate then in effect; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. METHOD OF PAYMENT. The Company will pay interest on the Debentures
(except defaulted interest) and Liquidated Damages to the Persons who are
registered Holders of Debentures at the close of business on the April 15 or
October 15 next preceding the Interest Payment Date, even if such Debentures
are cancelled after such record date and on or before such Interest Payment
Date, except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. The Debentures will be payable as to principal, premium,
interest and Liquidated Damages at the office or agency of the Company
maintained for such purpose within or without the City and State of New York,
or, at the option of the Company, payment of interest and Liquidated Damages
may be made by check mailed to the Holders at their addresses set forth in the
register of Holders, and provided that payment by wire transfer of immediately
available funds will be required with respect to principal of and interest,
premium and Liquidated Damages on, all Global Debentures and all other
Debentures the Holders of which shall have provided wire transfer instructions
to the Company or the Paying Agent. Such payment shall be in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Trust Company of Texas,
the Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any Holder.
The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Debentures under an Indenture
dated as of April 16, 1997 ("Indenture") between the Company and the Trustee.
The terms of the Debentures include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code Sections 77aaa-77bbbb). The Debentures are subject to
all such terms, and Holders are referred to the Indenture and such Act for a
statement of such terms. The Debentures are general subordinated unsecured
obligations of the Company limited to $60,000,000 aggregate principal amount.
5. OPTIONAL REDEMPTION. The Company shall have the option to redeem
the Debentures on or after May 3, 2000. The Company shall have the option to
redeem the Debentures, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below plus accrued and unpaid interest and
Liquidated Damages thereon to the applicable redemption date, if redeemed
during the twelve-month period beginning on May 3 of the years indicated below:
A-3
<PAGE> 65
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . . . . . . 104.86%
2001 . . . . . . . . . . . . . . . . . . . . . . 103.64%
2002 . . . . . . . . . . . . . . . . . . . . . . . 102.43%
2003 . . . . . . . . . . . . . . . . . . . . . . . 101.21%
2004 and thereafter . . . . . . . . . . . . . . . 100.000%
</TABLE>
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Debentures.
7. REPURCHASE AT OPTION OF HOLDER. If there is a Change of Control,
the Company shall be required to make an offer (a "Change of Control Offer") to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
each Holder's Debentures at a purchase price equal to 100% of the aggregate
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder describing the transaction that constitutes the
Change of Control and setting forth the procedures governing the Change of
Control Offer as required by the Indenture.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Debentures are to be redeemed at its registered address. Debentures in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Debentures held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on
Debentures or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Debentures are in registered
form without coupons in denominations of $1,000 and integral multiples of
$1,000. The transfer of Debentures may be registered and Debentures may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Debenture or portion of a Debenture
selected for redemption, except for the unredeemed portion of any Debenture
being redeemed in part. Also, it need not exchange or register the transfer of
any Debentures for a period of 15 days before a selection of Debentures to be
redeemed or during the period between a record date and the corresponding
Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Debenture may be
treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Debentures may be amended or supplemented with the consent
of the Holders of at least a majority in principal amount of the then
outstanding Debentures, and any existing default or compliance with any
provision of the Indenture or the Debentures may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding
Debentures. Without the consent of any Holder of a Debenture, the Indenture or
the Debentures may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Debentures in addition to or in
place of certificated
A-4
<PAGE> 66
Debentures, to provide for the assumption of the Company's obligations to
Holders of the Debentures in case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the Holders of
the Debentures or that does not adversely affect the legal rights under the
Indenture of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest or Liquidated Damages on the
Debentures; (ii) default in payment when due of the principal of or premium, if
any, on the Debentures; (iii) failure by the Company to comply with Section
4.08 of the Indenture; (iv) failure by the Company for 60 days after notice to
comply with any of its other agreements in the Indenture or the Debentures; (v)
default under any mortgage, indenture or instrument under which there may be
issued or by which there may be secured or evidenced any Indebtedness for money
borrowed by the Company (or the payment of which is guaranteed by the Company),
whether such Indebtedness or guarantee now exists or is created after the date
of the Indenture, which default (a) is caused by a failure to pay principal of
or premium or interest on such Indebtedness prior to the expiration of any
grace period provided in such Indebtedness (a "Payment Default") or (b) results
in the acceleration of such Indebtedness prior to its express maturity and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$10.0 million or more; (vi) failure by the Company to pay final judgments
aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; and (vii) certain events of
bankruptcy or insolvency with respect to the Company. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Debentures may declare all the
Debentures to be due and payable. Notwithstanding the foregoing, in the case of
an Event of Default arising from certain events of bankruptcy or insolvency,
all outstanding Debentures will become due and payable without further action
or notice. Holders may not enforce the Indenture or the Debentures except as
provided in the Indenture. Subject to certain limitations, Holders of a
majority in principal amount of the then outstanding Debentures may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Debentures notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest) if it determines that withholding notice is in their interest. The
Holders of a majority in aggregate principal amount of the Debentures then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Debentures waive any existing Default or Event of Default and its consequences
under the Indenture except a continuing Default or Event of Default in the
payment of interest on, or the principal of, the Debentures. The Company is
required to deliver to the Trustee annually a statement regarding compliance
with the Indenture, and the Company is required upon becoming aware of any
Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
13. DEFEASANCE. The Debentures are subject to defeasance upon the
terms and conditions specified in the Indenture.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
15. CONVERSION RIGHTS. Subject to and upon compliance with the
provisions of the Indenture, the Holder of any Debenture shall have the right,
at the option of such Holder, at any time after 60 days following the last date
of original issuance of the Debentures and prior to the close of business on
_________, 2009 (except that, with respect to any Debenture or portion of a
Debenture that shall be
A-5
<PAGE> 67
called for redemption or delivered for repurchase, such right shall terminate
immediately prior to close of business on the date fixed for redemption of such
Debenture or portion of such Debenture unless the Company shall default in
payment due upon redemption thereof) to convert the principal amount of any
such Debenture, or any portion of such principal amount that is $1,000 or any
integral multiple thereof, into that number of fully paid and nonassessable
shares of Common Stock (as such shares shall then be constituted) obtained by
dividing the aggregate principal amount of the Debentures or a portion thereof
surrendered for conversion by the Conversion Price in effect at such time
rounded to the nearest cent, by surrender of the Debenture so to be converted
in whole or in part. The Conversion Price shall be that amount as determined
pursuant to the Certificate of Designations with respect to the 8 1/2%
Convertible Exchangeable Preferred Stock (the "Preferred Stock"), filed with
the Secretary of State of the State of Delaware on April 15, 1997, on the date
of exchange of the Preferred Stock for the Debentures, subject to adjustment as
provided in the Indenture. Immediately following such conversion, the rights
of the Holders of converted Debentures shall cease and the persons entitled to
receive the Common Stock upon the conversion of Debentures shall be treated for
all purposes as having become the owners of such Common Stock.
16. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Debentures or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Debenture waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.
17. AUTHENTICATION. This Debenture shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Debentures under the Indenture,
Holders of Transferred Restricted Securities shall have all the rights set
forth in the Registration Rights Agreement dated as of April __, 1997, among
the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
20. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Debentures and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Debentures or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Greyhound Lines, Inc.
15110 North Dallas Parkway
Dallas, Texas 75248
Attention: General Counsel
A-6
<PAGE> 68
ASSIGNMENT FORM
To assign this Debenture, fill in the form below: (I) or (we) assign and
transfer this Debenture to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
to transfer this Debenture on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
------------------- -------------------------------------
(Sign exactly as your name appears on the Debenture)
Signature Guarantee:
A-7
<PAGE> 69
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Debenture purchased by the
Company pursuant to Section 4.08 of the Indenture, check the box below:
[ ] Section 4.08
If you want to elect to have only part of the Debenture purchased
by the Company pursuant to Section 4.08 of the Indenture, state the amount you
elect to have purchased: $___________
Date: Your Signature:
------------------- -------------------------------------
(Sign exactly as your name appears on the Debenture)
Tax Identification No.:
--------------------
Signature Guarantee.
A-8
<PAGE> 70
SCHEDULE OF EXCHANGES OF DEBENTURES(3/)
THE FOLLOWING EXCHANGES OF A PART OF THIS GLOBAL DEBENTURE FOR OTHER DEBENTURES
HAVE BEEN MADE:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Date of Exchange Amount of decrease Amount of increase Principal Amount of Signature of
in Principal Amount in Principal Amount this Global authorized officer
of this Global of this Global Debenture following of Trustee or
Debenture Debenture such decrease (or Debenture Custodian
increase)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------
(3.) This should be included only if the Debenture is issued in global form.
A-9
<PAGE> 71
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE DEBENTURE
(Pursuant to Section 2.06(b) of the Indenture)
[REGISTRAR]
Re: 8 1/2% Convertible Subordinated Debentures due 2009 of Greyhound
Lines, Inc.
Reference is hereby made to the Indenture dated as of April 15, 1997
(the "Indenture"), between Greyhound Lines, Inc. (the "Company") and U.S. Trust
Company of Texas, N.A., as trustee (the "Trustee"). Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
This relates to $ ___________ principal amount of Debentures which are
evidenced by one or more Definitive Debentures in the name of
__________________ (the "Transferor"). The Transferor has requested an
exchange or transfer of such Definitive Debenture(s) in the form of an equal
principal amount of Debentures evidenced by one or more Definitive Debentures,
to be delivered to the Transferor or, in the case of a transfer of such
Debentures, to such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Debentures
surrendered to the Trustee herewith for exchange (the "Surrendered
Debentures"), the Holder of such Surrendered Debentures hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Debentures are being acquired for the Transferor's own
account, without transfer;
or
[ ] the Surrendered Debentures are being transferred to the Company or any
of its Subsidiaries;
or
[ ] the Surrendered Debentures are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Debentures are
being transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Debentures for its own account, or for one or
more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in each
case in a transaction meeting the requirements of Rule 144A;
or
B-1-1
<PAGE> 72
[ ] the Surrendered Debentures are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
or
[ ] the Surrendered Debentures are being transferred pursuant to an
exemption under the Securities Act other than Rule 144A, Rule 144 or
Rule 904 to a Person who is an Accredited Institutional Investor and the
Transferor further certifies that the Transfer complies with the
transfer restrictions applicable to beneficial interests in Global
Debentures and Definitive Debentures bearing the legend set forth in
Section 2.06(f) of the Indenture and the requirements of the exemption
claimed, which certification is supported by (a) if such transfer is in
respect of a principal amount of Debentures at the time of Transfer of
$100,000 or more, a certificate executed by the Transferee in the form
of Exhibit C to the Indenture, or (b) if such Transfer is in respect of
a principal amount of Debentures at the time of transfer of less than
$100,000, (i) a certificate executed in the form of Exhibit C to the
Indenture and (ii) an Opinion of Counsel provided by the Transferor or
the Transferee (a copy of which the Transferor has attached to this
certification), to the effect that (1) such Transfer is in compliance
with the Securities Act and (2) such Transfer complies with any
applicable blue sky securities laws of any state of the United States;
or
[ ] the Surrendered Debentures are being transferred pursuant to an
effective registration statement under the Securities Act;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the
Debentures are being transferred in compliance with the transfer
restrictions applicable to the Global Debentures and in accordance with
the requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act and any applicable blue sky laws of any state of the
United States;
and the Surrendered Debentures are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States or any
other applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Transferor]
By:
--------------------------
Name:
Title:
Dated:
cc: Greyhound Lines, Inc.
B-1-2
<PAGE> 73
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM GLOBAL DEBENTURE TO DEFINITIVE DEBENTURE
(Pursuant to Section 2.06(c) of the Indenture)
[REGISTRAR]
Re: 8 1/2% Convertible Subordinated Debentures due 2009 of Greyhound
Lines, Inc.
Reference is hereby made to the Indenture dated as of April 16, 1997
(the "Indenture"), between Continental Global Group, Inc. (the "Company") and
U.S. Trust Company of Texas, N.A., as trustee (the "Trustee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $__________ principal amount of Debentures which
are evidenced by a beneficial interest in one or more 144A Global Debentures or
Regulation S Permanent Global Debentures in the name of ____________________
(the "Transferor"). The Transferor has requested an exchange or transfer of
such beneficial interest in the form of an equal principal amount of Debentures
evidenced by one or more Definitive Debentures, to be delivered to the
Transferor or, in the case of a transfer of such Debentures, to such Person as
the Transferor instructs the Trustee.
In connection with such request and in respect of the Debentures
surrendered to the Trustee herewith for exchange (the "Surrendered
Debentures"), the Holder of such Surrendered Debentures hereby certifies that:
[CHECK ONE]
[ ] the Surrendered Debentures are being transferred to the beneficial owner
of such Debentures;
or
[ ] the Surrendered Debentures are being transferred pursuant to and in
accordance with Rule 144A under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, the
Transferor hereby further certifies that the Surrendered Debentures are
being transferred to a Person that the Transferor reasonably believes is
purchasing the Surrendered Debentures for its own account, or for one or
more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in each
case in a transaction meeting they requirements of Rule 144A;
or
[ ] the Surrendered Debentures are being transferred in a transaction
permitted by Rule 144 under the Securities Act;
or
B-2-1
<PAGE> 74
[ ] the Surrendered Debentures are being transferred pursuant to an
effective registration statement under the Securities Act;
or
[ ] the Surrendered Debentures are being transferred pursuant to an
exemption under the Securities Act other than Rule 144A, Rule 144
or Rule 904 to a Person who is an Institutional Accredited
Investor and the Transferor further certifies that the Transfer
complies with the transfer restrictions applicable to beneficial
interests in Global Debentures and Definitive Senior Debentures
bearing the legend set forth in Section 2.06(f) of the Indenture
and the requirements of the exemption claimed, which
certification is supported by (x) if such transfer is in respect
of a principal amount of Debentures at the time of Transfer of
$100,000 or more, a certificate executed by the Transferee in the
form of Exhibit C to the Indenture, or (y) if such Transfer is in
respect of a principal amount of Debentures at the time of
transfer of less than $100,000, (1) a certificate executed in the
form of Exhibit C to the Indenture and (2) an Opinion of Counsel
provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect
that (1) such Transfer is in compliance with the Securities Act
and (2) such Transfer complies with any applicable blue sky
securities laws of any state of the United States;
or
[ ] such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the
Debentures are being transferred in compliance with the transfer
restrictions applicable to the Global Debentures and in accordance with
the requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act and any applicable blue sky laws of any state of the
United States;
and the Surrendered Debentures are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States or any
other applicable jurisdiction.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Transferor]
By:
---------------------------
Name:
Title:
Dated:
cc: Greyhound Lines, Inc.
B-2-2
<PAGE> 75
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED BY
INSTITUTIONAL ACCREDITED INVESTORS
_______________, _____
___________________, as Registrar
Attention: Corporate Trust Department
Ladies and Gentlemen:
We are delivering this letter in connection with an offering of 8 1/2%
Convertible Subordinated Debentures due 2009 (the "Debentures") of Greyhound
Lines, Inc., a Delaware corporation (the "Company"), all as described in the
Offering Memorandum (the "Offering Memorandum") relating to the offering of the
Debentures.
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act"), or an entity in which all of the equity owners
are accredited investors within the meaning of Rule 501(a)(1), (2), (3)
or (7) under the Securities Act (an "Institutional Accredited
Investor");
(ii) any purchase of Debentures by us will be for our own
account or for the account of one or more other Institutional Accredited
Investors;
(iii) in the event that we purchase any Debentures, we will
acquire Debentures having a minimum purchase price of at least $100,000
for our own account and for each separate account for which we are
acting;
(iv) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks
of purchasing Debentures;
(v) we are not acquiring Debentures with a view to any
distribution thereof in a transaction that would violate the Securities
Act or the securities laws of any State of the United States or any
other applicable jurisdiction; provided that the disposition of our
property and the property of any accounts for which we are acting as
fiduciary shall remain at all times within our control; and
(vi) we have received a copy of the Offering Memorandum and
acknowledge that we have had access to such financial and other
information, and have been afforded the opportunity to ask such
questions of representatives of the Company and receive answers thereto,
as we deem necessary in connection with our decision to purchase
Debentures.
We understand that the Debentures are being offered in a
transaction not involving any public offering within the meaning of the
Securities Act and that the Debentures have not been registered under the
Securities Act, and we agree, on our own behalf and on behalf of each account
for which we acquire any Debentures, that such Debentures may be offered,
resold, pledged or otherwise transferred only (i) to a person whom we
reasonably believe to be a qualified institutional buyer (as defined in Rule
144A under the Securities Act) in a transaction meeting the requirements of
Rule 144A under the Securities Act, in a transaction meeting the requirements
of Rule 144 under the Securities Act, outside the United States in a
transaction meeting the requirements of Rule 904 under the Securities Act, or
in accordance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion
C-1
<PAGE> 76
of counsel if the Company so requests), (ii) to the Company or (iii) pursuant
to an effective registration statement, and in each case, in accordance with
any applicable securities laws of any State of the United States or any other
applicable jurisdiction. We understand that the registrar will not be required
to accept for registration of transfer any Debentures, except upon presentation
of evidence satisfactory to the Company that the foregoing restrictions on
transfer have been complied with.
We acknowledge that you and the Company will rely upon our
confirmations, acknowledgements and agreements set forth herein, and we agree
to notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
-------------------------------------
[Name of Purchaser]
By:
--------------------------------
Name:
Title:
Address:
C-2
<PAGE> 1
EXHIBIT 4.3
L & W Draft No. 3, 4/13/97
================================================================================
GREYHOUND LINES, INC.
Up to 2,760,000 Shares
8 1/2% Convertible Exchange Preferred Stock
REGISTRATION RIGHTS AGREEMENT
Dated as of April 16, 1997
BEAR, STEARNS & CO. INC.
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and
entered into as of April 16, 1997 by and between Greyhound Lines, Inc., a
Delaware corporation (the "Company"), and Bear, Stearns & Co. Inc. (the
"Initial Purchaser"), who has agreed to purchase up to 2,760,000 shares (the
"Shares") of the Company's 8 1/2% Convertible Exchangeable Preferred Stock (the
"Preferred Stock") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
April 11, 1997 (the "Purchase Agreement"), by and between the Company and the
Initial Purchaser. In order to induce the Initial Purchaser to purchase the
Shares, the Company has agreed to provide the registration rights set forth in
this Agreement. The execution and delivery of this Agreement is a condition to
the obligations of the Initial Purchaser set forth in Section 3 of the Purchase
Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange
Act.
Certificate of Designations: The Certificate of Designations, dated
as of April __, 1997 and filed with the Secretary of State of the State of
Delaware, pursuant to which the Preferred Stock is to be issued.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Common Stock: The common stock, par value $0.01 per share, of the
Company.
Effectiveness Target Date: As defined in Section 4.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Debenture Indenture: As defined in the Certificate of
Designations.
Exchange Debentures: As defined in the Certificate of Designations.
Exempt Resales: The transactions in which the Initial Purchaser
proposes to sell the Series A Notes (i) to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, (ii) to certain
institutional "accredited investors," as such term is defined in Rule
501(a)(1), (2), (3) and (7) of Regulation D under the Act ("Accredited
Institutions") and (iii) outside the United States to certain non-U.S. Persons
meeting the requirements of Rule 904 under the Act.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 7(a) hereof.
<PAGE> 3
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Initial Purchaser: As defined in the preamble hereto.
Record Holder: With respect to any dividend payment date relating to
the Preferred Stock, each Person who is a Holder of Shares on the record date
with respect to the dividend payment date on which such dividend payment date
shall occur. With respect to any interest payment date relating to the
Exchange Debentures, each Person who is a Holder of Exchange Debentures on the
record date with respect to the interest payment date on which such interest
payment date shall occur.
Registration Default: As defined in Section 4 hereof.
Registration Statement: Any registration statement of the Company
relating to the registration for resale of Transfer Restricted Notes pursuant
to the Shelf Registration Statement, which is filed pursuant to the provisions
of this Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Shelf Filing Deadline: As defined in Section 3 hereof.
Shelf Registration Statement: As defined in Section 3 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Exchange Debenture Indenture.
Transfer Restricted Securities: Each Share, Exchange Debenture and
share of Common Stock issuable upon conversion of the Preferred Stock or the
Exchange Debentures until (i) the date on which such Share, Exchange Debenture
or share of Common Stock, as the case may be, has been effectively registered
under the Act and disposed of in accordance with the Shelf Registration
Statement or (ii) the date on which such Share, Exchange Debenture, or share of
Common Stock, as the case may be, is distributed to the public pursuant to Rule
144 under the Act or may be distributed to the public pursuant to Rule 144(k)
under the Securities Act.
Trustee: The trustee for the Exchange Debentures under the Exchange
Debenture Indenture.
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2
<PAGE> 4
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed
to be a holder of Transfer Restricted Securities (each, a "Holder") whenever
such Person owns Transfer Restricted Securities of record.
SECTION 3. SHELF REGISTRATION
(a) Shelf Registration. The Company shall use its reasonable best
efforts to:
(x) cause to be filed a shelf registration statement pursuant to
Rule 415 under the Act (the "Shelf Registration Statement") on or prior to
45 days after the consummation of the offering of the Preferred Stock (the
"Shelf Filing Deadline"), which Shelf Registration Statement shall provide
for resales of all Transfer Restricted Securities the Holders of which
shall have provided the information required pursuant to Section 3(b)
hereof; and
(y) cause such Shelf Registration Statement to be declared
effective by the Commission on or before the 75th day after the Shelf
Filing Deadline.
The Company shall use its reasonable best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 5(a) and (b) hereof to the extent
necessary to ensure that it is available for resales of Transfer Restricted
Securities by the Holders of Transfer Restricted Securities entitled to the
benefit of this Section 3(a), and to ensure that it conforms with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of at least two
years following the Closing Date or, if earlier, until the Shelf Registration
Statement terminates when all Transfer Restricted Securities covered by such
Shelf Registration Statement have been sold; provided, that the Company shall
have the option of suspending the effectiveness of the Shelf Registration
Statement for one period of up to 60 consecutive days per calendar year if the
Board of Directors of the Company determines that compliance with the
disclosure obligations necessary to maintain the effectiveness of the Shelf
Registration Statement at such time would have a material adverse effect on the
Company (each such period, a "Suspension Period").
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein, including the information set forth in the
questionnaire included as Annex B to the Offering Memorandum. No Holder of
Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant
to Section 4 hereof unless and until such Holder shall have used its best
efforts to provide all such reasonably requested information. Each Holder as
to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the
3
<PAGE> 5
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
SECTION 4. LIQUIDATED DAMAGES
If (i) the Company fails to file the Shelf Registration Statement
with the Commission on or prior to the Shelf Filing Deadline, (ii) the Shelf
Registration Statement has not been declared effective by the Commission on or
prior to the 75th day after the Shelf Filing Deadline (the "Effectiveness
Target Date"), whether or not the Company has breached any obligation to use
its reasonable best efforts to cause the Shelf Registration Statement to be
declared effective, or (iii) the Shelf Registration Statement is filed and
declared effective but shall thereafter cease to be effective or fail to be
usable for any period of 10 consecutive days or for any 20 days in any 180-day
period in connection with resales of Transfer Restricted Securities other than
as a result of a Suspension Period (each such event referred to in clauses (i)
through (iii), a "Registration Default"), the Company hereby agrees to pay to
each Holder of Transfer Restricted Securities (other than shares of Common
Stock) liquidated damages ("Liquidated Damages") at an annual rate of 0.25% of
the liquidation preference of the Preferred Stock constituting Transfer
Restricted Securities, or 0.25% of the principal amount of the Exchange
Debentures constituting Transfer Restricted Securities, which shall accrue from
the date of the Registration Default until such Registration Default is cured.
All accrued Liquidated Damages shall be paid to Record Holders by the Company
by wire transfer of immediately available funds or by federal funds check on
each dividend payment date with respect to the Preferred Stock and as provided
in the Certificate of Designations, and each interest payment date with respect
to the Exchange Debentures. Following the cure of all Registration Defaults
relating to any particular Transfer Restricted Securities, the accrual of
Liquidated Damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such security shall
have been satisfied in full.
SECTION 5. REGISTRATION PROCEDURES
(a) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 5(b) below and shall use its reasonable best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof
and, pursuant thereto, the Company will prepare and file with the Commission in
accordance with Section 3(a) hereof a Shelf Registration Statement relating to
the registration on any appropriate form under the Act, which form shall be
available for the sale of the Transfer Restricted Securities in accordance with
the intended method or methods of distribution thereof.
(b) General Provisions. In connection with the Shelf Registration
Statement and any Prospectus required by this Agreement to permit the sale or
resale of Transfer Restricted Securities, the Company shall:
4
<PAGE> 6
(i) use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective and provide all requisite
financial statements (including, if required by the Act or any regulation
thereunder, financial statements of any Subsidiaries) for the period
specified in Section 3 of this Agreement; upon the occurrence of any event
that would cause the Shelf Registration Statement or the Prospectus
contained therein (A) to contain a material misstatement or omission or
(B) not to be effective and usable for resale of Transfer Restricted
Securities during the period required by this Agreement, the Company shall
file promptly an appropriate amendment to the Shelf Registration
Statement, in the case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use its reasonable
best efforts to cause such amendment to be declared effective and the
Shelf Registration Statement and the related Prospectus to become usable
for their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Shelf Registration Statement as may be
necessary to keep the Shelf Registration Statement effective for the
applicable period set forth in Section 3 hereof, or such shorter period as
will terminate when all Transfer Restricted Securities covered by the
Shelf Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by the Shelf Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in the Shelf
Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Shelf
Registration Statement or any post-effective amendment thereto, when the
same has become effective, (B) of any request by the Commission for
amendments to the Shelf Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement under the
Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or sale
in any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening of
any event that makes any statement of a material fact made in the Shelf
Registration Statement, the Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Shelf
Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Shelf Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption
from qualification of the Transfer Restricted Securities under state
securities or Blue Sky laws, the Company shall use its reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s) (all of whom shall be required to acknowledge the
confidentiality of the information therein, if requested by the Company
prior to being furnished the same), if any, before filing with the
Commission, copies of the Shelf Registration Statement or any Prospectus
included therein or any amendments or
5
<PAGE> 7
supplements to the Shelf Registration Statement or Prospectus (but
excluding any documents incorporated by reference as a result of the
Company's periodic reporting requirements under the Exchange Act), and the
Company shall not file the Shelf Registration Statement or Prospectus or
any amendment or supplement to the Shelf Registration Statement or
Prospectus (excluding all such documents incorporated by reference as a
result of the Company's periodic reporting requirements under the Exchange
Act) to which a selling Holder of Transfer Restricted Securities covered
by the Shelf Registration Statement or the underwriter(s), if any, shall
reasonably object within five business days after the receipt thereof. A
selling Holder or underwriter, if any, shall be deemed to have reasonably
objected to such filing if the Shelf Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
a material misstatement or omission;
(v) promptly following the filing of any document that is to be
incorporated by reference into the Shelf Registration Statement or
Prospectus, provide copies of such document to the selling Holders and to
the underwriter(s), if any, make the Company's representatives available
for discussion of such document and other customary due diligence matters,
and include such information in such document prior to the filing thereof
as such selling Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to the Shelf Registration Statement, and any attorney or accountant
retained by such selling Holders or any of the underwriter(s), all
financial and other records, pertinent corporate documents and properties
of the Company and cause the Company's officers, directors and employees
to supply all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with the Shelf
Registration Statement subsequent to the filing thereof and prior to its
effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in the Shelf Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the number of shares or principal amount of Transfer Restricted
Securities, as the case may be, being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the Shelf
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference
therein and all exhibits (including exhibits incorporated therein by
reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company hereby
consents to the use of the Prospectus and any amendment or supplement
thereto by each of the selling Holders and each of the underwriter(s), if
any, in connection with the offering and the sale of the Transfer
6
<PAGE> 8
Restricted Securities covered by the Prospectus or any amendment or
supplement thereto; provided that such use of the Prospectus and any
amendment or supplement thereto and such offering and sale conforms to the
Plan of Distribution set forth in the Prospectus and complies with the
terms of this Agreement and all applicable laws and regulations
thereunder;
(x) in the event of an Underwritten Registration, enter into
such customary agreements (including an underwriting agreement), and make
such customary representations and warranties, and take all such other
customary actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to the Shelf Registration Statement contemplated by this Agreement, all to
such extent as may be requested by any Holder of Transfer Restricted
Securities or underwriter in connection with any sale or resale pursuant
to the Shelf Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or
not the registration is an Underwritten Registration, the Company shall:
(A) Except in the case of an Underwritten Registration, furnish
to each selling Holder upon the effectiveness of the Shelf
Registration Statement:
(1) a certificate, dated the date of effectiveness of the
Shelf Registration Statement, signed on behalf of the Company
by two senior officers, one of whom must be its Chief Financial
Officer, confirming, as of such date, the matters set forth in
paragraphs (a), (c) and (d) of Section 8 of the Purchase
Agreement with respect to the transactions contemplated by the
Shelf Registration Statement;
(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement, of counsel for the Company,
covering the matters set forth in Exhibits A and B of the
Purchase Agreement with respect to the transactions contemplated
by the Shelf Registration Statement, and in any event including
a statement to the effect that such counsel has participated in
conferences with officers and other representatives of the
Company and representatives of the independent public
accountants for the Company in connection with the preparation
of such Registration Statement and the related Prospectus and
have considered the matters required to be stated therein and
the statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the
basis of the foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by officers and other
representatives of the Company and without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the Registration Statement,
at the time such Registration Statement or any post-effective
amendment thereto became effective, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus
contained in such Registration Statement as of its date
contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no
responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
7
<PAGE> 9
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement, from the
Company's independent accountants if such comfort letter shall
be issuable to the selling Holders in accordance with the
relevant accounting industry pronouncements, in the customary
form and covering matters of the type customarily covered in
comfort letters by underwriters in connection with primary
underwritten offerings, and affirming the matters set forth in
the comfort letters delivered pursuant to Section 8(h) of the
Purchase Agreement, without exception; and
(B) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
pursuant to this clause (x), if any.
If at any time the representations and warranties of the Company and
the Guarantors contemplated in clause (A)(1) above cease to be true and
correct, the Company shall so advise the Initial Purchaser and the
underwriter(s), if any, and each selling Holder promptly and, if requested
by such Persons, shall confirm such advice in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if
any, and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities
or Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s) may request and do any and all other acts or things
reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that the Company shall not be
required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters and
transactions relating to the Shelf Registration Statement, in any
jurisdiction where it is not now so subject;
(xii) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and enable such Transfer Restricted
Securities to be in such denominations and registered in such names as the
Holders or the underwriter(s), if any, may reasonably request at least two
business days prior to any sale of Transfer Restricted Securities made by
such underwriter(s);
(xiii) if any fact or event contemplated by clause (b)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Shelf Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein not misleading;
(xiv) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Shelf Registration
Statement and provide printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depository
Trust Company;
8
<PAGE> 10
(xv) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that
is required to be retained in accordance with the rules and regulations of
the NASD;
(xvi) otherwise use their reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing at
the end of any fiscal quarter in which Transfer Restricted Securities are
sold to underwriters in a firm or best efforts Underwritten Offering or
(B) if not sold to underwriters in such an offering, beginning with the
first month of the Company's first fiscal quarter commencing after the
effective date of the Shelf Registration Statement;
(xvii) if the Preferred Stock is exchanged for the Exchange
Debentures, cause the Exchange Debenture Indenture to be qualified under
the TIA not later than the later of the effective date of the Shelf
Registration Statement required by this Agreement or the date of exchange,
and, in connection therewith, cooperate with the Trustee and the Holders
of Exchange Debentures to effect such changes to the Exchange Debenture
Indenture as may be required for such Exchange Debenture Indenture to be
so qualified in accordance with the terms of the TIA; and execute and use
their reasonable best efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms
and documents required to be filed with the Commission to enable such
Exchange Debenture Indenture to be so qualified in a timely manner;
(xviii) cause all Transfer Restricted Securities covered by the
Shelf Registration Statement to be listed on each securities exchange on
which the Preferred Stock is then listed if requested by the Holders of a
majority in aggregate number of shares of Preferred Stock or Common Stock,
or in aggregate principal amount of Exchange Debentures, as the case may
be, or the managing underwriter(s), if any; and
(xix) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Company of the existence of any fact
of the kind described in Section 5(b)(iii)(D) hereof, such Holder will keep
such notice confidential and forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the Shelf Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(b)(xiii) hereof, or until it is advised in writing
(the "Advice") by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus. If so directed by the Company,
each Holder will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies then in such Holder's possession, of the
Prospectus covering such Transfer Restricted Securities that was current at the
time of receipt of such notice. In the event the Company shall give any such
notice, the time period regarding the effectiveness of the Shelf Registration
Statement set forth in Section 3 hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice
pursuant to Section 5(b)(iii)(D) hereof to and including the date when each
selling Holder covered by the Shelf Registration Statement shall have received
the
9
<PAGE> 11
copies of the supplemented or amended Prospectus contemplated by Section
5(b)(xiii) hereof or shall have received the Advice.
SECTION 6. REGISTRATION EXPENSES
(a) All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless of
whether the Shelf Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including
filings made by any Initial Purchaser or Holder with the NASD (and, if
applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel that may be required by the rules and regulations of the
NASD)); (ii) all fees and expenses of compliance with federal securities and
state Blue Sky or securities laws; (iii) all fees and disbursements of counsel
for the Company and, subject to Section 7(b) below, the Holders of Transfer
Restricted Securities; (iv) all application and filing fees in connection with
listing the Transfer Restricted Securities on a national securities exchange or
automated quotation system, if any; and (v) all fees and disbursements of
independent certified public accountants of the Company (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
The Company will, in any event, bear its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Company. The Company shall not be responsible for any other
expenses or costs, including but not limited to, commissions, fees and
discounts of underwriters, brokers, dealers and agents.
(b) In connection with the Shelf Registration Statement required by
this Agreement, the Company will reimburse the Initial Purchaser and the
Holders of Transfer Restricted Securities being registered pursuant to the
Shelf Registration Statement for the reasonable fees and disbursements of not
more than one counsel, who shall be Latham & Watkins or such other counsel as
may be chosen by the Holders of a majority in number of shares or principal
amount, as the case may be, of the Transfer Restricted Securities for whose
benefit the Shelf Registration Statement is being prepared.
SECTION 7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold harmless (i) each
Holder, (ii) each person, if any, who controls any Holder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clauses (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), to
the fullest extent lawful, from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including but not limited to
reasonable attorneys' fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any investigation or
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Shelf
Registration Statement or Prospectus, or in any supplement thereto or amendment
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
10
<PAGE> 12
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
will not be liable in any such case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the any of the Holders
expressly for use therein; and provided further, however, that the foregoing
indemnity shall not inure to the benefit of any Indemnified Holder from whom
the person asserting such loss, liability, claim, damage or expense (A)
received a Prospectus or an amendment or supplement thereto in violation of the
last paragraph of Section 6 above if such violation caused such loss,
liability, claim, damage or expense or (B) purchased any Transfer Restricted
Security if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Indemnified Holder to such person at or
prior to the written confirmation of the sale of such Transfer Restricted
Security to such person and if the Prospectus (as so amended or supplemented
would have cured the defect giving rise to such loss, liability, claim damage,
or expense). This indemnity agreement will be in addition to any liability
which the Company may otherwise have, including under this Agreement.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each of their respective officers,
directors, employers, partners, representatives and agents to the same extent
as the foregoing indemnity from the Company to each of the Indemnified Holders,
but only with respect to information relating to such Holder furnished in
writing by such Holder for use in the Shelf Registration Statement, or in any
amendment thereof or supplement thereto; provided, however, that in no case
shall any selling Holder be liable or responsible for any amount in excess of
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. This indemnity will be in
addition to any liability which the Holders may otherwise have, including under
this Agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 or otherwise except to the
extent that it has been prejudiced in any material respect by such failure).
In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to the extent it may elect
by written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume and control the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action, (ii) the indemnifying parties shall not have employed counsel to take
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have been advised by counsel that representation of such indemnified party and
any indemnifying parties by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such
representation by the same counsel has been proposed) because of actual or
potential interests between them (in which case the indemnifying party or
parties
11
<PAGE> 13
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses of
counsel shall be borne by the indemnifying parties; provided, however, that the
indemnifying party under subsection (a) or (b) above shall only be liable for
the legal expenses of one counsel (in addition to any local counsel) for all
indemnified parties. Anything in this subsection to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action effected without its prior written consent; provided
that such consent was not unreasonably withheld.
SECTION 8. CONTRIBUTION
In order to provide for contribution in circumstances in which the
indemnification provided for in Section 8 is for any reason held to be
unenforceable against the Company or is insufficient to hold harmless a party
indemnified thereunder, the Company, on the one hand, and the Holders on the
other hand, shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company, any
contribution received by the Company from persons, other than a Holder, who may
also be liable for contribution, including persons who control the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act) to which the Company or any Holder may be subject, in such proportion as
is appropriate to reflect the relative benefits received by the Company, on one
hand, and each Holder, on the other hand, from the offering of the Preferred
Stock or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but
also the relative fault of the Company, on one hand, and the Holders on the
other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on one hand, and the Holders, on the other hand, shall be deemed to be
in the same proportion as (i) the total proceeds from the offering of Preferred
Stock (net of discounts but before deducting expenses) received by the Company
and (ii) the discounts and commissions received by the Initial Purchaser,
respectively, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault of the Company, on one hand, and of
each Holder, on the other hand, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or such Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 8, (i) in no case shall any Holder be required to contribute any amount
in excess of the amount by which the proceeds received by such Holder upon the
sale of the Registrable Securities giving rise to such obligation exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 8, (A) each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act and (B) the respective officers, directors, partners, employees,
12
<PAGE> 14
representatives and agents of such Holder or any controlling person shall have
the same rights to contribution as the Initial Purchaser, and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act shall have the same rights to contribution as
the Company, subject in each case to clauses (i) and (ii) of this Section 8.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 8, notify such party or parties from whom contribution may
be sought, but the failure to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation
it or they may have under this Section 8 or otherwise. No party shall be
liable for contribution with respect to any action or claim settled without its
prior written consent; provided that such written consent was not unreasonably
withheld.
SECTION 9. RULE 144A
The Company hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Company agrees that monetary damages (including
the Liquidated Damages contemplated hereby) would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate, provided, that with respect
to the Preferred Stock and the Exchange Debentures, the Liquidated Damages
contemplated hereby shall be the exclusive remedy for any breach of Section 3
of this Agreement.
13
<PAGE> 15
(b) No Inconsistent Agreements. The Company shall not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights
granted to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder of Preferred Stock or Common Stock, at the
address set forth on the stock register of the Company, with a copy to the
transfer agent, and if to a Holder of Exchange Debentures, at the address
set forth on the records of the Registrar under the Exchange Debenture
Indenture, with a copy to the Registrar under the Exchange Debenture
Indenture; and
(ii) if to the Company:
Greyhound Lines, Inc.
15110 North Dallas Parkway
Suite 600
Dallas, Texas 75248
Telecopier No.: (972) 789-7403
Attention: Mark E. Southerst, Esq.
With a copy to:
Weil, Gotshal & Manges, LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201
Telecopier No.: (214) 746-7777
Attention: Jeremy W. Dickens, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
If and when the Preferred Stock is exchanged for the Exchange
Debentures, then copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Exchange Debenture Indenture.
14
<PAGE> 16
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, the successors and assigns of subsequent Holders of Transfer
Restricted Securities; provided, however, that this Agreement shall not inure
to the benefit of or be binding upon a successor or assign of a Holder unless
and to the extent such successor or assign acquired Transfer Restricted Notes
from such Holder.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICT OF LAW RULES THEREOF.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
[SIGNATURES ON THE FOLLOWING PAGE]
15
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
GREYHOUND LINES, INC.
By:
--------------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By:
------------------------------------
Name:
Title:
16
<PAGE> 1
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS EXCEPT RATIO)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1992
-----------------
<S> <C>
Interest Income (Loss) Before Taxes, Discontinued Operations
and Extraordinary Item.................................... $20,091
Interest Expense............................................ 35,297
Portion of Rents Representative of the Interest Factor...... 15,980
-------
Income (Loss) Before Taxes as Adjusted...................... 71,368
-------
Fixed Charges:
Interest Expense.......................................... 35,296
Interest Capitalized...................................... 0
Portion of Rents Representative of the Interest Factor.... 15,980
-------
Fixed Charges............................................. $51,277
-------
Coverage Deficiency......................................... N/A
=======
Ratio of Earnings to Fixed Charges.......................... 1.39
=======
</TABLE>
<PAGE> 2
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
-----------------
<S> <C>
Income before income taxes, discontinued operations,
extraordinary items and cumulative effect of a change in
accounting principle...................................... $14,847
Interest expense............................................ 30,832
Portion of rents representative of the interest factor...... 13,598
-------
Income before taxes as adjusted............................. 59,277
-------
Fixed charges:
Interest expense.......................................... 30,832
Interest capitalized...................................... 0
Portion of rents representative of the interest factor.... 13,598
-------
Fixed charges............................................. $44,430
-------
Coverage deficiency......................................... N/A
=======
Ratio of earnings to fixed charges.......................... 1.33
=======
</TABLE>
<PAGE> 3
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31, 1994
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operation,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(98,932)
Interest Expense............................................ 33,456
Portion of Rents Representative of the Interest Factor...... 14,491
--------
Income (Loss) Before Taxes as Adjusted...................... (50,985)
Fixed Charges:
Interest Expense.......................................... 33,456
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 14,491
--------
Fixed Charges............................................. 47,947
--------
Coverage Deficiency......................................... $(98,932)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
<PAGE> 4
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(17,444)
Interest Expense............................................ 26,807
Portion of Rents Representative of the Interest Factor...... 17,344
--------
Income (Loss) Before Taxes as Adjusted...................... 26,707
Fixed Charges:
Interest Expense.......................................... 26,807
Interest Capitalized...................................... --
Portion of Rents Represented of the Interest Factor....... 17,344
--------
Fixed Charges............................................. 44,151
--------
Coverage Deficiency......................................... $(17,444)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
<PAGE> 5
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(6,542)
Interest Expense............................................ 27,346
Portion of Rents Representative of the Interest Factor...... 19,556
-------
Income (Loss) Before Taxes as Adjusted...................... 40,360
Fixed Charges:
Interest Expense.......................................... 27,346
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 19,556
-------
Fixed Charges............................................. 46,902
-------
Coverage Deficiency......................................... $(6,542)
=======
Ratio of Earnings to Fixed Charges.......................... N/A
=======
</TABLE>
<PAGE> 6
EXHIBIT 12.1
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
1997
-------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(17,089)
Interest Expense............................................ 7,586
Portion of Rents Representative of the Interest Factor...... 5,030
--------
Income (Loss) Before Taxes as Adjusted...................... (4,473)
Fixed Charges:
Interest Expense.......................................... 7,586
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 5,030
--------
Fixed Charges............................................. 12,616
--------
Coverage Deficiency......................................... (17,089)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
<PAGE> 1
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(IN THOUSANDS EXCEPT RATIO)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1992
-----------------
<S> <C>
Interest Income (Loss) Before Taxes, Discontinued Operations
and Extraordinary Item.................................... $20,091
Interest Expense............................................ 35,297
Portion of Rents Representative of the Interest Factor...... 15,980
-------
Income (Loss) Before Taxes as Adjusted...................... 71,368
-------
Fixed Charges:
Interest Expense.......................................... 35,296
Interest Capitalized...................................... 0
Portion of Rents Representative of the Interest Factor.... 15,980
-------
Fixed Charges............................................. $51,277
-------
Coverage Deficiency......................................... N/A
=======
Ratio of Earnings to Fixed Charges.......................... 1.39
=======
</TABLE>
2
<PAGE> 2
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
-----------------
<S> <C>
Income before income taxes, discontinued operations,
extraordinary items and cumulative effect of a change in
accounting principle...................................... $14,847
Interest expense............................................ 30,832
Portion of rents representative of the interest factor...... 13,598
-------
Income before taxes as adjusted............................. 59,277
-------
Fixed charges:
Interest expense.......................................... 30,832
Interest capitalized...................................... 0
Portion of rents representative of the interest factor.... 13,598
-------
Fixed charges............................................. $44,430
-------
Coverage deficiency......................................... N/A
=======
Ratio of earnings to fixed charges.......................... 1.33
=======
</TABLE>
3
<PAGE> 3
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED
DECEMBER 31, 1994
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operation,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(98,932)
Interest Expense............................................ 33,456
Portion of Rents Representative of the Interest Factor...... 14,491
--------
Income (Loss) Before Taxes as Adjusted...................... (50,985)
Fixed Charges:
Interest Expense.......................................... 33,456
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 14,491
--------
Fixed Charges............................................. 47,947
--------
Coverage Deficiency......................................... $(98,932)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
4
<PAGE> 4
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(17,444)
Interest Expense............................................ 26,807
Portion of Rents Representative of the Interest Factor...... 17,344
--------
Income (Loss) Before Taxes as Adjusted...................... 26,707
Fixed Charges:
Interest Expense.......................................... 26,807
Interest Capitalized...................................... --
Portion of Rents Represented of the Interest Factor....... 17,344
--------
Fixed Charges............................................. 44,151
--------
Coverage Deficiency......................................... $(17,444)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
5
<PAGE> 5
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(6,542)
Interest Expense............................................ 27,346
Portion of Rents Representative of the Interest Factor...... 19,556
-------
Income (Loss) Before Taxes as Adjusted...................... 40,360
Fixed Charges:
Interest Expense.......................................... 27,346
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 19,556
-------
Fixed Charges............................................. 46,902
-------
Coverage Deficiency......................................... $(6,542)
=======
Ratio of Earnings to Fixed Charges.......................... N/A
=======
</TABLE>
6
<PAGE> 6
EXHIBIT 12.2
GREYHOUND LINES, INC. AND SUBSIDIARIES
COMPUTATION OF COVERAGE DEFICIENCY
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31,
1997
-------------
<S> <C>
Net Income (Loss) Before Taxes, Discontinued Operations,
Extraordinary Items and Cumulative Effect of a Change in
Accounting Principle...................................... $(17,089)
Interest Expense............................................ 7,586
Portion of Rents Representative of the Interest Factor...... 5,030
--------
Income (Loss) Before Taxes as Adjusted...................... (4,473)
Fixed Charges:
Interest Expense.......................................... 7,586
Interest Capitalized...................................... --
Portion of Rents Representative of the Interest Factor.... 5,030
--------
Fixed Charges............................................. 12,616
--------
Coverage Deficiency......................................... (17,089)
========
Ratio of Earnings to Fixed Charges.......................... N/A
========
</TABLE>
7
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 12,
1997, included in Greyhound Lines, Inc.'s Form 10-K for the year ended December
31, 1996, and to all references to our Firm included in this registration
Statement.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Dallas, Texas
May 12, 1997
